Australian Broker Call
September 14, 2017
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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)
THIS REPORT WILL BE UPDATED SHORTLY
Last Updated: 10:26 AM
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
Today's Upgrades and Downgrades
| HSO - | HEALTHSCOPE | Upgrade to Buy from Hold | Ord Minnett |
| LNK - | LINK ADMINISTRATION | Upgrade to Buy from Neutral | UBS |
| SRX - | SIRTEX MEDICAL | Downgrade to Hold from Add | Morgans |
Citi rates BLD as Sell (5) -
Citi is considerably more confident regarding the company's US business than it was at the time of the FY17 result.
US management has done a competent job in combining with Headwaters personnel and articulating the opportunity for the new company in the US building products and construction materials market, the broker observes.
Execution will be the test and the broker looks for indicators of improving non-residential construction activity in the US to support expectations for fly ash.
Sell rating and $6.20 target retained.
Target price is $6.20 Current Price is $6.81 Difference: minus $0.61 (current price is over target).
If BLD meets the Citi target it will return approximately minus 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $6.91, suggesting upside of 1.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Citi forecasts a full year FY18 dividend of 25.00 cents and EPS of 27.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 35.1, implying annual growth of 20.2%. Current consensus DPS estimate is 24.2, implying a prospective dividend yield of 3.6%. Current consensus EPS estimate suggests the PER is 19.4. |
Forecast for FY19:
Citi forecasts a full year FY19 dividend of 29.00 cents and EPS of 32.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 43.3, implying annual growth of 23.4%. Current consensus DPS estimate is 28.4, implying a prospective dividend yield of 4.2%. Current consensus EPS estimate suggests the PER is 15.7. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates HSO as Upgrade to Buy from Hold (1) -
Ord Minnett believes Healthscope will face another challenging year as earnings are set to contract, given a number of Victorian hospitals are tracking below plan.
Value has emerged, however, as the stock is trading well below is 2014 IPO price despite adding more than $500m in new capacity.
The broker upgrades to Buy from Hold. Target is $2.
Target price is $2.00 Current Price is $1.68 Difference: $0.32
If HSO meets the Ord Minnett target it will return approximately 19% (excluding dividends, fees and charges).
Current consensus price target is $2.13, suggesting upside of 26.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 7.00 cents and EPS of 10.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 10.6, implying annual growth of 12.8%. Current consensus DPS estimate is 7.5, implying a prospective dividend yield of 4.5%. Current consensus EPS estimate suggests the PER is 15.8. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 7.00 cents and EPS of 11.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 11.4, implying annual growth of 7.5%. Current consensus DPS estimate is 7.6, implying a prospective dividend yield of 4.5%. Current consensus EPS estimate suggests the PER is 14.7. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
IDT INSTITUTE OF DRUG TECHNOLOGY AUSTRALIA LIMITED
Pharmaceuticals & Biotech/Lifesciences
Overnight Price: $0.08
Morgans - Cessation of coverage
Forecast for FY17:
Morgans forecasts a full year FY17 dividend of 0.00 cents and EPS of minus 1.60 cents. |
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 0.00 cents and EPS of minus 0.19 cents. |
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates LNK as Upgrade to Buy from Neutral (1) -
Despite consistently delivering earnings that are ahead of expectations the shares steadily de-rated, UBS observes, amid concerns about stagnant funds administration revenue and the recent acquisition.
Nevertheless, UBS suggests super account consolidation headwinds will ease and the company's low fees versus the industry set it up to be the beneficiary of mergers.
UBS envisages compelling value in what it describes as a defensive and highly cash generating financial infrastructure exposure. Rating is upgraded to Buy from Neutral. Target is raised to $8.85 from $8.55.
Target price is $8.85 Current Price is $7.39 Difference: $1.46
If LNK meets the UBS target it will return approximately 20% (excluding dividends, fees and charges).
Current consensus price target is $8.64, suggesting upside of 16.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 16.00 cents and EPS of 36.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 35.2, implying annual growth of 55.5%. Current consensus DPS estimate is 16.6, implying a prospective dividend yield of 2.2%. Current consensus EPS estimate suggests the PER is 21.0. |
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 22.00 cents and EPS of 48.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 46.3, implying annual growth of 31.5%. Current consensus DPS estimate is 22.9, implying a prospective dividend yield of 3.1%. Current consensus EPS estimate suggests the PER is 16.0. |
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates NCM as Underperform (5) -
The PC1 crusher at Cadia is back in production. The prohibition notice has been amended to allow mining where agreed workers been completed.
Credit Suisse observes FY18 production potential remains constrained by PC 2 propagation development and cave shape management requirements.
Underperform and $18.20 target retained.
Target price is $18.20 Current Price is $22.41 Difference: minus $4.21 (current price is over target).
If NCM meets the Credit Suisse target it will return approximately minus 19% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $20.14, suggesting downside of -10.1% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 26.31 cents and EPS of 95.90 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 78.4, implying annual growth of N/A. Current consensus DPS estimate is 24.0, implying a prospective dividend yield of 1.1%. Current consensus EPS estimate suggests the PER is 28.6. |
Forecast for FY19:
Credit Suisse forecasts a full year FY19 dividend of 52.83 cents and EPS of 131.59 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 114.4, implying annual growth of 45.9%. Current consensus DPS estimate is 33.1, implying a prospective dividend yield of 1.5%. Current consensus EPS estimate suggests the PER is 19.6. |
This company reports in USD. 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
UBS rates NCM as Sell (5) -
The company has announced the prohibition notice on PC 1 has been lifted for two of the extraction drives.
UBS expects the remaining drives will have the prohibition notice is lifted over the coming months and set up Cadia to return to nameplate production by March 2018.
UBS believes the market largely look through the seismic event that occurred in April but it did highlight the risks in the company's concentrated asset portfolio. Cadia and Lihir account for two thirds of production and almost 100% of the broker's calculation of gross asset value.
Sell rating retained. Target is $14.00.
Target price is $14.00 Current Price is $22.41 Difference: minus $8.41 (current price is over target).
If NCM meets the UBS target it will return approximately minus 38% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $20.14, suggesting downside of -10.1% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 21.05 cents and EPS of 103.92 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 78.4, implying annual growth of N/A. Current consensus DPS estimate is 24.0, implying a prospective dividend yield of 1.1%. Current consensus EPS estimate suggests the PER is 28.6. |
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 24.99 cents and EPS of 126.28 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 114.4, implying annual growth of 45.9%. Current consensus DPS estimate is 33.1, implying a prospective dividend yield of 1.5%. Current consensus EPS estimate suggests the PER is 19.6. |
This company reports in USD. 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
Macquarie rates NMT as Outperform (1) -
The company, through its subsidiary Alphamet, has entered its first sub-licence agreement for the use of the Neomet Process. Macquarie believes this will be an important step in crystallising technology-based revenue for the company.
There is no indication as yet on the proposed metal extraction rates, or royalty rate after the three year period of grace.
Macquarie believes the agreement provides a path to other royalty-style revenue agreements. Outperform rating and $0.37 target retained.
Target price is $0.37 Current Price is $0.30 Difference: $0.07
If NMT meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 0.00 cents and EPS of 0.60 cents. |
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 0.00 cents and EPS of 4.90 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgans rates SRX as Downgrade to Hold from Add (3) -
Morgans believes intense competition, ongoing legal battles and no specifics around a viable forward strategy limits the upside for the stock.
The broker downgrades to Hold from Add. Target is steady at $16.53.
Target price is $16.53 Current Price is $15.77 Difference: $0.76
If SRX meets the Morgans target it will return approximately 5% (excluding dividends, fees and charges).
Current consensus price target is $19.78, suggesting upside of 25.4% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 30.00 cents and EPS of 99.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 97.2, implying annual growth of N/A. Current consensus DPS estimate is 30.0, implying a prospective dividend yield of 1.9%. Current consensus EPS estimate suggests the PER is 16.2. |
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 33.00 cents and EPS of 112.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 105.3, implying annual growth of 8.3%. Current consensus DPS estimate is 32.1, implying a prospective dividend yield of 2.0%. Current consensus EPS estimate suggests the PER is 15.0. |
Market Sentiment: 0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates SYR as Outperform (1) -
First half results confirmed unchanged guidance for a year one production target of 140-160,000t.
Credit Suisse observes no additional delays or changes to the schedule were disclosed and first production appears on schedule for October.
Target is $7.45. Outperform retained.
Target price is $7.45 Current Price is $3.77 Difference: $3.68
If SYR meets the Credit Suisse target it will return approximately 98% (excluding dividends, fees and charges).
Current consensus price target is $4.67, suggesting upside of 23.9% (ex-dividends)
The company's fiscal year ends in December.
Forecast for FY17:
Credit Suisse forecasts a full year FY17 dividend of 0.00 cents and EPS of minus 10.25 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is -9.0, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is N/A. |
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 0.00 cents and EPS of 20.64 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 5.1, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 73.9. |
Market Sentiment: 0.6
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates TPM as Lighten (4) -
Ord Minnett updates forecasts ahead of the company's FY17 results to include estimates for the Australian mobile venture. The broker lowers FY17 operating earnings estimates slightly because of lower NBN margins.
The broker does not expect the Australian mobile venture to be positive for earnings until FY21. Moreover, Ord Minnett would not be surprised if the company has to raise capital by FY19. Lighten retained. Target is lowered to $4.80 from $5.55.
Target price is $4.80 Current Price is $5.22 Difference: minus $0.42 (current price is over target).
If TPM meets the Ord Minnett target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $6.51, suggesting upside of 24.7% (ex-dividends)
The company's fiscal year ends in July.
Forecast for FY17:
Ord Minnett forecasts a full year FY17 dividend of 16.00 cents and EPS of 43.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 46.4, implying annual growth of 18.1%. Current consensus DPS estimate is 15.8, implying a prospective dividend yield of 3.0%. Current consensus EPS estimate suggests the PER is 11.3. |
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 16.00 cents and EPS of 35.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 38.1, implying annual growth of -17.9%. Current consensus DPS estimate is 13.7, implying a prospective dividend yield of 2.6%. Current consensus EPS estimate suggests the PER is 13.7. |
Market Sentiment: -0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Summaries
| BLD - | BORAL | Sell - Citi | Overnight Price $6.81 |
| HSO - | HEALTHSCOPE | Upgrade to Buy from Hold - Ord Minnett | Overnight Price $1.68 |
| IDT - | INSTITUTE OF DRUG TECH | Cessation of coverage - Morgans | Overnight Price $0.08 |
| LNK - | LINK ADMINISTRATION | Upgrade to Buy from Neutral - UBS | Overnight Price $7.39 |
| NCM - | NEWCREST MINING | Underperform - Credit Suisse | Overnight Price $22.41 |
| Sell - UBS | Overnight Price $22.41 | ||
| NMT - | NEOMETALS | Outperform - Macquarie | Overnight Price $0.30 |
| SRX - | SIRTEX MEDICAL | Downgrade to Hold from Add - Morgans | Overnight Price $15.77 |
| SYR - | SYRAH RESOURCES | Outperform - Credit Suisse | Overnight Price $3.77 |
| TPM - | TPG TELECOM | Lighten - Ord Minnett | Overnight Price $5.22 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 4 |
| 3. Hold | 1 |
| 4. Reduce | 1 |
| 5. Sell | 3 |
Thursday 14 September 2017
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