Australian Broker Call
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September 29, 2022
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COMPANIES DISCUSSED IN THIS ISSUE
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The number next to the symbol represents the number of brokers covering it for this report -(if more than 1).
Last Updated: 05:00 PM
Your daily news report on the latest recommendation, valuation, forecast and opinion changes.
This report includes concise but limited reviews of research recently published by Stockbrokers, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end.
For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE
Today's Upgrades and Downgrades
| CLW - | Charter Hall Long WALE REIT | Upgrade to Buy from Neutral | Citi |
| RMS - | Ramelius Resources | Upgrade to Accumulate from Hold | Ord Minnett |
Overnight Price: $1.26
Macquarie rates AWC as Underperform (5) -
Alumina Ltd has provided further detail as to its decarbonisation plans, highlighting a near-term focus on mechanical vapor recompression and electric calcination technology, both of which are in research and development.
Macquarie described the competitive carbon emissions performance, with all Alumina Ltd's refinery operations (through the AWAC JV) on the first quartile of the emissions intensity curve.
The JV has reduced its refinery greenhouse gas emissions intensity -4.4% below the 2015 baseline, and smelter greenhouse gas emissions -31% from the baseline.
The Underperform rating and target price of $1.10 are retained.
Target price is $1.10 Current Price is $1.26 Difference: minus $0.16 (current price is over target).
If AWC meets the Macquarie target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $1.70, suggesting upside of 32.8% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY22:
Macquarie forecasts a full year FY22 dividend of 6.03 cents and EPS of 4.35 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 8.7, implying annual growth of N/A. Current consensus DPS estimate is 9.4, implying a prospective dividend yield of 7.3%. Current consensus EPS estimate suggests the PER is 14.7. |
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 5.19 cents and EPS of 7.15 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 8.0, implying annual growth of -8.0%. Current consensus DPS estimate is 7.4, implying a prospective dividend yield of 5.8%. Current consensus EPS estimate suggests the PER is 16.0. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $3.96
Citi rates CLW as Upgrade to Buy from Neutral (1) -
Citi has upgraded Charter Hall Long WALE REIT to Buy from Neutral observing the securities have fallen yet another -12% since it downgraded to Neutral in July.
The (growth) concerns that motivated the downgrade in July are still valid, but at a -36% discount to Net Tangible Assets (NTA) valuation, the broker has adopted the view that too cheap is, well, too cheap.
In favour of the REIT, Citi points out around 50% of the rents are indexed to CPI while a low risk income stream is guaranteed through a circa 12 year WALE and 99.9% occupancy.
Target $4.70. No changes made to forecasts.
Target price is $4.70 Current Price is $3.96 Difference: $0.74
If CLW meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).
Current consensus price target is $4.66, suggesting upside of 18.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Citi forecasts a full year FY23 dividend of 28.00 cents and EPS of 28.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 28.0, implying annual growth of -79.1%. Current consensus DPS estimate is 28.0, implying a prospective dividend yield of 7.1%. Current consensus EPS estimate suggests the PER is 14.0. |
Forecast for FY24:
Citi forecasts a full year FY24 dividend of 29.20 cents and EPS of 29.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 29.0, implying annual growth of 3.6%. Current consensus DPS estimate is 29.1, implying a prospective dividend yield of 7.4%. Current consensus EPS estimate suggests the PER is 13.5. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $24.56
Morgan Stanley rates CPU as Overweight (1) -
Morgan Stanley feels downside risks for Computershare from inflation and weaker M&A activity is already reflected in the share price.
Moreover, the broker upgrades margin income forecasts and sees further upside risk as interest rate spot and forward curves have moved up meaningfully in key markets.
The broker also now assumes a US67c currency, down from US70c. The target rises to $29.40 from $28.00 and the Overweight rating is unchanged. Industry view: Attractive.
Target price is $29.40 Current Price is $24.56 Difference: $4.84
If CPU meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).
Current consensus price target is $28.66, suggesting upside of 15.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Morgan Stanley forecasts a full year FY23 dividend of 112.84 cents and EPS of 131.06 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 141.1, implying annual growth of N/A. Current consensus DPS estimate is 111.1, implying a prospective dividend yield of 4.5%. Current consensus EPS estimate suggests the PER is 17.5. |
Forecast for FY24:
Morgan Stanley forecasts a full year FY24 dividend of 119.85 cents and EPS of 138.49 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 163.4, implying annual growth of 15.8%. Current consensus DPS estimate is 113.8, implying a prospective dividend yield of 4.6%. Current consensus EPS estimate suggests the PER is 15.1. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
CSL CSL LIMITED
Pharmaceuticals & Biotech/Lifesciences
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Overnight Price: $282.35
Credit Suisse rates CSL as Neutral (3) -
On October 17, CSL is due to deliver a briefing on Vifor Pharma (acquisition completed in August), and Credit Suisse takes the opportunity to adjust its forecasts in anticipation.
The broker lowers its FY23 and FY24 EPS forecasts for CSL on lower Vifor earnings and currency adjustments. The $305 target and Neutral rating are unchanged.
Vifor has leading global positions in iron deficiency and nephrology, which are structurally growing niche pharmaceutical markets, explains the analyst.
Target price is $305.00 Current Price is $282.35 Difference: $22.65
If CSL meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).
Current consensus price target is $324.80, suggesting upside of 12.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Credit Suisse forecasts a full year FY23 dividend of 328.01 cents and EPS of 744.32 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 862.3, implying annual growth of N/A. Current consensus DPS estimate is 408.2, implying a prospective dividend yield of 1.4%. Current consensus EPS estimate suggests the PER is 33.5. |
Forecast for FY24:
Credit Suisse forecasts a full year FY24 dividend of 438.74 cents and EPS of 950.38 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 1064.3, implying annual growth of 23.4%. Current consensus DPS estimate is 507.6, implying a prospective dividend yield of 1.8%. Current consensus EPS estimate suggests the PER is 27.1. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
INA INGENIA COMMUNITIES GROUP
Aged Care & Seniors
More Research Tools In Stock Analysis - click HERE
Overnight Price: $3.78
Ord Minnett rates INA as Initiation of coverage with Buy (1) -
Ord Minnett initiates coverage on Ingenia Communities. The broker expects the size of Australia's ageing demographic will outstrip current residential land lease community supply, supporting long-term growth prospects for Ingenia Communities and peers.
Compared to peers, the broker anticipates Ingenia Communities will outperform, with its outlook underpinned by a strong domestic tourism business and its land lease community operations offering continued growth.
The broker initiates with a Buy rating and a target price of $5.11.
Target price is $5.11 Current Price is $3.78 Difference: $1.33
If INA meets the Ord Minnett target it will return approximately 35% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY23:
Ord Minnett forecasts a full year FY23 EPS of 25.00 cents. |
Forecast for FY24:
Ord Minnett forecasts a full year FY24 EPS of 30.50 cents. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
LIC LIFESTYLE COMMUNITIES LIMITED
Infra & Property Developers
More Research Tools In Stock Analysis - click HERE
Overnight Price: $15.21
Ord Minnett rates LIC as Initiation of coverage with Accumulate (2) -
Ord Minnett initiates coverage on Lifestyle Communities. The broker expects the size of Australia's ageing demographic will outstrip current residential land lease community supply, supporting long-term growth prospects for Lifestyle Communities and peers.
Lifestyle Communities has achieved a meaningful re-rating, a reflection of its sector leading growth and returns profile. Ord Minnett considers the stock to offer longer-term potential despite the more limited upside.
The broker initiates with an Accumulate rating and a target price of $18.31.
Target price is $18.31 Current Price is $15.21 Difference: $3.1
If LIC meets the Ord Minnett target it will return approximately 20% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY23:
Ord Minnett forecasts a full year FY23 EPS of 63.90 cents. |
Forecast for FY24:
Ord Minnett forecasts a full year FY24 EPS of 89.00 cents. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $0.17
Morgans rates MX1 as Speculative Buy (1) -
Following two positive announcements by Micro-X, Morgans now sees a cash runway through to 2024 when sales momentum in Europe and Argus sales should kick in.
Varex Corporation, the largest independent manufacturer of x-ray technology components, has taken an equity stake in Micro-X.
Varex will also pay $7.5m (via installments/not yet included in broker's forecast) to use Micro-X's NEX technology in the field of multi-beam x-ray tube.
Separately, the US Department of Homeland Security has extended the Checkpoint project which includes an additional US$0.4m in funding.
The Speculative Buy rating is maintained, while the target price falls to $0.33 from $0.36 due to the equity placement.
Target price is $0.33 Current Price is $0.17 Difference: $0.16
If MX1 meets the Morgans target it will return approximately 94% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY23:
Morgans forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 2.20 cents. |
Forecast for FY24:
Morgans forecasts a full year FY24 dividend of 0.00 cents and EPS of 0.10 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $0.77
Macquarie rates NIC as Neutral (3) -
Having finalised the acquisition of an additional 40% stake in the Oracle nickel project, Nickel Industries has increased its interest in the project to 70%.
As per the definitive agreement, Nickel Industries paid -US$212m to Shanghai Decent for the additional stake, although Macquarie notes one quarter early.
The broker's earnings per share forecasts lift 18%, 50%, 41%, 28% and 9% through to 2026, with the project expected to start commissioning in October.
The Neutral rating is retained and the target price decreases to $0.74 from $0.92.
Target price is $0.74 Current Price is $0.77 Difference: minus $0.03 (current price is over target).
If NIC meets the Macquarie target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).
The company's fiscal year ends in December.
Forecast for FY22:
Macquarie forecasts a full year FY22 dividend of 4.00 cents and EPS of 5.60 cents. |
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 4.00 cents and EPS of 4.00 cents. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $0.65
Ord Minnett rates RMS as Upgrade to Accumulate from Hold (2) -
Ord Minnett finds the -40% sell-down of Ramelius Resources' shares since July to be reflective of margin pressures and a perception of deliverability risk. The broker considers these factors more than priced in to current trading levels, and expects the stock should re-rate.
The broker estimates current upside of 72%, driving an increase to its rating.
The rating is upgraded to Accumulate from Hold and the target price price decreases to $1.10 from $1.15.
Target price is $1.10 Current Price is $0.65 Difference: $0.45
If RMS meets the Ord Minnett target it will return approximately 69% (excluding dividends, fees and charges).
Current consensus price target is $1.16, suggesting upside of 70.1% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Ord Minnett forecasts a full year FY23 dividend of 1.00 cents and EPS of 8.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 4.2, implying annual growth of 187.7%. Current consensus DPS estimate is 1.3, implying a prospective dividend yield of 1.9%. Current consensus EPS estimate suggests the PER is 16.2. |
Forecast for FY24:
Ord Minnett forecasts a full year FY24 dividend of 1.40 cents and EPS of 4.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 7.3, implying annual growth of 73.8%. Current consensus DPS estimate is 2.2, implying a prospective dividend yield of 3.2%. Current consensus EPS estimate suggests the PER is 9.3. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Today's Price Target Changes
| Company | Last Price | Broker | New Target | Prev Target | Change | |
| CPU | Computershare | $24.73 | Morgan Stanley | 29.40 | 28.00 | 5.00% |
| MX1 | Micro-X | $0.17 | Morgans | 0.33 | 0.36 | -8.33% |
| NIC | Nickel Industries | $0.80 | Macquarie | 0.74 | 0.92 | -19.57% |
| RMS | Ramelius Resources | $0.68 | Ord Minnett | 1.10 | 1.15 | -4.35% |
Summaries
| AWC | Alumina Ltd | Underperform - Macquarie | Overnight Price $1.26 |
| CLW | Charter Hall Long WALE REIT | Upgrade to Buy from Neutral - Citi | Overnight Price $3.96 |
| CPU | Computershare | Overweight - Morgan Stanley | Overnight Price $24.56 |
| CSL | CSL | Neutral - Credit Suisse | Overnight Price $282.35 |
| INA | Ingenia Communities | Initiation of coverage with Buy - Ord Minnett | Overnight Price $3.78 |
| LIC | Lifestyle Communities | Initiation of coverage with Accumulate - Ord Minnett | Overnight Price $15.21 |
| MX1 | Micro-X | Speculative Buy - Morgans | Overnight Price $0.17 |
| NIC | Nickel Industries | Neutral - Macquarie | Overnight Price $0.77 |
| RMS | Ramelius Resources | Upgrade to Accumulate from Hold - Ord Minnett | Overnight Price $0.65 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 4 |
| 2. Accumulate | 2 |
| 3. Hold | 2 |
| 5. Sell | 1 |
Thursday 29 September 2022
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