Australian Broker Call

Ord Minnett rates ALD as Buy (1) -

China has released additional export quotas for refined product to alleviate its covid-related inventory build-up. Ord Minnett's research counterparts in Asia do not believe this will materially affect regional refining margins.

Yet the news is positive for Ampol, given this was the biggest near-term risk to regional margins. China's exports are expected to be -23% lower in 2022. Buy rating and $37.90 target maintained.

Target price is $37.90 Current Price is $36.30 Difference: $1.6
If ALD meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $35.01, suggesting downside of -3.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Morgans rates ALX as Hold (3) -

After Australian infrastructure manager IFM  purchased a 15% interest in Atlas Arteria, Morgans raises its target price to $8.10 (to match the on-market purchases) from $6.41. It's thought Atlas Arteria will receive a takeover bid.

The broker retains its Hold rating and notes the potential for a takeover price to exceed the current share price.

Separately, the analyst raises its stand-alone valuation for the company to $6.47/share from $6.41.

Target price is $8.10 Current Price is $8.25 Difference: minus $0.15 (current price is over target).
If ALX meets the Morgans target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.92, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

UBS rates ANZ as Buy (1) -

UBS remains confident its forecasts for the banks as rising interest rates provide a shock absorber for earnings. Yet the broker is cautious about the potential for further sector outperformance.

During periods of low growth and high inflation banks have historically underperformed relative to the market. That said, based on the broker's analysis, there would need to be a substantial disruption in credit provisions to derail the earnings story.

ANZ Bank remains the broker's only Buy rated stock among the four majors while the target is reduced to $30 from $32.

Target price is $30.00 Current Price is $23.89 Difference: $6.11
If ANZ meets the UBS target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $29.18, suggesting upside of 24.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Credit Suisse rates ASX as Neutral (3) -

Interest rate futures volumes on the ASX remain below pre-pandemic levels and while there is a general expectations these will recover when interest rate volatility returns, Credit Suisse suspects it could take longer than many expect.

As a result, the broker believes this makes the ASX24 derivatives volume growth in consensus forecasts appear ambitious. Nevertheless this should be offset by strong growth in electricity futures volumes and in turn drive expansion in the average ASX24 derivatives fee.

The broker reiterates a Neutral rating and $85 target.

Target price is $85.00 Current Price is $79.10 Difference: $5.9
If ASX meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $81.39, suggesting upside of 2.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.4

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

Macquarie rates ASX as Outperform (1) -

After assessing ASX's distributed ledger technology (DLT) build, Macquarie feels any additional revenue opportunities are limited and the build is more about maintaining existing revenues.

Nonetheless, the broker highlights the ASX’ strong pricing power and diversification, which should be defensive in a volatile market. The Outperform rating and $94 target price are maintained.

Target price is $94.00 Current Price is $79.10 Difference: $14.9
If ASX meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $81.39, suggesting upside of 2.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.4

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

Macquarie rates BOE as Outperform (1) -

Following news the US is looking to secure enriched uranium supply outside of Russia, Macquarie notes sentiment has turned more positive in the Uranium sector.

Overall, the broker likes the tailwinds for the sector from increased contracting, an increased focus on energy security and an expected supply deficit.

Companies like Boss Energy, with a near-term path to production are preferred by Macquarie. First production is targeted for the fourth quarter of 2023. The Outperform rating and $3.20 target price are maintained.

Target price is $3.20 Current Price is $2.45 Difference: $0.75
If BOE meets the Macquarie target it will return approximately 31% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

UBS rates CCX as Buy (1) -

In analysing the results for a key US competitor, UBS notes the plans to clear inventory will weigh on City Chic Collective in the short term while reduced promotional activity later in the year will become a positive.

The broker believes stores are the key way to acquire customers for City Chic in Australasia and in other markets leveraging existing customers and selling more should be the focus. Buy rating and $4.50 target maintained.

Target price is $4.50 Current Price is $2.03 Difference: $2.47
If CCX meets the UBS target it will return approximately 122% (excluding dividends, fees and charges).

Current consensus price target is $4.84, suggesting upside of 145.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgans rates CHL as Add (1) -

Camplify released a positive financial year-to-date trading update to May 22, according to Morgans, with gross transaction value (GTV) rising 72% on the previous corresponding period. Future bookings are also considered to be strong.

While the company operates in Australia, the UK and is emerging in Spain, the analyst highlights increasing activity in New Zealand, due to the return of international tourists. 

Nonetheless, the broker lowers its original revenue forecasts and reduces the valuation multiple after a de-rating of peers. The target price slips to $4.25 from $4.75, while the Add rating is maintained.

Target price is $4.25 Current Price is $2.20 Difference: $2.05
If CHL meets the Morgans target it will return approximately 93% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Credit Suisse rates CWY as Downgrade to Underperform from Neutral (5) -

Cleanaway Waste Management intends to build EfW (energy from waste) facilities in Melbourne and Brisbane with 300-500,000t per annum capacity. Credit Suisse expects most of the investment will be incurred in FY25 and FY26 with commissioning and commencement of operations in FY27.

The company considers the construction and demolition market an attractive growth opportunity, with the investment expected to double its tangible asset base.

While management retains segment EBITDA margin targets, the broker believes this is a poor metric for a business with a high diversity of capital intensity and return on invested capital or EBIT margin targets would be better. Credit Suisse downgrades to Underperform from Neutral and reduces the target to $2.60 from $2.80.

Target price is $2.60 Current Price is $2.89 Difference: minus $0.29 (current price is over target).
If CWY meets the Credit Suisse target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.12, suggesting upside of 9.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.2

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

Morgans rates JIN as Add (1) -

Morgans' positive view on the outlook for Jumbo Interactive was reinforced by commentary around multiple growth opportunities at the company's investor day.

These opportunities include expansion of the SaaS business to the charity sector, and penetration of the US iLottery market, explains the analyst.

The target falls to $18.30 from $20.50 on lower earnings estimates due to reduced large jackpot activity in recent months. The Add rating is maintained.

Target price is $18.30 Current Price is $14.79 Difference: $3.51
If JIN meets the Morgans target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $20.45, suggesting upside of 40.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Macquarie rates PDN as Outperform (1) -

Following news the US is looking to secure enriched uranium supply outside of Russia, Macquarie notes sentiment has turned more positive in the Uranium sector.

Overall, the broker likes the tailwinds for the sector from increased contracting, an increased focus on energy security and an estimated supply deficit.

Companies like Paladin Energy, with a near-term path to production are preferred by Macquarie. The company recently confirmed an 18-month timeframe to first production. The Outperform rating and $1.00 target price are maintained.

Target price is $1.00 Current Price is $0.80 Difference: $0.2
If PDN meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 1.0

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

Citi rates SGM as Neutral (3) -

Sims now expects underlying EBIT in a range of $750-770m for FY22. Citi adjusts its estimates as a result and raises its FY22 forecast by 5%.

The target is reduced to $20.40 from $21.60 and a Neutral rating is maintained.

Target price is $20.40 Current Price is $18.30 Difference: $2.1
If SGM meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $21.75, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Macquarie rates SGM as Neutral (3) -

Sims new FY22 earnings (EBIT) guidance of $750m-$770m exceeded Macquarie's $673.6m forecast. Management attributed the  performance to strong metal prices and volumes.

Nonetheless, the broker maintains its Neutral rating as scrap prices are drifting lower and economic risks grow in Europe and the US. The target price slips to $19.70 from $20.00 largely due to cash outflows relating to the -$93m Brisbane Port acquisition.

Target price is $19.70 Current Price is $18.30 Difference: $1.4
If SGM meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $21.75, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

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

Sims new guidance range for FY22 underlying earnings (EBIT) was a 16% beat compared to Morgan Stanley's forecast and a 8% beat versus the consensus estimate. Upgraded guidance was due to higher metal prices and improved volumes.

Nonetheless, earnings beyond FY22 are also pertinent for the broker, especially in view of recent declines for scrap prices. The Equal-weight rating and $18 target price are maintained. Industry view is In-Line.

Target price is $18.00 Current Price is $18.30 Difference: minus $0.3 (current price is over target).
If SGM meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $21.75, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Ord Minnett rates SGM as Buy (1) -

Guidance for FY22 EBIT of $750-770m is ahead of Ord Minnett's forecast. Strong prices and volumes have underpinned the forecast although challenging conditions remain in respect of geopolitical and economic uncertainty. Scrap prices have fallen -35% since March.

Ord Minnett retains a Buy rating while trimming the target to $25 from $26. This is based on an attractive valuation, net cash position and long-term growth potential.

Target price is $25.00 Current Price is $18.30 Difference: $6.7
If SGM meets the Ord Minnett target it will return approximately 37% (excluding dividends, fees and charges).

Current consensus price target is $21.75, suggesting upside of 17.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Macquarie rates VEA as Outperform (1) -

Macquarie raises its target price for Viva Energy by 17% to $3.50 on increased refining margin forecasts, partly offset by increased estimates for electricity and wages from 2023 onwards.

The analyst describes earning momentum as "extraordinary", due largely to a significant increase in refining margins, and the recovery in fuel volumes (to a lesser extent). The Outperform rating is maintained.

Target price is $3.50 Current Price is $3.03 Difference: $0.47
If VEA meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $3.05, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Ord Minnett rates VEA as Accumulate (2) -

China has released additional export quotas for refined product to alleviate its covid-related inventory build-up. Ord Minnett's research counterparts in Asia do not believe this will materially affect regional refining margins.

Yet the news is positive for Viva Energy, given this was the biggest near-term risk to regional margins. China's exports are expected to be -23% lower in 2022. Accumulate rating and $2.95 target maintained.

Target price is $2.95 Current Price is $3.03 Difference: minus $0.08 (current price is over target).
If VEA meets the Ord Minnett target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.05, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

UBS rates WBC as Downgrade to Neutral from Buy (3) -

UBS remains confident its forecasts for the banks as rising interest rates provide a shock absorber for earnings. Yet the broker is cautious about the potential for further sector outperformance.

During periods of low growth and high inflation banks have historically underperformed relative to the market. That said, based on the broker's analysis, there would need to be a substantial disruption in credit provisions to derail the earnings story.

UBS downgrades Westpac to Neutral from Buy and reduces the target to $26 from $27.

Target price is $26.00 Current Price is $21.98 Difference: $4.02
If WBC meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $25.34, suggesting upside of 18.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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