Let’s hear what the investment bank has to say about some ASX prospects.
The post Why is Macquarie bullish on these 3 ASX shares? appeared first on The Motley Fool Australia. –
ASX shares have made a swift recovery in December after investors knocked some froth off the market in earlier months, spurred on by fears of the Omicron COVID-19 variant.
Today, the benchmark S&P/ASX 200 Index (ASX: XJO) is inching higher in afternoon trade, up 1.27% at 7,514 points at the time of writing.
As we roll on into the new year, it’s a useful exercise to check what picks are on the radar of top brokers covering the Aussie markets. With that in mind, let’s take a look at what Macquarie is saying on these 3 ASX shares.
Rio Tinto Ltd (ASX: RIO)
Shares in ASX resources giant Rio Tinto are edging lower today, just 0.21% in the red at $98.89 apiece.
In a recent note to clients, bank Macquarie was positive on Rio’s purchase of the Rincon lithium project in Argentina, noting it demonstrates the miner’s commitment to investing in low-carbon commodities.
The Rincon mine has a capacity for the production of 50,000 tonnes of lithium carbonate on an annual basis with a mine life of 40 years.
Macquarie says when baking in these figures to Rio’s annual production outlook, it lifts the resource giant’s long-term lithium-carbonate production to 108,000 tonnes of lithium per year.
The broker tips Rio to outperform and rates it as a buy with a $133 price target, suggesting a 34% margin of safety at the time of writing.
Charter Hall Group (ASX: CHC)
In a recent note to clients, Macquarie says it was a tad confused with Charter Hall’s $207 million spend to buy a 50% stake in Paradice Investment Management.
The bank also notes that Charter Hall had previously sought to expand its foothold into infrastructure by potentially buying Hastings’ platform alongside its real estate debt.
While none of these investments came through, Macquarie acknowledges the ventures “were still in the sphere of real assets, which in our view is closer to the core competency of Charter Hall compared to a listed equity fund manager”.
Alas, the broker reckons that the Paradice acquisition is a key inflection point for Charter Hall’s upcoming first-half results in February.
Macquarie has Charter Hall as a buy and values the company at $22.98 per share. JP Morgan, Barrenjoey, Morgan Stanley, Jefferies, and Jarden also list Charter Hall as a buy.
Nine Entertainment Co. Holdings Ltd (ASX: NEC)
Shares in Nine Entertainment are inching higher today, trading up 1.42% at $2.85 apiece.
According to a recent note to clients, Macquarie reckons that Nine’s contract renewal for broadcast rights of the National Rugby League (NRL) on more favourable terms is a positive outcome for the media giant.
After a long period of negotiations, the NRL and Nine inked the $575 million deal only last week, extending the partnership to more than 40 years.
The broker notes that Nine won the new contract on a $130 million per annum basis for 2023 into 2027. That deal sits around 7% lower than its prior engagements with the NRL.
The cost reflects a decline in audience sizes amid Nine’s projections for the period. Macquarie sees further upside in Nine’s share price, valuing the company at $2.90 per share.
Morgan Stanley and JP Morgan are more constructive on the company’s share price, with each broker assigning price targets of $3.75 and $3.60 respectively.
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The author has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.