Australian Broker Call *Extra* Edition – Jul 08, 2020

Daily Market Reports | Jul 08 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)

ADA   ALU   AMA (2)   AMP   ASB   AX1   BFC   BGL   CAT   CGF (2)   CKF (2)   DGH   EQT   EVS   FPH   GNX   GUD   HVN   INA   IRI   LIC   LTR   MTO   MYX   NXS   PRN   QUB   RBL (2)   RFF   RHP   RIC   SHV   SMP   VTH   YOJ  

AMA    AMA GROUP LIMITED

Automobiles & Components - Overnight Price: $0.64

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

AMA Group has indicated that repair volumes are improving and should return to normal by the December quarter 2021. Additionally, the service agreement negotiation with Insurance Australia Group ((IAG)) has completed.

Bell Potter believes profit and cashflow expectations outperformed both market and management expectations.

No guidance was given by the company and the broker's forecasts are unchanged. However, there was a 6% increase in target price to $0.85 from $0.80 due to an updated valuation methodology.

This report was published on June 19, 2020.

Target price is $0.85 Current Price is $0.64 Difference: $0.21
If AMA meets the Bell Potter target it will return approximately 33% (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 3.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 18.29.

Forecast for FY21:

Bell Potter 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 320.00.

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


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

The broker has revised down expectations for debt levels, after AMA Group announced a trading update. However, the net debt is still elevated and balance sheet risks remain high.

On one hand, the update has allowed Goldman Sachs to no longer model for a FY21 equity raise, which was based on the potential for a debt covenant breach. On the other hand, AMA Group has traditionally derived growth via acquisitions, and with limited organic growth in the industry, the potential still remains for a capital raising.

The company expects repair volumes to recover to pre covid-19 levels by FY21 and announced an improved pricing outcome from negotiations with key insurance customers.

The Neutral rating is maintained. The target price is increased to $0.71 from $0.43.

This report was published on June 25, 2020.

Target price is $0.71 Current Price is $0.64 Difference: $0.07
If AMA meets the Goldman Sachs target it will return approximately 11% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Goldman Sachs forecasts a full year FY20 dividend of 0.00 cents and EPS of 2.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 32.00.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 0.00 cents and EPS of 4.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.00.

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

BFC    BESTON GLOBAL FOOD COMPANY LIMITED

Dairy - Overnight Price: $0.08

PhillipCapital rates ((BFC)) as Buy (1) -

Beston Global Food Co has made the transition to an operating company from a food-related investment company. The dual focus is now on dairy and pre-cooked meats.

Phillip Capital pronounces the recent $10m capital raise, and intended use of funds, as a transformational event for the company and foresees a long-awaited profit by FY22.

The broker wrongly assumed that the recent sale of dairy farms to Aurora Dairies would preclude the need for raising capital. However, the analysts are pleased to see that gearing will be reduced to zero and that the company will now go for growth.

By adopting proven overseas technology and production methods, the company may effectively extract 4x times more Lactoferrin from the same quantity of milk. Hence, the rush is on to spend -$12m on stage 1 of upgrading its Lactoferrin plant, which will generate an additional $13.5m in revenue.

The broker points to very low PE ratios of 4.3x for FY22 & 3.0x for FY23. The analysts also highlight the company announcement on June 22 of a potential takeover bid.

The Buy rating is maintained. The target price is $0.16.

This report was published on June 25, 2020.

Target price is $0.16 Current Price is $0.08 Difference: $0.08
If BFC meets the PhillipCapital target it will return approximately 100% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

PhillipCapital forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 2.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 4.00.

Forecast for FY21:

PhillipCapital forecasts a full year FY21 dividend of 0.00 cents and EPS of 0.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 26.67.

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

BGL    BELLEVUE GOLD LTD

Gold & Silver - Overnight Price: $0.97

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

Bellevue Gold is a gold exploration company that owns the Bellevue gold project in Western Australia. Canaccord Genuity highlights it is the highest grade gold development project in Australia.

The company confirmed recoveries that are both exceptional and well in excess of industry benchmarks. For the first time, the company has set a timeline for commencement of underground drilling (in December, 2020).

A maiden Indicated Resource estimate is due in “coming weeks”. The broker is expecting it to be 550-650koz at 8-10g/t with good scope to grow to approximately 1 million oz by the end of 2020.

Canaccord Genuity believes the company is the most attractive and well-funded gold story across all their coverage.

Buy (speculative) rating is maintained. The target price is increased to $1.45 from $1.35.

This report was published on June 24, 2020.

Target price is $1.45 Current Price is $0.97 Difference: $0.48
If BGL meets the Canaccord Genuity target it will return approximately 49% (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 0.02 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 4850.00.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 0.01 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 9700.00.

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

DGH    DESANE GROUP HOLDINGS LIMITED

Overnight Price: $1.35

Taylor Collison rates ((DGH)) as Speculative Buy (2) -

Desane is a Sydney-based property investment and property development (residential and mixed-use) business, which has been listed on the ASX for over 30 years.

The broker believes Desane is well placed to capitalise on any downturn with capacity for both acquisitions and development alternatives.

Having sold a major property in November 2018, the company has net cash of $7.1m and the ability to gear up its balance sheet.

The broker has performed a rental analysis of the existing portfolio and believes rental income is secure. There is also development upside for projects at various levels of completion.

Outperform rating maintained. The NTA for FY21 is estimated to be $1.49.

This report was published on June 24, 2020.

Current Price is $1.35. Target price not assessed.

Forecast for FY20:

Taylor Collison forecasts a full year FY20 dividend of 2.50 cents and EPS of 6.60 cents.
At the last closing share price the estimated dividend yield is 1.85%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.45.

Forecast for FY21:

Taylor Collison forecasts a full year FY21 dividend of 3.00 cents and EPS of 5.40 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 25.00.

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

EQT    EQT HOLDINGS LIMITED

Diversified Financials - Overnight Price: $25.45

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

Recent corporate activity relating to AMP Life has been the catalyst for the outsourcing of trustee arrangements to EQT Holdings.

Baillieu estimates the $7.0 bn of superannuation funds will result in $1.5-$2.0m of annualised revenue and boosts the company's FUA to a total of $20bn.

While this is not a game-changing contract win, the broker expects it to provide EQT Holdings with ongoing potential opportunities in superannuation and investments.

The broker increases earnings forecasts by 2% for both FY21and FY22. Buy rating maintained. Target price increased to $31 from $30.

The report was published on July 01, 2020.

Target price is $31.00 Current Price is $25.45 Difference: $5.55
If EQT 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 85.00 cents and EPS of 99.90 cents.
At the last closing share price the estimated dividend yield is 3.34%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.48.

Forecast for FY21:

E.L. & C Baillieu forecasts a full year FY21 dividend of 86.00 cents and EPS of 99.90 cents.
At the last closing share price the estimated dividend yield is 3.38%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.48.

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


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