Australian Broker Call

Ord Minnett rates AHG as Hold (3) -

AP Eagers ((APE)) has bid for the remaining shares in Automotive Holdings. Ord Minnett notes the effective takeover premium is a relatively thin 7.6%, however, with AP Eagers' holding 29% of the company this limits the likelihood of a competing offer.

Ord Minnett believes the near-term sale of the refrigerated logistics for an adequate price would de-gear the business and put it in a much more favourable position.

The broker maintains a Hold rating and raises the target to $2.20 from $1.90 in line with the implied terms of the AP Eagers offer.

Target price is $2.20 Current Price is $2.10 Difference: $0.1
If AHG meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $1.95, suggesting downside of -6.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.1

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

Macquarie rates ANN as Outperform (1) -

Macro economic trends signal modest organic revenue growth while raw material prices remain favourable, Macquarie observes. This presents upside to the broker's first half FY20 forecasts if sustained at current levels over the next few months.

The broker also notes the flexibility on the balance sheet. Outperform rating maintained. Target rises to $28.20 from $28.00.

Target price is $28.20 Current Price is $25.68 Difference: $2.52
If ANN meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $26.21, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.5

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

Credit Suisse rates CGC as Outperform (1) -

Credit Suisse upgrades net profit estimates by 7-8% for 2020 and 2021 after visiting the Chinese operations. The broker has also gained confidence in the company's ability to enhance yield and pricing through genetics and management.

Credit Suisse is a little cautious, as the Moroccan berry season is underway. April is the largest month for that business and a strong rebound is anticipated, after a weak season in 2018.

2020 is expected to be an off year for the citrus cycle, which should soften earnings growth in that year. The company is guiding for at least 30% growth in earnings per share in 2019.

Outperform rating maintained. Target rises to $6.00 from $5.70.

Target price is $6.00 Current Price is $5.20 Difference: $0.8
If CGC meets the Credit Suisse target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $5.89, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

Macquarie rates CGC as Outperform (1) -

Macquarie believes the company is well-positioned for growth and on track to achieve its targets for five-year berry plantings of 240ha in China by 2020. The international business is a driver of the company's target for net profit growth of 30% or more in 2019.

China forms part of the company's international division, along with Morocco, and represented 17% of 2018 operating earnings.

Macquarie notes jumbo berries are priced at 60-80% premium regardless of the season. There is also market scarcity and Costa Group has a logistical advantage, taking just two days to market from harvest.

Macquarie maintains an Outperform rating and reduces the target to $6.22 from $6.27.

Target price is $6.22 Current Price is $5.20 Difference: $1.02
If CGC meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $5.89, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

UBS rates CGC as Buy (1) -

Overall, UBS is more confident about the opportunity in China and envisages modest near-term upside. The broker observes from a visit to the Chinese operations that political risk is lower, the team is well supported and the relationship with Driscoll's is strong.

No new information was provided on earnings from China other than a change to 2020 ha guidance, to around 246 ha. UBS suspects company management is erring on the conservative side in terms of pricing and yield and acknowledges the fixed cost leverage may be greater than appreciated.

Meanwhile, recent Australian pricing trends have been mixed with tomatoes better, berries in line and mushrooms softer than expected. Buy rating and $6.80 target maintained.

Target price is $6.80 Current Price is $5.20 Difference: $1.6
If CGC meets the UBS target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $5.89, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

Deutsche Bank rates CSL as Hold (3) -

Deutsche Bank has gained comfort regarding FY20 immunoglobulin forecasts after visiting the company's sites in the US.

US collections are seen moving into different demographics which could, the broker suspects, lead to lower plasma yields and lower margins.

Deutsche Bank increases forecasts for earnings per share by 3-4% for FY20-21. Hold rating maintained. Target is $203.

Target price is $203.00 Current Price is $201.39 Difference: $1.61
If CSL meets the Deutsche Bank target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $204.58, suggesting upside of 1.6% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.4

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

Citi rates DMP as Neutral (3) -

After a visit to the Japanese operations Citi remains positive on the growth potential for stores, also noting the challenge to increase frequency of visits. Lower prices are also central to better sales growth.

The broker considers the opportunity long-dated and remains concerned that profitability may be slightly below guidance for FY19. The broker retains a Neutral rating and $45.60 target.

Target price is $45.60 Current Price is $43.01 Difference: $2.59
If DMP meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $44.40, suggesting upside of 3.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.1

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

Macquarie rates DMP as Outperform (1) -

Macquarie is encouraged by the turnaround in same-store sales in Japan. The region represents 22% of group earnings and is growing quickly as stores are rolled out.

The FY20 estimated PE of 21x provides valuation support for a business growing in excess of double digits and the broker maintains an Outperform rating. Target is $51.40.

Target price is $51.40 Current Price is $43.01 Difference: $8.39
If DMP meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $44.40, suggesting upside of 3.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.1

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

Morgans rates ICQ as Add (1) -

The company reported strong first quarter growth in cash receipts and revenue, overcoming weak new vehicle markets caused by elections in Thailand and Indonesia.

The company has reiterated guidance, expecting to achieve break-even for operating earnings by the end of 2019.

Morgans believes the strength of the used car dealer franchise paid off, as new car sales were down -3% in three key markets. The broker maintains an Add rating and $0.31 target.

Current Price is $0.23. Target price not assessed.

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Deutsche Bank rates IPH as Hold (3) -

IPH has revised its proposal to acquire listed competitor Xenith IP ((XIP)). Under the new proposal shareholders will receive $1.28 in cash and 0.1261 IPH shares for every Xenith share.

IPH will also include the option for all cash or all scrip, subject to scaling back. Deutsche Bank has a Hold rating and $5.70 target.

Target price is $5.70 Current Price is $6.96 Difference: minus $1.26 (current price is over target).
If IPH meets the Deutsche Bank target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.38, suggesting downside of -8.4% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

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

Citi rates NWL as Neutral (3) -

Citi believes the win of the ANZ Private contract is a positive and should be accretive to margins. However, the broker leaves forecasts unchanged as the timing of the transition of funds is uncertain. 

Netwealth has been selected as the preferred platform provider for ANZ Private, with funds expected to transition from the existing provider in July. Citi expects earnings per share to grow at three-year compound rates of 25% as the structural shift towards specialist platform providers increases.

However, downside risk is envisaged as the major platform providers fight back to maintain share. Neutral rating and $8.05 target maintained.

Target price is $8.05 Current Price is $8.98 Difference: minus $0.93 (current price is over target).
If NWL meets the Citi target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.96, suggesting downside of -11.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Credit Suisse rates NWL as Neutral (3) -

The Netwealth platform is to be made available to existing ANZ private clients in July. Credit Suisse believes this is a sizeable win for Netwealth and a tribute to the company's quality of service and offering.

The broker estimates the win could deliver net flows of $1.0-1.5bn over FY20. Credit Suisse upgrades earnings forecasts by 3% for FY20-21.

While expecting the account will be positively received, high expectations for net flows are already factored into forecasts and the broker maintains a Neutral rating. Target is raised to $8.65 from $8.40.

Target price is $8.65 Current Price is $8.98 Difference: minus $0.33 (current price is over target).
If NWL meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.96, suggesting downside of -11.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Ord Minnett rates OSH as Downgrade to Hold from Buy (3) -

Ord Minnett adjusts oil price forecasts for the March quarter which leads to a lift in forecasts for the June quarter to US$70/bbl, and US$65/bbl for the remainder of 2019 and 2020.

Based on valuation the broker downgrades its recommendation on Oil Search to Hold from Buy and raises the target to $8.65 from $8.60. The broker suggests the sector is now becoming fully valued.

Target price is $8.65 Current Price is $8.14 Difference: $0.51
If OSH meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $8.60, suggesting upside of 5.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.3

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

Macquarie rates PRU as Outperform (1) -

The company has received a committed letter of offer for a US$150m corporate debt facility from a syndicate of banks. The company will use the facility along with cash reserves and cash flow to fund the development of its third gold mine, Yaoure in Cote d'Ivoire.

Obtaining this funding is important, Macquarie suggests, for the company's aspiration to produce over 500,000 ounces per annum from three West African gold mines. The broker maintains an Outperform rating and raises the target to $0.55 from $0.50.

Target price is $0.55 Current Price is $0.48 Difference: $0.07
If PRU meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $0.56, suggesting upside of 16.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Credit Suisse rates PTM as Neutral (3) -

The company reported funds under management of $25.8bn as of March, up 6.9% in the quarter. Growth was driven by a positive investment performance. Given a weak fund performance, Credit Suisse does not expect the company's formulaic bonus pools to operate in FY19 as performance hurdles have not yet been met.

The broker is forecasting a -35-40% cut in variable remuneration in FY19. Despite the weaker fund performance and flows, the -15% fall in the share price has created some value protection, the broker assesses. Neutral rating and $4.70 target maintained.

Target price is $4.70 Current Price is $4.69 Difference: $0.01
If PTM meets the Credit Suisse target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $4.36, suggesting downside of -7.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.8

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

Macquarie rates QAN as Outperform (1) -

Macquarie reviews the June quarter domestic capacity. For the first time since 2014, Easter and Anzac Day align and then there is the federal election.

The former two are positive for April leisure travel and are being reflected in capacity, while the offset is the election, which generally affects demand as parliamentarians campaign within their own electorates.

Despite being cautious for the near term the broker still believes domestic profitability can hover around record levels. Outperform rating and $6.25 target maintained.

Target price is $6.25 Current Price is $5.72 Difference: $0.53
If QAN meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $6.02, suggesting upside of 5.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.3

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

Citi rates RSG as Buy (1) -

The company has indicated March quarter gold production was significantly higher than the December quarter and the prior corresponding March quarter.

Aside from the value of gold, Citi expects the main driver of the share price in 2019 will be the ramping up of the Syama underground mine as commercial production is planned for the September quarter.

The broker maintains a Buy/High Risk rating, raising the target to $2.00 from $1.95.

Target price is $2.00 Current Price is $1.23 Difference: $0.77
If RSG meets the Citi target it will return approximately 63% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Citi rates SGM as Neutral (3) -

Citi observes management has outlined an ambitious strategy to expand US ferrous volumes, which will require M&A. Opportunities are also envisaged from waste-to-energy and e-cycling.

The focus on new revenue streams will mean a significant step up in expenditure, which Citi believes removes any near-term capital management potential.

As returns are likely to be medium to longer dated the broker retains a Neutral rating. Target is $11.50.

Target price is $11.50 Current Price is $10.99 Difference: $0.51
If SGM meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $12.03, suggesting upside of 9.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.4

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

Morgan Stanley rates SGM as Overweight (1) -

Sims Metal has outlined initiatives that will cost $670m over five years and this reduces the likelihood of meaningful capital management, in Morgan Stanley's view. A desire to only pay franked dividends is likely to reduce current expectations as well.

At its investor briefing the company unveiled a number of strategies to position for the next 10-20 years. Growth is highlighted across several fronts with plans to increase North American ferrous volumes by 40% and double non-ferrous volumes.

The company is also planning to move into the waste-to-energy segment, but Morgan Stanley would like to see the opportunity proven first and believes the timeframes are likely to prove ambitious. Overweight rating. Target is $12.50. Industry view is Cautious.

Target price is $12.50 Current Price is $10.99 Difference: $1.51
If SGM meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $12.03, suggesting upside of 9.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.4

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

Ord Minnett rates SGM as Buy (1) -

The company has announced strategic initiatives including a new waste-to-energy business as well as the offshore expansion of the existing landfill gas capabilities.

On balance, Ord Minnett believes the company's plan makes sense as a means of creating a new earnings stream and offset the risks associated with rising landfill prices. Still, execution risk exists.

Ord Minnett maintains a Buy rating and $13.20 target.

Target price is $13.20 Current Price is $10.99 Difference: $2.21
If SGM meets the Ord Minnett target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $12.03, suggesting upside of 9.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.4

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

UBS rates SGM as Sell (5) -

The company's strategy briefing provided no trading update but outlined 30-year trends which include a reduction in waste trading and the increased value of materials in waste streams.

The metals recycling business remains the focus and the company envisages 5% growth per annum over the next five years through acquisitions, greenfield sites and organic growth.

Nevertheless, Sims Metal is diversifying, by expanding the e-recycling business and entering the waste-to-energy and landfill-to-energy segments in Australia. Sims is also expanding its US municipal recycling exposure.

The initiatives target a 15% return with growth expenditure of $670m over the next five years. UBS maintains a Sell rating and $9.10 target.

Target price is $9.10 Current Price is $10.99 Difference: minus $1.89 (current price is over target).
If SGM meets the UBS target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.03, suggesting upside of 9.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.4

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

Ord Minnett rates SXY as Upgrade to Hold from Lighten (3) -

Ord Minnett adjusts oil price forecasts for the March quarter which leads to a lift in forecasts for the June quarter to US$70/bbl, and US$65/bbl for the remainder of 2019 and 2020.

The broker upgrades Senex Energy to Hold from Lighten based on valuation. Target is raised to $0.40 from $0.34.

Target price is $0.40 Current Price is $0.36 Difference: $0.04
If SXY meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $0.47, suggesting upside of 29.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Macquarie rates WES as Outperform (1) -

Macquarie considers the bid for Lynas Corp ((LYC)) in more detail. The broker assesses the company has not "bet the farm" and a move away from coal into electric vehicles makes strategic sense.

The company considers the Mount Weld mine a strategically important asset as it has the largest rare earth deposit outside of China. The broker suspects Wesfarmers will seek to leverage its existing infrastructure and expertise in Western Australia.

Outperform rating and $37.13 target maintained.

Target price is $37.13 Current Price is $34.07 Difference: $3.06
If WES meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $32.17, suggesting downside of -5.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.4

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

Citi rates WHC as Buy (1) -

While thermal coal prices have fallen too quickly to bring about a supply response, if prices remain at current levels for an extended period, Citi expects China will lift import restrictions on Australian coal so as to access the current price arbitrage.

US thermal coal exports are also expected to contract. The broker retains a Buy rating and $5.10 target for Whitehaven Coal.

Target price is $5.10 Current Price is $3.87 Difference: $1.23
If WHC meets the Citi target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $5.18, suggesting upside of 33.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.8

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