OUR QUEST IS NOT TO BE BULLISH OR BEARISH, BUT TO CORRECTLY ASSESS FUTURE TRENDS

Credit Suisse rates CSR as Upgrade to Outperform from Neutral

Credit Suisse observes the projected volume decline has disappeared and multi-residential units are now the only segment showing material weakness.

The broker is encouraged by both industry assessment and approvals data that show strength in non-residential construction, particularly government-exposed sectors.

The broker increases estimates for net profit in FY21 by 13%. Rating is upgraded to Outperform from Neutral and the target raised to $5.30 from $4.10.

Morgans rates CTD as Add

Morgans has resumed coverage of Corporate Travel Management. To avoid confusion for our readers, prior to a blackout period of coverage the broker rated the company as a Hold with a $14.20 price target. Given the hiatus in coverage, FNArena will consider this update as a pseudo initiation of coverage, with an Add rating and target price of $20.50.  

On October 30, Corporate Travel Management will acquire Travel & Transport (T&T), a leading corporate travel company in the US at a cost of US$200.4m. Strategically, this acquisition is both highly accretive and compelling, enthuses Morgans. It’s considered this will provide the company with its targeted level of scale and will make the company the fifth largest corporate travel company in the world.

When travel demand recovers post covid-19 (Morgans assume FY23), the company should achieve its $10bn total transaction value (TTV) target with the addition of T&T, calculates the broker.

In addition, the analyst highlights the acquisition will give the company access to a world class hotel program which will further bolster its value proposition with clients, while also being a lucrative revenue stream.

The rating is upgraded to Add from Hold (after a period of non coverage) and the target price is increased to $20.50 from $14.20.

UBS rates RHC as Neutral

UBS notes larger private hospitals (and not standalone day hospitals) dominate when it comes to day stay services. The broker highlights data from 2019 which show that of the circa $10bn paid by private health insurers to private hospitals, about 21% went to fund day stays, out of which the share of day admissions within private hospitals was about 16%.

The broker also notes incentives for sector consolidation are not clear and insurer rates for the same procedure may be lower than those achieved by larger groups like Ramsay Health Care. 

Without a material change to incentives for operating in the standalone market, the broker does not think it wise for Ramsay to increase its exposure in this subsector. Capital may be better spent improving the day service offering within its existing large hospitals, suggests UBS.

UBS retains its Neutral rating with a target price of $71.20.