Australian Broker Call *Extra* Edition – May 17, 2022

Daily Market Reports | May 17 2022

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)

360   5GG   ALL   AMC   AUB   BLX   BSL   BWX (2)   CAJ   CKF   CRN   CSR   DEG   EHE   FLT   GNC   GT1   IDX   IEL   JHG   JHX   LIC   LOV   MAP   MCP   MFG   MGR   MTS   NAB   NAN   NWL   ORA   PDL   PMV   PPH   QBE   SGF   SLR   SUL   TCL   TNE   WBC (2)   WEB   WES  

360    LIFE360, INC

Software & Services - Overnight Price: $3.63

Bell Potter rates ((360)) as Buy (1) -

Life 360's March-quarter Appendix 4c's revelation of negative cash flow of US$38m and cash of US$98m looks scary at first, says Bell Potter, suggesting a capital raising might be in the wings. 

Not so, says the broker, who after adjusting for one-offs pegs normalised operating cash flow at -US$17m, which assuming a continuation of the trend, should leave a cash balance of US$72m to US$73m by year end. Earnings estimates are unchanged.

Buy rating retained. Target price falls -9% to $7.50 form $8.25 to account for market movements and time creep, and the broker raises to weighted average cost of capital 0.3 percentage points to be conservative.

This report was published on May 6, 2022.

Target price is $7.50 Current Price is $3.63 Difference: $3.87
If 360 meets the Bell Potter target it will return approximately 107% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 35.98 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 10.09.

Forecast for FY23:

Bell Potter forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 15.54 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 23.37.

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

5GG    PENTANET LIMITED

Telecommunication - Overnight Price: $0.28

Shaw and Partners rates ((5GG)) as Initiation of coverage with Buy (1) -

Shaw and Partners initiates coverage of Pentanet with a Buy (High Risk) rating and 40c target price.

Pentanet is a Perth-based telecom with a high-margin, high-speed fixed wireless network, and has invested in a fledgling cloud gaming business with its partner US-listed Nvidia on the Cloud.GG platform.

The broker believes successful strategic execution should deliver high-margin customer growth. The broker appreciates the potential of the prospect, and notes the company is close to break even on an operating cash flow basis, and should move to positive earnings of $2.4m in FY24 (although EPS forecasts are negative out to and including FY24).

This report was published on May 10, 2022.

Target price is $0.40 Current Price is $0.28 Difference: $0.12
If 5GG meets the Shaw and Partners target it will return approximately 43% (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 0.00 cents and EPS of minus 3.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 7.18.

Forecast for FY22:

Shaw and Partners forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 2.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 12.73.

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

ALL    ARISTOCRAT LEISURE LIMITED

Gaming - Overnight Price: $31.65

Jarden rates ((ALL)) as Overweight (2) -

Jarden notes Aristocrat Leisure's refinance and terming-out of its debt obligations opens the door for large scale M&A activity and capital management.

Aristocrat will replace its existing US$1.85bn Term Loan B with a US$1.35bn Term Loan A (May 2027) and a US$500m Term Loan B (May 2029). The company's revolving credit facility will rise to a multi-currency US$500m revolver from $286m, with its maturity extended to May 2027.

Previously, the broker had assumed debt would be repaid to avoid negative carry and while it is uncertain of the rationale behind running such a big cash balance, it adds a buy-back prospect to its M&A prospect.

Overweight rating retained. Target price eases to $39.23 from $39.28.

This report was published on May 9, 2022.

Target price is $39.23 Current Price is $31.65 Difference: $7.58
If ALL meets the Jarden target it will return approximately 24% (excluding dividends, fees and charges).
Current consensus price target is $46.25, suggesting upside of 0.0%(ex-dividends)
The company's fiscal year ends in September.

Forecast for FY22:

Jarden forecasts a full year FY22 dividend of 58.00 cents and EPS of 144.60 cents.
At the last closing share price the estimated dividend yield is 1.83%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.89.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 153.4, implying annual growth of 19.7%.
Current consensus DPS estimate is 58.8, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY23:

Jarden forecasts a full year FY23 dividend of 62.00 cents and EPS of 156.10 cents.
At the last closing share price the estimated dividend yield is 1.96%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.28.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 177.5, implying annual growth of 15.7%.
Current consensus DPS estimate is 70.3, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is N/A.

Market Sentiment: 0.9
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

AMC    AMCOR PLC

Paper & Packaging - Overnight Price: $18.47

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

Despite an inflationary environment, Amcor's third quarter earnings per share were a 3% beat to consensus while the company also managed to retain full year guidance despite market fears in what Jarden considers a good result.

The update also saw the company lift its long-run capital expenditure guidance to 4-5% of revenue from a previous 3-4%, although Jarden noted it is unclear if this increase refers to growth expenditure or simply stay-in-business costs.

The broker finds Amcor to be handling inflationary and availability issues well, and noted free cash flow remains strong at US$1.1bn for the year.

The Buy rating is retained and the target price decreases to $17.95 from $18.05.

This report was published on May 5, 2022.

Target price is $17.95 Current Price is $18.47 Difference: minus $0.52 (current price is over target).
If AMC meets the Jarden target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $18.34, suggesting upside of 0.0%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY22:

Jarden forecasts a full year FY22 dividend of 67.46 cents and EPS of 109.02 cents.
At the last closing share price the estimated dividend yield is 3.65%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.94.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 116.5, implying annual growth of N/A.
Current consensus DPS estimate is 70.5, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY23:

Jarden forecasts a full year FY23 dividend of 69.23 cents and EPS of 115.70 cents.
At the last closing share price the estimated dividend yield is 3.75%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.96.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 121.7, implying annual growth of 4.5%.
Current consensus DPS estimate is 72.6, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is N/A.

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

AUB    AUB GROUP LIMITED

Diversified Financials - Overnight Price: $19.39

Jarden rates ((AUB)) as Upgrade to Buy from Overweight (1) -

AUB Group has acquired wholesale broker Tysers for $880m in a deal Jarden says could yield 30% EPS accretion, including $25m in synergies, and says Tysers is an attractive growth prospect.

The acquisition is the company's first foray into the Lloyds market and the broker expects it will slightly improve AUB's exposure to the global premium rate environment versus the Australian markets. The deal was struck at the lower end of recent acquisition multiples, notes the broker.

EPS forecasts are steady for FY22 before rising 24% for FY23 and 27% for FY24.

Rating upgraded to Buy from Overweight. Target price jumps to $31.70 from $25.15.

This report was published on May 10, 2022.

Target price is $31.70 Current Price is $19.39 Difference: $12.31
If AUB meets the Jarden target it will return approximately 63% (excluding dividends, fees and charges).
Current consensus price target is $25.76, suggesting upside of 0.0%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY22:

Jarden forecasts a full year FY22 dividend of 61.10 cents and EPS of 97.60 cents.
At the last closing share price the estimated dividend yield is 3.15%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.87.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 91.8, implying annual growth of -1.4%.
Current consensus DPS estimate is 59.0, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY23:

Jarden forecasts a full year FY23 dividend of 67.40 cents and EPS of 107.80 cents.
At the last closing share price the estimated dividend yield is 3.48%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.99.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 103.7, implying annual growth of 13.0%.
Current consensus DPS estimate is 61.0, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is N/A.

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

BLX    BEACON LIGHTING GROUP LIMITED

Furniture & Renovation - Overnight Price: $2.11

Jarden rates ((BLX)) as Overweight (2) -

Jarden's AIB Construction Activity Survey suggests 4% growth in new contracts in the six months, vs a -1% decline in the previous survey, and backlogs have extends to 1.5 years from one year, underpinning near-term earnings, says the broker.

The survey also reveals a skew to larger national contractors with turnover in excess of $100m.

Steel product pricing strength proved the standout, Jarden tipping a potential 10% rise in prices.

Project costs jumped 10% but the respondents reported a greater willingness for customers to share the impost compared witht he previous survey. The broker surmises improved profitability for construction companies could erode margins for developers such as Mirvac and labour shortages are also expected to bite.

The survey suggests demand for fibre cement has risen at the expense of brick most likely due to a widening price differential, says the broker.

Jarden says rates remain a risk for the medium term and that rate rises traditionally lead building approvals by three month (the broker is tipping a -15% to -20% fall) and prefers building material companies with potential for market share gain such as James Hardie Industries and Bluescope Steel.

On the distribution front, Jarden notes Total Tools, James Hardie Industries and Beacon Lighting ((BLX)) are all improving penetration but Bunnings remains the clear leader with Metcash the main beneficiary from contract wins.

Overweight rating retained for Beacon Lighting Group. Target price is $2.60, which compares to the last entry in the FNArena database in January of $2.80.

This report was published on May 9, 2022.

Target price is $2.60 Current Price is $2.11 Difference: $0.49
If BLX meets the Jarden target it will return approximately 23% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY22:

Jarden forecasts a full year FY22 dividend of 10.10 cents and EPS of 16.00 cents.
At the last closing share price the estimated dividend yield is 4.79%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.19.

Forecast for FY23:

Jarden forecasts a full year FY23 dividend of 7.80 cents and EPS of 12.90 cents.
At the last closing share price the estimated dividend yield is 3.70%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.36.

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

BSL    BLUESCOPE STEEL LIMITED

Steel & Scrap - Overnight Price: $17.57

Jarden rates ((BSL)) as Overweight (2) -

Jarden's AIB Construction Activity Survey suggests 4% growth in new contracts in the six months, vs a -1% decline in the previous survey, and backlogs have extends to 1.5 years from one year, underpinning near-term earnings, says the broker.

The survey also reveals a skew to larger national contractors with turnover in excess of $100m.

Steel product pricing strength proved the standout, Jarden tipping a potential 10% rise in prices.

Project costs jumped 10% but the respondents reported a greater willingness for customers to share the impost compared witht he previous survey. The broker surmises improved profitability for construction companies could erode margins for developers such as Mirvac ((MGR)) and labour shortages are also expected to bite.

The survey suggests demand for fibre cement has risen at the expense of brick most likely due to a widening price differential, says the broker.

Jarden says rates remain a risk for the medium term and that rate rises traditionally lead building approvals by three month (the broker is tipping a -15% to -20% fall) and prefers building material companies with potential for market share gain such as James Hardie Industries and Bluescope Steel.

On the distribution front, Jarden notes Total Tools, James Hardie Industries and Beacon Lighting are all improving penetration but Bunnings remains the clear leader with Metcash the main beneficiary from contract wins.

Overweight rating retained for BlueScope Steel. Target price is $23, which compares to the last entry in the FNArena database in April of $23.60.

This report was published on May 9, 2022.

Target price is $23.60 Current Price is $17.57 Difference: $6.03
If BSL meets the Jarden target it will return approximately 34% (excluding dividends, fees and charges).
Current consensus price target is $25.63, suggesting upside of 0.0%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY22:

Jarden forecasts a full year FY22 dividend of 50.00 cents and EPS of 483.80 cents.
At the last closing share price the estimated dividend yield is 2.85%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 3.63.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 514.6, implying annual growth of 117.2%.
Current consensus DPS estimate is 50.0, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY23:

Jarden forecasts a full year FY23 dividend of 50.00 cents and EPS of 484.50 cents.
At the last closing share price the estimated dividend yield is 2.85%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 3.63.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 306.8, implying annual growth of -40.4%.
Current consensus DPS estimate is 50.0, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is N/A.

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

BWX    BWX LIMITED

Household & Personal Products - Overnight Price: $1.36

Canaccord Genuity rates ((BWX)) as Downgrade to Hold from Buy (3) -

BWX's trading update reveals a revenue miss, higher customer acquisition costs and earnings erosion as cost inflation bites.

Management expects FY23 organic earnings will normalise in FY23.

Cannacord Genuity notes the company is trading at a sharp discount to global peers and, while the broker spies solid value and expects a successful turnaround is in the wings, it takes a cautious stance, noting growing industry uncertainty, negative cash flow and a slow balance sheet.

Rating downgraded to Hold from Buy. Target price falls to $1.59 from $4.13.

This report was published on May 9, 2022.

Target price is $1.59 Current Price is $1.36 Difference: $0.23
If BWX meets the Canaccord Genuity target it will return approximately 17% (excluding dividends, fees and charges).
Current consensus price target is $2.67, suggesting upside of 0.0%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY22:

Canaccord Genuity forecasts a full year FY22 dividend of 2.30 cents and EPS of 7.80 cents.
At the last closing share price the estimated dividend yield is 1.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.44.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 8.1, implying annual growth of -52.5%.
Current consensus DPS estimate is 2.2, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY23:

Canaccord Genuity forecasts a full year FY23 dividend of 2.10 cents and EPS of 10.30 cents.
At the last closing share price the estimated dividend yield is 1.54%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.20.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.6, implying annual growth of 55.6%.
Current consensus DPS estimate is 4.1, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is N/A.

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


Jarden rates ((BWX)) as Overweight (2) -

Full year revenue guidance from BWX of $240-250m reflects a -2.4% miss on Jarden's forecast at the midpoint, while full year earnings guidance of $34-37m is a -13.4% miss.

Weakness in the digital segment drove the lower than anticipated revenue, although growth from Sukin as a result from increased shelf space in Woolworths was a positive, while higher labour and marketing costs drove the earnings miss. 

Cost savings are on the cards, with the company flagging $5m in cost savings that can be achieved regardless of ongoing supply chain issues, but more detail on ongoing costs will be disclosed at the investor day.

The Overweight rating is retained and the target price decreases to $1.98 from $2.74.

This report was published on May 6, 2022.

Target price is $1.98 Current Price is $1.36 Difference: $0.62
If BWX meets the Jarden target it will return approximately 46% (excluding dividends, fees and charges).
Current consensus price target is $2.67, suggesting upside of 0.0%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY22:

Jarden forecasts a full year FY22 dividend of 0.00 cents and EPS of 8.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.28.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 8.1, implying annual growth of -52.5%.
Current consensus DPS estimate is 2.2, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY23:

Jarden forecasts a full year FY23 dividend of 0.00 cents and EPS of 8.60 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.81.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.6, implying annual growth of 55.6%.
Current consensus DPS estimate is 4.1, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is N/A.

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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