Australian Broker Call

Credit Suisse rates AQG as Outperform (1) -

The company has provided a maiden resource for Ardic of 379,000 ounces. This maiden resource occupies less than 25% of the exploration target.

The grade of 1.3g/t is materially higher than the historical average grade that has been mined, suggesting to Credit Suisse higher production potential for lower cost. The resource is only 6km from the existing copper oxide facilities.

Outperform and $5.30 target retained.

Target price is $5.30 Current Price is $2.21 Difference: $3.09
If AQG meets the Credit Suisse target it will return approximately 140% (excluding dividends, fees and charges).

Current consensus price target is $3.96, suggesting upside of 79.3% (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: 1.0

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

Deutsche Bank rates BEN as Downgrade to Sell from Hold (5) -

Deutsche Bank observes Bendigo & Adelaide is overweight mortgages, at 71% of its loan book. The broker is now factoring in a significant increase in impairments.

The Homesafe business is considered vulnerable, with revaluation gains set to reverse on the back of falling house prices.

Deutsche Bank downgrades to Sell from Hold. Target is reduced to $9.50 from $10.75.

Target price is $9.50 Current Price is $10.29 Difference: minus $0.79 (current price is over target).
If BEN meets the Deutsche Bank target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $10.63, suggesting upside of 3.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.5

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

Citi rates CBA as Neutral (3) -

Citi updates its model to reflect the bank's new customer remediation costs and insurance recoveries. The broker makes minor changes to FY19 forecasts with the impact of transaction and separation costs largely mitigated by a recovery in insurance.

Target is $72. Neutral rating retained.

Target price is $72.00 Current Price is $69.97 Difference: $2.03
If CBA meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $72.08, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates CBA as Underweight (5) -

Commonwealth Bank will include additional insurance recoveries and remediation costs in its first half result. However, Morgan Stanley estimates the net reduction in reported cash profit equates to only $255m, with just $115m affecting continuing cash profit.

Hence, the announcement does not materially affect earnings expectations. Underweight. Target is $64.50. Industry view: In-Line.

Target price is $64.50 Current Price is $69.97 Difference: minus $5.47 (current price is over target).
If CBA meets the Morgan Stanley target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $72.08, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in June.

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

Macquarie rates CHC as Outperform (1) -

Charter Hall has announced a reduction in its distribution pay-out policy to 70-95% of operating earnings per share from 85-95%. At the lower end, Macquarie calculates this implies a -10% decline versus FY18.

On face value this appears of concern but the broker understands the change stems from elevated earnings growth in FY20.

The broker believes the company will expand its exposure to growing property sub-sectors such as child care and reducing the pay-out ratio in FY20 will help provide balance sheet capacity.

Price target is $7.27. Outperform rating retained.

Target price is $7.27 Current Price is $7.59 Difference: minus $0.32 (current price is over target).
If CHC meets the Macquarie target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.35, suggesting downside of -3.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Credit Suisse rates OSH as Neutral (3) -

Credit Suisse believes PNG LNG may provide further outperformance, although expansion could be delayed because of tolling agreement negotiations. This may drag on the share price next year.

The broker believes Oil Search is more of a takeover target than ever before, providing downside support.

The broker maintains a Neutral rating and considers most of the upside is reflected in the price. Targets raised to $7.83 from $7.55.

Target price is $7.83 Current Price is $7.36 Difference: $0.47
If OSH meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $8.87, suggesting upside of 20.6% (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: 0.4

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

Citi rates QBE as Buy (1) -

Citi reduces estimates for 2018 and 2019 by -5% and -0.2% respectively to include QBE's update on its reinsurance renewal and efficiency program.

The broker considers disappointments in 2018 are unlikely and further share price upside is possible over the medium term if QBE can move towards a forecast mid-cycle combined operating ratio of 93.4%.

Citi maintains a Buy rating and $12.80 target.

Target price is $12.80 Current Price is $10.28 Difference: $2.52
If QBE meets the Citi target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $12.12, suggesting upside of 17.9% (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: 0.8

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

Credit Suisse rates QBE as Outperform (1) -

QBE has updated on its 2019 reinsurance, announcing a three-year operating efficiency program. Credit Suisse is encouraged by the company's decision not to provide some aspirational profitability targets, which have historically impressed the market at the time but led to disappointment in the years following. Nevertheless, this has left many questioning the path of profitability.

The broker adjusts for some timing differences and increases 2019 estimates for earnings by 2.5%, largely as a result of US$95m in restructuring costs being split over two years. Offsetting this is a -4% downgrade to 2020 earnings. Outperform maintained. Target is $13.

Target price is $13.00 Current Price is $10.28 Difference: $2.72
If QBE meets the Credit Suisse target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $12.12, suggesting upside of 17.9% (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: 0.8

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

Macquarie rates QBE as Outperform (1) -

The company has released details of the 2019 reinsurance program and 2021 cost reduction program. Macquarie assesses the trajectory of improvements has been prolonged.

A new $130m cost reduction program has been announced, spread over the next three years. The catastrophe budget is increased by $200m.

Macquarie maintains an Outperform rating and reduces the target to $12.00 from $12.40.

Target price is $12.00 Current Price is $10.28 Difference: $1.72
If QBE meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $12.12, suggesting upside of 17.9% (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: 0.8

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

Morgan Stanley rates QBE as Overweight (1) -

Morgan Stanley suspects the reaction to the company's update is overdone. Business momentum remains strong and QBE appears confident a sustainable return on equity of over 10% can be obtained.

The broker believes strong execution is being supported by improving fundamentals, although interest-rate/credit markets are contributing to greater volatility.

The broker continues to target a 2.8% yield on 2019 estimates and expects the underlying running yield will exceed 2018.

Overweight rating maintained. Target is $12.50. Industry view is In-Line.

Target price is $12.50 Current Price is $10.28 Difference: $2.22
If QBE meets the Morgan Stanley target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $12.12, suggesting upside of 17.9% (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: 0.8

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

Morgans rates QBE as Upgrade to Add from Hold (1) -

Morgans finds there are pros and cons with the new reinsurance program but benefits should increase if QBE is successful in driving down claims costs.

While the efficiency program has been well explained and scoped, Morgans notes it is lower than similar programs being undertaken by peers.

The broker lifts 2018 estimates for earnings per share by 1% but lowers 2019 by -3%, because of lower benefits from the cost reduction plan than previously expected.

Target is lowered to $11.61 from $12.28. Rating is upgraded to Add from Hold on valuation grounds.

Target price is $11.61 Current Price is $10.28 Difference: $1.33
If QBE meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $12.12, suggesting upside of 17.9% (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: 0.8

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

UBS rates QBE as Buy (1) -

UBS assesses the company's update is mostly about business as usual. The broker suspects the reinsurance renewal will ensure a slightly larger drag on 2019 versus previous expectations.

The core business appears on track, as QBE has stated it is confident in achieving an improved combined operating ratio.

UBS maintains a Buy rating and reduces the target to $11.80 from $12.20.

Target price is $11.80 Current Price is $10.28 Difference: $1.52
If QBE meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $12.12, suggesting upside of 17.9% (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: 0.8

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

UBS rates SYD as Neutral (3) -

UBS has indications of a sharp pullback in travel intentions to Australia and Sydney by Chinese residents. A further review of overall flight schedules suggests a moderation in capacity as well.

Although further capacity may be added and loads could rise, the broker now expects a more muted outlook and reduces international traffic growth to 4.8% in 2018 and 4.0% for 2019 onwards.

This downgrade to near-term assumptions reduces the target to $7.00 from $7.30 and a Neutral rating is maintained.

Target price is $7.00 Current Price is $7.03 Difference: minus $0.03 (current price is over target).
If SYD meets the UBS target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.44, suggesting upside of 5.9% (ex-dividends)

The company's fiscal year ends in December.

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