Australian Broker Call *Extra* Edition – Oct 11, 2021

Daily Market Reports | Oct 11 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)

5GG   ABP   AIS   APE   ASX   BMN   BOE   BWP   CBO   CIP   CLW   COB   COF (3)   CQE   DGH   DUG   EGH   ENN   FCL   HSN   IMU   JRV   LOT   LYL   MIN   MRM   MSB   NSR   PDN   PEN   PME   PNI   QBE   SRL   TNE   TWE   UMG   VMY   VTI   WAF   WHC  

PNI    PINNACLE INVESTMENT MANAGEMENT GROUP LIMITED

Wealth Management & Investments - Overnight Price: $14.86

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

Pinnacle Investment has acquired a further 10% of Coolabah Capital, funded by the distribution reinvestment plan. As Pinnacle Investment has a market cap of $3.1bn, Wilsons believes the acquisition is not material and makes no changes to forecasts or valuation.

Still, the broker is encouraged by the transaction and its structure as it provides more exposure to a rapidly growing and highly successful affiliate. Overweight rating and $16.50 target maintained.

This report was published on September 6, 2021.

Target price is $16.50 Current Price is $14.86 Difference: $1.64
If PNI meets the Wilsons target it will return approximately 11% (excluding dividends, fees and charges).
Current consensus price target is $15.60, suggesting upside of 5.0%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY22:

Wilsons forecasts a full year FY22 dividend of 38.80 cents and EPS of 46.10 cents.
At the last closing share price the estimated dividend yield is 2.61%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 32.23.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 42.8, implying annual growth of 12.0%.
Current consensus DPS estimate is 35.1, implying a prospective dividend yield of 2.4%.
Current consensus EPS estimate suggests the PER is 34.7.

Forecast for FY23:

Wilsons forecasts a full year FY23 dividend of 45.90 cents and EPS of 54.50 cents.
At the last closing share price the estimated dividend yield is 3.09%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 27.27.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 49.9, implying annual growth of 16.6%.
Current consensus DPS estimate is 40.9, implying a prospective dividend yield of 2.8%.
Current consensus EPS estimate suggests the PER is 29.8.

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

QBE    QBE INSURANCE GROUP LIMITED

Insurance - Overnight Price: $12.23

Jarden rates ((QBE)) as Buy (1) -

Jarden observes gearing has improved considerably since FY17 and, along with improved profitability, the cost of debt is starting to become better.

The broker cites the refinancing of GBP400m in sub-debt at 3.5%, providing a saving for earnings per share from the second half of FY22 onwards of 1% per annum.

With US$1.9 bn in sub-debt available for refinancing by December 2025 the broker envisages scope for an additional 3-5% upside to earnings per share over time. Buy rating and $14.20 target maintained.

This report was published on September 6, 2021.

Target price is $14.20 Current Price is $12.23 Difference: $1.97
If QBE meets the Jarden target it will return approximately 16% (excluding dividends, fees and charges).
Current consensus price target is $13.94, suggesting upside of 14.0%(ex-dividends)
The company's fiscal year ends in December.

Forecast for FY21:

Jarden forecasts a full year FY21 dividend of 58.48 cents and EPS of 75.76 cents.
At the last closing share price the estimated dividend yield is 4.78%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.14.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 79.7, implying annual growth of N/A.
Current consensus DPS estimate is 54.3, implying a prospective dividend yield of 4.4%.
Current consensus EPS estimate suggests the PER is 15.3.

Forecast for FY22:

Jarden forecasts a full year FY22 dividend of 87.72 cents and EPS of 98.22 cents.
At the last closing share price the estimated dividend yield is 7.17%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.45.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 98.1, implying annual growth of 23.1%.
Current consensus DPS estimate is 77.0, implying a prospective dividend yield of 6.3%.
Current consensus EPS estimate suggests the PER is 12.5.

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

SRL    SUNRISE ENERGY METALS LIMITED

New Battery Elements - Overnight Price: $1.59

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

Canaccord Genuity forecasts a structural supply deficit in the cobalt market by 2024 and expects to see a rush to secure supply and rapidly rising prices. The broker raises the target price for Sunrise Energy Metals to $3 from $2.50 and retains a Speculative Buy.

The company is developing the Sunrise Energy project in central NSW, which one of the few permitted, construction-ready projects in Australia, according to the analyst.

The broker estimates a 50-year project with 900kt of nickel and 160kt of cobalt in Resource, and anticipates annual earnings (EBITDA) of $689m with around 70% margins. It's thought it will take around four years for payback of capital. 

This report was published on September 3, 2021.

Target price is $3.00 Current Price is $1.59 Difference: $1.41
If SRL meets the Canaccord Genuity target it will return approximately 89% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY22:

Canaccord Genuity forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 11.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 14.45.

Forecast for FY23:

Canaccord Genuity forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 8.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 19.88.

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

TNE    TECHNOLOGY ONE LIMITED

IT & Support - Overnight Price: $11.87

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

TechnologyOne will discontinue on-premises maintenance & support and new license sales at the end of FY24. Wilsons supports the move and expects revenue quality will improve as a result.

The broker also believes the acquisition of Scientia opens up cross-selling opportunities and upgrades forecasts. Revenue estimates are lifted 4% and profit 2%. As a result the target is raised to $10.56 from $9.89. Market Weight rating maintained.

This report was published on September 7, 2021.

Target price is $10.56 Current Price is $11.87 Difference: minus $1.31 (current price is over target).
If TNE meets the Wilsons target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $10.10, suggesting downside of -14.9%(ex-dividends)
The company's fiscal year ends in September.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 14.00 cents and EPS of 23.20 cents.
At the last closing share price the estimated dividend yield is 1.18%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 51.16.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 22.1, implying annual growth of 11.9%.
Current consensus DPS estimate is 13.5, implying a prospective dividend yield of 1.1%.
Current consensus EPS estimate suggests the PER is 53.7.

Forecast for FY22:

Wilsons forecasts a full year FY22 dividend of 17.40 cents and EPS of 28.70 cents.
At the last closing share price the estimated dividend yield is 1.47%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 41.36.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 24.5, implying annual growth of 10.9%.
Current consensus DPS estimate is 16.2, implying a prospective dividend yield of 1.4%.
Current consensus EPS estimate suggests the PER is 48.4.

Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

TWE    TREASURY WINE ESTATES LIMITED

Food, Beverages & Tobacco - Overnight Price: $12.05

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

Goldman Sachs observes positive momentum in Treasury Wine's US execution and exports to the world outside of China. Sales remain ahead of the wine market with premiumisation continuing and the value of promotional sales reducing.

While Australian bottled wine imports to China were down -99.8% in June average prices continued to improve. Still Australian exports to the rest of the world are below the levels to replace the declines in sales to China.

Goldman Sachs retains a Neutral rating and $10.60 target.

This report was published on August 8, 2021.

Target price is $10.60 Current Price is $12.05 Difference: minus $1.45 (current price is over target).
If TWE meets the Goldman Sachs target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $12.21, suggesting upside of 1.3%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY22:

Goldman Sachs forecasts a full year FY22 dividend of 30.00 cents and EPS of 46.00 cents.
At the last closing share price the estimated dividend yield is 2.49%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 26.20.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 46.0, implying annual growth of 32.7%.
Current consensus DPS estimate is 29.1, implying a prospective dividend yield of 2.4%.
Current consensus EPS estimate suggests the PER is 26.2.

Forecast for FY23:

Goldman Sachs forecasts a full year FY23 dividend of 33.00 cents and EPS of 50.00 cents.
At the last closing share price the estimated dividend yield is 2.74%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.10.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 54.7, implying annual growth of 18.9%.
Current consensus DPS estimate is 34.9, implying a prospective dividend yield of 2.9%.
Current consensus EPS estimate suggests the PER is 22.0.

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

UMG    UNITED MALT GROUP LIMITED

Agriculture - Overnight Price: $4.16

Bell Potter rates ((UMG)) as Hold (3) -

United Malt Group issued a trading update for the FY21 second half, reporting shipping delays to Asia, lockdowns and unrecoverable debt inventories.

The company guided to lower earnings (roughly -6.5% according to Bell Potters' estimates).

United Malt Group reported a -$20m to -$22m bad debt against one client in Asia and -$4 to -$6m bad debt against an insolvent grain supplier. 

Bell Potter notes the impairment, at -1% to -2% of processing revenue, is material and will require replacement in FY22.

Profit forecasts are downgraded -32% for FY21 (ending September 30); -17% for FY22 and -1% for FY23, the broker factoring in a slower than expected recovery. EPS and dividend impacts are felt more keenly in FY22.

Hold rating maintained. Target price eases to $4.40 from $4.60.

This report was published on September 3, 2021.

Target price is $4.40 Current Price is $4.16 Difference: $0.24
If UMG meets the Bell Potter target it will return approximately 6% (excluding dividends, fees and charges).
Current consensus price target is $4.75, suggesting upside of 14.1%(ex-dividends)
The company's fiscal year ends in September.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 7.00 cents and EPS of 13.30 cents.
At the last closing share price the estimated dividend yield is 1.68%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 31.28.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.4, implying annual growth of -26.5%.
Current consensus DPS estimate is 7.5, implying a prospective dividend yield of 1.8%.
Current consensus EPS estimate suggests the PER is 33.5.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 10.00 cents and EPS of 18.30 cents.
At the last closing share price the estimated dividend yield is 2.40%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.73.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 23.3, implying annual growth of 87.9%.
Current consensus DPS estimate is 14.0, implying a prospective dividend yield of 3.4%.
Current consensus EPS estimate suggests the PER is 17.9.

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

VMY    VIMY RESOURCES LIMITED

Uranium - Overnight Price: $0.22

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

With spot uranium is trading at its highest price in six years at US$39/lb, Shaw and Partners has upgraded its pricing deck.

The broker is guiding to an US$85/lb price spike, and long-term uranium pricing of US$60/lb by 2028, driven by a decade of underinvestment and expected long-term demand to support increasing electrification and decarbonisation. 

The Buy rating is retained and the target price increases to $0.27 from $0.25.

This report was published on September 6, 2021.

Target price is $0.27 Current Price is $0.22 Difference: $0.05
If VMY meets the Shaw and Partners target it will return approximately 23% (excluding dividends, fees and charges).

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


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