Australian Broker Call
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September 16, 2019
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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
Today's Upgrades and Downgrades
| ECX - | ECLIPX GROUP | Upgrade to Buy from Neutral | Citi |
Overnight Price: $2.65
Macquarie rates CIA as Outperform (1) -
The company has completed the purchase of the remaining stake in Bloom Lake. Securing the funding for the phase 2 expansion is the last remaining hurdle, Macquarie observes, and upgrade momentum is being driven by buoyant iron ore prices.
Outperform rating and $4.30 target maintained.
Target price is $4.30 Current Price is $2.65 Difference: $1.65
If CIA meets the Macquarie target it will return approximately 62% (excluding dividends, fees and charges).
The company's fiscal year ends in March.
Forecast for FY20:
Macquarie forecasts a full year FY20 dividend of 0.00 cents and EPS of 60.88 cents. |
Forecast for FY21:
Macquarie forecasts a full year FY21 dividend of 0.00 cents and EPS of 33.27 cents. |
This company reports in CAD. 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
ECX ECLIPX GROUP LIMITED
Vehicle Leasing & Salary Packaging
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Overnight Price: $1.73
Citi rates ECX as Upgrade to Buy from Neutral (1) -
The company has announced the divestment of its commercial equipment finance business. As the core fleet & novated leasing has returned to a dominant position, and with just two further divestments in the pipeline (Right2Drive and consumer), Citi upgrades to Buy from Neutral.
While lowering net operating income forecasts, the broker's estimates of operating earnings (EBITDA) increase as the losses from commercial equipment are removed. FY20 estimates of earnings per share are upgraded by 15%. Target is raised to $1.96 from $1.56.
Target price is $1.96 Current Price is $1.73 Difference: $0.23
If ECX meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).
Current consensus price target is $1.73, suggesting upside of 0.1% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY19:
Citi forecasts a full year FY19 dividend of 0.00 cents and EPS of 10.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 10.4, implying annual growth of -47.5%. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 16.6. |
Forecast for FY20:
Citi forecasts a full year FY20 dividend of 5.50 cents and EPS of 11.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 13.3, implying annual growth of 27.9%. Current consensus DPS estimate is 6.1, implying a prospective dividend yield of 3.5%. Current consensus EPS estimate suggests the PER is 13.0. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
JHX JAMES HARDIE INDUSTRIES N.V.
Building Products & Services
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Overnight Price: $23.41
Ord Minnett rates JHX as Accumulate (2) -
Ord Minnett has a positive view on the Fermacell business after a two-day investor trip to Germany and the Netherlands. However, the broker suggests returns for the fibre gypsum operations will remain well short of what the company delivers in fibre cement.
Hence, success in Europe will be dependent on whether James Hardie can create sufficient demand for fibre cement to justify investing in local plants. Ord Minnett maintains an Accumulate rating and $23.50 target.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $23.50 Current Price is $23.41 Difference: $0.09
If JHX meets the Ord Minnett target it will return approximately 0% (excluding dividends, fees and charges).
Current consensus price target is $24.39, suggesting upside of 4.2% (ex-dividends)
The company's fiscal year ends in March.
Forecast for FY20:
Ord Minnett forecasts a full year FY20 EPS of 111.25 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 116.4, implying annual growth of N/A. Current consensus DPS estimate is 65.8, implying a prospective dividend yield of 2.8%. Current consensus EPS estimate suggests the PER is 20.1. |
Forecast for FY21:
Ord Minnett forecasts a full year FY21 EPS of 123.28 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 130.9, implying annual growth of 12.5%. Current consensus DPS estimate is 78.0, implying a prospective dividend yield of 3.3%. Current consensus EPS estimate suggests the PER is 17.9. |
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
Overnight Price: $7.38
Ord Minnett rates NHF as Hold (3) -
The company has released a revised FY19 result presentation, after the chart showing a significant spike in claims inflation was deemed incorrect.
Management said the error related related to claims data that was only used in the chart and FY20 underlying profit guidance is retained, expected to be at least $200m.
The main risk, Ord Minnett suggests, is that the government will seek more concessions on further premium rate increases which could constrain margins from FY21.
Hold rating maintained. Target rises to $7.21 from $6.97.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $7.21 Current Price is $7.38 Difference: minus $0.17 (current price is over target).
If NHF meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $6.54, suggesting downside of -11.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Ord Minnett forecasts a full year FY20 dividend of 20.00 cents and EPS of 37.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 34.0, implying annual growth of 3.3%. Current consensus DPS estimate is 21.6, implying a prospective dividend yield of 2.9%. Current consensus EPS estimate suggests the PER is 21.7. |
Forecast for FY21:
Ord Minnett forecasts a full year FY21 dividend of 23.00 cents and EPS of 38.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 34.9, implying annual growth of 2.6%. Current consensus DPS estimate is 22.6, implying a prospective dividend yield of 3.1%. Current consensus EPS estimate suggests the PER is 21.1. |
Market Sentiment: -0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
RHC RAMSAY HEALTH CARE LIMITED
Healthcare services
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Overnight Price: $65.20
UBS rates RHC as Neutral (3) -
The outlook for private hospital volumes and prices remains the key driver of Ramsay Health Care, UBS assesses. Australia represents around 78% of the FY20 earnings (EBIT) forecast.
Ongoing deterioration in private health insurance participation will put increased pressure on the public system and ultimately lead to sustained volume growth from private operators, in the broker's view.
Neutral rating and $68.40 target maintained.
Target price is $68.40 Current Price is $65.20 Difference: $3.2
If RHC meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $68.30, suggesting upside of 4.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
UBS forecasts a full year FY20 dividend of 150.00 cents and EPS of 302.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 293.9, implying annual growth of 10.9%. Current consensus DPS estimate is 159.3, implying a prospective dividend yield of 2.4%. Current consensus EPS estimate suggests the PER is 22.2. |
Forecast for FY21:
UBS forecasts a full year FY21 dividend of 155.00 cents and EPS of 320.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 314.1, implying annual growth of 6.9%. Current consensus DPS estimate is 168.3, implying a prospective dividend yield of 2.6%. Current consensus EPS estimate suggests the PER is 20.8. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $3.04
Credit Suisse rates SBM as Underperform (5) -
Credit Suisse was impressed with the visit to the Torquoy mine and processing facility. The broker now appreciates why management was willing to pay a premium to acquire Atlantic Gold although still believes exploration success is necessary to bridge the premium.
The two conditions necessary for Atlantic Gold to exercise its option to purchase a 40% minority interest have been met. The broker believes it is in St Barbara's interest to move to 100% ownership to simplify the current structure.
Target price steady at $2.76. Underperform rating retained.
Target price is $2.76 Current Price is $3.04 Difference: minus $0.28 (current price is over target).
If SBM meets the Credit Suisse target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $3.49, suggesting upside of 14.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Credit Suisse forecasts a full year FY20 dividend of 8.91 cents and EPS of 22.26 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 32.6, implying annual growth of 20.7%. Current consensus DPS estimate is 10.3, implying a prospective dividend yield of 3.4%. Current consensus EPS estimate suggests the PER is 9.3. |
Forecast for FY21:
Credit Suisse forecasts a full year FY21 dividend of 4.98 cents and EPS of 19.44 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 31.8, implying annual growth of -2.5%. Current consensus DPS estimate is 10.0, implying a prospective dividend yield of 3.3%. Current consensus EPS estimate suggests the PER is 9.6. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates SBM as Outperform (1) -
After visiting the newly-acquired Atlantic Gold operations, Macquarie believes exploration will be the factor that delivers more value, although the potential for new discoveries is high.
Overall, the broker considers the risk profile of the acquisition is low, given the potential. Outperform rating and $3.50 target maintained.
Target price is $3.50 Current Price is $3.04 Difference: $0.46
If SBM meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).
Current consensus price target is $3.49, suggesting upside of 14.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Macquarie forecasts a full year FY20 dividend of 10.00 cents and EPS of 27.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 32.6, implying annual growth of 20.7%. Current consensus DPS estimate is 10.3, implying a prospective dividend yield of 3.4%. Current consensus EPS estimate suggests the PER is 9.3. |
Forecast for FY21:
Macquarie forecasts a full year FY21 dividend of 16.00 cents and EPS of 32.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 31.8, implying annual growth of -2.5%. Current consensus DPS estimate is 10.0, implying a prospective dividend yield of 3.3%. Current consensus EPS estimate suggests the PER is 9.6. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
TLS TELSTRA CORPORATION LIMITED
Telecommunication
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Overnight Price: $3.57
Morgan Stanley rates TLS as Underweight (5) -
Morgan Stanley believes Telstra shares have potential to move in both directions, based on the decision by the Federal Court on the proposed merger of TPG Telecom ((TPM)) and Vodafone Australia. A decision is expected by October 1 2019.
The merger has been opposed by the ACCC on the basis it would be a lessening of competition in the supply of mobile services. Morgan Stanley believes a merger would create a stronger third mobile player that would eventually lead to an increase in competition.
This could constrain Telstra's mobile subscriber growth. Underweight rating. Target is $3.20. Industry view: In-Line.
Target price is $3.20 Current Price is $3.57 Difference: minus $0.37 (current price is over target).
If TLS meets the Morgan Stanley target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $3.90, suggesting upside of 9.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Morgan Stanley forecasts a full year FY20 dividend of 16.00 cents and EPS of 23.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 20.6, implying annual growth of 13.8%. Current consensus DPS estimate is 16.0, implying a prospective dividend yield of 4.5%. Current consensus EPS estimate suggests the PER is 17.3. |
Forecast for FY21:
Morgan Stanley forecasts a full year FY21 dividend of 15.00 cents and EPS of 19.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 19.4, implying annual growth of -5.8%. Current consensus DPS estimate is 15.8, implying a prospective dividend yield of 4.4%. Current consensus EPS estimate suggests the PER is 18.4. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $6.91
Morgan Stanley rates TPM as Equal-weight (3) -
TPG Telecom and Vodafone Australia are currently appealing to the Federal Court on their proposed merger. A decision is expected by October 1 2019.
The merger has been opposed by the ACCC on the basis it would be a lessening of competition in the supply of mobile services.
Morgan Stanley believes a merger would create a stronger third mobile player that would eventually lead to an increase in competition. The broker suggests an outcome either way in the Federal Court would have a meaningful impact on TPG Telecom shares.
Rating is Equal-weight. Target is $6.85. Industry view is In-Line.
Target price is $6.85 Current Price is $6.91 Difference: minus $0.06 (current price is over target).
If TPM 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 $6.47, suggesting downside of -6.4% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY20:
Morgan Stanley forecasts a full year FY20 dividend of 2.80 cents and EPS of 28.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 27.4, implying annual growth of 46.5%. Current consensus DPS estimate is 3.8, implying a prospective dividend yield of 0.5%. Current consensus EPS estimate suggests the PER is 25.2. |
Forecast for FY21:
Morgan Stanley forecasts a full year FY21 EPS of 27.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 22.3, implying annual growth of -18.6%. Current consensus DPS estimate is 5.9, implying a prospective dividend yield of 0.9%. Current consensus EPS estimate suggests the PER is 31.0. |
Market Sentiment: -0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $3.37
Credit Suisse rates WHC as Outperform (1) -
Credit Suisse remains confident that the organic growth in this business is still not reflected in the current share price. The investor briefing provided an overview of the growth path to 2030.
All operations have upside, in the broker's view, notwithstanding the headwinds for coal prices. Outperform rating and $4.40 target maintained.
Target price is $4.40 Current Price is $3.37 Difference: $1.03
If WHC meets the Credit Suisse target it will return approximately 31% (excluding dividends, fees and charges).
Current consensus price target is $4.12, suggesting upside of 22.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Credit Suisse forecasts a full year FY20 dividend of 24.70 cents and EPS of 32.94 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 27.7, implying annual growth of -48.2%. Current consensus DPS estimate is 18.4, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 12.2. |
Forecast for FY21:
Credit Suisse forecasts a full year FY21 dividend of 17.41 cents and EPS of 34.82 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 27.2, implying annual growth of -1.8%. Current consensus DPS estimate is 13.6, implying a prospective dividend yield of 4.0%. Current consensus EPS estimate suggests the PER is 12.4. |
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates WHC as Buy (1) -
The market requires high-quality coal which the company's projects provide. This is the assessment UBS makes in the wake of the company's inaugural investor briefing.
The share of coal in primary energy demand is expected to decline, but the company envisages growth prospects in both thermal and metallurgical markets based on quality.
UBS maintains a Buy rating and $4 target.
Target price is $4.00 Current Price is $3.37 Difference: $0.63
If WHC meets the UBS target it will return approximately 19% (excluding dividends, fees and charges).
Current consensus price target is $4.12, suggesting upside of 22.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
UBS forecasts a full year FY20 dividend of 13.00 cents and EPS of 17.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 27.7, implying annual growth of -48.2%. Current consensus DPS estimate is 18.4, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 12.2. |
Forecast for FY21:
UBS forecasts a full year FY21 dividend of 10.00 cents and EPS of 14.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 27.2, implying annual growth of -1.8%. Current consensus DPS estimate is 13.6, implying a prospective dividend yield of 4.0%. Current consensus EPS estimate suggests the PER is 12.4. |
Market Sentiment: 0.7
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 | |
| ECX | ECLIPX GROUP | $1.73 | Citi | 1.96 | 1.56 | 25.64% |
| NHF | NIB HOLDINGS | $7.38 | Ord Minnett | 7.21 | 6.97 | 3.44% |
Summaries
| CIA | CHAMPION IRON | Outperform - Macquarie | Overnight Price $2.65 |
| ECX | ECLIPX GROUP | Upgrade to Buy from Neutral - Citi | Overnight Price $1.73 |
| JHX | JAMES HARDIE | Accumulate - Ord Minnett | Overnight Price $23.41 |
| NHF | NIB HOLDINGS | Hold - Ord Minnett | Overnight Price $7.38 |
| RHC | RAMSAY HEALTH CARE | Neutral - UBS | Overnight Price $65.20 |
| SBM | ST BARBARA | Underperform - Credit Suisse | Overnight Price $3.04 |
| Outperform - Macquarie | Overnight Price $3.04 | ||
| TLS | TELSTRA CORP | Underweight - Morgan Stanley | Overnight Price $3.57 |
| TPM | TPG TELECOM | Equal-weight - Morgan Stanley | Overnight Price $6.91 |
| WHC | WHITEHAVEN COAL | Outperform - Credit Suisse | Overnight Price $3.37 |
| Buy - UBS | Overnight Price $3.37 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 5 |
| 2. Accumulate | 1 |
| 3. Hold | 3 |
| 5. Sell | 2 |
Monday 16 September 2019
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