Australian Broker Call

Macquarie rates AJM as Underperform (5) -

First half results revealed a larger loss than Macquarie estimated. The broker considers earnings at this stage are largely irrelevant, given the sole activity is the development of the Altura project (formerly Pilgangoora).

The company expects commissioning of the crushing circuit to commence in March. Stage 2 expansion remains on track and is expected to be completed by April. Macquarie does not yet factor in an expansion case for the stock. Underperform rating and $0.25 target maintained.

Target price is $0.25 Current Price is $0.36 Difference: minus $0.11 (current price is over target).
If AJM meets the Macquarie target it will return approximately minus 31% (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

Credit Suisse rates BHP as Neutral (3) -

The company's US onshore data room is reported to be fully open. Credit Suisse expects much interest will be expressed in the company's acreage, with bids to be received by the middle of the year.

While the primary focus is on cash sales the company has not ruled out alternative avenues to extract value from its exit of this business. Credit Suisse continues to believe this process will provide a greater opportunity to grow BHP's conventional business.

Neutral rating and $31 target maintained.

Target price is $31.00 Current Price is $28.70 Difference: $2.3
If BHP meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $32.70, suggesting upside of 13.9% (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: 0.5

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

Ord Minnett rates CMW as Hold (3) -

Redefine Properties has sold its 19.5% stake in Cromwell, at $1.05 per security, to ARA Asset Management. Ord Minnett considers this move a first step to a partnership or privatisation of the business.

The sale is likely to result in either ARA Asset Management partnering with Cromwell and leveraging its platform to pursue Australian investment activities or ARA bidding for the remaining shares in Cromwell, the most likely outcome in the broker's view.

Ord Minnett maintains a Hold rating and raises the target to $1.06 from $0.97.

Target price is $1.06 Current Price is $1.03 Difference: $0.03
If CMW meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $1.01, suggesting downside of -1.7% (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

Citi rates DMP as Sell (5) -

Australia's pizza market is likely to consolidate further if Retail Food Group ((RFG)) closes stores. Per store, Retail Food Group generates one quarter the profit that Domino's Pizza generates.

Citi believes there could be upside risk for Domino's Pizza, estimating for each 1% movement in Australian same-store sales growth its earnings are affected by 1%.

The share price has likely fallen on concerns about the second half, in Citi's view. The broker is below guidance, estimating 16% growth in net profit for the full year. Sell rating and $43.60 target maintained.

Target price is $43.60 Current Price is $43.70 Difference: minus $0.1 (current price is over target).
If DMP meets the Citi target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $48.44, suggesting upside of 10.8% (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

UBS rates JHC as Neutral (3) -

The company has downgraded FY18 guidance after deciding to follow Regis Healthcare's ((RHC)) lead and refund all capital refurbishment deductions charged to residents since 2015. UBS had envisaged a risk for the company after the Federal Court ruling.

FY18 operating earnings are expected to be -14-19% below FY17. The broker continues to like the stock on a longer-term view, supported by a significant development pipeline and the potential for margin uplift through operating efficiencies. Neutral rating maintained. Target is reduced to $1.90 from $1.95.

Target price is $1.90 Current Price is $1.87 Difference: $0.03
If JHC meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $1.95, suggesting upside of 4.0% (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

Ord Minnett rates LLC as Downgrade to Lighten from Hold (4) -

Ord Minnett notes the share price has recovered from the impact of the $200m impairment charge against the Australian construction business. Hence, the company has outperformed the A-REIT sector by nearly 16 percentage points so far in 2018.

When normalising construction earnings, the broker estimates the company's core earnings comprise around 50% of group profit and the market is valuing these at a multiple of 18x. This valuation differential is material and is expected to constrain Lend Lease's relative performance. As a result, Ord Minnett downgrades to Lighten from Hold. Target is steady at $17.

Target price is $17.00 Current Price is $17.67 Difference: minus $0.67 (current price is over target).
If LLC meets the Ord Minnett target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $18.35, suggesting upside of 3.8% (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

Ord Minnett rates NSR as Downgrade to Lighten from Hold (4) -

Ord Minnett found the recent A-REIT reporting season slightly disappointing. Headwinds are hurting retail while office growth was weaker than market conditions might suggest.

On a weighted average basis, the broker lowers sector FY18 earnings estimates by 140 basis points.

The broker cuts its recommendation for National Storage to Lighten from Hold. Target is $1.42.

Target price is $1.42 Current Price is $1.52 Difference: minus $0.1 (current price is over target).
If NSR meets the Ord Minnett target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.52, suggesting upside of 0.2% (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

Citi rates NST as Neutral (3) -

The company has acquired the South Kalgoorlie operations from Westgold Resources ((WGX)) for $80m. The purchase includes the Jubilee mill, HBJ underground mine and reserves of 3.6mt at 2.15g/t.

Citi is surprised the company used cash and scrip for the deal rather than all-cash. The milling capacity was the driver of the acquisition as it will enable a faster and more economic route for the company to reach its target for Kalgoorlie operations. Neutral rating maintained. Target rises to $6.60 from $6.30.

Target price is $6.60 Current Price is $6.72 Difference: minus $0.12 (current price is over target).
If NST meets the Citi target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.41, suggesting downside of -19.5% (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

Credit Suisse rates NST as Underperform (5) -

The company will acquire the South Kalgoorlie operations from Westgold ((WGX)) for $80m. Credit Suisse observes the transaction brings much-needed milling capacity to Northern Star immediately but would appear to diminish the average resource quality.

Underperform rating and $4.55 target maintained.

Target price is $4.55 Current Price is $6.72 Difference: minus $2.17 (current price is over target).
If NST meets the Credit Suisse target it will return approximately minus 32% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.41, suggesting downside of -19.5% (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

UBS rates NST as Neutral (3) -

The company will acquire Westgold's ((WGX)) South Kalgoorlie operations to ensure adequate milling capacity to meet its production targets. The cost is $80m, in cash and scrip, and provides the company with the Jubilee mill and 4m ozs of resources and tenements.

UBS considers the company a quality gold producer, having successfully transformed old and under-explored assets. The broker expects Northern Star to invest heavily in the South Kalgoorlie assets with the intention of lengthening mine life. Neutral rating maintained. Target is $5.68.

Target price is $5.68 Current Price is $6.72 Difference: minus $1.04 (current price is over target).
If NST meets the UBS target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.41, suggesting downside of -19.5% (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 QUB as Equal-weight (3) -

The ACCC has confirmed it will not object to the company's acquisition in December of Maritime Container Services (MCS). Morgan Stanley estimates MCS could contribute around $11m to FY19 net profit including synergies.

Target is $2.63. Equal-weight rating, Cautious industry view retained.

Target price is $2.63 Current Price is $2.37 Difference: $0.26
If QUB meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $2.72, suggesting upside of 14.6% (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

Citi rates REA as Upgrade to Buy from Neutral (1) -

Citi estimates the depth penetration rate for new listings is 63%, forecast to rise to 69% by FY20 and above 80% in the longer term. Listings growth has been strong to date but likely to be affected by the early timing of Easter in March, the broker suspects.

REA Group's pricing encourages agents to move up the product curve and Citi forecasts a 3-year CAGR of 22% for depth revenue. FY18-20 estimates are upgraded 1-3%. Rating is upgraded to Buy from Neutral. Target is raised to $90.00 from $80.20.

Target price is $90.00 Current Price is $79.36 Difference: $10.64
If REA meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $76.61, suggesting downside of -3.5% (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

Credit Suisse rates SGM as Underperform (5) -

The company has acquired the privately-owned UK-based Morley scrap recycling business. Credit Suisse believes this is consistent with the company's strategy and estimates around $12m in operating earnings (EBIT).

The broker suggests there are mixed implications for scrap prices from the US steel tariffs, although US steel prices and spreads provide head room for higher US scrap prices. Yet, the company's US export-based scrap model limits its capacity to supply US steel mills.

Underperform rating and $14.50 target maintained.

Target price is $14.50 Current Price is $15.80 Difference: minus $1.3 (current price is over target).
If SGM meets the Credit Suisse target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $16.24, suggesting upside of 2.8% (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 SGR as Outperform (1) -

Macquarie reviews forecasts for The Star Sydney, taking into account the Sovereign Resort expansion that is expected to be completed in FY20. The company will spend $220m during the next 18 months to create a new and expanded area.

The broker makes modest increases to operating earnings estimates for FY18-20. Target is raised to $6.05 from $5.75. Outperform maintained.

Target price is $6.05 Current Price is $5.45 Difference: $0.6
If SGR meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $6.22, suggesting upside of 14.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.9

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

Credit Suisse rates TWR as Upgrade to Outperform from Neutral (1) -

Suncorp ((SUN)) has sold its 19.99% stake in Tower to Bain Capital Credit. With this major overhang removed, and post a review of earnings and forecasts, Credit Suisse upgrades to Outperform from Neutral. Target is raised to $0.90 from $0.65.

Target price is $0.90 Current Price is $0.76 Difference: $0.14
If TWR meets the Credit Suisse target it will return approximately 18% (excluding dividends, fees and charges).

The company's fiscal year ends in September.

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: 1.0

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

Ord Minnett rates VVR as Upgrade to Buy from Accumulate (1) -

Ord Minnett found the recent A-REIT reporting season slightly disappointing. Headwinds are hurting retail while office growth was weaker than market conditions might suggest.

On a weighted average basis, the broker lowers sector FY18 earnings estimates by 140 basis points.

The sector has corrected in the year to date and subsequently the broker envisages value in the sector. Viva Energy's recommendation is upgraded to Buy from Accumulate. $2.30 target.

Target price is $2.30 Current Price is $2.04 Difference: $0.26
If VVR meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $2.43, suggesting upside of 19.0% (ex-dividends)

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