Australian Broker Call

Citi rates 29M as Neutral (3) -

Ahead of its year end, 29Metals warns copper and zinc production will come in at the lower end of guidance range, while gold and silver should come in at the top end. Looking ahead to its next year, the company guided to flat copper growth but zinc to increase 5-10% year-on-year. 

Citi expects this update to largely disappoint, having anticipated 10% copper production growth and 35% zinc production growth in the coming year. The company cited earlier than planned mine changes at Golden Grove and reduced milling rates at Capricorn Copper as drivers. 

The Neutral rating is retained and the target price decreases to $2.40 from $2.50.

Target price is $2.40 Current Price is $2.25 Difference: $0.15
If 29M meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $2.05, suggesting downside of -12.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.5

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

Macquarie rates 29M as Downgrade to Underperform from Outperform (5) -

29Metals' preliminary 2023 guidance fell well short of Macquarie's forecast.

Management's operational update reveals production at Capricorn is uncertain and that milling rates are running below capacity because the tailings dam is nearly full, and the broker cites ongoing uncertainty as to the timing of regulatory approval for an increase in its tailings storage facility. 

The company also reported lower zinc grades at Golden Grove.

All up, the company's copper production is forecast to be flat in 2023, zinc production is forecast to rise 5% to 10% and gold and silver production is forecast to fall -10% to -15%. 

EPS forecasts are steady for 2022 and 2023; but fall between -40% and -79% across 2024-2027.

Rating downgraded to Underperform from Neutral. Target price falls to $1.50 from $2.70.

Target price is $1.50 Current Price is $2.25 Difference: minus $0.75 (current price is over target).
If 29M meets the Macquarie target it will return approximately minus 33% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.05, suggesting downside of -12.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.5

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

Morgan Stanley rates 29M as Underweight (5) -

29Metals' full year guidance has significantly disappointed Morgan Stanley. Copper production guidance has missed the broker's forecasts by -16%, gold by -21% and zinc by -18%. 

While zinc looks to improve 5-10% year-on-year, copper is expected to be flat and gold to decline -10-15% year-on-year. Further, the company has guided to total capital and site costs of $603-713m, with Morgan Stanley assuming $665m.  

The Underweight rating and target price of $2.00 are retained. Industry view: Attractive.

Target price is $2.00 Current Price is $2.25 Difference: minus $0.25 (current price is over target).
If 29M meets the Morgan Stanley target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.05, suggesting downside of -12.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -0.5

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

Macquarie rates BPT as Neutral (3) -

Macquarie resumes coverage of Beach Energy after being on restriction and after the company's withdrawal from the Warrego Energy ((WGO)) bid, with a Neutral rating and $1.70 target price.

The broker observes early exploration drilling results from the Perth basin are soon to be published, and the broker estimates the program could add 27c to the company's share price regardless of single drill outcomes, given the number of drillings under way, explaining only 40% of drills are successful.

Macquarie expects Clough's administration will be disruptive to work. 

This being the case, the broker observes the company has a strong capacity for mergers and acquisitions, and believes now might be the time.

Target price is $1.70 Current Price is $1.60 Difference: $0.1
If BPT meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $1.92, suggesting upside of 17.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Citi rates BSL as Buy (1) -

Despite seeing material downside to consensus forecasts for BlueScope Steel, Citi continues to see a medium-term value case for the company. The broker believes BlueScope should benefit from earnings support from FY24.

Citi has lifted its iron price forecasts by 13% and 12% in 2023 and 2024, anticipating the iron ore to remain tight over the coming year. Hot rolled coil pricing improving from recent lows but recovering more slowly than anticipated.  

The Buy rating is retained and the target price decreases to $19.50 from $20.00.

Target price is $19.50 Current Price is $16.82 Difference: $2.68
If BSL meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $19.85, suggesting upside of 16.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Morgans rates CMW as Hold (3) -

Cromwell Property continues to sell down non-core assets to both reduce debt and simplify the business but this will take time, Morgans notes, given there is up to $900m of identified assets to divest.

A planned REIT spin-off has been delayed given current market conditions and geopolitical events continue to weigh on any likely near-term sale of the Polish retail or Italian logistics properties that remain on balance sheet.

No FY23 guidance has been provided but Cromwell continues to pay quarterly dividends, the broker notes. Hold and $1.00 target retained.

Target price is $1.00 Current Price is $0.65 Difference: $0.35
If CMW meets the Morgans target it will return approximately 54% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Macquarie rates JMS as Outperform (1) -

Jupiter Mines November-quarter results broadly met Macquarie's forecasts, despite weakness in the August quarter arising from the Transnet strike and weaker manganese prices.

The company closed the quarter with $95m in attributable cash and management has advised it will publish its growth strategy before the end of February.

Macquarie spies room for consolidation of the Kalahari Manganese Fields, starting with Tshipi, which could improve the company's manganese returns.

FY23 EPS forecasts fall -2%. Outperform rating and 26c target price retained, the broker anticipating attractive dividends going forward.

Target price is $0.26 Current Price is $0.21 Difference: $0.05
If JMS meets the Macquarie target it will return approximately 24% (excluding dividends, fees and charges).

The company's fiscal year ends in February.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

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

After a ten-year hiatus, Morgans has returned to initiate coverage of Mineral Resources with an Add rating and $94 target ($11.05 in 2012).

The broker notes Mineral Resources is a founder-led business and top tier miner and crusher that has grown consistently despite barely issuing a share over the last decade.

The company’s diversification (iron ore, mining services) leaves it far more capable of tolerating volatility in lithium markets than its peers in the sector. While the share price looks a little rich at present, the broker sees undervaluation against the organic growth profile.

Target price is $94.00 Current Price is $80.70 Difference: $13.3
If MIN meets the Morgans target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $91.45, suggesting upside of 14.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Macquarie rates OZL as No Rating (-1) -

OZ Minerals's annual Mineral Resource and Ore Reserve summary details a sharp rise in reserves and resource at Prominent Hill (up 20%), and Macquarie extends its mine-life assumptions accordingly.

But the company's Carrapateena estimate revealed a -6% decrease in contained copper, and a -5% drop in resources overall.

The company also published a maiden mineral resource estimate for Pantera.

Net, the results yielded sub-2% changes to EPS forecasts.

Macquarie is on research restriction.

Current Price is $27.78. Target price not assessed.

Current consensus price target is $27.57, suggesting downside of -1.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.1

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

Macquarie rates PLS as Outperform (1) -

Pilbara Minerals has confirmed offtake pricing for major customers at US$6300/dmt, as of December 2022.

The broker appreciates the certainty this provides heading into the March quarter.

Capital expenditure forecasts for the P680 build has risen 36% to $404m (Macquarie had expected 24%), with a final investment decision on the P1000 postponed by one quarter, but Macquarie says the company's strong cash flow means Pilbara Minerals should take the rise in its stride and still pay dividends in FY23.

EPS forecasts fall -1% to -4% between FY23 and FY28, to mainly reflect depreciation associated with the capex rise.

Outperform rating retained. Target price eases -10c to $7.50.

Target price is $7.50 Current Price is $3.84 Difference: $3.66
If PLS meets the Macquarie target it will return approximately 95% (excluding dividends, fees and charges).

Current consensus price target is $4.63, suggesting upside of 20.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

UBS rates PLS as Sell (5) -

Updating on expansion projects, Pilbara Minerals has increased P680 capital expenditure by $100m, but a price review has the company anticipating better pricing outcomes from profit share negotiations. 

The price review has occurred faster than UBS had anticipated, and despite terms of negotiations remaining confidential the broker believes Pilbara Minerals has attained a higher average realised price. The broker lifts realised spodumene expectations 85 and 4% for FY23 and FY24.

Within the broker's industry coverage, Pilbara Minerals remains the most leveraged to prices. UBS highlights every 10% increases to its long-term lithium deck equates to a 35 cents per share increase to valuation. The Sell rating is retained and the target price increases to $3.15 from $3.10.

Target price is $3.15 Current Price is $3.84 Difference: minus $0.69 (current price is over target).
If PLS meets the UBS target it will return approximately minus 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.63, suggesting upside of 20.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Macquarie rates TCL as Outperform (1) -

Transurban Group has confirmed it is close to signing a binding agreement for the M7-M12 interchange expansion.

Management has advised that near-term construction will slow traffic between FY24 and FY26, but Macquarie suspects the M7 rebound could be stronger than expected given the opening of the new Sydney Airport.

The broker observes the NSW government did not change the tolling system, leaving it at CPI-indexed and contributing funds, possibly due to impending elections, and says this may offer a toll re-organisation opportunity for Transurban.

The broker tinkers with EPS forecasts. Target price is $14.19 up from $14.08. Outperform rating retained.

Target price is $14.19 Current Price is $13.64 Difference: $0.55
If TCL meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $14.07, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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