Australian Broker Call
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December 23, 2019
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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).
Last Updated: 05:00 PM
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
| CGR - | CML GROUP | Downgrade to Hold from Add | Morgans |
| EVT - | EVENT HOSPITALITY | Downgrade to Neutral from Buy | Citi |
| JIN - | JUMBO INTERACTIVE | Downgrade to Hold from Add | Morgans |
Overnight Price: $0.55
Morgans rates CGR as Downgrade to Hold from Add (3) -
Having announced a merger with Consolidated Operations Group ((COG)) at a price the broker believed undervalued the company, CML Group has received a new non-binding offer from Scottish Pacific Group at 57cps. The board considers it a superior proposal to Consolidated's cash/scrip offer and has granted due diligence. Consolidated has indicated it will not exercise its "matching right" option.
Morgans moves to Hold and lifts its target to the 57c offer price from 51c, believing Scottish Pacific to have the highest probability of success.
Target price is $0.51 Current Price is $0.55 Difference: minus $0.04 (current price is over target).
If CGR meets the Morgans target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).
The company's fiscal year ends in June.
Forecast for FY20:
Morgans forecasts a full year FY20 dividend of 2.60 cents and EPS of 5.10 cents. |
Forecast for FY21:
Morgans forecasts a full year FY21 dividend of 3.10 cents and EPS of 6.40 cents. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $3.43
Morgans rates CIP as Hold (3) -
Centuria Industrial REIT has announced several acquisitions, including two assets leased to Arnott's, which increase the fund's weighted average lease expiry (WALE). FY20 earnings and distribution guidance remain unchanged.
The broker retains Hold, lifting its target to $3.19 from $2.98.
Target price is $3.19 Current Price is $3.43 Difference: minus $0.24 (current price is over target).
If CIP meets the Morgans target it will return approximately minus 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $3.49, suggesting upside of 1.7% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Morgans forecasts a full year FY20 dividend of 18.70 cents and EPS of 19.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 19.8, implying annual growth of -42.3%. Current consensus DPS estimate is 18.8, implying a prospective dividend yield of 5.5%. Current consensus EPS estimate suggests the PER is 17.3. |
Forecast for FY21:
Morgans forecasts a full year FY21 dividend of 19.10 cents and EPS of 20.10 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 20.1, implying annual growth of 1.5%. Current consensus DPS estimate is 19.1, implying a prospective dividend yield of 5.6%. Current consensus EPS estimate suggests the PER is 17.1. |
Market Sentiment: 0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
EVT EVENT HOSPITALITY AND ENTERTAINMENT LTD
Travel, Leisure & Tourism
More Research Tools In Stock Analysis - click HERE
Overnight Price: $13.47
Citi rates EVT as Downgrade to Neutral from Buy (3) -
Citi suspects "sequel fatigue" may have set in, given the latest Star Wars offering is not enjoying the same box office success pre-Christmas as has previously been the case. December quarter box office in general is down -14% to date, with this year's slate not matching last year's blockbusters. The broker also takes weaker business confidence as a signal for weaker hotel revenues ahead.
Citi thus downgrades Event Hospitality & Entertainment to Neutral, despite an undemanding multiple, lowering its target to $14.40 from $15.05. The broker nevertheless acknowledges longer term opportunity in the company's development pipeline.
Target price is $14.40 Current Price is $13.47 Difference: $0.93
If EVT meets the Citi target it will return approximately 7% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY20:
Citi forecasts a full year FY20 dividend of 54.50 cents and EPS of 66.50 cents. |
Forecast for FY21:
Citi forecasts a full year FY21 dividend of 55.00 cents and EPS of 69.90 cents. |
Market Sentiment: 0.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $3.24
Citi rates IPL as Neutral (3) -
There was little in the way of new information to come out of Incitec Pivot's AGM, the broker notes. The explosives division is expected to enjoy above market growth rates thanks to new technology, while the fertiliser business review continues. The company does not provide specific guidance, but Citi sees downside risk potential given weak fertiliser prices to date.
Neutral retained, target falls to $3.45 from $3.55.
Target price is $3.45 Current Price is $3.24 Difference: $0.21
If IPL meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).
Current consensus price target is $3.52, suggesting upside of 8.8% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY20:
Citi forecasts a full year FY20 dividend of 7.20 cents and EPS of 14.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 16.0, implying annual growth of 68.4%. Current consensus DPS estimate is 8.9, implying a prospective dividend yield of 2.7%. Current consensus EPS estimate suggests the PER is 20.3. |
Forecast for FY21:
Citi forecasts a full year FY21 dividend of 9.30 cents and EPS of 18.50 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 21.2, implying annual growth of 32.5%. Current consensus DPS estimate is 10.9, implying a prospective dividend yield of 3.4%. Current consensus EPS estimate suggests the PER is 15.3. |
Market Sentiment: 0.1
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $14.66
Morgans rates JIN as Downgrade to Hold from Add (3) -
Jumbo Interactive has taken the market by surprise with a decision to ramp up investment for the future in both its lottery reseller and SaaS businesses. Updated earnings guidance subsequently fell short of consensus expectations. Morgans nevertheless sees merit in the decision.
But given the company is cycling tough comparables, ahead of now increased expenditure, Morgans moves to Hold following large earnings forecast downgrades. Target falls to $16.38 from $19.97.
Target price is $16.38 Current Price is $14.66 Difference: $1.72
If JIN meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY20:
Morgans forecasts a full year FY20 dividend of 39.00 cents and EPS of 46.00 cents. |
Forecast for FY21:
Morgans forecasts a full year FY21 dividend of 49.00 cents and EPS of 57.00 cents. |
Market Sentiment: 0.5
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $2.53
Morgans rates REG as Hold (3) -
Regis Healthcare has significantly downgraded guidance to reflect ongoing lower occupancy rates. The broker reduces profit forecasts by -26%. While the Royal Commission report is not due until November 2020, the broker notes aged care companies are already making adjustments in line with the interim report.
The broker does not rule out government assistance to cover some of the additional cost. For now, target falls to $2.67 from $2.94, Hold retained.
Target price is $2.67 Current Price is $2.53 Difference: $0.14
If REG meets the Morgans target it will return approximately 6% (excluding dividends, fees and charges).
Current consensus price target is $2.88, suggesting upside of 13.8% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Morgans forecasts a full year FY20 dividend of 11.00 cents and EPS of 10.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 12.2, implying annual growth of -27.9%. Current consensus DPS estimate is 12.3, implying a prospective dividend yield of 4.9%. Current consensus EPS estimate suggests the PER is 20.7. |
Forecast for FY21:
Morgans forecasts a full year FY21 dividend of 14.00 cents and EPS of 14.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 13.7, implying annual growth of 12.3%. Current consensus DPS estimate is 13.5, implying a prospective dividend yield of 5.3%. Current consensus EPS estimate suggests the PER is 18.5. |
Market Sentiment: -0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Overnight Price: $2.72
Citi rates S32 as Buy (1) -
South32 has exercised its option to acquire 50% of a JV company that will own the Arctic and Bornite projects in Alaska with Canada's Trilogy Metals. The broker doesn't see Arctic as being in production until 2027-28 while Bornite is in an even earlier stage.
Buy and $3.20 target retained.
Target price is $3.20 Current Price is $2.72 Difference: $0.48
If S32 meets the Citi target it will return approximately 18% (excluding dividends, fees and charges).
Current consensus price target is $2.91, suggesting upside of 6.9% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Citi forecasts a full year FY20 dividend of 5.75 cents and EPS of 12.22 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 13.0, implying annual growth of N/A. Current consensus DPS estimate is 7.5, implying a prospective dividend yield of 2.8%. Current consensus EPS estimate suggests the PER is 20.9. |
Forecast for FY21:
Citi forecasts a full year FY21 dividend of 15.81 cents and EPS of 30.05 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 21.9, implying annual growth of 68.5%. Current consensus DPS estimate is 12.1, implying a prospective dividend yield of 4.4%. Current consensus EPS estimate suggests the PER is 12.4. |
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
Overnight Price: $2.53
Morgans rates WHC as Add (1) -
In the wake of a disappointing guidance update from Whitehaven Coal, the broker has downgraded production forecasts and increased costs. Lower near term thermal coal price expectations also add to a target price decrease to $3.67 from $4.33.
The stock looks "far too cheap", the broker suggests, at a -30% discount to the broker's valuation but given several issues for the company at the moment, the broker expects investors to sit on the sidelines for now. Add retained.
Target price is $3.67 Current Price is $2.53 Difference: $1.14
If WHC meets the Morgans target it will return approximately 45% (excluding dividends, fees and charges).
Current consensus price target is $3.35, suggesting upside of 32.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY20:
Morgans forecasts a full year FY20 dividend of 7.00 cents and EPS of 13.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 12.9, implying annual growth of -75.9%. Current consensus DPS estimate is 8.0, implying a prospective dividend yield of 3.2%. Current consensus EPS estimate suggests the PER is 19.6. |
Forecast for FY21:
Morgans forecasts a full year FY21 dividend of 10.00 cents and EPS of 24.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 19.4, implying annual growth of 50.4%. Current consensus DPS estimate is 8.1, implying a prospective dividend yield of 3.2%. Current consensus EPS estimate suggests the PER is 13.0. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Today's Price Target Changes
| Company | Last Price | Broker | New Target | Prev Target | Change | |
| CIP | CENTURIA INDUSTRIAL REIT | $3.43 | Morgans | 3.19 | 2.98 | 7.05% |
| EVT | EVENT HOSPITALITY | $13.47 | Citi | 14.40 | 15.05 | -4.32% |
| IPL | INCITEC PIVOT | $3.24 | Citi | 3.45 | 3.55 | -2.82% |
| JIN | JUMBO INTERACTIVE | $14.66 | Morgans | 16.38 | 19.97 | -17.98% |
| REG | REGIS HEALTHCARE | $2.53 | Morgans | 2.67 | 2.94 | -9.18% |
| WHC | WHITEHAVEN COAL | $2.53 | Morgans | 3.67 | 4.33 | -15.24% |
Summaries
| CGR | CML GROUP | Downgrade to Hold from Add - Morgans | Overnight Price $0.55 |
| CIP | CENTURIA INDUSTRIAL REIT | Hold - Morgans | Overnight Price $3.43 |
| EVT | EVENT HOSPITALITY | Downgrade to Neutral from Buy - Citi | Overnight Price $13.47 |
| IPL | INCITEC PIVOT | Neutral - Citi | Overnight Price $3.24 |
| JIN | JUMBO INTERACTIVE | Downgrade to Hold from Add - Morgans | Overnight Price $14.66 |
| REG | REGIS HEALTHCARE | Hold - Morgans | Overnight Price $2.53 |
| S32 | SOUTH32 | Buy - Citi | Overnight Price $2.72 |
| WHC | WHITEHAVEN COAL | Add - Morgans | Overnight Price $2.53 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 2 |
| 3. Hold | 6 |
Monday 23 December 2019
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