Australian Broker Call
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January 05, 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: 04:06 PM
Your daily news report on the latest recommendation, valuation, forecast and opinion changes.
This report includes concise but limited reviews of research recently published by Stockbrokers, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end.
For more info about the different terms used by stockbrokers, as well as the different methodologies behind similar sounding ratings, download our guide HERE
Today's Upgrades and Downgrades
| BPT - | BEACH ENERGY | Downgrade to Sell from Neutral | Citi |
AAD ARDENT LEISURE GROUP
Travel, Leisure & Tourism
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Overnight Price: $1.99
Ord Minnett rates AAD as Hold (3) -
The company has sold its bowling & entertainment division for $160m. The sale simplifies the company into two divisions, both with potential for meaningful upside in the near term, in Ord Minnett's view.
The broker envisage a clear path for upside to the medium term but, given execution risk, maintains a Hold rating. Target is raised to $1.85 from $1.65.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $1.85 Current Price is $1.99 Difference: minus $0.14 (current price is over target).
If AAD meets the Ord Minnett target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $1.88, suggesting downside of -5.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 4.00 cents and EPS of 4.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 2.3, implying annual growth of N/A. Current consensus DPS estimate is 3.9, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 86.5. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 6.00 cents and EPS of 6.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 5.8, implying annual growth of 152.2%. Current consensus DPS estimate is 5.5, implying a prospective dividend yield of 2.8%. Current consensus EPS estimate suggests the PER is 34.3. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
ARB ARB CORPORATION LIMITED
Automobiles & Components
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Overnight Price: $17.70
Ord Minnett rates ARB as Lighten (4) -
The company has guided to pre-tax profit at around 10% above the prior year. This is broadly in line with Ord Minnett's forecasts and suggests strong growth is likely to have been driven by exports as well as a recovery in OEM business.
The broker considers the stock high quality but believes the opportunity is currently fully priced in. Lighten retained. Target is raised to $15.00 from $13.60.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $15.00 Current Price is $17.70 Difference: minus $2.7 (current price is over target).
If ARB 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 $16.78, suggesting downside of -5.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 37.00 cents and EPS of 67.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 68.7, implying annual growth of 10.6%. Current consensus DPS estimate is 37.4, implying a prospective dividend yield of 2.1%. Current consensus EPS estimate suggests the PER is 25.8. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 41.00 cents and EPS of 74.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 76.0, implying annual growth of 10.6%. Current consensus DPS estimate is 41.3, implying a prospective dividend yield of 2.3%. Current consensus EPS estimate suggests the PER is 23.3. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $1.36
Citi rates BPT as Downgrade to Sell from Neutral (5) -
Citi analysts have downgraded to Sell from Neutral while lifting their price target to $1.09 from $0.97. Today's update has resulted in sizable reductions to forecasts due to changes in accountancy and the timing of the Lattice deal.
Citi notes the strong rally in crude oil prices but also believes weakness will set in post winter peak demand. The analysts have been of the view that oil stocks in general are expensive, and they remain so today.
Target price is $1.09 Current Price is $1.36 Difference: minus $0.27 (current price is over target).
If BPT 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 $0.94, suggesting downside of -30.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Citi forecasts a full year FY18 EPS of 6.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 7.9, implying annual growth of -61.9%. Current consensus DPS estimate is 2.2, implying a prospective dividend yield of 1.6%. Current consensus EPS estimate suggests the PER is 17.2. |
Forecast for FY19:
Citi forecasts a full year FY19 EPS of 7.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 9.1, implying annual growth of 15.2%. Current consensus DPS estimate is 2.0, implying a prospective dividend yield of 1.5%. Current consensus EPS estimate suggests the PER is 14.9. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $0.28
Ord Minnett rates CAJ as Accumulate (2) -
The company has acquired Radiology Tasmania, which Ord Minnett suggests involves a significant uplift in FY19 operating earnings.
The broker increases FY18 and FY19 estimates for earnings per share by 33% and 41% respectively. Without factoring in any upside from a potential take over of Integral Diagnostics ((IDX)) the broker considers the stock is cheap.
Accumulate rating retained. Target is raised to 32c from 28c.
Target price is $0.32 Current Price is $0.28 Difference: $0.04
If CAJ meets the Ord Minnett target it will return approximately 14% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 0.50 cents and EPS of 0.90 cents. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 0.70 cents and EPS of 1.80 cents. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
DLX DULUX GROUP LIMITED
Building Products & Services
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Overnight Price: $7.39
Citi rates DLX as Sell (5) -
The decision to get rid of most of the loss making sub-scale JV operations in China/Hong Kong coatings is seen as a positive by Citi, but it doesn't change the Sell rating.
Target price is $7.50 Current Price is $7.39 Difference: $0.11
If DLX meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).
Current consensus price target is $7.00, suggesting downside of -5.3% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 27.00 cents and EPS of 38.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 37.7, implying annual growth of 1.1%. Current consensus DPS estimate is 27.5, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 19.6. |
Forecast for FY19:
Citi forecasts a full year FY19 dividend of 28.00 cents and EPS of 38.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 39.2, implying annual growth of 4.0%. Current consensus DPS estimate is 28.5, implying a prospective dividend yield of 3.9%. Current consensus EPS estimate suggests the PER is 18.9. |
Market Sentiment: -0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Summaries
| AAD | ARDENT LEISURE | Hold - Ord Minnett | Overnight Price $1.99 |
| ARB | ARB CORP | Lighten - Ord Minnett | Overnight Price $17.70 |
| BPT | BEACH ENERGY | Downgrade to Sell from Neutral - Citi | Overnight Price $1.36 |
| CAJ | CAPITOL HEALTH | Accumulate - Ord Minnett | Overnight Price $0.28 |
| DLX | DULUX GROUP | Sell - Citi | Overnight Price $7.39 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 2. Accumulate | 1 |
| 3. Hold | 1 |
| 4. Reduce | 1 |
| 5. Sell | 2 |
Monday 15 January 2018
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