Weekly Reports | 10:40 AM
Broker Rating Changes (Post Thursday Last Week)
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SPARK NEW ZEALAND LIMITED ((SPK)) Upgrade to Overweight from Neutral by Jarden.B/H/S: 0/0/0
Jarden reduces its target for Spark New Zealand to NZ$4.67 from NZ$5.03 due to more conservative forecasts for FY25 and a small increase in the long-term maintenance capex assumption. The rating is upgraded to Overweight from Neutral on valuation.
Over the past decade, the broker notes investors were attracted to the company's strong mobile business and steady management with a focus on capital allocation discipline to support steady dividends. It's felt management need to reconfirm its commitment to these principles.
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CITY CHIC COLLECTIVE LIMITED ((CCX)) Downgrade to Hold from Buy by Petra Capital.B/H/S: 0/0/0
Petra Capital has downgraded City Chic Collective from Buy to Hold, with a revised price target of 17c down from 60c.
The company announced what the broker considered to be a depressed trading update for FY24, including the divestment of Avenue for US$12m and an equity capital raise of $23m at 15c.
Group sales are expected to fall -30% to around $187m in FY24, with both A&NZ and Americas regions weak.
Petra Capital downgrades EBITDA estimates by between -53%-74%, citing renewed weakness in City Chic sales despite new product arrivals for FY24 and FY25, respectively.
CETTIRE LIMITED ((CTT)) Downgrade to Hold from Buy by Petra Capital.B/H/S: 0/0/0
Petra Capital has downgraded Cettire to Hold from Buy, with a revised price target of $1.20, down from $5.10.
Management provided a very weak trading update with FY24 EBITDA of $32m-$35m, significantly below previous estimates of $45.1m, highlights the analyst.
The update points to a notable margin squeeze, softening demand, and increased promotional activity, Petra Capital observes.
Future risks include the extent to which suppliers fund promotions versus the company, and reduced visibility in forecasting margins.
The broker cuts EBITDA forecasts by -25% to -40%, reflecting lower revenue and increased margin sensitivity to the consumer cycle for FY24 to FY26, respectively.
Hold rating. $1.20 target.
INSURANCE AUSTRALIA GROUP LIMITED ((IAG)) Downgrade to Overweight from Buy by Jarden.B/H/S: 0/0/0
Insurance Australia Group has announced two significant new reinsurance covers, in an attempt to deliver a higher return on equity (ROE) metric with greater downside protection, explains Jarden.
Underwriting profits from above-budget CAT costs and prior year reserve top-ups have eroded around -25% of underlying insurance trading ratio (ITR) profits over the past five years, points out the broker.
The broker's rating is downgraded to Overweight from Buy on valuation, but the target rises to $7.35 from $6.80 after incorporating a lower weighted average cost of capital (WACC) and a higher PE relative multiple.
LEO LITHIUM LIMITED ((LLL)) Downgrade to Hold from Speculative Buy by Canaccord Genuity.B/H/S: 0/0/0
Canaccord Genuity analysts have downgraded their rating for Leo Lithium to Hold from Speculative Buy, lowering the price target to $0.50 from $0.80.
The downgrade reflects increased sovereign challenges in Mali and adjustments to financial projections following the sale of Goulamina to Ganfeng for US$343m.
The sale, approved by the Mali government, results in Leo Lithium ceasing project involvement by November 2024. Financial forecasts have been updated, with FY24 EBITDA now expected to be -$7.4m, reflecting better cost management, but FY25 EBITDA revised to $10m.
The broker views the transaction and subsequent capital return as steps to mitigate political risks and improve shareholder returns.
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