Australian Broker Call *Extra* Edition – Feb 06, 2024

Daily Market Reports | Feb 06 2024

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)

AIA   ARX   BGL   BLD   BPT (3)   CAI   CIA   CSR   CU6   DMP   FBU   FMG   GMD   GOR (2)   IFL   IGO (3)   IPL   JHX   KAR (2)   MDR   MEI   MIN (2)   MP1   NPR   NWL   NXS   PLT   PPM   PPT   PXA   RMD (2)   RRL (2)   RWC   SDR   SDV   SFR (2)   STO (2)   STX   SUN   TLC   WC8   WOW  

AIA    AUCKLAND INTERNATIONAL AIRPORT LIMITED

Infrastructure & Utilities - Overnight Price: $7.96

Jarden rates ((AIA)) as Upgrade to Neutral from Underweight (3) -

Jarden assesses a weaker than expected guidance update from Air New Zealand (AIR) on the potential passenger volumes for Auckland International Airport.

International volumes are below guidance and load factors remain under 2019 levels. The analyst expects FY24 international passengers of 10.1m against 10.6m guidance. Forecast domestic volumes of 8.45m are also slightly softer than 8.5m guidance.

The broker highlights potential downside risks to Auckland Airport's earnings in FY24 with net profit guidance at $260m-$280m and the Jarden forecast at the lower end of the range.

Jarden lifts the target price to $8.26 from $7.71 based on lower risk-free rates and has a Neutral rating. 

This report was published on January 29, 2024.

Target price is $8.26 Current Price is $7.96 Difference: $0.3
If AIA meets the Jarden target it will return approximately 4% (excluding dividends, fees and charges).
Current consensus price target is $7.85, suggesting downside of -1.4%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY24:

Jarden forecasts a full year FY24 dividend of 13.14 cents and EPS of 16.47 cents.
At the last closing share price the estimated dividend yield is 1.65%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 48.33.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 18.1, implying annual growth of N/A.
Current consensus DPS estimate is 14.1, implying a prospective dividend yield of 1.8%.
Current consensus EPS estimate suggests the PER is 44.0.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 14.90 cents and EPS of 18.69 cents.
At the last closing share price the estimated dividend yield is 1.87%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 42.59.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 21.0, implying annual growth of 16.0%.
Current consensus DPS estimate is 16.1, implying a prospective dividend yield of 2.0%.
Current consensus EPS estimate suggests the PER is 37.9.

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

ARX    AROA BIOSURGERY LIMITED

Pharmaceuticals & Biotech/Lifesciences - Overnight Price: $0.54

Wilsons rates ((ARX)) as Overweight (1) -

In the year that Aroa Biosurgery was meant to finally deliver ‘proper’ earnings, corrections to revenue share assumptions for OviTex have triggered a guidance downgrade.

The financial hit is perhaps less significant than that to sentiment, Wilsons suggests, because it re-aggravates the argument that Aroa’s OviTex business is of lower revenue quality.

The subsequent -14% hit to the share price is likely overdone, Wilsons believes, however understandable as investor patience wanes. The FY24 result will be key.

Target falls to $1.00 from $1.60, Overweight retained.

This report was published on January 31, 2024.

Target price is $1.00 Current Price is $0.54 Difference: $0.46
If ARX meets the Wilsons target it will return approximately 85% (excluding dividends, fees and charges).
The company's fiscal year ends in March.

Forecast for FY24:

Wilsons forecasts a full year FY24 dividend of 0.00 cents and EPS of minus 1.94 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 27.79.

Forecast for FY25:

Wilsons forecasts a full year FY25 dividend of 0.00 cents and EPS of 0.46 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 116.63.

This company reports in NZD. 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

BGL    BELLEVUE GOLD LIMITED

Gold & Silver - Overnight Price: $1.26

Canaccord Genuity rates ((BGL)) as Speculative Buy (1) -

Bellevue Gold has reported December quarter production of 15,500 ounces compared to the 21,600 ounces expected by Canaccord Genuity, with all-in sustaining costs not reported. 

The company did reach nameplate capacity in the month of December, its second full month of operations. 

Canaccord Genuity notes the majority of quarterly production came from the Armand area, one of four main mining areas to be mined over FY24, and that all four mining areas are now in production.

The Speculative Buy rating is retained and the target price decreases to $1.80 from $1.85.

This report was published on January 29, 2024.

Target price is $1.80 Current Price is $1.26 Difference: $0.54
If BGL meets the Canaccord Genuity target it will return approximately 43% (excluding dividends, fees and charges).
The company's fiscal year ends in June.

Forecast for FY24:

Canaccord Genuity forecasts a full year FY24 dividend of 0.00 cents and EPS of 9.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.00.

Forecast for FY25:

Canaccord Genuity forecasts a full year FY25 dividend of 0.00 cents and EPS of 25.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 5.04.

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

BLD    BORAL LIMITED

Building Products & Services - Overnight Price: $5.30

Goldman Sachs rates ((BLD)) as Downgrade to Sell from Neutral (5) -

Prior to reporting season results, Goldman Sachs notes building starts in Australia have been weaker-than-expected, but it's now thought the elevated backlog will take longer to unwind than previously forecast.

In the US, the broker has a more robust forecast for housing starts due to growing single-family 2024/25 starts. Multi-family starts in 2024 are expected to decline, but growth is anticipated in 2025.

From among Goldman's coverage, James Hardie Industries is considered best placed, with operating leverage under-appreciated by the wider market. The company has also been a beneficiary of normalising input costs in the 4Q.

As Boral has successfully executed a margin turnaround, the share price has significantly outperformed, and the broker downgrades its rating to Sell from Neutral. 

The analyst feels recent margin expansion may be hard to sustain as residential starts in Australia wane, and infrastructure may have limited capacity for incremental growth.

The target rises to $4.90 from $4.70.

This report was published on February 25, 2024.

Target price is $4.90 Current Price is $5.30 Difference: minus $0.4 (current price is over target).
If BLD meets the Goldman Sachs target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $4.84, suggesting downside of -8.6%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY24:

Goldman Sachs forecasts a full year FY24 EPS of 18.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 29.44.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 17.9, implying annual growth of 25.0%.
Current consensus DPS estimate is 3.7, implying a prospective dividend yield of 0.7%.
Current consensus EPS estimate suggests the PER is 29.6.

Forecast for FY25:

Goldman Sachs forecasts a full year FY25 EPS of 21.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 25.24.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 22.3, implying annual growth of 24.6%.
Current consensus DPS estimate is 7.4, implying a prospective dividend yield of 1.4%.
Current consensus EPS estimate suggests the PER is 23.8.

Market Sentiment: -0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

BPT    BEACH ENERGY LIMITED

Crude Oil - Overnight Price: $1.65

Canaccord Genuity rates ((BPT)) as Hold (3) -

As Beach Energy's Waitsia progresses towards first production, Canaccord Genuity has lifted its risking for the asset to 90%. The broker retains its concern around Waitsia's capital expenditure and timing of the start up, but notes the positive progress. 

Looking at the company's December quarter result, production of 4.3m barrels of oil equivalent was a miss to the broker's forecast, and down -4% quarter-on-quarter, driven by Kupe and Bass Basin. 

Revenue of $544m, however, was well above the broker. Canaccord Genuity explains the discrepancy was due to third party sales, in particular the first Waitsia LNG cargo.

The Hold rating is retained and the target price increases to $1.60 from $1.54.

This report was published on February 29, 2024.

Target price is $1.60 Current Price is $1.65 Difference: minus $0.045 (current price is over target).
If BPT meets the Canaccord Genuity target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $1.81, suggesting upside of 9.9%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY24:

Canaccord Genuity forecasts a full year FY24 dividend of 2.00 cents and EPS of 18.10 cents.
At the last closing share price the estimated dividend yield is 1.22%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.09.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.9, implying annual growth of -3.9%.
Current consensus DPS estimate is 4.7, implying a prospective dividend yield of 2.9%.
Current consensus EPS estimate suggests the PER is 9.7.

Forecast for FY25:

Canaccord Genuity forecasts a full year FY25 dividend of 2.00 cents and EPS of 22.60 cents.
At the last closing share price the estimated dividend yield is 1.22%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.28.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 28.4, implying annual growth of 68.0%.
Current consensus DPS estimate is 10.1, implying a prospective dividend yield of 6.1%.
Current consensus EPS estimate suggests the PER is 5.8.

Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Goldman Sachs rates ((BPT)) as Downgrade to Sell from Neutral (5) -

According to Goldman Sachs, Beach Energy reported mixed 2Q24 results.

Notably the report included an early LNG cargo from Waitsia (export allowance) which was better than expected, but offset by a non-cash -$505m charge from higher capex and operating expenses at the Cooper Basin JV with Santos.

The analyst adjusts EBITDA earnings by 14%, -4% and -3% for FY24 to FY26, respectively, and the NAV is lowered by -2% to $1.69 from $1.73.

Although the stock is trading at an attractive discount to NAV, Goldman's retains a Sell rating with better perceived opportunities in upstream energy companies.

The price target is shifted marginally to $1.66 from $1.65.

This report was published on January 26, 2024.

Target price is $1.66 Current Price is $1.65 Difference: $0.015
If BPT meets the Goldman Sachs target it will return approximately 1% (excluding dividends, fees and charges).
Current consensus price target is $1.81, suggesting upside of 9.9%(ex-dividends)

Forecast for FY24:

Current consensus EPS estimate is 16.9, implying annual growth of -3.9%.
Current consensus DPS estimate is 4.7, implying a prospective dividend yield of 2.9%.
Current consensus EPS estimate suggests the PER is 9.7.

Forecast for FY25:

Current consensus EPS estimate is 28.4, implying annual growth of 68.0%.
Current consensus DPS estimate is 10.1, implying a prospective dividend yield of 6.1%.
Current consensus EPS estimate suggests the PER is 5.8.

Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Jarden rates ((BPT)) as Overweight (2) -

Beach Energy's December quarter trading update, "cleared the decks" for the start of the new CEO/MD Brett Woods, notes Jarden.

A material non-cash impairment for the completion of the arbitration with Origin Energy ((ORG)) over the Otway gas contract led to a miss, but this was a minor negative to the narrowed FY24 guidance (in line with consensus) , highlights the analyst.

Jarden points to the results as mixed and envisages the market may require time to absorb the updates, including the surprise Waitsia LNG cargo sale before the completion of the gas plant.

On the upside, the company sold an LNG cargo to BP for $96m and a condensate cargo for $66m.

Overweight rating retained, the broker believing the net effect of the result was to remove some uncertainty around Otway. Target price rises to $1.85 from $1.80.

This report was published on February 25, 2024.

Target price is $1.85 Current Price is $1.65 Difference: $0.205
If BPT meets the Jarden target it will return approximately 12% (excluding dividends, fees and charges).
Current consensus price target is $1.81, suggesting upside of 9.9%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY24:

Jarden forecasts a full year FY24 dividend of 6.50 cents and EPS of 13.50 cents.
At the last closing share price the estimated dividend yield is 3.95%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.19.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 16.9, implying annual growth of -3.9%.
Current consensus DPS estimate is 4.7, implying a prospective dividend yield of 2.9%.
Current consensus EPS estimate suggests the PER is 9.7.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 10.00 cents and EPS of 25.50 cents.
At the last closing share price the estimated dividend yield is 6.08%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.45.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 28.4, implying annual growth of 68.0%.
Current consensus DPS estimate is 10.1, implying a prospective dividend yield of 6.1%.
Current consensus EPS estimate suggests the PER is 5.8.

Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources