Australian Broker Call

Macquarie rates BKT as Outperform (1) -

Black Rock Mining has signed a Memorandum of Understanding offtake agreement with South Korean steelmaker POSCO in addition to its recent offtake agreement of 100% of Module 1 fines, further aligning it with the steelmaker, advises Macquarie.

Macquarie now expects a US$100m capital raising.

Under the agreement, POSCO will inject US$40m for a 19.99% share in Black Rock Mining.

Macquarie expects US$190m will be needed to finance its Mahenge graphite project, and forecasts $160m will be sourced from debt; US$40m comes from the POSCO injection, and the final US$100m will involve a capital raising in the March quarter.

Hence, the broker delays its development timeline, increasing its FY24 loss forecasts and tipping FY25 EPS forecasts into negative territory, while EPS forecasts fall -39% to -70% thereafter.

Outperform rating retained. Target price falls -11% to 25c from 28c.

Target price is $0.25 Current Price is $0.09 Difference: $0.158
If BKT meets the Macquarie target it will return approximately 172% (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

UBS rates CBA as Neutral (3) -

UBS zooms in on CommBank's business bank, spying strong growth opportunities at this stage of the cycle as competitive pressure ramps up.

In particular, the broker also sees room to convert more transactional relationships into business loans, allowing CBA to build market share.

The broker expects this should boost earnings by roughly $600m (or $5 a share) and the stand-alone valuation by roughly 15%.

Neutral rating and $105 target price retained.

Target price is $105.00 Current Price is $102.01 Difference: $2.99
If CBA meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $91.08, suggesting downside of -10.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: -0.7

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

Macquarie rates FBU as Outperform (1) -

The Climate Change Response (Late Penalties and Industrial Allocation) Amendment Act passed late last month to deal with the overallocation of free units is likely to result in a -NZ$13m reduction of Fletcher Building's NZ$47m free carbon units at its Golden Bay Cement facility, advises Macquarie.

The broker had largely expected some reduction, and brings forward the loss of these units to 2024. Macquarie also suspects Golden Bay Cement may be facing small market share losses given recent strength in cement imports.

EPS forecasts fall -2% in FY24; -3% in FY25; and -2% in FY26.

Outperform rating retained. Target price falls to NZ$7.20 from NZ$7.39.

Current Price is $4.47. Target price not assessed.

Current consensus price target is $5.30, suggesting upside of 19.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.6

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 advises its Goulamina agreement with Ganfeng has been revised and executed. After the provision of US$137.2m in funding, Ganfeng owns 55% and Leo Lithium owns 45%.

Macquarie is glad to hear that mining in Mali has resumed after a government-instructed suspension in July, and that the company has reiterated its first spodumene production is expected by the March quarter. But the broker adopts a more conservative valuation and raises its free carry interest to 30% after the Government of Mali passed a new mining code that allows it to take up to a 30% interest in new mineral projects.

The broker also observes that, since Leo Lithium's trading halt, share prices for peers have fallen roughly -25%.

EPS forecasts fall -20% to -40% for 2025 and later years.

Outperform rating retained. Target price falls -35% to $1 from $1.55 to reflect the company's changed equity position in Goulamina, and its lower earnings prospects.

Target price is $1.00 Current Price is $0.56 Difference: $0.44
If LLL meets the Macquarie target it will return approximately 79% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Bell Potter rates LTR as Downgrade to Speculative Hold from Speculative Buy (3) -

Bell Potter downgrades its rating for Liontown Resources to Speculative Hold from Speculative Buy following receipt of a conditional $3.00/share cash proposal from Albemarle.

The offer is to acquire all outstanding shares via a scheme of arrangement and Liontown's board has granted Albemarle a limited period of exclusive due diligence.

The $3.35 target price is unchanged.

Target price is $3.35 Current Price is $2.85 Difference: $0.5
If LTR meets the Bell Potter target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $2.99, suggesting upside of 7.6% (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

Macquarie rates LTR as Downgrade to Neutral from Outperform (3) -

Albemarle has issued a final, conditional and non-binding indicative proposal to buy Liontown Resources for $3 cash, valuing the company at $6.6bn.

Macquarie says the bid implies a long-term spodumene price of US$1,940 a tonne. The broker doubts a rival bid will appear and downgrades to Neutral from Outperform.

Target price falls to $3 from $3.10.

Target price is $3.00 Current Price is $2.85 Difference: $0.15
If LTR meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $2.99, suggesting upside of 7.6% (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

Morgans rates LTR as Hold (3) -

Morgans raises its target to $3.00 from $2.50 for Liontown Resources to align with the updated non-binding cash offer from Albemarle to enter exclusive due diligence.

Albemarle is looking for a unanimous recommendation at $3/share from the Liontown Resources board before it becomes binding.

The broker retains its Hold rating given it believes the acquisition will likely proceed and this outcome is already factored into the share price.

Target price is $3.00 Current Price is $2.85 Difference: $0.15
If LTR meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $2.99, suggesting upside of 7.6% (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

Shaw and Partners rates M7T as Buy (1) -

Last week's FY23 result for Mach7 Technologies only slightly missed Shaw and Partners revenue and adjusted earnings (EBITDA) forecasts. Operating expenses of -$26.5m were higher than the -$25m expected.

The broker feels FY24 guidance for 15-25% revenue growth is a strong reflection of momentum for the business. While $48m in sales is implied by guidance, the analyst anticipates up to $60m given pipeline commentary remains robust.

Management expects $31m of renewals in FY24, up from $5.3m in FY23 and also expects the business to be cash flow positive in FY24.

The Buy rating and $1.30 target are unchanged.

Target price is $1.30 Current Price is $0.80 Difference: $0.5
If M7T meets the Shaw and Partners target it will return approximately 63% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Bell Potter rates MCE as Speculative Buy (1) -

FY23 underlying earnings (EBITDA) for Matrix Composites & Engineering were in line with Bell Potter's forecast.

Management also announced receipt of a $13m purchase order for a deepwater riser buoyancy system, with manufacturing of the
system to commence imminently. The Subsea orderbook is now around $68m for product delivery in FY24.

While the broker's gross profit margin assumptions rise, along with interest income forecasts, the target falls to 32c from 35c due to an increase in net debt, given a working capital build-up. Speculative Buy.

Target price is $0.32 Current Price is $0.28 Difference: $0.045
If MCE 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 FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Citi rates MIN as Buy (1) -

Mineral Resources has announced it will buy Bald Hill from receivers and may eventailly get a bargain (perhaps less than -$1bn), on Citi's valuation estimate, though a key question relates to the manner of financing the purchase.

Taking into account current gearing, the broker believes Mineral Resources could afford to pay -$500m in cash and one alternative for the balance (among many) is to renegotiate the Wodgina tolling agreements.

Bald Hill would provide a processing hub in the Eastern Goldfields region of WA. The $79 target and Buy rating are maintained.

Target price is $79.00 Current Price is $73.90 Difference: $5.1
If MIN meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $78.00, suggesting upside of 6.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.4

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

Bell Potter rates PWH as Hold (3) -

Following last month's FY23 result for PWR Holdings, Bell Potter updates its forecasts for new segment reporting and adjusts its win-rate assumptions in the OEM and Aerospace & Defence segments.

The broker's forecast for the Aftermarket segment also rise due to next month's launch of a renewed strategy in the US.

The target rises to $11 from $10.50. Hold.

Target price is $11.00 Current Price is $10.65 Difference: $0.35
If PWH meets the Bell Potter target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $11.16, suggesting upside of 3.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.5

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

Morgans - Cessation of coverage

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

UBS rates SFR as Downgrade to Neutral from Buy (3) -

Sandfire Resources's FY24 result appears to have met UBS's forecasts and the broker shifts its focus to guidance.

The good news was a faster than expected ramp-up at Motheo, but Wilsons says this was offset by higher underground development capital expenditure, higher G&A costs and deferred stripping at Motheo.

The broker appreciates the scarcity of ASX copper plays and Sandfire Resources' leverage to the copper price, but observes the share price is approaching its target price.

Rating is downgraded to Neutral from Buy. Target price is steady at $7.

Target price is $7.00 Current Price is $6.76 Difference: $0.24
If SFR meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $6.80, suggesting upside of 4.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.3

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

Ord Minnett rates SKC as Buy (1) -

Ord Minnett says SkyCity Entertainment's New Zealand casino license will be suspended for 10 days given New Zealand's Department of Internal Affairs has found the company failed to monitor continuous play by a customer between 2017 and 2021.

FY24 and FY25 EPS forecasts fall sharply.

But the broker believes the sell-off has been overdone, observing the company is now trading at a sharp discount to the broker's valuation, possibly on fears of further reprisals.

Buy rating and $3.20 target price retained, the broker only factoring in the 10-day suspension, but its Uncertainty rating rises to High from Medium.

Target price is $3.20 Current Price is $1.85 Difference: $1.35
If SKC meets the Ord Minnett target it will return approximately 73% (excluding dividends, fees and charges).

Current consensus price target is $3.20, suggesting upside of 71.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 1.0

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