Question 1: You wrote favourably about BOQ in mid-September. After yesterday’s result and sharp rise, is there still value in BOQ?
Answer: Yes, I liked it at $6.80 (see https://switzerreport.com.au/is-it-time-to-look-at-the-regional-banks/ [1]). Yesterday, it rose 11.1% to close at $7.59.
I thought the profit result was marginally better than expected. Although cash earnings were down 5%, the underlying profit was up 1%. The market liked the momentum of the final quarter – increasing net interest margin, above system growth in mortgages and business lending, and flat costs. Further, it forecast “positive jaws” for FY23 (income growing at a faster rate than expense growth). The dividend of 46c, up on FY21, was in line with forecasts.
I only look at the regional banks when they are really good value compared to the major banks. I thought they were some weeks back, with BOQ my preference. After yesterday’s rally, some of that attraction has gone, but I can see further strengthening in the weeks’ ahead.
Question 2: Can a SMSF continue to operate if one of only two trustees die or becomes incompetent?
Answer: It depends on whether you have a corporate trustee or the individual members are trustees. If a corporate trustee, the fund can continue upon the death of a member (and director) because the other (surviving) member becomes the sole director of the corporate trustee.
If the individual trustees are members (the most common structure), the SIS Act requires that there be two trustees. Upon the death of a member, you would need to ask another person to become a trustee, or change it to a corporate trustee structure with a single director, or wind the SMSF up and transfer the monies to another super fund.
If the member becomes incapacitated, their enduring power of attorney (provided they have been appointed) can step in and act in their place as a trustee or director.
Question 3: Has the Telstra restructure been approved? How will it impact me as a shareholder?
Answer: Yes, the restructure, which will see a new head entity, Telstra Group Limited, and four subsidiary companies, was overwhelmingly approved by shareholders on Tuesday with 99.6% of shares voting in favour. The four companies are ServeCo (essentially the existing retail, small business and corporate business units of Telstra), InfraCo Fixed (Telstra’s fixed infrastructure), Amplitel (the mobile towers business, which Telstra owns 51%) and Telstra International. Apart from having a more focussed management structure (including capital allocation), the main advantage for shareholders is that Telstra will be able to divest components, or invest in partnership with other companies. For example, Telstra might sell some or all of its infrastructure business, which for shareholders may result in higher dividends, return of capital or a share buyback.
Question 4: Will Telstra’s stock code change, and will I get a new holding statement?
Answer: I haven’t been able to confirm this, but I expect so. The last day for trading in current Telstra shares (TLS: Telstra Corporation Limited) is 20 October. On Friday 21 October, trading will commence in Telstra Group Limited on a deferred settlement basis. I expect this will be under a new code.
You are also likely to receive a new CHESS holding statement. There shouldn’t be any impact from a CGT perspective (cost base or acquisition date), because rollover relief is being received.
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