Australian Broker Call
September 12, 2016
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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: 10:59 AM
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
| SYR - | SYRAH RESOURCES | Upgrade to Outperform from Neutral | Macquarie |
Deutsche Bank rates FLT as Hold (3) -
The latest international departure figures are encouraging, Deutsche Bank believes, as they show the strongest rate of growth in the last 12 months and a positive for Flight Centre.
Travel to SE Asia grew at 14.7% in July, US travel rose 8.5% and leisure travel increased 7.7%.
Hold rating and $38 target retained.
Target price is $38.00 Current Price is $37.07 Difference: $0.93
If FLT meets the Deutsche Bank target it will return approximately 3% (excluding dividends, fees and charges).
Current consensus price target is $35.94, suggesting downside of -0.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Deutsche Bank forecasts a full year FY17 dividend of 151.00 cents and EPS of 243.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 247.6, implying annual growth of 2.1%. Current consensus DPS estimate is 149.5, implying a prospective dividend yield of 4.2%. Current consensus EPS estimate suggests the PER is 14.5. |
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 159.00 cents and EPS of 255.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 257.3, implying annual growth of 3.9%. Current consensus DPS estimate is 159.8, implying a prospective dividend yield of 4.4%. Current consensus EPS estimate suggests the PER is 14.0. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgan Stanley rates GNC as Overweight (1) -
Morgan Stanley observes contacts across the grain supply chain are increasingly bullish about the FY17 wheat harvest and the bull case suggests upgrades to FY17 profit estimates could be meaningful.
Still, poor wheat prices are considered a risk and temper the broker's upgrades at this point. The broker understands soil moisture is now good enough to protect against excessive heat, typically the biggest risk to a wheat harvest, yet excessive rain in the final weeks has the potential to lower the quality and volume of harvest.
The broker retains an Overweight rating and $9.70 target. Industry view is Attractive.
Target price is $9.70 Current Price is $8.18 Difference: $1.52
If GNC meets the Morgan Stanley target it will return approximately 19% (excluding dividends, fees and charges).
Current consensus price target is $8.94, suggesting upside of 10.9% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY16:
Morgan Stanley forecasts a full year FY16 dividend of 11.30 cents and EPS of 23.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 21.3, implying annual growth of 59.0%. Current consensus DPS estimate is 11.4, implying a prospective dividend yield of 1.4%. Current consensus EPS estimate suggests the PER is 37.8. |
Forecast for FY17:
Morgan Stanley forecasts a full year FY17 dividend of 20.90 cents and EPS of 42.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 38.9, implying annual growth of 82.6%. Current consensus DPS estimate is 19.5, implying a prospective dividend yield of 2.4%. Current consensus EPS estimate suggests the PER is 20.7. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Deutsche Bank rates MYR as Hold (3) -
Competitive pressures continue but Deutsche Bank observes the sales momentum seems to have been maintained, with new initiatives along with a better retail environment contributing.
The broker expects EBIT margins to still decline but at a slower rate. Management is expected to be cautiously optimistic on the outlook at the results. A Hold rating and $1.25 target are retained.
Target price is $1.25 Current Price is $1.28 Difference: minus $0.03 (current price is over target).
If MYR meets the Deutsche Bank target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $1.33, suggesting upside of 5.7% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY16:
Deutsche Bank forecasts a full year FY16 dividend of 6.00 cents and EPS of 9.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 10.2, implying annual growth of 100.0%. Current consensus DPS estimate is 6.1, implying a prospective dividend yield of 4.8%. Current consensus EPS estimate suggests the PER is 12.4. |
Forecast for FY17:
Deutsche Bank forecasts a full year FY17 dividend of 6.00 cents and EPS of 9.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 9.1, implying annual growth of -10.8%. Current consensus DPS estimate is 5.8, implying a prospective dividend yield of 4.6%. Current consensus EPS estimate suggests the PER is 13.8. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates MYR as Hold (3) -
Ord Minnett is interested in the upcoming FY16 results and the extent to which like-for-like sales growth is continuing, as well as the progress on the implementation of the "New Myer" strategy.
The broker forecasts FY16 net profit of $70m, down 9.7%. Hold rating and $1.40 target retained.
Target price is $1.40 Current Price is $1.28 Difference: $0.12
If MYR meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).
Current consensus price target is $1.33, suggesting upside of 5.7% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY16:
Ord Minnett forecasts a full year FY16 dividend of 5.00 cents and EPS of 7.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 10.2, implying annual growth of 100.0%. Current consensus DPS estimate is 6.1, implying a prospective dividend yield of 4.8%. Current consensus EPS estimate suggests the PER is 12.4. |
Forecast for FY17:
Ord Minnett forecasts a full year FY17 dividend of 6.00 cents and EPS of 7.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 9.1, implying annual growth of -10.8%. Current consensus DPS estimate is 5.8, implying a prospective dividend yield of 4.6%. Current consensus EPS estimate suggests the PER is 13.8. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Deutsche Bank rates PGH as Buy (1) -
Further to the news of the acquisition of Australian Pharmaceutical Manufacturers (APM), Deutsche Bank increases earnings forecasts by 3-4%.
Buy rating retained. Target is raised to $7.10 from $6.80.
Target price is $7.10 Current Price is $6.27 Difference: $0.83
If PGH meets the Deutsche Bank target it will return approximately 13% (excluding dividends, fees and charges).
Current consensus price target is $6.40, suggesting upside of 2.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Deutsche Bank forecasts a full year FY17 dividend of 26.00 cents and EPS of 39.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 36.5, implying annual growth of 25.9%. Current consensus DPS estimate is 24.5, implying a prospective dividend yield of 3.9%. Current consensus EPS estimate suggests the PER is 17.0. |
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 29.00 cents and EPS of 45.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 41.1, implying annual growth of 12.6%. Current consensus DPS estimate is 27.4, implying a prospective dividend yield of 4.4%. Current consensus EPS estimate suggests the PER is 15.1. |
Market Sentiment: 0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates RMD as Outperform (1) -
US Medicare has announced reimbursement rates for durable medical equipment for re-competing in round one as part of the competitive bidding program.
Credit Suisse considers the industry under pressure given the magnitude of price changes under previous rounds but this is less the case for ResMed.
In terms of ResMed's offering, the broker envisages its comprehensive range of solutions will allow the purchasing entities to reduce costs as an attractive alternative to price discounting.
Target of $9.80 and Outperform rating retained.
Target price is $9.80 Current Price is $8.71 Difference: $1.09
If RMD meets the Credit Suisse target it will return approximately 13% (excluding dividends, fees and charges).
Current consensus price target is $9.92, suggesting upside of 14.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Credit Suisse forecasts a full year FY17 dividend of 18.40 cents and EPS of 34.75 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 37.5, implying annual growth of N/A. Current consensus DPS estimate is 17.3, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 23.1. |
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 20.03 cents and EPS of 39.04 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 38.9, implying annual growth of 3.7%. Current consensus DPS estimate is 19.7, implying a prospective dividend yield of 2.3%. Current consensus EPS estimate suggests the PER is 22.2. |
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
Credit Suisse rates SYR as Outperform (1) -
The first half result revealed Balama is on schedule and within budget.
Credit Suisse suggests the share price reflects a US$750/t graphite basket but zero value for the spherical opportunity, the vanadium resource and the option of the resources outside of that included in the valuation.
The broker believes the market is in denial over the demand implications in the graphite market.
Outperform rating retained. Target is $7.80.
Target price is $7.80 Current Price is $4.06 Difference: $3.74
If SYR meets the Credit Suisse target it will return approximately 92% (excluding dividends, fees and charges).
Current consensus price target is $6.44, suggesting upside of 57.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY16:
Credit Suisse forecasts a full year FY16 dividend of 0.00 cents and EPS of minus 5.59 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is -6.0, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is N/A. |
Forecast for FY17:
Credit Suisse forecasts a full year FY17 dividend of 0.00 cents and EPS of 29.93 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 9.5, implying annual growth of N/A. Current consensus DPS estimate is 1.3, implying a prospective dividend yield of 0.3%. Current consensus EPS estimate suggests the PER is 43.2. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates SYR as Upgrade to Outperform from Neutral (1) -
The company has advised that construction of the Balama project is on schedule and on budget. Macquarie analysts point out the project is now 43% completed.
Post the recent raising, the analysts believe the company is now sufficiently cashed up until revenues start flowing in, not expected before FY18. The analysts remind investors commercial production is expected towards the end of CY17.
Target price (unchanged) at $6.60. Upgrade to Outperform from Neutral following share price weakness.
Target price is $6.60 Current Price is $4.06 Difference: $2.54
If SYR meets the Macquarie target it will return approximately 63% (excluding dividends, fees and charges).
Current consensus price target is $6.44, suggesting upside of 57.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY16:
Macquarie forecasts a full year FY16 dividend of 0.00 cents and EPS of minus 9.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is -6.0, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is N/A. |
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 0.00 cents and EPS of 1.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 9.5, implying annual growth of N/A. Current consensus DPS estimate is 1.3, implying a prospective dividend yield of 0.3%. Current consensus EPS estimate suggests the PER is 43.2. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates VAH as Neutral (3) -
Virgin Australia has reversed some of the proposed fare changes in order to prevent a backlash and reduce the number of corporate travellers likely to switch to Qantas ((QAN)).
Credit Suisse considers the changes overall are marginally positive for Qantas. The broker expects a softer performance on average seat kilometres in the first half because of continued weakness in the resources industry and the east-west routes to Perth.
Neutral rating and 26c target retained.
Target price is $0.26 Current Price is $0.24 Difference: $0.02
If VAH meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).
Current consensus price target is $0.24, suggesting upside of 2.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Credit Suisse forecasts a full year FY17 dividend of 0.00 cents and EPS of 0.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 1.8, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 13.1. |
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 0.00 cents and EPS of 53.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 10.1, implying annual growth of 461.1%. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 2.3. |
Market Sentiment: -0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Summaries
| FLT - | FLIGHT CENTRE | Hold - Deutsche Bank | Overnight Price $37.07 |
| GNC - | GRAINCORP | Overweight - Morgan Stanley | Overnight Price $8.18 |
| MYR - | MYER | Hold - Deutsche Bank | Overnight Price $1.28 |
| Hold - Ord Minnett | Overnight Price $1.28 | ||
| PGH - | PACT GROUP | Buy - Deutsche Bank | Overnight Price $6.27 |
| RMD - | RESMED | Outperform - Credit Suisse | Overnight Price $8.71 |
| SYR - | SYRAH RESOURCES | Outperform - Credit Suisse | Overnight Price $4.06 |
| Upgrade to Outperform from Neutral - Macquarie | Overnight Price $4.06 | ||
| VAH - | VIRGIN AUSTRALIA | Neutral - Credit Suisse | Overnight Price $0.24 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 5 |
| 3. Hold | 4 |
Monday 12 September 2016
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