Australian Broker Call

Macquarie rates AJM as Underperform (5) -

The company has secured an additional US$15m in funding which brings its total debt to US$125m. The ramp up of the mine appears to be taking longer than planned and Macquarie had suspected additional funds may be needed, yet the new debt negates the need for a capital raising.

Still the risk is not completely removed and refinancing the larger debt facility remains a long-term uncertainty. Underperform rating maintained. Target is reduced $0.24 from $0.25.

Target price is $0.24 Current Price is $0.24 Difference: $0
If AJM meets the Macquarie target it will return approximately 0% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -1.0

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

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

Citi observes rising steel prices/spreads have begun to reverse and may now be past the peak. Sentiment in US steel markets and China's macro data are likely to get worse before getting better, in the broker's view.

China appears to have relaxed stringent winter emission standards, providing local governments with greater flexibility to set winter output reductions. The broker considers this a negative for sentiment, with Chinese steel prices likely to trade lower in the near term.

Citi believes the risk/reward at this point has turned negative and downgrades to Sell from Buy. Target is reduced to $15.00 for $20.50.

Target price is $15.00 Current Price is $16.47 Difference: minus $1.47 (current price is over target).
If BSL 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 $19.52, suggesting upside of 18.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.5

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

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

Kirin has announced a strategic review of its Lion Dairy and Drinks Oceania business. Morgan Stanley believes there is potential for Coca-Cola Amatil to have some interest in these assets, although the company has not publicly commented.

The new Australian beverages CEO, Peter West, was managing director of Lion Dairy and Drinks until January this year, and may have insight into the potential synergies.

The broker suspects Coca-Cola Amatil could better leverage its extensive distribution network with the inclusion of incremental brands and enhance its cold chain distribution capabilities. Currently its only milk brand is Barista Bros.

Equal-weight. Target is $9.60. Cautious industry view.

Target price is $9.60 Current Price is $9.51 Difference: $0.09
If CCL meets the Morgan Stanley target it will return approximately 1% (excluding dividends, fees and charges).

Current consensus price target is $9.05, suggesting downside of -4.8% (ex-dividends)

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: -0.5

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

Credit Suisse rates GNC as Outperform (1) -

Credit Suisse downgrades FY19 earnings expectations in line with a revised crop production estimate of 11mt for the east coast of Australia, from 14.3mt. The broker estimates that around $87m in cash flow provides a small funding buffer relative to forecast EBITDA.

With the cessation of major growth projects capital expenditure, at around $80m per annum, is likely to be sustainable for the next several years, although this clearly limits the near-term growth options.

Hence, while another year of poor production cannot be ruled out, the broker believes valuation support remains adequate. Outperform rating maintained. Target is reduced to $9.07 from $9.09.

Target price is $9.07 Current Price is $7.87 Difference: $1.2
If GNC meets the Credit Suisse target it will return approximately 15% (excluding dividends, fees and charges).

Current consensus price target is $8.46, suggesting upside of 7.5% (ex-dividends)

The company's fiscal year ends in September.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Deutsche Bank rates GNC as Buy (1) -

Buy rating and $9.20 price target retained as Deutsche Bank takes the view that negative news has already been priced in. 

Target price is $9.20 Current Price is $7.87 Difference: $1.33
If GNC meets the Deutsche Bank target it will return approximately 17% (excluding dividends, fees and charges).

Current consensus price target is $8.46, suggesting upside of 7.5% (ex-dividends)

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 0.4

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

Macquarie rates GOR as Outperform (1) -

First half results revealed a -$2.3m loss from corporate costs. The company spent $72m on developing Gruyere and Macquarie expects the share of Gruyere capital expenditure to total $107m over the second half of 2018, representing a peak in expenditure.

Construction remains on track for first gold in June 2019. Outperform rating maintained. Target is $0.95.

Target price is $0.95 Current Price is $0.62 Difference: $0.33
If GOR meets the Macquarie target it will return approximately 53% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY18:

Forecast for FY19:

Market Sentiment: 1.0

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

UBS rates JBH as Neutral (3) -

UBS suspects its margin forecasts could prove conservative if the headwinds generated by online business and the housing slowdown are less than expected. The broker lifts medium-term margin forecasts for The Good Guys to 5% above FY23 EBIT but still forecasts a -15 basis points decline to FY21.

The main positive catalyst would be a sign that The Good Guys' margins are moving closer to its global peers set. While analysis suggests a potential opportunity via improving margins for The Good Guys, UBS believes the stock screens as fair value on a risk/reward basis because of the intensifying competition. Neutral rating and $23.20 target maintained.

Target price is $23.20 Current Price is $24.68 Difference: minus $1.48 (current price is over target).
If JBH meets the UBS target it will return approximately minus 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $25.63, suggesting upside of 3.9% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.1

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

Citi rates MQG as Neutral (3) -

Following the sale of Quadrant Energy and the guidance for FY19 to be "broadly in line" with FY18, Citi updates forecasts, raising FY19 estimates for earnings per share by 6%.

FY20 estimates are broadly flat, reflecting the revised timing of the Quadrant sale offset by the gain on sale from Nuix. Citi maintains a Neutral rating and $120 target.

Target price is $120.00 Current Price is $125.61 Difference: minus $5.61 (current price is over target).
If MQG meets the Citi target it will return approximately minus 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $121.39, suggesting downside of -3.4% (ex-dividends)

The company's fiscal year ends in March.

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 MQG as Hold (3) -

Following Macquarie's market update, Deutsche Bank analysts have lifted forecasts, while expressing increased confidence. Hold rating retained. Price target has moved to $115 (was $110).

Target price is $115.00 Current Price is $125.61 Difference: minus $10.61 (current price is over target).
If MQG meets the Deutsche Bank target it will return approximately minus 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $121.39, suggesting downside of -3.4% (ex-dividends)

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

Morgan Stanley rates MQG as Overweight (1) -

Macquarie Group has reiterated expectations for FY19 to be "broadly in line" with FY18. First time guidance for the first half indicates strong performance fees, Morgan Stanley suggests.

The broker believes the outlook is conservative and forecasts 10% earnings growth with support from strong markets, a weaker Australian dollar and the Quadrant sale.

Overweight. Industry view is In-Line and the target is $130.

Target price is $130.00 Current Price is $125.61 Difference: $4.39
If MQG meets the Morgan Stanley target it will return approximately 3% (excluding dividends, fees and charges).

Current consensus price target is $121.39, suggesting downside of -3.4% (ex-dividends)

The company's fiscal year ends in March.

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

Morgans rates MQG as Add (1) -

Management has reiterated expectations for FY19 net profit to be broadly in line with FY18 but the outlook does not include the recent Quadrant Energy sale. Morgans upgrades FY19 and FY20 estimates for earnings per share by 4-8%.

The broker believes the business is tracking well and there are reasonably robust activity levels in all divisions, besides corporate and asset finance. As there are still, potentially, sizeable realisations of assets to be had, Morgans suspects upside earnings risk exists.

Add rating maintained. Target rises to $130.70 from $115.80.

Target price is $130.70 Current Price is $125.61 Difference: $5.09
If MQG meets the Morgans target it will return approximately 4% (excluding dividends, fees and charges).

Current consensus price target is $121.39, suggesting downside of -3.4% (ex-dividends)

The company's fiscal year ends in March.

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

Credit Suisse rates QUB as Underperform (5) -

NSW crop production is expected to be down -46% and Queensland down -38%, the states where the company has its greatest exposure. Although the market has likely discounted any prospect of production growth, Credit Suisse suspects ABARES' new forecasts are significantly worse than market expectations.

Transport and handling of agricultural products contribute 20-25% to the company's segment revenue and around 10% of total revenue. Credit Suisse maintains an Underperform rating and $2.40 target.

Target price is $2.40 Current Price is $2.74 Difference: minus $0.34 (current price is over target).
If QUB meets the Credit Suisse target it will return approximately minus 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Current consensus price target is $2.74, suggesting downside of -0.2% (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

Morgan Stanley rates TAH as Overweight (1) -

Management's long-term incentives now include a 75% weighting on total shareholder return and a 25% weighting on synergy targets over a three-year period. Morgan Stanley views this new incentive plan positively, as it stipulates management must exceed the $130m in EBITDA to receive 100% of its synergy incentives.

Morgan Stanley estimates that for every additional $10m in synergies achieved this adds an extra $0.06 in value per share. The broker believes additional synergies are likely to be a combination of both revenue and cost, including further technology opportunities, more property rationalisation and/or digital initiatives associated with keno.

Overweight and $5.20 target retained. Industry view: Cautious.

Target price is $5.20 Current Price is $4.89 Difference: $0.31
If TAH meets the Morgan Stanley target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $5.26, suggesting upside of 7.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY19:

Forecast for FY20:

Market Sentiment: 0.9

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