Australian Broker Call *Extra* Edition – May 20, 2020

Daily Market Reports | May 20 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)

AD8 (2)   APX   AVH   BID (2)   BRG   CAJ   CGL   CLV   EHL   HLA   HUB   IMU   IRE   LIC   MVP   OTW   PGX   PNV   PRN   PSQ (2)   RUL   SLC   SLK (2)   UMG   WPR   XRO   Z1P  

APX    APPEN LIMITED

IT & Support - Overnight Price: $29.74

Bell Potter rates ((APX)) as Downgrade to Hold from Buy (3) -

As per Bell Potter, the rally in Appen's share price suggests the market may be expecting an upgrade; one that the broker does not consider certain due to the current market environment.

The broker has not changed 2020 forecast with operating income estimated at circa $135m, already ahead of the guidance of $125-130m.

Rating downgraded to Hold from Buy with target price at $30.

The report was published on May 12, 2020.

Target price is $30.00 Current Price is $29.74 Difference: $0.26
If APX meets the Bell Potter target it will return approximately 1% (excluding dividends, fees and charges).
Current consensus price target is $31.48, suggesting upside of 5.8%(ex-dividends)
The company's fiscal year ends in December.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 11.00 cents and EPS of 67.20 cents.
At the last closing share price the estimated dividend yield is 0.37%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 44.26.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 65.4, implying annual growth of 85.4%.
Current consensus DPS estimate is 11.4, implying a prospective dividend yield of 0.4%.
Current consensus EPS estimate suggests the PER is 45.5.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 15.00 cents and EPS of 86.00 cents.
At the last closing share price the estimated dividend yield is 0.50%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 34.58.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 85.8, implying annual growth of 31.2%.
Current consensus DPS estimate is 14.9, implying a prospective dividend yield of 0.5%.
Current consensus EPS estimate suggests the PER is 34.7.

Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

BRG    BREVILLE GROUP LIMITED

Household & Personal Products - Overnight Price: $20.03

Goldman Sachs rates ((BRG)) as Neutral (3) -

Breville Group’s update was way ahead of Goldman Sach’s expectations with global products growing 24% between January-April and distribution up 30%.

The group recently announced a fully underwritten $104m institutional placement and share purchase plan. The broker believes the fresh capital raising will instill flexibility in the group’s balance sheet and help in dealing with working capital pressures while looking out for new market opportunities.

The broker expects revenue growth momentum to continue in the second half of FY20. Neutral rating retained with the target price increased to $19.25 from $16.70.

The report was published on May 14, 2020.

Target price is $19.25 Current Price is $20.03 Difference: minus $0.78 (current price is over target).
If BRG meets the Goldman Sachs target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $20.57, suggesting upside of 2.7%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY20:

Goldman Sachs forecasts a full year FY20 dividend of 30.00 cents and EPS of 59.00 cents.
At the last closing share price the estimated dividend yield is 1.50%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 33.95.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 58.3, implying annual growth of 12.5%.
Current consensus DPS estimate is 32.6, implying a prospective dividend yield of 1.6%.
Current consensus EPS estimate suggests the PER is 34.4.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 46.00 cents and EPS of 67.00 cents.
At the last closing share price the estimated dividend yield is 2.30%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 29.90.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 59.0, implying annual growth of 1.2%.
Current consensus DPS estimate is 40.1, implying a prospective dividend yield of 2.0%.
Current consensus EPS estimate suggests the PER is 33.9.

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

CGL    THE CITADEL GROUP LIMITED

IT & Support - Overnight Price: $2.90

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

The factors in Citadel Group’s favour include long-term contracts, high-quality customer base and exposure to key sectors like health and government, notes Bell Potter while explaining the rationale behind no downgrade in forecasts so far even with covid-19 led restrictions.

The broker does acknowledge some impact is inevitable from spending reduction/deferral in some sectors and has reduced forecasts in those areas.

Overall, earnings forecasts for FY20 and FY21 have been reduced by -10% and -9% driven by expected revenue reduction in the technology segment and slightly lower margin forecasts.

Buy rating retained with target price at $4.75.

This report was published on May 13, 2020.

Target price is $4.75 Current Price is $2.90 Difference: $1.85
If CGL meets the Bell Potter target it will return approximately 64% (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 9.60 cents and EPS of 19.30 cents.
At the last closing share price the estimated dividend yield is 3.31%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.03.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 10.60 cents and EPS of 26.40 cents.
At the last closing share price the estimated dividend yield is 3.66%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.98.

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

EHL    EMECO HOLDINGS LTD

Mining Sector Contracting - Overnight Price: $1.03

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

Bell Potter notes limited covid-19 impact on Australian key commodity production volumes and, consequently, on Emeco Holdings. The broker notes the majority of producers reiterated FY20 production guidance and those who withdrew did so due to increasing uncertainty and not any material impact.

With low thermal and metallurgical coal prices, Australian producers are under pressure to optimise costs and this is expected to continue to present a risk to FY21 utilisation. The broker expects a cyclical shock to earnings, but considers Emeco Holdings somewhat insulated. 

Bell Potter has upgraded earnings estimates for FY20 and FY21 by 17.5% and 0.9%. The stock is rated a Buy with target price at $1.40.

This report was published on May 13, 2020.

Target price is $1.40 Current Price is $1.03 Difference: $0.37
If EHL meets the Bell Potter target it will return approximately 36% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Bell Potter forecasts a full year FY20 EPS of 22.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 4.60.

Forecast for FY21:

Bell Potter forecasts a full year FY21 EPS of 11.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.04.

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

HLA    HEALTHIA LIMITED

Healthcare services - Overnight Price: $0.99

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

Healthia announced the acquisition of 12 Podiatry clinics in Victoria, operating under the brand The Foot and Ankle Clinic, with total consideration around $5m, funded largely through existing cash reserves.

This acquisition will bring total acquired annualised operating earnings for FY20 to $4.2m, in line with Canaccord Genuity’s estimate of $4.4m. Overall, the broker notes business performance has been resilient during the pandemic.

Earnings forecast for FY20 are expected to reduce by -9.5% to $0.086. The broker retains its Buy rating with target price at $1.45.

This report was published on May 12, 2020.

Target price is $1.45 Current Price is $0.99 Difference: $0.46
If HLA meets the Canaccord Genuity target it will return approximately 46% (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 2.00 cents and EPS of 9.00 cents.
At the last closing share price the estimated dividend yield is 2.02%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.00.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 4.00 cents and EPS of 12.00 cents.
At the last closing share price the estimated dividend yield is 4.04%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.25.

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


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