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

Daily Market Reports | Aug 26 2020

An additional news report on the recommendation, valuation, forecast and opinion changes for ASX-listedequities.

In addition to The Australian Broker Call Report, which is published and updated daily (Mon-Fri), FNArenahas now added The Australian Broker Call *Extra* Edition, featuring additional sources of research and insights on ASX-listedstocks, also enlarging the number of stocks that make up the FNArenauniverse.

One key difference is the *Extra* Edition will not be updated daily, but merely "regularly" depending on availabilityofsuitable 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 publicationmay not be up to date, or yet awaiting another update by FNArena'steam 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)

ADH(3) ALU BCI BRG(2) CL1 CQE CQR GWA IMD IMR JAN(3) KGN LIC(2) MAD PPS PXS

ALU ALTIUM LIMITED

Hardware & Equipment - Overnight Price: $37.45

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

Altium has reported underlying FY20 earnings (EBITDA) of US$70.5m, which was -2% below the Goldman Sachs forecast.

The company provided revenue and earnings guidance ranges which trigger downgrades to the broker's near-term earnings (EBITDA) forecasts, partially offset by a lower tax rate at the EPS level.

The broker notes the company remains strong in the PCB software market which has longer-term appeal. However, the analyst believes the company's re-rating potential will be limited while consensus remains in a downgrade cycle.

The Neutral rating is maintained. The target price is increased to $36.35 from $32.50.

This report was published on August 18, 2020.

Target price is $36.35 Current Price is $37.45 Difference: minus $1.1 (current price is over target).
If ALU meets the Goldman Sachs target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $35.35, suggesting downside of -5.6%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 62.26 cents and EPS of 62.26 cents.
At the last closing share price the estimated dividend yield is 1.66%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 60.15.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 57.1, implying annual growth of N/A.
Current consensus DPS estimate is 41.3, implying a prospective dividend yield of 1.1%.
Current consensus EPS estimate suggests the PER is 65.6.

Forecast for FY22:

Goldman Sachs forecasts a full year FY22 dividend of 80.05 cents and EPS of 83.01 cents.
At the last closing share price the estimated dividend yield is 2.14%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 45.11.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 65.9, implying annual growth of 15.4%.
Current consensus DPS estimate is 46.8, implying a prospective dividend yield of 1.2%.
Current consensus EPS estimate suggests the PER is 56.8.

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

BCI BC IRON LIMITED

Iron Ore - Overnight Price: $0.28

Bell Potter rates ((BCI)) as Initiation of coverage with Buy (1) -

BC Irons iron ore earnings stream and strong cash position provide a strong foundation for developingits 100% owned Mardie Salt and sulphate of potash (SOP) project in Western Australia, reports Bell Potter.

The broker highlights the company combines an iron ore royalty-like business with a large scale greenfields salt and fertiliser project.

The company is expected to reach a final investment decision and receive approval for Mardie in early 2021. The broker expects financing to commence in mid-2021 with first production from 2024.

Noting the Mardie Salt and SOP project has the potential to add value, Bell Potter initiates coverage on the stock with a Buy rating and a target price of $0.47.

This report was published on August 12, 2020.

Target price is $0.47 Current Price is $0.28 Difference: $0.19
If BCI meets the Bell Potter target it will return approximately 68% (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 3.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.24.

Forecast for FY22:

Bell Potter forecasts a full year FY22 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 25.45.

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

CL1 CLASS LIMITED

Cloud services - Overnight Price: $1.96

Wilsons rates ((CL1)) as Downgrade to Market Weight from Overweight (3) -

Class'results were strong, observes Wilsons, led by the core Class Super offering. The company has guided to revenue of $53m, up 20%, with underlying operating margin of more than 39.6% versus Wilsons' 41.2%.

Class considers the industry is highly fragmented and "ripe for consolidation and the broker takes this to mean there may be M&A activity going ahead.

FY21may be a game-changerwith the company establishingcredibility in Class Trust which could create momentum into FY22,comments the broker.Wilsons downgrades its rating to Market Weight from Overweight with a target price of $2.11.

This report was published on August 14, 2020.

Target price is $2.11 Current Price is $1.96 Difference: $0.15
If CL1 meets the Wilsons target it will return approximately 8% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 5.00 cents and EPS of 6.20 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 31.61.

Forecast for FY22:

Wilsons forecasts a full year FY22 dividend of 5.00 cents and EPS of 7.60 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 25.79.

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

CQE CHARTER HALL SOCIAL INFRASTRUCTURE REIT

Childcare - Overnight Price: $2.62

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

Canaccord Genuity notes Charter Hall Social Infrastructure REITdelivered another "solid set of earnings". The REIT's guidance points towards a positive earnings outlook withdistribution guidance for 15c.

This is above the broker's previous estimate and implies the business is operating in fairly normal conditions.

Given the REIT's high level of tenant occupancy, long weighted average lease expiryand an expected dividend yield of 6.0% in FY21, Canaccord Genuity maintains its Buy recommendation with a price target of $2.79.

The report was published on August 11,2020.

Target price is $2.79 Current Price is $2.62 Difference: $0.17
If CQE meets the Canaccord Genuity target it will return approximately 6% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 15.00 cents and EPS of 15.00 cents.
At the last closing share price the estimated dividend yield is 5.73%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.47.

Forecast for FY22:

Canaccord Genuity forecasts a full year FY22 dividend of 16.00 cents and EPS of 17.00 cents.
At the last closing share price the estimated dividend yield is 6.11%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.41.

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

CQR CHARTER HALL RETAIL REIT

REITs - Overnight Price: $3.33

Moelis rates ((CQR)) as Reinstates coverage with Buy (1) -

Charter Hall Retail REITreported FY20 funds from operations (FFO) of 30.56c or 28.4c when adjusted for covid-19. The distribution was 24.52c, implying 100% adjusted funds from operations (AFFO).

Moelisreinstates coverage with a Buy rating and target price of $3.65.

The broker notes the REIT is trading at a discount to net tangible asset which reflects uncertainty around the strategic direction of the recent acquisitions.

The REIT remains an attractive value proposition, states the broker,supported by its defensive income stream and attractive distribution yield.

Target price is $3.65 Current Price is $3.33 Difference: $0.32
If CQR meets the Moelis target it will return approximately 10% (excluding dividends, fees and charges).
Current consensus price target is $3.37, suggesting upside of 1.2%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY21:

Moelis forecasts a full year FY21 dividend of 22.60 cents and EPS of 25.00 cents.
At the last closing share price the estimated dividend yield is 6.79%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.32.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 25.2, implying annual growth of 166.4%.
Current consensus DPS estimate is 23.0, implying a prospective dividend yield of 6.9%.
Current consensus EPS estimate suggests the PER is 13.2.

Forecast for FY22:

Moelis forecasts a full year FY22 dividend of 24.40 cents and EPS of 27.20 cents.
At the last closing share price the estimated dividend yield is 7.33%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.24.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 26.2, implying annual growth of 4.0%.
Current consensus DPS estimate is 24.7, implying a prospective dividend yield of 7.4%.
Current consensus EPS estimate suggests the PER is 12.7.

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


The full story is for FNArena subscribers only. To read the full story plus enjoy a free two-week trial to our service SIGN UP HERE

If you already had your free trial, why not join as a paying subscriber? CLICK HERE

MEMBER LOGIN