Australian Broker Call

Macquarie rates ADI as No Rating (-1) -

APN Industria REIT is acquiring $368m of industrial properties and developments at an average yield of 5%, to be funded by a $350m equity raise.

The broker is involved the raising and thus currently under restriction.

Current Price is $3.74. Target price not assessed.

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

Citi rates BKW as Buy (1) -

Citi analysts comment FY21 profit beat both market consensus and their own forecasts. The positive surprise, it seems, relates to property revaluation.

Citi's forecasts have been lifted as forecast investment income is now higher. The broker's forecasts remain positive for both NSW and Victoria and markets in North America.

Target price lifts to $30 from $27.20. Buy rating retained.

Target price is $30.00 Current Price is $25.06 Difference: $4.94
If BKW meets the Citi target it will return approximately 20% (excluding dividends, fees and charges).

Current consensus price target is $26.30, suggesting upside of 2.1% (ex-dividends)

The company's fiscal year ends in July.

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 BKW as Neutral (3) -

Brickworks reported above expectation on gains in property and investments, with underlying earnings increasing 86%. Covid-related disruptions in building, both here and in the US, nevertheless continue to weigh on recovery, the broker notes.

Building activity should stretch out to provide some earnings visibility, the broker suggests, but the US business will recover more slowly than previously expected and Victoria provides uncertainty.

Still, the company's property pipeline is solid, and the investment in Soul Pattinson ((SOL)) should remain supportive. Valuation is nonetheless fair, the broker believes. Hold retained, target rises to $26.65 from $24.10.

Target price is $26.65 Current Price is $25.06 Difference: $1.59
If BKW meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $26.30, suggesting upside of 2.1% (ex-dividends)

The company's fiscal year ends in July.

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

Morgans rates BKW as Hold (3) -

Brickworks FY21 result and final dividend of 40cps were in-line with Morgans forecasts. The result was considered underpinned by the record performance of the Property segment. It's thought the Building Products businesses should see an ongoing cyclical recovery.

The broker increases FY22-24 earnings (EBIT) forecasts by 48%, 31% and 47%, respectively, and raises the target price to $25.72 from $24.37. The Hold rating is maintained as the stock is trading within range of the new target price.

A very strong development pipeline supports another positive year ahead for Property, suggests the analyst.

Target price is $25.72 Current Price is $25.06 Difference: $0.66
If BKW meets the Morgans target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $26.30, suggesting upside of 2.1% (ex-dividends)

The company's fiscal year ends in July.

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 CIP as Outperform (1) -

Centuria Industrial REIT has launched a $325 raising to help fund $350m in asset purchases. The broker estimates -2.4% dilution to funds from operations, but due to fixed interest expense offsets, guidance has been maintained.

The broker has trimmed earnings forecasts but increased its target price to $4.22 from $4.00 reflecting a risk-free decrease to 2.40% from 2.52%. Upside exists from rental growth, balance sheet deployment and cap-rate compression, the broker suggests.

Outperform retained.

Target price is $4.22 Current Price is $4.01 Difference: $0.21
If CIP meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $3.97, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in June.

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

UBS rates CIP as Neutral (3) -

Centuria Industrial REIT has acquired eight assets for -$351m, partly funded by a $300m capital raise. Despite favourable cost of equity, the transactions are estimated by UBS to be circa -3% dilutive though this may be recouped by further debt funded acquisitions.

Upside and growth trajectory from here is less clear and the analyst retains the Neutral rating. Management is only comfortable to pursue moderate (around 7% of portfolio) higher returning asset repositioning/development activity. The target price of $3.81 is unchanged.

Target price is $3.81 Current Price is $4.01 Difference: minus $0.2 (current price is over target).
If CIP meets the UBS target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.97, suggesting upside of 5.2% (ex-dividends)

The company's fiscal year ends in June.

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

Citi rates CSL as Neutral (3) -

In an attempt to gradually fully acquire Biotest AG, Spanish competitor Grifols has acquired Tiancheng Pharmaceutical Holdings, the largest shareholder of Biotest.

Citi notes getting to 100% ownership of Biotest will take at least till mid-2022, but also that Grifols has expressed higher targets for plasma collection centres and plasma fractionating capacity. Both targets remain inside projected growth for the global industry overall.

Citi analysts remain sceptical about the threat posed by ArgenX's alternative MG FcRn product; contrary to fears expressed elsewhere, they do not see this product altering the plasma industry in a significant manner.

For CSL, the Neutral rating is retained and the target price remains at $325.00. Citi expects to see upgrades to market forecasts over the next six months.

Target price is $325.00 Current Price is $312.99 Difference: $12.01
If CSL meets the Citi target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $305.32, suggesting downside of -2.2% (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: 0.2

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

Citi rates DXS as Sell (5) -

Citi analysts observe how a number of recent transactions is pulling Dexus away from pure Office exposure, highlighting management at the REIT's new strategy of active diversification.

Nonetheless, observes the broker, office rent remains the majority contributor to Dexus' annual income and structural headwinds remain the name of the game.

Sell rating retained. Target $9.54.

Target price is $9.54 Current Price is $11.10 Difference: minus $1.56 (current price is over target).
If DXS meets the Citi target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.11, suggesting upside of 3.0% (ex-dividends)

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Morgan Stanley rates DXS as Overweight (1) -

While Dexus Property is and will remain an asset-heavy rent collector, it is very active in finding ways to add value, Morgan Stanley notes. The announced acquisition of $1.5bn of industrial assets typifies this strategy. The broker calculates 12-month earnings accretion of 2.5-3%.

Dexus has found a way to give shareholders exposure to the industrial asset class without necessarily compromising income, the broker notes, as it seeks to simply be a minority owner while earning management fees. Overweight and $11.95 target retained.

Industry View: In Line.

Target price is $11.95 Current Price is $11.10 Difference: $0.85
If DXS meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $11.11, suggesting upside of 3.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Macquarie rates FSF as Upgrade to Outperform from Underperform (1) -

Fonterra reported towards the top end of the guidance range and better than the last update implied. The last quarter was nevertheless slight loss-making, Macquarie notes, on lower milk prices.

The company has revealed its long-term strategy, targeting 40-50% underlying earnings growth by FY30, which would drive around a 75% increase in earnings per share, the broker calculates.

This is driven by increased focus on value-add, including “Active Living”, supported by higher capital investment and ramp up in R&D spending. On this positive outlook, and on current valuation, the broker double-upgrades to Outperform from Underperform.

Target rises to NZ$4.28 from NZ$4.25.

Current Price is $3.87. Target price not assessed.

The company's fiscal year ends in July.

Forecast for FY22:

Forecast for FY23:

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

Citi rates PMV as Neutral (3) -

Citi's post-results analysis is centred around the retailer's margins and prospects for margins to remain at a higher level than pre-covid. Citi analysts believe this is the case due to more online sales and rent renegotiations.

The trading update for the first seven weeks is considered not so bad ("less negative") as lockdowns provided major impact. Citi's focus is on re-opening of borders and economies.

The analysts believe the Premier Investments share price deserves to trade at a premium vis a vis other retailers, also because the company is a beneficiary of the increasing shift to online sales, but without a need for heavy investment.

Target price increases to $30.70 from $27.40. Neutral. Estimates have been lifted.

Target price is $30.70 Current Price is $27.63 Difference: $3.07
If PMV meets the Citi target it will return approximately 11% (excluding dividends, fees and charges).

Current consensus price target is $29.37, suggesting upside of 0.5% (ex-dividends)

The company's fiscal year ends in July.

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

Credit Suisse rates PMV as Neutral (3) -

Adjusting for impacts, Premier Investment's FY21 earnings before tax was $352.4m, a 1.7% beat on Credit Suisse's forecast and 75% year-on-year growth. The broker notes Retail earnings before tax were above the mid-point of guidance, impressive given covid restrictions.

Credit Suisse also highlighted reduced promotional activity drove a gross margin increase to 331 basis points, and the broker expects a return to pre-covid gross margin levels in FY22. Total global sales declined -9% in the first seven weeks of FY22.

The Neutral rating is retained and the target price increases to $28.74 from $26.28.

Target price is $28.74 Current Price is $27.63 Difference: $1.11
If PMV meets the Credit Suisse target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $29.37, suggesting upside of 0.5% (ex-dividends)

The company's fiscal year ends in July.

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

Macquarie rates PMV as Outperform (1) -

Premier Investments reported an 88% year on year increase in earnings, driven by increased sales and gross margins on a "favourable" cost of doing business, the broker notes. Given rent and other concessions in FY21, the broker sees margins normalising from here.

While Smiggle offshore is benefiting from "back to school" in FY22, A&NZ lockdowns are a drag. But the broker supports the company's  decision to yet again invest in inventory ahead of anticipated pent-up demand associated with ultimate reopening.

Premier is "loading up for a cracker Christmas". Outperform retained, target rises to $33 from $31.

Target price is $33.00 Current Price is $27.63 Difference: $5.37
If PMV meets the Macquarie target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $29.37, suggesting upside of 0.5% (ex-dividends)

The company's fiscal year ends in July.

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

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

At first glance, the broker notes Premier Investments' FY21 result was in line with guidance, but sales are down -10% in FY22 to date due to lockdowns.

The company has consistently exceeded the broker's expectations over the last 12-18 months, reflecting a strong consumer and solid execution. However, earnings growth in FY22 is increasingly challenging due to lockdowns, lower demand and lower margins.

CEO transition also adds further complexity, the broker notes. Equal-weight retained, target rises to $26.75 from $24.00.

Industry view: In-Line.

Target price is $26.75 Current Price is $27.63 Difference: minus $0.88 (current price is over target).
If PMV meets the Morgan Stanley target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $29.37, suggesting upside of 0.5% (ex-dividends)

The company's fiscal year ends in July.

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

UBS rates PMV as Buy (1) -

UBS retains its Buy rating and $30 target price after a FY21 result in-line with guidance. The final DPS of 46cps was below consensus (54.7cps) and the broker's forecast for 64.5cps. Premier Retail earnings (EBIT) margins were slightly lower than the analyst's forecast.

Sales are down -9.5% for the first seven weeks of the new financial year (beginning in July). Online has jumped 44.6% with 56% of network closed for most of August and into September. 

Target price is $30.00 Current Price is $27.63 Difference: $2.37
If PMV meets the UBS target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $29.37, suggesting upside of 0.5% (ex-dividends)

The company's fiscal year ends in July.

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

Citi rates SFR as Neutral (3) -

Sandfire Resources is buying Spanish copper company Matsa for US$1.87bn to be financed through $1.25bn in fresh equity, US$650m in syndicated debt, on top of short-term debt and available cash.

Citi sees the strategic merit of the deal and points out Sandfire might be en route to turning itself into a 200ktpa copper producer.

Target price lifts to $7.30. Neutral (High Risk) rating retained.

Target price is $7.30 Current Price is $6.22 Difference: $1.08
If SFR meets the Citi target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $6.88, suggesting upside of 10.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Credit Suisse rates SFR as Downgrade to Neutral from Outperform (3) -

Sandfire Resources' acquisition of the Aguas Tenidas copper/polymetallic mining complex for $2.64bn is expected to close in the March quarter. Credit Suisse notes the transaction is expected to add around 110,000 tonnes per annum copper production in FY22.

It is Credit Suisse's view that the acquisition presents a dilution risk, estimating the deal may be 30% dilutive to shareholders. 

The rating is downgraded to Neutral from Outperform and the target price decreases to $6.00 from $7.70.

Target price is $6.00 Current Price is $6.22 Difference: minus $0.22 (current price is over target).
If SFR meets the Credit Suisse target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $6.88, suggesting upside of 10.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Macquarie rates SFR as No Rating (-1) -

Sandfire Resources has announced the acquisition of the MATSA underground copper mine and production plant project in Spain for $42.6bn, to be funded by a $1.2bn equity raising, $1.1bn in debt and existing cash.

As the broker is involved it is now on research restriction.

Current Price is $6.22. Target price not assessed.

Current consensus price target is $6.88, suggesting upside of 10.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Morgan Stanley rates SFR as Overweight (1) -

Sandfire Resources will acquire the Matsa mining complex in Spain. On first glance, the broker suggests the deal screens well on a valuation basis.

The transaction would address near-term production reduction from Degrussa  with Motheo (Botswana) ramping up from FY24 onwards.

Yet a key concern for the broker is whether reserve life can be extended beyond the current 6 years, with resource life in excess of 20 years, given it's too early to determine the costs of extensions. Overweight and $7.95 target retained.

Industry view: Attractive.

Target price is $7.95 Current Price is $6.22 Difference: $1.73
If SFR meets the Morgan Stanley target it will return approximately 28% (excluding dividends, fees and charges).

Current consensus price target is $6.88, suggesting upside of 10.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.3

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

Morgans rates SOL as Hold (3) -

Morgans assesses a broadly solid FY21 result for Washington H Soul Pattinson & Company. Strong contributions from some core investments is considered to show the earnings cyclicality of these businesses. The 36cps fully franked final dividend was in-line.

Group underlying profit rose 93% on the previous corresponding period, largely due to Brickworks' ((BKW)) solid performance from both its building products Australia and Property divisions. New Hope Corp ((NHC)) also contributed strongly due to a thermal coal price recovery.

Morgans raises its target price to $36.78 from $28.84 and maintains its Hold rating.

Target price is $36.78 Current Price is $37.74 Difference: minus $0.96 (current price is over target).
If SOL meets the Morgans target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in July.

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

Credit Suisse rates TAH as Neutral (3) -

Scientific Games is exploring a potential spin-out of its lottery divisions, and has announced financial details. Reuters indicated the company's Lottery initial public listing could value the business at $10bn, around 14.5x underlying earnings.

It is Credit Suisse's view that Tabcorp Holdings' current share price represents 16x underlying earnings for its Lottery and Keno division, and that a 1.7x premium is sustainable for the company. Further, the broker notes valuation implies Tabcorp Holding's superior customer duration. 

The Neutral rating and target price of $5.25 are retained.

Target price is $5.25 Current Price is $4.88 Difference: $0.37
If TAH meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $5.49, suggesting upside of 13.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.6

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

Macquarie rates WGX as Outperform (1) -

Following a site visit the broker notes the Big Bell ramp-up is gaining momentum while the new Bluebird mine is beginning to "hit its straps".

Given the considerable self-funded investment in Big Bell, Westgold Resources has until now lacked cash flows to meaningfully deliver on its strategy, the broker notes. But shrinking capex and inceasing production puts the miner in a strong position.

The broker sees the recent maiden dividend as a clear indication of improving cashflow stability. Outperform retained, target rises to $2.60 from $2.30.

Target price is $2.60 Current Price is $1.68 Difference: $0.92
If WGX meets the Macquarie target it will return approximately 55% (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