Australian Broker Call

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December 18, 2019

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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
AGI - AINSWORTH GAME TECHN Upgrade to Neutral from Underperform Macquarie
NST - NORTHERN STAR Upgrade to Neutral from Underperform Credit Suisse
SFR - SANDFIRE Upgrade to Outperform from Neutral Macquarie
AGI  AINSWORTH GAME TECHNOLOGY LIMITED

Gaming

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Overnight Price: $0.77

Macquarie rates AGI as Upgrade to Neutral from Underperform (3) -

Macquarie believes challenges in game performance will continue to affect the growth trajectory. Increased investment in game development is a positive but a recovery in earnings remains a challenge.

FY20 guidance implies Ainsworth Game could report the worst financial result in the last 10 years, with Macquarie forecasting $2m adjusted pre-tax profit.

The broker upgrades to Neutral from Underperform as valuation support has emerged. Target is raised to $0.80 from $0.55.

Target price is $0.80 Current Price is $0.77 Difference: $0.03
If AGI meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 0.00 cents and EPS of 0.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 154.00.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 0.00 cents and EPS of 2.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 38.50.

Market Sentiment: -0.5

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

AWC  ALUMINA LIMITED

Aluminium, Bauxite & Alumina

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Overnight Price: $2.37

Citi rates AWC as Neutral (3) -

AWAC will permanently close Point Comfort refinery and report a post-tax restructuring charge of US$260m in the fourth quarter of 2019. Citi assumes the charges will not be taken as exceptional items.

The broker maintains a Neutral rating and $2.20 target.

Target price is $2.20 Current Price is $2.37 Difference: minus $0.17 (current price is over target).
If AWC meets the Citi target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.13, suggesting downside of -10.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Citi forecasts a full year FY19 dividend of 7.04 cents and EPS of 11.64 cents.
At the last closing share price the estimated dividend yield is 2.97%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.36.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.5, implying annual growth of N/A.

Current consensus DPS estimate is 10.3, implying a prospective dividend yield of 4.3%.

Current consensus EPS estimate suggests the PER is 14.4.

Forecast for FY20:

Citi forecasts a full year FY20 dividend of 17.68 cents and EPS of 17.82 cents.
At the last closing share price the estimated dividend yield is 7.46%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.30.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.3, implying annual growth of -25.5%.

Current consensus DPS estimate is 11.6, implying a prospective dividend yield of 4.9%.

Current consensus EPS estimate suggests the PER is 19.3.

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


Macquarie rates AWC as Underperform (5) -

The AWAC joint venture has announced a formal closure of Point Comfort alumina refinery in Texas. This is immaterial to forecasts as Macquarie had assumed no re-start.

The broker assesses earnings downgrade momentum for Alumina Ltd based on the spot price scenario.

Macquarie also believes the San Ciprian refinery in Spain and the Portland aluminium smelter in Victoria are also at risk of closure as part of Alcoa's review of global production capacity.

Underperform rating and $1.30 target maintained.

Target price is $1.30 Current Price is $2.37 Difference: minus $1.07 (current price is over target).
If AWC meets the Macquarie target it will return approximately minus 45% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.13, suggesting downside of -10.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Macquarie forecasts a full year FY19 dividend of 9.92 cents and EPS of 18.54 cents.
At the last closing share price the estimated dividend yield is 4.18%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.79.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.5, implying annual growth of N/A.

Current consensus DPS estimate is 10.3, implying a prospective dividend yield of 4.3%.

Current consensus EPS estimate suggests the PER is 14.4.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 5.89 cents and EPS of 12.36 cents.
At the last closing share price the estimated dividend yield is 2.49%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.18.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.3, implying annual growth of -25.5%.

Current consensus DPS estimate is 11.6, implying a prospective dividend yield of 4.9%.

Current consensus EPS estimate suggests the PER is 19.3.

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


Morgan Stanley rates AWC as Overweight (1) -

Alumina Ltd has announced the closure of Point Comfort refinery in Texas. AWAC expects to record restructuring related charges after tax of US$260m.

Morgan Stanley notes this will have a limited impact on dividend yield, which is based on cash flow. The broker's current model assumes an annual curtailment and closure cash cost of US$40m for Point Comfort in 2019 and 2020.

Overweight rating, Attractive industry view and $2.45 target maintained.

Target price is $2.45 Current Price is $2.37 Difference: $0.08
If AWC meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.13, suggesting downside of -10.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Morgan Stanley forecasts a full year FY19 dividend of 12.93 cents and EPS of 17.24 cents.
At the last closing share price the estimated dividend yield is 5.46%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.74.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.5, implying annual growth of N/A.

Current consensus DPS estimate is 10.3, implying a prospective dividend yield of 4.3%.

Current consensus EPS estimate suggests the PER is 14.4.

Forecast for FY20:

Morgan Stanley forecasts a full year FY20 dividend of 10.35 cents and EPS of 7.04 cents.
At the last closing share price the estimated dividend yield is 4.37%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 33.66.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.3, implying annual growth of -25.5%.

Current consensus DPS estimate is 11.6, implying a prospective dividend yield of 4.9%.

Current consensus EPS estimate suggests the PER is 19.3.

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

FCL  FINEOS CORPORATION HOLDINGS PLC

Cloud services

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Overnight Price: $2.76

Macquarie rates FCL as Outperform (1) -

The company's trading update has indicated subscription revenue growth of around 39% so far in FY20. Services revenue is 19% ahead of prospectus.

This strengthens the overall outlook and Macquarie maintains an Outperform rating and $3.75 target.

Target price is $3.75 Current Price is $2.76 Difference: $0.99
If FCL meets the Macquarie target it will return approximately 36% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 0.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 394.29.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 1.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 212.31.

Market Sentiment: 1.0

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

HMC  HOME CONSORTIUM LIMITED

Real Estate

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Overnight Price: $3.85

Ord Minnett rates HMC as Initiation of coverage with Hold (3) -

Ord Minnett initiates coverage of Home Consortium with a Hold rating and $3.70 target. The company acquired the old Masters assets and has converted them into convenience-based retail assets.

Currently there are 21 trading centres, and a further nine developments are expected to be delivered over the next few years.

The company is paying a dividend based on where its funds will be as the 30 assets stabilise, which the broker assesses should enable an elevated distribution pay-out ratio in FY20 and FY21.

Target price is $3.70 Current Price is $3.85 Difference: minus $0.15 (current price is over target).
If HMC meets the Ord Minnett target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 14.00 cents and EPS of 7.00 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 55.00.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 20.00 cents and EPS of 15.00 cents.
At the last closing share price the estimated dividend yield is 5.19%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.67.

Market Sentiment: 0.0

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

ILU  ILUKA RESOURCES LIMITED

Mineral Sands

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Overnight Price: $9.34

Citi rates ILU as Sell (5) -

The impairment of Sierra Rutile has not surprised Citi. Iluka Resources will recognise a pre-tax impairment charge of US$290m. Carrying value will be reduced to just US$50m. This assumes minimal operational improvement.

Citi finds it difficult to ascribe any meaningful value to Sembehun at this stage, noting the company expects to provide an update by mid 2020. Sell rating and $9 target maintained.

Target price is $9.00 Current Price is $9.34 Difference: minus $0.34 (current price is over target).
If ILU meets the Citi target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.53, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Citi forecasts a full year FY19 dividend of 9.00 cents and EPS of 65.60 cents.
At the last closing share price the estimated dividend yield is 0.96%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.24.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 60.1, implying annual growth of -16.8%.

Current consensus DPS estimate is 14.5, implying a prospective dividend yield of 1.6%.

Current consensus EPS estimate suggests the PER is 15.5.

Forecast for FY20:

Citi forecasts a full year FY20 dividend of 28.00 cents and EPS of 93.60 cents.
At the last closing share price the estimated dividend yield is 3.00%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.98.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 77.3, implying annual growth of 28.6%.

Current consensus DPS estimate is 21.9, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 12.1.

Market Sentiment: -0.2

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


Credit Suisse rates ILU as Neutral (3) -

The impairments taken at Sierra Rutile were well flagged but slightly larger than Credit Suisse expected. In the event a development route for Sembehun cannot be found the auditors are indicating that Sierra Rutile is now worth just US$50m, which the broker points out is a far cry from the US$330m paid three years ago, plus the US$150m of capital sunk post acquisition.

That said, Credit Suisse still ascribes a greater value, and assesses the market also does, on the basis the Sembehun resource is ultimately developed.

Meanwhile, the review of MAC has been underway since September and is the most important data point the broker will look for in early 2020.

Neutral rating maintained. Target is reduced to $9.00 from $9.20.

Target price is $9.00 Current Price is $9.34 Difference: minus $0.34 (current price is over target).
If ILU meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.53, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Credit Suisse forecasts a full year FY19 dividend of 15.00 cents and EPS of 66.43 cents.
At the last closing share price the estimated dividend yield is 1.61%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.06.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 60.1, implying annual growth of -16.8%.

Current consensus DPS estimate is 14.5, implying a prospective dividend yield of 1.6%.

Current consensus EPS estimate suggests the PER is 15.5.

Forecast for FY20:

Credit Suisse forecasts a full year FY20 dividend of 14.00 cents and EPS of 63.70 cents.
At the last closing share price the estimated dividend yield is 1.50%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.66.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 77.3, implying annual growth of 28.6%.

Current consensus DPS estimate is 21.9, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 12.1.

Market Sentiment: -0.2

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


Macquarie rates ILU as No Rating (-1) -

Iluka has written down the book value of Sierra Rutile to US$50m and has also written off a US$115m deferred tax asset relating to Sierra Rutile. Macquarie was not surprised by the announcement.

The reduction in carrying value comes as the company continues to assess development options for the Sembehun project. Macquarie is restricted on a rating and target at present.

Current Price is $9.34. Target price not assessed.

Current consensus price target is $9.53, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Macquarie forecasts a full year FY19 dividend of 13.00 cents and EPS of 73.40 cents.
At the last closing share price the estimated dividend yield is 1.39%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.72.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 60.1, implying annual growth of -16.8%.

Current consensus DPS estimate is 14.5, implying a prospective dividend yield of 1.6%.

Current consensus EPS estimate suggests the PER is 15.5.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 22.00 cents and EPS of 78.50 cents.
At the last closing share price the estimated dividend yield is 2.36%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.90.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 77.3, implying annual growth of 28.6%.

Current consensus DPS estimate is 21.9, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 12.1.

Market Sentiment: -0.2

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


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

Morgan Stanley believes the impairment of Sierra Rutile highlights the difficulties to date at the operation. The carrying value has been reduced to US$50m.

This assumes minimal operating improvements and the broker notes it does not include a meaningful value for Sembehun. Meanwhile, updated guidance for 2019 is for rutile production of 135,000t.

Equal-weight rating retained along with a $10.45 target. Industry view: In-Line.

Target price is $10.45 Current Price is $9.34 Difference: $1.11
If ILU meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $9.53, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Morgan Stanley forecasts a full year FY19 dividend of 15.60 cents and EPS of 66.00 cents.
At the last closing share price the estimated dividend yield is 1.67%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.15.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 60.1, implying annual growth of -16.8%.

Current consensus DPS estimate is 14.5, implying a prospective dividend yield of 1.6%.

Current consensus EPS estimate suggests the PER is 15.5.

Forecast for FY20:

Morgan Stanley forecasts a full year FY20 dividend of 30.30 cents and EPS of 73.00 cents.
At the last closing share price the estimated dividend yield is 3.24%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.79.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 77.3, implying annual growth of 28.6%.

Current consensus DPS estimate is 21.9, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 12.1.

Market Sentiment: -0.2

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


Ord Minnett rates ILU as Hold (3) -

Iluka Resources will write down the carrying value of the Sierra Rutile operations by US$290m with a flow-on write-down of deferred tax assets of US$115m. The company has, as yet, been unable to find a viable path to develop the Sembehun deposit.

Ord Minnett maintains a Hold rating and $9.20 target.

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

Target price is $9.20 Current Price is $9.34 Difference: minus $0.14 (current price is over target).
If ILU meets the Ord Minnett target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.53, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Ord Minnett forecasts a full year FY19 EPS of 70.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.34.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 60.1, implying annual growth of -16.8%.

Current consensus DPS estimate is 14.5, implying a prospective dividend yield of 1.6%.

Current consensus EPS estimate suggests the PER is 15.5.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 EPS of 82.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.39.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 77.3, implying annual growth of 28.6%.

Current consensus DPS estimate is 21.9, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 12.1.

Market Sentiment: -0.2

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


UBS rates ILU as Neutral (3) -

Iluka Resources has announced a US$290m write down of the Sierra Rutile asset to US$50m because of a lack of economic options at this stage for the development of Sembehun.

Guidance for 2019 has been updated to production of 135,000t of rutile and 2022 170,000t.

UBS maintains a Neutral rating and $10 target. The broker believes the biggest issue for management is the market's perception of short mine life and this announcement does not help.

Target price is $10.00 Current Price is $9.34 Difference: $0.66
If ILU meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $9.53, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

UBS forecasts a full year FY19 dividend of 20.00 cents and EPS of 19.00 cents.
At the last closing share price the estimated dividend yield is 2.14%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 49.16.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 60.1, implying annual growth of -16.8%.

Current consensus DPS estimate is 14.5, implying a prospective dividend yield of 1.6%.

Current consensus EPS estimate suggests the PER is 15.5.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 15.00 cents and EPS of 73.00 cents.
At the last closing share price the estimated dividend yield is 1.61%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.79.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 77.3, implying annual growth of 28.6%.

Current consensus DPS estimate is 21.9, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 12.1.

Market Sentiment: -0.2

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

NAB  NATIONAL AUSTRALIA BANK LIMITED

Banks

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Overnight Price: $25.23

Ord Minnett rates NAB as Accumulate (2) -

ASIC has commenced civil penalty proceedings against National Australia Bank in the Federal Court relating to alleged breaches of the act.

These relate to fee-for-no-service conduct, which was investigated in depth during the Royal Commission and for which refunds have been provisioned.

Ord Minnett notes penalties are difficult to estimate although the bank appears to have a strong level of remediation provision.

Accumulate rating and $29.30 target maintained.

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

Target price is $29.30 Current Price is $25.23 Difference: $4.07
If NAB meets the Ord Minnett target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $27.10, suggesting upside of 7.4% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 166.00 cents and EPS of 210.00 cents.
At the last closing share price the estimated dividend yield is 6.58%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.01.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 201.1, implying annual growth of 12.4%.

Current consensus DPS estimate is 163.3, implying a prospective dividend yield of 6.5%.

Current consensus EPS estimate suggests the PER is 12.5.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 166.00 cents and EPS of 217.00 cents.
At the last closing share price the estimated dividend yield is 6.58%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.63.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 207.3, implying annual growth of 3.1%.

Current consensus DPS estimate is 163.3, implying a prospective dividend yield of 6.5%.

Current consensus EPS estimate suggests the PER is 12.2.

Market Sentiment: -0.1

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

NST  NORTHERN STAR RESOURCES LTD

Gold & Silver

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Overnight Price: $9.98

Citi rates NST as Buy (1) -

Northern Star will become Australia second-largest gold producer after taking a 50% stake in the Kalgoorlie Super Pit. After the transition, Citi notes the joint venture will get its third general manager in less than seven months, a key "person risk".

 Reservations on the timing and management challenges aside, Citi considers the transaction should improve the company's global appeal. Importantly, the broker acknowledges the re-vamping of Pogo is on track.

Citi retains a Buy rating and $12.40 target.

Target price is $12.40 Current Price is $9.98 Difference: $2.42
If NST meets the Citi target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $11.05, suggesting upside of 10.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Citi forecasts a full year FY20 dividend of 17.00 cents and EPS of 72.70 cents.
At the last closing share price the estimated dividend yield is 1.70%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.73.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 59.2, implying annual growth of 142.6%.

Current consensus DPS estimate is 18.2, implying a prospective dividend yield of 1.8%.

Current consensus EPS estimate suggests the PER is 16.9.

Forecast for FY21:

Citi forecasts a full year FY21 dividend of 21.00 cents and EPS of 81.10 cents.
At the last closing share price the estimated dividend yield is 2.10%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.31.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 81.5, implying annual growth of 37.7%.

Current consensus DPS estimate is 22.6, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 12.2.

Market Sentiment: 0.5

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


Credit Suisse rates NST as Upgrade to Neutral from Underperform (3) -

Credit Suisse believes the company has paid a fair price for 50% of the Super Pit based on the current reserves and the assumption that the current constrained production and elevated costs will improve.

The broker suspects management's reluctance to provide more than just 2020 guidance reflects uncertainties identified during due diligence, or perhaps the lack of visibility around future production.

Rating is upgraded to Neutral from Underperform and the target is steady at $9.60.

Target price is $9.60 Current Price is $9.98 Difference: minus $0.38 (current price is over target).
If NST meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.05, suggesting upside of 10.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Credit Suisse forecasts a full year FY20 dividend of 23.94 cents and EPS of 68.09 cents.
At the last closing share price the estimated dividend yield is 2.40%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.66.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 59.2, implying annual growth of 142.6%.

Current consensus DPS estimate is 18.2, implying a prospective dividend yield of 1.8%.

Current consensus EPS estimate suggests the PER is 16.9.

Forecast for FY21:

Credit Suisse forecasts a full year FY21 dividend of 35.89 cents and EPS of 98.78 cents.
At the last closing share price the estimated dividend yield is 3.60%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.10.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 81.5, implying annual growth of 37.7%.

Current consensus DPS estimate is 22.6, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 12.2.

Market Sentiment: 0.5

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


Morgan Stanley rates NST as Underweight (5) -

Northern Star will acquire Newmont's 50% operating stake in the Kalgoorlie Super Pit for US$800m. This will be funded by a placement and a share purchase plan.

Morgan Stanley notes Northern Star is a high-quality underground miner but if the Super Pit cannot go underground then adding value to the mature open pit may be more difficult.

However the deal is considered accretive on an enterprise value/reserve basis and should mean the company's production is further diversified.

Underweight rating. Industry view is Attractive. Target is $9.10.

Target price is $9.10 Current Price is $9.98 Difference: minus $0.88 (current price is over target).
If NST meets the Morgan Stanley target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.05, suggesting upside of 10.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Morgan Stanley forecasts a full year FY20 dividend of 16.50 cents and EPS of 47.00 cents.
At the last closing share price the estimated dividend yield is 1.65%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.23.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 59.2, implying annual growth of 142.6%.

Current consensus DPS estimate is 18.2, implying a prospective dividend yield of 1.8%.

Current consensus EPS estimate suggests the PER is 16.9.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 16.90 cents and EPS of 60.00 cents.
At the last closing share price the estimated dividend yield is 1.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.63.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 81.5, implying annual growth of 37.7%.

Current consensus DPS estimate is 22.6, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 12.2.

Market Sentiment: 0.5

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


UBS rates NST as Buy (1) -

Northern Star will buy 50% of the Super Pit in Kalgoorlie from Newmont. UBS believes the price is fair and the partners will add value through more aggressive exploration to enable a greater contribution from higher-grade underground mining.

The broker also believes the latest production numbers from Pogo show an inflection point in performance has arrived. This is the main reason UBS retains a Buy rating. Target is reduced to $11.70 from $12.00.

Target price is $11.70 Current Price is $9.98 Difference: $1.72
If NST meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $11.05, suggesting upside of 10.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

UBS forecasts a full year FY20 dividend of 19.00 cents and EPS of 61.00 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 16.36.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 59.2, implying annual growth of 142.6%.

Current consensus DPS estimate is 18.2, implying a prospective dividend yield of 1.8%.

Current consensus EPS estimate suggests the PER is 16.9.

Forecast for FY21:

UBS forecasts a full year FY21 dividend of 23.00 cents and EPS of 89.00 cents.
At the last closing share price the estimated dividend yield is 2.30%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.21.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 81.5, implying annual growth of 37.7%.

Current consensus DPS estimate is 22.6, implying a prospective dividend yield of 2.3%.

Current consensus EPS estimate suggests the PER is 12.2.

Market Sentiment: 0.5

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

ORI  ORICA LIMITED

Mining Sector Contracting

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Overnight Price: $23.32

Citi rates ORI as Neutral (3) -

Citi notes the company's upbeat outlook at the AGM, with profit momentum being driven by demand, technology and the prospect of Burrup being operational in the second half.

At current levels the broker retains a Neutral rating and $24.50 target, viewing the risk/reward as evenly balanced.

Target price is $24.50 Current Price is $23.32 Difference: $1.18
If ORI meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $21.91, suggesting downside of -6.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Citi forecasts a full year FY20 dividend of 62.00 cents and EPS of 103.20 cents.
At the last closing share price the estimated dividend yield is 2.66%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.60.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 104.2, implying annual growth of 61.6%.

Current consensus DPS estimate is 61.3, implying a prospective dividend yield of 2.6%.

Current consensus EPS estimate suggests the PER is 22.4.

Forecast for FY21:

Citi forecasts a full year FY21 dividend of 69.00 cents and EPS of 115.40 cents.
At the last closing share price the estimated dividend yield is 2.96%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.21.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 116.2, implying annual growth of 11.5%.

Current consensus DPS estimate is 69.6, implying a prospective dividend yield of 3.0%.

Current consensus EPS estimate suggests the PER is 20.1.

Market Sentiment: -0.1

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


Macquarie rates ORI as Neutral (3) -

FY20 guidance has been reiterated at the AGM. Burrup is expected to be fully operational in the second half.

Macquarie notes the Yara ammonia plant has been off-line since the end of November and while there is time for this to be fixed ahead of the start up at Burrup the situation needs to be monitored.

Meanwhile, GroundProbe continues to track ahead of expectations. Neutral rating and $23.05 target maintained.

Target price is $23.05 Current Price is $23.32 Difference: minus $0.27 (current price is over target).
If ORI meets the Macquarie target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $21.91, suggesting downside of -6.0% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 57.90 cents and EPS of 102.50 cents.
At the last closing share price the estimated dividend yield is 2.48%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 22.75.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 104.2, implying annual growth of 61.6%.

Current consensus DPS estimate is 61.3, implying a prospective dividend yield of 2.6%.

Current consensus EPS estimate suggests the PER is 22.4.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 62.00 cents and EPS of 109.90 cents.
At the last closing share price the estimated dividend yield is 2.66%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.22.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 116.2, implying annual growth of 11.5%.

Current consensus DPS estimate is 69.6, implying a prospective dividend yield of 3.0%.

Current consensus EPS estimate suggests the PER is 20.1.

Market Sentiment: -0.1

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

PPH  PUSHPAY HOLDINGS LIMITED

Software & Services

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Overnight Price: $3.87

Ord Minnett rates PPH as Lighten (4) -

The company has acquired Church Community Builder for US$87.5m. Disclosure was limited but Ord Minnett estimates a 5.7x trailing enterprise value/gross profit multiple was paid and expects the acquisition to be 2% accretive to cash flow in FY21.

In the near term the broker envisages an opportunity to consolidate the Church Community Builder processing volume onto the Pushpay platform and improve the economics.

At this stage Ord Minnett retains a cautious stance and awaits more evidence that the acquisition can deliver an attractive return on the price paid. Lighten rating maintained. Target is reduced to $2.72 from $2.77.

Target price is $2.72 Current Price is $3.87 Difference: minus $1.15 (current price is over target).
If PPH meets the Ord Minnett target it will return approximately minus 30% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.72, suggesting downside of -29.7% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 0.00 cents and EPS of 7.47 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 51.79.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 8.5, 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 45.5.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 0.00 cents and EPS of 11.93 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 32.45.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.6, implying annual growth of 48.2%.

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

Current consensus EPS estimate suggests the PER is 30.7.

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

SFR  SANDFIRE RESOURCES NL

Copper

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Overnight Price: $6.10

Macquarie rates SFR as Upgrade to Outperform from Neutral (1) -

For the first time Macquarie incorporates both the T3 project and Black Butte into modelling. While lower grade resources are likely to add 2-3 years life to DeGrussa, albeit at half the current production rate, the T3 project should offset this.

Meanwhile, at Black Butte the company is expecting to secure a decision later this year, although Macquarie notes there is a risk of further delays. Rating is upgraded to Outperform from Neutral. Target is lifted 13% to $6.80.

Target price is $6.80 Current Price is $6.10 Difference: $0.7
If SFR meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $6.46, suggesting upside of 6.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Macquarie forecasts a full year FY20 dividend of 23.00 cents and EPS of 62.10 cents.
At the last closing share price the estimated dividend yield is 3.77%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.82.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 69.2, implying annual growth of 6.1%.

Current consensus DPS estimate is 22.3, implying a prospective dividend yield of 3.7%.

Current consensus EPS estimate suggests the PER is 8.8.

Forecast for FY21:

Macquarie forecasts a full year FY21 dividend of 24.00 cents and EPS of 77.60 cents.
At the last closing share price the estimated dividend yield is 3.93%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.86.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 92.5, implying annual growth of 33.7%.

Current consensus DPS estimate is 28.6, implying a prospective dividend yield of 4.7%.

Current consensus EPS estimate suggests the PER is 6.6.

Market Sentiment: 0.4

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

SKI  SPARK INFRASTRUCTURE GROUP

Infrastructure & Utilities

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Overnight Price: $2.20

Morgans rates SKI as Reduce (5) -

South Australia Power Network (49% owned by Spark Infrastructure) has asked for no material change in total revenue across 2020-25, even though it is targeting higher expenditure than the regulator assumes.

Morgans notes expenditure is the main issue, as it drives growth in the regulated asset base and thus the return on, and return of, capital allowance.

Hence, the network will need to outperform on costs. Morgans builds a -3% shortfall into revenue modelling and maintains a Reduce rating. Target is raised to $2.00 from $1.96. SAPN is 28% of the broker's target price.

Target price is $2.00 Current Price is $2.20 Difference: minus $0.2 (current price is over target).
If SKI meets the Morgans target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.27, suggesting upside of 3.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Morgans forecasts a full year FY19 dividend of 15.00 cents and EPS of 15.00 cents.
At the last closing share price the estimated dividend yield is 6.82%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.67.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 8.2, implying annual growth of N/A.

Current consensus DPS estimate is 15.0, implying a prospective dividend yield of 6.8%.

Current consensus EPS estimate suggests the PER is 26.8.

Forecast for FY20:

Morgans forecasts a full year FY20 dividend of 15.00 cents and EPS of 15.00 cents.
At the last closing share price the estimated dividend yield is 6.82%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.67.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 7.6, implying annual growth of -7.3%.

Current consensus DPS estimate is 14.5, implying a prospective dividend yield of 6.6%.

Current consensus EPS estimate suggests the PER is 28.9.

Market Sentiment: 0.0

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

WBC  WESTPAC BANKING CORPORATION

Banks

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Overnight Price: $24.47

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

APRA has commenced an investigation into possible breaches of the banking act by Westpac. It will also increase capital requirements by $500m and initiate a review program focused on risk governance.

Morgan Stanley expected an inquiry would result, similar to the one launched into Commonwealth Bank's ((CBA)) practices in 2017.

Equal-weight rating maintained. Target is $24.50. Industry view: In Line.

Target price is $24.50 Current Price is $24.47 Difference: $0.03
If WBC meets the Morgan Stanley target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $26.51, suggesting upside of 8.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Morgan Stanley forecasts a full year FY20 dividend of 160.00 cents and EPS of 162.00 cents.
At the last closing share price the estimated dividend yield is 6.54%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.10.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 185.8, implying annual growth of -19.5%.

Current consensus DPS estimate is 160.0, implying a prospective dividend yield of 6.5%.

Current consensus EPS estimate suggests the PER is 13.2.

Forecast for FY21:

Morgan Stanley forecasts a full year FY21 dividend of 160.00 cents and EPS of 188.00 cents.
At the last closing share price the estimated dividend yield is 6.54%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.02.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 200.9, implying annual growth of 8.1%.

Current consensus DPS estimate is 160.8, implying a prospective dividend yield of 6.6%.

Current consensus EPS estimate suggests the PER is 12.2.

Market Sentiment: 0.3

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


Ord Minnett rates WBC as Hold (3) -

APRA has launched an investigation into whether Westpac has breached the banking act. The review will focus on the bank's conduct that led to the matters alleged by AUSTRAC regarding money laundering.

APRA will also impose a $500m increase on the bank's capital requirements taking this to $1bn. Ord Minnett maintains a Hold rating, given the potential impact on the underlying business and ongoing retail banking pressures.

Target is trimmed to $25.00 from $25.30.

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

Target price is $25.00 Current Price is $24.47 Difference: $0.53
If WBC meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $26.51, suggesting upside of 8.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Ord Minnett forecasts a full year FY20 dividend of 160.00 cents and EPS of 173.00 cents.
At the last closing share price the estimated dividend yield is 6.54%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.14.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 185.8, implying annual growth of -19.5%.

Current consensus DPS estimate is 160.0, implying a prospective dividend yield of 6.5%.

Current consensus EPS estimate suggests the PER is 13.2.

Forecast for FY21:

Ord Minnett forecasts a full year FY21 dividend of 160.00 cents and EPS of 196.00 cents.
At the last closing share price the estimated dividend yield is 6.54%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.48.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 200.9, implying annual growth of 8.1%.

Current consensus DPS estimate is 160.8, implying a prospective dividend yield of 6.6%.

Current consensus EPS estimate suggests the PER is 12.2.

Market Sentiment: 0.3

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
AGI AINSWORTH GAME TECHN $0.77 Macquarie 0.80 0.55 45.45%
ILU ILUKA RESOURCES $9.34 Credit Suisse 9.00 9.20 -2.17%
Macquarie N/A 9.30 -100.00%
NST NORTHERN STAR $9.98 UBS 11.70 12.00 -2.50%
PPH PUSHPAY HOLDINGS $3.87 Ord Minnett 2.72 2.77 -1.81%
SFR SANDFIRE $6.10 Macquarie 6.80 6.00 13.33%
SKI SPARK INFRASTRUCTURE $2.20 Morgans 2.00 1.96 2.04%
WBC WESTPAC BANKING $24.47 Ord Minnett 25.00 25.30 -1.19%
Summaries
AGI AINSWORTH GAME TECHN Upgrade to Neutral from Underperform - Macquarie Overnight Price $0.77
AWC ALUMINA Neutral - Citi Overnight Price $2.37
Underperform - Macquarie Overnight Price $2.37
Overweight - Morgan Stanley Overnight Price $2.37
FCL FINEOS CORP Outperform - Macquarie Overnight Price $2.76
HMC HOME CONSORTIUM LTD Initiation of coverage with Hold - Ord Minnett Overnight Price $3.85
ILU ILUKA RESOURCES Sell - Citi Overnight Price $9.34
Neutral - Credit Suisse Overnight Price $9.34
No Rating - Macquarie Overnight Price $9.34
Equal-weight - Morgan Stanley Overnight Price $9.34
Hold - Ord Minnett Overnight Price $9.34
Neutral - UBS Overnight Price $9.34
NAB NATIONAL AUSTRALIA BANK Accumulate - Ord Minnett Overnight Price $25.23
NST NORTHERN STAR Buy - Citi Overnight Price $9.98
Upgrade to Neutral from Underperform - Credit Suisse Overnight Price $9.98
Underweight - Morgan Stanley Overnight Price $9.98
Buy - UBS Overnight Price $9.98
ORI ORICA Neutral - Citi Overnight Price $23.32
Neutral - Macquarie Overnight Price $23.32
PPH PUSHPAY HOLDINGS Lighten - Ord Minnett Overnight Price $3.87
SFR SANDFIRE Upgrade to Outperform from Neutral - Macquarie Overnight Price $6.10
SKI SPARK INFRASTRUCTURE Reduce - Morgans Overnight Price $2.20
WBC WESTPAC BANKING Equal-weight - Morgan Stanley Overnight Price $24.47
Hold - Ord Minnett Overnight Price $24.47
RATING SUMMARY
Rating No. Of Recommendations
1. Buy

5

2. Accumulate

1

3. Hold

12

4. Reduce

1

5. Sell

4

Wednesday 18 December 2019

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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.