Australian Broker Call *Extra* Edition – Oct 18, 2023

This story features AUSTIN ENGINEERING LIMITED, and other companies. For more info SHARE ANALYSIS: ANG

An additional news report on the recommendation, valuation, forecast and opinion changes and updates 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)

ANG   ASM   BOQ   CSR   FBU   INA   IPH   JHX   MEI   OCC   OPT   VVA  

ANG    AUSTIN ENGINEERING LIMITED

Mining Sector Contracting – Overnight Price: $0.26

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

Austin Engineering has reiterated its expectations of a large earnings increase over FY24 given double digit revenue growth and higher profit margins. Petra Capital estimates full year net profit should exceed $25m.

The broker remains ahead of company guidance at this time, expecting the company will continue to benefit from elevated demand, market share gains and  efficiency gains. 

The Buy rating and target price of 37 cents are retained.

This report was published on October 13, 2023.

Target price is $0.37 Current Price is $0.26 Difference: $0.115
If ANG meets the Petra Capital target it will return approximately 45% (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 1.50 cents and EPS of 4.70 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 5.43.

Forecast for FY25:

Petra Capital forecasts a full year FY25 dividend of 1.50 cents and EPS of 5.20 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 4.90.

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

ASM    AUSTRALIAN STRATEGIC MATERIALS LIMITED

Rare Earth Minerals – Overnight Price: $1.40

Petra Capital rates ((ASM)) as Hold (3) –

Testwork from Australian Strategic Materials has confirmed the Dubbo project can produce in demand Tb and Dy rare earth oxides to specifications, news that Petra Capital expects puts the company in a strong position in offtake and strategic investments discussions.

Petra Capital points out Tb and Dy oxides represent 18% of the forecast annual revenue from Australian Strategic Materials, or $151m. 

The Hold rating and target price of $1.94 are retained, but the broker highlights news of an offtake agreement or stategic investment could drive an upgrade. 

This report was published on October 17, 2023.

Target price is $1.94 Current Price is $1.40 Difference: $0.54
If ASM meets the Petra Capital target it will return approximately 39% (excluding dividends, fees and charges).

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

BOQ    BANK OF QUEENSLAND LIMITED

Banks – Overnight Price: $5.52

Goldman Sachs rates ((BOQ)) as Sell (5) –

Cash earnings from Bank of Queensland declined -8.4% in FY23 to $453m. While the full year result was only a -1% miss to Goldman Sachs' expectations, the broker has reduced its earnings per share forecasts -20%, -18% and -12% through to FY26.

While the broker feels the bank is pursuing the right long-term strategy with its transformation program, it remains concerned about exposure to non-staff cost inflation and the operational risks and cost pressures involving with pursuing such a strategy. 

The Sell rating is retained and the target price declines to $5.15 from $5.59.

This report was published on October 11, 2023.

Target price is $5.15 Current Price is $5.52 Difference: minus $0.37 (current price is over target).
If BOQ meets the Goldman Sachs target it will return approximately minus 7% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $5.64, suggesting upside of 2.2%(ex-dividends)
The company's fiscal year ends in August.

Forecast for FY24:

Goldman Sachs forecasts a full year FY24 EPS of 41.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.46.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 48.3, implying annual growth of 153.3%.
Current consensus DPS estimate is 39.5, implying a prospective dividend yield of 7.2%.
Current consensus EPS estimate suggests the PER is 11.4.

Forecast for FY25:

Goldman Sachs forecasts a full year FY25 EPS of 45.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.27.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 50.0, implying annual growth of 3.5%.
Current consensus DPS estimate is 40.5, implying a prospective dividend yield of 7.3%.
Current consensus EPS estimate suggests the PER is 11.0.

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

CSR    CSR LIMITED

Building Products & Services – Overnight Price: $5.85

Jarden rates ((CSR)) as Overweight (2) –

WA-based Australian construction materials company BGC has signed an agreement with Belgium-based Etex. The latter aims to acquire BGC’s plasterboard and fibre cement operations to expand its regional presence beyond 14 Australian sites and around 400 employees.

Jarden feels this transaction poses a greater competitive threat to number two player, CSR, though number one James hardie Industries may not be totally exempt from a negative impact.

The broker suggests greater competition could potentially pare back recent material price hikes, while adding more capacity may be more carefully weighed by incumbent players.

Jarden's Overweight rating and $5.70 target are maintained for CSR.

This report was published on October 13, 2023.

Target price is $5.70 Current Price is $5.85 Difference: minus $0.15 (current price is over target).
If CSR meets the Jarden target it will return approximately minus 3% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $5.62, suggesting downside of -3.9%(ex-dividends)
The company's fiscal year ends in March.

Forecast for FY24:

Jarden forecasts a full year FY24 dividend of 27.90 cents and EPS of 39.90 cents.
At the last closing share price the estimated dividend yield is 4.77%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.66.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 37.4, implying annual growth of -17.9%.
Current consensus DPS estimate is 28.0, implying a prospective dividend yield of 4.8%.
Current consensus EPS estimate suggests the PER is 15.6.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 28.10 cents and EPS of 40.20 cents.
At the last closing share price the estimated dividend yield is 4.80%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.55.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 36.8, implying annual growth of -1.6%.
Current consensus DPS estimate is 27.2, implying a prospective dividend yield of 4.6%.
Current consensus EPS estimate suggests the PER is 15.9.

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

FBU    FLETCHER BUILDING LIMITED

Building Products & Services – Overnight Price: $4.08

Goldman Sachs rates ((FBU)) as Buy (1) –

Fletcher Building and BGC Construction remain in a stalemate on the Iplex pro-fit pipe issue, with Fletcher Building attributing leaks to installation practices and BGC attributing issues to product failure. 

Goldman Sachs points out BGC is also estimating the cost of repair at $1.8bn, compared to Fletcher Building's estimates of $50-100m. The former reflects the cost of a full re-piping of 30,000 homes nationally, while Fletcher Building's cost addresses only homes in Perth. 

The Buy rating and target price of $5.25 are retained.

This report was published on October 15, 2023.

Target price is $5.25 Current Price is $4.08 Difference: $1.17
If FBU meets the Goldman Sachs target it will return approximately 29% (excluding dividends, fees and charges).
Current consensus price target is $5.30, suggesting upside of 29.8%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY24:

Goldman Sachs forecasts a full year FY24 EPS of 43.45 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.39.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 42.4, implying annual growth of N/A.
Current consensus DPS estimate is 29.6, implying a prospective dividend yield of 7.3%.
Current consensus EPS estimate suggests the PER is 9.6.

Forecast for FY25:

Goldman Sachs forecasts a full year FY25 EPS of 43.45 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.39.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 38.8, implying annual growth of -8.5%.
Current consensus DPS estimate is 26.9, implying a prospective dividend yield of 6.6%.
Current consensus EPS estimate suggests the PER is 10.5.

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

INA    INGENIA COMMUNITIES GROUP

Aged Care & Seniors – Overnight Price: $3.92

Moelis rates ((INA)) as Hold (3) –

Ingenia Communities' largest shareholder, Sun Communities, has divested its 10% stake to Ingenia Communities through a black trade of $3.90 per share, but Moelis feels the trade does not neccessarily impact on the joint venture partnership between the two.

Moelis feels Ingenia Communities benefits from Sun Communities' long-term commitment to the joint venture through incremental scale and external party funding.

The Hold rating and target price of $4.18 are retained.

This report was published on October 12, 2023.

Target price is $4.18 Current Price is $3.92 Difference: $0.26
If INA meets the Moelis target it will return approximately 7% (excluding dividends, fees and charges).
Current consensus price target is $4.54, suggesting upside of 15.8%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY24:

Moelis forecasts a full year FY24 dividend of 11.00 cents and EPS of 20.80 cents.
At the last closing share price the estimated dividend yield is 2.81%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.85.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 21.7, implying annual growth of 37.4%.
Current consensus DPS estimate is 11.1, implying a prospective dividend yield of 2.8%.
Current consensus EPS estimate suggests the PER is 18.1.

Forecast for FY25:

Moelis forecasts a full year FY25 dividend of 11.00 cents and EPS of 21.50 cents.
At the last closing share price the estimated dividend yield is 2.81%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.23.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 28.3, implying annual growth of 30.4%.
Current consensus DPS estimate is 13.0, implying a prospective dividend yield of 3.3%.
Current consensus EPS estimate suggests the PER is 13.9.

Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

IPH    IPH LIMITED

Legal – Overnight Price: $7.19

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

For the Australian operations of IPH, Petra Capital explains Australian patent filings are relevant as a measure of both market share and an indication for upcoming work. IPH also has operations in Asia, New Zealand and Canada.

While the company's Australian September quarter patent filings were weaker than the broker expected, the analyst remains patient in light of recent business development initiatives and price increases to mitigate inflation.

No changes are made to the broker's forecasts and the $10.70 target is unchanged. Buy.

This report was published on October 13, 2023.

Target price is $10.70 Current Price is $7.19 Difference: $3.51
If IPH meets the Petra Capital target it will return approximately 49% (excluding dividends, fees and charges).
Current consensus price target is $10.49, suggesting upside of 45.9%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY24:

Petra Capital forecasts a full year FY24 dividend of 33.70 cents and EPS of 44.30 cents.
At the last closing share price the estimated dividend yield is 4.69%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.23.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 44.9, implying annual growth of 56.9%.
Current consensus DPS estimate is 34.6, implying a prospective dividend yield of 4.8%.
Current consensus EPS estimate suggests the PER is 16.0.

Forecast for FY25:

Petra Capital forecasts a full year FY25 dividend of 36.00 cents and EPS of 47.20 cents.
At the last closing share price the estimated dividend yield is 5.01%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.23.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 48.1, implying annual growth of 7.1%.
Current consensus DPS estimate is 36.9, implying a prospective dividend yield of 5.1%.
Current consensus EPS estimate suggests the PER is 14.9.

Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

JHX    JAMES HARDIE INDUSTRIES PLC

Building Products & Services – Overnight Price: $41.87

Jarden rates ((JHX)) as Overweight (2) –

Jarden is not ruling out any potential impact on James Hardie Industries' (original) home operations after WA-based Australian construction materials company BGC signed an agreement with Belgium-based Etex.

The transaction poses a greater competitive threat, however, to number two player CSR, in the analysts' view.

Etex aims to acquire BGC’s plasterboard and fibre cement operations to expand its regional presence beyond 14 Australian sites and around 400 employees.

The broker suggests greater competition could potentially pare back recent material price hikes, while adding more capacity may be more carefully weighed by incumbent players before proceeding.

Jarden's Overweight rating and $48.60 target are maintained for James Hardie Industries.

This report was published on October 13, 2023.

Target price is $48.60 Current Price is $41.87 Difference: $6.73
If JHX meets the Jarden target it will return approximately 16% (excluding dividends, fees and charges).
Current consensus price target is $50.74, suggesting upside of 21.2%(ex-dividends)
The company's fiscal year ends in March.

Forecast for FY24:

Jarden forecasts a full year FY24 dividend of 0.00 cents and EPS of 226.97 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 18.45.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 230.4, implying annual growth of N/A.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is 18.2.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 0.00 cents and EPS of 253.31 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.53.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 260.4, implying annual growth of 13.0%.
Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A.
Current consensus EPS estimate suggests the PER is 16.1.

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

MEI    METEORIC RESOURCES NL

Overnight Price: $0.21

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

Following a visit to the Caldeira ionic clay rare earth project in Brazil, the analyst at Petra Capital came away impressed by both the scale and advanced nature of the project. Throughput rates of 5Mtpa are expected from the proposed plant.

Prior to the visit, Petra Capital already considered Caldeira the world's best undeveloped project of its type.

The broker raises the target for Meteoric Resources to 40c from 32c after identifying an increased chance of better recoveries and grades at the beginning of the mine life. Buy.

This report was published on October 16, 2023.

Target price is $0.40 Current Price is $0.21 Difference: $0.185
If MEI meets the Petra Capital target it will return approximately 86% (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 minus 0.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 53.75.

Forecast for FY25:

Petra Capital forecasts a full year FY25 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 43.00.

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

OCC    ORTHOCELL LIMITED

Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $0.36

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

Petra Capital anticipates a strong 1Q trading update by Orthocell now that a second distributor, Striate, has been deployed in the US. A later strategy update is then expected at the AGM.

Last month, a leading dental surgical and biomaterials supplier, Ace Southern launched the perFORM dental membrane.

Orthocell will manufacture and supply the product to the company at the same transfer price and terms currently in place with BioHorizons for Striate, explains Petra Capital.

Together, BioHorizons and Ace Southern significantly expand the US customer base for Orthocell's dental membrane product. The broker anticipates a doubling (at least) of FY24 unit volumes for Orthocell compared to the previous corresponding period.

The Buy rating and $1.35 target are unchanged.

This report was published on October 16, 2023.

Target price is $1.35 Current Price is $0.36 Difference: $0.99
If OCC meets the Petra Capital target it will return approximately 275% (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 minus 2.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 12.86.

Forecast for FY25:

Petra Capital forecasts a full year FY25 dividend of 0.00 cents and EPS of minus 1.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 24.00.

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

OPT    OPTHEA LIMITED

Pharmaceuticals & Biotech/Lifesciences – Overnight Price: $0.34

Goldman Sachs rates ((OPT)) as Buy (1) –

In order to reflect Opthea's recent full year results and capital raise, Goldman Sachs has updated its estimates. While revenue forecasts for FY24-25 are unchanged earnings are downgraded -42%, accounting for both the capital raise and expected higher expenses. 

Among several notable candidates vying for a share of the US$13bn retinal disease market, Goldman Sachs finds OPT-302 particualrly interesting. The treatment has demonstrated improved efficacy above the existing standard of care and a favourable safety profile. 

The Buy rating is retained and the target price decreases to $2.05 from $2.80.

This report was published on October 15, 2023.

Target price is $2.05 Current Price is $0.34 Difference: $1.71
If OPT meets the Goldman Sachs target it will return approximately 503% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY24:

Goldman Sachs forecasts a full year FY24 dividend of 0.00 cents and EPS of minus 25.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 1.36.

Forecast for FY25:

Goldman Sachs forecasts a full year FY25 dividend of 0.00 cents and EPS of minus 15.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 2.27.

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

VVA    VIVA LEISURE LIMITED

Travel, Leisure & Tourism – Overnight Price: $1.40

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

Petra Capital expects the upcoming AGM on October 26 will confirm positive trading momentum for Viva Leisure, evident so far in FY23. First-time FY24 guidance may also be provided by management.

The broker anticipates a higher share price over time when the market appreciates the non-discretionary nature of lower-priced gym memberships. Upside is also expected as the gym roll-out continues and via the Plus Fitness franchise acquisition.

No changes are made to the analyst's forecasts and the $2.44 target and Buy rating are maintained.

This report was published on October 16, 2023.

Target price is $2.44 Current Price is $1.40 Difference: $1.04
If VVA meets the Petra Capital target it will return approximately 74% (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 12.20 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.48.

Forecast for FY25:

Petra Capital forecasts a full year FY25 dividend of 0.00 cents and EPS of 16.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.48.

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

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