Australian Broker Call

Macquarie rates AMC as Outperform (1) -

Macquarie assesses the sustainability debate has become more balanced in recent months. Coca-Cola has noted that PET is recyclable and able to form part of a circular economy.

There is more work to do on flexibles for these to be fully recyclable. The company has reiterated FY20 guidance and Macquarie notes it is in a defensive end market and has limited industrial exposure.

Outperform rating maintained. Target is steady at $16.87.

Target price is $16.87 Current Price is $15.32 Difference: $1.55
If AMC meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $16.00, suggesting upside of 4.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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 BXB as Neutral (3) -

UBS has surveyed European pallet customers who indicate a solid outlook for pooling volumes and the ability for poolers to pass on higher operating costs. CHEP has outperformed competition on price, quality and the availability of pallets.

Customers are anticipating a 3.5% increase in pallet prices, which is slightly lower than the survey result last year at 4.0%. UBS retains a Neutral rating and reduces the target to $12.00 from $12.10.

Target price is $12.00 Current Price is $11.97 Difference: $0.03
If BXB meets the UBS target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $11.90, suggesting downside of -0.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.2

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

Citi rates CCL as Sell (5) -

Coca Cola Amatil is exposed to the container deposit scheme potentially being introduced in Victoria. Citi analysts assess there is downside risk to FY21 earnings per share in the order of -1.1%.

The NSW scheme, introduced late 2017, resulted in a -3.4% drop in volumes while, similarly, in Queensland volumes dropped -3.8% in the first half of 2019.

While the share price has strengthened over the past month with a more positive outlook on 2020, Citi assesses the upside is mostly related to lower raw material prices. Sell rating and $9.70 target maintained.

Target price is $9.70 Current Price is $11.12 Difference: minus $1.42 (current price is over target).
If CCL 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 $10.58, suggesting downside of -4.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.3

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

Credit Suisse rates CIP as Neutral (3) -

Centuria Industrial has acquired two assets for $236m from Arnott's via a sale and lease-back on a combined initial yield of 5.9% vs a capitalisation rate of 5.23%. This will be funded via a placement and a new debt facility.

The acquisitions have increased the scale of the company's portfolio to around $1.5bn and management has indicated the acquisitions provide certainty on cash flow over the long-term.

Neutral rating and $3.27 target maintained.

Target price is $3.27 Current Price is $3.45 Difference: minus $0.18 (current price is over target).
If CIP meets the Credit Suisse target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.48, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Macquarie rates CMM as Initiation of coverage with Outperform (1) -

Macquarie initiates coverage of Capricorn Metals with an Outperform rating and $1.50 target. The company owns the Karlawinda gold development in Western Australia.

With an experienced management team reducing the risk, Macquarie believes the stock will undergo a re-rating over the next year as Karlawinda approaches first gold in late FY21.

Target price is $1.50 Current Price is $1.16 Difference: $0.34
If CMM meets the Macquarie target it will return approximately 29% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Citi rates CWY as Buy (1) -

Citi believes the likelihood of a container deposit scheme being implemented in Victoria, which is the last remaining major state without such a scheme, has increased substantially.

Cleanaway Waste is well-positioned to capitalise on this and the broker estimates a potential 3% upside to solid waste service revenue.

This could result in an increased valuation. The broker retains a Buy rating and $2.25 target.

Target price is $2.25 Current Price is $1.98 Difference: $0.27
If CWY meets the Citi target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $2.13, suggesting upside of 7.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.6

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

Morgan Stanley rates EVN as Upgrade to Equal-weight from Underweight (3) -

Evolution Mining has fallen -28% from its August peak and is now near Morgan Stanley's valuation, prompting an upgrade to Equal-weight from Underweight. The broker sees costs and the relatively short lives of some of the company's mines as well priced versus the potential for operational and mine-life improvements.

Target falls to $3.80 from $4.00. Industry view: In-Line.

Target price is $3.80 Current Price is $3.82 Difference: minus $0.02 (current price is over target).
If EVN meets the Morgan Stanley target it will return approximately minus 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.44, suggesting upside of 16.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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

UBS rates GNC as Buy (1) -

GrainCorp has announced the appointment of Robert Spurway as managing director and CEO of the new GrainCorp after the proposed de-merger of the malt company which is scheduled for March 2020.

Mr Spurway is currently chief operating officer of global operations at Fonterra Cooperative. Buy rating and $9.40 target maintained.

Target price is $9.40 Current Price is $7.60 Difference: $1.8
If GNC meets the UBS target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $8.70, suggesting upside of 14.5% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.5

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

Ord Minnett rates IAP as Hold (3) -

Investec Australia Property will sell 757 Ann Street Fortitude Valley for $94m. This reflects an 11% premium to the September book value and a 6.6% passing yield with an estimated 5.7% capitalisation rate. Ord Minnett considers this a good outcome.

Settlement will be delayed until April 2020, allowing Investec Australia Property to retain rental income until the end of FY20. Proceeds from the sale will be used to pay down debt. Hold rating and $1.50 target maintained.

Target price is $1.50 Current Price is $1.46 Difference: $0.04
If IAP meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

The company's fiscal year ends in March.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Citi rates ILU as Downgrade to Sell from Neutral (5) -

Citi downgrades Iluka to Sell from Neutral because of recent share price strength. Target is steady at $9. Citi estimates global growth will be modestly higher in 2020, which is bullish for commodities.

An improvement in market conditions for commodities is expected to attract investor flows. Most of the improvement is expected to come from emerging markets.

Nevertheless, the two largest economies, the US and China, still have the greatest potential to influence demand through policy decisions, in light of the US election holding promise for a breakthrough with China on trade.

Monetary and fiscal policies in both countries have potential for higher GDP, the broker notes as well.

Target price is $9.00 Current Price is $9.30 Difference: minus $0.3 (current price is over target).
If ILU meets the Citi target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.53, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in December.

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

Morgan Stanley rates ILU as Downgrade to Equal-weight from Overweight (3) -

After a 40% rally from its trough in August, Iluka Resources is now close to Morgan Stanley's valuation, hence a downgrade to Equal-weight from Overweight. A demerger of the MAC royalty would add upside but given the complexities the broker does not see this happening.

If the Sembuhan project is deemed commercial, this would provide for incremental upside. Target falls to $10.45 from $11.15 on a commodity price forecast review. Industry view: In-Line.

Target price is $10.45 Current Price is $9.30 Difference: $1.15
If ILU meets the Morgan Stanley target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $9.53, suggesting upside of 2.4% (ex-dividends)

The company's fiscal year ends in December.

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

UBS rates JHX as Buy (1) -

UBS observes a doubling of the share price over the last 12 months probably reflects a resumption of growth in US housing and a return to market share gains.

The broker now has more confidence in the company's strategy and outlook but notes investors are questioning whether it is too late to engage with the stock.

UBS believes the share price is still attractive based on the outlook, although it has captured recent momentum, and the market is yet to price in higher home building activity. Buy rating and $30 target maintained.

Target price is $30.00 Current Price is $28.21 Difference: $1.79
If JHX meets the UBS target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $29.89, suggesting upside of 6.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY20:

Forecast for FY21:

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

Market Sentiment: 0.9

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

UBS rates RHC as Neutral (3) -

Despite an increase in people on the elective surgery waiting list in NSW this has not translated into significant slippage in the percentage of patients actually undergoing surgery within recommended timeframes, UBS assesses.

The broker believes Ramsay Health Care is well-placed to benefit from more formalised public hospital outsourcing based on its geographic coverage and diversity of services.

While returns on these contracts may not be equivalent to privately insured patients they are likely to add to operating profit nonetheless. Neutral rating. Target is $71.

Target price is $71.00 Current Price is $71.38 Difference: minus $0.38 (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 $68.67, suggesting downside of -3.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

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 Downgrade to Neutral from Buy (3) -

Citi estimates global growth will be modestly higher in 2020, which is bullish for commodities. The broker is positive about hard coking coal in the first quarter of 2020, expecting the price to average US$170/t over the year.

The alumina market is expected to move to a modest deficit in 2020. The broker remains cautious on iron ore and expects sizeable oversupply over the next two years will bring down benchmark prices to US$60/t by 2022.

Rio Tinto's rating is downgraded to Neutral from Buy, to reflect the outperformance in the stock over the past 12 months, and the target is reduced to $100 from $105.

Target price is $100.00 Current Price is $99.12 Difference: $0.88
If RIO meets the Citi target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $96.45, suggesting downside of -2.7% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

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

Citi rates WHC as Downgrade to Neutral from Buy (3) -

Citi estimates global growth will be modestly higher in 2020, which is bullish for commodities. The broker is positive about hard coking coal in the first quarter of 2020, expecting the price to average US$170/t over the year.

Yet the broker downgrades Whitehaven Coal to Neutral from Buy because of the cuts to near-term earnings and the risk of ongoing weather-related constraints at Maules Creek. Target is reduced to $2.90 from $3.70.

Target price is $2.90 Current Price is $2.73 Difference: $0.17
If WHC meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $3.44, suggesting upside of 26.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.4

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