Australian Broker Call *Extra* Edition – May 20, 2019

This story features ELIXINOL WELLNESS LIMITED, and other companies. For more info SHARE ANALYSIS: EXL

An additional news report on the recommendation, valuation, forecast and opinion changes for ASX-listed equities.

In addition to The Australian Broker Call Report, which is published and updated daily (Mon-Fri), FNArena has now added The Australian Broker Call *Extra* Edition, featuring additional sources of research and insights on ASX-listed stocks, also enlarging the number of stocks that make up the FNArena universe.

One key difference is the *Extra* Edition will not be updated daily, but merely "regularly" depending on availability of suitable quality content. As such, the *Extra* Edition tries to build a bridge between daily updates via the Australian Broker Call Report and ad hoc news stories, that are not always timely for investors hungry for the next information update.

Investors using the *Extra* Edition as a source of input for their own share market research should thus take into account that information after publication may not be up to date, or yet awaiting another update by FNArena's team of journalists.

Similar to The Australian Broker Call Report, this *Extra* Edition includes concise but limited reviews of research recently published by Stockbrokers and other experts, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end of this Report.

The Australian Broker Call *Extra* Edition is a summary that has been prepared independently of the sources identified. Readers will check the full text of the recommendations and consult a Licenced Advisor before making any investment decision.

The copyright of this Report is owned by the publisher. Readers will not copy, forward or disseminate this Report to any other person. For more vital information about the sources included, see the bottom of this Report.

COMPANIES DISCUSSED IN THIS ISSUE

Click on a symbol for fast access.
The number next to the symbol represents the number of brokers covering it for this report -(if more than 1)

EXL   HSN   HUO   MCP   MTO   MYE   PNV   RHP   RVS   TPW (2)  

EXL    ELIXINOL GLOBAL LIMITED

Health & Nutrition – Overnight Price: $4.84

Bell Potter rates ((EXL)) as Upgrade to Buy from Hold (1) –

Bell Potter has observed how international peers including Charlotte's Web and CV Science have reported strong quarterly performances, even after historically strong December quarter updates. Upon reflection on the Hemp CBD market in the US, the analysts conclude "the land grab for the retail market is well and truly underway".

They believe Elixinol Global now has product on shelves with its first national retail partner in more than 330 stores. There is potential for more deals for national distribution. The broker points out, revenues from these and other deals are the major driver of the anticipated lift in sales.

Peer comparison pushes up the price target by 19% to $6.32. The rating is upgraded to Buy/Speculative from Hold/Speculative in anticipation of a general sector re-rating later in the year.

This report was published on May 14, 2019.

Target price is $6.36 Current Price is $4.84 Difference: $1.52
If EXL meets the Bell Potter target it will return approximately 31% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 0.00 cents and EPS of 1.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 284.71.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.00 cents and EPS of 11.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 44.00.

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

HSN    HANSEN TECHNOLOGIES LIMITED

IT & Support – Overnight Price: $3.77

E.L. & C Baillieu rates ((HSN)) as Buy (1) –

Hansen Technologies has bought Canadian global cross-silo telco and media software provider Sigma Systems in a debt-funded deal valued at $166m.

Bailleau says Sigma's products sit adjacent to Hansen's core billing products, offering cross-sell and growth opportunities to Hansen's energy and PayTV and telco customers. The deal increases Hansen's exposure to the telco sector to 38% from 17%.

The broker says the deal represents a trailing acquisition multiple of 8.3x, and the company expects the acquisition to be earnings-per-share accretive.? Bailleau increases earnings per share forecasts 6.7% and 12% in FY20 and FY21 to account for the acquisition, believing the deal holds strategic merit.

Target price rises to $4.40 from $4. 

This report was published on May 3, 2019.

Target price is $4.40 Current Price is $3.77 Difference: $0.63
If HSN meets the E.L. & C Baillieu target it will return approximately 17% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

E.L. & C Baillieu forecasts a full year FY19 dividend of 6.00 cents and EPS of 12.40 cents.
At the last closing share price the estimated dividend yield is 1.59%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 30.40.

Forecast for FY20:

E.L. & C Baillieu forecasts a full year FY20 dividend of 6.00 cents and EPS of 12.70 cents.
At the last closing share price the estimated dividend yield is 1.59%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 29.69.

Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

HUO    HUON AQUACULTURE GROUP LIMITED

Aquaculture – Overnight Price: $4.54

Shaw and Partners rates ((HUO)) as Buy (1) –

Huon Aquaculture has downgraded FY19 earnings-before-interest-and-tax (EBITDA) profit guidance roughly -20% to reflect a -0.5% fall in the harvest arising in jellyfish, fish mortalities, and sub-optimal weights.

But strong guidance for FY20/21 remains unchanged and Shaw commends the decision to withhold suboptimal weight fish as that will underwrite future years. 

The broker believes earnings have been rebased, notes gearing is past its peak, and expects a large decrease in capital expenditure.

Shaw downgrades EBITDA forecasts -19.8%, -10.1% and -9.4% across FY19-FY21, challenging FY20/21 guidance, to reflect lower harvest and margins.

Target price falls -7% to $4.75 a share. Buy rating retained.

This report was published on May 7, 2019.

Target price is $4.75 Current Price is $4.54 Difference: $0.21
If HUO meets the Shaw and Partners target it will return approximately 5% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Shaw and Partners forecasts a full year FY19 dividend of 5.90 cents and EPS of 21.90 cents.
At the last closing share price the estimated dividend yield is 1.30%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.73.

Forecast for FY20:

Shaw and Partners forecasts a full year FY20 dividend of 10.10 cents and EPS of 40.40 cents.
At the last closing share price the estimated dividend yield is 2.22%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.24.

Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

MCP    MCPHERSON'S LIMITED

Health & Nutrition – Overnight Price: $1.19

Moelis rates ((MCP)) as Buy (1) –

McPherson's has entered a joint venture with SugarBaby to bring tanning products to market, an investment Moelis estimates at $5m-$10m.

The company will take a 51% stake in SugarBaby with an option to buy the remaining 49% in FY24.

The broker evaluates the deal as sensible and a good fit with McPherson's product portfolio.

Meanwhile, the company has offered guidance for pre-tax profit growth of 10%-15%.

The broker notes strong double digit domestic growth from the A'kin and Dr. Le Winn's brands, which is well ahead of category growth. Offshore sales also grew strongly, with demand from China rising 119%. The broker expects the shifts in manufacturing to Aware in June should pave the way for strong sales growth for several years.

Moelis retains a Buy rating, noting the FY19 price-earnings multiple of 9.6x and growth prospects. Target price is steady at $1.57.

This report was published on May 10, 2019.

Target price is $1.57 Current Price is $1.19 Difference: $0.38
If MCP meets the Moelis target it will return approximately 32% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Moelis forecasts a full year FY19 dividend of 10.90 cents and EPS of 12.20 cents.
At the last closing share price the estimated dividend yield is 9.16%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.75.

Forecast for FY20:

Moelis forecasts a full year FY20 dividend of 7.90 cents and EPS of 13.50 cents.
At the last closing share price the estimated dividend yield is 6.64%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.81.

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

MTO    MOTORCYCLE HOLDINGS LIMITED

Automobiles & Components – Overnight Price: $1.05

Wilsons rates ((MTO)) as Hold (3) –

Motorcycle Holdings has confirmed that new bike sales continue to weaken and Wilsons downgrades accordingly.

The broker is heartened by the continued strength in the company's sales of second-hand bikes, suggesting underlying demand for motorbikes generally remains firm.

Wilsons notes that while the valuation at a price-earnings ratio of 8.4x is appealing, continued weakness in new bike sales and high debt justify a Hold rating.

Earnings per share estimates fall -15% to -21% across the forecast period and the target price falls to $1.36.

This report was published on May 6, 2019.

Target price is $1.36 Current Price is $1.05 Difference: $0.31
If MTO meets the Wilsons target it will return approximately 30% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Wilsons forecasts a full year FY19 dividend of 16.10 cents and EPS of 14.80 cents.
At the last closing share price the estimated dividend yield is 15.33%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.09.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 13.70 cents and EPS of 16.20 cents.
At the last closing share price the estimated dividend yield is 13.05%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.48.

Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

MYE    MASTERMYNE GROUP LIMITED

Mining Sector Contracting – Overnight Price: $0.83

Wilsons rates ((MYE)) as Buy (1) –

Mastermyne has issued a -$1m downgrade to guidance, which Wilsons views as small given the company lost its most profitable contract to a mine fire and closure last October.

The broker believes the underlying business is strong, citing fourth-quarter run rate margins of more than 10%, and the renewal of the company's largest contract.

Wilsons upgrades revenue in FY20/21 to reflect a recent equipment contract win for a major metallurgical coal operation in the Bowen Basin.

Target price eases to $1.60 from $1.70. The broker notes the stock is trading on a cheap FY20 earnings multiple of 3.2x and retains a Buy rating.

This report was published on May 1, 2019.

Target price is $1.60 Current Price is $0.83 Difference: $0.77
If MYE meets the Wilsons target it will return approximately 93% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Wilsons forecasts a full year FY19 dividend of 3.40 cents and EPS of 8.70 cents.
At the last closing share price the estimated dividend yield is 4.10%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.54.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 7.30 cents and EPS of 13.50 cents.
At the last closing share price the estimated dividend yield is 8.80%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.15.

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

PNV    POLYNOVO LIMITED

Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $1.06

E.L. & C Baillieu rates ((PNV)) as Buy (1) –

PolyNovo has gained access to the United States Department of Defence contracts through the Defence Acquisition Program Administration and Veterans Affairs, and to the US Federal Supply Services contracts; to supply its NovoSorb BTM product.

The product can now be used to treat US defence families globally, and the much larger US Medicare and Medicaid inpatient and outpatients market on a fully refundable basis.

Bailleau says that, while the contracts are a good testimony to its efficacy, it is only at procurement approval stage and expects no immediate scaling of sales.

But the broker likes the company's profile: the contracts suggest product acceptance; M&A is a possibility given market disruption; third parties continue to underwrite research and development trials; and it holds other products in other larger addressable markets not yet addressed in Bailleau's valuation.

The broker retains a discounted cash flow valuation of $1.14 a share and target price of $1.15. Buy rating retained.

This report was published on May 2, 2019.

Target price is $1.15 Current Price is $1.06 Difference: $0.09
If PNV meets the E.L. & C Baillieu target it will return approximately 8% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

E.L. & C Baillieu forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 0.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 212.00.

Forecast for FY20:

E.L. & C Baillieu forecasts a full year FY20 dividend of 0.00 cents and EPS of 0.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 212.00.

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

RHP    RHIPE LIMITED

Cloud services – Overnight Price: $2.24

Bell Potter rates ((RHP)) as Downgrade to Hold from Buy (3) –

Bell Potter believes market expectations for Rhipe may have overstepped the mark and downgrades to Hold from Buy.

The market is anticipating a strong FY19 full-year result and FY20 guidance, and the stock is trading on a multiple of 49x FY19 and 33x FY20 earnings.

Bell Potter believes the company continues to benefit from the structural tailwinds from the megatrend of cloud computing and its leverage to Microsoft in the Asian Pacific and remains bullish on the stock.

Target price jumps 15% to $2.30 to reflect changes largely to the valuation method but forecasts are otherwise unchanged.

This report was published on May 2, 2019.

Target price is $2.30 Current Price is $2.24 Difference: $0.06
If RHP meets the Bell Potter target it will return approximately 3% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 2.30 cents and EPS of 4.90 cents.
At the last closing share price the estimated dividend yield is 1.03%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 45.71.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 2.80 cents and EPS of 7.30 cents.
At the last closing share price the estimated dividend yield is 1.25%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 30.68.

Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

RVS    REVASUM INC

Hardware & Equipment – Overnight Price: $1.30

Shaw and Partners rates ((RVS)) as Buy (1) –

Revasum, the leading supplier of silicon carbide grinding and polishing, could be set to benefit from Cree Inc's plan to invest $1bn in its silicon carbide capacity as it positions itself for the world's transition to electric vehicles and the accompanying increase in 5G phone demand out to 2024.

Cree expects that a restructure of existing facilities and refurbishment of tools could allow it to deliver state-of-the-art 200mm silicon carbide wafer fabrication at a third of the cost of a new build state-of-the-art automotive-qualified production facility, and allow it to increase silicon carbide capacity 30-fold.

Shaw notes Revasum's grinders are superior to the competition and it is well-placed to benefit from CREE's decision. Meanwhile, the broker notes Tesla has improved EV charging times by 50% in its new Model S and Model X, which will now deliver 660km and 575km respectively (a 10% improvement on a single charge).

The broker retains a Buy, High Risk rating and $2 target price.

This report was published on May 9, 2019.

Target price is $2.00 Current Price is $1.30 Difference: $0.7
If RVS meets the Shaw and Partners target it will return approximately 54% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Shaw and Partners forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 0.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 433.33.

Forecast for FY20:

Shaw and Partners forecasts a full year FY20 dividend of 0.00 cents and EPS of 2.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 54.17.

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

TPW    TEMPLE & WEBSTER GROUP

Furniture & Renovation – Overnight Price: $1.35

Bell Potter rates ((TPW)) as Buy (1) –

Online furniture and homewares retailer Temple & Webster has released a trading update reflecting strong sales momentum. The trading update showed steady revenue growth of 40% year on year; 36% customer growth; and an on-target contribution margin of at least 15%.

Bell Potter forecasts FY20 revenue growth at more than 30% and predicts growth in the company's Trade & Commercial segment to underpin growth over the medium term. The broker increases revenue forecasts 0.2%, 0.8% and 3.9% across FY19 to FY21.

Target price rises to $1.77 from $1.60. Buy rating retained, the broker believes the stock demonstrates good long-term growth prospects and will benefit from market tailwinds, particularly the shift to online.

This report was published on May 8, 2019.

Target price is $1.77 Current Price is $1.35 Difference: $0.42
If TPW meets the Bell Potter target it will return approximately 31% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Bell Potter forecasts a full year FY19 dividend of 0.00 cents and EPS of 1.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 122.73.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.00 cents and EPS of 1.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 96.43.

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

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Canaccord Genuity rates ((TPW)) as Buy (1) –

Online furniture and homewares retailer Temple & Webster has released a second quarter trading update. Year-on-year to April 30, the company posted 40% revenue growth, ahead of forecast growth of 33%, and exceeding market share growth of roughly 36% despite weak retail and home sales, reflecting improved unit economics/repeat customers.

The group margin held at the targeted 15%-plus. Canaccord Genuity suggests the company can now invest in new markets and has lower overheads than traditional bricks and mortar retailers.

Buy rating retained and the target price rises to $1.80 from $1.60.

This report was published on May 7, 2019.

Target price is $1.80 Current Price is $1.35 Difference: $0.45
If TPW meets the Canaccord Genuity target it will return approximately 33% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY19:

Canaccord Genuity forecasts a full year FY19 dividend of 0.00 cents and EPS of 0.00 cents.

Forecast for FY20:

Canaccord Genuity forecasts a full year FY20 dividend of 0.00 cents and EPS of 0.01 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13500.00.

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

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Disclaimer:
The content of this information does in no way reflect the opinions of FNArena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FNArena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.

As part of emerging new trends overseas, The Australian Broker Call *Extra* Edition also includes providers of sponsored research. Readers should bear in mind, sponsored research, while not necessarily of lower quality, has the embedded complication that the company that is the subject of the research has paid for this research. Providers of sponsored research that can potentially be included in this Report are Breakaway Research, Edison Investment Research, Independent Investment Research, NDF Research, Pitt Street Research, and TMT Analytics.

Decisions about inclusions in this Report are made independently of the providers of stock market research and at full discretion of the team of journalists responsible for content at FNArena. Inclusion does not equal endorsement, in any way, shape or form. This Report is provided for informational purposes only.

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