Australian Broker Call *Extra* Edition – Jun 12, 2019

Daily Market Reports | Jun 12 2019

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)

ABA   ARB   ARQ   AVH   CDA (2)   EML   EXL   MRM (2)   MVP   MYE   RIC   STG  

ABA    AUSWIDE BANK LTD

Banks - Overnight Price: $5.14

Bell Potter rates ((ABA)) as Buy (1) -

Bell Potter upgrades AuswideBank's earnings-per-share forecasts 1% across FY19-FY21 in response to a second-half trading update.

Strong 6% annualised loan growth combined with a downtrend in impairment costs and a strong capital position met the broker's expectation and lower-than-expected wholesale funding costs proved the icing on the cake.

Bell Potter believes the higher net interest margin will lay the foundation for a dividend increase, and raises its H2 dividend forecast to 19c per share from 18c. The higher forecast dividend yield of 6.5% compared with 6.25% previously results in a neutral valuation and the target price is unchanged at $5.95.

The broker retains a Buy rating, given the valuation implies a total share holder return over 12 months of greater than 15%.

This report was published on June 4, 2019.

Target price is $5.95 Current Price is $5.14 Difference: $0.81
If ABA 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 FY19:

Bell Potter forecasts a full year FY19 dividend of 35.00 cents and EPS of 41.00 cents.
At the last closing share price the estimated dividend yield is 6.81%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.54.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 37.00 cents and EPS of 44.00 cents.
At the last closing share price the estimated dividend yield is 7.20%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.68.

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

ARB    ARB CORPORATION LIMITED

Automobiles & Components - Overnight Price: $18.68

Wilsons rates ((ARB)) as Hold (3) -

ARB Corporation  recently confirmed solid sales growth, but the broker notes a divergence in segment results, with Australian Aftermarket sales slowing.

The broker believes the company remains a sound investment, citing the vertically integrated business model and strong balance sheet, but says the price-earnings ratio of 23x FY20 earnings doesn't justify excitement given weakness in certain sectors.

Wilsons anticipates the Australian Aftermarket segment should recover this year but for now retains a Hold rating.

Target price steady at $18.20.

This report was published on May 28, 2019.

Target price is $18.20 Current Price is $18.68 Difference: minus $0.48 (current price is over target).
If ARB meets the Wilsons target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $17.82, suggesting downside of -4.6%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY19:

Wilsons forecasts a full year FY19 dividend of 39.00 cents and EPS of 72.10 cents.
At the last closing share price the estimated dividend yield is 2.09%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.91.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 71.6, implying annual growth of 11.4%.
Current consensus DPS estimate is 39.8, implying a prospective dividend yield of 2.1%.
Current consensus EPS estimate suggests the PER is 26.1.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 42.50 cents and EPS of 79.10 cents.
At the last closing share price the estimated dividend yield is 2.28%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.62.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 78.2, implying annual growth of 9.2%.
Current consensus DPS estimate is 43.4, implying a prospective dividend yield of 2.3%.
Current consensus EPS estimate suggests the PER is 23.9.

Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

ARQ    ARQ GROUP LIMITED

IT & Support - Overnight Price: $1.38

Wilsons rates ((ARQ)) as Downgrade to Hold from Buy (3) -

Wilsons downgrades earnings forecasts -8% to -21% across FY19/20 for ARQ Group to reflect recent guidance, and now sits below consensus and at the lower end of guidance.

While the broker believes ARQ is structurally attractive for the long term, it expects at least two halves of positive growth will be needed before the market re-rates the stock.

Wilsons notes net debt is relatively high, sitting at roughly 1.8x FY19 earnings and is optimistic that cash generation in 2020 will remedy the situation.

Broker downgrades to Hold from Buy. Target price falls to $1.75 from $2.47.

This report was published on June 4, 2019.

Target price is $1.75 Current Price is $1.38 Difference: $0.37
If ARQ meets the Wilsons target it will return approximately 27% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY19:

Wilsons forecasts a full year FY19 dividend of 4.20 cents and EPS of 7.20 cents.
At the last closing share price the estimated dividend yield is 3.04%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.17.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 4.00 cents and EPS of 6.60 cents.
At the last closing share price the estimated dividend yield is 2.90%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.91.

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


The full story is for FNArena subscribers only. To read the full story plus enjoy a free two-week trial to our service SIGN UP HERE

If you already had your free trial, why not join as a paying subscriber? CLICK HERE

MEMBER LOGIN