BROKER ALERT'S (3 x BRU, 1 x CBA, 1 x IPL, 3 x KAR, 6 x RIO, 1 x SIP)
Deutsche Bank rates BRU as Buy (1) -
Buru Energy's funding package, just announced, will allow the company to be fully funded for appraisal and development activity through to the end of 2014. Funds will be deployed to the full field development of Ungani oil field. Buru will allocate $54m for appraisal of the Laurel wet gas plays.
The Buy rating and $3.15 price target are unchanged. Based on the target price Deutsche Bank sees material upside potential.
Target price is $3.15 Current Price is $1.84 Difference: $1.31 If BRU meets the Deutsche Bank target it will return approximately 71% (excluding dividends, fees and charges).
The company's fiscal year ends in June. Deutsche Bank forecasts a full year FY13 dividend of 0.00 cents and EPS of minus 0.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 613.33.
Market Sentiment: 1.0
JP Morgan rates BRU as Overweight (1) -
Buru has announced a complex set of funding measures which will finance 2013-14 exploration, with a capital placement included, and secured a modern rig for its drilling program. The broker believes the positives of the announcement outweigh the negative of diluted capital.
Target falls to $3.50 from $4.15 but Overweight retained.
Target price is $3.50 Current Price is $1.84 Difference: $1.66 If BRU meets the JP Morgan target it will return approximately 90% (excluding dividends, fees and charges).
The company's fiscal year ends in June. JP Morgan forecasts a full year FY13 dividend of 0.00 cents and EPS of minus 5.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 36.80.
Market Sentiment: 1.0
Macquarie rates BRU as Outperform (1) -
Buru Energy has provided more information on Ungani, after five months of limited drilling activity. The company has secured a rig for further exploration across the Ungani oil trend and committed to the next phase of testing the vast Laurel wet gas formation.
In conjunction, the company has $110-130m in new funding sources, including up to $28m in remaining Mitsubishi development carry, the release of $20m of gas pre-payments, a $30m reserves-based debt facility and a $35m institutional placement with a further optional share purchase plan capped at $5m.
Macquarie maintains the Outperform rating and the price target is reduced to $2.80 from $3.00.
Target price is $2.80 Current Price is $1.84 Difference: $0.96 If BRU meets the Macquarie target it will return approximately 52% (excluding dividends, fees and charges).
The company's fiscal year ends in June. Macquarie forecasts a full year FY13 dividend of 0.00 cents and EPS of minus 3.40 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 54.12.
Market Sentiment: 1.0
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BA-Merrill Lynch rates CBA as Underperform, Low Risk (5) -
CBA may be a well-run and high-returning business but Merrills believes the valuation premium is hard to justify given the medium-term growth headwinds. The earnings mix for FY14/15 has been tweaked with marginal upgrades as a result.
The price objective is raised to $58.60 from $57.90. The Underperform rating is retained.
Target price is $58.60 Current Price is $73.00 Difference: minus $14.4 (current price is over target). If CBA meets the BA-Merrill Lynch target it will return approximately minus 20% (excluding dividends, fees and charges - negative figures indicate an expected loss).
The company's fiscal year ends in June. BA-Merrill Lynch forecasts a full year FY13 dividend of 358.00 cents and EPS of 471.00 cents. At the last closing share price the estimated dividend yield is 4.90%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 15.50.
Market Sentiment: -0.5
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Citi rates IPL as Neutral (3) -
Soft global fertiliser markets have wiped out all the benefits of the lower A$ for Incitec, the broker notes. On the balance, the broker has reduced forecast earnings by 3-5% in FY13-15. The outlook is tough, the broker suggests, with a lower AUD still the only driver.
Neutral and $2.80 target retained. The broker still prefers IPL to Orica ((ORI)).
Target price is $2.80 Current Price is $2.64 Difference: $0.16 If IPL meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).
The company's fiscal year ends in September. Citi forecasts a full year FY13 dividend of 13.00 cents and EPS of 19.30 cents. At the last closing share price the estimated dividend yield is 4.92%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.68.
Market Sentiment: 0.3
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Citi rates KAR as Neutral, High Risk (3) -
Karoon boasts valuable acreage but lacks the cashflow to exploit it, the broker points out. Hence the company has announced a $150m insto placement and $25m SPP in an attempt to provide funding but also to provide a greater position of strength from which to attract farm-out partners, the broker notes.
Target falls to $6.37 from $7.33 and Neutral retained.
Target price is $6.75 Current Price is $5.13 Difference: $1.62 If KAR meets the Citi target it will return approximately 32% (excluding dividends, fees and charges).
The company's fiscal year ends in June. Citi forecasts a full year FY13 dividend of 0.00 cents and EPS of minus 13.30 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 38.57.
Market Sentiment: 0.8
Credit Suisse rates KAR as Upgrade to Outperform from Neutral (1) -
The $150 million placement was a surprise for Credit Suisse as Karoon Gas had around $205m in cash already. The company is strengthening its balance sheet to improve the bargaining position ahead of farm-out negotiations. Credit Suisse thinks the farming out of interests in the Browse Basin may take longer than previously expected.
Reflecting the dilution aspect of the equity raising the price target is reduced to $6.40 from $7.00. The share price has declined 18% since the broker downgraded the stock three weeks ago and, with 25% potential return, the rating is now raised to Outperform from Neutral.
Target price is $6.40 Current Price is $5.13 Difference: $1.27 If KAR meets the Credit Suisse target it will return approximately 25% (excluding dividends, fees and charges).
The company's fiscal year ends in June. Credit Suisse forecasts a full year FY13 dividend of 0.00 cents and EPS of minus 9.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 54.00.
Market Sentiment: 0.8
Macquarie rates KAR as Outperform (1) -
Karoon has raised $150 million via an underwritten institutional placement at $5.10 a share. Karoon also intends to undertake a further share purchase plan.
With further appraisal and greater emphasis being placed on development options in the Browse and Santos Basins, Macquarie thinks the fundamental backdrop is improving. The next phase of drilling at Kangaroo and Bilby will not commence until early 2015, so the focus for now is on farming down assets to cement the funding position ahead of 18 months of drilling.
The Outperform rating and $9.00 price target are maintained.
Target price is $9.00 Current Price is $5.13 Difference: $3.87 If KAR meets the Macquarie target it will return approximately 75% (excluding dividends, fees and charges).
The company's fiscal year ends in June. Macquarie forecasts a full year FY13 dividend of 0.00 cents and EPS of minus 6.50 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 78.92.
Market Sentiment: 0.8
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BA-Merrill Lynch rates RIO as Buy, Medium Risk (1) -
The first half was slightly light on BA-Merrill Lynch's expectations. Portfolio restructuring continues and the broker sees upside to the extent this continues. Iron ore is surprising on the upside against very bearish market expectations. The mixed record on divestments - Northparkes has gone, the diamonds division is shelved for now and Pacific Aluminium is returning to the fold after a suitable bidder was not found.
The price target is reduced to $77.00 from $77.50 and the Buy rating is retained.
Target price is $77.00 Current Price is $59.48 Difference: $17.52 If RIO meets the BA-Merrill Lynch target it will return approximately 29% (excluding dividends, fees and charges).
The company's fiscal year ends in June. BA-Merrill Lynch forecasts a full year FY13 dividend of 164.78 cents and EPS of 435.13 cents. At the last closing share price the estimated dividend yield is 2.77%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.67.
Market Sentiment: 1.0
CIMB Securities rates RIO as Outperform (1) -
Rio Tinto's interim report surprised through achieved costs reductions, report analysts at CIMB. To them this suggests the company is going to report better than the projected US$2bn in costs savings for the full year. But there were some disappointments too, with CIMB citing lower coal production and higher capex for the year.
All in all, CIMB found it all a little underwhelming, but retains its preference for Rio over BHP Billiton ((BHP)) on the basis of relative valuation. Price target increases to $74.20 (up 10c). Rating remains at Outperform.
Note: the analysts have used the opportunity to re-adjust their forecasts and the result is for significantly lower EPS projections for the years ahead, and a steady dividend.
Target price is $74.20 Current Price is $59.48 Difference: $14.72 If RIO meets the CIMB Securities target it will return approximately 25% (excluding dividends, fees and charges).
The company's fiscal year ends in June. CIMB Securities forecasts a full year FY13 dividend of 164.78 cents and EPS of 415.39 cents. At the last closing share price the estimated dividend yield is 2.77%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.32.
Market Sentiment: 1.0
Citi rates RIO as Buy (1) -
It was a challenging first half for RIO and while earnings were in line with consensus they fell short of the broker. The good news is the broker expects a much better second half and has revaluated forecasts for production, costs and the A$.
Target price rises to $71 from $67 and Buy retained. The broker prefers Rio to BHP Billiton ((BHP)).
Target price is $71.00 Current Price is $59.48 Difference: $11.52 If RIO meets the Citi target it will return approximately 19% (excluding dividends, fees and charges).
The company's fiscal year ends in June. Citi forecasts a full year FY13 dividend of 182.54 cents and EPS of 485.45 cents. At the last closing share price the estimated dividend yield is 3.07%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.25.
Market Sentiment: 1.0
Credit Suisse rates RIO as Outperform (1) -
First half underlying earnings were in line with the broker and the interim dividend held no surprises either. Cost reductions remain on track. Pacific Aluminium will be re-integrated as no suitably priced bids were received.
The Outperform rating and $68.00 price target are maintained.
Target price is $68.00 Current Price is $59.48 Difference: $8.52 If RIO meets the Credit Suisse target it will return approximately 14% (excluding dividends, fees and charges).
The company's fiscal year ends in June. Credit Suisse forecasts a full year FY13 dividend of 164.78 cents and EPS of 454.91 cents. At the last closing share price the estimated dividend yield is 2.77%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 13.08.
Market Sentiment: 1.0
JP Morgan rates RIO as Overweight (1) -
Rio's result was largely in line but not crash hot given higher than expected capex and debt and the decision not to divest of Pacific Aluminium, which the broker sees as a disappointment. Management has also softened its stance on the Pilbara expansion rush, suggesting a slower pace. This will improve cashflows and support the iron ore price without impacting on NPV, the broker notes, so it's not really bad news.
All up the broker was underwhelmed but is still attracted to production growth and cost reductions. Target falls to $77 from $78 but Overweight retained.
Target price is $77.00 Current Price is $59.48 Difference: $17.52 If RIO meets the JP Morgan target it will return approximately 29% (excluding dividends, fees and charges).
The company's fiscal year ends in June. JP Morgan forecasts a full year FY13 dividend of 173.66 cents and EPS of 403.55 cents. At the last closing share price the estimated dividend yield is 2.92%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.74.
Market Sentiment: 1.0
UBS rates RIO as Buy (1) -
Rio Tinto's first half numbers were "clean" in the broker's view, and in line. The company is well on its way to achieving cost cutting targets. UBS is yet to fully reconcile the numbers for H1 but 2013 earnings appear to be down around 1.6%.
Rio Tinto announced that the aluminium business was staying with the company. This business, in UBS' view, uses US$19 billion of capital for almost no return and the broker ponders the fact that an in specie distribution would see the return on investment capital rise to 29% from 22%.
The Buy rating and $80 price target are unchanged.
Target price is $80.00 Current Price is $59.48 Difference: $20.52 If RIO meets the UBS target it will return approximately 34% (excluding dividends, fees and charges).
The company's fiscal year ends in June. UBS forecasts a full year FY13 dividend of 177.60 cents and EPS of 460.78 cents. At the last closing share price the estimated dividend yield is 2.99%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 12.91.
