WA Index

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WA Index

Issue 184 | April 2019

Welcome to the 184th edition of the Deloitte WA Index, a monthly review of Western Australian stocks and indices.

The market capitalisation of Western Australian listed companies increased by 1.4% to close the month at $179.4bn for March. A favourable month for resources drove the increase, particularly in iron ore with both Mount Gibson Iron and Fortescue Metals Group contributing strong results.

Download the list of WA’s top 100 listed companies, as of 31 March 2019, explore the sections below and if you do not currently receive our WA Index, please register to be added to our distribution list.

Highlights:

If you have any questions in relation to the Deloitte WA Index please contact Dave Andrews.

As of 31 March 2019

Deloitte WA Index gender agenda

In light of International Women’s Day which was celebrated on 8 March, this edition of the Deloitte WA Index includes a review into the composition of the Board and management teams of the top 100 WA-based listed companies. Specifically, the roles women occupy in leadership positions across these companies, and how female participation has evolved over recent times.

With a continued focus for the advancement of women in leadership, founded on a journey towards gender equality across many areas of modern society, we have seen more and more Australian companies leading by example in supercharging diversity and inclusion agendas across many aspects and roles within business.

Significant progress is being made with a greater numbers of leadership positions being occupied by female talent and the diversity ratio continues to improve. While easy to demonstrate progress, we would all acknowledge we are not where we need to be just yet.

For this article we obtained ASX statistics of the composition of Key Management Personnel (‘KMP’), defined as CEO/CFO, Directors and Company Secretaries, of the WA Index Top 100 companies as at 1 March 2019, and that of five years ago (2014) to benchmark how WA companies compare across time, as well as against the broader Australian market, on gender representation.

Firstly, a comparison between 2019 and 2014 shows that the share of women acting in KMP positions has more than doubled over the last five years which is really encouraging. However, this observation is somewhat bitter-sweet.

The data shows that female representation has moved from 8% in 2014 to 16% in 2019, highlighting there is still a long way to go before we are anywhere nearer society’s gender equality expectations.

KMP Positions
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Meanwhile, the comparable gender statistic for the wider ASX population is approx. 11% female representation in 2014, increasing to approx. 16% in 2019. Yes, the WA Index Top 100 has outpaced the broader market’s gender rate of change, but a single digit starting base really shows WA had little choice but to respond quickly. Thankfully, WA’s top 100 now appears to be at least on-par with our east coast counterparts.

Over the last five years there has been a positive shift in diversity ratios, but there has also been a marked shift in the composition of the companies represented in the Deloitte WA Index top 100. Interestingly, only 53 of the current Top 100 companies occupied the list in 2014.

Moreover, of those 47 companies not in the current Top 100, only 25% had female KMP representation at that time.

Fast forward to 2019 and the ‘new breed’ (ie: companies entering the WA Top 100 during the last five years) have strongly improved these statistics where the data shows over 57% of these companies have females holding KMP positions. Recognition of progressive movement in gender diversity in recent times.

The increasing presence of women in leadership roles is evidenced across the suite of KMP positions, however, the significant increase in women representation around the board table of WA listed entities cannot be overlooked.

Female representation across KMP roles
Select above image to enhance the female representation across KMP roles

The statistics for women on boards is monitored in many leadership circles and tracked by a number of national industry bodies, particularly across the ASX200. Not proposing to dive into statistics measured elsewhere, we make one observation in the data and that is that female directorship appointments across the WA Index top 100 have more than doubled in the last five years, a rate exceeding the ASX200 average over that same time.

To understand WA’s over-achievement in these board appointments, we only need to look to the industry to which the WA Index is highly represented, being the ASX materials industry, to see how these achievements have been realised. 56 of the WA Index Top 100 companies reside in the materials sector, which holds the majority of WA’s mining and mining services organisations.

This sector recognises the value of working to enhance its image across a variety of social, environmental, political and cultural challenges. With such a diverse range of issues and stakeholders, we naturally need a diversity in the teams to respond.

It is reassuring to see that WA’s largest and highly influential sector has begun to take a strong lead in advancing female leadership positions. In celebration of International Women’s Day 2019, we look forward to following the progress of the mining industry, and the WA Index companies more broadly, continuing to make a positive impact in this area.

Commodity review

The commodity market experienced majority negative price movements in March. This month the WA Index Commodities Review focuses on zinc, lead, cobalt, uranium, palladium and Liquid Natural Gas.

Key commodities surveyed during March:

  • Zinc hit a nine month peak during March, with overall price increasing by 5.5% from US$2,775/MT to US$2,929/MT. Optimism regarding the US-China trade deal has been growing, with U.S. Treasury Secretary Steven Mnuchin boasting that “constructive” talks have been held between the world’s most influential economies. Expectations surrounding this trade deal have seen zinc prices increase by 24% since early January.
  • Lead prices declined by 5.9% during March to close at US$2,003.5/mt with concerns of weaker economic growth - notably in China, the first consumer of lead worldwide - resulting in likely continued downward pressure on the commodity price for the foreseeable future.
  • Cobalt saw a price decrease of 6.3% over the month of March from US$32,000 to US$30,000 and has historically seen large fluctuations in price due to unstable economic conditions in the Democratic Republic of Congo where a majority of the world’s cobalt is mined. Despite this slump, cobalt is expected to have greater demand in the future due to its use in electric cars and other rechargeable batteries.
  • Overall, the price of uranium fell by 8% to close at 25.75 US$/LB. The drop can be partially attributed to the market interpretation of the expansion approval granted by the U.S. government to Colorado-based Ur-Energy. This approval allows the company to more than double the surface of its Lost Creek mine, located in the U.S. state of Wyoming. The U.S. Bureau of Land Management is also considering an additional proposal from Ur-Energy for an in-situ mine at a former conventional uranium mine site near to Lost Creek.
  • Palladium prices fell by 10% across March to US$1,390/troy oz due to uncertainties in the auto sales market, which is responsible for more than 80% of palladium demand. Experts have described this decline as a small but necessary decline, a sort of recalibration, and the price is set to rise in coming months.
  • LNG fell by 29% to a closing price of US$4.4/mmbtu following a decline in oil prices, attributed to greater supply in the market and buyers lower interest. High winter temperatures recorded in Asia and Europe also contributed to the reduced demand for LNG during the month.

Commodity and Precious Metal Prices
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Performance of WA Index and global indices

Performance of WA Index and global indices
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Global indices displayed mostly positive growth during the month of March, led primarily through an overall increase in the FTSE 100 of 2.9%. Investors have remained optimistic on word that a trade deal could soon be reached between the two powerhouse economies of China and the US, resulting in reduced tariffs and other restrictions on the US and the removal of sanctions held over Chinese imports.

A number of companies also boasted substantial growth this month with miners taking the lead. Rio Tinto, BHP, Glencore and Antofagasta mining were among companies enjoying the positive outlook currently held by investors. Other indices remained relatively stable over the month, with US S&P up 1.8%, the All Ordinaries up 0.1%, and Nikkei down 0.8% due to Japanese companies closing at the end of March going ex-dividend before the year-ending in order to qualify for the latest dividend payout and also by concerns regarding the U.S. economy.

WA Index movement

WA Index movement
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  • Mount Gibson Iron grew its market capitalisation from $876m to $1,049m through the month, on the back of the release of strong half year results. The company recorded a net profit after tax of $45.1m. Total product sales for the six months to December 2018 amounted to 2.2 million wet metric tonnes, generating sales revenue of $177.4m, compared to 1.7 million wet metric tonnes and $117m for the previous period.
  • Acquisition interest from Wesfarmers resulted in positive momentum to Lynas Corporation’s market capitalisation, climbing 18.7% to $1.4bn. Wesfarmers made a highly conditional, non-binding indicative proposal on the March 26 to acquire 100% of Lynas shares for $2.25 per share, being a 44% premium on the March 25 closing price of $1.56. Lynas responded by announcing it would not engage with Wesfarmers on the terms outlined in its proposal.
  • Fortescue Metals Group has continued a strong start to the year, in light of sound increases in iron ore prices. Over the month of March, market capitalisation increased 17.3% from $18.6bn to $21.9bn. Iron ore prices are forecast to remain above current highs of about US$80 per tonne, spurred by shocks to supply from a mine disaster in Brazil in January 2019.

Major index players in March 2019
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wa index

Top performers of the month

Western Australian top performers over the past month by growth in market capitalisation

Top performers of the month
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The top Deloitte WA Index Movers and Shakers in March were:

  • Northern Minerals Limited’s market capitalisation increased by 139% through March to reach $127.8m. The company announced plans to issue a further 60 million ordinary shares as part of a $3m capital raising effort with investor Liu Xiaohua. Another series of subscription agreements with multiple sophisticated investors is underway in order to raise further capital of $20mby issuing 400 million additional shares. The capital raised is aimed to be used for exploration and working capital purposes.
  • BBX Minerals Limited’s market capitalisation was bolstered by approval for exploration permits being received during the month, as it grew by 71.9% in March to $111.2m. The approval of these licence applications grants the company trial mining licences for its Ema and Três Estados tenements.
  • Strong half-year accounts drove Rand Mining Limited’s market capitalisation to $149.2m, up 46.3% from February. The accounts reported a profit after tax of $77.6m, compared to $10.3m for the prior half-year period. A significant increase in activity at the East Kundana Joint Venture drove top-line growth.

If you don’t currently receive our WA Index, you can register to be added to our distribution list.

If you have any questions in relation to the Deloitte WA Index please contact Dave Andrews.

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