Australian Broker Call *Extra* Edition – Apr 06, 2020

Daily Market Reports | Apr 06 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)

ANG   BTH   D2O   EXL   GSS   HSN   IFM   IMF   JRV   LME   LVT   MSV   MVP   MWY (2)   MXI   NXS   OPY   PAL   PKS   PVS   PWH   REH   RFF   SDF   SHJ   SXE   VTH   WZR   Z1P  

ANG    AUSTIN ENGINEERING LIMITED

Mining Sector Contracting - Overnight Price: $0.13

Wilsons rates ((ANG)) as Overweight (1) -

Austin Engineering’s first half disappointed Wilsons with revenue and operating profit behind broker estimates. This was driven by orders postponed to the second half FY20, reduced sales volume and a challenging market.

Despite this, the broker notes, the company is confident about the earnings trajectory, attributing the miss to timing issues and reiterating the company’s strong cash balance and dividend return.

Revenue and operating profit forecasts remain unchanged at $24-28m while operating cash flow is expected to reduce a little, notes Wilsons.

Even though investors need to gain confidence with the second-half earnings, the broker sees upside and believes the company can deliver.

Overweight rating maintained with target price at $0.25.

The report was published on February 28, 2020.

Target price is $0.25 Current Price is $0.13 Difference: $0.12
If ANG meets the Wilsons target it will return approximately 92% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 0.70 cents and EPS of 1.60 cents.
At the last closing share price the estimated dividend yield is 5.38%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.13.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 0.90 cents and EPS of 2.20 cents.
At the last closing share price the estimated dividend yield is 6.92%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 5.91.

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: $0.47

E.L. & C Baillieu rates ((BTH)) as Buy (1) -

Bigtincan Holdings reported a strong first half with revenue at $14.3m, operating loss of -$1.9m and gross margin at 86%.

Growth on both counts - recurring revenue and acquisition – showed improvement with the ‘land and expand’ strategy and acquisition of Veelo, Asdeq and Xinn respectively, notes Baillieu. Broadening the company’s addressable market was Veela which gave the company presence in the technology vertical and Xinn, doing the same in financial services, comments the broker.

The broker has upgraded revenue forecast by 4-15% for FY20-22 with operating profit decreased by -$0.4m in FY20.

Baillieu considers the first-half numbers to be very strong along with improved cashflow and strong revenue growth. The cherry on the cake, states the broker, is the long growth runway as Bigtincan continues to broaden its product offering and addressable market.

Buy retained with target price $1.06.

The report was published on February 28, 2020.

Target price is $1.06 Current Price is $0.47 Difference: $0.59
If BTH meets the E.L. & C Baillieu target it will return approximately 126% (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 0.00 cents and EPS of minus 1.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 33.57.

Forecast for FY21:

E.L. & C Baillieu forecasts a full year FY21 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 235.00.

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

D2O    DUXTON WATER LIMITED

Agriculture - Overnight Price: $1.25

Bell Potter rates ((D2O)) as Hold (3) -

Duxton Water reported first-half figures mostly in-line with Bell Potter’s forecast with revenue, gross profit and net profit after tax at $96.5m, $21.1m and $7.4m, all in that order.

The cashflow saw an inflow of $24.8m versus -$14.2m in the prior comparable period and increase in net debt, due to investment in water assets worth $92.8m over the year, notes Bell Potter.

Although with no formal earnings guidance, the company points towards dividend worth 5.7cps for FY20. Bell Potter has upgraded net profit after tax by 8%.

Keeping in mind the ACCC inquiry into water markets and downside risk to entitlement prices, the broker retains Hold with target price at $1.55.

The report was published on February 28, 2020.

Target price is $1.55 Current Price is $1.25 Difference: $0.3
If D2O meets the Bell Potter target it will return approximately 24% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 5.70 cents and EPS of 6.40 cents.
At the last closing share price the estimated dividend yield is 4.56%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.53.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 6.00 cents and EPS of 7.50 cents.
At the last closing share price the estimated dividend yield is 4.80%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.67.

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: $0.28

Bell Potter rates ((EXL)) as Hold (3) -

Elixinol Global’s first half saw revenue at $27.2m with operating loss and statutory loss of -$22.6m and -$83.3m respectively. On the positive side, the balance sheet has been reset with non-viable assets sold/closed, notes Bell Potter.

The company is now focused on selling Elixinol branded products for the US, the UK and Europe markets respectively, comments the broker. Revenue contraction for the group in FY19 was driven by minimising involvement in low margin bulk goods, private label sales and cutting revenues from infusion strategies in the US, further observes the broker.

Bell Potter expects reduction in gross cash flow from operations to circa $5m in FY20 from $51m in 2019 and anticipates the next major catalyst to be the launch of the rebranded product range in the US. 

Broker’s revenue forecast reduced by -11% with EPS estimate reduced by -13% for FY20. Hold rating retained with target price at $0.46.

The report was published on February 28, 2020.

Target price is $0.46 Current Price is $0.28 Difference: $0.18
If EXL meets the Bell Potter target it will return approximately 64% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 11.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 2.35.

Forecast for FY21:

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

GSS    GENETIC SIGNATURES LIMITED

Pharmaceuticals & Biotech/Lifesciences - Overnight Price: $1.75

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

Reported results for Genetic Signatures were in-line with Bell Potter’s expectations, along with a strong balance sheet and adequate funding.

The group’s focus has been validation of respiratory detection kits used in identification of the Wuhan-originated coronavirus strain. The company plans on getting approvals from key markets once validation is over, comments Bell Potter.

While this presents a huge near-term revenue opportunity, validation may be delayed due to labs managing a potential outbreak of the disease, thereby putting the predictability of the group’s short-term revenue at risk.

The submission of Enteric Protozoan Kit in the US is on track and is considered a key catalyst for the stock and a key driver of future revenues for the company.

Buy rating maintained with target price at $1.50.

The report was published on February 28, 2020.

Target price is $1.50 Current Price is $1.75 Difference: minus $0.25 (current price is over target).
If GSS meets the Bell Potter target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).
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 minus 3.60 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 48.61.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 2.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 70.00.

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

HSN    HANSEN TECHNOLOGIES LIMITED

IT & Support - Overnight Price: $2.76

E.L. & C Baillieu rates ((HSN)) as Buy (1) -

Half-yearly result for Hansen Technologies was a tad below Baillieu’s forecasts with operating profit of $34.1m and net profit at $18.2m.

The company increased the operating profit guidance by circa 2% but cut revenue guidance to $300-305m from $305-310m respectively. The analysts, on their part, have reduced EPS forecasts by -1-3% for the year.

The broker considers business from the Nordic region to be strong. Overall, the stock is relatively low risk, well-diversified and cheap with improved organic growth prospects and margin improvement, comments Baillieu.

The broker rates the stock a Buy with target price at $4.50.

The report was published on February 28, 2020.

Target price is $4.50 Current Price is $2.76 Difference: $1.74
If HSN meets the E.L. & C Baillieu target it will return approximately 63% (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 6.00 cents and EPS of 19.50 cents.
At the last closing share price the estimated dividend yield is 2.17%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.15.

Forecast for FY21:

E.L. & C Baillieu forecasts a full year FY21 dividend of 6.50 cents and EPS of 21.60 cents.
At the last closing share price the estimated dividend yield is 2.36%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.78.

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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