Australian Broker Call
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September 08, 2021
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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: 05:00 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
Overnight Price: $132.70
Morgan Stanley rates APT as No Rating (-1) -
Morgan Stanley observes Afterpay is acquiring new US customers at a rapid rate with app downloads increasing by 2.3x over the year to August. Nevertheless, this is below the March 2021 record. The UK downloads doubled as well.
The broker notes competitor Klarna topped both regions while Zip Co's ((Z1P)) Quadpay momentum in the US has slowed.
The broker has no rating or target at present. Industry view: In-Line.
Current Price is $132.70. Target price not assessed.
Current consensus price target is $141.68, suggesting upside of 8.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Morgan Stanley forecasts a full year FY22 dividend of 0.00 cents and EPS of 9.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 1.1, 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 11828.2. |
Forecast for FY23:
Morgan Stanley forecasts a full year FY23 dividend of 0.00 cents and EPS of 90.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 28.2, implying annual growth of 2463.6%. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 461.4. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $2.02
Citi rates AWC as Neutral (3) -
Alumina prices have shot up to US$340/t after the Jamalco refinery fire and then the military coup in Guinea. As a result, Citi increases net profit estimates for the company by 22% to US$178m.
If the coup in Guinea gives rise to material disruption in bauxite exports, the broker would review alumina price forecasts again. Neutral rating maintained. Target rises to $2.10 from $1.80.
Target price is $2.10 Current Price is $2.02 Difference: $0.08
If AWC meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).
Current consensus price target is $1.88, suggesting downside of -10.3% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY21:
Citi forecasts a full year FY21 dividend of 9.05 cents and EPS of 8.25 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 7.4, implying annual growth of N/A. Current consensus DPS estimate is 8.4, implying a prospective dividend yield of 4.0%. Current consensus EPS estimate suggests the PER is 28.4. |
Forecast for FY22:
Citi forecasts a full year FY22 dividend of 16.23 cents and EPS of 16.37 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 9.7, implying annual growth of 31.1%. Current consensus DPS estimate is 10.5, implying a prospective dividend yield of 5.0%. Current consensus EPS estimate suggests the PER is 21.6. |
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
DMP DOMINO'S PIZZA ENTERPRISES LIMITED
Food, Beverages & Tobacco
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Overnight Price: $159.85
Citi rates DMP as Buy (1) -
Citi observes, after discussions with Domino's Pizza management and those of Hungry Jack's, that there is a future in plant-based meat substitutes. Both businesses believe in the growth potential, with Hungry Jack's expecting 10% of the beef market to be based on plants by 2030.
Meanwhile, Domino's Pizza has closed its "dark kitchen" in Japan and moved to a more prominent location where it can access the takeaway market and allow consumers to relate more easily to the brand.
Domino's Pizza has also stated a preference for smaller stores as this increases efficiency. The broker considers the stock has multiple growth opportunities and potential for acquisitions in new territories. Buy rating and $159.05 target maintained.
Target price is $159.05 Current Price is $159.85 Difference: minus $0.8 (current price is over target).
If DMP meets the Citi target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $113.39, suggesting downside of -29.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Citi forecasts a full year FY22 dividend of 195.90 cents and EPS of 244.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 254.4, implying annual growth of 19.6%. Current consensus DPS estimate is 186.3, implying a prospective dividend yield of 1.2%. Current consensus EPS estimate suggests the PER is 63.2. |
Forecast for FY23:
Citi forecasts a full year FY23 dividend of 246.50 cents and EPS of 308.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 303.1, implying annual growth of 19.1%. Current consensus DPS estimate is 232.5, implying a prospective dividend yield of 1.4%. Current consensus EPS estimate suggests the PER is 53.0. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $6.38
Macquarie rates GNC as Outperform (1) -
ABARES has released its second east coast crop production estimates for winter, at 26.5mt. This is a 20% increase on the first estimate in June, and Macquarie raises its forecasts to the same level.
The broker's previous analysis suggested there was potential for 28.5mt by the end of the season. The broker notes GrainCorp has the greatest leverage within the agricultural sector to another above-average winter crop.
The weather outlook also indicates above-average rainfall for the grain belt on the east coast over the next three months. Macquarie retains an Outperform rating and raises the target to $7.32 from $7.27.
Target price is $7.32 Current Price is $6.38 Difference: $0.94
If GNC meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).
Current consensus price target is $6.81, suggesting upside of 6.5% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY21:
Macquarie forecasts a full year FY21 dividend of 24.80 cents and EPS of 59.40 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 57.6, implying annual growth of 106.9%. Current consensus DPS estimate is 29.9, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 11.1. |
Forecast for FY22:
Macquarie forecasts a full year FY22 dividend of 25.50 cents and EPS of 54.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 55.3, implying annual growth of -4.0%. Current consensus DPS estimate is 32.9, implying a prospective dividend yield of 5.1%. Current consensus EPS estimate suggests the PER is 11.6. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $4.92
Credit Suisse rates HLS as Outperform (1) -
Credit Suisse raises FY22 estimates for earnings per share by 45% because of higher coronavirus testing rates. The broker forecasts the testing will contribute $570m in revenue in the first half of FY22.
Credit Suisse now assumes reimbursement rates continue into 2022, unlikely to be cut with the election due next year. The broker also highlights FY23 estimates are not factoring in the full upside from international travel testing.
Outperform retained. Target rises to $5.50 from $5.35.
Target price is $5.50 Current Price is $4.92 Difference: $0.58
If HLS meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).
Current consensus price target is $4.99, suggesting downside of -0.1% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Credit Suisse forecasts a full year FY22 dividend of 20.40 cents and EPS of 45.99 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 31.3, implying annual growth of N/A. Current consensus DPS estimate is 16.1, implying a prospective dividend yield of 3.2%. Current consensus EPS estimate suggests the PER is 16.0. |
Forecast for FY23:
Credit Suisse forecasts a full year FY23 dividend of 12.06 cents and EPS of 24.77 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 23.8, implying annual growth of -24.0%. Current consensus DPS estimate is 14.4, implying a prospective dividend yield of 2.9%. Current consensus EPS estimate suggests the PER is 21.0. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $1.32
Macquarie rates MCR as Neutral (3) -
Mincor Resources has announced a $65m capital raising at $1.28/share. This will enable the company to construct a mine camp at Cassini.
The capital raising was unexpected but does provide greater financial flexibility, Macquarie assesses.
Macquarie was encouraged by the recent exploration results at Golden Mile and Location1 and now expects drilling activity will accelerate.
Neutral rating maintained. Target is reduced to $1.35 from $1.40.
Target price is $1.35 Current Price is $1.32 Difference: $0.03
If MCR meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY22:
Macquarie forecasts a full year FY22 dividend of 0.00 cents and EPS of 5.40 cents. |
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 0.00 cents and EPS of 14.00 cents. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $6.68
Macquarie rates SFR as Outperform (1) -
Sandfire Resources has discovered mineralisation along strike from the A4 open pit at the Motheo project in Botswana. Macquarie assesses this is effectively a new discovery and should deliver a material increase in mining inventory.
The near-term catalysts are a pre-feasibility study and maiden reserve for the A4 deposit. The broker suggests buoyant copper prices underpin upgrade momentum and retains an Outperform rating. Target is steady at $9.70.
Target price is $9.70 Current Price is $6.68 Difference: $3.02
If SFR meets the Macquarie target it will return approximately 45% (excluding dividends, fees and charges).
Current consensus price target is $7.67, suggesting upside of 17.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Macquarie forecasts a full year FY22 dividend of 25.00 cents and EPS of 100.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 115.1, implying annual growth of 19.5%. Current consensus DPS estimate is 31.4, implying a prospective dividend yield of 4.8%. Current consensus EPS estimate suggests the PER is 5.7. |
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 6.00 cents and EPS of 25.30 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 2.5, implying annual growth of -97.8%. Current consensus DPS estimate is 2.4, implying a prospective dividend yield of 0.4%. Current consensus EPS estimate suggests the PER is 260.8. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $42.32
Credit Suisse rates SHL as Outperform (1) -
Credit Suisse raises FY22 estimates for earnings per share by 9% because of higher coronavirus testing rates in Australia. The broker forecasts the testing will contribute $1.2bn in revenue in the first half of FY22.
Credit Suisse now assumes reimbursement rates continue into 2022, unlikely to be cut with the election due next year. The broker also highlights FY23 estimates are not factoring in the full upside from international travel testing.
Australian testing assumptions for coronavirus in FY23 account for around 7% of Sonic Healthcare's Australian pathology revenue.
Outperform retained. Target rises to $46.50 from $45.00.
Target price is $46.50 Current Price is $42.32 Difference: $4.18
If SHL meets the Credit Suisse target it will return approximately 10% (excluding dividends, fees and charges).
Current consensus price target is $42.61, suggesting upside of 2.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Credit Suisse forecasts a full year FY22 dividend of 97.35 cents and EPS of 254.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 227.5, implying annual growth of -17.4%. Current consensus DPS estimate is 97.6, implying a prospective dividend yield of 2.3%. Current consensus EPS estimate suggests the PER is 18.3. |
Forecast for FY23:
Credit Suisse forecasts a full year FY23 dividend of 102.22 cents and EPS of 169.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 153.4, implying annual growth of -32.6%. Current consensus DPS estimate is 103.9, implying a prospective dividend yield of 2.5%. Current consensus EPS estimate suggests the PER is 27.2. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
SVW SEVEN GROUP HOLDINGS LIMITED
Diversified Financials
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Overnight Price: $20.96
Ord Minnett rates SVW as Buy (1) -
Seven Group now owns around 70% of Boral ((BLD)) and Ord Minnett updates its modelling. Valuation remains unchanged.
Buy rating and $24 target maintained.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $24.00 Current Price is $20.96 Difference: $3.04
If SVW meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).
Current consensus price target is $26.96, suggesting upside of 27.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY22:
Ord Minnett forecasts a full year FY22 dividend of 48.00 cents and EPS of 172.30 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 174.2, implying annual growth of -5.2%. Current consensus DPS estimate is 48.3, implying a prospective dividend yield of 2.3%. Current consensus EPS estimate suggests the PER is 12.1. |
Forecast for FY23:
Ord Minnett forecasts a full year FY23 dividend of 53.00 cents and EPS of 196.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 201.2, implying annual growth of 15.5%. Current consensus DPS estimate is 49.5, implying a prospective dividend yield of 2.3%. Current consensus EPS estimate suggests the PER is 10.5. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Today's Price Target Changes
| Company | Last Price | Broker | New Target | Prev Target | Change | |
| AWC | Alumina Ltd | $2.10 | Citi | 2.10 | 1.80 | 16.67% |
| GNC | GrainCorp | $6.39 | Macquarie | 7.32 | 7.27 | 0.69% |
| HLS | Healius | $5.00 | Credit Suisse | 5.50 | 5.35 | 2.80% |
| MCR | Mincor Resources | $1.31 | Macquarie | 1.35 | 1.40 | -3.57% |
| SHL | Sonic Healthcare | $41.66 | Credit Suisse | 46.50 | 45.00 | 3.33% |
Summaries
| APT | Afterpay | No Rating - Morgan Stanley | Overnight Price $132.70 |
| AWC | Alumina Ltd | Neutral - Citi | Overnight Price $2.02 |
| DMP | Domino's Pizza Enterprises | Buy - Citi | Overnight Price $159.85 |
| GNC | GrainCorp | Outperform - Macquarie | Overnight Price $6.38 |
| HLS | Healius | Outperform - Credit Suisse | Overnight Price $4.92 |
| MCR | Mincor Resources | Neutral - Macquarie | Overnight Price $1.32 |
| SFR | Sandfire Resources | Outperform - Macquarie | Overnight Price $6.68 |
| SHL | Sonic Healthcare | Outperform - Credit Suisse | Overnight Price $42.32 |
| SVW | Seven Group | Buy - Ord Minnett | Overnight Price $20.96 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 6 |
| 3. Hold | 2 |
Wednesday 08 September 2021
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