Australian Broker Call *Extra* Edition – Jan 22, 2020

This story features APPEN LIMITED, and other companies. For more info SHARE ANALYSIS: APX

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)

APX   INA   LYL (2)   MND   MOZ   NST   SAR   SMR (2)   SSM   WHC  

APX    APPEN LIMITED

IT & Support – Overnight Price: $25.88

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

The company is currently Bell Potter's best pick in the tech sector. It is expected to report a very positive result for 2019, along with strong indications of continuing the same in 2020.

The company's growth, the broker explains, is driven by a strong core business along with expectations for improvement in the performance of Figure 8 in 2020. China is also expected to increase its contribution in terms of revenues in 2020 and after.

Bell Potter is bullish and expects operational profits to increase by 28% to $129.4m in 2020 and by 30% to $167.9m in 2021. Bell Potter rates this stock a Buy with a $28.75 target.

This report was released on January 17, 2020.

Target price is $28.75 Current Price is $25.88 Difference: $2.87
If APX meets the Bell Potter target it will return approximately 11% (excluding dividends, fees and charges).
Current consensus price target is $29.66, suggesting upside of 14.6%(ex-dividends)
The company's fiscal year ends in December.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 9.00 cents and EPS of 56.80 cents.
At the last closing share price the estimated dividend yield is 0.35%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 45.56.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 50.3, implying annual growth of 28.2%.
Current consensus DPS estimate is 8.8, implying a prospective dividend yield of 0.3%.
Current consensus EPS estimate suggests the PER is 51.5.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 11.00 cents and EPS of 74.20 cents.
At the last closing share price the estimated dividend yield is 0.43%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 34.88.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 65.1, implying annual growth of 29.4%.
Current consensus DPS estimate is 12.7, implying a prospective dividend yield of 0.5%.
Current consensus EPS estimate suggests the PER is 39.8.

Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

INA    INGENIA COMMUNITIES GROUP

Aged Care & Seniors – Overnight Price: $4.65

Moelis rates ((INA)) as Hold (3) –

Moelis notes that the Ingenia group has been impacted by the bushfires and while none of the group's tourism parks have suffered any damage, the community owner lost two residents' homes at Lake Conjola.

Furthermore, notes Moelis, new home sales at Lake Conjola are expected to be adversely impacted during 2H20. The closure of three assets in NSW has led to a loss of close to -$2m in tourism revenue, although Moelis clarifies the group's insurance would cover the property loss as well as gross profits.

The broker recommends holding onto the shares for now. Moelis clarifies the bushfire impact is a one-off, without any impact on revenue. 

The broker also anticipates an improvement in residential market conditions. That, along with the real estate group's recent inclusion in the ASX200, are points in the company's favour. The broker retains its Hold rating with target price of $4.62.

This report was published on January 15, 2020.

Target price is $4.62 Current Price is $4.65 Difference: minus $0.03 (current price is over target).
If INA meets the Moelis target it will return approximately minus 1% (excluding dividends, fees and charges – negative figures indicate an expected loss).
The company's fiscal year ends in June.

Forecast for FY20:

Moelis forecasts a full year FY20 dividend of 12.00 cents and EPS of 22.00 cents.
At the last closing share price the estimated dividend yield is 2.58%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.14.

Forecast for FY21:

Moelis forecasts a full year FY21 dividend of 12.90 cents and EPS of 24.80 cents.
At the last closing share price the estimated dividend yield is 2.77%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.75.

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

LYL    LYCOPODIUM LIMITED

Mining Sector Contracting – Overnight Price: $6.30

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

The company's Mondium JV recently secured a circa $400m contract from Rio Tinto. This is the latest in a series of contracts and would enhance its market standing, suggests Bell Potter.

The broker also highlights an increase in the price of gold which has enhanced future prospects for the company. The analysts point out the company's minerals division operates at a higher margin, thereby increasing profitability prospects.

The broker has upgraded FY21 and FY22 revenue forecasts by 6.1% and 16.1% respectively. Bell Potter rates this stock a Buy with a $6.5 target.

This report was published on January 14, 2020.

Target price is $6.50 Current Price is $6.30 Difference: $0.2
If LYL meets the Bell Potter target it will return approximately 3% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 32.00 cents and EPS of 43.70 cents.
At the last closing share price the estimated dividend yield is 5.08%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.42.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 36.00 cents and EPS of 52.20 cents.
At the last closing share price the estimated dividend yield is 5.71%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.07.

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

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Hartleys rates ((LYL)) as Buy (2) –

Hartleys notes Lycopodium's Mondium JV has been awarded a contract worth close to $400m with Rio Tinto.

The broker terms this a significant achievement for Mondium and an acknowledgment of years of investment and work.

There have been project delays, observes Hartleys, but the impact is only short-term and the broker is confident about the firm’s prospects. The broker gives Lycopodium a Buy rating with target price $6.76

The report was first published on January 13, 2020.

Target price is $6.76 Current Price is $6.30 Difference: $0.46
If LYL meets the Hartleys target it will return approximately 7% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Hartleys forecasts a full year FY20 dividend of 30.00 cents and EPS of 41.60 cents.
At the last closing share price the estimated dividend yield is 4.76%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.14.

Forecast for FY21:

Hartleys forecasts a full year FY21 dividend of 36.70 cents and EPS of 56.40 cents.
At the last closing share price the estimated dividend yield is 5.83%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.17.

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

MND    MONADELPHOUS GROUP LIMITED

Mining Sector Contracting – Overnight Price: $17.77

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

Bell Potter has a positive take on Monadelphous due to the announcement of contract awards worth circa $350m, putting it on track to achieve its $1.5bn target in awards for FY20.

The broker expects growth to continue on account of an increase in iron ore development activity along with maintenance demand due to a rise in production. 

The Mondium JV contract worth some $400m will also provide prospects of growth and expansion, suggests the broker.

Operating margins are expected to improve to 7.5-7.6% by FY21/FY22. Bell Potter rates this stock a Buy with a target price of $20.30.

This report was published on January 14, 2020.

Target price is $20.30 Current Price is $17.77 Difference: $2.53
If MND meets the Bell Potter target it will return approximately 14% (excluding dividends, fees and charges).
Current consensus price target is $16.29, suggesting downside of -8.3%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 58.00 cents and EPS of 72.80 cents.
At the last closing share price the estimated dividend yield is 3.26%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.41.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 70.5, implying annual growth of 31.2%.
Current consensus DPS estimate is 56.3, implying a prospective dividend yield of 3.2%.
Current consensus EPS estimate suggests the PER is 25.2.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 85.00 cents and EPS of 99.90 cents.
At the last closing share price the estimated dividend yield is 4.78%.
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 87.4, implying annual growth of 24.0%.
Current consensus DPS estimate is 68.9, implying a prospective dividend yield of 3.9%.
Current consensus EPS estimate suggests the PER is 20.3.

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

MOZ    MOSAIC BRANDS LIMITED

Apparel & Footwear – Overnight Price: $1.66

Wilsons rates ((MOZ)) as Buy (1) –

Wilsons notes the retailer's revenues have been impacted by the bushfires, as well as broader difficult trading conditions. 

Updated revenue estimates show a decline in FY20 to $869.3m while operating profits are estimated to decline to $49.5m and $67.3m in FY20 and FY21 respectively.

The gross margins are estimated to be 59% in FY20 and the broker remains confident about management's online strategy gaining momentum. 

The broker retains its Buy rating with a target price of $3.43.

This report was published on January 14, 2020. 

Target price is $3.43 Current Price is $1.66 Difference: $1.77
If MOZ meets the Wilsons target it will return approximately 107% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 10.50 cents and EPS of 18.90 cents.
At the last closing share price the estimated dividend yield is 6.33%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.78.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 18.50 cents and EPS of 31.70 cents.
At the last closing share price the estimated dividend yield is 11.14%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 5.24.

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

NST    NORTHERN STAR RESOURCES LTD

Gold & Silver – Overnight Price: $12.74

Goldman Sachs rates ((NST)) as Neutral (3) –

Goldman Sachs notes Northern Star Resources recently purchased a 50% stake in Kalgoorlie Consolidated Gold Mines for US$800m in December 2019. The broker considers the Net Present Value (NPV) of the acquired asset to be $1.53bn.

Goldman Sachs is of the opinion the gold-producer has impressive earnings growth potential and EPS expected to grow at an annual compounded rate of 23% (CAGR) over the next five years.

Along with that, the Pogo turnaround will lead to a growth in free cash flow, states the broker. Goldman Sachs gives this stock a Neutral rating with target price $11.60.

The report was first published on January 14, 2020.

Target price is $11.60 Current Price is $12.74 Difference: minus $1.14 (current price is over target).
If NST meets the Goldman Sachs target it will return approximately minus 9% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $11.33, suggesting downside of -11.0%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY20:

Goldman Sachs forecasts a full year FY20 dividend of 17.00 cents and EPS of 58.60 cents.
At the last closing share price the estimated dividend yield is 1.33%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.74.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 59.0, implying annual growth of 141.8%.
Current consensus DPS estimate is 18.2, implying a prospective dividend yield of 1.4%.
Current consensus EPS estimate suggests the PER is 21.6.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 22.00 cents and EPS of 83.20 cents.
At the last closing share price the estimated dividend yield is 1.73%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.31.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 83.0, implying annual growth of 40.7%.
Current consensus DPS estimate is 22.6, implying a prospective dividend yield of 1.8%.
Current consensus EPS estimate suggests the PER is 15.3.

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

SAR    SARACEN MINERAL HOLDINGS LIMITED

Gold & Silver – Overnight Price: $3.82

Goldman Sachs rates ((SAR)) as Buy (1) –

Goldman Sachs notes Saracen Mineral purchased a 50% stake in Kalgoorlie Consolidated Gold Mines for US$750m in December 2019. The broker considers the Net Present Value (NPV) of the acquired asset to be $1.53bn.

Goldman Sachs is extremely positive on Saracen's growth prospects on the back of an expected increase in production to more than 800 kozpa by FY24.

In addition, the broker notes Saracen has strong free cash flow and expects to see good shareholder returns in the foreseeable future. Goldman Sachs rates this stock a Buy with target price of $4.3.

This report was published on January 14, 2020

Target price is $4.30 Current Price is $3.82 Difference: $0.48
If SAR meets the Goldman Sachs target it will return approximately 13% (excluding dividends, fees and charges).
Current consensus price target is $4.03, suggesting upside of 5.6%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY20:

Goldman Sachs forecasts a full year FY20 dividend of 3.00 cents and EPS of 16.40 cents.
At the last closing share price the estimated dividend yield is 0.79%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.29.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 20.3, implying annual growth of 79.6%.
Current consensus DPS estimate is 5.0, implying a prospective dividend yield of 1.3%.
Current consensus EPS estimate suggests the PER is 18.8.

Forecast for FY21:

Goldman Sachs forecasts a full year FY21 dividend of 8.00 cents and EPS of 26.60 cents.
At the last closing share price the estimated dividend yield is 2.09%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.36.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 36.4, implying annual growth of 79.3%.
Current consensus DPS estimate is 10.0, implying a prospective dividend yield of 2.6%.
Current consensus EPS estimate suggests the PER is 10.5.

Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

SMR    STANMORE COAL LIMITED

Coal – Overnight Price: $1.01

Bell Potter rates ((SMR)) as Downgrade to Hold from Buy (3) –

The company's operating profits outlook has decreased owing to delays in coal shipments and an increase in waste stripping, comments Bell Potter.

This has also led to an increase in the cost outlook while saleable coal production estimates, as per the broker, remain the same for FY20.

Furthermore, the broker notes the net cash reserves fell at quarter-end to $58m due to a combination of dividend payout, increase in working capital and a fall in operating cash flows.

The company relies on an upturn in coal prices failing which, earnings would fall in FY20-21, the report states.

Bell Potter is cautiously optimistic and opines this is a well-run company with the capacity to pursue growth prospects and gives the stock a Hold rating with a target price of $1.10.

This report was published on January 14, 2020.

Target price is $1.10 Current Price is $1.01 Difference: $0.09
If SMR meets the Bell Potter target it will return approximately 9% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 4.00 cents and EPS of 19.00 cents.
At the last closing share price the estimated dividend yield is 3.96%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 5.32.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 6.00 cents and EPS of 12.00 cents.
At the last closing share price the estimated dividend yield is 5.94%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.42.

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

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Wilsons rates ((SMR)) as Buy (1) –

Wilsons states the production results for Q2FY20 were slightly below estimates.

Moreover, the broker notes an increase in the costs forecast from $99.50/t to $107/t for FY20 and a decrease in the operating profits to $50-52m from $53-56m respectively.

Wilsons considers the outlook to be positive due to strong growth prospects and a well-managed operation. The broker is reviewing the target price and earnings forecasts currently.

This report was published on January 14, 2020.

Current Price is $1.01. Target price not assessed.
The company's fiscal year ends in June.

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

SSM    SERVICE STREAM LIMITED

Industrial Sector Contractors & Engineers – Overnight Price: $2.71

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

Bell Potter has a positive take on Service Stream due to a better-than-expected NBN activation rate for 1H20, although the Ready-to-Connect rate has been below target during the same period. 

Overall, NBN is likely to meet its target for FY20, suggests the broker. The analyst further cements this view by highlighting the extensions secured by the company on the NRMA and OMMA NBN agreements respectively as well as new agreements entered into by Comdain.

The broker expects Service Stream to deliver its 13th consecutive half-yearly profit.  Bell Potter retains its Buy rating with a target price of $3.15.

This report was published on January 15, 2020.

Target price is $3.15 Current Price is $2.71 Difference: $0.44
If SSM 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 FY20:

Bell Potter forecasts a full year FY20 dividend of 10.00 cents and EPS of 15.30 cents.
At the last closing share price the estimated dividend yield is 3.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.71.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 11.00 cents and EPS of 16.00 cents.
At the last closing share price the estimated dividend yield is 4.06%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.94.

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

WHC    WHITEHAVEN COAL LIMITED

Coal – Overnight Price: $2.53

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

Bell Potter observes Whitehaven Coal faced difficulties during Q2 FY20 due to issues with the Narrabri and Maules Creek coal mines respectively.
 
The broker expects growth to pick up during the second half of FY20, with Whitehaven expecting to achieve more than 60% of its FY20 production targets during this time. 

Bell Potter also expects the issues with both coal mines to have moderated by then. This, along with ample projects in the pipeline and strong cash generation, would support production growth over the medium to long term. Bell Potter rates this stock a Buy with a $4 target.

This report was released on January 17, 2020.

Target price is $4.00 Current Price is $2.53 Difference: $1.47
If WHC meets the Bell Potter target it will return approximately 58% (excluding dividends, fees and charges).
Current consensus price target is $3.20, suggesting upside of 26.5%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 9.00 cents and EPS of 12.00 cents.
At the last closing share price the estimated dividend yield is 3.56%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.08.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.1, implying annual growth of -77.4%.
Current consensus DPS estimate is 7.0, implying a prospective dividend yield of 2.8%.
Current consensus EPS estimate suggests the PER is 20.9.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 12.00 cents and EPS of 18.00 cents.
At the last closing share price the estimated dividend yield is 4.74%.
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 19.4, implying annual growth of 60.3%.
Current consensus DPS estimate is 8.1, implying a prospective dividend yield of 3.2%.
Current consensus EPS estimate suggests the PER is 13.0.

Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

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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.

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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