Australian Broker Call *Extra* Edition – Aug 12, 2020

Daily Market Reports | Aug 12 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)

360 (2)   ALQ   APE (3)   ARX (2)   BWX   CCP   CCX   DOW   EHL   FCL   GMG   GSS   GUD   IPD   JHG   MMM   MND   MQG   MSB   OBL   PBH   PCK   PVS (2)   RCL   RMY   RVS   STG   SUL   UMG   VUK  

ALQ    ALS LIMITED

Industrial Sector Contractors & Engineers - Overnight Price: $9.00

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

ALS Ltd provided a trading update for 1Q21 with revenues below Goldman Sachs anticipated 1H21 run rate, but flat margins were meaningfully above the broker's expectations.

The broker highlights other key takeaways including Life Sciences was the least impacted by covid-19 as it provides essential services, and while mining sample flows were challenged at the beginning of the quarter, they experienced an improvement in late May/June, due to an increase in general mining activity.

Management noted the company's recent acquisitions (ARJ and Aquimisa) are performing in-line with expectations.

The Neutral rating is maintained. The target price is increased to $8.80.

This report was published on July 29, 2020.

Target price is $8.80 Current Price is $9.00 Difference: minus $0.2 (current price is over target).
If ALQ 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 $8.12, suggesting downside of -9.8%(ex-dividends)
The company's fiscal year ends in March.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 0.00 cents and EPS of 36.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 32.6, implying annual growth of 23.2%.
Current consensus DPS estimate is 15.9, implying a prospective dividend yield of 1.8%.
Current consensus EPS estimate suggests the PER is 27.6.

Forecast for FY22:

Goldman Sachs forecasts a full year FY22 dividend of 0.00 cents and EPS of 41.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.95.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 39.8, implying annual growth of 22.1%.
Current consensus DPS estimate is 20.9, implying a prospective dividend yield of 2.3%.
Current consensus EPS estimate suggests the PER is 22.6.

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

BWX    BWX LTD

Household & Personal Products - Overnight Price: $4.12

Canaccord Genuity rates ((BWX)) as Upgrade to Buy from Hold (1) -

BWX announced unaudited earnings (EBITDA) of 30.9m. This was within its guidance range and 4% above the Canaccord Genuity estimate.

Sukin was the standout performer of the company's brands and its revenue reflected accelerating like-for-like growth, says the analyst.

Canaccord Genuity points to other highlights including increased gross margins, an improved working capital profile and better net debt.

The company is raising up to $50m of new equity via a $40m placement and a $10m SPP with an issue price of $3.40. The raising will support the development of a new operations centre.

The broker upgrades the rating to a Buy from Hold as the company has undertaken two years of increasing investment in its own operations. The analyst suggests it now has a more robust business model with improved growth prospects and is generating higher quality earnings, along with a stronger balance sheet.

The target price is increased to $4.58 from $4.01.

This report was published on August 4, 2020.

Target price is $4.58 Current Price is $4.12 Difference: $0.46
If BWX meets the Canaccord Genuity target it will return approximately 11% (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 4.00 cents and EPS of 11.00 cents.
At the last closing share price the estimated dividend yield is 0.97%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 37.45.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 5.90 cents and EPS of 13.00 cents.
At the last closing share price the estimated dividend yield is 1.43%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 31.69.

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

EHL    EMECO HOLDINGS LTD

Mining Sector Contracting - Overnight Price: $1.02

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

Emeco Holdings reported a strong FY20 result with earnings in line with its guidance. The company also guided towards a better than expected FY21 outlook.

Operating income was up 15% while net profit grew by 23.1%. Bell Potter notes earnings were hit by the soft coal markets driven by less utilisation in the Eastern Region due to the pandemic.

This was partially offset by a better than expected result from Pit N Portal. Western Regions' exposure to gold and iron ore also helped. The broker considers the company's rental business outlook to be better than expected. 

The broker has revised its earnings estimates downwards for FY21 while increasing it for FY22.

Bell Potter reiterates its Buy recommendation with the target price increasing to $1.60 from $1.52. The broker expects coal-related headwinds to continue to impact the Eastern Region.

Target price is $1.60 Current Price is $1.02 Difference: $0.58
If EHL meets the Bell Potter target it will return approximately 57% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 0.00 cents and EPS of 10.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.90.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 0.00 cents and EPS of 17.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 5.90.

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

FCL    FINEOS CORPORATION HOLDINGS PLC

Cloud services - Overnight Price: $4.57

Moelis rates ((FCL)) as Hold (3) -

Fineos Corp Holdings released its Q420 operating update and Moelis notes the company continues to execute well through the pandemic, by winning new clients and maintaining high professional services utilisation.

Full year cash receipts were EUR82m, which was slightly below expectations, according to the analyst, given management expected revenue to be at the upper end of EUR84m-86m guidance range.

Two new contracts were signed in the quarter, F&G (announced in June) and AIA Australia, a top two life insurer in Australia.

The largest North American client completed an upgrade to the cloud. Having the full AdminSuite live in the cloud is an important milestone for future Policy and Billing sales, which the broker expects to play out in the latter half of FY21.

Moelis reinstates coverage with a Hold and a target price of $4.72.

This report was published on July 30, 2020.

Target price is $4.72 Current Price is $4.57 Difference: $0.15
If FCL meets the Moelis target it will return approximately 3% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Moelis forecasts a full year FY20 dividend of 0.00 cents and EPS of 3.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 147.42.

Forecast for FY21:

Moelis forecasts a full year FY21 dividend of 0.00 cents and EPS of 5.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 91.40.

This company reports in EUR. 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

GUD    G.U.D. HOLDINGS LIMITED

Automobiles & Components - Overnight Price: $11.58

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

GUD Holdings' FY20 result is labeled as "reasonable" with net profit down -13% due to volatile trading conditions. Operating income in the core automotive segment declined -8% because of fx impact and unfavourable mix margins.

Strong cash conversion at 97% helped minimise damage to the balance sheet from weaker trading results. Trading conditions have improved and longer-term, Wilsons forecasts single-digit operating income growth and modest bolt-on acquisition activity.

Wilsons maintains its Market Weight rating with a target price of $11.15.

This report was published on July 29, 2020.

Target price is $11.15 Current Price is $11.58 Difference: minus $0.43 (current price is over target).
If GUD meets the Wilsons target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $11.65, suggesting upside of 0.6%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 54.00 cents and EPS of 67.60 cents.
At the last closing share price the estimated dividend yield is 4.66%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.13.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 60.8, implying annual growth of 20.6%.
Current consensus DPS estimate is 41.4, implying a prospective dividend yield of 3.6%.
Current consensus EPS estimate suggests the PER is 19.0.

Forecast for FY22:

Wilsons forecasts a full year FY22 dividend of 57.00 cents and EPS of 70.20 cents.
At the last closing share price the estimated dividend yield is 4.92%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.50.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 65.8, implying annual growth of 8.2%.
Current consensus DPS estimate is 51.4, implying a prospective dividend yield of 4.4%.
Current consensus EPS estimate suggests the PER is 17.6.

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


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