ASX rises, Premier rallies on Myer's plan to buy Just Jeans, Portmans, Dotti — as it happened

That's it for today. Thanks for joining us.

See you tomorrow.

 Zip Co (+11.83%) and Premier Investments (9.91%) were the top movers today, followed by Mineral Resources (+7.15%) and Tabcorp (+5.49%).

Among the worst performers were Coronado Global Resources (-6.64%), Paladin Energy (-4.92%), and Resmed (-2.97%).

My colleague Kirsten Aiken has spoken to Myer CEO Olivia Wirth about Myer's planned acquisition of Premier Investment's five Apparel Brands - Jay Jays, Dotti, Jacqui E, Just Jeans and Portmans.

Ms Wirth has described the acquisition as a "growth story" for Myer, saying the five brands cater towards a very broad range of ages - from young consumers to older consumers - and it will allow Myer to apply the "very popular" Myer one program, which has 10.6 million customers, more broadly across that whole suite of apparel.

"We announced some time ago that there is a strategic view underway, and this is all about making sure that we have a very clear and direction over the next five to seven years, to make sure that we can move onto a growth footing," Ms Wirth said.

You can catch more tonight on The Business at 8:45pm AEST:

 The ASX200 has gained valued for the third day in a row.

It's risen by 27 points (+0.34%), to close on 8,249 points.

Following  on from that post about e-waste and generative AI:

Just 10 per cent of lithium-ion batteries (LIBs) in Australia are collected and sent offshore for processing, with the rest either stockpiled or put in landfill where they can cause "significant environmental harm".

Edith Cowan University senior research engineer Yasir Arafat and Daryoush Habibi have been working to raise awareness about Australia's "alarmingly low" recycling rate for LIBs which, in landfill, can lead to the leakage of hazardous metals like cobalt, nickel and manganese.

Australia currently produces about 3,300 tonnes of LIB waste a year, according to the CSIRO, with the federal government projecting Australia's annual wastage to soar to 137,000 tonnes by 2035.

Dr Arafat says East Asian countries such as China, South Korea and Japan currently dominate the global recycling landscape for LIBs, accounting for 71 per cent of recycling plants:

Where's it all leading?

A new study published in Nature Computational Science estimates that generative AI could generate up to 2.3 million tonnes of electronic waste (e-waste) per year by 2030.

Generative AI produced about 2,400 tonnes of e-waste in 2023. But that relatively small figure will shoot up when vast data centres built to develop products such as ChatGPT are gutted of computer parts succeeded by new designs.

E-waste is now the planet's fastest-growing waste stream. A record 62 million tonnes of e-waste was produced in 2022, according to the UN's global e-waste monitor report.

Companies importing electronic goods or building data centres in Australia are currently under no legal obligation to consider the volume of e-waste they generate.

Zip Co is an Australian-based company that provides point-of-sale credit and digital payment services in two core markets — Australia and New Zealand (ANZ) and the United States (US).

And its shares are currently trading 12% higher.

It provided an update to the ASX this morning, before the market opened, with its results for the quarter ending 30 September 2024 (1Q25).

It said it achieved unaudited group cash EBTDA of $31.7 million (up 233.7% on 1Q24) in the quarter, driven by a "particularly strong performance in the US business".

Also:

• Revenue  was $239.9 million (up 18.8% on 1Q24)
• Revenue margin of 8.5% (vs 8.8% on 1Q24)
• Cash transaction margin of 3.9% (vs 3.6% in 1Q24)

It says Zip US delivered total transaction volume (TTV) of US$1.3 billion, up 42.8% vs the same period last year, and revenue of US$92.1 million, an increase of 43.9% on the same period last year.

And Zip US continued to expand its merchant partnerships in the US, signing FanBasis, GameStop, Major League Baseball Ticketing via Tickets.com, Major League Baseball Shop, Take 5 Oil Change and Tools.com.

And its share price is up significantly today:

Neurologists and Parkinson's Australia are calling on the regulator to ban paraquat over its links with Parkinson's disease.

But Cotton Australia wants to continue using the chemical at its current legal rates of application.

A proposed regulatory decision was released in August recommending tighter restrictions on the chemical's use and lower usage rates.

Public consultation on the proposal is due to close on Tuesday.

Myer shares were up earlier this morning, but now they're trading in negative territory. Premier shares, on the other hand, are still doing well.

Veteran retail consultant Geoff Dart says Myer's deal with Premier Investments "does not make sense."

"Both [companies] are diametrically opposed demographically, trying to cater for 13-year-olds to 80-year-olds is problematic," he told the ABC.

"It's going to be a real struggle, it honestly is. It's not a healthy environment for retail, generally."

Mr Dart said the deal was a win for Premier but could spell disaster for Myer, which he described as an "old, tired" brand that needed a marketing overhaul.

"I'd rebrand Myer. The time's come where it's either do or die, it's down $3.3 billion with store closures declining 2.9 per cent, it's eroding," he said.

He said an enormous amount of investment had already gone into refitting Myer stores.

"They just have to do things differently and be modern and international which they're not."

RBC Capital Markets analyst Owen Birrell says BlueScope's profit downgrade was not entirely unexpected, and the fact that the company has confirmed its productivity targets is a positive.

He circulated this note earlier:

"Given its offshore peers have confirmed similar challenging trading patterns both across Asia and North America, we think it is not surprising to see BlueScope downgrade its 1H25 guidance today," Mr Birrell says.

"With Chinese steel exports remaining elevated for over 12 months now, the seaborne steel market remains in oversupply, placing material downward pressure on steel prices and spreads, and we are continuing to see the pressure on regional steel producers.

"For BlueScope's Australian business, it has received some protection from the lower Australian dollar which has kept import parity price high; however, there are concerns that a rising Australian dollar in coming months may remove these protections.

"On that front, it is important to see that BlueScope has confirmed the productivity and cost-out program with this update, and importantly revealed the $200m target. This target is designed to ensure that the Port Kembla steelworks remains break-even at bottom of the cycle floor spreads, and therefore should adequately leverage any recovery.

"We previously highlighted that we expect the current challenging global steel market to continue for some time, and that FY25 would represent the trough for the company's earnings.

"While there is an unlikely quick fix coming, we expect that through time the pressures on the macro environment to incrementally ease, and for BlueScope to further its 'self help' programmes to remove excess costs and improve efficiencies.

Mr Birrell says after this morning's profit guidance update, his rating for BlueScope stocks remains "outperform" rated.

How do we make sense of analyst ratings?

At this point, please remember that the information in this blog is not intended as investment advice.

But this is for people who are curious.

Investopedia has a basic chart (below) that helps to visualise how analyst ratings systems can work:

But different firms can have different ways of rating stocks.

And here's how RBC Capital Markets does it:

If you're wondering why BlueScope's share price took a hit this morning, it's because the company provided a negative update to the ASX before the market opened.

It said it now expects underlying earnings before interest and tax (EBIT) for the first half of FY2025 to be in the range of $270 million to $310 million.

That's below its prior guidance range of $350 million to $420 million.

The company's managing director and chief executive officer, Mark Vassella, had this to say in an official statement:

"The revised outlook highlights the challenging operating conditions not only facing BlueScope, but the broader global steel industry.

"These challenges include the continued softness in East Asian spreads off the back of record levels of Chinese steel exports, ongoing cost inflation and a period of pause and uncertainty in the US pending the outcome of the election and timing of further rate cuts.

"Whilst these pressures are impacting performance in the near-term, we are confident in BlueScope's resilience, underpinned by a robust balance sheet, diversified business model and strong operating disciplines. BlueScope has a culture of rising to these challenges, and we will continue our work in balancing near-term performance with longer-term sustainable growth and returns."

You can see what impact that had on the share price. It took a battering when the market opened.

It's spent the last almost-two hours regaining its composure.

ANZ's head of Australian economics, Adam Boyton, has circulated a note that discusses how the ongoing expansion of the care sector is accounting for a "material share" of employment growth.

He explains:

• The occupation group showing the largest increase in employment over the past year is ‘carers and aides’ (up 80,100). At a detailed industry level, employment across Residential Care Services and Social Assistance Services has risen by 108,600 over the past year. 
• The gender bias in the care workforce also helps explain some of the broader increase in female labour force participation over the past year. Any associated increase in participation means the expansion of the care sector is likely to have less impact on overall labour market tightness than a similar expansion in some other sectors. 
• It is difficult to see employment growth across the care sector slowing significantly in coming years given expected on-going growth in National Disability Insurance Scheme (NDIS) and aged care expenses.

He says the two industry sectors most aligned to the care economy are ‘residential care services’ and ‘social assistance services.’

"Around a million people are currently employed across the two industries, with 78% female," he says.

"Over the past year, employment across these two industries has risen by 108,600, with female employment up 91,400 versus 17,100 for males.

"This growth in employment likely reflects the ageing of the population, ongoing growth in the NDIS and the mandatory increase in minimum care minutes in residential aged care facilities (although this latter factor should have less influence going forward given the timing of the increase).

"It is difficult to see employment growth across the care sector slowing significantly in coming years given expected increases in NDIS and aged care expenses as noted in the federal budget papers," he says.

No.

Well, not instantly anyway.

The market capitalisation of Graincorp is just over $2 billion. The 'market cap' is the theoretical value of a company, multiplying the number of shares in the market by their current price.

Myer is currently 'valued' at $866 million.

Being in the ASX 200 index is important, and adds value to companies because 'index-hugger' funds need to invest. That demand pushes up the price.

But that seems a long way off, despite the addition of Dotti and Jacqui E to the annual report.

Myer executive chair Olivia Wirth told an investor briefing she was confident the merger would create one of Australia's leading retail platforms.

As part of deal, the managing director of Apparel Brands, Teresa Rendo, will join Myer's executive team.

Ms Wirth said more details on the corporate strategy will be provided in February.

She said all Myer directors had "unanimously" recommended shareholders approve the merger, which was expected to be finalised next year pending necessary approvals.

Ms Wirth said the merger would drive growth and offer a larger, more diversified shareholder base and improved access to capital.

Annual sales were projected to reach $4 billion, with a 50% gross profit increase.

The merger will create a combined portfolio of 783 stores and more than 17,300 employees.

Ms Wirth spruiked Myer's loyalty program — the Myer One card — as what would "enhance customer engagement" across apparel, beauty, and homewares, and "broaden demographic appeal".

She said the goal of the merger was to become a "robust, omnichannel retail entity underpinned by an engaged loyalty customer base".

Put that on a T-shirt!

Investors are still getting a briefing from Myer executive chair Olivia Wirth, but they haven't wasted time showing what they think using money.

A share of retailer Myer is +5.9% to crack through $1 — something it hasn't done since March 2023 and, before that, 2017. The price is currently $1.02.

Premier Investments, which retains its money-spinners Peter Alexander and Smiggle, is up +17.5% to $36.27 after successfully off-loading some of its weakest performing assets to Myer.

Biggest deal news of the day is department store giant Myer is buying five brands from the Premier Investments company led by substantial Myer investor billionaire Solomon Lew.

Myer has struck a deal with Premier Investments to purchase its clothing division Apparel Brands, which includes Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E.

Premier will retain ownership of its Smiggle stationery brand and sleepwear label Peter Alexander.

In exchange for Apparel Brands, Myer will issue new shares to Premier, which it will distribute to its investors — the new shares will account for more than 51 per cent of Myer.

Here's what we know so far.

Myer executive chair Olivia Wirth is telling investors about the benefits of buying brands like Jay Jays and Jacqui E from Premier Investments.

“The proposed acquisition is transformational for Myer” with “compelling” strategic and financial benefit.

One of the benefits will be growth in the loyalty programs and potential “greater ‘cross-shop” in its online store.

Ms Wirth says the independent directors of the board are backing the deal.

Conditions to be overcome include approval from regulators, approval by shareholders and no material adverse changes.

In the early minutes of trading the flagship ASX 200 index is up, trading +0.15% to 8,233-points.