Australian Broker Call

Credit Suisse rates APA as Underperform (5) -

The final details of the new arbitration framework have been released. Credit Suisse observes the intent is to reduce the imbalance in bargaining power that shippers face when negotiating with pipeline operators and impose a constraint on the exercise of market power.

The reforms, in the broker's opinion, effectively end APA Group's monopoly position. The company will be required to publish financial information for each pipeline, its pricing methodology for each service and the average price received for each service.

Credit Suisse observes this will provide significant power to customers and effectively end any ability to discriminate on price. Underperform rating and $8.10 target retained.

Target price is $8.10 Current Price is $9.35 Difference: minus $1.25 (current price is over target).
If APA meets the Credit Suisse target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.16, suggesting downside of -1.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.1

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

Citi rates BEN as Sell (5) -

Following the announcement the bank will change its accountancy treatment for Homesafe income and funding costs, Citi analysts have reduced their estimates for the years ahead.

Sell rating and $11.75 price target have been left untouched.

Target price is $11.75 Current Price is $10.38 Difference: $1.37
If BEN meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $11.01, suggesting upside of 6.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.9

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

Ord Minnett rates BWP as Hold (3) -

Ord Minnett expects the company to spend $100m on developing smaller assets in order to secure Bunnings on new long-term leases at marginally higher rents.

The broker believes, if these leases can be finalised, it will substantially de-risk the entire small-store exposure.

Hold rating retained. Target rises to $3.15 from $3.10.

Target price is $3.15 Current Price is $3.14 Difference: $0.01
If BWP meets the Ord Minnett target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $2.76, suggesting downside of -10.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.8

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

Ord Minnett rates HFA as Initiation of coverage with Buy (1) -

HFA is a holding company for US-based Lighthouse Partners, a business which manages multi-manager hedge funds. Ord Minnett observes a strong track record of growth in assets under management and good cash flow.

Despite all the positives, the broker observes the stock trades on an FY18 cash/PE multiple of 7.9, the cheapest among ASX.-listed fund managers. The broker initiates coverage with a Buy rating and target of $2.85.

Target price is $2.85 Current Price is $2.21 Difference: $0.64
If HFA meets the Ord Minnett target it will return approximately 29% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

Citi rates IFL as Downgrade to Neutral from Buy (3) -

Citi analysts observe the company is presently surrounded by positive news flow. They anticipate the trend in Funds under Administration (FuA) growth should be accelerating at this point in time.

Alas, the share price has rallied too, and this triggers the downgrade to Neutral from Buy. Target price remains untouched at $9.40. Estimates haven't moved either.

Target price is $9.40 Current Price is $9.13 Difference: $0.27
If IFL meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $8.59, suggesting downside of -4.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.2

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

Credit Suisse rates IFL as Neutral (3) -

The company's investor briefing focused on advice. No financial targets or changes to strategy were announced.

Recent flows have been encouraging, Credit Suisse notes, and the growth strategy is convincing, but there are questions around costs and the sustainability of operating margins.

Neutral retained. Target is $8.70.

Target price is $8.70 Current Price is $9.13 Difference: minus $0.43 (current price is over target).
If IFL meets the Credit Suisse target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.59, suggesting downside of -4.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.2

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

Morgan Stanley rates IFL as Equal-weight (3) -

At its investor briefing the company outlined a view that it is an advice-led business. More advisers will drive more flows and greater efficiency of advisers means more customers per planner.

Morgan Stanley envisages the debate is around whether the dealer group provides portfolio construction and product packaging via the platform or the platform prevails as a packager of managed account solutions. The broker observes the company considers itself in the latter camp.

Equal-weight retained. Target is $8.50. Industry view: In-line.

Target price is $8.50 Current Price is $9.13 Difference: minus $0.63 (current price is over target).
If IFL meets the Morgan Stanley target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.59, suggesting downside of -4.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.2

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

Macquarie rates MGC as Neutral (3) -

The company has commenced a strategic review and has stated the opening price for FY18 for the southern milk region is in the range of  $5.20-5.40/kg of milk solids, including the recently announced loyalty payment.

The company has said the forecast is based on relatively conservative assumptions around commodity prices and the collection of 2.5bn litres for FY18.

While the strategic review will allow the new CEO to redefine the company strategy the review of the capital structure may be of concern to the market, Macquarie suggests.

The broker assesses the mid-cycle valuation is cheap, assuming the company can close the price gap on milk in the medium term. Target is reduced to $0.83 from $1.05, because of the structural risk. Neutral retained.

Target price is $0.83 Current Price is $0.74 Difference: $0.095
If MGC meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Morgans rates MGC as Hold (3) -

The company has opened its farm-gate milk price for FY18 at $5.20-5.40/kg of milk solids. The company is also undertaking a strategic review.

Because of the lower--than-expected forecast milk intake, Morgans revises net profit forecasts down by -7.4% and -14.0% for FY18 and FY19 respectively. Competitors are likely to pay a higher farm-gate price and further market share losses are expected by the broker.

Morgans agrees the company needs to address the appropriateness of its profit sharing mechanism and conflicted capital structure but, in the meantime, uncertainty around many aspects is too great. Hold rating retained. Target is reduced to $0.75 from $1.00.

Target price is $0.75 Current Price is $0.74 Difference: $0.015
If MGC meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Citi rates PDN as Neutral (3) -

Citi has decided to remove its price target for Paladin Energy, motivated by the imbroglio between the company and its major Chinese investor, plus the added uncertainty from a much lower than anticipated spot uranium price. The price target was last raised to 16c from 11c in February.

The analysts observe management's debt restructuring plans are essentially in Limbo, while the ownership of the Langer Heinrich mine hangs in the balance. Neutral rating retained. No other changes have been made.

Current Price is $0.05. Target price not assessed.

Current consensus price target is $0.12, suggesting upside of 155.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

This company reports in USD. 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

Ord Minnett rates PLG as Accumulate (2) -

The company has announced a series of property transactions, including the sale of 320 Pit Street in Sydney, which will realise $12.5m in post-tax performance fees in FY18.

This fee, combined with other profits on transactions, has resulted in Ord Minnett upgrading FY18 forecasts for earnings per share by 28%. The company has reiterated guidance for FY17  distribution of 6.32c.

Ord Minnett maintains an Accumulate rating, reducing the target to $0.95 from $1.00.

Target price is $0.95 Current Price is $0.84 Difference: $0.115
If PLG meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

Credit Suisse rates RRL as Underperform (5) -

The company has announced a maiden ore reserve for Tooheys Well, sufficient to replace depleted stocks from FY17 mining.

Credit Suisse observes the reserve is evidence of continued success in the company's regional exploration program, converting resources to reserves and bringing satellite ore to the mine plan.

Underperform retained on valuation. Target rises to $3.05 from $3.00.

Target price is $3.05 Current Price is $3.44 Difference: minus $0.39 (current price is over target).
If RRL meets the Credit Suisse target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.20, suggesting downside of -9.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.3

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

Macquarie rates RRL as Neutral (3) -

The company has released a maiden reserve for the Tooheys Well satellite deposit. The reserve estimate is in line with Macquarie's prior assumption of mineable inventory for the deposit.

Macquarie believes McPhillamys remains the long-term growth driver but its development timeline continues to be uncertain. Neutral retained. Target rises to $3.20 from $3.00.

Target price is $3.20 Current Price is $3.44 Difference: minus $0.24 (current price is over target).
If RRL meets the Macquarie target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.20, suggesting downside of -9.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.3

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

Macquarie rates SGM as Outperform (1) -

The company has provided a moderate outlook for FY17, with Macquarie observing a combination of subdued Chinese export activity and improved scrap prices that support better market conditions and improved volumes.

The company expects second half underlying operating earnings to be greater than the first half. On the back of the refined outlook Macquarie retains an Outperform rating.

The broker increases FY18 estimates by 6.4% to reflect growing confidence in the company's ability to deliver efficiency improvements. Target rises to $14.80 from $14.20.

Target price is $14.80 Current Price is $13.15 Difference: $1.65
If SGM meets the Macquarie target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $13.31, suggesting downside of -1.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Credit Suisse rates WPL as Underperform (5) -

The company has announced that the heads of agreement with Pertamina has been converted into a sales and purchase agreement. Woodside will supply an initial ramp-up volume, building to  600,000 tpa from 2022-34.

While acknowledging the positives for Woodside, in terms of the foothold in Asia, with no indication of a pricing mechanism, Credit Suisse finds calculating a financial implication almost impossible.

Underperform rating retained. Target is $26.80.

Target price is $26.80 Current Price is $31.50 Difference: minus $4.7 (current price is over target).
If WPL meets the Credit Suisse target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $32.45, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.2

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