FX Strategist

Greg Gibbs

Fundamental analysis of topical themes in FX

Amplifying Global FX Capital

Amplifying Global FX Capital was founded in 2015 and is fully owned by Greg Gibbs. It is a registered company both in Australia and Colorado, USA and is a licensed in Australia to provide financial services.

We are producing a regular trading view orientated macroeconomic analysis of topical themes in global financial markets, with a particular focus on foreign exchange. We invite you to view an “executive summary” of these reports in “AmpGFX Reports” under our “Research” menu.

These reports are drawn from the analysis of Greg Gibbs and inform the capital management he undertakes on behalf of the company. The trading performance is posted periodically on our website. We aim to build our company into both a research and capital management business. We are currently in the planning phase for managing capital for wholesale customers.

Greg Gibbs has spent his working life of more than 26 years in financial markets, beginning in 1989 at the Reserve Bank of Australia, after completing a Bachelor of Economics Degree (Honours) at the Australian National University. He has been a CFA Charterholder since 2005. He has worked in Sydney, Singapore, New York and London for major global banks and presented on foreign exchange markets to major financial institutions and companies around the world, and maintained a high profile in the financial media.

Before Amplifying Global FX Capital, Greg was the Head of Asia Pacific Market Strategy at the Royal Bank of Scotland based Singapore. He now resides in Breckenridge Colorado.

Macroeconomics

The AUD is being pulled harder in opposite directions with the labour data suggesting the non-mining sector is coming to life, but weaker commodity demand in China and weak energy prices are dragging harder from below; best to stay on the side-lines for now.&nbsp; Oil prices appear to be responding to concerns over too much supply.&nbsp; The ECB has said low oil prices are a contributing factor to its assessment that more policy easing may be required. We stick to our weaker EUR view, as other major CBs are more prepared to look through the dis-inflation risk.

The AUD is being pulled harder in opposite directions with the labour data suggesting the non-mining sector is coming to life, but weaker commodity demand in China and weak energy prices are dragging harder from below; best to stay on the side-lines for now.&nbsp; Oil prices appear to be responding to concerns over too much supply.&nbsp; The ECB has said low oil prices are a contributing factor to its assessment that more policy easing may be required. We stick to our weaker EUR view, as other major CBs are more prepared to look through the dis-inflation risk.

AmpGFX - AUD pulled harder in opposite directions

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

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Equity Capital Markets

Santos plans to raise A$2.5bn through a 1 for 1.7 rights issues, at a 25% discount to TERP, as a part of its broader A$3.5bn capital raise. The institutional entitlement offer is expected to be completed tomorrow, post which an institutional shortfall bookbuild is likely to be launched. While we await the details of the shortfall bookbuild, we take a look at the deal.&nbsp;We would bid at most at TERP given:<ul><li>The Hony deal&nbsp;is likely to lead to an end of the Scepter episode, as a full fledged takeover,&nbsp;near the previously offered price, looks&nbsp;nearly impossible</li><li>The A$3.5bn combined capital raise will decrease net gearing from 89% to 41%, thus, easing debt concerns in the near term.&nbsp;However, earnings at EBITDA level will not be impacted from the capital raise and the stock doesn't seem to be trading at a very large discount to its peer group on EV/EBITDA basis, thus, upside may not be very high</li><li>Recent lessons from the Origin Energy deal point to a good performance in the short-term, while Oil prices remain key drivers over the medium to long term and may continue to put pressure on the stock performance</li><li>Overall we would be comfortable bidding at most as TERP, since that would still offer some buffer in terms of valuations versus peers</li></ul>

Santos plans to raise A$2.5bn through a 1 for 1.7 rights issues, at a 25% discount to TERP, as a part of its broader A$3.5bn capital raise. The institutional entitlement offer is expected to be completed tomorrow, post which an institutional shortfall bookbuild is likely to be launched. While we await the details of the shortfall bookbuild, we take a look at the deal.&nbsp;We would bid at most at TERP given:The Hony deal&nbsp;is likely to lead to an end of the Scepter episode, as a full fledged takeover,&nbsp;near the previously offered price, looks&nbsp;nearly impossibleThe A$3.5bn combined capital raise will decrease net gearing from 89% to 41%, thus, easing debt concerns in the near term.&nbsp;However, earnings at EBITDA level will not be impacted from the capital raise and the stock doesn't seem to be trading at a very large discount to its peer group on EV/EBITDA basis, thus, upside may not be very highRecent lessons from the Origin Energy deal point to a good performance in the short-term, while Oil prices remain key drivers over the medium to long term and may continue to put pressure on the stock performanceOverall we would be comfortable bidding at most as TERP, since that would still offer some buffer in terms of valuations versus peers

Origin Energy plans to sell US$286m/A$400m worth of stock as part of its retail shortfall bookbuild, post completion of its retail entitlement offer.We had covered the institutional short fall <a href="http://www.smartkarma.com/insights/capital-raise-still-doesn-t-quell-the-uncertainty-but-stock-remains-cheap-towards-the-lower-end" target="_blank">here</a>, concluding that the deal remained cheap at the lower end. The stock has performed well since then and remained well above the shortfall bookbuild clearing price of A$5.20/share.We would expect the retail shortfall to clear at least at those levels, if not above, despite its larger size. We would be inclined to bid up to a suitable discount.

Origin Energy plans to sell US$286m/A$400m worth of stock as part of its retail shortfall bookbuild, post completion of its retail entitlement offer.We had covered the institutional short fall here, concluding that the deal remained cheap at the lower end. The stock has performed well since then and remained well above the shortfall bookbuild clearing price of A$5.20/share.We would expect the retail shortfall to clear at least at those levels, if not above, despite its larger size. We would be inclined to bid up to a suitable discount.

QUICK NOTE: Time to reload - but this time round limited risk will likely lead to limited returns

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

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Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

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Event-Driven

<ul><li class="p1">We are retaining our AUD 8.00 per share fair value estimate&nbsp;despite a soft third quarter, with just 14.5&nbsp;mmboe produced, along with a hastily&nbsp;rejected left-field AUD 6.88 conditional takeover bid from&nbsp;private equity.</li><li class="p1">Another strong performance from the Papua&nbsp;New Guinea Liquefied Natural Gas, or PNG LNG, project&nbsp;partially offset unscheduled oil maintenance at both Chim&nbsp;Sao and Mutineer-Exeter/Fletcher Finucane and lower than&nbsp;expected domestic gas demand in Queensland.</li><li class="p1">Our&nbsp;2015 earnings forecast declines 30% to AUD 0.13 per share&nbsp;as a result of forgone high-value oil.</li><li class="p1">Regardless, Santos&nbsp;shares have rallied to AUD 6.50 on the takeover approach.</li><li class="p1">An improved bid is the obvious route to a closing in the gap&nbsp;between the shares and our AUD 8.00 fair value estimate;&nbsp;that, or an equity raising and/or asset sales to address debt&nbsp;levels.</li></ul>Analysts: Mark Taylor &amp; Mathew Hodge

We are retaining our AUD 8.00 per share fair value estimate&nbsp;despite a soft third quarter, with just 14.5&nbsp;mmboe produced, along with a hastily&nbsp;rejected left-field AUD 6.88 conditional takeover bid from&nbsp;private equity.Another strong performance from the Papua&nbsp;New Guinea Liquefied Natural Gas, or PNG LNG, project&nbsp;partially offset unscheduled oil maintenance at both Chim&nbsp;Sao and Mutineer-Exeter/Fletcher Finucane and lower than&nbsp;expected domestic gas demand in Queensland.Our&nbsp;2015 earnings forecast declines 30% to AUD 0.13 per share&nbsp;as a result of forgone high-value oil.Regardless, Santos&nbsp;shares have rallied to AUD 6.50 on the takeover approach.An improved bid is the obvious route to a closing in the gap&nbsp;between the shares and our AUD 8.00 fair value estimate;&nbsp;that, or an equity raising and/or asset sales to address debt&nbsp;levels.Analysts: Mark Taylor &amp; Mathew Hodge

Maintenance-Crimped Third Quarter Overshadowed by Takeover Bid

<ul><li>Oil Search reported better-than-expected production and revenue in third-quarter 2015.</li><li>This is sufficient to drive forecast earnings increases, but not enough to move our fair value estimate.</li><li>The PNG LNG project operated at an annualised rate of 7.4 million metric tons, achieving a solid LNG price of USD 8.90 per million British thermal units, up 10% on the second quarter.</li><li>We increase our 2015 and 2016 earnings forecasts by 15% and 12% to AUD 0.42 and AUD 0.36 per share, respectively.</li><li>Oil Search is confident that PNG LNG can sustain the higher volumes over the balance of 2015 and 2016.</li><li>We upgrade our group 2015 production forecast to the higher end of guidance for 27-29 million barrels of oil equivalent.</li></ul>Analysts: Mark Taylor &amp; Mathew HodgeLogin to access the full report.

Oil Search reported better-than-expected production and revenue in third-quarter 2015.This is sufficient to drive forecast earnings increases, but not enough to move our fair value estimate.The PNG LNG project operated at an annualised rate of 7.4 million metric tons, achieving a solid LNG price of USD 8.90 per million British thermal units, up 10% on the second quarter.We increase our 2015 and 2016 earnings forecasts by 15% and 12% to AUD 0.42 and AUD 0.36 per share, respectively.Oil Search is confident that PNG LNG can sustain the higher volumes over the balance of 2015 and 2016.We upgrade our group 2015 production forecast to the higher end of guidance for 27-29 million barrels of oil equivalent.Analysts: Mark Taylor &amp; Mathew HodgeLogin to access the full report.

Volumes Impress for the PNG Liquefied Natural Gas Project

Australia

Woodside Petroleum Limited explores for and produces oil and gas from offshore and onshore facilities located in Western Australia and Northern Territory. The Company operates numerous oil and gas fields and pipelines throughout Australia, United States and Mauritania and its products include liquefied natural gas, domestic gas, condensate, crude oil and liquefied petroleum gas.

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Woodside Petroleum (WPL AU)

AmpGFX - AUD pulled harder in opposite directions

The AUD is being pulled harder in opposite directions with the labour data suggesting the non-mining sector is coming to life, but weaker commodity...

Greg Gibbs

Ridding itself of the Spectre of Scepter

Santos plans to raise A$2.5bn through a 1 for 1.7 rights issues, at a 25% discount to TERP, as a part of its broader A$3.5bn capital raise. The...

Sumeet Singh

QUICK NOTE: Time to reload - but this time round limited risk will likely lead to limited returns

Origin Energy plans to sell US$286m/A$400m worth of stock as part of its retail shortfall bookbuild, post completion of its retail entitlement...

Sumeet Singh

Maintenance-Crimped Third Quarter Overshadowed by Takeover Bid

We are retaining our AUD 8.00 per share fair value estimate despite a soft third quarter, with just 14.5 mmboe produced, along with a...

Morningstar, Inc.

Volumes Impress for the PNG Liquefied Natural Gas Project

Oil Search reported better-than-expected production and revenue in third-quarter 2015. This is sufficient to drive forecast earnings increases,...

Morningstar, Inc.

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