Australian Broker Call

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

Atlas Arteria has negotiated transactions to achieve a simpler structure. The company has issued $1.35bn of new equity to acquire an additional 6.14% interest in the APRR from Macquarie-managed funds.

The company has also agreed to refinance amortising debt. Once completed, Morgan Stanley estimates an additional EUR33m in FY20 capital returns.

The company then intends to manage distributions to reflect sustainable operating cash flows. Morgan Stanley has an Equal-weight rating, Cautious industry view and $8.27 target.

Target price is $8.27 Current Price is $7.51 Difference: $0.76
If ALX meets the Morgan Stanley target it will return approximately 10% (excluding dividends, fees and charges).

Current consensus price target is $7.82, suggesting upside of 4.1% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.0

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

Morgans - Cessation of coverage

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.0

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

Macquarie rates CHC as Outperform (1) -

Charter Hall has upgraded FY20 operating earnings estimates to growth of around 30%. Macquarie increases estimates for earnings per share by 9% for FY20 and 5% for FY21, suggesting half of the company's FY20 upgrade is being driven by underlying earnings and transitory items account for the remainder.

Macquarie still expects FY21 earnings per share to fall -16%, driven by the roll-off of CHOT performance fees.The broker assesses the low interest rate environment remains supportive of deployment into real estate. Outperform rating and target is increased to $13.48 from $13.10.

Target price is $13.48 Current Price is $11.14 Difference: $2.34
If CHC meets the Macquarie target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $12.84, suggesting upside of 15.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.8

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

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

UBS is increasingly convinced of Charter Hall's ability to continue raising and deploying third-party equity/debt. The broker upgrades earnings estimates by 7-8% to reflect growth in assets under management and co-investments.

UBS also believes concerns regarding peak performance fees in FY20 and Sydney/Melbourne office fundamentals are unjustified. The broker upgrades to Buy from Neutral and raises the target to $12.50 from $12.10.

Target price is $12.50 Current Price is $11.14 Difference: $1.36
If CHC meets the UBS target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $12.84, suggesting upside of 15.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.8

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

Ord Minnett rates CIP as Buy (1) -

Centuria Industrial has acquired the Arnott's assets in Brisbane and Adelaide from KKR & Co. The sites were bought for $236m at a blended yield of 5.9% on a sale and lease-back arrangement.

Ord Minnett estimates the transaction is neutral to earnings in FY20 but lowers the target to $4.00 from $4.20 to reflect dilution to the value uplift ascribed to the existing portfolio. Buy rating maintained.

Target price is $4.00 Current Price is $3.40 Difference: $0.6
If CIP meets the Ord Minnett target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $3.42, suggesting upside of 0.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Citi rates CLW as Buy (1) -

The company's asset base has now grown to $3.6bn, up 71% in the last six months, which highlights the potential for significant ongoing growth. In the latest round of acquisitions, the company will jointly acquire a portfolio interest in 225 long-lease service stations, leased to BP Australia.

Separately, along with a Charter Hall unlisted fund, the company will also acquire the Arnott's primary manufacturing site in Huntingwood NSW, with a lease term of 32 years. Citi reiterates a Buy rating and raises the target to $6.52 from $6.51.

Target price is $6.52 Current Price is $5.41 Difference: $1.11
If CLW meets the Citi target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $5.60, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Macquarie rates CLW as Underperform (5) -

The company has acquired $619m in assets, partially funded by $350m institutional raising. The acquisitions include a 50% interest in the Arnott's industrial asset in NSW for $199m.

A Charter Hall managed partnership is also acquiring a 49% interest in 225 convenience retail properties leased to BP for $840m at a 5.5% yield. Charter Hall Long WALE is acquiring a 50% stake in this partnership.

Macquarie raises estimates for FY20 and FY21 earnings per share by 2.7% and 3.1%, respectively. Underperform rating maintained. Target is raised to $4.74 from $4.49.

Target price is $4.74 Current Price is $5.41 Difference: minus $0.67 (current price is over target).
If CLW 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 $5.60, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

UBS rates CLW as Neutral (3) -

UBS observes the company has finished a very acquisitive 2019 by purchasing a 50% share in an Arnott's industrial property for $199m and a 50% share in a Charter Hall ((CHC)) managed partnership for $420m.

As a result of the transaction, weighting to the east coast increases to 74% and CPI-based rent reviews increase to 44% from 34%.

Neutral rating maintained. Target rises to $5.40 from $5.21.

Target price is $5.40 Current Price is $5.41 Difference: minus $0.01 (current price is over target).
If CLW meets the UBS target it will return approximately minus 0% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $5.60, suggesting upside of 3.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.3

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

Credit Suisse rates CQR as Neutral (3) -

Charter Hall Retail has acquired an interest in a $1.7bn portfolio of convenience retail assets leased to BP Australia. The investment is via a $137m equity interest.

The company will divest five non-core retail assets to fund the investment, for a total consideration of $117m. It also intends to divest a further $100m in non-core assets to maintain gearing in the middle of its target range of 30-40%.

 FY20 operating earnings guidance has also been upgraded to growth of 2.2%. The distribution pay-out ratio forecast is 90-95% of operating earnings.

Credit Suisse maintains a Neutral rating and increases the target to $4.27 from $4.23.

Target price is $4.27 Current Price is $4.53 Difference: minus $0.26 (current price is over target).
If CQR meets the Credit Suisse target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.12, suggesting downside of -9.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.5

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

Macquarie rates CQR as Underperform (5) -

Charter Hall Retail is taking a 30% interest in the BP partnership for $137m of equity. BP will now represent 6.3% of the rental income and be the fourth largest tenant.

The company has sold $117m in assets and has flagged a further $100m in non-core divestments by the end of FY20.

Macquarie is attracted to the sustainable free cash flow yield but, given the limited growth profile, retains an Underperform rating. Target is raised to $3.91 from $3.90.

Target price is $3.91 Current Price is $4.53 Difference: minus $0.62 (current price is over target).
If CQR meets the Macquarie target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.12, suggesting downside of -9.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.5

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

Morgan Stanley rates CQR as Underweight (5) -

The company has acquired a 30% stake in a new Charter Hall-managed partnership, which will in turn purchase a 49% stake in a BP portfolio comprising 225 service stations/convenience retail properties.

The deal takes Charter Hall Retail's weighted average lease expiry to 7.2 years from 6.5 years. The equity commitment will be around $137m of which $117m will come from the divestments of five shopping malls, allowing gearing to remain within the target of 30-40% range.

Despite the 'positive' news, Morgan Stanley retains an Underweight rating, primarily as a result of a bearish view on the retail sub-sector within its coverage. Target is $4.05. Industry view is In-Line.

Target price is $4.05 Current Price is $4.53 Difference: minus $0.48 (current price is over target).
If CQR meets the Morgan Stanley target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.12, suggesting downside of -9.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.5

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

Morgan Stanley rates DTC as Overweight (1) -

Damstra has announced the acquisition of Scenario Advantage Workforce, which has 29,000 users across 21 customers and 54 locations.

The workforce management software provider generates $1.3m in annual revenue with similar operating earnings margins (20% plus) to Damstra's existing business.

Morgan Stanley retains an Overweight rating and $1.60 target. Industry view is In-Line.

Target price is $1.60 Current Price is $1.06 Difference: $0.54
If DTC meets the Morgan Stanley target it will return approximately 51% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Citi rates EVN as Buy (1) -

Citi maintains a Buy rating on Evolution Mining given the recent pull-back in the stock. Even with a high-cost Red Lake, the company has one of the lowest all-in sustaining costs (AISC) across the broker's coverage and there is growth potential at Cowal.

Target is reduced to $4.40 from $4.60 as Citi rolls forward valuation and earnings.

Target price is $4.40 Current Price is $3.53 Difference: $0.87
If EVN meets the Citi target it will return approximately 25% (excluding dividends, fees and charges).

Current consensus price target is $4.41, suggesting upside of 24.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 0.1

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

Morgans rates ICQ as Add (1) -

The company has indicated it reached break-even on EBITDA in November, slightly ahead of schedule and FY20 is expected to be positive on cash flow and operating earnings. FY20 revenue is expected to grow by at least 50%.

Morgans expects the online automobile advertising in Southeast Asia will become substantial over time. Add rating maintained. Target is reduced to $0.37 from $0.38.

Target price is $0.37 Current Price is $0.30 Difference: $0.07
If ICQ meets the Morgans target it will return approximately 23% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 1.0

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

Ord Minnett rates LYC as Buy (1) -

Ord Minnett notes the US Department of Defence has a tender for a heavy rare earths plant, which could have significant prospects for Lynas Corp.

In May, Lynas entered a joint venture with Blue Line Corp to create a heavy rare earths separation facility in the US. Blue Line is a privately-known Texas-based specialist chemical procurement company and currently a customer of Lynas.

Ord Minnett speculates this is the perfect joint venture for such a tender. Buy rating reiterated. Target is $4.90.

Target price is $4.90 Current Price is $2.57 Difference: $2.33
If LYC meets the Ord Minnett target it will return approximately 91% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Morgan Stanley rates NEA as Overweight (1) -

The company has acquired technology and IP from Pushpin, a deep learning and roof geometry insight provider, and existing customer of Nearmap. Morgan Stanley assesses the transaction and near-term financial impact are small.

However, the acquisition will allow the company to sell the acquired roofing geometry capability into its larger customer base in the US and globally.

Overweight rating, In-Line industry view and $4.20 target maintained.

Target price is $4.20 Current Price is $2.63 Difference: $1.57
If NEA meets the Morgan Stanley target it will return approximately 60% (excluding dividends, fees and charges).

Current consensus price target is $4.08, suggesting upside of 55.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Morgans rates OSH as Downgrade to Hold from Add (3) -

Morgans downgrades to Hold from Add, concerned about the new risks associated with PNG growth. The broker recognises the new government may require a settling in period and may seek a higher share of value from P'nyang, which in turn could jeopardise the entire three-train development.

The broker is now less convinced about assumptions that an agreement on fiscal terms will be easily reached. Target is reduced to $7.82 from $8.68.

Target price is $7.82 Current Price is $7.36 Difference: $0.46
If OSH meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $7.48, suggesting upside of 1.6% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY19:

Forecast for FY20:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.1

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

Morgans rates PNI as Add (1) -

The company has acquired a 25% equity stake in Coolabah Capital Investments for $29.1m. Pinnacle Investment will be the global distribution partner, taking a revenue share of capital raised in institutional, retail and offshore channels.

No financial metrics for Coolabah Capital have been provided. Morgans observes this adds to the long-term growth profile and there is significant growth potential. The broker maintains an Add rating and reduces the target to $5.62 from $5.65.

Target price is $5.62 Current Price is $4.75 Difference: $0.87
If PNI meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges).

Current consensus price target is $6.19, suggesting upside of 30.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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

Morgans rates RBL as Add (1) -

Redbubble has downgraded expectations for FY20, prompted by a new player in the market for stickers that uses the Amazon platform and is undercutting. Morgans questions just how long one player can sell goods at well below the cost of production.

The broker considers the global market for the company's merchandise highly attractive. Redbubble has reached break-even on cash flow and risks are diminishing.

The broker considers the sell-off in the stock an extreme over-reaction. Add rating maintained. Target is reduced to $2.10 from $2.28.

Target price is $2.10 Current Price is $1.03 Difference: $1.07
If RBL meets the Morgans target it will return approximately 104% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: 1.0

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