Weekly Reports | 11:15 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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GENERATION DEVELOPMENT GROUP LIMITED ((GDG)) Upgrade to Buy from Hold by Petra Capital.B/H/S: 0/0/0
Petra Capital upgrades its rating for Generation Development to Buy from Hold as the market is now more comfortable with the bedding-down of the Evidentia acquisition. The broker's $7.17 target is unchanged.
Annuities are seen as a potential growth driver, supported by the Retirement Income Covenant, highlights the broker.
Currently, less than 2% of superannuation assets are in annuities, highlights Petra Capital, leaving significant scope for growth given retirees face longevity, investment, and inflation risks under account-based pensions.
Ord Minnett notes the company has a strong track record as a challenger brand, gaining share in investment bonds and positioning for annuity market disruption.
KINGSGATE CONSOLIDATED LIMITED ((KCN)) Upgrade to Buy from Speculative Buy by Canaccord Genuity.B/H/S: 0/0/0
Management at Kingsgate Consolidated has guided to production of 85-95koz in FY26 at costs (AISC) of US$1,550-1,750/oz. Higher-grade ore is driving the lift, while the plant is running 14% above nameplate highlights Canaccord Genuity.
The broker notes this guidance compares with 75koz at US$2,024/oz in FY25 and is below the broker’s prior 99koz estimate.
Costs are higher than modeled by the broker, but free cash flow (FCF) of $120m in FY26 should enable repayment of the remaining $52m debt.
FY25 delivered earnings (EBITDA) of $95m and profit of $29m, both below the broker's forecasts. The analysts' FY26 and FY27 earnings (EBITDA) forecasts are reduced by around -14%.
Canaccord raises its target price to $4.95 from $4.50 and upgrades to Buy from Speculative Buy on lowering valuation risking on an improved balance sheet and more confidence in the operational outlook.
SAYONA MINING LIMITED ((SYA)) Upgrade to Buy from Speculative Buy by Canaccord Genuity.B/H/S: 0/0/0
Canaccord Genuity has resumed coverage of Sayona Mining following its merger with Piedmont Lithium. The company will be renamed Elevra Lithium.
The broker notes the North American Lithium (NAL) spodumene mine in Quebec delivered 205kt in FY25 at -US$778/t cash costs, versus 158kt at US$1,080/t in FY24. The analysts model output of 208ktpa at US$870/t over FY26-28.
At current prices, Canaccord points out NAL is near breakeven, while expansion to 300ktpa from FY29 could reduce costs by around -15% to -US$735/t, supporting a clear economic case.
The broker highlights optionality from Moblan, a 27-year, 300ktpa project with reserves upgraded following recent drilling, and Ewoyya in Ghana, where Elevra can earn 50% with offtake rights. Both are seen as high-quality longer-term development opportunities.
Canaccord lifts its valuation to 6c from 4c a share and upgrades to Buy from Speculative Buy.
TPG TELECOM LIMITED ((TPG)) Upgrade to Overweight from Neutral by Jarden.B/H/S: 0/0/0
Jarden notes TPG Telecom has underperformed excessively following energy, gas and water asset sales despite balance sheet and free float improvements.
A near-term overhang consists of minorities re-investing proceeds because that's required to further reduce debt.
The broker expects around 224m new shares to be issued under the -$688m reinvestment plan, assuming there's 100% take-up at a -5% discount.
At current levels, the broker highlights the implied forecast free cash flow yields of 6.5-10.3% in FY26–28 are attractive, supporting an upgrade to Overweight from Neutral.
Target trimmed to $5.25 from $5.30.
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ALKANE RESOURCES LIMITED ((ALK)) Downgrade to Hold from Buy by Moelis.B/H/S: 0/0/0
Alkane Resources' formal FY26 guidance following the merger completion with Mandalay Resources was a clear disappointment to Moelis.
The consolidated gold production guidance was lower than the broker's estimate at the midpoint, but the bigger negative was a miss to Tomingley's production forecast and higher costs.
Costs guidance for all three mines were higher than the broker's forecast, but the combination of lower production surprised negatively.
The broker cut FY26 net profit forecast by -38% and FY27 by -31%, with similar downgrades to EPS forecasts.
Target trimmed to $1.20 from $1.40. Rating downgraded to Hold from Buy.
HOMECO DAILY NEEDS REIT ((HDN)) Downgrade to Hold from Buy by Moelis.B/H/S: 0/0/0
Last month, HomeCo Daily Needs REIT delivered FY25 funds from operations (FFO) of 8.8cpu and distribution of 8.5cpu, in line with guidance.
Moelis highlights like-for-like net operating income (NOI) growth of 4%, ahead of peers, with weighted average rent reviews (WARR) of 3.5% and leasing spreads of 6%.
The broker notes net tangible assets (NTA) rose around 1% to $1.47 in six months, as portfolio capitalisation rates compressed -6bps to 5.56%.
Gearing eased to 35.2% from 36% as the trust recycled capital, with -$310m in acquisitions and developments offset by $250m in divestments, explains the analyst.
Management guided to FY26 FFO of 9cpu and distribution of 8.6cpu, implying a payout ratio of 95.6%. The broker highlights rebased hedging at around 50% allows earnings to benefit from falling interest rates, while capital recycling and developments remain accretive.
Moelis raises its target price to $1.44 from $1.36 but downgrades to Hold from Buy on valuation grounds.
ORA BANDA MINING LIMITED ((OBM)) Downgrade to Hold from Buy by Moelis.B/H/S: 0/0/0
Moelis downgrades its rating for Ora Banda Mining to Hold from Buy, citing the recent share price rally has eroded valuation upside despite encouraging exploration results and resource additions. The target is increased to 88c from 85c.
The analyst highlights spot price sensitivity could imply valuation near $1.10 per share, though also points out shorter mine life versus peers increases risk.
While remaining positive on geological potential, Moelis stresses exploration requires time and success is not assured.
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