Australian Broker Call

Credit Suisse rates AMC as Neutral (3) -

Credit Suisse sees no immediate impact from proposed changes to the Packaging and Packaging Waste Directive (PPWD), by the European Commission. 

While the company derives 25% of revenue from its Western European flexible packaging operations, it could take many years for developments to unfold, explains the analyst.

The amended PPWD could tighten definitions of recyclabiity and labelling, notes the broker, which could incentivise Amcor's customers to invest in waste management schemes. The Neutral rating and $16 target are retained.

Target price is $16.00 Current Price is $15.50 Difference: $0.5
If AMC meets the Credit Suisse target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $18.07, suggesting upside of 17.3% (ex-dividends)

The company's fiscal year ends in June.

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: 0.6

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

Citi rates ASB as Buy (1) -

Citi reassures investors the retirement of some Freedom class littoral combat (LCSs) by the US Navy due to design issues is unlikely to impact Austal-built Independence class LCSs. The design of both ships is quite different.

In addition, the broker's research indicates the US Navy has continued to commission Independence class LCSs. The $2.35 target and Buy rating are uchanged.

Target price is $2.35 Current Price is $2.02 Difference: $0.33
If ASB meets the Citi target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $2.28, suggesting upside of 14.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.7

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

Macquarie rates AWC as Neutral (3) -

Macquarie notes alumina prices have risen to US$528/t from US$345/t earlier this year and feels the market may be tighter over the near term due to the recent alumina export ban by Australia.

The broker notes a 10% move in alumina prices has the potential to change Alumina Ltd's earnings by 20-43%. A Neutral rating is maintained in recognition of potential near-term trade flow uncertainty from the export ban. The $2.00 target is unchanged.

Target price is $2.00 Current Price is $1.99 Difference: $0.01
If AWC meets the Macquarie target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $2.15, suggesting upside of 7.5% (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: 0.6

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

UBS rates LIC as Initiation of coverage with Neutral (3) -

UBS initiates coverage on Lifestyle Communities, noting the company is its preferred manufactured housing estates exposure given strong sector focus, consistent strategy and proven long-term growth. 

Recent increased funding should drive a 27-50% increase in development settlements, with the company guiding to 1,100-1,300 units settled over FY22-24, but the broker expects an aging population will support further demand. 

The broker likes the company's strong customer value proposition, with 50% of sales made on referrals, and its focus on affordability. 

The broker initiates with a Neutral rating and a target price of $17.75.

Target price is $17.75 Current Price is $17.36 Difference: $0.39
If LIC meets the UBS target it will return approximately 2% (excluding dividends, fees and charges).

Market Sentiment: 0.0

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

Ord Minnett rates LNK as Hold (3) -

Following an update by Link Administration, the $5.50 takeover bid by Dye and Durham for Link Administration appears to be on-track, according to Ord Minnett.  The Hold rating and $5.50 target are retained.

However, the sale of the banking and credit management (BCM) division is proving difficult and may not result in any upside for shareholders, suggests the analyst.

The broker notes there may be some floor support for the company should the takeover not proceed due to a non-binding bid for the Retirement and Superannuation Solutions Retirement division from global investor FNZ Group.

Target price is $5.50 Current Price is $5.15 Difference: $0.35
If LNK meets the Ord Minnett target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $5.55, suggesting upside of 7.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.0

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

Morgan Stanley rates MQG as Overweight (1) -

Morgan Stanley feels tailwinds for Macquarie Group's Commodities and Global Markets division may be more than cyclical and the broker has increasing confidence around the opportunity in the renewable energy space.

As a result of rising energy price volatility, Morgan Stanley increases its earnings forecasts. However, should private markets activity remain subdued for longer there is considered to be downside risk to FY23 earnings.

The Overweight rating is retained and the target price rises to $245 from $242. Industry view: Attractive.

Target price is $245.00 Current Price is $195.01 Difference: $49.99
If MQG meets the Morgan Stanley target it will return approximately 26% (excluding dividends, fees and charges).

Current consensus price target is $220.80, suggesting upside of 11.8% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Credit Suisse rates QUB as Outperform (1) -

Qube Holdings has confirmed a $400m off-market buyback whereby shareholders may offer shares at between a -5% and -14% discount to the current market price. The after tax benefit will vary according to the shareholders individual tax circumstances, notes Credit Suisse.

The buyback proceeds received by shareholders are a $1.61/share capital component and a fully franked dividend equal to the buyback price less $1.61/share.

The Outperform rating and $3.55 target are retained.

Target price is $3.55 Current Price is $3.05 Difference: $0.5
If QUB meets the Credit Suisse target it will return approximately 16% (excluding dividends, fees and charges).

Current consensus price target is $3.32, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

UBS rates QUB as Neutral (3) -

Qube Holdings has confirmed a $400m off-market buyback in what UBS notes is just part of broader company strategy to deploy the $1.67bn in proceeds from the Moorebank Logistics Park sale, estimating a further $600-700m will be available for growth initiatives. 

The buyback will be priced at a -5-14%% discount to market, comprising $1.61 per share and a fully franked dividend. The company estimates eligible super funds could realise as much as a 6% premium to market. 

The Neutral rating and $3.30 target are retained.

Target price is $3.30 Current Price is $3.05 Difference: $0.25
If QUB meets the UBS target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $3.32, suggesting upside of 9.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

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

Macquarie rates RIO as Outperform (1) -

Macquarie notes alumina prices have risen to US$528/t from US$345/t earlier this year and feels the market may be tighter over the near term due to the recent alumina export ban by Australia.

The broker notes aluminium accounts for around 25% of its valuation for Rio Tinto. While the company has a 80% stake in Queensland Alumina Ltd in a joint venture with Russia’s Rusal, this exposure is less than 1% of the company's valuation, explains the analyst.

The Outperform rating and $140 target are retained.

Target price is $140.00 Current Price is $110.44 Difference: $29.56
If RIO meets the Macquarie target it will return approximately 27% (excluding dividends, fees and charges).

Current consensus price target is $116.36, suggesting upside of 2.1% (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: 0.3

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

Morgan Stanley rates RIO as Overweight (1) -

Following the Australian government ban on exports of alumina and aluminum ores, including bauxite, to Russia, Morgan Stanley estimates Rio Tinto's revenue exposure is less than 0.05% and less than 1% of earnings (EBITDA).

The Overweight rating and target price of $122.50 are retained. Industry view: Attractive.

Target price is $122.50 Current Price is $110.44 Difference: $12.06
If RIO meets the Morgan Stanley target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $116.36, suggesting upside of 2.1% (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: 0.3

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

Macquarie rates S32 as Outperform (1) -

Macquarie notes alumina prices have risen to US$528/t from US$345/t earlier this year and feels the market may be tighter over the near term due to the recent alumina export ban by Australia.

The broker notes a 10% move in alumina prices translates to a 1-4% earnings change for South32. Apart from alumina, the company is considered to have earnings upside from buoyant coking coal and base metal prices.

South32 is Macquarie's preferred large-cap miner. The $7.00 target and Outperform rating are unchanged.

Target price is $7.00 Current Price is $4.88 Difference: $2.12
If S32 meets the Macquarie target it will return approximately 43% (excluding dividends, fees and charges).

Current consensus price target is $5.38, suggesting upside of 6.3% (ex-dividends)

The company's fiscal year ends in June.

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

Morgans rates STA as Add (1) -

After a recent site visit to Strandline Resources' Coburn mineral sands project, Morgans believes construction is being well managed.

The broker leaves its underlying cost and production assumptions unchanged. However, the target rises to $0.62 from $0.52 due to a tight market for mineral sands and spot pricing above industry forecasts. The Add rating is unchanged.

Target price is $0.62 Current Price is $0.35 Difference: $0.27
If STA meets the Morgans target it will return approximately 77% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

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

UBS rates SWM as Buy (1) -

Continuing momentum in the ad market could offer 15% upside to UBS's $315m base earnings forecast for Seven West Media. The media company grew year-on-year earnings 30% in the first half, with two-thirds attributed to free-to-air ad revenue strength. 

The free-to-air and broadcaster-video-on-demand ad markets grew a combined 17% in the first half, up 14% on pre-covid levels. Following a strong second half start, UBS expects 5% growth in free-to-air and more than 50% growth in broadcaster-video-on-demand.

Earnings per share forecasts are upgraded 11% and 8% for FY22 and FY23. 

The Buy rating and $0.95 target price are retained.

Target price is $0.95 Current Price is $0.63 Difference: $0.32
If SWM meets the UBS target it will return approximately 51% (excluding dividends, fees and charges).

Current consensus price target is $0.88, suggesting upside of 31.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.9

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

Ord Minnett rates WEB as Buy (1) -

Ord Minnett advocates a buy into weakness (given ongoing volatilty) approach for Webjet shares. While the upcoming FY22 result (March year end) will be weaker than initially expected, strong demand for 2023 Northern Hemisphere summer holiday travel is forecast.

Additionally, the analyst estimates the B2B and B2C divisions should win material market share. 

The broker raises its target to $7.51 from $7.31 and maintains its Buy rating.

Target price is $7.51 Current Price is $5.57 Difference: $1.94
If WEB meets the Ord Minnett target it will return approximately 35% (excluding dividends, fees and charges).

Current consensus price target is $6.17, suggesting upside of 11.2% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.4

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