Australian stock report - ANZ Banking Group

AUSTR

Australia and New Zealand Banking drops on high volatility October 20, 2017 16:00 AEST

NEWS BITES - AUSTRALIA

Australia and New Zealand Banking Group Limited (ASX:ANZ), Australia's 3rd largest Bank by market cap, traded between an intraday low of $A30.26 and a high of $A30.74, suggesting a trading opportunity between peaks and troughs. The average daily volatility of 1.4% places the stock in the 4th quartile in the market, meaning it is the least volatile. Since the start of trading its volatility (highest price minus lowest price/lowest price) of 1.6% was 1.1 times the average daily volatility of 1.4%, up from 0.9% on Thursday and 0.5% on Wednesday. A fall in the price on high volatility is a bearish signal. The stock price has decreased 1.0c (0.03%) from its last trading session of October 19 to close at $A30.59. Compared with the All Ordinaries Index which rose 8.8 points (0.1%) in the day, the relative price change was -0.2%. The volume was 0.5 times the average daily trading volume of 5.8 million shares.

Highlights in today's Report:

SECTION 1 BEARISH SIGNALS

Fundamentals, Technicals, Short Selling, Low Performance Indicator

SECTION 2 BULLISH SIGNALS

Fundamentals, Undervaluation [compared with sector average], Technicals, High Performance Indicators, Moving Annual Return, Beta & Alpha, Aggregate Volumes, Prices and Turnover Period

SECTION 3 RANKING

Global, Independent Ratings

SECTION 4 FINANCIALS

Financials Summary, Annual Report for the year ended September 30, 2016 (year-on-year comparisons with previous corresponding period)-, Trailing 12 Months Dividends

SECTION 5 CORPORATE BONDS

Key Statistics, Yield Curve - Australia and New Zealand Banking Bond vs US Treasury

SECTION 6 PROFILE

Activities, Industry & Sector, Top Management, Issued Capital

SECTION 7 REPORTED BUYING AND SELLING

SECTION 8 STOCK BUZZ

SECTION 1 AUSTRALIA AND NEW ZEALAND BANKING BEARISH SIGNALS

1.1 Fundamentals:

+ Revenue growth rate has shown signs of deterioration in recent years. [Year ended, all figures in %]

YearRevenue GrowthEPS Growth
Sep 16-4.3-26.5
Sep 151-

1.2 Technicals:

Overbought/Bearish/Resistance Signals:

+ The stock is overbought according to the Williams % R indicator of -8.9, suggesting the price is close to its 14-day high of $A30.74.

+ The Stochastic indicator of 91.5 has broken through the overbought line of 80; this indicates the price is close to its 14-day high and is likely to revert to a downtrend.

1.3 Short Selling:

+ In the Australian Short Selling market of 1079 stocks, short selling (on ASX and CHI-X) as a % of issued shares ranked 248th and within the top quartile of stocks, a bearish indicator.

1.4 Low Performance Indicator:

DescriptionValueRank In Market
Return on Assets [ROA] %0.6In Bottom 3%

SECTION 2 AUSTRALIA AND NEW ZEALAND BANKING BULLISH SIGNALS

2.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 5.2%, divided by average yield of dividend yielding stocks in the All Ordinaries Index of 4.2% is 124.2%. This suggests the stock is undervalued in dividend yield terms.

+ Net profit margin has averaged 22.8% in the last 3 years. This is considered superior and suggests a high margin of safety.

+ As per the Du Pont analysis, Return on Equity of 9.9% is better than sector average of 9.7%. This is computed as net profit margin of 19.1% times asset turnover [sales/assets] of 0.04 times leverage factor [total assets/shareholders' equity] of 15.8.

2.2 Undervaluation [compared with sector average]:

+ Price/Earnings of 16.2 [18.6]. We estimate Australia and New Zealand Banking stock is trading at a current year P/E of 16.6 and a forward year P/E of 17.5.

+ Price to Book of 1.8 [2.1]. We estimate Australia and New Zealand Banking stock is trading at a current year Price to Book of 1.6 and a forward year Price to Book of 1.5.

2.3 Technicals:

+ The price increased 1.8% in the last week and 1.9% in the last month.

+ The 4.7% discount to 12-month high of $A32.09 against the 25.4% premium to 12-month low of $A24.40 suggests the stock continues to push for new highs.

+ The present value of $A1,000 (PV1000) invested one year ago in Australia and New Zealand Banking is $A1,219, comprising a capital gain of $A153 and dividend reinvested of $A66.

PV$10001-week1-month1-year
ANZ.ASX1,0181,0191,219
All Ordinaries Index1,0141,0391,080

+ The present value of AUD1,000 (PV1000) invested thirty years ago in Australia and New Zealand Banking is $A28,581, including a capital gain of $A10,483 and dividend reinvested of $A17,098.

+ 30 years Multiplier in AUD = 28.581x

+ Compound Annual Growth Rate (CAGR) in AUD = 11.7%

Present Value of USD1,000 invested 30 years ago:

+ The present value of USD1,000 (PV1000) invested thirty years ago in Australia and New Zealand Banking is $US31,060, including a capital gain of $US11,479 and dividend reinvested of $US18,581.

+ 30 years ago AUD 1 equalled USD 0.7241

+ 30 years Multiplier in USD = 31.06x

+ Compound Annual Growth Rate (CAGR) in USD = 12.0%

Oct 20, 2017: AUD 1 equals USD 0.79

2.4 High Performance Indicators:

DescriptionValueRank In Market
Today's Turnover$A94.8 millionIn Top 1%
Price/MAP501.03In Top Quartile
Volatility %1.6In Top Quartile

2.5 Moving Annual Return

Based on a dynamic start date of 5 years ago, the Moving Annual Return has been positive in 4 of the last 5 years. An investment a year ago in ANZ would have produced a return of 21.3%.

ANZClose (AUD)Dividends (AUD)Capital Gain / (Loss) %% YieldAnnual Return %
Oct 2030.591.615.3621.3
1 Yr ago26.531.7546.910.9
2 Yrs ago25.51.81(7.1)6.6(0.5)
3 Yrs ago27.461.745.76.712.4
4 Yrs ago25.981.5228.27.535.7

Close 5 years ago $A20.27

2.6 Beta & Alpha:

+ Beta: the Beta of Australia and New Zealand Banking stock is 1.3. A Beta greater than 1 suggests this is a high risk, high return stock with volatility greater than that of the market.

+ Alpha: the Alpha of the stock is 6.7. The actual return of 14.3% exceeded the expected return of 7.6%, reflecting outperformance.

2.7 Aggregate Volumes, Prices and Turnover Period:

[Volume Index or VI in brackets; 1 is average]

+ ASX: ANZ.ASX 3,098,385 [VI of 0.5] volume 98.17% of aggregate. Price: $A30.59.

+ New Zealand: ANZ.NZSX 55,204 [VI of 1.7] volume 1.75% of aggregate. Price: $NZ34.35. Using the current exchange rate of NZD1 equals 0.8924AUD, The shares are at a 0.2% premium to the close price on ASX.

+ Frankfurt: ANB.FRA 2,403 [VI of 3.6] volume 0.08% of aggregate. Price: EUR20.42. Using the current exchange rate of EUR1 equals 1.5043AUD, The shares are at a 0.4% premium to the close price on ASX.

+ Aggregate volume: there were 3.2 million shares of Australia and New Zealand Banking worth $A96.5 million traded today. The aggregate volume was 0.5 times average trading of 5.8 million shares.

The turnover rate in the 12 months to date was 49.4% (or a turnover period of 2 years 7 days). This average length of ownership of the stock at 1.2 times the average holding period of 1 year 8 months for stocks in the All Ordinaries Index suggests a larger number of core investors, making a long-term investment safer.

SECTION 3 RANKING

3.1 Global Rank [out of 47,820 stocks] and Rank in the Asia Pacific Region [out of 2,051 stocks]

DescriptionValueGlobal RankIn APAC Region
MCap (US$)70.7B1645
Total Assets (US$)719.9B1102
Revenue (US$)26B5486
Net Profit (US$)4.5B2095
Return on Equity %9.913,166421
Net Profit Margin %19.16,036242
Price to Book1.817,647752
Price/Earnings16.29,976359
Yield %5.23,931215
PV$1000 (1Year) US$*1,25114,187519
US$* Change (1Year) %18.715,777564

* 1 year ago AUD 1 = USD 0.77

Oct 20, 2017: AUD 1 equals USD 0.79

3.2 Independent Ratings

Australia and New Zealand Banking Group Limited was ranked 38 in the Brand Finance list of the world's 500 Valuable Banking brands by brand value in 2015; an improvement over a year from rank 39 in 2014. Brand Finance valued the brand at US$6,664 million and ranked it Number 38 in APAC.

It was ranked 48 in SNL's list of Top 100 Banks by Total Assets in 2016; a deterioration over a year from rank 47 in 2015.

It was ranked 56 by Newsweek and Corporate Knights Capital in the World's 500 Greenest Companies 2016. It had outstanding scores of 11.7% in Water productivity, 9.9% in Energy productivity and 9.4% in Waste productivity.

It is the 78th largest by profit in the FT Global 500.

It is a new entrant in PwC's list of Top 100 Global companies; ranked 96th by MCap as at March 31, 2015.

It is the 295th largest by revenue in the Forbes Global 2000.

It is placed 453/1307 in BSS News Bites' ranking of Australian performers in the past year, a percentile ranking of 65.

SECTION 4 AUSTRALIA AND NEW ZEALAND BANKING FINANCIALS

4.1 Financials Summary

Year endedSep 2016Sep 2015Sep 2014
Sales (USD B)26.127.227
Pretax (USD B)6.48.38.1
Net (USD B)4.55.95.7
EPS (AUD)1.892.572.57

Net profit was down 23.8% from US$5.9 billion in 2015 to US$4.5 billion in 2016. Earnings Per Share (EPS) was down 26.5% from $A2.57 to $A1.89.

4.2 Annual Report for the year ended September 30, 2016 (year-on-year comparisons with previous corresponding period)-

Favourable Changes:

+ Tier 1 Ratio up from 11.3% to 11.8%.

+ Tier 2 Ratio up from 2% to 2.5%.

+ Deposits up 3.7% to $A577.5b ($US443.9b).

+ Non-Performing loans to Net loans deteriorated from 2.78% to 2.94%.

Unfavourable Changes:

+ Net profit slumps 23.8% from $A7.5b ($US5.2b) to $A5.7b ($US4.4b)

+ Total income down 4.3% from $A34.6b ($US24.2b) to $A33.1b ($US25.4b).

+ EPS slumps 26.5% from $A2.57 ($US1.8) to $A1.89 ($US1.45).

+ EBIT to total assets down 24.5 from 1.2% to 0.9%.

+ Return on Equity down from 13.1% to 9.9%.

+ Net tangible assets per share down 2.3% from $A17.74 ($US12.4) to $A17.34 ($US13.3).

Note:

+ Retained earnings to total assets steady at 3.1%.

+ Net Loans steady at $A567.1b ($US435.9b).

4.3 Trailing 12 Months Dividends

Trailing 12 Months ToValue ($A)
20 Oct 20171.6
20 Oct 20161.75
20 Oct 20151.81
20 Oct 20141.74
20 Oct 20131.52

SECTION 5 AUSTRALIA AND NEW ZEALAND BANKING CORPORATE BONDS

5.1 Key Statistics

MaturityYield to maturity %Yrs to Maturity% Rise/Fall 3-mo
Jan to Nov 20181.39 to 1.670.24 to 1.08-0.15 to -0.12
Jun to Sep 20191.61 to 1.891.65 to 1.93-0.22
Jan to Nov 20201.71 to 2.262.24 to 3.08-0.82 to -0.36
Jan to Dec 20212.28 to 2.473.23 to 4.12-0.23
Mar to Aug 20222 to 2.524.39 to 4.84-0.13
Nov 20252.818.08-

5.2 Yield Curve - Australia and New Zealand Banking Bond vs US Treasury

Years to MaturityANZ Bond Yield (%)Treasury Yield (%)Spread to Treasury(Basis Points)
11.741.434
22.071.5750
32.181.7147
52.51251

The yield curve is upward sloping which is typical. The term premium between the yield of a 5-year Australia and New Zealand Banking Group Limited bond of 2.51% and the yield of a 1 year bond of 1.74% is 0.77%. Further, the yield curve is flattening from a term premium of 0.81% a month ago to a current level of 0.77%. This indicates investor expectations of falling inflation and/or decreasing demand for longer-term bonds. In comparison, the term premium of Treasury is 0.6%, up from 0.56% a month ago.

SECTION 6 AUSTRALIA AND NEW ZEALAND BANKING PROFILE

6.1 Activities

Australia and New Zealand Banking Group Limited is an international bank with activities in general banking, mortgage and installment lending, life insurance, leasing, hire purchase and general finance. ANZ also provides international and investment banking, investment and portfolio management and advisory services, nominee and custodian services, stock broking and executor and trustee services.

6.2 Industry & Sector

Classification LevelName of Sector
Economic SectorFinancials
Business SectorBanking & Investment Services
Industry GroupBanking Services
IndustryBanks

6.3 Top Management

The chairman is David Gonski, the chief executive officer is Shayne Elliott and the chief financial officer is Michelle Jablko.

6.4 Issued Capital

Based on 2,937,415,327 issued shares the market capitalisation is $A89.9 billion.

SECTION 7 REPORTED BUYING AND SELLING

Insider Buying and Selling

Reported Buying:

May 16: Australia and New Zealand Banking substantial shareholder buys

Australia and New Zealand Banking (ASX:ANZ) substantial shareholder Blackrock Group bought 148,984,864 shares worth $A4,353,337,726 ($US3,227,999,924) on May 12. The purchase price was $A29.22.

Reported Selling:

May 05: Australia and New Zealand Banking substantial shareholder sells

Australia and New Zealand Banking (ASX:ANZ) substantial shareholder BlackRock Investment Management (Australia) Limited sold 13,728 shares worth $A430,373 ($US318,390) on May 03. The selling price was $A31.35.

SECTION 8 STOCK BUZZ

Corporate Wire

To view Recent Company Headlines, click here

October 18: ANZ New Zealand Board changes and Chairman appointment

September 28: Australia and New Zealand Banking announces issued capital of 2,937,415,327

Australia and New Zealand Banking (ANZ.AU) has announced total shares on issue of 2,937,415,327. The effective date is Thursday, September 28.

September 26: ANZ - wholesale debt ANZHAR - interest payment details

September 18: ANZ responds to media speculation on Wealth Australia

September 07: Australia and New Zealand Banking announces issued capital of 2,937,415,327

Australia and New Zealand Banking (ANZ.AU) has announced total shares on issue of 2,937,415,327. The effective date is Thursday, September 07.

Contact: (03) 9273 6141

Physical Address: ANZ Centre Melbourne, Level 9, 833 Collins Street, Docklands, VIC, Australia, 3008

State/Province/Country: Australia

Exchange: Australian Securities Exchange

ISIN: AU000000ANZ3

AU:ANZ; ASX:ANZ; AX:ANZ; ANZ.AX

PermID: 4295856605

Australia & New Zealand Banking Group Ltd, Australia And New Zealand Banking Group Limited, Australia And New Zealand Banking Group Ltd

Source: www.BuySellSignals.com