Australian Broker Call

March 30, 2017

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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: 04:40 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

Today's Upgrades and Downgrades
DLX - DULUX GROUP Downgrade to Sell from Neutral UBS
SUN - SUNCORP Downgrade to Neutral from Outperform Macquarie
BHP  BHP BILLITON LIMITED

Bulks

Overnight Price: $23.97

Ord Minnett rates BHP as Hold (3) -

The company has confirmed that South Flank will be the replacement iron ore mine for the 80mtpa Yandi operation, with Yandi expected to be fully depleted on a 5-10 year view.

No capital expenditure details have been provided as yet, although Ord Minnett estimates the project to cost around US$30 a tonne or around US$2.4 bn.

The replacement mine is expected to have better production specification although cash costs could be higher. Ord Minnett retains a Hold rating and $26 target.

Target price is $26.00 Current Price is $23.97 Difference: $2.03
If BHP meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $27.84, suggesting upside of 15.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Ord Minnett forecasts a full year FY17 dividend of 127.51 cents and EPS of 193.92 cents.
At the last closing share price the estimated dividend yield is 5.32%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.36.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 200.7, implying annual growth of N/A.

Current consensus DPS estimate is 117.3, implying a prospective dividend yield of 4.9%.

Current consensus EPS estimate suggests the PER is 12.0.

Forecast for FY18:

Ord Minnett forecasts a full year FY18 dividend of 102.27 cents and EPS of 147.43 cents.
At the last closing share price the estimated dividend yield is 4.27%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.26.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 163.7, implying annual growth of -18.4%.

Current consensus DPS estimate is 90.4, implying a prospective dividend yield of 3.8%.

Current consensus EPS estimate suggests the PER is 14.7.

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

BLX  BEACON LIGHTING GROUP LIMITED

Furniture & Renovation

Overnight Price: $1.72

Citi rates BLX as Initiation of coverage with Neutral (3) -

Citi has initiated coverage against a background of pending housing-related headwinds. The inaugural rating is Neutral. Maiden price target is $1.75.

The analysts point out, Woolworth's ((WOW)) exit from the hardware market has had an impact on Beacon's performance. Going forward, however, the analysts see potential to now start gaining market share while accelerating store rollout with Beacon considered a beneficiary of a more favourable competitive landscape.

Target price is $1.75 Current Price is $1.72 Difference: $0.03
If BLX meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Citi forecasts a full year FY17 dividend of 4.90 cents and EPS of 8.10 cents.
At the last closing share price the estimated dividend yield is 2.85%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.23.

Forecast for FY18:

Citi forecasts a full year FY18 dividend of 5.20 cents and EPS of 8.80 cents.
At the last closing share price the estimated dividend yield is 3.02%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.55.

Market Sentiment: 0.5

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

BXB  BRAMBLES LIMITED

Transportation & Logistics

Overnight Price: $9.48

ADDED

Credit Suisse rates BXB as Underperform (5) -

Unknown to most of us, but the USA and neighbouring Canada are running a long-standing dispute on softwood lumber imports to the USA. Credit Suisse reports the USA is taking action, potentially through 30% import duties and the price has shot up 14% in response.

This may not be the end of this story and the analysts point out sustained high lumber prices are a negative for Brambles. As the company has procurement contracts with US producers, there may be a delay until higher prices hit, suggest the analysts.

Underperform rating retained, as well as the $8.50 price target.

Target price is $8.50 Current Price is $9.48 Difference: minus $0.98 (current price is over target).
If BXB meets the Credit Suisse target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.93, suggesting upside of 5.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Credit Suisse forecasts a full year FY17 dividend of 38.52 cents and EPS of 48.51 cents.
At the last closing share price the estimated dividend yield is 4.06%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.54.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 53.5, implying annual growth of N/A.

Current consensus DPS estimate is 30.0, implying a prospective dividend yield of 3.2%.

Current consensus EPS estimate suggests the PER is 17.7.

Forecast for FY18:

Credit Suisse forecasts a full year FY18 dividend of 38.54 cents and EPS of 51.97 cents.
At the last closing share price the estimated dividend yield is 4.07%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.24.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 55.7, implying annual growth of 4.1%.

Current consensus DPS estimate is 32.1, implying a prospective dividend yield of 3.4%.

Current consensus EPS estimate suggests the PER is 17.0.

This company reports in USD. 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

CGF  CHALLENGER LIMITED

Wealth Management & Investments

Overnight Price: $12.43

Macquarie rates CGF as Outperform (1) -

Macquarie expects the second half of FY17 will be the low point for life margins, although consensus expectations suggest continued moderation.

The broker suggests investment yields and longer-duration products - higher margin - support life margins bottoming at around 427 basis points in the second half of FY17 with expansion thereafter.

The company will need additional capital to support growth in its life book and longer-duration product and Macquarie expects a $300m equity raising in the first half of FY18. Outperform retained. Target is raised to $13.52 from $12.34.

Target price is $13.52 Current Price is $12.43 Difference: $1.09
If CGF meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $11.35, suggesting downside of -9.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 34.00 cents and EPS of 67.40 cents.
At the last closing share price the estimated dividend yield is 2.74%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.44.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 66.0, implying annual growth of 12.8%.

Current consensus DPS estimate is 34.0, implying a prospective dividend yield of 2.7%.

Current consensus EPS estimate suggests the PER is 19.1.

Forecast for FY18:

Macquarie forecasts a full year FY18 dividend of 36.70 cents and EPS of 73.90 cents.
At the last closing share price the estimated dividend yield is 2.95%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.82.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 71.8, implying annual growth of 8.8%.

Current consensus DPS estimate is 37.0, implying a prospective dividend yield of 2.9%.

Current consensus EPS estimate suggests the PER is 17.5.

Market Sentiment: 0.1

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

CWN  CROWN RESORTS LIMITED

Gaming

Overnight Price: $11.76

Deutsche Bank rates CWN as Buy (1) -

The company has entered into a cash-settled equity swap to sell an additional stake in Melco Crown. Post settlement, Deutsche Bank expects Crown to retain a 3.3% interest in the joint venture.

The company has not indicated its intention regarding the additional cash, but a share buy-back and subordinated notes buy-back are  underway. Buy rating and $13.72 target retained.

Target price is $13.72 Current Price is $11.76 Difference: $1.96
If CWN meets the Deutsche Bank target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $13.25, suggesting upside of 11.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Deutsche Bank forecasts a full year FY17 dividend of 143.00 cents and EPS of 51.00 cents.
At the last closing share price the estimated dividend yield is 12.16%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.06.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 72.2, implying annual growth of -44.6%.

Current consensus DPS estimate is 124.9, implying a prospective dividend yield of 10.5%.

Current consensus EPS estimate suggests the PER is 16.4.

Forecast for FY18:

Deutsche Bank forecasts a full year FY18 dividend of 60.00 cents and EPS of 57.00 cents.
At the last closing share price the estimated dividend yield is 5.10%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.63.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 59.1, implying annual growth of -18.1%.

Current consensus DPS estimate is 69.7, implying a prospective dividend yield of 5.9%.

Current consensus EPS estimate suggests the PER is 20.1.

Market Sentiment: 0.5

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

DLX  DULUX GROUP LIMITED

Building Products & Services

Overnight Price: $6.80

UBS rates DLX as Downgrade to Sell from Neutral (5) -

There's no doubting Dulux' superiority and solid market share in paint, and as such the stock deserves a premium multiple, UBS suggests. But the non-paint business continues to show subdued prospects and a turnaround seems some way off.

A cooling in the housing market also suggests paint earnings may have seen a peak. On 7% outperformance against the index in the past month, UBS downgrades to Sell, retaining a $6.10 target.

Target price is $6.10 Current Price is $6.80 Difference: minus $0.7 (current price is over target).
If DLX meets the UBS target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.04, suggesting downside of -8.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY17:

UBS forecasts a full year FY17 dividend of 25.00 cents and EPS of 35.00 cents.
At the last closing share price the estimated dividend yield is 3.68%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.43.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 34.7, implying annual growth of 3.6%.

Current consensus DPS estimate is 24.9, implying a prospective dividend yield of 3.8%.

Current consensus EPS estimate suggests the PER is 19.0.

Forecast for FY18:

UBS forecasts a full year FY18 dividend of 26.00 cents and EPS of 36.00 cents.
At the last closing share price the estimated dividend yield is 3.82%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.89.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 35.0, implying annual growth of 0.9%.

Current consensus DPS estimate is 25.2, implying a prospective dividend yield of 3.8%.

Current consensus EPS estimate suggests the PER is 18.8.

Market Sentiment: -0.5

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

FBU  FLETCHER BUILDING LIMITED

Building Products & Services

Overnight Price: $7.56

UBS rates FBU as Buy (1) -

In the wake of Fletcher's guidance downgrade, the broker has reviewed its assessment and decided issues in the construction division are not systemic, suggesting margins should normalise over the medium term given a still elevated level of NZ residential and infrastructure construction.

As a conglomerate, Fletcher should trade on a PE discount to peers but a current -25% is overdone compared to a -10% average, the broker suggests. While admitting investor sentiment will remain subdued if further near term construction losses eventuate, the broker retains Buy. Target falls to NZ$9.30 from NZ$9.85.

Current Price is $7.56. Target price not assessed.

Current consensus price target is $9.00, suggesting upside of 18.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

UBS forecasts a full year FY17 dividend of 37.66 cents and EPS of 49.90 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 15.15.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 49.1, implying annual growth of N/A.

Current consensus DPS estimate is 36.8, implying a prospective dividend yield of 4.8%.

Current consensus EPS estimate suggests the PER is 15.5.

Forecast for FY18:

UBS forecasts a full year FY18 dividend of 39.54 cents and EPS of 63.08 cents.
At the last closing share price the estimated dividend yield is 5.23%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.99.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 61.7, implying annual growth of 25.7%.

Current consensus DPS estimate is 39.6, implying a prospective dividend yield of 5.2%.

Current consensus EPS estimate suggests the PER is 12.3.

This company reports in NZD. 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

IAG  INSURANCE AUSTRALIA GROUP LIMITED

Insurance

Overnight Price: $6.09

Macquarie rates IAG as Underperform (5) -

Macquarie assesses that premium rate increases across the insurance market are being led by cost inflation in claims. As insurers get costs under control price rises should again moderate across the market, in the broker's view.

The broker believes cost reductions and the ability to hold market share through FY18 are opportunities for the company to surprise on the upside. Based on current valuation, the stock appears fully valued and Macquarie retains an Underperform rating. Target is raised to $5.75 from $5.70.

Target price is $5.75 Current Price is $6.09 Difference: minus $0.34 (current price is over target).
If IAG meets the Macquarie target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.01, suggesting downside of -1.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 30.00 cents and EPS of 40.60 cents.
At the last closing share price the estimated dividend yield is 4.93%.
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 37.2, implying annual growth of 44.2%.

Current consensus DPS estimate is 29.6, implying a prospective dividend yield of 4.9%.

Current consensus EPS estimate suggests the PER is 16.3.

Forecast for FY18:

Macquarie forecasts a full year FY18 dividend of 32.00 cents and EPS of 37.90 cents.
At the last closing share price the estimated dividend yield is 5.25%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.07.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 36.4, implying annual growth of -2.2%.

Current consensus DPS estimate is 28.4, implying a prospective dividend yield of 4.7%.

Current consensus EPS estimate suggests the PER is 16.7.

Market Sentiment: -0.1

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


UBS rates IAG as Neutral (3) -

The broker has attempted to make some early calculations regarding the possible impact of Cyclone Debbie on IAG earnings. While not directly comparable given it hit a less populated area, the Cyclone Yasi outcome has been used as a guide.

The broker suggests the IAG impact is more difficult to assess than the Suncorp ((SUN)) impact. [Suncorp has suggested to date reinsurance will cover it.] The broker has at this stage trimmed its IAG FY17 earnings forecast by -6.6%. No change to rating and target as yet.

Target price is $6.00 Current Price is $6.09 Difference: minus $0.09 (current price is over target).
If IAG meets the UBS target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.01, suggesting downside of -1.2% (ex-dividends)

Forecast for FY17:

Current consensus EPS estimate is 37.2, implying annual growth of 44.2%.

Current consensus DPS estimate is 29.6, implying a prospective dividend yield of 4.9%.

Current consensus EPS estimate suggests the PER is 16.3.

Forecast for FY18:

Current consensus EPS estimate is 36.4, implying annual growth of -2.2%.

Current consensus DPS estimate is 28.4, implying a prospective dividend yield of 4.7%.

Current consensus EPS estimate suggests the PER is 16.7.

Market Sentiment: -0.1

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

ILU  ILUKA RESOURCES LIMITED

Mineral Sands

Overnight Price: $7.33

Ord Minnett rates ILU as Lighten (4) -

BHP Billiton ((BHP)) has confirmed that South Flank, an extension of Mining Area C, will be the replacement iron ore mine for the 80mtpa Yandi operation, with Yandi expected to be fully depleted on a 5-10 year view.

Ord Minnett considers this a material announcement for Iluka Resources, given the company receives a royalty from Mining Area C production.

The development could be a positive for shareholders, although this assumes a new deposit sits within the royalty boundary. While this has not been confirmed, the broker believes it is more likely than not.

While recognising the company's benefits, including its asset quality and dominant position in the zircon market, Ord Minnett believes the market is anticipating better price rises than the fundamentals suggest. Lighten recommendation retained. Target is $6.40.

Target price is $6.40 Current Price is $7.33 Difference: minus $0.93 (current price is over target).
If ILU meets the Ord Minnett target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.24, suggesting downside of -2.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Ord Minnett forecasts a full year FY17 dividend of 0.00 cents and EPS of 16.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 45.81.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 8.5, implying annual growth of N/A.

Current consensus DPS estimate is 2.8, implying a prospective dividend yield of 0.4%.

Current consensus EPS estimate suggests the PER is 87.5.

Forecast for FY18:

Ord Minnett forecasts a full year FY18 dividend of 0.00 cents and EPS of 39.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.79.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.7, implying annual growth of 249.4%.

Current consensus DPS estimate is 1.7, implying a prospective dividend yield of 0.2%.

Current consensus EPS estimate suggests the PER is 25.1.

Market Sentiment: 0.1

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

MYR  MYER HOLDINGS LIMITED

Household & Personal Products

Overnight Price: $1.19

ADDED

Credit Suisse rates MYR as Outperform (1) -

Premier Investments ((PMV)) has emerged with a 10.77% equity stake and analysts at Credit Suisse speculate whether, maybe, the potential for other corporate interest in Myer may have hit Solomon Lew's radar?

The analysts acknowledge, they can but guess about Lew/Premier Investments' real intentions. One thing they know for certain and that is there appears little reason (if any) for Premier Investment to "invest" in a structurally challenged department store, operating in a mature Australian retail market, ahead of a potential Amazon entry to Australia.

Could a potential corporate merger between David Jones and Myer be on the cards? Credit Suisse points out South Africa's Steinhoff also has growing department store interests in Australia. Outperform rating and $1.44 price target retained.

Target price is $1.44 Current Price is $1.19 Difference: $0.25
If MYR meets the Credit Suisse target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $1.25, suggesting upside of 2.5% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY17:

Credit Suisse forecasts a full year FY17 dividend of 7.00 cents and EPS of 9.58 cents.
At the last closing share price the estimated dividend yield is 5.88%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.42.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 8.8, implying annual growth of 14.3%.

Current consensus DPS estimate is 5.8, implying a prospective dividend yield of 4.8%.

Current consensus EPS estimate suggests the PER is 13.9.

Forecast for FY18:

Credit Suisse forecasts a full year FY18 dividend of 7.65 cents and EPS of 11.43 cents.
At the last closing share price the estimated dividend yield is 6.43%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.41.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.9, implying annual growth of 12.5%.

Current consensus DPS estimate is 6.7, implying a prospective dividend yield of 5.5%.

Current consensus EPS estimate suggests the PER is 12.3.

Market Sentiment: 0.4

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


Macquarie rates MYR as Outperform (1) -

Macquarie suspects the disclosure of the strategic stake by Premier Investments ((PMV)) at 10.77% will put a floor under the stock. Myer is considered to be trading broadly in line with its value over the last 12 months.

While the denial by Premier Investments of an imminent takeover offer eliminates a short-term upside catalyst, this also limits the downside, as corporate activity will likely remain at the forefront of investor thoughts, the broker suggests.

Outperform and $1.21 target retained.

Target price is $1.21 Current Price is $1.19 Difference: $0.02
If MYR meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $1.25, suggesting upside of 2.5% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 5.00 cents and EPS of 8.70 cents.
At the last closing share price the estimated dividend yield is 4.20%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.68.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 8.8, implying annual growth of 14.3%.

Current consensus DPS estimate is 5.8, implying a prospective dividend yield of 4.8%.

Current consensus EPS estimate suggests the PER is 13.9.

Forecast for FY18:

Macquarie forecasts a full year FY18 dividend of 5.00 cents and EPS of 9.60 cents.
At the last closing share price the estimated dividend yield is 4.20%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.40.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.9, implying annual growth of 12.5%.

Current consensus DPS estimate is 6.7, implying a prospective dividend yield of 5.5%.

Current consensus EPS estimate suggests the PER is 12.3.

Market Sentiment: 0.4

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

NCK  NICK SCALI LIMITED

Furniture & Renovation

Overnight Price: $7.16

Citi rates NCK as Initiation of coverage with Buy (1) -

Citi has initiated coverage with a Buy rating, despite acknowledging the company's growth outlook is meeting housing-related headwinds. The analysts believe there are company-specific factors that are able to offer offset.

Nick Scali is looking into expanding into New Zealand and Citi sees a 10-stores opportunity. In addition, the analysts suggest management might start looking into acquisitions to enter additional geographical markets. Target $8.20.

Target price is $8.20 Current Price is $7.16 Difference: $1.04
If NCK meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Citi forecasts a full year FY17 dividend of 30.00 cents and EPS of 43.00 cents.
At the last closing share price the estimated dividend yield is 4.19%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.65.

Forecast for FY18:

Citi forecasts a full year FY18 dividend of 33.00 cents and EPS of 48.00 cents.
At the last closing share price the estimated dividend yield is 4.61%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.92.

Market Sentiment: 1.0

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

ORG  ORIGIN ENERGY LIMITED

NatGas

Overnight Price: $7.08

Citi rates ORG as Sell (5) -

Origin has closed a deal with Engie and Citi explains Origin is effectively renting 240MW of spare Pelican Point capacity in SA for a fixed fee from FY17-20.

It is the analysts' view, smaller non-integrated peers such as Engie are feeling the pressure because of recent material price spikes, while for Origin deals like this improve market share. Sell.

Target price is $6.80 Current Price is $7.08 Difference: minus $0.28 (current price is over target).
If ORG meets the Citi target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.23, suggesting upside of 1.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Citi forecasts a full year FY17 dividend of 0.00 cents and EPS of 32.60 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.72.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 18.1, 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 39.4.

Forecast for FY18:

Citi forecasts a full year FY18 dividend of 0.00 cents and EPS of 59.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 56.6, implying annual growth of 212.7%.

Current consensus DPS estimate is 9.6, implying a prospective dividend yield of 1.3%.

Current consensus EPS estimate suggests the PER is 12.6.

Market Sentiment: 0.4

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


Ord Minnett rates ORG as Accumulate (2) -

The company has signed two transactions with Engie. Origin will supply gas to Pelican Point from July 2017 in exchange for 240MW of electricity.. The company has also agreed to sell eight PJs of natural gas to Engie in 2018 and 2019.

In Ord Minnett's view, this shows an attempt to address the key issue of electricity security in South Australia by providing additional peaking power.  While it is likely to have limited impact on average spot prices in the state the broker suspects it could reduce price volatility by taking out the frequency of prices reaching the cap.

Accumulate rating and $7.10 target retained.

Target price is $7.10 Current Price is $7.08 Difference: $0.02
If ORG meets the Ord Minnett target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $7.23, suggesting upside of 1.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Ord Minnett forecasts a full year FY17 dividend of 0.00 cents and EPS of minus 73.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 9.70.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 18.1, 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 39.4.

Forecast for FY18:

Ord Minnett forecasts a full year FY18 dividend of 10.00 cents and EPS of 54.00 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 13.11.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 56.6, implying annual growth of 212.7%.

Current consensus DPS estimate is 9.6, implying a prospective dividend yield of 1.3%.

Current consensus EPS estimate suggests the PER is 12.6.

Market Sentiment: 0.4

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

PMV  PREMIER INVESTMENTS LIMITED

Apparel & Footwear

Overnight Price: $14.18

Macquarie rates PMV as Outperform (1) -

The company has confirmed it purchased around 11% of Myer ((MYR)) for $1.15 a share.  A takeover offer is not currently being considered.

Macquarie is not sure what to make of the transaction at this point in time and needs to have a final bid in train in order to take a view, if one occurs at all. The broker notes Premier Investments is a long-time holder of a 27.5% stake in Breville ((BRG)) and treats the Myer holding using a similar treatment to Breville.

Outperform rating retained. Target rises to $17.92 from $17.19.

Target price is $17.92 Current Price is $14.18 Difference: $3.74
If PMV meets the Macquarie target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $15.73, suggesting upside of 10.8% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 51.50 cents and EPS of 71.60 cents.
At the last closing share price the estimated dividend yield is 3.63%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.80.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 71.1, implying annual growth of 7.3%.

Current consensus DPS estimate is 53.1, implying a prospective dividend yield of 3.7%.

Current consensus EPS estimate suggests the PER is 20.0.

Forecast for FY18:

Macquarie forecasts a full year FY18 dividend of 60.00 cents and EPS of 83.30 cents.
At the last closing share price the estimated dividend yield is 4.23%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.02.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 80.7, implying annual growth of 13.5%.

Current consensus DPS estimate is 59.9, implying a prospective dividend yield of 4.2%.

Current consensus EPS estimate suggests the PER is 17.6.

Market Sentiment: 0.7

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


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

The company has made a strategic investment in Myer ((MYR)), taking around 10.77%. The company does not intend currently to make a takeover offer.

The transaction leaves net cash at $29.6m as of July 2017 on Morgan Stanley's forecast, reducing the capacity for further acquisitions that can be funded in the same manner. Morgan Stanley will watch to see if management takes a more active role in the strategic investment  in Myer over time.

Equal-weight rating,  In-Line investment view and $14 target retained.

Target price is $14.00 Current Price is $14.18 Difference: minus $0.18 (current price is over target).
If PMV 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 $15.73, suggesting upside of 10.8% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY17:

Morgan Stanley forecasts a full year FY17 dividend of 53.60 cents and EPS of 72.00 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 19.69.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 71.1, implying annual growth of 7.3%.

Current consensus DPS estimate is 53.1, implying a prospective dividend yield of 3.7%.

Current consensus EPS estimate suggests the PER is 20.0.

Forecast for FY18:

Morgan Stanley forecasts a full year FY18 dividend of 59.50 cents and EPS of 82.00 cents.
At the last closing share price the estimated dividend yield is 4.20%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.29.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 80.7, implying annual growth of 13.5%.

Current consensus DPS estimate is 59.9, implying a prospective dividend yield of 4.2%.

Current consensus EPS estimate suggests the PER is 17.6.

Market Sentiment: 0.7

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

SUN  SUNCORP GROUP LIMITED

Banks

Overnight Price: $13.25

Macquarie rates SUN as Downgrade to Neutral from Outperform (3) -

Macquarie assesses that premium rate increases across the insurance market are being led by claims cost inflation. As insurers get costs under control price rises should again moderate across of market, in the broker's view.

The broker downgrades expectations for Suncorp's gross written premium growth based on its analysis. Rating is downgraded to Neutral from Outperform. Target is reduced to $13.60 from $14.33.

Target price is $13.60 Current Price is $13.25 Difference: $0.35
If SUN meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $13.64, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 71.00 cents and EPS of 91.70 cents.
At the last closing share price the estimated dividend yield is 5.36%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.45.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 88.8, implying annual growth of 9.1%.

Current consensus DPS estimate is 72.7, implying a prospective dividend yield of 5.5%.

Current consensus EPS estimate suggests the PER is 14.9.

Forecast for FY18:

Macquarie forecasts a full year FY18 dividend of 78.00 cents and EPS of 97.00 cents.
At the last closing share price the estimated dividend yield is 5.89%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.66.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 95.4, implying annual growth of 7.4%.

Current consensus DPS estimate is 76.1, implying a prospective dividend yield of 5.7%.

Current consensus EPS estimate suggests the PER is 13.9.

Market Sentiment: 0.3

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

TLS  TELSTRA CORPORATION LIMITED

Telecommunication

Overnight Price: $4.61

Deutsche Bank rates TLS as Hold (3) -

Deutsche Bank expects operating earnings (EBITDA) will decline to $10.2bn in FY22 from $10.5bn and FY15. The main driver is the impact of the NBN, offset by organic growth in core segments as well as productivity improvements.

Based on the broker's estimates, the dividend is expected to be maintained at $0.31 between FY17-25.

Deutsche Bank updates forecast for increased NBN subscriber assumptions and minor adjustments to working capital estimates. This means an increase of 0-2% in earnings per share for FY17-21. Hold retained. Target rises to $4.87 from $4.79.

Target price is $4.87 Current Price is $4.61 Difference: $0.26
If TLS meets the Deutsche Bank target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.79, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Deutsche Bank forecasts a full year FY17 dividend of 31.00 cents and EPS of 33.00 cents.
At the last closing share price the estimated dividend yield is 6.72%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.97.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 31.6, implying annual growth of -33.3%.

Current consensus DPS estimate is 31.1, implying a prospective dividend yield of 6.7%.

Current consensus EPS estimate suggests the PER is 14.6.

Forecast for FY18:

Deutsche Bank forecasts a full year FY18 dividend of 31.00 cents and EPS of 33.00 cents.
At the last closing share price the estimated dividend yield is 6.72%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.97.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 33.8, implying annual growth of 7.0%.

Current consensus DPS estimate is 31.1, implying a prospective dividend yield of 6.7%.

Current consensus EPS estimate suggests the PER is 13.7.

Market Sentiment: -0.4

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

Summaries
BHP - BHP BILLITON Hold - Ord Minnett Overnight Price $23.97
BLX - BEACON LIGHTING Initiation of coverage with Neutral - Citi Overnight Price $1.72
BXB - BRAMBLES Underperform - Credit Suisse Overnight Price $9.48
CGF - CHALLENGER Outperform - Macquarie Overnight Price $12.43
CWN - CROWN RESORTS Buy - Deutsche Bank Overnight Price $11.76
DLX - DULUX GROUP Downgrade to Sell from Neutral - UBS Overnight Price $6.80
FBU - FLETCHER BUILDING Buy - UBS Overnight Price $7.56
IAG - INSURANCE AUSTRALIA Underperform - Macquarie Overnight Price $6.09
Neutral - UBS Overnight Price $6.09
ILU - ILUKA RESOURCES Lighten - Ord Minnett Overnight Price $7.33
MYR - MYER Outperform - Credit Suisse Overnight Price $1.19
Outperform - Macquarie Overnight Price $1.19
NCK - NICK SCALI Initiation of coverage with Buy - Citi Overnight Price $7.16
ORG - ORIGIN ENERGY Sell - Citi Overnight Price $7.08
Accumulate - Ord Minnett Overnight Price $7.08
PMV - PREMIER INVESTMENTS Outperform - Macquarie Overnight Price $14.18
Equal-weight - Morgan Stanley Overnight Price $14.18
SUN - SUNCORP Downgrade to Neutral from Outperform - Macquarie Overnight Price $13.25
TLS - TELSTRA CORP Hold - Deutsche Bank Overnight Price $4.61
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

7

2. Accumulate

1

3. Hold

6

4. Reduce

1

5. Sell

4

Thursday 30 March 2017

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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.