Australian Broker Call
March 27, 2017
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COMPANIES DISCUSSED IN THIS ISSUE
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Last Updated: 01:14 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
| SXY - | SENEX ENERGY | Upgrade to Neutral from Sell | Citi |
Credit Suisse rates BOQ as Neutral (3) -
Credit Suisse expects $185m in cash earnings for the first half, when the company reports on March 30.
The broker suspects that, with Bank of Queensland's later reporting period versus other banks (by two months), there will be less exposure to the term deposit price competition that was experienced in late 2016.
Neutral rating and $12.25 target retained.
Target price is $12.25 Current Price is $11.53 Difference: $0.72
If BOQ meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges).
Current consensus price target is $11.52, suggesting upside of 1.2% (ex-dividends)
The company's fiscal year ends in August.
Forecast for FY17:
Credit Suisse forecasts a full year FY17 dividend of 77.00 cents and EPS of 98.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 92.2, implying annual growth of -3.6%. Current consensus DPS estimate is 76.3, implying a prospective dividend yield of 6.7%. Current consensus EPS estimate suggests the PER is 12.3. |
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 78.00 cents and EPS of 102.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 93.4, implying annual growth of 1.3%. Current consensus DPS estimate is 76.4, implying a prospective dividend yield of 6.7%. Current consensus EPS estimate suggests the PER is 12.2. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates EVN as Outperform (1) -
Credit Suisse analysts kept their Outperform rating and $2.30 target intact post a site visit to the Ernest Henry mine operation.
It is the analysts' view, Ernest Henry is a robust, well run operation, largely developed to current 2026 reserve life, with declining sustaining capital until a decision is made to extend life of the mine.
Target price is $2.30 Current Price is $2.05 Difference: $0.25
If EVN meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).
Current consensus price target is $2.52, suggesting upside of 17.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Credit Suisse forecasts a full year FY17 dividend of 4.00 cents and EPS of 17.37 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 18.2, implying annual growth of N/A. Current consensus DPS estimate is 3.9, implying a prospective dividend yield of 1.8%. Current consensus EPS estimate suggests the PER is 11.7. |
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 4.35 cents and EPS of 23.02 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 22.9, implying annual growth of 25.8%. Current consensus DPS estimate is 4.3, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 9.3. |
Market Sentiment: 0.9
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates EVN as Outperform (1) -
Macquarie has found the visit to the Ernest Henry mine confirmed the quality of the asset. The broker believes the company's economic interest will prove to be a highly beneficial transaction and deliver strong cash flows over a substantial period.
Although expansion or extension is not the focus for the near term, the broker believes the ultimate life will far exceed the current reserve. Outperform and $2.50 target retained.
Target price is $2.50 Current Price is $2.05 Difference: $0.45
If EVN meets the Macquarie target it will return approximately 22% (excluding dividends, fees and charges).
Current consensus price target is $2.52, suggesting upside of 17.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 4.00 cents and EPS of 14.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 18.2, implying annual growth of N/A. Current consensus DPS estimate is 3.9, implying a prospective dividend yield of 1.8%. Current consensus EPS estimate suggests the PER is 11.7. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 6.00 cents and EPS of 24.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 22.9, implying annual growth of 25.8%. Current consensus DPS estimate is 4.3, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 9.3. |
Market Sentiment: 0.9
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates EVN as Buy (1) -
UBS is impressed with the Ernest Henry operations. The company's economic interest in the mine grants it 100% of the gold and 30% of the copper production with 30% of the associated expenditure.
The broker believes there is genuine life and upside beyond the current 11-year mine plan and investors should focus on the strong free cash flow that leads to the company de-gearing in 2017.
Buy rating retained. Target is $2.65.
Target price is $2.65 Current Price is $2.05 Difference: $0.6
If EVN meets the UBS target it will return approximately 29% (excluding dividends, fees and charges).
Current consensus price target is $2.52, suggesting upside of 17.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
UBS forecasts a full year FY17 dividend of 4.00 cents and EPS of 20.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 18.2, implying annual growth of N/A. Current consensus DPS estimate is 3.9, implying a prospective dividend yield of 1.8%. Current consensus EPS estimate suggests the PER is 11.7. |
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 4.00 cents and EPS of 24.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 22.9, implying annual growth of 25.8%. Current consensus DPS estimate is 4.3, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 9.3. |
Market Sentiment: 0.9
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates FMG as Outperform (1) -
Macquarie believes further early debt repayments are likely as iron ore prices are buoyant. Net debt is expected to have fallen to US$2.8bn at the end of March, implying gearing of 22%.
The stock appears attractive to the broker on earnings multiples using flat iron ore prices of US$60/t or higher. Outperform retained and target is $6.80.
Target price is $6.80 Current Price is $6.26 Difference: $0.54
If FMG meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).
Current consensus price target is $6.75, suggesting upside of 11.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 33.80 cents and EPS of 84.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 119.0, implying annual growth of N/A. Current consensus DPS estimate is 48.3, implying a prospective dividend yield of 8.0%. Current consensus EPS estimate suggests the PER is 5.1. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 18.90 cents and EPS of 29.30 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 68.6, implying annual growth of -42.4%. Current consensus DPS estimate is 30.3, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 8.8. |
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
Ord Minnett rates FMG as Accumulate (2) -
Ord Minnett factors in its recently-raised iron ore price forecasts for the major producers. 2017 and 2018 forecasts are upgraded to US$82 and US$65 a tonne, respectively.
Fortescue Metals is stand-out operator in the sector, in the broker's view, generating high free cash flow and offering the most compelling investment case among the larger miners.
A material uplift in dividends is expected in the near term as the balance sheet is strong. Accumulate recommendation is retained. Target is raised to $8.00 from $7.90.
Target price is $8.00 Current Price is $6.26 Difference: $1.74
If FMG meets the Ord Minnett target it will return approximately 28% (excluding dividends, fees and charges).
Current consensus price target is $6.75, suggesting upside of 11.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Ord Minnett forecasts a full year FY17 dividend of 55.79 cents and EPS of 126.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 119.0, implying annual growth of N/A. Current consensus DPS estimate is 48.3, implying a prospective dividend yield of 8.0%. Current consensus EPS estimate suggests the PER is 5.1. |
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 58.60 cents and EPS of 101.21 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 68.6, implying annual growth of -42.4%. Current consensus DPS estimate is 30.3, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 8.8. |
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
FPH FISHER & PAYKEL HEALTHCARE CORPORATION LIMITED
Medical Equipment & Devices
Overnight Price: $8.80
UBS rates FPH as Neutral (3) -
UBS, as a result of slower growth in new applications, has lowered forecasts for hospital revenue growth to 13% per annum in FY18 and FY19, from 15%.
Earnings per share forecasts are trimmed by 1% for FY19. Nevertheless, earnings growth projections remain strong.
Neutral rating retained. Target is raised to NZ$9.85 from NZ$9.50.
Current Price is $8.80. Target price not assessed.
Current consensus price target is N/A
The company's fiscal year ends in March.
Forecast for FY17:
UBS forecasts a full year FY17 dividend of 18.29 cents and EPS of 27.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 27.4, implying annual growth of 18.8%. Current consensus DPS estimate is 18.4, implying a prospective dividend yield of 2.1%. Current consensus EPS estimate suggests the PER is 32.0. |
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 21.47 cents and EPS of 32.67 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 32.3, implying annual growth of 17.9%. Current consensus DPS estimate is 22.6, implying a prospective dividend yield of 2.6%. Current consensus EPS estimate suggests the PER is 27.1. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
MLX METALS X LIMITED
Overnight Price: $0.74
Macquarie rates MLX as Initiation of coverage with Outperform (1) -
Macquarie is initiating coverage on the company, starting off with an Outperform rating and $1.00 target. The company offers exposure to copper and tin through its mines in Western Australia and Tasmania.
Now gold assets have been offloaded, the broker believes the leaner business is better positioned to unlock the significant organic growth potential within the assets.
Target price is $1.00 Current Price is $0.74 Difference: $0.26
If MLX meets the Macquarie target it will return approximately 35% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 0.00 cents and EPS of 3.50 cents. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 1.60 cents and EPS of 5.20 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates SGM as Accumulate (2) -
Ord Minnett believes lower Chinese steel exports may be the catalyst for improving demand for scrap.
Combined with broader steel market strength, this has led to growth in scrap prices and improves the broker's volume and earnings estimates for the company.
Ord Minnett retains an Accumulate rating and raises the target to $15.20 from $14.20.
Target price is $15.20 Current Price is $12.45 Difference: $2.75
If SGM meets the Ord Minnett target it will return approximately 22% (excluding dividends, fees and charges).
Current consensus price target is $13.11, suggesting upside of 5.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Ord Minnett forecasts a full year FY17 dividend of 40.00 cents and EPS of 81.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 68.6, implying annual growth of 27.8%. Current consensus DPS estimate is 38.3, implying a prospective dividend yield of 3.1%. Current consensus EPS estimate suggests the PER is 18.1. |
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 40.00 cents and EPS of 98.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 80.1, implying annual growth of 16.8%. Current consensus DPS estimate is 40.5, implying a prospective dividend yield of 3.3%. Current consensus EPS estimate suggests the PER is 15.5. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Citi rates SXY as Upgrade to Neutral from Sell (3) -
Last month, Citi downgraded to Sell because the share price was too high. Following a retreat, the analysts have decided it is time to upgrade to Neutral/High Risk.
Senex should be one of main beneficiaries from a tight domestic gas market, over time, through its Western Surat Gas Project, predict the analysts. They also think it is too early to pay up for that prospect just yet. Target unchanged at 35c.
Target price is $0.35 Current Price is $0.33 Difference: $0.02
If SXY meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).
Current consensus price target is $0.35, suggesting upside of 7.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
Citi forecasts a full year FY17 dividend of 0.00 cents and EPS of minus 1.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is -0.7, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is N/A. |
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 0.00 cents and EPS of minus 0.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 2.1, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 15.6. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates VRT as Neutral (3) -
Despite a rebound in the industry growth over January and February, UBS expects a contraction of -3.0% for the domestic cycle in the second half of FY17.
The fourth quarter is expected to be particularly challenging. The broker finds few positive catalysts and retains a Neutral rating. Target is $5.94.
Target price is $5.94 Current Price is $5.94 Difference: $0
If VRT meets the UBS target it will return approximately 0% (excluding dividends, fees and charges).
Current consensus price target is $6.50, suggesting upside of 9.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY17:
UBS forecasts a full year FY17 dividend of 27.00 cents and EPS of 37.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 38.3, implying annual growth of -7.0%. Current consensus DPS estimate is 28.2, implying a prospective dividend yield of 4.8%. Current consensus EPS estimate suggests the PER is 15.4. |
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 28.00 cents and EPS of 43.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 43.4, implying annual growth of 13.3%. Current consensus DPS estimate is 30.5, implying a prospective dividend yield of 5.2%. Current consensus EPS estimate suggests the PER is 13.6. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Summaries
| BOQ - | BANK OF QUEENSLAND | Neutral - Credit Suisse | Overnight Price $11.53 |
| EVN - | EVOLUTION MINING | Outperform - Credit Suisse | Overnight Price $2.05 |
| Outperform - Macquarie | Overnight Price $2.05 | ||
| Buy - UBS | Overnight Price $2.05 | ||
| FMG - | FORTESCUE | Outperform - Macquarie | Overnight Price $6.26 |
| Accumulate - Ord Minnett | Overnight Price $6.26 | ||
| FPH - | FISHER & PAYKEL HEALTHCARE | Neutral - UBS | Overnight Price $8.80 |
| MLX - | METALS X | Initiation of coverage with Outperform - Macquarie | Overnight Price $0.74 |
| SGM - | SIMS METAL MANAGEMENT | Accumulate - Ord Minnett | Overnight Price $12.45 |
| SXY - | SENEX ENERGY | Upgrade to Neutral from Sell - Citi | Overnight Price $0.33 |
| VRT - | VIRTUS HEALTH | Neutral - UBS | Overnight Price $5.94 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 5 |
| 2. Accumulate | 2 |
| 3. Hold | 4 |
Monday 27 March 2017
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