Australian Broker Call
October 09, 2017
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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: 10:42 AM
Your daily news report on the latest recommendation, valuation, forecast and opinion changes.
This report includes concise but limited reviews of research recently published by Stockbrokers, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end.
For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE
Deutsche Bank rates BHP as Buy (1) -
Deutsche Bank increases 2017 and 2018 earnings estimates for iron ore stocks by an average of 9% and 11% respectively despite lifting Australian dollar forecasts by around 10% for the same period.
Despite a view that iron ore will retrace to US$50-60/t in the December quarter some stocks are seen already reflecting a lower iron ore price. A dip in the iron ore price should be seen as an opportunity to buy BHP, in the broker's opinion.
Deutsche Bank retains a Buy rating and raises the target to $28.50 from $28.00.
Target price is $28.50 Current Price is $26.54 Difference: $1.96
If BHP meets the Deutsche Bank target it will return approximately 7% (excluding dividends, fees and charges).
Current consensus price target is $29.20, suggesting upside of 9.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 86.59 cents and EPS of 143.01 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 171.1, implying annual growth of N/A. Current consensus DPS estimate is 105.4, implying a prospective dividend yield of 3.9%. Current consensus EPS estimate suggests the PER is 15.6. |
Forecast for FY19:
Deutsche Bank forecasts a full year FY19 dividend of 96.33 cents and EPS of 160.99 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 149.6, implying annual growth of -12.6%. Current consensus DPS estimate is 94.5, implying a prospective dividend yield of 3.5%. Current consensus EPS estimate suggests the PER is 17.9. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates BSL as Outperform (1) -
The Senate has delivered a positive report recommending the anti-dumping measures bill be passed.
Credit Suisse observes passage of the bill through the Senate will not change the company's first half earnings but should support domestic price increases in the second half.
The broker retains an Outperform rating and $12.75 target.
Target price is $12.75 Current Price is $11.34 Difference: $1.41
If BSL meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).
Current consensus price target is $13.03, suggesting upside of 12.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 13.00 cents and EPS of 88.11 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 96.9, implying annual growth of -22.7%. Current consensus DPS estimate is 11.9, implying a prospective dividend yield of 1.0%. Current consensus EPS estimate suggests the PER is 11.9. |
Forecast for FY19:
Credit Suisse forecasts a full year FY19 dividend of 13.00 cents and EPS of 96.79 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 100.7, implying annual growth of 3.9%. Current consensus DPS estimate is 14.4, implying a prospective dividend yield of 1.2%. Current consensus EPS estimate suggests the PER is 11.5. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates DXS as Hold (3) -
The broker observes leasing is progressing well at the 100 Mount Street, North Sydney, property acquired in February 2016.
On completion, Ord Minnett expects the property to re-value to a cap rate of about 5%. resulting in a $90m development profit of which an estimated $35m has been booked.
Hold rating and $9.50 target retained.
Target price is $9.50 Current Price is $9.36 Difference: $0.14
If DXS meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).
Current consensus price target is $9.46, suggesting upside of 0.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 48.00 cents and EPS of 51.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 58.2, implying annual growth of -55.4%. Current consensus DPS estimate is 47.3, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 16.2. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 47.00 cents and EPS of 53.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 58.3, implying annual growth of 0.2%. Current consensus DPS estimate is 48.2, implying a prospective dividend yield of 5.1%. Current consensus EPS estimate suggests the PER is 16.2. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates FBU as Outperform (1) -
Credit Suisse expects a new CEO will re-define the financial targets and priorities.
The broker's analysis suggests it might be possible for the company to achieve its operating earnings target of NZ$900m-plus by retaining its existing portfolio over 3-4 years, but this is a higher risk and potentially low-reward outcome.
While an asset sale or a narrowing of the existing portfolio is not a remedy for the financial performance, the broker suspects it could free up the business to allow a stronger focus on core operations where value can be added.
Outperform rating. Target is NZ$9.20.
Current Price is $7.11. Target price not assessed.
Current consensus price target is $9.00, suggesting upside of 27.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 38.70 cents and EPS of 57.48 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 58.3, implying annual growth of N/A. Current consensus DPS estimate is 37.9, implying a prospective dividend yield of 5.4%. Current consensus EPS estimate suggests the PER is 12.1. |
Forecast for FY19:
Credit Suisse forecasts a full year FY19 dividend of 42.47 cents and EPS of 63.14 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 59.0, implying annual growth of 1.2%. Current consensus DPS estimate is 38.3, implying a prospective dividend yield of 5.4%. Current consensus EPS estimate suggests the PER is 11.9. |
This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Citi rates JHX as Sell (5) -
Citi observes labour constraints have already provided a bottleneck to construction and the rebuilding of Houston will be elongated.
Pricing power for labour in disaster-affected areas may pull supply from other markets which could counter the upside for material suppliers such as James Hardie at a national level.
Meanwhile, import competition is expected to intensify in the short to medium time because of the rebuilding opportunity that is presented.
Citi maintains a Sell rating and $16 target.
Target price is $16.00 Current Price is $17.64 Difference: minus $1.64 (current price is over target).
If JHX meets the Citi target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $19.65, suggesting upside of 10.8% (ex-dividends)
The company's fiscal year ends in March.
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 46.24 cents and EPS of 75.69 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 76.7, implying annual growth of N/A. Current consensus DPS estimate is 52.2, implying a prospective dividend yield of 2.9%. Current consensus EPS estimate suggests the PER is 23.1. |
Forecast for FY19:
Citi forecasts a full year FY19 dividend of 50.20 cents and EPS of 81.51 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 88.7, implying annual growth of 15.6%. Current consensus DPS estimate is 57.2, implying a prospective dividend yield of 3.2%. Current consensus EPS estimate suggests the PER is 20.0. |
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
Deutsche Bank rates MIN as Hold (3) -
Deutsche Bank increases 2017 and 2018 earnings estimates for iron ore stocks by an average of 9% and 11% respectively despite lifting Australian dollar forecasts by around 10% for the same period.
Despite a view that iron ore will retrace to US$50-60/t in the December quarter some stocks are seen already reflecting a lower iron ore price.
Deutsche Bank considers Mineral Resources shares are the most fully valued of the iron ore names and retains a Hold rating. Target is raised to $15.00 from $13.50.
Target price is $15.00 Current Price is $17.75 Difference: minus $2.75 (current price is over target).
If MIN meets the Deutsche Bank target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $18.10, suggesting upside of 1.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 72.00 cents and EPS of 145.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 125.1, implying annual growth of 16.2%. Current consensus DPS estimate is 62.0, implying a prospective dividend yield of 3.5%. Current consensus EPS estimate suggests the PER is 14.2. |
Forecast for FY19:
Deutsche Bank forecasts a full year FY19 dividend of 76.00 cents and EPS of 151.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 179.8, implying annual growth of 43.7%. Current consensus DPS estimate is 91.7, implying a prospective dividend yield of 5.1%. Current consensus EPS estimate suggests the PER is 9.9. |
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Deutsche Bank rates RIO as Buy (1) -
Deutsche Bank increases 2017 and 2018 earnings estimates for iron ore stocks by an average of 9% and 11% respectively despite lifting Australian dollar forecasts by around 10% for the same period.
Despite a view that iron ore will retrace to US$50-60/t in the December quarter some stocks are seen already reflecting a lower iron ore price. A dip in the iron ore price should be seen as an opportunity to buy Rio Tinto, in the broker's opinion.
Buy retained. Target is raised to $77 from $75.
Target price is $77.00 Current Price is $69.25 Difference: $7.75
If RIO meets the Deutsche Bank target it will return approximately 11% (excluding dividends, fees and charges).
Current consensus price target is $74.00, suggesting upside of 6.1% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Deutsche Bank forecasts a full year FY17 dividend of 338.49 cents and EPS of 593.02 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 589.1, implying annual growth of N/A. Current consensus DPS estimate is 351.1, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 11.8. |
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 320.13 cents and EPS of 594.33 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 519.8, implying annual growth of -11.8%. Current consensus DPS estimate is 300.0, implying a prospective dividend yield of 4.3%. Current consensus EPS estimate suggests the PER is 13.4. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Deutsche Bank rates SEK as Hold (3) -
The company has confirmed the completion of the Zhaopin privatisation and receipt of cash proceeds of US$176m.
Deutsche Bank observes a cash return improves the debt metrics for the purposes of the company's debt covenants and provides scope for the use of net proceeds to pursue either further investment or capital management.
Hold rating retained. Target is $16.00.
Target price is $16.00 Current Price is $16.80 Difference: minus $0.8 (current price is over target).
If SEK meets the Deutsche Bank target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $16.84, suggesting downside of -0.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 37.00 cents and EPS of 57.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 60.6, implying annual growth of -38.1%. Current consensus DPS estimate is 44.2, implying a prospective dividend yield of 2.6%. Current consensus EPS estimate suggests the PER is 27.9. |
Forecast for FY19:
Deutsche Bank forecasts a full year FY19 dividend of 44.00 cents and EPS of 66.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 70.6, implying annual growth of 16.5%. Current consensus DPS estimate is 47.5, implying a prospective dividend yield of 2.8%. Current consensus EPS estimate suggests the PER is 24.0. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgans rates SVY as Add (1) -
Shallow drilling of Thursday's Gossan has confirmed the presence of higher grade "D" veins with the best intercept of 3m at 4.14% copper. These zones may lift the overall resource grade and have confirmed gold and silver credits.
Morgans believes exploration success could lift the share price to its target of $0.28, reduced from $0.36. The broker retains an Add rating.
Target price is $0.28 Current Price is $0.15 Difference: $0.13
If SVY meets the Morgans target it will return approximately 87% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 0.00 cents and EPS of minus 1.70 cents. |
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 1.70 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates TCL as Outperform (1) -
Macquarie expects Transurban to raise capital to support the West Gate tunnel project and follow this, if it is successful, with WestConnex.
The choice of selling only 51% of WestConnex increases competition for the company but the broker observes there are still some competitive advantages that should minimise the likelihood of making an investment mistake.
Outperform retained. Target is reduced $12.78 from $12.90.
Target price is $12.78 Current Price is $11.83 Difference: $0.95
If TCL meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges).
Current consensus price target is $12.68, suggesting upside of 6.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 56.00 cents and EPS of 55.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 23.8, implying annual growth of 103.4%. Current consensus DPS estimate is 56.1, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 50.1. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 59.00 cents and EPS of 62.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 30.5, implying annual growth of 28.2%. Current consensus DPS estimate is 61.5, implying a prospective dividend yield of 5.2%. Current consensus EPS estimate suggests the PER is 39.1. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates TLS as Hold (3) -
Ord Minnett observes Belong Mobile subscribers will be counted as traditional post-paid subscribers and the new distribution channel will likely result in the dilution of the company's post-paid average revenue per user.
On that basis mobile post-paid ARPU expectations are lowered to a -1% decline from stable, on an annual basis, for the foreseeable future.
Hold. Target is reduced to $3.85 from $4.20.
Target price is $3.85 Current Price is $3.43 Difference: $0.425
If TLS meets the Ord Minnett target it will return approximately 12% (excluding dividends, fees and charges).
Current consensus price target is $3.83, suggesting upside of 10.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 22.00 cents and EPS of 35.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 30.9, implying annual growth of -4.9%. Current consensus DPS estimate is 22.0, implying a prospective dividend yield of 6.3%. Current consensus EPS estimate suggests the PER is 11.2. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 22.00 cents and EPS of 38.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 30.4, implying annual growth of -1.6%. Current consensus DPS estimate is 22.1, implying a prospective dividend yield of 6.4%. Current consensus EPS estimate suggests the PER is 11.4. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Summaries
| BHP - | BHP BILLITON | Buy - Deutsche Bank | Overnight Price $26.54 |
| BSL - | BLUESCOPE STEEL | Outperform - Credit Suisse | Overnight Price $11.34 |
| DXS - | DEXUS PROPERTY | Hold - Ord Minnett | Overnight Price $9.36 |
| FBU - | FLETCHER BUILDING | Outperform - Credit Suisse | Overnight Price $7.11 |
| JHX - | JAMES HARDIE | Sell - Citi | Overnight Price $17.64 |
| MIN - | MINERAL RESOURCES | Hold - Deutsche Bank | Overnight Price $17.75 |
| RIO - | RIO TINTO | Buy - Deutsche Bank | Overnight Price $69.25 |
| SEK - | SEEK | Hold - Deutsche Bank | Overnight Price $16.80 |
| SVY - | STAVELY MINERALS | Add - Morgans | Overnight Price $0.15 |
| TCL - | TRANSURBAN GROUP | Outperform - Macquarie | Overnight Price $11.83 |
| TLS - | TELSTRA CORP | Hold - Ord Minnett | Overnight Price $3.43 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 6 |
| 3. Hold | 4 |
| 5. Sell | 1 |
Monday 09 October 2017
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