In Case You Missed It – BC Extra Upgrades & Downgrades – 13-10-23

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This story features CSR LIMITED, and other companies.
For more info SHARE ANALYSIS: CSR

Broker Rating Changes (Post Thursday Last Week)

By Mark Woodruff

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CSR LIMITED ((CSR)) Upgrade to Buy from Neutral by Goldman Sachs.

Goldman Sachs expects the existing building backlog could provide some through-the-cycle buffering to CSR. With dwellings under construction at historic levels, the broker is predicting completions increase to 187,000 and the current backlog will resolve itself by end of 2024. 

It expects completions to moderate in FY25 and trough in FY26, by which time a steady or lowering interest rate environment could yield an improved housing outlook. 

The rating is upgraded to Buy from Neutral and the target price increases $6.45 from $5.95. 

CORE LITHIUM LIMITED ((CXO)) Upgrade to Buy from Hold by Petra Capital.

Petra Capital upgrades its Core Lithium rating, finding the current stock price too cheap given upside risk. With a current market cap of $844m, the broker values the company at $1.2bn taking into consideration assumptions for the coming two years. 

The broker feels the company has kept production expectations low for the coming two years, guiding to between 80 and 90,000 tonnes in FY24 and lower in FY25, leaving room for upside. Looking ahead, the broker expects the BP33 project to be key to Core Lithium's future, with a final investment decision on the project due in the March quarter. 

The rating is upgraded to Buy from Hold and the target price decreases to 60 cents from 66 cents.

IPH LIMITED ((IPH)) Upgrade to Buy from Neutral by Goldman Sachs.

With its defensive business model and solid growth outlook, Goldman Sachs has seen value in lifting its rating on IPH to Buy from Neutral. At this point, the broker believes the market continues to price in patent filing market share challenges in Australia New Zealand and Asia, with the stock trading at around a -20% discount, but a positive update at the upcoming AGM could drive a re-rate. 

Goldman Sachs expects the company could fund further merger and acquisition activity on its current balance sheet, and highlights further Canadian acquisitions, as flagged at the full year result, could prove a catalyst. 

The target price increases 1.2% to $8.75. 

STEADFAST GROUP LIMITED ((SDF)) Upgrade to Overweight from Neutral by Jarden.

Steadfast Group has purchased US independent agency network ISU group for -US$55m.

Jarden expects investors will appreciate this softly softly approach to US expansion, the deal being debt funded and immediately EPS accretive, and allay their fears.

The broker says the purchase will allow the company to gain a foothold and scale over time, describing it as a manageable first step into a massive market and observing the company has an opportunity to acquire equity in the ISU's broker network over time – an estimated revenue pool of US$1bn.

Meanwhile, Steadfast should provide the balance sheet capacity and experience to boost ISU's appeal, says the broker.

Rating is upgraded to Overweight from Neutral. Target price is steady at $6.

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ADBRI LIMITED ((ABC)) Downgrade to Sell from Neutral by Goldman Sachs.

Goldman Sachs downgrades its rating for Adbri to Sell from Neutral as the broker trims net profit forecasts over FY23-25 due to higher forecasts for interest expenses.

In a net neutral for revenue forecasts, the analysts suggest higher infrastructure estimates will be offset by a weaker housing starts profile. 

While the balance sheet is well within covenants, it remains more stretched than Adbri's target, cautions the broker. Apart from this concern, the analysts highlight an ongoing challenging cost backdrop.

Goldman Sachs also highlights upside risks including an improvement in the residential end-market, cash cost moderation/deflation, a better-than-expected price recovery and an extension to the infrastructure cycle.

The $1.85 target price is unchanged.

LIONTOWN RESOURCES LIMITED ((LTR)) Downgrade to Underweight from Neutral by Jarden.

Jarden is concerned about increasing downside risk to Liontown Resources' share price as Hancock Prospecting continues to increase its holding amid a conditional cash offer from Albemarle. 

While the latter's $3 per share cash offer remains subject to due diligence, Hancock Prospecting has increased its holding in the company from a less than 5% stake to 12.4%, all at no more than $3 per share. With this in mind, the broker sees a chance of a higher offer as being diminished, therefore increasing downside risk to the share price. 

The broker describes its rating downgrade to Underweight from Neutral as "bold in the face of strong corporate interest", but notes Hancock Prospecting's ability to increase its stake at less than $3 per share undermines a competitive situation. It retains its $3.00 target price. 

Price Target Changes (Post Thursday Last Week)

More Highlights

CRD   CONRAD ASIA ENERGY LIMITED

Business & Consumer Credit – Overnight Price: $1.38

Wilsons rates ((CRD)) as Initiation of coverage with Overweight (1) –

Wilsons has initiated coverage on Conrad Asia Energy, noting it is the only ASX-listed pure offshore Asia exploraton and production gas company.

While the company has several discovered gas resources, all in the shallow waters offshore Indonesia, its first gas development will be Mako, one of the largest discoveries in Indonesia in the last decade. The broker is estimating Mako could generate average free cash flow of US$116m per annum over its first four years. 

Importantly, the gas field is located in the fastest growing gas demand region in the world, with imports expected to almost quadruple over thirty years. The broker initiates with an Overweight rating and a target price of $2.52.

This report was published on October 5, 2023.

Target price is $2.52 Current Price is $1.38 Difference: $1.14
If CRD meets the Wilsons target it will return approximately 83% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY23:

Wilsons forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 12.04 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 11.46.

Forecast for FY24:

Wilsons forecasts a full year FY24 dividend of 0.00 cents and EPS of minus 2.41 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 57.31.

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

EMN    EURO MANGANESE INC

New Battery Elements – Overnight Price: $0.12

Canaccord Genuity rates ((EMN)) as Speculative Buy (1) –

Having completed resubmission of its Environmental and Social Impact Assessment (ESIA) for its Chvaletice manganese project, Euro Manganese is now anticipating final ESIA approval within three months. 

Canaccord Genuity continues to find Euro Manganese a compelling exposure to the battery thematic. Over the coming nine months the broker expects to see completion of land access agreements, planning permit submissions, commencement of front end engineering design, offtake agreement and financing discussions, and potentially early works programs. 

The Speculative Buy rating and target price of $1.15 are retained.

This report was published on October 5, 2023.

Target price is $1.15 Current Price is $0.12 Difference: $1.035
If EMN meets the Canaccord Genuity target it will return approximately 900% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY22:

Canaccord Genuity forecasts a full year FY22 dividend of 0.00 cents and EPS of minus 2.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 5.75.

Forecast for FY23:

Canaccord Genuity forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 1.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 11.50.

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

GNG   GR ENGINEERING SERVICES LIMITED

Mining Sector Contracting – Overnight Price: $2.19

Taylor Collison rates ((GNG)) as Initiation of coverage with Outperform (2) –

Taylor Collison initiates coverage on engineering services contractor GR Engineering Services with an Outperform rating and $2.52 target. The company provides engineering, design and construction services to the mining and minerals processing industries.

These services range from pre-feasibility studies through to construction of mining infrastructure, and the broker points out margins are correlated to the long-term price of the minerals in which it specialises.

While only a small part of revenue is secured from pre-feasibility and feasibility studies, this specialty helps the company gain tendering of engineering, procurement, and construction (EPC) work against competitors, explains the analyst.

Given an expected long demand cycle for clean energy minerals, and its potential to provide consistent profits and high labour utilisation, the broker sees an attractive payback from investing in shares of GR Engineering Services.

This report was published on October 3, 2023.

Target price is $2.52 Current Price is $2.19 Difference: $0.33
If GNG meets the Taylor Collison target it will return approximately 15% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY24:

Taylor Collison forecasts a full year FY24 dividend of 19.00 cents and EPS of 20.10 cents.
At the last closing share price the estimated dividend yield is 8.68%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.90.

Forecast for FY25:

Taylor Collison forecasts a full year FY25 dividend of 20.00 cents and EPS of 21.30 cents.
At the last closing share price the estimated dividend yield is 9.13%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.28.

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

GNX    GENEX POWER LIMITED

EV, Solar & Batteries – Overnight Price: $0.16

Petra Capital rates ((GNX)) as Buy (1) –

Petra Capital believes Genex Power's 25-year purchasing power agreement with Fortescue Metals Group ((FMG)) at its Bulli Creek project is a key milestone for the company.

The term compares with the typical PPA term of 10 to 15 years observes the broker, adding this and the fixed-price structure provides a high degree of certainty to financiers.

The broker says management has referred to discussions with other parties, suggesting momentum may be building for the company.

Buy rating retained. Target price rises to 28.5c from 26c.

This report was published on October 10, 2023.

Target price is $0.28 Current Price is $0.16 Difference: $0.125
If GNX meets the Petra Capital target it will return approximately 78% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY24:

Petra Capital forecasts a full year FY24 dividend of 0.00 cents and EPS of 0.00 cents.

Forecast for FY25:

Petra Capital forecasts a full year FY25 dividend of 0.20 cents and EPS of 0.60 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 26.67.

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

LNW    LIGHT & WONDER INC

Overnight Price: $114.00

Jarden rates ((LNW)) as Buy (1) –

Press releases from Light & Wonder ahead of the Global Gaming Convention have left Jarden encouraged, namely the announcement of a new licensed title, Squid Game, and a push into the Georgia coin-only amusement machine replacement market. 

Having collaborated with Netflix on the new title, and marking Netflix's first license with the gaming industry, Jarden sees potential for the game to be transformational in attracting a new, younger audience for the company. 

The Buy rating and target price of $136.00 are retained.

This report was published on October 9, 2023.

Target price is $136.00 Current Price is $114.00 Difference: $22
If LNW meets the Jarden target it will return approximately 19% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY23:

Jarden forecasts a full year FY23 dividend of 0.00 cents and EPS of 129.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 88.17.

Forecast for FY24:

Jarden forecasts a full year FY24 dividend of 0.00 cents and EPS of 359.90 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 31.68.

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

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