Weekly Reports | 11:05 AM
A summary of the highlights from Broker Call Extra updates throughout the week past.
Broker Rating Changes (Post Thursday Last Week)
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A2 MILK COMPANY LIMITED ((A2M)) Upgrade to Neutral from Underweight by Jarden.B/H/S: 0/0/0
Jarden upgrades a2 Milk Co to Neutral from Underweight and reduces the target to NZ$7.36 from NZ$9.20 to include recent changes from the Ministry of Primary Industries as it relates to infant formula cereulide toxin testing.
The broker takes some comfort, as time has passed, that there are no further issues that need to be notified to the market.
Its desktop channel checks also confirm stock shortages in China Label across many online storefronts, which aligns with supply constraints foreshadowed in the trading update in mid April.
Jarden acknowledges there remain many unanswered questions regarding the investment case, but also finds the reduced cereulide tail risk is now better reflected in the share price de-rating.
On June 15th the broker followed up as follows:
Jarden maintains a Neutral rating for a2 Milk Co with a NZ$7.36 target price following channel checks indicating an emerging restock cycle for its China Label infant milk formula range.
Desktop analysis of popular Taobao storefronts and localised social media monitoring confirm the gradual re-entry of product supply across Mother and Baby Store and general trade channels.
New product batches manufactured after February 2026 feature an additional traceability QR code sticker, allowing consumers to directly verify customs clearance and negative cereulide testing results.
The analyst notes the stabilisation of product availability reduces severe tail risks associated with product recalls or structural supply chain disruptions.
A -20% discount remains embedded within the 12-month discounted cash flow valuation to account for residual uncertainty ahead of opening guidance for FY27 in August.
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SOUTHERN CROSS ELECTRICAL ENGINEERING LIMITED ((SXE)) Downgrade to Hold from Buy by Shaw and Partners.B/H/S: 0/0/0
Shaw and Partners moves its rating to Hold from Buy for Southern Cross Electrical Engineering with its target price increased to $4.70.
The structural adjustments follow a strong trading update for FY27, guiding EBITDA to at least $100m which implies a 33% year-on-year growth trajectory.
Capital restructuring includes a successful institutional placement of $150m in equity at $4.00 per share and a planned $15m share purchase plan to fund expanding project working capital and strategic acquisitions.
The analyst notes strong second-half performance momentum in FY26 and a robust awards pipeline across data centers, infrastructure, and renewable energy segments underpin intermediate expansion.
While industrial tailwinds remain constructive, a high forward price-to-earnings multiple requires careful risk tracking given that lumpy non-recurring streams represent approximately 80% of group revenue, the report points out.
TRANSURBAN GROUP LIMITED ((TCL)) Downgrade to Underweight from Neutral by Jarden.B/H/S: 0/0/0
Jarden downgrades Transurban Group to Underweight from Neutral as the stock is now trading at a forecast 4.7% FY27 yield, below the Australian government 10-year bond yield at 4.90%.
The broker also highlights the risks to the fourth quarter traffic outlook as a result of geopolitical and macroeconomic uncertainty although acknowledges the update on April volumes was better than expected.
FY26 free cash flow estimates are marginally increased, reflecting FX effects and higher toll prices in the US, which drives a slight increase to the target, to $13.10 from $12.90.
| Order | Company | New Rating | Old Rating | Broker | |
|---|---|---|---|---|---|
| Upgrade | |||||
| 1 | A2 MILK COMPANY LIMITED | Neutral | Sell | Jarden | |
| Downgrade | |||||
| 2 | SOUTHERN CROSS ELECTRICAL ENGINEERING LIMITED | Neutral | Buy | Shaw and Partners | |
| 3 | TRANSURBAN GROUP LIMITED | Sell | Neutral | Jarden | |
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