Australian Broker Call

Bell Potter rates A4N as Speculative Buy (1) -

Bell Potter points to the completion of the contract for the $400m debt financing with lenders, the Northern Australia Infrastructure Facility and Export Finance Australia for Alpha HPA. The terms are consistent with those announced earlier in the year.

With the funding in place and $185m cash on the balance sheet at the end of September, the broker believes the company has further de-risked and, following recent customer discussions, is well-positioned to move ahead with the first HPA process in North America.

Management has deferred the final investment decision for Phase B until 1H 2025.

The Speculative Buy rating and $2.00 target are unchanged.

Target price is $2.00 Current Price is $0.87 Difference: $1.135
If A4N meets the Bell Potter target it will return approximately 131% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 1.0

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

Macquarie rates APA as Outperform (1) -

Macquarie observes the disappointing AER draft rejection of APA Group's Basslink regulation request. The regulator pointed to the uncertainty around the benefits of converting Basslink versus the assured cost increases for consumers.

The broker notes the 15-year gas transport agreement for the Sturt pipeline is positive at around $66m and aligns with expectations, with Beetaloo becoming an East Coast LNG solution.

The target price is trimmed to $8.02 from $8.13. The Outperform rating remains unchanged.

Target price is $8.02 Current Price is $7.18 Difference: $0.84
If APA meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $7.79, suggesting upside of 11.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.2

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

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

Morgan Stanley acknowledges the energy regulator's draft decision to leave APA Group's Basslink as unregulated, which will impact estimated FY26 earnings by around $15m.

The regulator estimated additional earnings of $0.75bn over a 20-30 year period on the group's proposed regulated asset base of $752m, and the broker views a regulated earnings stream as preferable to the merchant stream, which will continue.

Morgan Stanley does not believe the final decision will differ from the draft decision.

The Equal-weight rating and $8.58 target are retained. Industry view: In-Line.

Target price is $8.58 Current Price is $7.18 Difference: $1.4
If APA meets the Morgan Stanley target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $7.79, suggesting upside of 11.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.2

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

Morgans rates APA as Hold (3) -

On the back of the regulator's draft decision on Basslink, which did not meet APA Group's desired outcome, Morgans does not see "compelling value" despite the share price weakness.

The analyst explains the strategic goal of converting Basslink, a historically difficult asset, into a regulated transmission asset was to achieve a more stable earnings stream. The regulator has, in draft form, rejected the move to a regulated asset.

Morgans believes the risk profile for the company has increased, with previously forecast earnings from Basslink of $80m now unlikely. Additionally, the loss of around 30% of its earnings in FY26 due to the expiry of the WGP haulage contracts remains a concern.

The broker highlights the need for more equity capital to fund APA Group's investment program to retain its credit ratings.

The rating is Hold, with a decline in the target price to $7.13 from $7.66.

Target price is $7.13 Current Price is $7.18 Difference: minus $0.05 (current price is over target).
If APA meets the Morgans target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.79, suggesting upside of 11.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.2

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

Shaw and Partners rates AW1 as Buy (1) -

Shaw and Partners notes American West Metals released an updated mineral resource estimate for its Storm Copper Project in Nunavut, Canada, increasing indicated resources by 117%.

The total resource is 20.6Mt at 1.11% Cu (228.5kt copper). The broker highlights the growth potential with deposits remaining open in multiple directions and the identification of near-surface targets like The Gap, Squall, and Hailstorm.

The shallow resource allows for a low-cost open-pit mining operation producing 20ktpa copper metal,  the broker states with a $75m capex estimate and a 10-year mine life from 2027.

Buy rating and 32c target maintained.

Target price is $0.32 Current Price is $0.05 Difference: $0.274
If AW1 meets the Shaw and Partners target it will return approximately 596% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 1.0

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

Citi rates BSL as Neutral (3) -

Citi continues to flag challenging conditions for steel markets into 2H25 as hot rolled coil spreads have decreased in both Asia and the US.

Increased Chinese exports have resulted in softer Asian steel prices and an increasing price discount for ASEAN product compared to US domestic product.

For BlueScope Steel, Citi lowers its earnings forecast by -10% for FY25 and sits well below consensus estimates.

Target price falls to $21 from $21.50. No change to the Neutral rating.

Target price is $21.00 Current Price is $20.15 Difference: $0.85
If BSL meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $22.85, suggesting upside of 14.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.5

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

Citi rates KAR as Buy (1) -

Karoon Energy experienced bad weather, forcing the cessation of production at Bauna on December 11 due to the failure of two chains in the vessel's mooring.

Rectification work is scheduled for the week of December 23, with a support vessel assisting in mobilising the vessel, Citi highlights.

The company has downgraded production guidance to 10.1-10.3mmboe from 10.5-10.8mmboe due to Bauna and lower production at Who Dat following a hurricane.

Citi lowers its 2024 EPS estimate by -8%. Target price slips to $2, with the Buy rating retained.

Target price is $2.00 Current Price is $1.26 Difference: $0.74
If KAR meets the Citi target it will return approximately 59% (excluding dividends, fees and charges).

Current consensus price target is $2.16, suggesting upside of 69.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.8

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

Macquarie rates KAR as Outperform (1) -

Problems at Bauna's vessel moorings have resulted in a cut in 2024 production guidance for Karoon Energy to 10.1-10.3mmboe.

Macquarie highlights two chains failed in the mooring system, resulting in a shutdown for around 12-15 days.

The analyst lowers the EPS estimate for 2024 by -7%, including a cut in the outlook for Who Dat, and by -1% for 2025 due to lower production, offset by a higher Brent oil price assumption of US$70/bbl.

The target price is lowered by -12% to $2 from $2.15. The Outperform rating remains.

Target price is $2.00 Current Price is $1.26 Difference: $0.74
If KAR meets the Macquarie target it will return approximately 59% (excluding dividends, fees and charges).

Current consensus price target is $2.16, suggesting upside of 69.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.8

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

Ord Minnett rates KAR as Buy (1) -

Karoon Energy has downgraded its 2024 production guidance following the failure of two mooring chains for the Bauna production storage vessel, leading to a shutdown in output, while a hurricane has impacted Who Dat.

Ord Minnett notes guidance has declined to 10.1-10.3m barrels of oil equivalent from 10.5-10.8m barrels for 2024.

The broker lowers EPS estimates by less than -1% for 2024 to 2026.

The target for Karoon Energy is $2.40. Buy.

Target price is $2.40 Current Price is $1.26 Difference: $1.14
If KAR meets the Ord Minnett target it will return approximately 90% (excluding dividends, fees and charges).

Current consensus price target is $2.16, suggesting upside of 69.8% (ex-dividends)

Forecast for FY24:

Forecast for FY25:

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

Market Sentiment: 0.8

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

Morgans rates MEK as Speculative Buy (1) -

Meeka Metals announced an updated mineral resource estimate for the Murchison Gold Project, increasing total resources to 1.4Moz.

The updated resource includes shallow, high-grade zones, which support the near-term potential for low-cost open-pit operations, Morgans notes.

Exploration drilling at Turnberry and nearby deposits continues to provide resource expansion opportunities, while recent metallurgical test work has confirmed strong gold recoveries exceeding 95%.

The broker observes development studies are advancing, with a definitive feasibility study expected in mid-2025.

Morgans reiterates the Speculative Buy rating and raises the target price to 23c from 18c.

Target price is $0.23 Current Price is $0.08 Difference: $0.155
If MEK meets the Morgans target it will return approximately 207% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 1.0

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

Morgan Stanley rates RDX as Initiation of coverage with Overweight (1) -

Morgan Stanley initiates coverage of Redox with an Overweight rating and a $4.50 target price.

Redox is the largest chemicals distributor in Australia and the 33rd largest globally based on 2023 revenues. It is family-owned and was established in 1965.

The analyst emphasises the chemicals distribution model is "attractive," operating in a fragmented market where distributor growth generally outpaces consumption. Redox is noted for stable margins and high cash flow conversion, Morgan Stanley states.

There is scope for M&A to drive growth given the fragmented structure of the market, and the business is asset-light. Redox, the broker reports, is known for excellent service and operational efficiency.

Overweight. Target $4.50. Industry view: In-Line.

Target price is $4.50 Current Price is $3.89 Difference: $0.61
If RDX meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $3.68, suggesting downside of -8.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 0.7

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

Bell Potter rates SNT as Speculative Buy (1) -

Bell Potter reports Syntara reported impressive interim Phase 2a data for its lead asset, SNT-5505, in myelofibrosis  including a strong clinical benefit, with 46% of patients achieving a 50% symptom improvement by week 12, increasing to 80% at week 38.

As per the broker, SNT-5505 demonstrated a favourable safety profile with no severe treatment-related adverse events and improvements in spleen size and blood parameters.

The company completed a $15m capital raise with funding now to June 2026 and remains on track for a Phase 2c/3 registrational trial. 

Speculative Buy rating retained. Target price is raised to 12c from 10.

Target price is $0.12 Current Price is $0.07 Difference: $0.051
If SNT meets the Bell Potter target it will return approximately 74% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY25:

Forecast for FY26:

Market Sentiment: 1.0

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