Weekly Reports | Jun 14 2024
Broker Rating Changes (Post Thursday Last Week)
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COOPER ENERGY LIMITED ((COE)) Upgrade to Buy from Speculative Buy by Canaccord Genuity.B/H/S: 0/0/0
Canaccord Genuity highlights Cooper Energy’s strong position in the south-east gas market, with potential for significant free cash flow generation of $300-500m over three years.
The Otway Basin's development projects, including the Annie and OP3D wells, are progressing well, the analysts observe, targeting first production by 2028.
Financial forecasts have been revised, with FY24 EBITDA now expected at $122m. The broker remains optimistic about Cooper Energy’s growth prospects amid rising gas prices and strategic infrastructure investments.
Canaccord Genuity has upgraded Cooper Energy to Buy from Speculative Buy while raising the price target to $0.27 from $0.25.
DICKER DATA LIMITED ((DDR)) Upgrade to Neutral from Sell by Goldman Sachs.B/H/S: 0/0/0
Goldman Sachs assesses Dicker Data has made "good progress" on its EBITDA margins following the Hills SIT and Exeed acquisitions. The headwinds from the backlog are expected to materially ease while PC recovery may commence in the second half of FY24.
Goldman Sachs still downgrades 2024 and 2025 revenue estimates by -8% and -7%, respectively, given a tough operating environment and a slow start to the current year.
Risks are considered "fairly balanced" and the broker upgrades to Neutral from Sell. Target is reduced to $9.85 from $10.50.
IPD GROUP LIMITED ((IPG)) Upgrade to Buy by Taylor Collison.B/H/S: 0/0/0
IPD Group has provided updated guidance for FY24 that includes adjusted EBITDA of $39-39.5m. Taylor Collison notes limited information beyond the numbers while new major project gains were mentioned without any specifics.
The broker estimates organic EBITDA growth of around 5% but awaits the full year result for more detail. Macro conditions are considered favourable for reaccelerating organic growth in FY25.
Catalysts include major infrastructure projects, a firm start date for the National Vehicle Emissions Standards and an investment boom in data centres. Rating is upgraded to Buy with around 15% upside considered to the broker's DCF valuation of $5.30.
SITEMINDER LIMITED ((SDR)) Upgrade to Overweight from Market Weight by Wilsons.B/H/S: 0/0/0
Wilsons believes consensus is underestimating the incremental gross profit contribution via Channels Plus and upgrades SiteMinder's rating to Overweight from Market Weight. It's felt the product is a game changer for the company's growth profile.
Channels Plus launches in the next two months, note the analysts, enabling Hoteliers to gain increased access to online travel agencies by directly connecting to SiteMinder, rather than Hoteliers managing each individual connection.
The product is a low touch “Free Option” bundled into base subscription fees, explains the broker.
The target is increased to $6.50 from $5.40.
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BWP TRUST ((BWP)) Downgrade to Sell from Hold by Moelis.B/H/S: 0/0/0
Moelis updates its forecasts after BWP Trust moves to 100% ownership of Newmark Property REIT ((NPR)) from the prior 93% stake.
The broker downgrades its rating for BWP Trust to Sell from Hold following two months of strong share market performance, and reduces the target to $3.61 from $3.64.
The broker points to an ongoing capex burden for BWP Trust from repositioning as Bunnings vacates older assets.
MINERAL RESOURCES LIMITED ((MIN)) Sell by Goldman Sachs.B/H/S: 0/0/0
Mineral Resources has sold its 49% stake in the Onslow iron-ore project, haul and road along with the project's $8.04 tolling fee for $1.2bn after tax, comprising an upfront cash payment of $1.1bn and the $200m balance is deferred subject to achieving a 35Mtpa run rate for any quarter before June 30, 2026.
Goldman Sachs observes the selldown is capped at 40Mtpa of production and adds the tolling fee will be reset at a lower rate after three years, and is subject to Foreign Investment Review Board approval.
Tolling payments above 40Mtpa will be 100% owned by Mineral Resources.
The company has entered a $750m drawdown facility which the broker expects will be cancelled on or before the project's completion.
All up, the broker considers the transaction to be strategically astute and a plus for the company's balance sheet. Sell rating and $47 target price retained pending deal completion.
SKYCITY ENTERTAINMENT GROUP LIMITED ((SKC)) Downgrade to Overweight from Buy by Jarden.B/H/S: 0/0/0
Jarden downgrades its rating for SkyCity Entertainment to Overweight from Buy and reduces the target to NZ$1.75 from NZ$2.90 after a profit warning, maiden guidance for FY25 and suspension of dividends until FY26.
Dividends are impacted while management conducts a wider capital structure review, including consideration of asset sales.
Earnings (EBITDA) guidance for FY24 was lowered to NZ$280-285m, down around -3% compared to the broker's forecast, due to the impact of a challenging economic environment on customer spend. FY25 underlying earnings guidance is NZ$250-270m.
There has also been a further delay to the Horizon Hotel opening (now set for August), and a potential increase in duty expense at the Adelaide casino following a recent South Australian Court of Appeal ruling, explain the analysts.
REJECT SHOP LIMITED ((TRS)) Downgrade to Overweight from Buy by Jarden.B/H/S: 0/0/0
Jarden downgrades its rating for Reject Shop to Overweight from Buy, the broker observing a recovery from supermarkets to volume growth and expansion of private label and everyday essentials as inflation moderates.
This means discounters will have their work cut out to remain competitive, especially given intensifying online trade from retailers such as Temu.
Jarden expects sales will grow slower than previously forecast but the outlook is still rosy, the broker forecasting a three-year compound annual growth rate of 34%.
The broker says the company now has to propel the flywheel to boost purchase frequency. Target price falls to $5.80 from $6.
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