Australian Broker Call *Extra* Edition – Oct 09, 2020

Daily Market Reports | Oct 09 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)

ALX   APE   API   APX   APZ   ARX   BPT   BRG   BXB   CAJ   JAN   JLG   LBY   LLC   MIN   MVP   NHC (2)   NWS   NXS (2)   OPY   PAL   PAR   PMV (2)   PNV   RHC   RHP (2)   SMP   SSM   YOJ  

PNV    POLYNOVO LIMITED

Pharmaceuticals & Biotech/Lifesciences - Overnight Price: $2.37

Bell Potter rates ((PNV)) as Initiation of coverage with Hold (3) -

Bell Potter initiates coverage on Polynovo with a Hold rating and a price target of $2.40.

Polynovo's Novosorb BTM (biologic temporizing matrix) product generated impressive sales growth in wounds and trauma, observes Bell Potter which convinces the broker the current trajectory is durable.

In the broker's view, the larger value proposition for the stock lies in physicians using the product beyond severe burns, into other wounds, surgical and reconstructive applications.

The broker recognises the growth opportunities from expanding beyond the burn category, but assesses this is largely priced in. 

This report was published on September 25, 2020.

Target price is $2.40 Current Price is $2.37 Difference: $0.03
If PNV meets the Bell Potter target it will return approximately 1% (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 0.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 592.50.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 0.00 cents and EPS of 2.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 107.73.

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

RHC    RAMSAY HEALTH CARE LIMITED

Healthcare services - Overnight Price: $69.49

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

After the restrictions were imposed, Ramsay Healthcare entered into the National Framework Agreement which ensured viability but drove margins to broadly 0% with the organisation operating on a cost-recovery basis. Volumes began recovering in mid-August and are tracking around 85%.

Currently, Ramsay expects 90-95% of pre-covid volumes by October-end. The company expects the NHS agreement to be withdrawn by end-December provided there is no material second wave, but the broker isn't too sure about this.

Assuming the agreement is withdrawn in December and there are no further restrictions on volumes, management sees strong pent-up demand driving second half volumes above pre-covid levels.

Goldman Sachs retains its Neutral rating with a target price of $63.

This report was published on September 23, 2020.

Target price is $63.00 Current Price is $69.49 Difference: minus $6.49 (current price is over target).
If RHC meets the Goldman Sachs target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $68.52, suggesting downside of -1.4%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 EPS of 149.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 46.64.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 196.3, implying annual growth of 49.8%.
Current consensus DPS estimate is 105.1, implying a prospective dividend yield of 1.5%.
Current consensus EPS estimate suggests the PER is 35.4.

Forecast for FY22:

Goldman Sachs forecasts a full year FY22 EPS of 238.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 29.20.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 270.8, implying annual growth of 38.0%.
Current consensus DPS estimate is 143.6, implying a prospective dividend yield of 2.1%.
Current consensus EPS estimate suggests the PER is 25.7.

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

RHP    RHIPE LIMITED

Cloud services - Overnight Price: $1.87

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

Rhipe has acquired Parallo, a New Zealand based IT services provider specialising in infrastructure and cloud deployment technologies.

Parallo helps independent software vendors (ISVs) and software as a service (SaaS) businesses to manage security, performance, availability and costs.

Bell Potter is pleased and believes this deal makes a lot of sense as it helps expand Rhipe's position as a value-added service provider and provides exposure to the high growth SaaS market.

According to Bell Potter, Rhipe continues to evolve as a proxy to the penetration of cloud computing across the APAC region. Management believes the business to be well-positioned for the next phase of growth.

Bell Potter retains its Buy rating with the target price rising to $2.35 from $2.30.

This report was published on September 21, 2020.

Target price is $2.35 Current Price is $1.87 Difference: $0.48
If RHP meets the Bell Potter target it will return approximately 26% (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 3.00 cents and EPS of 4.70 cents.
At the last closing share price the estimated dividend yield is 1.60%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 39.79.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 4.00 cents and EPS of 6.50 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 28.77.

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


Shaw and Partners rates ((RHP)) as Buy (1) -

Rhipe has acquired Parallo, a New Zealand based IT services and cloud deployment provider that provides a range of public cloud, migration, MSP and deployment services.

Shaw and Partners notes the company's earnings are majorly recurring. The broker expects Rhipe to undertake more acquisitions in FY21 and by 2020 end.

The first half of FY21 is expected to be strong. Shaw and Partners notes the company is trading at exceptional value, especially when viewed as a licensing business growing 35% per annum with an earnings stream that is mostly recurring.

The Buy rating is unchanged with a target price of $2.87.

This report was published on September 22, 2020.

Target price is $2.87 Current Price is $1.87 Difference: $1
If RHP meets the Shaw and Partners target it will return approximately 53% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY21:

Shaw and Partners forecasts a full year FY21 dividend of 4.00 cents and EPS of 8.00 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 23.38.

Forecast for FY22:

Shaw and Partners forecasts a full year FY22 dividend of 5.20 cents and EPS of 10.40 cents.
At the last closing share price the estimated dividend yield is 2.78%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.98.

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

SMP    SMARTPAY HOLDINGS LIMITED

Business & Consumer Credit - Overnight Price: $0.58

CCZ Equities rates ((SMP)) as Buy (1) -

Smartpay Holdings' August update reported Australian lead generation and new customer acquisition to be at record levels with August 2020 revenue up 12%. Both transactions per terminal and average transaction value were above pre-covid levels.

CCZ Equities expects a strong September quarter with a boost to trading activity once Victorian lockdowns are lifted. The company expects the total Australian transacting terminals to exceed 5,000 as Victoria emerges from lockdown.

The broker estimates Smartpay Holdings added 250-300 transacting terminals in the month of August which is labeled "impressive" given the Victorian market was closed.

A Buy rating is maintained with a target price of NZ$0.80.

This report was published on September 21, 2020.

Current Price is $0.58. Target price not assessed.

Forecast for FY21:

CCZ Equities forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 0.09 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 617.02.

Forecast for FY22:

CCZ Equities forecasts a full year FY22 dividend of 0.00 cents and EPS of 3.11 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.64.

This company reports in NZD. 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

SSM    SERVICE STREAM LIMITED

Industrial Sector Contractors & Engineers - Overnight Price: $2.14

Bell Potter rates ((SSM)) as Upgrade to Buy from Hold (1) -

NBN Co announced $4.5bn of new network investments, including additional fibre laid out for FTTN connections, upgrades across other NBN network technologies and another -$700m investment to improve its business network.

Service Stream is a core delivery partner for NBN and Bell Potter assesses there is likely to be significant scope for the company to increase its services to NBN over the current investment phase, which extends to 2023. However, the broker also cautions the company is likely to face significant competition in securing new work.

The broker believes NBN’s major investment plans will turn the sentiments to new opportunities in front of Service Stream and lifts its earnings forecasts for FY22-23.

The rating is upgraded to Buy from Hold with the target price rising to $2.30 from $2.05.

This report was published on September 23, 2020.

Target price is $2.30 Current Price is $2.14 Difference: $0.16
If SSM meets the Bell Potter target it will return approximately 7% (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 9.00 cents and EPS of 13.40 cents.
At the last closing share price the estimated dividend yield is 4.21%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.97.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 10.00 cents and EPS of 14.90 cents.
At the last closing share price the estimated dividend yield is 4.67%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.36.

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

YOJ    YOJEE LIMITED

Software & Services - Overnight Price: $0.21

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 aims at more than 1 million planned deliveries this financial year, while announcing August deliveries are up 23% on July. 

Euroz notes this level of volume growth is after the go live for the company's e-commerce logistics on 24 June and most of this was from the Kuehne and Nagel agreement alone.

Yojee is also strengthening its platform enterprise capabilities and the broker highlights there are now over 450 APIs.

Euroz maintains its Speculative Buy recommendation with a target price of $0.43.

This report was published on September 10, 2020.

Target price is $0.43 Current Price is $0.21 Difference: $0.22
If YOJ meets the Euroz target it will return approximately 105% (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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