Australian Broker Call

UBS rates AIZ as Buy (1) -

Air New Zealand has reiterated FY20 guidance at its AGM, although jet fuel prices are being closely watched. Pre-tax profit guidance is NZ$350-450m, based on current market conditions and assuming an average jet fuel price of US$75/bbl.

UBS suspects domestic routes will produce the majority of earnings (EBIT) in FY20. Jetstar ((QAN)), which is stopping NZ regional services at the end of November, accounts for around 10% of capacity.

This indicates to UBS a potential benefit to Air NZ earnings of around NZ$20m, based on existing unit profitability.

Buy rating maintained. Target is NZ$3.10.

Current Price is $2.58. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.0

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

Citi rates APT as Neutral (3) -

Citi only initiated coverage of Afterpay Touch les than one week ago. It started off with a Neutral rating and $33.70 price target, and both remain intact after today's update. The reason for today's update is that Swedish born competitor Klarna has launched a new marketing campaign in the UK.

Investors might remember Klarna recently announced a partnership with CommBank ((CBA)) in Australia. Bottom line: Citi analysts believe Klarna spending big on convincing UK shoppers they must use Buy Now Pay Later services more often is likely to also benefit Afterpay Touch.

On the flipside, Afterpay Touch might have to spend more marketing money itself. Klarna has a headstart in the UK.

Target price is $33.70 Current Price is $35.35 Difference: minus $1.65 (current price is over target).
If APT meets the Citi target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $33.52, suggesting downside of -5.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.7

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

Macquarie rates BHP as Outperform (1) -

The company has described a subdued outlook for demand, with slowing growth rates in China and weakness elsewhere. BHP Group believes Chinese steel demand growth will slow to around 1% per annum over the next five years, implying steel production will effectively plateau.

Macquarie believes near-term risks to earnings forecasts for BHP Group have emerged because of declines in metallurgical coal, iron ore and oil prices. Nevertheless, the upside risk to forecasts for FY21 and beyond remains significant. Outperform rating and $40 target maintained.

Target price is $40.00 Current Price is $36.53 Difference: $3.47
If BHP meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $38.36, suggesting upside of 5.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.1

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

Ord Minnett rates BHP as Hold (3) -

Ord Minnett found BHP Group relatively downbeat at its briefing recently, as it expects iron ore and copper demand to slow next year. The company believes steel production in China has plateaued, expecting a 1% growth rate, with some cyclical deviations, to 2025.

The company estimates the scrap ratio in China, at 22%, will double before mid century. The rise in the scrap ratio will largely stem from the rolling out of electric arc furnaces. India is now BHP Group's main customer for metallurgical coal.

Ord Minnett maintains a Hold rating and $38 target.

Target price is $38.00 Current Price is $36.53 Difference: $1.47
If BHP meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $38.36, suggesting upside of 5.0% (ex-dividends)

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.1

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

Macquarie rates BIN as Neutral (3) -

The company has sold Banksmeadow to a private equity group for $50m. The sale price was at the lower end of expectations, hence Macquarie suggests lower buyback capacity.

The broker believes greater visibility is needed to drive any reassessment of valuations in what is a challenged outlook. Neutral maintained. Target is reduced to $2.25 from $2.35.

Target price is $2.25 Current Price is $2.28 Difference: minus $0.03 (current price is over target).
If BIN meets the Macquarie target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.43, suggesting upside of 6.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Macquarie rates BPT as Neutral (3) -

Macquarie anticipates a substantial development program should fill the Otway gas plant, which is currently producing well below nameplate and constrained by declining volumes in supply fields.

Beach Energy owns and runs the infrastructure and has indicated that prospective fields can generate an internal rate of return of more than 50%.

The company continues to guide towards significant upside and Macquarie is yet to include exploration success fully in forecasts. Neutral maintained. Target is raised to $2.25 from $2.10.

Target price is $2.25 Current Price is $2.55 Difference: minus $0.3 (current price is over target).
If BPT meets the Macquarie target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.28, suggesting downside of -10.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Ord Minnett rates HLO as Buy (1) -

Ord Minnett expects the acquisition of TravelEdge for $28m will be a win/win for both parties. The sector is currently experiencing increased pressure on airline revenue at the same time as there is a need to invest to remain at the forefront of technology.

It therefore makes sense to the broker for TravelEdge to be sold to a larger competitor with scale. The broker expects Helloworld will be able to extract some synergies from the transaction, which would represent upside to estimates.

Buy rating maintained. Target is raised to $6.40 from $6.21.

Target price is $6.40 Current Price is $4.65 Difference: $1.75
If HLO meets the Ord Minnett target it will return approximately 38% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Ord Minnett rates HLS as Accumulate (2) -

Healius is confident in the trends in both revenues and margins that were evident in the June half year from Medicare data. The sharp lift in GP recruitment and promises of a dramatic lift in earnings from the recently-acquired day hospital group mean Ord Minnett also envisages potential for medical centre earnings to exceed forecasts.

The broker lifts underlying profit forecast by 2% for FY20 and FY21. Another takeover offer is considered to be a possibility and the broker maintains an Accumulate rating and $3.50 target.

Target price is $3.50 Current Price is $3.21 Difference: $0.29
If HLS meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $3.22, suggesting upside of 0.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

UBS rates MND as Upgrade to Buy from Neutral (1) -

Following the recent underperformance of the share price, UBS upgrades to Buy from Neutral. The broker expects Monadelphous to return to sales growth in FY20 as it transitions into iron ore replacement and sustaining capital projects from LNG construction.

Updated analysis indicates that up to 87% of the broker's FY20 sales forecasts may already be secured by long-term maintenance contracts or construction projects awarded through FY19 and FY20 to date. Target is reduced to $18.15 from $18.50.

Target price is $18.15 Current Price is $15.61 Difference: $2.54
If MND meets the UBS target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $17.23, suggesting upside of 10.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Macquarie rates NAB as Downgrade to Neutral from Outperform (3) -

Following the relative outperformance in the shares over the last quarter Macquarie observes National Australia Bank's discount to its peers has narrowed. While the bank is less exposed to challenging retail banking trends, the broker envisages minimal growth in earnings per share.

With the new CEO starting later this year Macquarie also assesses the potential upside from material cost reductions is limited. Hence, the rating is downgraded to Neutral from Outperform. Target is raised to $30 from $28.

Target price is $30.00 Current Price is $29.76 Difference: $0.24
If NAB meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $27.21, suggesting downside of -8.6% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

Credit Suisse rates QUB as Underperform (5) -

Management has indicated there is increasing demand for the warehouse space at Moorebank Logistics Park but the capital expenditure required is higher than previously expected. Despite the potential efficiency benefits Credit Suisse suspects lease rates are unlikely to be better than market levels.

Management has indicated it may take 2-3 years for container volumes to reach break-even. Credit Suisse lowers FY20 net profit estimates by -3%, partly because of a slower ramping up in activity than previously assessed.

The broker's cautious view is based on subdued economic activity and a weaker outlook for agricultural volumes. Underperform maintained. Target is raised to $2.80 from $2.55.

Target price is $2.80 Current Price is $3.17 Difference: minus $0.37 (current price is over target).
If QUB meets the Credit Suisse target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.95, suggesting downside of -7.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.3

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

Credit Suisse rates TWE as Outperform (1) -

Management has reiterated FY20 guidance for 15-20% earnings (EBITS) growth. Credit Suisse errs to the lower side of the forecasts.

The company expects growth to come from geographic expansion in China. The margin target in the US is 25% and the broker models 23% by FY23.

Outperform rating and $19.30 target maintained.

Target price is $19.30 Current Price is $18.28 Difference: $1.02
If TWE meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $18.79, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Macquarie rates TWE as Outperform (1) -

Macquarie assesses, from the company's investor briefing, that growth in China will be driven by investment in the French portfolio, regional expansion and changes in the distribution model.

The company has reiterated medium-term targets for earnings (EBITS) margins of over 35% in Asia and over 25% in the Americas. Macquarie maintains a Outperform rating and raises the target to $19.97 from $19.05.

Target price is $19.97 Current Price is $18.28 Difference: $1.69
If TWE meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $18.79, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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