Australian Broker Call
March 03, 2017
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COMPANIES DISCUSSED IN THIS ISSUE
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Last Updated: 12:34 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
| BOQ - | BANK OF QUEENSLAND | Downgrade to Lighten from Hold | Ord Minnett |
| MPL - | MEDIBANK PRIVATE | Downgrade to Neutral from Outperform | Macquarie |
| NHF - | NIB HOLDINGS | Downgrade to Neutral from Outperform | Macquarie |
| S32 - | SOUTH32 | Upgrade to Buy from Neutral | UBS |
Ord Minnett rates BOQ as Downgrade to Lighten from Hold (4) -
Ord Minnett forecasts first half cash earnings of $171m, which incorporates a -5% downgrade. This reflects a lack of volume growth, margin weakness from deposit competition and re-basing of trading gains.
Importantly, the lack of growth in the first half means the bank can maintain the interim dividend at $0.38, despite it translating into an 85% pay-out ratio. Order Minnett downgrades to Lighten from Hold. Target is reduced to $11.00 from $11.25.
Target price is $11.00 Current Price is $11.94 Difference: minus $0.94 (current price is over target).
If BOQ meets the Ord Minnett target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $11.40, suggesting downside of -0.9% (ex-dividends)
The company's fiscal year ends in August.
Forecast for FY17:
Ord Minnett forecasts a full year FY17 EPS of 89.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 92.0, implying annual growth of -3.8%. Current consensus DPS estimate is 76.1, implying a prospective dividend yield of 6.6%. Current consensus EPS estimate suggests the PER is 12.5. |
Forecast for FY18:
Ord Minnett forecasts a full year FY18 EPS of 93.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 93.0, implying annual growth of 1.1%. Current consensus DPS estimate is 76.3, implying a prospective dividend yield of 6.6%. Current consensus EPS estimate suggests the PER is 12.4. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates CCL as Neutral (3) -
UBS concludes that the risk of materially missing medium term forecasts has fallen, and upgrades its forecast for Indonesia and the alcohol/coffee business.
While structural headwinds remain, these should be offset by cost reductions and the broker does not believe the valuation is overly demanding.
With this in mind the broker, while retaining a Neutral rating, raises the target to $10.00 from $7.90.
Target price is $10.00 Current Price is $10.34 Difference: minus $0.34 (current price is over target).
If CCL meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $10.21, suggesting downside of -1.0% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
UBS forecasts a full year FY17 dividend of 47.50 cents and EPS of 57.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 56.6, implying annual growth of N/A. Current consensus DPS estimate is 48.5, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 18.2. |
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 50.20 cents and EPS of 59.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 59.4, implying annual growth of 4.9%. Current consensus DPS estimate is 50.0, implying a prospective dividend yield of 4.8%. Current consensus EPS estimate suggests the PER is 17.4. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Deutsche Bank rates CWN as Buy (1) -
Gross gaming revenue in Macau in February was ahead of expectations, with an increase of 17.8% versus Deutsche Bank's forecast of 10%. This was largely driven by strong VIP play at the end of the Chinese New Year.
The broker continues to forecast gross gaming revenue growth of 15% in 2017, but suspects this could be negatively affected by the imposition of Chinese capital controls. Buy retained. Target falls to $13.72 from $14.55.
Target price is $13.72 Current Price is $11.74 Difference: $1.98
If CWN meets the Deutsche Bank target it will return approximately 17% (excluding dividends, fees and charges).
Current consensus price target is $13.21, suggesting upside of 14.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Deutsche Bank forecasts a full year FY17 dividend of 143.00 cents and EPS of 51.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 72.2, implying annual growth of -44.6%. Current consensus DPS estimate is 124.9, implying a prospective dividend yield of 10.8%. Current consensus EPS estimate suggests the PER is 16.0. |
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 60.00 cents and EPS of 57.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 58.6, implying annual growth of -18.8%. Current consensus DPS estimate is 69.7, implying a prospective dividend yield of 6.0%. Current consensus EPS estimate suggests the PER is 19.7. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates CWY as Neutral (3) -
First half results were solid, against a backdrop of sluggish market conditions and Credit Suisse is more confident in the turnaround process.
The broker acknowledges further cost-reduction potential, in order to improve the business, and also notices there is more organic growth driving upside to expectations. The broker considers the valuation fair and retains a Neutral rating. Target rises to $1.23 from $0.84.
Target price is $1.23 Current Price is $1.24 Difference: minus $0.01 (current price is over target).
If CWY meets the Credit Suisse target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $1.20, suggesting downside of -2.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Credit Suisse forecasts a full year FY17 dividend of 1.96 cents and EPS of 4.44 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 4.6, implying annual growth of 64.3%. Current consensus DPS estimate is 2.1, implying a prospective dividend yield of 1.7%. Current consensus EPS estimate suggests the PER is 26.8. |
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 2.52 cents and EPS of 5.37 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 5.6, implying annual growth of 21.7%. Current consensus DPS estimate is 2.7, implying a prospective dividend yield of 2.2%. 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
Morgans rates HLO as Hold (3) -
First half results beat forecasts. FY17 guidance was reiterated but Morgans suspects it is conservative. The broker upgrades estimates to account for recent acquisitions.
The broker notes the company is clearly benefiting from strong inbound tourism. Nevertheless, Morgans believes some of the benefits of the turnaround in the business are already factored into the share price and maintains a Hold rating. Target is reduced to $4.40 from $4.65.
Target price is $4.40 Current Price is $4.00 Difference: $0.4
If HLO meets the Morgans target it will return approximately 10% (excluding dividends, fees and charges).
Current consensus price target is $4.69, suggesting upside of 14.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Morgans forecasts a full year FY17 dividend of 11.00 cents and EPS of 20.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 20.5, implying annual growth of 973.3%. Current consensus DPS estimate is 7.7, implying a prospective dividend yield of 1.9%. Current consensus EPS estimate suggests the PER is 20.0. |
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 14.00 cents and EPS of 26.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 26.8, implying annual growth of 30.7%. Current consensus DPS estimate is 11.7, implying a prospective dividend yield of 2.8%. Current consensus EPS estimate suggests the PER is 15.3. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates MPL as Downgrade to Neutral from Outperform (3) -
With the recent share price performance narrowing the discount to Macquarie's price target, the rating is downgraded to Neutral from Outperform.
The broker does not believe the investment case is supported at current levels, given the combination of moderating industry premium growth and operations at, or near, peak margins.
Claims growth remains materially below long-term trends, which is a risk to the broker's view. The other risk is a structural change to address the policy-holder mix and lack of growth amongst younger members. Target is $2.95.
Target price is $2.95 Current Price is $2.89 Difference: $0.06
If MPL meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).
Current consensus price target is $2.71, suggesting downside of -3.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 11.50 cents and EPS of 15.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 15.7, implying annual growth of 3.3%. Current consensus DPS estimate is 11.7, implying a prospective dividend yield of 4.2%. Current consensus EPS estimate suggests the PER is 17.8. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 11.50 cents and EPS of 14.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 15.0, implying annual growth of -4.5%. Current consensus DPS estimate is 11.7, implying a prospective dividend yield of 4.2%. Current consensus EPS estimate suggests the PER is 18.6. |
Market Sentiment: -0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates NHF as Downgrade to Neutral from Outperform (3) -
With the recent share price performance narrowing the discount to Macquarie's price target, the rating is downgraded to Neutral from Outperform.
The broker does not believe the investment case is supported at current levels, given the combination of moderating industry premium growth and operations at, or near, peak margins.
Claims growth remains materially below long-term trends, which is a risk to the broker's view. The other risk is a structural change to address the policy-holder mix and lack of growth amongst younger members. Target is $5.50.
Target price is $5.50 Current Price is $5.42 Difference: $0.08
If NHF meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).
Current consensus price target is $5.17, suggesting downside of -3.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 17.50 cents and EPS of 27.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 26.9, implying annual growth of 26.9%. Current consensus DPS estimate is 17.0, implying a prospective dividend yield of 3.2%. Current consensus EPS estimate suggests the PER is 20.0. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 18.00 cents and EPS of 27.30 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 27.4, implying annual growth of 1.9%. Current consensus DPS estimate is 18.1, implying a prospective dividend yield of 3.4%. Current consensus EPS estimate suggests the PER is 19.6. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates S32 as Upgrade to Buy from Neutral (1) -
UBS upgrades to Buy from Neutral, believing metallurgical coal and manganese prices are stabilising and valuation metrics now look compelling.
The broker believes the stock offers a free cash flow yield of over 15% with out-of-cycle returns possible in the June quarter. The company has stated at its results briefing that was very close to being able to justify returns to shareholders and UBS believes this will increasingly be the case.
Target is raised to $2.80 from $2.75.
Target price is $2.80 Current Price is $2.72 Difference: $0.08
If S32 meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).
Current consensus price target is $3.15, suggesting upside of 16.1% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
UBS forecasts a full year FY17 dividend of 11.97 cents and EPS of 31.91 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 31.4, implying annual growth of N/A. Current consensus DPS estimate is 14.1, implying a prospective dividend yield of 5.2%. Current consensus EPS estimate suggests the PER is 8.6. |
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 10.64 cents and EPS of 27.92 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 27.4, implying annual growth of -12.7%. Current consensus DPS estimate is 13.6, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 9.9. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.9
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates TGR as Buy (1) -
The company plans to raise $80m via an underwritten share placement and up to $20m via a share purchase plan. New finance facilities have also been announced.
The company has guided to $270m in capital expenditure over the next five years. The investment does not surprise Ord Minnett, but it does suggest the company is likely to raise capital to ensure leverage does not get too high.
The broker reduces FY17 and FY18 forecasts for earnings per share by -2% and -9% respectively. Buy retained. Target reduced to $5.33 from $5.50.
Target price is $5.33 Current Price is $4.90 Difference: $0.43
If TGR meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).
Current consensus price target is $5.20, suggesting upside of 16.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Ord Minnett forecasts a full year FY17 dividend of 15.00 cents and EPS of 35.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 30.0, implying annual growth of -9.0%. Current consensus DPS estimate is 15.7, implying a prospective dividend yield of 3.5%. Current consensus EPS estimate suggests the PER is 14.9. |
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 19.00 cents and EPS of 38.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 35.6, implying annual growth of 18.7%. Current consensus DPS estimate is 18.2, implying a prospective dividend yield of 4.1%. Current consensus EPS estimate suggests the PER is 12.6. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Summaries
| BOQ - | BANK OF QUEENSLAND | Downgrade to Lighten from Hold - Ord Minnett | Overnight Price $11.94 |
| CCL - | COCA-COLA AMATIL | Neutral - UBS | Overnight Price $10.34 |
| CWN - | CROWN RESORTS | Buy - Deutsche Bank | Overnight Price $11.74 |
| CWY - | CLEANAWAY WASTE MANAGEMENT | Neutral - Credit Suisse | Overnight Price $1.24 |
| HLO - | HELLOWORLD | Hold - Morgans | Overnight Price $4.00 |
| MPL - | MEDIBANK PRIVATE | Downgrade to Neutral from Outperform - Macquarie | Overnight Price $2.89 |
| NHF - | NIB HOLDINGS | Downgrade to Neutral from Outperform - Macquarie | Overnight Price $5.42 |
| S32 - | SOUTH32 | Upgrade to Buy from Neutral - UBS | Overnight Price $2.72 |
| TGR - | TASSAL GROUP | Buy - Ord Minnett | Overnight Price $4.90 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 3 |
| 3. Hold | 5 |
| 4. Reduce | 1 |
Friday 03 March 2017
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