Australian Broker Call

Macquarie rates AGL as No Rating (-1) -

While Macquarie anticipates a tough FY23 for AGL Energy, likely delivering flat earnings, the broker forecasts surge years in FY24 and FY25 as elevated raw material costs lift power prices. 

AGL Energy last benefited from surge years between FY17 and FY20, using the windfall profits to lift divided payouts to 75% and buy back $1.1bn in shares. The broker expects profits would this time be needed to reduce debt, fund provisions and reinvest in batteries and energy hubs.

Macquarie updates its earnings per share forecasts -0.14%, 46% and 8% through to FY26 to capture surge benefits. The broker remains on research restriction.

Current Price is $6.64. Target price not assessed.

Current consensus price target is $8.87, suggesting upside of 38.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.4

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

Ord Minnett rates BHP as Hold (3) -

Ord Minnett adopts a more cautious view on iron ore price forecasts on flat 2023 global steel production and ore supply growth from the major producers. Price estimates are lowered to US$121/t in 2022 and by -11% to US$94/t in 2023.

As a result, the broker's FY23 earnings forecasts for BHP Group, Rio Tinto and Fortescue Metals fall by -15-20%, though valuations are relatively unchanged beyond FY23.

The price target for BHP Group falls to $42 from $43, while the Hold rating is unchanged.

Target price is $42.00 Current Price is $38.17 Difference: $3.83
If BHP meets the Ord Minnett target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $41.18, suggesting upside of 13.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Morgan Stanley rates DXS as Overweight (1) -

Using history as a guide, Morgan Stanley estimates around 278bps of cap rate expansion risk to Dexus at present.

In 2011-14, bond yields were around the current 3.7% and Office cap rates were at circa 7.1% versus 4.8% today, implying around -8% share price downside.

The broker keeps its Overweight rating though lowers its target to $10.55 from $10.85. It's noted other factors including transactional evidence, income outlook and quality of building affect Office values. Industry View: In-line.

Target price is $10.55 Current Price is $7.91 Difference: $2.64
If DXS meets the Morgan Stanley target it will return approximately 33% (excluding dividends, fees and charges).

Current consensus price target is $10.27, suggesting upside of 31.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

Ord Minnett rates FMG as Hold (3) -

Ord Minnett adopts a more cautious view on iron ore price forecasts on flat 2023 global steel production and ore supply growth from the major producers. Price estimates are lowered to US$121/t in 2022 and by -11% to US$94/t in 2023.

As a result, the broker's FY23 earnings forecasts for BHP Group, Rio Tinto and Fortescue Metals fall by -15-20%, though valuations are relatively unchanged beyond FY23.

The price target for Fortescue Metals falls to $17.50 from $19, while the Hold rating is unchanged.

Target price is $17.50 Current Price is $16.76 Difference: $0.74
If FMG meets the Ord Minnett target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $16.34, suggesting upside of 2.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

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

Macquarie rates GPT as Outperform (1) -

With GPT Group having acquired a $681.7m portfolio from Ascot Capital in November, Macquarie expects it would be favourable for the company to seed these assets in an industrial fund. 

The company's uncommitted development pipeline stands at $1.9bn, and Macquarie expects establishment of the fund could provide $750m in capacity to this, leaving an additional $1.1bn required. Macquarie estimates the net outcome of a sell-down would be 0.2% dilutive to GPT Group. 

The Outperform rating and $4.70 target price are retained.

Target price is $4.70 Current Price is $3.89 Difference: $0.81
If GPT meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $4.73, suggesting upside of 23.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.2

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

Morgans rates IBG as No Rating (-1) -

Ironbark Zinc has been evaluating the 100% owned Citronen zinc-lead project in Greenland. A major risk has been in financing the project via an application to the US export credit agency (EXIM Bank), explains Morgans.

While the application is still pending, the broker notes EXIM Bank has satisfied a major due diligence condition for the US$657m facility, with both parties confirming their intention to continue to work together.

The goal of reaching final investment decision (FID) in 2022 is now unrealistic, according to the board, which is now considering additional pathways to realise maximum value from the Citronen project.

The company will explore alternate financing options including export credit agencies and strategic partners to complete funding ahead of the FID, explains the analyst.

Morgans sets no target price or rating.

Current Price is $0.02. Target price not assessed.

The company's fiscal year ends in June.

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

Ord Minnett rates LLC as Buy (1) -

Despite a challenging leasing environment, Lendlease Group has yet to see capitalisation rate expansion in the San Francisco office market.

The analyst at Ord Minnett reports from a tour of projects in San Francisco that vacancy is a high 15%, with physical office occupancy just 43% of pre-covid levels.

Despite these concerns, the broker supports Lendlease Group's decision to proceed on its new projects (Van Ness Avenue and the Google campus). It's thought new projects will benefit in a number of ways including via a flight to quality.

The Buy rating and $12.50 target are retained.

Target price is $12.50 Current Price is $9.34 Difference: $3.16
If LLC meets the Ord Minnett target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $12.41, suggesting upside of 36.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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

Macquarie rates OZL as No Rating (-1) -

OZ Minerals approved its West Musgrave copper-nickel project and first production is expected in the second half of 2025. While the announcement has little impact on Macquarie's estimates, a faster than expected ramp up of the project has seen the broker lift earnings per share forecasts 21% and 14% in 2025 and 2026.

Prior to company approval, OZ Minerals has secured all key regulatory approvals and a land access agreement from the Ngaanyatjarra people. The project is anticipated to deliver an average 28,000 tonnes nickel and 35,000 tonnes copper annually. 

Macquarie is currently on research restriction for the company and offers no target price or rating.

Current Price is $26.50. Target price not assessed.

Current consensus price target is $25.48, suggesting downside of -0.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

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

OZ Minerals will develop the West Musgrave copper-nickel project in Western Australia at a cost of $1.7bn, though Morgan Stanley suggests there may be further capex inflation, given the current environment.

The Equal-weight rating and 23.10 target are unchanged. Industry View: Attractive.

Target price is $23.10 Current Price is $26.50 Difference: minus $3.4 (current price is over target).
If OZL meets the Morgan Stanley target it will return approximately minus 13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $25.48, suggesting downside of -0.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

UBS rates OZL as Neutral (3) -

OZ Minerals' West Musgrave project has been approved after a feasibility study returned a slightly large project than previous reports. Throughput for the site is now estimated at 13.5m tonnes per annum and with 7% more metal, albeit with a 45% increase to capital expenditure and 28% increase to C1 costs. 

UBS finds commissioning on target for anticipated first production in the second half of 2025. While the lift in capital expenditure was in line with the broker's expectations, the longer mine life has resulted in 30% more metal production than forecast. 

The Neutral rating and target price of $26.50 are retained.

Target price is $26.50 Current Price is $26.50 Difference: $0
If OZL meets the UBS target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $25.48, suggesting downside of -0.5% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

UBS rates PMV as Buy (1) -

Ahead of Premier Investments' full year result on September 29, UBS is anticipating total sales of $1.4bn, earnings of $333m and net profit of $235m, down -1%, -13% and -13% year-on-year respectively, although the company is cycling a 53 week year with a 52 week year.

Recovery from Smiggle was a key driver in the second half, although declines are expected across the company's other brands in the half as they cycled tough comparables, including the typically strong performing Peter Alexander.

The Buy rating and target price of $23.00 are retained.

Target price is $23.00 Current Price is $21.21 Difference: $1.79
If PMV meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $25.68, suggesting upside of 25.7% (ex-dividends)

The company's fiscal year ends in July.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Ord Minnett rates RIO as Hold (3) -

Ord Minnett adopts a more cautious view on iron ore price forecasts on flat 2023 global steel production and ore supply growth from the major producers. Price estimates are lowered to US$121/t in 2022 and by -11% to US$94/t in 2023.

As a result, the broker's FY23 earnings forecasts for BHP Group, Rio Tinto and Fortescue Metals fall by -15-20%, though valuations are relatively unchanged beyond FY23.

The price target for Rio Tinto falls to $100 from $102, while the Hold rating is unchanged.

Target price is $100.00 Current Price is $93.00 Difference: $7
If RIO meets the Ord Minnett target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $105.07, suggesting upside of 19.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 0.6

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

UBS rates SSR as Buy (1) -

SSR Mining has announced the restart of its Copler mine operations on September 22 having received necessary regulatory approvals from the Turkish government. Based on the first week of production post-restart, UBS expects SSR Mining can reach the lower end of its 585-655,000 ounces guidance range. 

The Copler mine has been suspended since a cyanide leak in late June. A solid year from the Seabee project should support SSR Mining's results. 

The Buy rating and target price of $24.30 are retained.

Target price is $24.30 Current Price is $21.05 Difference: $3.25
If SSR meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

UBS rates STO as Buy (1) -

The Federal Court has suspended drilling at Santos' Barossa gas project as of September 21, the result of a successful appeal by a Munupi clan elder. UBS expects Santos will apply for an expedited appeal hearing, but at best expects an outcome in mid-January.

Drilling at the project will remain suspended until a a drilling environment plan is approved. Santos expects capital expenditure contingency can absorb the added costs of delays, but UBS has conservatively added a further $100m in expenditure to the project. The broker also expects first gas to be delayed to the end of 2025.

The Buy rating is retained and the target price decreases to $9.40 from $9.45.

Target price is $9.40 Current Price is $7.42 Difference: $1.98
If STO meets the UBS target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $9.68, suggesting upside of 40.0% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

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

Market Sentiment: 1.0

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

Ord Minnett rates WHC as Buy (1) -

Ord Minnett likes Whitehaven Coal's resolution to commence a 12-month program to buyback 25% of shares on issue.

It's also noted thermal coal prices remain near all-time highs and the analyst believes prices can remain higher for longer during northern winter months. The target rises to $9.00 from $8.00. Buy.

However, peak coal prices may have arrived, explains the broker, as export volumes in Indonesia have jumped, and the EU has softened on the extent of bans applying to Russian coal.

Target price is $9.00 Current Price is $9.20 Difference: minus $0.2 (current price is over target).
If WHC meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.64, suggesting upside of 22.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

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