Australian Broker Call

Macquarie rates AFG as Outperform (1) -

Despite competition, Australian Finance Group has been able to grow its securities book since June. Total lodgements were up 16% in October, the highest level of activity the company has recorded.

Meanwhile refinancing activity has returned to more traditional levels from a peak in April. Macquarie makes few changes to estimates as a result of the update, raising the target to $2.56 from $2.41 and maintaining an Outperform rating.

Target price is $2.56 Current Price is $2.42 Difference: $0.14
If AFG meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $2.45, suggesting upside of 3.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.7

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

Macquarie rates KAR as Outperform (1) -

Karoon Energy shares are up more than 50% since the renegotiated terms on Bauna were announced. Macquarie envisages "forgotten" upside in the Neon & Goia oil fields.

Under the new management, the broker assesses the company is turning its attention to a broader Santos Basin strategy in order to boost oil production.

Macquarie maintains an Outperform rating with the target raised to $1.40 from $1.25.

Target price is $1.40 Current Price is $1.02 Difference: $0.38
If KAR meets the Macquarie target it will return approximately 37% (excluding dividends, fees and charges).

Current consensus price target is $1.43, suggesting upside of 41.6% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 1.0

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

Morgans rates MTO as Hold (3) -

Motorcycle Holdings' first half guidance indicates to Morgans strong margins are the key driver of earnings strength along with strong volume. Also, new brands and dealerships are considered contributors to earnings strength.

The company expects current volumes are sustainable.

The broker sees the balance sheet as being in a strong position and notes dividends will recommence in the first half. Assuming a 60% payout ratio, the analyst calculates a yield of 7%-plus at the current price.

Morgans lifts EPS forecasts by 17% in FY21 and around 6% for FY22 and FY23. The Hold rating is unchanged and the target is increased to $2.81 from $2.67.

Target price is $2.81 Current Price is $2.59 Difference: $0.22
If MTO meets the Morgans target it will return approximately 8% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Ord Minnett rates MTS as Accumulate (2) -

Metcash will be reporting its first-half result on 7 December and Ord Minnett forecasts a net profit of $97.8m, up 8% versus last year. The broker also expects the recent capital raising to weigh on the company's earnings per share and expects a -4% decline to 9.6c.

Sales growth and margin expansion are forecast across all divisions and the broker decides to stick to its Accumulate recommendation with a target price of $3.30.

Target price is $3.30 Current Price is $3.04 Difference: $0.26
If MTS meets the Ord Minnett target it will return approximately 9% (excluding dividends, fees and charges).

Current consensus price target is $3.46, suggesting upside of 15.8% (ex-dividends)

The company's fiscal year ends in April.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.9

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

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

Origin Energy has reiterated its strategy and lifted production guidance by 4%. However, Morgan Stanley assesses break-even gains on higher volumes are being offset by the appreciation in the Australian dollar.

Energy markets operating earnings guidance is unchanged. The broker suspects new renewables and evolving regulation will prove challenging for higher capital-cost operators such as Origin Energy.

The share price is up 23% in the current quarter, signalling a constructive 2021 oil & gas outlook but a subdued electricity forward curve, in the broker's view.

Equal-weight retained. Target is reduced to $5.55 from $5.93. Industry view: Cautious.

Target price is $5.55 Current Price is $5.19 Difference: $0.36
If ORG meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $6.42, suggesting upside of 23.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.6

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

Morgan Stanley rates SGP as Overweight (1) -

Stockland has appointed Tarun Gupta as managing director and CEO. He will commence from June 1 2021. Mr Gupta has been CFO of Lendlease ((LLC)) since May 2016.

Morgan Stanley believes he will be a steady set of hands and could add value by maximising what Stockland can do with its land bank as well as capital partnering aspirations.

A further evaluation of the role of retirement living, which has been for sale, is also a possibility the broker suggests.

Overweight rating. Target is $4.45. Industry view: In-line.

Target price is $4.45 Current Price is $4.62 Difference: minus $0.17 (current price is over target).
If SGP meets the Morgan Stanley target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.01, suggesting downside of -12.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.0

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

Citi rates TWE as Downgrade to Sell from Buy (5) -

China has imposed anti-dumping tariffs of 169% on Treasury Wine wines. Citi believes this will impact the company's earnings significantly in the near-term on account of an oversupply of Australian wine (given China has effectively closed its door).

According to the broker's estimate, China generates about $164-$190m in operating income for Treasury Wine. In FY21, the operating income is expected to fall to $421m but the real challenge for the company, suggests Citi, is a circa 11% overhang of supply.

The broker believes it will be difficult for the company to maintain any presence in China and going ahead, expects the key share price driver to be the Americas.

Citi downgrades its rating to Sell from Buy with the target trimmed to $8.20 from $10.40.

Target price is $8.20 Current Price is $9.23 Difference: minus $1.03 (current price is over target).
If TWE meets the Citi target it will return approximately minus 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.35, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.1

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

Macquarie rates TWE as Neutral (3) -

China has announced a range of security deposits for wine importers, including 169% for Treasury Wine wines, while it finalises its investigation. Essentially, Macquarie considers this a tariff which will act to limit sales into China.

The duration is unknown at this stage but, in forecasts, the broker conservatively has Chinese volumes at zero for the next 2.5 years.

Macquarie assumes Treasury Wine can scale its Asian cost base appropriately but there remains potential downside risk to short-term margin assumptions if the distribution team remains intact.

Macquarie maintains a Neutral rating and $10.60 target.

Target price is $10.60 Current Price is $9.23 Difference: $1.37
If TWE meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $9.35, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.1

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

Morgan Stanley rates TWE as Overweight (1) -

China has announced temporary anti-dumping measures on Australian wine in the form of security deposits. Initial interpretation suggests an interim tariff of 169% for Treasury Wine's exports.

This exceeds industry base case assumptions, Morgan Stanley observes and, at these levels, there is limited scope for continued exports to China via traditional channels.

The broker also notes downside risk in other markets as tariffs have been applied across the industry.

Overweight rating maintained with a target of $11. Industry view: Cautious.

Target price is $11.00 Current Price is $9.23 Difference: $1.77
If TWE meets the Morgan Stanley target it will return approximately 19% (excluding dividends, fees and charges).

Current consensus price target is $9.35, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.1

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

Ord Minnett rates TWE as Hold (3) -

China’s Ministry of Commerce has decided to apply interim tariffs of 107–212% to Australian wine imported into China.

Ord Minnett notes the tariffs are at the high end of the expected range which does not bode well for Treasury Wine. A reallocation of the company's China volume is expected to reduce Treasury Wine's FY22 operating income by about -14%.

The broker has refrained from making any changes to its earnings forecasts at this stage and maintains its Hold rating with a $9 target price.

Target price is $9.00 Current Price is $9.23 Difference: minus $0.23 (current price is over target).
If TWE meets the Ord Minnett target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $9.35, suggesting upside of 8.1% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY21:

Forecast for FY22:

Market Sentiment: 0.1

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