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FN Arena Broker Call Headlines - 21 Dec 2012

Reported by FN Arena
Tuesday, January 1, 2013
Topics in this article:
Macquarie,Fortescue Metals ,Qantas Airways,Oz Minerals,Bluescope Steel,Orica,Dexus Property,Graincorp Limited
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- QANTAS AIRWAYS LIMITED

Deutsche Bank rates as Buy (1) - The broker notes the ACCC has given the thumbs up to the tas and Emirates alliance for 5 years. A few changes have been made to the initial proposal, but nothing material, says Deutsche.

The broker sees as much $193m in overall benefits to tas from the arrangement, but they're not in the forecasts yet, with the broker waiting for the final decision from the ACCC expected in March 2013. The Buy recommendation is retained.

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- ORICA LIMITED

JP Morgan rates as Overweight (1) - JP Morgan notes the company has held a call to discuss some inaccuracies they say are making the rounds. First, there is no oversupply issue, says JPM. Second, the broker points out import parity prices do not include distribution costs, so some AN price forecasts out there are being understated.

However, while the broker expects an overall increase in margins and returns for the Australia/Asia Mining Services division over the next four years, it still expects a steady overall deterioration in both margins and return on capital out to FY18. Despite this, the Overweight call is maintained on the broker's belief the stock remains undervalued.

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- OZ MINERALS LIMITED

Macquarie rates as Outperform (1) - Target $7.50 (was $9.15). The broker notes the company has reiterated its 2012 guidance into the end of the year, but also advised the outlook for 2013 is challenging with output to decline and costs increase. FY12-14 EPS forecasts are trimmed by 2%, 32% and 20% on expected lower levels of both copper and gold production, with the same pulling the price target lower.

The broker expects things to start turning around in 2013, with production pushing higher, but on meaner, leaner cost bases. Copper remains the broker's preferred commodity and the Outperform call is maintained.

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- GRAINCORP LIMITED

Macquarie rates as Underperform (5) - The broker notes forecast grain receivals are down 10-18% in 2013 and export volumes are down 20-25%, in line with its expectations. While no earnings guidance was offered at the AGM, the broker continues to expect  a 15% decline in adjusted net profit.

The broker admits ADM's offer price could move higher, but given the 40% post offer rally, it's more than in the price. The Underperform call is maintained, especially given the deal could still fall over.

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- BLUESCOPE STEEL LIMITED

Deutsche Bank rates as Buy (1) - The broker notes the federal government is set to apply dumping margins to HRC exported from Japan, the Republic of Korea, Malaysia and Taiwan.

Deutsche estimates the FY13 operating earnings benefit following the approval will come in around $28m, or around 27% of the broker's earnings forecast.  Buy call, price target and forecasts maintained.

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- SYDNEY AIRPORT HOLDINGS LIMITED

CIMB Securities rates as Neutral (3) - Target $3.47 (was $3.48). The broker reports that November traffic was up 6.9%, with domestic traffic up 7.0%, while international traffic increased 6.7%.

CIMB believes that with a steady stream of new capacity announcements and a good amount of existing capacity growth already on the cards, the outlook for traffic growth in FY13F remains solid. The Neutral call is maintained, with the stock more attractive on a two-to-three year time frame.

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- FORTESCUE METALS GROUP LTD

UBS rates as Downgrade to Neutral from Buy (3) - The stockbroker observes the share price has risen no less than 52% since September with spot iron ore bouncing 55% over the period. UBS has updated its projections and a lower price forecast for iron ore plus a stronger AUD results in lowered estimates for the company. Regardless, the price target has lifted to $5 from $4.50 previously.

The analysts comment the proposed sale of equity in Pilbara infrastructure could net more than US$4bn. As spot iron ore is now expected to fall over the weeks ahead, the rating has been pulled back to Neutral. Further out in 2013, UBS expects the price of iron ore to strengthen again.

UBS forecasts an average price for iron ore of US$116/tonne in 2013. The analysts note this is below market consensus which predicts US$126/t.

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- DEXUS PROPERTY GROUP

Macquarie rates as Neutral (3) - The broker notes the company has sold the majority of its US industrial portfolio at a 13% premium to book value.

Post the sale, the business is nice and simplified leaving management in a good position to chase some earnings growth via accretive acquisitions over the next 12-18 months. Neutral call maintained.

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02/09/2014 14:17Sydney, Australia. 2 September,2014
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