Weekly Reports | 10:30 AM
Broker Rating Changes (Post Thursday Last Week)
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BWP TRUST ((BWP)) Upgrade to Hold from Sell by Moelis.B/H/S: 0/0/0
BWP Trust delivered FY24 earnings and distribution in line with Moelis' expectations. BWP has successfully integrated the Newmark Property REIT portfolio following the transaction completing late June.
While the transaction is marginally dilutive to earnings, strategically it increases portfolio quality given NPR's assets are younger and in modern format, and it provides scale benefits to BWP, the broker notes.
It also has a positive impact on BWP's weighted average lease expiry. BWP was more active in acquiring and divesting assets than has been the case in recent years, Moelis notes.
Given demand for Bunnings ((WES)) assets, the broker believes we're nearing the end of the asset devaluation cycle. Upgrade to Hold from Sell, target rises to $3.74 from $3.61.
CHARTER HALL SOCIAL INFRASTRUCTURE REIT ((CQE)) Upgrade to Buy from Hold by Moelis and Upgrade to Buy from Hold by Canaccord Genuity.B/H/S: 0/0/0
Charter Hall Social Infrastructure REIT reported results which met Moelis' expectations. Average daily fees rose 9.5% year-on-year and gearing rose to 33.7% from 33.25%.
Management revised the hedging structure which results in higher interest rates in the short term, the analyst states.
Target price unchanged at $3.02. The REIT is upgraded to Buy from Hold.
Charter Hall Social Infrastructure REIT delivered FY24 results that were in line with expectations. The FY25 distribution guidance was -9% below Canaccord Genuity's forecasts.
This stemmed from a hedging reset, which the broker believes will increase the level of growth over the medium to longer term as it essentially brings forward debt costs.
The valuation is also becoming more attractive on a yield spread basis and, with the ongoing recycling of portfolio assets, in turn could support a narrowing of the discount to NTA. The broker upgrades to Buy from Hold and reduces the target to $2.84 from $2.95.
HUB24 LIMITED ((HUB)) Upgrade to Overweight from Market Weight by Wilsons.B/H/S: 0/0/0
Wilsons upgrades Hub24 to Overweight from Market Weight following a strong start to FY25. The broker considers the upgraded guidance, that signals more than $11bn in net flows per annum, highlights the opportunities ahead.
The broker also emphasises the balance sheet is in an "intriguing position", which signals the company may be readying for further M&A.
With the ongoing momentum and positive earnings upgrades, Wilsons expects the shares will close the PE gap relative to Netwealth Group ((NWL)) over the next 12 months. Target is raised to $56.20 from $49.00.
See also HUB downgrade.
SIMS LIMITED ((SGM)) Upgrade to Overweight from Neutral by Jarden.B/H/S: 0/0/0
In a better-than-expected price outcome, according to Jarden, Sims has sold its underperforming UK Metals business for around $385m. Also, management announced plans to sell its residual -12.4% stake in Circular Services for around US$30m.
At a time of US steel capacity increases, arguably these transactions improve the likelihood of a takeover/merger, suggests the broker, given the company's lagging share price.
Jarden lowers its target for Sims to $11.90 from $12.10 but upgrades to Overweight from Neutral on greater valuation certainty.
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