Australian Broker Call *Extra* Edition – Jun 26, 2020

Daily Market Reports | Jun 26 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)

BGA   BSL   CCL   CSL   DMP   ELO (2)   GEM   HRL   HVN   IPH   IRI   JBH   JLG (2)   KGN   MSB   NHC   NUF   OPY   PKS   SGM   TNK   WES  

BGA    BEGA CHEESE LIMITED

Dairy - Overnight Price: $4.50

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

Bega Cheese is engaged in the processing, manufacturing and distribution of dairy and associated products to both Australian and international markets.

Bell Potter notes a material softening in skim milk powder (SMP) returns after the first half, falling circa -18% from February 2020 levels. The farmgate prices (FMP) by the company are higher than expected by the broker.

Milk volume intake in FY20 is expected to rise by 8% for the company. Headwinds in the form of low SMP returns and strong competition for milk will define FY21 and the broker has downgraded net profit for each of FY20-22.

Bell Potter retains its Hold rating with target price unchanged at $4.85.

This report was published on June 10, 2020.

Target price is $4.85 Current Price is $4.50 Difference: $0.35
If BGA meets the Bell Potter target it will return approximately 8% (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 10.00 cents and EPS of 11.70 cents.
At the last closing share price the estimated dividend yield is 2.22%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 38.46.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 11.00 cents and EPS of 18.90 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 23.81.

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

BSL    BLUESCOPE STEEL LIMITED

Steel & Scrap - Overnight Price: $11.04

Goldman Sachs rates ((BSL)) as Upgrade to Buy from Neutral (1) -

A broad pro-cyclical rally led by the restart of economic activity has improved the outlook for the steel sector. Goldman Sachs expects an improvement over the coming months with the first half of FY21 looking materially better than assumed.

Goldman Sachs has upgraded its rating on BlueScope Steel to Buy from Neutral with target price increasing to $14.95 from $10.25.

This report was published on June 8, 2020.

Target price is $14.95 Current Price is $11.04 Difference: $3.91
If BSL meets the Goldman Sachs target it will return approximately 35% (excluding dividends, fees and charges).
Current consensus price target is $12.80, suggesting upside of 12.0%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY20:

Goldman Sachs forecasts a full year FY20 dividend of 14.00 cents and EPS of 52.80 cents.
At the last closing share price the estimated dividend yield is 1.27%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.91.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 62.5, implying annual growth of -67.1%.
Current consensus DPS estimate is 11.2, implying a prospective dividend yield of 1.0%.
Current consensus EPS estimate suggests the PER is 18.3.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 14.00 cents and EPS of 58.60 cents.
At the last closing share price the estimated dividend yield is 1.27%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.84.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 67.9, implying annual growth of 8.6%.
Current consensus DPS estimate is 11.6, implying a prospective dividend yield of 1.0%.
Current consensus EPS estimate suggests the PER is 16.8.

Market Sentiment: 0.4
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: $7.20

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

On Canaccord Genuity's assessment, Elmo Software is the fastest growing and most well-capitalised HR tech company in the region.

The company recently reinstated its annual recurring revenue (ARR) guidance for FY20 to between $55-$55m and has also upgraded the operating income guidance to between -$2.5-$4.5m.

Canaccord Genuity expects the company to go for acquisitions, especially after having raised capital to enhance its balance sheet position.

Earnings forecasts have been upgraded for FY20-22, while the broker still sees further upside potential, with the procurement activity returning to normal.

Canaccord Genuity maintains its Buy rating with the target price increased to $8.20 from $6.75.

This report was published on June 11, 2020.

Target price is $8.20 Current Price is $7.20 Difference: $1
If ELO meets the Canaccord Genuity target it will return approximately 14% (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 21.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 32.88.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 16.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 44.44.

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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