Australian Broker Call
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March 15, 2018
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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)
THIS REPORT WILL BE UPDATED SHORTLY
Last Updated: 10:11 AM
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
| WES - | WESFARMERS | Upgrade to Outperform from Neutral | Credit Suisse |
Overnight Price: $28.34
Morgan Stanley rates ANZ as Equal-weight (3) -
Morgan Stanley notes the bank has completed more than 50% of its $1.5bn buyback. A further $4bn in buybacks could be undertaken over the next two years. The broker believes a special dividend is unlikely but growth in the ordinary dividend should resume in FY19.
Rating is Equal-weight. Target is $29.30. Sector view is In-Line.
Target price is $29.30 Current Price is $28.34 Difference: $0.96
If ANZ meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).
Current consensus price target is $30.13, suggesting upside of 6.3% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 160.00 cents and EPS of 233.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 235.0, implying annual growth of 6.8%. Current consensus DPS estimate is 160.5, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 12.1. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 166.00 cents and EPS of 243.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 239.8, implying annual growth of 2.0%. Current consensus DPS estimate is 162.4, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 11.8. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $1.92
Macquarie rates GTN as Outperform (1) -
The company has announced the exit of the US market and Macquarie, while disappointed with the outcome, acknowledges the divestment is prudent as the ownership of that entity is transferred to the current USTN president.
The broker believes value exists in the stock and as the register settles there should be greater confidence in the outlook. Outperform rating maintained. Target is reduced to $2.40 from $3.20.
Target price is $2.40 Current Price is $1.92 Difference: $0.48
If GTN meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 4.80 cents and EPS of 1.50 cents. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 13.30 cents and EPS of 16.00 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $10.00
Credit Suisse rates QBE as Neutral (3) -
QBE remains committed to the Asia Pacific part of its emerging markets business, having announced the sale of its Latin American operations. Credit Suisse reviews key Asian exposures and concludes that remediating this business may take some years.
Selling Latin American assets removes a loss from the group and the broker notes many investors are also taking this approach to Asia Pacific. While the division represents only 5% of gross written premium it can have an impact on profit, as demonstrated in 2017.
Credit Suisse believes the recovery is not easy and relies on a lot of external factors working in QBE's favour. As the share price continues to underperform the broker considers the stock closer to fair value and maintains a Neutral rating. Target is $10.20.
Target price is $10.20 Current Price is $10.00 Difference: $0.2
If QBE meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).
Current consensus price target is $10.91, suggesting upside of 9.1% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 51.79 cents and EPS of 64.73 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 69.1, implying annual growth of N/A. Current consensus DPS estimate is 51.6, implying a prospective dividend yield of 5.2%. Current consensus EPS estimate suggests the PER is 14.5. |
Forecast for FY19:
Credit Suisse forecasts a full year FY19 dividend of 62.06 cents and EPS of 76.29 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 83.6, implying annual growth of 21.0%. Current consensus DPS estimate is 67.2, implying a prospective dividend yield of 6.7%. Current consensus EPS estimate suggests the PER is 12.0. |
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
SIQ SMARTGROUP CORPORATION LTD
Vehicle Leasing & Salary Packaging
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Overnight Price: $11.00
Morgans rates SIQ as Add (1) -
Having completed a $75m placement the company's gearing position has eased. Morgans suggests the company now has the balance sheet capacity to make an acquisition circa $20-30m in operating earnings.
In addition to acquisitions the company is delivering organic growth via scale benefits. The broker maintains an Add rating and reduces the target to $11.60 from $11.70.
Target price is $11.60 Current Price is $11.00 Difference: $0.6
If SIQ meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $11.73, suggesting upside of 6.6% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 40.00 cents and EPS of 62.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 60.7, implying annual growth of 75.9%. Current consensus DPS estimate is 41.4, implying a prospective dividend yield of 3.8%. Current consensus EPS estimate suggests the PER is 18.1. |
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 43.00 cents and EPS of 67.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 66.3, implying annual growth of 9.2%. Current consensus DPS estimate is 45.1, implying a prospective dividend yield of 4.1%. Current consensus EPS estimate suggests the PER is 16.6. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $6.04
Macquarie rates TPM as Neutral (3) -
Ahead of the company's first half result on March 20, Macquarie suspects investors are unlikely to price in material upside from the mobile strategies, given the early stages of the roll out and associated challenges.
The broker notes fixed line competition remains tough although NBN delays are a positive for TPG, given associated margin compression. Neutral rating and $6.50 target maintained.
Target price is $6.50 Current Price is $6.04 Difference: $0.46
If TPM meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).
Current consensus price target is $5.74, suggesting downside of -5.0% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 4.00 cents and EPS of 42.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 40.2, implying annual growth of -16.1%. Current consensus DPS estimate is 4.3, implying a prospective dividend yield of 0.7%. Current consensus EPS estimate suggests the PER is 15.0. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 4.00 cents and EPS of 33.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 27.5, implying annual growth of -31.6%. Current consensus DPS estimate is 3.8, implying a prospective dividend yield of 0.6%. Current consensus EPS estimate suggests the PER is 22.0. |
Market Sentiment: -0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $40.88
Credit Suisse rates WES as Upgrade to Outperform from Neutral (1) -
Credit Suisse makes a relative value call based on upgrade to valuation of Bunnings Australasia and on the probability that the underperformance of Bunnings UK and Ireland will be dealt with in the next six months.
On this basis the broker upgrades to Outperform from Neutral and raises the target to $44.98 from $40.65. The broker also believes the market has become too negative on Coles.
Target price is $44.98 Current Price is $40.88 Difference: $4.1
If WES meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).
Current consensus price target is $41.85, suggesting upside of 2.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 195.00 cents and EPS of 250.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 231.7, implying annual growth of -9.0%. Current consensus DPS estimate is 216.6, implying a prospective dividend yield of 5.3%. Current consensus EPS estimate suggests the PER is 17.6. |
Forecast for FY19:
Credit Suisse forecasts a full year FY19 dividend of 175.00 cents and EPS of 244.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 250.8, implying annual growth of 8.2%. Current consensus DPS estimate is 219.0, implying a prospective dividend yield of 5.4%. Current consensus EPS estimate suggests the PER is 16.3. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Summaries
| ANZ | ANZ BANKING GROUP | Equal-weight - Morgan Stanley | Overnight Price $28.34 |
| GTN | GTN LTD | Outperform - Macquarie | Overnight Price $1.92 |
| QBE | QBE INSURANCE | Neutral - Credit Suisse | Overnight Price $10.00 |
| SIQ | SMARTGROUP | Add - Morgans | Overnight Price $11.00 |
| TPM | TPG TELECOM | Neutral - Macquarie | Overnight Price $6.04 |
| WES | WESFARMERS | Upgrade to Outperform from Neutral - Credit Suisse | Overnight Price $40.88 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 3 |
| 3. Hold | 3 |
Thursday 15 March 2018
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