Australian Broker Call *Extra* Edition – Dec 05, 2024

This story features AIR NEW ZEALAND LIMITED, and other companies. For more info SHARE ANALYSIS: AIZ

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)

AIZ   AQZ   BHP   BVS   CKF   GOR   IAG   MTS (2)   NST (2)  

AIZ    AIR NEW ZEALAND LIMITED

Transportation & Logistics – Overnight Price: $0.51

Jarden rates ((AIZ)) as Neutral (3) –

At its recent investor day, Air New Zealand presented various initiatives aimed at driving earnings improvements by FY28.

Revenue initiatives are centered around capacity growth and premiumisation of the long-haul fleet, Jarden notes, with premium seating lifting 30% over FY19 levels and a 10-15% revenue per available seat kilometre increase expected on North American routes.

On the cost side, the airline is seeking to save around -NZ$100m with targeted savings in labour and overheads. Jarden’s updated forecasts reflect a modestly more positive earnings outlook with downside risk to capacity offset by lower fuel, labour and interest costs.

Target rises to NZ61c from NZ57c, Neutral retained.

This report was published on December 4, 2024.

Current Price is $0.51. Target price not assessed.
The company’s fiscal year ends in June.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 1.84 cents and EPS of 2.94 cents.
At the last closing share price the estimated dividend yield is 3.60%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 17.35.

Forecast for FY26:

Jarden forecasts a full year FY26 dividend of 2.94 cents and EPS of 4.87 cents.
At the last closing share price the estimated dividend yield is 5.76%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 10.48.

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

AQZ    ALLIANCE AVIATION SERVICES LIMITED

Transportation & Logistics – Overnight Price: $2.71

Wilsons rates ((AQZ)) as Overweight (1) –

Ahead of Alliance Aviation Services completing its fleet expansion by early FY27, analysts at Wilsons have gone through their modeling yet again and the exercise has strengthened their confidence in projected trajectory for cash flows.

As the fleet expansion should result in strong earnings growth, the broker’s investment thesis has been re-confirmed.

Price target lifts to $4.32 from $4.22. Overweight.

This report was published on December 5, 2024.

Target price is $4.32 Current Price is $2.71 Difference: $1.61
If AQZ meets the Wilsons target it will return approximately 59% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY25:

Wilsons forecasts a full year FY25 dividend of 0.00 cents and EPS of 40.00 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 6.77.

Forecast for FY26:

Wilsons forecasts a full year FY26 dividend of 6.80 cents and EPS of 44.20 cents.
At the last closing share price the estimated dividend yield is 2.51%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 6.13.

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

BHP    BHP GROUP LIMITED

Bulks – Overnight Price: $41.05

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

Goldman Sachs attended BHP Group’s investor tour of the Escondida and Spence copper mines in Chile where ten projects were outlined costing potentially up to -US$15bn to offset -400kt of depletion.

The broker does not think higher Chilean capex and the announced Filo Del Sol and Josemaria acquisitions preclude BHP from looking at further inorganic copper opportunities including producing copper assets.

Goldman notes BHP has an attractive valuation, but at a premium to Rio Tinto ((RIO)), with modest free cash flow below Rio Tinto. The broker remains bullish on copper. Buy retained, target $47.40.

This report was published on December 3, 2024.

Target price is $47.40 Current Price is $41.05 Difference: $6.35
If BHP meets the Goldman Sachs target it will return approximately 15% (excluding dividends, fees and charges).
Current consensus price target is $45.46, suggesting upside of 12.0%(ex-dividends)
The company’s fiscal year ends in June.

Forecast for FY25:

Goldman Sachs forecasts a full year FY25 dividend of 149.37 cents and EPS of 300.24 cents.
At the last closing share price the estimated dividend yield is 3.64%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 13.67.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 336.5, implying annual growth of N/A.
Current consensus DPS estimate is 182.4, implying a prospective dividend yield of 4.5%.
Current consensus EPS estimate suggests the PER is 12.1.

Forecast for FY26:

Goldman Sachs forecasts a full year FY26 dividend of 162.95 cents and EPS of 325.89 cents.
At the last closing share price the estimated dividend yield is 3.97%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 12.60.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 352.0, implying annual growth of 4.6%.
Current consensus DPS estimate is 191.4, implying a prospective dividend yield of 4.7%.
Current consensus EPS estimate suggests the PER is 11.5.

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

BVS    BRAVURA SOLUTIONS LIMITED

Wealth Management & Investments – Overnight Price: $2.00

Wilsons rates ((BVS)) as Overweight (1) –

Bravura Solutions’ yet again upgraded guidance for FY25 and Wilsons points out the vast majority of the upgrade to revenues flows down to earnings (EBITDA).

With the business still experiencing headwinds from modest contract wins, the broker finds the latest developments “pleasing”.

Wilsons is now willing to take the view that operational momentum might have troughed for the company. Cost reductions have been achieved, it’s now up to see revenues pick up next.

The broker does see only modest upside ahead, for now, but takes the opportunity to reiterate its Overweight rating. Target price lifts by 40% to $2.06.

This report was published on December 5, 2024.

Target price is $2.06 Current Price is $2.00 Difference: $0.06
If BVS meets the Wilsons target it will return approximately 3% (excluding dividends, fees and charges).
The company’s fiscal year ends in June.

Forecast for FY25:

Wilsons forecasts a full year FY25 dividend of 19.70 cents and EPS of 5.70 cents.
At the last closing share price the estimated dividend yield is 9.85%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 35.09.

Forecast for FY26:

Wilsons forecasts a full year FY26 dividend of 3.60 cents and EPS of 6.10 cents.
At the last closing share price the estimated dividend yield is 1.80%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 32.79.

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

CKF    COLLINS FOODS LIMITED

Food, Beverages & Tobacco – Overnight Price: $8.23

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

Collins Foods reported a softer 1H25 result with underlying earnings down -6% year on year, in line with Jarden, with cash conversion strong at 108%.

The company continues to face top-line headwinds, with a weaker consumer backdrop (Australia/EU), political impact (Netherlands) and a new master franchise (Germany) all adversely impacting growth, the broker notes.

Jarden expects top-line growth to accelerate through 2H25 as price increases are cycled, consumer spending lifts and new stores
come online.

Given the significant level of cost leverage in the business, the broker expects evidence of the top line lifting more than 3% will be a driver of material earnings and a multiple re-rate. This is considered unlikely to occur until FY26.

Target falls to $9.20 from $9.57, Overweight retained.

This report was published on December 4, 2024.

Target price is $9.20 Current Price is $8.23 Difference: $0.97
If CKF meets the Jarden target it will return approximately 12% (excluding dividends, fees and charges).
Current consensus price target is $9.82, suggesting upside of 20.5%(ex-dividends)
The company’s fiscal year ends in May.

Forecast for FY25:

Jarden forecasts a full year FY25 EPS of 37.20 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 22.12.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 38.4, implying annual growth of -20.1%.
Current consensus DPS estimate is 22.7, implying a prospective dividend yield of 2.8%.
Current consensus EPS estimate suggests the PER is 21.2.

Forecast for FY26:

Jarden forecasts a full year FY26 EPS of 54.90 cents.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 14.99.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 53.1, implying annual growth of 38.3%.
Current consensus DPS estimate is 29.3, implying a prospective dividend yield of 3.6%.
Current consensus EPS estimate suggests the PER is 15.3.

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

GOR    GOLD ROAD RESOURCES LIMITED

Gold & Silver – Overnight Price: $2.00

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

Goldman Sachs sees a potential positive read-across for Gold Road Resources from Northern Star Resources’ ((NST)) acquisition of De Grey Mining ((DEG)) given Gold Road owns 17% of De Grey.

The acquisition (if approved) would potentially add some $0.8bn to Gold Road’s already net cash balance sheet, the broker estimates, and Gold Road also holds neighbouring leases to De Grey’s Hemi project.

Furthermore, Goldman sees potential support for Gold Road to re-rate on its own fundamentals, with the stock currently trading at a significant discount to peers. Target rises to $2.35 from $2.25, Buy retained.

This report was published on December 3, 2024.

Target price is $2.35 Current Price is $2.00 Difference: $0.35
If GOR meets the Goldman Sachs target it will return approximately 18% (excluding dividends, fees and charges).
Current consensus price target is $2.33, suggesting upside of 13.3%(ex-dividends)
The company’s fiscal year ends in December.

Forecast for FY24:

Goldman Sachs forecasts a full year FY24 dividend of 1.60 cents and EPS of 13.50 cents.
At the last closing share price the estimated dividend yield is 0.80%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 14.81.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 12.5, implying annual growth of 16.5%.
Current consensus DPS estimate is 1.7, implying a prospective dividend yield of 0.8%.
Current consensus EPS estimate suggests the PER is 16.5.

Forecast for FY25:

Goldman Sachs forecasts a full year FY25 dividend of 3.20 cents and EPS of 18.60 cents.
At the last closing share price the estimated dividend yield is 1.60%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 10.75.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 19.9, implying annual growth of 59.2%.
Current consensus DPS estimate is 3.3, implying a prospective dividend yield of 1.6%.
Current consensus EPS estimate suggests the PER is 10.4.

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

IAG    INSURANCE AUSTRALIA GROUP LIMITED

Insurance – Overnight Price: $8.57

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

Insurance Australia Group’s Investor Day revealed, while management’s priority in Intermediated Insurance Australia remains margin expansion, underpinned by efficiency gains, the insurer has laid out ambitions to create a growth engine in Direct Insurance Australia following several periods of negative volume growth.

Jarden believes IAG’s FY27 ambition to reduce its expense ratio excluding levies by -100bps could provide margin flexibility to improve price competitiveness.

With positive earned rate and inflation “jaws” expected to support margins, emerging catastrophe upside risk heading into the 1H25 result and potential accretive M&A in its personal lines core, Jarden retains an Overweight rating and $8.05 target.

This report was published on December 4, 2024.

Target price is $8.05 Current Price is $8.57 Difference: minus $0.52 (current price is over target).
If IAG meets the Jarden target it will return approximately minus 6% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $8.57, suggesting downside of -0.8%(ex-dividends)
The company’s fiscal year ends in June.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 31.00 cents and EPS of 42.90 cents.
At the last closing share price the estimated dividend yield is 3.62%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 19.98.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 40.6, implying annual growth of 8.8%.
Current consensus DPS estimate is 30.0, implying a prospective dividend yield of 3.5%.
Current consensus EPS estimate suggests the PER is 21.3.

Forecast for FY26:

Jarden forecasts a full year FY26 dividend of 32.00 cents and EPS of 44.10 cents.
At the last closing share price the estimated dividend yield is 3.73%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 19.43.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 44.1, implying annual growth of 8.6%.
Current consensus DPS estimate is 32.6, implying a prospective dividend yield of 3.8%.
Current consensus EPS estimate suggests the PER is 19.6.

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

MTS    METCASH LIMITED

Food, Beverages & Tobacco – Overnight Price: $3.35

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

Metcash’s group sales were up 6.3% year on year and -2.2% below Goldman Sachs’ estimate. Supermarkets and Liquor were largely in-line while Superior Foods and Hardware performed slightly softer than expectations.

While the 1H25 segment sales and group underlying profit had been pre-announced, the broker thinks it is important to consider total earnings inclusive of Project Horizon costs, which were higher than Goldman’s estimate and the Project Horizon significant item guidance in FY25-26 has been increased.

The key question for the broker is clarity on management’s commentary on its expectation for Hardware improving and the key initiatives that will impact Independent Hardware Group and Total Tools revenue and/or earnings. Sell and $3.10 target retained.

This report was published on December 3, 2024.

Target price is $3.10 Current Price is $3.35 Difference: minus $0.25 (current price is over target).
If MTS 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 $3.61, suggesting upside of 8.7%(ex-dividends)

Forecast for FY25:

Current consensus EPS estimate is 24.9, implying annual growth of -3.5%.
Current consensus DPS estimate is 17.1, implying a prospective dividend yield of 5.2%.
Current consensus EPS estimate suggests the PER is 13.3.

Forecast for FY26:

Current consensus EPS estimate is 26.9, implying annual growth of 8.0%.
Current consensus DPS estimate is 18.9, implying a prospective dividend yield of 5.7%.
Current consensus EPS estimate suggests the PER is 12.3.

Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

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

Metcash’s 1H25 result was soft, Jarden notes, with earnings down -8% year on year ex-M&A. Hardware continues to weigh on the group, with Total Tools earnings down -16% and hardware down more than -25% ex-M&A.

Jarden is becoming more positive on the housing outlook and forecasts a bottoming in 1H25. Metcash continues to execute well in grocery, the broker believes, with share trends better, Superior performing well and a number of large contract opportunities in the pipeline.

Despite a lack of near-term catalysts, Jarden remains positive on valuation grounds and believes that when the housing cycle turns, operating leverage will be greater than the market appreciates. Target falls to $4.10 from $4.30, Overweight retained.

This report was published on December 4, 2024.

Target price is $4.10 Current Price is $3.35 Difference: $0.75
If MTS meets the Jarden target it will return approximately 22% (excluding dividends, fees and charges).
Current consensus price target is $3.61, suggesting upside of 8.7%(ex-dividends)
The company’s fiscal year ends in April.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 22.00 cents and EPS of 25.70 cents.
At the last closing share price the estimated dividend yield is 6.57%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 13.04.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 24.9, implying annual growth of -3.5%.
Current consensus DPS estimate is 17.1, implying a prospective dividend yield of 5.2%.
Current consensus EPS estimate suggests the PER is 13.3.

Forecast for FY26:

Jarden forecasts a full year FY26 dividend of 24.00 cents and EPS of 28.00 cents.
At the last closing share price the estimated dividend yield is 7.16%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 11.96.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 26.9, implying annual growth of 8.0%.
Current consensus DPS estimate is 18.9, implying a prospective dividend yield of 5.7%.
Current consensus EPS estimate suggests the PER is 12.3.

Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena’s consensus calculations require a minimum of three sources

NST    NORTHERN STAR RESOURCES LIMITED

Gold & Silver – Overnight Price: $16.14

Goldman Sachs rates ((NST)) as Neutral (3) –

Northern Star Resources has proposed to acquire De Grey Mining ((DEG)) and its Mallina gold project (Hemi).

Overall, Goldman Sachs believes Hemi would enhance the quality and scale of Northern Star’s portfolio, improving pro-forma production and medium-term earnings via the addition of a high quality greenfield project, and estimates the acquisition would not impact the capital management framework.

Neutral and $16.60 target retained.

This report was published on December 3, 2024.

Target price is $16.60 Current Price is $16.14 Difference: $0.46
If NST meets the Goldman Sachs target it will return approximately 3% (excluding dividends, fees and charges).
Current consensus price target is $17.96, suggesting upside of 10.1%(ex-dividends)
The company’s fiscal year ends in June.

Forecast for FY25:

Goldman Sachs forecasts a full year FY25 dividend of 57.60 cents and EPS of 118.00 cents.
At the last closing share price the estimated dividend yield is 3.57%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 13.68.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 108.1, implying annual growth of 94.4%.
Current consensus DPS estimate is 48.4, implying a prospective dividend yield of 3.0%.
Current consensus EPS estimate suggests the PER is 15.1.

Forecast for FY26:

Goldman Sachs forecasts a full year FY26 dividend of 60.90 cents and EPS of 158.00 cents.
At the last closing share price the estimated dividend yield is 3.77%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 10.22.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 129.3, implying annual growth of 19.6%.
Current consensus DPS estimate is 52.4, implying a prospective dividend yield of 3.2%.
Current consensus EPS estimate suggests the PER is 12.6.

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

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Jarden rates ((NST)) as Underweight (4) –

Northern Star Resources has agreed to acquire De Grey Mining ((DEG)). De Grey’s key asset is the 100%-owned, semi-refractory, Hemi gold project in the Pilbara. The acquisition would represent a significant departure from the historical Northern Star growth strategy, Jarden notes.

Jarden points out the acquisition of an undeveloped project which is yet to receive environmental approval effectively transfers material development, capital escalation and permitting risks to Northern Star shareholders.

The broker does nevertheless acknowledge the acquisition of Hemi is consistent with the miner’s desire to buy/build a fourth production centre in a safe jurisdiction. Underweight and $13.10 target retained.

This report was published on December 3, 2024.

Target price is $13.10 Current Price is $16.14 Difference: minus $3.04 (current price is over target).
If NST meets the Jarden target it will return approximately minus 19% (excluding dividends, fees and charges – negative figures indicate an expected loss).
Current consensus price target is $17.96, suggesting upside of 10.1%(ex-dividends)
The company’s fiscal year ends in June.

Forecast for FY25:

Jarden forecasts a full year FY25 dividend of 40.00 cents and EPS of 85.70 cents.
At the last closing share price the estimated dividend yield is 2.48%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 18.83.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 108.1, implying annual growth of 94.4%.
Current consensus DPS estimate is 48.4, implying a prospective dividend yield of 3.0%.
Current consensus EPS estimate suggests the PER is 15.1.

Forecast for FY26:

Jarden forecasts a full year FY26 dividend of 40.00 cents and EPS of 71.30 cents.
At the last closing share price the estimated dividend yield is 2.48%.
At the last closing share price the stock’s estimated Price to Earnings Ratio (PER) is 22.64.

How do these forecasts compare to market consensus projections?

Current consensus EPS estimate is 129.3, implying annual growth of 19.6%.
Current consensus DPS estimate is 52.4, implying a prospective dividend yield of 3.2%.
Current consensus EPS estimate suggests the PER is 12.6.

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

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