Australian Broker Call

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December 07, 2020

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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
CWY - Cleanaway Waste Management Equal-weight Morgan Stanley
EVN - Evolution Mining Upgrade to Neutral from Underperform Macquarie
JMS - JUPITER MINES Downgrade to Neutral from Outperform Macquarie
NCM - Newcrest Mining Upgrade to Neutral from Underperform Macquarie
PAN - Panoramic Resources Upgrade to Neutral from Underperform Macquarie
WAF - West African Resources Upgrade to Outperform from Neutral Macquarie
WPL - Woodside Petroleum Downgrade to Accumulate from Buy Ord Minnett
WSA - Western Areas Upgrade to Outperform from Neutral Macquarie
APT  AFTERPAY LIMITED

Business & Consumer Credit

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Overnight Price: $94.50

Credit Suisse rates APT as Initiation of coverage with Outperform (1) -

Credit Suisse initiates coverage of Afterpay with an Outperform rating and a target price of $124.

With Afterpay delivering significant growth, Credit Suisse expects the company's sales could increase almost six-fold 6x from FY20 levels over the next five years.

The broker assesses the buy now pay later (BNPL) industry is benefiting from structural growth due to higher e-commerce penetration, a shift away from credit cards and exposure to millennials/Gen Z whose retail spending is expected to rise strongly in the coming years.

Afterpay is expected to gain a higher share of total payments given its strong value proposition to both customers and merchants which extends beyond purely being a payment provider.

Target price is $124.00 Current Price is $94.50 Difference: $29.5
If APT meets the Credit Suisse target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $98.36, suggesting upside of 1.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Credit Suisse forecasts a full year FY21 dividend of 0.00 cents and EPS of 11.06 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 854.43.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.4, 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 779.8.

Forecast for FY22:

Credit Suisse forecasts a full year FY22 dividend of 0.00 cents and EPS of 48.25 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 195.85.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 46.8, implying annual growth of 277.4%.

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

Current consensus EPS estimate suggests the PER is 206.6.

Market Sentiment: 0.3

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

AQZ  ALLIANCE AVIATION SERVICES LIMITED

Transportation & Logistics

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Overnight Price: $3.90

Ord Minnett rates AQZ as Buy (1) -

Ord Minnett found the trading update positive, with first half pre-tax profit guidance 20% ahead of expectations. The move towards contract and charter flights is persisting as mining companies show a preference for flexibility.

The broker believes the company remains a key beneficiary of the changes in the Western Australian and Queensland aviation services market and retains a Buy rating. Target is raised to $4.50 from $4.15.

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

Target price is $4.50 Current Price is $3.90 Difference: $0.6
If AQZ meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $4.35, suggesting upside of 13.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 14.50 cents and EPS of 22.30 cents.
At the last closing share price the estimated dividend yield is 3.72%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.49.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 21.4, implying annual growth of 1.5%.

Current consensus DPS estimate is 13.4, implying a prospective dividend yield of 3.5%.

Current consensus EPS estimate suggests the PER is 17.9.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 18.20 cents and EPS of 27.20 cents.
At the last closing share price the estimated dividend yield is 4.67%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.34.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 25.3, implying annual growth of 18.2%.

Current consensus DPS estimate is 14.9, implying a prospective dividend yield of 3.9%.

Current consensus EPS estimate suggests the PER is 15.2.

Market Sentiment: 1.0

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

ASX  ASX LIMITED

Wealth Management & Investments

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Overnight Price: $77.64

Credit Suisse rates ASX as Underperform (5) -

ASX’s November trading activity was broadly in line with Credit Suisse's forecasts and the broker's revenue forecasts remain largely unchanged.

While ASX benefited from higher activity and above-trend revenue growth in FY20, Credit Suisse expects revenue growth to be minimal in FY21.

Credit Suisse reiterates its Underperform rating. Target is $73.

Target price is $73.00 Current Price is $77.64 Difference: minus $4.64 (current price is over target).
If ASX meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $72.43, suggesting downside of -6.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Credit Suisse forecasts a full year FY21 dividend of 219.00 cents and EPS of 243.00 cents.
At the last closing share price the estimated dividend yield is 2.82%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 31.95.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 247.1, implying annual growth of -4.1%.

Current consensus DPS estimate is 223.0, implying a prospective dividend yield of 2.9%.

Current consensus EPS estimate suggests the PER is 31.4.

Forecast for FY22:

Credit Suisse forecasts a full year FY22 dividend of 216.00 cents and EPS of 240.00 cents.
At the last closing share price the estimated dividend yield is 2.78%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 32.35.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 254.4, implying annual growth of 3.0%.

Current consensus DPS estimate is 228.8, implying a prospective dividend yield of 2.9%.

Current consensus EPS estimate suggests the PER is 30.5.

Market Sentiment: -1.0

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

BHP  BHP GROUP

Bulks

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Overnight Price: $41.50

Macquarie rates BHP as Outperform (1) -

Buoyant iron ore prices continue to drive strong earnings momentum for iron ore miners and impressive free cash flow yields.

Macquarie upgrades earnings forecasts by 11% for FY21 and FY22. Outperform reiterated. Target is raised to $46 from $43.

Target price is $46.00 Current Price is $41.50 Difference: $4.5
If BHP meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $41.15, suggesting downside of -2.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 278.51 cents and EPS of 386.70 cents.
At the last closing share price the estimated dividend yield is 6.71%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.73.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 319.8, implying annual growth of N/A.

Current consensus DPS estimate is 217.8, implying a prospective dividend yield of 5.1%.

Current consensus EPS estimate suggests the PER is 13.3.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 220.18 cents and EPS of 348.64 cents.
At the last closing share price the estimated dividend yield is 5.31%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.90.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 301.8, implying annual growth of -5.6%.

Current consensus DPS estimate is 197.6, implying a prospective dividend yield of 4.7%.

Current consensus EPS estimate suggests the PER is 14.0.

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

CSL  CSL LIMITED

Pharmaceuticals & Biotech/Lifesciences

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Overnight Price: $293.80

Macquarie rates CSL as Neutral (3) -

Macquarie notes foot traffic for around 100 of the US-based collection centres has eased after hitting a new peak mid November. In conjunction, coronavirus cases in the US have increased.

While the broker assumes a recovery in immunoglobulin growth and earnings for CSL Behring in FY22, plasma collection continues to present risks for the short term. Neutral rating. Target is $296.

Target price is $296.00 Current Price is $293.80 Difference: $2.2
If CSL meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $316.81, suggesting upside of 7.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 335.96 cents and EPS of 743.66 cents.
At the last closing share price the estimated dividend yield is 1.14%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 39.51.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 668.4, implying annual growth of N/A.

Current consensus DPS estimate is 295.6, implying a prospective dividend yield of 1.0%.

Current consensus EPS estimate suggests the PER is 44.1.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 375.77 cents and EPS of 832.17 cents.
At the last closing share price the estimated dividend yield is 1.28%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 35.31.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 739.6, implying annual growth of 10.7%.

Current consensus DPS estimate is 334.3, implying a prospective dividend yield of 1.1%.

Current consensus EPS estimate suggests the PER is 39.9.

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

CWY  CLEANAWAY WASTE MANAGEMENT LIMITED

Industrial Sector Contractors & Engineers

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Overnight Price: $2.60

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

Morgan Stanley notes large commercial and industrial customers are looking into reusing their waste or improve packaging materials, but the overall waste production behaviour in Australia has changed little.

Laws and policies now require more of recycled content in packaging manufacturing and in the government procurement process although standardisation of landfill levy is difficult to achieve across states given the regulation structure and transport costs.

Cleanaway Waste Management could improve its competitive advantage by working on its digital strategy, suggests Morgan Stanley, and help the company win municipal contracts and potentially national accounts.

Equal-Weight rating. Target is $2.50. Industry view: Cautious.

Target price is $2.50 Current Price is $2.60 Difference: minus $0.1 (current price is over target).
If CWY meets the Morgan Stanley target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.48, suggesting downside of -6.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 4.60 cents and EPS of 7.30 cents.
At the last closing share price the estimated dividend yield is 1.77%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 35.62.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 7.9, implying annual growth of 43.6%.

Current consensus DPS estimate is 4.5, implying a prospective dividend yield of 1.7%.

Current consensus EPS estimate suggests the PER is 33.5.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 5.30 cents and EPS of 8.30 cents.
At the last closing share price the estimated dividend yield is 2.04%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 31.33.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.2, implying annual growth of 16.5%.

Current consensus DPS estimate is 5.4, implying a prospective dividend yield of 2.0%.

Current consensus EPS estimate suggests the PER is 28.8.

Market Sentiment: 0.5

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

EVN  EVOLUTION MINING LIMITED

Gold & Silver

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Overnight Price: $5.05

Macquarie rates EVN as Upgrade to Neutral from Underperform (3) -

The spot price for gold presents some upside to Macquarie's FY21 earnings forecasts, primarily a function of currency.

The broker's gold price forecasts calls for a -21% and -22% drop in gold prices in Australian dollar terms in 2021 and 2022, respectively.

Rating is upgraded to Neutral from Underperform on valuation. Target is steady at $5.30.

Target price is $5.30 Current Price is $5.05 Difference: $0.25
If EVN meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $5.24, suggesting upside of 4.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 12.00 cents and EPS of 22.60 cents.
At the last closing share price the estimated dividend yield is 2.38%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.35.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 28.5, implying annual growth of 60.9%.

Current consensus DPS estimate is 14.5, implying a prospective dividend yield of 2.9%.

Current consensus EPS estimate suggests the PER is 17.5.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 7.00 cents and EPS of 14.50 cents.
At the last closing share price the estimated dividend yield is 1.39%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 34.83.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.2, implying annual growth of 2.5%.

Current consensus DPS estimate is 14.2, implying a prospective dividend yield of 2.8%.

Current consensus EPS estimate suggests the PER is 17.1.

Market Sentiment: -0.3

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

FMG  FORTESCUE METALS GROUP LTD

Iron Ore

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Overnight Price: $20.61

Macquarie rates FMG as Outperform (1) -

Buoyant iron ore prices continue to drive strong earnings momentum for iron ore miners and impressive free cash flow yields.

Macquarie reiterates an Outperform rating and raises the target to $23 from $20. The improved outlook for the iron ore price drives an 18% earnings upgrade for Fortescue Metals in FY21 and FY22.

Target price is $23.00 Current Price is $20.61 Difference: $2.39
If FMG meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $18.19, suggesting downside of -15.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 261.00 cents and EPS of 329.30 cents.
At the last closing share price the estimated dividend yield is 12.66%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.26.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 268.8, implying annual growth of N/A.

Current consensus DPS estimate is 270.0, implying a prospective dividend yield of 12.6%.

Current consensus EPS estimate suggests the PER is 8.0.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 171.00 cents and EPS of 213.40 cents.
At the last closing share price the estimated dividend yield is 8.30%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.66.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 166.4, implying annual growth of -38.1%.

Current consensus DPS estimate is 189.9, implying a prospective dividend yield of 8.9%.

Current consensus EPS estimate suggests the PER is 12.9.

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

FSF  FONTERRA SHAREHOLDERS' FUND

Dairy

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Overnight Price: $4.11

UBS rates FSF as Neutral (3) -

Fonterra Shareholders reported a strong start to the first quarter with broadly stable gross profit.

UBS suspects current commodity pricing means gross margins will come under material pressure in the second half because of lower returns, particularly in cheese and casein.

At this stage the broker maintains current estimates, expecting normalised earnings (EBIT) to be down -9%. Neutral maintained. Target is NZ$4.05.

Current Price is $4.11. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in July.

Forecast for FY21:

UBS forecasts a full year FY21 dividend of 13.11 cents and EPS of 26.32 cents.
At the last closing share price the estimated dividend yield is 3.19%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.61.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.0, implying annual growth of N/A.

Current consensus DPS estimate is 14.2, implying a prospective dividend yield of 3.4%.

Current consensus EPS estimate suggests the PER is 14.2.

Forecast for FY22:

UBS forecasts a full year FY22 dividend of 15.76 cents and EPS of 28.68 cents.
At the last closing share price the estimated dividend yield is 3.83%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.33.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 32.7, implying annual growth of 12.8%.

Current consensus DPS estimate is 16.7, implying a prospective dividend yield of 4.1%.

Current consensus EPS estimate suggests the PER is 12.6.

This company reports in NZD. 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

JMS  JUPITER MINES LIMITED

Industrial Metals

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Overnight Price: $0.28

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

Macquarie reduces manganese price forecasts which drives material reductions to earnings estimates for Jupiter Mines in FY21-24.

Rating is downgraded to Neutral from Outperform. Target is reduced to $0.30 from $0.35.

Target price is $0.30 Current Price is $0.28 Difference: $0.02
If JMS meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

The company's fiscal year ends in February.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 1.00 cents and EPS of 1.53 cents.
At the last closing share price the estimated dividend yield is 3.57%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.30.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 1.40 cents and EPS of 1.58 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 17.72.

Market Sentiment: 0.0

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

NCM  NEWCREST MINING LIMITED

Gold & Silver

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Overnight Price: $27.22

Macquarie rates NCM as Upgrade to Neutral from Underperform (3) -

Macquarie upgrades to Neutral from Underperform on valuation. The broker's gold price forecasts are -21% and -22% lower, in Australian dollar terms, versus spot prices over 2021 and 2022, respectively.

The company's copper exposure has a beneficial impact, providing amplified earnings upside, the broker adds. Target is steady at $29.

Target price is $29.00 Current Price is $27.22 Difference: $1.78
If NCM meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $33.87, suggesting upside of 24.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 29.89 cents and EPS of 149.90 cents.
At the last closing share price the estimated dividend yield is 1.10%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.16.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 192.4, implying annual growth of N/A.

Current consensus DPS estimate is 32.2, implying a prospective dividend yield of 1.2%.

Current consensus EPS estimate suggests the PER is 14.2.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 21.87 cents and EPS of 78.01 cents.
At the last closing share price the estimated dividend yield is 0.80%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 34.89.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 182.6, implying annual growth of -5.1%.

Current consensus DPS estimate is 31.0, implying a prospective dividend yield of 1.1%.

Current consensus EPS estimate suggests the PER is 14.9.

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

Market Sentiment: 0.6

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

OML  OOH!MEDIA LIMITED

Out of Home Advertising

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Overnight Price: $1.81

Credit Suisse rates OML as Outperform (1) -

With audience and media spend recovering rapidly, Credit Suisse assumes the company will return to pre-corona revenue in 2022.

oOh!Media shares' current trading momentum indicates positive timing risk around the return to normal conditions, suggests the broker.

Outperform rating retained. Target rises to $2.30 from $1.25.

Target price is $2.30 Current Price is $1.81 Difference: $0.49
If OML meets the Credit Suisse target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $1.60, suggesting downside of -11.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Credit Suisse forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 1.04 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 174.04.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -2.4, implying annual growth of N/A.

Current consensus DPS estimate is 3.7, implying a prospective dividend yield of 2.1%.

Current consensus EPS estimate suggests the PER is N/A.

Forecast for FY21:

Credit Suisse forecasts a full year FY21 dividend of 0.00 cents and EPS of 5.99 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 30.22.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 5.7, 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 31.6.

Market Sentiment: 0.7

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

PAN  PANORAMIC RESOURCES LIMITED

Nickel

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Overnight Price: $0.14

Macquarie rates PAN as Upgrade to Neutral from Underperform (3) -

Panoramic Resources has leverage to an improving nickel price environment, Macquarie assesses.

The broker lifts the rating to Neutral from Underperform following progress on development. Target edges up to $0.13 from $0.10.

Target price is $0.13 Current Price is $0.14 Difference: minus $0.01 (current price is over target).
If PAN meets the Macquarie target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 0.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 28.00.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 2.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 6.67.

Market Sentiment: 0.0

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

QAN  QANTAS AIRWAYS LIMITED

Transportation & Logistics

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Overnight Price: $5.27

Credit Suisse rates QAN as Underperform (5) -

Credit Suisse suspects the domestic market will not be so structurally sound for Qantas Airways with Virgin expected to gain a higher share of the profit under Bain's ownership and a third entrant - the regional airline Regional Express Holdings ((REX)) - planning to enter the domestic market in March 2021.

Credit Suisse expects Qantas's business costs to reduce by $1bn (6%) from FY23 onwards, likely to be passed on in lower ticket prices ultimately.

Underperform rating and $3 target retained.

Target price is $3.00 Current Price is $5.27 Difference: minus $2.27 (current price is over target).
If QAN meets the Credit Suisse target it will return approximately minus 43% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.21, suggesting downside of -5.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Credit Suisse forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 50.64 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 10.41.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -51.1, 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 N/A.

Forecast for FY22:

Credit Suisse forecasts a full year FY22 dividend of 0.00 cents and EPS of 21.73 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.25.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 27.4, implying annual growth of N/A.

Current consensus DPS estimate is 5.3, implying a prospective dividend yield of 1.0%.

Current consensus EPS estimate suggests the PER is 20.0.

Market Sentiment: 0.3

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


UBS rates QAN as Buy (1) -

Domestic capacity will increase to almost 70% of pre-pandemic levels by the end of the year. UBS suspects Qantas is taking share and the recent news around a vaccine now outweighs the risk of further domestic border closures.

Qantas has indicated it has liquidity of $3.6bn in net debt of $5.9bn. As a vaccine is expected within the next 12 months the broker considers the balance sheet risk is materially reduced.

Buy rating maintained. Target rises to $6.20 from $5.25.

Target price is $6.20 Current Price is $5.27 Difference: $0.93
If QAN meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $5.21, suggesting downside of -5.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

UBS forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 51.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 10.33.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -51.1, 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 N/A.

Forecast for FY22:

UBS forecasts a full year FY22 dividend of 21.00 cents and EPS of 33.00 cents.
At the last closing share price the estimated dividend yield is 3.98%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.97.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 27.4, implying annual growth of N/A.

Current consensus DPS estimate is 5.3, implying a prospective dividend yield of 1.0%.

Current consensus EPS estimate suggests the PER is 20.0.

Market Sentiment: 0.3

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: $113.20

Macquarie rates RIO as Outperform (1) -

Buoyant iron ore prices continue to drive strong earnings momentum for iron ore miners and impressive free cash flow yields.

Macquarie reiterates an Outperform rating and raises the target to $118 from $110. Earnings estimates rise 5% for 2020 and 22% for 2021.

Target price is $118.00 Current Price is $113.20 Difference: $4.8
If RIO meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $108.07, suggesting downside of -7.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 710.12 cents and EPS of 1119.71 cents.
At the last closing share price the estimated dividend yield is 6.27%.
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 933.2, implying annual growth of N/A.

Current consensus DPS estimate is 594.1, implying a prospective dividend yield of 5.1%.

Current consensus EPS estimate suggests the PER is 12.5.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 892.39 cents and EPS of 1274.13 cents.
At the last closing share price the estimated dividend yield is 7.88%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.88.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 1013.0, implying annual growth of 8.6%.

Current consensus DPS estimate is 702.9, implying a prospective dividend yield of 6.0%.

Current consensus EPS estimate suggests the PER is 11.5.

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: $2.61

Macquarie rates S32 as Underperform (5) -

Macquarie reiterates an Underperform rating as cuts to silver and manganese price forecasts drive -47% and -22% reductions to FY21 and FY22 estimates, respectively.

An upgrade to the aluminium outlook lifts FY24-26 estimates by 15-22%. South32's target is raised to $2.00 from $1.90.

Target price is $2.00 Current Price is $2.61 Difference: minus $0.61 (current price is over target).
If S32 meets the Macquarie target it will return approximately minus 23% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.69, suggesting upside of 3.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 3.06 cents and EPS of 7.44 cents.
At the last closing share price the estimated dividend yield is 1.17%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 35.09.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 11.1, implying annual growth of N/A.

Current consensus DPS estimate is 5.3, implying a prospective dividend yield of 2.0%.

Current consensus EPS estimate suggests the PER is 23.3.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 4.96 cents and EPS of 12.54 cents.
At the last closing share price the estimated dividend yield is 1.90%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.81.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 15.6, implying annual growth of 40.5%.

Current consensus DPS estimate is 7.6, implying a prospective dividend yield of 2.9%.

Current consensus EPS estimate suggests the PER is 16.6.

This company reports in USD. 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

STO  SANTOS LIMITED

NatGas

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Overnight Price: $6.36

Morgan Stanley rates STO as Overweight (1) -

Santos' disclosure on Barossa estimates cash costs near US$2/mmbtu with a reduction in the capex to circa US$3.6bn. Full year production guidance was increased in Western Australia to circa 30mmboe.

The company outperformed peers in 2020 and Morgan Stanley thinks there is room for more upside if oil recovers. The broker is positive on the company's ability to execute on cost synergies and scale up production.

Santos is Morgan Stanley's most preferred pick in the large-cap stocks.

Overweight retained. Target rises to $7 from $6.30. Industry view: Cautious.

Target price is $7.00 Current Price is $6.36 Difference: $0.64
If STO meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $6.78, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Morgan Stanley forecasts a full year FY20 dividend of 3.94 cents and EPS of 21.87 cents.
At the last closing share price the estimated dividend yield is 0.62%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 29.08.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 21.1, implying annual growth of N/A.

Current consensus DPS estimate is 6.5, implying a prospective dividend yield of 1.0%.

Current consensus EPS estimate suggests the PER is 31.0.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 11.52 cents and EPS of 35.00 cents.
At the last closing share price the estimated dividend yield is 1.81%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.17.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 33.0, implying annual growth of 56.4%.

Current consensus DPS estimate is 8.7, implying a prospective dividend yield of 1.3%.

Current consensus EPS estimate suggests the PER is 19.8.

This company reports in USD. 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

WAF  WEST AFRICAN RESOURCES LIMITED

Gold & Silver

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Overnight Price: $0.96

Macquarie rates WAF as Upgrade to Outperform from Neutral (1) -

Macquarie makes modest reductions to 2021 and 2022 Australian dollar gold price forecasts. For the majority of gold stocks this means small reductions to earnings forecasts for FY21-23.

West African Resources is upgraded to Outperform from Neutral on valuation. Target is steady at $1.10.

Target price is $1.10 Current Price is $0.96 Difference: $0.14
If WAF meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 0.00 cents and EPS of 8.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.71.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 0.00 cents and EPS of 23.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 4.14.

Market Sentiment: 1.0

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

WPL  WOODSIDE PETROLEUM LIMITED

NatGas

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Overnight Price: $23.00

Citi rates WPL as Neutral (3) -

Citi has included Woodside Petroleum's purchase of an additional 13.67% stake in the Sangomar oil field in its model and has delayed the company's expected final investment decision (FID) payment for the Scarborough asset to the second half of FY21, in line with guidance.

As a result, earnings forecast has decreased by -1% in 2022.

Citi retains a Neutral rating with the target price rising slightly to $22.36 from $22.06.

Target price is $22.36 Current Price is $23.00 Difference: minus $0.64 (current price is over target).
If WPL meets the Citi target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $23.33, suggesting upside of 0.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Citi forecasts a full year FY20 dividend of 71.45 cents and EPS of 88.80 cents.
At the last closing share price the estimated dividend yield is 3.11%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.90.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 67.0, implying annual growth of N/A.

Current consensus DPS estimate is 51.4, implying a prospective dividend yield of 2.2%.

Current consensus EPS estimate suggests the PER is 34.6.

Forecast for FY21:

Citi forecasts a full year FY21 dividend of 107.90 cents and EPS of 135.03 cents.
At the last closing share price the estimated dividend yield is 4.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.03.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 99.3, implying annual growth of 48.2%.

Current consensus DPS estimate is 72.2, implying a prospective dividend yield of 3.1%.

Current consensus EPS estimate suggests the PER is 23.3.

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

Market Sentiment: 0.6

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


UPDATED

Ord Minnett rates WPL as Downgrade to Accumulate from Buy (2) -

Woodside Petroleum has exercised pre-emptive rights to acquire FAR Ltd's ((FAR)) stake in the Sangomar project in Senegal for US$165-170m.

The transaction is modestly accretive in US dollar terms, Ord Minnett suggests, although increasing the stake to 82% lifts the capital expenditure burden by around US$600m.

Woodside has indicated it will sell down to 40%, and the process of selling down should demonstrate the value of the project more so than the acquisition of the Cairn Energy and FAR stakes.

Ord Minnett downgrades to Accumulate from Buy to reflect the strong performance in the share price. Target is reduced to $23.80 from $24.00.

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

Target price is $23.80 Current Price is $23.00 Difference: $0.8
If WPL meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $23.33, suggesting upside of 0.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 48.12 cents and EPS of 64.16 cents.
At the last closing share price the estimated dividend yield is 2.09%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 35.85.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 67.0, implying annual growth of N/A.

Current consensus DPS estimate is 51.4, implying a prospective dividend yield of 2.2%.

Current consensus EPS estimate suggests the PER is 34.6.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 65.62 cents and EPS of 84.57 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 27.20.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 99.3, implying annual growth of 48.2%.

Current consensus DPS estimate is 72.2, implying a prospective dividend yield of 3.1%.

Current consensus EPS estimate suggests the PER is 23.3.

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

Market Sentiment: 0.6

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

WSA  WESTERN AREAS NL

Nickel

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Overnight Price: $2.42

Macquarie rates WSA as Upgrade to Outperform from Neutral (1) -

An improved earnings outlook for base metals and, in particular, better leverage to an improving nickel price has resulted in Macquarie upgrading Western Areas to Outperform from Neutral.

Spot copper and nickel prices are trading 7-17% above upgraded FY21 and FY22 forecasts and as a result the broker calculates earnings upside of 60% to more than 100% under a spot price scenario for FY22. Target rises to $2.60 from $2.00.

Target price is $2.60 Current Price is $2.42 Difference: $0.18
If WSA meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $2.52, suggesting downside of -1.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 1.00 cents and EPS of 6.80 cents.
At the last closing share price the estimated dividend yield is 0.41%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 35.59.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 4.5, implying annual growth of -61.4%.

Current consensus DPS estimate is 1.2, implying a prospective dividend yield of 0.5%.

Current consensus EPS estimate suggests the PER is 56.0.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 1.00 cents and EPS of 2.50 cents.
At the last closing share price the estimated dividend yield is 0.41%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 96.80.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.0, implying annual growth of 100.0%.

Current consensus DPS estimate is 1.5, implying a prospective dividend yield of 0.6%.

Current consensus EPS estimate suggests the PER is 28.0.

Market Sentiment: 0.8

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
AQZ Alliance Aviation $3.84 Ord Minnett 4.50 4.15 8.43%
AWC Alumina $1.92 Macquarie 1.50 1.40 7.14%
BHP BHP $42.39 Macquarie 46.00 44.00 4.55%
CIA Champion Iron $5.23 Macquarie 5.90 5.10 15.69%
CWY Cleanaway Waste Management $2.65 Morgan Stanley 2.50 2.78 -10.07%
DRR DETERRA ROYALTIES $5.25 Macquarie 5.50 5.00 10.00%
FMG Fortescue $21.39 Macquarie 23.00 20.00 15.00%
ILU Iluka Resources $5.75 Macquarie 5.60 5.50 1.82%
JMS JUPITER MINES $0.28 Macquarie 0.30 0.35 -14.29%
MCR Mincor Resources $1.07 Macquarie 1.20 1.05 14.29%
MGX Mount Gibson Iron $0.85 Macquarie 1.00 0.93 7.53%
MIN Mineral Resources $34.65 Macquarie 38.00 35.00 8.57%
OML oOh!media $1.80 Credit Suisse 2.30 1.25 84.00%
OZL Oz Minerals $19.39 Macquarie 19.70 17.40 13.22%
PAN Panoramic Resources $0.14 Macquarie 0.13 0.10 30.00%
QAN Qantas Airways $5.49 UBS 6.20 5.25 18.10%
RIO Rio Tinto $116.36 Macquarie 118.00 111.00 6.31%
S32 South32 $2.59 Macquarie 2.00 1.90 5.26%
SBM St Barbara $2.56 Macquarie 2.40 2.30 4.35%
SFR Sandfire $5.77 Macquarie 6.10 5.40 12.96%
STO Santos $6.55 Morgan Stanley 7.00 6.30 11.11%
WHC Whitehaven Coal $1.69 Macquarie 1.30 1.20 8.33%
WPL Woodside Petroleum $23.15 Citi 22.36 22.06 1.36%
Ord Minnett 23.80 24.00 -0.83%
WSA Western Areas $2.52 Macquarie 2.60 2.00 30.00%
Summaries
APT Afterpay Initiation of coverage with Outperform - Credit Suisse Overnight Price $94.50
AQZ Alliance Aviation Buy - Ord Minnett Overnight Price $3.90
ASX ASX Ltd Underperform - Credit Suisse Overnight Price $77.64
BHP BHP Outperform - Macquarie Overnight Price $41.50
CSL CSL Neutral - Macquarie Overnight Price $293.80
CWY Cleanaway Waste Management Equal-weight - Morgan Stanley Overnight Price $2.60
EVN Evolution Mining Upgrade to Neutral from Underperform - Macquarie Overnight Price $5.05
FMG Fortescue Outperform - Macquarie Overnight Price $20.61
FSF Fonterra Neutral - UBS Overnight Price $4.11
JMS JUPITER MINES Downgrade to Neutral from Outperform - Macquarie Overnight Price $0.28
NCM Newcrest Mining Upgrade to Neutral from Underperform - Macquarie Overnight Price $27.22
OML oOh!media Outperform - Credit Suisse Overnight Price $1.81
PAN Panoramic Resources Upgrade to Neutral from Underperform - Macquarie Overnight Price $0.14
QAN Qantas Airways Underperform - Credit Suisse Overnight Price $5.27
Buy - UBS Overnight Price $5.27
RIO Rio Tinto Outperform - Macquarie Overnight Price $113.20
S32 South32 Underperform - Macquarie Overnight Price $2.61
STO Santos Overweight - Morgan Stanley Overnight Price $6.36
WAF West African Resources Upgrade to Outperform from Neutral - Macquarie Overnight Price $0.96
WPL Woodside Petroleum Neutral - Citi Overnight Price $23.00
Downgrade to Accumulate from Buy - Ord Minnett Overnight Price $23.00
WSA Western Areas Upgrade to Outperform from Neutral - Macquarie Overnight Price $2.42
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

10

2. Accumulate

1

3. Hold

8

5. Sell

3

Monday 07 December 2020

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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.