Australian Broker Call
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December 21, 2022
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COMPANIES DISCUSSED IN THIS ISSUE
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The number next to the symbol represents the number of brokers covering it for this report -(if more than 1).
Last Updated: 05:00 PM
Your daily news report on the latest recommendation, valuation, forecast and opinion changes.
This report includes concise but limited reviews of research recently published by Stockbrokers, 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.
For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE
Overnight Price: $1.44
Citi rates AFG as Buy (1) -
Due to growth in Australian Finance Group's trail book and a skew to annuity-like trail commissions, Citi sees lesser sensitivity than peers to declining new sales in the mortgage market.
This attribute will likely soften the impact of market headwinds on the company's earnings, according to the analysts. A flat earnings profile is expected into FY23 and through to FY25.
Citi believes Australian Finance Group is the clear stock to buy in the space and maintains its Buy rating, while the target eases to $2.40 from $2.50.
Target price is $2.40 Current Price is $1.44 Difference: $0.965
If AFG meets the Citi target it will return approximately 67% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY23:
Citi forecasts a full year FY23 dividend of 16.80 cents and EPS of 22.00 cents. |
Forecast for FY24:
Citi forecasts a full year FY24 dividend of 16.70 cents and EPS of 21.90 cents. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
CCX CITY CHIC COLLECTIVE LIMITED
Apparel & Footwear
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Overnight Price: $0.41
UBS rates CCX as Neutral (3) -
Following a trading update by City Chic Collective for the first 24 weeks of FY23, UBS lowers its FY23 and FY24 EPS forecasts by -176% and -48%, respectively, and slashes its target to 45c from $1.10.
The reduced forecasts result from the sales decline, lower FY23 earnings (EBITDA) margins and a lower multiple, explains the analyst.
Sales fell by -7% compared to the previous corresponding period and slowed against the -2% fall for the first twenty weeks of FY23. By region, A&NZ sales were flat while Americas and the EMEA region fell by -14% and -5%, respectively.
Neutral retained.
Target price is $0.45 Current Price is $0.41 Difference: $0.045
If CCX meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).
Current consensus price target is $0.90, suggesting upside of 122.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
UBS forecasts a full year FY23 EPS of minus 2.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 3.7, implying annual growth of -61.6%. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 10.9. |
Forecast for FY24:
UBS forecasts a full year FY24 EPS of 3.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 7.4, implying annual growth of 100.0%. Current consensus DPS estimate is 1.3, implying a prospective dividend yield of 3.2%. Current consensus EPS estimate suggests the PER is 5.5. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $25.93
Morgan Stanley rates CPU as Overweight (1) -
Citi points out mortgage originations in the US are at multi-decade lows and expects the situation will worsen in 2023 and 2024.
The speed of rate hikes is having a net negative impact on Computershare's underlying mortgage servicing revenues (ex margin income), explains the broker. US mortgage refinance applications are down -85% year-on-year in 2022.
The Buy rating and $31.60 target are maintained. Industry View: In-Line.
Target price is $31.60 Current Price is $25.93 Difference: $5.67
If CPU meets the Morgan Stanley target it will return approximately 22% (excluding dividends, fees and charges).
Current consensus price target is $32.21, suggesting upside of 24.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Morgan Stanley forecasts a full year FY23 EPS of 155.04 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 150.2, implying annual growth of N/A. Current consensus DPS estimate is 144.0, implying a prospective dividend yield of 5.6%. Current consensus EPS estimate suggests the PER is 17.3. |
Forecast for FY24:
Morgan Stanley forecasts a full year FY24 EPS of 183.75 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 188.8, implying annual growth of 25.7%. Current consensus DPS estimate is 147.2, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 13.7. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.9
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
DHG DOMAIN HOLDINGS AUSTRALIA LIMITED
Real Estate
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Overnight Price: $2.59
UBS rates DHG as Buy (1) -
A softer-than-expected trading update by Domain Holdings Australia suggests to UBS December listings are decelerating at a faster than anticipated rate. It's thought agents and potential sellers are deferring listings into 2023.
The broker lowers lower its 2Q listing volume growth forecast to -22% from -20% and considers it likely RBA rate hikes into February 2023 will dampen seller sentiment.
The analyst points out Domain continues to trade at a -30-35% price earnings discount to Neutral-rated REA Group. The Buy rating is retained, while target is reduced by -18% to $3.20.
Target price is $3.20 Current Price is $2.59 Difference: $0.61
If DHG meets the UBS target it will return approximately 24% (excluding dividends, fees and charges).
Current consensus price target is $3.51, suggesting upside of 37.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Current consensus EPS estimate is 10.0, implying annual growth of 69.5%. Current consensus DPS estimate is 5.9, implying a prospective dividend yield of 2.3%. Current consensus EPS estimate suggests the PER is 25.6. |
Forecast for FY24:
Current consensus EPS estimate is 11.7, implying annual growth of 17.0%. Current consensus DPS estimate is 6.9, implying a prospective dividend yield of 2.7%. Current consensus EPS estimate suggests the PER is 21.9. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
GOZ GROWTHPOINT PROPERTIES AUSTRALIA
Infra & Property Developers
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Overnight Price: $3.03
Macquarie rates GOZ as Outperform (1) -
Management at Growthpoint Properties Australian has upgraded guidance for FY23 funds from operations (FFO) to 25.5-26.5cpu from 25.0-26.0cpu, though still behind Macquarie's forecast for 26.9cpu.
The REIT also announced December 22 preliminary revaluations, which were down -4.3% half-on-half, and the analyst suggests additional declines are in store. However, it's felt the balance sheet is well-placed in the medium-term.
The broker maintains its Outperform rating and $3.45 target.
Target price is $3.45 Current Price is $3.03 Difference: $0.42
If GOZ meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).
Current consensus price target is $3.66, suggesting upside of 18.1% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 21.40 cents and EPS of 22.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 23.1, implying annual growth of -61.2%. Current consensus DPS estimate is 21.1, implying a prospective dividend yield of 6.8%. Current consensus EPS estimate suggests the PER is 13.4. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 21.60 cents and EPS of 22.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 23.5, implying annual growth of 1.7%. Current consensus DPS estimate is 21.5, implying a prospective dividend yield of 6.9%. Current consensus EPS estimate suggests the PER is 13.2. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
LTR LIONTOWN RESOURCES LIMITED
New Battery Elements
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Overnight Price: $1.35
Macquarie rates LTR as Outperform (1) -
In what Macquarie considers a key step in the development of Kathleen Valley, Liontown Resources has signed a binding Power Purchase Agreement with Zenith Energy ((ZEN)).
This outcome should ensure the site is powered to capacity ahead of the commissioning process, explains the analyst. Management expects to commence commissioning in the second half of 2024.
The Outperform rating and $3.40 target are maintained.
Target price is $3.40 Current Price is $1.35 Difference: $2.05
If LTR meets the Macquarie target it will return approximately 152% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 0.80 cents. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 0.00 cents and EPS of minus 1.10 cents. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $108.90
UBS rates REA as Neutral (3) -
UBS cuts its price target for REA Group in reaction to a softer-than-expected trading update by Domain Holdings Australia.
The update by Domain suggests to the analyst December listings are decelerating at a faster than anticipated rate. It's thought agents and potential sellers are deferring listings into 2023.
The broker lowers lower its 2Q listing volume growth forecast to -22% from -20% and considers it likely RBA rate hikes into February 2023 will dampen seller sentiment.
The target for REA Group is reduced to $120.20 from $126.30. Neutral.
Target price is $120.20 Current Price is $108.90 Difference: $11.3
If REA meets the UBS target it will return approximately 10% (excluding dividends, fees and charges).
Current consensus price target is $125.00, suggesting upside of 12.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Current consensus EPS estimate is 321.4, implying annual growth of 10.3%. Current consensus DPS estimate is 172.2, implying a prospective dividend yield of 1.6%. Current consensus EPS estimate suggests the PER is 34.6. |
Forecast for FY24:
Current consensus EPS estimate is 361.2, implying annual growth of 12.4%. Current consensus DPS estimate is 197.0, implying a prospective dividend yield of 1.8%. Current consensus EPS estimate suggests the PER is 30.8. |
Market Sentiment: 0.2
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
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Overnight Price: $1.95
Macquarie rates SRL as Neutral (3) -
While Macquarie considers approval for the receipt of a $10m grant is a positive for Sunrise Energy Metals, further significant funding is required before construction at the Sunrise project can begin.
The potential grant is from grant from the NSW Critical Minerals and High-Tech Metals Activation Fund.
The Neutral rating and $2.10 target are unchanged.
Target price is $2.10 Current Price is $1.95 Difference: $0.15
If SRL meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 10.30 cents. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 0.00 cents and EPS of minus 10.60 cents. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $0.86
Macquarie rates WGX as Outperform (1) -
Macquarie leaves its 90c target unchanged after noting Westgold Resources is on track to achieving the top end of the volume guidance range of 120-130koz. Attaining the lower end of the $1,900-2,100/koz costs guidance range is also considered likely.
The analyst highlights management has implemented cost reduction strategies, which over 2022 has seen a -16% reduction in total expenditure. Outperform.
Target price is $0.90 Current Price is $0.86 Difference: $0.045
If WGX meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 0.00 cents and EPS of 4.90 cents. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 0.00 cents and EPS of 1.10 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $10.32
UBS rates WHC as Buy (1) -
After returning from a recently visit to Whitehaven Coal's core assets, UBS assesses near-term growth at Maules Creek and Narrabri are on track for FY25.
However, the analyst believes Organic growth is challenging as the Narrabri expansion is awaiting Federal Environment minister approval, the success of which is not helped by the Queensland Land Court's rejection of the (privately-owned) Waratah coal project.
The Buy rating and $9.20 target are unchanged.
Target price is $9.20 Current Price is $10.32 Difference: minus $1.12 (current price is over target).
If WHC meets the UBS target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $11.46, suggesting upside of 6.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
UBS forecasts a full year FY23 dividend of 185.00 cents and EPS of 375.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 409.8, implying annual growth of 107.4%. Current consensus DPS estimate is 96.9, implying a prospective dividend yield of 9.0%. Current consensus EPS estimate suggests the PER is 2.6. |
Forecast for FY24:
UBS forecasts a full year FY24 dividend of 139.00 cents and EPS of 293.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 300.3, implying annual growth of -26.7%. Current consensus DPS estimate is 108.4, implying a prospective dividend yield of 10.1%. Current consensus EPS estimate suggests the PER is 3.6. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Today's Price Target Changes
| Company | Last Price | Broker | New Target | Prev Target | Change | |
| AFG | Australian Finance Group | $1.44 | Citi | 2.40 | 2.50 | -4.00% |
| CCX | City Chic Collective | $0.41 | UBS | 0.45 | 1.10 | -59.09% |
| DHG | Domain Holdings Australia | $2.56 | UBS | 3.20 | 3.90 | -17.95% |
| REA | REA Group | $111.07 | UBS | 120.20 | 126.30 | -4.83% |
Summaries
| AFG | Australian Finance Group | Buy - Citi | Overnight Price $1.44 |
| CCX | City Chic Collective | Neutral - UBS | Overnight Price $0.41 |
| CPU | Computershare | Overweight - Morgan Stanley | Overnight Price $25.93 |
| DHG | Domain Holdings Australia | Buy - UBS | Overnight Price $2.59 |
| GOZ | Growthpoint Properties Australia | Outperform - Macquarie | Overnight Price $3.03 |
| LTR | Liontown Resources | Outperform - Macquarie | Overnight Price $1.35 |
| REA | REA Group | Neutral - UBS | Overnight Price $108.90 |
| SRL | Sunrise Energy Metals | Neutral - Macquarie | Overnight Price $1.95 |
| WGX | Westgold Resources | Outperform - Macquarie | Overnight Price $0.86 |
| WHC | Whitehaven Coal | Buy - UBS | Overnight Price $10.32 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 7 |
| 3. Hold | 3 |
Wednesday 21 December 2022
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