Australian Broker Call

October 10, 2016

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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: 11:01 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
BOQ - BANK OF QUEENSLAND Downgrade to Sell from Neutral UBS
DOW - DOWNER EDI Downgrade to Hold from Buy Deutsche Bank
IOF - INVESTA OFFICE Downgrade to Sell from Neutral UBS
MFG - MAGELLAN FINANCIAL GROUP Upgrade to Outperform from Neutral Credit Suisse
UGL - UGL Upgrade to Buy from Hold Deutsche Bank
BHP  BHP BILLITON LIMITED

Materials

Overnight Price: $23.30

ADDED

Ord Minnett rates BHP as Hold (3) -

It appears Ord Minnett analysts have taken another look at their modeling post BHP's petroleum division briefing which in itself suggested little excitement lays ahead for this part of the business.

Either way, the price target has crept up to $21 (from $20). Ord Minnett retains a Hold rating. The stockbroker maintains a relative preference for Rio Tinto (RIO) in the sector.

Target price is $21.00 Current Price is $23.30 Difference: minus $2.3 (current price is over target).
If BHP meets the Ord Minnett target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $23.29, suggesting downside of -0.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Ord Minnett forecasts a full year FY17 dividend of 62.35 cents and EPS of 93.52 cents.
At the last closing share price the estimated dividend yield is 2.68%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.91.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 95.2, implying annual growth of N/A.

Current consensus DPS estimate is 60.4, implying a prospective dividend yield of 2.6%.

Current consensus EPS estimate suggests the PER is 24.7.

Forecast for FY18:

Ord Minnett forecasts a full year FY18 dividend of 90.81 cents and EPS of 96.23 cents.
At the last closing share price the estimated dividend yield is 3.90%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.21.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 100.9, implying annual growth of 6.0%.

Current consensus DPS estimate is 66.3, implying a prospective dividend yield of 2.8%.

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

BOQ  BANK OF QUEENSLAND LIMITED

Banks

Overnight Price: $11.05

UPDATED

Morgans rates BOQ as Resume Coverage with Hold rating (3) -

Morgans resumes coverage with a Hold rating and $10.20 target. Cash earnings in FY16 were $360m, missing expectations. The main area of disappointment was the net interest margin.

The bank expects net interest margins to continue to contract in the first half. Morgans observes the bank has a greater reliance on term deposits than the major banks so is hurt more when there is a step up in competition in this area.

Morgans expects that, in the event the bank decides to apply for advanced accreditation next year, operating costs may exceed current FY17 forecasts.

If revisions to the standardised approach for credit risk fall in the bank's favour then Morgans calculates there is potential for a special dividend up to 80c in the first half of FY18.

Target price is $10.20 Current Price is $11.05 Difference: minus $0.85 (current price is over target).
If BOQ meets the Morgans 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 upside of 4.1% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY17:

Morgans forecasts a full year FY17 dividend of 76.00 cents and EPS of 94.00 cents.
At the last closing share price the estimated dividend yield is 6.88%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.76.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 92.2, implying annual growth of N/A.

Current consensus DPS estimate is 76.1, implying a prospective dividend yield of 6.9%.

Current consensus EPS estimate suggests the PER is 11.9.

Forecast for FY18:

Morgans forecasts a full year FY18 dividend of 76.00 cents and EPS of 91.00 cents.
At the last closing share price the estimated dividend yield is 6.88%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.14.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 92.8, implying annual growth of 0.7%.

Current consensus DPS estimate is 76.3, implying a prospective dividend yield of 7.0%.

Current consensus EPS estimate suggests the PER is 11.8.

Market Sentiment: 0.1

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


UBS rates BOQ as Downgrade to Sell from Neutral (5) -

FY16 results were soft, with margin performance the weakest element. UBS believes the pressure on net interest margins is ongoing but the one area of improvement continues to be asset quality.

Cost initiatives and niche products are expected to be beneficial but unlikely to offset the headwinds. The broker now assumes a reduction in the second half dividend. Rating is downgraded to Sell from Neutral given the recent rally. Target is lowered to $10.00 from $10.50.

Target price is $10.00 Current Price is $11.05 Difference: minus $1.05 (current price is over target).
If BOQ meets the UBS target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.40, suggesting upside of 4.1% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY17:

UBS forecasts a full year FY17 dividend of 73.00 cents and EPS of 89.00 cents.
At the last closing share price the estimated dividend yield is 6.61%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.42.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 92.2, implying annual growth of N/A.

Current consensus DPS estimate is 76.1, implying a prospective dividend yield of 6.9%.

Current consensus EPS estimate suggests the PER is 11.9.

Forecast for FY18:

UBS forecasts a full year FY18 dividend of 70.00 cents and EPS of 86.00 cents.
At the last closing share price the estimated dividend yield is 6.33%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.85.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 92.8, implying annual growth of 0.7%.

Current consensus DPS estimate is 76.3, implying a prospective dividend yield of 7.0%.

Current consensus EPS estimate suggests the PER is 11.8.

Market Sentiment: 0.1

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

CTX  CALTEX AUSTRALIA LIMITED

Energy

Overnight Price: $34.71

Macquarie rates CTX as Neutral (3) -

With Woolworths' ((WOW)) petrol business up for sale, the broker considers the potential for Caltex to be the acquirer. It would be a positive for Caltex, the broker contends, not through increased volume but through synergies. Some 3.4% earnings accretion should be on offer.

A deal would fast-track Caltex' retail ambitions but would need to be approved by the ACCC. Meanwhile the broker retains Neutral and a $32.97 target.

Target price is $32.97 Current Price is $34.71 Difference: minus $1.74 (current price is over target).
If CTX meets the Macquarie target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $35.30, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Macquarie forecasts a full year FY16 dividend of 110.00 cents and EPS of 204.00 cents.
At the last closing share price the estimated dividend yield is 3.17%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.01.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 203.0, implying annual growth of -12.9%.

Current consensus DPS estimate is 106.0, implying a prospective dividend yield of 3.1%.

Current consensus EPS estimate suggests the PER is 17.0.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 120.00 cents and EPS of 230.00 cents.
At the last closing share price the estimated dividend yield is 3.46%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.09.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 221.1, implying annual growth of 8.9%.

Current consensus DPS estimate is 116.1, implying a prospective dividend yield of 3.4%.

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

DOW  DOWNER EDI LIMITED

Commercial Services & Supplies

Overnight Price: $5.59

Deutsche Bank rates DOW as Downgrade to Hold from Buy (3) -

Changes to FX assumptions have led Deutsche Bank to review earnings forecasts and target prices for the engineering and contractor sector. Earnings per share changes for FY17-20 range from reductions of 6.3% to increases of 2.7%.

Downer EDI is downgraded to Hold from Buy as it is trading close to the broker's target price. Target is raised to $5.22 from $5.20.

Target price is $5.22 Current Price is $5.59 Difference: minus $0.37 (current price is over target).
If DOW meets the Deutsche Bank target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.88, suggesting downside of -11.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Deutsche Bank forecasts a full year FY17 dividend of 19.00 cents and EPS of 39.00 cents.
At the last closing share price the estimated dividend yield is 3.40%.
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 39.2, implying annual growth of -2.7%.

Current consensus DPS estimate is 23.8, implying a prospective dividend yield of 4.3%.

Current consensus EPS estimate suggests the PER is 14.1.

Forecast for FY18:

Deutsche Bank forecasts a full year FY18 dividend of 19.00 cents and EPS of 38.00 cents.
At the last closing share price the estimated dividend yield is 3.40%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.71.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 40.1, implying annual growth of 2.3%.

Current consensus DPS estimate is 24.0, implying a prospective dividend yield of 4.3%.

Current consensus EPS estimate suggests the PER is 13.8.

Market Sentiment: 0.5

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

IOF  INVESTA OFFICE FUND

Real Estate

Overnight Price: $4.43

UBS rates IOF as Downgrade to Sell from Neutral (5) -

UBS pares back expectations for growth in earnings per share and dividends. While forecasts for Sydney office in 2016/17 envisage robust growth this is tempered by caution on Sydney rents in 2018 and softer growth expected from Melbourne.

The broker also notes material over renting in specific assets in the portfolio. Rating is downgraded to Sell from Neutral. Target is reduced to $4.17 from $4.42.

Target price is $4.17 Current Price is $4.43 Difference: minus $0.26 (current price is over target).
If IOF meets the UBS target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.34, suggesting downside of -1.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

UBS forecasts a full year FY17 dividend of 20.00 cents and EPS of 29.20 cents.
At the last closing share price the estimated dividend yield is 4.51%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.17.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 26.0, implying annual growth of -67.7%.

Current consensus DPS estimate is 20.0, implying a prospective dividend yield of 4.6%.

Current consensus EPS estimate suggests the PER is 16.9.

Forecast for FY18:

UBS forecasts a full year FY18 dividend of 21.00 cents and EPS of 30.40 cents.
At the last closing share price the estimated dividend yield is 4.74%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.57.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 27.2, implying annual growth of 4.6%.

Current consensus DPS estimate is 20.8, implying a prospective dividend yield of 4.7%.

Current consensus EPS estimate suggests the PER is 16.1.

Market Sentiment: 0.0

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

KAR  KAROON GAS AUSTRALIA LIMITED

Energy

Overnight Price: $1.59

Deutsche Bank rates KAR as Buy (1) -

The company has confirmed negotiations with Petrobras on the potential for a stake in the Bauna and Tartaruga oil fields. This follows a competitive bidding process but acquisitions remain conditional on a number of outcomes.

If the company was able to acquire the assets at an implied price long term of US$60/bbl this would imply an accretive transaction, in Deutsche Bank's view. The main unknown is how Karoon will fund any such acquisitions and the broker suspects an equity raising would be likely.

A Buy rating and $2.30 target are retained.

Target price is $2.30 Current Price is $1.59 Difference: $0.715
If KAR meets the Deutsche Bank target it will return approximately 45% (excluding dividends, fees and charges).

Current consensus price target is $2.29, suggesting upside of 41.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Deutsche Bank forecasts a full year FY17 dividend of 0.00 cents and EPS of minus 9.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 17.61.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -14.2, 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 FY18:

Deutsche Bank forecasts a full year FY18 dividend of 0.00 cents and EPS of minus 3.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 52.83.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -7.6, 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.

Market Sentiment: 1.0

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

MFG  MAGELLAN FINANCIAL GROUP LIMITED

Diversified Financials

Overnight Price: $21.58

Credit Suisse rates MFG as Upgrade to Outperform from Neutral (1) -

The share price may have fallen since the FY16 result but Credit Suisse observes very strong flows. The broker believes the concerns about a weak fund performance are overdone.

Earnings estimates are upgraded 1-2% to reflect higher funds assumptions. The broker expects the fund performance will benefit as weak quarters roll off. Funds under management were up 4.5% in the September quarter.

Rating is upgraded to Outperform from Neutral. Target is $26.

Target price is $26.00 Current Price is $21.58 Difference: $4.42
If MFG meets the Credit Suisse target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $25.41, suggesting upside of 14.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Credit Suisse forecasts a full year FY17 dividend of 91.00 cents and EPS of 119.00 cents.
At the last closing share price the estimated dividend yield is 4.22%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.13.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 109.9, implying annual growth of -11.0%.

Current consensus DPS estimate is 84.2, implying a prospective dividend yield of 3.8%.

Current consensus EPS estimate suggests the PER is 20.2.

Forecast for FY18:

Credit Suisse forecasts a full year FY18 dividend of 110.00 cents and EPS of 143.00 cents.
At the last closing share price the estimated dividend yield is 5.10%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.09.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 129.3, implying annual growth of 17.7%.

Current consensus DPS estimate is 98.7, implying a prospective dividend yield of 4.5%.

Current consensus EPS estimate suggests the PER is 17.1.

Market Sentiment: 0.2

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


Macquarie rates MFG as Outperform (1) -

Magellan's funds under management ticked down slightly in September but net flows were positive. Annualised net flows are running at 11.5% growth, well ahead of the broker's 5% plus benchmark.

This supports the broker's Outperform rating. Target slips to $25.94 from $26.54.

Target price is $25.94 Current Price is $21.58 Difference: $4.36
If MFG meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $25.41, suggesting upside of 14.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 85.00 cents and EPS of 110.00 cents.
At the last closing share price the estimated dividend yield is 3.94%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.62.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 109.9, implying annual growth of -11.0%.

Current consensus DPS estimate is 84.2, implying a prospective dividend yield of 3.8%.

Current consensus EPS estimate suggests the PER is 20.2.

Forecast for FY18:

Macquarie forecasts a full year FY18 dividend of 92.30 cents and EPS of 120.00 cents.
At the last closing share price the estimated dividend yield is 4.28%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.98.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 129.3, implying annual growth of 17.7%.

Current consensus DPS estimate is 98.7, implying a prospective dividend yield of 4.5%.

Current consensus EPS estimate suggests the PER is 17.1.

Market Sentiment: 0.2

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

MTS  METCASH LIMITED

Food & Staples Retailing

Overnight Price: $2.10

UPDATED

Morgan Stanley rates MTS as Overweight (1) -

Morgan Stanley believes the business model is now more sustainable, with a more diversified earnings base and improvement in the food & grocery balance sheet.

The broker updates estimates following the acquisition of Home Timber & Hardware, upgrading FY18-19 forecasts by 8-11% and factoring in synergies of $10m in FY18, improving to $14m in FY20.

Overweight rating and $2.50 target maintained. In-Line sector view.

Target price is $2.50 Current Price is $2.10 Difference: $0.4
If MTS meets the Morgan Stanley target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $2.21, suggesting upside of 5.1% (ex-dividends)

The company's fiscal year ends in April.

Forecast for FY17:

Morgan Stanley forecasts a full year FY17 dividend of 0.00 cents and EPS of 18.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.67.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 18.2, implying annual growth of -21.9%.

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

Current consensus EPS estimate suggests the PER is 11.6.

Forecast for FY18:

Morgan Stanley forecasts a full year FY18 dividend of 20.00 cents and EPS of 20.00 cents.
At the last closing share price the estimated dividend yield is 9.52%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.50.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 20.3, implying annual growth of 11.5%.

Current consensus DPS estimate is 13.4, implying a prospective dividend yield of 6.4%.

Current consensus EPS estimate suggests the PER is 10.4.

Market Sentiment: 0.4

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

PEP  PEPPER GROUP LIMITED

Diversified Financials

Overnight Price: $2.53

Macquarie rates PEP as Outperform (1) -

Pepper has priced its $800m residential mortgage backed security. It's Pepper's largest ever RMBS and the largest non-conforming mortgage securitisation in the Australian market since 2006.

The broker continues to like Pepper's solid domestic and offshore growth outlook, prudent risk management, diversified funding and experienced team. Outperform and $3.17 target retained.

Target price is $3.17 Current Price is $2.53 Difference: $0.64
If PEP meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY16:

Macquarie forecasts a full year FY16 dividend of 7.90 cents and EPS of 32.40 cents.
At the last closing share price the estimated dividend yield is 3.12%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.81.

Forecast for FY17:

Macquarie forecasts a full year FY17 dividend of 9.20 cents and EPS of 36.70 cents.
At the last closing share price the estimated dividend yield is 3.64%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.89.

Market Sentiment: 1.0

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

PRY  PRIMARY HEALTH CARE LIMITED

Health Care Equipment & Services

Overnight Price: $4.07

Citi rates PRY as Neutral (3) -

The company's focus is on operational improvements and Citi believes the recruitment of GPs under a new model, the roll out of new large bulk billing centres as well as IT investment will be slow and the benefits uncertain.

Consequently FY17 may have a greater skew in earnings, with the second half boosted by the acquisition of private billing medical practices. Neutral retained. Target rises to $4.11 from $3.71.

Target price is $4.11 Current Price is $4.07 Difference: $0.04
If PRY meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.01, suggesting downside of -1.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Citi forecasts a full year FY17 dividend of 13.00 cents and EPS of 20.60 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 19.76.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 21.0, implying annual growth of 45.8%.

Current consensus DPS estimate is 14.5, implying a prospective dividend yield of 3.6%.

Current consensus EPS estimate suggests the PER is 19.4.

Forecast for FY18:

Citi forecasts a full year FY18 dividend of 15.00 cents and EPS of 22.50 cents.
At the last closing share price the estimated dividend yield is 3.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.09.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 23.3, implying annual growth of 11.0%.

Current consensus DPS estimate is 17.4, implying a prospective dividend yield of 4.3%.

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

RHC  RAMSAY HEALTH CARE LIMITED

Health Care Equipment & Services

Overnight Price: $80.00

UBS rates RHC as Neutral (3) -

The company recently announced its entry into pharmacy with around 19 community pharmacies. The company envisages the opportunity to meet its 15% return hurdles with its hospital cost base providing lower prices for its pharmacy.

UBS believes the opportunity to acquire pharmacy is accelerating owing to the October cuts to the Pharmaceutical Benefits Scheme which has taken out around 1% from pharmacy.

Despite the discount style of its retail catalogue, UBS expects the company will ultimately construct a service model which is synonymous with its hospital brand. Neutral rating and $80.50 target retained.

Target price is $80.50 Current Price is $80.00 Difference: $0.5
If RHC meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $78.97, suggesting downside of -1.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

UBS forecasts a full year FY17 dividend of 139.00 cents and EPS of 263.00 cents.
At the last closing share price the estimated dividend yield is 1.74%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 30.42.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 258.8, implying annual growth of 18.9%.

Current consensus DPS estimate is 134.8, implying a prospective dividend yield of 1.7%.

Current consensus EPS estimate suggests the PER is 31.1.

Forecast for FY18:

UBS forecasts a full year FY18 dividend of 155.00 cents and EPS of 292.00 cents.
At the last closing share price the estimated dividend yield is 1.94%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 27.40.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 292.1, implying annual growth of 12.9%.

Current consensus DPS estimate is 153.5, implying a prospective dividend yield of 1.9%.

Current consensus EPS estimate suggests the PER is 27.5.

Market Sentiment: 0.2

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

UGL  UGL LIMITED

Capital Goods

Overnight Price: $2.14

Deutsche Bank rates UGL as Upgrade to Buy from Hold (1) -

Deutsche Bank upgrades to Buy from Hold, believing the risk/reward is now appealing. The stock offers a 9% dividend yield on FY18 estimates with compound earnings-per-share growth of 3.6% from FY17-20.

The broker considers the current share price contains an overly bearish scenario but does not discount the risks of further over-runs in costs at Ichthys. E&C revenue forecasts are lowered for FY18-20 to reflect no expected recovery in resources construction revenue.

Target is reduced to $2.36 from $2.78.

Target price is $2.36 Current Price is $2.14 Difference: $0.22
If UGL meets the Deutsche Bank target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $2.36, suggesting upside of 10.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Deutsche Bank forecasts a full year FY17 dividend of 0.00 cents and EPS of 28.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.64.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.3, implying annual growth of N/A.

Current consensus DPS estimate is 4.2, implying a prospective dividend yield of 2.0%.

Current consensus EPS estimate suggests the PER is 7.3.

Forecast for FY18:

Deutsche Bank forecasts a full year FY18 dividend of 19.00 cents and EPS of 27.00 cents.
At the last closing share price the estimated dividend yield is 8.88%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.93.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 33.8, implying annual growth of 15.4%.

Current consensus DPS estimate is 13.7, implying a prospective dividend yield of 6.4%.

Current consensus EPS estimate suggests the PER is 6.3.

Market Sentiment: -0.2

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

Summaries
BHP - BHP BILLITON Hold - Ord Minnett Overnight Price $23.30
BOQ - BANK OF QUEENSLAND Resume Coverage with Hold rating - Morgans Overnight Price $11.05
Downgrade to Sell from Neutral - UBS Overnight Price $11.05
CTX - CALTEX AUSTRALIA Neutral - Macquarie Overnight Price $34.71
DOW - DOWNER EDI Downgrade to Hold from Buy - Deutsche Bank Overnight Price $5.59
IOF - INVESTA OFFICE Downgrade to Sell from Neutral - UBS Overnight Price $4.43
KAR - KAROON GAS Buy - Deutsche Bank Overnight Price $1.59
MFG - MAGELLAN FINANCIAL GROUP Upgrade to Outperform from Neutral - Credit Suisse Overnight Price $21.58
Outperform - Macquarie Overnight Price $21.58
MTS - METCASH Overweight - Morgan Stanley Overnight Price $2.10
PEP - PEPPER GROUP Outperform - Macquarie Overnight Price $2.53
PRY - PRIMARY HEALTH CARE Neutral - Citi Overnight Price $4.07
RHC - RAMSAY HEALTH CARE Neutral - UBS Overnight Price $80.00
UGL - UGL Upgrade to Buy from Hold - Deutsche Bank Overnight Price $2.14
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

6

3. Hold

6

5. Sell

2

Monday 10 October 2016

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