Australian Broker Call

Credit Suisse rates AQG as Outperform (1) -

The company has updated on its principal growth projects, outside of Copler. Credit Suisse finds an enlarged Ardich resource a near-term opportunity but Gediktepe less appealing, as it is more remote and complex.

The upgraded resource at Ardich has increased ore tonnage by 73% and gold grades by 12%. It is located close to the Copler infrastructure.

The broker maintains an Outperform rating and $5.05 target.

Target price is $5.05 Current Price is $3.75 Difference: $1.3
If AQG meets the Credit Suisse target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $4.76, suggesting upside of 27.0% (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: 1.0

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

Macquarie rates CPU as Downgrade to Underperform from Neutral (5) -

Following the recent move in global bond yields, Macquarie revises its margin income forecasts. More dovish commentary from the central banks suggest margin income growth could moderate.

The broker envisages downside risk to consensus estimates and the current multiple. With a more subdued margin income outlook, less incremental benefit from cost reductions and the cessation of the impact of the fixed fee revenue in the UK Macquarie currently forecasts a -1% decline in FY21 management earnings.

Rating is downgraded to Underperform from Neutral and the target reduced to $16.50 from $19.00.

Target price is $16.50 Current Price is $17.18 Difference: minus $0.68 (current price is over target).
If CPU meets the Macquarie target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $17.91, suggesting upside of 4.3% (ex-dividends)

The company's fiscal year ends in June.

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: -0.4

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

Macquarie rates EHE as Neutral (3) -

The company has reaffirmed guidance and accounted for the one-off boost to the subsidy, which increases Macquarie's estimates for operating earnings (EBITDA) in FY19 to $100.9m from $91.9m.

The broker lowers the final dividend pay-out ratio to 79% to strip out the effect of the one-off funding. There are no signs of occupancy improvement, with the third quarter average below the first half.

The main positive, in the broker's view, is that occupancy has not deteriorated, although sentiment remains a headwind. Neutral rating maintained. Target is raised to $2.75 from $2.47.

Target price is $2.75 Current Price is $2.71 Difference: $0.04
If EHE meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $2.72, suggesting upside of 0.4% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates EHE as Buy (1) -

The company has updated on the government's residential care funding boost and has chosen to exclude this one-off revenue from guidance.

On UBS assumptions this implies FY19 operating earnings (EBITDA) of around $92m. The broker maintains a Buy rating and $3 target.

Target price is $3.00 Current Price is $2.71 Difference: $0.29
If EHE meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $2.72, suggesting upside of 0.4% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates EVN as Underweight (5) -

Morgan Stanley observes confidence in the potential new underground mine at Cowal has increased. Drilling in 2019 is likely to determine the viability of the new high-grade mine and this is not currently included in forecasts.

Cowal is on track for 300,000 ounces per annum. The company believes GRE46 could become an underground mine of around 750-1000tpa at 3-4g/t with first ore around 2022. Underweight maintained. Industry view is Attractive. Target is $2.70.

Target price is $2.70 Current Price is $3.62 Difference: minus $0.92 (current price is over target).
If EVN meets the Morgan Stanley target it will return approximately minus 25% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.41, suggesting downside of -5.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.4

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

Ord Minnett rates EVN as Hold (3) -

After visiting the company's flagship Cowal operation, Ord Minnett notes plant throughput and recovery improvements could be delivered over the next 12 months.

The underground potential is also improving. The company plans to submit an environmental impact statement for an underground operation at the GRE46 target by the end of the year and, assuming a 12-month permit period, should be able to commence mining by early 2021.

The broker maintains a Hold rating and $3.40 target.

Target price is $3.40 Current Price is $3.62 Difference: minus $0.22 (current price is over target).
If EVN meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.41, suggesting downside of -5.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.4

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

Deutsche Bank rates GNC as Buy (1) -

Deutsche Bank considers the proposed separation of the malt and grains/oils business is a positive. This delivers a credible alternative for shareholders should the LTAP takeover not eventuate.

On a de-merged basis, the broker envisages 15% upside to the current share price. Buy rating and $10.96 maintained.

Target price is $10.96 Current Price is $9.47 Difference: $1.49
If GNC meets the Deutsche Bank target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $9.41, suggesting downside of -0.7% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

Macquarie rates GNC as No Rating (-1) -

The company intends to de-merge its global malting business. The grains & oils business will also be combined. In parallel with progressing a de-merger of the malt business, Graincorp also continues to actively engage with parties that have expressed an interest in acquiring part or parts of its portfolio.

The company is considering a grain production derivative to reduce volatility and targeting $20m in new cost savings from the simplification and cost reduction initiatives.

Macquarie is currently restricted from providing a recommendation or target.

Current Price is $9.47. Target price not assessed.

Current consensus price target is $9.41, suggesting downside of -0.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

UBS rates GNC as Buy (1) -

Graincorp will de-merge its global malting business by the end of 2019 and integrate grains & oils as a separate listed company. UBS observes the malting company has generally outperformed expectations, while the grains division has lost market share.

The strategic rationale for the company's decision is further reinforced by the lack of synergies between domestic malt production and malting barley procurement operations in the grains division, UBS observes.

The broker believes a de-merger will unlock shareholder value. Buy rating and $10.42 target maintained.

Target price is $10.42 Current Price is $9.47 Difference: $0.95
If GNC meets the UBS target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $9.41, suggesting downside of -0.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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

Morgans rates GNX as Downgrade to Hold from Add (3) -

The company has updated capital expenditure guidance to around $250m for the K2-Hydro project. This is $25m above Morgans' prior assumptions.

The Jemalong project could be constructed in FY20, subject to project financing, which would put a strain on the company's cash flows and add to the need for equity capital.

Given how important the K2-Hydro project is to the valuation, and the uncertainty regarding concessional funding, Morgans downgrades to Hold from Add.

The company has indicated it will know more about the availability of a grant by the end of April. Target is reduced to $0.25 from $0.30.

Target price is $0.25 Current Price is $0.24 Difference: $0.01
If GNX meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Citi rates ING as Sell (5) -

Inghams has provided an update as part of a conference, with a key message of a fall in the wheat price and a recovery in New Zealand. Citi suspects there still could be downside to FY20 estimates for earnings, given the run rate over the second half. Moreover, retail prices for poultry continue to fluctuate.

The broker retains a Sell rating and points out, while the focus will remain on cash flow and dividends, more attention is likely to be paid to brand and new product development when the new CEO unveils his strategy in the June quarter, and this may crimp near-term margins. Target unchanged at $3.85.

Target price is $3.85 Current Price is $4.21 Difference: minus $0.36 (current price is over target).
If ING meets the Citi target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.00, suggesting downside of -5.0% (ex-dividends)

The company's fiscal year ends in June.

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

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

Morgan Stanley found few surprises in the first half result. Sales were slightly ahead of the broker's expectations. The broker expects a modest performance in the second half as comparables will be tougher.

The transformation of the domestic retail business is ongoing, with improved product innovation and less reliance on promotional periods. However, the strategy increasingly revolves around brands rather than stores, and the broker finds international sales hard to project.

Morgan Stanley lacks the evidence or conviction to become more positive and retains an Equal-weight rating. In-Line sector view. Price target reduced to $2.60 from $3.00.

Target price is $2.60 Current Price is $2.25 Difference: $0.35
If KMD meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $2.45, suggesting upside of 8.9% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.5

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

Credit Suisse rates MFG as Neutral (3) -

The company reported funds under management growth of 12.2% in the March quarter. The benefits from markets were mostly from a broader rebound in equities as Credit Suisse notes funds underperformed.

The broker points out Magellan Financial is the only manager under coverage receiving inflows and the pipeline is expected to remain strong.

As the stock is considered fairly valued the broker retains a Neutral rating. Target is raised to $35.50 from $35.00.

Target price is $35.50 Current Price is $38.31 Difference: minus $2.81 (current price is over target).
If MFG meets the Credit Suisse target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $34.09, suggesting downside of -11.0% (ex-dividends)

The company's fiscal year ends in June.

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

Morgans rates MFG as Hold (3) -

The company reported March funds under management of $79.4bn, up 4.5% for the month and 12.2% for the quarter. Net flows have been strong.

Morgans believes the company's strong presence with advice networks, and structural tailwinds, means a retirement income product that is in the planning would be welcomed, and material for the long-term.

Morgans maintains a Hold rating and would use any market volatility to return to a more positive stance. Target is raised to $37.65 from $33.40.

Target price is $37.65 Current Price is $38.31 Difference: minus $0.66 (current price is over target).
If MFG meets the Morgans target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $34.09, suggesting downside of -11.0% (ex-dividends)

The company's fiscal year ends in June.

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 PAN as Outperform (1) -

Macquarie increases assumptions around the pace of the ramp up at Savannah, which drives increases of 9% to FY19 and FY20 earnings estimates.

The broker expects Panoramic Resources to receive around $20m in cash inflows early in the fourth quarter with the sale of the concentrate shipment and the proceeds of the rights issue.

The problems which caused the need for an equity injection seem to be improving, Macquarie observes, and the company appears on its way to hitting production targets. Outperform rating and $0.60 target maintained.

Target price is $0.60 Current Price is $0.41 Difference: $0.19
If PAN meets the Macquarie target it will return approximately 46% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Macquarie rates SCG as Downgrade to Underperform from Neutral (5) -

Amid soft retail conditions for landlords because of cyclical and structural headwinds and the company's "heavy" balance sheet, Macquarie downgrades to Underperform from Neutral.

The broker recently visited Westfield Miranda shopping centre and notes the centre has hoardings on around 4% of space. Lease expiries from the 2014 development are staggered between November 2019 and 2021.

The company would not be drawn on potential pricing, with lease negotiations currently in place, and Macquarie suspects downside risk to rents, given the structurally challenged retail conditions. Target is reduced to $3.52 from $3.69.

Target price is $3.52 Current Price is $3.90 Difference: minus $0.38 (current price is over target).
If SCG meets the Macquarie target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.95, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.2

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

Macquarie rates SDA as Downgrade to Underperform from Neutral (5) -

Macquarie observes a deterioration in the core business drove multiple downgrades in FY18 and this has created downside risk to earnings in FY19. Limited disclosure reduces confidence.

The broker believes sustained delivery of organic revenue and earnings growth at a group level, as well as cash generation, are required to be more positive.

The broker downgrades to Underperform from Neutral. Target is reduced to $2.85 from $3.00. Low free cash flow raises concerns about the stability of the dividend.

Target price is $2.85 Current Price is $3.77 Difference: minus $0.92 (current price is over target).
If SDA meets the Macquarie target it will return approximately minus 24% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.31, suggesting downside of -12.3% (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

Macquarie rates SDF as Outperform (1) -

The premium rate environment appears supportive for insurance brokers, in Macquarie's view. The broker estimates premium rates were up 8.2% for the company in the third quarter compared with guidance of around 5%.

The broker considers operating conditions and the prospect for consensus upgrades supports an Outperform rating. Target is $3.90.

Target price is $3.90 Current Price is $3.13 Difference: $0.77
If SDF meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $3.27, suggesting upside of 4.4% (ex-dividends)

The company's fiscal year ends in June.

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 SKI as Neutral (3) -

Macquarie updates its estimates to account for changes in long-term bond assumptions. Lowering bond rate assumptions is typically positive for the value of infrastructure.

However, for regulated utilities, the broker notes it is not as significant, as both the discount rate and the re-set rate move together along with the average debt rate.

The main brake on the share price, the broker envisages, is dividend uncertainty in 2021. Neutral maintained. Target is reduced to $2.28 from $2.41.

Target price is $2.28 Current Price is $2.19 Difference: $0.09
If SKI meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $2.25, suggesting upside of 2.9% (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

Morgan Stanley rates WOW as Underweight (5) -

Morgan Stanley continues to believe the valuation is too rich, given the earnings growth outlook. The broker adjusts its numbers to allow for the buyback and the petrol divestment and lifts FY20 estimates for earnings per share by 5%. Target is raised to $26 from $23.

Morgan Stanley notes Kaufland's progress in Australia has been slower than first expected while Aldi's growth appears to be moderating.

While this is undoubtedly positive for the near term for Woolworths, industry expenditure has recently increased and looks set to accelerate as the business invests in online and modernising the supply chain. Underweight rating maintained. Industry view: Cautious.

Target price is $26.00 Current Price is $30.32 Difference: minus $4.32 (current price is over target).
If WOW meets the Morgan Stanley target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $28.75, suggesting downside of -5.2% (ex-dividends)

The company's fiscal year ends in June.

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