Australian Broker Call
March 16, 2017
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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: 09:37 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.
For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE
Today's Upgrades and Downgrades
| CSL - | CSL | Downgrade to Neutral from Buy | UBS |
| STO - | SANTOS | Upgrade to Neutral from Underperform | Credit Suisse |
UBS rates CSL as Downgrade to Neutral from Buy (3) -
CSL is benefiting from plasma supply bottlenecks elsewhere, plus it is in a position to increase its own supply, thus maximising benefits. Did anyone mention Steven Bradbury?
UBS analysts decided to touch base with the industry at a major conference, to get a grip on how long/how much this story has to play out further. Their fresh conclusion: these structurally positive industry conditions support CSL's market volume expansion well into the medium term.
Price target lifted to $132.15 from $122 as future years estimates increase. Alas, recent price gains have also triggered a downgrade to Neutral from Buy.
Target price is $132.15 Current Price is $124.58 Difference: $7.57
If CSL meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).
Current consensus price target is $125.84, suggesting upside of 1.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
UBS forecasts a full year FY17 dividend of 176.74 cents and EPS of 419.93 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 398.2, implying annual growth of N/A. Current consensus DPS estimate is 180.5, implying a prospective dividend yield of 1.4%. Current consensus EPS estimate suggests the PER is 31.3. |
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 192.69 cents and EPS of 467.77 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 467.9, implying annual growth of 17.5%. Current consensus DPS estimate is 208.9, implying a prospective dividend yield of 1.7%. Current consensus EPS estimate suggests the PER is 26.6. |
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 - Cessation of coverage
Forecast for FY16:
Morgans forecasts a full year FY16 dividend of 0.00 cents and EPS of 3.00 cents. |
Forecast for FY17:
Morgans forecasts a full year FY17 dividend of 0.00 cents and EPS of 5.20 cents. |
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates GMG as Outperform (1) -
Should Amazon move into the Australian market, as has been widely speculated, Credit Suisse observes the potential benefits for Goodman Group are clear.
Besides being the best positioned to roll out the distribution centre requirements, the company could also benefit from any resulting supply chain re-configuration by existing retailers, that are adapting to meet the new threat.
Although expecting development margins may ease back over the next few years, the broker envisages little risk of a demand cycle taking the top off volumes. Outperform retained. Target rises to $7.92 from $7.37.
Target price is $7.92 Current Price is $7.51 Difference: $0.41
If GMG meets the Credit Suisse target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $7.81, suggesting upside of 4.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Credit Suisse forecasts a full year FY17 dividend of 26.00 cents and EPS of 44.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 44.9, implying annual growth of -37.6%. Current consensus DPS estimate is 25.9, implying a prospective dividend yield of 3.4%. Current consensus EPS estimate suggests the PER is 16.7. |
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 28.00 cents and EPS of 47.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 45.9, implying annual growth of 2.2%. Current consensus DPS estimate is 27.2, implying a prospective dividend yield of 3.6%. Current consensus EPS estimate suggests the PER is 16.4. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates KAR as Outperform (1) -
The company has reported an interim net loss after tax of -$8.3m, greater than Macquarie expected. This was the result of a higher-than-expected exploration and evaluation write-off.
The delays in Brazil continue and, while disappointing, the broker notes value for the project is not attributed in the core valuation, and thus any encouraging update regarding court proceedings will have a positive impact.
Outperform and $2.40 target retained.
Target price is $2.40 Current Price is $1.63 Difference: $0.775
If KAR meets the Macquarie target it will return approximately 48% (excluding dividends, fees and charges).
Current consensus price target is $2.01, suggesting upside of 23.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 0.00 cents and EPS of minus 8.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is -13.0, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is N/A. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 0.00 cents and EPS of minus 16.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is -10.2, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is N/A. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates SEH as Outperform (1) -
2016 results revealed an after-tax loss of -US$7.8m, broadly in line with expectations. The company will move towards full-field development in 2017.
Despite a disappointing history of meeting guidance, the broker expects the company to achieve its 2017 gross production target from its Ordos Basin acreage. The main concern centres on pricing and production throughout the northern summer's lower gas demand.
Outperform and $0.20 target retained.
Target price is $0.20 Current Price is $0.10 Difference: $0.103
If SEH meets the Macquarie target it will return approximately 106% (excluding dividends, fees and charges).
The company's fiscal year ends in December.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 0.00 cents and EPS of 0.70 cents. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 0.00 cents and EPS of 2.00 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates STO as Upgrade to Neutral from Underperform (3) -
Credit Suisse suggests the risks around the share price might be more balanced now and upgrades to Neutral from Underperform. The broker acknowledges it may be too early on the call, if oil prices continue to slide.
The broker awaits resolutions on the east coast gas market, as the company is clearly at the epicentre. Nevertheless, Credit Suisse continues to wonder where GLNG sits in the debate, as the argument is being made that new gas is expensive to bring to the market.
Credit Suisse continues to have concerns regarding the long-term structural challenges for the company but notes the stock could move both ways, depending largely on the trajectory of the oil price. Target is $3.80.
Target price is $3.80 Current Price is $3.55 Difference: $0.25
If STO meets the Credit Suisse target it will return approximately 7% (excluding dividends, fees and charges).
Current consensus price target is $4.63, suggesting upside of 30.4% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Credit Suisse forecasts a full year FY17 dividend of 0.00 cents and EPS of 23.47 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 18.8, implying annual growth of N/A. Current consensus DPS estimate is 3.8, implying a prospective dividend yield of 1.1%. Current consensus EPS estimate suggests the PER is 18.9. |
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 13.17 cents and EPS of 32.91 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 24.9, implying annual growth of 32.4%. Current consensus DPS estimate is 9.3, implying a prospective dividend yield of 2.6%. Current consensus EPS estimate suggests the PER is 14.3. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Citi rates SYD as Buy (1) -
Citi research suggests the market has factored in too great a discount for the loss of the monopoly for Sydney Airport. On the analysts' calculations, downside from participating in the planned new airport could be as high as 87c for Sydney Airport. Buy.
Target price is $7.14 Current Price is $6.16 Difference: $0.98
If SYD meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).
Current consensus price target is $6.65, suggesting upside of 7.9% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Citi forecasts a full year FY17 dividend of 34.00 cents and EPS of 16.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 15.6, implying annual growth of N/A. Current consensus DPS estimate is 33.8, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 39.5. |
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 36.00 cents and EPS of 17.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 17.6, implying annual growth of 12.8%. Current consensus DPS estimate is 36.1, implying a prospective dividend yield of 5.9%. Current consensus EPS estimate suggests the PER is 35.0. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates WES as Outperform (1) -
Macquarie revises expectations for the UK and Ireland versions of Bunnings, after attending site visits of the Homebase and the first UK store.
The 255-store Homebase footprint provides crucial scale for Bunnings and the ability to leveraged improvements, in the broker's view, yet the upside may be constrained by the historical reputation of Homebase for poor value and availability.
The broker suspects it is likely to be easier with a new brand rather than re-building an old one and conversion to Bunnings is now a more likely prospect
Macquarie maintains an Outperform rating. Target is raised to $45.50 from $44.70.
Target price is $45.50 Current Price is $43.88 Difference: $1.62
If WES meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).
Current consensus price target is $42.22, suggesting downside of -3.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 236.70 cents and EPS of 274.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 263.9, implying annual growth of 629.0%. Current consensus DPS estimate is 220.6, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 16.6. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 254.50 cents and EPS of 294.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 266.7, implying annual growth of 1.1%. Current consensus DPS estimate is 223.4, implying a prospective dividend yield of 5.1%. Current consensus EPS estimate suggests the PER is 16.5. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Summaries
| CSL - | CSL | Downgrade to Neutral from Buy - UBS | Overnight Price $124.58 |
| EGO - | EMPIRE OIL & GAS | Cessation of coverage - Morgans | Overnight Price $0.23 |
| GMG - | GOODMAN GRP | Outperform - Credit Suisse | Overnight Price $7.51 |
| KAR - | KAROON GAS | Outperform - Macquarie | Overnight Price $1.63 |
| SEH - | SINO GAS & ENERGY | Outperform - Macquarie | Overnight Price $0.10 |
| STO - | SANTOS | Upgrade to Neutral from Underperform - Credit Suisse | Overnight Price $3.55 |
| SYD - | SYDNEY AIRPORT | Buy - Citi | Overnight Price $6.16 |
| WES - | WESFARMERS | Outperform - Macquarie | Overnight Price $43.88 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 5 |
| 3. Hold | 2 |
Thursday 16 March 2017
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