Australian Broker Call *Extra* Edition – May 31, 2022

Daily Market Reports | May 31 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)

ABP   AOF   ARF   ARX   BWP   CDA   CDP   CGC   CNI   CQE   CQR   DXC   DXI   ECF   ENN   ERF   FPH (2)   GDC   GDI   GTK (2)   LPD   NPR   NSR   SCP   TNE (2)   UWL   WEB   WPR  

TNE    TECHNOLOGY ONE LIMITED

IT & Support - Overnight Price: $10.72

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

A solid first half result from TechnologyOne according to Shaw and Partners, including 44% software as a service annual recurring revenue growth, as well as guidance for more than 40% growth in the full year. The broker also highlighted momentum in the UK, with a strong pipeline for FY22 and a growing headcount.

Higher than anticipated costs in the half of $137.9m compared to an expected $129.9m were largely driven by Scientia, but Shaw and Partners notes integration is moving quickly. 

The Buy rating and target price of $12.10 are retained

This report was published on May 25, 2022.

Target price is $12.10 Current Price is $10.72 Difference: $1.38
If TNE meets the Shaw and Partners target it will return approximately 13% (excluding dividends, fees and charges).
The company's fiscal year ends in September.

Forecast for FY22:

Shaw and Partners forecasts a full year FY22 dividend of 14.90 cents and EPS of 26.70 cents.
At the last closing share price the estimated dividend yield is 1.39%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 40.15.

Forecast for FY23:

Shaw and Partners forecasts a full year FY23 dividend of 15.90 cents and EPS of 29.30 cents.
At the last closing share price the estimated dividend yield is 1.48%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 36.59.

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


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

TechnologyOne has declared its software as a service (SaaS) transformation complete, with SaaS fees increasing 40% in the first half in what Wilson described as a solid result, and a similar level of growth expected in the coming half.

With 97% of its revenue now coming from SaaS, the company noted segmentally Education annual recurring revenue grew 31% equating to $17m, Government grew 21% equating to $8m, and Local Government grew 19% equating to $16m.

The Market Weight rating is retained and the target price decreases to $11.08 from $12.08 , reflecting higher costs.

This report was published on May 25, 2022.

Target price is $11.08 Current Price is $10.72 Difference: $0.36
If TNE meets the Wilsons target it will return approximately 3% (excluding dividends, fees and charges).
The company's fiscal year ends in September.

Forecast for FY22:

Wilsons forecasts a full year FY22 dividend of 15.20 cents and EPS of 26.40 cents.
At the last closing share price the estimated dividend yield is 1.42%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 40.61.

Forecast for FY23:

Wilsons forecasts a full year FY23 dividend of 16.50 cents and EPS of 32.70 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 32.78.

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

UWL    UNITI GROUP LIMITED

Telecommunication - Overnight Price: $4.92

JP Morgan rates ((UWL)) as Overweight (1) -

JP Morgan expects wholesale costs will rise, following proposed changes to the NBN Special Access Undertaking. As Uniti Group's rate card mirrors NBN pricing moves, it's estimated long run earnings (EBITDA) could be 20% higher than previously expected. 

Additionally, concerns around the material adverse change clause for the Morrison/Brookfield bid are now largely alleviated after the proposed changes, suggests the broker.

The target price remains set in-line with the highest indicative offer for the company at $5/share, and the Neutral rating is unchanged.

This report was published on May 24, 2022.

Target price is $5.00 Current Price is $4.92 Difference: $0.08
If UWL meets the JP Morgan target it will return approximately 2% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY22:

JP Morgan forecasts a full year FY22 dividend of 0.00 cents and EPS of 12.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 41.00.

Forecast for FY23:

JP Morgan forecasts a full year FY23 dividend of 0.00 cents and EPS of 14.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 35.14.

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

WEB    WEBJET LIMITED

Travel, Leisure & Tourism - Overnight Price: $6.10

JP Morgan rates ((WEB)) as Neutral (3) -

Webjet's FY22 result was broadly in-line with JP Morgan's estimates and showed a return to profitability in the 2H for the B2B segment with positive momentum continuing for B2C.

While management's medium-term targets look achievable to the analyst, the share price currently incorporates those targets and the Neutral rating is unchanged. Near-term earnings forecasts lift (due to a changed valuation model) and the target rises to $5.80 from $5.20.

The Neutral rating is unchanged.

This report was published on May 20, 2022.

Target price is $5.80 Current Price is $6.10 Difference: minus $0.3 (current price is over target).
If WEB meets the JP Morgan target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $6.38, suggesting upside of 4.6%(ex-dividends)
The company's fiscal year ends in March.

Forecast for FY23:

JP Morgan forecasts a full year FY23 dividend of 4.00 cents and EPS of 9.00 cents.
At the last closing share price the estimated dividend yield is 0.66%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 67.78.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 15.4, implying annual growth of N/A.
Current consensus DPS estimate is 1.1, implying a prospective dividend yield of 0.2%.
Current consensus EPS estimate suggests the PER is 39.6.

Forecast for FY24:

JP Morgan forecasts a full year FY24 dividend of 10.00 cents and EPS of 26.00 cents.
At the last closing share price the estimated dividend yield is 1.64%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.46.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 31.9, implying annual growth of 107.1%.
Current consensus DPS estimate is 5.8, implying a prospective dividend yield of 1.0%.
Current consensus EPS estimate suggests the PER is 19.1.

Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

WPR    WAYPOINT REIT LIMITED

REITs - Overnight Price: $2.50

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

Moelis undertakes a review of Australian REITs and says that while rising interest rates will dampen earnings, rising inflation should increase the attractiveness of many REITS as defensive investments, noting their strong balance sheets and attractive income growth profiles. Earnings forecasts fall -2.4% and -4.2% across Moelis's portfolio coverage.

Waypoint REIT is one such REIT and Moelis expects its portfolio will continue to improve as the company disposes of 13% of assets and returns the proceeds to shareholders.

Moelis notes the company is trading at a -17% discount to net tangible assets and expects this will magnify the payout benefit and makes Waypoint one of the cheapest long-WALE (weighted average lease expiry) REITs on the ASX.

Buy rating retained. Target price slips to $3.02 from $3.06.

This report was published on May 25, 2022.

Target price is $3.02 Current Price is $2.50 Difference: $0.52
If WPR meets the Moelis target it will return approximately 21% (excluding dividends, fees and charges).
Current consensus price target is $2.92, suggesting upside of 16.9%(ex-dividends)

Forecast for FY22:

Current consensus EPS estimate is 16.1, implying annual growth of -71.8%.
Current consensus DPS estimate is 16.7, implying a prospective dividend yield of 6.7%.
Current consensus EPS estimate suggests the PER is 15.5.

Forecast for FY23:

Current consensus EPS estimate is 16.7, implying annual growth of 3.7%.
Current consensus DPS estimate is 16.9, implying a prospective dividend yield of 6.8%.
Current consensus EPS estimate suggests the PER is 15.0.

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


Disclaimer:
The content of this information does in no way reflect the opinions of FNArena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FNArena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.

As part of emerging new trends overseas, The Australian Broker Call *Extra* Edition also includes providers of sponsored research. Readers should bear in mind, sponsored research, while not necessarily of lower quality, has the embedded complication that the company that is the subject of the research has paid for this research. Providers of sponsored research that can potentially be included in this Report are Breakaway Research, Edison Investment Research, Independent Investment Research, NDF Research, Pitt Street Research, and TMT Analytics.

Decisions about inclusions in this Report are made independently of the providers of stock market research and at full discretion of the team of journalists responsible for content at FNArena. Inclusion does not equal endorsement, in any way, shape or form. This Report is provided for informational purposes only.


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