Australian Broker Call *Extra* Edition – Jun 30, 2021

Daily Market Reports | Jun 30 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)

AIM   ARB   BGA   CDA   CIP   CQR   DEG   ELO   EMN   ERD   FMG   GDI   GNG   GNP   GOR   HUB   IFM   IGO   JAN   LNK   LOT   MFD   MFG   MP1   MRM   MWY   NEC   NWC   NXT   ORR   OTW   PEN   PFP   PME   PWR   PYG   RCL   RRL   SMP   TLX   UWL (3)   WES (2)   WHC   WOR  

AIM    ACCESS INNOVATION HOLDINGS LIMITED

Commercial Services & Supplies - Overnight Price: $0.87

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

Access Innovation has announced a 3-year extension of its live captioning contract with Sky News Australia.

Bell Potter believes this development demonstrates the company’s ability to sell its new higher margin product (Smart ASR) into its existing customer base without cannibalising the existing revenue base through increased volume.

Management has also reaffirmed prospectus forecasts for FY21, with deals completed post IPO providing further upside. This includes an additional $1.5m revenue from the acquisitions of Caption IT and Caption access in January, plus $1.7m revenue from the EEG acquisition completed on 8 May.

Following this update, the broker has upgraded FY21 revenue forecasts by around 4% and narrowed underlying earnings to a forecast loss of -$4.3m.

Buy rating and target price of $1.40 both unchanged.

This report was published on June 4, 2021.

Target price is $1.40 Current Price is $0.87 Difference: $0.53
If AIM meets the Bell Potter target it will return approximately 61% (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 minus 2.60 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 33.46.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 0.00 cents and EPS of 1.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 45.79.

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

ARB    ARB CORPORATION LIMITED

Automobiles & Components - Overnight Price: $43.50

Wilsons rates ((ARB)) as Overweight (1) -

Given the combination of strong demand and supply constraints, Wilsons now sees strong trading results for ARB Corp extending into calendar year 2022.

The broker remains attracted to ARB and its prospects for sustained sales growth through a continued shift to SUVs, significant investment in R&D, and penetration of export markets.

May saw another month of strong sales in the 4X4, up 61% on the previous period and Large SUV, up 85% on the previous period.

Wilsons believes sustained strong demand is being driven by the structural shift towards these vehicle types, extension of the Federal Government’s instant asset write-off scheme (to 30 June 2023), and domestic tourism activity.

Of particular note is evidence of improved activity levels in the Dealership and Fleet channels which lagged the strength in the Retail channel in first half FY21.

While gross margins are broadly unchanged, Wilsons' sales forecasts are upgraded 4.5% in FY21, 6.5% in FY22 and 2.4% in FY23.

Wilsons maintains its Overweight rating with the target rising to $47.80 from $39.90.

This report was published on June 4, 2021.

Target price is $47.80 Current Price is $43.50 Difference: $4.3
If ARB meets the Wilsons target it will return approximately 10% (excluding dividends, fees and charges).
Current consensus price target is $38.89, suggesting downside of -10.6%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 60.00 cents and EPS of 126.40 cents.
At the last closing share price the estimated dividend yield is 1.38%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 34.41.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 116.9, implying annual growth of 62.8%.
Current consensus DPS estimate is 57.9, implying a prospective dividend yield of 1.3%.
Current consensus EPS estimate suggests the PER is 37.2.

Forecast for FY22:

Wilsons forecasts a full year FY22 dividend of 63.00 cents and EPS of 113.90 cents.
At the last closing share price the estimated dividend yield is 1.45%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 38.19.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 109.4, implying annual growth of -6.4%.
Current consensus DPS estimate is 63.5, implying a prospective dividend yield of 1.5%.
Current consensus EPS estimate suggests the PER is 39.8.

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

BGA    BEGA CHEESE LIMITED

Dairy - Overnight Price: $5.90

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

Due to an update of peer group multiples for the sum-of-the-parts valuation and a longer term increase in synergies from recently acquired Lion Dairy and Drinks, Goldman Sachs has increased the longer term synergy target for Bega Cheese to $45m from $41m.

The broker has greater confidence that Bega can extract benefits from milk solids optimisation, toll processing opportunities, and chilled distribution network synergies.

Driven by removal of previously announced Reckitt service fee income, Goldman Sachs has revised FY21, FY22, and FY23 underlying earnings per share by 0.0%, -2.5%, and -4.7% respectively.

While it is not obvious from the current earnings margins Lion Dairy and Drinks generates, the broker thinks increased branded exposure should deliver greater returns over the long-term, particularly post-synergies.

Neutral rating with the target rising to $6.40 from $6.05.

This report was published on June 3, 2021.

Target price is $6.40 Current Price is $5.90 Difference: $0.5
If BGA meets the Goldman Sachs target it will return approximately 8% (excluding dividends, fees and charges).
Current consensus price target is $6.78, suggesting upside of 15.0%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 11.00 cents and EPS of 15.00 cents.
At the last closing share price the estimated dividend yield is 1.86%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 39.33.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.4, implying annual growth of 67.9%.
Current consensus DPS estimate is 9.7, implying a prospective dividend yield of 1.6%.
Current consensus EPS estimate suggests the PER is 36.0.

Forecast for FY22:

Goldman Sachs forecasts a full year FY22 dividend of 13.00 cents and EPS of 29.00 cents.
At the last closing share price the estimated dividend yield is 2.20%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.34.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.8, implying annual growth of 81.7%.
Current consensus DPS estimate is 11.8, implying a prospective dividend yield of 2.0%.
Current consensus EPS estimate suggests the PER is 19.8.

Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

CDA    CODAN LIMITED

Hardware & Equipment - Overnight Price: $17.79

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

Given it hasn't scaled to a level that supports the investment required in the technology, Codan Ltd has entered into an agreement to sell its Tracking Solutions division, Minetec to Caterpillar for US$14m plus an earnout over five years.

Based on the underperformance and relevance relative to the enlarged Codan business, Canaccord Genuity doesn't regard the sale as surprising and estimates the company has invested $30-40m in Minetec over time.

In Canaccord Genuity's view, the earnings impact will be negligible, relative to the broker's estimates and had been forecasting a small profit in FY21, increasing to earnings of $2.5m in FY22.

While there will be an impact on revenue with Cannacord's estimates for FY22 being $15m, there will be no impact on the broker's valuation.

The Buy rating and target price of $17.10 both retained.

This report was published on June 2, 2021.

Target price is $17.10 Current Price is $17.79 Difference: minus $0.69 (current price is over target).
If CDA meets the Canaccord Genuity target it will return approximately minus 4% (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 26.00 cents and EPS of 53.00 cents.
At the last closing share price the estimated dividend yield is 1.46%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 33.57.

Forecast for FY22:

Canaccord Genuity forecasts a full year FY22 dividend of 33.00 cents and EPS of 66.00 cents.
At the last closing share price the estimated dividend yield is 1.85%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 26.95.

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

CIP    CENTURIA INDUSTRIAL REIT

REITs - Overnight Price: $3.75

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

Centuria Industrial REIT recently announced the revaluation of its entire portfolio of 61 properties with net tangible asset/unit increasing by 16% from $3.33 to $3.85.

The REITs two largest assets, its Telstra Data Centre and Arnott’s biscuit factory, reported valuation gains of 13% and 9% respectively, and are now valued at cap rates of 3.38% and 3.88% respectively, highlights Moelis.

Driven by a highly competitive transactional market, and with the portfolio cap rate now at 4.5%, Moelis believes Centuria Industrial REIT has one of the firmer portfolio cap rates in the listed market.

Though the sector remains highly favourable, and continues to benefit from supportive macro tailwinds, the broker believes the REIT's 4.8% distribution per unit is relatively fairly valued, with upside likely to be driven by accretive acquisitions and successfully leasing outcomes.

Hold rating is retained and the target price increases to $3.69 from $3.62 to reflect a strong uplift to the broker's sum of the parts valuation.

This report was published on June 4, 2021.

Target price is $3.69 Current Price is $3.75 Difference: minus $0.06 (current price is over target).
If CIP meets the Moelis target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $3.76, suggesting upside of 0.4%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY21:

Moelis forecasts a full year FY21 dividend of 17.00 cents and EPS of 17.50 cents.
At the last closing share price the estimated dividend yield is 4.53%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.43.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 17.5, implying annual growth of -21.2%.
Current consensus DPS estimate is 17.0, implying a prospective dividend yield of 4.5%.
Current consensus EPS estimate suggests the PER is 21.4.

Forecast for FY22:

Moelis forecasts a full year FY22 dividend of 17.50 cents and EPS of 17.80 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 21.07.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 18.1, implying annual growth of 3.4%.
Current consensus DPS estimate is 17.7, implying a prospective dividend yield of 4.7%.
Current consensus EPS estimate suggests the PER is 20.7.

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


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