Australian Broker Call

Ord Minnett rates BLD as Hold (3) -

On reviewing the medium-term outlook for construction activity in a higher rate environment, Ord Minnett has lowered its valuation on Boral. The broker finds the stock undervalued at current levels, and feels the market is pricing in a cautious demand outlook. 

Given Boral has failed to demonstrate any real pricing power in the last decade, Ord Minnett expects pricing growth outside of input cost increases will prove a challenge longer-term, but does expect construction materials earnings margins to improve from currently depressed levels. 

The Hold rating is retained and the target price decreases to $3.60 from $4.00.

Target price is $3.60 Current Price is $3.48 Difference: $0.12
If BLD meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $3.66, suggesting upside of 2.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.2

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

Macquarie rates KMD as Neutral (3) -

KMD Brands's  first half result appears to have pleased Macquarie, the company making headway despite macro challenges, and management advises momentum has continued apace in second half trading through to March, sales jumping 31.9% in February.

The return of overseas travel and the cycling of covid distortions helped the company stage a mild sales recovery and management reiterated guidance and its overseas aspirations.

Gross margins rose in the face of freight and raw materials inflation and a sharp jump in operational expenditure.

Net debt proved a slight miss at $84.9m vs the broker's $83.7mm and ditto for inventories, but strong sales are expected to eat into stocks in the June half.

EPS forecasts are steady in FY23; but rise 4.6% in FY24.

Neutral rating retained to reflect the uncertain macro environment. Target price rises to 97c from 92c.

Target price is $0.97 Current Price is $0.95 Difference: $0.02
If KMD meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $1.01, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY23:

Forecast for FY24:

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

UBS rates KMD as Buy (1) -

Pre-guided 1H sales were in line with the UBS forecast, with strong underlying earnings (EBITDA) resulting from a material sales recovery for the Kathmandu brand and solid growth in the surf segment.

The broker also highlights a return to growth for the Oboz brand and a 580bps improvement in the company-wide margin compared to the previous corresponding period, driven by lower opex.

The analyst expects further margin improvement and notes positive 1H momentum continued into the first month of the 2H.

The Buy rating and NZ$1.50 target price are unchanged. 

Current Price is $0.95. Target price not assessed.

Current consensus price target is $1.01, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY23:

Forecast for FY24:

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

Citi rates LFS as Neutral (3) -

Citi feels the market has interpreted the cyberattack on Latitude Group optimistically, despite a -7% fall upon resumption of trading.

While the company's shares were in a trading halt, the wider market fell by -1% and around half of the -7% fall relates to going ex-dividend, explains the analyst.

The broker cautions given it is still too early to quantity the impact on volumes and costs. A lasting risk could be the requirement for further investment in IT and cyber defence.

The Neutral rating and $1.30 target are unchanged.

Target price is $1.30 Current Price is $1.12 Difference: $0.18
If LFS meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $1.23, suggesting upside of 5.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.3

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

Ord Minnett rates MGR as Buy (1) -

With residential sales contracts signed and commercial developments at or near completion, Ord Minnett considers Mirvac Group's earnings for the current fiscal year to be at less risk. 

The broker anticipates a moderation of residential earnings in 2024, as higher interest rates, lower dwelling prices and weak wage growth filter through, but expects Mirvac Group can gain market share in these conditions. 

The Buy rating and target price of $3.10 are retained.

Target price is $3.10 Current Price is $2.06 Difference: $1.04
If MGR meets the Ord Minnett target it will return approximately 50% (excluding dividends, fees and charges).

Current consensus price target is $2.49, suggesting upside of 19.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Ord Minnett rates NHC as Hold (3) -

Exceptionally high thermal coal pricing saw New Hope deliver a record first half result, despite wet weather impacts at the company's Bengalla asset that both raised unit cash costs and saw sales volumes cut by around a third. 

Ord Minnett expects a recovery in saleable volumes in the second half is possible, with the company committing to operational improvements at Bengalla. The broker considers the stock somewhat undervalued despite a recent rally. 

The Hold rating and target price of $6.30 are retained.

Target price is $6.30 Current Price is $5.60 Difference: $0.7
If NHC meets the Ord Minnett target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $5.83, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Macquarie rates NSR as Underperform (5) -

National Storage REIT has launched a $325m equity raising to pay down debt and fund strategic plans.

Macquarie says the $2.33 to $2.41 price implies a cost of equity of 4.9% which compares with the incremental cost of debt of 4.6%, but says it should turn accretive in FY24.

In the full wash, the broker considers it to be earnings neutral, while giving the balance sheet a healthy boost, and delivering an extra $450m to spend on strategic growth investments. 

EPS forecasts ease -0.2% in FY 23; -0.9% in FY24; and rise 3.5% in FY25.

Underperform rating retained to reflect the slowing cycle and rising interest rates. Target is $2.23, which compares to the last entry in the FNArena database in February of $2.15.

Target price is $2.23 Current Price is $2.51 Difference: minus $0.28 (current price is over target).
If NSR meets the Macquarie target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.24, suggesting downside of -8.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.8

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

Macquarie rates NUF as Outperform (1) -

Macquarie cuts Nufarm's EPS forecasts by -4% in FY23 and -2% in FY24 to reflect rising interest costs.

Otherwise, it appears steady as she goes with management reiterating guidance at its annual general meeting and the broker spying a solid FY23 for agchem and seeds.

Outperform rating retained. Target price falls to $7.11 from $7.75 to reflect lower industry multiples and a slight rise in net debt.

Target price is $7.11 Current Price is $5.44 Difference: $1.67
If NUF meets the Macquarie target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $6.93, suggesting upside of 26.7% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

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

Prior to 1H results due on March 27, UBS downgrades its rating for Premier Investments to Neutral from Buy on valuation after a recent share price rally.

Looking beyond the result, the broker forecasts Retail earnings (EBIT) will fall in FY23 and FY24 on a negative channel shift back to stores. Also, a more challenging environment for the consumer should result in softer demand and some trade down.

The $26 target price is unchanged.

Target price is $26.00 Current Price is $25.80 Difference: $0.2
If PMV meets the UBS target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $26.62, suggesting upside of 6.7% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Macquarie rates RDY as Outperform (1) -

Macquarie reviews ReadyTech after returning from restriction and adopts an Outperform rating and $4 target price.

EPS forecasts fall -6% in FY23; and -4% in FY24 to reflect higher net interest costs.

The broker appreciates the company's $160m revenue target and high conviction pipeline, adding that rising enterprise customer numbers vindicate the company's strategy and continued investment, showing ReadyTech is gaining market share from major rivals.

Target price is $4.00 Current Price is $3.21 Difference: $0.79
If RDY meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Macquarie rates RMS as Outperform (1) -

Ramelius Resources has announced an all-scrip off-market bid for Breaker Resources ((BRB)) for $131m (a premium of 41%) and Macquarie observes Breaker held $77m in cash at December 31.

Breaker's board has unanimously recommended acceptance in the absence of a better offer.

Under the deal, each Breaker shareholder gets one Ramelius share for every 2.82 Breaker shares held.

What's in it for Ramelius? Macquarie says Breaker's nearby Lake Roe project could give Ramelius the critical mass it needs for development.

EPS forecasts fall -3% in FY23; and -12% in FY24 and FY25 to reflect the dilution.

Outperform rating and $1.30 target price retained.

Target price is $1.30 Current Price is $1.10 Difference: $0.2
If RMS meets the Macquarie target it will return approximately 18% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Citi rates SGM as Sell (5) -

Sims will acquire Northeast, one of the largest copper recyclers in the US, which processes and sells around 60ktpa of non-ferrous
metal. While the purchase is for an undisclosed sum, Citi predicts the bill will be around US$30m.

The broker expects processing synergies via more efficient freight/transport when Northeast is combined with Sims' existing operations in the US. It's also thought the combined operations should be able to access additional end-markets.

The Sell rating and $14.30 target are unchanged.

Target price is $14.30 Current Price is $14.98 Difference: minus $0.68 (current price is over target).
If SGM meets the Citi target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $14.84, suggesting upside of 1.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: -0.4

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

UBS rates UMG as Upgrade to Buy from Neutral (1) -

Industry feedback suggests to UBS beer demand has improved while input costs such as barley prices, freight and energy have remained largely supportive.

The broker also expects FY24 earnings will be materially higher than the consensus forecast and decides to upgrade its rating for United Malt to Buy from Hold.  A lower earnings multiple relative to peers was another factor in the upgrade.

The target rises to $3.80 from $3.70.

Target price is $3.80 Current Price is $3.26 Difference: $0.54
If UMG meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $3.88, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Citi rates UNI as Neutral (3) -

Internal research by Citi suggests Universal Store is executing well and its target customer is proving relatively resilient.

Early indications are positive for the Thrills acquisition though the analyst remains concerned around brand concentration risk when and if consumer preferences change.

The Neutral rating and $5.75 target are unchanged.

Target price is $5.75 Current Price is $5.10 Difference: $0.65
If UNI meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $6.13, suggesting upside of 21.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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