Australian Broker Call
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April 24, 2019
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COMPANIES DISCUSSED IN THIS ISSUE
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The number next to the symbol represents the number of brokers covering it for this report -(if more than 1).
Last Updated: 05:00 PM
Your daily news report on the latest recommendation, valuation, forecast and opinion changes.
This report includes concise but limited reviews of research recently published by Stockbrokers, 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.
For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE
Today's Upgrades and Downgrades
| KGN - | KOGAN.COM | Downgrade to Neutral from Buy | UBS |
Overnight Price: $2.86
Credit Suisse rates CRN as Outperform (1) -
Sales volumes were softer in the March quarter. Saleable production of 5mt was affected by rail availability in Queensland and poor mine conditions at Buchanan that affected yields.
2019 guidance is unchanged and Buchanan production has already lifted since the rock intrusion was encountered. Realised pricing and cash generation continues to be strong, Credit Suisse observes. The broker retains an Outperform rating and $3.80 target.
Target price is $3.80 Current Price is $2.86 Difference: $0.94
If CRN meets the Credit Suisse target it will return approximately 33% (excluding dividends, fees and charges).
Current consensus price target is $3.92, suggesting upside of 36.9% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY19:
Credit Suisse forecasts a full year FY19 dividend of 49.77 cents and EPS of 53.71 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 62.2, implying annual growth of N/A. Current consensus DPS estimate is 55.7, implying a prospective dividend yield of 19.5%. Current consensus EPS estimate suggests the PER is 4.6. |
Forecast for FY20:
Credit Suisse forecasts a full year FY20 dividend of 27.40 cents and EPS of 25.89 cents. |
This company reports in USD. 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
UBS rates CRN as Buy (1) -
Saleable coal production was below UBS estimates. Volumes were constrained by the availability of rail services, while there were challenging operating conditions at the Buchanan mine.
The company has maintained guidance although UBS assesses costs need to improve in order for the US$51-52/t guidance range to be achieved.
Blending continues to be the focus for obtaining higher realised prices for the company's metallurgical coal products. Buy rating maintained. Target is reduced to $3.90 from $4.00.
Target price is $3.90 Current Price is $2.86 Difference: $1.04
If CRN meets the UBS target it will return approximately 36% (excluding dividends, fees and charges).
Current consensus price target is $3.92, suggesting upside of 36.9% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 62.00 cents and EPS of 66.13 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 62.2, implying annual growth of N/A. Current consensus DPS estimate is 55.7, implying a prospective dividend yield of 19.5%. Current consensus EPS estimate suggests the PER is 4.6. |
Forecast for FY20:
UBS forecasts a full year FY20 dividend of 53.73 cents and EPS of 45.47 cents. |
This company reports in USD. 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
Overnight Price: $8.98
Morgans rates GNC as Hold (3) -
Morgans understands the company's marketing operations have been affected by the anti-dumping investigation into Australian barley exports by China. This has caused feed grain prices to weaken materially. Given the fall, the broker believes the company has had to sell grain at prices below what it purchased.
The broker makes material downgrades to FY19 forecasts and expects a loss to be reported. The issue also raises concerns about the company's trading and risk management policies. Hold rating maintained. Target is raised to $9.30 from $7.20.
The broker also believes the share price could trade lower if the LTAP offer does not proceed, although the de-merger proposal from Graincorp is a short-term measure that should create value for shareholders.
Target price is $9.30 Current Price is $8.98 Difference: $0.32
If GNC meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).
Current consensus price target is $9.93, suggesting upside of 10.6% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 8.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is -0.7, implying annual growth of N/A. Current consensus DPS estimate is 6.2, implying a prospective dividend yield of 0.7%. Current consensus EPS estimate suggests the PER is N/A. |
Forecast for FY20:
Morgans forecasts a full year FY20 dividend of 16.00 cents and EPS of 31.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 38.2, implying annual growth of N/A. Current consensus DPS estimate is 20.0, implying a prospective dividend yield of 2.2%. Current consensus EPS estimate suggests the PER is 23.5. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $5.66
UBS rates KGN as Downgrade to Neutral from Buy (3) -
The company has announced a strong March quarter of trading and two new vertical markets: Kogan Energy Compare and Kogan Cars with EclipX Group ((ECX)). UBS believes these will be slow profit producers.
The company has also launched a retail subscription service to tie in with its upcoming credit card offer. UBS envisages near-term risk is to the upside for earnings but considers this priced into the stock.
To become more positive, the broker requires a strong ramp up of at least one new vertical and improving cash flow. Rating is downgraded to Neutral from Buy and the target is raised to $5.80 from $5.00.
Target price is $5.80 Current Price is $5.66 Difference: $0.14
If KGN meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 14.00 cents and EPS of 19.00 cents. |
Forecast for FY20:
UBS forecasts a full year FY20 dividend of 17.00 cents and EPS of 23.00 cents. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $25.67
UBS rates NAB as Sell (5) -
Sell rating retained, as well as the $23 price target as UBS analysts have now joined the growing queue of banking analysts in Australia that are anticipating National Australia Bank to cut its dividend for shareholders to 90c at the upcoming interim results release.
UBS summarises the NAB board predicament as follows: To cut, and how much to cut? That is the question. In addition, the analysts see scope for large and ongoing additional provisions as the review process for customer remediation progresses.
UBS has factored in an incremental -$500m in one-off remediation costs for 2H19. A dividend cut to 85c is seen as a possibility if the domestic housing market deteriorates further and/or New Zealand authorities hold on to their capital requirement proposals.
Target price is $23.00 Current Price is $25.67 Difference: minus $2.67 (current price is over target).
If NAB meets the UBS target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $26.80, suggesting upside of 4.4% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 180.00 cents and EPS of 200.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 218.5, implying annual growth of 1.3%. Current consensus DPS estimate is 179.1, implying a prospective dividend yield of 7.0%. Current consensus EPS estimate suggests the PER is 11.7. |
Forecast for FY20:
UBS forecasts a full year FY20 dividend of 180.00 cents and EPS of 206.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 231.1, implying annual growth of 5.8%. Current consensus DPS estimate is 178.3, implying a prospective dividend yield of 6.9%. Current consensus EPS estimate suggests the PER is 11.1. |
Market Sentiment: 0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $3.34
UBS rates ORE as Buy (1) -
The go-ahead for the Naraha lithium hydroxide plant in Japan has finally been received. Commissioning is expected in the first half of 2021. The plant capacity is 10,000tpa of battery grade lithium hydroxide.
Meanwhile, the company reported March quarter production and prices that were ahead of UBS's expectations. Rain affected battery grade carbonate production but this should recommence in the June quarter. The broker maintains a Buy rating and $4.20 target.
Target price is $4.20 Current Price is $3.34 Difference: $0.86
If ORE meets the UBS target it will return approximately 26% (excluding dividends, fees and charges).
Current consensus price target is $4.68, suggesting upside of 40.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 0.00 cents and EPS of 11.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 10.6, implying annual growth of 1177.1%. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 31.5. |
Forecast for FY20:
UBS forecasts a full year FY20 dividend of 0.00 cents and EPS of 7.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 10.5, implying annual growth of -0.9%. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 31.8. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
RAP RESAPP HEALTH LIMITED
Medical Equipment & Devices
More Research Tools In Stock Analysis - click HERE
Overnight Price: $0.16
Morgans rates RAP as Add (1) -
The company has positive results for its adult respiratory study known as Breathe Easy. The company's smart phone-based algorithms were found to accurately diagnose all respiratory diseases in the study.
Morgans estimates the adult respiratory market is three times larger than the paediatric market. A number of short-term catalysts include complete recruitment for an at-home obstructive sleep apnoea study, CE mark approval and US FDA clearance.
Add rating and $0.19 target maintained.
Target price is $0.19 Current Price is $0.16 Difference: $0.03
If RAP meets the Morgans target it will return approximately 19% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 1.00 cents. |
Forecast for FY20:
Morgans forecasts a full year FY20 dividend of 0.00 cents and EPS of minus 0.70 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $35.99
Macquarie rates WES as Outperform (1) -
The Australian residential market appears to be stabilising and Macquarie believes Bunnings can continue to outperform as it expands its ranges, rolls out stores and increases the trade component.
The broker also notes some improvement in loan approvals and credit growth for owner occupiers. This should all be positive for sales at Bunnings. Outperform rating and $37.13 target maintained.
Target price is $37.13 Current Price is $35.99 Difference: $1.14
If WES meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).
Current consensus price target is $32.17, suggesting downside of -10.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 272.50 cents and EPS of 172.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 217.3, implying annual growth of 105.3%. Current consensus DPS estimate is 276.2, implying a prospective dividend yield of 7.7%. Current consensus EPS estimate suggests the PER is 16.6. |
Forecast for FY20:
Macquarie forecasts a full year FY20 dividend of 167.70 cents and EPS of 186.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 174.0, implying annual growth of -19.9%. Current consensus DPS estimate is 155.0, implying a prospective dividend yield of 4.3%. Current consensus EPS estimate suggests the PER is 20.7. |
Market Sentiment: -0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
WGN WAGNERS HOLDING COMPANY LIMITED
Building Products & Services
More Research Tools In Stock Analysis - click HERE
Overnight Price: $2.02
Morgans rates WGN as Hold (3) -
The company has updated the market about the dispute on cement pricing with Boral ((BLD)). Wagners will defend its position by taking the matter to court and has filed a statement of claim with the Supreme Court of Queensland.
Cement deliveries to Boral are likely to remain suspended for the six months that is allowed under the terms of the take-or-pay supply agreement. Morgans suspects a battle is looming and notes the company has elected to revise earnings (EBIT) guidance.
New FY19 EBIT guidance is $25-28m versus $35-38m, with changes made to both cement and concrete assumptions.
The broker has trimmed its growth assumptions for south-east Queensland and reduced the multiples for Wagners, given the increased uncertainty over FY20 earnings/demand conditions. Target is lowered to $2.17 from $3.04. Hold rating maintained.
Target price is $2.17 Current Price is $2.02 Difference: $0.15
If WGN meets the Morgans target it will return approximately 7% (excluding dividends, fees and charges).
Current consensus price target is $2.47, suggesting upside of 22.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 3.30 cents and EPS of 8.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 9.8, implying annual growth of -42.7%. Current consensus DPS estimate is 6.7, implying a prospective dividend yield of 3.3%. Current consensus EPS estimate suggests the PER is 20.6. |
Forecast for FY20:
Morgans forecasts a full year FY20 dividend of 5.50 cents and EPS of 11.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 10.5, implying annual growth of 7.1%. Current consensus DPS estimate is 6.0, implying a prospective dividend yield of 3.0%. Current consensus EPS estimate suggests the PER is 19.2. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Today's Price Target Changes
| Company | Broker | New Target | Prev Target | Change | |
| CRN | CORONADO GLOBAL RESOURCES | UBS | 3.90 | 4.00 | -2.50% |
| GNC | GRAINCORP | Morgans | 9.30 | 7.20 | 29.17% |
| KGN | KOGAN.COM | UBS | 5.80 | 5.00 | 16.00% |
| WGN | WAGNERS HOLDING | Morgans | 2.17 | 3.04 | -28.62% |
Summaries
| CRN | CORONADO GLOBAL RESOURCES | Outperform - Credit Suisse | Overnight Price $2.86 |
| Buy - UBS | Overnight Price $2.86 | ||
| GNC | GRAINCORP | Hold - Morgans | Overnight Price $8.98 |
| KGN | KOGAN.COM | Downgrade to Neutral from Buy - UBS | Overnight Price $5.66 |
| NAB | NATIONAL AUSTRALIA BANK | Sell - UBS | Overnight Price $25.67 |
| ORE | OROCOBRE | Buy - UBS | Overnight Price $3.34 |
| RAP | RESAPP HEALTH | Add - Morgans | Overnight Price $0.16 |
| WES | WESFARMERS | Outperform - Macquarie | Overnight Price $35.99 |
| WGN | WAGNERS HOLDING | Hold - Morgans | Overnight Price $2.02 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 5 |
| 3. Hold | 3 |
| 5. Sell | 1 |
Wednesday 24 April 2019
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