Australian Broker Call
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January 11, 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: 04:10 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
| ALU - | ALTIUM | Downgrade to Hold from Buy | Deutsche Bank |
| JBH - | JB HI-FI | Upgrade to Overweight from Equal-weight | Morgan Stanley |
| SBM - | ST BARBARA | Downgrade to Sell from Neutral | Citi |
Overnight Price: $14.12
Deutsche Bank rates ALU as Downgrade to Hold from Buy (3) -
Deutsche Bank believes the stock is attractive but downgrades to Hold from Buy on valuation grounds. Target is raised to $12.50 from $9.50.
The stock deserves to trade at a premium, but the broker points out that it is trading at a 43% premium to domestic and 13% premium to international peers, which currently prices in its attractive characteristics.
Target price is $12.50 Current Price is $14.12 Difference: minus $1.62 (current price is over target).
If ALU 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 $11.20, suggesting downside of -20.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Deutsche Bank forecasts a full year FY18 dividend of 26.03 cents and EPS of 37.74 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 33.4, implying annual growth of 53.9%. Current consensus DPS estimate is 29.2, implying a prospective dividend yield of 2.1%. Current consensus EPS estimate suggests the PER is 42.3. |
Forecast for FY19:
Deutsche Bank forecasts a full year FY19 dividend of 24.00 cents and EPS of 34.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 37.5, implying annual growth of 12.3%. Current consensus DPS estimate is 33.5, implying a prospective dividend yield of 2.4%. Current consensus EPS estimate suggests the PER is 37.7. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $0.90
Citi rates AX1 as Buy (1) -
A combination of lower gross margin assumptions (due to Amazon, negative) and a reduced discount (also thanks to Amazon, positive) plus increased market multiples has pushed up the target price to $1.02 from $0.95 prior.
Earnings estimates have fallen (see above), but the Buy rating remains in place.
Target price is $1.02 Current Price is $0.90 Difference: $0.12
If AX1 meets the Citi target it will return approximately 13% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
BLX BEACON LIGHTING GROUP LIMITED
Furniture & Renovation
More Research Tools In Stock Analysis - click HERE
Overnight Price: $1.59
Citi rates BLX as Buy (1) -
Citi believes the company is well placed to benefit from a more rational competitive environment following the closure of Masters. An accelerated roll-out of stores in FY17 should also provide benefits.
Nevertheless, the broker is concerned about price pressures and the potential to canibalise existing stores. Buy rating and $1.60 target maintained.
Target price is $1.60 Current Price is $1.59 Difference: $0.01
If BLX meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 5.20 cents and EPS of 9.00 cents. |
Forecast for FY19:
Citi forecasts a full year FY19 dividend of 5.10 cents and EPS of 8.40 cents. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Deutsche Bank rates CYB as Initiation of coverage with Sell (5) -
Deutsche Bank has initiated coverage with a sell rating, predicting margin pressure is on the way, while the shares are trading at a premium vis a vis UK peers.
Deutsche Bank's maiden price target of 283 suggests downside of -13%.
Current Price is $5.64. Target price not assessed.
Current consensus price target is $5.42, suggesting downside of -3.8% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY18:
Current consensus EPS estimate is 42.0, implying annual growth of N/A. Current consensus DPS estimate is 6.3, implying a prospective dividend yield of 1.1%. Current consensus EPS estimate suggests the PER is 13.4. |
Forecast for FY19:
Current consensus EPS estimate is 53.8, implying annual growth of 28.1%. Current consensus DPS estimate is 66.7, implying a prospective dividend yield of 11.8%. Current consensus EPS estimate suggests the PER is 10.5. |
This company reports in GBP. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $28.19
Morgan Stanley rates JBH as Upgrade to Overweight from Equal-weight (1) -
Christmas was stronger than expected and the improved technology cycle, along with greater confidence in the company's ability to compete with Amazon, leads Morgan Stanley to upgrade to Overweight from Equal-weight.
Despite the recent rally the broker considers the shares cheap and, while remaining cautious, suspects the company is insulated somewhat from the broader Australian consumer cycle.
Target is raised to $32 from $25 and a Cautious industry view is maintained.
Target price is $32.00 Current Price is $28.19 Difference: $3.81
If JBH meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).
Current consensus price target is $25.71, suggesting downside of -8.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 137.00 cents and EPS of 212.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 207.0, implying annual growth of 34.2%. Current consensus DPS estimate is 133.5, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 13.6. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 151.00 cents and EPS of 231.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 213.8, implying annual growth of 3.3%. Current consensus DPS estimate is 138.3, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 13.2. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
MFG MAGELLAN FINANCIAL GROUP LIMITED
Wealth Management & Investments
More Research Tools In Stock Analysis - click HERE
Overnight Price: $27.37
Morgans rates MFG as Hold (3) -
Morgans believes the stock represents reasonable value but retains a Hold rating, preferring to use any global market volatility to take a more positive position.
The company reported December funds under management were up 14.4% over the half year. Morgans raises the target to $29.10 from $28.22.
Target price is $29.10 Current Price is $27.37 Difference: $1.73
If MFG meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).
Current consensus price target is $28.81, suggesting upside of 5.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 103.00 cents and EPS of 137.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 121.2, implying annual growth of 3.7%. Current consensus DPS estimate is 101.4, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 22.6. |
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 115.00 cents and EPS of 153.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 149.7, implying annual growth of 23.5%. Current consensus DPS estimate is 116.3, implying a prospective dividend yield of 4.2%. Current consensus EPS estimate suggests the PER is 18.3. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $81.67
Morgans rates RIO as Hold (3) -
The company has a strong set of fundamentals, Morgans believes, as it re-shapes its portfolio. The market, in turn, has rewarded the company by applying what the broker considers is a premium to its implied market valuation.
As the stock is close to fair value Morgans retains a Hold rating. Target is raised to $73.33 from $62.38.
Target price is $73.33 Current Price is $81.67 Difference: minus $8.34 (current price is over target).
If RIO meets the Morgans target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $79.10, suggesting downside of -3.1% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Morgans forecasts a full year FY17 dividend of 359.14 cents and EPS of 631.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 609.3, implying annual growth of N/A. Current consensus DPS estimate is 360.1, implying a prospective dividend yield of 4.4%. Current consensus EPS estimate suggests the PER is 13.4. |
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 363.05 cents and EPS of 727.39 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 569.6, implying annual growth of -6.5%. Current consensus DPS estimate is 327.0, implying a prospective dividend yield of 4.0%. Current consensus EPS estimate suggests the PER is 14.3. |
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: $3.89
Citi rates SBM as Downgrade to Sell from Neutral (5) -
The December quarter was positive but the current share price exceeds Citi's valuation so the rating is downgraded to Sell from Neutral.
Cost guidance is expected with the full report on January 23, but as the lift in production was driven by higher grades in the quarter rather than tonnage, the broker expects unit costs to fall. Target is raised to $3.40 from $3.10.
Target price is $3.40 Current Price is $3.89 Difference: minus $0.49 (current price is over target).
If SBM meets the Citi target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $3.37, suggesting downside of -13.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 12.00 cents and EPS of 39.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 34.3, implying annual growth of 8.2%. Current consensus DPS estimate is 8.5, implying a prospective dividend yield of 2.2%. Current consensus EPS estimate suggests the PER is 11.3. |
Forecast for FY19:
Citi forecasts a full year FY19 dividend of 9.00 cents and EPS of 29.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 99.0, implying annual growth of 188.6%. Current consensus DPS estimate is 8.0, implying a prospective dividend yield of 2.1%. Current consensus EPS estimate suggests the PER is 3.9. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgans rates STO as Reduce (5) -
As the oil price has recovered to US$70/bbl the company's profitability has improved to the point where Morgans is no longer concerned about the capital position.
Accordingly, the target is re-set in line with valuation, at $4.32, up from $2.84. The broker envisages potential for the company to use its stronger share price to pursue scrip-funded acquisitions. Reduce rating maintained.
Target price is $4.32 Current Price is $5.45 Difference: minus $1.13 (current price is over target).
If STO meets the Morgans target it will return approximately minus 21% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $5.21, suggesting downside of -4.5% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Morgans forecasts a full year FY17 dividend of 0.00 cents and EPS of 18.22 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 15.0, implying annual growth of N/A. Current consensus DPS estimate is 0.4, implying a prospective dividend yield of 0.1%. Current consensus EPS estimate suggests the PER is 36.3. |
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 0.00 cents and EPS of 35.13 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 25.2, implying annual growth of 68.0%. Current consensus DPS estimate is 2.0, implying a prospective dividend yield of 0.4%. 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: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Summaries
| ALU | ALTIUM | Downgrade to Hold from Buy - Deutsche Bank | Overnight Price $14.12 |
| AX1 | ACCENT GROUP | Buy - Citi | Overnight Price $0.90 |
| BLX | BEACON LIGHTING | Buy - Citi | Overnight Price $1.59 |
| CYB | CYBG | Initiation of coverage with Sell - Deutsche Bank | Overnight Price $5.64 |
| JBH | JB HI-FI | Upgrade to Overweight from Equal-weight - Morgan Stanley | Overnight Price $28.19 |
| MFG | MAGELLAN FINANCIAL GROUP | Hold - Morgans | Overnight Price $27.37 |
| RIO | RIO TINTO | Hold - Morgans | Overnight Price $81.67 |
| SBM | ST BARBARA | Downgrade to Sell from Neutral - Citi | Overnight Price $3.89 |
| STO | SANTOS | Reduce - Morgans | Overnight Price $5.45 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 3 |
| 3. Hold | 3 |
| 5. Sell | 3 |
Monday 15 January 2018
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