Australian Broker Call *Extra* Edition – Jan 29, 2020

Daily Market Reports | Jan 29 2020

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)

AMG   APC   APT   BSA   BTH   CAJ   CVL   EGH   EGN   IMA   JYC   LME   LNK   PBP   PPS   PVS (2)   WZR  

AMG    AUSMEX MINING GROUP LIMITED

Industrial Metals - Overnight Price: $0.07

State One Stockbroking rates ((AMG)) as Hold (3) -

The mineral exploration company has exposure to projects in two Australian mineral provinces- the Cloncurry Project in Queensland and the Burra Project in South Australia. 

State One Stockbroking values the Cloncurry Gold Exploration Target at $20m, the Canteen IOCG Prospect at a discounted value of $15m while the value of the Burra Project is considered to be $30m. In total, Ausmex Mining has been assigned an Enterprise Value (EV) of 65m.

Even at an estimated 75% upside from the current price levels, State One Stockbroking considers Ausmex Mining a risky pick and recommends a Hold on the stock. The target price is $0.11.

The report was published on December 23, 2019.

Target price is $0.11 Current Price is $0.07 Difference: $0.04
If AMG meets the State One Stockbroking target it will return approximately 57% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

State One Stockbroking forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 1.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 7.00.

Forecast for FY21:

State One Stockbroking forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 1.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 7.00.

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

APC    AUSTRALIAN POTASH LIMITED

Agriculture - Overnight Price: $0.11

Patersons rates ((APC)) as Initiation of coverage with Speculative Buy (1) -

The ASX-listed minerals company fully owns the Lake Wells Sulphate of Potash (LWSOP) project located North-East of Kalgoorlie. Patersons believes this is one of the best locations for SOP production and highlights the presence of 18.1mt drainable SOP.

A recent Definitive Feasibility Study by the company confirms a long-life project of 30 years with the icing on the cake being the global demand for SOP growing at a CAGR (Compounded Annual Growth Rate) of 1.3% to 2040, affirms the broker.

The study also estimates a pre-tax NPV (Net Present Value) of $665m along with an Internal Rate of Return (IRR) of 25%. Patersons has initiated coverage with a Buy (Speculative) rating on the back of an experienced management team and anticipation of strong margins of up to 50%. The target price is $0.23.

The report was first published on October 8, 2019.

Target price is $0.23 Current Price is $0.11 Difference: $0.12
If APC meets the Patersons target it will return approximately 109% (excluding dividends, fees and charges).

Forecast for FY20:

Patersons forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 1.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 7.33.

Forecast for FY21:

Patersons forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 3.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 3.14.

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

APT    AFTERPAY LIMITED

Business & Consumer Credit - Overnight Price: $36.70

Goldman Sachs rates ((APT)) as Buy (1) -

Goldman Sachs has updated for Afterpay’s performance in H120 and opines the buy now, pay later player's customer base may have reached 7.2m globally by December 31, 2019.

Afterpay was on a roll with its Gross Merchandise Value (GMV) adding up to $3.7bn till December 2019. It is likely, suggests the broker, for Afterpay to not only achieve its GMV forecast of $4.3bn for 1H20 but exceed it by up to $0.50bn.

Even so, the estimates for FY20 have not been changed as Goldman Sachs suspects the growth is seasonal and wants to observe trends further. Goldman Sachs is positive about the company's prospects as the combined potential market opportunity for its payment service in ANZ, US and UK is estimated to be worth $1tn.

Buy rating retained with a target price of $42.90.

The report was published on January 14, 2020.

Target price is $42.90 Current Price is $36.70 Difference: $6.2
If APT meets the Goldman Sachs target it will return approximately 17% (excluding dividends, fees and charges).
Current consensus price target is $33.84, suggesting downside of -7.8%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY20:

Goldman Sachs forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 2.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 1835.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 5.1, implying annual growth of N/A.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is 719.6.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 0.00 cents and EPS of 30.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 122.33.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 22.1, implying annual growth of 333.3%.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is 166.1.

Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

BSA    BSA LIMITED

Industrial Sector Contractors & Engineers - Overnight Price: $0.40

PhillipCapital rates ((BSA)) as Initiation of coverage with Buy (1) -

The communications and technical services company has three main segments and a substantial chunk of its earnings is recurring, opines Phillip Capital. The results for BSA for FY18 and FY19 were impacted by abnormal items but the storm has passed and the outlook for FY20 remains strong, according to the broker.

Even though BSA exited its HVAC - Major projects business in September 2019 due to considerable losses on its Royal Adelaide Hospital contract, the broker remains optimistic.

This is due to a string of positive factors like BSA Connect’s extension of the NBN contract, getting new customers onboard (BSA Maintain), getting a contract for the WestConnex tunnels fire suppression system (BSA Build).

The broker also reckons the company can think of acquisitions now, owing to a comfortable cash position. Phillip Capital initiates coverage on BSA with a Buy recommendation and a target price of $0.49.

The report was published on December 30, 2019.

Target price is $0.49 Current Price is $0.40 Difference: $0.09
If BSA meets the PhillipCapital target it will return approximately 22% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

PhillipCapital forecasts a full year FY20 dividend of 1.00 cents and EPS of 3.50 cents.
At the last closing share price the estimated dividend yield is 2.50%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.43.

Forecast for FY21:

PhillipCapital forecasts a full year FY21 dividend of 1.30 cents and EPS of 4.20 cents.
At the last closing share price the estimated dividend yield is 3.25%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.52.

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

BTH    BIGTINCAN HOLDINGS LIMITED

Cloud services - Overnight Price: $0.88

PhillipCapital rates ((BTH)) as Initiation of coverage with Buy (1) -

A global leader recognised for its 'Bigtincan Hub software', Bigtincan uses machine learning to increase the effectiveness of sales and customer service reps. 

Even though the firm incurred operating losses in FY19, it has made a significant move towards profitability with revenues up by 51% in the same period, declares Phillip Capital. The broker expects strong profitability with guidance for 30-40% organic revenue growth in Q1 FY20.

Scrutinizing growth, Phillip Capital comments it is driven by a switch to Cloud, SaaS and mobility. The software company is focusing on achieving growth rather than becoming profitable currently, an observation by the broker made on account of Bigtincan having made five acquisitions to bolster its position in the market.  

The broker expects one more year of losses and negative cash flows, before turning "modestly profitable" in FY21. Additionally, the company is looked upon as a SaaS business with "significant global expansion potential".

For all these reasons, the broker has initiated coverage on this stock with a Buy rating and a target price of $0.78.

The report was first published on December 20, 2019.

Target price is $0.78 Current Price is $0.88 Difference: minus $0.1 (current price is over target).
If BTH meets the PhillipCapital target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).
The company's fiscal year ends in June.

Forecast for FY20:

PhillipCapital forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 1.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 67.69.

Forecast for FY21:

PhillipCapital forecasts a full year FY21 dividend of 0.00 cents and EPS of 0.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 293.33.

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


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