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Director‟s Cut
Impacts of Australia‟s carbon tax
The Australian government has announced a carbon tax of A$23 per tonne, plus
compensation for households and carbon intensive businesses. Yesterday we
looked at the economic impact. While there is uncertainty over the carbon price
post 2015, today‟s edition looks at the stocks that are impacted the most.
Looking first at mining, Lee Bowers says the coal sector will see the largest
negative impact, with highly gaseous coal operations in ramp-up hit hardest of
all. Given their diversified operations, he estimates the negative NPV impact on
BHP Billiton (BHP AU) and Rio Tinto (RIO AU) at 2-3%. >> Read Report
Turning to LNG, Adrian Wood sees Santos (STO AU) and Woodside (WPL
AU) as most exposed due to growing LNG related emissions and Santos‟
significant domestic production, which receives no shelter. For Origin Energy
(ORG AU) the impact is broadly neutral, with additional costs in E&P and
APLNG offset by gains in the generation and retail divisions. >> Read Report
Ian Myles says the carbon tax is positive for AGL Energy (AGL AU), as it adds
to earnings, while other measures in the announced package are likely to enable
development of cleaner energy sources such as wind farms.
For the transport sector, Russell Shaw says Qantas (QAN AU) is a clear loser
with the tax around three times existing voluntary carbon offsets. He also says
rail haulers such as QR National (QRN AU) are likely to pass through the extra
costs, while the deferral of carbon pricing for heavy vehicles until 2014 is good
news for Toll Holdings (TOL AU).
Highlights
Michael Sohn believes the fundamentals for Hyundai Motor (005380 KS),
and Hyundai Mobis (012330 KS) remain strong, and recommends to buy.
Cooley May believes LyondellBasell (LYB US) is best-of-class commodity
chemical producers, with a growth profile that warrants a higher valuation.
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