Australian Broker Call *Extra* Edition – Jun 27, 2022

Daily Market Reports | Jun 27 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)

4DX   A4N   ACW   ADH   ARF   AVD   BHP   CCX   CKF   CNI   COE   CQE   CQR   CRN   DSK   FBU   GMG   GNC   GPT   HCW   HDN   HMC   HPI   IPH   KMD   LOV   M7T   MPL   NHC   NSR   PBH   RBL   RDY   S32   SCG   SCP   SM1   SYM   TPG   UBI   VCX   WHC   WPR  

ACW    ACTINOGEN MEDICAL LIMITED

Overnight Price: $0.04

Bell Potter rates ((ACW)) as Speculative Buy (1) -

Bell Potter initiates coverage on Australian drug developer Actinogen Medical with a Speculative Buy rating and $0.044 target price. The company has a single molecular asset, Xanamem, aimed at targeting a number of neurological conditions.

These conditions include Alzheimer’s disease, severe depression and Fragile X syndrome. Xanamem effectively penetrates the brain and reduces cortisol levels found in the central nervous system.

The analyst incorporates conservative assumptions into forecasts regarding a successful deal for the company with a larger pharmaceutical partner to achieve approval and launch of Xanamem.

This report was published on June 23, 2022.

Target price is $0.04 Current Price is $0.04 Difference: $0.004
If ACW meets the Bell Potter target it will return approximately 10% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY22:

Bell Potter forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 0.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 13.33.

Forecast for FY23:

Bell Potter forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 0.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 20.00.

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

ADH    ADAIRS LIMITED

Furniture & Renovation - Overnight Price: $1.79

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

Canaccord Genuity anticipates Australian consumers will increasingly feel the impacts of an inflationary environment in the coming year, and as a result has applied a more bearish outlook to its retail coverage. 

The broker notes Adairs is particularly exposed to declining demand for home goods, and this drives its significant downwards earnings revision. The broker further highlighted the company operates in a highly competitive category, and will need to work to integrate recent acquisitions.

The rating is downgraded to Hold from Buy and the target price decreases to $2.30 from $3.40.

This report was published on June 22, 2022.

Target price is $2.30 Current Price is $1.79 Difference: $0.51
If ADH meets the Canaccord Genuity target it will return approximately 28% (excluding dividends, fees and charges).
Current consensus price target is $3.50, suggesting upside of 91.3%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY22:

Canaccord Genuity forecasts a full year FY22 dividend of 16.50 cents and EPS of 29.80 cents.
At the last closing share price the estimated dividend yield is 9.22%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.01.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 30.4, implying annual growth of -19.4%.
Current consensus DPS estimate is 18.0, implying a prospective dividend yield of 9.8%.
Current consensus EPS estimate suggests the PER is 6.0.

Forecast for FY23:

Canaccord Genuity forecasts a full year FY23 dividend of 14.00 cents and EPS of 27.30 cents.
At the last closing share price the estimated dividend yield is 7.82%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.56.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 33.4, implying annual growth of 9.9%.
Current consensus DPS estimate is 23.3, implying a prospective dividend yield of 12.7%.
Current consensus EPS estimate suggests the PER is 5.5.

Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

ARF    ARENA REIT

REITs - Overnight Price: $4.20

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

Given the sell-off in A-REITs and sharp increase in debt financing, Goldman Sachs reviews the sector, anticipating those that are more leveraged could underperform.

The broker estimates that a -10% decline in asset valuations would result in gearing increasing by 250 basis points on average. Moreover, a 100 basis points increase to interest rates equates to a -3% decline in earnings on average across its coverage.

Goldman Sachs reduces earnings estimates by -4% on average across its estimates for Arena REIT over FY23-24. Neutral rating maintained. Target is reduced to $4.40 from $4.57.

This report was published on June 22, 2022.

Target price is $4.40 Current Price is $4.20 Difference: $0.2
If ARF meets the Goldman Sachs target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $4.38, suggesting upside of 2.7%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY22:

Goldman Sachs forecasts a full year FY22 EPS of 16.60 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.30.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.6, implying annual growth of -60.4%.
Current consensus DPS estimate is 16.0, implying a prospective dividend yield of 3.7%.
Current consensus EPS estimate suggests the PER is 25.7.

Forecast for FY23:

Goldman Sachs forecasts a full year FY23 EPS of 17.60 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.86.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 17.3, implying annual growth of 4.2%.
Current consensus DPS estimate is 17.1, implying a prospective dividend yield of 4.0%.
Current consensus EPS estimate suggests the PER is 24.7.

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

AVD    AVADA GROUP LIMITED

Industrial Sector Contractors & Engineers - Overnight Price: $0.88

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

Avada Group has acquired Construct Traffic, extending its operations into Victoria. This acquisition will bring the group to 950 vehicles and almost 2000 traffic controllers and should deliver normalised FY22 revenue of $34.5m and EBITDA of $5m.

Shaw and Partners highlights the strategic rationale in the acquisition, given the company currently operates in just Queensland and NSW. Meanwhile, ongoing disruptions to operations have been flagged because of the weather impacts of La Nina throughout Queensland and NSW.

A recovery to expected trading levels was experienced in June amid improved weather conditions. Revenue is now likely to miss prospectus ($146.6m) with the range of $138.2-138.7m anticipated. The broker retains a Buy rating, reducing the target to $1.29 from $1.40.

This report was published on June 22, 2022.

Target price is $1.29 Current Price is $0.88 Difference: $0.41
If AVD meets the Shaw and Partners target it will return approximately 47% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY22:

Shaw and Partners forecasts a full year FY22 dividend of 0.00 cents and EPS of 7.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.28.

Forecast for FY23:

Shaw and Partners forecasts a full year FY23 dividend of 5.40 cents and EPS of 10.90 cents.
At the last closing share price the estimated dividend yield is 6.14%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.07.

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

BHP    BHP GROUP LIMITED

Bulks - Overnight Price: $40.50

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

The Queensland government has raised coal royalties and included additional tiers, increasing the effective royalty rate when coal prices are above $175/t. Goldman Sachs remains positive about both thermal and metallurgical coal because of supply disruptions.

Within the broker's coverage, BHP Group is one of the only companies with a major impact from Queensland's decision. On balance, higher royalties are negative for earnings per share and valuation and a potential disincentive for new projects and expansion.

In turn, this may reduce medium-long-term supply, particularly for metallurgical coal, and support higher prices for longer. Goldman Sachs reiterates a Buy rating and reduces the target to $49.40 from $50.80.

This report was published on June 22, 2022.

Target price is $49.40 Current Price is $40.50 Difference: $8.9
If BHP meets the Goldman Sachs target it will return approximately 22% (excluding dividends, fees and charges).
Current consensus price target is $46.05, suggesting upside of 15.8%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY22:

Goldman Sachs forecasts a full year FY22 dividend of 485.49 cents and EPS of 645.03 cents.
At the last closing share price the estimated dividend yield is 11.99%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.28.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 644.6, implying annual growth of N/A.
Current consensus DPS estimate is 595.8, implying a prospective dividend yield of 15.0%.
Current consensus EPS estimate suggests the PER is 6.2.

Forecast for FY23:

Goldman Sachs forecasts a full year FY23 dividend of 390.59 cents and EPS of 519.87 cents.
At the last closing share price the estimated dividend yield is 9.64%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.79.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 565.3, implying annual growth of -12.3%.
Current consensus DPS estimate is 452.1, implying a prospective dividend yield of 11.4%.
Current consensus EPS estimate suggests the PER is 7.0.

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

CCX    CITY CHIC COLLECTIVE LIMITED

Apparel & Footwear - Overnight Price: $1.76

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

Canaccord Genuity anticipates Australian consumers will increasingly feel the impacts of an inflationary environment in the coming year, and as a result has applied a more bearish outlook to its retail coverage. 

The broker considers City Chic Collective to have the best risk/reward in the sector given medium-term tailwinds. The broker expects the company can deliver top line growth in FY23, anticipating some pricing competition from broader consumer weakness. 

The Buy rating is retained and the target price decreases to $2.80 from $4.60.

This report was published on June 22, 2022.

Target price is $2.80 Current Price is $1.76 Difference: $1.04
If CCX meets the Canaccord Genuity target it will return approximately 59% (excluding dividends, fees and charges).
Current consensus price target is $3.94, suggesting upside of 118.9%(ex-dividends)
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 12.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.19.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 11.9, implying annual growth of 24.1%.
Current consensus DPS estimate is 1.8, implying a prospective dividend yield of 1.0%.
Current consensus EPS estimate suggests the PER is 15.1.

Forecast for FY23:

Canaccord Genuity forecasts a full year FY23 dividend of 0.00 cents and EPS of 13.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.66.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 14.7, implying annual growth of 23.5%.
Current consensus DPS estimate is 3.6, implying a prospective dividend yield of 2.0%.
Current consensus EPS estimate suggests the PER is 12.2.

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


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