Australian Broker Call

Ord Minnett rates ABP as Resume coverage with Hold (3) -

Ord Minnett revises forecasts to incorporate recent transactions and resumes coverage with a Hold rating and $4 target. The acquisition of 99 Walker Street, North Sydney, for $311m confirms the transition in the company to a storage and office-focused real estate investment trust.

This is the largest asset owned by Abacus Property and, while under-rented, has been acquired on a tight yield and without a lot of opportunities to add value, the broker notes.

Ord Minnett envisages good opportunities for Abacus Property to grow its storage business accretively, although expanding the office portfolio is regarded a more competitive proposition.

Target price is $4.00 Current Price is $3.89 Difference: $0.11
If ABP meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $3.97, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Citi rates AX1 as Buy (1) -

Amid few surprises at Accent's AGM, Citi did note Trybe is rolling out faster than expected and the Vans distribution contract has been extended to 2023, representing some 10% of sales.

Skechers is the company's most significant contract, the broker notes, which runs to 2026.

Accent remains one of Citi's key picks in small cap retail, trading at a slight discount to peers. Store rollouts, increasing vertical penetration and franchise acquisitions support the broker's Buy rating and $1.67 target.

Target price is $1.67 Current Price is $1.71 Difference: minus $0.04 (current price is over target).
If AX1 meets the Citi target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

UBS rates BSL as Sell (5) -

BlueScope Steel has set a bold target of reducing its carbon intensity by -1% per annum by 2030, UBS notes. To achieve this, every site has a plan and the majority of the reduction will be led by Port Kembla. Port Kembla is expected to use cleaner coal and higher grade iron ore.

The negative aspect, the broker points out, is that these inputs typically cost more. In addition, Port Kembla will use more scrap.

The broker believes BlueScope Steel will need to work hard to meet lower emissions intensity targets while keeping costs down. Sell rating maintained. Target is reduced to $12.28 from $12.40.

Target price is $12.28 Current Price is $14.55 Difference: minus $2.27 (current price is over target).
If BSL meets the UBS target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $14.18, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.2

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

Citi rates CCX as Sell (5) -

The broker expects City Chic Collective to enjoy strong US/online sales in the crucial Black Friday to Christmas period, but notes there has been investment in marketing. The stock continues to trade at a premium given solid US/online growth to date.

While the broker likes the company's market position and growth prospects, at 21x forward earnings the stock is considered too rich. Sell and $2.30 target retained.

Target price is $2.30 Current Price is $2.73 Difference: minus $0.43 (current price is over target).
If CCX meets the Citi target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -1.0

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

Citi rates CPU as Neutral (3) -

FY20 has to date been a mix of positives and negatives for Computershare, Citi suggests. Lower US rates and higher wage inflation will be a headwind in FY21, and the broker expects a further step-down in UKAR revenue and cost base volatility as the company rolls out its new Equatex sourced system.

Neutral retained. Removing a prior discount for interest rate uncertainty leads to a target increase to $18.30 from $17.00.

Target price is $18.30 Current Price is $17.70 Difference: $0.6
If CPU meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $15.93, suggesting downside of -10.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: -0.3

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

Credit Suisse rates CSL as Outperform (1) -

A tight market in plasma presents an opportunity in Europe, Credit Suisse notes. The broker suspects the US political environment, where CSL generates 55% of its immunoglobulin revenue, is likely to limit any significant price rises.

However, with prices more than -20% lower in Europe and the rest of the world the broker believes prices are likely to converge. Outperform rating maintained. Target rises to $305 from $249.

Credit Suisse believes the valuation is justified given the strong market position in a niche industry that has robust fundamentals.

Target price is $305.00 Current Price is $283.75 Difference: $21.25
If CSL meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $269.13, suggesting downside of -5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.6

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

Macquarie rates CSL as Outperform (1) -

For CSL, Macquarie envisages near to medium-term revenue growth in haemophilia product will be underpinned by Idelvion. The long-term risks relate primarily to gene therapy. A number of gene therapy candidates are in clinical trials for the treatment of haemophilia A/B.

The broker continues to believe the plasma collection centre network is a competitive advantage for CSL and retains an Outperform rating. Target is raised to $300 from $250.

Target price is $300.00 Current Price is $283.75 Difference: $16.25
If CSL meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $269.13, suggesting downside of -5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.6

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

Credit Suisse rates CTX as Neutral (3) -

Credit Suisse suggests shareholders are likely to benefit from the options to separate the ownership of the fuel & infrastructure and convenience in order to widen the field of potential acquirers, as no single buyer is likely to attach maximum value to each of these businesses.

Credit Suisse estimates that Caltex Australia could be worth up to $13bn using the upper end of valuation scenarios for each of its businesses. While not ruling out the potential for a trade sale, a de-merger of fuels & infrastructure has a ready benchmark in Viva Energy ((VEA)), the broker adds.

Credit Suisse retains a Neutral rating and raises the target to $36.75 from $34.50.

Target price is $36.75 Current Price is $34.57 Difference: $2.18
If CTX meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $32.78, suggesting downside of -5.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.3

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

Macquarie rates CTX as Neutral (3) -

Caltex Australia has received a cash takeover offer of $34.50 a share. Macquarie suspects the board would prefer the IPO of the convenience property as it extracts higher total shareholder value and this then may generate an "interloper bid" to close the gap.

However, the IPO option is higher risk, the broker assesses, given listed markets may not necessarily value the core operating business in the same way as per Viva Energy ((VEA)).

Target is raised to $34.50 from $27.97. Neutral maintained.

Target price is $34.50 Current Price is $34.57 Difference: minus $0.07 (current price is over target).
If CTX meets the Macquarie target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $32.78, suggesting downside of -5.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.3

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

Citi rates FBU as Neutral (3) -

Fletcher Building's AGM confirmed the company is on track to meet consensus expectations, although trading to date has been a mixture of stronger and weaker results for different businesses.

Self-help strategies are progressing well, Citi notes, and leverage to an eventual upturn has strengthened.

Support is being provided by an ongoing buyback. The broker retains Neutral and a NZ$5.10 target.

Current Price is $4.93. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.0

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

Credit Suisse rates FBU as Neutral (3) -

The company has provided FY20 earnings (EBIT) guidance for the first time, at NZ$515-565m. Credit Suisse considers this a modest downgrade to expectations.

Activity levels in New Zealand remain robust, although there are some signs of easing in residential and infrastructure segments. The company has reiterated a target for NZ$100m in cost savings in Australia by FY21.

However, with similar promises being made in the past, and the backdrop of the declining residential market, Credit Suisse believes this target is not without significant risk and remains a key swing factor for the near-term earnings.

Target price edges up to NZ$4.98 from NZ$4.97. Neutral rating retained.

Current Price is $4.93. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.0

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 provided first time FY20 earnings (EBIT) guidance of $515-565m. At the mid point this is in line with Macquarie's expectations. The company has noted that Australian earnings will be weighted to the second half but retains its cost-reduction target.

Macquarie suggests New Zealand is also probably weighted to the second half, although finishing trades in the first quarter and residential demand are strong. Macquarie maintains a Neutral rating and NZ$5 target.

Current Price is $4.93. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.0

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

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

FY20 guidance for EBIT of NZ$515-565m is in line with Morgan Stanley's estimates. The broker notes core earnings in New Zealand remain solid, while steel continues to be affected by market competition.

Australian earnings are expected to be weighted to the second half. Morgan Stanley believes caution is warranted in regards to the turnaround in Australia, particularly with continued residential weakness.

Equal-weight rating maintained. Target is NZ$5.00. Cautious industry view.

Current Price is $4.93. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.0

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

Credit Suisse rates FPH as Underperform (5) -

First half net profit of NZ$121m was up 7.7%, largely as expected. Hospital delivered 17% constant currency revenue growth, supported by strong demand for nasal high-flow therapy products.

Home care operating revenue declined -1%, driven by declining sales for legacy OSA masks. Credit Suisse maintains an Underperform rating and raises the target to NZ$14.38 from NZ$13.15.

Current Price is $21.00. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in March.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: -0.8

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

Macquarie rates NCM as Underperform (5) -

Macquarie notes a long list of major capital projects and new developments which are to be completed over the next decade. This will coincide with higher capital expenditure and a decline in cash flow as production from Cadia is reduced.

The broker rebuilds its modelling, revamping production, expenditure and timing forecasts. The outlook for development is now less compelling, although the company has the balance sheet to handle the -US$10bn in capital outlay being contemplated.

Underperform rating maintained, as Macquarie does not believe the premium in the stock can be maintained. Target is reduced to $23 from $31.

Target price is $23.00 Current Price is $30.72 Difference: minus $7.72 (current price is over target).
If NCM meets the Macquarie target it will return approximately minus 25% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $29.71, suggesting downside of -3.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: -0.6

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

Citi rates NWH as Buy (1) -

While NRW Holdings' largest ever acquisition, BCG Contracting, is attractive integration represents a key risk, Citi suggests. The broker nonetheless retains Buy, noting BCG increases the scale of NRW's core civil and mining businesses and increases exposure to maintenance, while NRW has a decent record of integrating and growing prior acquisitions. Target rises to $3.70 from $2.65.

Target price is $3.70 Current Price is $2.99 Difference: $0.71
If NWH meets the Citi target it will return approximately 24% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

UBS rates NWH as Buy (1) -

The company has acquired BGC Contracting for $116.4m. NRW Holdings is targeting pre-tax synergies of $15m, on the back of consolidation and a reduction in duplication.

UBS notes BGC Contracting operates a contract that includes a client option to acquire certain fleet, and exercise of this option would reduce earnings by around -$9m or net profit by around -$2m.

The company is undertaking a fully-underwritten placement to raise $120m and a share purchase plan capped at $10m. Buy rating and $3.20 target maintained.

Target price is $3.20 Current Price is $2.99 Difference: $0.21
If NWH meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Citi rates OSH as Neutral (3) -

Having visited PNG, the broker believes the timing of a P'nyang deal is uncertain, but a deal will ultimately eventuate. Neutral retained.

The broker expects increased production in 2020 but notes capex has crept higher. Target falls to $7.29 from $7.32.

Target price is $7.29 Current Price is $7.46 Difference: minus $0.17 (current price is over target).
If OSH meets the Citi target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.55, suggesting upside of 1.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.3

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

Citi rates OZL as Neutral (3) -

OZ Minerals has approved the small-scale Pedra Branca copper project in Brazil as part of its Carajas hub strategy with partner Vale. It's not a game changer, the broker notes, but the miner intends to leverage exploration ground on the way to transforming Carajas into a meaningful copper play.

Neutral and $12.00 target retained.

Target price is $12.00 Current Price is $10.54 Difference: $1.46
If OZL meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $10.67, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

Credit Suisse rates OZL as Underperform (5) -

The Pedra Branca mine development has been approved and a small reserve has been declared. Credit Suisse asserts Brazil is a drain on resources and capital and distracts management from the more valuable Carrapateena.

Pedra Branca has an eight-year life and the broker believes this far from justifies the company's -$418m foray into Brazil.

Underperform rating maintained. Target is $8.00.

Target price is $8.00 Current Price is $10.54 Difference: minus $2.54 (current price is over target).
If OZL meets the Credit Suisse target it will return approximately minus 24% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.67, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

Macquarie rates OZL as Outperform (1) -

OZ Minerals has formally approved the development of Pedra Branca. The maiden reserve is smaller than Macquarie expected. The feasibility study has outlined a development that is higher grade but shorter life than the broker had assumed.

The ability to extract a return from the purchase now relies on exploration success and developing CentroGold, the broker asserts. Macquarie maintains an Outperform rating and reduces the target to $12.00 from $12.30.

Target price is $12.00 Current Price is $10.54 Difference: $1.46
If OZL meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $10.67, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

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

Morgan Stanley notes the Pedra Branca feasibility study has not materially changed the value of the project. OZ Minerals has acquired options on promising but preliminary targets.

The broker notes an option to sell Pedra Branca ore to Vale which could expand overall production beyond the capacity of the Antas mill if mining at Carajas eventually lifts. There is also the option to buy the Santa Lucia and Circular North deposits.

Equal-weight rating and $10.70 target maintained. Industry view is Attractive.

Target price is $10.70 Current Price is $10.54 Difference: $0.16
If OZL meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $10.67, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

UBS rates QUB as Neutral (3) -

UBS notes competitor DP World has put through another increase in landside port charges, increasing the average fee paid by trucking companies to $88 per full container collection, from $66.

The broker includes an increase to Patrick's infrastructure charges from FY21 which should contribute an additional $18m of pre-tax profit.

The ACCC recently disclosed that infrastructure charges represent 12% of stevedore revenue in FY19. UBS calculates these charges account for 21% of Patrick's FY21 revenue.

The ACCC has stated it does not have the power to determine stevedore charges and thus UBS awaits the Victorian government's review of port pricing to determine whether there will be any changes to the current structure.

The broker also expects $1.1bn in non-warehouse capital expenditure at Moorebank relating to the enabling and precinct infrastructure necessary for future warehouse developments.

UBS maintains a Neutral rating and raises the target to $3.25 from $3.10.

Target price is $3.25 Current Price is $3.38 Difference: minus $0.13 (current price is over target).
If QUB meets the UBS target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.01, suggesting downside of -11.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.4

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

Macquarie rates VUK as Outperform (1) -

FY19 results were broadly in line with expectations. Given the market's concerns around margin performance, Macquarie was reassured that management was able to provide stable guidance for FY20.

Despite challenging operating conditions Virgin Money UK was able to lift business lending and personal portfolios.

Macquarie maintains an Outperform rating but believes it will be difficult for the company to meet guidance for a 12% return on equity by FY22 if current operating conditions persist. Target is raised to $3.70 from $3.00.

Target price is $3.70 Current Price is $2.69 Difference: $1.01
If VUK meets the Macquarie target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $2.91

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.7

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

Credit Suisse rates WGN as Outperform (1) -

Wagners has secured a $35m contract with the Carmichael project for quarry operations and haulage. With Wagners mobilising immediately, Credit Suisse assumes revenue will commence in April 2020.

Other catalysts include the award of the Cross River Rail tunnel contract, estimated to be around $20m per annum. There is also the $150m Mozambique LNG contract.

Success in both would mean the company's earnings (EBIT) almost double, although the broker does not include either in forecasts as yet. Outperform rating maintained. Target rises to $2.30 from $2.05.

Target price is $2.30 Current Price is $2.20 Difference: $0.1
If WGN meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $1.95, suggesting downside of -11.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Macquarie rates WGN as Underperform (5) -

Wagners has won a five-year $35m contract with Adani. Meanwhile, a court hearing relating to the Boral ((BLD)) dispute has been adjourned to February and remains a key uncertainty in Macquarie's view.

The broker considers the Adani contract a solid gain, given the size and duration. Given residual risks in relation to the Boral supply, and market conditions, Macquarie continues to believe the stock is expensive.

Underperform rating maintained. The target is raised to $1.30 from $1.15.

Target price is $1.30 Current Price is $2.20 Difference: minus $0.9 (current price is over target).
If WGN meets the Macquarie target it will return approximately minus 41% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.95, suggesting downside of -11.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Morgans rates WGN as Hold (3) -

Wagners has secured the $35m contract to supply quarry materials and haulage to the Carmichael mine in Queensland. The first stage will commence immediately.

Morgans includes the contract value in forecasts, which lifts underlying net profit forecasts by 12% and 16% for FY20 and FY21 respectively. The broker considers the risk/reward profile of the stock evenly balanced and maintains a Hold rating and $2.25 target.

Target price is $2.25 Current Price is $2.20 Difference: $0.05
If WGN meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $1.95, suggesting downside of -11.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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