Australian Broker Call *Extra* Edition – Jun 02, 2022

Daily Market Reports | Jun 02 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)

ALQ   CGC (2)   CIA   EDV   FPH   GEN   NAN (3)   PDL   RTR   S32   TAH   TLC   TNE   TOY   VHT   WBC  

TLC    LOTTERY CORPORATION LIMITED

Gaming - Overnight Price: $4.60

Jarden rates ((TLC)) as Initiation of coverage with Neutral (3) -

Jarden has initiated coverage of the newly formed company, Lottery Corp, from the demerger of Tabcorp's Lotteries and Keno business.

The broker notes the company is able to remain highly leveraged with a relatively high credit rating and a low cost of debt due to the fact that Lottery Corp has a strong competitive advantage with an industry that is heavily regulated with high barriers to entry, which leads to earnings stability and resilience. 

Jarden points out there is no license renewal risk until 2028 in Victoria and finds the stock appears to discount growth in both the Digital and OzLotto businesses, as well as possible corporate interest.

A neutral rate and a price target of $4.52 is initiated for Lottery Corp.

This report was published on May 25, 2022.

Target price is $4.52 Current Price is $4.60 Difference: minus $0.08 (current price is over target).
If TLC meets the Jarden target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $5.08, suggesting upside of 10.3%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY22:

Jarden forecasts a full year FY22 dividend of 13.00 cents and EPS of 16.20 cents.
At the last closing share price the estimated dividend yield is 2.83%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 28.40.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.2, implying annual growth of N/A.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is 28.4.

Forecast for FY23:

Jarden forecasts a full year FY23 dividend of 13.00 cents and EPS of 15.80 cents.
At the last closing share price the estimated dividend yield is 2.83%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 29.11.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 17.5, implying annual growth of 8.0%.
Current consensus DPS estimate is 15.9, implying a prospective dividend yield of 3.5%.
Current consensus EPS estimate suggests the PER is 26.3.

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: $10.63

Goldman Sachs rates ((TNE)) as Buy (1) -

TechnologyOne reported H1 FY22 earnings that showed stronger than expected annual recurring revenue (ARR) and softer margins according to Goldman Sachs.

The broker believes the company is on a firm footing to reach ARR of $500m with an increase in the rate of transition to the SaaS business model and an improvement in the new business growth in the UK, as well as cross-selling into the existing customer base.

Goldman Sachs increased revenue forecasts but reduced margins that lowered earnings forecasts before tax by -1% and -3%, respectively for FY22 and FY23. 

The company is considered by the broker to offer stable earnings given the low churn and defensive public sector markets as well as being on track to become a pure SaaS business.

The price target has been reduced to $13.30 from $13.90 and a Buy rating is maintained.

This report was published on May 24, 2022.

Target price is $13.30 Current Price is $10.63 Difference: $2.67
If TNE meets the Goldman Sachs target it will return approximately 25% (excluding dividends, fees and charges).
The company's fiscal year ends in September.

Forecast for FY22:

Goldman Sachs forecasts a full year FY22 dividend of 15.70 cents and EPS of 26.00 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 40.88.

Forecast for FY23:

Goldman Sachs forecasts a full year FY23 dividend of 18.20 cents and EPS of 30.00 cents.
At the last closing share price the estimated dividend yield is 1.71%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 35.43.

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

TOY    TOYS 'R' US ANZ LIMITED

Retailing - Overnight Price: $0.09

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

Shaw and Partners initiates coverage on Toys 'R' Us ANZ, noting the company is Australia's leader in the fast-growing online toy, hobby and baby segment with 191,000 active customers.

With Australia's toy and baby market value estimated at $6.3bn, Toys 'R' Us ANZ is targeting 5% market share in the medium-term, compared to its current 1.5% penetration, equating to more than $300m in revenue.

Shaw and Partners notes the imminent relaunch of Toys“R”Us and Babies“R”Us in the UK, one of the most advanced e-commerce markets in Europe presents a huge opportunity to the company.

60% of toy sales in the UK were made through e-commerce channels in 2021, with e-commerce expected to account for 35% of all retail sales by 2025.

The broker initiates with a Buy rating and a target price of $0.20.

This report was published on May 26, 2022.

Target price is $0.20 Current Price is $0.09 Difference: $0.11
If TOY meets the Shaw and Partners target it will return approximately 122% (excluding dividends, fees and charges).
The company's fiscal year ends in July.

Forecast for FY22:

Shaw and Partners forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 0.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 10.00.

Forecast for FY23:

Shaw and Partners forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 0.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 12.86.

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

VHT    VOLPARA HEALTH TECHNOLOGIES LIMITED

Medical Equipment & Devices - Overnight Price: $0.77

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

Volpara Health Technologies' FY22 full-year result slightly outpaced Bell Potter and sharply outpaced consensus, thanks in part to the CRA acquisition.

The loss at the earnings level tightened 4% year on year, notes the broker. Bell Potter suspects organic growth was soft - possibly 10% of the previous year's subscription revenue.

But the target spies plenty of low-hanging fruit on hand for the new CEO. Buy rating retained. Target price slips to $1.23 from $1.30.

This report was published on May 27, 2022.

Target price is $1.23 Current Price is $0.77 Difference: $0.46
If VHT meets the Bell Potter target it will return approximately 60% (excluding dividends, fees and charges).
The company's fiscal year ends in March.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 4.79 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 16.07.

Forecast for FY23:

Bell Potter forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 3.48 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 22.15.

This company reports in NZD. 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

WBC    WESTPAC BANKING CORPORATION

Banks - Overnight Price: $24.10

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

Westpac has entered into a Heads of Agreement to merge BT Fund Management's personal and corporate super funds with Mercer Super Trust.

It has also agreed to sell its Advance Asset Management business to Mercer Australia. 

Goldman Sachs expects both deals to be finalised in the first half of FY23 and expects the BT deal will result in a small loss, while Advance will come at a profit, yielding a net gain of $225m after tax.

Strategically, it aligns with the bank's goal of simplification, says the broker, and more asset sales are on the drawing board.

Transaction and separation costs of -$80m are expected to be expensed in the September half as a notable item, says the broker.

Neutral rating and $27.29 target price are retained.

This report was published on May 26, 2022.

Target price is $27.29 Current Price is $24.10 Difference: $3.19
If WBC meets the Goldman Sachs target it will return approximately 13% (excluding dividends, fees and charges).
Current consensus price target is $25.49, suggesting upside of 5.7%(ex-dividends)
The company's fiscal year ends in September.

Forecast for FY22:

Goldman Sachs forecasts a full year FY22 EPS of 163.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.79.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 156.0, implying annual growth of 4.4%.
Current consensus DPS estimate is 121.1, implying a prospective dividend yield of 5.0%.
Current consensus EPS estimate suggests the PER is 15.4.

Forecast for FY23:

Goldman Sachs forecasts a full year FY23 EPS of 178.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.54.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 188.3, implying annual growth of 20.7%.
Current consensus DPS estimate is 136.1, implying a prospective dividend yield of 5.6%.
Current consensus EPS estimate suggests the PER is 12.8.

Market Sentiment: 0.4
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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