Australian Broker Call *Extra* Edition – Mar 23, 2020

Daily Market Reports | Mar 23 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)

APX   BSA   BUB   CAT   IGL   LYL   MLX   MNF   PGX  

APX    APPEN LIMITED

IT & Support - Overnight Price: $19.80

Canaccord Genuity rates ((APX)) as Hold (3) -

Appen’s Figure Eight (acquired in 2019) declared $33.7m in recurring revenue, up 28% from 2019 with the language technology data provider anticipating paying an earn-out of $37m in FY20, notes Canaccord Genuity.

Having established itself in the secure data space for some time, the company is well-positioned to consider government work which may be an exciting avenue for growth, according to the broker, adding  the relevance segment seems to have peaked and Appen's next stage of growth would be led in combination with Figure Eight.

The company’s changed forecast guidance for operating profit of $125-130m is a tad below the market consensus of $132m for FY20. Canaccord Genuity has modestly tweaked its forecast with operating profit falling -4% to $128m for FY20 at an AUD/USD rate of 68c. Also, the estimates for net profit after tax and EPS have gone down by -6%.

With underlying growth rate slowing, the stock has gone down from a price-to-earnings (PER) perspective and the broker retains the Hold rating with the target price increased slightly to $28.80 from $28.30.

The report was published on February 25, 2020.

Target price is $28.80 Current Price is $19.80 Difference: $9
If APX meets the Canaccord Genuity target it will return approximately 45% (excluding dividends, fees and charges).
Current consensus price target is $28.30, suggesting upside of 42.9%(ex-dividends)
The company's fiscal year ends in December.

Forecast for FY20:

Canaccord Genuity forecasts a full year FY20 dividend of 18.00 cents and EPS of 66.00 cents.
At the last closing share price the estimated dividend yield is 0.91%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 30.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 64.5, implying annual growth of 82.8%.
Current consensus DPS estimate is 11.0, implying a prospective dividend yield of 0.6%.
Current consensus EPS estimate suggests the PER is 30.7.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 27.00 cents and EPS of 89.00 cents.
At the last closing share price the estimated dividend yield is 1.36%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.25.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 80.4, implying annual growth of 24.7%.
Current consensus DPS estimate is 14.3, implying a prospective dividend yield of 0.7%.
Current consensus EPS estimate suggests the PER is 24.6.

Market Sentiment: 1.0
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: $0.28

Canaccord Genuity rates ((BSA)) as Buy (1) -

Operating profit for BSA saw an increase of 39% for the first half at $12.8m against $9.2m in the prior period. The half-yearly earnings exclude impact of the HVAC - major projects business divested during the period.

Corporate cost increased to $3.7m in the first half from $2.9m during the first half of 2019 and was well ahead of the broker’s forecasts of $3.2m. Canaccord Genuity estimates similar cost for the second half of $3.7m.

Company management has guided towards FY20 revenues amounting to $500m, having achieved revenues of $259m in the first half, notes the broker, while the FY20 operating profit forecast, at $13.2m, looks at a materially stronger second half.

The broker has reduced FY20 and FY21 operating costs forecasts by -1% and -2.5% to $25.2m and $27.1m, mostly due to higher corporate costs. The broker retains the Buy rating with target price at $0.49.

The report was published on February 25, 2020.

Target price is $0.49 Current Price is $0.28 Difference: $0.21
If BSA meets the Canaccord Genuity target it will return approximately 75% (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 1.00 cents and EPS of 3.00 cents.
At the last closing share price the estimated dividend yield is 3.57%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.33.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 1.00 cents and EPS of 3.00 cents.
At the last closing share price the estimated dividend yield is 3.57%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.33.

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


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