Weekly Reports | 10:30 AM
A summary of the highlights from Broker Call Extra updates throughout the week past.
Broker Rating Changes (Post Thursday Last Week)
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A2 MILK COMPANY LIMITED ((A2M)) Overweight by Jarden.B/H/S: 0/0/0
Jarden maintains an Overweight rating for a2 Milk Co with its target price decreased to NZ$9.00 from NZ$9.30 following an analysis of first-quarter performance supporting China label market share recovery.
The analyst notes online inventory checks and social media reviews indicate restocking momentum has continued, with consumer discussions shifting away from supply chain and testing concerns towards product experience.
While pricing for early-stage infant milk formula across both China and English labels drifted downward, the company successfully launched its new ultra-premium a2 Zhi Chu Qi Run product at a higher price point to target lower-tier cities.
The analyst estimates achieving current China label forecasts would likely require the September exit offtake rate to reach approximately 67%, up from a 40% average in July.
Jarden trims its valuation to reflect higher risk-free rate assumptions while retaining a positive stance given reduced tail risks from prior product recalls.
VICINITY CENTRES ((VCX)) Upgrade to Neutral from Underweight by Jarden.B/H/S: 0/0/0
Jarden lowers Australian REIT price targets by an average of -11%, lifting its risk-free rate assumption to 5.1% from 4.4% and capitalisation rates by 30bps to 6.2%.
FY28 earnings forecasts for residential developers and property fund managers are also reduced to reflect weaker sales, slower funds growth and negative revaluations.
Despite these adjustments, the broker sees potential sector total returns of 16%, comprising 12% capital upside and a 4% distribution yield. Current prices imply further increases in interest rates beyond Jarden's assumptions.
A peak in rates, potentially already reached or following a November hike, is viewed as a positive catalyst.
Rental growth remains supported by constrained new supply, while balance sheets are broadly sound. Jarden favours better-capitalised companies with lower leverage.
Its rating for Vicinity Centres has been upgraded to Neutral from Underweight following sector underperformance and other factors such as the clearing of the overhang from the potential MSCI index removal.
Price target has dropped to $2.50 from $2.70.
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DEXUS ((DXS)) Downgrade to Neutral from Overweight by Jarden.B/H/S: 0/0/0
Jarden lowers Australian REIT price targets by an average of -11%, lifting its risk-free rate assumption to 5.1% from 4.4% and capitalisation rates by 30bps to 6.2%.
FY28 earnings forecasts for residential developers and property fund managers are also reduced to reflect weaker sales, slower funds growth and negative revaluations.
Despite these adjustments, the broker sees potential sector total returns of 16%, comprising 12% capital upside and a 4% distribution yield. Current prices imply further increases in interest rates beyond Jarden's assumptions.
A peak in rates, potentially already reached or following a November hike, is viewed as a positive catalyst.
Rental growth remains supported by constrained new supply, while balance sheets are broadly sound. Jarden favours better-capitalised companies with lower leverage.
Its rating for Dexus has been downgraded to Neutral from Overweight on less relative value appeal. Price target drops to $5.68 (we had $6.19).
INGENIA COMMUNITIES GROUP ((INA)) Downgrade to Neutral from Overweight by Jarden.B/H/S: 0/0/0
Jarden lowers Australian REIT price targets by an average of -11%, lifting its risk-free rate assumption to 5.1% from 4.4% and capitalisation rates by 30bps to 6.2%.
FY28 earnings forecasts for residential developers and property fund managers are also reduced to reflect weaker sales, slower funds growth and negative revaluations.
Despite these adjustments, the broker sees potential sector total returns of 16%, comprising 12% capital upside and a 4% distribution yield. Current prices imply further increases in interest rates beyond Jarden's assumptions.
A peak in rates, potentially already reached or following a November hike, is viewed as a positive catalyst.
Rental growth remains supported by constrained new supply, while balance sheets are broadly sound. Jarden favours better-capitalised companies with lower leverage.
Its rating for Ingenia Communities has been downgraded to Neutral from Overweight as the risk versus reward proposition is seen as more evenly balanced, also including the potential for Peet ((PPC)) and Warburg Pincus transactions.
Price target drops to $5.20 from $5.36.
MIRVAC GROUP ((MGR)) Downgrade to Overweight from Buy by Jarden.B/H/S: 0/0/0
Jarden lowers Australian REIT price targets by an average of -11%, lifting its risk-free rate assumption to 5.1% from 4.4% and capitalisation rates by 30bps to 6.2%.
FY28 earnings forecasts for residential developers and property fund managers are also reduced to reflect weaker sales, slower funds growth and negative revaluations.
Despite these adjustments, the broker sees potential sector total returns of 16%, comprising 12% capital upside and a 4% distribution yield. Current prices imply further increases in interest rates beyond Jarden's assumptions.
A peak in rates, potentially already reached or following a November hike, is viewed as a positive catalyst.
Rental growth remains supported by constrained new supply, while balance sheets are broadly sound. Jarden favours better-capitalised companies with lower leverage.
Its rating for Mirvac Group has been downgraded to Overweight from Buy on anticipation of a moderation in sales. Price target reduces to $2 from $2.28.
| Order | Company | New Rating | Old Rating | Broker | |
|---|---|---|---|---|---|
| Upgrade | |||||
| 1 | A2 MILK COMPANY LIMITED | Buy | Neutral | Jarden | |
| 2 | VICINITY CENTRES | Neutral | Sell | Jarden | |
| Downgrade | |||||
| 3 | DEXUS | Neutral | Buy | Jarden | |
| 4 | INGENIA COMMUNITIES GROUP | Neutral | Buy | Jarden | |
| 5 | MIRVAC GROUP | Buy | Buy | Jarden | |
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