THE DISTILLERY: LPT for two

It's a welcome return to business topics today along with another pleasant surprise – the Fairfax papers offering better vision and depth than The Australian.

Leading off is an interesting piece by Elizabeth Knight examining the wind shift that has Fortescue Metals tacking away from Chinese capital. After some detail explaining the complexities of the dead Chinese deal, Knight puts the boot in: "The new plan is to fund Fortescue's expansion plans using internal cash flows. Such a move would take a very long time.” The piece also contains a broadside arguing that the changes of direction are "one of the reasons it [Fortescue] is not taken seriously by the big end of town”. This is a cheap shot given Twiggy is one of the few occupying a CBD office who actually built a company from scratch.

Malcolm Maiden takes look at the Toll purchase of Japanese freight forwarder Footwork. Maiden does a good job of outlining Paul Little's well-played acquisition numbers. He also describes Little's plans to "establish Toll as a door-to-door Asia-Pacific freight forwarder”. A weakness of the piece however, is its failure to examine the context of the move. Does Asia need more integrated freight forwarders? DHL has struggled to make money for years and there is also a growing challenge from incumbent government players through Australia Post's Kahala initiative (which includes Japan Post).

Ross Gittins also contributes today with a bold take on the Aussie Battler. Having taken some time to come to this subject, he rehashes the list of reasons behind the rise – higher interest rates, growth, commodity boom and China proxy. Not to be left behind again, Gittins jumps forward with a declaration of a secular bull market for Aussie Battler: "...the likelihood is that over the coming decade and more it will exceed parity. The days of the Pacific Peso look long gone.” This column agrees upside is likely in the short to medium term. But it is much less trusting of global markets, which reverse on a penny when the narrative changes. Rate-rises elsewhere, a realisation that most commodities are in surplus, a panic flight to safety when US growth crashes again or even a blowout in the Australian current account deficit might all trigger a roller-coaster plunge.

In The Australian Financial Review's Chanticleer, Alan Jury snaps a soporific streak with lively insights into the future of Macquarie Media and the challenge facing Roger Corbett. The opening line is a doozy, "Max Moore Wilton is no stranger to walking the fine line between conflicting responsibilities.” Indeed. The piece goes on to speculate that Mac Media will be the next in line for management internalisation which helps explain an extraordinary 250 per cent surge in its share price. On Corbett he is equally forthright, with a warning that the board he inherits is unlikely to "tick a lot of governance boxes”.

Inside the paper, Alan Mitchell has an interesting comment on the evolution of dynamics between secretary of the Treasury Ken Henry and the government. He poses questions about the degree of independence Henry can sustain on budget questions when conducting a variety of advisory roles on infrastructure, tax and the NBN. This is a good question and important piece, most especially given the Rudd government has shown a tendency to appropriate rather than ostracise opposition.

The AFR editorial is also timely today, taking the opportunity to address manufacturing innovation on the occasion of a rising dollar. The article declares the government's "innovation councils” to be "reminiscent of old-fashioned tripartite industry planning”. It campaigns for "fearlessly” pursued government reform, especially around "cherished sectors” such as automotive. This column is inclined to agree, though the article's description of manufacturers as now "more likely to be making what makes sense in Australia – supporting the boom commodity sectors and construction” gives one pause about the dangers of Dutch disease.

The Australian today is led by Adele Ferguson. She takes a detailed look at the new Lend Lease LPT and other moves in the sector including around the Mirvac Real Estate Investment Trust. Ferguson declares that "Simplicity is now the name of the game in the LPT sector” and sees "the start of a thawing of activity in the LPT sector”. Corporate activity may well be a source for speculative return. But further upside, it seems to this column, will depend upon successful reflation of assets in western economies: an open question.

Sticking with LPT's and the ongoing fallout from yesteryear's over-complex corporate structures, Bryan Frith, digs through the detail surrounding attempts to recapitalise the Multiplex Prime Property Fund (MPP). Frith appears to have a hotline to Nicholas Bolton, who is a leading agitator against the Brookfield Multiplex Capital Management (BMCM) entitlement offer. Frith concludes "...the independent directors of BMCM who are pushing the MPP entitlement offer are the same independents who would have to decide whether the entitlement issue is in the best interests of MAPF unitholders. They appear to be hopelessly conflicted.” Well worth a read.

In other stories, John Durie and Matthew Stevens both look into resolution of the Fairfax board stoush. Perhaps a new chairman helps explain a better effort overall.