Australian Broker Call
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June 08, 2018
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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: 11:24 AM
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
AX1 - | ACCENT GROUP | Downgrade to Reduce from Hold | Morgans |
BHP - | BHP BILLITON | Upgrade to Accumulate from Hold | Ord Minnett |
CWY - | CLEANAWAY WASTE MANAGEMENT | Downgrade to Hold from Add | Morgans |
ING - | INGHAMS GROUP | Downgrade to Neutral from Outperform | Macquarie |
RIO - | RIO TINTO | Upgrade to Accumulate from Hold | Ord Minnett |
WES - | WESFARMERS | Downgrade to Neutral from Outperform | Credit Suisse |
Downgrade to Lighten from Hold | Ord Minnett |
ABC ADELAIDE BRIGHTON LIMITED
Building Products & Services
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Overnight Price: $6.74
Morgan Stanley rates ABC as Underweight (5) -
Morgan Stanley observes management is constructive regarding demand from both Australian residential and infrastructure activity. Lime volumes are expected to be stable in FY18.
Import competition continues which is likely to keep a cap on the market, in the broker's view. Morgan Stanley considers Adelaide Brighton a quality business but the premium hard to justify.
Underweight maintained. Target is $6.00. Industry view: Cautious.
Target price is $6.00 Current Price is $6.74 Difference: minus $0.74 (current price is over target).
If ABC meets the Morgan Stanley target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $6.06, suggesting downside of -10.1% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 30.00 cents and EPS of 32.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 31.6, implying annual growth of 12.9%. Current consensus DPS estimate is 26.4, implying a prospective dividend yield of 3.9%. Current consensus EPS estimate suggests the PER is 21.3. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 33.00 cents and EPS of 35.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 34.1, implying annual growth of 7.9%. Current consensus DPS estimate is 28.4, implying a prospective dividend yield of 4.2%. Current consensus EPS estimate suggests the PER is 19.8. |
Market Sentiment: -0.2
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
AIZ AIR NEW ZEALAND LIMITED
Transportation & Logistics
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Overnight Price: $2.95
UBS rates AIZ as Neutral (3) -
The two factors impacting on Air NZ are lower FY19 earnings due to higher fuel costs, but stronger cash flow FY20 as fleet modernisation is completed, the broker notes. The airline should be able to pass on higher fuel costs on domestic routes but international looks challenging as new seat capacity is added.
The broker has lowered near term forecasts but retains an NZ$3.21 target and Neutral rating.
Current Price is $2.95. Target price not assessed.
Current consensus price target is N/A
The company's fiscal year ends in June.
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 20.31 cents and EPS of 33.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 32.0, implying annual growth of N/A. Current consensus DPS estimate is 20.3, implying a prospective dividend yield of 6.9%. Current consensus EPS estimate suggests the PER is 9.2. |
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 22.16 cents and EPS of 29.55 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 29.5, implying annual growth of -7.8%. Current consensus DPS estimate is 21.0, implying a prospective dividend yield of 7.1%. Current consensus EPS estimate suggests the PER is 10.0. |
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: $7.84
Ord Minnett rates ALQ as Lighten (4) -
While Ord Minnett was disappointed with the FY18 result, it acknowledges the commodities business is growing strongly and the valuation is not overly demanding. Nevertheless, the margin headwinds in the life sciences division appear to have worsened.
On reviewing the result, Ord Minnett decreases operating earnings estimates by -6% for FY19 and -5% for FY20. Lighten rating is maintained and the target is raised to $6.63 from $6.50.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $6.63 Current Price is $7.84 Difference: minus $1.21 (current price is over target).
If ALQ meets the Ord Minnett target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $7.49, suggesting downside of -4.5% (ex-dividends)
The company's fiscal year ends in March.
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 20.00 cents and EPS of 33.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 34.5, implying annual growth of 233.7%. Current consensus DPS estimate is 20.5, implying a prospective dividend yield of 2.6%. Current consensus EPS estimate suggests the PER is 22.7. |
Forecast for FY20:
Ord Minnett forecasts a full year FY20 dividend of 23.00 cents and EPS of 38.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 40.5, implying annual growth of 17.4%. Current consensus DPS estimate is 23.8, implying a prospective dividend yield of 3.0%. Current consensus EPS estimate suggests the PER is 19.4. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $26.72
Morgans rates ANZ as Add (1) -
If ANZ is found guilty of criminal cartel offences under the Competition and Consumer Act, Morgans believes the bank could face a total penalty as high as $2.6bn, although using historical cases as a guide the penalty may end up being 50% of the statutory maximum, more like $1.3bn.
The broker notes a high degree of uncertainty at this stage regarding the outcome and does not include any penalty in forecasts. However, Morgans is factoring in the risk of a penalty, as well as a risk of investor class action, with respect to the August 2015 capital raising.
Add rating retained. Target is reduced to $29 from $30.
Target price is $29.00 Current Price is $26.72 Difference: $2.28
If ANZ meets the Morgans target it will return approximately 9% (excluding dividends, fees and charges).
Current consensus price target is $29.29, suggesting upside of 9.6% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 160.00 cents and EPS of 231.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 229.2, implying annual growth of 4.1%. Current consensus DPS estimate is 160.6, implying a prospective dividend yield of 6.0%. Current consensus EPS estimate suggests the PER is 11.7. |
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 160.00 cents and EPS of 245.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 235.6, implying annual growth of 2.8%. Current consensus DPS estimate is 163.7, implying a prospective dividend yield of 6.1%. Current consensus EPS estimate suggests the PER is 11.3. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $1.53
Morgans rates AX1 as Downgrade to Reduce from Hold (5) -
Morgans has reviewed forecasts for Accent Group. The broker increases assumptions around store roll-out and margin given the improved hedging position and the move away from blanket discounting.
Nevertheless, a steep premium has now been factored into the stock and the broker is mindful of the competition intensity. Rating is downgraded to Reduce from Hold. Target is raised to $1.39 from $1.05.
Target price is $1.39 Current Price is $1.53 Difference: minus $0.14 (current price is over target).
If AX1 meets the Morgans target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).
The company's fiscal year ends in June.
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 6.20 cents and EPS of 7.60 cents. |
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 6.90 cents and EPS of 8.50 cents. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $6.86
Morgan Stanley rates BAP as Overweight (1) -
The company has reiterated FY18 guidance at the Morgan Stanley conference. Management suspects there is scope to lift roll-out targets to 220-230 stores versus the current target of 200.
Morgan Stanley's Overweight rating is reiterated. Target is $7.00. Industry view: In-line.
Target price is $7.00 Current Price is $6.86 Difference: $0.14
If BAP meets the Morgan Stanley target it will return approximately 2% (excluding dividends, fees and charges).
Current consensus price target is $6.62, suggesting downside of -3.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 18.90 cents and EPS of 31.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 31.2, implying annual growth of 31.3%. Current consensus DPS estimate is 16.5, implying a prospective dividend yield of 2.4%. Current consensus EPS estimate suggests the PER is 22.0. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 EPS of 36.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 35.4, implying annual growth of 13.5%. Current consensus DPS estimate is 19.3, implying a prospective dividend yield of 2.8%. Current consensus EPS estimate suggests the PER is 19.4. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $34.09
Ord Minnett rates BHP as Upgrade to Accumulate from Hold (2) -
Ord Minnett expects strong prices are required to incentivise new supply to come on line in the iron ore and coal markets. This leads the broker to upgrade long-term forecasts to US$60/t for iron ore, US$140/t for hard coking coal and US$77/t for thermal coal.
Ord Minnett does not believe the sector is replenishing its project pipeline and that supports commodity prices. Therefore, the consensus upgrade cycle is likely to continue over the medium term. Moreover, low debt across the sector and a favourable macro backdrop are supportive of strong shareholder returns.
BHP is upgraded to Accumulate from Hold. Target is raised to $38 from $30.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $38.00 Current Price is $34.09 Difference: $3.91
If BHP meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).
Current consensus price target is $34.13, suggesting upside of 0.1% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 163.64 cents and EPS of 180.39 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 223.6, implying annual growth of N/A. Current consensus DPS estimate is 152.9, implying a prospective dividend yield of 4.5%. Current consensus EPS estimate suggests the PER is 15.2. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 166.52 cents and EPS of 234.93 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 232.1, implying annual growth of 3.8%. Current consensus DPS estimate is 143.5, implying a prospective dividend yield of 4.2%. Current consensus EPS estimate suggests the PER is 14.7. |
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
Overnight Price: $7.89
UBS rates CGC as Buy (1) -
A tour of Costa's berry and avocado operations in FNQ did nothing to alter the broker's belief FY18 guidance is conservative. The broker forecasts strong growth in both categories over the next five years, helping Costa to realise its ambition of 52-week supply of all categories.
China provides longer term upside potential. Buy and $7.50 target retained.
Target price is $7.50 Current Price is $7.89 Difference: minus $0.39 (current price is over target).
If CGC meets the UBS target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $7.55, suggesting downside of -4.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 14.00 cents and EPS of 25.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 25.1, implying annual growth of 38.8%. Current consensus DPS estimate is 14.9, implying a prospective dividend yield of 1.9%. Current consensus EPS estimate suggests the PER is 31.4. |
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 17.00 cents and EPS of 31.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 29.2, implying annual growth of 16.3%. Current consensus DPS estimate is 16.6, implying a prospective dividend yield of 2.1%. Current consensus EPS estimate suggests the PER is 27.0. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
CWY CLEANAWAY WASTE MANAGEMENT LIMITED
Industrial Sector Contractors & Engineers
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Overnight Price: $1.68
Morgans rates CWY as Downgrade to Hold from Add (3) -
The company has indicated the China Sword policy restricting the import of contaminated recycling waste has impacted FY18 operating earnings (EBITDA) by -$3-6m. The Queensland government's landfill levy is not expected to have a material impact.
While Morgans remains attracted to the stock, the rating is downgraded to Hold from Add because of strength in the share price. Target is raised to $1.78 from $1.68.
Target price is $1.78 Current Price is $1.68 Difference: $0.1
If CWY meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).
Current consensus price target is $1.73, suggesting upside of 3.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 2.10 cents and EPS of 5.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 4.9, implying annual growth of 6.5%. Current consensus DPS estimate is 2.1, implying a prospective dividend yield of 1.3%. Current consensus EPS estimate suggests the PER is 34.3. |
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 3.50 cents and EPS of 7.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 6.7, implying annual growth of 36.7%. Current consensus DPS estimate is 2.7, implying a prospective dividend yield of 1.6%. Current consensus EPS estimate suggests the PER is 25.1. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $4.73
Credit Suisse rates FMG as Outperform (1) -
Fortescue has amassed a 19.9% stake in Atlas Iron ((AGO)). Credit Suisse observes Fortescue does not intend to support the proposed scheme of arrangement between Atlas and Mineral Resources ((MIN)) on current terms.
Atlas has inked a deal to export low-cost DSO lithium from the Pilgangoora project in Western Australia and has two prospective tenements.
Credit Suisse wonders whether Fortescue is intent on emerging as a new lithium player. The broker further notes the economics of Atlas Iron's existing iron ore operations are not overly compelling.
Outperform rating and $5.75 target maintained.
Target price is $5.75 Current Price is $4.73 Difference: $1.02
If FMG meets the Credit Suisse target it will return approximately 22% (excluding dividends, fees and charges).
Current consensus price target is $5.34, suggesting upside of 12.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 22.52 cents and EPS of 45.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 46.9, implying annual growth of N/A. Current consensus DPS estimate is 24.8, implying a prospective dividend yield of 5.2%. Current consensus EPS estimate suggests the PER is 10.1. |
Forecast for FY19:
Credit Suisse forecasts a full year FY19 dividend of 21.82 cents and EPS of 33.57 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 43.8, implying annual growth of -6.6%. Current consensus DPS estimate is 25.7, implying a prospective dividend yield of 5.4%. Current consensus EPS estimate suggests the PER is 10.8. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.4
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 expects strong prices are required to incentivise new supply to come on line in the iron ore and coal markets. This leads the broker to upgrade long-term forecasts to US$60/t for iron ore.
Ord Minnett does not believe the sector is replenishing its project pipeline and that supports commodity prices. Therefore, the consensus upgrade cycle is likely to continue over the medium term.
The broker maintains an Accumulate rating on Fortescue based on valuation and strong free cash flow, despite higher product discounts. Target is raised to $5.80 from $5.00.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $5.80 Current Price is $4.73 Difference: $1.07
If FMG meets the Ord Minnett target it will return approximately 23% (excluding dividends, fees and charges).
Current consensus price target is $5.34, suggesting upside of 12.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 20.65 cents and EPS of 42.59 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 46.9, implying annual growth of N/A. Current consensus DPS estimate is 24.8, implying a prospective dividend yield of 5.2%. Current consensus EPS estimate suggests the PER is 10.1. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 20.62 cents and EPS of 36.08 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 43.8, implying annual growth of -6.6%. Current consensus DPS estimate is 25.7, implying a prospective dividend yield of 5.4%. Current consensus EPS estimate suggests the PER is 10.8. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates FMG as Buy (1) -
The broker believes the appeal of Atlas Iron ((AGO)) to Fortescue is not simply undeveloped resources and $500m of tax loses, or the miner's sidelines in lithium and manganese, but an opportunity to buy into the North West Infrastructure JV, which is planning a new inner harbour development at Port Hedland.
The broker believes it would be a win-win for all parties, with Fortescue gaining access to the new berths and the JV not having to build its own rail/port infrastructure to get there. Buy and $5.75 target retained.
Target price is $5.75 Current Price is $4.73 Difference: $1.02
If FMG meets the UBS target it will return approximately 22% (excluding dividends, fees and charges).
Current consensus price target is $5.34, suggesting upside of 12.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 25.77 cents and EPS of 42.52 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 46.9, implying annual growth of N/A. Current consensus DPS estimate is 24.8, implying a prospective dividend yield of 5.2%. Current consensus EPS estimate suggests the PER is 10.1. |
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 36.08 cents and EPS of 50.25 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 43.8, implying annual growth of -6.6%. Current consensus DPS estimate is 25.7, implying a prospective dividend yield of 5.4%. Current consensus EPS estimate suggests the PER is 10.8. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
ING INGHAMS GROUP LIMITED
Food, Beverages & Tobacco
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Overnight Price: $3.74
Macquarie rates ING as Downgrade to Neutral from Outperform (3) -
CEO, Mick McMahon, will be stepping down at the FY18 results. The transition has come earlier than Macquarie expected. The share price reaction has reflected this development and the strong regard in which the CEO is held, the broker suggests.
There is no change to the FY18 outlook, with feed cost increases being recovered via prices, both under contract and on the spot market.
While valuation is undemanding, the broker suggests uncertainty over new management is likely to persist until a permanent CEO arrives and there is clarity on the FY19 outlook.
Rating is downgraded to Neutral from Outperform. $4.00 target retained.
Target price is $4.00 Current Price is $3.74 Difference: $0.26
If ING meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).
Current consensus price target is $3.95, suggesting upside of 5.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 19.50 cents and EPS of 29.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 29.5, implying annual growth of 74.2%. Current consensus DPS estimate is 19.7, implying a prospective dividend yield of 5.3%. Current consensus EPS estimate suggests the PER is 12.7. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 20.10 cents and EPS of 31.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 30.9, implying annual growth of 4.7%. Current consensus DPS estimate is 21.0, implying a prospective dividend yield of 5.6%. Current consensus EPS estimate suggests the PER is 12.1. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $18.70
Morgan Stanley rates MIN as Overweight (1) -
Fortescue Metals ((FMG)) has amassed 19.9% of Atlas Iron ((AGO)) shares and has indicated it does not intend to vote in favour of the scheme of arrangement. The scheme of arrangement underway requires 75% of votes and 50% of shareholders to be cast in favour of the Mineral Resources takeover.
Morgan Stanley suggests the acquisition of shares by Fortescue may be in order to keep low-grade tonnage out of the market, or for strategic purposes. The company has not commented regarding its additional stake.
Target is $23.60. Overweight retained. Industry view: Attractive.
Target price is $23.60 Current Price is $18.70 Difference: $4.9
If MIN meets the Morgan Stanley target it will return approximately 26% (excluding dividends, fees and charges).
Current consensus price target is $21.28, suggesting upside of 13.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 59.20 cents and EPS of 143.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 164.3, implying annual growth of 52.6%. Current consensus DPS estimate is 68.1, implying a prospective dividend yield of 3.6%. Current consensus EPS estimate suggests the PER is 11.4. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 116.00 cents and EPS of 241.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 231.3, implying annual growth of 40.8%. Current consensus DPS estimate is 105.5, implying a prospective dividend yield of 5.6%. Current consensus EPS estimate suggests the PER is 8.1. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates MLX as Outperform (1) -
Softer production is expected from Nifty over the fourth quarter. Dilution of stopes from within the remnant area is continuing to affect both production tonnage and grade.
In revising production down, Macquarie reduces estimates for EPS by -8% and -3% over FY18 and FY19 respectively. Outperform and $1.30 target retained.
Target price is $1.30 Current Price is $0.84 Difference: $0.46
If MLX meets the Macquarie target it will return approximately 55% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 1.00 cents and EPS of 1.20 cents. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 3.00 cents and EPS of 9.10 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
PTM PLATINUM ASSET MANAGEMENT LIMITED
Wealth Management & Investments
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Overnight Price: $6.05
Morgan Stanley rates PTM as Equal-weight (3) -
Morgan Stanley estimates around $30m of inflows or a 1% annualised run rate in May. The full impact of the former CEO's transition to a full-time director role is not yet clear to the broker, although so far it appears minimal.
Performance of the key international fund is strong on a one-year view. Morgan Stanley's target is $7.00. Equal-weight maintained. Industry view is In-Line.
Target price is $7.00 Current Price is $6.05 Difference: $0.95
If PTM meets the Morgan Stanley target it will return approximately 16% (excluding dividends, fees and charges).
Current consensus price target is $6.31, suggesting upside of 4.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 31.00 cents and EPS of 33.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 33.5, implying annual growth of 5.5%. Current consensus DPS estimate is 32.1, implying a prospective dividend yield of 5.3%. Current consensus EPS estimate suggests the PER is 18.1. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 31.00 cents and EPS of 35.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 33.4, implying annual growth of -0.3%. Current consensus DPS estimate is 31.5, implying a prospective dividend yield of 5.2%. Current consensus EPS estimate suggests the PER is 18.1. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $86.14
Ord Minnett rates RIO as Upgrade to Accumulate from Hold (2) -
Ord Minnett expects strong prices are required to incentivise new supply to come on line in the iron ore and coal markets. This leads the broker to upgrade long-term forecasts to US$60/t for iron ore, US$140/t for hard coking coal and US$77/t for thermal coal.
Ord Minnett does not believe the sector is replenishing its project pipeline and that supports commodity prices. Therefore, the consensus upgrade cycle is likely to continue over the medium term. Moreover, low debt across the sector and a favourable macro backdrop are supportive of strong shareholder returns.
Hence, Rio Tinto is upgraded to Accumulate from Hold. Target is raised to $96 from $78.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $96.00 Current Price is $86.14 Difference: $9.86
If RIO meets the Ord Minnett target it will return approximately 11% (excluding dividends, fees and charges).
Current consensus price target is $88.06, suggesting upside of 2.2% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 426.49 cents and EPS of 931.58 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 715.1, implying annual growth of N/A. Current consensus DPS estimate is 405.1, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 12.0. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 404.59 cents and EPS of 672.59 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 622.3, implying annual growth of -13.0%. Current consensus DPS estimate is 370.3, implying a prospective dividend yield of 4.3%. Current consensus EPS estimate suggests the PER is 13.8. |
This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.9
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $3.85
Ord Minnett rates S32 as Hold (3) -
Ord Minnett expects strong prices are required to incentivise new supply to come on line in the iron ore and coal markets. This leads the broker to upgrade long-term forecasts to US$140/t for hard coking coal and US$77/t for thermal coal.
Ord Minnett does not believe the sector is replenishing its project pipeline and that supports commodity prices. Therefore, the consensus upgrade cycle is likely to continue over the medium term.
The broker maintains a Hold rating for South32, envisaging less valuation support and in view of recent operating issues. Target is raised to $4.00 from $3.60.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $4.00 Current Price is $3.85 Difference: $0.15
If S32 meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).
Current consensus price target is $3.77, suggesting downside of -2.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 16.75 cents and EPS of 33.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 31.5, implying annual growth of N/A. Current consensus DPS estimate is 19.1, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 12.2. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 21.94 cents and EPS of 36.14 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 32.1, implying annual growth of 1.9%. Current consensus DPS estimate is 17.4, implying a prospective dividend yield of 4.5%. Current consensus EPS estimate suggests the PER is 12.0. |
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
Overnight Price: $46.27
Citi rates WES as Sell (5) -
Citi highlights the focus on capital discipline at the strategy briefing. Capital returns now appear more likely than M&A. The floor space of Target will also be reduced by -20% over the next five years while Coles is ramping up its private label and refurbishment.
The broker points out that Wesfarmers is trading at its highest level in over three years, as investors put a premium on capital returns.
Citi considers the risk of a de-rating is more imminent than earnings accretion from capital returns that could occur post de-merger. Sell rating maintained. Target is reduced to $41.10 from $41.40.
Target price is $41.10 Current Price is $46.27 Difference: minus $5.17 (current price is over target).
If WES meets the Citi target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $43.32, suggesting downside of -6.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 225.00 cents and EPS of 245.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 227.8, implying annual growth of -10.6%. Current consensus DPS estimate is 218.3, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 20.3. |
Forecast for FY19:
Citi forecasts a full year FY19 dividend of 229.00 cents and EPS of 253.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 259.9, implying annual growth of 14.1%. Current consensus DPS estimate is 226.9, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 17.8. |
Market Sentiment: -0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates WES as Downgrade to Neutral from Outperform (3) -
Wesfarmers has emphasised more disciplined capital allocation and a higher risk threshold for M&A at its investor briefing. Credit Suisse envisages no lack of internal opportunities to support improved returns on capital over time.
While FY18 earnings appear supported by a strong performance in chemicals and growth in Bunnings and Kmart ,the recent share price appreciation causes the broker to downgrade to Neutral from Outperform. Target is reduced to $47.31 from $47.36.
Target price is $47.31 Current Price is $46.27 Difference: $1.04
If WES meets the Credit Suisse target it will return approximately 2% (excluding dividends, fees and charges).
Current consensus price target is $43.32, suggesting downside of -6.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 206.00 cents and EPS of 250.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 227.8, implying annual growth of -10.6%. Current consensus DPS estimate is 218.3, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 20.3. |
Forecast for FY19:
Credit Suisse forecasts a full year FY19 dividend of 209.00 cents and EPS of 256.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 259.9, implying annual growth of 14.1%. Current consensus DPS estimate is 226.9, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 17.8. |
Market Sentiment: -0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Deutsche Bank rates WES as Hold (3) -
After the strategy briefing Deutsche Bank was left with the impression that management would be happy to run a smaller, better capital base if the right M&A opportunity does not present.
The CEO believes existing businesses present the best opportunity to invest and shareholder returns and valuation will be an important consideration going forward.
Hold rating. Target is $43.
Target price is $43.00 Current Price is $46.27 Difference: minus $3.27 (current price is over target).
If WES meets the Deutsche Bank target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $43.32, suggesting downside of -6.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 223.00 cents and EPS of 247.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 227.8, implying annual growth of -10.6%. Current consensus DPS estimate is 218.3, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 20.3. |
Forecast for FY19:
Deutsche Bank forecasts a full year FY19 dividend of 225.00 cents and EPS of 252.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 259.9, implying annual growth of 14.1%. Current consensus DPS estimate is 226.9, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 17.8. |
Market Sentiment: -0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates WES as No Rating (-1) -
Wesfarmers is intent on narrowing its portfolio to high-growth businesses. The company has reaffirmed second half EBIT growth for Coles and confirmed its commitment to completion of the Coles de-merger in FY19.
Bunnings continues to build out its dominant position. The turnaround at Target continues and space is expected to decrease -20% in the next five years.
Macquarie is restricted on providing a rating and target at this stage.
Current Price is $46.27. Target price not assessed.
Current consensus price target is $43.32, suggesting downside of -6.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 216.50 cents and EPS of 250.30 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 227.8, implying annual growth of -10.6%. Current consensus DPS estimate is 218.3, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 20.3. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 263.90 cents and EPS of 293.30 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 259.9, implying annual growth of 14.1%. Current consensus DPS estimate is 226.9, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 17.8. |
Market Sentiment: -0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgan Stanley rates WES as Underweight (5) -
The company provided little incremental information at its annual briefing. Morgan Stanley suggests investors may be disappointed by the lack of capital management and clarity on the Coles balance sheet.
There are indications that Coles faces headwinds from produce deflation, the new enterprise bargaining agreement and lower Coles Express earnings.
Underweight rating retained. Industry view is Cautious. Target is $39.
Target price is $39.00 Current Price is $46.27 Difference: minus $7.27 (current price is over target).
If WES meets the Morgan Stanley target it will return approximately minus 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $43.32, suggesting downside of -6.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 207.00 cents and EPS of 246.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 227.8, implying annual growth of -10.6%. Current consensus DPS estimate is 218.3, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 20.3. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 207.00 cents and EPS of 244.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 259.9, implying annual growth of 14.1%. Current consensus DPS estimate is 226.9, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 17.8. |
Market Sentiment: -0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgans rates WES as Hold (3) -
The company's strategy briefing provided insight into plans for the individual business segments but did not change Morgans' view. The broker believes management is doing a good job re-positioning the portfolio and re-weighting it toward stronger growth and higher-returning business.
The broker suspects management will be disciplined regarding any M&A activity. The broker maintains a Hold rating and, as Homebase earnings are removed from forecasts, raises the target to $47.34 from $44.74.
Target price is $47.34 Current Price is $46.27 Difference: $1.07
If WES meets the Morgans target it will return approximately 2% (excluding dividends, fees and charges).
Current consensus price target is $43.32, suggesting downside of -6.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 223.00 cents and EPS of 242.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 227.8, implying annual growth of -10.6%. Current consensus DPS estimate is 218.3, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 20.3. |
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 230.00 cents and EPS of 262.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 259.9, implying annual growth of 14.1%. Current consensus DPS estimate is 226.9, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 17.8. |
Market Sentiment: -0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates WES as Downgrade to Lighten from Hold (4) -
The company's strategy briefing outlined growth prospects for various divisions. Yet,Ord Minnett finds a lack of valuation support because of the challenges to the Coles business and the risks emerging at Bunnings because of the consumer & housing environment.
There is also the risk of an oversupply of ammonium nitrate for industrial businesses and execution risk at Target that the broker cites. Ord Minnett downgrades to Lighten from Hold and lowers the target to $42.50 from $43.00.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $42.50 Current Price is $46.27 Difference: minus $3.77 (current price is over target).
If WES meets the Ord Minnett target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $43.32, suggesting downside of -6.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 225.00 cents and EPS of 89.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 227.8, implying annual growth of -10.6%. Current consensus DPS estimate is 218.3, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 20.3. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 230.00 cents and EPS of 262.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 259.9, implying annual growth of 14.1%. Current consensus DPS estimate is 226.9, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 17.8. |
Market Sentiment: -0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates WES as Neutral (3) -
The broker's key takeaway from Wesfarmers' strategy day was that the company is not afraid to shrink to improve shareholder returns. The outlook for Bunnings and the department stores was better than the broker expected.
Coles was less impressive, with capex to increase by 20% and earnings headwinds mounting. The broker nevertheless foresees the likelihood of a capital return from the Curragh proceeds. Neutral and $43 target retained.
Target price is $43.00 Current Price is $46.27 Difference: minus $3.27 (current price is over target).
If WES meets the UBS target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $43.32, suggesting downside of -6.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 221.00 cents and EPS of 253.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 227.8, implying annual growth of -10.6%. Current consensus DPS estimate is 218.3, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 20.3. |
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 221.00 cents and EPS of 256.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 259.9, implying annual growth of 14.1%. Current consensus DPS estimate is 226.9, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 17.8. |
Market Sentiment: -0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Summaries
ABC | ADELAIDE BRIGHTON | Underweight - Morgan Stanley | Overnight Price $6.74 |
AIZ | AIR NEW ZEALAND | Neutral - UBS | Overnight Price $2.95 |
ALQ | ALS LIMITED | Lighten - Ord Minnett | Overnight Price $7.84 |
ANZ | ANZ BANKING GROUP | Add - Morgans | Overnight Price $26.72 |
AX1 | ACCENT GROUP | Downgrade to Reduce from Hold - Morgans | Overnight Price $1.53 |
BAP | BAPCOR LIMITED | Overweight - Morgan Stanley | Overnight Price $6.86 |
BHP | BHP BILLITON | Upgrade to Accumulate from Hold - Ord Minnett | Overnight Price $34.09 |
CGC | COSTA GROUP | Buy - UBS | Overnight Price $7.89 |
CWY | CLEANAWAY WASTE MANAGEMENT | Downgrade to Hold from Add - Morgans | Overnight Price $1.68 |
FMG | FORTESCUE | Outperform - Credit Suisse | Overnight Price $4.73 |
Accumulate - Ord Minnett | Overnight Price $4.73 | ||
Buy - UBS | Overnight Price $4.73 | ||
ING | INGHAMS GROUP | Downgrade to Neutral from Outperform - Macquarie | Overnight Price $3.74 |
MIN | MINERAL RESOURCES | Overweight - Morgan Stanley | Overnight Price $18.70 |
MLX | METALS X | Outperform - Macquarie | Overnight Price $0.84 |
PTM | PLATINUM | Equal-weight - Morgan Stanley | Overnight Price $6.05 |
RIO | RIO TINTO | Upgrade to Accumulate from Hold - Ord Minnett | Overnight Price $86.14 |
S32 | SOUTH32 | Hold - Ord Minnett | Overnight Price $3.85 |
WES | WESFARMERS | Sell - Citi | Overnight Price $46.27 |
Downgrade to Neutral from Outperform - Credit Suisse | Overnight Price $46.27 | ||
Hold - Deutsche Bank | Overnight Price $46.27 | ||
No Rating - Macquarie | Overnight Price $46.27 | ||
Underweight - Morgan Stanley | Overnight Price $46.27 | ||
Hold - Morgans | Overnight Price $46.27 | ||
Downgrade to Lighten from Hold - Ord Minnett | Overnight Price $46.27 | ||
Neutral - UBS | Overnight Price $46.27 |
RATING SUMMARY
Rating | No. Of Recommendations |
1. Buy | 7 |
2. Accumulate | 3 |
3. Hold | 9 |
4. Reduce | 2 |
5. Sell | 4 |
Friday 08 June 2018
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Disclaimer:
The content of this information does in no way reflect the opinions of
FNArena, or of its journalists. In fact we don't have any opinion about
the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe
and comment on. By doing so we believe we provide intelligent investors
with a valuable tool that helps them in making up their own minds, reading
market trends and getting a feel for what is happening beneath the surface.
This document is provided for informational purposes only. It does not
constitute an offer to sell or a solicitation to buy any security or other
financial instrument. FNArena employs very experienced journalists who
base their work on information believed to be reliable and accurate, though
no guarantee is given that the daily report is accurate or complete. Investors
should contact their personal adviser before making any investment decision.
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