Australian Broker Call

Credit Suisse rates A2M as Outperform (1) -

The company has reiterated its key financials in response to numerous enquiries following negative trading updates from other participants in the Chinese infant formula market.

Credit Suisse believes it has sufficiently factored in the seasonality relating to major retail periods in China for infant formula. The broker's view on the stock is based on the successful execution of its A2-type fresh milk products.

The broker maintains an Outperform rating and NZ$2.57 target.

Current Price is $2.07. Target price not assessed.

Current consensus price target is $1.80, suggesting downside of -12.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.0

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

Morgans rates AAD as Hold (3) -

Morgans lowers forecasts substantially, following the sale of the marinas and the update on the theme parks. The broker notes, while positive for the balance sheet in the current environment, the sale of the marinas is dilutive in the short term.

With so much of the stock's valuation ascribed to Main Event, the broker awaits the first half like-for-like performance. A hold rating is retained. Target is lifted to $2.26 from $2.23.

Target price is $2.26 Current Price is $2.33 Difference: minus $0.07 (current price is over target).
If AAD meets the Morgans target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.27, suggesting downside of -1.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.1

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

Citi rates AMC as Buy (1) -

Citi analysts remain staunch supporters of owning Amcor shares. They continue to see macro headwinds holding back the shares, but they also suggest that, historically, whenever macro was weighing on the share price, this almost every time proved to be a good buying opportunity.

Changing dynamics in currencies are presently building up as a challenge with USD appreciating strongly but both euro and GBP weakening materially. Estimates have been cut in response. Target drops to $16.95 from $17.60. Buy.

Target price is $16.95 Current Price is $14.98 Difference: $1.97
If AMC meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $15.47, suggesting upside of 4.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

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

Morgan Stanley rates ANN as Downgrade to Equal-weight from Overweight (3) -

While organic growth and FX appear more positive, Morgan Stanley envisages a potential risk to estimates from a rising oil price and its potential impact on the company's raw material derivatives.

The stock is considered to be trading at fair value now and the broker downgrades to Equal-weight from Overweight. Target edges up to $24.50 from $24.45. Sector view is In-Line.

Target price is $24.50 Current Price is $24.05 Difference: $0.45
If ANN meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $22.48, suggesting downside of -6.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.0

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

Credit Suisse rates APN as Resume coverage with Outperform rating (1) -

Credit Suisse resumes coverage with an Outperform rating and $3.20 target. The broker considers the full ownership of Adshel an important strategic step.

In addition to increasing its exposure to one of the few strong growth sectors in the broader media area, full ownership enables the company to invest more in the business and increase the pace of digitisation across the network.

The broker believes the stock is undervalued compared with outdoor media peers.

Target price is $3.20 Current Price is $2.69 Difference: $0.51
If APN meets the Credit Suisse target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $3.63, suggesting upside of 35.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.7

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

Macquarie rates AWC as Neutral (3) -

The AWAC joint venture will commence shipments of bauxite from Western Australia, having signed an agreement to sell 400,000t to a third party.

Macquarie considers the growing bauxite business and emerging theme for Alumina Ltd and further sales would represent upside risk to base case estimates.

The outlook has improved on the back of the recent rally in alumina prices and the broker suspects the company could deliver a dividend yield in excess of 10% in 2017. Neutral rating and $1.70 target retained.

Target price is $1.70 Current Price is $1.82 Difference: minus $0.12 (current price is over target).
If AWC meets the Macquarie target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $1.61, suggesting downside of -11.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

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 BKW as Neutral (3) -

The sale of the first part of the Oakdale West site into the joint-venture property trust with Goodman ((GMG)) will result  in a $50m profit being recognised in FY17, which is greater than the $35m Citi had anticipated.

The broker believes the announcement underpins the company's land and development earnings in FY17 which should experience another year of growth.

Neutral retained. Target is $14.50.

Target price is $14.50 Current Price is $13.27 Difference: $1.23
If BKW meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $14.89, suggesting upside of 11.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

Deutsche Bank rates BKW as Buy (1) -

The company has sold the Oakdale West site, valued at $116m, into its industrial property trust. The transaction triggers around $50m in profit for Brickworks in FY17.

Deutsche Bank upgrades net profit estimates by 7% to $164m for FY17. The broker also reduces expectations for further land sales in FY18.

Buy rating retained. Target rises to $16.67 from $16.60.

Target price is $16.67 Current Price is $13.27 Difference: $3.4
If BKW meets the Deutsche Bank target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $14.89, suggesting upside of 11.6% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

Morgans rates BOQ as Hold (3) -

The bank will acquire Centrepoint Alliance's ((CAF)) premium funding business for $20m.

Centrepoint Alliance was using a facility from National Australia Bank ((NAB)) to fund the loans but Bank of Qld will do this itself and thereby have a lower cost of funds.

Morgans increases its cash earnings forecasts by 2.0% and 3.0% for FY17 and FY18 respectively, as a result of the acquisition and higher net interest margin forecasts stemming from the recent loan re-pricing.

Hold rating retained. Target rises to $10.80 from $10.20.

Target price is $10.80 Current Price is $12.06 Difference: minus $1.26 (current price is over target).
If BOQ meets the Morgans target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.54, suggesting downside of -4.5% (ex-dividends)

The company's fiscal year ends in August.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.1

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

Citi rates BXB as Buy (1) -

Today's update is essentially driven by FX movements of late, but Citi analysts have grabbed the opportunity to reconfirm their investment view for Brambles, which is positive.

The analysts continue to see multiple avenues for growth, but they also acknowledge a re-rating is unlikely until the new CEO makes clear what his vision for the years ahead is.

Updating for FX and lower market multiples pulls back the price target to $13.89 from $15.20. Buy rating retained.

Target price is $13.89 Current Price is $12.27 Difference: $1.62
If BXB meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $12.94, suggesting upside of 4.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

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

UBS rates CAB as Buy (1) -

The company has sold its 49% stake in CDC, Australia's largest private bus business, for $186m. Net proceeds of $183m are expected.

While the board is still evaluating the best use of the proceeds, priority will be given to reducing debt and reinvesting in growth. The board also intends to distribute some available surplus proceeds to shareholders.

UBS maintains a Buy rating and $4.00 target.

Target price is $4.00 Current Price is $3.89 Difference: $0.11
If CAB meets the UBS target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $3.61, suggesting downside of -6.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

UBS rates CLW as Initiation of coverage with Neutral (3) -

UBS initiates coverage with a Neutral rating and $4.16 target. The stock offers a 6.3% distribution yield and 4.2%, three-year compound growth.

The stock comprises 66 properties and is differentiated by having a diversified portfolio of long weighted average lease expiries.

Target price is $4.16 Current Price is $3.98 Difference: $0.18
If CLW meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $4.04, suggesting upside of 1.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.3

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

Morgan Stanley rates CTD as Overweight (1) -

The company has announced two acquisitions and reiterated organic EBITDA guidance of $85-90m. Morgan Stanley does not include the acquisitions in forecasts until completed, but expects mid-teen accretion.

The company has raised $71m in new equity to fund the acquisition of a UK agency, Redfern, and a Tasmanian agency, Andrew Jones. The broker incorporates the potential upside into its bull case.

Morgan Stanley retains an Overweight rating. Target is raised to $20.25 from $18.30. Industry view: In-Line.

Target price is $20.25 Current Price is $17.98 Difference: $2.27
If CTD meets the Morgan Stanley target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $18.92, suggesting upside of 5.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

Macquarie rates DCN as Outperform (1) -

The company has secured a $150m debt facility to part-finance construction of the Mt Morgans gold project. Macquarie expects the securing of the debt will help pave the way to completion.

Outperform retained. Target is lifted to $2.70.

Target price is $2.70 Current Price is $2.04 Difference: $0.66
If DCN meets the Macquarie target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $2.95, suggesting upside of 50.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

Citi rates ING as Initiation of coverage with Buy (1) -

Citi initiates coverage on Inghams with a Buy rating and $3.60 price target. The analysts in particular see an opportunity through cost cutting.

Citi analysts estimate the cost saving program in operation is worth $160-$200m and on the back of it, Inghams should achieve CAGR EPS growth of 16% from FY16-FY19.

Target price is $3.60 Current Price is $3.16 Difference: $0.44
If ING meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $3.65, suggesting upside of 14.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

UBS rates MQA as Neutral (3) -

UBS expects cash flow to double over the next three years under the company's current structure.

The broker envisages the stock on a 7.2% operating, free cash flow yield in 2019, based on its current market capitalisation.

A Neutral rating is maintained. Target is reduced to $5.00 from $5.70 based on an 8.5% cost of equity.

Target price is $5.00 Current Price is $4.88 Difference: $0.12
If MQA meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $5.50, suggesting upside of 13.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.7

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

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

The company is expecting net profit of $1.65-1.85m in the first half, implying on Morgans' estimates a 21%/79% skew in FY17. This is greater than the historical seasonality of 30%/70%.

The broker suspects currency headwinds to result in a reduction to earnings in FY17 but remains comfortable with a full year net profit forecast of $8.3m.

Given share price weakness the broker upgrades to Add from Hold. Target is steady at $3.15.

Target price is $3.15 Current Price is $2.36 Difference: $0.79
If PWH meets the Morgans target it will return approximately 33% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

Macquarie rates REA as Outperform (1) -

The company will sell its European assets to Oakley Capital private equity for $189.7m. Macquarie observes these assets have failed to generate the returns witnessed in Australia.

The broker argues there is limited benefit from global scale in real estate classifieds, given markets evolve independently and are more dependent on local network effects than technology.

Domestic assets have stronger longer-term prospects and the broker retains an Outperform rating and $56 target.

Target price is $56.00 Current Price is $54.65 Difference: $1.35
If REA meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $59.34, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.9

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

Morgans rates REA as Add (1) -

The company has sold its European property portals for $189.7m. Morgans observes the sale will remove the long-term option value inherent in its ability to merge the European portals with another and create synergy benefits.

Still, the broker acknowledges Europe would have needed another 3-5 years of investment to achieve an acceptable return.

Morgans retains a Add rating and raises the target to $59.37 from $58.90.

Target price is $59.37 Current Price is $54.65 Difference: $4.72
If REA meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $59.34, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.9

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

UBS rates REA as Buy (1) -

The company has sold its European assets for $190m. Loss of euro earnings will only be partly offset by interest earned at the cash rate and UBS, therefore, expects the sale to be slightly dilutive to earnings per share.

Separately, the company has announced a new strategic partnership with National Australia Bank ((NAB)). UBS expects the up-front commission rate will be lower than other mortgage brokers, given NAB is also funding development costs.

The broker factors in both developments and FY19-20 earnings per share lifts slightly. Buy rating and $56 target retained.

Target price is $56.00 Current Price is $54.65 Difference: $1.35
If REA meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $59.34, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.9

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

Citi rates SEH as Buy (1) -

The company has received a Chinese reserves approval for Sanjiaobei and Linxing West.

This is a key regulatory step in Chinese approvals and allows the company to commence its overall development plan, involving engineering and environmental approvals.

Citi believes the stock provides material upside on an unrisked basis.The broker expects the overall development plan will be signed off in late 2018. Buy/High Risk retained. Target is $0.16.

Target price is $0.16 Current Price is $0.11 Difference: $0.055
If SEH meets the Citi target it will return approximately 52% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 1.0

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

Citi rates SYD as Neutral (3) -

Management has said the current terms provided by the federal government make it challenging to invest in a western Sydney airport. The government is not providing any site preparation works or funding support.

Citi agrees the investment decision is difficult in its current form. In the event that the company is unable to negotiate a better deal with the government, the broker believes the likelihood of exercising the investment decision is low.

Buy rating retained. Target is $7.23.

Target price is $7.23 Current Price is $6.07 Difference: $1.16
If SYD meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $6.70, suggesting upside of 10.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.1

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

Credit Suisse rates SYD as Underperform (5) -

Credit Suisse believes the federal government has made Sydney Airport a highly unattractive proposition to develop and operate the western Sydney airport at Badgery's Creek. The broker expects it to decline the proposal.

The broker estimates the company would destroy $1.5bn in value by taking on the project. If it does not accept the project the government is likely to take it on or find an alternative developer/operator with a lower cost of capital.

Underperform retained. Target is lowered to $5.50 from $6.00.

Target price is $5.50 Current Price is $6.07 Difference: minus $0.57 (current price is over target).
If SYD meets the Credit Suisse target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.70, suggesting upside of 10.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.1

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

UBS rates TCH as Downgrade to Neutral from Buy (3) -

The company's business update signalled 2016 revenue is expected to be $36-38m versus UBS estimates of $42.8m. The broker downgrades pre-tax profit forecasts by 91% to $1.0m, the mid point of guidance ($0-2m).

The broker recognises the stock looks cheap but until there is further clarification regarding the drivers of the downgrade finds it hard to have a high degree of confidence in forecasts.

Rating is downgraded to Neutral from Buy and the target to $1.15 from $2.35.

Target price is $1.15 Current Price is $1.10 Difference: $0.05
If TCH meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.0

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