article 3 months old

Australian Broker Call *Extra* Edition – Mar 18, 2020

Daily Market Reports | Mar 18 2020

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

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

One key difference is the *Extra* Edition will not be updated daily, but merely “regularly” depending on availabilityofsuitable 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 publicationmay not be up to date, or yet awaiting another update by FNArena’steam 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)

AGI APZ CAJ FWD GDI GEM HPI HUO JLG MAH MLD MOZ MRM MVP MYX(2) OML PBP RDY SHV SNL SSG UWL(2) VEA VTG

AGI AINSWORTH GAME TECHNOLOGY LIMITED

Gaming – Overnight Price: $0.63

Wilsons rates ((AGI)) as Market Weight (3) –

The gaming solutions provider’s first-half results seem to be a continuation of the trend in recent years, with the company struggling to generate momentum leading to soft unit sales. This was in-line with the broker’s expectation but with the belief that the nadir has perhaps been reached and the second-half would see a return to profitability.

The past had seen the US propping up Australia but this no longer seems to be the case, notes the broker, with management indicating new products in the pipeline but the market remaining skeptical given the recent track record.

The broker states the strong cash-flow seems the only positive point and while valuation remains relatively undemanding, the broker states it feels a long way back for this company to return to an investment-grade small-cap.

Wilsons retains the Market weight rating with target price sitting at $0.67.

This report was released on 25 February 2020.

Target price is $0.67 Current Price is $0.63 Difference: $0.04
If AGI meets the Wilsons target it will return approximately 6% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 0.00 cents and EPS of 0.20 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 315.00.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 1.00 cents and EPS of 2.00 cents.
At the last closing share price the estimated dividend yield is 1.59%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 31.50.

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

APZ ASPEN GROUP

Overnight Price: $0.91

Moelis rates ((APZ)) as Hold (3) –

The company has reiterated guidance for FY20 with EPS between 6.75cps -7.0cps despite bush fire impacts on NSW south coast, notes Moelis.

The company declared underlying EPS of 3.8c, up 55% versus the prior comparable period.

The company’s property portfolio increased by 25% to $160m following two residential acquisitions (Linfield and Perth), with the first stage of Lindfield refurbishments completeand apartments leased at materially higherrents.

The broker views the first-half results as validation of Aspen’s strategy with a marked improvement across asset performance.The new management maximised value from existing assets via intensive management and cost savings and scaling the platform through value-adding acquisitions, commentsMoelis.

The broker maintains the Hold rating while increasing the target price to $1.23 from $1.14.

The report was published on February 24, 2020.

Target price is $1.23 Current Price is $0.91 Difference: $0.32
If APZ meets the Moelis target it will return approximately 35% (excluding dividends, fees and charges).

Forecast for FY20:

Moelis forecasts a full year FY20 dividend of 6.00 cents and EPS of 6.90 cents.
At the last closing share price the estimated dividend yield is 6.59%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 13.19.

Forecast for FY21:

Moelis forecasts a full year FY21 dividend of 6.60 cents and EPS of 7.70 cents.
At the last closing share price the estimated dividend yield is 7.25%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 11.82.

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

CAJ CAPITOL HEALTH LIMITED

Healthcare services – Overnight Price: $0.23

Shaw and Partners rates ((CAJ)) as Buy (1) –

The diagnostic imaging services provider announced half-yearly results that were in line with expectations. The revenue of $80.6m was ahead of Shaw’s expectationat $79.5m while the underlying operating profit at $13.7m was 8% ahead of the broker’s expectations. Operating cash flow was at record levels, up 47% to $11.3m.

Against an overall medicare services growth of less than 3%, this result, with 4% organic growth, was quite impressive, states Shaw and Partners.

Capitol Health affirmed guidance for moderate growth in FY20 with a rather conservative $14.1m estimated in operating profit in the second half.The broker believes there is upside potential here.

Shaw forecasts flat organic growth in the second half due to rationalisation of network which would eventually lead to a rise in group margins.

The broker expects the group’s Return on Equity (ROE) to increase by circa 200bps in FY21 while forecasting $28.1m in operating profits in FY20, which would rise to $3.9m in FY21.

Shaw and Partners rates the stock a Buy with target price at $0.32.

The report was published on February 26, 2020.

Target price is $0.32 Current Price is $0.23 Difference: $0.09
If CAJ meets the Shaw and Partners target it will return approximately 39% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Shaw and Partners forecasts a full year FY20 dividend of 1.00 cents and EPS of 1.40 cents.
At the last closing share price the estimated dividend yield is 4.35%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 16.43.

Forecast for FY21:

Shaw and Partners forecasts a full year FY21 dividend of 1.30 cents and EPS of 1.80 cents.
At the last closing share price the estimated dividend yield is 5.65%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 12.78.

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

FWD FLEETWOOD CORPORATION LIMITED

Infra & Property Developers – Overnight Price: $1.33

Moelis rates ((FWD)) as Buy (1) –

The modular accommodation solutions provider released the first-half results with underlying operating profit of $11.1m, 21% above Moelis’s estimate of $9.1m.

A very strong performance by Searipple (accommodation solutions provider) delivered operating profit of $9.6m, almost double the corresponding 2019 figure of $4.8m and 71% more than the broker’s $5.6m estimate. However, a weak buildings-solutions result played spoilsport, with operating profit at $1.1m, well below Moelis’s $3.2m estimate.

While the company attributed the weak result to delays in being awarded two major projects along with business development costs north of $2m, the operating margin itself was just 1%, materially below FY18 & FY19 average of 5%-6%, comments Moelis.

The company has maintained guidance for FY20 operating profit of $25m, subject to the outcome of bids yet to be awarded and no project/supply chain delays from covid-19.

The broker has lowered FY20 operating profit forecast by -16% to $21.8m, highlighting the risk to earnings due to delays in projects though Moelis believes that driven by state-sponsored spending, market fundamentals are attractive for building solutions.

Moelis retains the Buy rating with target price at $2.37.

This report was released on 24 February 2020.

Target price is $2.37 Current Price is $1.33 Difference: $1.04
If FWD meets the Moelis target it will return approximately 78% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Moelis forecasts a full year FY20 dividend of 4.50 cents and EPS of 15.50 cents.
At the last closing share price the estimated dividend yield is 3.38%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 8.58.

Forecast for FY21:

Moelis forecasts a full year FY21 dividend of 6.90 cents and EPS of 22.90 cents.
At the last closing share price the estimated dividend yield is 5.19%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 5.81.

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

GDI GDI PROPERTY GROUP

REITs – Overnight Price: $1.12

Moelis rates ((GDI)) as Buy (1) –

The property group has reported Funds from Operations (FFO) of $23.8m in the first half, down by -3.7%. Net Tangible Assets (NTA) increased to $1.32, with Westralia Square’s valuation increasing by $31m despite its capitalisation rate remaining unchanged at 6.75%.

The group confirmed the FY20 DPS guidance for 7.75cps. Moelis’s FY20 FFO estimate remains largely unchanged, with the reduction in fund acquisition fee from only selling down 52% of Fund 46 predominantly being offset by the co-investment income. Moelis’s FY21 and FY22 estimates have increased by 1.5%-1.9% due to accretion from the co-investment stake.

The broker believes the group to be strongly positioned with material upside from two key balance sheet exposures at Westralia Square & Mill Green and retains the Buy rating with target price increasing to $1.67.

This report was released on 24 February 2020.

Target price is $1.67 Current Price is $1.12 Difference: $0.55
If GDI meets the Moelis target it will return approximately 49% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Moelis forecasts a full year FY20 dividend of 7.80 cents and EPS of 8.60 cents.
At the last closing share price the estimated dividend yield is 6.96%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 13.02.

Forecast for FY21:

Moelis forecasts a full year FY21 dividend of 7.80 cents and EPS of 8.90 cents.
At the last closing share price the estimated dividend yield is 6.96%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 12.58.

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

GEM G8 EDUCATION LIMITED

Childcare – Overnight Price: $0.87

Moelis rates ((GEM)) as Hold (3) –

The early childhood education and care provider announced an underlying operating profit of $132.5m for 2019, above Moelis’s estimate of $131m. For 2020, the company has indicated occupancy being slightly behind due to bushfires and coronavirus.

Moelis notes an outlay of circa -$10m in operating expenses in 2020 related to turnaround resources, training costs and centre upgrades, with a further -$3.2m to meet new ECT (early childhood teacher) ratio changes coming into effect from January 2020.

Moelis believes the 2020 operating profits would reduce by -2% to $132.1m and turn flat during the second half. Also, the broker considers the circa $10m worth incremental turnaround costs as recurring expenses beyond FY20.

Despite incremental earnings from ramping up and an expected fee increase of around 4.5%, additional costs of about -$13m, increasing competition, cost pressures and potentially depressed demand due to coronavirus compels the broker to term 2020 as challenging.

The broker maintains the Hold rating with target price reduced to $1.91 from $2.11.

This report was released on 24 February 2020.

Target price is $1.91 Current Price is $0.87 Difference: $1.04
If GEM meets the Moelis target it will return approximately 120% (excluding dividends, fees and charges).
Current consensus price target is $1.87, suggesting upside of 115.2%(ex-dividends)
The company’s fiscal year ends in June.

Forecast for FY20:

Moelis forecasts a full year FY20 dividend of 11.40 cents and EPS of 16.30 cents.
At the last closing share price the estimated dividend yield is 13.10%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 5.34.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 15.8, implying annual growth of 15.7%.
Current consensus DPS estimate is 10.5, implying a prospective dividend yield of 12.1%.
Current consensus EPS estimate suggests the PER is 5.5.

Forecast for FY21:

Moelis forecasts a full year FY21 dividend of 14.00 cents and EPS of 18.60 cents.
At the last closing share price the estimated dividend yield is 16.09%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 4.68.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 18.4, implying annual growth of 16.5%.
Current consensus DPS estimate is 12.4, implying a prospective dividend yield of 14.3%.
Current consensus EPS estimate suggests the PER is 4.7.

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

HPI HOTEL PROPERTY INVESTMENTS

Infra & Property Developers – Overnight Price: $2.16

Goldman Sachs rates ((HPI)) as Upgrade to Neutral from Sell (3) –

The first half saw Funds from Operations (FFO) at $15.1m, up 5.6% due to increase in rental income and lower variable costs.

The main risk to earnings is the 2021 lease expirations which form about 45% of income, notes Goldman Sachs. Although the real estate investor has made a lot of progress on this with twenty out of the twenty-eight leases undergoing a fifteen-year extension with unchanged rents andeight leases havingbeen extended for ten years with a 47% base rent reduction.

The analyst notes increase in the weighted average lease expiry to 11.8 years from 3.8 years, while the captalisationrate saw a compression to 6.1% from 6.4%.

The company maintained the FY20 DPS guidance of 20.7cps, up 4% year on yearwith the broker increasingEPS estimates by 4%, 2% and 2% for FY20, FY21 and FY22 respectively.

The broker upgrades the rating to Neutral from Sell with target price at $3.07.

The report was published on February 24, 2020.

Target price is $3.07 Current Price is $2.16 Difference: $0.91
If HPI meets the Goldman Sachs target it will return approximately 42% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Goldman Sachs forecasts a full year FY20 dividend of 21.00 cents and EPS of 21.00 cents.
At the last closing share price the estimated dividend yield is 9.72%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 10.29.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 20.00 cents and EPS of 20.00 cents.
At the last closing share price the estimated dividend yield is 9.26%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 10.80.

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

HUO HUON AQUACULTURE GROUP LIMITED

Aquaculture – Overnight Price: $3.85

Shaw and Partners rates ((HUO)) as Hold (3) –

The first half saw 13.32kt of fish harvested, up 47% on a year-on-year basis and a record for the company, observes Shaw and Partners.

However, the record harvest did not lead to a better result, with operating profit -25% below market expectations at $21.6m. This miss is attributed to high costs, negative leverage, and lower pricing. The broker expects improvement with the operating profit in the second half, estimated at $28m.

Huonhas affirmed guidance of above 25kt for the second half, which the broker considers to be conservative. Shaw comments that, contrary to expectations, an increase in fish growth leads to a higher working capital which, coupled with a long cash flow cycle (cash flowing in 12-24 months later), leads to debt increase, as was seen in the first half with net debt rising to about $140m.

The broker has changed operating profit forecasts by -27%, -3.7% and +2% for FY20, FY21 and FY22 respectively. For now, the broker retains the Hold rating with target price at $4.46.

The report was published on February 24, 2020.

Target price is $4.46 Current Price is $3.85 Difference: $0.61
If HUO meets the Shaw and Partners target it will return approximately 16% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Shaw and Partners forecasts a full year FY20 dividend of 0.00 cents and EPS of 13.10 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 29.39.

Forecast for FY21:

Shaw and Partners forecasts a full year FY21 dividend of 5.90 cents and EPS of 45.90 cents.
At the last closing share price the estimated dividend yield is 1.53%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 8.39.

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

JLG JOHNS LYNG GROUP LIMITED

Building Products & Services – Overnight Price: $2.04

Moelis rates ((JLG)) as Hold (3) –

The group’s half-yearly revenue of $233.7m was a little less than Moelis’s estimate of $236.5m and was driven by high business as usual (BAU) activity along with record job volumes in the core insurance building and restoration services segment.

Operating profit was $20.0m (post-AASB 16 basis) while net profit after tax was $7.9m, up 1.2% versus the first half. The group reiterated FY20 guidance of $420m in revenues and $35.6m operating profit (post-AASB16), notes Moelis.

The broker anticipates strong organic growth for the second half driven by new panel wins, a new office in Coffs Harbour and growth in the broker market.

The catastrophic events (CAT) revenue at $38.2 was ahead of the previous entire year’s guidance of $31.6m and the broker’s estimates of $25.0m.

Acquisition growth for FY21 looks promising after acquiring Capitol Strata and Air Control Australia in the second half along with their first US-based franchise in Nashville, comments the broker.

Moelis’s revenue and operating profit estimates now sit at circa 6.9% and circa 6.7% ahead of the group’s FY20 forecast.

Moelis retain the hold rating for now with target price increasing to $2.79 from $2.64.

The report was published on February 26, 2020.

Target price is $2.79 Current Price is $2.04 Difference: $0.75
If JLG meets the Moelis target it will return approximately 37% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Moelis forecasts a full year FY20 dividend of 3.60 cents and EPS of 7.20 cents.
At the last closing share price the estimated dividend yield is 1.76%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 28.33.

Forecast for FY21:

Moelis forecasts a full year FY21 dividend of 4.30 cents and EPS of 8.50 cents.
At the last closing share price the estimated dividend yield is 2.11%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 24.00.

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

MAH MACMAHON HOLDINGS LIMITED

Mining Sector Contracting – Overnight Price: $0.22

Moelis rates ((MAH)) as Buy (1) –

The mining services provider declared a strong result with underlying operating profit of $44m and net profit after tax of $31.5m during the first half. Both figures were 12% above Moelis’s estimates of $39m and $28m, respectively.

Driven by growth in new contract wins (Example- Silver Lake Resources) and adoption of new automatic drills & diesel-electric trucks, Macmahon Holdings has raised FY20 capital expenditure (capex) guidance to $155m from $110m, above Moelis’s $114m.

The company also guided towards increased operating profit of $95m from $85m for FY20, with the broker increasing the same to $89m.

Noting a potential upside to the estimate if the company’s Batu Hijau project (a copper-gold mining contract in Indonesia) achieves gain share, Moelis believes every 2.5% in cost savings delivered to the customer could be worth circa $4m per annum in terms of operating profit to the company.

Moelis is positive about the company due to near-term tender opportunities and Batu Hijau’s gain share prospects and retains the Buy rating with target price increased to $0.35 from $0.30.

This report was released on 25February 2020.

Target price is $0.35 Current Price is $0.22 Difference: $0.13
If MAH meets the Moelis target it will return approximately 59% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Moelis forecasts a full year FY20 dividend of 0.80 cents and EPS of 2.90 cents.
At the last closing share price the estimated dividend yield is 3.64%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 7.59.

Forecast for FY21:

Moelis forecasts a full year FY21 dividend of 0.80 cents and EPS of 2.60 cents.
At the last closing share price the estimated dividend yield is 3.64%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 8.46.

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

MLD MACA LIMITED

Mining Sector Contracting – Overnight Price: $0.78

Moelis rates ((MLD)) as Hold (3) –

The mine to mill solutions provider reported operating profits worth $54m in the first half, 18% ahead of Moelis’s expectations. The net profit after tax was $14.0m and in line with the broker’s $13.8m estimate, while the mining division showed continuous improvement with revenue growth of 13% at $281m with operating profit margin at 18%, states Moelis.

The company has affirmed operating profit guidance during the second half ranging from $104m -$110m while the broker increased estimates for the same by 4% to $109.6m.

The company successfully rolled over a number of contracts for renewal including Ramelius Resources ((RMS)) and Pilbara Minerals ((PLS)), notes the broker. The recently announced Ravensthorpe-FQM contract is expected to drive earnings growth in the second half to about $96m per annum, states Moelis.

While total loans to other companies reduced to $33m from $48m, total receivables increased to $206m from $191m with key debtors being Carabella Resources (owing $77m), Blackham Resources (owing $22m) and Great Panther (owing $20m), notes the broker.

With an improved cashflow conversion and normalisation of debtors needed to justify an upgrade, the broker maintains both the Hold rating and target price at $1.09.

This report was released on 24 February 2020.

Target price is $1.09 Current Price is $0.78 Difference: $0.31
If MLD meets the Moelis target it will return approximately 40% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Moelis forecasts a full year FY20 dividend of 5.00 cents and EPS of 10.00 cents.
At the last closing share price the estimated dividend yield is 6.41%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 7.80.

Forecast for FY21:

Moelis forecasts a full year FY21 dividend of 6.00 cents and EPS of 9.30 cents.
At the last closing share price the estimated dividend yield is 7.69%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 8.39.

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

MOZ MOSAIC BRANDS LIMITED

Apparel & Footwear – Overnight Price: $0.63

Wilsons rates ((MOZ)) as Overweight (1) –

Trading below its peers, the ladies fashion retailer has been impacted by covid-19, with supply chain disruptions and quarantine-induced delays, notes Wilsons. The broker believes there is some inventory risk for the months of April and May. Covid-19 has even prompted the board to postpone interim dividend to a later date.

Mosaic Brands declared revenue of $413.8m, down -10.5% year-on-year and -1.2% below the broker’s forecast. Operating profit at $32.7m was 12.5% above year-on-year but still -1.0% below the broker’s estimate.

While the company has not provided guidance, the broker has made minor changes to forecasts with operating profits reduced by -2.7% and -1.8% to $48.1m and $66.1m in FY20 and FY21 respectively.

Any material uplift in EziBuy’s revenue would be subject to restocking which is currently uncertain due to covid-19, comments Wilsons.

While the second half may face inventory headwinds, the broker considers the company to be well placed to deliver attractive growth in FY21 andrates the stock Overweight with target price at $2.01.

The report was published on February 26, 2020.

Target price is $2.01 Current Price is $0.63 Difference: $1.38
If MOZ meets the Wilsons target it will return approximately 219% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 0.50 cents and EPS of 15.30 cents.
At the last closing share price the estimated dividend yield is 0.79%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 4.12.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 18.00 cents and EPS of 30.40 cents.
At the last closing share price the estimated dividend yield is 28.57%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 2.07.

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

MRM MMA OFFSHORE LIMITED

Energy Sector Contracting – Overnight Price: $0.09

Canaccord Genuity rates ((MRM)) as Speculative Buy (1) –

Owning and operating 30-plusoffshore supply vessels globally, MMA Offshore recently reported an underlying operating profit of $21.1m for the first half, ahead of Canaccord Genuity’s estimate by 29%.The broker comments the figure was driven mostly by margin expansion, signifying the high level of operating leverage enjoyed by the company.

The company has guided towards continued growth in operating profit during the second half. This period, states Canaccord Genuity, would also see full contribution from Neptune Marine, a recent acquisition with expertise in topside and subsea inspection. The broker expects dilution in group margins in the second half.

Even though the company is deleveraging and exploring alternatives for debt financing, the broker is concerned about the high net debt to operating profit ratio (Net Debt/EBITDA) of 5.2x.

Canaccord Genuity considers high operating leverage along with better vessel revenues as likely drivers for operating profit which, the broker estimates, would increase by 5% in FY20.

The broker maintains the rating of Speculative Buy with target price$0.28.

The report was published on February 24, 2020.

Target price is $0.28 Current Price is $0.09 Difference: $0.19
If MRM meets the Canaccord Genuity target it will return approximately 211% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Canaccord Genuity forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 3.10 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is minus 2.90.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 2.20 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is minus 4.09.

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

MVP MEDICAL DEVELOPMENTS INTERNATIONAL LIMITED

Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $4.94

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

Medical Developments International reported first-half revenue of $10.9m which was in-line with Bell Potter’s expectations.

Driven by strong growth in Breath-A-tech (leading brand providing asthma managing devices) in Australia, order resumption in UK and growth in the US, sales in the respiratory segment, at $4.1m, were above the broker’s forecast of $3.2m.

Overall, Penthrox (used in emergency or procedural pain relief) sales at $6.7m were below the broker’s forecast of $7.3m, even thoughA&NZ growth was considered strong, comments Bell Potter.

With the pilot program launch across 200 CVS stores and the launch of private label in Walmart as growth drivers for the respiratory segment, the broker expects FY20 growth to be skewed towards the second half of the year. For Penthrox, business with Mundipharma focusing on hospitals and GPs should continue to drive growth, comments the broker.

Bell Potter reduces the net profit after tax forecast by somewhere between -$0.2m to -$0.4m for FY20 & FY21, driven by an increase in operating expenses, offset somewhatby an increase in the broker’s revenue estimates.

Bell Potter retains Buy on the stock and raises target price to $11.36 from $7.15.

The report was published on February 24, 2020.

Target price is $11.36 Current Price is $4.94 Difference: $6.42
If MVP meets the Bell Potter target it will return approximately 130% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 4.00 cents and EPS of 1.80 cents.
At the last closing share price the estimated dividend yield is 0.81%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 274.44.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 4.00 cents and EPS of 3.10 cents.
At the last closing share price the estimated dividend yield is 0.81%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 159.35.

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

MYX MAYNE PHARMA GROUP LIMITED

Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $0.28

Bell Potter rates ((MYX)) as Hold (3) –

Having warned of a modest first-half, the pharmaceutical company reported a decline in overall revenue by -17% to $227.1m while operating profit declined by -46% to $34.6m.

Price deflation in the Generic Products Division (GPD) and overall low gross profit margins were primarily responsible for the low numbers, notes Bell Potter. MaynePharma seems to be following the Industry-wide trend of cost rationalisation and headcount reduction, comments the broker.

For short term revenue and margin growth, Bell Potter considers Tolsura (used for controlling infectious disease) as the best option and is also positive about the impending launch of NuvaRing in late 2020, with another launch in 2021- that of E4/DRSP contraceptive.

Bell Potter reduces earnings forecast for FY20 by -51% to $39.4m, due to more cuts to revenue forecast in generics and specialty brands and with NuvaRing’s launch subject to regulatory clearance.

The broker maintains the Hold rating while reducing the target price to $0.35.

This report was released on 24 February 2020.

Target price is $0.35 Current Price is $0.28 Difference: $0.07
If MYX meets the Bell Potter target it will return approximately 25% (excluding dividends, fees and charges).
Current consensus price target is $0.42, suggesting upside of 48.2%(ex-dividends)
The company’s fiscal year ends in June.

Forecast for FY20:

Bell Potter forecasts a full year FY20 EPS of 2.30 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 12.17.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -0.1, 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 N/A.

Forecast for FY21:

Bell Potter forecasts a full year FY21 EPS of 5.10 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 5.49.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 1.4, 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 20.0.

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


E.L. & C Baillieu rates ((MYX)) as Buy (1) –

The specialty pharmaceutical company reported a dip of -42% in the operating profit during the half-yearly results. This figure at $47.4m excludes all one-off items and missed Baillieu’s forecast by -2%.The Generic Products Division (GPD) in particular saw the gross profit decline by -55% and was -12% below Baillieu’s estimates. Specialty sales segment grew by 10% and was the saving grace.

While Baillieu acknowledges a rising competition in the generic segment which impacted sales to the tune of -US$30m, the broker also believes the same would be less severe going forward and forecasts a lower rate of erosion in the GPD sales for the second half at -18% versus -29% in the first half.

Mayne Pharma’s involvement across the entire vertical chain from development, manufacture, marketing and distribution of both generic and branded specialty pharmaceutical products is considered to be a key driver for investment, comments Baillieu, as is the company’s provision of contract service to third party customers.

The broker decreases EPS forecasts by -20% while the operating profit is expected to increase by 40% in FY21.

For the time being, the broker retains Buy rating with target price at $0.43.

The report was published on February 25, 2020.

Target price is $0.43 Current Price is $0.28 Difference: $0.15
If MYX meets the E.L. & C Baillieu target it will return approximately 54% (excluding dividends, fees and charges).
Current consensus price target is $0.42, suggesting upside of 48.2%(ex-dividends)
The company’s fiscal year ends in June.

Forecast for FY20:

E.L. & C Baillieu forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 0.20 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is minus 140.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -0.1, 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 N/A.

Forecast for FY21:

E.L. & C Baillieu forecasts a full year FY21 dividend of 0.00 cents and EPS of 1.70 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 16.47.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 1.4, 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 20.0.

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

OML OOH!MEDIA LIMITED

Out of Home Advertising – Overnight Price: $1.03

Canaccord Genuity rates ((OML)) as Hold (3) –

After a nightmarish third quarter for what is one of Australia’s largest Out-of-Home advertising companies, oOh!Mediaappears to be stabilising, comments Canaccord Genuity, with operating profit in FY19 just below the mid-point of the guidance range.

The operating profit guidance by the company for FY20 ranges from -1% to 4% or $140m to $155m. The broker has revised FY20 revenue forecast to reflect a 1% growth, down from 2.4% while also revising the EPS estimates for FY20 and FY21 by -1% and 1% respectively.

Canaccord expects some debt relief from the fully underwritten Dividend Reinvestment Plan (DRP), saving about $10m per annum and helping in reducing gearing.

The billboard segment is also showing signs of improvement, notes the broker, but it is not enough to alleviate concerns on account of depressed business sentiment, prompting the broker to retainthe Hold recommendation with target price at $3.00.

The report was published on February 24, 2020.

Target price is $3.00 Current Price is $1.03 Difference: $1.97
If OML meets the Canaccord Genuity target it will return approximately 191% (excluding dividends, fees and charges).
Current consensus price target is $3.66, suggesting upside of 255.3%(ex-dividends)
The company’s fiscal year ends in December.

Forecast for FY20:

Canaccord Genuity forecasts a full year FY20 dividend of 12.00 cents and EPS of 24.00 cents.
At the last closing share price the estimated dividend yield is 11.65%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 4.29.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 17.5, implying annual growth of 191.7%.
Current consensus DPS estimate is 10.2, implying a prospective dividend yield of 9.9%.
Current consensus EPS estimate suggests the PER is 5.9.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 13.00 cents and EPS of 25.00 cents.
At the last closing share price the estimated dividend yield is 12.62%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 4.12.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 22.4, implying annual growth of 28.0%.
Current consensus DPS estimate is 13.2, implying a prospective dividend yield of 12.8%.
Current consensus EPS estimate suggests the PER is 4.6.

Market Sentiment: 0.9
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

PBP PROBIOTEC LIMITED

Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $1.97

Shaw and Partners rates ((PBP)) as Buy (1) –

Probiotic’s operating revenue was $44.1m, up 34% while operating income was $6.2m, up 68% year-on-year. This was due to a combination of organic growth and acquisitions (South Pack Laboratories in 2017 and ABS Ltd in 2019). Operating cash flow was up $13.7m at $8.3m and 12% ahead of Shaw’s expectations.

The group affirmed guidance for revenue at $100m and operating income at $16-$17m respectively, notes Shaw and Partners. The brokerexpects Probiotic to exit FY20 with a net cash position and considers the group could undertake acquisition/buy-back/dividend increase.

Other supporting factors include long term and high-value contracts with international companies, earnings exceeding estimates, a strong balance sheet with nil debt and EPS upside potential of 40%, comments Shaw and Partners.

Probiotic has guided towards $2-$2.5m in operating income due to uplift from CPSA assets, new contracts and value through a combination of SPL & ABS synergies. The broker leaves EPS estimates unchanged for FY20 & FY21 and increases the same by 3.6% for FY22.

The broker reiterates the Buy recommendation with target price of $2.43.

This report was released on 25 February 2020.

Target price is $2.43 Current Price is $1.97 Difference: $0.46
If PBP meets the Shaw and Partners target it will return approximately 23% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Shaw and Partners forecasts a full year FY20 dividend of 4.80 cents and EPS of 12.00 cents.
At the last closing share price the estimated dividend yield is 2.44%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 16.42.

Forecast for FY21:

Shaw and Partners forecasts a full year FY21 dividend of 6.40 cents and EPS of 16.10 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 12.24.

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

RDY READYTECH HOLDINGS LTD

Software & Services – Overnight Price: $1.20

Wilsons rates ((RDY)) as Overweight (1) –

ReadyTech’s headline figures read well with revenue growth up 20%, operating profit growth at 36% and operating cash conversion at 86%.The group has affirmed outlook for FY20 in-line with existing consensus forecasts and is expecting to deliver 20% revenue growth and operating profit margins of approximately 40%, states Wilsons.

The broker’s FY20 forecast is effectively unchanged, suggesting circa 26% operating profit growth.

While both divisions are delivering growth, employment appears to have performed more strongly versus expectations at 17% organic growth with education up 11%. Education could see a stronger second half given the recent win with Bendigo Kangan Institute announced in January, expects Wilsons.

The broker is positive about the group due to new clients acquisition, growth in average revenue per client and client retention at 95%.

The company has delivered solid stock-price performance since listing and the valuation remains attractive, states the broker.

The broker retains Overweight rating with target price of $3.18.

This report was released on 24 February 2020.

Target price is $3.18 Current Price is $1.20 Difference: $1.98
If RDY meets the Wilsons target it will return approximately 165% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 3.10 cents and EPS of 10.20 cents.
At the last closing share price the estimated dividend yield is 2.58%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 11.76.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 6.30 cents and EPS of 13.10 cents.
At the last closing share price the estimated dividend yield is 5.25%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 9.16.

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

SHV SELECT HARVESTS LIMITED

Agriculture – Overnight Price: $6.17

Wilsons rates ((SHV)) as Downgrade to Underweight from Market Weight (5) –

Almond grower Select Harvests confirmed a weaker almond price, due to a larger US crop and demand disruption owing to coronavirus in China.

The company has forecasted a net price between $8.00-8.60/kg with no concerns about meetings the volume yield target of about 21,800t, notes Wilsons. The company upgraded crop production by 5-6% to reflect higher contributions from immature orchards, aided by slightly higher yield on mature trees.

The broker has lowered its almond price estimate by -7% in FY20 which increasesby 3% in FY22 although lowered the long-term price forecast -2%. Production costs are estimated to decrease by -3% in FY20 and then increase across the forecast period.

While these changes result in almond segment operating profit upgrades in the near term, the broker anticipates a circa -13% downgrade to outer year almond segment operating profit forecast.

The broker forecasts lower almond segment earnings and downgrades its rating to Underweight from Market Weight with target price at $6.33.

This report was released on 24 February 2020.

Target price is $6.33 Current Price is $6.17 Difference: $0.16
If SHV meets the Wilsons target it will return approximately 3% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 27.90 cents and EPS of 43.00 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 14.35.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 37.60 cents and EPS of 57.80 cents.
At the last closing share price the estimated dividend yield is 6.09%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 10.67.

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

Automobiles & Components – Overnight Price: $3.61

E.L. & C Baillieu rates ((SNL)) as Buy (1) –

Supply Network operates under the Multispares Limited brand, providing aftermarket parts to commercial vehicles in Australia and New Zealand.

Reporting a half yearly underlying net profit after tax of $4.8m which was 16% higher than the prior comparable period, Baillieu observes sales also increased by 13.2% to $68.0m during the period. This was slightly more than the company’s usual sales run-rate of 6-10%, points outBaillieu.

The company’s operating profit saw an increase by 17.6% to $7.1m with operating margins of 10.6%, up 55bps. Company guidance points towards more growth in the second half, with sales expected to be circa $136m, a tad less than Baillieu’s estimate of $137m.

Consistent with the strategy to increase top-line growth via organic measures, the company started operations at a new branch in Brisbane and is likely to add two-three more over the next three years, comments the broker.

Keeping in mind the company’s strong track record of growth along with a high return on capital, the broker retains the Buy recommendation with target price at $4.90.

The report was published on February 24, 2020.

Target price is $4.90 Current Price is $3.61 Difference: $1.29
If SNL meets the E.L. & C Baillieu target it will return approximately 36% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

E.L. & C Baillieu forecasts a full year FY20 dividend of 15.50 cents and EPS of 22.80 cents.
At the last closing share price the estimated dividend yield is 4.29%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 15.83.

Forecast for FY21:

E.L. & C Baillieu forecasts a full year FY21 dividend of 17.00 cents and EPS of 25.90 cents.
At the last closing share price the estimated dividend yield is 4.71%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 13.94.

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

SSG SHAVER SHOP GROUP LIMITED

Household & Personal Products – Overnight Price: $0.50

Shaw and Partners rates ((SSG)) as Buy (1) –

With three consecutive strong reporting periods (first-half of 2019 to the first-half of 2020), Shaver Shopbeat the sales and earnings forecasts by Shaw and Partners. The main driver here was the online component which led to a 61% increase in sales and forms 17.6% of total group sales, notes Shaw.

The gross margin decreased to 41.7% from 42.7% mostly due to a product mix shift to lower-margin products.The group has guided towards FY20 operating profits ranging from $14.25m to $15.75m but without catering to the impact of covid-19, cautions the broker.

Shaw and Partners is happy with the net cash position of $8.4m along with an increase in the operating cash flows by 62% to $29.3m and a reduction in inventories by -29% to $33m for the period.

Even after three consecutivestrong quarters, Shaw thinks the shares aretoo attractively priced to ignore, albeit at a highrisk. The broker rates the stock a Buy with the target price at $0.90.

The report was published on February 24, 2020.

Target price is $0.90 Current Price is $0.50 Difference: $0.4
If SSG meets the Shaw and Partners target it will return approximately 80% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Shaw and Partners forecasts a full year FY20 dividend of 4.30 cents and EPS of 6.30 cents.
At the last closing share price the estimated dividend yield is 8.60%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 7.94.

Forecast for FY21:

Shaw and Partners forecasts a full year FY21 dividend of 4.00 cents and EPS of 7.10 cents.
At the last closing share price the estimated dividend yield is 8.00%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 7.04.

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

UWL UNITI GROUP LIMITED

Telecommunication – Overnight Price: $0.89

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

A provider of telecom services with a focus on fixed-wireless, fibre and telco services, the group changed the reporting format, providing the result on an underlying rather than a pro forma one, notes Bell Potter, with operating profit at $33m for the first half.

Uniti Group affirmed guidance for the second half ranging between $17.5-18.5m, taking the entire FY20 operating profit to between $35-37.

These figures are based on the aftermath of acquisitions (1300 Holdings, OPENetworks, LBNCo, Fone Dynamics and Call Dynamics) a mix synergy and organic growth, comments Bell Potter.

Bell Potter notes little change in the FY20 EPS forecast but has upgraded the FY21 and FY22 EPS forecasts by 10% and 3% respectively, driven by an increase inmargin estimates.

The broker maintains Buy with a -2% decrease in the target price to $2.25 from $2.30.

This report was released on 24 February 2020.

Target price is $2.25 Current Price is $0.89 Difference: $1.36
If UWL meets the Bell Potter target it will return approximately 153% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.00 cents and EPS of 5.20 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 17.12.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 0.00 cents and EPS of 7.00 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 12.71.

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


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

Small cap telecommunications company delivering internet and telco services across Australia, Uniti Group reported an underlying operating profit of $7.2m during the first half. This figure, comments Canaccord Genuity, is primarily acquisition-driven and excludes share-based costs worth $4.9m.

On a similar note, the operating profit margin amounted to 33% during the first half and is expected to reach 51%, anticipates the broker.

Pointing towards a pipeline of projects within the wholesale and infrastructure business, the broker forecasts an increase in capital expenditure to $4.8m during the second half from $2.1m in the first half.

Noting that earnings would be driven by an increase in growth numbers due to better-than-expected realisation of synergies from the LBNCo and 1300 Australia acquisitions, the broker expects the company to exceed operating profit guidance of $38-$40m for FY20.

Canaccord Genuity retains the Buy recommendation with target price at $2.20.

The report was published on February 24, 2020.

Target price is $2.20 Current Price is $0.89 Difference: $1.31
If UWL meets the Canaccord Genuity target it will return approximately 147% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

Canaccord Genuity forecasts a full year FY20 dividend of 0.00 cents and EPS of 5.90 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 15.08.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 0.00 cents and EPS of 7.10 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 12.54.

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

VEA VIVA ENERGY GROUP LIMITED

Crude Oil – Overnight Price: $1.47

Goldman Sachs rates ((VEA)) as Upgrade to Buy (1) –

The 2019 operating profit of $644.5mwas -0.2% below the broker’s estimate but 0.7% ahead of consensus. The net profit after tax, driven by higher lease impactand tax expense, missed Goldman Sachs’s estimate and the consensus by -14.3% and -12.7% respectively.

Viva Energy announced a $680m buyback expected by the end of second-quarter FY20 and equal to circa 20% of market capitalisation, notes the broker.

The broker factors in a Geelong refinery maintenance of US$7.64/bbl in FY20 before rebounding to US$8.64/bbl (AUD/USD at 0.68) driving approximately 20% earnings growth alone.

Goldman Sachs expects the $680m off-market buyback to support the share price in the near term, alongside a rebound in 2021 earnings driven by better refining margins, increasing retail market share and stable retail margins.

The broker upgrades its rating to Buy with target price at $2.20.

This report was released on 24 February 2020.

Target price is $2.20 Current Price is $1.47 Difference: $0.73
If VEA meets the Goldman Sachs target it will return approximately 50% (excluding dividends, fees and charges).
Current consensus price target is $2.18, suggesting upside of 48.4%(ex-dividends)
The company’s fiscal year ends in December.

Forecast for FY20:

Goldman Sachs forecasts a full year FY20 dividend of 7.00 cents and EPS of 9.00 cents.
At the last closing share price the estimated dividend yield is 4.76%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 16.33.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 8.1, implying annual growth of 39.7%.
Current consensus DPS estimate is 5.9, implying a prospective dividend yield of 4.0%.
Current consensus EPS estimate suggests the PER is 18.1.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 10.00 cents and EPS of 15.00 cents.
At the last closing share price the estimated dividend yield is 6.80%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 9.80.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 10.1, implying annual growth of 24.7%.
Current consensus DPS estimate is 7.4, implying a prospective dividend yield of 5.0%.
Current consensus EPS estimate suggests the PER is 14.6.

Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

VTG VITA GROUP LIMITED

Telecommunication – Overnight Price: $1.00

E.L. & C Baillieu rates ((VTG)) as Buy (1) –

Vita Group reported half-yearly results with revenue of $432m, up 14%, operating profit of $26.4m, up 5% (pre-AASB16) and net profit after tax of $14.5m, up 3%.Baillieu notes an increase in revenue for both divisions – ICT (information and communication technology) and SHAW (skin-health and wellness).

The ICT revenue, up 13% at $420m, saw growth in the device and accessory segment, whichmore than offsetthe combined effect of weakness in the connectivity segment and a reduction in bespoke remuneration of about -$7m. Baillieu notes, with customers migrating to Telstra ((TLS)) stores, business ICT was down -52% while retail ICT revenue rose by 19%.

SHAW, on the other hand, saw rapid growth in the artisan business, enjoying revenues of $11m, up 65%, highlights the broker. Commenting on FY20 growth drivers, the analyst notes the group’s significant infrastructure investment would lead to expansion of clinics to 20-23 from sixteen in FY20.

Baillieu believes the group is on track to make up for the -$13m remuneration loss from Telstra ((TLS)) in FY20, while a ramp-up of5G devices would further provide upside to growth. On the flip side, there is uncertainty regarding covid-19’s impact on operations.

The broker considers the company to have a good track record with good medium-term growth prospects and retains the Buy rating with target price at $1.81.

The report was published on February 24, 2020.

Target price is $1.81 Current Price is $1.00 Difference: $0.81
If VTG meets the E.L. & C Baillieu target it will return approximately 81% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY20:

E.L. & C Baillieu forecasts a full year FY20 dividend of 9.70 cents and EPS of 15.40 cents.
At the last closing share price the estimated dividend yield is 9.70%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 6.49.

Forecast for FY21:

E.L. & C Baillieu forecasts a full year FY21 dividend of 10.30 cents and EPS of 15.80 cents.
At the last closing share price the estimated dividend yield is 10.30%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 6.33.

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


Disclaimer:
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.

As part of emerging new trends overseas, The Australian Broker Call *Extra* Edition also includes providers of sponsored research. Readers should bear in mind, sponsored research, while not necessarily of lower quality, has the embedded complication that the company that is the subject of the research has paid for this research. Providers of sponsored research that can potentially be included in this Report are Breakaway Research, Edison Investment Research, Independent Investment Research, NDF Research, Pitt Street Research, and TMT Analytics.

Decisions about inclusions in this Report are made independently of the providers of stock market research and at full discretion of the team of journalists responsible for content at FNArena. Inclusion does not equal endorsement, in any way, shape or form. This Report is provided for informational purposes only.

Share on FacebookTweet about this on TwitterShare on LinkedIn

Click to view our Glossary of Financial Terms

CHARTS

AGI APZ CAJ FWD GDI GEM HPI HUO JLG MAH MLD MOZ MRM MVP MYX OML PBP PLS RDY RMS SHV SNL SSG TLS UWL VEA VTG