Australian Broker Call

Macquarie rates AJM as Underperform (5) -

Construction of Altura's Pilgangoora mine and process plant is nearing completion but cash is now getting tight, the broker notes. Stage 2 may provide the opportunity to refinance.

Early stage 2 financing may negate a need for additional funding for first shipments but the broker suggests stage 1 will first need to demonstrate its production capability before this is likely. Underperform and 25c target retained.

Target price is $0.25 Current Price is $0.33 Difference: minus $0.08 (current price is over target).
If AJM meets the Macquarie target it will return approximately minus 24% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -1.0

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

Citi rates AZJ as Resumption of coverage with Sell (5) -

We last heard from Citi on Aurizon in August 2017. Back then, the rating was Sell alongside a $4.75 price target. Today, Citi re-initiates coverage, sticking with the Sell rating and a price target of $3.80.

The analysts highlight the company is facing significant headwinds from a lower regulatory return ruling under the four year UT5 regime, increasing the urgency to reduce operating costs.

It won't be sufficient to prevent EBIT from falling -18% in FY20, if Citi's forecasts prove accurate.

Target price is $3.80 Current Price is $4.34 Difference: minus $0.54 (current price is over target).
If AZJ meets the Citi target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.29, suggesting downside of -1.1% (ex-dividends)

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

UBS rates BLD as Re-instate Coverage with Neutral (3) -

UBS believes the long-term backdrop for Boral is strong, given diversification, and there is exposure to increasing Australian infrastructure expenditure as well as momentum in US housing construction.

Uncertainty arises in terms of margins in Australia, as pricing power is falling and competition increasing. For now, UBS suspects the headwinds will hold back a re-rating. The broker re-instates coverage with a Neutral rating and $7.19 target.

Target price is $7.19 Current Price is $6.57 Difference: $0.62
If BLD meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $7.52, suggesting upside of 14.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Morgan Stanley rates BXB as Underweight (5) -

Margin pressure in the Americas is expected to remain a feature of the second half and into FY19, in Morgan Stanley's view. With US profitability under pressure the broker believes operating leverage is likely to be largely absent in FY19.

Morgan Stanley forecasts 5% growth in revenue for CHEP Americas in FY18-20. The broker incorporates slight changes to forecasts, with moderated expectations in the Americas largely offset by upgrades in other divisions.

Underweight rating retained and target raised to $9.50 from $9.00. Industry view is Cautious.

Target price is $9.50 Current Price is $9.74 Difference: minus $0.24 (current price is over target).
If BXB meets the Morgan Stanley target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.49, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.3

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

Morgans rates BXB as Hold (3) -

The company will report its FY18 result on August 24. Morgans expects a solid performance from CHEP EMEA and IFCO. Nevertheless, the focus will be on CHEP Americas and the extent to which higher transport and lumber costs affect earnings.

Morgans maintains a Hold rating, as the ability to pass increases in costs onto customers remains uncertain. Until this can be ascertained on a sustainable basis the broker envisages potential downside risks to CHEP Americas earnings. Target is raised to $9.89 from $9.44.

Target price is $9.89 Current Price is $9.74 Difference: $0.15
If BXB meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $10.49, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.3

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

Macquarie rates CLQ as Outperform (1) -

Clean Teq is currently assessing funding options for its US$1.5bn Sunrise project. The broker assumes 60:40 debt/equity but notes a streaming deal or prepayment could significantly reduce the equity requirement.

Solving the funding issue and securing offtake agreements for remaining Syerston nickel/cobalt production are key catalysts, the broker suggests. Outperform retained, target falls to $1.40 from $1.50.

Target price is $1.40 Current Price is $0.71 Difference: $0.69
If CLQ meets the Macquarie target it will return approximately 97% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Ord Minnett rates DHG as Initiation of coverage with Accumulate (2) -

Ord Minnett prefers Domain to REA Group ((REA)) and initiates coverage with an Accumulate rating and $3.50 target. The broker envisages more upside to Domain from a depth penetration perspective and it is trading at a discount to REA as well as its other domestic and international peers.

The decline in Australian property listings has accelerated recently and this may produce a headwind in FY19, the broker acknowledges. Yet the current share price implies an extra -5% annual decline over FY19-25 which is considered highly unlikely.

Target price is $3.50 Current Price is $3.25 Difference: $0.25
If DHG meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $3.31, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.2

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

Macquarie rates FBU as No Rating (-1) -

The broker is currently restricted from making a recommendation.

Current Price is $6.54. Target price not assessed.

Current consensus price target is $6.60, suggesting upside of 0.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.2

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

Morgans rates HPI as Hold (3) -

The company is an internally-managed A-REIT offering exposure to premium hotel assets with income underpinned by leases to quality tenants such as Coles ((WES)) and Australian Leisure and Hospitality.

As such, Morgans believes the key risks relate to any potential adverse changes to gaming and liquor laws in Queensland that could negatively affect property values, as well as any change to strategy at Coles. Hold rating maintained. Target is raised to $3.18 from $3.14.

Target price is $3.18 Current Price is $3.21 Difference: minus $0.03 (current price is over target).
If HPI meets the Morgans target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Macquarie rates IPL as Outperform (1) -

In light of the well documented poor cropping season in Australia, particularly NSW-Vic, the broker is now forecasting a -15% reduction in fertiliser volumes for Incitec. Global fertisliser prices nevertheless remain firm.

Adjusting for currency, the FY18 earnings impact is -1.5%. But target rises to $3.95 from $3.91, Outperform retained.

Target price is $3.95 Current Price is $3.68 Difference: $0.27
If IPL meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $3.81, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

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

UBS argues that a significant level of earnings downside is now factored into the share price. The broker envisages FY19 as a potential year of transformation.

Analysis suggests upside for valuation and earnings growth and, if not, the stock then becomes a cash-flow yield play on declining earnings. Rating is upgraded to Buy from Neutral. Target is reduced to $1.00 from $1.05.

Target price is $1.00 Current Price is $0.82 Difference: $0.18
If ISD meets the UBS target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $0.99, suggesting upside of 21.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Morgans rates IVC as Hold (3) -

Morgans expects the first half result on August 16 to be affected by reduced volumes because of the temporary closure of renovated sites. The broker forecasts first half operating earnings will be down -12%, in line with revised management guidance.

The broker increases the target to $13.00 from $12.24 because of increased confidence in the acquisition pipeline. Hold maintained.

Target price is $13.00 Current Price is $14.04 Difference: minus $1.04 (current price is over target).
If IVC meets the Morgans target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $12.50, suggesting downside of -11.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

UBS rates JHX as Re-instate Coverage with Buy (1) -

As the US housing cycle is at its mid point and the company has a dominant position in fibre cement, as well as growth in Europe, UBS believes the long-term trajectory for earnings on margins is strong.

The broker models a through-the-cycle average margin of 27%. UBS suggests there are plenty of catalyst to lift margins, which last peaked at over 29% when US housing starts topped out. The broker re-instates coverage with a Buy rating and $27 target.

Target price is $27.00 Current Price is $22.59 Difference: $4.41
If JHX meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $25.11, suggesting upside of 11.1% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY19:

Forecast for FY20:

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

Market Sentiment: 0.6

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

Morgans rates LVH as Add (1) -

Morgans reduces forecasts, valuation and target after a poor June quarter, in which no major client accounts were added. The broker remains positive on the prospects.

Should the company be successful in implementing its strategy, the rewards could be substantial and Morgans maintains an Add rating. Target is reduced to $0.92 from $1.14.

Target price is $0.92 Current Price is $0.48 Difference: $0.44
If LVH meets the Morgans target it will return approximately 92% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Macquarie rates MIN as No Rating (-1) -

Construction of Mineral Resources Wodgina plant remains on track. Indicated capital costs of $610m compare to the broker's initial $430m assumption. Forecast earnings are nonetheless in line.

The broker is currently restricted from making a recommendation.

Current Price is $16.97. Target price not assessed.

Current consensus price target is $18.83, suggesting upside of 11.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Macquarie rates MMM as Initiation of coverage with Outperform (1) -

The broker initiates coverage of Marley Spoon, a global "digital meal kit delivery company", with an Outperform rating. The company does not deliver digital meal kits, but real food via online ordering. Marley Spoon hopes to disrupt an online food market enjoying increasing volumes.

The company's model is superior to peers, the broker believes, despite a scale disadvantage from only being fairly new to the scene. Strong growth is expected, with free cash flow a priority. Target $1.74.

Target price is $1.74 Current Price is $1.28 Difference: $0.46
If MMM meets the Macquarie target it will return approximately 36% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Morgan Stanley rates NHF as Upgrade to Equal-weight from Underweight (3) -

Morgan Stanley has used a sector preview to upgrade to Equal-weight from underweight, with reference to the fact the shares have fallen -17% year-to-date. Estimates have risen. Price target gained 20c to $5.30.

Target price is $5.30 Current Price is $5.51 Difference: minus $0.21 (current price is over target).
If NHF meets the Morgan Stanley target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.87, suggesting upside of 6.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Morgans rates NSR as Hold (3) -

The company has announced a further $33m in acquisitions, bringing total acquisitions for FY18 to $136m. Morgans expects upside risks relating to higher growth in yield and scale benefits.

The FY18 result is due on August 22. The broker maintains a Hold rating and raises the target to $1.61 from $1.60.

Target price is $1.61 Current Price is $1.69 Difference: minus $0.08 (current price is over target).
If NSR meets the Morgans target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.51, suggesting downside of -10.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

Morgans rates OZL as Add (1) -

Morgans refines its modelling to include lower medium-term costs and the expanded capital base. The broker suggests the market is under-appreciating the valuation uplift as Carrapateena transitions from peak expenditure in 2018-19 and generates substantial cash from 2020-21.

The broker expects the company to be strongly rewarded through its counter-cyclical growth strategy. Add rating maintained. Target rises to $10.75 from $10.05.

Target price is $10.75 Current Price is $9.76 Difference: $0.99
If OZL meets the Morgans target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $10.57, suggesting upside of 8.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Ord Minnett rates RWC as Accumulate (2) -

The company has acquired British engineering business John Guest, providing significant manufacturing and distribution capabilities in Europe. Ord Minnett upgrades FY18 operating earnings estimates to $158m to include $3m from John Guest. The broker factors in $4m of synergies in FY19, net of $10m in costs.

Following a period of research restrictions the broker moves to an Accumulate rating with a $6.40 target. Ord Minnett envisages potential upside to growth estimates if the company can continue to expand its distribution base.

Target price is $6.40 Current Price is $6.13 Difference: $0.27
If RWC meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $5.60, suggesting downside of -8.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

UBS rates SDA as Downgrade to Neutral from Buy (3) -

UBS believe the stock is benefiting from potential earnings upgrades in FY19 from a rebound in energy verticals, as well as a multiple re-rating if investors obtain confidence that strong organic growth has returned.

Still, the broker concedes that, as the company has flagged, any recovery could be largely weighted to 2019. Rating is downgraded to Neutral from Buy. Target is raised to $6.00 from $5.80.

Target price is $6.00 Current Price is $5.86 Difference: $0.14
If SDA meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $6.10, suggesting upside of 4.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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

Market Sentiment: 0.3

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

Morgans rates TGP as Hold (3) -

FY18 guidance for EPS has been recently lowered to around 5c from 5.5c, mainly because of lower returns from the AJD investment and timing surrounding fees. 360 capital will report its FY18 result on August 22.

Morgans expects potential upside to earnings depending on the timing and quantum of new funds/cash deployment. Hold maintained. Target is reduced to $1.01 from $1.06.

Target price is $1.01 Current Price is $0.97 Difference: $0.04
If TGP 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:

Forecast for FY19:

Market Sentiment: 0.0

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

Credit Suisse rates TWE as Downgrade to Underperform from Neutral (5) -

The recent rally in the share price has caused Credit Suisse to downgrade to Underperform from Neutral. The broker still believes FY19 guidance of 25% growth in EBITS is achievable.

Yet the new US distribution model is unproven and the latest retail sales data shows volume down -17% in the supermarket channel that accounts for 40% of the company's US volume. The broker suggests the share price is factoring in success. A $15.65 target is maintained.

Target price is $15.65 Current Price is $18.29 Difference: minus $2.64 (current price is over target).
If TWE meets the Credit Suisse target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $17.42, suggesting downside of -4.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.1

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

Ord Minnett rates URW as Initiation of coverage with Buy (1) -

Ord Minnett incorporates its European research counterpart forecasts in its view on the Unibail Rodamco Westfield Australian-listed CDIs. The broker initiates coverage with a Buy rating and $19 target.

The stock is trading on a PE multiple of 14.3x FY18 estimates and a 6.3% dividend yield. It is trading on an implied cap rate of 4.8% versus the book at 4.4%, which is too high for a portfolio of this quality, Ord Minnett believes.

The broker considers the stock has the best retail portfolio globally. Material value creation is expected as the development pipeline is built out over the next 7-8 years.

Target price is $19.00 Current Price is $14.66 Difference: $4.34
If URW meets the Ord Minnett target it will return approximately 30% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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