Australian Broker Call

Credit Suisse rates AIZ as Neutral (3) -

There had been an interruption in coverage and Credit Suisse now has officially a new man in charge of covering Air New Zealand. He "assumes" primary coverage with a Neutral rating, unchanged from the last report we have in our archive, dated 29 August 2016.

The November operating statistics highlighted the ongoing yield decline, says the new guy. While research by Credit Suisse suggests there should be some improvement on the horizon, this cannot prevent a reduction in forecasts. Estimates went down by -11%/-14%/-1% for FY17/18/19.

Price target declines to NZ$2.05 from NZ$2.25. Updated forecasts suggest Air New Zealand remains in a negative cycle as far as profits are concerned.

Current Price is $2.15. Target price not assessed.

Current consensus price target is N/A

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

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 BAP as Buy (1) -

Hellaby's board has accepted Bapcor's increased offer of NZ$3.60ps. The broker had already assumed success in its forecasts but notes there is a risk of any potential delay in divesting of non-core assets.

Buy and $6.85 target retained.

Target price is $6.85 Current Price is $5.88 Difference: $0.97
If BAP meets the UBS target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $6.06, suggesting upside of 3.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

Credit Suisse rates CHC as Underperform (5) -

Credit Suisse has reduced its price target to $4.45 from $4.60. This reflects potential value "at risk" associated with Charter Hall Retail's ((CQR)) FuM as the analysts have been exploring scenarios involving a full merger between Charter Hall Retail and Shopping Centres Australasia ((SCP)).

Target price is $4.45 Current Price is $4.55 Difference: minus $0.1 (current price is over target).
If CHC meets the Credit Suisse target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.06, suggesting upside of 12.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Deutsche Bank rates DUE as Hold (3) -

Now that takeover offer by the CKI consortium has gained DUET board approval, Deutsche Bank thinks the remaining key risk is whether the Foreign Investment Review Board (FIRB) will provide approval.

The analysts see sufficient parallels between a recent failed attempt to acquire AusGrid and the current one for DUET, while noting CKI was also bidding for AusGrid, to assume FIRB approval might not follow.

Deutsche Bank finds there is further risk if the ACCC/AER could take any issue with increased concentration of ownership of Victorian regulated distribution networks. No changes have been made.

Target price is $2.60 Current Price is $2.93 Difference: minus $0.33 (current price is over target).
If DUE meets the Deutsche Bank target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.74, suggesting downside of -6.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.1

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

Ord Minnett rates DUE as Hold (3) -

Duet's board has recommended the acceptance of the sweetened $3.03ps offer from the Chinese-led consortium, in line with the broker's assumption. A shareholder vote will be held in April.  

The broker expects the share price to close in on the offer price once it is clarified that the offer is exclusive of the interim dividend. FIRB remains a hurdle, but the broker expects approval to be granted. Hold and $2.80 target retained.

Target price is $2.80 Current Price is $2.93 Difference: minus $0.13 (current price is over target).
If DUE meets the Ord Minnett target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.74, suggesting downside of -6.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.1

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

UBS rates ERA as Sell (5) -

ERA's Dec Q "production" (the processing of stockpiled ore) was down 9% in the Dec Q due to scheduled maintenance. 2016 production improved by 17%, just ahead of the broker's forecast. Legacy contracts ensured a realised price of US$45/lb with spot having fallen as low as US$18/lb in the quarter.

The risk nevertheless remains that ERA will not be able to fund its rehabilitation program, with production set to fall in 2017, albeit majority shareholder Rio Tinto ((RIO)) has extended credit to cover any shortfall, the broker notes. Sell and 5c target retained.

Target price is $0.05 Current Price is $0.69 Difference: minus $0.635 (current price is over target).
If ERA meets the UBS target it will return approximately minus 93% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: -1.0

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

Morgans rates GHC as Hold (3) -

Hold rating retained as Generation Healthcare announced preliminary revaluations on its portfolio as at 31 December, which showed the weighted average cap rate has tightened 34 basis points to 6.67%.

Guidance had already been reiterated prior for DPS of 8.973, paid half yearly, note the analysts. In addition, the REIT also announced a $28.6m investment into the Epping Medical Centre in Melbourne plus the sale of its Bendigo asset for $11.35m. Price target drops to $2.02 from $2.08.

Target price is $2.02 Current Price is $1.93 Difference: $0.09
If GHC meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

UBS rates GNC as Neutral (3) -

The near complete harvest of the winter crop is on track to match the FY11 record, the broker notes. The broker has upgraded earnings, offset by lost market share in receivals.

The broker notes ADM's divestment of its 19.9% stake last month removes an overhang but brings into question the value of the company's assets. The broker does see value for an international grain trader, but does not see another takeover bid in the near term.

Neutral retained. Target rises to $9.60 from $8.95.

Target price is $9.60 Current Price is $9.59 Difference: $0.01
If GNC meets the UBS target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $9.71, suggesting upside of 0.3% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.5

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

Credit Suisse rates HSO as Neutral (3) -

Credit Suisse previews the upcoming interim report release (Feb 22). Relative to prior assumptions, slightly lower hospital earnings growth is expected to be partially offset by stronger performance from pathology. Minor adjustments have been made.

All in all, the analysts remain of the view that current issues need time to be resolved. Neutral rating and $2.40 price target unchanged.

Target price is $2.40 Current Price is $2.37 Difference: $0.03
If HSO meets the Credit Suisse target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $2.61, suggesting upside of 11.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Macquarie rates IEL as Outperform (1) -

IDP has acquired UK-based digital marketing and online student recruitment company Hotcourses, which is basically a global uni/college comparison site. The deal complements IDP's student placement division and accelerates digital engagement strategies, the broker suggests.

The GBP30m acquisition price seems reasonable to the broker, funded by debt but leaving a still-strong balance sheet. Outperform and $4.67 target retained.

Target price is $4.67 Current Price is $3.75 Difference: $0.92
If IEL meets the Macquarie target it will return approximately 25% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

Morgans rates NAN as Add (1) -

The company's December quarter sales update was largely in line with expectations, but it did confirm continued positive momentum, suggest the analysts.

The release of ultrasound decontamination guidelines in England later in the year is likely to spark an acceleration in sales, predict the analysts.

Morgans remains positive on Nanosonic's outlook. Short term forecasts have been lifted. Add rating retained. Price target climbs by 1c to $3.67.

Target price is $3.67 Current Price is $3.16 Difference: $0.51
If NAN meets the Morgans target it will return approximately 16% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 1.0

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

Ord Minnett rates OML as Accumulate (2) -

Industry statistics show a 15.8% increase in outdoor advertising revenue in 2016. The broker expects the out-of-home category to continue to benefit from the adoption of digital technology which will present new revenue opportunities and increase returns.

The broker retains an Accumulate rating on oOh!media and a $5.25 target.

Target price is $5.25 Current Price is $4.59 Difference: $0.66
If OML meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $5.20, suggesting upside of 14.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY16:

Forecast for FY17:

Market Sentiment: 0.3

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

Credit Suisse rates RRL as Neutral (3) -

Credit Suisse has seen enough evidence to assume Regis Resources will likely produce near the top end of management's guidance, while keeping costs near the bottom of guidance.

The analysts spotted a strong December quarter performance. The analysts also note well-funded exploration continues to deliver "compelling results". Minor changes have been implemented. Neutral rating and $2.80 price target unchanged.

Target price is $2.80 Current Price is $3.14 Difference: minus $0.34 (current price is over target).
If RRL meets the Credit Suisse target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.09, suggesting downside of -7.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

Ord Minnett rates RRL as Accumulate (2) -

Regis' Dec Q production beat the broker's forecast by 2% and costs were 4% lower. Better operating cash flow also led to a beat on forecast cash balance.

As satellite pits are integrated into the main mine plan, the broker assumes production will hit the top end of guidance. This pipeline of organic growth, alongside attractive free cash flow and compelling dividend yield, make Regis the broker's preferred gold exposure.

Accumulate retained. Target rises to $4.00 from $3.80.

Target price is $4.00 Current Price is $3.14 Difference: $0.86
If RRL meets the Ord Minnett target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $3.09, suggesting downside of -7.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

UBS rates RRL as Buy (1) -

Regis' Dec Q production and sales were largely in line with the broker's forecasts and on track to meet FY guidance. First ore processed from Gloster made a contribution, with full production from Erlistoun expected by end FY17.

The broker sees Regis as offering an undemanding valuation on free cash flow yield and dependable production, with a focus on exploration. The miner is well placed to weather lower gold prices, the broker suggests. Buy and $3.08 target retained.

Target price is $3.08 Current Price is $3.14 Difference: minus $0.06 (current price is over target).
If RRL meets the UBS target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.09, suggesting downside of -7.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.3

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

Credit Suisse rates SCP as Underperform (5) -

Following the acquisition of a 4.9% stake in Charter Hall Retail ((CQR)). Credit Suisse has decided to investigate the potential merits of a full tie-up between the two entities.

Bottom line: the combination between the two still looks expensive and CS finds there is "better value and thematic appeal" in Scentre Group ((SCG)), Westfield ((WFD)), Mirvac ((MGR)) and Goodman Group ((GMG)).

Target price is $2.04 Current Price is $2.19 Difference: minus $0.15 (current price is over target).
If SCP meets the Credit Suisse target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.09, suggesting downside of -3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: -0.6

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

Credit Suisse rates TCL as Outperform (1) -

Credit Suisse believes Transurban is due to announce a final agreement on the Western Distributor investment in Feb-Mar. The analysts suggest the announcement may serve as a catalyst to raise equity.

Credit Suisse is anticipating a $1bn equity raising in 2H FY17 and since this fresh capital will be used to fund further growth, the share market will treat it positively, in the analysts' opinion.

Transurban is not expected to upgrade dividend guidance at the upcoming interim report release. Outperform rating and $12.50 price target remain intact.

Target price is $12.50 Current Price is $10.37 Difference: $2.13
If TCL meets the Credit Suisse target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $11.69, suggesting upside of 12.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.6

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

Citi rates WHC as Buy (1) -

Production for the December quarter proved below expectations, with Citi analysts suggesting part of scheduled production has been pushed into H2.

Lower realised met coal pricing has triggered reductions for 2017, but 2018 estimates have lifted on increased met coal sales from Maules Creek.

As net debt is expected to fall by $260m to $600m, Citi analysts are anticipating dividends to be reinstated at the interim (4c). Buy rating retained.

Target price is $3.80 Current Price is $2.93 Difference: $0.87
If WHC meets the Citi target it will return approximately 30% (excluding dividends, fees and charges).

Current consensus price target is $3.14, suggesting upside of 8.4% (ex-dividends)

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Credit Suisse rates WHC as Outperform (1) -

Credit Suisse analysts seem pleased with Whitehaven Coal's performance in the December quarter. They have made minor adjustments only. Outperform rating retained, as well as the $3.60 price target.

Target price is $3.60 Current Price is $2.93 Difference: $0.67
If WHC meets the Credit Suisse target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $3.14, suggesting upside of 8.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Deutsche Bank rates WHC as Hold (3) -

December production fell short of Deutsche Bank's expectations and Narrabri issues, dubbed "unfavourable ground conditions", are to blame. Realised met coal pricing also disappointed, say the analysts.

Estimates have been lowered. The analysts note free cash flow is accumulating rapidly, allowing for firm de-gearing of the balance sheet, but valuation remains an impediment to change the Hold rating. Price target loses 10c to $3.00.

Target price is $3.00 Current Price is $2.93 Difference: $0.07
If WHC meets the Deutsche Bank target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $3.14, suggesting upside of 8.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Morgans rates WHC as Hold (3) -

Clearly, observes stockbroker Morgans, this company is making hay while the sun shines. It looks like full year guidance will be achieved, despite some disruption. Shareholders may well start anticipating the return of dividends.

Morgans finds the share price is probably a little ahead of fundamentals. Plus the predictability of earnings is to become less predictable. Hold rating retained. Target jumps to $2.85 from $2.64.

Target price is $2.85 Current Price is $2.93 Difference: minus $0.08 (current price is over target).
If WHC meets the Morgans target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.14, suggesting upside of 8.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

Ord Minnett rates WHC as Accumulate (2) -

Whitehaven's Dec Q production met the broker's forecast but realised pricing fell short due to a mix of carry-over tonnage, lagged realisations and contract structures. Call it a timing issue. 

The broker retains an Accumulate rating and $3.20 target based on solid free cash flow, a material reduction in net debt and robust valuation metrics.

Target price is $3.20 Current Price is $2.93 Difference: $0.27
If WHC meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $3.14, suggesting upside of 8.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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

UBS rates WHC as Neutral (3) -

Wet weather impacted production at Narrabri and Werris Creek in the Dec Q, leaving Maules Creek to carry the can and provide for only a 2% reduction in coal output. Sales were stronger for the quarter, the broker notes.

The broker has slightly increased its coal price assumptions but retains a target of $2.90 for Whitehaven, and a Neutral rating.

Target price is $2.90 Current Price is $2.93 Difference: minus $0.03 (current price is over target).
If WHC meets the UBS target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.14, suggesting upside of 8.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.4

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