Australian Broker Call

Shaw and Partners rates A1M as Buy (1) -

AIC Mines reported a maiden ore reserve at Jericho of 1.8mt at 1.8% copper and 0.3 g/t gold, representing conversion of just 20% of the resource.

Shaw and Partners notes the maiden reserve supports accelerated development of the deposit, while project studies are ongoing. The broker believes AIC Mines offers investors one of the few ways to invest in a simple leveraged exposure to the copper price.

Buy rating and $0.60 target retained.

Target price is $0.60 Current Price is $0.39 Difference: $0.215
If A1M meets the Shaw and Partners target it will return approximately 56% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Morgan Stanley rates AGL as Equal-weight (3) -

Morgan Stanley sees less discounting for electricity in the early stages of FY24 compared to muted discounting in FY23, and a low chance of a return to aggressive discounting given the concentrated industry structure.

Bill increases of more than 18-25%, with 50% increases not uncommon, have been noted from some of the broker's data sources. 

The analysts see near-term earnings growth for both Origin Energy and AGL Energy.

The target for AGL Energy rises to $11.88 from $11.38 on a rise in forecast retail margins and a regular mark-to-market for energy and certificate prices, as well as for the risk-free interest rate.

Equal-weight rating. Industry View: Cautious.

Target price is $11.88 Current Price is $11.21 Difference: $0.67
If AGL meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $11.79, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Morgans rates AQZ as Add (1) -

Alliance Aviation Services has announced unaudited FY23 underlying profit (NPBT) will be $56.9m, a 3.5% beat against the top end of the prior guidance range and a 13.8% beat versus Morgans forecast.

The analyst notes the beats reflect increased E190 wet lease flight hours from additional aircraft capacity and higher utilisation in the 2H.

The broker upgrades its FY23-25 profit forecasts by more than 10% and raises its target to $5.20 from $4.70. Morgans expectation for a final dividend has now been brought forward to FY25 from FY27.

Management also announced a second E190 expansion program and the analyst believes the company is on the cusp of an earnings upgrade cycle.

Target price is $5.20 Current Price is $3.20 Difference: $2
If AQZ meets the Morgans target it will return approximately 63% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Ord Minnett rates AQZ as Buy (1) -

Alliance Aviation Services delivered FY23 earnings guidance "comfortably above" expectations. Incorporating updated guidance and increasing asset utilisation going forward, Ord Minnett raises pre-tax profit forecasts for FY23 and FY24 by 13% and 22%, respectively.

Ord Minnett asserts, while the last two years have been challenging for the business, the company has now demonstrated the delivery of a major step up in earnings on the back of improved utilisation.

Moreover, the additional US$100m in available debt provides capital to assist with asset purchases that should drive significant cash flow over time. Buy rating maintained. Target rises to $4.50 from $4.40.

Target price is $4.50 Current Price is $3.20 Difference: $1.3
If AQZ meets the Ord Minnett target it will return approximately 41% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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 CIP as Hold (3) -

Centuria Industrial REIT has two ultra long WALE assets which were largely responsible for overall portfolio values falling by -2.1% in pre-announced preliminary revaluations for June. The balance of assets experienced nil movement, explains Morgans.

Those two assets are the Telstra Data Centre in Clayton, Victoria, and the Arnott’s factory in Virginia, Brisbane. Both have an around 27 year weighted average lease expiry (WALE) with circa 59% of income linked to CPI indexation.

Management's FY23 guidance was for funds from operations (FFO) of 17cps and DPS of 16c.

The broker's target rises to $3.45 from $3.38. Hold.

Target price is $3.45 Current Price is $3.13 Difference: $0.32
If CIP meets the Morgans target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $3.42, suggesting upside of 9.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.2

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

Morgans rates GDF as Add (1) -

Garda Property recently pre-announced revaluations on around 80% of its portfolio with the net overall impact resulting in cap rates expanding by 55bps.

Morgans highlights industrial cap rate expansion was offset by strong growth in rents and a material increase in value for the North Lakes industrial land. 

FY23 DPS guidance was unchanged and the broker's FY24 DPS forecast remains at 7.2c.

The target falls to $1.81 from $1.90. Add.

Target price is $1.81 Current Price is $1.27 Difference: $0.535
If GDF meets the Morgans target it will return approximately 42% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Macquarie rates GL1 as Outperform (1) -

Global Lithium Resources has made a rare earth discovery adjacent to the Manna lithium project which will be called Cardunia Rocks.

Soil sampling has returned peak as a result of 3350 ppm total rare earth oxides and identified an estimated 8.5km trend that passes to the east and south of Manna.

The results will be used to set targets for the 2023 exploration program and a separate team will be tasked to the project so as not to impact the expansion of the Manna lithium resource.

Target is steady at $2.50. Outperform maintained.

Target price is $2.50 Current Price is $1.65 Difference: $0.85
If GL1 meets the Macquarie target it will return approximately 52% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Shaw and Partners rates GL1 as Buy (1) -

Global Lithium Resources has a rare earths discovery adjacent to the Manna lithium project, to be named Cardunia Rocks. Shaw and Partners believes this presents an exciting critical minerals opportunity but should not distract from the core focus on lithium.

The broker expects a number of catalysts such as geotechnical surveys, metallurgical test work and definitive feasibility study before the end of 2023 for Manna, prior to a decision to proceed to FID in 2024.

The 2023 drill campaign of at least 50,000m of RC and diamond drilling will resume in August. Buy recommendation and $3.50 target price retained.

Target price is $3.50 Current Price is $1.65 Difference: $1.85
If GL1 meets the Shaw and Partners target it will return approximately 112% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Shaw and Partners rates LOT as Buy (1) -

Lotus Resources has agreed a merger with A-Cap Energy, which Shaw and Partners describes as effectively a scrip-based takeover by Lotus. A-Cap Energy owns the low-grade Letlhakane uranium deposit in Botswana.

The strategic acquisition provides the company with a uranium asset for development beyond the re-start of the Kayelekera project in Malawi.

A-Cap Energy also owns the Wilconi nickel cobalt project in Western Australia, to which Shaw and Partners ascribes no value and suspects will likely be divested by Lotus.

Buy rating maintained. Target rises to $0.53 from $0.47 after including Letlhakane in valuation at US$160m.

Target price is $0.53 Current Price is $0.20 Difference: $0.33
If LOT meets the Shaw and Partners target it will return approximately 165% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

Morgan Stanley rates MQG as Overweight (1) -

Revenues from Macquarie Group's Commodities and Global Markets (CGM) division comprised around 45% of group revenues in FY23 (March year end).

The division benefits from client demand and trading opportunities from high volatility in wholesale gas prices and other commodities. Consequently, Morgan Stanley highlights EU gas price volatility has moderated substantially from a record FY23. 

Nonetheless, the broker expects EU gas prices will experience volatility after October and provide the bank with plenty of trading opportunities.

Larger differentials in US gas prices is another indicator of commodity revenue opportunities and the analysts note the Morgan Stanley US gas price dispersion index for the June quarter is down -42% year-on-year.

Regardless, the bank's commodities guidance is for FY24 to be up on FY22 (not clear why FY23 overlooked), which the broker acknowledges looks challenging to achieve, though also points out it's early in the new financial year.

Industry view: In-Line. Target $215. Overweight.

Target price is $215.00 Current Price is $180.96 Difference: $34.04
If MQG meets the Morgan Stanley target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $193.36, suggesting upside of 5.7% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

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

Net inflows of $3.1bn were in line with Macquarie's expectations. The broker assesses the relative attractiveness of term deposits relative to Netwealth Group's cash transaction account and equities is leading to headwinds on margins and net flows.

The company is looking to implement measures to offset this in the first half of FY24, although to the broker it seems unlikely trends will normalise in the near term while interest rates are elevated.

Rating is downgraded to Neutral from Outperform on valuation grounds. The target is reduced to $14.40 from $15.00.

Target price is $14.40 Current Price is $14.46 Difference: minus $0.06 (current price is over target).
If NWL meets the Macquarie target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $15.01, suggesting upside of 9.7% (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

Morgans rates NWL as Hold (3) -

Funds under management (FUM) for Netwealth Group rose by 5.4% for the June quarter to end at $70.3bn, an increase of 26% on the previous corresponding period.

Morgans notes there was a $1.2bn positive market move and net inflows were a strong $3.15bn for the quarter largely due to a large Institutional inflow of $1.2bn. Core Retail inflows of around $2bn were down -26% on the previous corresponding period.

While the analysts expect strong operating leverage in FY24/25, the core Retail flow run-rate should remain at the current moderated level in FY24 (due to the macro scene), with further assistance from Institutional.

The target rises to $14.85 from $14.45. Hold.

Target price is $14.85 Current Price is $14.46 Difference: $0.39
If NWL meets the Morgans target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $15.01, suggesting upside of 9.7% (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

Ord Minnett rates NWL as Accumulate (2) -

Netwealth Group posted strong flows in the fourth quarter, with a large institutional mandate of $1.2bn meaning FY23 net flow guidance was achieved at the mid point.

Ord Minnett finds the flow pipeline and market share growth opportunity appealing, believing the business is well-placed to grow revenue and earnings over the next few years.

Funds on platform increased 6.6% over the quarter as better-than-expected markets offset softer flows.

An Accumulate rating is reiterated. Target is raised to $15.30 from $13.70.

Target price is $15.30 Current Price is $14.46 Difference: $0.84
If NWL meets the Ord Minnett target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $15.01, suggesting upside of 9.7% (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

UBS rates NWL as Buy (1) -

Funds under management and net flows were ahead of estimates although UBS highlights the lower-margin elements in Netwealth Group's fourth quarter performance.

The broker points out high interest rates are clearly affecting client appetite. No FY24 guidance or costs, were provided. The broker expects lumpy flows will continue amid new client wins and transitions, the timing of which is hard to predict.

UBS retains a Buy rating and $16.50 target.

Target price is $16.50 Current Price is $14.46 Difference: $2.04
If NWL meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $15.01, suggesting upside of 9.7% (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

Morgan Stanley rates ORG as Overweight (1) -

Morgan Stanley sees less discounting for electricity in the early stages of FY24 compared to muted discounting in FY23, and a low chance of a return to aggressive discounting given the concentrated industry structure.

The broker sees near-term earnings growth for both Origin Energy and AGL Energy. Bill increases of more than 18-25%, with 50% increases not uncommon, have been noted from some data sources. 

The Overweight rating and target price of $8.88 are retained for Origin Energy after the broker increases its retail bill margin assumptions and marks-to-market for oil prices, bond yields and currency. Industry view: Cautious.

Target price is $8.88 Current Price is $8.50 Difference: $0.38
If ORG meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $8.74, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Bell Potter rates PXS as Speculative Buy (1) -

Bell Potter sees potential for PXS-5505 to be used in combination with JAK inhibitor therapy to possibly ameliorate worsening anaemia and thrombocytopenia in patients with already low baseline counts.

The broker's view follows promising results from the Pharmaxis open-label Phase 2 clinical trial in Myelofibrosis, which has enrolled 21 patients who were intolerant/unresponsive/ineligible for JAK inhibitor therapy.

The broker is Speculative Buy-rated with a target price of $0.10.

Target price is $0.10 Current Price is $0.05 Difference: $0.049
If PXS meets the Bell Potter target it will return approximately 96% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Macquarie rates SBM as Resume Coverage with Outperform (1) -

St. Barbara delivered preliminary production figures of 77,100 ounces for the fourth quarter, 35% above Macquarie's estimate and covering the last quarter of contributions from Leonora, which was sold on June 30.

Macquarie expects Simberi to be the key producing asset over the next few years and, while no longer incorporating the sulphide project into its base case, considers an alternative development plan for Simberi sulphides could be the key opportunity over the medium term.

The company plans to drill sulphide targets and return to the sulphide plan by FY26. The broker resumes coverage with a Outperform rating and $0.35 target.

Target price is $0.35 Current Price is $0.28 Difference: $0.075
If SBM meets the Macquarie target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $0.82, suggesting upside of 182.8% (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

Macquarie rates VEA as Outperform (1) -

Macquarie had anticipated a weak second quarter refining result at Geelong because of the routine turnaround and the outage, and Viva Energy's second quarter EBITDA of $67m was -43% below estimates.

The company has reiterated guidance, expecting the platform re-start in early September. Yet costs now appear higher, with loss estimates during July and August now guided at -$30-40m, net of insurance recoveries.

Still, refinery issues are one-off items for 2023 and therefore Macquarie believes this presents a buying opportunity for longer-term investors. Outperform. Target is steady at $3.40.

Target price is $3.40 Current Price is $2.92 Difference: $0.48
If VEA meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $3.38, suggesting upside of 11.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Morgan Stanley rates VEA as Equal-weight (3) -

Morgan Stanley assesses a weak 1H trading update by Viva Energy with group earnings - EBITDA RC (replacement cost) -  missing the  consensus forecast by -15%. It's noted the consensus figure included some stale estimates.

The miss was due to planned and unplanned outages at the Geelong refinery and the resulting lower refining margin of US$10.8/bbl, explain the analysts.

Progress on repairs at Geelong and an increase in retail and commercial fuel sales, led by aviation demand, suggests to the broker underlying signs of an earnings recovery in the 2H.

Management estimates a 2H refinery outage impact of -$30-40m of EBITDA RC, net of insurance recoveries.

Equal-weight. The target rises to $3.20 from $3.18. Industry view is Attractive.

Target price is $3.20 Current Price is $2.92 Difference: $0.28
If VEA meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $3.38, suggesting upside of 11.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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