Australian Broker Call
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March 08, 2018
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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)
THIS REPORT WILL BE UPDATED SHORTLY
Last Updated: 10:19 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.
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ANG AUSTIN ENGINEERING LIMITED
Mining Sector Contracting
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Overnight Price: $0.25
Morgans rates ANG as Hold (3) -
First half earnings slightly exceeded forecasts. Morgans observes tender activity is at record levels and supports the revenue and margin growth that is incorporated into forecasts. The broker remains cautious about the trajectory, nonetheless, given the lumpiness of activity in some geographies and flat pricing.
Morgans believes the bulk of the recovery post repairs to the balance sheet has been realised. Medium-term upside is linked growth in market share and corporate appeal. Target is reduced to $0.26 from $0.27. Hold maintained.
Target price is $0.26 Current Price is $0.25 Difference: $0.01
If ANG meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 0.00 cents and EPS of 1.50 cents. |
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 0.00 cents and EPS of 1.60 cents. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $28.22
Morgan Stanley rates ANZ as Equal-weight (3) -
Morgan Stanley observes Australia's major banks face a deteriorating revenue growth outlook and increased scrutiny, with little room to deliver positive surprise on expenses, loan losses and capital management. The broker believes ANZ offers a good cost story and improving risk profile against this backdrop.
ANZ is the broker's preferred major bank. Rating is Equal-weight. Target is raised to $29.30 from $29.00. Sector view is In-Line.
Target price is $29.30 Current Price is $28.22 Difference: $1.08
If ANZ meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).
Current consensus price target is $30.13, suggesting upside of 6.8% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 160.00 cents and EPS of 233.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 235.0, implying annual growth of 6.8%. Current consensus DPS estimate is 160.5, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 12.0. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 166.00 cents and EPS of 243.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 239.8, implying annual growth of 2.0%. Current consensus DPS estimate is 162.4, implying a prospective dividend yield of 5.8%. Current consensus EPS estimate suggests the PER is 11.8. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgan Stanley rates ARF as Overweight (1) -
After meeting with management Morgan Stanley is more confident in the company's ability to sustain its 5.7% distribution yield and competitive growth, against a backdrop where other passive asset classes remain under pressure.
The broker suggests the company has around $40m for acquisitions or developments whilst maintaining gearing below 30%. The company remains open to selling more assets but did indicate some cap rates have softened by up to 50 basis points over the last six months.
Overweight and target is $2.50. Industry view: Cautious.
Target price is $2.50 Current Price is $2.25 Difference: $0.25
If ARF meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 12.80 cents and EPS of 13.10 cents. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 13.70 cents and EPS of 13.90 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $15.84
UBS rates BSL as Buy (1) -
UBS considers the outlook for the company's US business is healthy, despite the US tariff proposition. North Star is set to benefit and higher prices should lead to widening spreads. This business accounts for 26% of earnings.
SteelScape and North American Building Solutions are small, accounting for around 10% of earnings. SteelScape, which relies on imported steel from Australia & Japan, is expected to pass on any price increases, while Building Solutions is also unlikely to be materially affected.
The broker believes the near-term outlook for US spreads is influencing investor views on the company, as they now appear to be speculating just how high prices might rise before moderating. A Buy rating is maintained. Target rises to $18.75 from $18.10.
Target price is $18.75 Current Price is $15.84 Difference: $2.91
If BSL meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).
Current consensus price target is $17.71, suggesting upside of 11.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 13.00 cents and EPS of 162.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 143.5, implying annual growth of 14.5%. Current consensus DPS estimate is 12.8, implying a prospective dividend yield of 0.8%. Current consensus EPS estimate suggests the PER is 11.0. |
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 12.00 cents and EPS of 144.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 153.7, implying annual growth of 7.1%. Current consensus DPS estimate is 14.3, implying a prospective dividend yield of 0.9%. Current consensus EPS estimate suggests the PER is 10.3. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $0.41
Macquarie rates KLL as Initiation of coverage with Outperform (1) -
Macquarie initiates coverage of Kalium Lakes with an Outperform rating and $0.60 target. The company is developing the Beyondie sulphate of potash project in Western Australia. First production is expected in late 2019. A bankable feasibility study in June should underpin the economics, the broker suggests.
Macquarie believes the outlook for sulphate of potash prices is positive and envisages upside risks to assumptions should the company be able to secure domestic market share.
Target price is $0.60 Current Price is $0.41 Difference: $0.19
If KLL meets the Macquarie target it will return approximately 46% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 0.00 cents and EPS of minus 5.90 cents. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 2.80 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
MYR MYER HOLDINGS LIMITED
Household & Personal Products
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Overnight Price: $0.44
Morgan Stanley - Cessation of coverage
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 3.80 cents and EPS of 6.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 4.5, implying annual growth of -45.8%. Current consensus DPS estimate is 2.5, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 9.8. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 4.20 cents and EPS of 8.30 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 4.4, implying annual growth of -2.2%. Current consensus DPS estimate is 2.5, implying a prospective dividend yield of 5.7%. Current consensus EPS estimate suggests the PER is 10.0. |
Market Sentiment: -0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $8.13
Morgan Stanley rates NUF as Overweight (1) -
The company's acquisition of Century, the European crop protection portfolio, is reported as approved by the European Commission.
Morgan Stanley notes, following completion of the FMC deal in February, the company has now successfully gained approval for two recent acquisitions in the European market and the news should be greeted positively.
Overweight rating and Cautious industry view. Target is $11.20.
Target price is $11.20 Current Price is $8.13 Difference: $3.07
If NUF meets the Morgan Stanley target it will return approximately 38% (excluding dividends, fees and charges).
Current consensus price target is $9.46, suggesting upside of 16.3% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 17.00 cents and EPS of 54.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 50.7, implying annual growth of 8.6%. Current consensus DPS estimate is 14.6, implying a prospective dividend yield of 1.8%. Current consensus EPS estimate suggests the PER is 16.0. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 20.00 cents and EPS of 62.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 62.2, implying annual growth of 22.7%. Current consensus DPS estimate is 17.9, implying a prospective dividend yield of 2.2%. Current consensus EPS estimate suggests the PER is 13.1. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
PTM PLATINUM ASSET MANAGEMENT LIMITED
Wealth Management & Investments
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Overnight Price: $5.93
Morgan Stanley rates PTM as Equal-weight (3) -
Morgan Stanley estimates around $100m in inflows in February, or around a 4.5% annualised run rate, and highlights consistent inflows despite the high volatility in the month that is typically challenging for retail investors.
The broker believes, with Kerr Neilson's transition to a full-time director role a better management structure could be apparent in the long run.
Target is $7.00. Equal-weight maintained. Industry view is In-Line.
Target price is $7.00 Current Price is $5.93 Difference: $1.07
If PTM meets the Morgan Stanley target it will return approximately 18% (excluding dividends, fees and charges).
Current consensus price target is $6.51, suggesting upside of 9.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 31.00 cents and EPS of 33.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 34.1, implying annual growth of 7.4%. Current consensus DPS estimate is 32.6, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 17.4. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 31.00 cents and EPS of 35.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 33.9, implying annual growth of -0.6%. Current consensus DPS estimate is 32.0, implying a prospective dividend yield of 5.4%. Current consensus EPS estimate suggests the PER is 17.5. |
Market Sentiment: -0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $13.91
Macquarie rates SUN as Underperform (5) -
Should the company decide to sell its Australian life insurance business Macquarie anticipates proceeds between $1.3-1.4bn. Selling this business could allow management to focus on the core strategy and provide flexibility for additional capital to be returned to shareholders, the broker suggests.
Macquarie remains cautious regarding the stock given low premium growth as well as the underlying margin outlook. Underperform maintained. Target is $13.25.
Target price is $13.25 Current Price is $13.91 Difference: minus $0.66 (current price is over target).
If SUN meets the Macquarie target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $14.19, suggesting upside of 2.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 74.00 cents and EPS of 79.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 79.5, implying annual growth of -5.2%. Current consensus DPS estimate is 71.8, implying a prospective dividend yield of 5.2%. Current consensus EPS estimate suggests the PER is 17.5. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 78.00 cents and EPS of 97.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 97.7, implying annual growth of 22.9%. Current consensus DPS estimate is 76.1, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 14.2. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $4.64
Credit Suisse rates TAH as Outperform (1) -
Credit Suisse notes the market consolidation, as CrownBet will acquire the William Hill Australia business for $300m. The broker anticipates a re-branding of the merged entity. The Western Australian government has also flagged interest in pursuing a sale of the WA TAB.
The broker expects FY19 to be competitive, although Tabcorp is cycling weak comparables and should benefit from the Soccer World Cup. Recent regulatory constraints on competitors may be of some assistance to revenue. The broker is expecting organic wagering EBITDA growth of 5.8% in FY19 and 4.6% in FY20.
Outperform maintained. Target is $5.20.
Target price is $5.20 Current Price is $4.64 Difference: $0.56
If TAH meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).
Current consensus price target is $5.33, suggesting upside of 14.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 20.00 cents and EPS of 17.45 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 16.3, implying annual growth of N/A. Current consensus DPS estimate is 20.7, implying a prospective dividend yield of 4.5%. Current consensus EPS estimate suggests the PER is 28.5. |
Forecast for FY19:
Credit Suisse forecasts a full year FY19 dividend of 22.00 cents and EPS of 22.36 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 21.6, implying annual growth of 32.5%. Current consensus DPS estimate is 22.3, implying a prospective dividend yield of 4.8%. Current consensus EPS estimate suggests the PER is 21.5. |
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $11.63
Morgan Stanley rates TCL as Equal-weight (3) -
The company has halted major construction work on the West Gate Tunnel project after the Victorian upper house revoked a planning approval.
The government will re-issue the approval promptly, allowing major works to re-start, but there is also potential for this to again be revoked. The Coalition and Greens are voting against the planning changes required for the project.
Equal-weight rating and Cautious industry view retained. Target is $13.
Target price is $13.00 Current Price is $11.63 Difference: $1.37
If TCL meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).
Current consensus price target is $13.04, suggesting upside of 12.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 56.00 cents and EPS of 19.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 26.2, implying annual growth of 123.9%. Current consensus DPS estimate is 56.0, implying a prospective dividend yield of 4.8%. Current consensus EPS estimate suggests the PER is 44.4. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 61.00 cents and EPS of 29.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 32.6, implying annual growth of 24.4%. Current consensus DPS estimate is 60.4, implying a prospective dividend yield of 5.2%. Current consensus EPS estimate suggests the PER is 35.7. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Summaries
| ANG | AUSTIN ENG | Hold - Morgans | Overnight Price $0.25 |
| ANZ | ANZ BANKING GROUP | Equal-weight - Morgan Stanley | Overnight Price $28.22 |
| ARF | ARENA REIT | Overweight - Morgan Stanley | Overnight Price $2.25 |
| BSL | BLUESCOPE STEEL | Buy - UBS | Overnight Price $15.84 |
| KLL | KALIUM LAKES | Initiation of coverage with Outperform - Macquarie | Overnight Price $0.41 |
| MYR | MYER | Cessation of coverage - Morgan Stanley | Overnight Price $0.44 |
| NUF | NUFARM | Overweight - Morgan Stanley | Overnight Price $8.13 |
| PTM | PLATINUM | Equal-weight - Morgan Stanley | Overnight Price $5.93 |
| SUN | SUNCORP | Underperform - Macquarie | Overnight Price $13.91 |
| TAH | TABCORP HOLDINGS | Outperform - Credit Suisse | Overnight Price $4.64 |
| TCL | TRANSURBAN GROUP | Equal-weight - Morgan Stanley | Overnight Price $11.63 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 5 |
| 3. Hold | 4 |
| 5. Sell | 1 |
Thursday 08 March 2018
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