Expanding Our Coverage Universe
Explore these new additions to our coverage and stay ahead of the curve in the ever-evolving investment landscape. Whether you're seeking stable blue-chip options or higher-risk opportunities, Morgans has you covered.
PolyNovo (PNV)
PolyNovo is a medical device company that specialises in the development and commercialisation of dermal regenerative solutions. The approved devices, NovoSorb® BTM and NovoSorb® MTX, are synthetic polymer-based scaffolds designed to be used in the treatment of burns and surgical wounds.
PolyNovo’s NovoSorb® technology has gained rapid market traction, initially in burns and extending into trauma. We talked to some surgeons about it and their conversations gave us confidence in the effectiveness of the product.
We believe PolyNovo’s growth trajectory will see revenue tip over $A100m within just two years. PolyNovo itself thinks the overall market potential of its current devices is US$1.7bn, of which it has less than 4% share. Clinical trials could support expanded indications.
PolyNovo may also enter into new geographies. We estimate these factors will drive revenue growth by ~30% pa over the next three years. On 5 September, we initiated coverage with a target price of A$1.88 and an Add recommendation.
CSR Limited (CSR)
CSR manufactures and distributes building products to its 18,000+ customers across Australia and New Zealand, as well as maintaining a portfolio of surplus land and 25% interest in the Tomago aluminium smelter. We think CSR is well positioned for long-term growth, having cemented its position as a leading manufacturer and supplier of building materials.
We believe it is more than capable of innovating to capture further market share. In our opinion, investment in CSR’s sustainable building material, Hebel, and property earnings upside through FY25-30 will underpin sustainable earnings growth.
CSR’s property division holds a suite of projects capable of delivering material earnings over the next 5-10 years. Short-term macroeconomic factors mean that CSR’s FY24 result will likely disappoint the market (it has a March year-end), with earnings expected to decline on the prior year.
Over the medium-term, however, we do anticipate earnings to be resilient, with CSR to benefit from the residential construction backlog, along with the latent demand for additional affordable housing. At the time of our report on 11 September, we saw all this as largely reflected in the share price, which was up 30% for the year at that point (it has since fallen back a bit).
We initiated coverage with a Hold recommendation and a 12-month target price of A$6.30/share.
True North Copper (TNC)
True North Copper is an emerging copper producer in the Mount Isa district, of north-west Queensland. Immediate production from its Cloncurry Project offers True North the potential to self-fund exploration across an extensive portfolio of known copper deposits.
The company holds a highly strategic and complementary portfolio of copper assets in a well serviced copper region, where we think the value of in-situ copper will only continue to appreciate in line with the market.
The stock looks far too cheap to us against comparable peers given our expectation of a significant uplift in cash flows. Back on 5 September, we initiated coverage with a Speculative Buy rating and 45cps target.
We like True North’s multi-year production cashflow opportunity, especially given possible upside to the mine life. Furthermore there is an exciting, higher grade development prospect at Mt Oxide, which could deliver further value.
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