Australian Broker Call
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March 07, 2023
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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).
Last Updated: 05:00 PM
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
| WTC - | WiseTech Global | Upgrade to Neutral from Sell | Citi |
AZJ AURIZON HOLDINGS LIMITED
Transportation & Logistics
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Overnight Price: $3.29
Macquarie rates AZJ as Outperform (1) -
Aurizon Holdings' network max allowable revenue (MAR) is running ahead of expectation with actual inflation adding some $230m to the network Regulatory Asset Base compared to expectation, Macquarie notes. This translates to $19mpa of additional revenue.
Regarding FY26 and FY27, depreciation has accelerated compared to expectation which also adds to the MAR. A baseline forecast of 207mt is seen as conservative and suggests upside to the broker's forecast.
With a bias to better coal volumes creating earnings upside, Outperform retained. Target rises to $3.94 from $3.71.
Target price is $3.94 Current Price is $3.29 Difference: $0.65
If AZJ meets the Macquarie target it will return approximately 20% (excluding dividends, fees and charges).
Current consensus price target is $3.92, suggesting upside of 17.1% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 15.40 cents and EPS of 21.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 22.1, implying annual growth of -20.7%. Current consensus DPS estimate is 16.1, implying a prospective dividend yield of 4.8%. Current consensus EPS estimate suggests the PER is 15.2. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 19.60 cents and EPS of 26.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 27.3, implying annual growth of 23.5%. Current consensus DPS estimate is 20.0, implying a prospective dividend yield of 6.0%. Current consensus EPS estimate suggests the PER is 12.3. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
BVS BRAVURA SOLUTIONS LIMITED
Wealth Management & Investments
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Overnight Price: $0.85
Macquarie rates BVS as No Rating (-1) -
Bravura Solutions' first half result missed Macquarie's expectations and FY23 guidance has been downgraded, with key client delays the main driver. The company has launched an $80m equity raising.
A previously flagged Operational Change Program was announced, with some $25-30m of cost savings expected once fully implemented in FY25.
As the broker is involved in the rasising it is now on research restriction.
Current Price is $0.85. Target price not assessed.
The company's fiscal year ends in June.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 7.70 cents. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 1.40 cents and EPS of 0.60 cents. |
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $3.22
Morgan Stanley rates CIP as Equal-weight (3) -
Morgan Stanley believes it would be premature to suggest downside risk for FY23 guidance after media reports that Centuria Industrial REIT's sixth largest tenant has gone into liquidation.
While Scott's Refrigerated Logistics contributes 3% to the REIT's total income, it's said rent payments are up to date and there are protections in place, including around nine months of bank guarantees.
The Equal-weight rating and $3.55 target are retained. Industry View: In-line.
Target price is $3.55 Current Price is $3.22 Difference: $0.33
If CIP meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).
Current consensus price target is $3.42, suggesting upside of 5.1% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Morgan Stanley forecasts a full year FY23 EPS of 17.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 17.0, implying annual growth of -71.6%. Current consensus DPS estimate is 16.0, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 19.1. |
Forecast for FY24:
Morgan Stanley forecasts a full year FY24 EPS of 17.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 16.9, implying annual growth of -0.6%. Current consensus DPS estimate is 16.0, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 19.2. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $1.02
Macquarie rates CXO as Outperform (1) -
A successful drilling campaign has enabled Core Lithium to more than double the resource estimate at BP33, one of eight deposits that
contribute to the global resource at Finniss. Macquarie has extended its Finniss mine life assumption by two years.
Most of the miner’s underground resources remain open at depth and present upside risk to the broker's longer-term production assumptions.
The success of the spodumene production ramp-up over the remainder of 2023 presents a material near-term catalyst, Macquarie suggests. Outperform reined, target rises to $1.50 from $1.30.
Target price is $1.50 Current Price is $1.02 Difference: $0.48
If CXO meets the Macquarie target it will return approximately 47% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 1.80 cents. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 5.70 cents and EPS of 19.30 cents. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $1.34
Morgans rates GDF as Add (1) -
As flagged at recent interim results, Garda Property will sell its Box Hill office asset for $40.3m and is looking to divest two other industrial assets which have a combined book value of around $32m.
Management sees its industrial development pipeline as the key growth opportunity, and funds from the Box Hill sale will be used to reduce debt for redeployment into this area, explains Morgans.
The Add rating and $1.90 target are maintained.
Target price is $1.90 Current Price is $1.34 Difference: $0.565
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:
Morgans forecasts a full year FY23 dividend of 7.20 cents and EPS of 6.50 cents. |
Forecast for FY24:
Morgans forecasts a full year FY24 dividend of 7.20 cents and EPS of 6.90 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $1.25
Macquarie rates MCR as Neutral (3) -
Macquarie has lowered its enterprise value multiple from 5.0x to 4.0x to reflect a view of increased risk for Mincor Resources achieving FY23 production guidance, which results in the target falling to $1.37 from $1.50.
The broker's production ramp-up and costs assumptions are the key risks to forecasts.
Target price is $1.37 Current Price is $1.25 Difference: $0.125
If MCR meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 0.00 cents and EPS of 2.40 cents. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 0.00 cents and EPS of 19.70 cents. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $1.02
Macquarie rates NIC as Neutral (3) -
Nickel Industries has agreed on revised terms for Dawn high-pressure acid leaching project which includes higher nameplate production capacity and lower capital expenditure, Macquarie notes.
The company has also announced it is converting two out of its four lines at Angel from nickel pig iron (used for stainless steel) to higher-margin nickel matte (batteries) with conversion expected in early 2024.
The broker forecasts 76% of nickel production will be delivered in the form of NPI in 2023 and with realisation rates below 60%, awaits
an improvement before changing its view. Neutral and $1.05 target retained.
Target price is $1.05 Current Price is $1.02 Difference: $0.03
If NIC meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).
The company's fiscal year ends in December.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 2.20 cents and EPS of 7.50 cents. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 2.50 cents and EPS of 8.40 cents. |
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
Overnight Price: $28.00
Macquarie rates OZL as No Rating (-1) -
Incorporating updates to its production and cost assumptions over the medium term has resulted in mixed changes to Macquarie's earnings forecasts for OZ Minerals.
2024 is downgraded by -29%, while earnings increase by 12-23% for 2025-27. The broker's 2023 earnings estimates remain unchanged.
Macquarie is on research restrictions and cannot provide a rating or target.
Current Price is $28.00. Target price not assessed.
Current consensus price target is $27.61, suggesting downside of -1.2% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 4.00 cents and EPS of 33.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 62.2, implying annual growth of 0.3%. Current consensus DPS estimate is 12.5, implying a prospective dividend yield of 0.4%. Current consensus EPS estimate suggests the PER is 44.9. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 7.00 cents and EPS of 59.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 104.9, implying annual growth of 68.6%. Current consensus DPS estimate is 12.5, implying a prospective dividend yield of 0.4%. Current consensus EPS estimate suggests the PER is 26.6. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $15.61
Macquarie rates SGM as Underperform (5) -
Sims has announced an intention to sell its 50% stake in LMS Energy (unlisted), a landfill gas business it has owned a share in since 2001.
Valuing LMS is not easy, Macquarie notes, given a lack of clear comparables and limited disclosure, but major oil & gas players have recently been acquiring assets in this space.
Applying this capital to growing towards the group’s outlined FY25 metal volume target would be positive, Macquarie suggests, especially if Sims can do so at attractive valuations in a coming tough market.
It's the upcoming tough market that keeps the broker on Underperform, with a $13.50 target.
Target price is $13.50 Current Price is $15.61 Difference: minus $2.11 (current price is over target).
If SGM meets the Macquarie target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $14.50, suggesting downside of -10.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 25.00 cents and EPS of 52.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 69.8, implying annual growth of -77.0%. Current consensus DPS estimate is 28.4, implying a prospective dividend yield of 1.8%. Current consensus EPS estimate suggests the PER is 23.2. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 24.00 cents and EPS of 59.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 94.0, implying annual growth of 34.7%. Current consensus DPS estimate is 30.2, implying a prospective dividend yield of 1.9%. Current consensus EPS estimate suggests the PER is 17.2. |
Market Sentiment: -0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $63.00
Citi rates WTC as Upgrade to Neutral from Sell (3) -
While wary of WiseTech Global's high valuation, Citi decides to upgrade its rating to Neutral from Sell on growth potential, new business opportunities and a strong balance sheet/profitability.
In the face of declining freight volumes, the analysts admire the company's impressive growth and see new growth emerging from global customs and landside logistics.
A highlight from 1H results, according to the broker, was the global customs roll-out with Kuehne & Nagel the largest global third party logistics (3PL) company with a reputation for developing its own software.
The target rises to $64.10 from $53.65.
Target price is $64.10 Current Price is $63.00 Difference: $1.1
If WTC meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).
Current consensus price target is $69.68, suggesting upside of 10.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Citi forecasts a full year FY23 dividend of 13.20 cents and EPS of 68.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 72.4, implying annual growth of 21.3%. Current consensus DPS estimate is 13.8, implying a prospective dividend yield of 0.2%. Current consensus EPS estimate suggests the PER is 87.1. |
Forecast for FY24:
Citi forecasts a full year FY24 dividend of 18.80 cents and EPS of 98.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 91.6, implying annual growth of 26.5%. Current consensus DPS estimate is 17.6, implying a prospective dividend yield of 0.3%. Current consensus EPS estimate suggests the PER is 68.8. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Today's Price Target Changes
| Company | Last Price | Broker | New Target | Prev Target | Change | |
| ANZ | ANZ Bank | $24.50 | Morgan Stanley | 26.20 | 25.50 | 2.75% |
| AZJ | Aurizon Holdings | $3.35 | Macquarie | 3.94 | 3.71 | 6.20% |
| CIP | Centuria Industrial REIT | $3.25 | Morgan Stanley | 3.55 | 3.25 | 9.23% |
| CXO | Core Lithium | $1.00 | Macquarie | 1.50 | 1.30 | 15.38% |
| MCR | Mincor Resources | $1.27 | Macquarie | 1.37 | 1.50 | -8.67% |
| WBC | Westpac | $22.37 | Morgan Stanley | 23.70 | 24.00 | -1.25% |
| WTC | WiseTech Global | $63.03 | Citi | 64.10 | 53.65 | 19.48% |
Summaries
| AZJ | Aurizon Holdings | Outperform - Macquarie | Overnight Price $3.29 |
| BVS | Bravura Solutions | No Rating - Macquarie | Overnight Price $0.85 |
| CIP | Centuria Industrial REIT | Equal-weight - Morgan Stanley | Overnight Price $3.22 |
| CXO | Core Lithium | Outperform - Macquarie | Overnight Price $1.02 |
| GDF | Garda Property | Add - Morgans | Overnight Price $1.34 |
| MCR | Mincor Resources | Neutral - Macquarie | Overnight Price $1.25 |
| NIC | Nickel Industries | Neutral - Macquarie | Overnight Price $1.02 |
| OZL | OZ Minerals | No Rating - Macquarie | Overnight Price $28.00 |
| SGM | Sims | Underperform - Macquarie | Overnight Price $15.61 |
| WTC | WiseTech Global | Upgrade to Neutral from Sell - Citi | Overnight Price $63.00 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 3 |
| 3. Hold | 4 |
| 5. Sell | 1 |
Tuesday 07 March 2023
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