Australian Broker Call

Credit Suisse rates AHY as Underperform (5) -

Asaleo's pre-released result and revised guidance implied a -35% drop in earnings -- exactly the share price fall on the day. The broker anticipates further earnings declines in 2019 due to sustained higher pulp prices and an ongoing inability to raise product prices.

The company has announced a strategic review which may also lead to restructuring costs. Target falls to 78c from $1.30, Underperform retained.

Target price is $0.78 Current Price is $0.85 Difference: minus $0.07 (current price is over target).
If AHY meets the Credit Suisse target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.96, suggesting upside of 12.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.7

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

Macquarie rates AHY as Neutral (3) -

The company has revised down earnings guidance for FY18 to $80-85m from $113-119m. The business has been affected by lower volumes, lower revenue amid increasing costs. The company expects to recognise material impairments and write-downs.

Macquarie reduces FY18 estimates for earnings per share by -45.6% and FY19 by -43.9%. Target is reduced to $0.84 from $1.45 to reflect lower earnings and increased gearing. Neutral maintained. The B2B area is performing in line with expectations and now delivering around 50% of group EBITDA following the downgrade.

Target price is $0.84 Current Price is $0.85 Difference: minus $0.01 (current price is over target).
If AHY meets the Macquarie target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.96, suggesting upside of 12.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.7

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

Macquarie rates AST as Outperform (1) -

The Australian Energy Regulator has released its integrated system plan (ISP). Macquarie finds the plan is highlighting the emerging growth opportunities in a rapidly changing market.

Ausnet is in a favourable position with a bias towards transmission and has strong exposure to these opportunities in the broker's opinion. Outperform maintained. Target is $1.74.

Target price is $1.74 Current Price is $1.59 Difference: $0.15
If AST meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $1.69, suggesting upside of 6.5% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.2

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

Citi rates GXY as Buy (1) -

Citi found the quarterly production update largely in-line, sticking with its Buy rating and $4.30 price target. Minor adjustments have been made to the modeling with the analysts explaining lower than expected recovery of 56% has been offset by higher grade of 1.17% and increased throughput.

Volumes and grade are expected to improve in 4Q18 when the plant upgrades are completed. Also, better recoveries should assist the company with boosting 2019/20 production to circa 220kt and average of 230ktpa beyond 2020.

Target price is $4.30 Current Price is $3.17 Difference: $1.13
If GXY meets the Citi target it will return approximately 36% (excluding dividends, fees and charges).

Current consensus price target is $3.58, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Credit Suisse rates GXY as Neutral (3) -

Galaxy's production increased in the June quarter on higher grades, improved recovery and above-nameplate throughput, the broker notes. After a soft March quarter, margins also improved.

The broker retains Neutral and a $3.15 target, acknowledging the catalyst of completion of the Sal da Vida northern tenement sale to POSCO.

Target price is $3.15 Current Price is $3.17 Difference: minus $0.02 (current price is over target).
If GXY meets the Credit Suisse target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.58, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Macquarie rates GXY as Outperform (1) -

Mount Cattlin had a strong quarter and concentrate sales exceeded Macquarie's expectations, supported by strong processed grade and recoveries. The broker believes Sal de Vida's eventual development could be altered by a potential JV arrangement and James Bay remains a strong long-term growth prospect.

Incorporating the quarterly result means a -5% drop in 2018 estimates because of reductions in Macquarie's realised price assumptions. Outperform rating and $3.90 target maintained.

Target price is $3.90 Current Price is $3.17 Difference: $0.73
If GXY meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $3.58, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Morgan Stanley rates GXY as Equal-weight (3) -

June quarter production was ahead of Morgan Stanley's estimates. Average margins rose to US$534/t, driven by higher achieved prices and grades.

Equal-weight rating. Target is $2.80. Industry View: In-Line.

Target price is $2.80 Current Price is $3.17 Difference: minus $0.37 (current price is over target).
If GXY meets the Morgan Stanley target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.58, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

UBS rates GXY as Buy (1) -

The June quarter was largely in line with UBS estimates. Spodumene concentrate production and grade were 47,900t and 5.8% respectively. Concentrate sold was slightly below expectations.

The company remains on track to deliver nameplate recoveries of 70-75% from the December quarter. UBS believes the yield improvement projects are critical to achieving 200,000+ tpa. Buy rating and $3.75 target maintained.

Target price is $3.75 Current Price is $3.17 Difference: $0.58
If GXY meets the UBS target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $3.58, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Credit Suisse rates NCM as Neutral (3) -

The broker applauds the appointment of a highly respected and experienced mining engineer to Newcrest's board, which up to now included no engineers, despite the company's core business of developing innovative mining technology.

As Newcrest looks to the America's for growth, Peter Tomsett's global knowledge should prove highly valuable. The broker retains Neutral and a $20.30 target.

Target price is $20.30 Current Price is $20.72 Difference: minus $0.42 (current price is over target).
If NCM 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 $21.04, suggesting upside of 1.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: -0.1

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

Morgan Stanley rates NEW as Equal-weight (3) -

Morgan Stanley estimates that New Energy Solar can reach cash coverage of distributions after fees of around 98% by FY21, based on the existing portfolio. The broker also believes the company's fee structure is acceptable based on benchmarks.

The stock is considered fairly valued at an FY19 dividend yield of 5%, unfranked. Equal-weight retained. Industry view: Cautious. Target is $1.53.

Target price is $1.53 Current Price is $1.45 Difference: $0.08
If NEW meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.0

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

Citi rates OSH as Sell (5) -

Citi has retained its Sell rating while adding 3% to its price target, now at $7.01. Financial guidance from the company was a bit different in composition, but all-in-all in line, comment the analysts.

Confidence in value emerging from the Alaskan assets has grown. Citi analysts believe Oil Search will exercise and partially sell down its option to increase equity and assign value to its exploration acreage.

Target price is $7.01 Current Price is $8.80 Difference: minus $1.79 (current price is over target).
If OSH meets the Citi target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.52, suggesting downside of -3.2% (ex-dividends)

Forecast for FY18:

Forecast for FY19:

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

UBS rates OSH as Neutral (3) -

The company has reiterated 2018 guidance and production is now expected to be towards the top end of the 23-26 mmboe range. UBS maintains a Neutral rating as the risks to LNG expansion timeframes persist. This includes the alignment from JV partners and approval of fiscal arrangements.

The broker reduces 2018 estimates for EPS by -13% to reflect lower realised revenue in the first half. 2019-20 EPS is increased by 2-3% to reflect successful contracting of PNG LNG volumes under a long-term contract. Target rises to $8.70 from $8.50.

Target price is $8.70 Current Price is $8.80 Difference: minus $0.1 (current price is over target).
If OSH 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 $8.52, suggesting downside of -3.2% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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

Citi rates PPT as Neutral (3) -

Citi notes net flows continue to be negative, albeit there is improvement from the previous quarter. It appears underperformance in the key Australian equities asset class hasn't helped.

Minor changes have been made to forecasts. The analysts are toying with the idea that, until the new CEO enters the building on 24th September, Perpetual's overall strategy may remain in limbo. Neutral rating and $45 price target retained.

Target price is $45.00 Current Price is $43.60 Difference: $1.4
If PPT meets the Citi target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $44.05, suggesting upside of 1.0% (ex-dividends)

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

Credit Suisse rates PPT as Neutral (3) -

Perpetual's funds under management grew by 2% in the June Q but 3% was provided by positive markets, hence the balance represents outflows and distributions, the broker notes. Yet FUM fell below the broker's expectations on a balance of market underperformance but smaller than forecast outflows.

That said, Perpetual has now suffered five quarters of outflows along with a deterioration in fund performance. The outlook is thus weak but the relative forward PE is near an all-time low and the new CEO will likely focus more on costs than growth, the broker suggests.

Neutral retained, target falls to $45 from $46.

Target price is $45.00 Current Price is $43.60 Difference: $1.4
If PPT meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $44.05, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

Morgan Stanley rates PPT as Equal-weight (3) -

Funds under management for the June quarter were 1.5% ahead of Morgan Stanley's forecasts as slightly weaker-than-expected flows were more than offset by market appreciation.

Equal-weight rating. Target is $46. Industry view: In-line.

Target price is $46.00 Current Price is $43.60 Difference: $2.4
If PPT meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $44.05, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

UBS rates PPT as Sell (5) -

Assets under management of $500m were ahead of UBS estimates for the June quarter. This primarily reflects higher AUM in lower margin cash & fixed income funds.

Despite better growth across these aspects, UBS remains cautious as underperformance across key Australian equity funds persists and net outflow risks remain high. Target is raised to $40.00 from $39.40. Sell retained. 

Target price is $40.00 Current Price is $43.60 Difference: minus $3.6 (current price is over target).
If PPT meets the UBS target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $44.05, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.1

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

Credit Suisse rates QBE as Neutral (3) -

QBE faces a major reinsurance renewal in January and management will have to choose between increasing the cost they pay or otherwise increasing earnings volatility, the broker notes. Either will weigh on sentiment unless margins can show significant improvement over 2018.

The broker retains Neutral and a $10.20 target, warning simple margin improvement is not the whole story amid 2018 restructuring.

Target price is $10.20 Current Price is $9.82 Difference: $0.38
If QBE meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $11.08, suggesting upside of 12.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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 REG as Buy (1) -

UBS has conducted analysis to better understand the growth and profitability profile of Regis Healthcare. The broker has modelled earnings of 10 developments and expects these facilities to provide incremental earnings contributions of around $5m and $16m in FY19 and FY20 respectively.

The contribution slips back to around $4m in FY21. The broker updates forecasts to better align with the ramp up of the greenfield program and envisages potential for consensus upgrades and a re-rating. Buy rating maintained. Target is reduced to $4.80 from $5.00.

Target price is $4.80 Current Price is $3.42 Difference: $1.38
If REG meets the UBS target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $4.20, suggesting upside of 22.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

UBS rates RHC as Neutral (3) -

UBS analysts have dived deeper into the financials and product offering at Capio, currently the subject of an unsolicited offer from Ramsay's French JV. The analysts note Capio operates predominantly outpatient or day-case setting services.

As things stand, Return on Invested Capital is only 7%, well below Ramsay's 12% in FY18. UBS does not think Ramsay's JV offer should be lifted substantially to get Capio shareholders over the line.

Better to develop these services organically, say the analysts. Also, lifting the bid for Capio by circa 25% (which could be achieved) would take Ramsay's debt coverage to 3x debt/EBITDA; above the level after the GdS acquisition in France, point out the analysts. Neutral. Target $54.

Target price is $54.00 Current Price is $54.55 Difference: minus $0.55 (current price is over target).
If RHC 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 $60.46, suggesting upside of 10.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Citi rates RIO as Buy (1) -

Citi analysts saw a mixed quarterly production report, only partially offset through better prices for bulks and a weaker AUD. Earnings estimates have been reduced by -2%.

Nevertheless, with the analysts upgrading commodity prices forecasts, and incorporating a weaker AUD, the price target lifts to $87 from $86. Buy rating retained.

Target price is $87.00 Current Price is $79.16 Difference: $7.84
If RIO meets the Citi target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $89.69, suggesting upside of 13.3% (ex-dividends)

Forecast for FY18:

Forecast for FY19:

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

Credit Suisse rates RIO as Outperform (1) -

Strong iron ore shipments in the June Q has led to FY guidance being tightened towards the top of the range. Other commodities were a mixed bag, the broker notes.

There was little to move the dial, the broker suggests, shifting focus towards a strong balance sheet offering a world of growth and/or capital management possibilities. Outperform and $89 target retained.

Target price is $89.00 Current Price is $79.16 Difference: $9.84
If RIO meets the Credit Suisse target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $89.69, suggesting upside of 13.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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

Macquarie rates RIO as Outperform (1) -

June quarter production was firm and output of iron ore, alumina, aluminium and coking coal were all within 3% of Macquarie's forecasts.

Incorporating the results and a reduction in production guidance for IOC and titanium dioxide has translated to slight reductions in earnings forecasts.

Target price of $94 and Outperform rating maintained.

Target price is $94.00 Current Price is $79.16 Difference: $14.84
If RIO meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $89.69, suggesting upside of 13.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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

UBS rates RIO as Buy (1) -

Production results in the June quarter were in line with UBS estimates, with the exception of copper and titanium dioxide. Given the strong result, guidance for all commodities is unchanged except for a narrowing of the titanium dioxide band and a reduction in IOC's iron ore pellet and concentrate production.

The company expects to achieve the upper end of its 330-340mt iron ore guidance range. Coal and aluminium guidance will be adjusted post the completion of asset disposals.

Buy rating maintained along with a $93 target.

Target price is $93.00 Current Price is $79.16 Difference: $13.84
If RIO meets the UBS target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $89.69, suggesting upside of 13.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

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

Macquarie rates SAR as Neutral (3) -

The company produced 78,900 ounces of gold in the June quarter to deliver a record production outcome for FY18 of 316,500 ounces.

Production guidance for FY19 has been lifted to 320-345,000 ounces and Macquarie's forecasts are at the top of this range. Exploration is considered a key catalyst, with Karari providing the base load.

Neutral rating and $2.20 target maintained.

Target price is $2.20 Current Price is $2.05 Difference: $0.15
If SAR meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.5

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