Australian Broker Call

UBS rates AGI as Sell (5) -

It seems like UBS has not been in a hurry to update on the company's half-yearly report.

A first half adjusted loss before tax (ex currency impact) of -$43m was below the UBS forecast loss of -$28m. As expected the period was impacted by significant disruption from covid across a number of regions which reduced customers' capex budgets.

The performance in Australia and North America showed signs of sequential improvement from the 2H20 though Latin America (Latam) revenue declined -85% and continues to be negatively impacted by mandated casino closures and operating restrictions.

Sell rating is maintained. Target is increased to $0.35 from $0.30. While concerns around existing debt maturities have been addressed, UBS forecasts a prolonged recovery profile across Latam.

Target price is $0.35 Current Price is $0.77 Difference: minus $0.42 (current price is over target).
If AGI meets the UBS target it will return approximately minus 55% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

UBS rates AIZ as Sell (5) -

UBS expects NZ borders to re-open in the second quarter 2022 and the associated cash burn creates an equity recapitalisation requirement of around -$1.1bn to restore liquidity levels and move gearing back in line with the company's target.

The Sell rating is maintained. Target is increased to NZ$0.71 from NZ$0.65, driven by reduced cash burn in FY21 and FY22 and lower equity dilution.

Current Price is $1.66. Target price not assessed.

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

This company reports in NZD. 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

Ord Minnett rates AMI as Buy (1) -

After a site visit to the new Dargues gold mine, the Ord Minnett analyst thinks the asset is a 'cracker', generating around $70m of free cash flow. The broker sees several opportunities to boost output and mine life.

Management expects the mine to produce approximately 50koz gold annually over an initial 5 year period at a cost of around $1250/oz. Ord Minnett doubles the project discounted cash flow to circa 33 cents from 14 cents and lifts FY22/23 group earnings by around 17%.

The Buy rating is unchanged and the target lifts to $1.05 from $0.95.

Target price is $1.05 Current Price is $0.41 Difference: $0.64
If AMI meets the Ord Minnett target it will return approximately 156% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Ord Minnett rates ARB as Accumulate (2) -

Ord Minnett highlights new vehicle sales have experienced a sharp upturn in recent months and particularly in the key vehicle segments which ARB Corp targets for its 4WD accessories. During March sales of SUV and Light Commercial vehicles (LCV) rose by 32% and 28%.

These new sales and demand for vehicles used for domestic tourism is resulting in high activity levels within the store network, explains the broker. The Accumulate rating and $36.50 target are retained.

Target price is $36.50 Current Price is $34.95 Difference: $1.55
If ARB meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $38.69, suggesting upside of 9.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.4

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

Credit Suisse rates ASX as Neutral (3) -

Credit Suisse maintains its Neutral rating with the target price rising to $74 from $71.

ASX's trading activity in March was stronger than Credit Suisse expected led by the strong trading activity of cash equities which appears to have bottomed in the broker's view.

While -20% down over last year, the daily average turnover was up slightly compared to the first half.

Even with activity tracking better than anticipated, the broker believes a positive case could be mounted for longer-term investors where this could be a reasonable entry point for a high-quality business that is seeing cyclically depressed revenues in some areas. 

Target price is $74.00 Current Price is $72.36 Difference: $1.64
If ASX meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $70.04, suggesting downside of -3.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Macquarie rates ASX as Neutral (3) -

ASX's monthly activity report for March 2021 showed a deterioration of futures volumes in the third quarter alongside normalising equity volumes and buoyant capital market activity.

Futures volumes per day in the third quarter were -25% lower over last year. Macquarie notes the volumes continue to be impacted by the RBA’s yield curve control. The broker expects futures volumes to remain subdued in the near-term with upward pressure on expenses.

Neutral rating with the target dropping to $66.50 from $67.

Target price is $66.50 Current Price is $72.36 Difference: minus $5.86 (current price is over target).
If ASX meets the Macquarie target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $70.04, suggesting downside of -3.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

UBS rates ASX as Neutral (3) -

UBS makes small EPS downgrades in outer years after the ASX released it's March 21 trading statistics showing participant balances have materially declined. This is considered to present further headwinds to net interest income.

Capital raisings are tracking softer than expected though the IPO outlook remains strong. Daily cash equity turnover appeared broadly in-line. The Neutral rating and target of $68 are maintained.

Target price is $68.00 Current Price is $72.36 Difference: minus $4.36 (current price is over target).
If ASX meets the UBS target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $70.04, suggesting downside of -3.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Ord Minnett rates BOQ as Hold (3) -

In a preview of first half results on April 15, Ord Minnett forecasts a cash net profit of $166m, up 122% half-on-half and 10% above the same period last year. An interim dividend of 17 cents is expected. 

Due to recent guidance after the capital raise, the broker considers the result is de-risked. The analyst's focus will be on management’s views on the persistence of margin strength, sustainability of the pickup in mortgage growth and an update on the investment program.

Hold retained. Target is $9.30.

Target price is $9.30 Current Price is $8.72 Difference: $0.58
If BOQ meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $9.23, suggesting upside of 5.9% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY21:

Forecast for FY22:

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 Neutral (3) -

With about 60% of Costa Group Holdings' Morocco blueberry harvest complete, Credit Suisse's channel checks indicate the pricing is 20% higher than last year with industry volume up 50%.

The broker has lifted the operating income forecast for the group's international division by 19% to $70m due to strong demand by European consumers. There is no change to 2021 earnings forecast.

Neutral with a target price of $4.70.

Target price is $4.70 Current Price is $4.65 Difference: $0.05
If CGC meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $4.81, suggesting upside of 2.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

UBS rates EML as Buy (1) -

EML Payments has acquired Sentenial for -$109m and potential earnout of -$62m in 2024. Sentenial is a European open banking (Nuapay) and account-to-account (A2A) payments provider. It will be paid via -$60m cash on hand and -$48m in scrip consideration.

UBS believes Nuapay is well placed for the land grab of the processing component of open banking in Europe, with expansion into the US and Australia planned over the medium term.

Buy rating retained. Target rises to $6.20 from $5.70. UBS highlights the acquisition creates cross sell opportunities (with the capacity to reduce customers processing costs), while further reducing the portion of earnings coming from Giftcards.

Target price is $6.20 Current Price is $5.73 Difference: $0.47
If EML meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Citi rates IGO as Neutral (3) -

Citi's commodity strategists believe Tsingshan’s move into ‘class 2’ conversion significantly undermines the medium-term nickel bull thematic. The broker trims nickel prices forecasts between -6% and -15% with the biggest impact reserved for 2023. 

Tsingshan is the world's largest nickel producer. The broker doesn't see nickel regaining its ‘EV’ premium until the supply side looks more constrained. However, the broker lifts the long-term nickel price forecast to US$7.71/lb, up 6%.

Citi lowers the target price for IGO to $6.90 from $7.10, primarily driven by cuts to nickel price forecasts of around -10% across the medium term. The Neutral rating is maintained.

Target price is $6.90 Current Price is $6.72 Difference: $0.18
If IGO meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $6.21, suggesting downside of -7.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Citi rates NIC as Neutral (3) -

Citi's commodity strategists believe Tsingshan’s move into ‘class 2’ conversion significantly undermines the medium-term nickel bull thematic. The broker trims nickel prices forecasts between -6% and -15% with the biggest impact reserved for 2023.

Tsingshan is the world's largest nickel producer.The broker doesn't see nickel regaining its ‘EV’ premium until the supply side looks more constrained. However, the broker lifts the long-term nickel price forecast to US$7.71/lb, up 6%.

Citi lowers the target price for Nickel Mines to $1.50 from $1.70, primarily driven by cuts to nickel price forecasts of around -10% across the medium term. The Neutral rating is maintained.

Target price is $1.50 Current Price is $1.38 Difference: $0.12
If NIC meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $1.50, suggesting upside of 10.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

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

Market Sentiment: 0.7

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

Macquarie rates NUF as Outperform (1) -

Macquarie expects Nufarm's first-half result to show strong improvement in Australia and Europe while North America was mixed. 

The broker now waits to see how this translates into profit given the company expects Australia and Europe to make a “meaningful contribution” to earnings growth in FY21.

The first-half results are expected on May 20.

Outperform rating with the target rising to $5.70 from $5.50.

Target price is $5.70 Current Price is $5.31 Difference: $0.39
If NUF meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $5.23, suggesting downside of -3.7% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

UBS rates SKI as Neutral (3) -

UBS updates forecasts ahead of the Australian Energy Regulator's (AER) final determination on 30 April 2021 that will confirm regulated revenues and allowed expenditure for Spark Infrastructure's 49% interest in the Victoria Power Networks (VPN) business.

AER's new approach to estimate inflation and higher Aust 10-year bond yields over January-March-21 will likely lead to higher allowed rates of return applying over the 2021-26 regulatory period, explains the broker.

The analyst sees downside risk to allowed spend in the final determination despite the two VPN networks reducing their total expenditure  by -21% (CitiPower) and -12% (Powercor) relative to their original expenditure proposals in May-20.

The Neutral rating is maintained and the target lowered to $2.15 from $2.20 to reflect reflect rising bond yields which offset higher near-term earnings.

Target price is $2.15 Current Price is $2.17 Difference: minus $0.02 (current price is over target).
If SKI meets the UBS target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.28, suggesting upside of 4.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.3

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

Morgans rates TYR as Initiation of coverage with Add (1) -

Morgans initiates coverage of Australia’s fifth largest merchant acquiring bank, Tyro Payments, with an Add rating and a target price of $4.25. 

The company is technology-driven and offers payment solutions (debit/credit card acquiring) and complementary business banking products in Australia.

The total transaction value acquired (TVA) in Australia of 660bn as at FY20 included $171bn in the company’s core verticals of Health, Hospitality and Retail. 

The company increased its TVA market share between FY15 and 1H21 to 3.5% from 1.4% and has consistently shown improving operating leverage over time.

Target price is $4.25 Current Price is $3.60 Difference: $0.65
If TYR meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $3.88, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.5

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

Citi rates WSA as Neutral (3) -

Citi's commodity strategists believe Tsingshan’s move into ‘class 2’ conversion significantly undermines the medium-term nickel bull thematic. The broker trims nickel prices forecasts between -6% and -15% with the biggest impact reserved for 2023.

Tsingshan is the world's largest nickel producer. The broker doesn't see nickel regaining its ‘EV’ premium until the supply side looks more constrained. However, the broker lifts the long-term nickel price forecast to US$7.71/lb, up 6%.

Citi lowers the target price for Western Areas to $2.40 from $2.65, primarily driven by cuts to nickel price forecasts of around -10% across the medium term. The Neutral rating is maintained.

Target price is $2.40 Current Price is $2.28 Difference: $0.12
If WSA meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $2.52, suggesting upside of 12.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Macquarie rates WSA as Outperform (1) -

Western Areas released its third-quarter preliminary production report which, Macquarie notes, was an improvement on the previous two quarters and in-line with the broker's expectations.

Grade improvements in the quarter were a key driver in the result and the broker believes the miner is now on track to achieve at least the bottom end of its nickel in concentrate production guidance.

Nickel prices continue to drive earnings upside momentum with FY22 and FY23 earnings forecasts rising by 80% and 55%.

Outperform rating with a target of $2.40.

Target price is $2.40 Current Price is $2.28 Difference: $0.12
If WSA meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $2.52, suggesting upside of 12.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Morgan Stanley rates WSA as Overweight (1) -

Western Areas' third-quarter preliminary production numbers were 7% better than Morgan Stanley expected, driven by a drawdown in stocks and better grades. 

Mining rates were somewhat lower than forecast but a return to higher grades at Flying Fox and Spotted Quoll mines may indicate problems starting to abate. Overall, the broker expects an improving outlook for the company going forward.

Target is $2.35. Overweight rating. Industry view: Attractive.

Target price is $2.35 Current Price is $2.28 Difference: $0.07
If WSA meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.52, suggesting upside of 12.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Ord Minnett rates WSA as Buy (1) -

In the wake of the preliminary March-quarter production report, Ord Minnett's forecast of 3,700t was exceeded by the production of 4,200t of nickel in concentrate representing an increase of 20% quarter-on-quarter.

There was an improved performance from the Forrestania project due to higher-grade areas at Flying Fox being mined after development and rehabilitation in the December quarter, explains the broker.

The Buy rating and $3.10 target are retained. Ord Minnett expects Western Areas to close FY21 with $164m in cash, the $75m debt facility yet to be drawn and -$180m of capital expenditure at Odysseus remaining.

Target price is $3.10 Current Price is $2.28 Difference: $0.82
If WSA meets the Ord Minnett target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $2.52, suggesting upside of 12.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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