Australian Broker Call
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August 05, 2019
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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: 05:00 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
Ord Minnett rates AMP as Hold (3) -
AMP is scheduled to report first-half financial results on August 8th and Ord Minnett spells it out to investors: if the sale of life insurance operations does not go ahead, this will boost the earnings profile, but the caveat is the risk for a capital raising equally increases.
The analysts are looking forward to the update on strategy under the new CEO. For now, Hold rating and $2.10 price target retained.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $2.10 Current Price is $1.82 Difference: $0.28
If AMP meets the Ord Minnett target it will return approximately 15% (excluding dividends, fees and charges).
Current consensus price target is $1.91, suggesting upside of 4.8% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 0.00 cents and EPS of 20.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 18.4, implying annual growth of 1740.0%. Current consensus DPS estimate is 4.8, implying a prospective dividend yield of 2.6%. Current consensus EPS estimate suggests the PER is 9.9. |
Forecast for FY20:
Ord Minnett forecasts a full year FY20 dividend of 15.00 cents and EPS of 19.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 17.7, implying annual growth of -3.8%. Current consensus DPS estimate is 13.9, implying a prospective dividend yield of 7.6%. Current consensus EPS estimate suggests the PER is 10.3. |
Market Sentiment: -0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $3.99
Morgans rates BGA as Hold (3) -
Bega Cheese has downgraded FY19 guidance for the second time. Underlying operating earnings (EBITDA) have been lowered to $113-117m versus prior guidance of $123m.
The company has noted competitive pressure from processors in light of the reduced Australian milk pool. Morgans interprets this to confirm prior thinking that the company has been overpaying for milk.
The competitive pressure is expected to continue into FY20 and the Australian milk pool is forecast to again contract by -3-5%. While the short-term outlook is tough, Morgans maintains a Hold rating. Target is reduced to $4.10 from $4.60.
Target price is $4.10 Current Price is $3.99 Difference: $0.11
If BGA meets the Morgans target it will return approximately 3% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 11.00 cents and EPS of 18.00 cents. |
Forecast for FY20:
Morgans forecasts a full year FY20 dividend of 11.00 cents and EPS of 21.00 cents. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
CSL CSL LIMITED
Pharmaceuticals & Biotech/Lifesciences
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Overnight Price: $226.45
Credit Suisse rates CSL as Neutral (3) -
Credit Suisse believes CSL is best positioned to benefit from strong growth in immunoglobulin. Volume growth rose to 9.5% in the US in April.
This is driven by increased awareness/diagnosis of diseases in which immunoglobulin is used and greater use off label. Neutral rating and $199 target retained.
Target price is $199.00 Current Price is $226.45 Difference: minus $27.45 (current price is over target).
If CSL meets the Credit Suisse target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $212.83, suggesting downside of -6.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY19:
Credit Suisse forecasts a full year FY19 dividend of 262.50 cents and EPS of 586.43 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 614.6, implying annual growth of N/A. Current consensus DPS estimate is 278.1, implying a prospective dividend yield of 1.2%. Current consensus EPS estimate suggests the PER is 36.8. |
Forecast for FY20:
Credit Suisse forecasts a full year FY20 dividend of 280.65 cents and EPS of 615.75 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 647.9, implying annual growth of 5.4%. Current consensus DPS estimate is 300.6, implying a prospective dividend yield of 1.3%. Current consensus EPS estimate suggests the PER is 35.0. |
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
UBS rates CSL as Buy (1) -
UBS notes immunoglobulin data from April in the US show growth remains robust. The broker expects growth of 13% in the second half. Haemophilia data remain weak.
The near-term catalysts will be the company's results on August 14 as well as the resolution of licensing issues in China. Buy rating and $223 target under review pending further analysis, also given strong share price performance in 2019.
Target price is $223.00 Current Price is $226.45 Difference: minus $3.45 (current price is over target).
If CSL meets the UBS target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $212.83, suggesting downside of -6.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 268.52 cents and EPS of 586.25 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 614.6, implying annual growth of N/A. Current consensus DPS estimate is 278.1, implying a prospective dividend yield of 1.2%. Current consensus EPS estimate suggests the PER is 36.8. |
Forecast for FY20:
UBS forecasts a full year FY20 dividend of 278.36 cents and EPS of 612.96 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 647.9, implying annual growth of 5.4%. Current consensus DPS estimate is 300.6, implying a prospective dividend yield of 1.3%. Current consensus EPS estimate suggests the PER is 35.0. |
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
DHG DOMAIN HOLDINGS AUSTRALIA LIMITED
Real Estate
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Overnight Price: $2.86
Credit Suisse rates DHG as Underperform (5) -
Weakness in property listings has become a familiar theme, Credit Suisse notes, and CoreLogic data show that in the second half of FY19 new listings in the capital cities were down -17%, with Sydney down -24% and Melbourne down -22%.
The broker finds no signs of a near-term recovery and expects Domain Holdings will be the most affected, given its greater exposure to the Sydney/Melbourne markets. Underperform rating and $2.30 target maintained.
Target price is $2.30 Current Price is $2.86 Difference: minus $0.56 (current price is over target).
If DHG meets the Credit Suisse target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $2.70, suggesting downside of -5.6% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY19:
Credit Suisse forecasts a full year FY19 dividend of 6.00 cents and EPS of 6.94 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 7.2, implying annual growth of N/A. Current consensus DPS estimate is 5.8, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 39.7. |
Forecast for FY20:
Credit Suisse forecasts a full year FY20 dividend of 8.00 cents and EPS of 8.34 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 8.9, implying annual growth of 23.6%. Current consensus DPS estimate is 6.9, implying a prospective dividend yield of 2.4%. Current consensus EPS estimate suggests the PER is 32.1. |
Market Sentiment: -0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $23.51
UBS rates EBO as Neutral (3) -
UBS expects a continuation of the first half trends, including declining community pharmacy revenue and gross profit when the company reports its results on August 22.
The company has commenced its new supply contract with Chemist Warehouse and the broker considers the first quarter of FY20 will be a period of heightened execution risk.
UBS maintains a Neutral rating. Target is raised to NZ$24 from NZ$21.
Current Price is $23.51. Target price not assessed.
Current consensus price target is $23.04, suggesting downside of -2.0% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 66.00 cents and EPS of 92.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 92.1, implying annual growth of -6.5%. Current consensus DPS estimate is 65.2, implying a prospective dividend yield of 2.8%. Current consensus EPS estimate suggests the PER is 25.5. |
Forecast for FY20:
UBS forecasts a full year FY20 dividend of 73.00 cents and EPS of 106.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 106.7, implying annual growth of 15.9%. Current consensus DPS estimate is 72.0, implying a prospective dividend yield of 3.1%. Current consensus EPS estimate suggests the PER is 22.0. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $4.61
Morgans rates NUF as Hold (3) -
The downgrade to FY19 guidance was not as bad as Morgans feared. The company has been affected by flooding in North America and continued drought in Australia. The broker finds the decision questionable to report below the line the cost of unrecovered overheads for the Laverton plant shutdown.
The placement of preference securities to Sumitomo has prevented the need for a capital raising in the near term but the broker considers the balance sheet is still too highly geared. Morgans maintains a Hold rating and reduces the target to $5.25 from $5.50.
Target price is $5.25 Current Price is $4.61 Difference: $0.64
If NUF meets the Morgans target it will return approximately 14% (excluding dividends, fees and charges).
Current consensus price target is $6.16, suggesting upside of 33.6% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 0.00 cents and EPS of 30.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 23.4, implying annual growth of -17.0%. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 19.7. |
Forecast for FY20:
Morgans forecasts a full year FY20 dividend of 9.00 cents and EPS of 40.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 37.9, implying annual growth of 62.0%. Current consensus DPS estimate is 9.1, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 12.2. |
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $3.30
Citi rates ORA as Neutral (3) -
The company is accelerating its restructuring, given challenging market conditions. Kimberly-Clark's recent decision to move a plant to China from Australia has confirmed the company's decision to re-size its operations, in Citi's view.
FY19 guidance is reaffirmed but Citi suspects the FY20 outlook is vulnerable. Slowing growth in both the US and Australasia, higher gas costs and the G2 re-build are likely to soften contributions from recent acquisitions.
Ultimately, the company believes top-line growth will remain tied to GDP growth. Neutral rating and $3.30 target maintained.
Target price is $3.30 Current Price is $3.30 Difference: $0
If ORA meets the Citi target it will return approximately 0% (excluding dividends, fees and charges).
Current consensus price target is $3.47, suggesting upside of 5.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY19:
Citi forecasts a full year FY19 dividend of 12.50 cents and EPS of 17.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 18.0, implying annual growth of 1.7%. Current consensus DPS estimate is 13.1, implying a prospective dividend yield of 4.0%. Current consensus EPS estimate suggests the PER is 18.3. |
Forecast for FY20:
Citi forecasts a full year FY20 dividend of 13.50 cents and EPS of 18.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 19.3, implying annual growth of 7.2%. Current consensus DPS estimate is 13.9, implying a prospective dividend yield of 4.2%. Current consensus EPS estimate suggests the PER is 17.1. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $9.99
Citi rates URW as Sell (5) -
Citi remains concerned about the de-leveraging that needs to occur. Management presented a confident outlook at the first half results but the broker is more worried about asset values falling faster, lowering collateral value and leading to more dilutive asset sales, or lenders applying higher debt costs.
During the first half the company did endure a debt downgrade and could face more if debt is not reduced, in the broker's view, placing the dividend under pressure. The broker maintains a Sell rating and EUR125 target.
Current Price is $9.99. Target price not assessed.
Current consensus price target is $11.27, suggesting upside of 12.8% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY19:
Citi forecasts a full year FY19 dividend of 17.26 cents and EPS of 19.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 56.0, implying annual growth of N/A. Current consensus DPS estimate is 52.4, implying a prospective dividend yield of 5.2%. Current consensus EPS estimate suggests the PER is 17.8. |
Forecast for FY20:
Citi forecasts a full year FY20 dividend of 17.26 cents and EPS of 20.34 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 57.5, implying annual growth of 2.7%. Current consensus DPS estimate is 53.2, implying a prospective dividend yield of 5.3%. Current consensus EPS estimate suggests the PER is 17.4. |
This company reports in EUR. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: -0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Today's Price Target Changes
| Company | Broker | New Target | Prev Target | Change | |
| BGA | BEGA CHEESE | Morgans | 4.10 | 4.60 | -10.87% |
| BWP | BWP TRUST | Ord Minnett | 3.45 | 3.35 | 2.99% |
| CDP | CARINDALE PROPERTY | Ord Minnett | 6.70 | 6.90 | -2.90% |
| CMW | CROMWELL PROPERTY | Ord Minnett | 1.20 | 1.15 | 4.35% |
| CQE | CHARTER HALL EDUCATION TRUST | Ord Minnett | 3.70 | 3.65 | 1.37% |
| CQR | CHARTER HALL RETAIL | Ord Minnett | 4.50 | 4.40 | 2.27% |
| DXS | DEXUS PROPERTY | Ord Minnett | 13.70 | 13.50 | 1.48% |
| GOZ | GROWTHPOINT PROP | Ord Minnett | 4.15 | 4.00 | 3.75% |
| HPI | HOTEL PROPERTY INVESTMENTS | Ord Minnett | 3.40 | 3.35 | 1.49% |
| NUF | NUFARM | Morgans | 5.25 | 5.50 | -4.55% |
| SCG | SCENTRE GROUP | Ord Minnett | 4.40 | 4.30 | 2.33% |
| VCX | VICINITY CENTRES | Ord Minnett | 2.90 | 2.85 | 1.75% |
| VVR | VIVA ENERGY REIT | Ord Minnett | 2.45 | 2.40 | 2.08% |
Summaries
| AMP | AMP | Hold - Ord Minnett | Overnight Price $1.82 |
| BGA | BEGA CHEESE | Hold - Morgans | Overnight Price $3.99 |
| CSL | CSL | Neutral - Credit Suisse | Overnight Price $226.45 |
| Buy - UBS | Overnight Price $226.45 | ||
| DHG | DOMAIN HOLDINGS | Underperform - Credit Suisse | Overnight Price $2.86 |
| EBO | EBOS GROUP | Neutral - UBS | Overnight Price $23.51 |
| NUF | NUFARM | Hold - Morgans | Overnight Price $4.61 |
| ORA | ORORA | Neutral - Citi | Overnight Price $3.30 |
| URW | UNIBAIL-RODAMCO-WESTFIELD | Sell - Citi | Overnight Price $9.99 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 1 |
| 3. Hold | 6 |
| 5. Sell | 2 |
Monday 05 August 2019
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