Australia's sharemarket should provide investors with a return of about 15 per cent in 2015 despite the subdued economy, says investment bank Credit Suisse.
Credit Suisse's equity research arm says the combination of interest rate cuts, the lowest cost of debt in a generation, solid growth in free cashflows, and relatively high dividend yields will support double-digit returns.
"We expect Aussie equities will provide a total return of around 15 per cent," the bank said in a research report.
The sharemarket's benchmark index, the ASX 200, delivered a return of six per cent in 2014 amid lower prices for iron ore and oil, and weakening consumer confidence.
Credit Suisse expects the ASX 200 to rise to 6,000 points by the end of 2015. Currently, it's around 5,300.
Given the sluggish economic outlook, investors should consider companies taking steps to help themselves, Credit Suisse advised.
"Companies which are restructuring should be less sensitive to the broader macro backdrop and more driven by management's ability to execute on corporate change," Credit Suisse said.
Restructuring involved cost cuts, asset sales and demergers, capital expenditure reduction, repositioning businesses, and efficiency gains through investment.
Credit Suisse said that of the 15 companies it thought may restructure in 2015, many of the changes had been signalled to the market but not priced in.
Many of the companies - dominated by mining, retail and transport companies - had performed poorly over the past one or two years.
The top five restructurers by market capitalisation were BHP Billiton, Rio Tinto, National Australia Bank, Woolworths and QBE Insurance.
In 2015, global miner BHP Billiton will demerge a range of assets, including aluminium, nickel, silver and coal, into a new entity called South32.
Credit Suisse values South32 at $US15 billion.
The bank said indications were that the new entity would have no debt and would generate free cashflow of about $US1 billion a year.
The next five restructurers were Lend Lease, Asciano, Toll Holdings, Investa Office Fund and Fairfax Media.
Property and infrastructure group Lend Lease is set to reposition its business to increase offshore earnings, and progress has already been made.
The five smallest restructurers were Premier Investments, Super Retail, Asaleo Care, APN News & Media, and OrotonGroup.
Clothing retailer Premier Investments is repositioning its underperforming brand Jay Jays, which contributes 18 per cent of group revenue. The Jay Jays turnaround is expected to substantially lift group earnings when completed.
FIVE BIGGEST RESTRUCTURERS FOR 2015 BY MARKET CAPITALISATION:
* BHP Billiton: demerger of South32
* Rio Tinto: cuts to capital expenditure, possible demerger of Alcan
* National Australia Bank: more asset sales, including Clydesdale Bank in the UK
* Woolworths: efficiency gains via supply chain investment
* QBE Insurance: cost cuts, potential float of Australian Lenders Mortgage Insurance business
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