Australian Broker Call

Morgans rates ALX as Downgrade to Hold from Add (3) -

Morgans continues to expect a strong rise in distributions over coming years, driven by growth in APRR operating earnings, a reduction in debt servicing and legislated tax cuts in France. Dulles Greenway will also pay first distributions after exiting lock-up in FY21.

Morgans reduces the target to $6.53 from $6.90, mainly as a result of updating AUD/EUR to current spot rates and also increasing the 2018 performance fee estimate while incorporating the new debt facility.

As a result, and because of the share price strength, the broker downgrades to Hold from Add.

Target price is $6.53 Current Price is $6.41 Difference: $0.12
If ALX meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $6.54, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

UBS rates BIN as Buy (1) -

Queensland has finally joined other states in introducing a landfill levy, which at $70/t is more than the broker anticipated.

The broker sees three positive implications for Bingo, being the potential to increase volumes and prices in NSW, the potential for Victoria to lift its levy, and the potential to replicate Bingo's post collection operations in Qld.

Buy and $3.20 target retained.

Target price is $3.20 Current Price is $2.85 Difference: $0.35
If BIN meets the UBS target it will return approximately 12% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Credit Suisse rates CBA as Neutral (3) -

The bank has settled the AUSTRAC litigation for $700m. Credit Suisse upgrades FY18 estimates for earnings by 1%. The settlement alleviates one of the outstanding conduct issues for CBA but the broker suggests there is more work to do to repair its reputation.

In the broker's estimates an additional $500m for conduct and litigation expenses is factored in for FY19. Neutral rating and $72.50 target maintained.

Target price is $72.50 Current Price is $70.24 Difference: $2.26
If CBA meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $74.50, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

Deutsche Bank rates CBA as Hold (3) -

The bank has settled with AUSTRAC and will pay a civil penalty of $700m, admitting to further contravening the anti-money laundering regulations.

Deutsche Bank observes the size of the penalty is significantly larger than the provision taken in the first half, of $375m, but remains manageable.

The broker believes one source of uncertainty has now been removed and should be welcomed by investors. Hold rating maintained. Target is $77.

Target price is $77.00 Current Price is $70.24 Difference: $6.76
If CBA meets the Deutsche Bank target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $74.50, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

Macquarie rates CBA as Neutral (3) -

CBA has entered an agreement with AUSTRAC to resolve civil proceedings with a penalty of $700m. While Macquarie believes pro forma capital is sufficient to maintain the dividend in the second half, there is less scope for special dividends in FY19/20.

Given the uncertainty around the earnings outlook and the instability of the management team, the broker considers the value premium is difficult to justify. Macquarie maintains a Neutral rating and $75.50 target.

Target price is $75.50 Current Price is $70.24 Difference: $5.26
If CBA meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $74.50, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

Morgan Stanley rates CBA as Underweight (5) -

Morgan Stanley considers the settlement with AUSTRAC is incrementally positive. CBA will pay a civil penalty of $700m, having already provisioned $375m in the first half.

The broker suspects the capital position continues to be tight at around 10.6% pro forma CET1. In the future, the flagged sale of CFS GAM could leave the bank with surplus capital but also create an earnings hole, in the broker's opinion.

Underweight. Price target $70. Industry view: In-Line.

Target price is $70.00 Current Price is $70.24 Difference: minus $0.24 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $74.50, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

Morgans rates CBA as Add (1) -

The bank has reached an agreement with AUSTRAC to pay a civil penalty of $700m. Morgans considers this a good outcome and with this now out of the way there are just two outstanding concerns.

The first is a risk of a one-notch downgrade to the long-term credit rating and the second is a fine from an offshore regulator for AML/CTF breaches. On the latter, the broker understands that no offshore regulator has, at this stage, indicated any action will be taken.

Add rating and $79 target maintained

Target price is $79.00 Current Price is $70.24 Difference: $8.76
If CBA meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $74.50, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

Ord Minnett rates CBA as Hold (3) -

CBA has an agreement to settle proceedings with AUSTRAC for $700m plus legal costs of $2.5m. The bank will now recognise a further $325m provision in the second half after $375m in the first half.

The total cost is slightly above Ord Minnett's estimates and to account for the change the broker makes a -2% reduction in second half earnings per share. The broker notes CBA still faces shareholder class action and there could be sanctions from overseas regulators.

Hold rating and $76 target maintained.

Target price is $76.00 Current Price is $70.24 Difference: $5.76
If CBA meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $74.50, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

UBS rates CBA as Neutral (3) -

CBA had only put away $375m as a provision against a likely Austrac fine, with another $200m for the Royal Commission in general. The broker did not assume any more in its valuation given any outcome was possible, but while $700m seems a lot on that basis, the market was fearing a number more like $1bn.

The bank has put away another $100m for increased compliance costs and called the Austrac affair a one-off event. The broker draws on history in noting regulatory/compliance costs tend to settle at many multiples of original estimates. Neutral and $74 target retained.

Target price is $74.00 Current Price is $70.24 Difference: $3.76
If CBA meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $74.50, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

UBS rates CSL as Buy (1) -

The latest US data show IG growth up 10.4% in February despite cycling strong comparables. The US consumes some 55% of global IG, the broker notes, and ongoing growth suggests there is a large amount of unmet clinical need.

The broker expects IG growth to slow to 7-8% and notes albumin growth is moderating, but CSL is well-placed in core plasma products, with 19 new centres opened in FY18 to date alone, representing 29% of industry additions.

Buy and $196 target retained.

Target price is $196.00 Current Price is $187.56 Difference: $8.44
If CSL meets the UBS target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $189.13, suggesting upside of 0.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.6

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

Credit Suisse rates CYB as Upgrade to Outperform from Neutral (1) -

The bank has announced a 7% increase to its preliminary offer to acquire Virgin Money, noting the takeover panel and the board have agreed to extend the final bid deadline to June 18. Credit Suisse now believes the deal is more likely to proceed to a final offer.

As the stock has de-rated by -10% since a preliminary offer was announced the broker upgrades to Outperform from Neutral. Target is $6.

Target price is $6.00 Current Price is $5.28 Difference: $0.72
If CYB meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $5.93, suggesting upside of 12.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

This company reports in GBP. 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

Citi rates DLX as Upgrade to Neutral from Sell (3) -

Following a site visit to the company's new Merrifield paint plant, and some weakness in the share price, Citi analysts have upgraded to Neutral from Sell. Price target has gained 10c to $7.60.

The analysts describe the new plant as "a world-class, highly automated operation with significant new product capabilities". They see upside potential for future revenues.

In addition, the company's strategic roll-out of Craig & Rose and Selleys brands in the UK market remains intact post the exit by Wesfarmers ((WES)). Here too Citi analysts see upside potential. All in all, they think DuluxGroup offers a solid platform for sustained growth, albeit with the notion the upside is likely to remain capped by weak indicators for new housing in Australia.

Target price is $7.60 Current Price is $7.73 Difference: minus $0.13 (current price is over target).
If DLX meets the Citi target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.24, suggesting downside of -6.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.4

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

Morgans rates GBT as Add (1) -

As short-term earnings are in a slump Morgans suggests winning new customers will be pivotal for the company in FY19. The company will need to convert current new business opportunities if it is to deliver share price momentum.

Unfortunately for shareholders, the broker observes the timing of customer decisions, and thus revenue, are unpredictable and may not occur soon enough.

Hence, there remains some short-term earnings risk because of the unpredictable nature of the timing of payments, in the broker's view. Morgans maintains an Add rating and $3.90 target.

Target price is $3.90 Current Price is $2.25 Difference: $1.65
If GBT meets the Morgans target it will return approximately 73% (excluding dividends, fees and charges).

Current consensus price target is $3.02, suggesting upside of 34.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Morgans rates GDF as Add (1) -

The company has announced two lease renewals, equal to around 9% of income at risk in FY19. The portfolio is currently valued at around $306m.

FY18 distribution guidance of 9c has been reiterated. Given the timing of projects under construction the pay-out ratio in FY18 and FY19 is expected to be between 100-105%. After this it is expected to revert to 90-95%.

Morgans maintains an Add rating and $1.26 target.

Target price is $1.26 Current Price is $1.20 Difference: $0.06
If GDF meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Credit Suisse rates HSO as Neutral (3) -

Credit Suisse factors in a structurally weaker industry and downgrades earnings estimates slightly. Affordability pressures have stretched the elasticity of demand for private health care in a market where there is a viable public hospital substitute.

The broker maintains a Neutral rating, noting the possibility of an M&A transaction remains in play. Target is $2.36.

Target price is $2.36 Current Price is $2.31 Difference: $0.05
If HSO meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $2.33, suggesting upside of 1.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

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

Deutsche Bank rates IPL as Buy (1) -

Deutsche Bank believes upside earnings risks are emerging. These risks emanate from the re-start of the $300m share buyback, finalisation of Gibson Island gas agreements and recovery in global nitrogen prices.

The broker maintains a Buy rating and $4.40 target.

Target price is $4.40 Current Price is $3.47 Difference: $0.93
If IPL meets the Deutsche Bank target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $3.84, suggesting upside of 10.5% (ex-dividends)

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

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

US Census data for 2017 show no change in market share across any of the major siding categories. Vinyl continues to hold the larger share at 27%, followed by stucco at 24%, brick at 22%, fibre cement at 20% and wood at 5%.

While continuing to believe the company's business will take share at the expense of vinyl, Morgan Stanley considers the data an important reminder that the path to 35% market share will take time and is not without risks, particularly given the embarkation on a European strategy.

Equal-weight rating. Target is $23.00. Cautious industry view.

Target price is $23.00 Current Price is $22.64 Difference: $0.36
If JHX meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $24.79, suggesting upside of 9.5% (ex-dividends)

The company's fiscal year ends in March.

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

Morgans rates JIN as Downgrade to Hold from Add (3) -

The company has flagged a strong trading period and expects total transaction value of around $182m for FY18. Morgans notes good cost control has also been in evidence, particularly in the low jackpot environment.

Forecasts have been upgraded and the broker currently sits ahead of guidance, given management's conservative track record.

With the stock trading above valuation, the broker downgrades to Hold from Add. Investors are expected to be rewarded over the next few years with a forecast 6%-plus gross dividend yield. Target has risen to $4.81 from $4.30.

Target price is $4.81 Current Price is $4.86 Difference: minus $0.05 (current price is over target).
If JIN meets the Morgans target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

UBS rates KGN as Buy (1) -

Kogan has announced it is entering two new markets, being whitegoods and NZ mobile, the latter in partnership with Vodafone. The broker awaits further details before including numbers into its forecast but notes whitegoods materially increases the company's addressable market.

It will not result in sudden earnings growth nonetheless, with inventory build required. The broker does however see further vertical additions ahead, with credit cards an obvious choice. Buy and $10.60 target retained.

Target price is $10.60 Current Price is $8.61 Difference: $1.99
If KGN meets the UBS target it will return approximately 23% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

UBS rates MGR as Downgrade to Sell from Neutral (5) -

UBS economists are now forecasting a -5% plus fall in house prices over the next 12 months which leads the stock analysts to downgrade Mirvac to Sell. UBS believes Mirvac's best customer, the investor, and best market, Sydney, are likely to be most impacted by credit tightening.

The market is forecasting a soft landing for housing, the broker notes, suggesting positive earnings growth out to FY22. UBS sees downside risk beyond FY19, which is largely pre-sold. Target falls to $2.16 from $2.26.

Target price is $2.16 Current Price is $2.23 Difference: minus $0.07 (current price is over target).
If MGR meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.36, suggesting upside of 5.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Citi rates NCM as Buy (1) -

Citi analysts highlight the "high takeover appeal" that is currently swirling over the Newcrest Mining share price. They believe it is far more cost-effective for one of the international majors in the sector to buy Newcrest than to try to build a similar suite of assets from scratch.

Newcrest's assets are low-opex, long-life point out the analysts. Buy rating retained. Target $25.80.

Target price is $25.80 Current Price is $21.03 Difference: $4.77
If NCM meets the Citi target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $21.07, suggesting upside of 0.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: -0.1

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

Morgans rates NTD as Add (1) -

The company has made its first acquisition since its IPO. Statewide Tyre Distribution is based in South Australia and is a wholesaler of passenger, van and truck tyres.

The company expects revenue and cost synergies over time which Morgans suggests will likely relate to warehousing productivity.

The broker believes the company is well-placed to further consolidate the wholesale market, which is where meaningful earnings growth and valuation upside remains. Add rating retained. Target rises to $1.44 from $1.37.

Target price is $1.44 Current Price is $1.25 Difference: $0.19
If NTD meets the Morgans target it will return approximately 15% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Credit Suisse rates RHC as Downgrade to Underperform from Neutral (5) -

Credit Suisse believes Ramsay can continue to attract a more complex case mix versus other private hospital operators but will not be immune to a structural slowdown. The broker factors in 3% long-term organic volume growth and 1.5% pricing growth.

This reduces estimates for earnings by an average of -2.5% over the forecast period. The broker considers the stock overvalued and downgrades to Underperform from Neutral. Target is reduced to $56.50 from $68.60.

Target price is $56.50 Current Price is $57.87 Difference: minus $1.37 (current price is over target).
If RHC meets the Credit Suisse target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $68.24, suggesting upside of 17.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

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

Deutsche Bank rates TAH as Buy (1) -

Deutsche Bank expects the news flow in coming months to be positive as NSW, Queensland and the ACT formally introduce a point of consumption tax rate of 8-15% from either July or January.

The lotteries business continues to perform strongly and the company should benefit from the FIFA World Cup from June.

The broker remains positive with the stock trading at a -19% discount to valuation. Buy rating and $5.50 target.

Target price is $5.50 Current Price is $4.49 Difference: $1.01
If TAH meets the Deutsche Bank target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $5.21, suggesting upside of 16.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Citi rates VCX as Neutral (3) -

Citi analysts suggested previously the shopping mall owner could be looking at a range of options to optimise value and the potential spin-off of lower-quality assets was specifically mentioned in this context.

Seems like the board at Vicinity Centres had been reading Citi's commentary too with the company announcing up to $1bn in asset sales in the form of sub-regional and neighbourhood shopping malls.

No impact on FY18 performance is expected, but that's a timing matter. All in all, Citi analysts believe the initiative is "a step in the right direction". Neutral rating retained, as well as the $2.72 target price.

Target price is $2.72 Current Price is $2.69 Difference: $0.03
If VCX meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $2.81, suggesting upside of 4.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

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

Macquarie rates VCX as No Rating (-1) -

The company has announced plans for the sale of up to $1bn of its malls with proceeds to be reinvested into development opportunities.

The company has indicated there are other assets in the portfolio to which the market is not ascribing full value and will provide an update in August.

Macquarie is restricted on rating and target.

Current Price is $2.69. Target price not assessed.

Current consensus price target is $2.81, suggesting upside of 4.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

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

Ord Minnett rates VCX as Accumulate (2) -

The company plans to sell up to $1bn of sub-regional and neighbourhood assets following a review, transitioning to a higher-quality portfolio. Ord Minnett compares this to the 19 assets worth $2.1bn it believes represent the tail in the portfolio.

The broker anticipates a positive reaction as transactions are completed. Part of the proceeds are expected to be used to buy back stock, with decisions to be made upon the divestments being completed.

Accumulate rating and $2.95 target maintained.

Target price is $2.95 Current Price is $2.69 Difference: $0.26
If VCX meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $2.81, suggesting upside of 4.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

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

UBS rates VCX as Buy (1) -

Vicinity Centres has announced the intended disposal of up to $1bn of non-core assets of a $16bn portfolio to be used to invest in its development pipeline. The REIT also continues to evaluate mixed-used conversion at a number of properties.

The question is, the broker notes, is there a market for $1bn of sub-regional shopping malls? Sales in that segment totalled only $3.6bn in all of 2017. Management believes it can sell at book value but the broker is going to wait and see. The market has de-rated the REIT so Buy retained. Target unchanged at $2.92.

Target price is $2.92 Current Price is $2.69 Difference: $0.23
If VCX meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $2.81, suggesting upside of 4.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

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