Australian Broker Call

Credit Suisse rates AWC as Neutral (3) -

Australian alumina prices appear elevated on an import parity basis and Credit Suisse believes the temporary dislocation in correlation with the company's share price will dissipate, which may see the share price converge lower.

In the interim, a strong final dividend should provide a buffer. Net income attributable to Alumina Ltd reported by Alcoa was US$140m in the December quarter. Net distributions received were US$263m, in line with Credit Suisse estimates..

Neutral rating and $2.30 target retained.

Target price is $2.30 Current Price is $2.38 Difference: minus $0.08 (current price is over target).
If AWC meets the Credit Suisse target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.32, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

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

Market Sentiment: 0.1

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

UBS rates AWC as Sell (5) -

A strong alumina and aluminium market supported Alcoa's strongest adjusted operating earnings since its public listing, but UBS notes weather delays and high energy/raw material costs meant that it was not able to fully capitalise on this.

The company projects global aluminium demand growth of 4.25-5.25% in 2018. UBS maintains a Sell rating for Alumina Ltd, believing the stock is fully valued and spot pricing unsustainable. Target is $1.85.

Target price is $1.85 Current Price is $2.38 Difference: minus $0.53 (current price is over target).
If AWC meets the UBS target it will return approximately minus 22% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.32, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

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

Market Sentiment: 0.1

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

Citi rates CBA as Downgrade to Sell from Neutral (5) -

Citi analysts have moved to a Sell, from Neutral, while lowering their price target to $72 (was $76.75).

The analysts justify their decision with the assessment that CBA is facing a decline in balance sheet momentum combined with rising compliance and remediation costs.

Examining previous crises suggests the CBA share price remains poised for a period of underperformance, according to Citi.

Target price is $72.00 Current Price is $78.85 Difference: minus $6.85 (current price is over target).
If CBA meets the Citi target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $78.00, suggesting downside of -1.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

Morgans rates CCP as Hold (3) -

Morgans expects the company to re-affirm net profit guidance for FY18 of $62-64m at its upcoming first half result. Over the year, some upside is expected and the broker suggests the company can sustain a premium to its historical PE ratio, given the growth profile.

Hold rating retained on short-term valuation but Morgans would look to return to a more positive stance when sufficient upside to valuation materialises. Target rises to $23.80 from $22.50.

Target price is $23.80 Current Price is $23.29 Difference: $0.51
If CCP meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Citi rates DHG as Sell (5) -

In November, Citi had initiated with a Sell rating and $3.40 target. The latter has since been lowered to $3.20. Citi remains of the view that the valuation is simply too rich.

The broker's view has only further strengthened now that Antony Catalano, CEO and a key force behind the successful spin-off out of Fairfax Media ((FXJ)), has abruptly resigned, barely two months after the IPO.

The company has released a preliminary trading update, suggesting everything is cruising along in-line with forecasts and expectations, but Citi remains undeterred because the stock is too expensive. Sell. Target $3.20.

Target price is $3.20 Current Price is $2.75 Difference: $0.45
If DHG meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $3.43, suggesting upside of 24.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.4

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

Ord Minnett rates HPI as Downgrade to Hold from Accumulate (3) -

Ord Minnett observes improving underlying fundamentals for A-REITs and considerable strength in transaction markets. Nevertheless, the sector is trading at a significant -9% discount to valuation. The broker expects an improvement in 2018 in retail operating conditions, driven by a pick up in consumer sentiment.

Hotel Property is downgraded to Hold from Accumulate. Target is raised to $3.30 from $3.20.

Target price is $3.30 Current Price is $3.25 Difference: $0.05
If HPI meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Credit Suisse rates IDX as No Rating (-1) -

First half operating earnings were in line with Credit Suisse estimates. The broker notes the relative spread to market growth narrowed materially during the first half. Forecasts are largely unchanged and net profit growth of around 20% is still expected in FY18.

The broker is restricted on the stock at present and cannot provide a target or rating.

Current Price is $2.30. Target price not assessed.

Current consensus price target is $2.15, suggesting downside of -6.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Ord Minnett rates IDX as Hold (3) -

First half net profit beat Ord Minnett's estimates, growing 24.1% on the prior corresponding half. The strong result was expected following the upgrade to FY18 forecasts in the prior week.

Cost reductions flagged at the FY17 result were a major contributor to the beat on estimates. The broker is highly positive on the trajectory of industry growth rates as well as management's ability to execute.

Hold maintained and Ord Minnett raises the target to $2.39 from $2.30.

Target price is $2.39 Current Price is $2.30 Difference: $0.09
If IDX meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $2.15, suggesting downside of -6.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Ord Minnett rates IVC as Lighten (4) -

The report that wiped -5% off the share price. Ord Minnett maintains its Lighten rating in combination with a $13.75 price target. The broker notes UK peer, Dignity, has issued a profit warning, succumbing to downward price pressure in order to retain dominant market share in the country.

The suggestion here is that the UK might be leading market dynamics in Australia, though the broker does acknowledge price comparison platforms and distribution aggregators in Australia are very much in their infancy, still.

Target price is $13.75 Current Price is $15.74 Difference: minus $1.99 (current price is over target).
If IVC meets the Ord Minnett target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $14.24, suggesting downside of -4.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.3

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

Morgans rates MMI as Add (1) -

Morgans notes development at Bauxite Hills is on schedule and mining will start after the wet season. The company has an offtake agreement for 7mt over four years with cornerstone investor Xinfa Group.

Target is raised to 31c from 29c. Add maintained.

Target price is $0.31 Current Price is $0.26 Difference: $0.05
If MMI meets the Morgans target it will return approximately 19% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Credit Suisse rates NWL as Initiation of coverage with Neutral (3) -

Credit Suisse initiates with a Neutral rating and $6.15 target. Netwealth owns an independent platform and is gaining share in a growing industry. 

The broker notes the company is capturing 19% of industry net flows despite having only 1.8% market share. The share price is up 75% since listing and the broker considers the run-up well supported by both industry and company-specific developments.

Target price is $6.15 Current Price is $6.50 Difference: minus $0.35 (current price is over target).
If NWL meets the Credit Suisse target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Credit Suisse rates QAN as Outperform (1) -

Credit Suisse trims the target to $6.90 from $7.00, to account for higher fuel cost estimates. Outperform retained.

The current stability and capacity discipline in the domestic market is expected to mean higher fuel prices are mostly offset by revenue growth. Another buyback is expected to be announced at the half-year results.

Target price is $6.90 Current Price is $5.25 Difference: $1.65
If QAN meets the Credit Suisse target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $6.53, suggesting upside of 24.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Citi rates SXY as Sell (5) -

Production and sales were in line with Citi's expectations in the December quarter. The broker highlights the strong liquidity position and the fact the company has taken advantage of higher oil prices to lock in hedging for the rest of FY18.

Citi remains cautious about the near-term flow rates and well quality for the Western Surat project, as Senex has called out operating issues, which may continue for many years, and also indicated investors need to be aware of capital being allocated between projects.

Sell/High Risk. Price target is 34c.

Target price is $0.34 Current Price is $0.38 Difference: minus $0.04 (current price is over target).
If SXY meets the Citi target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.37, suggesting downside of -1.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Credit Suisse rates SXY as Outperform (1) -

December quarter production was solid and Credit Suisse finds the early indications from the Western Surat project promising. Fully de-risking the company's two major growth projects could send the target to $0.80 or more, the broker suggests.

Most of the de-risking is expected to occur in the next 6-12 months. The broker envisages the strategic value of the company makes it a serious takeover target. Either way, equity investors are expected to be well rewarded.

Outperform rating retained. Target is $0.40.

Target price is $0.40 Current Price is $0.38 Difference: $0.02
If SXY meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $0.37, suggesting downside of -1.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Deutsche Bank rates SXY as Hold (3) -

December production proved in-line with Deutsche Bank's expectations. The analysts note Senex remains on track to deliver FY18 production guidance of 0.75-0.9mmboe.

Further progress has been booked regarding Project Atlas and Deutsche Bank analysts believe the overall environment remains supportive for additional gas supply projects.

Oil price forecasts have been revised upwards. Price target remains 30c. Hold rating retained.

Target price is $0.30 Current Price is $0.38 Difference: minus $0.08 (current price is over target).
If SXY meets the Deutsche Bank target it will return approximately minus 21% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.37, suggesting downside of -1.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Ord Minnett rates SXY as Hold (3) -

December quarter production was strong. Ord Minnett believes there are significant milestones to be achieved this year which will likely de-risk the stock and act as positive catalysts. The broker raises its target to $0.42 from $0.40.

Yet, given reasonably full value and a medium term negative view on underlying oil prices, the broker maintains a Hold rating.

Target price is $0.42 Current Price is $0.38 Difference: $0.04
If SXY meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $0.37, suggesting downside of -1.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Morgans rates SYD as Upgrade to Add from Hold (1) -

December passenger numbers showed strong international growth and Morgans expects 11% growth in net operating receipts in 2017. Over the next three years the broker expects 6% per annum compound growth in cash flows.

Rising government bond rates remain the key risk to the investment view and the broker suggests investors retain the capacity to take advantage of share price weakness that may occur if bond rates lift materially.

Morgans upgrades to Add from Hold. Target is raised to $7.14 from $7.11.

Target price is $7.14 Current Price is $6.74 Difference: $0.4
If SYD meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $7.23, suggesting upside of 7.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

UBS rates WPL as Buy (1) -

December quarter production was broadly in line with UBS. Capital expenditure was higher than the broker expected, attributed to delayed start up of Wheatstone.

UBS believes the market is underestimating the positive catalysts for the company in 2018 and the dividend leverage to the oil price, as well as over-estimating the risks to Pluto LNG re-pricing. Buy rating maintained. Target slips to $38.00 from $38.10.

Target price is $38.00 Current Price is $33.09 Difference: $4.91
If WPL meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $31.35, suggesting downside of -5.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

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

Market Sentiment: -0.1

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