Australian Broker Call *Extra* Edition – Feb 04, 2019

This story features ADACEL TECHNOLOGIES LIMITED, and other companies. For more info SHARE ANALYSIS: ADA

An additional news report on the recommendation, valuation, forecast and opinion changes for ASX-listed equities.

In addition to The Australian Broker Call Report, which is published and updated daily (Mon-Fri), FNArena has now added The Australian Broker Call *Extra* Edition, featuring additional sources of research and insights on ASX-listed stocks, also enlarging the number of stocks that make up the FNArena universe.

One key difference is the *Extra* Edition will not be updated daily, but merely "regularly" depending on availability of suitable quality content. As such, the *Extra* Edition tries to build a bridge between daily updates via the Australian Broker Call Report and ad hoc news stories, that are not always timely for investors hungry for the next information update.

Investors using the *Extra* Edition as a source of input for their own share market research should thus take into account that information after publication may not be up to date, or yet awaiting another update by FNArena's team of journalists.

Similar to The Australian Broker Call Report, this *Extra* Edition includes concise but limited reviews of research recently published by Stockbrokers and other experts, 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 of this Report.

The Australian Broker Call *Extra* Edition is a summary that has been prepared independently of the sources identified. Readers will check the full text of the recommendations and consult a Licenced Advisor before making any investment decision.

The copyright of this Report is owned by the publisher. Readers will not copy, forward or disseminate this Report to any other person. For more vital information about the sources included, see the bottom of this Report.

COMPANIES DISCUSSED IN THIS ISSUE

Click on a symbol for fast access.
The number next to the symbol represents the number of brokers covering it for this report -(if more than 1)

ADA   CCP (2)   CRD (2)   EXL   GEM   GUD   MMM   NWL   PPS   SNL   VHT  

ADA    ADACEL TECHNOLOGIES LTD

Software & Services – Overnight Price: $0.84

Bell Potter rates ((ADA)) as Buy (1) –

Adacel's outlook should not have been affected too much by the US government shut down, argue the analysts, with most contracts already funded, though the controller training contract, representing circa 5% of annual gross profit might be the exception.

Bell Potter has made minor changes to forecasts, while conducting a full review of its estimates, but incorporating a larger discount because of shutdown risk has caused the price target to drop to $1.25 from $1.50. Buy rating retained as the share price is still well below the revised marker.

This research update was released on January 30, 2019.

Target price is $1.25 Current Price is $0.84 Difference: $0.41
If ADA meets the Bell Potter target it will return approximately 49% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 4.50 cents and EPS of 8.00 cents.
At the last closing share price the estimated dividend yield is 5.36%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.50.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 5.50 cents and EPS of 10.00 cents.
At the last closing share price the estimated dividend yield is 6.55%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.40.

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

CCP    CREDIT CORP GROUP LIMITED

Business & Consumer Credit – Overnight Price: $21.95

Baillieu 1889 rates ((CCP)) as Downgrade to Hold from Buy (3) –

The interim performance proved better-than-expected, though not spectacularly so. Declared dividend of 36c was equally slightly higher than expected. Baillieu labels the report a "clean" result with a "strong dividend".

The broker observes Credit Corp continues to build collection headcount in the US and will look to open another collection facility over there in the medium-term. Also, management has indicated there is some $100m in debt headroom to further fund growth. Minor increases to forecasts have been implemented.

Despite a positive undertone in today's report, Baillieu has decided to downgrade to Hold from Buy, while lifting the price target to $23.90 from $23.25. That decision was motivated by "valuation", explain the analysts. This research report was released on January 30, 2019.

Target price is $23.90 Current Price is $21.95 Difference: $1.95
If CCP meets the Baillieu 1889 target it will return approximately 9% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Baillieu 1889 forecasts a full year FY19 dividend of 77.00 cents and EPS of 148.30 cents.
At the last closing share price the estimated dividend yield is 3.51%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.80.

Forecast for FY20:

Baillieu 1889 forecasts a full year FY20 dividend of 86.00 cents and EPS of 164.60 cents.
At the last closing share price the estimated dividend yield is 3.92%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.34.

Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

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Canaccord Genuity rates ((CCP)) as Buy (1) –

Canaccord Genuity found the interim report merely in-line, but the analysts see plenty of opportunities available to the company to secure ongoing growth in the years ahead. One such avenue is auto lending with the broker pointing out the company remains very underrepresented in this segment, presently carrying a loan book of less than $20m in a $6bn annual market for used car financing in Australia.

Canaccord Genuity therefore advises it remains confident in the company achieving double-digit percentage growth in the years ahead, despite uncertainty about cyclical tightness in the domestic debt purchasing market.

Buy rating retained, while the price target moves up to $23.03 from $21.99 on higher forecasts. This research report was released on January 30, 2019.

Target price is $23.03 Current Price is $21.95 Difference: $1.08
If CCP meets the Canaccord Genuity target it will return approximately 5% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Canaccord Genuity forecasts a full year FY19 dividend of 74.00 cents and EPS of 147.80 cents.
At the last closing share price the estimated dividend yield is 3.37%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.85.

Forecast for FY20:

Canaccord Genuity forecasts a full year FY20 dividend of 82.00 cents and EPS of 162.30 cents.
At the last closing share price the estimated dividend yield is 3.74%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.52.

Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

CRD    CREDIBLE LABS INC

Business & Consumer Credit – Overnight Price: $0.77

Bell Potter rates ((CRD)) as Buy (1) –

A record US$368m of closed loan volumes (CLV) in Q4 highlights continued momentum for the company's platform, say Bell Potter analysts. The number of loans originated increased from around 50 per day to around 120 per day in Q4, showing the scalability of Credible Lab's platform.

The broker notes the company has been successful in launching its mortgage refinancing platform ahead of schedule in 20 US states in October 2018. The company has also commenced development of the home purchase mortgage marketplace, with launch forecast in the first half of 2019.

Bell Potter has increased 2019 revenue forecast by 7% and 2010 by 9%. This leads to an increase in the target price to $1.45 from $1.28. The broker expects the company to achieve profitability on its current cash resources and maintains a (Speculative) Buy rating.

This report was first published on January 31, 2019.

Target price is $1.45 Current Price is $0.77 Difference: $0.68
If CRD meets the Bell Potter target it will return approximately 88% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY18:

Bell Potter forecasts a full year FY18 dividend of 0.00 cents and EPS of minus 6.48 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 11.88.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 6.62 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 11.64.

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

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Moelis rates ((CRD)) as Buy (1) –

Credible Labs recorded a second consecutive quarter of record closed loan volume (CLV) in Q4, up 4% on Q3 and 108% year-on-year. This despite the fact Q3 is seasonally the strongest quarter in student loan origination.

The company's mortgage refinancing footprint now covers 34 US states, representing 77% of mortgage originations in the US following its launch in September 2018. Moelis expects the mortgage vertical to ramp up significantly over the next few years, similar to the company's experience in student loan refinancing.

The broker believes the company enters 2019 with a significantly de-risked commercialisation profile following the strong finish to 2018 and the rapid growth in CLV.

Moelis maintains a Buy rating and $1.47 target price.  This report was published on January 31, 2019.

Target price is $1.47 Current Price is $0.77 Difference: $0.7
If CRD meets the Moelis target it will return approximately 91% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY18:

Moelis forecasts a full year FY18 dividend of 0.00 cents and EPS of minus 8.37 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 9.20.

Forecast for FY19:

Moelis forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 9.18 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 8.39.

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

EXL    ELIXINOL GLOBAL LIMITED

Health & Nutrition – Overnight Price: $3.30

Bell Potter rates ((EXL)) as Downgrade to Hold from Buy (3) –

Bell Potter continues to see strong growth ahead, just not at the same pace as investors have witnessed over past quarters. The company is ramping up its marketing spending and the broker suggests this is a necessary move in order to keep up with growing competition in the sector.

Making genuine inroads in US distribution likely requires a statement from the FDA regarding safety of CBD Hemp products when it comes to food or dietary supplements, the broker suggests. Current forecasts assume it will be a while still before the company can announce it has signed a binding agreement for national distribution in the USA.

Even though competition seems to be heating up, Bell Potter still thinks Elixinol Global's outlook remains "exceptionally positive". Price target rises to $3.36 from $3. Rating is downgraded to Hold from Buy.

This report was published on 1 February 2019.

Target price is $3.36 Current Price is $3.30 Difference: $0.06
If EXL meets the Bell Potter target it will return approximately 2% (excluding dividends, fees and charges).

Forecast for FY18:

Bell Potter forecasts a full year FY18 dividend of 0.00 cents and EPS of 1.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 253.85.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 0.00 cents and EPS of 5.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 62.26.

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

GEM    G8 EDUCATION LIMITED

Childcare – Overnight Price: $3.25

Wilsons rates ((GEM)) as Downgrade to Sell from Hold (5) –

Wilsons sees plenty of risk, short term, and those are not being priced in by investors. Some of the headwinds mentioned are the fact that national centre supply remains an issue, subsidy benefits may be short-dated and the age and state exposure of G8 Education’s portfolio is seen as "unfavourable".

On this basis, the recommendation has shifted to Sell from Hold (downgrade) with a price target of $2.53. This research report was issued on January 30, 2019.

Target price is $2.53 Current Price is $3.25 Difference: minus $0.72 (current price is over target).
If GEM meets the Wilsons target it will return approximately minus 22% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $3.17, suggesting downside of -2.4%(ex-dividends)
The company's fiscal year ends in December.

Forecast for FY18:

Wilsons forecasts a full year FY18 dividend of 12.70 cents and EPS of 16.90 cents.
At the last closing share price the estimated dividend yield is 3.91%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.23.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 17.4, implying annual growth of -8.0%.
Current consensus DPS estimate is 15.9, implying a prospective dividend yield of 4.9%.
Current consensus EPS estimate suggests the PER is 18.7.

Forecast for FY19:

Wilsons forecasts a full year FY19 dividend of 13.80 cents and EPS of 18.50 cents.
At the last closing share price the estimated dividend yield is 4.25%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.57.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 20.5, implying annual growth of 17.8%.
Current consensus DPS estimate is 14.9, implying a prospective dividend yield of 4.6%.
Current consensus EPS estimate suggests the PER is 15.9.

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 – Overnight Price: $11.50

Wilsons rates ((GUD)) as Hold (3) –

Wilsons found the company's first half results disappointing, despite the 14% increase in net profits on the previous corresponding period which was -4% below the broker's forecast.

While Auto operating profit (EBIT) growth was sustained at double digits, it slowed due to lower volume growth and margin contraction. Working capital intensity also contributed to a lower growth/ROIC outlook for the core business.

As a result, Wilsons reduces EPS forecasts by -3-5%, reflecting lower Auto organic sales growth over the next 18 months, with this offset somewhat by inclusion of small bolt-on acquisitions in FY20 and FY21.

The broker retains a Hold rating and $11.25 target price. This report was first published on January 31, 2019.

Target price is $11.25 Current Price is $11.50 Difference: minus $0.25 (current price is over target).
If GUD meets the Wilsons target it will return approximately minus 2% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $13.67, suggesting upside of 18.9%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY19:

Wilsons forecasts a full year FY19 dividend of 52.00 cents and EPS of 70.30 cents.
At the last closing share price the estimated dividend yield is 4.52%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.36.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 71.6, implying annual growth of 22.2%.
Current consensus DPS estimate is 55.8, implying a prospective dividend yield of 4.9%.
Current consensus EPS estimate suggests the PER is 16.1.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 56.10 cents and EPS of 74.80 cents.
At the last closing share price the estimated dividend yield is 4.88%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.37.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 78.5, implying annual growth of 9.6%.
Current consensus DPS estimate is 62.3, implying a prospective dividend yield of 5.4%.
Current consensus EPS estimate suggests the PER is 14.6.

Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

MMM    MARLEY SPOON AG

Consumer Products & Services – Overnight Price: $0.57

Canaccord Genuity rates ((MMM)) as Buy (1) –

Canaccord Genuity cannot help but point at the accelerating growth pace across all geographies as exposed through the release of the Q4 2018 update. In addition, the company has announced a EUR22m financing package which, according to the analysts, should be sufficient to assist it reaching break even by FY20.

Certainly, Canaccord Genuiy has been encouraged further by both observations, suggesting one key factor behind this stock's savage de-rating post IPO was market fear for a heavily dilutive capital raising; that risk should now be on the backburner, opening the door to a re-rating.

Incorporating the 22% dilution from convertible bonds, plus a few other factors, has resulted in slightly lower estimates, which translates into a revised price target of $1.50 versus $1.55 prior. Buy rating retained. This research report was released on January 30, 2019.

Target price is $1.50 Current Price is $0.57 Difference: $0.93
If MMM meets the Canaccord Genuity target it will return approximately 163% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY18:

Canaccord Genuity forecasts a full year FY18 dividend of 0.00 cents and EPS of minus 18.49 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 3.08.

Forecast for FY19:

Canaccord Genuity forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 10.36 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 5.50.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

NWL    NETWEALTH GROUP LIMITED

Wealth Management & Investments – Overnight Price: $7.04

Bell Potter rates ((NWL)) as Buy (1) –

Bell Potter sees the current share market and regulatory environment as tough for Netwealth, but believes the company's significant technology advantage places it in a strong position to cope with, and ultimately benefit from, advisor dislocation. Strong profitability and the ability to grow net flows and earnings through a volatile cycle make Netwealth the broker's top pick in the platform space.

Ahead of a quarterly update, the broker has trimmed earnings forecasts on a mark-to-market basis, which leads to a target price cut to $9.90 from $10.50, but retains Buy, noting negative marks-to-market are par for the course but new client wins are the focus of the upcoming update.

The report was first published on January 25, 2019.

Target price is $9.90 Current Price is $7.04 Difference: $2.86
If NWL meets the Bell Potter target it will return approximately 41% (excluding dividends, fees and charges).
Current consensus price target is $7.68, suggesting upside of 9.0%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 12.00 cents and EPS of 14.50 cents.
At the last closing share price the estimated dividend yield is 1.70%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 48.55.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 14.3, implying annual growth of 69.4%.
Current consensus DPS estimate is 10.5, implying a prospective dividend yield of 1.5%.
Current consensus EPS estimate suggests the PER is 49.2.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 15.00 cents and EPS of 19.00 cents.
At the last closing share price the estimated dividend yield is 2.13%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 37.05.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 17.7, implying annual growth of 23.8%.
Current consensus DPS estimate is 13.4, implying a prospective dividend yield of 1.9%.
Current consensus EPS estimate suggests the PER is 39.8.

Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

PPS    PRAEMIUM LIMITED

Wealth Management & Investments – Overnight Price: $0.68

Bell Potter rates ((PPS)) as Downgrade to Hold from Buy (3) –

Praemium's quarterly update has revealed the company is not getting the uplift in net flows Bell Potter expected from a range of client wins locally and abroad. The broker has thus moderated forecasts.

Bell Potter will now take a "wait and see" approach to the impact of nine new clients, the new UMA platform, and progress in international markets. The broker still sees net positive flows, but at a slower pace. This, coupled with a mark-to-market, leads to meaningly forecast earnings cuts. Target falls to 81c from $1.36.

Bell Potter downgrades to Hold from Buy. The report was first published on January 25, 2019.

Target price is $0.81 Current Price is $0.68 Difference: $0.13
If PPS meets the Bell Potter target it will return approximately 19% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 0.00 cents and EPS of 1.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 48.57.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.90 cents and EPS of 2.00 cents.
At the last closing share price the estimated dividend yield is 1.32%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 34.00.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

SNL    SUPPLY NETWORK LIMITED

Overnight Price: $4.15

Baillieu 1889 rates ((SNL)) as Hold (3) –

Supply Network provides after-market parts to the commercial vehicle industry in Australia and New Zealand. Turns out, the 8% growth as indicated by the release of preliminary unaudited H1 financials was smack bang in line with forecasts at Baillieu. FY19 guidance has been labelled "largely in line", suggesting some minor adjustments will have to be made (forecasts a little higher previously).

The analysts retain forecasts for solid growth ahead, further carried by a strong financial position, a reliable track record, hardly any debt and high returns on capital. The analysts further highlight robust underlying industry growth, with the company growing the number of branches and increasing its market share.

Nevertheless, the $4.55 price target remains in place, alongside an unchanged Hold rating. This research update was released on January 25, 2019.

Target price is $4.55 Current Price is $4.15 Difference: $0.4
If SNL meets the Baillieu 1889 target it will return approximately 10% (excluding dividends, fees and charges).

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

VHT    VOLPARA HEALTH TECHNOLOGIES LIMITED

Medical Equipment & Devices – Overnight Price: $1.11

Bell Potter rates ((VHT)) as Buy (1) –

The release of the Q3 revenue and cash flow statements proved a disappointing event, with Bell Potter pointing out the company effectively issued a profit warning, now guiding towards a lower level of annual recurring revenues.

Guidance for the full year still requires a stronger Q4, but the analysts refer to management indicating this should be the case. Also, Q4 is traditionally the strongest quarter in the year for the company, they add.

Forecasts have been reduced, but Bell Potter continues to express confidence that coming quarters will continue to show growth. On that basis, Buy rating retained. Price target falls by -15% to $1.49. This research update was released on January 30, 2019.

Target price is $1.49 Current Price is $1.11 Difference: $0.38
If VHT meets the Bell Potter target it will return approximately 34% (excluding dividends, fees and charges).
The company's fiscal year ends in March.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 5.85 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 18.97.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 2.42 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 45.96.

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

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The content of this information does in no way reflect the opinions of FNArena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FNArena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.

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