Australian Broker Call *Extra* Edition – May 16, 2019

This story features AINSWORTH GAME TECHNOLOGY LIMITED, and other companies. For more info SHARE ANALYSIS: AGI

An additional news report on the recommendation, valuation, forecast and opinion changes for ASX-listed equities.

In addition to The Australian Broker Call Report, which is published and updated daily (Mon-Fri), FNArena has now added The Australian Broker Call *Extra* Edition, featuring additional sources of research and insights on ASX-listed stocks, also enlarging the number of stocks that make up the FNArena universe.

One key difference is the *Extra* Edition will not be updated daily, but merely "regularly" depending on availability of suitable quality content. As such, the *Extra* Edition tries to build a bridge between daily updates via the Australian Broker Call Report and ad hoc news stories, that are not always timely for investors hungry for the next information update.

Investors using the *Extra* Edition as a source of input for their own share market research should thus take into account that information after publication may not be up to date, or yet awaiting another update by FNArena's team of journalists.

Similar to The Australian Broker Call Report, this *Extra* Edition includes concise but limited reviews of research recently published by Stockbrokers and other experts, 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 of this Report.

The Australian Broker Call *Extra* Edition is a summary that has been prepared independently of the sources identified. Readers will check the full text of the recommendations and consult a Licenced Advisor before making any investment decision.

The copyright of this Report is owned by the publisher. Readers will not copy, forward or disseminate this Report to any other person. For more vital information about the sources included, see the bottom of this Report.

COMPANIES DISCUSSED IN THIS ISSUE

Click on a symbol for fast access.
The number next to the symbol represents the number of brokers covering it for this report -(if more than 1)

AGI   AHX   BTH   CAT   CCP   CGC   CRD   CUP   DN8   EPD   TNE  

AGI    AINSWORTH GAME TECHNOLOGY LIMITED

Gaming – Overnight Price: $0.81

Wilsons rates ((AGI)) as Sell (5) –

Ainsworth Game Technology can't seem to win a trick and its outlook is unlikely to improve without a white knight, says Wilsons.

The broker notes weak demand has resulted in slot buyers cutting capital expenditure, a state of affairs compounded by AGI's product's poor popularity. It believes the company is trapped in a spiral of limited research and development expenditure relative to peers, which in turn leads to weaker machine sales.

Sales fell -50% in the year to date and Ainsworth slipped to 6th supplier in the March quarter, triggering further downgrades.? Wilsons sets its estimates about -19% below consensus and assumes a steep decline in FY19 earnings.

Sell rating. Target price sits at 67c.

This report was published on May 6, 2019.

Target price is $0.67 Current Price is $0.81 Difference: minus $0.14 (current price is over target).
If AGI meets the Wilsons target it will return approximately minus 17% (excluding dividends, fees and charges – negative figures indicate an expected loss).
The company's fiscal year ends in June.

Forecast for FY19:

Wilsons forecasts a full year FY19 dividend of 0.00 cents and EPS of 9.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.53.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 2.00 cents and EPS of 3.50 cents.
At the last closing share price the estimated dividend yield is 2.47%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.14.

Market Sentiment: -1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

AHX    APIAM ANIMAL HEALTH LTD

Medical Equipment & Devices – Overnight Price: $0.41

Shaw and Partners rates ((AHX)) as Buy (1) –

Shaw and Partners has revised down Apiam Animal Health's target price to 90c from $1 after the company's third-quarter trading update.

Despite a strong result (revenue rose 9% in the quarter and gross profit rose 13%), the broker says phasing and weather factors are likely to persist in creating uneven revenue patterns across quarters.

Shaw lowers forecasts for FY19 citing drought concerns and its affects on the rain-dependent dairy industry; the affects of Autumn temperatures in feedlots on respiratory disease;  and respiratory conditions in the pig industry during winter. 

Shaw expects strong gross margins in the long term and points to the Chinese sheep genetic project, and Apiam's US joint venture. The broker says the company has a strong platform in place which can now be leveraged to support more than 2x sales, and expects a re-rating of the stock. Buy rating retained.

This report was published on April 30, 2019.

Target price is $0.90 Current Price is $0.41 Difference: $0.49
If AHX meets the Shaw and Partners target it will return approximately 120% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Shaw and Partners forecasts a full year FY19 dividend of 1.80 cents and EPS of 4.90 cents.
At the last closing share price the estimated dividend yield is 4.39%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.37.

Forecast for FY20:

Shaw and Partners forecasts a full year FY20 dividend of 1.90 cents and EPS of 6.30 cents.
At the last closing share price the estimated dividend yield is 4.63%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.51.

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

BTH    BIGTINCAN HOLDINGS LIMITED

Cloud services – Overnight Price: $0.59

Canaccord Genuity rates ((BTH)) as Buy (1) –

The company is eying at least one acquisition but Canaccord Genuity is refusing to account for it in its current modeling. The model has been updated for the recent 1-for-6 share placement. Meanwhile, or so it appears, the company's core operations are growing fast as ever.

New contract wins have been announced with Mohawk Industries, Cisco, Scoot, and Pentair. The analyst has a buoyant outlook for the industry and for this company in particular and refers to research by Aragon Research to support its thesis. According to Aragon, the global sales enablement software marketing (on-premise and cloud) is expected to increase to US$5bn by 2021 from US$1bn.

The combination of increasing medium-term forecasts (ex potential acquisition) and rolling forward the model has pushed up the share price target to 75c from 60c prior. Canaccord Genuity views the capital raise as a significant milestone that strengthens the company's "competitive moat" while also allowing it to extend its product leadership position.

This report was published on May 14, 2019.

Target price is $0.75 Current Price is $0.59 Difference: $0.16
If BTH meets the Canaccord Genuity target it will return approximately 27% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Canaccord Genuity forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 2.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 29.50.

Forecast for FY20:

Canaccord Genuity forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 2.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 29.50.

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

CAT    CATAPULT GROUP INTERNATIONAL LTD

Medical Equipment & Devices – Overnight Price: $1.29

Bell Potter rates ((CAT)) as Upgrade to Buy from Hold (1) –

Bell Potter has removed the "Speculative" tag, as well as upgraded to Buy from Hold upon further examining of its key projections. The analysts believe company management will use the release of FY19 financials to pull forward its target of achieving positive free cash flow, currently targeted for the end of FY21.

The company should also announce a new CEO in the next few months. FY19 should mark the achievement of positive statutory EBITDA for the first time ever, according to Bell Potter's updated projections.

Price target has lifted to $1.50 from $1.25 with no changes to forecasts.

This report was released on May 14, 2019.

Target price is $1.50 Current Price is $1.29 Difference: $0.21
If CAT meets the Bell Potter target it will return approximately 16% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 7.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 17.43.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 4.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 28.67.

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

CCP    CREDIT CORP GROUP LIMITED

Business & Consumer Credit – Overnight Price: $23.49

Canaccord Genuity rates ((CCP)) as Downgrade to Hold from Buy (3) –

Canaccord Genuity has downgraded Credit Corp from Buy to Hold, noting the stock appears fully valued and is trading 16% ahead of its capital raising.

The broker notes that consensus estimates are 10% higher than its own, but says Credit Corp has announced expansion plans into Washington State, an investment thesis that will demand measured, incremental execution and deferred return.

The broker also notes Credit Corp may be a contender for Baycorp, the largest debt purchaser in the US.

Canaccord cuts earnings per share estimates -2.4% for FY20 to reflect the increase in the capital raising to $125m from $100m.

Target price slips to $22.58 from $22.75.

This report was published on May 7, 2019.

Target price is $22.58 Current Price is $23.49 Difference: minus $0.91 (current price is over target).
If CCP meets the Canaccord Genuity 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 FY19:

Canaccord Genuity forecasts a full year FY19 dividend of 71.00 cents and EPS of 144.50 cents.
At the last closing share price the estimated dividend yield is 3.02%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.26.

Forecast for FY20:

Canaccord Genuity forecasts a full year FY20 dividend of 75.00 cents and EPS of 145.20 cents.
At the last closing share price the estimated dividend yield is 3.19%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.18.

Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

CGC    COSTA GROUP HOLDINGS LIMITED

Agriculture – Overnight Price: $4.91

Wilsons rates ((CGC)) as Hold (3) –

Wilsons has reduced forecasts while noting FY19 earnings growth is very much dependent on the operations in Morocco recovering. Meanwhile, company has already acknowledged the season over there is running 2-3 weeks late.

It also appears growers in Spain have jumped on the opportunity to supply European blueberry customers instead, creating not only downward pressure on price, but also the potential for repeated disappointment.

Wilsons suggests the outlook for Costa Group remains "mixed". Growth in citrus remains equally an important driver for FY19, but it is too early yet to make solid predictions on this account. Target price falls to $4.77 from $5 on lowered estimates.

Research update was released on May 14, 2019.

Target price is $4.77 Current Price is $4.91 Difference: minus $0.14 (current price is over target).
If CGC meets the Wilsons target it will return approximately minus 3% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $5.87, suggesting upside of 19.5%(ex-dividends)
The company's fiscal year ends in December.

Forecast for FY19:

Wilsons forecasts a full year FY19 dividend of 13.10 cents and EPS of 23.80 cents.
At the last closing share price the estimated dividend yield is 2.67%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.63.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 23.9, implying annual growth of -29.4%.
Current consensus DPS estimate is 14.7, implying a prospective dividend yield of 3.0%.
Current consensus EPS estimate suggests the PER is 20.5.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 15.20 cents and EPS of 27.60 cents.
At the last closing share price the estimated dividend yield is 3.10%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.79.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 27.4, implying annual growth of 14.6%.
Current consensus DPS estimate is 16.7, implying a prospective dividend yield of 3.4%.
Current consensus EPS estimate suggests the PER is 17.9.

Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

CRD    CREDIBLE LABS INC

Business & Consumer Credit – Overnight Price: $1.50

Moelis rates ((CRD)) as Buy (1) –

Credible Labs Inc's first-quarter trading update shows closed-loan volumes rose 127% year on year, and 20% on the previous quarter.

The majority of growth was sourced from student-loan refinancing, personal loans and student loan origination.

Moelis says a recent partnership with Realtor.com, the second-largest real-estate platform in the United States, offers strong prospects in the mortgage arena.

The broker says the company's strong cash position should be sufficient to drive it to profitability.

Target price rises to $1.64 from $1.50. Buy rating retained.

This report was published on April 310, 2019.

Target price is $1.64 Current Price is $1.50 Difference: $0.14
If CRD meets the Moelis target it will return approximately 9% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY19:

Moelis forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 7.19 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 20.86.

Forecast for FY20:

Moelis forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 6.64 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 22.60.

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

CUP    COUNTPLUS LIMITED

Commercial Services & Supplies – Overnight Price: $0.51

Wilsons rates ((CUP)) as Buy (1) –

Countplus has acquired a minority interest in Melbourne-based converged accounting and financial planning practice Rundles.

Wilsons says the deal represents outstanding value, being struck on an earnings-before-interest-tax-depreciation-and-amortisation multiple of 4.5x.

Rundles has delivered a pre-tax margin of more than 61% for the past three years.

Wilsons notes Countplus's strong acquisition pipeline of roughly two per year past FY20, and the context of the big banks' possible exit from non-core businesses such as wealth.

The broker says the deal increases FY20 and FY21 earnings per share by 6.4% and 4.5%, and raises the target price to $1.13 from $1.01.

Buy rating retained.

This report was published on May 1, 2019. 

Target price is $1.13 Current Price is $0.51 Difference: $0.62
If CUP meets the Wilsons target it will return approximately 122% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Wilsons forecasts a full year FY19 dividend of 2.20 cents and EPS of 3.20 cents.
At the last closing share price the estimated dividend yield is 4.31%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.94.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 3.30 cents and EPS of 5.10 cents.
At the last closing share price the estimated dividend yield is 6.47%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.00.

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

DN8    DREAMSCAPE NETWORKS LTD

Software & Services – Overnight Price: $0.14

Bell Potter rates ((DN8)) as Buy (1) –

Dreamscape released a trading update showing bookings have risen 15%-17%; revenue 16%-18%; earnings before interest (EBITDA) and tax 67%-76%; and net profit 59%-81%.

Bell Potter notes the EBITDA margin has risen to 15% (up from 10.3% in FY18), thanks to restructuring, consolidation of global offices to Singapore; and consolidation of investment in cost-effective operations in the Philippines.

The news has prompted the broker to trim revenue forecasts -4% across the forecast period but revenue margin forecasts have increased. Bell Potter believes the trading multiples to be a bargain at 11.4x FY19 and 7.9x FY20 and expects good results should help refresh the share register.

Buy recommendation retained. Target price rises to 17c from 15c.

This report was published on May 9, 2019.

Target price is $0.17 Current Price is $0.14 Difference: $0.03
If DN8 meets the Bell Potter target it will return approximately 21% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 0.00 cents and EPS of 1.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.67.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.00 cents and EPS of 1.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.24.

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

TNE    TECHNOLOGYONE LIMITED

IT & Support – Overnight Price: $8.95

Bell Potter rates ((TNE)) as Upgrade to Buy from Hold (1) –

Bell Potter is anticipating a strong result when TechnologyOne releases its interim report on May 21. Net profit growth should be near the top of the company's targeted range of 10-15% from the year prior.

Also, management has already indicated the skew H1/H2 will not be as large as in previous years. In anticipation, Bell Potter has removed its valuation discount which pushes up the price target to $9.50 from $8.75.

The rating is upgraded to (trading) Buy from Hold. No changes have been made to forecasts. Bell Potter acknowledges the stock doesn't exactly look cheap, but in comparison with valuations ascribed to tech peers such as WiseTech Global and Altium, the broker finds current valuation looks "reasonable".

This report was released on May 10, 2019.

Target price is $9.50 Current Price is $8.95 Difference: $0.55
If TNE meets the Bell Potter target it will return approximately 6% (excluding dividends, fees and charges).
Current consensus price target is $5.61, suggesting downside of -37.3%(ex-dividends)
The company's fiscal year ends in September.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 12.40 cents and EPS of 17.90 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 50.00.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 18.3, implying annual growth of 13.7%.
Current consensus DPS estimate is 12.5, implying a prospective dividend yield of 1.4%.
Current consensus EPS estimate suggests the PER is 48.9.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 14.40 cents and EPS of 20.50 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 43.66.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 20.9, implying annual growth of 14.2%.
Current consensus DPS estimate is 13.5, implying a prospective dividend yield of 1.5%.
Current consensus EPS estimate suggests the PER is 42.8.

Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

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.

As part of emerging new trends overseas, The Australian Broker Call *Extra* Edition also includes providers of sponsored research. Readers should bear in mind, sponsored research, while not necessarily of lower quality, has the embedded complication that the company that is the subject of the research has paid for this research. Providers of sponsored research that can potentially be included in this Report are Breakaway Research, Edison Investment Research, Independent Investment Research, NDF Research, Pitt Street Research, and TMT Analytics.

Decisions about inclusions in this Report are made independently of the providers of stock market research and at full discretion of the team of journalists responsible for content at FNArena. Inclusion does not equal endorsement, in any way, shape or form. This Report is provided for informational purposes only.

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