Aust/Bullish/consensus/report/2/5/2002 AOR target
The Australian Bullish Consensus Report - May 02, 2002 The Australian Bullish Consensus Report - May 02, 2002 "This summary has been prepared independently of the brokers identified. This service does not have the sponsorship, affiliation or approval of those brokers. This report is meant as information about brokers recommendations of today. Subscribers should check the full text of the recommendations before making any investment decision and consult their financial advisor before acting on these recommendations to suit their particular circumstances."
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SYDNEY (OFN) - Your Daily Summary of the major broker recommendation, valuation and forecast changes.
Bullish Consensus Today (BCR): 65.00%
ADSTEAM MARINE LIMITED [ADZ] $2.07 Citigroup - Underperform, High Risk. Company's monopoly threatened via new entrant (possibly Wijsmuller) leading to conclusion that future downgrades seem inevitable.
UBS Warburg - Hold. Cut valuation by 23c to $2.17 FY03 profit by 10% to $31.4m and FY03 by 10% to $38.1m. As Port Melbourne operations likely to see competition and Australian Towage conditions still slow. Cut 12 mth target to $2.28.
AUSTEREO GROUP LIMITED [AEO] $1.87 Hartley Poynton - Hold. Lowered FY02 EPS by 5% due to ongoing worse than expected weakness in national advertisment market. Concerns about increasing competion have risen further.
ARISTOCRAT LEISURE LIMITED [ALL] $5.34 CSFB - Buy. WMS loss of market share has to be positive for Aristocrat even overall market has shrunk. Strategic plan likely to be delivered. 12 mth target $7.70.
AMP LIMITED [AMP] $18.50 Citigroup - Outperform, Low Risk. Expect upcoming Q1 cash flow report to be illustrative of tough conditions. Short term performance likely to be subdued. Still see outperformance on 12 months basis.
AURION GOLD LIMITED [AOR] $3.10 BNP Paribas - Outperform. Lift target to $3.97. March quarter production report revealed lower production than expected in combination with higher costs than expected. But offset through higher gold price. Cut profit forecasts by 2%. Still at modest premium to Net Present Value.
BHP BILLITON LIMITED [BHP] $10.85 BNP Paribas - Outperform. Cut target by 6% to $13.30. March quarter result below consensus, mostly due to higher tax rate. Cut FY02 profit by 5%, FY03 by 6.5%, FY04 by 4.2%.
Citigroup - Outperform, Medium Risk. March quarter result below forecasts. Cut FY02 profit to $2.015bn from $2.140bn, FY03 ex-steel to $2.3bn from $2.4bn.
CSFB - Buy. Short term likely to see drop to around $10.00 on economic and commodity volatilty. This would be a buying opportunity for medium to long term prospects. 12 mth target $13.50.
JB Were - Buy. Valuation $10.85. March quarter result slightly below market expectations, but slightly above JB Were forecast. Cut FY02 profit to US$2.035bn from US$2.053bn.
Macquarie - Outperform/LT Marketperform. This quarter's result was the low point and the cycle should start to improve from here onwards. Second half demand recovery likely to be sparked by current monetary and fiscal stimuli. 12 mth target $13+.
Merrill Lynch - Strong Buy/LT Strong Buy. Target $14.00. Cut forecasts by 2-3%. Believe stock has been oversold.
COATES HIRE LIMITED [COA] $2.05 Citigroup - Buy, High Risk. Lift FY02 profit by 13% due to surprisingly smooth integration of Wreckair. Lift FY03 by 8%, FY04 by 9%. Note that increases do not take into account possible price increases. Lift mid-cycle valuation to $2.08. Consider share price $3.00 possible whithin twelve months.
FOSTER'S GROUP LIMITED [FGL] $4.78 JB Were - Hold. Company seems well positioned for growth in RTD-market after acquisition of BCB Beverages Australia. Key issue is securing license agreements for distribution of international RTD brands in Australia.
JP Morgan - LT Buy. Acquisition of BCB will allow for more efficient bottling solution. 12 mth target of $5.00 remains as market continues to look to Beringer and Mildara earnings.
UBS Warburg - Buy. Although the BCB acquisition is small in value it is strategically important for any RTD (Ready to Drink) innovations. It also helps the company to hedge against lower beer sales. 12 mth target $5.65.
FOODLAND ASSOCIATED LIMITED [FOA] $18.32 ABN Amro - Add. Lift target to $19.26. Believe a possible Woolworths New Zealand acquisition would be 5% EPS-positive due to strong recent share appreciation. Expect any deal to be financed through equity and debt.
JAMES HARDIE INDUSTRIES N.V. [JHX] $6.48 Merrill Lynch - Strong Buy/LT Strong Buy. Target $7.00. Note that sale of Gypsum operations leaves plenty of room to strengthen balance sheet and fund further acquisitions. Believe company should have opportunity to return $50m-$100m to shareholders.
KAZ GROUP LIMITED [KAZ] $0.36 Hartley Poynton - Hold. Expect that stock will be held back due to limited earnings visibility and dented investor's trust. Stock hardly looks cheap on agressively lowered FY03 forecasts.
MAYNE GROUP LIMITED [MAY] $3.69 Morgan Stanley - Equal-Weight/Industry In-Line. Stock now trading at 16% below book value. This is seen as an opportunity. Believe significant value makes the risk/return attractive, but wait for evidence of traction from mamagement changes before upgrading recommendation.
MIA GROUP LIMITED [MIA] $1.02 Citigroup - Neutral, Low Risk. Underlying businesses still in good shape, but market warry of health stocks that come out with a bad surprise. Discounted Cash Flow valuation $1.40.
UBS Warburg - Buy. FY02 guidance well below expectations. Cut FY02 EPS by 12% and FY03 by 13% and FY04 by 9%. Cut valuation by 25c to $1.30. Cut 12 mth target by 54c to $1.17 as uncertainty increasing. However buy recommendation remains following share price fall.
UBS Warburg - Downgrade to Marketperform/LT Outperform from Outperform/LT Strong Outperform. Cut FY02 EPS by 11% and FY03 by 8%. Although stock has dropped sharply in current market conditions a stronger driver will be needed to see a recovery. NHS outsourcing agreements may serve this purpose.
MACQUARIE OFFICE TRUST [MOF] $1.29 Macquarie - Upgrade to Outperform/LT Outperform. Acquisition of 1 Martin Place office will be EPS accretive from FY04. Buy significantly improves the quality of the trust's portfolio.
MILLER'S RETAIL LIMITED [MRL] $2.55 Hartley Poynton - Upgrade to Buy. Regard company's forecast of a 15% increase in FY02 profit as extremely conservative. FY02 EBITA is tipped to rise by 30%. Stock substantially undervalued.
ORICA LIMITED [ORI] $8.49 ABN Amro - Add. Target $7.87. Forecast H1 FY02 profit $66m. Expect company to reiterate that FY02 profit target $180m is minimum, initiating market upgrades. Analysts feel there is upside to their forecasts and have put them under review pending the interim result announcement.
Hartley Poynton - Sell. Base case valuation $4.78. Significant upside exists if company can deliver on promises. If full benefits from current program can be achieved, valuation could rise to $7.00. Not encouraged by current trends in North American explosives.
Macquarie - Outperform/LT Outperform. Earnings forecasts are under review with an eye for upgrades, but this will come post May 6 result. 12 mth target $10.50.
UBS Warburg - Buy. 1H02 result of $65m expected on May 6. It will be an important result as it is the first 6 mths under CEO Broomhead. Cost reduction progress will also be key. 12 mth target $9.30, with $1.00 of potential upside if earnings forecasts are conservative.
QUEENSLAND COTTON HOLDINGS LIMITED [QCH] $3.80 Hartley Poynton - Sell. FY02 result above expectations. As poor wheater conditions have materially impacted 2002 crop, outlook looks less rosy.
SEVEN NETWORK LIMITED [SEV] $6.23 BNP Paribas - Upgrade to Outperform. Cut target to $7.75 from $8.00. Cut FY02 by 12.1% to $55.4m, FY03 by 7.2% to $81.4m, FY04 by 5.0% to $96.3m. To reflect lower tv ratings and subsequently lower ad income. Believe recent sell-off has overcompensated for lowered expectations.
CSFB - Downgrade to Hold from Buy. Cut target by 10% to $7.20 as ratings and revenue gaps unlikely to be closed soon. Following warning by CSFB last week.
STW COMMUNICATIONS GROUP LIMITED [SGN] $4.10 Citigroup - Buy, High Risk. Lift forecasts by 1-3% to take into account higher stake in SCTV. Believe share price weakness is not warranted as 80% of revenues is dervied from fixed contracts.
Hartley Poynton - Hold. Valuation increases by 3c to $4.23 following increase of stake in Indonesian SCTV.
SKILLED ENGINEERING LIMITED [SKE] $1.45 Citigroup - Neutral, High Risk. Lift FY02 EPS by 16%, FY03 by 7% following quarterly report. Sentiment is likely to remain cautious given volatile earnings history.
JB Were - Buy/LT Hold. Valuation $1.60. Q3 results in line with expectations. Concerns about industry structure still intact.
SUNCORP-METWAY LIMITED. [SUN] $12.58 JP Morgan - Buy. Trowbridge appointment as General Insurance head is excellent. However, Queensland CTP portfolio uncertainty will continue to weigh on the stock until next result.
Macquarie - Marketperform/LT Outperform. Appointment reduces any management concerns following departure of Wilkie.
WESTPAC BANKING CORPORATION [WBC] $16.40 JP Morgan - Buy. Expecting 1H02 result of $956m and a div of 34c. Cost efficiencies seen continuing, particularly once restructuring charge is totally amortised. Strong interest spread likely to be maintained.
WESTFIELD HOLDINGS LIMITED [WSF] $16.30 Merrill Lynch - Buy/LT Strong Buy. Believe stock is undervalued as target is $19.45 without taking into account possible Jacobs/RNA acquisitions. Base case valuation based upon assumption of five center acquisitions per annum. Growth in assets under management (AUM) seen as the key driver. Current estimates are for 11-12% AUM growth per year.
END.
AOR Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
