Australian Broker Call

Bell Potter rates ALC as Downgrade to Hold from Buy (3) -

Alcidion Group's Sep Q update showed the largest net outflow of net operating capital experienced in the last two years, Bell Potter notes. This has disappointingly led to a capital raise, but only a modest $6m to bloster the balance sheet.

Contracted revenue for FY24 has seen an increase of 12% year on year, however quarterly cash payments also increased 16%.

Considering the nature of the capital raise, persisting delays to contract wins, and increasing cost base, Bell Potter has lowered short-term earnings forecasts and increased its risk discount. Downgrade to Hold from Buy, target falls to 8c from 16c.

Target price is $0.08 Current Price is $0.07 Difference: $0.01
If ALC meets the Bell Potter target it will return approximately 14% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Ord Minnett rates AMC as Buy (1) -

Amcor's 1Q adjusted earnings (EBIT) were in line with Ord Minnett's forecast. These earnings fell by -9% on the previous corresponding period due to lower customer demand as shown by an -8% fall in sales volumes.

The broker points out the exit from the comany's Russian operations in 2023 has an annual -US$100m impact on earnings.

An interim dividend of US12.5cps was declared, entitling ASX-traded chess depositary shareholders to an unfranked 19.73cps. 

The $17.50 target and Buy rating are unchanged.

Target price is $17.50 Current Price is $13.66 Difference: $3.84
If AMC meets the Ord Minnett target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $15.48, suggesting upside of 12.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

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

Shaw and Partners rates BKT as Buy (1) -

In what will form part of the debt package for the 84%-owned Mahenge Graphite project in Tanzania, explains Shaw and Partners, Black Rock Mining has received approval from The Development Bank of Southern Africa for debt of up to US$59.6m.

While key terms of the loan are yet to be released. the broker assumes an interest rate of 10%. Management is ultimately targeting up to 50% debt funding for the project to reach production, with the balance in equity.

The analysts expect POSCO, the world’s largest anode chemical producer outside China, to make-up a large amount of the funding solution to hasten production.

The Buy rating and target price of 46 cents are retained.

Target price is $0.46 Current Price is $0.12 Difference: $0.34
If BKT meets the Shaw and Partners target it will return approximately 283% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

Macquarie rates BVS as Upgrade to Neutral from Underperform (3) -

Given its improved earnings profile, Macquarie sees reduced near-term downside risk for Bravura Solutions, which is guiding to full year earnings of $10-15m, exclusive of an additional $7m cost out. 

The broker calculates the additional cost out brings gross savings to $47m, which alongside a year-on-year capital expenditure reduction of -$10-$12m leaves the company with materially improved cash flow.

The broker does, however, remain cautious on the medium-term outlook, noting cost-saving measures could impact revenue growth. The rating is upgraded to Neutral from Underperform and the target price increases to 83 cents from 65 cents. 

Target price is $0.83 Current Price is $0.81 Difference: $0.025
If BVS meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Macquarie rates CHN as Outperform (1) -

Resource developers have faced a challenging year, says Macquarie, with weaker commodity prices driving cheaper valuation that could make developers attractive merger and acquisition targets. 

The quarter saw Chalice Mining release its Gonneville scoping study, driving share price weakness. The company has commenced its pre-feasibility study, and Macquarie feels incorporating a high-grade starter pit or underground ore could materially improve economics. 

The Outperform rating is retained and the target price decreases to $3.10 from $3.50.

Target price is $3.10 Current Price is $1.85 Difference: $1.25
If CHN meets the Macquarie target it will return approximately 68% (excluding dividends, fees and charges).

Current consensus price target is $4.16, suggesting upside of 115.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.5

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

Citi rates CKF as Neutral (3) -

Citi believes there may be upside potential to its forecasts for Collins Foods in the first half of FY24, based on the company's third quarter results. The broker points out KFC Australia sales in the quarter appear to be tracking ahead of expectations.

The brand appears to have achieved 9% same store sales growth in the quarter. Notably, kiosk sales lifted 90% on the previous comparable quarter, and the company intends to expand the number of kiosks being operated within KFC Australia stores.

The Neutral rating and target price of $11.10 are retained.

Target price is $11.10 Current Price is $9.40 Difference: $1.7
If CKF meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $10.99, suggesting upside of 15.6% (ex-dividends)

The company's fiscal year ends in May.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Citi rates CSR as Neutral (3) -

With housing activity at a peak, CSR is delivering record margins with its factories largely at peak. Citi is cautious on the outlook for the company, given to investors would need to assume there will be no building cycle for the stock to get any more positive. 

While the backlog, and potential government stimulus, may diminish impacts, Citi is wary of a cycle emerging.

However, the company's building products segment deliver a strong result, increasing revenue 11% year-on-year, leading Citi to lift eanings expectations for FY24 and FY25. 

The Neutral rating is retained and the target price increases to $5.75 from $5.45.

Target price is $5.75 Current Price is $5.66 Difference: $0.09
If CSR meets the Citi target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $5.90, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Macquarie rates CSR as Upgrade to Neutral from Underperform (3) -

Off the back of a first half result from CSR that exceeded Macquarie's expectations, the broker has highlighted a margin beat was underpinned by strong traction and operational execution in the building products segment. 

The broker remains wary of building activity moving forwards, but likes that execution remains strong and that the company continues to stress a strong building activity pipeline and preparations for demand declines. 

The rating is upgraded to Neutral from Underperform and the target price increases to $5.50 from $4.90.

Target price is $5.50 Current Price is $5.66 Difference: minus $0.16 (current price is over target).
If CSR meets the Macquarie target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.90, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

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

CSR's 1H results materially missed forecasts by Morgan Stanley and consensus due to the timing of Property earnings, which will now be 2H weighted. A strong beat in Building Products outweighed a miss in the Aluminium division.

Management's guidance for Aluminium has decreased by -56% at the mid point of the range.

While the company is “closely monitoring” the outlook, the broker sees support from a strong construction pipeline in the short-term.

The target rises to $5.60 from $5.50. Equal-weight. Industry view: In-Line.

Target price is $5.60 Current Price is $5.66 Difference: minus $0.06 (current price is over target).
If CSR 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 $5.90, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Morgans rates CSR as Upgrade to Add from Hold (1) -

After a further review of CSR's 1H result, Morgans highlights underlying strength in the Building Products division which delivered a record result with earnings (EBIT) rising by 18% year-on-year.

This performance was insufficient to offset the timing differences for Property and the larger-than-expected loss from Aluminium, and overall group earnings missed the consensus forecast by -15%, explains the analyst.

Despite this overall result, Morgans now upgrades its rating to Add from Hold and raises the target to $6.75 from $6.35.

These changes by the broker are partly due to latent housing demand which is not yet reflected in approvals data but is apparent from recent management commentary by some REITs including Stockland ((SGP)) and Cromwell Property Group ((CMW)).

Target price is $6.75 Current Price is $5.66 Difference: $1.09
If CSR meets the Morgans target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $5.90, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Ord Minnett rates CSR as Hold (3) -

Ord Minnett was impressed CSR's Buildings Products division managed to increase 1H sales by 11% on the previous corresponding period, despite a challenging environment for housing construction.

The broker attributes a strong backlog and an out-of-cycle price increase in the 2H of FY23 to the Building Products performance. Despite input cost pressures the margin for this division rose to 16.3% from 15.3% in the previous corresponding period.

The company's pipeline is 50% above historical averages and should drive activity well into 2024, suggests the analyst.

A fully franked interim dividend of 15cps was declared.

Ord Minnett increases its target to $5.80 from $5.50 and maintains a Hold rating.

Target price is $5.80 Current Price is $5.66 Difference: $0.14
If CSR meets the Ord Minnett target it will return approximately 2% (excluding dividends, fees and charges).

Current consensus price target is $5.90, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

UBS rates CSR as Buy (1) -

As also per yesterday's initial update, UBS spotted a "stellar" H1 performance by the production products, offset by misses in the aluminium operation and in property.

Also, the broker is less concerned about the outlook for detached housing construction. As such, CSR remains its most preferred choice to have exposure to building products on the ASX.

One additional positive is the West Schofields project will proceed, albeit under strict conditions, as a result of recent re-zoning decisions by the NSW government.

The positive surprise by building products is the winner with UBS lifting EPS forecasts by 18% and 9% respectively for FY24 and FY25 despite disappointment from the other two operations. DPS estimates have also received a boost.

Buy. Target $6.50.

Target price is $6.50 Current Price is $5.66 Difference: $0.84
If CSR meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $5.90, suggesting upside of 1.0% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.3

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

Macquarie rates CTM as Outperform (1) -

Resource developers have faced a challenging year, says Macquarie, with weaker commodity prices driving cheaper valuation that could make developers attractive merger and acquisition targets. 

The quarter saw Centaurus Metals advance the definitive feasibility study for its Jaguar project, with the company aiming for completion in the coming quarter. The weaker nickel price has been a headwind, but Macquarie notes a number of catalysts in the quarter ahead. 

The Outperform rating is retained and the target price decreases to $1.00 from $1.50.

Target price is $1.00 Current Price is $0.46 Difference: $0.54
If CTM meets the Macquarie target it will return approximately 117% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

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

Bell Potter rates GNC as Buy (1) -

In recent weeks Bell Potter has seen increasingly positive signs for the 2023-24 east coast winter crop outcome, with forecasts generally lifting in the southern acreage and implying a more positive FY24 outlook than previously adopted.

The broker contimues to see the share price of GrainCorp as pricing in a material retracement below normalised crop level earnings. In the near term there are potential catalysts including both a more favourable December ABARES forecast and investment in new oilseed crush capacity.

Buy and $9.45 target retained.

Target price is $9.45 Current Price is $7.04 Difference: $2.41
If GNC meets the Bell Potter target it will return approximately 34% (excluding dividends, fees and charges).

Current consensus price target is $8.83, suggesting upside of 23.8% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.6

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

Macquarie rates HLI as Upgrade to Neutral from Underperform (3) -

Macroeconomic conditions remained surprsingly supportive for Helia Group through the second quarter says Macquarie, which continues to expect a moderate weakening in claims until there are clearer signs of rapid or significant economic deterioration. 

The company reported total incurred claims of -$13.7m in the quarter, but expects a return to long-term levels over FY23-24. Macquarie made upgrades to its earnings per share forecasts through to FY25, anticipating a reduced claims cycle and higher investment income. 

The rating is upgraded to Neutral and the target price increases to $3.90 from $3.10.

Target price is $3.90 Current Price is $3.79 Difference: $0.11
If HLI meets the Macquarie target it will return approximately 3% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Ord Minnett rates HLI as Hold (3) -

Ord Minnett notes the rate of decline for Helia Group's gross written premiums (GWP) has slowed and a the bottom is likely near. Third quarter GWPs were around -35% lower than the previous corresponding period.

Management's FY23 guidance for insurance revenue is unchanged.

The broker's $3.70 target is unchanged despite lowering forecasts by -7% on weaker investment income due to unrealised losses from rising bond yields and falling equity markets.

The Hold rating is maintained.

Target price is $3.70 Current Price is $3.79 Difference: minus $0.09 (current price is over target).
If HLI meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in December.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

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

Macquarie rates IPH as Outperform (1) -

Early October filing volumes suggest IPH has outperformed the market, with the company's volumes down -3.2% compared to a marketwide decline of -5.9%, but Macquarie notes this may be understated given monthly data lags. 

Filing volumes remain a key driver of IPH's Australia and New Zealand earnings, with initial filings accounting for 20-25% of revenue. The broker considers the company's outlook to be supported by greenshoots in not only Australia and New Zealand, but also Canada. 

The Outperform rating and target price of $12.75 are retained.

Target price is $12.75 Current Price is $6.92 Difference: $5.83
If IPH meets the Macquarie target it will return approximately 84% (excluding dividends, fees and charges).

Current consensus price target is $10.49, suggesting upside of 48.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.8

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

Bell Potter rates JHG as Buy (1) -

Janus Henderson reported quarterly figures that were better than Bell Potter's forecasts, helped by higher average assets under management, higher management fees and lower costs.

The update showed a continued benefit of the new strategy with strong inflows into fixed interest ETFs, improved retention of US intermediary businesses and the development of private asset strategies, the broker notes.

However the company is set to delist from the ASX, leaving the NYSE listing as the only place for interested investors. In the meantime Bell Potter retains Buy. Target rises to $42.47 from $42.20.

Target price is $42.47 Current Price is $37.25 Difference: $5.22
If JHG meets the Bell Potter target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $40.76, suggesting upside of 6.3% (ex-dividends)

The company's fiscal year ends in December.

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

Macquarie rates LTR as Outperform (1) -

Resource developers have faced a challenging year, says Macquarie, with weaker commodity prices driving cheaper valuation that could make developers attractive merger and acquisition targets. 

A busy quarter for Liontown Resources saw the company fully fund its Kathleen Valley project to first production, locking in debt funding of $760m alongside a $376m capital raise. Capital costs for the project are unchanged. 

The Outperform rating and target price of $2.70 are retained.

Target price is $2.70 Current Price is $1.59 Difference: $1.115
If LTR meets the Macquarie target it will return approximately 70% (excluding dividends, fees and charges).

Current consensus price target is $2.35, suggesting upside of 42.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.5

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

Citi rates MQG as Neutral (3) -

On Citi's initial assessment, Macquarie Group's H1 performance missed the broker's forecast by -12% at the cash earnings level, and market consensus by some -20%.

Revenues look in line but the broker observes credit/impairment reversals as well as stronger corporate division revenues have provided a boost to the H1 top line.

One big disappointment comes in the form of much higher than anticipated costs, and a higher tax rate. Both these factors are not reflected in management's guidance for H2, the broker notes.

Target $175. Neutral.

Target price is $175.00 Current Price is $160.39 Difference: $14.61
If MQG meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $189.88, suggesting upside of 16.8% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

Ord Minnett rates MQG as Hold (3) -

It is Ord Minnett's early assessment Macquarie Group's H1 result, released earlier this morning, missed its forecasts by circa -15%-16%, with a dividend declared some 13% higher than anticipated.

The broker suggests timing of asset realisations in green investments seems to be one culprit behind today's disappointing market update.

Target $175. Hold.

Target price is $175.00 Current Price is $160.39 Difference: $14.61
If MQG meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $189.88, suggesting upside of 16.8% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

UBS rates MQG as Buy (1) -

Macquarie Group released H1 results this morning and UBS, upon initial assessment, has spotted a "big miss", to the order of -22% against consensus forecasts, with the disappointment softened via a $2bn share buyback.

The interim dividend of $2.55 marks a -43% decline half-on-half but the broker believes it narrowly beats market consensus.

Guidance, overall, suggests some kind of stabilisation for H2, the broker suggests, but consensus forecasts are likely to fall post today's release, UBS anticipates.

Macquarie Asset Management and Commodities and Global Markets have been identified as the weak points in today's release.

Target $196. Buy.

Target price is $196.00 Current Price is $160.39 Difference: $35.61
If MQG meets the UBS target it will return approximately 22% (excluding dividends, fees and charges).

Current consensus price target is $189.88, suggesting upside of 16.8% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.6

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

Morgans rates NVX as No Rating (-1) -

Morgans revises its coverage of Novonix to now only monitor future developments and not provide forecasts, a target or recommendation.

Simultaneously, the broker advises the company has announced a $100m grant from the Department of Energy (DOE) in the US to continue to invest in the Riverside facility to increase its production capacity to 20ktpa.

Riverside will support the KORE Power contract as well as other future customers, explains the analyst.

Prior to this announcement, the broker points out Novonix was seeking a larger grant of $150m.

The DOE requires Novonix to at least match the contribution from the government.

Current Price is $0.72. 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 OCL as Initiation of coverage with Sell (5) -

Ord Minnett initiates coverage on founder-led enterprise content management (ECM) company Objective Corp with a Sell rating on valuation and $5.50 target price. The company provides software to the public sector in A&NZ.

While Objective is well managed, its core ECM product suite operates in a relatively mature market, in the analyst's view. Despite an outsized demand environment during covid, a compound annual growth rate (CAGR) of just 4% was achieved over the past five-years.

Over that same period, gross margins declined to 93% from 96%, observes the broker. 

More positively, Ord Minnett suggests the core ECM software business is well protected by switching costs for the customers, as evidenced by a 99% annual customer retention rate.

Target price is $5.50 Current Price is $10.90 Difference: minus $5.4 (current price is over target).
If OCL meets the Ord Minnett target it will return approximately minus 50% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.32, suggesting upside of 2.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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

Macquarie rates RXM as Outperform (1) -

Resource developers have faced a challenging year, says Macquarie, with weaker commodity prices driving cheaper valuation that could make developers attractive merger and acquisition targets. 

Rex Minerals progressed its operational readiness plans for its Hillside project during the quarter, but given the weakening short-term copper price environemnt the company is expected discussions with potential strategic partners to extend into 2024. 

The Outperform rating is retained and the target price decreases to 27 cents from 32 cents.

Target price is $0.27 Current Price is $0.17 Difference: $0.105
If RXM meets the Macquarie target it will return approximately 64% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 1.0

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

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

Morgan Stanley performs a check on management's assertions about the economics of the Chatswood Chase project for the revitalised mall in FY26/27.

On October 31, Vicinity Centres announced it would acquire the remaining 49% (to go to 100%) of the shopping mall in Sydney, and confirmed the $620m redevelopment of the centre will proceed from March 2024.

The broker concludes Vicinity's projections look optimistic though acknowledges management may have reasons to be upbeat given more than 45% of income associated with the redevelopment has been secured.

Equal-Weight rating and $1.95 target price retained. Industry view: In line.

Target price is $1.95 Current Price is $1.77 Difference: $0.18
If VCX meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $1.90, suggesting upside of 5.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY24:

Forecast for FY25:

Market Sentiment: 0.0

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