In Case You Missed It – BC Extra Upgrades & Downgrades – 15-12-23

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This story features EML PAYMENTS LIMITED, and other companies.
For more info SHARE ANALYSIS: EML
The company is included in ALL-ORDS and ALL-TECH

Broker Rating Changes (Post Friday Last Week)

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EML PAYMENTS LIMITED ((EML)) Upgrade to Overweight from Market Weight by Wilsons.B/H/S: 0/0/0

A lack of disclosure around updates on PCSIL from EML Payments has left the market disappointed, but created an opportunity for Wilsons to upgrade its rating on the stock amid a material share price drop. The company outlined a refocus on its core, profitable and cash flow positive businesses.

The broker does expect an outcome on PCSIL in coming months, rather than years. While Wilsons expects some investors will remain cautious given the track record of the previous management, it sees risk reducing for EML Payments over the next twelve months.

The rating is upgraded to Overweight and the target price of $1.17 is retained.

IRESS LIMITED ((IRE)) Upgrade to Overweight from Underweight by Wilsons.B/H/S: 0/0/0

Wilsons has been impressed by the speed of turnaround from Iress, with cost initiatives appearing to take effect amid FY24 earnings upgrades of 8-9%, which, notes the broker, are expected to drop through to net profit.

The broker expects the company's mortgage segment to be the next divestment target, and potential proceeds exceeding $100m could deliver meaningful balance sheet deleveraging and temper the return on invested capital trajectory.

The rating is upgraded to Overweight from Underweight and the target price increases to $8.16 from $5.68.

Price Target Changes (Post Friday Last Week)

More Highlights

AKG    ACADEMIES AUSTRALASIA GROUP LIMITED

Overnight Price: $0.30

Taylor Collison rates ((AKG)) as Initiation of coverage with Speculative Buy (1) –

Taylor Collison initiates research coverage on Academies Australasia with a Speculative Buy rating and 40c target price. Significant exposure to the influx of international students into Australia is considered attractive, while the Goulburn Street expansion should assist.

The majority of courses at Goulburn Street are high margin, notes the analyst, and given the company's relatively fixed cost base, should generate operating leverage as enrolment numbers grow.

The broker suggests tuition pre-payments are supportive of significant revenue growth, while 67% board and management ownership should also help drive value. Moreover, it's felt the company's college portfolio is not fully reflected in the current market capitalisation.

This report was published on December 11, 2023.

Target price is $0.40 Current Price is $0.30 Difference: $0.095
If AKG meets the Taylor Collison target it will return approximately 31% (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 0.64 cents and EPS of 0.80 cents.
At the last closing share price the estimated dividend yield is 2.10%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 38.13.

Forecast for FY25:

Taylor Collison forecasts a full year FY25 dividend of 2.44 cents and EPS of 3.30 cents.
At the last closing share price the estimated dividend yield is 8.00%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.24.

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

CIA    CHAMPION IRON LIMITED

Iron Ore – Overnight Price: $7.76

Jarden rates ((CIA)) as Buy (1) –

Champion Iron has announced the closure of a US$230m term loan facility, effectively retiring the US$400m balance of its revolving credit facility, freeing up US$400m in liquidity to supplement operating free cash flow.

Jarden estimates this leaves Champion Iron with sufficient operating free cash flow to fund the capital expenditure required to augment the phase II concentrator at Bloom Lake, estimated at CAD$470m.

The broker, however, is increasingly expectant that the company will pursue modification of both concentrators, delivering at least 15m tonnes per annum of direct reduction pellet feed product. 

The Buy rating is retained and the target price increases to $8.54 from $7.44.

This report was published on December 1, 2023.

Target price is $8.54 Current Price is $7.76 Difference: $0.78
If CIA meets the Jarden target it will return approximately 10% (excluding dividends, fees and charges).
The company's fiscal year ends in December.

Forecast for FY24:

Jarden forecasts a full year FY24 dividend of 23.47 cents and EPS of 79.12 cents.
At the last closing share price the estimated dividend yield is 3.02%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.81.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 1.12 cents and EPS of 87.39 cents.
At the last closing share price the estimated dividend yield is 0.14%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.88.

This company reports in CAD. 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

CVW    CLEARVIEW WEALTH LIMITED

Insurance – Overnight Price: $0.57

Taylor Collison rates ((CVW)) as Initiation of coverage with Buy (1) –

As Clearview Wealth is currently winning 11% of all new life insurance business sold through advisers in Australia, and shares are trading at an around -40% discount to Taylor Collison's estimate of fair value, coverage is initiated with a Buy rating.

The company's current total market share is only 3.2% of a $10bn market, which has grown at an around 5% historical compound annual growth rate (CAGR), notes the analyst. An 83c target is set.

The broker sees no impediment to market share gain given the industry has now ‘rebased’ following the Hayne Royal Commission and Clearview's operations are now more focused, having exited its financial advice (CAF) business.

This report was published on December 1, 2023.

Target price is $0.83 Current Price is $0.57 Difference: $0.26
If CVW meets the Taylor Collison target it will return approximately 46% (excluding dividends, fees and charges).

Forecast for FY24:

Taylor Collison forecasts a full year FY24 dividend of 2.40 cents and EPS of 5.20 cents.
At the last closing share price the estimated dividend yield is 4.21%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.96.

Forecast for FY25:

Taylor Collison forecasts a full year FY25 dividend of 3.40 cents and EPS of 6.90 cents.
At the last closing share price the estimated dividend yield is 5.96%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 8.26.

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

DTL    DATA#3 LIMITED.

IT & Support – Overnight Price: $8.20

Jarden rates ((DTL)) as Initiation of coverage with Buy (1) –

Jarden initiates research coverage on Data#3 with a Buy rating given a proven ability to grow services off a low base through economic headwinds, as well as the company’s exposure to both software tailwinds and Microsoft.

The company also has a positive exposure to interest rates and is able to take share in Australian states where it is under-penetrated due to its competitive advantage, explains the broker. A target price of $8.93 is set.

Data#3 is continuing to take share in an Information and Communication Technology (ICT) market which is expected (by Jarden) to grow at around 7% in 2024.

Moreover, the company is well positioned to benefit from the AI super-trend, according to the analysts. While there should only be a modest short-term impact, material upside risk is expected if the technology delivers even a fraction of its potential.

This report was published on December 5, 2023.

Target price is $8.93 Current Price is $8.20 Difference: $0.73
If DTL meets the Jarden target it will return approximately 9% (excluding dividends, fees and charges).
Current consensus price target is $7.80, suggesting downside of -4.9%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY24:

Jarden forecasts a full year FY24 dividend of 25.01 cents and EPS of 27.40 cents.
At the last closing share price the estimated dividend yield is 3.05%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 29.93.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 26.8, implying annual growth of 11.9%.
Current consensus DPS estimate is 23.5, implying a prospective dividend yield of 2.9%.
Current consensus EPS estimate suggests the PER is 30.6.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 28.72 cents and EPS of 31.40 cents.
At the last closing share price the estimated dividend yield is 3.50%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 26.11.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 29.9, implying annual growth of 11.6%.
Current consensus DPS estimate is 26.8, implying a prospective dividend yield of 3.3%.
Current consensus EPS estimate suggests the PER is 27.4.

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

KYP    KINATICO LIMITED

Software & Services – Overnight Price: $0.11

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

Regulatory technology (Reg-Tech) workforce software business Kinatico is well progressed in transitioning to a predominantly recurring revenue model, explains Taylor Collison.

There has been zero customer churn in the last 18 months (during the 15%-complete transition), along with higher quality revenue streams, points out the analyst, who begins research coverage with an Outperform rating.

The company is primarily focused on daily workforce management through its software solutions and OnCite platform. SaaS revenue has increased to $5.1m in FY23 from $0.6m in FY22.

Additionally, earnings have been diversified following the Bright acquisition in 2021, allowing customer’s daily compliance requirements to be addressed through the entire employee lifecycle.

The company became profitable in FY23 following a 110% increase in SaaS revenue and improved operational automation with employee numbers falling by around -30%.

No 12-month target price is set.

This report was published on December 1, 2023.

Current Price is $0.11. Target price not assessed.
The company's fiscal year ends in June.

Forecast for FY24:

Taylor Collison forecasts a full year FY24 dividend of 0.00 cents and EPS of 0.18 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 61.11.

Forecast for FY25:

Taylor Collison forecasts a full year FY25 dividend of 0.00 cents and EPS of 0.55 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 20.00.

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

MXI    MAXIPARTS LIMITED

Automobiles & Components – Overnight Price: $2.52

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

Due to current favourable industry dynamics for MaxiPARTS' core truck/trailer parts division, Taylor Collison is expecting a step-change in EPS growth to around 22% per annum for FY24 and FY25, up from 11.8% during FY23.

Even after vehicle backlogs clear (which could be two years), the broker expects the trend of improved supplier and customer adoption should remain as a tailwind for the sector.

These better trends are due to expanding vehicle content and greater sophistication of the aftermarket channel, explains Taylor Collison.

Given a conservative balance sheet, capital management may also be in prospect, suggests the analyst, who begins research coverage with an Outperform rating. A $3.40 target price is set.

This report was published on December 1, 2023.

Target price is $3.40 Current Price is $2.52 Difference: $0.88
If MXI meets the Taylor Collison target it will return approximately 35% (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 8.00 cents and EPS of 19.90 cents.
At the last closing share price the estimated dividend yield is 3.17%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.66.

Forecast for FY25:

Taylor Collison forecasts a full year FY25 dividend of 9.70 cents and EPS of 24.30 cents.
At the last closing share price the estimated dividend yield is 3.85%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.37.

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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