Australian Broker Call

Macquarie rates AIA as Outperform (1) -

Auckland Council plans to sell all or part of its $2bn 18% shareholding Auckland International Airport as part of a strategic divestment pending ratepayer approval, which could take a while. The sale is aimed at cutting debt and net interest costs.

Macquarie says the sale price will depend on the company's capital expenditure plan, particularly for the new integrated Domestic Jet terminal.

Outperform rating and NZ$8.60 target price retained.

Current Price is $7.52. Target price not assessed.

Current consensus price target is $7.50, suggesting downside of -0.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in NZD. 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

Morgan Stanley rates BTH as Overweight (1) -

Morgan Stanley considers the bid by 13.6% shareholder SQN Investors for Bigtincan Holdings is opportunistic and the 80c/share cash bid represents a small (17.6%) premium to the last closing share price.

Management has had preliminary discussions with other interested parties, notes the broker. The company recently reiterated its FY23 guidance at its AGM.

The $1.15 target and Overweight rating are retained. Industry view: In-Line.

Target price is $1.15 Current Price is $0.76 Difference: $0.395
If BTH meets the Morgan Stanley target it will return approximately 52% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Credit Suisse rates CRN as Outperform (1) -

While no new 2022 guidance was issued, Coronado Global Resources noted existing production guidance "will not be met" and unit cost guidance is "also at risk".

Credit Suisse feels near-term weather risks and operational disappointments this year may result in more conservative 2023 guidance and lead to a lower consensus forecast for production volume.

The broker's 2022/23 production estimates fall to 16Mt/17.4Mt from 16.9Mt/18.5Mt, respectively, and the target is trimmed to $2.40 from $2.50. Outperform.

Target price is $2.40 Current Price is $2.00 Difference: $0.4
If CRN meets the Credit Suisse target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $2.40, suggesting upside of 23.1% (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: 0.8

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

Macquarie rates CRN as Outperform (1) -

Coronado Global Resources has advised it is unlikely to achieve 2022 production guidance (after a recent downgrade) as poor weather continues to affect its Queensland operations, and says cost guidance is looking shaky.

Macquarie raises its cost assumptions cuts EPS forecasts -6% for 2022; and 3% to 4% for 2023 onward.

Outperform rating retained, the broker noting strength in metallurgical coal prices. Target price falls to $3.10 from $3.30.

Target price is $3.10 Current Price is $2.00 Difference: $1.1
If CRN meets the Macquarie target it will return approximately 55% (excluding dividends, fees and charges).

Current consensus price target is $2.40, suggesting upside of 23.1% (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: 0.8

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

UBS rates CRN as Neutral (3) -

Coronado Global Resources' has advised it won't meet recently downgraded 2022 guidance as rain continues to bucket down at Blackwater.

But UBS thinks it will take more than a little rain at Blackwater to slow Coronado, noting growth plans are on track.

Neutral rating and $1.70 target price retained.

Target price is $1.70 Current Price is $2.00 Difference: minus $0.3 (current price is over target).
If CRN meets the UBS target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.40, suggesting upside of 23.1% (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: 0.8

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

UBS rates ELD as Downgrade to Neutral from Buy (3) -

UBS downgrades Elders to Neutral from Buy, expecting softer earnings growth and citing management uncertainty after the resignation of its CEO and CFO.

Challenges are building, says the broker, including reduced earnings from the Elders' Agency business as cattle prices stabilise; the one-off nature of some price benefits; and lower Real Estate returns in response to rising interest rates. 

The broker says the business remains attractive as a capital light high return proposition (having returned an earnings (EBIT) compound annual growth rate of 24% over the past 10 years) but the broker requires stronger evidence of earnings momentum before returning to Buy.

EPS forecasts fall 18% for FY23; and 19% for FY24. Price target falls to $11.30 from $15.

Target price is $11.30 Current Price is $10.40 Difference: $0.9
If ELD meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $12.37, suggesting upside of 24.2% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Morgans rates GDF as Add (1) -

Following a (previously flagged) asset disposal and the revaluation of two office assets, Morgans lowers its target for Garda Property to $1.98 from $2.03.

The proceeds from the office sale will be used to reduce debt. The positive impact from the reduction in debt largely offsets the negative result of losing around 9% of the group's property income courtesy of the sale. Add.

Target price is $1.98 Current Price is $1.41 Difference: $0.575
If GDF meets the Morgans target it will return approximately 41% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Ord Minnett rates IGO as Lighten (4) -

A fire at IGO's Nova mine has sidelined production until mid-January, says Ord Minnett and on the upside, the Kwinana hydroxide plant has hit commercial production - a positive surprise.

Net, the broker cuts the target price -4% to $10.10 from $10.50. 

Lighten rating retained.

Target price is $10.10 Current Price is $16.34 Difference: minus $6.24 (current price is over target).
If IGO meets the Ord Minnett target it will return approximately minus 38% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $15.11, suggesting downside of -2.5% (ex-dividends)

The company's fiscal year ends in June.

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

Morgan Stanley rates IPL as Overweight (1) -

In a review of the investment case for Incitec Pivot, Morgan Stanley believes management's intention (outlined in May) to delay a demerger by 6-12 months makes sense. It's thought the delay means avenues can be pursed to take advantage of the strong pricing environment.

The broker's analysis suggests a valuation range of $1,791-3,060m for the Waggaman plant (WALA). It's thought any sale would facilitate meaningful capital management, with buybacks the preferred mechanism, due to a lack of franking credits

Should the WALA sale not proceed, Morgan Stanley's believes shareholders would prefer a sale of the Australian fertiliser assets.

The Overweight rating and $5.05 target are unchanged. Industry view: In-Line.

Target price is $5.05 Current Price is $3.97 Difference: $1.08
If IPL meets the Morgan Stanley target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $4.34, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in September.

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

Ord Minnett rates ORG as No Rating (-1) -

Ord Minnett is on research restriction for Origin Energy and advises previous recommendations and price targets should not be relied upon.

Current Price is $7.90. Target price not assessed.

Current consensus price target is $7.35, suggesting downside of -6.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.3

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

Credit Suisse rates PMV as Outperform (1) -

Credit Suisse assesses a strong financial year-to-date trading update by Premier Investments to November 27.

The analyst believes the consensus forecast for 1H sales would need to rise by 6-8 percentage points, should the November rate of growth continue through December and January.

The broker forecasts a contraction in sales revenue in the 2H of FY23 on a softening in consumer spending. A net cash forecast of $350m by the end of FY23 is thought to leave scope for further capital management.

The $28.94 target and Outperform rating are unchanged.

Target price is $28.94 Current Price is $25.40 Difference: $3.54
If PMV meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $25.72, suggesting upside of 1.2% (ex-dividends)

The company's fiscal year ends in July.

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

Macquarie rates STO as Outperform (1) -

Santos's appeal to the full federal court over the Barossa drilling plan has been dismissed but the company plans to submit another environmental plan after more sturdy community consultations, delaying drilling by roughly another three months, says Macquarie.

The broker explains the case sets a precedent in which offshore developers must now consult all relevant persons connected with the Sea Country.

On the upside, the broker believes the company may be able to finalise its US$1.1bn sale of PNG-LNG.

On the downside, Macquarie observes the market is starting to price in stranded asset risk for the Barossa, which represents 91c a share. But the broker estimates the company has $1.2bn in net undeveloped resources which the broker expects will proceed to production, including the Barossa and advises investors hang on for another three months - a big ask in this market.

Outperform rating and $9.90 target price retained.

Target price is $9.90 Current Price is $7.15 Difference: $2.75
If STO meets the Macquarie target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $9.19, suggesting upside of 25.2% (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

Morgan Stanley rates TLS as Overweight (1) -

Morgan Stanley reviews any potential catalyst for the Telstra Group share price from the October 11 approval by shareholders for the board to undertake the sale of up to 49.9% of the Infraco Fixed business.

While there is no current deals in front of the company today, the analysts feel there would be interest in the assets from industry funds/infrastructure investors.

The broker believes proceeds would be applied against debt providing capacity for a return of $10-11bn to shareholders through an on-market buyback. If all of InfraCo Fixed were sold, a 26-35% lift in EPS/DPS is expected.

The Overweight rating is unchanged and the target rises to $4.75 from $4.60. Industry View: In-Line. 

Target price is $4.75 Current Price is $4.00 Difference: $0.75
If TLS meets the Morgan Stanley target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $4.45, suggesting upside of 11.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

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

Morgan Stanley rates TUA as Overweight (1) -

Following last week's strong trading update, Morgan Stanley highlights Tuas' net additional subscriber momentum is still tracking ahead of its forecast, while margins have expanded to 35% in the 1Q from 29% in the 2H of FY22.

Revenue in the 1Q climbed by 56% year-on-year, implying annualised revenue of $76m, pretty much in line with the broker's forecast for $77m.

The Overweight rating and $1.85 target are retained. Industry View: In-Line.

Target price is $1.85 Current Price is $1.37 Difference: $0.48
If TUA meets the Morgan Stanley target it will return approximately 35% (excluding dividends, fees and charges).

The company's fiscal year ends in July.

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

Morgans rates VNT as Initiation of coverage with Add (1) -

Morgans initiates coverage on Ventia Services, which has a dominant position in providing maintenance to essential infrastructure in A&NZ. Modest capex and legacy tax losses are expected to result in strong cash flows and dividend yield.

The analyst considers the business is mature and operates in a stable and growing market, with potential to deliver high single digit earnings growth via new contracts and expanding services to existing customers.

The broker commences with an Add rating and sets a $3.25 target price.

Target price is $3.25 Current Price is $2.65 Difference: $0.6
If VNT meets the Morgans target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $3.02, suggesting upside of 11.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.8

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

Citi rates WDS as Buy (1) -

Citi stays Buy-rated on Woodside Energy given ongoing high dividend potential and lowers its target to $38.50 from $38.80 following twin events last week.

Early in the week, management provided FY23 production and capex guidance and the annual investor day on Friday confirmed to the analyst big production aspirations.

The broker's EPS forecasts for 2023 and 2024 fall by -23% and -12%, respectively, on the latest guidance.

Target price is $38.50 Current Price is $35.71 Difference: $2.79
If WDS meets the Citi target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $36.96, suggesting upside of 1.2% (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: 0.4

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