Aegis Equities Research

Energy

Arrow Energy (AOE) The battle for Pure Energy heats up 12/02/2009 18:20
Following BG Group trumping AOE's origional offer, AOE has increased its bid. Total consideration for the cash and scrip bid... + more Following BG Group trumping AOE's origional offer, AOE has increased its bid. Total consideration for the cash and scrip bid is valued at around $890M, 21% up on its first offer and 12% up on BG's all cash offer. AOE has also declared the offer unconditional. AOE's share price has risen following BG's offer for PES and we have downgraded our ST view to NEUTRAL. We will review the PES target statement when released to gain more insight and await BG's response, expected on 18 February 2009. - less

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Materials

James Hardie Industries NV (JHX) 3Q09 Result: Not hardy enough 12/02/2009 18:19
JHX reported 3Q09 NPAT (excluding asbestos- and ASIC-related items) of US$16.5M, 56.3% down on pcp. We have revised margins downward... + more JHX reported 3Q09 NPAT (excluding asbestos- and ASIC-related items) of US$16.5M, 56.3% down on pcp. We have revised margins downward in line with management’s comments. We are in line with guidance for FY09 (we forecast NPAT excluding asbestos, etc of ~$101M). Our price target is little changed. While JHX seems to be successful at holding onto its share of the housing pie, that is little consolation if the pie is disappearing. Wait for conditions to definitively bottom out. SELL reaffirmed. - less

PaperlinX (PPX) Paper cuts may prove fatal 12/02/2009 14:57
In response to an ASX price query, PPX declared that although its results are not yet finalised, 1H09 EBIT looks... + more In response to an ASX price query, PPX declared that although its results are not yet finalised, 1H09 EBIT looks to be down 40% on the pcp, while impairment charges may be taken against the Australian Paper assets. Until the debt situation is rectified and the outlook for paper demand improves, we see no reason to be invested in the stock. Even at currently depressed levels, we maintain our 12-month and long-term SELL recommendations. - less

Rio Tinto (RIO) FY08 result: First impressions 13/02/2009 00:55
RIO reported a FY08 NPAT of US$3.7B, down 50% on pcp. Adjusted net profit was $10B, up 38% on pcp.... + more RIO reported a FY08 NPAT of US$3.7B, down 50% on pcp. Adjusted net profit was $10B, up 38% on pcp. Reported profit fell due to higher operating costs and significantly higher impairment charges. Operating cashflow improved sharply up 64%, to US$21B, primarily due to rising cash receipts. RIO declared a 2H09 dividend of US136cps. Our NEUTRAL 12-month and long-term recommendations are under review pending a more detailed analysis of the result including the impact of a partnership with Chinalco. - less

Sims Metal Management (SGM) Impairment charge is of little consequence 12/02/2009 16:31
SGM has advised the market that 1H09 underlying NPAT will be in the range of A$90M-A$95M, which is in line... + more SGM has advised the market that 1H09 underlying NPAT will be in the range of A$90M-A$95M, which is in line with our forecast of A$92.1M. The company has advised that an impairment charge of around A$173M will be booked against goodwill on some of the company’s North American assets. Therefore, the company will report a 1H09 net loss of A$78M-A$83M. We retain our neutral view on the stock over both 12-month and long-term investment horizons. - less

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Industrials

Leighton Holdings (LEI) 1H09 result: No surprises from previous update 12/02/2009 20:33
LEI announced an adjusted 1H09 NPAT of $279.3M, 11% above 1H08. LEI stated that the result was underpinned by strong... + more LEI announced an adjusted 1H09 NPAT of $279.3M, 11% above 1H08. LEI stated that the result was underpinned by strong performance of the operating companies, with the exception of Leighton Properties and some softening in the Middle East. Including asset writedowns totalling $239M (pre-tax), the reported profit was $110.1M. An interim dividend of 60cps (ff) was declared. We have not made material changes to our model. Our 12-month price target is largely unchanged at $19.20. NEUTRAL retained. - less

PMP Ltd (PMP) 1H09 Result: Margins put through the press 11/02/2009 22:28
PMP has released its 1H09 result, reporting a loss of $11.1M for the fiscal period. Excluding significant items, PMP's Printing... + more PMP has released its 1H09 result, reporting a loss of $11.1M for the fiscal period. Excluding significant items, PMP's Printing revenues declined 2% and margins were lower at only 7.1% due to pricing pressure. PMP's adjusted net profit was $16.8M, down 42.4% on pcp. No interim dividend will be paid this period. Stripping out significant items, the result was $3.6M better than we forecast. We see no reasons for investors to enter into this stock in the near term and we maintain REDUCE. - less

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Consumer Discretionary

Fleetwood Corp (FWD) 1H09 result: Ahead of our forecast... but risks remain 13/02/2009 16:35
FWD reported 1H09 NPAT of $18.4M, 15% up on 1H08 and 10% above our forecast. The uplift was driven predominantly... + more FWD reported 1H09 NPAT of $18.4M, 15% up on 1H08 and 10% above our forecast. The uplift was driven predominantly from revenue growth in the Manufactured Accommodation division which offset a decline in revenues in Recreational Vehicles. A fully franked 30.0cps interim dividend was declared which includes a fully franked 20.0cps special dividend. We have revised down our capex forecasts to reflect the reduced need to expand capacity. Our 12-month price target increases by 16.4% to $3.55. REDUCE. - less

JB Hi-Fi (JBH) 1H09 Result: Successfully swimming against the tide 10/02/2009 19:14
On the back of 28% growth in sales, JBH has increased 1H09 NPAT by 41% to $59M. Comparable store growth... + more On the back of 28% growth in sales, JBH has increased 1H09 NPAT by 41% to $59M. Comparable store growth was 11.1% across the Australian and New Zealand store network. The company declared a 15cps (ff) interim dividend, representing a payout ratio of 28%. This reinforces our view that JBH represents our preferred exposure to the discretionary retail sector. We retain our BUY recommendation over both 12-month and long-term investment horizons. - less

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Consumer Staple

Coca-Cola Amatil (CCL) FY08 Result: Doing everything right, but COGS headwinds to bite in FY09 12/02/2009 20:55
Total revenue was $4.03B, down on the pcp, but in line with our forecasts. EBIT from continuing operations was up... + more Total revenue was $4.03B, down on the pcp, but in line with our forecasts. EBIT from continuing operations was up 10.1%, driven largely by price and mix. Adjsuted NPAT was up 10% to $404.3M. CCL declared a final dividend of 22cps (ff), up 2cps bringing full year total to 39cps. No specific earnings guidance was made. In total we revise down our FY09 and FY10 EPS by 4.4% and 4.8% respectively. Our 12-month price target reduces 4.5% from $8.94 to $8.57. Our outlook is neutral. - less

Australian Agricultural Co. (AAC) FY08 Result: Looking to rebuild the herd 10/02/2009 23:14
AAC reported an FY08 Net Loss of $38.7M, in line with recent guidance. The reported loss included a $24.9M unrealised... + more AAC reported an FY08 Net Loss of $38.7M, in line with recent guidance. The reported loss included a $24.9M unrealised loss on interest rate hedging. AAC’s underlying performance was impacted by drought conditions and higher input costs (grain and fuel). We are of the view that the current market price of AAC significantly undervalues the underlying assets of the company and maintain our favourable 12-month and long-term views. - less

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Australian Equity Strategy

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