Australian Broker Call
November 08, 2017
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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)
THIS REPORT WILL BE UPDATED SHORTLY
Last Updated: 10:08 AM
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
Credit Suisse rates AIZ as Underperform (5) -
Credit Suisse observes, over the past 12 months, the stock has re-rated close to peak valuation. At the current share price, the broker estimates that the market implies the stock delivers a long-run, pre-tax return on invested capital of 17%.
Despite a number of supportive cyclical and structural tailwinds, the broker believes the inherent operating leverage in the business, combined with a material sensitivity to oil prices & elastic demand for air travel, will continue to underpin volatility in earnings and cash flow going forward.
Credit Suisse increases its target to NZ$2.90 from NZ$2.55. Underperform retained.
Current Price is $3.04. Target price not assessed.
Current consensus price target is N/A
The company's fiscal year ends in June.
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 20.54 cents and EPS of 32.30 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 32.6, implying annual growth of N/A. Current consensus DPS estimate is 19.8, implying a prospective dividend yield of 6.5%. Current consensus EPS estimate suggests the PER is 9.3. |
Forecast for FY19:
Credit Suisse forecasts a full year FY19 dividend of 20.54 cents and EPS of 30.06 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 31.9, implying annual growth of -2.1%. Current consensus DPS estimate is 19.8, implying a prospective dividend yield of 6.5%. Current consensus EPS estimate suggests the PER is 9.5. |
This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: -0.3
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates DLX as Lighten (4) -
The company is scheduled to report its FY17 result November 15. Ord Minnett expects a net profit of $142.3m, a 9.1% increase.
The share price is performed strongly over the past month and the broker cannot point to any specific factors to explain this, keeping earnings estimates largely unchanged.
Ord Minnett continues to believe the company will struggle to deliver earnings growth that is sufficient to justify its current trading multiples. Lighten rating retained. Target is lowered to $6.40 from $6.45.
This stock is not covered in-house by Ord Minnett. Instead, the broker whitelabels research by JP Morgan.
Target price is $6.40 Current Price is $7.55 Difference: minus $1.15 (current price is over target).
If DLX meets the Ord Minnett target it will return approximately minus 15% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $6.43, suggesting downside of -14.8% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY17:
Ord Minnett forecasts a full year FY17 dividend of 26.00 cents and EPS of 37.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 35.5, implying annual growth of 4.1%. Current consensus DPS estimate is 25.9, implying a prospective dividend yield of 3.4%. Current consensus EPS estimate suggests the PER is 21.3. |
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 27.00 cents and EPS of 37.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 36.0, implying annual growth of 1.4%. Current consensus DPS estimate is 26.4, implying a prospective dividend yield of 3.5%. Current consensus EPS estimate suggests the PER is 21.0. |
Market Sentiment: -0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates GMG as Neutral (3) -
UBS observes Goodman Group is a well-run business and has sustainable growth with a conservative capital structure in a sector with strong tailwinds. However, the valuation is considered full and there is no short-term de-rating in sight.
UBS continues to forecast 6% growth in FY19-20, predominantly driven by management income. The broker retains a Neutral rating and raises the target to $8.30 from $7.68.
Target price is $8.30 Current Price is $8.55 Difference: minus $0.25 (current price is over target).
If GMG meets the UBS target it will return approximately minus 3% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $8.37, suggesting downside of -2.1% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 27.60 cents and EPS of 46.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 45.8, implying annual growth of 5.3%. Current consensus DPS estimate is 27.5, implying a prospective dividend yield of 3.2%. Current consensus EPS estimate suggests the PER is 18.7. |
Forecast for FY19:
UBS forecasts a full year FY19 dividend of 29.30 cents and EPS of 48.80 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 48.6, implying annual growth of 6.1%. Current consensus DPS estimate is 29.2, implying a prospective dividend yield of 3.4%. Current consensus EPS estimate suggests the PER is 17.6. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgans rates IPD as Add (1) -
Morgans remodels the business to better reflect the growth in the installed base. Quarterly sales are still tracking below expectations.
For the near-term revenue estimates have been lowered but in the longer term the broker considers the revenue position more sustainable.
Add rating retained and target is reduced to $1.46 from $1.52.
Target price is $1.46 Current Price is $0.78 Difference: $0.68
If IPD meets the Morgans target it will return approximately 87% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 0.00 cents and EPS of minus 7.00 cents. |
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 0.00 cents and EPS of minus 2.10 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates ORG as No Rating (-1) -
Macquarie notes the rapid introduction of solar energy in Queensland and expects that Origin Energy will be most impacted, with 752,000 customers and three gas-fired generation plants..
Origin is naturally short on off-peak, with cover through its gas peak capacity. Until batteries emerge as a significant force, Macquarie suggests ownership of gas peakers is likely to be the cheapest hedge strategy.
Thus, solar undermining the middle of the day should be positive for the company's portfolio and earnings, although the broker concedes this is difficult to quantify.
Macquarie is restricted on rating and target at this stage.
Current Price is $8.44. Target price not assessed.
Current consensus price target is $8.07, suggesting downside of -4.3% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 10.00 cents and EPS of 50.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 49.1, implying annual growth of N/A. Current consensus DPS estimate is 4.4, implying a prospective dividend yield of 0.5%. Current consensus EPS estimate suggests the PER is 17.2. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 39.00 cents and EPS of 65.70 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 63.5, implying annual growth of 29.3%. Current consensus DPS estimate is 22.7, implying a prospective dividend yield of 2.7%. Current consensus EPS estimate suggests the PER is 13.3. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Ord Minnett rates PAC as Buy (1) -
Ord Minnett envisages heightened risk of the stock re-entering the ASX 300 index in March, as it currently has a free float of over $250m and reasonable trading volumes.
Redeployment of the company's cash is not priced in and the broker observes strong momentum in its key portfolio aspects. The broker retains a Buy rating. Target is raised to $8.23 from $8.11.
Target price is $8.23 Current Price is $6.92 Difference: $1.31
If PAC meets the Ord Minnett target it will return approximately 19% (excluding dividends, fees and charges).
The company's fiscal year ends in June.
Forecast for FY18:
Ord Minnett forecasts a full year FY18 dividend of 27.40 cents and EPS of 42.20 cents. |
Forecast for FY19:
Ord Minnett forecasts a full year FY19 dividend of 33.70 cents and EPS of 48.10 cents. |
Market Sentiment: 1.0
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Macquarie rates PTM as Underperform (5) -
Fund flows were up 7.1% in October. Nevertheless, Macquarie suggests net inflows of around $170m and material outperformance in the International Fund are not sufficient to justify the current valuation.
Underperform retained. Target rises to $5.11 from $4.70.
Target price is $5.11 Current Price is $7.86 Difference: minus $2.75 (current price is over target).
If PTM meets the Macquarie target it will return approximately minus 35% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $5.09, suggesting downside of -35.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Macquarie forecasts a full year FY18 dividend of 31.00 cents and EPS of 31.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 30.3, implying annual growth of -4.5%. Current consensus DPS estimate is 29.4, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 25.9. |
Forecast for FY19:
Macquarie forecasts a full year FY19 dividend of 30.00 cents and EPS of 31.20 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 30.2, implying annual growth of -0.3%. Current consensus DPS estimate is 28.9, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 26.0. |
Market Sentiment: -0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgan Stanley rates PTM as Underweight (5) -
Morgan Stanley estimates around $210m of inflows in October, or at a 10% annualised run rate, up from the September outcome.
The broker considers the valuation full. Underweight retained. Target: $4.40. Industry View: In Line.
Target price is $4.40 Current Price is $7.86 Difference: minus $3.46 (current price is over target).
If PTM meets the Morgan Stanley target it will return approximately minus 44% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Current consensus price target is $5.09, suggesting downside of -35.2% (ex-dividends)
The company's fiscal year ends in June.
Forecast for FY18:
Morgan Stanley forecasts a full year FY18 dividend of 26.00 cents and EPS of 29.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 30.3, implying annual growth of -4.5%. Current consensus DPS estimate is 29.4, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 25.9. |
Forecast for FY19:
Morgan Stanley forecasts a full year FY19 dividend of 25.00 cents and EPS of 28.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 30.2, implying annual growth of -0.3%. Current consensus DPS estimate is 28.9, implying a prospective dividend yield of 3.7%. Current consensus EPS estimate suggests the PER is 26.0. |
Market Sentiment: -0.8
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Credit Suisse rates SM1 as Underperform (5) -
Credit Suisse believes that the growth ambitions of the company, and its customers such as A2 Milk ((A2M)), means there is scope for sourcing to evolve and margin expectations to change.
This could affect Synlait Milk in the longer term, although it is difficult to quantify.
Credit Suisse, therefore, takes a cautious approach to the company's long-term margin assumptions. Target is NZ$5.98. Underperform maintained.
Current Price is $6.54. Target price not assessed.
Current consensus price target is N/A
The company's fiscal year ends in July.
Forecast for FY18:
Credit Suisse forecasts a full year FY18 dividend of 0.00 cents and EPS of 35.92 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 32.4, implying annual growth of N/A. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 20.2. |
Forecast for FY19:
Credit Suisse forecasts a full year FY19 dividend of 0.00 cents and EPS of 40.78 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 38.6, implying annual growth of 19.1%. Current consensus DPS estimate is N/A, implying a prospective dividend yield of N/A. Current consensus EPS estimate suggests the PER is 16.9. |
This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.
Market Sentiment: -0.7
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Morgans rates WBC as Add (1) -
The bank reported cash earnings of $8.06bn, lower than Morgans expected. The miss was largely because of soft markets & treasury.
The broker was impressed with the loan growth, and the margin expansion that was achieved across all business divisions. Morgans maintains an Add rating and reduces the target to $37 and $38.
Target price is $38.00 Current Price is $32.64 Difference: $5.36
If WBC meets the Morgans target it will return approximately 16% (excluding dividends, fees and charges).
Current consensus price target is $33.70, suggesting upside of 3.2% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY18:
Morgans forecasts a full year FY18 dividend of 190.00 cents and EPS of 255.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 243.8, implying annual growth of 2.4%. Current consensus DPS estimate is 189.0, implying a prospective dividend yield of 5.8%. Current consensus EPS estimate suggests the PER is 13.4. |
Forecast for FY19:
Morgans forecasts a full year FY19 dividend of 195.00 cents and EPS of 265.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 248.6, implying annual growth of 2.0%. Current consensus DPS estimate is 193.2, implying a prospective dividend yield of 5.9%. Current consensus EPS estimate suggests the PER is 13.1. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
UBS rates WBC as Neutral (3) -
FY17 results were held back by weaker trading income and provisions for customer refunds and UBS expects, with limited growth prospects, the bank can return capital.
This prospect includes increasing the ordinary dividend, a special dividend and the neutralisation of shares issued by the distribution reinvestment plan.
Neutral and $32.50 target retained.
Target price is $32.50 Current Price is $32.64 Difference: minus $0.14 (current price is over target).
If WBC 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 $33.70, suggesting upside of 3.2% (ex-dividends)
The company's fiscal year ends in September.
Forecast for FY18:
UBS forecasts a full year FY18 dividend of 188.00 cents and EPS of 233.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 243.8, implying annual growth of 2.4%. Current consensus DPS estimate is 189.0, implying a prospective dividend yield of 5.8%. Current consensus EPS estimate suggests the PER is 13.4. |
Forecast for FY19:
UBS forecasts a full year FY19 EPS of 234.00 cents. How do these forecasts compare to market consensus projections? Current consensus EPS estimate is 248.6, implying annual growth of 2.0%. Current consensus DPS estimate is 193.2, implying a prospective dividend yield of 5.9%. Current consensus EPS estimate suggests the PER is 13.1. |
Market Sentiment: 0.4
All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources
Summaries
| AIZ | AIR NEW ZEALAND | Underperform - Credit Suisse | Overnight Price $3.04 |
| DLX | DULUX GROUP | Lighten - Ord Minnett | Overnight Price $7.55 |
| GMG | GOODMAN GRP | Neutral - UBS | Overnight Price $8.55 |
| IPD | IMPEDIMED | Add - Morgans | Overnight Price $0.78 |
| ORG | ORIGIN ENERGY | No Rating - Macquarie | Overnight Price $8.44 |
| PAC | PACIFIC CURRENT GROUP | Buy - Ord Minnett | Overnight Price $6.92 |
| PTM | PLATINUM | Underperform - Macquarie | Overnight Price $7.86 |
| Underweight - Morgan Stanley | Overnight Price $7.86 | ||
| SM1 | SYNLAIT MILK | Underperform - Credit Suisse | Overnight Price $6.54 |
| WBC | WESTPAC BANKING | Add - Morgans | Overnight Price $32.64 |
| Neutral - UBS | Overnight Price $32.64 |
RATING SUMMARY
| Rating | No. Of Recommendations |
| 1. Buy | 3 |
| 3. Hold | 2 |
| 4. Reduce | 1 |
| 5. Sell | 4 |
Wednesday 08 November 2017
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the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe
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with a valuable tool that helps them in making up their own minds, reading
market trends and getting a feel for what is happening beneath the surface.
This document is provided for informational purposes only. It does not
constitute an offer to sell or a solicitation to buy any security or other
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base their work on information believed to be reliable and accurate, though
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should contact their personal adviser before making any investment decision.
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