Best calls to action – Tuesday, 23 February
About the author:
- Author name:
- By Andrew Tang
- Job title:
- Analyst - Equity Strategy
- Date posted:
- 23 February 2021, 12:00 PM
- Sectors Covered:
- Equity Strategy and Quant
Bank of Queensland – It's not just about ME
Bank of Queensland (ASX:BOQ) has announced that it has entered into an agreement to acquire 100% of Members Equity Bank Limited (ME Bank) for cash consideration of $1.325bn.
The acquisition will be funded by an underwritten capital raising of $1.35bn at a price of $7.35 per share.
We expect the acquisition to be ~10% cash EPS accretive once $80m per annum of pre-tax cost synergies are realised.
As part of a 1H21 trading update alongside the ME Bank acquisition announcement, BOQ has said it expects 1H21 cash earnings of $163-166m.
The bottom end of this range is 26% better than our expectation and ~29% better than FactSet consensus.
The trading update shows a continuation of the positive themes seen in the recent round of major bank reporting. Recommendation is upgraded to ADD.
Read our full reports and latest price targets on ASX:BOQ here.
Costa Group Holdings – Strong foundation to build on
Costa Group's (ASX:CGC) 2H20 result provided the first indication that its domestic earnings recovery is on track, with the group entering FY21 in a far stronger relative position.
FY21 outlook comments were positive, with demand/pricing generally strong and the International businesses off to a promising start.
We upgrade our forecasts and see a range of drivers to support strong earnings growth in FY21.
With positive operating momentum and near-term catalysts, ADD maintained.
Read our full reports and latest price targets on ASX:CGC here.
Senex Energy Limited – Confiding building in earnings platform
Senex Energy's (ASX:SXY) surprised us in its 1H21 result announcing both ordinary and special dividends.
This came on the back of Senex's switch into positive FCF generation.
1H21 EBITDAX was 11% ahead of our estimate at A$24.6m. FY21 gas production guidance narrowed to 17-18PJ (was 16.3-18.6PJ), with capex guidance lifted on growth accelerating.
Meanwhile EBITDA and FCF guidance unchanged.
FY21 is a transition year from Senex as we expect the market to steadily gain confidence in its emerging earnings platform.
We maintain our ADD rating, with Senex one of our top sector preferences.
Read our full reports and latest price targets on ASX:SXY here.
Booktopia Group – Prospectus forecasts make for light reading
As we had envisaged, Booktopia Group (ASX:BKG) has used the 1H21 result to significantly upgrade prospectus forecasts, post a very strong 1H result.
Whilst revised guidance was ahead of Morgans at the topline (+3%) it has fallen ~6% short at the EBITDA line, on lower guided margins in 2H.
We believe guidance remains conservative and have slightly increased FY21 EBITDA estimates.
Jan/Feb was said to be 'ahead of plan' - our traffic tracking suggests Jan traffic to the Booktopia site outperformed Dec, with obvious momentum in the business.
We remain confident of long-term margin improvement, noting the ~26% incremental margin the revised guidance implies.
We maintain the ADD rating on BKG, with a slightly increased price target.
Read our full reports and latest price targets on ASX:BKG here.
PTB Group Limited (A$0.71) ADD TP A$0.88 - Pushing to realise growth in the US
PTB Group's (ASX:PTB) 1H21 EBITDA result was +55% yoy, +15% hoh and 4% above MorgsE.
Despite a 3% NPBTFX miss vs MorgsE, FY guidance was maintained.
The company is looking to accelerate take-up of engine management programs in its acquired US business.
Tourism exposed demand is showing strong signs of recovery with flight hours in the Maldives in line with long term averages.
Net gearing remains steady at 25% but cash from the property settlement is expected in the second half.
We maintain our ADD rating and reduce our price target.
Read our full reports and latest price targets on ASX:PTB here.
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You can find further detailed analysis of company results this reporting season by browsing our reporting season tag, and view a full list of upcoming results on our Reporting Season Calendar.
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Disclaimer: Analyst may own shares. The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.