Australian Broker Call *Extra* Edition – Jul 14, 2020

This story features ADACEL TECHNOLOGIES LIMITED, and other companies. For more info SHARE ANALYSIS: ADA

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   CKF (2)   EQT   EVS   GNX   GUD   IFL   ILU   LOV   MLD   MYS   NEU   NUF (2)   NXS   NXT   PBP   PDN   PSQ   RIC   SRG   ST1   TNK   YOJ  

ADA    ADACEL TECHNOLOGIES LTD

Software & Services – Overnight Price: $0.56

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

Adacel Technologies has announced a contract win with the US Army of around $4m. The broker forecasts strong earnings growth for FY21 and anticipates four systems contracts will also be completed.

The Bell Potter forecast is for FY21 earnings before tax of $6.6m, which is 65% greater than FY20. The broker has confidence in the forecast as the dollar value of the US Army contract accounts for the majority of assumed contract wins.

Despite not paying a dividend in FY19, the broker anticipates both an interim and final dividend for the forecast period.

Buy rating maintained. Target price is $0.75.

This report was published on June 26, 2020.

Target price is $0.75 Current Price is $0.56 Difference: $0.19
If ADA meets the Bell Potter target it will return approximately 34% (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 1.50 cents and EPS of 2.00 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 28.00.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 2.50 cents and EPS of 6.50 cents.
At the last closing share price the estimated dividend yield is 4.46%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.62.

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

CKF    COLLINS FOODS LIMITED

Food, Beverages & Tobacco – Overnight Price: $9.22

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

The Collins Foods FY20 result revealed strength in Australia and relative weakness in Europe. Momentum in KFC Australia drove the result and this has continued in the first seven weeks of the new financial year with comparative sales up 12%.

Canaccord Genuity states the European performance exceeded its forecast and will not act as an overall drag, as the region accounts for less than 10% of group earnings pre-overheads.

The broker believes the Australian performance resulted from the switch to drive-thru and delivery from reduced dining areas. The brand of KFC was also a strength.

A rapid change in strategy toward growth-by-acquisition (more likely in Europe) at the expense of organic rollout was highlighted by the broker.

The rating was upgraded to Buy from Hold. The target price increased to $9.75 from $7.50.

The report was published on June 30, 2020.

Target price is $9.75 Current Price is $9.22 Difference: $0.53
If CKF meets the Canaccord Genuity target it will return approximately 6% (excluding dividends, fees and charges).
The company's fiscal year ends in May.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 23.00 cents and EPS of 41.00 cents.
At the last closing share price the estimated dividend yield is 2.49%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.49.

Forecast for FY22:

Canaccord Genuity forecasts a full year FY22 dividend of 24.00 cents and EPS of 44.00 cents.
At the last closing share price the estimated dividend yield is 2.60%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.95.

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

Collins Foods reported a net profit 5% above the previous corresponding period. Sales and margin improvements, along with a promising start to the financial year have led Wilsons to upgrade forecasts materially.

The broker considers that KFC Germany is building momentum and higher operating leverage may be imminent.

The balance sheet has sufficient capacity for acquisitions, however, the broker is supportive of the temporary delay in store rollout given the prevailing and upcoming capital commitments.

Overweight rating is maintained. Target price is increased to $10.47 from $8.63.

The report was published on July 01, 2020.

Target price is $10.47 Current Price is $9.22 Difference: $1.25
If CKF meets the Wilsons target it will return approximately 14% (excluding dividends, fees and charges).
The company's fiscal year ends in May.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 23.00 cents and EPS of 44.70 cents.
At the last closing share price the estimated dividend yield is 2.49%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.63.

Forecast for FY22:

Wilsons forecasts a full year FY22 dividend of 24.00 cents and EPS of 47.70 cents.
At the last closing share price the estimated dividend yield is 2.60%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.33.

Market Sentiment: 1.0
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: $24.55

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

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

Baillieu estimates the $7bn of superannuation funds within AMP Life will result in $1.5-$2.0m of annualised revenue and boost the company's funds under administration (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 $24.55 Difference: $6.45
If EQT meets the E.L. & C Baillieu target it will return approximately 26% (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 3.46%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.57.

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 3.50%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.57.

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

EVS    ENVIROSUITE LIMITED

Industrial Sector Contractors & Engineers – Overnight Price: $0.16

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

Envirosuite is a leading global provider of environmental management software. The company provides solutions across the air, noise and water sectors. Airports represent a concentration risk, as they generate over 80% of revenue.

The company has brought forward an earnings target by three months, as a result of cost reductions, synergies and increased revenue projections. 

While a positive outcome, Bell Potter awaits further clarification upon the release of FY20 results in August. The broker explains how this should result in a lower forecast loss, but has retained the existing valuation, which is set at a 90% premium to the share price.

Bell Potter retains its Buy (Speculative) recommendation with a valuation set at $0.275 per share.

This report was published on June 30, 2020.

Target price is $0.28 Current Price is $0.16 Difference: $0.115
If EVS meets the Bell Potter target it will return approximately 72% (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 1.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 8.42.

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 17.78.

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

GNX    GENEX POWER LIMITED

EV, Solar & Batteries – Overnight Price: $0.23

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

Genex Power's 250MW Kidston pumped hydro development (K2Hydro) in Queensland is set to receive a final investment decision during the third quarter, 2020.

The $600m budget has been reaffirmed. Pricing (nearly all fixed price) and terms have been confirmed with all major contractors, who will absorb weather, geotechnical and labour risks.

Canaccord Genuity believes JPower will be the likely buyer in the 50% sell down of K2Hydro and has assumed a $40m developer margin.

The Northern Australia Infrastructure Fund has agreed to extend its $610m concessional funding offer to September 30, while the Queensland government and Genex are progressing the agreement to co-fund the transmission line that links the Kidston renewables hub to the electricity grid.

Speculative Buy is maintained. Price target price increased to $0.34 from $0.30.

The report was published on July 01, 2020.

Target price is $0.34 Current Price is $0.23 Difference: $0.11
If GNX meets the Canaccord Genuity target it will return approximately 48% (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 1.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 17.69.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 0.00 cents and EPS of 0.00 cents.

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

GUD    G.U.D. HOLDINGS LIMITED

Automobiles & Components – Overnight Price: $11.50

Wilsons rates ((GUD)) as Market Weight (3) –

Wilsons believe an improvement in trading for the core Auto business has been underway since May. Some peer confirmation has been provided by a trading update from Bapcor ((BAP)).

This is believed to be due to a combination of increased travel distance post-lockdown and government support packages. 

The broker forecasts Auto sales will decline by 6% in 2H20. The subsequent half should see organic growth return to around 5% and margins are expected to improve with the benefit of cost reductions and the recent rally of the Australian dollar.

Despite lower earnings and cash conversion dropping to 50% (from a 3 year average of 80%), there are no leverage fears for the broker.

Market weight rating is maintained. Price target is decreased to $11.15 from $11.70.

This report was produced on June 29, 2020.

Target price is $11.15 Current Price is $11.50 Difference: minus $0.35 (current price is over target).
If GUD meets the Wilsons target it will return approximately minus 3% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $10.44, suggesting downside of -9.2%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 49.00 cents and EPS of 59.10 cents.
At the last closing share price the estimated dividend yield is 4.26%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.46.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 57.7, implying annual growth of -16.3%.
Current consensus DPS estimate is 38.5, implying a prospective dividend yield of 3.3%.
Current consensus EPS estimate suggests the PER is 19.9.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 57.00 cents and EPS of 69.80 cents.
At the last closing share price the estimated dividend yield is 4.96%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.48.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 59.9, implying annual growth of 3.8%.
Current consensus DPS estimate is 48.4, implying a prospective dividend yield of 4.2%.
Current consensus EPS estimate suggests the PER is 19.2.

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

IFL    IOOF HOLDINGS LIMITED

Wealth Management & Investments – Overnight Price: $4.95

Bell Potter rates ((IFL)) as Sell (5) –

After a review of the balance sheet, Bell Potter downgrades IOOF Holdings to a Sell. Covid-19 has heightened existing problems and a capital raise may be required, concludes the broker.

Over the next three years, the broker forecasts spending requirements of -$700m (including dividends, remediation program and remaining integration costs) to exceed revenues of approximately $375m ($125 net profit after tax per annum). This calculation assumes a steady debt level of $460m.

Bell Potter has slightly increased earnings forecasts over the next three years, but this is largely a result of mark to markets, with the ASX200 appreciating during the quarter.

The rating is reduced to Sell from Hold. The target price is increased to $4.30 from $4.00. 

The report was published on June 30, 2020.

Target price is $4.30 Current Price is $4.95 Difference: minus $0.65 (current price is over target).
If IFL meets the Bell Potter target it will return approximately minus 13% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $4.70, suggesting downside of -5.1%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 21.00 cents and EPS of 34.60 cents.
At the last closing share price the estimated dividend yield is 4.24%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.31.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 39.1, implying annual growth of 382.7%.
Current consensus DPS estimate is 31.3, implying a prospective dividend yield of 6.3%.
Current consensus EPS estimate suggests the PER is 12.7.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 10.00 cents and EPS of 37.20 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 13.31.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 45.0, implying annual growth of 15.1%.
Current consensus DPS estimate is 30.8, implying a prospective dividend yield of 6.2%.
Current consensus EPS estimate suggests the PER is 11.0.

Market Sentiment: 0.2
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: $8.90

Goldman Sachs rates ((ILU)) as Buy (1) –

Goldman Sachs is unmoved by Iluka Resources announcing they will be in receipt of less than the 175kt of contracted synthetic rutile (SR) subject to take-or-pay arrangements, as they have already accounted for this in prior forecasts.

The broker expects steady prices during 2H20 for Ilmenite, rutile and SR. Prices will then decline in 2021, before bouncing back in 2022.

Zircon prices are expected to decline for another six months before climbing in 2021 on better demand and a supply shortage.

The Buy rating is maintained. The price target remains at $10.10

This report was published on June 26, 2020.

Target price is $10.10 Current Price is $8.90 Difference: $1.2
If ILU meets the Goldman Sachs target it will return approximately 13% (excluding dividends, fees and charges).
Current consensus price target is $9.54, suggesting upside of 7.2%(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 1.12%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.12.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 48.4, implying annual growth of N/A.
Current consensus DPS estimate is 17.5, implying a prospective dividend yield of 2.0%.
Current consensus EPS estimate suggests the PER is 18.4.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 21.60 cents and EPS of 61.00 cents.
At the last closing share price the estimated dividend yield is 2.43%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.59.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 81.1, implying annual growth of 67.6%.
Current consensus DPS estimate is 33.2, implying a prospective dividend yield of 3.7%.
Current consensus EPS estimate suggests the PER is 11.0.

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

LOV    LOVISA HOLDINGS LIMITED

Luxury – Overnight Price: $6.21

Canaccord Genuity rates ((LOV)) as Hold (3) –

Lovisa Holdings provided a trading update which revealed FY20 sales of $237m, which was lower than the $253m forecast by Canaccord Genuity.

The broker expects earnings will reach a low point in a years time and the current share price is expensive at a forward PE of 30x times.

The ROW markets are performing worse than the average and all Spanish stores were closed, incurring -$3m in restructuring costs.

Canaccord Genuity acknowledges the balance sheet is better than expectations and would be supportive of any potential acquisitions upon normalisation of conditions.

Hold rating is maintained. Price target increased to $5.00 from $4.75.

The report was published on July 3, 2020.

Target price is $5.00 Current Price is $6.21 Difference: minus $1.21 (current price is over target).
If LOV meets the Canaccord Genuity target it will return approximately minus 19% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $6.60, suggesting upside of 6.2%(ex-dividends)
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 19.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 32.68.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 20.8, implying annual growth of -40.7%.
Current consensus DPS estimate is 3.8, implying a prospective dividend yield of 0.6%.
Current consensus EPS estimate suggests the PER is 29.9.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 8.00 cents and EPS of 20.00 cents.
At the last closing share price the estimated dividend yield is 1.29%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 31.05.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 23.2, implying annual growth of 11.5%.
Current consensus DPS estimate is 10.9, implying a prospective dividend yield of 1.8%.
Current consensus EPS estimate suggests the PER is 26.8.

Market Sentiment: 0.0
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: $0.82

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

Maca announced a $230m contract win with Atlas Iron and provided some clarity around some 2H20 cash movements.

The contract win increases work in hand to $2.2bn and the broker see potential for additional near-term contract wins.

The company reported net debt of $74m, about -$16m lower than forecast by Canaccord Genuity.

While generally positive on the stock, the broker remains concerned with challenges surrounding the Bluff Coal project (Queensland). It accounts for around 15% of group revenue and could be a loss-making project in FY21.

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

This report was published on July 3, 2020.

Target price is $1.13 Current Price is $0.82 Difference: $0.31
If MLD meets the Canaccord Genuity target it will return approximately 38% (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 13.90 cents.
At the last closing share price the estimated dividend yield is 6.10%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 5.90.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 5.00 cents and EPS of 11.80 cents.
At the last closing share price the estimated dividend yield is 6.10%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.95.

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

MYS    MYSTATE LIMITED

Banks – Overnight Price: $3.97

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

MyState disclosed the covid-19 impact on impairment expenses, which indicated approximately $582 of loans have been provided with assistance.

Almost 97% relate to housing, with 89% being principal and interest loans while 79% are Owner Occupied and mainly in NSW, VIC, TAS and QLD.

Using forward assumptions, MyState forecasts an increase in provisions of between -$3m-$4m.

The broker estimates total impairment expense for FY20 is materially lower than estimates for MyState's peers. As a result, the forecast final dividend of 8.75 cents is relatively assured.

The broker reiterates the Buy rating. The target price is $4.50.

The report was published on June 29, 2020.

Target price is $4.50 Current Price is $3.97 Difference: $0.53
If MYS meets the Bell Potter target it will return approximately 13% (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 23.00 cents and EPS of 34.90 cents.
At the last closing share price the estimated dividend yield is 5.79%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.38.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 20.50 cents and EPS of 33.40 cents.
At the last closing share price the estimated dividend yield is 5.16%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.89.

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

NEU    NEUREN PHARMACEUTICALS LTD

Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $1.29

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

Neuren, the clinical stage drug development company, has raised $21.9m from a $20m placement and SPP, both at $1.40. The funds will be largely used to fund the lesser-known of its two drugs under development, named NNZ-2591.

Looking forward, Bell Potter suggests an important catalyst for the company will be the Phase 3 Lavender trial results, involving the company's lead drug trofinetide. These results will be more than 12 months away.

The broker has reallocated research and development costs, which increases the net loss forecast in FY20 and FY21 by -9% and -16%, respectively.

Buy is maintained. Target price is decreased to $3.05 from $3.10.

This report was published on June 29, 2020.

Target price is $3.05 Current Price is $1.29 Difference: $1.76
If NEU meets the Bell Potter target it will return approximately 136% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 10.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 12.65.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 11.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 11.42.

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

NUF    NUFARM LIMITED

Agriculture – Overnight Price: $3.95

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

Nufarm has announced capacity reductions across two of its facilities, resulting in one-off restructuring costs. Costs of approximately -$50m will be incurred over the next 18 months, but once completed should result in up to $15m in earnings per year.

The broker suggests the share price is trading at levels comparable to its peers. Additionally, the opportunity of the omega-3 canola product is being negated by the underperformance of the European business (-$40-$45m below market expectations)

Resolving this latter issue will be a greater catalyst than the omega-3 opportunity, according to Bell Potter.

Hold rating maintained. Target priced reduced to $4.60 from $4.70.

This report was published on July 01, 2020.

Target price is $4.60 Current Price is $3.95 Difference: $0.65
If NUF meets the Bell Potter target it will return approximately 16% (excluding dividends, fees and charges).
Current consensus price target is $5.31, suggesting upside of 34.3%(ex-dividends)
The company's fiscal year ends in July.

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 33.19.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -2.3, implying annual growth of N/A.
Current consensus DPS estimate is 1.2, implying a prospective dividend yield of 0.3%.
Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 8.00 cents and EPS of 15.50 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 25.48.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 20.4, implying annual growth of N/A.
Current consensus DPS estimate is 5.1, implying a prospective dividend yield of 1.3%.
Current consensus EPS estimate suggests the PER is 19.4.

Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

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Goldman Sachs rates ((NUF)) as Buy (1) –

Nufarm announced plans to further rationalise manufacturing in both Austria and Australia over the next 18 months.

The broker notes that any proceeds from the sale of the Laverton facility have been excluded, when highlighting the -$5m of closure costs. An additional -$10m one-off cost will be incurred in Austria from the cessation of manufacturing herbicide 2, 4-D.

Goldman Sachs views the announcement as compatible with the Performance Improvement Program announced with the 1H19 results. Furthermore, the broker believes that stabilising the manufacturing and supply chain base are vital going forward.

Goldman Sachs reiterates its Buy recommendation with a target price of $6.40.

This report was published on June 30, 2020.

Target price is $6.40 Current Price is $3.95 Difference: $2.45
If NUF meets the Goldman Sachs target it will return approximately 62% (excluding dividends, fees and charges).
Current consensus price target is $5.31, suggesting upside of 34.3%(ex-dividends)
The company's fiscal year ends in July.

Forecast for FY20:

Goldman Sachs forecasts a full year FY20 dividend of 0.00 cents and EPS of 3.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 131.67.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -2.3, implying annual growth of N/A.
Current consensus DPS estimate is 1.2, implying a prospective dividend yield of 0.3%.
Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 7.00 cents and EPS of 24.00 cents.
At the last closing share price the estimated dividend yield is 1.77%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.46.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 20.4, implying annual growth of N/A.
Current consensus DPS estimate is 5.1, implying a prospective dividend yield of 1.3%.
Current consensus EPS estimate suggests the PER is 19.4.

Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

NXS    NEXT SCIENCE LIMITED

Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $1.43

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

Next Science has a primary focus on disrupting and combating biofilms, one of the leading causes of antimicrobial resistance. To that end, the company develops, manufactures and partners innovative products.

SurgX (sterile gel applied to surgical incisions) is developing a biofilm-disruption narrative with surgeons, ahead of the expected FDA approval of Next Science's flagship product Xperience in 3Q20.

Once approved, it will support a 2H20 launch in orthopedic and colorectal surgery, targeting surgical site infection in US hospitals. Wilsons forecast that FDA approval of Xperience will be a catalyst for upgrades.

The significance of Xperience is revealed by the brokers' first year sales estimates of $8m growing to $85m after five years, allowing the company to be profitable by FY22.

Wilsons retains Overweight. Target price is $2.87.

The report was published on July 01, 2020.

Target price is $2.87 Current Price is $1.43 Difference: $1.44
If NXS meets the Wilsons target it will return approximately 101% (excluding dividends, fees and charges).

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 6.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 23.44.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 5.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 26.98.

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

NXT    NEXTDC LIMITED

Cloud services – Overnight Price: $11.31

Goldman Sachs rates ((NXT)) as Buy (1) –

Momentum from a record 2H20 has carried forward with the company announcing a 4MW increase in contracted commitments at the S2 facility and 24MW of 'options' in the NSW market.

The total capacity of S1 and S2 facilities has now been exceeded with combined contracted commitments in NSW of 60MW. This suggests to the broker that S3, which recently commenced construction, has 14MW of options.

Goldman Sachs believes its forecast for FY19-23 EBITDA CAGR over 25% is now justified. The analysts expect growth from conversion of existing expansion options, organic growth and potential to win contracts in Sydney, Melbourne and Perth (new facility nearly completed).

Buy rating maintained, Price target increased to $11.10 from $9.75

This report was published on July 01, 2020.

Target price is $11.10 Current Price is $11.31 Difference: minus $0.21 (current price is over target).
If NXT meets the Goldman Sachs target it will return approximately minus 2% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $10.63, suggesting downside of -6.0%(ex-dividends)
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 minus 4.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 282.75.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -4.0, 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:

Goldman Sachs forecasts a full year FY21 dividend of 0.00 cents and EPS of 0.00 cents.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 0.2, 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 5655.0.

Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

PBP    PROBIOTEC LIMITED

Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $2.06

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

Shaw and Partners believes the Probiotic share price reflects a -30% discount to its peer group, yet it is likely to benefit from covid-19 over the short and long-term.

Growth may originate from an increase in the core over-the-counter (OTC) pharma (cough and cold) products, potential government support and the trend toward on-shoring. In anticipation, the company has increased manufacturing capacity and the broker believes large multi-year contracts should flow.

Shaw and Partners forecasts $16.5m EBITDA for the upcoming FY20 result. Net debt is likely to be minimal and at least $35m should be available for acquisitions.

Buy rating reaffirmed with target price of $2.43.

The report was published on July 01, 2020.

Target price is $2.43 Current Price is $2.06 Difference: $0.37
If PBP meets the Shaw and Partners target it will return approximately 18% (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 4.80 cents and EPS of 10.40 cents.
At the last closing share price the estimated dividend yield is 2.33%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.81.

Forecast for FY21:

Shaw and Partners forecasts a full year FY21 dividend of 6.40 cents and EPS of 15.50 cents.
At the last closing share price the estimated dividend yield is 3.11%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.29.

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

PDN    PALADIN ENERGY LTD

Uranium – Overnight Price: $0.12

Shaw and Partners rates ((PDN)) as Initiation of coverage with Buy (1) –

Shaw and Partners initiates coverage of Paladin Energy with a Buy rating and $0.26 price target.

The company is preparing to restart the 75% owned Langer Heinrich uranium mine in Namibia, after an improvement in the spot price of uranium to US$33/lb.

Shaw and Partners believes Paladin will require uranium sales at a price of around US$50/lb, with a tenor of at least five years, to underwrite a restart. It will be a low-risk restart, as production will be from existing stockpiles and operating costs will be low, at an all-in sustaining cost of about US32/lb.

The company estimates it will cost around -US$81m to restart operations and upgrade the processing plant, for the relatively simple open cut mine.

Paladin needs to recapitalise the existing US$143 debt (plus accrued interest).

The broker believes a key catalyst will be the continued improvement in the uranium market and indications of utility buyers returning to the term contract market.

This report was published on Jul 01, 2020.

Target price is $0.26 Current Price is $0.12 Difference: $0.14
If PDN meets the Shaw and Partners target it will return approximately 117% (excluding dividends, fees and charges).

Forecast for FY20:

Shaw and Partners forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 1.94 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 6.20.

Forecast for FY21:

Shaw and Partners forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 1.79 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 6.71.

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

PSQ    PACIFIC SMILES GROUP LIMITED

Healthcare services – Overnight Price: $1.55

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

Pacific Smiles Group has issued FY20 guidance. Volumes have been steadily increasing since covid-19 restrictions were lifted and all centres were reopened in May.

Trading was stronger than expected by Bell Potter, who now expects pent-up demand to positively impact volumes in the next quarter.

Also, JobKeeper payments have increased margins. A potential negative is the reinstatement of Victorian restrictions (since occurred) as 28 of the 94 centres are located there.

The broker has reinstated an interim dividend for FY21 and continues to expect no dividend for FY20. Hold rating retained. Target price increased to $1.65 from $1.54.

This report was published on July 01, 2020.

Target price is $1.65 Current Price is $1.55 Difference: $0.1
If PSQ 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 2.40 cents and EPS of 4.20 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 36.90.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 5.10 cents and EPS of 4.70 cents.
At the last closing share price the estimated dividend yield is 3.29%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 32.98.

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

RIC    RIDLEY CORPORATION LIMITED

Agriculture – Overnight Price: $0.74

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

Ridley Corp has confirmed the commissioning, on time and on budget, of a new feedmill at Wellsford, near Bendigo in Victoria.

This allows the closure of the Mooroopna feedmill and the consolidation of its production and customers, while still retaining 70,000 tonnes of feed capacity at Wellsford.

Wilsons continues to be cautiously optimistic about sustained earnings growth. The broker notes the core valuation of the business is $0.93, which is above the prevailing share price.

Overweight rating retained. Target price is reduced to $1.10 from $1.15.

This report was published on June 29, 2020.

Target price is $1.10 Current Price is $0.74 Difference: $0.36
If RIC meets the Wilsons target it will return approximately 49% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 3.00 cents and EPS of 5.50 cents.
At the last closing share price the estimated dividend yield is 4.05%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.45.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 3.00 cents and EPS of 5.60 cents.
At the last closing share price the estimated dividend yield is 4.05%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.21.

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

SRG    SRG GLOBAL LIMITED

Mining Sector Contracting – Overnight Price: $0.25

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

SRG Global has confidently guided to greater than 50% growth in year-on-year earnings for FY21. Shaw and Partners suggest this confidence stems from a $707m order book and around 70% in recurring earnings.

The analysts also believe it derives from imminent and recent contract wins, a reduction in fixed costs and New Zealand operations returning to full capacity after the recent lockdown.

Post the CGS merger, the broker suggests the combined SRG is far stronger on a range of metrics, while still trading at a -21% discount to its peers. 

Buy rating maintained. Target price is $0.45

This report was published on July 3, 2020.

Target price is $0.45 Current Price is $0.25 Difference: $0.2
If SRG meets the Shaw and Partners target it will return approximately 80% (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 0.50 cents and EPS of 1.60 cents.
At the last closing share price the estimated dividend yield is 2.00%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.63.

Forecast for FY21:

Shaw and Partners forecasts a full year FY21 dividend of 1.00 cents and EPS of 2.70 cents.
At the last closing share price the estimated dividend yield is 4.00%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.26.

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

ST1    SPIRIT TELECOM LIMITED

Telecommunication – Overnight Price: $0.27

Shaw and Partners rates ((ST1)) as Buy (1) –

Spirit Telecom, the independent telecommunications provider, has acquired VPD Group, which delivers a range of services across Qld and NSW with over 85% in recurring revenues.

Shaw and Partners believes this not only provides geographical diversity, but also provides a product offering across the wholesale spectrum. Additionally, it provides a significant sales channel.

The company advises VPD Group is being acquired for -$14m with earn-outs that can lever up to a total amount of -$27.5m.

The broker expects the company to either be an ongoing active consolidator or become a target itself.

The broker upgrades underlying EBITDA for FY21-22 by 46%, 39% and 35%, respectively. Buy rating maintained. Target price increased to $0.34 from $0.27.

The report was published on June 29, 2020.

Target price is $0.34 Current Price is $0.27 Difference: $0.07
If ST1 meets the Shaw and Partners target it will return approximately 26% (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 0.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 270.00.

Forecast for FY21:

Shaw and Partners forecasts a full year FY21 dividend of 0.00 cents and EPS of 1.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.55.

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

TNK    THINK CHILDCARE AND EDUCATION LIMITED

Childcare – Overnight Price: $0.84

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

Think Childcare Developments, the development arm of Think Childcare, has acquired six purpose built Nido centres. This brings the secured pipeline of incubator centres to 24. They are expected to commence trading in the next 18-24 months.

Wilsons is encouraged the development arm has been able to source independent funding and believes it now has capacity to acquire profitable centres. A key catalyst will be a favourable debt or equity raising to support this acquisition-led growth.

The broker views the company as well capitalised, with an attractive valuation and a fully franked dividend yield of around 7%..

Overweight rating is retained. Target price is increased to $1.38 from $1.20

This report was published on July 01, 2020.

Target price is $1.38 Current Price is $0.84 Difference: $0.54
If TNK meets the Wilsons target it will return approximately 64% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 6.00 cents and EPS of 11.10 cents.
At the last closing share price the estimated dividend yield is 7.14%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.57.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 10.00 cents and EPS of 18.90 cents.
At the last closing share price the estimated dividend yield is 11.90%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 4.44.

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

YOJ    YOJEE LIMITED

Software & Services – Overnight Price: $0.09

Euroz rates ((YOJ)) as Speculative Buy (1) –

Yojee Limited focuses on developing a sharing- economy based logistics platform in the Asia-Pacific region.

The company processed 10,000 transactions on the first day of going live in the Philippines and the broker believes that if scale of transactions is achieved, margins of 50% are considered conservative.

A presentation by the company shows achievable revenue of $7.3m should the transactions per day increase to 100,000 per day.

Euroz states that validation of the platform by existing clients, including a leading logistics company, is important for ultimate success.

The Buy rating is maintained. The target price is $0.13.

This report was published on June 24, 2020.

Target price is $0.13 Current Price is $0.09 Difference: $0.04
If YOJ meets the Euroz target it will return approximately 44% (excluding dividends, fees and charges).

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

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