Australian Broker Call *Extra* Edition – Jun 16, 2020

This story features ALTIUM, and other companies. For more info SHARE ANALYSIS: ALU

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)

ALU   APT   APX   ARB   ELO   EVT   ILU   LYL   MAD   MLD   MNF   MSV   NIC   OPY   OSL   OTW   PWH   SSM   STG (2)   VHT   Z1P  

ALU    ALTIUM LIMITED

Hardware & Equipment – Overnight Price: $32.41

Bell Potter rates ((ALU)) as Downgrade to Sell from Hold (5) –

Altium is offering a rather heavy discount on Altium Designer's perpetual license and a one-year subscription, notes Bell Potter. This is likely to reduce FY20 revenue more than expected by the broker.

Earnings forecasts have been downgraded for FY20-22 driven by the higher than expected discounts along with a reduction in forecasted subscriber growth.

Although having a positive long-term outlook on the stock, Bell Potter downgrades its rating to Sell from Hold on account of short-term headwinds. The target price decreases to $32.50 from $35.

This report was published on June 5, 2020.

Target price is $32.50 Current Price is $32.41 Difference: $0.09
If ALU meets the Bell Potter target it will return approximately 0% (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 56.57 cents and EPS of 54.34 cents.
At the last closing share price the estimated dividend yield is 1.75%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 59.64.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 62.53 cents and EPS of 68.48 cents.
At the last closing share price the estimated dividend yield is 1.93%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 47.33.

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

APT    AFTERPAY LIMITED

Business & Consumer Credit – Overnight Price: $51.16

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

Bell Potter considers growth in Afterpay’s share price to be driven by growth in its gross merchant value. Another factor key to its success, suggests the broker, will be the company's ability to integrate with other e-commerce and payment infrastructure players like Visa, Mastercard, eBay and Wix.

Bell Potter makes no material changes to its forecasts save for increasing the Customer Lifetime Value (CLV). Bell Potter retains its Buy rating with its target price increasing to $65 from $51.50.

This report was published on June 5, 2020.

Target price is $65.00 Current Price is $51.16 Difference: $13.84
If APT meets the Bell Potter target it will return approximately 27% (excluding dividends, fees and charges).
Current consensus price target is $32.18, suggesting downside of -37.1%(ex-dividends)
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 4.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 1247.80.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -19.9, 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 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 390.53.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -8.9, 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.

Market Sentiment: 0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

APX    APPEN LIMITED

IT & Support – Overnight Price: $29.77

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

Appen reaffirmed its 2020 operating income guidance between $125-130m. This is less than Bell Potter’s forecasted figure of $135.2m, mostly due to a lower average exchange rate (AUD/USD) assumed for the year.

The company expects 2020 margins to be in the high teens and has reported year to date revenue along with confirmed orders to be around $350m, which is 50% of the broker’s forecasted revenue for the year of $701m.

The broker expects Appen to upgrade 2020 guidance around the release of its first-half results driven by better performance. Bell Potter rates the stock as Hold with a target price of $31.25.

This report was published on June 1, 2020.

Target price is $31.25 Current Price is $29.77 Difference: $1.48
If APX meets the Bell Potter target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $32.78, suggesting upside of 10.1%(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 44.30.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 64.3, implying annual growth of 82.3%.
Current consensus DPS estimate is 10.9, implying a prospective dividend yield of 0.4%.
Current consensus EPS estimate suggests the PER is 46.3.

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 34.62.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 84.8, implying annual growth of 31.9%.
Current consensus DPS estimate is 14.4, implying a prospective dividend yield of 0.5%.
Current consensus EPS estimate suggests the PER is 35.1.

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

ARB    ARB CORPORATION LIMITED

Automobiles & Components – Overnight Price: $16.51

Wilsons rates ((ARB)) as Buy (1) –

New vehicle sales declined by -39% in April, rebounding somewhat in May. ARB Corp is a major player in the four-wheel drive (4WD) vehicle accessories segment.

Wilsons considers the April improvement to be driven by government stimulus measures and destocking taking place in some channels. Overall, the company's sales were down -7% in FY20 and the broker expects operating income to reduce for the next few years.

The long-term outlook is supported by improvement expected in domestic tourism and infrastructure projects, with export markets also presenting a lucrative opportunity.

The pandemic-led disruption gives the group a chance to curb its operating expenses which reached 36% of sales in FY19. Overall, Wilsons maintains its Overweight rating with a target price of $19.70.

This report was published on June 3, 2020.

Target price is $19.70 Current Price is $16.51 Difference: $3.19
If ARB meets the Wilsons target it will return approximately 19% (excluding dividends, fees and charges).
Current consensus price target is $17.58, suggesting upside of 6.5%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 33.50 cents and EPS of 56.40 cents.
At the last closing share price the estimated dividend yield is 2.03%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 29.27.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 61.2, implying annual growth of -14.9%.
Current consensus DPS estimate is 32.0, implying a prospective dividend yield of 1.9%.
Current consensus EPS estimate suggests the PER is 27.0.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 45.00 cents and EPS of 74.60 cents.
At the last closing share price the estimated dividend yield is 2.73%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.13.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 69.6, implying annual growth of 13.7%.
Current consensus DPS estimate is 37.9, implying a prospective dividend yield of 2.3%.
Current consensus EPS estimate suggests the PER is 23.7.

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

ELO    ELMO SOFTWARE LIMITED

Jobs & Skilled Labour Services – Overnight Price: $6.96

Wilsons rates ((ELO)) as Upgrade to Market Weight from Underweight (1) –

Elmo Software’s recent circa $73m capital raising has propped up its war chest to fund expansion plans in the UK, reports Wilsons. The broker agrees with the expansion plans, noting opportunities in both single point and multi-module solutions markets.

As per an estimate by the broker, the company has the potential to make close to $14m in revenues per annum if it grabs even about 1% of the UK’s total addressable market (TAM).

ELMO Connect, the new communications module, will be monetised from September-October and the broker expects to see average revenue per user grow in the second half and FY21.

Overall, Wilsons feels issues plaguing the company have receded somewhat and upgrades its rating to Market Weight from Underweight, with its target price increased to $6.36 from $4.32.

This report was published on June 4, 2020.

Target price is $6.36 Current Price is $6.96 Difference: minus $0.6 (current price is over target).
If ELO meets the Wilsons target it will return approximately minus 9% (excluding dividends, fees and charges – negative figures indicate an expected loss).
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 minus 26.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 26.07.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 20.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 34.80.

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

EVT    EVENT HOSPITALITY AND ENTERTAINMENT LTD

Travel, Leisure & Tourism – Overnight Price: $8.22

E.L. & C Baillieu rates ((EVT)) as Downgrade to Hold from Buy (3) –

Event Hospitality and Entertainment relies heavily on tourism and entertainment. While cinemas can open from June onwards, Baillieu notes Event/Village Roadshow cinemas may reopen in mid-July to coincide with the release of the film Tenet, as per press reports.

Thredbo, which is set to reopen on June 22, will have visits at 50% of its actual capacity due to the ongoing social distancing rules. The hospitality segment saw low occupancy rates in March/April and this trend is expected to continue. 

The broker downgrades FY20-21 operating income forecasts by -15-16% and admits it is difficult to forecast operating costs due to the high casual component of the workforce. It predicts a return to pre-covid-19 trading patterns by FY22.

Baillieu has downgraded its rating to Hold from Buy with a target price of $10.

This report was published on June 4, 2020.

Target price is $10.00 Current Price is $8.22 Difference: $1.78
If EVT meets the E.L. & C Baillieu target it will return approximately 22% (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 21.00 cents and EPS of 19.50 cents.
At the last closing share price the estimated dividend yield is 2.55%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 42.15.

Forecast for FY21:

E.L. & C Baillieu forecasts a full year FY21 dividend of 22.00 cents and EPS of 14.90 cents.
At the last closing share price the estimated dividend yield is 2.68%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 55.17.

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

ILU    ILUKA RESOURCES LIMITED

Mineral Sands – Overnight Price: $8.55

Goldman Sachs rates ((ILU)) as Upgrade to Buy from Neutral (1) –

Iluka Resources will enter the rare earth mineral market in the third quarter of 2020, reports Goldman Sachs. Although zircon production will increase driven by the Eneabba, Balranald and Wimmera projects, the broker forecasts an overall tight market for the mineral from 2021-23 with price expected to go up in 2021. 

2020 earnings estimates have been decreased due to lower expected sale of synthetic rutile while FY21, driven by strengthening iron ore prices along with improved zircon sales, is expected to be better. The broker values the mineral sands business at circa $2.4bn while Mining Area C (MAC) is calculated to be worth around $2bn.

Goldman Sachs upgrades its rating to Buy from Neutral driven by attractive valuation, proposed demerger of the MAC iron ore royalty and the prospect of a price recovery in 2021. The target price is $10.10. On Goldman Sachs' projections, rare earths will represent 10-12% of Iluka's revenues by 2025.

This report was published on June 3, 2020.

Target price is $10.10 Current Price is $8.55 Difference: $1.55
If ILU meets the Goldman Sachs target it will return approximately 18% (excluding dividends, fees and charges).
Current consensus price target is $9.43, suggesting upside of 10.2%(ex-dividends)
The company's fiscal year ends in December.

Forecast for FY20:

Goldman Sachs forecasts a full year FY20 dividend of 10.00 cents and EPS of 52.00 cents.
At the last closing share price the estimated dividend yield is 1.17%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.44.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 58.0, implying annual growth of N/A.
Current consensus DPS estimate is 23.0, implying a prospective dividend yield of 2.7%.
Current consensus EPS estimate suggests the PER is 14.7.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 22.00 cents and EPS of 61.00 cents.
At the last closing share price the estimated dividend yield is 2.57%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.02.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 87.3, implying annual growth of 50.5%.
Current consensus DPS estimate is 33.8, implying a prospective dividend yield of 4.0%.
Current consensus EPS estimate suggests the PER is 9.8.

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

LYL    LYCOPODIUM LIMITED

Mining Sector Contracting – Overnight Price: $4.75

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

Lycopodium has updated its FY20 net profit guidance to $11.5m, less than the pre-covid-19 figure of $14.1m. The company has acknowledged delays in new projects and a material impact on new opportunities, a situation which Bell Potter believes is the new normal for the energy and resources sectors.

The broker has increased FY20 earnings estimates (in-line with Lycopodium's guidance) but expects a decline in FY21 revenue on account of project delays. The broker also notes restrictions taking a toll on gold projects despite the high gold price, with normalcy expected in FY22.

An uncertain economic environment and constrained new project activity prompts Bell Potter to maintain its Hold rating with a target price of $4.65.

This report was published on June 1, 2020.

Target price is $4.65 Current Price is $4.75 Difference: minus $0.1 (current price is over target).
If LYL meets the Bell Potter target it will return approximately minus 2% (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 18.00 cents and EPS of 28.90 cents.
At the last closing share price the estimated dividend yield is 3.79%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.44.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 13.00 cents and EPS of 21.10 cents.
At the last closing share price the estimated dividend yield is 2.74%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.51.

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

MAD    MADER GROUP LIMITED

Mining Sector Contracting – Overnight Price: $0.82

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

Mader Group is the biggest independent heavy mobile equipment labour provider in Australia, listed on the ASX in 2019.

The group has guided towards FY20 revenue of $270-275m, in-line with Bell Potter’s estimated $271m. The guidance suggests the group has been able to handle the additional covid-19 related costs well, comments the broker.

The broker highlights impressive gains on a quarterly basis by the group in its Western Australia (home market) and Eastern Australia divisions along with a whopping 2,482% growth in the US division. The broker considers gains here to help offset some of the revenue loss from its international division.

FY21 growth has been de-risked by work secured from BHP Group ((BHP)) for $6.5m while renewing a number of key contracts, highlights the broker.

Bell Potter has increased earnings estimates for FY20-22 and continues to forecast below-trend growth in FY21 with potential upside risk from the Western Australian and the US divisions, and possibly from other international regions too.

The broker retains its Buy rating with the target price increased to $1.18 from $1.10.

This report was published on June 2, 2020.

Target price is $1.18 Current Price is $0.82 Difference: $0.36
If MAD meets the Bell Potter target it will return approximately 44% (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 4.91 cents and EPS of 13.10 cents.
At the last closing share price the estimated dividend yield is 5.99%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.26.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 5.36 cents and EPS of 13.70 cents.
At the last closing share price the estimated dividend yield is 6.54%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 5.99.

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
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: $0.86

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

Maca’s earnings have strengthened as per its latest trading update, as have its mining margins. Canaccord Genuity sees upside to valuation due to margins picking up and a stabilising working capital profile.

The broker expects gold and iron ore to be the major earnings drivers in the near term, with the company securing contracts with Fortescue Metals Group ((FMG)), Atlas Iron and Emerald Resources ((EMR)), while hopeful for an extension with Ramelius Resources ((RMS)) and Regis Resources ((RRL)).

The Bluff Coal project (Queensland) will be exposed to spot pricing at the end of FY20 and is the Achilles heel in an otherwise strong outlook, comments the broker. The profitability of the project is under question and leads the broker to downgrade its FY21 forecasts.

Canaccord Genuity retains its Buy recommendation with a target price of $1.13.

This report was published on June 1, 2020.

Target price is $1.13 Current Price is $0.86 Difference: $0.27
If MLD meets the Canaccord Genuity target it will return approximately 31% (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 5.00 cents and EPS of 13.80 cents.
At the last closing share price the estimated dividend yield is 5.81%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.23.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 5.00 cents and EPS of 11.60 cents.
At the last closing share price the estimated dividend yield is 5.81%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.41.

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

MNF    MNF GROUP LIMITED

Telecommunication – Overnight Price: $5.10

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

MNF Group, one of Australia’s biggest VoIP (Voice over internet protocol) providers, has seen demand shoot up significantly with the pandemic-induced work from home. This has especially been notable in the unified communications as a service (UCaaS) segment in the Asia Pacific region (APAC).

Baillieu believes the group will increase UCaaS's market penetration in the APAC region, driving strong growth in the coming years with an estimated CAGR of 23% over 2019-2025. The broker upgrades its FY20 operating income forecast to match the company’s guidance while increasing FY21-22 earnings forecasts by 5% each. 

The broker maintains its Buy rating with a target price of $6.24.

This report was published on June 5, 2020.

Target price is $6.24 Current Price is $5.10 Difference: $1.14
If MNF meets the E.L. & C Baillieu target it will return approximately 22% (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 7.00 cents and EPS of 20.90 cents.
At the last closing share price the estimated dividend yield is 1.37%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.40.

Forecast for FY21:

E.L. & C Baillieu forecasts a full year FY21 dividend of 7.90 cents and EPS of 23.80 cents.
At the last closing share price the estimated dividend yield is 1.55%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.43.

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

MSV    MITCHELL SERVICES LIMITED

Mining Sector Contracting – Overnight Price: $0.47

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

Wilsons sees no hiccups in Mitchell Services achieving its FY20 guidance range (revenue of $170-180m and operating income of $34-36m) with its own forecasts towards the lower end of the range. Wilsons does expect a generous final dividend owing to strong cash conversion.

The broker is a tad more positive about FY21 with expansion of the existing contracts and deployment of additional rigs. Near term catalysts include the BHP Olympic Dam contract tender and exploration around Victoria’s Fosterville.

The business is considered to be well placed to benefit from a cyclical rebound with better management of drilling risks. Other positives include high-quality customers, increasing exposure to underground operations and a focus on production rather than exploration.

Wilsons rates the company Overweight with a target price of $1.10.

This report was published on June 4, 2020.

Target price is $1.10 Current Price is $0.47 Difference: $0.63
If MSV meets the Wilsons target it will return approximately 134% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 1.10 cents and EPS of 4.90 cents.
At the last closing share price the estimated dividend yield is 2.34%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.59.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 0.00 cents and EPS of 6.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.81.

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

NIC    NICKEL MINES LIMITED

Nickel – Overnight Price: $0.53

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

Nickel Mines, whose operations are Indonesia based, recently exercised its option to acquire an additional 20% interest in its Hengjaya and Ranger rotary kiln electric furnace (RKEF) nickel projects in Indonesia.

This acquisition was funded by raising $231m and has increased the company's stake to 80% in both the projects. The rest is owned by Shanghai Decent Investments which is a subsidiary of Tsingshan Group (world's largest stainless steel producer).

Bell Potter considers this transaction to be a major milestone for Nickel Mines, projected to become strongly value accretive with the benefits far exceeding costs. The broker elaborates by pointing at higher production and increasing cash flows.

Nickel Mines is the largest pure-play nickel player listed on the ASX, highlights the broker. Bell Potter considers the company a top pick in its sector and retains its Buy recommendation with the target price decreased slightly to $1.08 from $1.10.

This report was published on June 4, 2020.

Target price is $1.08 Current Price is $0.53 Difference: $0.55
If NIC meets the Bell Potter target it will return approximately 104% (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 17.72 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 2.99.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 0.00 cents and EPS of 25.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 2.05.

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

OPY    OPENPAY GROUP LTD

Business & Consumer Credit – Overnight Price: $2.14

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

Openpay is a player in the buy now pay later (BNPL) category but unlike Afterpay which targets the retail sector, Openpay is mainly focused on healthcare, automotive and home improvement. Outside of Australia and New Zealand, the company has forayed into the UK. Recently, the company secured debt funding of $25m from the UK.

Shaw and Partners points out May saw strong growth with active customers growing by 131% year-on-year (yoy) to more than 293,000, while active merchants increased by 50% to 2,096 yoy. The company recently entered the B2B segment through an agreement with Woolworths ((WOW)) for a SaaS payments solution providing end to end trade account management.

The broker highlights the company, instead of going down the same road as other BNPL players, has differentiated itself in a number of ways. This includes focusing on the UK rather than the US, targeting an older demographic, developing B2B capability and a move towards online education (payment of school fees etc).

Shaw and Partners points out Openpay’s differentiated model ensures it is well placed for long term growth even though it may not be grabbing headlines like Afterpay. The current valuation is also attractive with the stock trading at quite a discount to its peers.

The broker maintains its Buy rating with a target price of $2.25.

This report was published on June 2, 2020.

Special Note: the broker lifted its price target to $3.25 on June 16, 2020.

Target price is $2.25 Current Price is $2.14 Difference: $0.11
If OPY meets the Shaw and Partners target it will return approximately 5% (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 minus 42.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 5.05.

Forecast for FY21:

Shaw and Partners forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 28.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 7.64.

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

OSL    ONCOSIL MEDICAL LTD

Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $0.12

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

Oncosil received the CE Mark in April for its Oncosil therapy used for treating advanced pancreatic cancer and the company intends to start commercialisation later in 2020. Bell Potter adds the company also obtained approval from Singapore, which the broker considers the first in a series of expected local approvals throughout the Asia Pacific region in the coming months.

The broker notes the company has about $23m in cash after raising $19m capital which is enough to provide working capital for launches across Europe and Asia Pacific. The single product medical device company has adequate cash for operations, believes the broker but admits such assumptions depend on the uptake by hospitals and funding requirements of a US approval study.

The company has also hired Mr Nigel Lange as its European, Middle East and Africa President. Bell Potter retains its Speculative Buy rating with valuation at $0.42 per share.

This report was published on June 5, 2020.

Target price is $0.42 Current Price is $0.12 Difference: $0.3
If OSL meets the Bell Potter target it will return approximately 250% (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 minus 1.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 12.00.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 0.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 13.33.

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

OTW    OVER THE WIRE HOLDINGS LIMITED

Cloud services – Overnight Price: $3.30

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

Over the Wire Holdings is a telecommunications, cloud and IT solutions provider with about 95% of its revenue coming from the business customers segment. The company recently announced a strategic partnership with NextDC ((NXT)) which will see the migration of core elements of its network and private cloud infrastructure into NextDC’s facilities.

While its recurring business has noted a modest hit from the pandemic, the non-recurring business has suffered the most and is expected to deliver only 70% of its original forecast, notes Bell Potter.

Over The Wire is confident of performing within 3% of FY20 consensus forecasts which have revenue estimates pegged at $90.4m, while operating income is estimated to be $17.4m. Bell Potter’s FY20 forecast is slightly below consensus although it does expect a strong rebound in FY21 and FY22.

Bell Potter holds onto its Hold rating with a target price of $3.50.

This report was published on June 1, 2020.

Target price is $3.50 Current Price is $3.30 Difference: $0.2
If OTW meets the Bell Potter target it will return approximately 6% (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 3.50 cents and EPS of 10.10 cents.
At the last closing share price the estimated dividend yield is 1.06%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 32.67.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 4.30 cents and EPS of 14.30 cents.
At the last closing share price the estimated dividend yield is 1.30%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.08.

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

PWH    PWR HOLDINGS LIMITED

Automobiles & Components – Overnight Price: $4.05

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

With elite motorsports returning (NASCAR) or about to return (Formula 1), Bell Potter is optimistic about PWR Holdings although admits the impact of these changes will mostly be seen in FY21.

The broker expects FY21 to see a return to normal trading conditions especially during the first half with a greater number of motorsport scheduled. This also implies revenue will be less skewed towards the second half and margins will likely improve in the first half of FY21, the broker points out.

Bell Potter has reduced earnings estimates for FY20 but has increased them for FY21 while the FY22 estimate remains largely unchanged. The broker reiterates its Buy rating with target price increased to $5 from $4.35.

This report was published on June 2, 2020.

Target price is $5.00 Current Price is $4.05 Difference: $0.95
If PWH meets the Bell Potter target it will return approximately 23% (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 6.00 cents and EPS of 12.10 cents.
At the last closing share price the estimated dividend yield is 1.48%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 33.47.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 8.90 cents and EPS of 18.00 cents.
At the last closing share price the estimated dividend yield is 2.20%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.50.

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

SSM    SERVICE STREAM LIMITED

Industrial Sector Contractors & Engineers – Overnight Price: $1.90

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

Service Stream has downgraded FY20 operating income guidance to $108m from $116m on account of the pandemic, even though Baillieu highlights robust demand for the company’s services during the lockdown. This is due to higher costs on account of social distancing and pause/delay on some projects.

The outlook remains positive with Baillieu noting increasing NBN footprint and rising activations. Other positives include robust finances and strong cashflows.

The broker expects FY20-22 revenue to fall by -6-12% while FY20 operating income is expected to increase by 1%. Baillieu reminds investors the underlying theme driving the stock remains strong and holds onto its Buy rating with a target price of $2.51.

This report was published on June 2, 2020.

Target price is $2.51 Current Price is $1.90 Difference: $0.61
If SSM meets the E.L. & C Baillieu target it will return approximately 32% (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 9.50 cents and EPS of 16.20 cents.
At the last closing share price the estimated dividend yield is 5.00%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.73.

Forecast for FY21:

E.L. & C Baillieu forecasts a full year FY21 dividend of 10.00 cents and EPS of 16.70 cents.
At the last closing share price the estimated dividend yield is 5.26%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.38.

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

STG    STRAKER TRANSLATIONS LIMITED

IT & Support – Overnight Price: $0.84

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

The FY20 result of Straker Translations was on expected lines with revenue up 13% year-on-year to NZ$27.7m and gross margin increasing to 54.8%. While no formal guidance has been issued, the company expects stable revenues for FY21.

The broker, anticipating softer trading conditions due to the pandemic, had already adjusted its FY21 forecasts and consequently made no material changes after the company’s result. Overall, the broker expects revenue growth of 6% in FY21 but a pause on M&A activity. \

Still, the broker’s optimism about Straker Translations is driven by the company's ability to apply technology and machine learning to the translation process. Bell Potter reaffirms its Speculative Buy recommendation with the target price decreasing to $1.45 from $1.50.

This report was published on June 2, 2020.

Target price is $1.45 Current Price is $0.84 Difference: $0.61
If STG meets the Bell Potter target it will return approximately 73% (excluding dividends, fees and charges).
The company's fiscal year ends in March.

Forecast for FY21:

Bell Potter 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 38.18.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 0.00 cents and EPS of 2.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 30.00.

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

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

Straker Translations Group’s FY20 results saw sales of NZ$27.7m, in-line with Shaw and Partner estimates. Recurring revenues stood strong at circa 86% driven by both organic and acquisition led growth, while enterprise side client growth was 70% year on year.

The broker reports the group is financially stable with no debt. Given the current uncertainty, the group has put a pause on its M&A activity, considered prudent by the broker.

Although the broker has downgraded FY21 sales by -12% on account of the pandemic, it notes the group has reaffirmed its revenue target of NZ$100m within 3 years.

Shaw and Partners considers the group to have long term value and highlights it is one of the world’s top ten fastest-growing companies in translation services. Operating in a large and mostly fragmented market gives the group an opportunity to go for acquisition activities, highlights the broker.

Straker Translations may reach earnings and cashflow breakeven in the next year or two, believes the broker and rates the stock a Buy with a target price of $1.20.

This report was published on June 1, 2020.

Target price is $1.20 Current Price is $0.84 Difference: $0.36
If STG meets the Shaw and Partners target it will return approximately 43% (excluding dividends, fees and charges).
The company's fiscal year ends in March.

Forecast for FY21:

Shaw and Partners forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 1.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 49.41.

Forecast for FY22:

Shaw and Partners forecasts a full year FY22 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 16.15.

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

VHT    VOLPARA HEALTH TECHNOLOGIES LIMITED

Medical Equipment & Devices – Overnight Price: $1.31

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

Volpara Health Technology reported a net loss of -$20.3m in FY20 with Bell Potter noting higher than anticipated costs in the second half.

Excluding the MRS Systems (breast clinic management software provider) acquisition impact, Bell Potter calculates revenue from business to be almost double the previous year, driven by an increase in average revenue per user (ARPU) as well as market share.

Although the company has not provided any revenue guidance for FY21, the broker expects its market share to increase to circa 28.6% (potentially via acquisitions) and average ARPU for new business of circa US$2.4.

The broker lowers its earnings estimates for FY21 and FY22, while maintaining its Buy recommendation. The target remains unchanged at $1.75.

This report was published on June 1, 2020.

Target price is $1.75 Current Price is $1.31 Difference: $0.44
If VHT meets the Bell Potter target it will return approximately 34% (excluding dividends, fees and charges).
The company's fiscal year ends in March.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 4.56 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 28.76.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 3.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 34.51.

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Z1P    ZIP CO LIMITED

Business & Consumer Credit – Overnight Price: $5.77

Shaw and Partners rates ((Z1P)) as Buy (1) –

Zip Co will have access to the US’s online retail market (15x bigger than the Australian market) thanks to its acquisition of QuadPay. QuadPay brings with it innovation in terms of technology and partners and has tie-ups with leading merchants, highlights Shaw and Partners. 

The broker expects 80-100m Americans to have BNPL accounts within the next four years and herein lies Zip Co’s opportunity, comments the broker.

The broker notes QuadPay is currently adding more than 100,000 customers per month with app store rankings rising. Shaw and Partners estimates the acquisition will increase revenue by circa 40% with FY21 revenue pegged at circa $350m while expecting customers to increase to 5.1m.

Shaw and Partners reaffirms its Buy rating with a target price of $6.25.

This report was published on June 3, 2020.

Target price is $6.25 Current Price is $5.77 Difference: $0.48
If Z1P meets the Shaw and Partners target it will return approximately 8% (excluding dividends, fees and charges).
Current consensus price target is $6.45, suggesting upside of 11.8%(ex-dividends)
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 minus 6.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 86.12.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -10.3, 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:

Shaw and Partners forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 9.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 58.88.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -8.1, 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.

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

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