Aegis Equities Research

Materials

Incitec Pivot (IPL) Share price close to entitlement price making this a close call 20/11/2008 17:26
The retail component of the IPL entitlements offer is due to close on 4 December 2008. At today's share price... + more The retail component of the IPL entitlements offer is due to close on 4 December 2008. At today's share price we would recommend taking up the entitlements. However, with the IPL share price trading around the level at which the entitlement offer is pitched, we advocate shareholders wait as long as is practical before deciding whether to take up the entitlements, as the share price may fall back below the entitlement price, making an acquisition of IPL shares on-market a more attractive option. - less

Sims Group Ltd (SGM) AGM - scrap metal prices lifting 21/11/2008 14:07
SGM has confirmed that liquidity has returned to the ferrous metal markets in the last 10-14 days and prices have... + more SGM has confirmed that liquidity has returned to the ferrous metal markets in the last 10-14 days and prices have risen by US$120-150/ton. However, the damage to 1H09 earnings has already been done. SGM expect 1H09 NPAT to be in the $120-140M range. Our FY09 and FY10 EPS expectations have reduced by 36.2% and 24.1%, respectively. We have maintained our short-term and long-term recommendations at HOLD. The successful business strategy and low-geared balance sheet provide upside potential. - less

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Industrials

Macquarie Infrastructure (MIG) Upgrade to Buy despite near-term weakness in traffic figures 20/11/2008 17:13
As MQG’s 1H09 result did not present any news detrimental to our view on MIG, we are removing the previously... + more As MQG’s 1H09 result did not present any news detrimental to our view on MIG, we are removing the previously applied 20% analyst discount. As the Canadian economy is unlikely to fully decouple from the US economy, which appears to be in relative freefall, we have further cut our short- to medium-term traffic figures for the 407ETR, MIG’s largest asset by value. Our 12-month price target for MIG is $1.93 and we are upgrading both our 12-month and long-term recommendations from Hold to BUY. - less

Asciano Group (AIO) The sweet and the sour; Growth prospect halted, but no need to fund $110M 19/11/2008 17:20
The Supreme Economic Council of the Kingdom of Saudi Arabia has directed that a "re-bid" process take place for the... + more The Supreme Economic Council of the Kingdom of Saudi Arabia has directed that a "re-bid" process take place for the Saudi Landbridge. Whilst AIO had the funds to pay for its stake, given the current environment we are somewhat indifferent because capital preservation is also paramount. AIO is not trading on its existing fundamentals let alone its growth prospects and we have no blue-sky factored into our forecasts from potential upside. We retain our BUY recommendation on fundamentals. - less

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Consumer Discretionary

Fairfax Media (FXJ) Prolonged weakness prompts downgrade to Hold 16/11/2008 18:28
At FXJ's AGM, CEO, David Kirk announced that 1Q09 EBITDA was down by mid-teen percentages on pcp. Trading has improved... + more At FXJ's AGM, CEO, David Kirk announced that 1Q09 EBITDA was down by mid-teen percentages on pcp. Trading has improved due to cost reductions, with EBITDA in 2Q09 to date down by mid single digit percentages on pcp. We have reduced our forecasts in FY09 and FY10 and now believe the advertising downturn will last longer than expected. We have increased FXJ’s beta as its interest cover drops below 3x in FY09 and FY10. We have downgraded our 12 month and long term recommendations to Hold. - less

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Consumer Staple

Goodman Fielder (GFF) AGM: 1H09 NPAT now expected to be 15% below pcp 21/11/2008 10:03
At its AGM, GFF said it expects 1H09 NPAT will be down 15% on pcp, but was comfortable with market... + more At its AGM, GFF said it expects 1H09 NPAT will be down 15% on pcp, but was comfortable with market FY09 NPAT forecasts of $191M-$204M. We have marginally revised forecast margins, and decreased interest expense due to our revision of 90-day BBSW. Our FY09 and FY10 EPS forecasts rise by 2.6% and 5.2% respectively. Our FY09 underlying NPAT forecast is $187.7M, below consensus - we feel pressure on sales will offset lower commodity prices. Our price target is largely unchanged. We remain neutral. - less

Graincorp (GNC) FY08 Result: A return to profitability expected in FY09 20/11/2008 16:40
GNC delivered an adjusted FY08 net loss of $18.9M, which is in line with both the FY07 result and our... + more GNC delivered an adjusted FY08 net loss of $18.9M, which is in line with both the FY07 result and our forecast. Poor seasonal conditions over recent years resulted in a limited carry, which negatively impacted FY08 earnings. While operational EBITDA was higher, increases in interest costs and higher inventory funding costs impacted the result. Early signs are for a much improved FY09 on the back of more favourable seasonal conditions. No dividend was declared. - less

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Australian Equity Strategy

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Energy

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