Australian Broker Call
July 05, 2017
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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: 11:33 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
Credit Suisse rates AHG as Outperform (1) -
Credit Suisse suggests it will not be easy to roll-out the easyauto123 used car model (pun intended). The format is relatively new and the forecast risk is inherently high, as the broker believes the company needs to prove the results achieved so far can be replicated elsewhere.
At this stage, Credit Suisse does not include the model in its earnings estimates or valuation. Outperform rating. Target is $3.60.
Target price is $3.60 Current Price is $3.44 Difference: $0.16
If AHG meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $3.56, suggesting upside of 4.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Credit Suisse forecasts a full year FY17 dividend of 20.12 cents and EPS of 27.73 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 25.7, implying annual growth of -12.6%. Current consensus DPS estimate is 19.7, implying a prospective dividend yield of 5.8%. Current consensus EPS estimate suggests the PER is 13.3. |
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 20.15 cents and EPS of 29.74 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 29.1, implying annual growth of 13.2%. Current consensus DPS estimate is 21.4, implying a prospective dividend yield of 6.3%. Current consensus EPS estimate suggests the PER is 11.7. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Deutsche Bank rates ALL as Buy (1) -
Following changes to FX assumptions Deutsche Bank reviews earnings estimates for the gambling sector. The changes are positive for Aristocrat and the broker increases its valuation by 3%.
Buy rating maintained. Target rises to $27.40 from $26.85.
Target price is $27.40 Current Price is $22.36 Difference: $5.04
If ALL meets the Deutsche Bank target it will return approximately 23% (excluding dividends, fees and charges).
Current consensus price target is $24.43, suggesting upside of 10.2% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY17:
Deutsche Bank forecasts a full year FY17 dividend of 39.00 cents and EPS of 94.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 85.5, implying annual growth of 55.2%. Current consensus DPS estimate is 34.0, implying a prospective dividend yield of 1.5%. Current consensus EPS estimate suggests the PER is 25.9. |
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 45.70 cents and EPS of 110.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 100.3, implying annual growth of 17.3%. Current consensus DPS estimate is 46.3, implying a prospective dividend yield of 2.1%. Current consensus EPS estimate suggests the PER is 22.1. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgan Stanley rates CTX as Underweight (5) -
Morgan Stanley observes debate around fuel standards changes and how these might impact the Caltex business over the medium term. The broker also notes investors are cautious regarding the company's retail strategy and are not applying any value. Morgan Stanley believes a move into retail is sensible, particularly given the modest amount of capital required at this point.
Morgan Stanley concludes that margins are close to peaking, although there are some that think there may be temporary improvements in margins should regular unleaded be banned. Morgan Stanley notes this did not play out in the UK and, typically, slowing volumes are not good for prices in any industry.
Underweight rating and $27 target retained. In-Line industry view.
Target price is $27.00 Current Price is $32.12 Difference: minus $5.12 (current price is over target).
If CTX meets the Morgan Stanley target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $33.12, suggesting upside of 5.0% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Morgan Stanley forecasts a full year FY17 dividend of 117.00 cents and EPS of 234.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 227.0, implying annual growth of -2.0%. Current consensus DPS estimate is 117.3, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 13.9. |
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 101.00 cents and EPS of 201.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 222.8, implying annual growth of -1.9%. Current consensus DPS estimate is 113.7, implying a prospective dividend yield of 3.6%. Current consensus EPS estimate suggests the PER is 14.2. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Deutsche Bank rates DOW as Hold (3) -
Changes to FX assumptions have led Deutsche Bank to revise earnings forecasts for engineers and contractors. Forecasts for earnings per share have mostly increased because of the depreciation of the Australian dollar against other currencies.
Hold retained. Target is reduced to $5.85 from $5.91.
Target price is $5.85 Current Price is $6.38 Difference: minus $0.53 (current price is over target).
If DOW meets the Deutsche Bank target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $6.12, suggesting downside of -3.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Deutsche Bank forecasts a full year FY17 dividend of 26.00 cents and EPS of 35.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 36.0, implying annual growth of -10.7%. Current consensus DPS estimate is 24.5, implying a prospective dividend yield of 3.9%. Current consensus EPS estimate suggests the PER is 17.6. |
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 32.00 cents and EPS of 46.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 40.1, implying annual growth of 11.4%. Current consensus DPS estimate is 24.0, implying a prospective dividend yield of 3.8%. Current consensus EPS estimate suggests the PER is 15.8. |
Market Sentiment: -0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates IAG as Outperform (1) -
Credit Suisse adjusts earnings forecast to allow for investment market movements and natural perils claims expectations in the June quarter.
Overall, FY17 net profit is decreased by -1.1%, driven primarily by weaker investment markets. Outperform retained. Target is $7.25.
Target price is $7.25 Current Price is $6.83 Difference: $0.42
If IAG meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).
Current consensus price target is $6.57, suggesting downside of -3.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Credit Suisse forecasts a full year FY17 dividend of 30.00 cents and EPS of 39.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 39.5, implying annual growth of 53.2%. Current consensus DPS estimate is 30.2, implying a prospective dividend yield of 4.4%. Current consensus EPS estimate suggests the PER is 17.2. |
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 31.00 cents and EPS of 41.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 38.2, implying annual growth of -3.3%. Current consensus DPS estimate is 29.1, implying a prospective dividend yield of 4.3%. Current consensus EPS estimate suggests the PER is 17.8. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Deutsche Bank rates IPL as Buy (1) -
Deutsche Bank observes the outlook for the company is positive given the ramp up of the Louisiana plant, quarry & construction demand in the US and gains in the US coal market. This is tempered by recent declines in global fertiliser prices.
The broker observes the urea price appears to have stabilised although the ammonia market has excess supply and the risk is that this will flow to lower diammonium phosphate prices.
Deutsche Bank retains a Buy rating and reduces the target to $4.15 from $4.35.
Target price is $4.15 Current Price is $3.43 Difference: $0.72
If IPL meets the Deutsche Bank target it will return approximately 21% (excluding dividends, fees and charges).
Current consensus price target is $3.75, suggesting upside of 10.3% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY17:
Deutsche Bank forecasts a full year FY17 dividend of 12.00 cents and EPS of 21.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 19.5, implying annual growth of 156.6%. Current consensus DPS estimate is 10.6, implying a prospective dividend yield of 3.1%. Current consensus EPS estimate suggests the PER is 17.4. |
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 14.00 cents and EPS of 25.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 23.9, implying annual growth of 22.6%. Current consensus DPS estimate is 12.7, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 14.2. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Citi rates LNK as Buy (1) -
Citi has updated its modeling for the bonus rights dilution as part of the Capita Asset Services (CAS) "transformational" acquisition. Target price $9.20. Rating Buy.
Target price is $9.20 Current Price is $7.71 Difference: $1.49
If LNK meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).
Current consensus price target is $8.79, suggesting upside of 14.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Citi forecasts a full year FY17 dividend of 16.20 cents and EPS of 34.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 33.8, implying annual growth of 168.5%. Current consensus DPS estimate is 16.3, implying a prospective dividend yield of 2.1%. Current consensus EPS estimate suggests the PER is 22.8. |
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 20.00 cents and EPS of 38.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 36.4, implying annual growth of 7.7%. Current consensus DPS estimate is 18.8, implying a prospective dividend yield of 2.4%. Current consensus EPS estimate suggests the PER is 21.2. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
MEB MEDIBIO LIMITED
Medical Equipment & Devices
Overnight Price: $0.36
Morgans rates MEB as Initiation of coverage with Add (1) -
Stockbroker Morgans initiates coverage of this "digital healthcare company" with an Add recommendation and DCF-based price target of $1.20 with the explicit added comment that an investment in Medibio is only appropriate for investors with a higher risk profile.
Medibio specialises in evidenced based screening and diagnosis of mental health illnesses, explains the broker, including Major Depressive Disorder (MDD) which affects approximately 10% of the population.
The company's objective mental health testing system is backed by over 15 years of research. The company is expected to start generating revenues from FY18 onwards. On Morgans' projections, significant revenues should start flowing in from FY20.
Target price is $1.20 Current Price is $0.36 Difference: $0.84
If MEB meets the Morgans target it will return approximately 233% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY17:
Morgans forecasts a full year FY17 dividend of 0.00 cents and EPS of minus 4.40 cents. |
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 0.00 cents and EPS of minus 4.90 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates MLX as Outperform (1) -
The updated definitive feasibility study on Rentails has confirmed the economics of the project are robust. Macquarie already incorporates the development in its estimates.
Macquarie makes modest changes to earnings forecasts, reducing FY17 earnings estimates by -6% after making final mark-to-market adjustments for the fourth quarter.
The Nifty mine is expected to grow copper output to over 40,000tpa. The broker calculates, with full production at Nifty and Renison likely in FY20, the business will trade at free cash flow yield of over 25%. Outperform rating and $1 target retained.
Target price is $1.00 Current Price is $0.71 Difference: $0.29
If MLX meets the Macquarie target it will return approximately 41% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 0.00 cents and EPS of 0.90 cents. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 1.00 cents and EPS of 5.20 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Deutsche Bank rates NUF as Sell (5) -
Deutsche Bank makes changes to earnings estimates for the chemical sector following changes to its FX assumptions. The changes are mostly positive.
The broker retains a Sell rating and raises the target to $6.75 from $6.60.
Target price is $6.75 Current Price is $9.33 Difference: minus $2.58 (current price is over target).
If NUF meets the Deutsche Bank target it will return approximately minus 28% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $9.69, suggesting upside of 5.1% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY17:
Deutsche Bank forecasts a full year FY17 dividend of 13.00 cents and EPS of 43.30 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 48.4, implying annual growth of 693.4%. Current consensus DPS estimate is 13.6, implying a prospective dividend yield of 1.5%. Current consensus EPS estimate suggests the PER is 19.0. |
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 14.80 cents and EPS of 49.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 59.1, implying annual growth of 22.1%. Current consensus DPS estimate is 15.9, implying a prospective dividend yield of 1.7%. Current consensus EPS estimate suggests the PER is 15.6. |
Market Sentiment: 0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Citi rates RRL as Buy (1) -
As the company has secured two process-water supply agreements for its McPhillamys gold project in NSW, Citi analysts point out water supply has been one of the major challenges to development, so this is one positive news announcement.
The company has reported two supply options. Target price remains at $3.75 with a Buy rating.
Target price is $3.75 Current Price is $3.68 Difference: $0.07
If RRL meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).
Current consensus price target is $3.33, suggesting downside of -10.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Citi forecasts a full year FY17 dividend of 16.80 cents and EPS of 28.30 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 25.1, implying annual growth of 12.2%. Current consensus DPS estimate is 14.0, implying a prospective dividend yield of 3.8%. Current consensus EPS estimate suggests the PER is 14.8. |
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 21.10 cents and EPS of 34.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 31.0, implying annual growth of 23.5%. Current consensus DPS estimate is 17.1, implying a prospective dividend yield of 4.6%. Current consensus EPS estimate suggests the PER is 12.0. |
Market Sentiment: -0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates RRL as Underperform (5) -
The company has obtained two viable water supply options to support development of a 7mtpa operation at McPhilamys.
The first option comes from Mount Piper power station and the Springvale mine and the second from long-term lease and acquisition of unused water access licenses over groundwater allocations.
This provides the impetus for Credit Suisse to increase the value contribution from the project. Underperform retained on valuation. Target rises to $3.35 from $3.05.
Target price is $3.35 Current Price is $3.68 Difference: minus $0.33 (current price is over target).
If RRL 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 $3.33, suggesting downside of -10.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Credit Suisse forecasts a full year FY17 dividend of 14.97 cents and EPS of 24.37 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 25.1, implying annual growth of 12.2%. Current consensus DPS estimate is 14.0, implying a prospective dividend yield of 3.8%. Current consensus EPS estimate suggests the PER is 14.8. |
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 21.72 cents and EPS of 36.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 31.0, implying annual growth of 23.5%. Current consensus DPS estimate is 17.1, implying a prospective dividend yield of 4.6%. Current consensus EPS estimate suggests the PER is 12.0. |
Market Sentiment: -0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates RRL as Neutral (3) -
The company has signed an agreement with Centennial Coal ((CEY)) and Energy Australia for securing water to the McPhillamys gold project in NSW. Macquarie expects the project to deliver 180,000 ozs per annum. First gold is expected in late 2019 or early 2020.
Enough wastewater has been sourced from the Springvale mine and the Mount Piper power station to supply a 7mtpa plant. The company will be accountable for all capital expenditure and operating expenses of the required pumps and pipelines.
Neutral rating and $3.20 target.
Target price is $3.20 Current Price is $3.68 Difference: minus $0.48 (current price is over target).
If RRL meets the Macquarie target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $3.33, suggesting downside of -10.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 15.00 cents and EPS of 26.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 25.1, implying annual growth of 12.2%. Current consensus DPS estimate is 14.0, implying a prospective dividend yield of 3.8%. Current consensus EPS estimate suggests the PER is 14.8. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 22.00 cents and EPS of 37.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 31.0, implying annual growth of 23.5%. Current consensus DPS estimate is 17.1, implying a prospective dividend yield of 4.6%. Current consensus EPS estimate suggests the PER is 12.0. |
Market Sentiment: -0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Summaries
| AHG - | AUTOMOTIVE HOLDINGS | Outperform - Credit Suisse | Overnight Price $3.44 |
| ALL - | ARISTOCRAT LEISURE | Buy - Deutsche Bank | Overnight Price $22.36 |
| CTX - | CALTEX AUSTRALIA | Underweight - Morgan Stanley | Overnight Price $32.12 |
| DOW - | DOWNER EDI | Hold - Deutsche Bank | Overnight Price $6.38 |
| IAG - | INSURANCE AUSTRALIA | Outperform - Credit Suisse | Overnight Price $6.83 |
| IPL - | INCITEC PIVOT | Buy - Deutsche Bank | Overnight Price $3.43 |
| LNK - | LINK ADMINISTRATION | Buy - Citi | Overnight Price $7.71 |
| MEB - | MEDIBIO | Initiation of coverage with Add - Morgans | Overnight Price $0.36 |
| MLX - | METALS X | Outperform - Macquarie | Overnight Price $0.71 |
| NUF - | NUFARM | Sell - Deutsche Bank | Overnight Price $9.33 |
| RRL - | REGIS RESOURCES | Buy - Citi | Overnight Price $3.68 |
| Underperform - Credit Suisse | Overnight Price $3.68 | ||
| Neutral - Macquarie | Overnight Price $3.68 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 8 |
| 3. Hold | 2 |
| 5. Sell | 3 |
Wednesday 05 July 2017
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