Australian Broker Call *Extra* Edition – Feb 23, 2024

Daily Market Reports | Feb 23 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)

AFP   ASX   COF   CQR   CWY (2)   DRR   DTL   HDN   IAG   ING (2)   MAH   QBE   QIP   RFG   RHC   SPZ   SYA (2)   WES   WHC   XRF  

SYA    SAYONA MINING LIMITED

New Battery Elements - Overnight Price: $0.05

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

Sayona Mining's definitive feasibility study has outlined a longer mine life with higher grades and higher recoveries, although Canaccord Genuity had assumed a much larger processing run rate.

Capital expenditure of -US$722m is also much higher than the broker had modelled. The study assumes first production in the first half of 2024 although the company is reviewing the timeline to take into account current market conditions.

The broker believes there is strong potential for further resource and reserve increases, as well as potential for mine plan optimisations. Hold rating and 6c target.

This report was published on February 20, 2024.

Target price is $0.06 Current Price is $0.05 Difference: $0.014
If SYA meets the Canaccord Genuity target it will return approximately 30% (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 0.01 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 460.00.

Forecast for FY25:

Canaccord Genuity forecasts a full year FY25 dividend of 0.00 cents and EPS of 0.02 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 230.00.

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

Petra Capital rates ((SYA)) as Buy (1) -

Sayona Mining has released a positive definitive feasibility study for its Moblan project, outlining a cost of -US$837m to build a 300,000 tonne per annum mine with an all-in sustaining cost of US$561 per tonne of spodumeme.

Petra Capital described the project as low cost, with the study suggesting operating expenditure of US$417 per tonne and with all-in sustaining costs in the second quartile. 

The broker also pointed out Moblan is the most favourably located lithium project in the region, and expects the site will be one of the few that gets built to support North American electric vehicle demand.

The broker expects Sayona Mining will now pursue funding and partnership agreements. The Buy rating is retained and the target price decreases to 14 cents from 15 cents.

This report was published on February 21, 2024.

Target price is $0.14 Current Price is $0.05 Difference: $0.094
If SYA meets the Petra Capital target it will return approximately 204% (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 0.70 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 6.57.

Forecast for FY25:

Petra Capital forecasts a full year FY25 dividend of 0.00 cents and EPS of 0.00 cents.

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

WES    WESFARMERS LIMITED

Consumer Products & Services - Overnight Price: $63.65

Goldman Sachs rates ((WES)) as Buy (1) -

Wesfarmers' retail businesses, and in particular Kmart, beat forecasts by Goldman Sachs for the 1H. Results for WesCEF were in line with the analysts' forecast, while Health/One Digital remains in an investment phase.

The broker highlights a standout operating cash flow (OCF) performance for the half, with free cash flow (FCF) of  $1.4bn compared to $0.8bn in the previous corresponding period. 

The analysts feel margins at Kmart are sustainable after management's multi-year transformation program. Year-on-year, Kmart delivered 173bps of earnings (EBIT) margin improvement in the half.

The Anko brand (for Kmart) is circa 85% of Kmart sales, and around 35-40% of Target's sales, highlights Goldman.

The target rises to $66 from $62.90. Buy.

This report was published on February 16, 2024.

Target price is $66.00 Current Price is $63.65 Difference: $2.35
If WES meets the Goldman Sachs target it will return approximately 4% (excluding dividends, fees and charges).
Current consensus price target is $56.73, suggesting downside of -10.9%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY24:

Goldman Sachs forecasts a full year FY24 dividend of 197.00 cents and EPS of 223.00 cents.
At the last closing share price the estimated dividend yield is 3.10%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 28.54.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 227.3, implying annual growth of 4.4%.
Current consensus DPS estimate is 192.7, implying a prospective dividend yield of 3.0%.
Current consensus EPS estimate suggests the PER is 28.0.

Forecast for FY25:

Goldman Sachs forecasts a full year FY25 dividend of 231.00 cents and EPS of 263.00 cents.
At the last closing share price the estimated dividend yield is 3.63%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 24.20.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 247.2, implying annual growth of 8.8%.
Current consensus DPS estimate is 211.7, implying a prospective dividend yield of 3.3%.
Current consensus EPS estimate suggests the PER is 25.7.

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

WHC    WHITEHAVEN COAL LIMITED

Coal - Overnight Price: $7.01

Goldman Sachs rates ((WHC)) as Neutral (3) -

Whitehaven Coal's 1H underlying earnings (EBITDA) and profit missed forecasts by Goldman Sachs due to higher than expected marketing costs and D&A expenses, and lower revenue than forecast at Narrabri. Stronger coal trading earnings provided a partial offset.

Post-result discussion with management revealed to the broker the company continues to explore the potential sell down of around -20% of the newly-acquired Blackwater mine to global steel producers.

Target falls to $6.00 from $6.20. Neutral retained.

This report was published on February 16, 2024.

Target price is $6.20 Current Price is $7.01 Difference: minus $0.81 (current price is over target).
If WHC meets the Goldman Sachs target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $7.97, suggesting upside of 13.6%(ex-dividends)
The company's fiscal year ends in June.

Forecast for FY24:

Goldman Sachs forecasts a full year FY24 dividend of 19.00 cents and EPS of 94.00 cents.
At the last closing share price the estimated dividend yield is 2.71%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 7.46.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 88.2, implying annual growth of -71.3%.
Current consensus DPS estimate is 14.0, implying a prospective dividend yield of 2.0%.
Current consensus EPS estimate suggests the PER is 7.9.

Forecast for FY25:

Goldman Sachs forecasts a full year FY25 dividend of 14.00 cents and EPS of 70.00 cents.
At the last closing share price the estimated dividend yield is 2.00%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.01.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 132.1, implying annual growth of 49.8%.
Current consensus DPS estimate is 22.7, implying a prospective dividend yield of 3.2%.
Current consensus EPS estimate suggests the PER is 5.3.

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

XRF    XRF SCIENTIFIC LIMITED

Mining Sector Contracting - Overnight Price: $1.10

Canaccord Genuity rates ((XRF)) as Upgrade to Speculative Buy from Hold (1) -

XRF Scientific impressed Canaccord Genuity with its first half results, considering the market had slowed throughout 2023. Revenue and EBITDA were slightly ahead of expectations.

On a FY25 PE of 15.9x, the broker believes the company has started the second half on a strong run rate with the potential for upside.

Rating is upgraded to Speculative Buy from Hold and the target lifted to $1.30 from $1.22. The broker envisages valuation upside although the lumpy revenue and earnings means a heightened level of risk.

This report was published on February 21, 2024.

Target price is $1.30 Current Price is $1.10 Difference: $0.2
If XRF meets the Canaccord Genuity target it will return approximately 18% (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 3.10 cents and EPS of 6.50 cents.
At the last closing share price the estimated dividend yield is 2.82%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 16.92.

Forecast for FY25:

Canaccord Genuity forecasts a full year FY25 dividend of 3.50 cents and EPS of 7.30 cents.
At the last closing share price the estimated dividend yield is 3.18%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.07.

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

Disclaimer:
The content of this information does in no way reflect the opinions of FNArena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide experienced, intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface.

This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FNArena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.

Decisions about inclusions in this Report are made independently of the providers of stock market research and at full discretion of the team of journalists responsible for content at FNArena. Inclusion does not equal endorsement, in any way, shape or form. This Report is provided for informational purposes only.