Australian Broker Call

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September 14, 2021

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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: 05:00 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
HDN - HomeCo Daily Needs REIT Downgrade to Hold from Accumulate Ord Minnett
ADH  ADAIRS LIMITED

Furniture & Renovation

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Overnight Price: $3.69

UPDATED

UBS rates ADH as Buy (1) -

While acknowledging the near-term uncertainty for domestic retailers relating to mobility restrictions, UBS believes investors should consider the earnings potential in a post-pandemic environment and Adairs presents an attractive entry opportunity.

The broker considers Adairs a quality retailer with a loyal customer base, flexible lease profile and a track record of pre-pandemic organic growth. FY23 net profit is forecast at $72m, above pre-pandemic levels. Buy rating retained. Target rises to $5.40 from $4.40.

Target price is $5.40 Current Price is $3.69 Difference: $1.71
If ADH meets the UBS target it will return approximately 46% (excluding dividends, fees and charges).

Current consensus price target is $4.57, suggesting upside of 17.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

UBS forecasts a full year FY22 dividend of 19.60 cents and EPS of 31.40 cents.
At the last closing share price the estimated dividend yield is 5.31%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.75.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 33.6, implying annual growth of -10.9%.

Current consensus DPS estimate is 21.5, implying a prospective dividend yield of 5.5%.

Current consensus EPS estimate suggests the PER is 11.6.

Forecast for FY23:

UBS forecasts a full year FY23 dividend of 29.90 cents and EPS of 41.10 cents.
At the last closing share price the estimated dividend yield is 8.10%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.98.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 38.5, implying annual growth of 14.6%.

Current consensus DPS estimate is 27.0, implying a prospective dividend yield of 6.9%.

Current consensus EPS estimate suggests the PER is 10.1.

Market Sentiment: 0.7

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

BHP  BHP GROUP LIMITED

Bulks

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Overnight Price: $41.48

Macquarie rates BHP as Outperform (1) -

BHP Group has formally approved the first stage of the Jansen project with the initial development aiming for an underground mine with a production capacity of 4.35mtpa.

Macquarie believes the decision to develop Jansen is part of a much larger commitment by the company to the potash market.

The broker considers the outlook for potash positive over the medium term. Demand growth of around 2.5% is expected to outpace growth in supply and the market move to a deficit after 2026. Outperform rating retained. Target is raised to $55 from $54.

Target price is $55.00 Current Price is $41.48 Difference: $13.52
If BHP meets the Macquarie target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $47.23, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 360.47 cents and EPS of 448.66 cents.
At the last closing share price the estimated dividend yield is 8.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.25.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 563.3, implying annual growth of N/A.

Current consensus DPS estimate is 395.3, implying a prospective dividend yield of 9.5%.

Current consensus EPS estimate suggests the PER is 7.4.

Forecast for FY23:

Macquarie forecasts a full year FY23 dividend of 281.99 cents and EPS of 352.89 cents.
At the last closing share price the estimated dividend yield is 6.80%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.75.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 399.2, implying annual growth of -29.1%.

Current consensus DPS estimate is 281.7, implying a prospective dividend yield of 6.8%.

Current consensus EPS estimate suggests the PER is 10.5.

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

BXB  BRAMBLES LIMITED

Transportation & Logistics

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Overnight Price: $12.26

Citi rates BXB as Buy (1) -

Management is guiding to 5-7% revenue growth from FY22-25, slightly ahead of current market expectations. Yet, Citi points out FY22 profit growth is expected to lag at 1-2% because of higher investments, while the share buyback will support earnings growth in this period.

Given the size of the planned expenditure - management has a potential $1.1bn four-year investment plan - Citi believes the realisation of returns will be the main focus. That said, the risk of returns not materialising on the $415m supply chain expenditure appear relatively low.

The broker retains a Buy rating and $13.58 target.

Target price is $13.58 Current Price is $12.26 Difference: $1.32
If BXB meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $12.74, suggesting upside of 13.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Citi forecasts a full year FY22 dividend of 33.52 cents and EPS of 56.13 cents.
At the last closing share price the estimated dividend yield is 2.73%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.84.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 56.8, implying annual growth of N/A.

Current consensus DPS estimate is 34.3, implying a prospective dividend yield of 3.1%.

Current consensus EPS estimate suggests the PER is 19.8.

Forecast for FY23:

Current consensus EPS estimate is 61.7, implying annual growth of 8.6%.

Current consensus DPS estimate is 37.9, implying a prospective dividend yield of 3.4%.

Current consensus EPS estimate suggests the PER is 18.2.

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

Market Sentiment: 0.5

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


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

Brambles is guiding to 5-7% constant currency revenue growth yet Morgan Stanley suspects the actual outcome may disappoint the market.

The company has announced a number of initiatives across its digital, supply chain and short-term investments.

The presentation highlighted elevated operating and capital expenditure in coming years and, while this may generate a return eventually, the broker suspects expenditure in FY22 should mean earnings are below consensus expectations.

Equal-weight maintained. Target is $12.50. Industry view: In line.

Target price is $12.50 Current Price is $12.26 Difference: $0.24
If BXB meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $12.74, suggesting upside of 13.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 29.26 cents and EPS of 54.54 cents.
At the last closing share price the estimated dividend yield is 2.39%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.48.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 56.8, implying annual growth of N/A.

Current consensus DPS estimate is 34.3, implying a prospective dividend yield of 3.1%.

Current consensus EPS estimate suggests the PER is 19.8.

Forecast for FY23:

Morgan Stanley forecasts a full year FY23 dividend of 33.25 cents and EPS of 59.86 cents.
At the last closing share price the estimated dividend yield is 2.71%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.48.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 61.7, implying annual growth of 8.6%.

Current consensus DPS estimate is 37.9, implying a prospective dividend yield of 3.4%.

Current consensus EPS estimate suggests the PER is 18.2.

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

Market Sentiment: 0.5

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

CGF  CHALLENGER LIMITED

Wealth Management & Investments

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Overnight Price: $6.38

Ord Minnett rates CGF as Hold (3) -

Challenger has sold a 30% stake in Whitehelm Capital to Germany's PATRIZIA for $50m. This will result in the loss of -$5bn in funds under management which Ord Minnett assesses will have a relatively immaterial effect on earnings.

Management has indicated, while it is not actively selling its interests in boutique partners, the price provided value to shareholders. Hold rating and $6 target maintained.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $6.00 Current Price is $6.38 Difference: minus $0.38 (current price is over target).
If CGF meets the Ord Minnett target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.01, suggesting downside of -7.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 EPS of 39.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.36.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 39.3, implying annual growth of -55.4%.

Current consensus DPS estimate is 22.1, implying a prospective dividend yield of 3.4%.

Current consensus EPS estimate suggests the PER is 16.5.

Forecast for FY23:

Ord Minnett forecasts a full year FY23 EPS of 43.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.84.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 42.9, implying annual growth of 9.2%.

Current consensus DPS estimate is 24.4, implying a prospective dividend yield of 3.8%.

Current consensus EPS estimate suggests the PER is 15.1.

Market Sentiment: 0.1

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

COE  COOPER ENERGY LIMITED

Crude Oil

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Overnight Price: $0.24

Macquarie rates COE as Neutral (3) -

Cooper Energy has new contractual arrangements at Sole, reducing the third-party gas purchases. Macquarie assesses the contracts provide greater certainty on volume but lock in lower pricing at Otway until at least 2024.

The broker also expects investors will be looking for a renegotiation of tolls with APA Group ((APA)) or, potentially, a purchase of the Orbost plant, which is likely to be difficult to finance. Neutral retained. Target rises to $0.24 from $0.22.

Target price is $0.24 Current Price is $0.24 Difference: $0
If COE meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $0.26, suggesting upside of 10.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 2.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 10.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -0.8, 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 FY23:

Macquarie forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 0.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 60.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 0.9, 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 26.7.

Market Sentiment: 0.2

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

CWY  CLEANAWAY WASTE MANAGEMENT LIMITED

Industrial Sector Contractors & Engineers

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Overnight Price: $2.63

Ord Minnett rates CWY as Accumulate (2) -

Cleanaway Waste's planned energy-from-waste project at Eastern Creek is not within the four listed regions the NSW government has identified in its plan for infrastructure locations.

Ord Minnett asserts the decision by the government is partially driven by politics as such facilities are not popular with locals. Given the uncertainty, the broker suspects Cleanaway may reassess its plans.

Accumulate rating and $3.00 target maintained.

This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.

Target price is $3.00 Current Price is $2.63 Difference: $0.37
If CWY meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $2.73, suggesting upside of 7.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 5.00 cents and EPS of 7.00 cents.
At the last closing share price the estimated dividend yield is 1.90%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 37.57.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 7.4, implying annual growth of 4.8%.

Current consensus DPS estimate is 4.5, implying a prospective dividend yield of 1.8%.

Current consensus EPS estimate suggests the PER is 34.5.

Forecast for FY23:

Ord Minnett forecasts a full year FY23 dividend of 6.00 cents and EPS of 10.00 cents.
At the last closing share price the estimated dividend yield is 2.28%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 26.30.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.4, implying annual growth of 27.0%.

Current consensus DPS estimate is 5.6, implying a prospective dividend yield of 2.2%.

Current consensus EPS estimate suggests the PER is 27.1.

Market Sentiment: 0.4

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

FCL  FINEOS CORPORATION HOLDINGS PLC

Cloud services

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Overnight Price: $4.30

Macquarie rates FCL as Resume Coverage with Outperform (1) -

Macquarie resumes coverage with an Outperform rating and $4.92 target.

The company has raised additional equity and, along with the net cash position, this provides three years of requirements based on the monthly operating cash burn, the broker assesses.

Funds will be used primarily to support opportunities and provide working capital for R&D investment.

Target price is $4.92 Current Price is $4.30 Difference: $0.62
If FCL meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $4.85, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 1.91 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 225.25.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -1.8, 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 FY23:

Macquarie forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 0.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 540.88.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 0.2, 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 2140.0.

This company reports in EUR. 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

HDN  HOMECO DAILY NEEDS REIT

REITs

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Overnight Price: $1.67

Macquarie rates HDN as Outperform (1) -

Homeco Daily Needs has acquired six assets for $222m by having raised $88.3m in equity. Macquarie notes the acquisitions are accretive, partially because of the favourable cost of equity.

On an annualised basis the broker forecasts the transaction to be around 3.4% accretive to earnings. Following completion of the transaction, gearing is now at 36% and leverage is expected to be positively impacted by revaluations.

Macquarie estimates a 5% valuation uplift will result in gearing moving to 34.3%. The broker retains an Outperform rating and raises the target to $1.74 from $1.64.

Target price is $1.74 Current Price is $1.67 Difference: $0.07
If HDN meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $1.63, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 8.30 cents and EPS of 8.20 cents.
At the last closing share price the estimated dividend yield is 4.97%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.37.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 8.5, implying annual growth of 49.4%.

Current consensus DPS estimate is 8.3, implying a prospective dividend yield of 5.2%.

Current consensus EPS estimate suggests the PER is 18.8.

Forecast for FY23:

Macquarie forecasts a full year FY23 dividend of 8.60 cents and EPS of 8.70 cents.
At the last closing share price the estimated dividend yield is 5.15%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.20.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.2, implying annual growth of 8.2%.

Current consensus DPS estimate is 8.7, implying a prospective dividend yield of 5.4%.

Current consensus EPS estimate suggests the PER is 17.4.

Market Sentiment: 0.5

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


Ord Minnett rates HDN as Downgrade to Hold from Accumulate (3) -

HomeCo Daily Needs has made a $88.3m placement to partially fund the acquisition of six assets for $222m and will establish a distribution reinvestment plan for the remainder of FY22.

The acquisitions are expected to be more than 3% accretive to earnings and include a Coles-anchored neighbourhood centre, three large format retail (LFR) centres and two strategic adjoining properties.

Ord Minnett downgrades to Hold from Accumulate because of the recent rally and raises the target to $1.58 from $1.54.

Target price is $1.58 Current Price is $1.67 Difference: minus $0.09 (current price is over target).
If HDN meets the Ord Minnett target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.63, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Ord Minnett forecasts a full year FY22 dividend of 8.30 cents and EPS of 8.70 cents.
At the last closing share price the estimated dividend yield is 4.97%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.20.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 8.5, implying annual growth of 49.4%.

Current consensus DPS estimate is 8.3, implying a prospective dividend yield of 5.2%.

Current consensus EPS estimate suggests the PER is 18.8.

Forecast for FY23:

Ord Minnett forecasts a full year FY23 dividend of 8.60 cents and EPS of 9.40 cents.
At the last closing share price the estimated dividend yield is 5.15%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.77.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.2, implying annual growth of 8.2%.

Current consensus DPS estimate is 8.7, implying a prospective dividend yield of 5.4%.

Current consensus EPS estimate suggests the PER is 17.4.

Market Sentiment: 0.5

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


UPDATED

UBS rates HDN as Neutral (3) -

HomeCo Daily Needs has used the improved cost of capital to acquire six assets for $222m on a yield of 5.8%. The transaction is assessed to be 3% accretive as it is partially funded with an $88m placement.

Distribution guidance has been increased to 8.25c. UBS finds the favourable tenant mix and growth outlook attractive yet believes the market has priced this into the stock. Neutral maintained. Target rises to $1.59 from $1.55.

Target price is $1.59 Current Price is $1.67 Difference: minus $0.08 (current price is over target).
If HDN meets the UBS target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.63, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

UBS forecasts a full year FY22 dividend of 8.40 cents and EPS of 8.70 cents.
At the last closing share price the estimated dividend yield is 5.03%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.20.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 8.5, implying annual growth of 49.4%.

Current consensus DPS estimate is 8.3, implying a prospective dividend yield of 5.2%.

Current consensus EPS estimate suggests the PER is 18.8.

Forecast for FY23:

UBS forecasts a full year FY23 dividend of 9.20 cents and EPS of 9.40 cents.
At the last closing share price the estimated dividend yield is 5.51%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.77.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 9.2, implying annual growth of 8.2%.

Current consensus DPS estimate is 8.7, implying a prospective dividend yield of 5.4%.

Current consensus EPS estimate suggests the PER is 17.4.

Market Sentiment: 0.5

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

IEL  IDP EDUCATION LIMITED

Education & Tuition

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Overnight Price: $32.72

UBS rates IEL as Buy (1) -

UBS assesses IDP Education has performed well over a tough year and the worst should be behind the business. The covid situation in India continues to improve rapidly since mobility restrictions and search trends for IELTS are up strongly.

Recent vaccination trends from in Australia position the industry to re-open in 2022, the broker asserts. As the operating environment improves the broker envisages increased momentum around the earnings recovery and retains a Buy rating. Target is raised to $36.40 from $32.25.

Target price is $36.40 Current Price is $32.72 Difference: $3.68
If IEL meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $32.94, suggesting upside of 0.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

UBS forecasts a full year FY22 dividend of 28.00 cents and EPS of 39.00 cents.
At the last closing share price the estimated dividend yield is 0.86%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 83.90.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 38.8, implying annual growth of 171.9%.

Current consensus DPS estimate is 26.0, implying a prospective dividend yield of 0.8%.

Current consensus EPS estimate suggests the PER is 84.9.

Forecast for FY23:

UBS forecasts a full year FY23 dividend of 46.00 cents and EPS of 64.00 cents.
At the last closing share price the estimated dividend yield is 1.41%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 51.13.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 62.9, implying annual growth of 62.1%.

Current consensus DPS estimate is 44.5, implying a prospective dividend yield of 1.4%.

Current consensus EPS estimate suggests the PER is 52.4.

Market Sentiment: 1.0

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

IPL  INCITEC PIVOT LIMITED

Agriculture

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Overnight Price: $2.76

Macquarie rates IPL as Outperform (1) -

Hurricane Ida has impacted the production at the Louisiana plant with four weeks of maintenance expected. Macquarie notes the plant has been running at nameplate since the last re-start at the end of May and is now a more fully-resourced operation.

The broker suspects the market is looking through the event, given the better recent performance and a favourable backdrop in fertiliser prices. Outperform maintained. Target is raised to $3.15 from $3.04.

Target price is $3.15 Current Price is $2.76 Difference: $0.39
If IPL meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $3.05, suggesting upside of 10.6% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 6.40 cents and EPS of 15.40 cents.
At the last closing share price the estimated dividend yield is 2.32%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.92.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.3, implying annual growth of 128.9%.

Current consensus DPS estimate is 7.3, implying a prospective dividend yield of 2.6%.

Current consensus EPS estimate suggests the PER is 16.9.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 10.90 cents and EPS of 21.80 cents.
At the last closing share price the estimated dividend yield is 3.95%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.66.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 20.9, implying annual growth of 28.2%.

Current consensus DPS estimate is 10.2, implying a prospective dividend yield of 3.7%.

Current consensus EPS estimate suggests the PER is 13.2.

Market Sentiment: 1.0

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


Morgan Stanley rates IPL as Overweight (1) -

No material damage has been identified at the Waggaman ammonia plant in Louisiana after Hurricane Ida. Still, it is expected to remain out of action for four weeks. The company estimates the cost of the outage at -US$28m at the EBIT line.

Morgan Stanley notes urea prices have increased in the wake of the hurricane. NOLA diammonium phosphate prices have increased while China's diammonium phosphate prices are unchanged.

Overweight maintained. Industry view: In-Line. Target is $2.90.

Target price is $2.90 Current Price is $2.76 Difference: $0.14
If IPL meets the Morgan Stanley target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $3.05, suggesting upside of 10.6% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 7.00 cents and EPS of 14.00 cents.
At the last closing share price the estimated dividend yield is 2.54%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.71.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.3, implying annual growth of 128.9%.

Current consensus DPS estimate is 7.3, implying a prospective dividend yield of 2.6%.

Current consensus EPS estimate suggests the PER is 16.9.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 10.00 cents and EPS of 20.00 cents.
At the last closing share price the estimated dividend yield is 3.62%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.80.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 20.9, implying annual growth of 28.2%.

Current consensus DPS estimate is 10.2, implying a prospective dividend yield of 3.7%.

Current consensus EPS estimate suggests the PER is 13.2.

Market Sentiment: 1.0

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

PWR  PETER WARREN AUTOMOTIVE HOLDINGS LIMITED

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Overnight Price: $3.20

Morgan Stanley rates PWR as Overweight (1) -

Morgan Stanley has become more bullish on Peter Warren Automotive. This stems from the housing wealth effects remaining intact, international leisure travel still being some time in the future and a continued preference of personal over public transport.

Morgan Stanley takes a long view on the growth trajectory although notes the market remains concerned about where the next catalyst will be. While restrictions in NSW will ease at the end of October, the re-opening trajectory is uncertain and, therefore, so too is the shape of the demand recovery.

Overweight maintained. Target is $4.60. Industry view: In-Line.

Target price is $4.60 Current Price is $3.20 Difference: $1.4
If PWR meets the Morgan Stanley target it will return approximately 44% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Morgan Stanley forecasts a full year FY22 dividend of 0.00 cents and EPS of 27.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.85.

Forecast for FY23:

Morgan Stanley forecasts a full year FY23 dividend of 27.00 cents and EPS of 28.00 cents.
At the last closing share price the estimated dividend yield is 8.44%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.43.

Market Sentiment: 1.0

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

SYD  SYDNEY AIRPORT

Infrastructure & Utilities

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Overnight Price: $8.37

Credit Suisse rates SYD as Neutral (3) -

Sydney Airport has received an $8.75 per share non-binding offer from the IFM consortium, above the previous offer, and the board is granting non-exclusive due diligence.

Credit Suisse assesses foreign and cross-holding ownership restrictions, as well as the size of the deal, make a competing bid unlikely. The broker assigns a high probability to the deal proceeding and raises the target to $8.75 from $8.00. Neutral retained.

Target price is $8.75 Current Price is $8.37 Difference: $0.38
If SYD meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $8.60, suggesting upside of 4.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Credit Suisse forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 11.75 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 71.23.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -10.4, 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 FY22:

Credit Suisse forecasts a full year FY22 dividend of 20.00 cents and EPS of 5.14 cents.
At the last closing share price the estimated dividend yield is 2.39%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 162.84.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 3.9, implying annual growth of N/A.

Current consensus DPS estimate is 15.8, implying a prospective dividend yield of 1.9%.

Current consensus EPS estimate suggests the PER is 211.0.

Market Sentiment: 0.2

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


Morgans rates SYD as Hold (3) -

The IFM consortium has revised its bid for Sydney Airport to $8.75 per share and due diligence has been granted. Morgans would be surprised if due diligence reveals any deal breakers, given the public disclosures by Sydney Airport and the consortium's intimate knowledge of the industry.

The broker takes the opportunity to materially downgrade passenger forecasts and retail revenue recovery for coming years, continuing to assume passenger recovery to pre-pandemic levels occurs by FY24.

Target is set at the new bid price of $8.75, up from the prior bid price of $8.45. Hold maintained.

Target price is $8.75 Current Price is $8.37 Difference: $0.38
If SYD meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $8.60, suggesting upside of 4.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Morgans forecasts a full year FY21 dividend of 0.00 cents.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -10.4, 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 FY22:

Morgans forecasts a full year FY22 dividend of 5.75 cents.
At the last closing share price the estimated dividend yield is 0.69%.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 3.9, implying annual growth of N/A.

Current consensus DPS estimate is 15.8, implying a prospective dividend yield of 1.9%.

Current consensus EPS estimate suggests the PER is 211.0.

Market Sentiment: 0.2

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


Ord Minnett rates SYD as Hold (3) -

Sydney Airport has received a revised offer from IFM Consortium, raising the bid price to $8.75 per share from $8.45, and has allowed non-exclusive due diligence for a period of four weeks. Ord Minnett considers this offer fair.

While domestic leisure travel is likely to rebound quickly, the broker points out international will take longer and this is the most important segment in the recovery, given higher passenger charges and expenditure per capita.

The broker does not rule out a competing bid, particularly given the appeal of long-duration infrastructure assets, and maintains a Hold rating. Target is raised to $8.75 from $8.45.

Target price is $8.75 Current Price is $8.37 Difference: $0.38
If SYD meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $8.60, suggesting upside of 4.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 6.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 139.50.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -10.4, 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 FY22:

Ord Minnett forecasts a full year FY22 dividend of 16.90 cents and EPS of 5.00 cents.
At the last closing share price the estimated dividend yield is 2.02%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 167.40.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 3.9, implying annual growth of N/A.

Current consensus DPS estimate is 15.8, implying a prospective dividend yield of 1.9%.

Current consensus EPS estimate suggests the PER is 211.0.

Market Sentiment: 0.2

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

Z1P  ZIP CO LIMITED

Business & Consumer Credit

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Overnight Price: $7.03

Macquarie rates Z1P as Underperform (5) -

In reviewing its outlook on the stock, Macquarie notes an increased risk appetite is driving elevated bad debt write-offs, particularly from QuadPay where these were around 25% of closing receivables and around 1.8% of total transaction value in the second half of FY21.

The elevated bad debts, reduced customer growth and subdued web traffic mean the broker remains cautious about the outlook. Moreover, the company will be cycling very strong months in the December quarter.

Underperform maintained. Target is reduced to $5.70 from $6.15.

Target price is $5.70 Current Price is $7.03 Difference: minus $1.33 (current price is over target).
If Z1P meets the Macquarie target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.67, suggesting upside of 12.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Macquarie forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 16.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 43.40.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is -10.6, 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.

Forecast for FY23:

Macquarie forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 5.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 119.15.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 0.5, 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 1370.0.

Market Sentiment: 0.1

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

Today's Price Target Changes
Company Last Price Broker New Target Prev Target Change
ADH Adairs $3.90 UBS 5.40 4.40 22.73%
BHP BHP Group $41.73 Macquarie 55.00 54.00 1.85%
BXB Brambles $11.24 Citi 13.58 12.89 5.35%
COE Cooper Energy $0.24 Macquarie 0.24 0.22 9.09%
FCL Fineos Corp $4.28 Macquarie 4.92 N/A -
HDN HomeCo Daily Needs REIT $1.60 Macquarie 1.74 1.64 6.10%
Ord Minnett 1.58 1.54 2.60%
UBS 1.59 1.55 2.58%
IEL IDP Education $32.94 UBS 36.40 32.25 12.87%
IPL Incitec Pivot $2.76 Macquarie 3.15 3.04 3.62%
SYD Sydney Airport $8.23 Credit Suisse 8.75 8.00 9.38%
Morgans 8.75 8.45 3.55%
Ord Minnett 8.75 8.45 3.55%
Z1P Zip Co $6.85 Macquarie 5.70 6.15 -7.32%
Summaries
ADH Adairs Buy - UBS Overnight Price $3.69
BHP BHP Group Outperform - Macquarie Overnight Price $41.48
BXB Brambles Buy - Citi Overnight Price $12.26
Equal-weight - Morgan Stanley Overnight Price $12.26
CGF Challenger Hold - Ord Minnett Overnight Price $6.38
COE Cooper Energy Neutral - Macquarie Overnight Price $0.24
CWY Cleanaway Waste Management Accumulate - Ord Minnett Overnight Price $2.63
FCL Fineos Corp Resume Coverage with Outperform - Macquarie Overnight Price $4.30
HDN HomeCo Daily Needs REIT Outperform - Macquarie Overnight Price $1.67
Downgrade to Hold from Accumulate - Ord Minnett Overnight Price $1.67
Neutral - UBS Overnight Price $1.67
IEL IDP Education Buy - UBS Overnight Price $32.72
IPL Incitec Pivot Outperform - Macquarie Overnight Price $2.76
Overweight - Morgan Stanley Overnight Price $2.76
PWR Peter Warren Automotive Overweight - Morgan Stanley Overnight Price $3.20
SYD Sydney Airport Neutral - Credit Suisse Overnight Price $8.37
Hold - Morgans Overnight Price $8.37
Hold - Ord Minnett Overnight Price $8.37
Z1P Zip Co Underperform - Macquarie Overnight Price $7.03
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

9

2. Accumulate

1

3. Hold

8

5. Sell

1

Tuesday 14 September 2021

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Disclaimer:
The content of this information does in no way reflect the opinions of FNArena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FNArena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.