Australian Broker Call

Citi rates AGL as Buy (1) -

Concerns have recently been expressed regarding the company's market concentration, implying domestic growth could become increasingly difficult, Citi observes. AGL is also approaching peak earnings, as wholesale electricity prices enter backwardation.

This suggests to the broker that AGL may possibly look to raise equity and enter a high growth market offshore to protect or grow its earnings. Nevertheless, Citi would need to witness compelling value creation to offset the risk, as opportunities of scale are likely to be difficult to find or expensive to buy.

Buy rating and $26.88 target maintained.

Target price is $26.88 Current Price is $25.49 Difference: $1.39
If AGL meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $27.48, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

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

Macquarie rates AGL as Outperform (1) -

The company has announced its replacement plan for Liddell which includes 1050 MW of renewable, 750 MW of gas peakers and 250 MW of batteries. AGL has quantified the expenditure at around $1.4bn.

Capital intensity is delayed until 2019 with spending then continuing until 2023. Macquarie suggests the core elements of the plan were well flagged. Moreover, it does not strain the capital expenditure profile and will enhance the ability to firm up the renewables portfolio.

Outperform. Target is $25.40.

Target price is $25.40 Current Price is $25.49 Difference: minus $0.09 (current price is over target).
If AGL meets the Macquarie target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $27.48, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

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

UBS rates AGL as Buy (1) -

AGL has reiterated its intention to close Liddell by 2022 and replace lost capacity with a series of projects over three stages, including increased Bayswater output, power purchase agreements, new gas-fired capacity and battery or hydro storage.

It's a credible plan, but the broker believes more growth will be needed to offset lost Liddell earnings. Meanwhile, the government wants AGL to sell Liddell so that battle's not over yet. The broker retains Buy and a $29.20 target.

Target price is $29.20 Current Price is $25.49 Difference: $3.71
If AGL meets the UBS target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $27.48, suggesting upside of 7.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.8

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

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

The announced sale of Australian life insurance operations to international insurer Zurich does not come as a surprise. Morgan Stanley points out the deal should be dilutive to the tune of -2.5% but releasing capital to shareholders should compensate for this and make it a broadly neutral deal.

Morgan Stanley sees a $3bn buyback in late 2018 as a real prospect. Rating is Equal-weight. Target is $28.50. Sector view is In-Line.

Target price is $28.50 Current Price is $28.70 Difference: minus $0.2 (current price is over target).
If ANZ 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 $30.44, suggesting upside of 6.1% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.2

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

Macquarie rates ASG as Outperform (1) -

Macquarie reviews forecasts following recent VFACTS data. Market conditions are mixed, while acquisitions represent a key growth driver for the company. Organic growth is supported by back-end services and parts.

The broker considers the recent weakness in the stock a compelling risk/reward opportunity. Outperform retained. Target is reduced to $2.75 from $3.20.

Target price is $2.75 Current Price is $1.88 Difference: $0.87
If ASG meets the Macquarie target it will return approximately 46% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

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

Mineral Resources ((MIN)) has confirmed an all-scrip offer for AWE, with AWE shareholders receiving one MIN share for every 22.325 shares held.

This values AWE at $0.80 a share as of Friday's close and compares with the bid from China Energy Reserve and Chemical at $0.73 per share, cash.

So close to Christmas, Citi is not sure that investors awaiting a higher offer will be rewarded by Santa and downgrades to Sell/High Risk from Neutral/High Risk rating. Target is $0.72.

Target price is $0.72 Current Price is $0.82 Difference: minus $0.1 (current price is over target).
If AWE meets the Citi target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.57, suggesting downside of -30.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.2

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

Deutsche Bank rates AWE as Hold (3) -

A second bidder has emerged, Mineral Resources ((MIN)). The company has offered one share for every 22.325 AWE shares held.

Deutsche Bank suggests Mineral Resources is interested in AWE to vertically integrate the energy supply chain, including the use of LNG plants to provide power solutions to a wide range of end users.

Hold rating retained. Target is $0.45.

Target price is $0.45 Current Price is $0.82 Difference: minus $0.37 (current price is over target).
If AWE meets the Deutsche Bank target it will return approximately minus 45% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.57, suggesting downside of -30.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.2

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

Morgan Stanley rates AWE as Underweight (5) -

AWE has indicated that Mineral Resources ((MIN)) has launched an all-scrip offer, valuing the stock at $484m, a 10% premium to Friday's close.

Morgan Stanley notes this is the fourth bid for AWE in the past four years, China Energy Reserve and Chemicals being the latest at $0.73 a share.

Morgan Stanley observes, although AWE's undeveloped gas assets are not close to Wodgina, there could be opportunities to swap assets with other northern gas producers. Given WA is currently long gas, the timing of the bid appears to the broker to be a combination of opportunistic and strategic intentions.

Underweight. Target is $0.45. Industry view: In-Line.

Target price is $0.45 Current Price is $0.82 Difference: minus $0.37 (current price is over target).
If AWE meets the Morgan Stanley target it will return approximately minus 45% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.57, suggesting downside of -30.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.2

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

UBS rates AWE as No Rating (-1) -

Mineral Resources ((MIN)) has joined the race to acquire AWE with a scrip offer valued currently at 80c, making it a premium to the prior 71c cash offer from China. MinRes does not require due diligence, having already scrutinised the assets during Origin Energy's ((ORG)) Lattice sale process.

The AWE board has recommended shareholders ignore both bids. The broker is advising and hence is currently restricted on making a recommendation.

Current Price is $0.82. Target price not assessed.

Current consensus price target is $0.57, suggesting downside of -30.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.2

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

Macquarie rates CLQ as Outperform (1) -

The company has announced ICBC as a full financing partner for its Sunrise project, with commitments now at US $500m. Macquarie notes the stock has fallen -25% in the past four weeks, matching a -12% decline in nickel prices.

However, cobalt prices have risen a further 25%, increasing cobalt's share of forecast revenue for the Sunrise project to 60%.

Outperform retained. Target is $2.20.

Target price is $2.20 Current Price is $1.18 Difference: $1.02
If CLQ meets the Macquarie target it will return approximately 86% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.5

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

Morgans rates CMA as Add (1) -

The company has acquired two new assets in NSW for $119.1m, to be partly funded via a $60m non-renounceable entitlement offer at $2.39. The equity raising is expected to be neutral to FY18 distributable earnings.

Morgans believes the A-REIT offers an attractive distribution yield of 7.4%, which is underpinned by rental income with the majority being fixed increases of 3.0%.

Add rating. Target raised to $2.58 from $2.56.

Target price is $2.58 Current Price is $2.44 Difference: $0.14
If CMA meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

Macquarie rates CMW as Underperform (5) -

The company has made a $170m equity placement to private investors, representing around 10% of the current shares on issue. Cromwell has also completed the IPO of the Cromwell European REIT.

Macquarie is positively disposed towards the completion of this IPO, as it provides evidence of successful execution by management, while the equity placement will reduce the financial leverage.

Nevertheless, with a distribution in excess of free cash flow and headwinds from vacancies in the domestic portfolio the broker stays with an Underperform rating. Target  is $0.90.

Target price is $0.90 Current Price is $1.02 Difference: minus $0.12 (current price is over target).
If CMW meets the Macquarie target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $0.98, suggesting downside of -4.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

Ord Minnett rates CMW as Hold (3) -

The company has issued $170m in shares to a private investor based in Singapore at a -5.5% discount to the current share price. Proceeds will be used to repay debt. The recipients of the shares are also cornerstone investors in the company's recent IPO of a REIT in Singapore.

The IPO carries a number of positives, Ord Minnett suggests, but still does not diminish the lack of transparency around the transaction and the dilution to existing investors.

The broker also believes the cost of capital is likely to increase as a result of the transaction. Hold rating and $1.05 target retained.

Target price is $1.05 Current Price is $1.02 Difference: $0.03
If CMW meets the Ord Minnett target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $0.98, suggesting downside of -4.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

Credit Suisse rates CWY as Neutral (3) -

A merger of Cleanaway and Tox Free ((TOX)) has been on the cards for many years, Credit Suisse notes, and has finally materialised. The offer price is $3.425.

Credit Suisse observes the transaction gives Cleanaway access to some higher quality business streams. The broker calculates around 21-25% accretion to earnings per share in FY18.

Neutral retained. Target is raised to $1.40 from $1.32.

Target price is $1.40 Current Price is $1.47 Difference: minus $0.07 (current price is over target).
If CWY 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 $1.57, suggesting upside of 6.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Deutsche Bank rates CWY as Buy (1) -

The company's proposed equity-funded acquisition of competitor, Tox Free ((TOX)) at $3.425 is positive in Deutsche Bank's opinion. This increases exposure to the improving and higher returning liquids and industrial business.

Cleanaway will undertake a $590m underwritten entitlement offer and has also reaffirmed FY18 guidance. Deutsche Bank retains a Buy rating and raises the target to $1.65 from $1.60.

Target price is $1.65 Current Price is $1.47 Difference: $0.18
If CWY meets the Deutsche Bank target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $1.57, suggesting upside of 6.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Macquarie rates CWY as No Rating (-1) -

The company will acquire Tox Free ((TOX)) at $3.425 a share, which represents a 21% premium to the last closing price. The acquisition is expected to be 27% accretive to earnings per share.

Cleanaway has also signalled that FY18 earnings will be in line with current market expectations, excluding the acquisition.

Macquarie is currently restricted from a rating and target.

Current Price is $1.47. Target price not assessed.

Current consensus price target is $1.57, suggesting upside of 6.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Ord Minnett rates CWY as Hold (3) -

The company intends to acquire Tox Free ((TOX)) for $3.425 a share. Ord Minnett considers the acquisition price fairly full and value accretion from the transaction is highly reliant on the synergies that remain over the medium to longer term.

The broker concedes the waste management industry in Australia has always been a prime candidate for consolidation but it is also an example where earnings per share and value accretion are not always aligned.

Hold. Target is raised to $1.54 from $1.36.

Target price is $1.54 Current Price is $1.47 Difference: $0.07
If CWY meets the Ord Minnett target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $1.57, suggesting upside of 6.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

UBS rates CWY as Upgrade to Buy from Neutral (1) -

Cleanaway has made a cash bid for Tox Free Solutions  ((TOX)) at $3.425, which amounts to a 28% premium. UBS had considered Tox' assets to be undervalued and an acquisition would diversify Cleanaway's earnings base and provide significant synergies.

UBS also considers consensus earnings forecasts for Cleanaway to be too low. The broker has not yet factored a successful takeover into forecasts, but has added a 50% chance to its valuation, increasing its target to $1.64 from $1.38, sufficient for an upgrade to Buy.

Target price is $1.64 Current Price is $1.47 Difference: $0.17
If CWY meets the UBS target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $1.57, suggesting upside of 6.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.6

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

Deutsche Bank rates HT1 as Buy (1) -

The company has confirmed it is on track to meet consensus forecasts for operating earnings (EBITDA) for 2017 of $118-119m.

Deutsche Bank lowers estimates, to take into account the impact on Adshel in 2017 from the Yarra Trams transition. Target is reduced to $2.85 from $2.90. Buy maintained.

Target price is $2.90 Current Price is $1.93 Difference: $0.97
If HT1 meets the Deutsche Bank target it will return approximately 50% (excluding dividends, fees and charges).

Current consensus price target is $2.69, suggesting upside of 39.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

Macquarie rates HT1 as Outperform (1) -

HT&E has indicated it is on track to meet consensus expectations for EBITDA of $118-119m. Macquarie likes the company's exposure to two of the healthiest sectors in the media market, outdoor and radio.

The broker also notes the company remains a highly attractive acquisition target in the context of changing media ownership laws. Outperform rating. Macquarie lowers the target to $2.40 from $2.45.

Target price is $2.40 Current Price is $1.93 Difference: $0.47
If HT1 meets the Macquarie target it will return approximately 24% (excluding dividends, fees and charges).

Current consensus price target is $2.69, suggesting upside of 39.4% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.8

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

Morgan Stanley rates MIN as Overweight (1) -

AWE ((AWE)) has indicated Mineral Resources has launched an all-scrip offer, valuing the stock at $484m, a 10% premium to Friday's close. Morgan Stanley notes the market reaction is clear, with market capitalisation losing -$274m or -57% of the offer for AWE equity.

Morgan Stanley observes, although AWE's undeveloped gas assets are not close to Wodgina, there could be opportunities to swap assets with other northern gas producers. Given WA is currently long gas, the timing of the bid appears to the broker to be a combination of opportunistic and strategic intentions.

Overweight. Target is reduced to $20.30 from $22.30. Industry view is Attractive.

Target price is $20.30 Current Price is $16.85 Difference: $3.45
If MIN meets the Morgan Stanley target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $19.43, suggesting upside of 15.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.7

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

Credit Suisse rates NST as Neutral (3) -

The company has acquired 16.4% of Echo Resources ((EAR)) on market for an average price of $0.29 per share.

Credit Suisse observes Echo offers an option on a $20m/6-month refurbishment of the Bronzewing mill, fed by a portion of the 27.4 mt gold resource spread across several deposits.

Consolidation of the Yandal region appears to the broker to be in Northern Star's sights.

Neutral rating retained. Target is $4.55.

Target price is $4.55 Current Price is $5.67 Difference: minus $1.12 (current price is over target).
If NST 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 $4.90, suggesting downside of -13.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.3

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

Morgans rates RAN as Hold (3) -

Morgans is disappointed with the company's business update, as issues have occurred with the commissioning of the raw material pre-processing system.

A review is underway as management assesses the impact of higher raw material costs on the economics of current orders. Another issue is the non-payment of a large order by a Chinese customer, which the broker asserts needs to be rectified given the stretched cash position of the company.

Hold rating maintained but Morgans advises investors to be extremely cautious. Target drops to 7c from 26c.

Target price is $0.07 Current Price is $0.07 Difference: $0
If RAN meets the Morgans target it will return approximately 0% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

Market Sentiment: 0.0

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

Ord Minnett rates TOX as Hold (3) -

The company has entered into a scheme implementation agreement with Cleanaway Waste ((CWY)), whereby Cleanaway will acquire Tox Free for $3.425 a share.

Ord Minnett suggests it unlikely another competitive bid for the company will emerge, given the full multiple that is being paid and the limited number of industry participants that could target a similar level of synergies.

The broker retains a Hold rating and raises the target to $3.43 from $2.15.

Target price is $3.45 Current Price is $3.41 Difference: $0.04
If TOX meets the Ord Minnett target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $2.70, suggesting downside of -20.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.3

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

Ord Minnett rates WFD as Accumulate (2) -

Ord Minnett observes increased activity globally in the regional mall space in the form of mergers and acquisitions. The activity, the broker suggests, reflects a material discount to fundamental valuations in the sector.

High-quality mall operators have been oversold on the risks around the launch of Amazon in Australia and long-term structural challenges, the broker suggests. Accumulate maintained. Westfield's target rises to $10.60 from $10.30.

Target price is $10.60 Current Price is $8.50 Difference: $2.1
If WFD meets the Ord Minnett target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $9.04, suggesting upside of 6.3% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY17:

Forecast for FY18:

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