Weekly Reports | Mar 22 2024
This story features LIONTOWN RESOURCES LIMITED, and other companies. For more info SHARE ANALYSIS: LTR
Broker Rating Changes (Post Thursday Last Week)
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LIONTOWN RESOURCES LIMITED ((LTR)) Upgrade to Overweight from Market Weight by Wilsons.B/H/S: 0/0/0
Wilsons raises its target for Liontown Resources by $1.00 to $1.85 and upgrades the rating to Overweight from Market weight as the funding gap to positive cashflow has now been bridged, in the broker's view.
Management has announced execution of a facility agreement for a $550m debt facility with a syndicate of leading international and domestic commercial banks and government credit agencies.
The debt facility is designed, according to the company, to ensure the Kathleen Valley Lithium project is funded through to first production and ramp-up to the 3mtpa base case.
See also LTR downgrade.
SERKO LIMITED ((SKO)) Upgrade to Overweight from Neutral by Jarden.B/H/S: 0/0/0
The year ahead will be an important one for Serko, points out Jarden, as the five-year agreement with Booking.com awaits renewal, but also, potentially, with the positive free cash flow milestone on the agenda.
First up, in order to meet FY25 financial targets, Jarden points out customer acquisitions need to accelerate. Reaching breakeven on the free cash flow measurement could well be achieved in FY25.
The broker has adopted a supportive view, and upgrades to Overweight from Neutral while adding NZ10c to its price target, now at NZ$4.95.
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29METALS LIMITED ((29M)) Downgrade to Neutral from Overweight by Jarden.B/H/S: 0/0/0
As per Jarden, persistent liquidity concerns have seen the broker downgrade its rating on 29Metals. While the stock has rallied more than 50% since reporting on its full year in late February, the broker expects this will provide shareholders little consolation.
The company has announced a new CEO, to commence from the start of May, and while the new hire seems a good fit, with more than 25 years of experience in the Australian mining industry, Jarden warns it could signal a 'clearing of the decks'.
The broker expects restitution of an appropriate capital structure and lower operating costs will be a priority.
The rating is downgraded to Neutral from Overweight and the target price of 38 cents is retained.
CORE LITHIUM LIMITED ((CXO)) Downgrade to Sell from Hold by Canaccord Genuity.B/H/S: 0/0/0
A challenging first half for Core Lithium, says Canaccord Genuity, with spodumene pricing taking a -75% tumble over the period. Negative earnings of -$11.5m were largely in line with the broker's expectations, but net losses of -$167.6 disappointed.
The steep lithium pricing decline saw the company undertake a strategic review, ultimately suspending mining at the Grants open pit. Core Lithium has noted it is unlikley it will be able to meet its offtake agreement obligations to Ganfeng and Yahua.
The rating is downgraded to Sell from Hold and the target price decreases to 14 cents from 19 cents.
LIONTOWN RESOURCES LIMITED ((LTR)) Downgrade to Underweight from Neutral by Jarden.B/H/S: 0/0/0
Liontown Resources has sourced a commitment letter for a reduced debt facility of $550m, after its banking syndicate withdrew its $760m package back in January. Both Westpac Bank ((WBC)) and ANZ Bank ((ANZ)) have withdrawn from the syndicate.
The company is working to complete preconditions ahead of drawdown, with a key precondition being provision of a new base case financial model by end of July, including revised mine plan and production, capital expenditure and operational expenditure estimates.
According to Jarden, the debt facility, alongside cash, will not be sufficient.
While possibly funded to first production in mid-2024, Liontown Resources would need to commission ahead of peers and lithium prices would need to be in excess of US$2,000 per dry metric tonne in order to generate sufficient free cash flow to meet repayments by October 2025.
The rating is downgraded to Underweight from Neutral and the target price of 91 cents is retained.
See also LTR upgrade.
SANDFIRE RESOURCES LIMITED ((SFR)) Downgrade to Neutral from Overweight by Jarden.B/H/S: 0/0/0
Despite its newly lowered rating on the stock, Jarden continues to see Sandfire Resources as a core holding in the resources sector. The broker considers the outlook for copper pricing positive, with material supply disruptions late last year tightening concentrate supply.
Following the Motheo growth project, Jarden expects Sandfire Resources can deliver 28% copper production growth over the next two years to around 108,000 tonnes of copper.
It also anticipates copper pricing lifting as high as US$4.50 per pound in FY26, with a long-term price expectation of US$3.50 per pound.
The rating is downgraded to Neutral from Overweight and the target price of $6.50 is retained.
SOMNOMED LIMITED ((SOM)) Downgrade to Market Weight from Overweight by Wilsons.B/H/S: 0/0/0
Wilsons downgrades its rating for SomnoMed to Market Weight from Overweight and slashes its target to 45c from $1.25 due to a lack of continuity in the RestAssure campaign.
The broker's changes are also in reaction to unexpected changes within senior management ranks.
The long-awaited global regulatory clearances for the new RestAssure platform are expected this year. Wilsons believes management should raise at least $15m to launch RestAssure properly and support the broader business.
The company's 1H results were consistent with prior 1Q and 2Q disclosures, note the analysts, and management reiterated FY24 revenue and EBITDA guidance.
| Order | Company | New Rating | Old Rating | Broker | |
|---|---|---|---|---|---|
| Upgrade | |||||
| 1 | LIONTOWN RESOURCES LIMITED | Buy | Neutral | Wilsons | |
| 2 | SERKO LIMITED | Buy | Neutral | Jarden | |
| Downgrade | |||||
| 3 | 29METALS LIMITED | Neutral | Buy | Jarden | |
| 4 | CORE LITHIUM LIMITED | Sell | Neutral | Canaccord Genuity | |
| 5 | LIONTOWN RESOURCES LIMITED | Sell | Sell | Jarden | |
| 6 | SANDFIRE RESOURCES LIMITED | Neutral | Buy | Jarden | |
| 7 | SOMNOMED LIMITED | Neutral | Buy | Wilsons | |
Price Target Changes (Post Thursday Last Week)
| Company | Last Price | Broker | New Target | Old Target | Change | |
|---|---|---|---|---|---|---|
| ABB | Aussie Broadband | $3.80 | Wilsons | 4.77 | 5.80 | -17.76% |
| ARU | Arafura Rare Earths | $0.21 | Canaccord Genuity | 0.40 | 0.50 | -20.00% |
| BMN | Bannerman Energy | $3.50 | Canaccord Genuity | 3.71 | 3.59 | 3.34% |
| CMM | Capricorn Metals | $5.02 | Jarden | 4.75 | 4.77 | -0.42% |
| CTM | Centaurus Metals | $0.32 | Canaccord Genuity | 0.80 | N/A | – |
| CVW | Clearview Wealth | $0.58 | Taylor Collison | 0.92 | 0.83 | 10.84% |
| CXO | Core Lithium | $0.17 | Canaccord Genuity | 0.14 | 0.19 | -26.32% |
| Goldman Sachs | 0.13 | 0.14 | -7.14% | |||
| Wilsons | 0.10 | 0.15 | -33.33% | |||
| DDR | Dicker Data | $11.24 | Goldman Sachs | 10.50 | 10.20 | 2.94% |
| DRE | Dreadnought Resources | $0.02 | Canaccord Genuity | 0.07 | 0.20 | -65.00% |
| DYL | Deep Yellow | $1.39 | Canaccord Genuity | 1.53 | 1.60 | -4.38% |
| EVN | Evolution Mining | $3.47 | Canaccord Genuity | 4.20 | 4.50 | -6.67% |
| FCL | Fineos Corp | $1.71 | Goldman Sachs | 1.95 | 2.20 | -11.36% |
| FSG | Field Solutions | $0.04 | Canaccord Genuity | 0.11 | 0.19 | -42.11% |
| GOR | Gold Road Resources | $1.52 | Canaccord Genuity | 1.90 | 1.85 | 2.70% |
| HAS | Hastings Technology Metals | $0.62 | Canaccord Genuity | 2.20 | 2.50 | -12.00% |
| ILU | Iluka Resources | $7.26 | Canaccord Genuity | 7.00 | 7.50 | -6.67% |
| IMD | Imdex | $2.26 | Jarden | 2.10 | 2.00 | 5.00% |
| LEL | Lithium Energy | $0.55 | Petra Capital | 1.86 | 1.90 | -2.11% |
| LIN | Lindian Resources | $0.12 | Canaccord Genuity | 0.50 | 0.70 | -28.57% |
| LTR | Liontown Resources | $1.25 | Jarden | 0.91 | 1.19 | -23.53% |
| Wilsons | 1.85 | 0.85 | 117.65% | |||
| LYC | Lynas Rare Earths | $5.83 | Canaccord Genuity | 6.90 | 7.50 | -8.00% |
| MAQ | Macquarie Technology | $78.20 | Goldman Sachs | 93.00 | 82.20 | 13.14% |
| MEI | Meteoric Resources | $0.24 | Petra Capital | 0.38 | 0.42 | -9.52% |
| MTS | Metcash | $3.87 | Goldman Sachs | 3.70 | 3.60 | 2.78% |
| Jarden | 4.20 | 4.30 | -2.33% | |||
| NCK | Nick Scali | $15.09 | Wilsons | 16.20 | 11.30 | 43.36% |
| NST | Northern Star Resources | $13.71 | Canaccord Genuity | 16.35 | 16.30 | 0.31% |
| NTU | Northern Minerals | $0.03 | Canaccord Genuity | 0.05 | 0.03 | 66.67% |
| PEK | Peak Rare Earths | $0.22 | Canaccord Genuity | 0.70 | 0.90 | -22.22% |
| RMS | Ramelius Resources | $1.73 | Canaccord Genuity | 2.10 | 2.15 | -2.33% |
| Canaccord Genuity | 2.25 | 2.15 | 4.65% | |||
| SLC | Superloop | $1.33 | Wilsons | 1.61 | 1.17 | 37.61% |
| SOM | SomnoMed | $0.38 | Wilsons | 0.45 | 1.25 | -64.00% |
| SPZ | Smart Parking | $0.43 | Petra Capital | 0.64 | 0.56 | 14.29% |
| THL | Tourism Holdings Rentals | $2.94 | Wilsons | 4.03 | 4.05 | -0.49% |
| TIE | Tietto Minerals | $0.62 | Canaccord Genuity | 0.80 | 0.75 | 6.67% |
| TLX | Telix Pharmaceuticals | $13.27 | Wilsons | 14.28 | 12.48 | 14.42% |
| VHM | VHM | $0.50 | Canaccord Genuity | 1.20 | 1.40 | -14.29% |
| Company | Last Price | Broker | New Target | Old Target | Change | |
More Highlights
CVW CLEARVIEW WEALTH LIMITED
Insurance – Overnight Price: $0.58
Taylor Collison rates ((CVW)) as Outperform (2) –
Taylor Collison highlights shares of Clearview Wealth continue to trade at a now widening discount to embedded value despite new business market share rising to 10.9% from 9.2%. An attractive dividend yield is also noted.
The broker expects ongoing market share wins now that the company is fully focused on life insurance and given the industry is now
‘rebased’ following the Hayne Royal Commission.
Taylor Collison retains its Outperform rating and has increased its target to 92c.
This report was published on March 8, 2024.
Target price is $0.92 Current Price is $0.58 Difference: $0.34
If CVW meets the Taylor Collison target it will return approximately 59% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY24:
Taylor Collison forecasts a full year FY24 dividend of 1.50 cents and EPS of 5.40 cents.
At the last closing share price the estimated dividend yield is 2.59%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.74.
Forecast for FY25:
Taylor Collison forecasts a full year FY25 dividend of 3.00 cents and EPS of 6.60 cents.
At the last closing share price the estimated dividend yield is 5.17%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.79.
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
BGL BELLEVUE GOLD LIMITED
Gold & Silver – Overnight Price: $1.84
Canaccord Genuity rates ((BGL)) as Buy (1) –
Canaccord Genuity points to the incongruity of recent record highs for both Australian dollar and US dollar gold prices and the ASX Gold Index which is currently around -13% below the 52-week high.
In a similar vein, gold companies under research coverage by the broker are all trading below their respective 52-week highs at an average discount of around -18%.
In selecting appropriate company exposures, the broker prefers those either in, or entering a free cash flow (FCF) harvest period. In the screening process, favourable mining jurisdictions and reasonable liquidity/market capitalisation were also looked upon favourably.
Canaccord prefers Buy-rated Perseus Mining, Regis Resources and Ramelius Resources. Bellevue Gold, which is on the cusp of commercial production, is also recommended as a Speculative Buy.
The target for Bellevue Gold is maintained at $1.80.
This report was published on March 13, 2024.
Target price is $1.80 Current Price is $1.84 Difference: minus $0.04 (current price is over target).
If BGL meets the Canaccord Genuity target it will return approximately minus 2% (excluding dividends, fees and charges – negative figures indicate an expected loss).
The company's fiscal year ends in June.
Forecast for FY24:
Canaccord Genuity forecasts a full year FY24 dividend of 0.00 cents and EPS of 9.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.44.
Forecast for FY25:
Canaccord Genuity forecasts a full year FY25 dividend of 0.00 cents and EPS of 25.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.36.
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
IMD IMDEX LIMITED
Mining Sector Contracting – Overnight Price: $2.23
Jarden rates ((IMD)) as Overweight (2) –
Jarden had already, cautiously, concluded Imdex's first half result suggested underlying momentum is improving. In follow-up research the analysts dare to predict the worst of the cycle might now be in the past.
With Imdex's balance sheet forecast to return to net cash in FY25, the broker sees scope for further accretive M&A, likely driven by complementary business services/products.
The share price is now trading above Jarden's price target, but the analysts are not worried and seek solace in their optimism and the fact the valuation remains below the stock's long-run average.
The Overweight rating is retained and target price is left untouched at $2.10.
This report was published on March 19, 2024.
Target price is $2.10 Current Price is $2.23 Difference: minus $0.13 (current price is over target).
If IMD meets the Jarden target it will return approximately minus 6% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $2.18, suggesting downside of -2.5%(ex-dividends)
The company's fiscal year ends in June.
Forecast for FY24:
Jarden forecasts a full year FY24 dividend of 3.60 cents and EPS of 11.00 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 20.27.How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 11.3, implying annual growth of 42.1%.
Current consensus DPS estimate is 3.3, implying a prospective dividend yield of 1.5%.
Current consensus EPS estimate suggests the PER is 19.7.
Forecast for FY25:
Jarden forecasts a full year FY25 dividend of 4.40 cents and EPS of 13.00 cents.
At the last closing share price the estimated dividend yield is 1.97%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.15.How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 12.7, implying annual growth of 12.4%.
Current consensus DPS estimate is 3.6, implying a prospective dividend yield of 1.6%.
Current consensus EPS estimate suggests the PER is 17.6.
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
LIC LIFESTYLE COMMUNITIES LIMITED
Aged Care & Seniors – Overnight Price: $15.40
Moelis rates ((LIC)) as Initiation of coverage with Buy (1) –
Moelis has initiated coverage on Lifestyle Communities with a Buy rating and $20 price target, describing the company as a high quality land-lease MHE developer and operator, supported by a highly accretive business model.
Unlike peers, explains the broker, Lifestyle Communities expenses infrastructure costs (rather than capitalising them), thereby
reducing development profit and increasing fair value gains.
The difference substantially reduces the tax burden, as fair value gains are only taxable upon sale of the asset (something which is not expected to occur).
The target market is expected to continue growing on the back of continuous growth in Australia's over-65 population.
This report was published on March 19, 2024.
Target price is $20.00 Current Price is $15.40 Difference: $4.6
If LIC meets the Moelis target it will return approximately 30% (excluding dividends, fees and charges).
Current consensus price target is $17.05, suggesting upside of 10.7%(ex-dividends)
The company's fiscal year ends in June.
Forecast for FY24:
Moelis forecasts a full year FY24 dividend of 12.00 cents and EPS of 55.10 cents.
At the last closing share price the estimated dividend yield is 0.78%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 27.95.How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 61.4, implying annual growth of -21.2%.
Current consensus DPS estimate is 12.8, implying a prospective dividend yield of 0.8%.
Current consensus EPS estimate suggests the PER is 25.1.
Forecast for FY25:
Moelis forecasts a full year FY25 dividend of 14.00 cents and EPS of 87.50 cents.
At the last closing share price the estimated dividend yield is 0.91%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.60.How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 95.1, implying annual growth of 54.9%.
Current consensus DPS estimate is 17.3, implying a prospective dividend yield of 1.1%.
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
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CHARTS
For more info SHARE ANALYSIS: 29M - 29METALS LIMITED
For more info SHARE ANALYSIS: ANZ - ANZ GROUP HOLDINGS LIMITED
For more info SHARE ANALYSIS: CXO - CORE LITHIUM LIMITED
For more info SHARE ANALYSIS: LTR - LIONTOWN RESOURCES LIMITED
For more info SHARE ANALYSIS: SFR - SANDFIRE RESOURCES LIMITED
For more info SHARE ANALYSIS: SKO - SERKO LIMITED
For more info SHARE ANALYSIS: SOM - SOMNOMED LIMITED
For more info SHARE ANALYSIS: WBC - WESTPAC BANKING CORPORATION