Australian Broker Call

Credit Suisse rates CAJ as Outperform (1) -

The company has updated its guidance to reflect an improved second half, with FY19 operating earnings expected to be in line with consensus in the low $26m range.

Credit Suisse's view is unchanged, assessing that either organic performance returns to market levels or the business becomes vulnerable to a consolidating industry.

Either way, shareholders are expected to be rewarded and Credit Suisse maintains an Outperform rating and $0.28 target.

Target price is $0.28 Current Price is $0.24 Difference: $0.04
If CAJ meets the Credit Suisse target it will return approximately 17% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

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

Citi rates CHC as Buy (1) -

Charter Hall has upgraded FY19 guidance, expecting 24% growth. Citi had flagged potential upside, noting guidance implies FY19 earnings per share of 46.7c, 7% above consensus. Performance fees from the Charter Hall Office Trust are the primary features of the upgrade.

The company has also announced preliminary FY19 funds under management of $30.2bn, up 30%. Citi reiterates a Buy rating and $11.10 target and the stock remains the top pick in the A-REIT coverage.

Target price is $11.10 Current Price is $11.10 Difference: $0
If CHC meets the Citi target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $11.20, suggesting upside of 0.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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 FY19 operating earnings growth guidance to 24% from 14-17%. The broker had assumed 16%. The upgrade largely reflects an upgrade to the Charter Hall Office Trust performance fee. Upside to this fee, and to assets under management, suggest upside risks to FY20 guidance, the broker believes.

The stock does not offer much in the way of total shareholder return at the price but given Charter Hall's ability to attract listed and unlisted capital, and earnings upside risk, the broker retains Outperform. Target rises to $10.64 from $10.53.

Target price is $10.64 Current Price is $11.10 Difference: minus $0.46 (current price is over target).
If CHC meets the Macquarie target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.20, suggesting upside of 0.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Citi rates CSR as Sell (5) -

Citi analysts attended an upbeat property presentation by CSR management with the analysts now of the view this particular segment (through development of projects) should underpin earnings for the next decade for the company.

The analysts concede making accurate forecasts for property earnings is fraught with danger, but they see significant value potential, albeit at this point offset by alumina cost headwinds. The latter means earnings forecasts near-term have declined.

Recognising the higher valuation for the company's property portfolio has pushed up the price target to $3.65, but Sell rating retained. Citi's updated forecasts imply negative EPS growth this financial year, with no growth assumed for FY21.

Target price is $3.65 Current Price is $4.07 Difference: minus $0.42 (current price is over target).
If CSR meets the Citi target it will return approximately minus 10% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $3.56, suggesting downside of -12.6% (ex-dividends)

The company's fiscal year ends in March.

Forecast for FY20:

Forecast for FY21:

Market Sentiment: -0.4

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

UBS rates GBT as Neutral (3) -

The company has received an indicative, non-binding offer at $3.25 per security from SS&C Technologies, 8% above the prior offer from Bravura Solutions ((BVS)). Four weeks of exclusive due diligence have been granted.

Bravura has reserved its right to make further offers for GBST. UBS raises the target to $3.25 from $3.00 in line with the latest offer. Neutral maintained.

Target price is $3.25 Current Price is $3.10 Difference: $0.15
If GBT meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $3.01, suggesting downside of -2.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

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

Ord Minnett rates HPI as Hold (3) -

Hold rating retained while the price target lifts to $3.35 from $3.20 as the broker updates and rolls forward its valuation modeling.

The analysts state they believe the portfolio is conservatively valued with potential for a further -35bp of cap rate compression.

Target price is $3.35 Current Price is $3.34 Difference: $0.01
If HPI meets the Ord Minnett target it will return approximately 0% (excluding dividends, fees and charges).

Current consensus price target is $3.31, suggesting downside of -0.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.3

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

Citi rates ING as Sell (5) -

Citi assesses Inghams needs to raise prices significantly to offset higher feed costs. The broker concedes there is upside risk to the Sell rating from African Swine Fever, which may mean red meat prices rise and provide scope for poultry prices to move up as well.

Swine Fever has severely affected pig production across Asia. Based on historical analysis, Citi calculates a 10% increase in red meat prices would lift Australian poultry volumes by 1.2%. Target is $3.85.

Target price is $3.85 Current Price is $4.05 Difference: minus $0.2 (current price is over target).
If ING meets the Citi target it will return approximately minus 5% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $4.00, suggesting downside of -1.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: -0.3

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

Macquarie rates LNK as Outperform (1) -

The UK regulator has decided Link Administration did not break the letter of law, with regard the suspended Woodford Equity Income Fund, but did not act in the spirit of the law by engaging in "regulatory arbitrage". This implies there can still be fines/remediations imposed.

The broker had expected capital management following from the CPCS sale but any buyback will now likely be delayed until penalties are known. Meanwhile share price weakness means Link is trading at a level which implies little value for the European operations, hence the broker retains Outperform. Target falls to $7.00 from $7.10.

Target price is $7.00 Current Price is $5.30 Difference: $1.7
If LNK meets the Macquarie target it will return approximately 32% (excluding dividends, fees and charges).

Current consensus price target is $6.98, suggesting upside of 31.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Credit Suisse rates MMS as Outperform (1) -

Credit Suisse believes the company needs a payback on its investments. FY19 earnings guidance was reduced to net profit of $87-89m recently and the company has acknowledged a challenging June quarter.

Soft market conditions and increased competition in the UK have persisted to a larger extent than previously anticipated. Write-downs in the UK also raise concerns for the broker about the quality of the business.

Outperform rating maintained as Credit Suisse still believes the stock offers value. Target is reduced to $14.00 from $14.45.

Target price is $14.00 Current Price is $12.25 Difference: $1.75
If MMS meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $14.56, suggesting upside of 18.8% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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

Credit Suisse rates OSH as Underperform (5) -

Oil Search has exercised its Alaskan option to double its stake which will result in a 51% interest in Pikka and Horseshoe and a net payment of US$64.3m to Oil Search from Repsol. The company has also deferred the sale of assets to the first half of 2020.

Credit Suisse believes the company will be under increased pressure to execute the sell-down next year, and either cut the dividend or raise equity. The broker maintains an Underperform rating and raises the target to $7.05 from $6.96.

Target price is $7.05 Current Price is $7.16 Difference: minus $0.11 (current price is over target).
If OSH meets the Credit Suisse target it will return approximately minus 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $8.22, suggesting upside of 14.8% (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: 0.0

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

Macquarie rates QBE as Neutral (3) -

The broker has marked-to-market for stronger equity market returns in the first half, offset by falling bond yields, which offer longer term earnings risk downside. Buybacks are nevertheless running ahead of schedule.

QBE's underlying business is moving in the right direction, the broker believes, but falling bond yields and the potential of FY19 US crop losses keep the broker on Neutral. Target falls to $12.50 from $12.90.

Target price is $12.50 Current Price is $11.73 Difference: $0.77
If QBE meets the Macquarie target it will return approximately 7% (excluding dividends, fees and charges).

Current consensus price target is $12.94, suggesting upside of 10.3% (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: 0.4

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

UBS rates SGM as Sell (5) -

UBS observes the company has been managing the shifting quotas in China's scrap metal market by finding new avenues for its products and upgrading products to meet stricter global guidelines.

The main issue is how the next round of internal initiatives will mitigate another fall in demand and prices for non-ferrous scrap.

UBS does not expect the outlook for non-ferrous scrap to improve any time soon and the market appears to be discounting the negative impact of lower prices on margins.

Sell rating maintained. Target is raised to $9.40 from $9.10.

Target price is $9.40 Current Price is $10.96 Difference: minus $1.56 (current price is over target).
If SGM meets the UBS target it will return approximately minus 14% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $11.62, suggesting upside of 6.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.4

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

Deutsche Bank rates SLC as Hold (3) -

Deutsche Bank was disappointed with the company's latest update, a downgrade to expectations because of delays in contract negotiations.

The business is undergoing significant restructuring and may take time to reflect the benefits. As the owner of unique fibre assets there is valuation support but a lack of sales execution remains of concern to the broker.

Hold rating and $1.40 target.

Target price is $1.40 Current Price is $1.34 Difference: $0.06
If SLC meets the Deutsche Bank target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $1.73, suggesting upside of 29.4% (ex-dividends)

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

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

Morgan Stanley rates SLC as Overweight (1) -

The company has downgraded FY19 operating earnings (EBITDA) estimates to $7-8m from $13-18m as it was unable to secure a significant contract before the end of the financial year.

If successful, Morgan Stanley assumes the contract will be reflected in FY20 earnings, although the company did not update prior FY20 guidance of $26-30m.

The broker remains positive about the opportunity in the Asia-Pacific telco enterprise market. Overweight rating. Industry view is In-Line. Target is 1.75.

Target price is $1.75 Current Price is $1.34 Difference: $0.41
If SLC meets the Morgan Stanley target it will return approximately 31% (excluding dividends, fees and charges).

Current consensus price target is $1.73, suggesting upside of 29.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

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

Morgans rates SLC as Add (1) -

The company has revised FY19 guidance to $7-8m from $13-18m previously, with the slippage attributed to transactions not occurring before balance sheet date. The company did not mention its prior FY20 operating earnings (EBITDA) guidance of $26-30m.

Morgans now expects this may require $10m in transactional earnings in order to be achieved. The company continues to monetise its APAC assets.

Morgans reduces FY19 forecasts and continues to envisage significant long-term upside upon sales execution. Add rating maintained. Target is reduced to $2.05 from $2.11.

Target price is $2.05 Current Price is $1.34 Difference: $0.71
If SLC meets the Morgans target it will return approximately 53% (excluding dividends, fees and charges).

Current consensus price target is $1.73, suggesting upside of 29.4% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.7

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

UBS rates TLS as Downgrade to Neutral from Buy (3) -

UBS assesses investors are pricing in a future improvement in mobile earnings. The stock may continue to outperform, the broker acknowledges, on relative yield in a low-interest rate environment.

However the metrics for mobile in the short-term still reflect the destructive pricing in the industry experienced until early 2019.

UBS lifts the target to $4.00 from $3.60 and downgrades to Neutral from Buy as the stock appears fairly valued.

Target price is $4.00 Current Price is $3.82 Difference: $0.18
If TLS meets the UBS target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $3.53, suggesting downside of -7.7% (ex-dividends)

The company's fiscal year ends in June.

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

Credit Suisse rates VOC as Neutral (3) -

Credit Suisse expects network services will be the focus at the upcoming investor briefing. The broker estimates that the market is factoring in a 21% market share in the data & IP market by FY23.

Neutral rating and $3.75 target maintained.

Target price is $3.75 Current Price is $3.31 Difference: $0.44
If VOC meets the Credit Suisse target it will return approximately 13% (excluding dividends, fees and charges).

Current consensus price target is $3.74, suggesting upside of 12.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.3

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

Morgans rates WEB as Hold (3) -

The company has reiterated FY19 operating earnings (EBITDA) guidance. Morgans revises forecasts for FY20, taking into account a more conservative view on the Thomas Cook agreement amid weak consumer discretionary spending and geopolitical uncertainty.

While management appears to be doing a good job on its strategy, lower visibility for earnings and a slowing B2C business causes the broker to retain a Hold rating. Target is reduced to $14.80 from $15.68.

Target price is $14.80 Current Price is $13.25 Difference: $1.55
If WEB meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges).

Current consensus price target is $17.29, suggesting upside of 30.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.6

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