Australian Broker Call

Ord Minnett rates AGL as Accumulate (2) -

Falling electricity forward prices have beaten down the company's stock price in recent weeks, Ord Minnett notes. On the medium term view, however, the broker believes the stock is attractive and Accumulate rating is maintained. The target is lowered to $24.50 from $27.00.

The main risk to the positive view, Ord Minnett suggests, is negative catalysts that drive market downgrades. The broker envisages risks around market estimates but notes the stock is already factoring in downgrades of -20%.

Target price is $24.50 Current Price is $21.68 Difference: $2.82
If AGL meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $24.46, suggesting upside of 12.8% (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

Ord Minnett rates ATL as Hold (3) -

The company will acquire Camperco, an independent motor home rental operator based in the UK and Ireland. This represents the company's first foray into the UK market, consistent with its plans to become a global RV solutions provider.

Ord Minnett incorporates the acquisition into estimates and increases FY19 earnings marginally. Hold rating maintained. Target rises to $1.71 from $1.62.

Target price is $1.71 Current Price is $1.63 Difference: $0.08
If ATL meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

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

Ord Minnett rates BRG as Buy (1) -

The share price has fallen -14% since the first half results. Ord Minnett considers this a buying opportunity, retaining a Buy rating and $15.60 target.

The broker suggests some may be concerned about the exposure to Myer ((MYR)) but would be surprised if this was more than 5% of group sales. The company expects to launch its Sage brand in Germany, Europe's largest coffee market, next month.

Target price is $15.60 Current Price is $11.34 Difference: $4.26
If BRG meets the Ord Minnett target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $13.56, suggesting upside of 19.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

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

Deutsche Bank rates CBA as Hold (3) -

In response to the news that CBA is looking to offload its 80% equity stake in Indonesian life insurer PT Commonwealth Life (PTCL), Deutsche Bank analysts point out that while this will be a marginal transaction, it makes sense and signals ongoing retreat from non-core operations.

The analysts estimate any deal to be worth circa $200m. Hold rating retained. Price target $80.50 (unchanged).

Target price is $80.50 Current Price is $72.31 Difference: $8.19
If CBA meets the Deutsche Bank target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $77.13, suggesting upside of 6.8% (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

Citi rates CWN as Buy (1) -

It has been a while since Citi analysts published an update on Crown Resorts. Today's update consists of minor adjustments to forecasts, but they have an impact on overall valuation with the price target moving to $14.50 from $13.75 prior.

Citi analysts have now incorporated asset sales and a share buyback in FY19, as well as a lower net interest burden and lower D&A. Buy rating retained.

Target price is $14.50 Current Price is $12.60 Difference: $1.9
If CWN meets the Citi target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $13.15, suggesting upside of 4.4% (ex-dividends)

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 FBU as Underperform (5) -

Debt restructure negotiations between the company and its lending syndicates are yet to reach a conclusion. The syndicates have agreed to a two month extension. There is no change to earnings guidance.

Underperform and NZ$5.30 target retained, as the broker inquires of the company just what information has been made available to the lenders for due diligence purposes.

Current Price is $5.58. Target price not assessed.

Current consensus price target is N/A

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: 0.3

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

Ord Minnett rates IFN as Upgrade to Buy from Hold (1) -

Ord Minnett has had a negative outlook on the company's three traditional revenue streams. While situation has not changed that much the broker notes the stock has de-rated such that it would be now at least 10% cheaper to buy Infigen than to build new wind farms.

As the valuation looks significantly more interesting Ord Minnett upgrades to Buy from Hold. Target falls to $0.71 from $0.73.

Target price is $0.71 Current Price is $0.60 Difference: $0.11
If IFN meets the Ord Minnett target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $0.63, suggesting upside of 5.0% (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

Morgan Stanley rates KMD as Equal-weight (3) -

First half results were strong and Morgan Stanley likes the renewed focus on growth, although contends it is too early to assume a material change in momentum at the group level.

Acquisition of Oboz in the US marks a shift in strategy to diversify exposure, although the broker believes a high multiple was paid and the business is unlikely to assist in expanding the Kathmandu brand offshore.

The broker retains an Equal-weight rating. Target is raised to $2.35 from $2.15. Industry view is In-Line.

Target price is $2.35 Current Price is $2.29 Difference: $0.06
If KMD meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $2.57, suggesting upside of 12.0% (ex-dividends)

The company's fiscal year ends in July.

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: 0.5

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

Deutsche Bank rates MYO as Buy (1) -

The ACCC has raised concern about MYOB intending to purchase Reckon's ((RKN)) Accountants Group, predominantly centred around the prediction the transaction is likely to substantially lessen competition in the supply of practice software to medium-to-large accounting firms.

Deutsche Bank now believes it is unlikely the regulator will approve the deal. As the deal had not yet been incorporated in forecasts, no changes need to be made. Buy. Target $4.40.

Target price is $4.40 Current Price is $3.05 Difference: $1.35
If MYO meets the Deutsche Bank target it will return approximately 44% (excluding dividends, fees and charges).

Current consensus price target is $3.96, suggesting upside of 30.6% (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

UBS rates MYO as Neutral (3) -

While neutral from a valuation standpoint, UBS believes the acquisition of Reckon's ((RKN)) accountancy operations, if it proceeds, will provide new capabilities and reinforce MYOB's market position.

If the acquisition does not proceed, and the ACCC's preliminary view is that it would lessen competition in the supply of practice software, there are risks MYOB would need to invest more in its product capabilities instead of acquiring the business.

Neutral rating and $3.40 target maintained.

Target price is $3.40 Current Price is $3.05 Difference: $0.35
If MYO meets the UBS target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $3.96, suggesting upside of 30.6% (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

Citi rates NEC as Sell (5) -

Citi analysts had remained quiet during the February reporting season, but winning the rights to broadcast Australian tennis from rival Seven West Media ((SWM)) for the 2020-2024 seasons has awakened the analysts' attention.

Total cost is $300m over the five years, an estimated 50% increase from what Seven West Media is currently paying. Citi estimates the agreement will translate into annual losses to the tune of -$20-$30m; a lot better than the -$50m losses incurred from broadcasting cricket, note the analysts.

The analysts suggest Nine might not want to hold on to the cricket rights. Target price $1.70. Rating remains Sell.

Target price is $1.70 Current Price is $2.27 Difference: minus $0.57 (current price is over target).
If NEC meets the Citi target it will return approximately minus 25% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.89, suggesting downside of -15.6% (ex-dividends)

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

Deutsche Bank rates NEC as Buy (1) -

Deutsche Bank have been taken by surprise by Nine Entertainment securing the exclusive live rights for all premium tennis in Australia for the five seasons 2020-2024. Annual cost for the privilege is $60m. Deutsche Bank thinks Seven West Media ((SWM)) is currently paying $35m until 2019.

While it is unlikely Nine will recoup the full annual cost, the analysts do believe there is opportunity to on-sell, for example to Pay TV. The analysts still expect Nine to pick up some of the cricket rights.

It is the analysts' view Seven West Media has now been drummed in a corner, with Nine still bidding for cricket and competitor Ten Network ((TEN)) better funded. No changes made at this stage. Buy. Price target $1.90.

Target price is $1.90 Current Price is $2.27 Difference: minus $0.37 (current price is over target).
If NEC meets the Deutsche Bank target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.89, suggesting downside of -15.6% (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

UBS rates NEC as Neutral (3) -

The company has won the exclusive live rights to the tennis for the 2020-24 seasons. Nine Entertainment is paying $60m in cash costs per annum. UBS believes there is potential for the company to monetise the pay-TV component.

The broker now questions whether the company will spend another $100m or more to continue with the same cricket broadcasts it has today. This, in turn, suggests another FTA TV network or consortium may wrest cricket rights from Nine.

Neutral rating and $1.90 target.

Target price is $1.90 Current Price is $2.27 Difference: minus $0.37 (current price is over target).
If NEC meets the UBS target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.89, suggesting downside of -15.6% (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

Morgans rates SEA as Initiation of coverage with Add (1) -

The company is raising US$260m in equity via a two-tranche placement to fund the acquisition of 21,900 net acres in the Eagle Ford play and to strengthen its balance sheet.

Morgans considers the stock has an attractive risk/reward balance and the shale producer has the opportunity to emerge as one of Australia's largest oil producers if it can execute on its development plans.

The broker initiates coverage with an Add rating and $0.21 target.

Target price is $0.21 Current Price is $0.06 Difference: $0.15
If SEA meets the Morgans target it will return approximately 250% (excluding dividends, fees and charges).

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

Citi rates SEH as Buy (1) -

Chinese partner CNOOC has decided to withhold cash and keep it inside the JV instead of paying some to Sino Gas & Energy Holdings. Citi analysts remind investors the last time something similar happened the share price tanked to 3c.

This time, however, there is no dispute and it appears cost allocation of past capex is standard and procedural, and no genuine disasters should be on the agenda. At least, that's the suggestion made by Citi analysts.

Citi analysts suggest cash payments should resume shortly and even if the ODP project were to be delayed by twelve months, this would still not break the fundamental investment case, in their eyes. Buy/High Risk rating retained. Target price drops to 27c from 31c.

Citi's unrisked valuation sits at 50c for the shares.

Target price is $0.27 Current Price is $0.16 Difference: $0.11
If SEH meets the Citi target it will return approximately 69% (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

Macquarie rates SEH as Outperform (1) -

The company reported a greater loss then the broker expected due to higher costs in China. The broker nevertheless sees this as a minor hiccup in the progression towards full development.

As the company is set to play a critical role in supplying gas to China into the future, negotiations are taking a while, the broker notes, as one might expect before a 20-year deal is agreed upon. The broker sees substantial upside through extended terms. Outperform and 20c target retained.

Target price is $0.20 Current Price is $0.16 Difference: $0.04
If SEH meets the Macquarie target it will return approximately 25% (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

Citi rates SGR as Buy (1) -

Citi analysts emphasise they retain a favourable view towards Star Entertainment Group and strategic initiatives undertaken in conjunction with partners Chow Tai Fook and Far East Consortium.

Incorporating the recent trading update, as well as dilution from share placement and offset from lower net interest, leads to lowered forecasts. This reduces the price target to $6.60 from $6.75. Buy rating retained.

Target price is $6.60 Current Price is $5.28 Difference: $1.32
If SGR meets the Citi target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $6.18, suggesting upside of 17.1% (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

Deutsche Bank rates SGR as Buy (1) -

Valuation has reduced -2% to $6.30 at Deutsche Bank, with the Buy rating maintained. The analysts view the alliances along with a 9.98% equity placement to Chow Tai Fook and Far East Consortium a longer term positive, albeit with a short term drag on earnings.

Deutsche Bank believes the deals will enable Star Entertainment to "accelerate, expand and de-risk development opportunities". The company's trading update is seen favourably as well.

Target price is $6.30 Current Price is $5.28 Difference: $1.02
If SGR meets the Deutsche Bank target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $6.18, suggesting upside of 17.1% (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

Morgan Stanley rates SGR as Overweight (1) -

Morgan Stanley considers the equity investment, through a 10% placement, by Far East and Chow Tai Fook as a positive step, which will strategically align all parties over the longer term.

Star Entertainment can also accelerate growth through new projects. The broker believes investors should look through the one-time dilution as the relationship should deliver greater value over the longer term.

Overweight and $6.00 target retained. Industry view: Cautious.

Target price is $6.00 Current Price is $5.28 Difference: $0.72
If SGR meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $6.18, suggesting upside of 17.1% (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

Morgans rates SGR as Add (1) -

The company has expanded its strategic partnership with Chow Tai Fook and Far East, resulting in a $490m placement to these parties. Additionally, a marketing alliance has been established to drive incremental tourism to Star Entertainment's properties.

Morgans maintains an Add rating and reduces the target to $6.21 from $6.26.

Target price is $6.21 Current Price is $5.28 Difference: $0.93
If SGR meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $6.18, suggesting upside of 17.1% (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

Ord Minnett rates SGR as Buy (1) -

The company has expanded its alliance with Chow Tai Fook and Far East, which have taken a 10% stake. The company has upgraded its dividend policy, targeting a pay-out range of 70-90% of normalised profit, up from 50% of statutory profit.

Ord Minnett believes Star Entertainment is delivering improvements to its domestic offering by reinvesting in the customer and driving tourism through product and loyalty. Hotel openings and improved room rates should assist the main gaming revenue.

A Buy rating is maintained. Target is $6.20.

Target price is $6.20 Current Price is $5.28 Difference: $0.92
If SGR meets the Ord Minnett target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $6.18, suggesting upside of 17.1% (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

UBS rates SGR as Buy (1) -

Chow Tai Fook and Far East have taken a 10% placement, intending to increase aggregate shareholding over time, capped at 19.9%. UBS believes the announcement provides certainty to the company's funding structure and extends the benefits of the strategic alliance.

While the equity raising may be dilutive, UBS believes further benefits from the marketing alliance and upside from new projects will drive accretion over the medium term.

Buy rating maintained. Target is $6.20.

Target price is $6.20 Current Price is $5.28 Difference: $0.92
If SGR meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $6.18, suggesting upside of 17.1% (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

UBS rates WHC as Buy (1) -

The company has announced the purchase of Rio Tinto's ((RIO)) 75% stake in the Winchester South coal project, Queensland. The company believes an open cut mine with a strip ratio of 5:1 and mine life of 20-30 years could be developed.

Given exploration and the studies required for Winchester, UBS estimates the earliest timeframe for first production is 4-5 years. Apart from the value additions there are diversification benefits in the areas of product and geography, as Whitehaven Coal does not currently produce hard coking coal from its NSW mines.

By rating and $5.50 target maintained.

Target price is $5.50 Current Price is $4.43 Difference: $1.07
If WHC meets the UBS target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $4.66, suggesting upside of 5.1% (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