Australian Broker Call

Citi rates AX1 as Neutral (3) -

Citi did not believe supply chain issues in Vietnam would be an issue for Accent Group in the first half, given excess inventory, but remained cautious on the second half.

However Nike’s second quarter result indicates supply chain issues will start to normalise in FY23 with Vietnam lockdowns reducing. That said, the more significant risk for Accent is that of Nike and other brands shifting focus to direct-to-consumer channels.

Neutral and $2.99 target retained.

Target price is $2.99 Current Price is $2.36 Difference: $0.63
If AX1 meets the Citi target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $2.84, suggesting upside of 20.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Citi rates CHC as Buy (1) -

Charter Hall has entered a strategic partnership with Paradice Investment Management and Citi gives the deal a first glance.

Charter Hall will buy a 50% stake in Paradice for $207m, 70% being equity funded and the balance in cash.

Citi says investor concerns about the strategic challenges of Charter Hall buying a listed equities business (and growth fears) triggered a  -7.5% sell-off but the broker considers the reaction exaggerated given the purchase only represents 2% of market capitalisation.

Citi points to last week's 27% earnings upgrade based on a guidance upgrade and strong underlying growth and retains a Buy rating and $24 target.

Target price is $24.00 Current Price is $19.99 Difference: $4.01
If CHC meets the Citi target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $22.55, suggesting upside of 14.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Macquarie rates CHC as Outperform (1) -

Charter Hall has entered an agreement to buy a 50% stake in listed equity fund manager Paradice Investments for 70% scrip and 30% cash.

Macquarie estimates the deal will be 1.2% accretive in FY22 and 3% thereafter, and upgrades estimates accordingly.

Charter Hall reaffirmed FY22 operating EPS guidance, and Macquarie expects another upgrade at the first-half result.

Macquarie says the deal will increase Charter Halls' funds under management (FUM) to $79.5bn from $61.3bn and gives Charter Hall an opportunity to service customers across several equities segments - Paradice has a scaleable model with growth potential.

The broker says justification will come by way of successful execution: increasing combined FUM through the combined platform.

Even though the deal represents a small percentage of Charter Hall's market capitalisation, uncertainty may prove a near-term drag, says Macquarie, but an Outperform rating is retained and the target price inches up to $22.98 from $22.90.

Target price is $22.98 Current Price is $19.99 Difference: $2.99
If CHC meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $22.55, suggesting upside of 14.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Macquarie rates JMS as Neutral (3) -

Jupiter Mines' November-quarter trading update outpaced Macquarie on production and sales by 10% and 2% respectively. Earnings (EBITDA) was as expected, despite a -2% fall in Tshipi EBITDA arising from softer prices.

Management said total material movements were travelling -10% below expectations as a result of excavator, dump truck and operator shortages, combined with high October rains.

Macquarie expects a healthy cash balance will fund a healthy unfranked dividend (the broker's dividend forecasts rise to 10% for FY23 and beyond).

Neutral rating retained, the broker awaiting further strategic commitments. Target price is 20c. 

Target price is $0.20 Current Price is $0.21 Difference: minus $0.01 (current price is over target).
If JMS meets the Macquarie target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in February.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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

Macquarie rates KLL as Outperform (1) -

Kalium Lakes has advised Beyondie's ramp-up will be softer than forecast, citing commissioning issues, and will provide a new ramp-up schedule after review. The news follows hot on the heels of the mid-December completion of a placement to fund the ramp-up.

Macquarie notes the ramp-up is critical to unlocking value for Kalium. FY22 EPS losses are reduced -4% to reflect lower capital expenditure, and FY23 EPS losses are reduced by -16%.

Management does not expect the delay will affect long-term production targets and Macquarie retains an Outperform rating and 20c target (-50% from the last update).

Target price is $0.20 Current Price is $0.13 Difference: $0.07
If KLL meets the Macquarie target it will return approximately 54% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgans rates LNK as Downgrade to Hold from Add (3) -

Link Administration has agreed to be taken over by Dye & Durham at $5.50, beating Carlyle Group's prior bid of $5.38. Morgans believes it's a favorable outcome for Link shareholders, given recent earnings underperformance.

Carlyle is continuing its due diligence so may yet come back with a better bid.

The broker lifts its target to the $5.50 bid price from $5.38 and downgrades to Hold from Add as the trading price is already in line.

Target price is $5.50 Current Price is $5.51 Difference: minus $0.01 (current price is over target).
If LNK meets the Morgans target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.53, suggesting downside of -0.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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

Macquarie rates MGX as Outperform (1) -

Mount Gibson Iron has reduced Koolan Island sales guidance due to advanced stripping and announced a -$40m to -$45m impairment to the Shine project will be recognised the first-half result.

Macquarie notes the stripping program, low sales and rising costs have hurt Mount Gibson's cash standing, now at $122m from $436m the previous year.

But management issued a stripping timeline revealing losses will continue during the advanced stripping phase, before costs fall and cash flow recovers strongly.

Macquarie cuts the target price to 70c from 80c. Outperform rating retained, the broker believing high grades, combined with forecast strong production growth and lower costs support a strong outlook after the advanced stripping is completed.

Target price is $0.70 Current Price is $0.43 Difference: $0.27
If MGX meets the Macquarie target it will return approximately 63% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgans rates POS as Upgrade to Add from Hold (1) -

Recent wide nickel intersections within Poseidon Nickel's existing Silver Swan Resource builds confidence infill drilling can increase the contained high grade nickel tonnes, Morgans notes.

Poseidon remains an attractive option on the nickel price, the broker suggests, with a pathway to a fast production restart in a strong nickel market and exploration upside.

On a US$7.50/lb nickel price assumption and US74c exchange rate the broker maintains a 13c target. On share price weakness the broker upgrades to Add (Speculative Buy) from Hold.

Target price is $0.13 Current Price is $0.11 Difference: $0.02
If POS meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Citi rates RIO as Buy (1) -

While Rio Tinto is dealing with community pushback in Serbia regarding its Jadar project, it has announced it is acquiring the Rincon Li
project in Argentina for US$825m from Rincon Mining, Citi notes.

Rincon is a large undeveloped brine project located in the lithium triangle in the Salta Province of Argentina.

Rather than using solar evaporation via ponds, the Rincon project is based around an adsorption technology to produce
battery grade lithium carbonate at higher recovery rates than traditional salar operations.

Citi expects "extremely high" lithium prices to extend through the first half of 2022. Buy and $115 target retained.

Target price is $115.00 Current Price is $99.35 Difference: $15.65
If RIO meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $107.50, suggesting upside of 8.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

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

Market Sentiment: 0.4

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

Morgans rates STP as Add (1) -

Step One Clothing has disclosed it had found that it has been over-claiming GST credits in respect of an overseas-based advertising supplier. To rectify this issue, it needs to make an adjustment to prior and current year marketing expenses, Morgans notes.

The prospectus FY22 earnings forecast was nonetheless unchanged. That said, the company revealed UK sales grew by only 3% in the first half -- disappointing for a business in te its second full year, the broker suggests, albeit due to logistical hold-ups.

Fearing Step One will not outperform guidance as assumed, the market trashed the stock by -35%, back to the issue price. Morgans does not think the story is "broken" nor longer term growth prospects diminished. Add retained, target falls to $2.70 from $3.20.

Target price is $2.70 Current Price is $1.53 Difference: $1.17
If STP meets the Morgans target it will return approximately 76% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgans rates WPR as Add (1) -

Waypoint REIT has flagged FY21 total distributions of 15.97c, slightly above Morgans 15.8c forecast. Waypoint is trading on an
implied distribution yield of around 5.7% paid quarterly.

Add and $3.00 target retained.

Target price is $3.00 Current Price is $2.77 Difference: $0.23
If WPR meets the Morgans target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $2.87, suggesting upside of 1.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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