IPL – Macquarie rates the stock as Outperform
The broker notes Incitec Pivot’s PE discount to peer Orica ((ORI)) is now the largest in a decade, leading the broker to favour the former over the latter.
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DOW – Deutsche Bank rates the stock as Buy
Downer EDI has disclosed that its partner at the Murra Warra wind farm, Senvion, has filed for self-administration in Germany. Senvion is responsible for the manufacture, transport, erection, and commissioning of the turbines and Downer for the balance of plant works.
Read MoreSXY – Credit Suisse rates the stock as Neutral
The Roma North gas facility was commissioned on May 27. The company is on track to deliver processed sales gas to GLNG by mid-2019. The main concern for Credit Suisse is the pace of the production ramp-up upstream rather than the processing facility.
Read MoreWHC – Deutsche Bank rates the stock as Buy
With the prospect of Adani’s Carmichael mine being approved in Queensland, Deutsche Bank believes the market should now be paying for Whitehaven Coal’s growth.
Read MoreSGM – Credit Suisse rates the stock as Outperform
The re-starting of US blast furnace capacity has caused a slump in US steel prices and put the steel market into surplus, constraining the price that US EAF steelmakers can pay for scrap. Recent tariff reductions have made this worse.
Read MoreAIZ – Macquarie rates the stock as Underperform
Macquarie assesses the FY19 outlook has softened a little, as the airline is unable to pass on higher fuel costs to customers in the current demand environment. The stock offers a strong dividend yield, which is sustainable, given the balance sheet and recent deferrals of capital expenditure.
Read MoreASL – Deutsche Bank rates the stock as Buy
Ausdrill has announced a three-year extension of the equipment hire contract with Peabody at $126m. Deutsche Bank suspects there was likely to be a marginal price increase to reflect tighter equipment availability and potentially better terms.
Read MoreBSL – Credit Suisse rates the stock as Outperform
Credit Suisse US steel analysts have reduced hot rolled coil (HRC) and steel spread assumptions citing planned capacity additions, declining US steel tariff protection and the likely rise in scrap.
Read MoreOZL – Morgans rates the stock as Upgrade to Add from Hold
Morgans believes the stock’s retreat of nearly -20% since early April is overdone. The broker suspects sentiment is the culprit because of ongoing US/China trade uncertainty.
Read MoreALL – Morgans rates the stock as Add
First half results were strong and ahead of Morgans’ expectations, with North America standing out. The company continues to retain a dominant position in the North American market with strong growth in platform sales and install gaming operations.
Read MoreWOW – Citi rates the stock as Downgrade to Sell from Neutral
German competitor Kaufland is looking to start a battle for its share of the Australian households’ wallet and Citi thinks this will act as a catalyst for a resumption of an industry-wide private label price war.
Read MoreANN – Credit Suisse rates the stock as Upgrade to Outperform from Neutral
Raw material prices have eased. Raw materials account for around 60% of the company’s cost of goods sold. Credit Suisse expects Ansell will achieve only a modest benefit in the second half but forecasts a benefit of around 5% for the first half of FY20.
Read MoreBHP – UBS rates the stock as Neutral
The company has presented a 10-20 year vision, acknowledging the world is changing and that BHP Group needs to change as well. The company envisages electrification and decarbonisation the two dominant themes evolving over the medium-long-term.
Read MoreBSL – Credit Suisse rates the stock as Outperform
Spreads in US spot hot-rolled coil versus scrap continue to weaken, declining to US$309/t, which Credit Suisse notes is below the company’s assumed US$394/t for the June half.
Read MoreARF – Deutsche Bank rates the stock as Sell
The company has settled or has exchanged contracts on, acquisitions of social infrastructure properties worth $62m. These includes three specialist disability accommodation properties, three early learning centre properties and five early learning centre developments.
Read MoreALQ – Credit Suisse rates the stock as Neutral
FY19 net profit was in line with Credit Suisse estimates. Revenue growth occurred across all segments and margins improved in life sciences for the first time in six years.
Read MorePME – Morgans rates the stock as Initiation of coverage with Add
Pro Medicus is a medical imaging software company, generating sales from its Visage product across North America and Europe as well as Asia-Pacific. The business generates revenue on a ‘pay-per-click’ basis, with guaranteed transaction minimums over contracts of five years or more.
Read MoreAMC – Deutsche Bank rates the stock as Buy
Deutsche Bank considers the proposed acquisition of Bemis positive and believes it will generate long-term value. The combined entity will become the global leader in consumer packaging.
Read MoreSEA – Morgans rates the stock as Add
First quarter financials were strong and revealed an earnings (EBITDAX) margin of 62%. Morgans considers the highlight was confirmation that the company and infrastructure provider Enterprise had cleared the bottleneck which constrained production growth.
Read MoreSCG – Deutsche Bank rates the stock as Sell
Scentre Group has sold a 50% interest in Westfield Burwood for $575m, representing a 4% premium to the December 2018 book value.
Read MoreBSL – Credit Suisse rates the stock as Outperform
The broker suggests reduced US steel tariffs for Canada could result in US steel spread pressure as imports potentially rise, impacting on already materially lower steel prices. US scrap prices may rise on likely increased supply from Turkey and reduced supply from Canada.
Read MoreAGL – Credit Suisse rates the stock as Underperform
Credit Suisse expects a -25% fall in Newcastle coal prices to be sustained. In terms of electricity, the broker believes interventionist federal policy will mean a return to oversupply beyond 2022 and, thus, a return to coal cost as the price setter.
Read MoreNWH – Deutsche Bank rates the stock as Downgrade to Sell from Hold
The company has won the contract for Koodaideri. Deutsche Bank believes the win was already factored in and, although the contract size is close to forecasts, at $150m over 80 weeks it is likely to be a disappointment to consensus expectations.
Read MoreEPW – Morgans rates the stock as Add
Morgans observes the investor briefing did not provide any updates on the FY19 outlook, although management is confident the energy solutions business will deliver growth.
Read MoreALL – Deutsche Bank rates the stock as Buy
Deutsche Bank believes the upcoming interim result will reveal that the extraordinary success of the land-based gaming business is being reinvested in the Americas and digital divisions. Nevertheless, the broker expects the result to surprise to the upside.
Read MoreSUN – Credit Suisse rates the stock as Neutral
Credit Suisse expects the increased natural hazards allowance and reinsurance cover for FY20 will reduce the downside risk to earnings. This should be a benefit by way of a reduced discount to Insurance Australia Group ((IAG)).
Read MoreGXY – Citi rates the stock as Buy
Galaxy Resources has made a strategic equity investment of $22.5m in Alliance Mineral ((A40)). This takes its holding to 12%. Alliance Mineral is currently ramping up the Bald Hill lithium project in Western Australia and has guided to production of 240,000t of spodumene concentrate in FY20.
Read MoreGMG – Credit Suisse rates the stock as Outperform
Goodman Group has reaffirmed FY19 guidance of growth in operating earnings of 9.5% and distribution growth of 7%. Credit Suisse notes the update highlighted the global demand for logistics space within the proximity of consumers in urban locations.
Read MoreADI – Morgans rates the stock as Hold
The company has announced the acquisition of four industrial assets located east of the Melbourne CBD. The assets bolster the industrial weighting of the fund and, Morgans observes, provide value-adding opportunities down the track.
Read MoreMYX – Credit Suisse rates the stock as Downgrade to Neutral from Outperform
The company has announced a significant deterioration in the performance of its generic products since the first half results because of increased competition and US$4m in one-off adverse items. The high-margin specialty brands revenue is also weaker than expected.
Read MoreFMG – Macquarie rates the stock as Outperform
Fortescue’s announced 60c special dividend came as a surprise given typically such announcements are reserved for the result release. The broker calculates 60c represents 80% of second-half earnings using its own (lower) iron ore price forecasts, and the company had flagged a payout ratio of 50-80%.
Read MoreADI – UBS rates the stock as Neutral
The company has acquired four industrial assets in Melbourne for $38m, funded by $30m equity raising and debt. Strong rental growth is expected over time.
Read MoreCBA – Citi rates the stock as Neutral
Citi observes Commonwealth Bank has utilised the March quarter to accelerate the recognition of customer remediation across wealth management advice & products and has now dealt with key issues, so a top up in future looks less likely.
Read MoreAST – Morgans rates the stock as Hold
Earnings lifted in the second half of FY19 and beat Morgans’ forecast. Excluding customer contributions, operating earnings (EBITDA) were flat but still exceeded forecasts by 4%. Distribution guidance of 10.2c per security for FY20 implies 5% growth on a cash yield of 5.6%.
Read MoreAMC – Credit Suisse rates the stock as Neutral
The broker notes China is now taxing plastic resins at 25% but this has not impacted on Amcor’s performance in China given resin prices fell, offsetting the tax. However, Amcor’s PE is now up to 17x which the broker sees as stretched, implying investors are paying for 13 years of earnings.
Read MoreBHP – Deutsche Bank rates the stock as Sell
Deutsche Bank observes BHP is currently investing the lowest amount among the four majors and, along with elevated iron ore prices, this is maintaining cash flows at healthy levels.
Read MoreCOH – Macquarie rates the stock as Underperform
Cochlear hosted an investor day on Friday at which no financial updates were provided. The company highlighted the opportunity presented by growth in adult uptake in developed markets along with new initiatives.
Read MoreSXY – Credit Suisse rates the stock as Downgrade to Neutral from Outperform
Credit Suisse believes Senex Energy is well positioned to benefit from higher domestic gas prices, as Project Atlas ramps up over the next two years. Yet, while the company has been touted as a takeover target, no bid has emerged.
Read MoreABC – Macquarie rates the stock as Neutral
Adelaide Brighton has downgraded FY profit guidance by -10-15% due to weak demand in residential construction, insufficiently offset by a lower exposure to infrastructure, falling cement/concrete prices in Qld which the broker sees going lower, and competition in South Australia.
Read MoreCTX – Credit Suisse rates the stock as Outperform
Credit Suisse observes the first quarter trading update has confirmed previous disclosures regarding margin compression in fuel retailing and poor refiner margins. The broker believes retail fuel margins are likely to remain an uncertain factor for the remainder of the first half.
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