Australian Broker Call *Extra* Edition – Jun 16, 2021

Daily Market Reports | Jun 16 2021

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)

ALG   ARX (2)   AVH (2)   BCB   BRI   BWX (3)   BXB   CGF   ELD (2)   GGG   GNG   IPL   LEG   PLS   PRN   RFG   S32   SSM   SUN  

BCB    BOWEN COKING COAL LTD

Coal - Overnight Price: $0.07

Euroz Hartleys rates ((BCB)) as Buy (2) -

As per Euroz Hartleys comments, Broadmeadow East has been catapulted to the most commercially advanced of Bowen Coking Coal's four coking coal assets driven by commercialisation via third party infrastructure agreements.

Euroz Hartleys notes increasing market awareness should see the company trade towards its target price. 

The broker highlights little value has been attributed to the low capex, early production option at Isaac River to date, or the large 177m tonne resource at Cooroorah. 

The Speculative Buy rating and target price of $0.15 are retained. 

This report was published on April 23, 2021.

Target price is $0.15 Current Price is $0.07 Difference: $0.08
If BCB meets the Euroz Hartleys target it will return approximately 114% (excluding dividends, fees and charges).

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

BRI    BIG RIVER INDUSTRIES LIMITED

Building Products & Services - Overnight Price: $2.15

Moelis rates ((BRI)) as Initiation of coverage with Buy (1) -

Moelis initiates coverage on Australian and New Zealand trade-focused timber and building product distributor, Big River Industries. The company manufactures and distributes specialty products including engineered timber flooring, customised plywood and architectural panels. 

The broker notes the current Australian construction cycle should drive multi-year growth for the company which attributed more than 50% of expected FY21 revenue to residential builds. Strong demand for detached housing is expected to drive growth, with approvals for these structures up 35% on 2020. 

Big River has 3 manufacturing facilities and 18 distribution sites in Australia and New Zealand, offering scale and diversification benefits. Further, Moelis expects operating leverage and recent acquisitions to drive strong earnings growth, estimating a compound annual growth rate on earnings of 22% from FY20-22. 

Moelis initiates coverage with a Buy rating and target price of $2.24.

This report was published on May 17, 2021. 

Target price is $2.24 Current Price is $2.15 Difference: $0.09
If BRI meets the Moelis target it will return approximately 4% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY21:

Moelis forecasts a full year FY21 dividend of 5.20 cents and EPS of 9.70 cents.
At the last closing share price the estimated dividend yield is 2.42%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.16.

Forecast for FY22:

Moelis forecasts a full year FY22 dividend of 5.60 cents and EPS of 11.30 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 19.03.

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: $5.22

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

BWX has announced the acquisition of online retailer Flora and Fauna for a debt-funded cash consideration of $27.9-30.8m. Management is expecting the acquisition to be earnings per share accretive in FY22 and strongly accretive by F24. 

Alongside Nourished Life, Flora and Fauna will form the basis of a direct-to-consumer unit which Bell Potter expects to benefit from operating efficiencies, promotional activities and cross sell opportunities, with only 13% customer crossover.

Flora and Fauna is expected to report FY21 revenue of $16.4-17.1m with an underlying profit margin greater than 4%. The broker upgrades underlying earnings forecasts for FY22 and FY23 by 2.9% and 5.0% respectively based on the acquisition. 

The Buy rating is retained and the target price increased to $5.70 from $5.40. 

This report was published on May 18, 2021.

Target price is $5.70 Current Price is $5.22 Difference: $0.48
If BWX meets the Bell Potter target it will return approximately 9% (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 4.20 cents and EPS of 12.30 cents.
At the last closing share price the estimated dividend yield is 0.80%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 42.44.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 6.30 cents and EPS of 17.80 cents.
At the last closing share price the estimated dividend yield is 1.21%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 29.33.

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


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

BWX has announced the expansion of its direct-to-consumer channel through the acquisition of online retail platform Flora & Fauna, expecting to pay $27.9-30.8m. The debt-funded transaction is expected to settle in early July. 

Flora and Fauna reported revenue of $10m in FY19 and $12m in FY20, with a revenue forecast of $16.4-17.1m for the current financial year. The broker points out the acquisition represents limited overlap with BWX's existing brands, accounting for around 13% customer overlap with the Nourished Life brand. 

Management has guided towards the acquisition being earnings accretive in FY22 and strongly accretive in FY24. Canaccord Genuity has incorporated an additional earnings increase of 2% in FY22, 4% in FY23 and 6% in FY24. 

The Buy rating is retained and the target price increases to $5.15 rom $4.95. 

This report was published on May 18, 2020.

Target price is $5.15 Current Price is $5.22 Difference: minus $0.07 (current price is over target).
If BWX meets the Canaccord Genuity target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).
The company's fiscal year ends in June.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 4.70 cents and EPS of 13.00 cents.
At the last closing share price the estimated dividend yield is 0.90%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 40.15.

Forecast for FY22:

Canaccord Genuity forecasts a full year FY22 dividend of 5.40 cents and EPS of 16.00 cents.
At the last closing share price the estimated dividend yield is 1.03%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 32.63.

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


Moelis rates ((BWX)) as Buy (1) -

BWX has acquired Flora and Fauna, an online retailer of vegan, ethical and sustainable products, for $27.9-30.8m. Flora and Fauna is expected to deliver revenue of $16.4-17.1m for FY21.

Moelis notes this acquisition could be combined with the under-performing Nourished Life platform to offer strategic value from a cost and revenue perspective. The broker expects substantial cost savings from warehouse consolidation, marketing efficiencies and procurement benefits that will be earnings accretive.

Further, Flora and Fauna offers BMX access to a younger, more eco-conscious consumer at a time of rising demand for ethical, sustainable and vegan products that is becoming a structural trend.

Moelis also looks ahead to BMX resuming expansion into the US market. The Buy rating is retained and the target price increases to $5.61 from $5.44.

This report was published on May 17, 2021.

Target price is $5.61 Current Price is $5.22 Difference: $0.39
If BWX meets the Moelis target it will return approximately 7% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY21:

Moelis forecasts a full year FY21 dividend of 3.80 cents and EPS of 12.20 cents.
At the last closing share price the estimated dividend yield is 0.73%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 42.79.

Forecast for FY22:

Moelis forecasts a full year FY22 dividend of 4.50 cents and EPS of 17.80 cents.
At the last closing share price the estimated dividend yield is 0.86%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 29.33.

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

BXB    BRAMBLES LIMITED

Transportation & Logistics - Overnight Price: $11.28

Jarden rates ((BXB)) as Buy (2) -

Jarden expects persistent signs of inflation within lumber, a key input for Brambles' US Pallets business to be offset by better contract structures and surcharges, boosted by rational competition and tight supply of alternatives, due to lumber market tightness.

The broker forecasts CHEP Americas underlying earnings (EBIT) margin to expand 130bps in second half FY21.

Key risks to Jarden's positive investment view include irrational competition for market share in US Pallets market, ineffective inflationary hedges in the Americas and EMEA, and pressure on free cashflow from higher capex.

The broker is forecasting US Pallets revenue growth of 6.1% in second half FY21, with price contributing 3.0% and volume 3.1%.

Overweight rating and target price of $11.85 both remain unchanged.

This report was published on May 17, 2021.

Target price is $11.85 Current Price is $11.28 Difference: $0.57
If BXB meets the Jarden target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $12.04, suggesting upside of 6.8%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY21:

Jarden forecasts a full year FY21 dividend of 31.57 cents and EPS of 49.98 cents.
At the last closing share price the estimated dividend yield is 2.80%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.57.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 51.1, implying annual growth of N/A.
Current consensus DPS estimate is 29.0, implying a prospective dividend yield of 2.6%.
Current consensus EPS estimate suggests the PER is 22.1.

Forecast for FY22:

Jarden forecasts a full year FY22 dividend of 33.59 cents and EPS of 53.34 cents.
At the last closing share price the estimated dividend yield is 2.98%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.15.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 56.2, implying annual growth of 10.0%.
Current consensus DPS estimate is 32.3, implying a prospective dividend yield of 2.9%.
Current consensus EPS estimate suggests the PER is 20.1.

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources


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