Australian Broker Call

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November 29, 2021

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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

ADH  ADAIRS LIMITED

Furniture & Renovation

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Overnight Price: $3.64

UPDATED

Morgans rates ADH as Add (1) -

In what Morgans considers a fair price, Adairs will acquire Focus on Furniture next week for $80m, with $74m in cash and $6m in new Adairs' shares. It's believed this will complement the core business and may provide opportunities for network expansion.

The broker estimates 11% EPS accretion in FY23, the first full year of ownership. Target price rises to $4.80 from $4.20 and the analyst feels the company's shares are cheap for the growth and dividend income on offer. The Add rating is unchanged.

Target price is $4.80 Current Price is $3.64 Difference: $1.16
If ADH meets the Morgans target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $4.93, suggesting upside of 34.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgans forecasts a full year FY22 dividend of 23.00 cents and EPS of 36.00 cents.
At the last closing share price the estimated dividend yield is 6.32%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.11.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 34.2, implying annual growth of -9.3%.

Current consensus DPS estimate is 22.0, implying a prospective dividend yield of 6.0%.

Current consensus EPS estimate suggests the PER is 10.7.

Forecast for FY23:

Morgans forecasts a full year FY23 dividend of 29.00 cents and EPS of 42.00 cents.
At the last closing share price the estimated dividend yield is 7.97%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.67.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 40.8, implying annual growth of 19.3%.

Current consensus DPS estimate is 28.6, implying a prospective dividend yield of 7.8%.

Current consensus EPS estimate suggests the PER is 9.0.

Market Sentiment: 0.8

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

ALL  ARISTOCRAT LEISURE LIMITED

Gaming

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Overnight Price: $44.80

UBS rates ALL as Buy (1) -

Following Aristocrat Leisure's FY21 results, UBS looks at market share data and concludes the company's premium portfolio is materially
outperforming the other manufacturers. The Buy rating and $53.60 target price are unchanged.

The company has four of the top five premium cabinets and three of the top five non-premium cabinets. Meanwhile, 'Crazy Rich Asians' and 'Buffalo Link' are within the top three new premium titles, points out the analyst.

Target price is $53.60 Current Price is $44.80 Difference: $8.8
If ALL meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $49.19, suggesting upside of 10.1% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

UBS forecasts a full year FY22 dividend of 57.00 cents and EPS of 158.00 cents.
At the last closing share price the estimated dividend yield is 1.27%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 28.35.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 155.2, implying annual growth of 21.1%.

Current consensus DPS estimate is 60.6, implying a prospective dividend yield of 1.4%.

Current consensus EPS estimate suggests the PER is 28.8.

Forecast for FY23:

UBS forecasts a full year FY23 dividend of 78.00 cents and EPS of 195.00 cents.
At the last closing share price the estimated dividend yield is 1.74%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.97.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 187.4, implying annual growth of 20.7%.

Current consensus DPS estimate is 76.2, implying a prospective dividend yield of 1.7%.

Current consensus EPS estimate suggests the PER is 23.9.

Market Sentiment: 0.8

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

AMP  AMP LIMITED

Insurance

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Overnight Price: $1.00

Citi rates AMP as Neutral (3) -

AMP's announced additional -$325m of impairments lowers its capital position by around -$220m, Citi estimates, but AMP has generated around $250m of capital from improved hybrid utilisation (convertible debt).

A key question for the broker is whether this will be sufficient to fund planned growth in infrastructure funds post its private capital division demerger. More will hopefully be revealed at tomorrow's investor day.

Neutral (High Risk) and $1.25 target retained for now.

Target price is $1.25 Current Price is $1.00 Difference: $0.25
If AMP meets the Citi target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $1.18, suggesting upside of 17.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Citi forecasts a full year FY21 dividend of 0.00 cents and EPS of 10.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.62.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.6, implying annual growth of 282.5%.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 10.4.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 5.00 cents and EPS of 10.10 cents.
At the last closing share price the estimated dividend yield is 5.00%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.90.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.9, implying annual growth of 3.1%.

Current consensus DPS estimate is 2.9, implying a prospective dividend yield of 2.9%.

Current consensus EPS estimate suggests the PER is 10.1.

Market Sentiment: 0.0

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


Ord Minnett rates AMP as Hold (3) -

Ord Minnett maintains its Hold rating and $1.20 price target after AMP announced it is taking an additional -$325m post-tax charge in its
2021 result.

Until there is some stabilisation in the business, the broker finds it hard to establish conviction on net tangible asset (NTA) value or earnings.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $1.20 Current Price is $1.00 Difference: $0.2
If AMP meets the Ord Minnett target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $1.18, suggesting upside of 17.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 0.00 cents and EPS of 9.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.11.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.6, implying annual growth of 282.5%.

Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.

Current consensus EPS estimate suggests the PER is 10.4.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 2.00 cents and EPS of 9.00 cents.
At the last closing share price the estimated dividend yield is 2.00%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.11.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.9, implying annual growth of 3.1%.

Current consensus DPS estimate is 2.9, implying a prospective dividend yield of 2.9%.

Current consensus EPS estimate suggests the PER is 10.1.

Market Sentiment: 0.0

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

BEN  BENDIGO & ADELAIDE BANK LIMITED

Banks

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Overnight Price: $8.53

Citi rates BEN as Neutral (3) -

Bendigo & Adelaide Bank has revealed details of its digital transformation plans underway for the last 12 months, intended to attract millennials away from new fintech platforms, with another three years to go.

Citi suggests investors will be disappointed management chose not to outline more detailed rationalisation benefits that will emerge from this investment.

Otherwise, the bank has reaffirmed FY22 guidance, expecting increased loan volumes to offset the margin pressure being felt across the sector. The cost of aforementioned investment lowers the broker's target price to $9.25 from $10.50. Neutral (High Risk) retained.

Target price is $9.25 Current Price is $8.53 Difference: $0.72
If BEN meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $10.06, suggesting upside of 17.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 53.00 cents and EPS of 69.20 cents.
At the last closing share price the estimated dividend yield is 6.21%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.33.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 72.5, implying annual growth of -26.1%.

Current consensus DPS estimate is 52.6, implying a prospective dividend yield of 6.1%.

Current consensus EPS estimate suggests the PER is 11.8.

Forecast for FY23:

Citi forecasts a full year FY23 dividend of 53.00 cents and EPS of 65.90 cents.
At the last closing share price the estimated dividend yield is 6.21%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.94.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 71.6, implying annual growth of -1.2%.

Current consensus DPS estimate is 53.6, implying a prospective dividend yield of 6.2%.

Current consensus EPS estimate suggests the PER is 12.0.

Market Sentiment: 0.0

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


UPDATED

Ord Minnett rates BEN as Hold (3) -

Following what Ord Minnett assesses has been a slow start to the fiscal year (around system growth in mortgages, negative growth in business), revenue forecasts for Bendigo & Adelaide Bank are lowered slightly. The target price falls to $9.60 from $10.00 and the Hold rating is unchanged.

Regarding a digital transformation update, management is positive on prospects for the Up mobile banking business.  Among the regional banks, the broker has a preference for Bank Of Queensland ((BOQ)).

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $9.60 Current Price is $8.53 Difference: $1.07
If BEN meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $10.06, suggesting upside of 17.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 53.00 cents and EPS of 71.00 cents.
At the last closing share price the estimated dividend yield is 6.21%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.01.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 72.5, implying annual growth of -26.1%.

Current consensus DPS estimate is 52.6, implying a prospective dividend yield of 6.1%.

Current consensus EPS estimate suggests the PER is 11.8.

Forecast for FY23:

Ord Minnett forecasts a full year FY23 dividend of 53.00 cents and EPS of 66.00 cents.
At the last closing share price the estimated dividend yield is 6.21%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.92.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 71.6, implying annual growth of -1.2%.

Current consensus DPS estimate is 53.6, implying a prospective dividend yield of 6.2%.

Current consensus EPS estimate suggests the PER is 12.0.

Market Sentiment: 0.0

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

DEG  DE GREY MINING LIMITED

Gold & Silver

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Overnight Price: $1.26

UPDATED

Macquarie rates DEG as Initiation of coverage with Outperform (1) -

Macquarie initiates coverage on De Grey Mining as the company continues to de-risk the 9.0m ounce resource Mallina gold project. The broker expects first production in early FY26, and an average $400m free cash flow per annum in the first five production years. 

According to Macquarie, Mallina shows tier-1 potential before further growth, and while the project has an assumed base ten-year production life the broker expects continued discovery and resource conversion can increase this a further five years. 

The broker initiates with a Outperform rating and a target price of $1.70. 

Target price is $1.70 Current Price is $1.26 Difference: $0.44
If DEG meets the Macquarie target it will return approximately 35% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 1.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 114.55.

Forecast for FY23:

Macquarie forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 1.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 126.00.

Market Sentiment: 1.0

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

DTC  DAMSTRA HOLDINGS LIMITED

Software & Services

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Overnight Price: $0.43

UPDATED

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

After Damstra Holdings downgraded FY22 revenue guidance to $30-34m from $35.9-38.9m previously, Morgan Stanley lowers its target price to $0.45 from $0.68. The broker feels liquidity constraints should be the focus given a further step-down in annual recurring revenue.

The analyst is concerned around volatility of key metrics and notes the lowering of guidance comes within a month of the 1Q update. It's felt delivery on the revised guidance is critical for a re-rate. The Equal-weight rating is unchanged. Industry view: In-Line.

Target price is $0.45 Current Price is $0.43 Difference: $0.02
If DTC meets the Morgan Stanley target it will return approximately 5% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 2.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 21.50.

Forecast for FY23:

Morgan Stanley forecasts a full year FY23 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 47.78.

Market Sentiment: 0.0

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

IAG  INSURANCE AUSTRALIA GROUP LIMITED

Insurance

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Overnight Price: $4.42

UPDATED

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

QBE Insurance Group ((QBE)) stands to benefit the most of insurance stocks under Morgan Stanley's coverage from record commercial line growth in the September quarter Australian industry data. 

While personal lines growth slowed to around to around 5.5%, with Insurance Australia Group below 5%, the broker sees modest upside risk for gross written premium (GWP) growth. The Equal-weight rating and $4.80 target price are retained for IAG. Industry view: In-Line.

Target price is $4.80 Current Price is $4.42 Difference: $0.38
If IAG meets the Morgan Stanley target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $5.35, suggesting upside of 21.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 19.00 cents and EPS of 25.00 cents.
At the last closing share price the estimated dividend yield is 4.30%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.68.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 21.8, implying annual growth of N/A.

Current consensus DPS estimate is 17.2, implying a prospective dividend yield of 3.9%.

Current consensus EPS estimate suggests the PER is 20.1.

Forecast for FY23:

Morgan Stanley forecasts a full year FY23 dividend of 22.00 cents and EPS of 28.00 cents.
At the last closing share price the estimated dividend yield is 4.98%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.79.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.4, implying annual growth of 34.9%.

Current consensus DPS estimate is 23.1, implying a prospective dividend yield of 5.3%.

Current consensus EPS estimate suggests the PER is 14.9.

Market Sentiment: 0.7

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

JHX  JAMES HARDIE INDUSTRIES PLC

Building Products & Services

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Overnight Price: $54.57

UPDATED

Macquarie rates JHX as Outperform (1) -

Macquarie takes a positive outlook on James Hardie Industries' long-term Europe prospects given improved performance and position compared to regional competitors, as the company progresses with investment site selection. 

Elsewhere, strong demand and supply chain constraints have benefited US pricing, and while Macquarie analysts are cautious of a global slowdown in 2022 they noted James Hardie Industries' has a history of outperforming peers during cycle downturns. 

The Outperform rating and target price of $61.75 are retained. 

Target price is $61.75 Current Price is $54.57 Difference: $7.18
If JHX meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $58.43, suggesting upside of 6.2% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 107.30 cents and EPS of 177.90 cents.
At the last closing share price the estimated dividend yield is 1.97%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 30.67.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 157.3, implying annual growth of N/A.

Current consensus DPS estimate is 112.1, implying a prospective dividend yield of 2.0%.

Current consensus EPS estimate suggests the PER is 35.0.

Forecast for FY23:

Macquarie forecasts a full year FY23 dividend of 137.77 cents and EPS of 230.49 cents.
At the last closing share price the estimated dividend yield is 2.52%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.68.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 193.3, implying annual growth of 22.9%.

Current consensus DPS estimate is 139.3, implying a prospective dividend yield of 2.5%.

Current consensus EPS estimate suggests the PER is 28.5.

This company reports in USD. 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

NAM  NAMOI COTTON LIMITED

Agriculture

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Overnight Price: $0.43

Morgans rates NAM as Add (1) -

Morgans resumes coverage on Namoi Cotton with an Add rating and $0.56 price target. With ample water in dams and storage, as well as higher forecast crops, the Australian cotton agribusiness is thought well placed for earnings growth over the next couple of years.

The analyst points out the -34% discount to net tangible assets should narrow after taking into account improved earnings/cashflow potential and the recent removal of the 20% shareholder cap.

Target price is $0.56 Current Price is $0.43 Difference: $0.13
If NAM meets the Morgans target it will return approximately 30% (excluding dividends, fees and charges).

The company's fiscal year ends in February.

Forecast for FY22:

Morgans forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 3.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 14.33.

Forecast for FY23:

Morgans forecasts a full year FY23 dividend of 3.00 cents and EPS of 8.00 cents.
At the last closing share price the estimated dividend yield is 6.98%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 5.38.

Market Sentiment: 1.0

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

QBE  QBE INSURANCE GROUP LIMITED

Insurance

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Overnight Price: $11.92

Morgan Stanley rates QBE as Overweight (1) -

QBE Insurance Group stands to benefit the most of insurance stocks under Morgan Stanley's coverage from record commercial line growth in the September quarter Australian industry data. The group experienced around 15% gross written premium (GWP) growth.

The broker retains the group as its preferred General Insurance exposure. The Overweight rating and $14 target price are unchanged. Industry View: In-Line.

Target price is $14.00 Current Price is $11.92 Difference: $2.08
If QBE meets the Morgan Stanley target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $14.15, suggesting upside of 21.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 46.36 cents and EPS of 79.48 cents.
At the last closing share price the estimated dividend yield is 3.89%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 82.7, implying annual growth of N/A.

Current consensus DPS estimate is 57.6, implying a prospective dividend yield of 5.0%.

Current consensus EPS estimate suggests the PER is 14.1.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 75.51 cents and EPS of 95.38 cents.
At the last closing share price the estimated dividend yield is 6.33%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.50.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 102.5, implying annual growth of 23.9%.

Current consensus DPS estimate is 81.8, implying a prospective dividend yield of 7.0%.

Current consensus EPS estimate suggests the PER is 11.3.

This company reports in USD. 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

RIO  RIO TINTO LIMITED

Bulks

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Overnight Price: $94.46

UPDATED

Morgans rates RIO as Hold (3) -

After a meeting with Simon Trott, Rio Tinto's Chief Executive of Iron Ore, Morgans existing concerns deepened around the long-term impact of what the analyst considers has been a significant underspend in the Pilbara. Target price falls to $104 from $112.

The broker notes the company is mine constrained (with infrastructure normally the key bottleneck). It's thought there's an increasingly tight schedule to bring on new replacement mines. Additional red tape after Juukan Gorge and covid travel restrictions further weigh.

The broker's Hold rating is maintained.

Target price is $104.00 Current Price is $94.46 Difference: $9.54
If RIO meets the Morgans target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $107.29, suggesting upside of 12.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Morgans forecasts a full year FY21 dividend of 1367.07 cents and EPS of 1890.32 cents.
At the last closing share price the estimated dividend yield is 14.47%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 5.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 1874.3, implying annual growth of N/A.

Current consensus DPS estimate is 1423.6, implying a prospective dividend yield of 14.9%.

Current consensus EPS estimate suggests the PER is 5.1.

Forecast for FY22:

Morgans forecasts a full year FY22 dividend of 666.31 cents and EPS of 1025.30 cents.
At the last closing share price the estimated dividend yield is 7.05%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.21.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 1188.6, implying annual growth of -36.6%.

Current consensus DPS estimate is 846.7, implying a prospective dividend yield of 8.8%.

Current consensus EPS estimate suggests the PER is 8.1.

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

S32  SOUTH32 LIMITED

Mining

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Overnight Price: $3.56

UPDATED

Macquarie rates S32 as Outperform (1) -

South32 has acquired a 45% stake in the Sierra Gorda copper project after KGHM Polska Miedz S.A. chose not to exercise its right to the interest. Macquarie finds the addition a strategic fit, expanding copper exposure  and adding upside benefit as decarbonisation continues. 

The total cost of US$1.55bn will be funded through a US$1.0bn debt facility and cash reserves, and the purchase benefits Macquarie's earnings per share forecasts by an average of 4% per year between FY22 and FY26. 

The Outperform rating is retained and target increases to $5.00 from $4.90.

Target price is $5.00 Current Price is $3.56 Difference: $1.44
If S32 meets the Macquarie target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $4.42, suggesting upside of 23.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 24.51 cents and EPS of 56.30 cents.
At the last closing share price the estimated dividend yield is 6.88%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.32.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 61.2, implying annual growth of N/A.

Current consensus DPS estimate is 29.2, implying a prospective dividend yield of 8.2%.

Current consensus EPS estimate suggests the PER is 5.8.

Forecast for FY23:

Macquarie forecasts a full year FY23 dividend of 17.09 cents and EPS of 39.61 cents.
At the last closing share price the estimated dividend yield is 4.80%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.99.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 48.1, implying annual growth of -21.4%.

Current consensus DPS estimate is 23.1, implying a prospective dividend yield of 6.5%.

Current consensus EPS estimate suggests the PER is 7.4.

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

SDR  SITEMINDER LIMITED

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Overnight Price: $5.85

UPDATED

Ord Minnett rates SDR as Initiation of coverage with Buy (1) -

Ord Minnett initiates coverage on hotel software product company SiteMinder with a Buy rating and $7.36 target price.

The company is evolving towards offering a range of global Hotel solutions from dependence on the Hotel software product, called Channel Manager, explains the analyst. It's thought impetus will come from increased global travel, a change in the revenue mix and new initiatives.

Property growth and a strong uplift in average revenue per user (ARPU) should result in post-pandemic compound annual growth in revenue of circa 30% per annum, estimates the broker.

Target price is $7.36 Current Price is $5.85 Difference: $1.51
If SDR meets the Ord Minnett target it will return approximately 26% (excluding dividends, fees and charges).

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 10.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 56.80.

Forecast for FY23:

Ord Minnett forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 10.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 58.50.

Market Sentiment: 1.0

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

SHV  SELECT HARVESTS LIMITED

Agriculture

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Overnight Price: $6.88

Citi rates SHV as Buy (1) -

Select Harvests reported an FY21 profit of $15.1m, down from FY20's record $25m, after a record crop had almond prices falling and supply chain challenges impacted.

Citi continues to view the current almond price weakness as temporary, with early signs of a revival in export demand and the Californian drought expected to continue over winter. To that end the company will wait before committing to sales of the FY22 crop.

Average FY22 almond prices will nonetheless be lower, on Citi's forecast, hence target falls to $9.00 from $9.85. Buy retained.

Target price is $9.00 Current Price is $6.88 Difference: $2.12
If SHV meets the Citi target it will return approximately 31% (excluding dividends, fees and charges).

The company's fiscal year ends in September.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 18.00 cents and EPS of 37.30 cents.
At the last closing share price the estimated dividend yield is 2.62%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.45.

Forecast for FY23:

Citi forecasts a full year FY23 dividend of 34.00 cents and EPS of 69.20 cents.
At the last closing share price the estimated dividend yield is 4.94%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.94.

Market Sentiment: 1.0

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


UBS rates SHV as Buy (1) -

Despite Select Harvests delivering a 25% beat versus FY21 consensus earnings (EBITDA) estimates, UBS lowers its target price to $8.60 from $9.50. This comes as the broker tempers its forecast earnings recovery in the face of almond price uncertainty.

Over the medium term, the analyst expects a recovery in prices predicated on a severe drought in California, combined with a healthy underlying demand. Industry feedback suggests further downside risk to pricing is relatively limited, notes UBS. Buy rating retained.

Target price is $8.60 Current Price is $6.88 Difference: $1.72
If SHV meets the UBS target it will return approximately 25% (excluding dividends, fees and charges).

The company's fiscal year ends in September.

Forecast for FY22:

UBS forecasts a full year FY22 dividend of 19.00 cents and EPS of 37.00 cents.
At the last closing share price the estimated dividend yield is 2.76%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.59.

Forecast for FY23:

UBS forecasts a full year FY23 dividend of 26.00 cents and EPS of 52.00 cents.
At the last closing share price the estimated dividend yield is 3.78%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.23.

Market Sentiment: 1.0

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

SKO  SERKO LIMITED

Software & Services

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Overnight Price: $6.70

UPDATED

Ord Minnett rates SKO as Buy (1) -

Ord Minnett sees a desirable range of growth alternatives for Serko following the interim result and $85m capital raising. The Buy rating is retained and the target price rises to $8.10 from $7.38.

The analyst believes the vital deal with Booking.com is on track. That company's focus on the “Connected Trip” should result in demand for an increasing range of products (Rail, Air, Car Rentals etc) globally, points out the broker.

Target price is $8.10 Current Price is $6.70 Difference: $1.4
If SKO meets the Ord Minnett target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $8.10, suggesting upside of 32.8% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 18.16 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 36.89.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -19.4, 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 N/A.

Forecast for FY23:

Ord Minnett forecasts a full year FY23 dividend of 0.00 cents and EPS of 2.92 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 229.69.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 2.1, 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 290.5.

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

SUN  SUNCORP GROUP LIMITED

Banks

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Overnight Price: $10.80

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

QBE Insurance Group ((QBE)) stands to benefit the most of insurance stocks under Morgan Stanley's coverage from record commercial line growth in the September quarter Australian industry data. 

While personal lines growth slowed to around to around 5.5%, with Suncorp Group below 5%, the broker sees modest upside risk for gross written premium (GWP) growth. The Equal-weight rating and $11.90 target price are retained. Industry view: In-Line.

Target price is $11.90 Current Price is $10.80 Difference: $1.1
If SUN meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $13.13, suggesting upside of 22.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 58.00 cents and EPS of 73.00 cents.
At the last closing share price the estimated dividend yield is 5.37%.
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 68.9, implying annual growth of -14.8%.

Current consensus DPS estimate is 56.3, implying a prospective dividend yield of 5.3%.

Current consensus EPS estimate suggests the PER is 15.5.

Forecast for FY23:

Morgan Stanley forecasts a full year FY23 dividend of 68.00 cents and EPS of 80.00 cents.
At the last closing share price the estimated dividend yield is 6.30%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.50.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 83.5, implying annual growth of 21.2%.

Current consensus DPS estimate is 67.5, implying a prospective dividend yield of 6.3%.

Current consensus EPS estimate suggests the PER is 12.8.

Market Sentiment: 0.6

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

UNI  UNIVERSAL STORE HOLDINGS LIMITED

Apparel & Footwear

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Overnight Price: $7.81

Macquarie rates UNI as Outperform (1) -

Universal Store Holdings has noted impact on its year-to-date metrics from lockdowns in early FY22, and is guiding to a -$7-9m earnings before tax impact. Macquarie notes November month-to-date total sales are already up 8.3%, and like-for-like sales up 3.8%. 

More positively, the company now totals 76 stores following 9 store openings in FY22. Marketing costs will almost double to around $9m to benefit accelerated sales. Earnings per share forecasts for FY22 decreases -28% but increases 2% and 7% for FY23 and FY24. 

The Outperform rating is retained and the target price increases to $9.60 from $8.90.

Target price is $9.60 Current Price is $7.81 Difference: $1.79
If UNI meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 11.00 cents and EPS of 30.80 cents.
At the last closing share price the estimated dividend yield is 1.41%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.36.

Forecast for FY23:

Macquarie forecasts a full year FY23 dividend of 18.00 cents and EPS of 49.70 cents.
At the last closing share price the estimated dividend yield is 2.30%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.71.

Market Sentiment: 1.0

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

WSP  WHISPIR LIMITED

Cloud services

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Overnight Price: $2.14

UPDATED

Ord Minnett rates WSP as Buy (1) -

Despite Whispir upgrading revenue and earnings (EBITDA) guidance, Ord Minnett lowers its target price to $3.45 from $3.89. This reflects decreasing multiples for smaller software companies and higher risk-free rates, explains the analyst.

The Buy rating is unchanged.

Management is targeting annual recurring revenue (ARR) of $100m by the end of FY23, and is investing for continued rapid expansion in the US and Asia, notes the broker.

Target price is $3.45 Current Price is $2.14 Difference: $1.31
If WSP meets the Ord Minnett target it will return approximately 61% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 14.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 14.46.

Forecast for FY23:

Ord Minnett forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 9.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 21.62.

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
ADH Adairs $3.67 Morgans 4.80 4.20 14.29%
BEN Bendigo & Adelaide Bank $8.58 Citi 9.25 10.50 -11.90%
Ord Minnett 9.60 10.00 -4.00%
DTC Damstra Holdings $0.43 Morgan Stanley 0.45 0.68 -33.82%
NAM Namoi Cotton $0.45 Morgans 0.56 N/A -
RIO Rio Tinto $95.78 Morgans 104.00 112.00 -7.14%
S32 South32 $3.57 Macquarie 5.00 4.90 2.04%
SHV Select Harvests $6.80 Citi 9.00 9.85 -8.63%
UBS 8.60 9.50 -9.47%
SKO Serko $6.10 Ord Minnett 8.10 7.38 9.76%
UNI Universal Store $7.67 Macquarie 9.60 8.90 7.87%
WSP Whispir $2.13 Ord Minnett 3.45 3.89 -11.31%
Summaries
ADH Adairs Add - Morgans Overnight Price $3.64
ALL Aristocrat Leisure Buy - UBS Overnight Price $44.80
AMP AMP Neutral - Citi Overnight Price $1.00
Hold - Ord Minnett Overnight Price $1.00
BEN Bendigo & Adelaide Bank Neutral - Citi Overnight Price $8.53
Hold - Ord Minnett Overnight Price $8.53
DEG De Grey Mining Initiation of coverage with Outperform - Macquarie Overnight Price $1.26
DTC Damstra Holdings Equal-weight - Morgan Stanley Overnight Price $0.43
IAG Insurance Australia Equal-weight - Morgan Stanley Overnight Price $4.42
JHX James Hardie Industries Outperform - Macquarie Overnight Price $54.57
NAM Namoi Cotton Add - Morgans Overnight Price $0.43
QBE QBE Insurance Overweight - Morgan Stanley Overnight Price $11.92
RIO Rio Tinto Hold - Morgans Overnight Price $94.46
S32 South32 Outperform - Macquarie Overnight Price $3.56
SDR SiteMinder Initiation of coverage with Buy - Ord Minnett Overnight Price $5.85
SHV Select Harvests Buy - Citi Overnight Price $6.88
Buy - UBS Overnight Price $6.88
SKO Serko Buy - Ord Minnett Overnight Price $6.70
SUN Suncorp Group Equal-weight - Morgan Stanley Overnight Price $10.80
UNI Universal Store Outperform - Macquarie Overnight Price $7.81
WSP Whispir Buy - Ord Minnett Overnight Price $2.14
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

13

3. Hold

8

Monday 29 November 2021

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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.