Australian Broker Call
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December 23, 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
| TPG - | TPG Telecom | Upgrade to Add from Hold | Morgans |
Overnight Price: $45.26
Macquarie rates BHP as Outperform (1) -
OZ Minerals has entered into a Scheme Implementation Deed with BHP Group, with the latter's $9.6bn takeover offer having been unanimously supported by OZ Minerals' board. BHP is set to acquire 100% of OZ Minerals' shares, at a cost of $28.25 per share.
Macquarie highlights the total economic benefit of the deal exceeds the $28.25 per share price, with some eligible shareholders able to the 75 cent per share franking credit to bring the per share value to $29.00. The transaction is subject to a 75% shareholder approval.
The Outperform rating and target price of $50.00 are retained.
Target price is $50.00 Current Price is $45.26 Difference: $4.74
If BHP meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).
Current consensus price target is $43.06, suggesting downside of -6.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 287.27 cents and EPS of 383.65 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 434.7, implying annual growth of N/A. Current consensus DPS estimate is 310.2, implying a prospective dividend yield of 6.7%. Current consensus EPS estimate suggests the PER is 10.6. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 330.37 cents and EPS of 441.25 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 425.5, implying annual growth of -2.1%. Current consensus DPS estimate is 305.5, implying a prospective dividend yield of 6.6%. Current consensus EPS estimate suggests the PER is 10.9. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $40.31
Morgans rates EBO as Add (1) -
Ebos Group is a supplier to Petspiration as well as other specialty pet retailers such as Pet Barn, and also supplies both the supermarket majors.
The recent acquisition of Petspiration by Woolworths ((WOW)) demonstrates the importance of the animal care division which Morgans estimates will grow at around 9.0% pa over the medium term.
The broker maintains an Add recommendation and suggests investors increase their weighting to this quality growth name. Target rises to $43.75 from $36.84.
Target price is $43.75 Current Price is $40.31 Difference: $3.44
If EBO meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).
Current consensus price target is $40.75, suggesting upside of 2.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Morgans forecasts a full year FY23 dividend of 97.00 cents and EPS of 148.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 120.3, implying annual growth of 5.0%. Current consensus DPS estimate is 102.9, implying a prospective dividend yield of 2.6%. Current consensus EPS estimate suggests the PER is 33.0. |
Forecast for FY24:
Morgans forecasts a full year FY24 dividend of 104.00 cents and EPS of 162.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 163.5, implying annual growth of 35.9%. Current consensus DPS estimate is 110.3, implying a prospective dividend yield of 2.8%. Current consensus EPS estimate suggests the PER is 24.3. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
GUD G.U.D. HOLDINGS LIMITED
Household & Personal Products
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Overnight Price: $7.99
UBS rates GUD as Neutral (3) -
Despite a challenging consumer outlook, UBS anticipates demand for G.U.D. Holdings' core auto business to remain relatively robust in the medium term. A Neutral rating, however, is driven by an implied second half earnings skew, anticipated declining new car demand, and headwinds from the Australian dollar and balance sheet.
The broker highlights a second half earnings skew does add risk to its outlook ahead of what is expected to be a more challenging year to come. UBS updates its earnings per share forecasts -5% and -4% in FY23 and FY24.
The Neutral rating is retained and the target price decreases to $8.40 from $9.50.
Target price is $8.40 Current Price is $7.99 Difference: $0.41
If GUD meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $11.55, suggesting upside of 52.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
UBS forecasts a full year FY23 EPS of 81.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 80.3, implying annual growth of 250.8%. Current consensus DPS estimate is 49.2, implying a prospective dividend yield of 6.5%. Current consensus EPS estimate suggests the PER is 9.4. |
Forecast for FY24:
UBS forecasts a full year FY24 EPS of 87.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 91.7, implying annual growth of 14.2%. Current consensus DPS estimate is 58.0, implying a prospective dividend yield of 7.7%. Current consensus EPS estimate suggests the PER is 8.2. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates IGO as Outperform (1) -
Production has resumed ar IGO's Nova mine following an eighteen day outage. The commissioning of a new generation power capacity, following a fire that caused damage to the power station, allowed mining operations to resume on December 11 and processing operations on December 21, notes Macquarie.
The company has warned full year production from Nova is now likely to be at, or just below, the bottom end of guidance. Macquarie has adjusted its earnings forecasts to reflect slightly reduced production.
The Outperform rating and target price of $21.00 are retained.
Target price is $21.00 Current Price is $13.92 Difference: $7.08
If IGO meets the Macquarie target it will return approximately 51% (excluding dividends, fees and charges).
Current consensus price target is $15.44, suggesting upside of 12.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 43.00 cents and EPS of 215.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 206.2, implying annual growth of 371.9%. Current consensus DPS estimate is 46.0, implying a prospective dividend yield of 3.3%. Current consensus EPS estimate suggests the PER is 6.7. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 79.00 cents and EPS of 304.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 203.1, implying annual growth of -1.5%. Current consensus DPS estimate is 101.8, implying a prospective dividend yield of 7.4%. Current consensus EPS estimate suggests the PER is 6.8. |
Market Sentiment: 0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $27.80
Macquarie rates OZL as No Rating (-1) -
OZ Minerals has entered into a Scheme Implementation Deed with BHP Group, with the latter's $9.6bn takeover offer having been unanimously supported by OZ Minerals' board. BHP Group is set to acquire 100% of OZ Minerals' shares, at a cost of $28.25 per share.
Macquarie highlights the total economic benefit of the deal exceeds the $28.25 per share price, with some eligible shareholders able to the 75 cent per share franking credit to bring the per share value to $29.00. The transaction is subject to a 75% shareholder approval.
Macquarie is on research restriction.
Current Price is $27.80. Target price not assessed.
Current consensus price target is $27.57, suggesting downside of -1.2% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY22:
Macquarie forecasts a full year FY22 dividend of 183.00 cents and EPS of 71.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 66.5, implying annual growth of -58.3%. Current consensus DPS estimate is 50.2, implying a prospective dividend yield of 1.8%. Current consensus EPS estimate suggests the PER is 42.0. |
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 7.00 cents and EPS of 58.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 83.8, implying annual growth of 26.0%. Current consensus DPS estimate is 14.6, implying a prospective dividend yield of 0.5%. Current consensus EPS estimate suggests the PER is 33.3. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $3.33
Macquarie rates SM1 as Neutral (3) -
Synlait Milk has updated on its full year outlook, retaining guidance but with a more significant second half skew that previously anticipated. Macquarie expects the changes to cash flow timing will result in higher net debt and interest costs.
Delayed ingredient shipments, phasing of lactoferrin volumes, and increased costs all impacted on first half performance, with the update suggesting a 20/80 skew, or more.
The Neutral rating and target price of NZ$3.41 are retained.
Current Price is $3.33. Target price not assessed.
The company's fiscal year ends in July.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 0.00 cents and EPS of 22.22 cents. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 0.00 cents and EPS of 36.95 cents. |
This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $2.56
Morgan Stanley rates SYM as Overweight (1) -
Symbio Holdings' full year earnings guidance has been subject to a -25% cut from the company, driven by the return of phone number inventory and delays in finalising new deals involving 400,000 numbers.
Morgan Stanley has subsequently lowered its earnings per share forecasts -52% for FY23 and between -51-53% in FY24 and FY25.
The broker is now anticipating a decline in communications platform as a service gross profit in FY23, and softer growth in the testing as a service and unified communications as a service divisions. Morgan Stanley sees no adverse impact on Symbio Holdings' competitive position.
The Overweight rating is retained and the target price decreases to $2.20 from $4.80. Industry view: In-Line.
Target price is $2.20 Current Price is $2.56 Difference: minus $0.36 (current price is over target).
If SYM meets the Morgan Stanley target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).
The company's fiscal year ends in June.
Forecast for FY23:
Morgan Stanley forecasts a full year FY23 dividend of 4.00 cents and EPS of 18.00 cents. |
Forecast for FY24:
Morgan Stanley forecasts a full year FY24 dividend of 4.00 cents and EPS of 20.00 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $4.77
Morgans rates TPG as Upgrade to Add from Hold (1) -
The ACCC has decided a merger of networks between TPG Telecom and Telstra ((TLS)) would leave consumers in regional areas worse off over time. Morgans sees the outcome as as a negative, but not final given the appeal process which could take up to a year.
And it also means TPG will not take a short term -$225m hit to short term earnings.
Either way Morgans believes the bad news is now priced in and sees value at current levels, upgrading to Add from Hold. Target falls to $5.50 from $6.00 due to a 50 basis point increase to the broker's cost of capital assumption.
Target price is $5.50 Current Price is $4.77 Difference: $0.73
If TPG meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges).
Current consensus price target is $6.12, suggesting upside of 27.4% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY22:
Morgans forecasts a full year FY22 dividend of 18.00 cents and EPS of 55.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 24.2, implying annual growth of 308.8%. Current consensus DPS estimate is 17.6, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 19.8. |
Forecast for FY23:
Morgans forecasts a full year FY23 dividend of 19.00 cents and EPS of 30.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 22.8, implying annual growth of -5.8%. Current consensus DPS estimate is 19.2, implying a prospective dividend yield of 4.0%. Current consensus EPS estimate suggests the PER is 21.1. |
Market Sentiment: 0.7
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 | |
| EBO | Ebos Group | $39.73 | Morgans | 43.75 | 36.84 | 18.76% |
| GUD | G.U.D. Holdings | $7.56 | UBS | 8.40 | 9.50 | -11.58% |
| SYM | Symbio Holdings | $1.49 | Morgan Stanley | 2.20 | 4.80 | -54.17% |
| TPG | TPG Telecom | $4.80 | Morgans | 5.50 | 6.00 | -8.33% |
Summaries
| BHP | BHP Group | Outperform - Macquarie | Overnight Price $45.26 |
| EBO | Ebos Group | Add - Morgans | Overnight Price $40.31 |
| GUD | G.U.D. Holdings | Neutral - UBS | Overnight Price $7.99 |
| IGO | IGO | Outperform - Macquarie | Overnight Price $13.92 |
| OZL | OZ Minerals | No Rating - Macquarie | Overnight Price $27.80 |
| SM1 | Synlait Milk | Neutral - Macquarie | Overnight Price $3.33 |
| SYM | Symbio Holdings | Overweight - Morgan Stanley | Overnight Price $2.56 |
| TPG | TPG Telecom | Upgrade to Add from Hold - Morgans | Overnight Price $4.77 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 5 |
| 3. Hold | 2 |
Friday 23 December 2022
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