Australian Broker Call *Extra* Edition – Feb 17, 2020

This story features ALLIANCE AVIATION SERVICES LIMITED, and other companies. For more info SHARE ANALYSIS: AQZ

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)

AQZ   ASG   CG1   CGL   EHL   ELD   EXL   FAR   FDV   GSS   MFD   NCK   PBH   PGC   PGX   RCL   RMY   SCP   SSM   STG   TPW  

AQZ    ALLIANCE AVIATION SERVICES LIMITED

Transportation & Logistics – Overnight Price: $2.67

Wilsons rates ((AQZ)) as Market Weight (3) –

The first-half result for FY20 has been a mixed bag for the airline with a less-than-expected increase in profit before taxes of 11%, a 10% increase in operating profits, growth in charter and contract flight hours and a decrease in cash outflow, notes Wilsons.

The broker reports robust trading conditions in the foreseeable future and an increase in flight hours during the second half. The free cash flow is expected to improve along with an increase in flight hours in the long run.

Wilsons expects EPS to go down by -6-7%, mostly due to depreciation while operating profit figures are not expected to change much.

The broker considers the shares fairly valued, recommending a Hold rating with the target price at $2.68.

The report was published on February 7, 2020.

Target price is $2.68 Current Price is $2.67 Difference: $0.01
If AQZ meets the Wilsons target it will return approximately 0% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 17.00 cents and EPS of 19.80 cents.
At the last closing share price the estimated dividend yield is 6.37%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.48.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 18.20 cents and EPS of 21.40 cents.
At the last closing share price the estimated dividend yield is 6.82%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.48.

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

ASG    AUTOSPORTS GROUP LIMITED

Automobiles & Components – Overnight Price: $1.65

Moelis rates ((ASG)) as Downgrade to Hold from Buy (3) –

Weak market conditions led to Autosports Group missing out on some volume incentive targets in the December quarter, notes Moelis. The broker downgrades the company’s first-half estimates by circa -20%.

Moelis highlights new car sales were down with overall trading conditions difficult in 2019. In spite of downgrading the EPS estimates for the coming full years by -6-20% to reflect weak operating conditions, the broker expects the luxury operator to improve due to cyclical recovery.

The broker downgrades the stock to Hold with the target price set at $1.80.

The report was published on February 3, 2020.

Target price is $1.80 Current Price is $1.65 Difference: $0.15
If ASG meets the Moelis target it will return approximately 9% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Moelis forecasts a full year FY20 dividend of 6.00 cents and EPS of 9.90 cents.
At the last closing share price the estimated dividend yield is 3.64%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.67.

Forecast for FY21:

Moelis forecasts a full year FY21 dividend of 7.70 cents and EPS of 12.80 cents.
At the last closing share price the estimated dividend yield is 4.67%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.89.

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

CG1    CARBONXT GROUP LIMITED

Industrial Sector Contractors & Engineers – Overnight Price: $0.45

Shaw and Partners rates ((CG1)) as Buy (1) –

Carbonxt recently released its second-quarter FY20 update, announcing the underlying cash flow achieving breakeven point. Cash receipts witnessed a decrease of -11% on a yearly basis to $3.9m due to lower sales to Carbonxt’s largest customer. Shaw and Partners notes company management expects sales to materially increase in the next quarter.

The company has reaffirmed guidance of $24m-$29m and the broker reckons management is excited about new opportunities and getting new contracts.

Given its track record and future prospects, Shaw and Partners considers the stock to be undervalued and retains its Buy rating. The target price is $0.70.

The report was first published on February 4, 2020.

Target price is $0.70 Current Price is $0.45 Difference: $0.25
If CG1 meets the Shaw and Partners target it will return approximately 56% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Shaw and Partners forecasts a full year FY20 dividend of 0.00 cents and EPS of 1.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.68.

Forecast for FY21:

Shaw and Partners forecasts a full year FY21 dividend of 0.00 cents and EPS of 8.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 5.17.

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

CGL    THE CITADEL GROUP LIMITED

IT & Support – Overnight Price: $5.62

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

With the extension of two of the largest contracts of Citadel Group (Queensland Health and Department of Defence), Bell Potter notes an improvement in the outlook and a decrease in the risk in the short to medium term.

Bell Potter expects a strong recovery in FY20 but mostly during the second half of the year. The broker expects an affirmation of FY20 guidance – with revenue of about $130m and operating profits ranging between $28 – 29m.

Bell Potter maintains a Buy rating with the target price increased to $6 from $5.50.

The report was first published on February 4, 2020.

Target price is $6.00 Current Price is $5.62 Difference: $0.38
If CGL meets the Bell Potter target it will return approximately 7% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 12.80 cents and EPS of 23.60 cents.
At the last closing share price the estimated dividend yield is 2.28%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.81.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 16.80 cents and EPS of 33.80 cents.
At the last closing share price the estimated dividend yield is 2.99%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.63.

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

EHL    EMECO HOLDINGS LTD

Mining Sector Contracting – Overnight Price: $2.07

Moelis rates ((EHL)) as Hold (3) –

Emeco Holdings has agreed to acquire Pit n Portal, an underground mining equipment and services provider, for $72m by February end 2020. Moelis notes this acquisition makes Emeco the largest hard rock underground mining equipment rental provider.

Moelis reckons the acquisition would provide earnings diversification along with underground exposure. The figures for the first half are also in line with the company’s guidance and 3% more than what Moelis estimated.

The broker maintains its Hold rating with a target price of $2.46.

The report was first published on January 30, 2020.

Target price is $2.46 Current Price is $2.07 Difference: $0.39
If EHL meets the Moelis target it will return approximately 19% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Moelis forecasts a full year FY20 dividend of 0.00 cents and EPS of 18.10 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.44.

Forecast for FY21:

Moelis forecasts a full year FY21 dividend of 0.00 cents and EPS of 21.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.67.

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

ELD    ELDERS LIMITED

Agriculture – Overnight Price: $8.23

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

The beginning of the northern wet season has witnessed a 20% rally in the EYCI (Eastern Young Cattle Indicator) calendar 2020 to date, even though it is still trading at a discount to US90CL. Bell Potter believes the rally will continue for now.

The broker anticipates strong first-quarter trends in the livestock markets with values of cattle and ovine turned off up circa 12% and 16% on a year-on-year basis respectively.

Bell Potter’s analysis is based on the assumptions of a normal winter cropping season, as well as the transition of the ag-chem business to Titan. The broker notes rain to be the earnings catalyst for Elders with cattle prices as a tailwind and potential upgrade driver in the second half of FY20 as well as FY21.

The broker is positive about the company and rates the stock a Buy with the target price at $8.65.

The report was published on February 5, 2020.

Target price is $8.65 Current Price is $8.23 Difference: $0.42
If ELD meets the Bell Potter target it will return approximately 5% (excluding dividends, fees and charges).
The company's fiscal year ends in September.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 20.00 cents and EPS of 56.00 cents.
At the last closing share price the estimated dividend yield is 2.43%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.70.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 25.00 cents and EPS of 76.60 cents.
At the last closing share price the estimated dividend yield is 3.04%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.74.

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

EXL    ELIXINOL GLOBAL LIMITED

Health & Nutrition – Overnight Price: $0.57

Bell Potter rates ((EXL)) as Hold (3) –

With a very poor fourth-quarter result, Elixinol Global is facing headwinds in the face of the weakest quarter so far. The fourth-quarter revenues amounted to $4.4m- very low compared to Bell Potter’s forecasted figure of $10.6m. The quarter marked a difficult year where a lot of catalysts failed to materialise, notes Bell Potter.

The most important reason is the labeling of CBD by the FDA as unsafe, prompting the company to make huge changes to the business. Elixinol will be selling the loss-making Health Foods Australia and its medical cannabis business – leading to large impairment charges.

The broker notes the US remains the biggest opportunity for growth notwithstanding distribution restrictions. There has not been any significant revenue growth from any channel, with the distribution agreement with the Albertsons Group also proving to be a disappointment, comments Bell Potter.

The broker retains its Hold rating for now. The target price has been reduced to $0.61 from $1.11.

The report was published on February 4, 2020.

Target price is $0.61 Current Price is $0.57 Difference: $0.04
If EXL meets the Bell Potter target it will return approximately 7% (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 minus 20.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 2.73.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 11.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 4.96.

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

FAR    FAR LIMITED

Crude Oil – Overnight Price: $0.03

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

The JV partners in the Sangomar oil project have decided to go ahead with its development. FAR is likely to hold a 13.67% interest in it, anticipates Bell Potter. The project is expected to generate close to US$180m cash flow to FAR for the first three years, reckons the broker.

Bell Potter points out the recent US$300m worth of senior debt was raised on very favourable terms by FAR and correlates with the quality of the project.

The broker is positive about the company due to factors including the Sangomar project, FAN exploration and monetization of the gas, and a favourable outcome to arbitration on the pre-emptive right to the ConocoPhillips’ stake.

The broker retains its Buy rating and sets the target price at $0.038.

The report was published on February 4, 2020.

Target price is $0.04 Current Price is $0.03 Difference: $0.008
If FAR meets the Bell Potter target it will return approximately 27% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY19:

Bell Potter forecasts a full year FY19 EPS of minus 0.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 15.00.

Forecast for FY20:

Bell Potter forecasts a full year FY20 EPS of minus 0.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 10.00.

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

FDV    FRONTIER DIGITAL VENTURES LIMITED

Online media & mobile platforms – Overnight Price: $1.06

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

Frontier Digital Ventures enjoyed a strong fourth quarter for FY19 with revenues up 74.6% year-on-year to $72.5m, exceeding all estimates, notes Bell Potter.

The broker expects margins to improve in FY20 and has increased revenue forecasts by 2.4%, 4.1%, and 3.1% in FY19, FY20 & FY21 respectively.

While Bell Potter expects more improvement over the long run, the recent share price surge has already started factoring this in and the broker downgrades the stock to Hold (Speculative) for now while the target price is at $1.30.

The report was published on January 31, 2020.

Target price is $1.30 Current Price is $1.06 Difference: $0.24
If FDV meets the Bell Potter target it will return approximately 23% (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 minus 3.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 35.33.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 0.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 151.43.

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

GSS    GENETIC SIGNATURES LIMITED

Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $1.17

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

After revenues growing consecutively every quarter for the last four years, Genetic Signatures saw the second quarter FY20 break the trend, decreasing -21% year-on-year, notes Bell Potter. This decrease was primarily driven by the timing of order receipts and cycling strong comps, states the broker.

The company expects a strong second half and has reaffirmed its guidance of revenue growth to exceed 47% Compounded Annual Growth Rate (CAGR). Bell Potter is cautious and forecasts revenue growth of 38% only.

The broker’s net loss forecast for FY20 and FY21 increased by 13% and 30% respectively. One of the main reasons is the minimal contribution from the US due to FDA clearance for Enteric Protozoan kit expected in FY21.

The broker rates the stock a Buy with the target price reduced to $1.55 from $1.60.

The report was published on February 3, 2020.

Target price is $1.55 Current Price is $1.17 Difference: $0.38
If GSS meets the Bell Potter target it will return approximately 32% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 3.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 35.45.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 2.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 46.80.

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

MFD    MAYFIELD CHILDCARE LIMITED

Childcare – Overnight Price: $1.13

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

In the opinion of the analysts, Mayfield Childcare reported a great result for 2019 with revenues having increased by 14% while the EPS was 11.9c, up 8.7%. The operating profit was $5.7m, a -4.3% miss to Canaccord Genuity’s estimate.

Canaccord considers Mayfield Childcare to be well-positioned for growth, noting supply growth in Mayfield operated areas along with a better understanding of the new Child Care Subsidy (CCS) by parents. The broker considers both these factors beneficial to the demand in 2020.

Canaccord Genuity considers the stock a good investment and holds on to its Buy rating, with the target price revised to $1.35 from $1.40.

The report was published on February 3, 2020.

Target price is $1.35 Current Price is $1.13 Difference: $0.22
If MFD meets the Canaccord Genuity target it will return approximately 19% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY19:

Canaccord Genuity forecasts a full year FY19 dividend of 8.00 cents and EPS of 12.00 cents.
At the last closing share price the estimated dividend yield is 7.08%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.42.

Forecast for FY20:

Canaccord Genuity forecasts a full year FY20 dividend of 8.00 cents and EPS of 13.00 cents.
At the last closing share price the estimated dividend yield is 7.08%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.69.

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

NCK    NICK SCALI LIMITED

Furniture & Renovation – Overnight Price: $8.00

Wilsons rates ((NCK)) as Market Weight (3) –

Nick Scali has reported first-half profits after taxes of $20.3m, exceeding the $17m-19m guidance.

Wilsons expects minor changes to forecasts driven mostly by Like-for-like revisions with forecast operating profit lifted to $57.8m (up 0.8%) and to $61.9m (up 0.3%) for FY20 and FY21 respectively. The broker anticipates the first half like-for-like sales decline of -7.5% while during the second half, this should reverse to a positive 1.7%.

The broker is of the view that conditions remain volatile and management may be expecting conditions to remain challenging during the second half. Nick Scali does not expect any material downside due to supply chain disruption from the coronavirus.

The broker rates the stock as Hold with a target price of $7.26.

The report was published on February 7, 2020.

Target price is $7.26 Current Price is $8.00 Difference: minus $0.74 (current price is over target).
If NCK meets the Wilsons target it will return approximately minus 9% (excluding dividends, fees and charges – negative figures indicate an expected loss).
The company's fiscal year ends in June.

Forecast for FY20:

Wilsons forecasts a full year FY20 dividend of 45.00 cents and EPS of 46.30 cents.
At the last closing share price the estimated dividend yield is 5.63%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.28.

Forecast for FY21:

Wilsons forecasts a full year FY21 dividend of 47.00 cents and EPS of 49.40 cents.
At the last closing share price the estimated dividend yield is 5.88%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.19.

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

PBH    POINTSBET HOLDINGS LTD

Gaming – Overnight Price: $5.94

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

PointsBet Holdings announced two new partnerships in Michigan and Kansas. The company released its second-quarter update and is optimistic due to continuous growth in the US business on the back of ample cash reserves and a $122m capital raising during the quarter, observes the broker.

Registered customers grew 24.3% to 185,138 while active clients increased 16.9% to 102,155. The total turnover increased 26.1% with the second quarter results boosted by NBA, NFL and the spring racing carnival.

The broker has increased the EBITDA loss forecasts to -$40m from -$28.1m for FY20 and to -$34.9m from -$21.3m in FY21 on account of more costs for customer acquisition and market entry respectively.

Bell Potter rates the stock a Buy and sets the target price at $7.30.

The report was first published on February 3, 2020.

Target price is $7.30 Current Price is $5.94 Difference: $1.36
If PBH meets the Bell Potter target it will return approximately 23% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 30.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 19.60.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 25.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 22.93.

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

PGC    PARAGON CARE LIMITED

Medical Equipment & Devices – Overnight Price: $0.27

Bell Potter rates ((PGC)) as Hold (3) –

Paragon has provided a guidance update for the first half, depicting a turbulent 12-months with the resignation of the CEO and CFO, unsuccessful implementation of the ERP system, and losses in Western Australia.

Adding further to the company’s woes are the high operating expenses, suspension of the dividend and poor cash flows forecasted from operations in the first half.

Bell Potter notes the company is expecting top-line growth of 8.5% while the gross margin has also been sustained at 38% – in line with the prior period. 

The broker lowers FY20 and FY21 EPS estimates by -15% and -13% respectively due to issues related to business lost in Western Australia and delayed capture of synergies.

The broker expects the situation to improve in six months and till then hangs on to its Hold rating with the target price at $0.37.

The report was published on February 5, 2020.

Target price is $0.37 Current Price is $0.27 Difference: $0.1
If PGC meets the Bell Potter target it will return approximately 37% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Bell Potter 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 11.25.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 1.20 cents and EPS of 4.10 cents.
At the last closing share price the estimated dividend yield is 4.44%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.59.

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

PGX    PRIMERO GROUP LIMITED

Mining Sector Contracting – Overnight Price: $0.39

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

Primero Group recently secured $100m worth of new work from Rio Tinto ((RIO)) and Fortescue Metals ((FMG)), announcing an increase in the contracted order book for FY20 to $195m. This figure is 18% higher than the company's recent revenue guidance of $165m.

According to the broker, factors in the company's favour include a conservative balance sheet, attractive valuation multiples and positive catalysts like contract wins, strong cashflows and the success of the Wartsila contract.

The broker expects more positive news from the company and has increased its revenue forecast by 14% while increasing EPS forecasts by 14% and 20% for FY20 and FY21 respectively.

Canaccord Genuity maintains its Buy rating with the target price increasing to $0.70 to $0.66.

The report was first published on February 3, 2020.

Target price is $0.70 Current Price is $0.39 Difference: $0.31
If PGX meets the Canaccord Genuity target it will return approximately 79% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Canaccord Genuity forecasts a full year FY20 dividend of 1.00 cents and EPS of 5.00 cents.
At the last closing share price the estimated dividend yield is 2.56%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.80.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 2.00 cents and EPS of 6.00 cents.
At the last closing share price the estimated dividend yield is 5.13%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.50.

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

RCL    READCLOUD LIMITED

Education & Tuition – Overnight Price: $0.34

Canaccord Genuity rates ((RCL)) as Initiation of coverage with Buy (1) –

ReadCloud connects users with digital education content from multiple publishers on a single platform, sitting between schools and publishers. The platform’s major focus is the secondary school market and the vocational training market.

Canaccord Genuity expects the platform to be more successful with schools that use the book hire method, which, along with a change in the curriculum for 2019 announced by the Queensland authorities, are stated as key growth catalysts by the broker.

Broker Canaccord notes an increase in the installed user base to 100k in 2019 and expects maiden profit to be achieved in FY20. FY21 is also expected to be a profitable year with revenue growth of about 71%. ReadCloud entered the VET market in the second quarter of 2019, which the broker reckons, offers a $100m revenue opportunity.

Canaccord Genuity is very positive about the market opportunity and growth prospects of the stock and initiates coverage with a Buy recommendation. The target price is $0.64.

The report was published on February 5, 2020.

Target price is $0.64 Current Price is $0.34 Difference: $0.3
If RCL meets the Canaccord Genuity target it will return approximately 88% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Canaccord Genuity forecasts a full year FY20 dividend of 0.00 cents and EPS of 0.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 170.00.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 0.00 cents and EPS of 1.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 26.15.

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

RMY    RMA GLOBAL LIMITED

Real Estate – Overnight Price: $0.63

Bell Potter rates ((RMY)) as Hold (3) –

RMA Global recently released its December quarter trading update, showing an increase in the adoption of US claimed profiles by 50.1% to 40,000 agents. Second-quarter receipts from customers are also up 3.4% on a quarterly basis to $1.96m. The company tied up with RealSatisifed to port existing reviews to its platform.

Bell Potter notes the company is focused on expanding in California and Florida and has made certain management appointments. The broker is interested in the ongoing discussions between the group and a US agency group about using Rate My Agent as their core promotional platform and awaits more news on this front.

RMA Global is moving generally in-line with the broker’s expectations, prompting only minor adjustments of 1% to EPS estimates for FY21 and FY22 respectively.

The broker retains its Hold rating for now with the target price of $0.40.

The report was first published on February 3, 2020.

Target price is $0.40 Current Price is $0.63 Difference: minus $0.23 (current price is over target).
If RMY meets the Bell Potter target it will return approximately minus 37% (excluding dividends, fees and charges – negative figures indicate an expected loss).
The company's fiscal year ends in June.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 2.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 22.50.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 0.00 cents and EPS of minus 0.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 70.00.

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

SCP    SHOPPING CENTRES AUSTRALASIA PROPERTY GROUP

REITs – Overnight Price: $3.11

Moelis rates ((SCP)) as Sell (5) –

The property group delivered the first-half numbers for FY20 with FFO (funds from operations) of 8.44cps versus Moelis’s estimate of 8.3cps. The broker highlights NOI (net operating income) grew by circa $1.6% and the outlook continues to be challenging, as indicated by the group.

The broker also notes that specialty sales increased by 1.5%, but admits specialty leasing was softer than expected.

Bell Potter states the company has delivered a good result in the midst of a challenging retail environment. The broker observes the stock is trading at record highs currently; this warrants a Sell rating with a target price of $2.64.

The report was published on February 5, 2020.

Target price is $2.64 Current Price is $3.11 Difference: minus $0.47 (current price is over target).
If SCP meets the Moelis target it will return approximately minus 15% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $2.69, suggesting downside of -13.5%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY20:

Moelis forecasts a full year FY20 dividend of 15.10 cents and EPS of 16.90 cents.
At the last closing share price the estimated dividend yield is 4.86%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.40.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.8, implying annual growth of 33.3%.
Current consensus DPS estimate is 15.1, implying a prospective dividend yield of 4.9%.
Current consensus EPS estimate suggests the PER is 18.5.

Forecast for FY21:

Moelis forecasts a full year FY21 dividend of 15.50 cents and EPS of 17.30 cents.
At the last closing share price the estimated dividend yield is 4.98%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 17.98.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 17.2, implying annual growth of 2.4%.
Current consensus DPS estimate is 15.5, implying a prospective dividend yield of 5.0%.
Current consensus EPS estimate suggests the PER is 18.1.

Market Sentiment: -0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

SSM    SERVICE STREAM LIMITED

Industrial Sector Contractors & Engineers – Overnight Price: $2.36

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

Service Stream has reported operating profits during the first half to be $58.1m. This includes the adoption of AASB16 Leases from July 2019. Excluding the impact of AASB16, Canaccord Genuity estimates organic operating profit growth of 13% on revenue growth of 1%.

For the telecommunications division, the broker forecasts revenues of $283m while operating profits are expected to be $43m with steady margins. For the utilities division, Canaccord Genuity expects revenues of $221m while operating profits are expected to be $18.4m along with margins increasing to 8.2%.

Overall, operating profits to operating cash flows saw a conversion of 58% during the first half, which the broker expects to improve to 80% in the second half. The company issued guidance stating operating profits in the second half to be in line with the first half. After taking the AASB16 leases into account, the broker expects operating profits in the second half to amount to $59m.

Canaccord Genuity retains the rating of Buy with the target price increasing to $3.12 from $3.05.

The report was published on February 5, 2020.

Target price is $3.12 Current Price is $2.36 Difference: $0.76
If SSM meets the Canaccord Genuity target it will return approximately 32% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Canaccord Genuity forecasts a full year FY20 dividend of 10.00 cents and EPS of 16.00 cents.
At the last closing share price the estimated dividend yield is 4.24%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.75.

Forecast for FY21:

Canaccord Genuity forecasts a full year FY21 dividend of 11.00 cents and EPS of 17.00 cents.
At the last closing share price the estimated dividend yield is 4.66%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.88.

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

STG    STRAKER TRANSLATIONS LIMITED

IT & Support – Overnight Price: $1.18

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

Straker Translations recently released its Q3 cash flow statement which highlights cash inflows of NZ$6.9m, up 2% from last year, notes Bell Potter. Straker also admitted to “subdued” revenue growth without disclosing any concrete numbers for now.

The company is following a strategy of shifting to large enterprise customers, notes the broker, while adding Straker is in the advanced stages of an M&A opportunity, expected to be closed by March-end.

Bell Potter has downgraded its revenue forecasts by about -1.5% but expects a strong second half. The broker upgrades its recommendation to Buy (Spec) with the target price unchanged at $1.90.

The report was published on January 30, 2020.

Target price is $1.90 Current Price is $1.18 Difference: $0.72
If STG meets the Bell Potter target it will return approximately 61% (excluding dividends, fees and charges).
The company's fiscal year ends in March.

Forecast for FY20:

Bell Potter forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 2.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 51.30.

Forecast for FY21:

Bell Potter forecasts a full year FY21 dividend of 0.00 cents and EPS of 1.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 98.33.

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: $3.92

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

Temple & Webster is Australia’s largest online-only furniture and homeware retailer targeting the ‘impulse’ and ‘intent’ buyers respectively. It is Bell Potter's view the company delivered a strong first half result, including strong top-line growth of $74.1m, increased operating profits of $2.1m and a positive cash generation of $15.7m.

The broker has strengthened its revenue estimates by 6%, 13% and 23% for FY20, FY21 and FY22.

The business is profitable and the company aims to increase top-line growth through initiatives like increasing the core categories in terms of depth and breadth, expanding private label offerings, expansion into related categories, leveraging scale to obtain cost advantage and exclusivity amongst others, notes Bell Potter.

The broker rates the stock as Buy with a target price of $4.10.

The report was published on February 4, 2020.

Target price is $4.10 Current Price is $3.92 Difference: $0.18
If TPW meets the Bell Potter target it will return approximately 5% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY20:

Bell Potter forecasts a full year FY20 EPS of 1.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 206.32.

Forecast for FY21:

Bell Potter forecasts a full year FY21 EPS of 3.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 105.95.

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

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