Australian Broker Call

UBS rates AMA as Buy (1) -

AMA Group has advised that the Australian taxation office has refused a request for de-merger relief, meaning the announced acquisition and de-merger scheme of arrangements will not proceed.

The company had recommended the sale of the panel business to Blackstone and the remaining automotive component business be de-merged into a separate ASX listed entity.

UBS believes the business performance remains strong and on target. Buy rating and $1.30 target maintained.

Target price is $1.30 Current Price is $0.95 Difference: $0.35
If AMA meets the UBS target it will return approximately 37% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Deutsche Bank rates ANZ as Hold (3) -

ANZ is expanding its on market share buyback to $3.0bn from $1.5bn. This follows the receipt of $1bn from Zurich for reinsurance commissions, the first stage of the sale of the life business.

Deutsche Bank continues to expect further capital management initiatives as more divestments are completed over the next 12-18 months.

Hold rating maintained. Target is $29.

Target price is $29.00 Current Price is $28.55 Difference: $0.45
If ANZ meets the Deutsche Bank target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $29.23, suggesting upside of 2.4% (ex-dividends)

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Morgan Stanley rates ANZ as Equal-weight (3) -

ANZ bank is increasing the on market share buyback to $3.0 bn from $1.5 bn. This is ahead of Morgan Stanley's expectations but the broker believes capital management is necessary to mitigate the dilution to earnings from the asset sales.

Rating is Equal-weight. Target is $27.60. Sector view is In-Line.

Target price is $27.60 Current Price is $28.55 Difference: minus $0.95 (current price is over target).
If ANZ meets the Morgan Stanley target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $29.23, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Ord Minnett rates ANZ as Accumulate (2) -

ANZ will increase its on market buyback to $3.0bn from $1.5bn. Timing is expected to be dependent on proceeds from asset sales.

Capital management remains a key theme for Ord Minnett and ANZ is expected to deliver sector-leading growth in earnings per share, which the broker estimates on a three-year annual rate at 4.7%.

Accumulate maintained. Target is $31.20.

Target price is $31.20 Current Price is $28.55 Difference: $2.65
If ANZ meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $29.23, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Ord Minnett rates BOQ as Lighten (4) -

Ord Minnett suggests the bank will need to make significant changes to comply with the recommendations from the Sedgwick review. This was an industry-commissioned report that looked at pay structures within the retail banking sector.

Ord Minnett expects the retail bank to grow well below system as it faces industry-wide mortgage front-book pressures. The broker expects uncertainty to linger for some time and maintains a Lighten rating with a $10.50 target.

Target price is $10.50 Current Price is $10.48 Difference: $0.02
If BOQ meets the Ord Minnett target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $10.67, suggesting upside of 1.8% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

Morgans rates CCP as Upgrade to Add from Hold (1) -

Morgans does not believe there are any legitimate concerns raised from the recent anonymous report published on Credit Corp. The broker suggests, despite the attempt to damage the company's reputation, it is unlikely the risk of access to funding has increased.

If mainstream banks decide not to lend the funds then alternative, albeit more expensive, funding options would be available. The broker believes fundamentals are solid and the three-year growth profile attractive.

Rating is upgraded back to Add from Hold. Target is reduced to $21.14 from $23.00.

Target price is $21.14 Current Price is $18.05 Difference: $3.09
If CCP meets the Morgans target it will return approximately 17% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

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

Ord Minnett rates CCP as Upgrade to Accumulate from Hold (2) -

The share price has retreated significantly in 2018, underperforming listed competitors and the broader market. Medium term prospects have not materially changed, Ord Minnett observes.

Given the retreat in the share price on the back of the extremely negative anonymous report that was aimed at encouraging the company's bank to withdraw its support, Ord Minnett upgrades to Accumulate from Hold. Target is reduced to $20.50 from $22.00 because of changes in earnings forecasts.

Target price is $20.50 Current Price is $18.05 Difference: $2.45
If CCP meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

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

Morgan Stanley rates DXS as Overweight (1) -

Delays in new supply and upside to Sydney's office demand could mean further upside exists for the Dexus Properties distributions. The stock remains Morgan Stanley's preferred office play as it grows its FUM platform.

Upside to revaluations is not limited to Sydney, as positive revaluations have also been recorded in Brisbane and Melbourne. The broker suggests this may highlight improvements in office operating metrics that could sustain current interest in office assets, particularly if potential supply is delayed because of capacity constraints.

Target price is $9.85. Industry view: Cautious. Overweight.

Target price is $9.85 Current Price is $9.96 Difference: minus $0.11 (current price is over target).
If DXS meets the Morgan Stanley target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.76, suggesting downside of -2.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.2

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

Macquarie rates FBU as Neutral (3) -

The company has affirmed FY18 EBIT guidance. Guidance for FY19 suggests to Macquarie a stable earnings outlook. Dividend policy continues to be 50-75% of net profit but now references available cash flow.

Macquarie expects the market to focus on Australian margins and execution on defensive capital expenditure. Neutral maintained. Target is raised to NZ$6.56 from NZ$6.54.

Current Price is $6.39. Target price not assessed.

Current consensus price target is $6.60, suggesting upside of 3.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.2

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

Ord Minnett rates HSN as Hold (3) -

Ord Minnett found the trading update weak as it implies negative organic growth in FY19 and lower operating earnings margins. FY19 guidance is preliminary and the broker is mindful that management is being cautious.

FY19 and FY20 cash flow forecasts are reduced by -20-26%, largely on the back of lower forecast project and licence fee revenue.

The broker maintains a Hold rating and may have taken a more positive view if the stock were trading below its base business case. Target is reduced to $3.43 from $4.54.

Target price is $3.43 Current Price is $3.26 Difference: $0.17
If HSN meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

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

Citi rates MHJ as Downgrade to Neutral from Buy (3) -

Citi analysts have changed their view about Michael Hill having less exposure to a troubled household spending budget, which earlier underpinned the Buy rating for the stock.

The analysts now believe the core operations are likely to underperform and uncertainty rules where growth medium term will be found now that Emma and Roe will be closed down.

The shares look cheaply priced, but Citi nevertheless downgrades to Neutral from Buy. Price target dives to $1 from $1.43 on reduced forecasts. The broker questions the limited growth options.

Target price is $1.00 Current Price is $0.96 Difference: $0.04
If MHJ meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $1.15, suggesting upside of 15.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

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

Credit Suisse rates MHJ as Outperform (1) -

Credit Suisse welcomes the closure of the remaining Emma & Roe stores. The six stores were immaterial to group earnings but the broker was concerned that the small portfolio could distract from the core business.

One-off cash costs for the exit total $3.1m. The broker welcomes a new financial year clear of any potential earnings headwinds from these businesses. Outperform maintained. Target is NZ$1.45.

Current Price is $0.96. Target price not assessed.

Current consensus price target is $1.15, suggesting upside of 15.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

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

Macquarie rates MHJ as Outperform (1) -

Instead of reducing Emma & Roe to 6 stores the company will now abandon the brand and focus on its core. Macquarie has identified a value gap between the current share price and its valuation of the core business.

Without the distraction of an underperforming business, the broker believes the company can now differentiate its brand and deliver on strategic competencies.

Outperform maintained. Target is $1.30.

Target price is $1.30 Current Price is $0.96 Difference: $0.34
If MHJ meets the Macquarie target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $1.15, suggesting upside of 15.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

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

Morgans rates MMI as Add (1) -

The company has raised $17.5m via a share issue mainly to existing shareholders. The company has revised the production schedule at the Bauxite Hills mine, as the barge loading port took longer to ramp up and remediation costs and slower-than-model product sales have reduced free cash.

Morgans maintains an Add rating and raises the target to $0.34 from $0.31. With the production schedule now revised there is reduced development risk and a reduced discount rate is applied to the broker's methodology.

Target price is $0.34 Current Price is $0.23 Difference: $0.11
If MMI meets the Morgans target it will return approximately 48% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

UBS rates NST as Upgrade to Buy from Sell (1) -

UBS takes a fresh look at Northern Star Resources with a new lead analyst. The broker believes the company's production aspirations are conservative. Modelled production is lifted to 692,000 ozs for FY19 and 697,000 ozs for FY20.

Rating is upgraded to Buy from Sell, driven by growth in production, earnings and cash flow. Target is raised to $7.50 from $6.06.

Target price is $7.50 Current Price is $6.84 Difference: $0.66
If NST meets the UBS target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $5.74, suggesting downside of -16.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

Credit Suisse rates OGC as Outperform (1) -

Amid reports that 23 mining companies have passed their audit in the Philippines, Credit Suisse assumes that Didipio, being on the review list, has been passed.

When confirmed, the broker expects this to be a significant re-rating event. Didipio is 31% of the value of the company's operations.

The broker has retained an Outperform rating and $3.80 target.

Target price is $3.80 Current Price is $3.68 Difference: $0.12
If OGC meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $4.60, suggesting upside of 25.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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

Credit Suisse rates TAH as Outperform (1) -

Victoria and Western Australia have increased race field fees from FY19. Even though the current Queensland regime expires June 30, 2019, Credit Suisse is not expecting any further moves, as the large Australian states now have closely aligned race field rates.

Separately, the point of consumption tax continues to present some risk to Tabcorp's earnings from the second half of FY19 and the broker considers it prudent to factor in some leakage.

Credit Suisse maintains an Outperform rating and $5.20 target.

Target price is $5.20 Current Price is $4.50 Difference: $0.7
If TAH meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $5.19, suggesting upside of 15.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

UBS rates TAH as Buy (1) -

The shares have declined -20% following a disappointing first half result amid heightened competition from bookmakers.

UBS understands these concerns but expects the company should benefit from a higher degree of regulatory certainty within wagering and lotteries going forward.

The broker maintains a Buy rating and reduces the target to $5.10 from $5.20.

Target price is $5.10 Current Price is $4.50 Difference: $0.6
If TAH meets the UBS target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $5.19, suggesting upside of 15.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Macquarie rates WAF as Outperform (1) -

West African Resources has updated its feasibility study for Sanbrado which lifts the production profile and extends the mine life.

The company has also reported a 76% lift in mining inventory, with a maiden underground reserve at the high-grade M1S prospect.

Macquarie maintains an Outperform rating and raises the target to $0.55 from $0.50.

Target price is $0.55 Current Price is $0.34 Difference: $0.21
If WAF meets the Macquarie target it will return approximately 62% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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