Australian Broker Call
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December 20, 2022
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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
Overnight Price: $0.13
Macquarie rates AMI as Outperform (1) -
After reporting two quarters of negative cash flow from its Hera asset, Aurelia Metals has transitioned the mine into care and maintenance, and subsequently lowered its full year guidance given lower production to 83,000 ounces from 87,000 ounces.
Aurelia Metals intends to extract the final stope ore from Hera in the coming quarter, and will redeploy its workforce to other sites. Macquarie highlights this could allow the company to minimise redundancies at Federation.
The Outperform rating is retained and the target price decreases to $0.20 from $0.23.
Target price is $0.20 Current Price is $0.13 Difference: $0.075
If AMI meets the Macquarie target it will return approximately 60% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 0.00 cents and EPS of minus 1.80 cents. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 0.00 cents and EPS of 0.50 cents. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
ARB ARB CORPORATION LIMITED
Automobiles & Components
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Overnight Price: $27.33
Citi rates ARB as Buy (1) -
Citi points out supply chain issues are persisting in the US for auto original equipment manufacturers (OEMs), which has negative implications for ARB Corp.
These issues, along with the company's weaker-than-expected 1Q trading update, could present downside risk to the analyst's forecasts.
Demand for new vehicles appear to be holding up, and the broker feels the company's strong balance sheet and highly profitable operations will help offset the supply disruptions.
The Buy rating and $39.25 target are unchanged.
Target price is $39.25 Current Price is $27.33 Difference: $11.92
If ARB meets the Citi target it will return approximately 44% (excluding dividends, fees and charges).
Current consensus price target is $33.53, suggesting upside of 22.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Current consensus EPS estimate is 131.1, implying annual growth of -12.2%. Current consensus DPS estimate is 65.8, implying a prospective dividend yield of 2.4%. Current consensus EPS estimate suggests the PER is 20.8. |
Forecast for FY24:
Current consensus EPS estimate is 142.0, implying annual growth of 8.3%. Current consensus DPS estimate is 72.3, implying a prospective dividend yield of 2.6%. Current consensus EPS estimate suggests the PER is 19.2. |
Market Sentiment: 0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $67.20
Morgan Stanley rates ASX as Equal-weight (3) -
Morgan Stanley points out rising wholesale energy prices benefit electricity futures on the ASX, which have risen over 30% in November year-to-date. However, electricity futures only comprise around 12% of the analyst's estimated total futures revenue.
The broker's intra-month tracking of December rate futures indicates volumes are down by -3% year-on-year, based on the first 12 trading days.
The Equal-weight rating and $72 target are retained. Industry view: In-Line
Target price is $72.00 Current Price is $67.20 Difference: $4.8
If ASX meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).
Current consensus price target is $75.11, suggesting upside of 11.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Morgan Stanley forecasts a full year FY23 dividend of 243.90 cents and EPS of 271.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 269.1, implying annual growth of 2.4%. Current consensus DPS estimate is 243.6, implying a prospective dividend yield of 3.6%. Current consensus EPS estimate suggests the PER is 25.0. |
Forecast for FY24:
Morgan Stanley forecasts a full year FY24 dividend of 253.50 cents and EPS of 281.60 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 280.6, implying annual growth of 4.3%. Current consensus DPS estimate is 254.1, implying a prospective dividend yield of 3.8%. Current consensus EPS estimate suggests the PER is 23.9. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $0.63
Citi rates BWX as Neutral (3) -
FY22 results (delivered late) for BWX revealed a -$323m impairment charge. Hence, statutory profit came in a -$336m compared to the consensus forecast for -$14m, explains Citi. Impairment were spread across all three cash generating units (CGU).
The midpoints of FY23 revenue and earnings (EBITDA) guidance also missed consensus estimates by -16% and -35%, respectively.
The guidance misses were largely due to weaker US demand and high levels of customer inventory in Australia, explains the analyst.
The Neutral rating and 74cps target are retained.
Target price is $0.74 Current Price is $0.63 Difference: $0.11
If BWX meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).
Current consensus price target is $0.88, suggesting upside of 39.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Citi forecasts a full year FY23 dividend of 0.00 cents and EPS of 7.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 8.1, implying annual growth of N/A. Current consensus DPS estimate is 1.0, implying a prospective dividend yield of 1.6%. Current consensus EPS estimate suggests the PER is 7.8. |
Forecast for FY24:
Citi forecasts a full year FY24 dividend of 0.00 cents and EPS of 10.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 10.1, implying annual growth of 24.7%. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 6.2. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $20.59
Morgan Stanley rates NCM as Overweight (1) -
Morgan Stanley views negatively the retirement of well-liked CEO Sandeep Biswas from Newcrest Mining given the short time frame for departure and a lack of clarity regarding the search for a replacement.
Mr Biswas is retiring from 18 December 2022 and will remain available in an advisory capacity until 18 March 2023.
The Overweight rating and $23.40 target are maintained. Industry View: Attractive.
Target price is $23.40 Current Price is $20.59 Difference: $2.81
If NCM meets the Morgan Stanley target it will return approximately 14% (excluding dividends, fees and charges).
Current consensus price target is $22.09, suggesting upside of 10.5% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Morgan Stanley forecasts a full year FY23 dividend of 25.12 cents and EPS of 94.73 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 103.2, implying annual growth of N/A. Current consensus DPS estimate is 26.2, implying a prospective dividend yield of 1.3%. Current consensus EPS estimate suggests the PER is 19.4. |
Forecast for FY24:
Morgan Stanley forecasts a full year FY24 dividend of 25.12 cents and EPS of 96.17 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 119.1, implying annual growth of 15.4%. Current consensus DPS estimate is 24.1, implying a prospective dividend yield of 1.2%. Current consensus EPS estimate suggests the PER is 16.8. |
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
PBP PROBIOTEC LIMITED
Pharmaceuticals & Biotech/Lifesciences
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Overnight Price: $2.16
Morgans rates PBP as Initiation of coverage with Add (1) -
Morgans initiates coverage on Australian pharmaceuticals and consumer goods contract manufacturer Probiotics with an Add rating and $3.30 target price.
The company services over 200 domestic and international clients including several tier-1 brands including Blackmores ((BKL)) and Unilever.
The broker believes the company should benefit from sectoral tailwinds from greater demand for manufacturing sovereignty and supply chain security within the pharmaceutical industry.
Scale and operating benefits may derive from planned site consolidation and potential M&A, suggests the analyst. The business is considered defensive and a 2.0% FY23 fully franked dividend yield is forecast.
Target price is $3.30 Current Price is $2.16 Difference: $1.14
If PBP meets the Morgans target it will return approximately 53% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY23:
Morgans forecasts a full year FY23 dividend of 5.00 cents and EPS of 16.00 cents. |
Forecast for FY24:
Morgans forecasts a full year FY24 dividend of 6.00 cents and EPS of 19.00 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $1.20
Citi rates PRN as Buy (1) -
Having initiated research on Perenti with a Buy rating earlier this month, Citi raises its target to $1.43 from $1.29 following the second guidance upgrade in a month.
The company has achieved operational improvement across Australia and Africa through improved rates, explains the broker, and management has improved confidence around near-term upside.
Earnings and revenue guidance have been raised by 8% and 6%, respectively.
Target price is $1.43 Current Price is $1.20 Difference: $0.23
If PRN meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY23:
Citi forecasts a full year FY23 dividend of 0.00 cents and EPS of 15.80 cents. |
Forecast for FY24:
Citi forecasts a full year FY24 dividend of 5.80 cents and EPS of 18.80 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates PRN as Outperform (1) -
Perenti has updated its full year revenue and earnings guidance for the second time, not anticipating revenue of $2.7-2.9bn and earnings of $230-250m, increases of 4-7% and 8% respectively.
Macquarie particularly likes that the update implies margins increase to 8.3-8.5%, a return to pre-covid levels. According to the broker, upgrades are underpinned by improvements to commercial conditions across a number of projects, as well as foreign exchange movements.
The Outperform rating is retained and the target price increases to $1.40 from $1.30.
Target price is $1.40 Current Price is $1.20 Difference: $0.2
If PRN meets the Macquarie target it will return approximately 17% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 0.00 cents and EPS of 18.30 cents. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 0.00 cents and EPS of 18.50 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $2.12
UBS rates SGR as Buy (1) -
UBS feels a media statement from the NSW Treasurer proposing to increase the NSW casino gaming tax from 1 July 2023 is policy positioning ahead of the upcoming NSW state election in March 2023. An additional $364m in tax over three years is proposed.
The broker points out Star Entertainment is in theory entitled to compensation for any material regulatory change under its current contract. However, compensation claims may be difficult following the Royal Commission findings.
UBS retains its Buy rating and $3.75 target.
Target price is $3.75 Current Price is $2.12 Difference: $1.63
If SGR meets the UBS target it will return approximately 77% (excluding dividends, fees and charges).
Current consensus price target is $3.21, suggesting upside of 51.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
UBS forecasts a full year FY23 EPS of 13.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 13.1, implying annual growth of N/A. Current consensus DPS estimate is 8.5, implying a prospective dividend yield of 4.0%. Current consensus EPS estimate suggests the PER is 16.2. |
Forecast for FY24:
UBS forecasts a full year FY24 EPS of 15.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 15.6, implying annual growth of 19.1%. Current consensus DPS estimate is 12.3, implying a prospective dividend yield of 5.8%. Current consensus EPS estimate suggests the PER is 13.6. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $14.88
Macquarie rates WOR as Outperform (1) -
Ongoing growth of Worley's labour force underpins Macquarie's positive outlook on the company, with the broker highlighting a correlation between labour and revenue growth.
Worley's workforce has increased more than 3% in FY23 to date, while job ads increased 7% in the last month compared to six months ago.
The broker also likes strong sustainability investment, with Worley announcing around 900 contract wins in the first quarter, including more than 300 late stage contracts. Macquarie expects ongoing contract wins to be a key catalyst for the company.
The Outperform rating is retained and the target price increases to $15.96 from $15.84.
Target price is $15.96 Current Price is $14.88 Difference: $1.08
If WOR meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).
Current consensus price target is $14.61, suggesting downside of -0.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY23:
Macquarie forecasts a full year FY23 dividend of 50.30 cents and EPS of 69.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 67.1, implying annual growth of 104.5%. Current consensus DPS estimate is 49.0, implying a prospective dividend yield of 3.3%. Current consensus EPS estimate suggests the PER is 22.0. |
Forecast for FY24:
Macquarie forecasts a full year FY24 dividend of 59.80 cents and EPS of 82.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 78.6, implying annual growth of 17.1%. Current consensus DPS estimate is 54.4, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 18.8. |
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 | Last Price | Broker | New Target | Prev Target | Change | |
| AMI | Aurelia Metals | $0.13 | Macquarie | 0.20 | 0.23 | -13.04% |
| BWX | BWX | Citi | 0.74 | 0.75 | -1.33% | |
| PRN | Perenti | $1.25 | Citi | 1.43 | 1.29 | 10.85% |
| Macquarie | 1.40 | 1.30 | 7.69% | |||
| SGR | Star Entertainment | $2.12 | UBS | 3.75 | 3.85 | -2.60% |
| WOR | Worley | $14.75 | Macquarie | 15.96 | 15.84 | 0.76% |
Summaries
| AMI | Aurelia Metals | Outperform - Macquarie | Overnight Price $0.13 |
| ARB | ARB Corp | Buy - Citi | Overnight Price $27.33 |
| ASX | ASX | Equal-weight - Morgan Stanley | Overnight Price $67.20 |
| BWX | BWX | Neutral - Citi | Overnight Price $0.63 |
| NCM | Newcrest Mining | Overweight - Morgan Stanley | Overnight Price $20.59 |
| PBP | Probiotec | Initiation of coverage with Add - Morgans | Overnight Price $2.16 |
| PRN | Perenti | Buy - Citi | Overnight Price $1.20 |
| Outperform - Macquarie | Overnight Price $1.20 | ||
| SGR | Star Entertainment | Buy - UBS | Overnight Price $2.12 |
| WOR | Worley | Outperform - Macquarie | Overnight Price $14.88 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 8 |
| 3. Hold | 2 |
Tuesday 20 December 2022
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