Australian Broker Call

Macquarie rates A11 as Outperform (1) -

Atlantic Lithium has a definitive feasibility study for Ewoyaa project, Ghana. The capital cost of US$185.2m is 23% higher than Macquarie expected and 37% above the estimate outlined in the prefeasibility study.

Macquarie retains a conservative view on cost inflation pressures in the mining industry and raises its capital expenditure forecasts for the project to US$250m. The next catalyst is the mining licence. Outperform maintained. Target is reduced to $0.70 from $0.80.

Target price is $0.70 Current Price is $0.55 Difference: $0.155
If A11 meets the Macquarie target it will return approximately 28% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Bell Potter rates BUB as Speculative Hold (3) -

Recent guidance by Bubs Australia suggests FY23 net revenue will be $52.5-55.7m, which is modestly below Bell Potter's previous $60m forecast.

Slower China revenues were evident in the 3Q and from 4Q trends, which the broker feels aligns with recent reporting by peer Holland-based Alpha Group on lower sales of milk powder products.

Moreover, the analyst believes excessive volumes of finished infant milk formula were imported into China due to a change to formulation regulations, and recent import activity figures show a peak in May, following a surge over February to April.

Bell Potter lowers its revenue forecasts and the target falls to 20c from 22c. Speculative Hold.

Target price is $0.20 Current Price is $0.18 Difference: $0.02
If BUB meets the Bell Potter target it will return approximately 11% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Bell Potter rates DVP as Buy (1) -

Current inflationary pressures have weighed on an updated definitive feasibility study (DFS) for Develop Global's Sulphur Springs development. However, Bell Potter notes offsets from an improved price outlook for zinc, copper and silver (compared to the 2018 definitive feasibility study).

Separately, the broker lowers its EPS forecasts to reflect an increased depreciation expense and lower interest income from an increased capex assumption at the Woodlawn operations. The target falls to $4.00 from $4.20.

A strong free cash flow generation outlook at Woodlawn will coincide with peak revenue from the Bellevue mining contract, which Bell Potter points out will help de-risk project financing at Sulphur Springs. Buy.

Target price is $4.00 Current Price is $3.46 Difference: $0.54
If DVP meets the Bell Potter target it will return approximately 16% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Bell Potter rates FDV as Speculative Buy (1) -

A new Stand-By Arrangement for a US$3bn loan program between the IMF and Pakistan reduces the risk of a sovereign default suggests Bell Potter. The arrangement is subject to approval in mid-July by the IMF Executive Board.

The broker feels the IMF bailout reduces the risk of further interest rate rises and is a positive for Frontier Digital Ventures' Zameen, given it lowers the chance of deteriorating operating conditions.

The Speculative Buy rating and 83c target are unchanged.

Target price is $0.83 Current Price is $0.40 Difference: $0.435
If FDV meets the Bell Potter target it will return approximately 110% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Bell Potter rates FMG as Sell (5) -

Bell Potter raises its earnings forecasts for Fortescue Metals on higher-than expected iron ore prices. Moreover, there's been a further tightening of price realisation discounts on good demand for mid-grade iron ore products and an increasing contribution from Iron Bridge.

Despite near-term positives, the broker highlights downstream demand remains weak and market sentiment is mixed. The Sell rating is retained, while the target rises to $15.16 from $14.45.

Target price is $15.16 Current Price is $21.95 Difference: minus $6.79 (current price is over target).
If FMG meets the Bell Potter target it will return approximately minus 31% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.82, suggesting downside of -24.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: -0.9

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgans rates IPD as Downgrade to Hold from Speculative Buy (3) -

Morgans expects upcoming volatility for the ImpediMed share price with a pending quarterly cashflow report that may disappoint.

Following recent share price strength after the recent capital raising, the analyst downgrades to Hold from Speculative Buy and suggests investors trim any overweight positions. Any share price pullback should be considered a buying opportunity.

The company completed a $20m placement, with an oversubscribed share purchase plan (SPP) raising an additional $10m at price of $0.13/share.

The broker highlights momentum for private payor coverage though sales in Sozo are expected to lag. The 19c target is unchanged.

Target price is $0.19 Current Price is $0.18 Difference: $0.01
If IPD meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates LLL as Outperform (1) -

Leo Lithium has first Direct Shipping Ore from Goulamina and first revenue is expected in the fourth quarter of 2023. The DSO from the stage I start pit contains 1.65mt of ore at an average grade of 1.68%.

The company expects mining activity will provide reconciliation data that will support a reserve update. The current mine plan expects DSO exports for 6-9 months ahead of spodumene production.

Macquarie welcomes the update and assesses completion of the stage 1 development presents the most material catalyst for the company. Outperform retained. Target is $1.60.

Target price is $1.60 Current Price is $1.07 Difference: $0.53
If LLL meets the Macquarie target it will return approximately 50% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates LNK as Downgrade to Neutral from Buy (3) -

Citi suspects Link Administration may have been blindsided by the emergence of Grow Inc as a serious competitor, as superannuation fund HESTA will partner with Grow for its outsourced administration services, a contract worth close to $50m in revenue.

This raises the risk that others super funds could do the same as some large Link contracts are due for renewal over the next few months, the broker adds.

Even if the contracts are retained, higher debt costs are likely to be a headwind and Citi believes growth in EPS now looks very difficult.

Although it is possible the stock offers value the broker has little confidence and reduces the rating to Neutral from Buy. Target is lowered to $1.60 from $2.45.

Target price is $1.60 Current Price is $1.67 Difference: minus $0.07 (current price is over target).
If LNK meets the Citi target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.91, suggesting upside of 13.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgans rates MSV as Speculative Buy (1) -

Mitchell Services will release its Q4 results on July 19 and FY23 financials in late-August. While already flagged by management, Morgans believes the imminent arrival of half-yearly dividends will serve as a positive catalyst for the share price.

In the coming 14 months, the broker forecasts an over 10% yield via the payment of 4cps in half-yearly dividends and suggests this payout looks conservative when set against the current debt level.

Overall, Morgans highlights Mitchell Services trades at a sharp discount to direct peers and multiples achieved in recent drilling services M&A activity.

The target rises to 56c from 55c and the Speculative Buy rating is unchanged.

Target price is $0.56 Current Price is $0.39 Difference: $0.175
If MSV meets the Morgans target it will return approximately 45% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates PLL as Outperform (1) -

Atlantic Lithium, Piedmont Lithium's partner, has a definitive feasibility study for Ewoyaa project, Ghana. The capital cost of US$185.2m is 23% higher than Macquarie expected and 37% above the estimate outlined in the prefeasibility study.

Macquarie retains a conservative view on cost inflation pressures in the mining industry, and raises its capital expenditure forecasts for the project to US$250m.

Incorporating higher expenditure and strip ratios results in modest changes to earnings forecasts. The next catalyst for Piedmont Lithium is an update on the production ramp up at Sayona. Outperform maintained. Target is reduced to $1.80 from $1.90.

Target price is $1.80 Current Price is $0.85 Difference: $0.95
If PLL meets the Macquarie target it will return approximately 112% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates RIO as Buy (1) -

Citi reviews volumes and costs for Rio Tinto and reduces 2023 EBITDA estimates by -3%. This is because of higher cost assumptions in the minerals, bauxite, alumina and aluminium divisions.

Ahead of a site visit to Oyu Tolgoi, the broker also reviews the high capital intensity of recent large-scale copper projects, assessing similar future projects would need a materially higher copper price.

Rio Tinto will have invested around $13.6bn in Oyu Tolgoi and Turquoise Hill Resources at completion of the underground. Oyu Tolgoi is expected to generate EBITDA of US$ 2.1bn in 2028 and by 2030 the company expects this will be the fourth largest copper mine globally.

Buy rating and $123 target maintained.

Target price is $123.00 Current Price is $114.69 Difference: $8.31
If RIO meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $113.75, suggesting downside of -1.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.2

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

UBS rates TCL as Buy (1) -

The ACCC has concerns about Transurban Group's potential purchase of a majority stake in EastLink that centre on the lessening of competition for concessions to construct, own or operate future toll roads in Victoria.

UBS is not surprised by this view but does not believe it will prevent the purchase.

Ultimately, it is the state that has the power to decide how future projects are awarded and there are benefits to consumers from scale, with Transurban able to deliver new infrastructure faster and at lower cost.

Buy rating and $15.45 target price retained.

Target price is $15.45 Current Price is $14.25 Difference: $1.2
If TCL meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $14.66, suggesting upside of 2.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources