Australian Broker Call
March 20, 2017
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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: 10:31 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
| PPS - | PRAEMIUM | Upgrade to Add from Hold | Morgans |
Deutsche Bank rates CSR as Hold (3) -
Deutsche Bank updates forecasts for aluminium and currencies, in line with its quarterly review.
The broker has forecasts that are 9% above consensus for FY17, which it suspects relates to a positive view on the margin expansion for building products.
Hold rating is retained as its valuation is in line with the current share price. Target is raised to $4.57 from $4.52.
Target price is $4.57 Current Price is $4.51 Difference: $0.06
If CSR meets the Deutsche Bank target it will return approximately 1% (excluding dividends, fees and charges).
Current consensus price target is $4.13, suggesting downside of -8.5% (ex-dividends)
The company's fiscal year ends in March.
Forecast for FY17:
Deutsche Bank forecasts a full year FY17 dividend of 27.00 cents and EPS of 40.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 37.3, implying annual growth of 32.3%. Current consensus DPS estimate is 26.4, implying a prospective dividend yield of 5.9%. Current consensus EPS estimate suggests the PER is 12.1. |
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 29.00 cents and EPS of 37.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 36.0, implying annual growth of -3.5%. Current consensus DPS estimate is 25.3, implying a prospective dividend yield of 5.6%. Current consensus EPS estimate suggests the PER is 12.5. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates CWN as Buy (1) -
UBS reviews the material changes to the business over the past year, which has resulted in a greater focus on domestic casinos and the distribution of around $1.1bn to shareholders. The broker incorporates a $90m reduction in costs.
Forecasts for earnings per share increased by 5% for FY18 and 2% for FY19. Buy rating retained. Target is raised to $13.39 from $13.15.
Target price is $13.39 Current Price is $11.46 Difference: $1.93
If CWN meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).
Current consensus price target is $13.25, suggesting upside of 15.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
UBS forecasts a full year FY17 dividend of 143.00 cents and EPS of 52.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 72.2, implying annual growth of -44.6%. Current consensus DPS estimate is 124.9, implying a prospective dividend yield of 10.9%. Current consensus EPS estimate suggests the PER is 15.9. |
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 60.00 cents and EPS of 63.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 59.1, implying annual growth of -18.1%. Current consensus DPS estimate is 69.7, implying a prospective dividend yield of 6.1%. Current consensus EPS estimate suggests the PER is 19.4. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates FBU as Underperform (5) -
The stock is in a trading halt, pending a review of the financial performance of its construction division and the impact on current guidance. Macquarie was always sceptical regarding the reference to the contract loss in the first half as a one-off.
Given the scale of the company's ambitions in construction and its rationale, the broker believes investors are likely to focus on the extent and nature of the fixed-price contract losses and what impact this unprofitable construction work has had on the integrated manufacturing businesses.
The broker retains an Underperform rating and NZ$8.00 target.
Current Price is $8.34. Target price not assessed.
Current consensus price target is $10.70, suggesting upside of 28.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 37.62 cents and EPS of 59.91 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 60.5, implying annual growth of N/A. Current consensus DPS estimate is 38.3, implying a prospective dividend yield of 4.6%. Current consensus EPS estimate suggests the PER is 13.8. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 38.56 cents and EPS of 58.03 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 64.4, implying annual growth of 6.4%. Current consensus DPS estimate is 40.1, implying a prospective dividend yield of 4.8%. Current consensus EPS estimate suggests the PER is 13.0. |
This company reports in NZD. 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
UBS rates FBU as Buy (1) -
The company has entered a trading halt as it is reviewing the financial performance of its construction division and the impact on FY17 guidance. UBS notes the first half result missed expectations with the main issue being a -$30m loss on one construction project.
UBS has in the past highlighted unforeseen cost inflation that could result in further losses. The broker does not incorporate unforeseen cost inflation for the relevant contracts in valuation, and believes it should be one-off in nature, given future tendering will accommodate current market conditions.
Buy rating and NZ$9.85 maintained.
Current Price is $8.34. Target price not assessed.
Current consensus price target is $10.70, suggesting upside of 28.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
UBS forecasts a full year FY17 dividend of 39.50 cents and EPS of 62.08 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 60.5, implying annual growth of N/A. Current consensus DPS estimate is 38.3, implying a prospective dividend yield of 4.6%. Current consensus EPS estimate suggests the PER is 13.8. |
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 39.50 cents and EPS of 64.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 64.4, implying annual growth of 6.4%. Current consensus DPS estimate is 40.1, implying a prospective dividend yield of 4.8%. Current consensus EPS estimate suggests the PER is 13.0. |
This company reports in NZD. 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
Macquarie rates FLT as Underperform (5) -
Macquarie analyses the impact of closing stores to restore growth. Client feedback suggests FY18 consensus estimates are too bearish and that the issues are cyclical rather than structural. While disagreeing with this premise, the broker also disagrees with the timing of the cyclical upturn.
The broker continues to believe that consensus expectations for a recovery in FY18 are too optimistic and that structural and cyclical issues will continue to weigh. Underperform retained.
FY17 estimates are raised by 1.2% while FY18 are reduced by -1.5%. Target rises to $25.56.
Target price is $25.56 Current Price is $28.83 Difference: minus $3.27 (current price is over target).
If FLT meets the Macquarie target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $30.74, suggesting upside of 6.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 126.50 cents and EPS of 212.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 212.3, implying annual growth of -12.4%. Current consensus DPS estimate is 130.1, implying a prospective dividend yield of 4.5%. Current consensus EPS estimate suggests the PER is 13.6. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 139.20 cents and EPS of 214.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 222.1, implying annual growth of 4.6%. Current consensus DPS estimate is 137.0, implying a prospective dividend yield of 4.8%. Current consensus EPS estimate suggests the PER is 13.0. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Citi rates PMV as Neutral (3) -
The company is scheduled to release H1 financials on March 21. Citi analysts remind investors a pre-release has already occurred, to appease market concerns, on Feb 8.
As such, we already know management expects underlying retail EBIT of $92 - $93m. Citi anticipates to see strong ongoing growth for Smiggles as well as downward pressure on gross margin. Neutral. Target $13.80.
Target price is $13.80 Current Price is $13.72 Difference: $0.08
If PMV meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).
Current consensus price target is $15.17, suggesting upside of 10.5% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY17:
Citi forecasts a full year FY17 dividend of 50.00 cents and EPS of 70.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 73.2, implying annual growth of 10.5%. Current consensus DPS estimate is 53.2, implying a prospective dividend yield of 3.9%. Current consensus EPS estimate suggests the PER is 18.7. |
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 56.00 cents and EPS of 83.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 83.0, implying annual growth of 13.4%. Current consensus DPS estimate is 59.4, implying a prospective dividend yield of 4.3%. Current consensus EPS estimate suggests the PER is 16.5. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgans rates PPS as Upgrade to Add from Hold (1) -
Morgans upgrades forecasts and valuation after reviewing assumptions about the potential growth rate for the UK business.
The recent GBP11bn takeover of Aberdeen Asset Management by Standard Life has highlighted the potential strategic value of modern UK platform operators such as Praemium.
The broker has stepped up growth rate assumptions for funds on platforms on the number of self-invested personal pensions that can be added over the next five years. The company is seen offering exposure to the growth in retirement savings accounts in both Australia and the UK.
Target rises to $0.52 from $0.43. Rating is upgraded to Add from Hold.
Target price is $0.52 Current Price is $0.40 Difference: $0.125
If PPS meets the Morgans target it will return approximately 32% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY17:
Morgans forecasts a full year FY17 dividend of 0.00 cents and EPS of 0.50 cents. |
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 0.00 cents and EPS of 1.70 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates PRG as Accumulate (2) -
While acknowledging that the February employment data showed uninspiring growth of only 0.8%, Ord Minnett envisages potential upside for the stock to deliver on its targets, supported by working capital inflow.
Given there has been no revision to the FY17 EBITDA guidance of $100m and it is nearing the end of March, the broker is increasingly confident the company will achieve its guidance. Accumulate rating and $2.21 target retained.
Target price is $2.21 Current Price is $1.87 Difference: $0.34
If PRG meets the Ord Minnett target it will return approximately 18% (excluding dividends, fees and charges).
Current consensus price target is $2.02, suggesting upside of 8.1% (ex-dividends)
The company's fiscal year ends in March.
Forecast for FY17:
Ord Minnett forecasts a full year FY17 dividend of 9.00 cents and EPS of 9.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 16.4, implying annual growth of N/A. Current consensus DPS estimate is 9.2, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 11.4. |
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 11.00 cents and EPS of 16.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 18.4, implying annual growth of 12.2%. Current consensus DPS estimate is 10.2, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 10.2. |
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgan Stanley rates SUN as Underweight (5) -
Supernormal profits from the Queensland CTP (green slip) are expected to fall as scheme reform drives cuts to premium rates. Without margin expansion elsewhere, Morgan Stanley envisages downside risk to reported margins for Suncorp.
The broker notes the company is aware of the risks and is seeking this margin expansion elsewhere. NSW CTP is unlikely to do all the heavy lifting, Morgan Stanley suspects, despite re-pricing, although rate increases for small-medium enterprises should help.
Underweight rating $12 target and In-Line industry view retained.
Target price is $12.00 Current Price is $13.34 Difference: minus $1.34 (current price is over target).
If SUN meets the Morgan Stanley target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $13.73, suggesting upside of 2.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Morgan Stanley forecasts a full year FY17 dividend of 78.00 cents and EPS of 93.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 89.6, implying annual growth of 10.1%. Current consensus DPS estimate is 73.3, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 14.9. |
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 81.00 cents and EPS of 97.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 95.6, implying annual growth of 6.7%. Current consensus DPS estimate is 76.1, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 14.0. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates TPM as Neutral (3) -
Macquarie updates estimates ahead of the first half results on March 21.The main change is the inclusion of Singapore earnings and capital expenditure. The broker also tempers NBN estimates by assuming modestly lower margins and outcomes for market share.
Neutral rating retained. Macquarie remains cautious about the outlook given the lack of clarity around the domestic mobile strategy. Target is reduced to $7.60 from $10.00.
Target price is $7.60 Current Price is $6.69 Difference: $0.91
If TPM meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges).
Current consensus price target is $8.04, suggesting upside of 20.2% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 15.30 cents and EPS of 45.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 45.1, implying annual growth of 14.8%. Current consensus DPS estimate is 15.8, implying a prospective dividend yield of 2.4%. Current consensus EPS estimate suggests the PER is 14.8. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 15.20 cents and EPS of 44.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 46.3, implying annual growth of 2.7%. Current consensus DPS estimate is 15.9, implying a prospective dividend yield of 2.4%. Current consensus EPS estimate suggests the PER is 14.4. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Summaries
| CSR - | CSR | Hold - Deutsche Bank | Overnight Price $4.51 |
| CWN - | CROWN RESORTS | Buy - UBS | Overnight Price $11.46 |
| FBU - | FLETCHER BUILDING | Underperform - Macquarie | Overnight Price $8.34 |
| Buy - UBS | Overnight Price $8.34 | ||
| FLT - | FLIGHT CENTRE | Underperform - Macquarie | Overnight Price $28.83 |
| PMV - | PREMIER INVESTMENTS | Neutral - Citi | Overnight Price $13.72 |
| PPS - | PRAEMIUM | Upgrade to Add from Hold - Morgans | Overnight Price $0.40 |
| PRG - | PROGRAM MAINTENANCE | Accumulate - Ord Minnett | Overnight Price $1.87 |
| SUN - | SUNCORP | Underweight - Morgan Stanley | Overnight Price $13.34 |
| TPM - | TPG TELECOM | Neutral - Macquarie | Overnight Price $6.69 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 3 |
| 2. Accumulate | 1 |
| 3. Hold | 3 |
| 5. Sell | 3 |
Monday 20 March 2017
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