Australian Broker Call
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September 27, 2019
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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
| REA - | REA GROUP | Downgrade to Lighten from Hold | Ord Minnett |
Overnight Price: $2.55
Ord Minnett rates BPT as Hold (3) -
The company has indicated the development of the Otway Basin assets remains a key part of its five-year outlook. Plans to bring production at the gas plant up to nameplate have been outlined and $600m is to be invested in the Otway assets.
The plant can meet 15% of Victorian peak winter demand when running at nameplate and 25% of Victorian annual gas demand if maximum utilisation is maintained over a full year. Hold rating and $2.55 target maintained.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $2.55 Current Price is $2.55 Difference: $0
If BPT meets the Ord Minnett target it will return approximately 0% (excluding dividends, fees and charges).
Current consensus price target is $2.28, suggesting downside of -10.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Ord Minnett forecasts a full year FY20 dividend of 4.00 cents and EPS of 26.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 26.6, implying annual growth of 4.9%. Current consensus DPS estimate is 3.3, implying a prospective dividend yield of 1.3%. Current consensus EPS estimate suggests the PER is 9.6. |
Forecast for FY21:
Ord Minnett forecasts a full year FY21 EPS of 29.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 27.7, implying annual growth of 4.1%. Current consensus DPS estimate is 5.6, implying a prospective dividend yield of 2.2%. Current consensus EPS estimate suggests the PER is 9.2. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $0.17
Morgans rates CTP as Add (1) -
FY19 results were in line with estimates. Morgans notes a marked uptick in earnings strength, with the EBITDAX margin rising to 50% from 32%.
Progress towards development of Project Range remains in focus, with a pilot program planned for the next six months. The broker assesses this is the most obvious source of valuation upside risk.
Morgans is also keen on the early results at Dukas-1. Add rating maintained. Target is raised to $0.25 from $0.24.
Target price is $0.25 Current Price is $0.17 Difference: $0.08
If CTP meets the Morgans target it will return approximately 47% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY20:
Morgans forecasts a full year FY20 dividend of 0.00 cents and EPS of 1.70 cents. |
Forecast for FY21:
Morgans forecasts a full year FY21 dividend of 0.00 cents and EPS of 2.40 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $3.20
Credit Suisse rates FSF as Neutral (3) -
Credit Suisse downgrades earnings forecasts, believing the year ahead will remain tough. The company has a long road ahead, given the value destruction that occurred through a series of poor investments, the broker observes.
While the intention to remediate a lack of transparency is welcome, Credit Suisse lacks the basis to make a conviction call. Neutral rating maintained. Target is reduced to NZ$3.85 from NZ$4.39.
Current Price is $3.20. Target price not assessed.
Current consensus price target is N/A
The company's fiscal year ends in July.
Forecast for FY20:
Credit Suisse forecasts a full year FY20 dividend of 12.29 cents and EPS of 25.44 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 23.1, implying annual growth of N/A. Current consensus DPS estimate is 10.0, implying a prospective dividend yield of 3.1%. Current consensus EPS estimate suggests the PER is 13.9. |
Forecast for FY21:
Credit Suisse forecasts a full year FY21 dividend of 16.07 cents and EPS of 32.15 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 31.4, implying annual growth of 35.9%. Current consensus DPS estimate is 15.7, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 10.2. |
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
Macquarie rates FSF as Underperform (5) -
FY20 guidance at the mid point is below expectations, Macquarie observes. A new dividend policy was provided with the FY19 results with a pay-out ratio of 40-60% of reported net profit, excluding abnormal gains.
While the pay-out is more conservative, Macquarie assesses it is somewhat tax inefficient given the deductibility of distributions paid to farmers.
Long-term targets are considered broadly consistent with an expected recovery in market earnings but Fonterra will need to prove itself through the new strategy before the broker regains confidence in the investment case.
Target price falls to NZ$3.30 from NZ$3.45. Underperform rating retained.
Current Price is $3.20. Target price not assessed.
Current consensus price target is N/A
The company's fiscal year ends in July.
Forecast for FY20:
Macquarie forecasts a full year FY20 dividend of 9.46 cents and EPS of 23.54 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 23.1, implying annual growth of N/A. Current consensus DPS estimate is 10.0, implying a prospective dividend yield of 3.1%. Current consensus EPS estimate suggests the PER is 13.9. |
Forecast for FY21:
Macquarie forecasts a full year FY21 dividend of 15.70 cents and EPS of 31.49 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 31.4, implying annual growth of 35.9%. Current consensus DPS estimate is 15.7, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 10.2. |
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
Overnight Price: $17.88
Macquarie rates LLC as Outperform (1) -
Macquarie reviews the prospectus for the company's proposed Singaporean REIT, which is expected to diversify funding options. Macquarie would expect Lendlease to vend in stakes from assets in the urban regeneration pipeline as they are developed.
The earnings implications are limited and the broker assesses further upside for Lendlease lies with a successful sale of the engineering & services division. Outperform rating and $16.41 target maintained.
Target price is $16.41 Current Price is $17.88 Difference: minus $1.47 (current price is over target).
If LLC meets the Macquarie target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $17.27, suggesting downside of -3.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Macquarie forecasts a full year FY20 dividend of 65.20 cents and EPS of 130.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 132.6, implying annual growth of 60.0%. Current consensus DPS estimate is 65.8, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 13.5. |
Forecast for FY21:
Macquarie forecasts a full year FY21 dividend of 64.50 cents and EPS of 129.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 133.1, implying annual growth of 0.4%. Current consensus DPS estimate is 68.5, implying a prospective dividend yield of 3.8%. Current consensus EPS estimate suggests the PER is 13.4. |
Market Sentiment: 0.9
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $4.46
Citi rates NUF as Buy (1) -
Citi assesses expectations are low leading into the FY19 results on September 30. The shares are down -27% in the year to date, sharply underperforming the broader market.
The broker believes attention will be on the guidance provided for FY20, where consensus estimates are forecasting a 19% rebound in operating earnings (EBITDA).
Following the incremental improvement in the balance sheet after the placement to Sumitomo, and with Omega-3 commercialisation on track, Citi retains a Buy rating. Target is $6.
Target price is $6.00 Current Price is $4.46 Difference: $1.54
If NUF meets the Citi target it will return approximately 35% (excluding dividends, fees and charges).
Current consensus price target is $6.08, suggesting upside of 36.4% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY19:
Citi forecasts a full year FY19 dividend of 0.00 cents and EPS of 20.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 23.4, implying annual growth of -17.0%. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 19.1. |
Forecast for FY20:
Citi forecasts a full year FY20 dividend of 11.00 cents and EPS of 36.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 36.5, implying annual growth of 56.0%. Current consensus DPS estimate is 8.4, implying a prospective dividend yield of 1.9%. Current consensus EPS estimate suggests the PER is 12.2. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $108.11
Ord Minnett rates REA as Downgrade to Lighten from Hold (4) -
Ord Minnett has checked depth penetration data, finding overall Premiere advertising penetration has increased to 20.0%, up from 19.4% in late August. Total depth penetration was up 44.1% for REA Group.
The broker downgrades to Lighten from Hold on valuation, with the stock trading well above the $90 target.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $90.00 Current Price is $108.11 Difference: minus $18.11 (current price is over target).
If REA meets the Ord Minnett target it will return approximately minus 17% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $97.43, suggesting downside of -9.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Ord Minnett forecasts a full year FY20 EPS of 271.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 269.3, implying annual growth of 237.9%. Current consensus DPS estimate is 131.7, implying a prospective dividend yield of 1.2%. Current consensus EPS estimate suggests the PER is 40.1. |
Forecast for FY21:
Ord Minnett forecasts a full year FY21 EPS of 322.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 307.2, implying annual growth of 14.1%. Current consensus DPS estimate is 154.7, implying a prospective dividend yield of 1.4%. Current consensus EPS estimate suggests the PER is 35.2. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
TWE TREASURY WINE ESTATES LIMITED
Food, Beverages & Tobacco
More Research Tools In Stock Analysis - click HERE
Overnight Price: $18.35
Morgans rates TWE as Add (1) -
Morgans assesses the investor briefing showcased the quality of management as well as the world-class viticultural assets. Vintages 2016-2019 are expected to underpin strong earnings growth out to FY22.
FY24 will benefit from the expansion of luxury wine making infrastructure in South Australia. Morgans maintains an Add rating and raises the target to $20.60 from $19.19.
The broker observes the company continues to invest in the business while still delivering solid double-digit earnings growth and outperforming peers on most metrics.
Target price is $20.60 Current Price is $18.35 Difference: $2.25
If TWE meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).
Current consensus price target is $19.00, suggesting upside of 3.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Morgans forecasts a full year FY20 dividend of 44.00 cents and EPS of 74.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 73.1, implying annual growth of 25.2%. Current consensus DPS estimate is 46.7, implying a prospective dividend yield of 2.5%. Current consensus EPS estimate suggests the PER is 25.1. |
Forecast for FY21:
Morgans forecasts a full year FY21 dividend of 55.00 cents and EPS of 89.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 86.9, implying annual growth of 18.9%. Current consensus DPS estimate is 56.0, implying a prospective dividend yield of 3.1%. Current consensus EPS estimate suggests the PER is 21.1. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $2.45
Macquarie rates WGX as Initiation of coverage with Outperform (1) -
Macquarie believes the current discount to peers stems from the mixed history of the company's asset base as well as FY19 results missing guidance. However, as the business simplifies the broker believes consistent delivery will be a positive catalyst.
Macquarie initiates coverage of Westgold Resources with an Outperform rating and $3.50 target. The company operates the Fortnum, Meekatharra and Cue gold assets in the Murchison district of WA.
Target price is $3.50 Current Price is $2.45 Difference: $1.05
If WGX meets the Macquarie target it will return approximately 43% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY20:
Macquarie forecasts a full year FY20 dividend of 0.00 cents and EPS of 25.40 cents. |
Forecast for FY21:
Macquarie forecasts a full year FY21 dividend of 0.00 cents and EPS of 32.90 cents. |
Market Sentiment: 1.0
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 | |
| CTP | CENTRAL PETROLEUM | $0.17 | Morgans | 0.25 | 0.24 | 4.17% |
| TWE | TREASURY WINE ESTATES | $18.35 | Morgans | 20.60 | 19.15 | 7.57% |
Summaries
| BPT | BEACH ENERGY | Hold - Ord Minnett | Overnight Price $2.55 |
| CTP | CENTRAL PETROLEUM | Add - Morgans | Overnight Price $0.17 |
| FSF | FONTERRA | Neutral - Credit Suisse | Overnight Price $3.20 |
| Underperform - Macquarie | Overnight Price $3.20 | ||
| LLC | LENDLEASE | Outperform - Macquarie | Overnight Price $17.88 |
| NUF | NUFARM | Buy - Citi | Overnight Price $4.46 |
| REA | REA GROUP | Downgrade to Lighten from Hold - Ord Minnett | Overnight Price $108.11 |
| TWE | TREASURY WINE ESTATES | Add - Morgans | Overnight Price $18.35 |
| WGX | WESTGOLD RESOURCES | Initiation of coverage with Outperform - Macquarie | Overnight Price $2.45 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 5 |
| 3. Hold | 2 |
| 4. Reduce | 1 |
| 5. Sell | 1 |
Friday 27 September 2019
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