Australian Broker Call

Macquarie rates ADI as Resume coverage with Neutral (3) -

APN Industria REIT raised $35m to partially fund circa $92m worth of acquisitions. Post-acquisition, the REIT will have a portfolio exposure of 56% to industrial. Macquarie finds the industrial exposure attractive, given the resilience shown during covid.

On the flip side, the broker notes there exist risks to the REIT's income as leases expire. The acquisitions have a blended weighted average lease expiry (WALE) of 3.1 years which is short relative to peers’ industrial WALEs.

Macquarie resumes coverage with a Neutral rating and a target price of $2.92.

Target price is $2.92 Current Price is $3.01 Difference: minus $0.09 (current price is over target).
If ADI meets the Macquarie target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Morgans rates BLX as Hold (3) -

Beacon Lighting Group provided first half profit (NPAT) guidance of around 110% growth year-on-year. This was due to persistently strong trading conditions/sales over the second quarter, notes Morgans.

The broker expects strong gross margin expansion in the the first half and opex leverage.

The company mentioned that international sales momentum was also strong.

The analyst predicts the group will execute further transactions in the new JV (to fund the acquisition of currently leased properties), and potentially fund other growth opportunities.

Morgans upgrades EPS forecasts by 20% in FY21 and circa 10% in FY22/23.

The Hold rating is maintained and the target is increased to $1.66 from $1.50.

Target price is $1.66 Current Price is $1.60 Difference: $0.06
If BLX meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Citi rates BSL as Neutral (3) -

Citi increases estimates for steel and scrap prices, raising BlueScope Steel's FY21 and FY22 net profit estimates by 20% and 9%, respectively.

The broker expects US flat rolled steel prices to peak around US$900/t during the first quarter of 2021 amid continued supply deficits.

Neutral rating retained. Target rises to $19.00 from $18.50.

Target price is $19.00 Current Price is $17.25 Difference: $1.75
If BSL meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $18.79, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

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

Citi initiates coverage of Electro Optic Systems with a Buy/High Risk rating and a $7.80 target.

The broker considers the company's intellectual property in lasers and communication systems means it can benefit from increased defence expenditure.

A compound growth rate of 41% over three years is expected because of the exposure to high-growth sectors such as counter drone and space communications.

Target price is $7.80 Current Price is $6.31 Difference: $1.49
If EOS meets the Citi target it will return approximately 24% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Market Sentiment: 1.0

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

Macquarie rates NCM as Underperform (5) -

Newcrest Mining has released an initial inferred resource estimate for the Havieron Project of 3.4m/oz gold and 160kt copper.

The company's 60% ownership will go to 70%, with total project expenditure of US$65m through a JV agreement.

Macquaries believes the first resource estimate at Havieron is an important step towards the project’s potential development.

Underperform rating is retained with a target of $29.

Target price is $29.00 Current Price is $26.93 Difference: $2.07
If NCM meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $32.67, suggesting upside of 20.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

This company reports in USD. 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

Morgans rates NCM as Hold (3) -

Newcrest Mining has released its maiden Inferred Mineral Resource for Havieron.

A global resource of 52mt at 2g/t gold and 0.31% copper (3.4moz of gold) contains a high grade 18Mt at 3.8g/t (2.2moz) within the Crescent Zone.

The gold and copper grades are considered impressive by Morgans and should easily support a bulk underground caving operation.

The higher grades in the Crescent Zone may support a more selective mining method compared to an (up-front) capital intensive caving operation, notes the broker.

Outside of Havieron, Morgans is watching progress at Red Chris where the company is working to grow resources and progress studies on potential bulk mining options.

The Hold rating is maintained and the target price is increased to $29.96 from $29.88.

Target price is $29.96 Current Price is $26.93 Difference: $3.03
If NCM meets the Morgans target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $32.67, suggesting upside of 20.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

This company reports in USD. 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

Citi rates NST as Upgrade to Buy from Neutral (1) -

Citi has downgraded its outlook for gold, anticipating "peak gold" in 2021 before the price unwinds in 2022 based on vaccine developments and a return to global growth.

Gold prices are expected to make a push above US$1975/oz in the next 6-9 months. The broker observes the ASX gold index is down -20% over the past three months on expectations of lower gold prices.

This drives a ratings upgrade to Northern Star, to Buy from Neutral, and the target price is lowered to $13.90 from $15.90.

Target price is $13.90 Current Price is $12.19 Difference: $1.71
If NST meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $13.35, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.2

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

Citi rates PRU as Upgrade to Buy from Neutral (1) -

Citi has downgraded its outlook for gold, anticipating "peak gold" in 2021 before the price unwinds in 2022 based on vaccine developments and a return to global growth.

Gold prices are expected to make a push above US$1975/oz in the next 6-9 months. The broker observes the ASX gold index is down -20% over the past three months on expectations of lower gold prices.

Citi revises forecasts for Perseus Mining down post 2021 and reduces the target to $1.55 from $1.60. Based on valuation, the rating is upgraded to Buy/High Risk from Neutral/High Risk.

Target price is $1.55 Current Price is $1.22 Difference: $0.33
If PRU meets the Citi target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $1.42, suggesting upside of 9.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

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

Rio Tinto has a final estimate of the Oyu Tolgoi underground mine development expenditure, reconfirming the development schedule.

First sustainable production is expected by October 2022 with total capital expenditure of US$6.75bn.

The next milestones on the project includes outstanding government approvals, funding and a power solution.

Equal-weight rating. Target is $113.50. Industry view: Attractive.

Target price is $113.50 Current Price is $114.37 Difference: minus $0.87 (current price is over target).
If RIO 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 $117.64, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

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

Citi rates RRL as Neutral (3) -

Citi has downgraded its outlook for gold, anticipating "peak gold" in 2021 before the price unwinds in 2022 based on vaccine developments and a return to global growth.

Gold prices are expected to make a push above US$1975/oz in the next 6-9 months. The broker observes the ASX gold index is down -20% over the past three months on expectations of lower gold prices.

Citi retains a Neutral rating for Regis Resources but adds a High Risk tag. Target is reduced to $4.40 from $5.40.

Target price is $4.40 Current Price is $3.76 Difference: $0.64
If RRL meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $4.73, suggesting upside of 26.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Macquarie rates RSG as Outperform (1) -

Resolute Mining Group will sell its Bibiani Gold Mine in Ghana to Chifeng Jilong Gold Mining for a consideration of US$105m. The transaction is expected to close by March 2021.

Macquarie considers the sale of Bibiani positive given the circa US$95m premium compared to the broker's previous valuation for the asset. The broker suspects the miner will use the proceeds to reduce its debt.

With the last of its non-core assets divested, Resolute Mining has to work on operational cash flows to continue its balance sheet deleveraging, suggests Macquarie.

Outperform retained for Resolute Mining. Target rises to $1.05 from $1.00.

Target price is $1.05 Current Price is $0.80 Difference: $0.25
If RSG meets the Macquarie target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $1.08, suggesting upside of 29.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Citi rates SAR as Upgrade to Buy from Neutral (1) -

Citi has downgraded its outlook for gold, anticipating "peak gold" in 2021 before the price unwinds in 2022 based on vaccine developments and a return to global growth.

Gold prices are expected to make a push above US$1975/oz in the next 6-9 months. The broker observes the ASX gold index is down -20% over the past three months on expectations of lower gold prices.

Citi upgrades Saracen Mineral Holdings to Buy from Neutral and reduces the target to $5.30 from $6.20 after a pullback in the stock.

Saracen remains the broker's preference heading into its potential merger deal with Northern Star ((NST)).

Target price is $5.30 Current Price is $4.59 Difference: $0.71
If SAR meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $5.46, suggesting upside of 16.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Macquarie rates SDF as Outperform (1) -

Macquarie observes AJ Gallagher's investor day supports Steadfast Group's investment thesis.

With Steadfast Group up circa 10% since early November and noting the group is trading at a discount to its historical relative multiples, Macquarie retains its Outperform rating with the target price rising to $4.30 from $4.

Target price is $4.30 Current Price is $3.90 Difference: $0.4
If SDF meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $4.23, suggesting upside of 5.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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

Citi rates SGM as Neutral (3) -

On higher assumed steel and scrap prices Citi raises net profit estimates for Sims by 19% and 2% for FY21 and FY22, respectively.

The broker increases the target to $12.50 from $11.00 and retains a Neutral rating.

Target price is $12.50 Current Price is $12.58 Difference: minus $0.08 (current price is over target).
If SGM meets the Citi target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.99, suggesting downside of -6.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Morgans rates VRT as Upgrade to Add from Hold (1) -

Morgans upgrades the rating to Add from Hold as industry participants have noted a swift recovery for the first quarter FY21. Positive momentum is considered to be building within the company and industry.

The broker finds Medicare data supports this conclusion and growth is now expected to continue, before a more normal activity period in the second half.

Following modelling adjustments to reflect more normal conditions in FY22, Morgans increases the valuation and price to $5.82 from $5.31. There are no changes to underlying forecasts.

Target price is $5.82 Current Price is $5.72 Difference: $0.1
If VRT meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $5.47, suggesting downside of -6.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Citi rates WHC as Buy (1) -

Whitehaven Coal has provided the first reserve estimate for Winchester South. The measured and indicated resource is 665mt with reserves of 350mt.

The project continues to progress through the approval process with a draft environmental impact statement submitted. Winchester South is capable of producing semi-hard coking coal, PCI and export thermal coal. Buy rating and $2 target.

Target price is $2.00 Current Price is $1.64 Difference: $0.36
If WHC meets the Citi target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $1.76, suggesting upside of 13.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Morgan Stanley rates WHC as Overweight (1) -

Morgan Stanley considers the reserve definition at Winchester South will add confidence regarding the deposit. The broker awaits further details including economics on the project and finds the quality of the coal disappointing.

Resources have expanded to 1100mt and a maiden reserve of 350mt is declared.

Overweight rating, $1.90 target maintained. Industry view: Attractive.

Target price is $1.90 Current Price is $1.64 Difference: $0.26
If WHC meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $1.76, suggesting upside of 13.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

UBS rates Z1P as Upgrade to Neutral from Sell (3) -

Zip Co has announced a capital raising of up to $150m. Proceeds will be used for the US and UK expansion. UBS believes the company is now well situated for growth strategies in new markets and new products.

Although this is a relatively early-stage investment that is still making a loss, amid significant capital requirements, the broker is confident in management's strategy. Rating is upgraded to Neutral from Sell, given the recent underperformance of the share price. Target is $5.70.

Target price is $5.70 Current Price is $5.57 Difference: $0.13
If Z1P meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $6.67, suggesting upside of 18.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.1

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