Australian Broker Call

Ord Minnett rates AGL as Accumulate (2) -

The company has announced reductions in Victorian retail electricity and gas prices ahead of the January 1, 2019 reset. The company estimates this will deliver savings of $23 per annum for households and $60 per annum for small business.

Gas prices will also be reduced by -0.9% for residential customers and -1.2% for small business. This follows earlier price reductions in South Australia, Queensland and NSW.

No guidance was provided with the announcement. Accumulate rating and $23.40 target maintained.

Target price is $23.40 Current Price is $19.08 Difference: $4.32
If AGL meets the Ord Minnett target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $20.63, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.1

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

Deutsche Bank rates ASL as Buy (1) -

While the actual first quarter result from Barminco is immaterial, as Ausdrill acquired the business after that date, Deutsche Bank considers the run rate and trajectory paramount.

Revenue increased 16%, driven by increased scope at key sites and the successful mobilisation of Mt Colin. Trading earnings (EBIT) implied a margin of 9.0%. Deutsche Bank considers this a very good outcome, with upside risk.

Buy rating maintained. Target is $2.

Target price is $2.00 Current Price is $1.40 Difference: $0.6
If ASL meets the Deutsche Bank target it will return approximately 43% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Market Sentiment: 1.0

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

UBS rates AZJ as Neutral (3) -

UBS believes Adani's decision to proceed with the Carmichael coal mine is immaterial to Aurizon. The funding structure outlined by Adani limits Aurizon's financial participation to any upgrade capital required in the existing Newlands system.

In the event Adani seeks a third-party provider for hauling the coal, UBS believes Aurizon is well positioned.

The broker maintains a Neutral rating and $4.60 target.

Target price is $4.60 Current Price is $4.29 Difference: $0.31
If AZJ meets the UBS target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $4.24, suggesting downside of -1.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.1

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

Morgans rates CAT as Add (1) -

Catapult has signed three new customer partnerships. In aggregate, Morgans suspects the new deals will bring the company closer to FY19 guidance.

The new customers will also open the way for further business in both the elite and semi-professional product lines. Add rating and $1.88 target maintained.

Target price is $1.88 Current Price is $1.00 Difference: $0.88
If CAT meets the Morgans target it will return approximately 88% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Citi rates CCL as Sell (5) -

The company has emphasised the need to simplify its Australian business and improve its brand presence in Indonesia. However, Citi believes these actions will take time and cost money. As a result, the broker expects earnings per share to decline by -5% in 2019.

Forecasts are lowered by -9% for 2019 and by -8% for 2020. Costs are rising because of the timing of hedges in PET resin and a lower Indonesian rupiah.

The company has also, effectively, ruled out a full acquisition of Lion Dairy & Drinks and Citi considers the probability of any acquisition is now much lower.

The broker believes the company's goal of achieving 5% growth in earnings per share is at least two years away. Sell rating maintained. Target is reduced to $8.15 from $8 90.

Target price is $8.15 Current Price is $8.75 Difference: minus $0.6 (current price is over target).
If CCL meets the Citi target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.66, suggesting downside of -1.0% (ex-dividends)

The company's fiscal year ends in December.

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

Deutsche Bank rates CCL as Upgrade to Hold from Sell (3) -

Deutsche Bank found several positives in the company's investor briefing. Investments are being made to reinvigorate the sales force and the group is looking to learn from the highly successful NZ operation.

Nevertheless, category headwinds are not dissipating and Deutsche Bank believes Indonesia will remain tough for the foreseeable future, albeit volumes are stabilising.

After the share price decline the broker believes the multiple is now more appropriate and upgrades to Hold from Sell. Target is $8.

Target price is $8.00 Current Price is $8.75 Difference: minus $0.75 (current price is over target).
If CCL meets the Deutsche Bank target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.66, suggesting downside of -1.0% (ex-dividends)

The company's fiscal year ends in December.

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 CCL as Equal-weight (3) -

2018 appears to have been another difficult year for the company, with Morgan Stanley noting growth is elusive. The catalyst could be a strategic shift to focus on the route to market customers.

The broker suspects the company has pushed too hard on online ordering and increasing the field force by 80% has the potential to drive growth.

To become more constructive on the stock the broker needs to witness stability in Australian earnings. Rating is Equal-weight. Target is reduced to $9.00 from $9.60. Cautious industry view.

Target price is $9.00 Current Price is $8.75 Difference: $0.25
If CCL meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $8.66, suggesting downside of -1.0% (ex-dividends)

The company's fiscal year ends in December.

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

Morgans rates CCL as Hold (3) -

Morgans believes FY19 will be another transition year for the company, with increased investment in both Australian beverages and Indonesia. The broker expects earnings to fall marginally followed by moderate growth in FY20.

The company's trading update was largely in line with expectations, except for SPC, which will now be sold. Australian beverages will be affected by the reinvestment of $40m and the implementation of the container deposit scheme in NSW, ACT and Queensland.

The company's cautious outlook highlights the structural and cyclical headwinds, in the broker's opinion, and a Hold rating is maintained. Target is reduced to $8.55 from $8.96.

The broker suspects, too, that CC Amatil is only interested in parts of the Lion Dairy & Drinks acquisition and there is no guarantee it will be successful.

Target price is $8.55 Current Price is $8.75 Difference: minus $0.2 (current price is over target).
If CCL meets the Morgans target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.66, suggesting downside of -1.0% (ex-dividends)

The company's fiscal year ends in December.

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 CCL as Upgrade to Hold from Lighten (3) -

The company has indicated 2019 will be another year of transition, with accelerated investment in Australian beverages. Ord Minnett was impressed by the plans, as the new chief of Australian beverages appears to understand the competitive advantage in the company's superior network and distribution.

Indonesia remains disappointing, the broker observes, and the company is refining its strategy, deploying a narrower category focus.

Following the decline in the share price, Ord Minnett suggests valuation support is emerging and upgrades to Hold from Lighten. Target is reduced to $8.50 from $8.75.

Target price is $8.50 Current Price is $8.75 Difference: minus $0.25 (current price is over target).
If CCL meets the Ord Minnett target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.66, suggesting downside of -1.0% (ex-dividends)

The company's fiscal year ends in December.

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 CGC as Initiation of coverage with Neutral (3) -

Costa Group is a grower and marketer of differentiated produce in Australia and Credit Suisse expects investors should benefit from the last 18 months of intense investment.

The broker considers the main risk to be output price or volume fluctuations, because of short-term supply/demand dynamics, often affected by growing conditions.

The broker initiates coverage with a Neutral rating and $7.35 target and projects strong earnings growth over the medium term.

Target price is $7.35 Current Price is $7.60 Difference: minus $0.25 (current price is over target).
If CGC meets the Credit Suisse target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $7.47, suggesting downside of -1.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.4

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

UBS rates LNK as Buy (1) -

Australia's first online property exchange, PEXA, has a significant network advantage and should be positioned to maintain a dominant share as key states mandate the adoption of electronic property settlement, UBS suggests.

As a result earnings are expected to be positive in the second half and rapidly lift by FY22. The broker believes the implications for Link Administration are that it will allow for gearing to be introduced and lift its stake to 44% from 20%.

UBS maintains a Buy rating and raises the target to $9.05 from $8.90.

Target price is $9.05 Current Price is $7.07 Difference: $1.98
If LNK meets the UBS target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $8.44, suggesting upside of 19.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Ord Minnett rates MND as Lighten (4) -

The company is experiencing good underlying growth with opportunities on the horizon. Ord Minnett notes expectations are high with consensus forecasts indicating operating earnings in FY21 to be 20% above FY18, despite a major contract rolling off.

Ord Minnett increases first half revenue forecast by 12% and expects operating earnings (EBITDA) of $55.3m, down -10%.

The broker notes inflation in capital expenditure from the miners is starting to materialise, a positive for contractors, although remains mindful of labour cost inflation.

Lighten rating and $13.02 target maintained.

Target price is $13.02 Current Price is $14.57 Difference: minus $1.55 (current price is over target).
If MND meets the Ord Minnett target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $14.46, suggesting downside of -0.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.2

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

Morgans rates NVX as Initiation of coverage with Hold (3) -

Novonix is building a battery anode business targeting the electric vehicle market. The company owns a graphite deposit in central Queensland and will manufacture synthetic graphite and then process it into battery grade anode powder through its interest in the PUREgraphite JV.

All major car brands are offering electric passenger vehicles and some are developing electric buses and trucks as well. Morgans notes the market is forecast to grow to annual vehicle sales of 11m in 2025 and 30m by 2030.

The broker's estimate of the potential value of the anode business implies the stock is significantly undervalued. Morgans initiates coverage with a Hold rating and $0.67 target.

Target price is $0.67 Current Price is $0.37 Difference: $0.3
If NVX meets the Morgans target it will return approximately 81% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Ord Minnett rates ORG as Buy (1) -

Origin Energy will maintain standing electricity prices for all non-concession customers in Victoria from January 1, as well as freeze gas prices. This means the costs associated with keeping standing rates flat will be absorbed by the company.

Ord Minnett suggests this decision is likely to be in response to continued demands from the federal energy minister for price reductions. Buy rating and $8.85 target maintained.

Target price is $8.85 Current Price is $6.90 Difference: $1.95
If ORG meets the Ord Minnett target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $9.04, suggesting upside of 31.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

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

UBS rates RIO as Buy (1) -

Rio Tinto has approved the US$2.6bn capital expenditure to develop the 43mtpa Koodaideri iron ore mine in the Pilbara.

UBS notes Rio Tinto is leading the mining technology revolution at the Pilbara operations by increasing its autonomous fleet and completing the Autohaul, its $940m rail investment.

UBS does not believe Koodaideri is a material catalyst for the stock but, that said, it is critical to the investment case in the medium term as it can enhance the company's position as the lowest-cost iron ore producer globally.

Buy rating maintained. Target is $90.

Target price is $90.00 Current Price is $74.99 Difference: $15.01
If RIO meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $88.90, suggesting upside of 18.5% (ex-dividends)

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: 0.8

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

Morgan Stanley rates TWE as Overweight (1) -

Morgan Stanley considers the slowdown in China temporary and believes the market should look through recent weakness. The broker downwardly revises earnings forecasts by -2-6% to reflect a slower Chinese market.

The broker now considers the stock cheap relative to global peers and, while the future may be bumpy, believes the market needs to reset expectations.

Overweight rating maintained. Target is reduced to $17 from $20. Industry view: Cautious.

Target price is $17.00 Current Price is $14.69 Difference: $2.31
If TWE meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $17.97, suggesting upside of 22.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.4

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