Daily Brief Australia: Austal Ltd, Commonwealth Bank of Australia, Nickel Industries and more

• Hanwha received counsel indicating foreign regulators won’t oppose Austal’s acquisition. They admit it’s restricted to AUKUS countries but argue Korea’s ties ease opposition.
• Hence, Hanwha Ocean is dropping some heavy hints that even though Austal has turned down the acquisition offer for now, there’s still a chance the deal could go through.
• The pivotal factor lies in whether Hanwha Ocean can secure approval from the AUKUS countries. Should they succeed, it is anticipated that Austal would be inclined to accept the deal.

• Perth-Based shipbuilder Austal Ltd (ASB AU) has confirmed a A$2.825/share non-binding indicative proposal, by way of a Scheme, from Hanwha Ocean (042660 KS). That’s a 28.4% premium to last close.
• Austal designs and builds defence vessels for the Australian and US navies. Austal believes Hanwha is unlikely to secure necessary approvals from the Australian and US governments. 
• Hanwha considers this view to be baseless, that it is a credible buyer, and its capabilities and investment are aligned with government objectives in Australia, the US and South Korea.

• It is not only NPLs that we must worry about for banks, but also loans that can turn NPL amidst a worsening economic backdrop
• CBA’s past due loans but not impaired are up 43% in past two years and this bucket of loans is now 2.6x NPLs compared with 1.9x NPLs recently
• Australia shows surging insolvencies across many sectors through 17 March 2024 and this can mean past due loans are more prone to migrating to turn NPL

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

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• Nickel Industries