Aegis Equities Research

Energy

Extract Resources (EXT) Initiation of coverage: Promising but overpriced 03/02/2010 17:32
We are initiating coverage of Extract Resources (EXT), an Australian-based uranium exploration and development company whose primary focus is in... + more We are initiating coverage of Extract Resources (EXT), an Australian-based uranium exploration and development company whose primary focus is in Namibia and its 100%-owned Husab Uranium Project. While there appears extensive exploration potential for new uranium discoveries in the region, the next chapter in the EXT story involves the risk-filled development stage. We have initiated coverage with a REDUCE recommendation, preferring a conservative stance until some risks are neutralised. - less

Riversdale Mining (RIV) Initiation of coverage: Big plans for Mozambique 03/02/2010 17:10
We are initiating coverage of Riversdale Mining (RIV), which has a 74% interest in Zululand Anthracite Colliery (ZAC), an operating... + more We are initiating coverage of Riversdale Mining (RIV), which has a 74% interest in Zululand Anthracite Colliery (ZAC), an operating mine producing anthracite coal in South Africa. RIV also owns 65% of the Benga Coal Project in Mozambique, which is progressing towards a 2Mtpa coal mine at a capital cost of US$270M. Our 12-month share price target is $7.61. We have initiated coverage with a NEUTRAL recommendation, preferring a conservative stance until growth risks are reduced. - less

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Materials

Alumina Ltd (AWC) FY09 Result: Growth curve modified a little 09/02/2010 17:05
AWC reported a net operating loss of $26M during FY09. The underlying loss was $2M, down on FY08's $202M profit.... + more AWC reported a net operating loss of $26M during FY09. The underlying loss was $2M, down on FY08's $202M profit. Lower realised prices were the primary driver as aluminium and alumina production fell just 5% and 6% YoY respectively. Aluminium prices fell 35% to US$0.76/lb and alumina prices fell 28% to US$243/t. AWC alumina production guidance for FY10 is for a 2Mt increase to 15.5Mt. A 2cps dividend was declared. We have maintained our ADD recommendation on both time horizons. - less

Incitec Pivot (IPL) $935M Moranbah Ammonium Nitrate plant construction to restart 08/02/2010 18:53
IPL will restart the construction of its $935M AN plant in May 2010. The construction was slowed 12 months ago... + more IPL will restart the construction of its $935M AN plant in May 2010. The construction was slowed 12 months ago as the demand for AN contracted markedly. The new plant is scheduled for beneficial operation in 1Q CY12, with 90% of production already committed. We have made some minor downward adjustments to our long term forecast urea prices, which has resulted in our 12 month target price falling ~8%. We retain our ST NEUTRAL and LT ADD recommendations. - less

OZ Minerals Limited (OZL) Trimming the sails 09/02/2010 17:07
OZL has released preliminary unaudited estimates for its FY09 results. The net operating loss is expected to be $500M-$520M. This... + more OZL has released preliminary unaudited estimates for its FY09 results. The net operating loss is expected to be $500M-$520M. This includes $520M-$555M relating to assets divested during the year, being earnings and losses on sale. Continuing operations are expected to report a $20M-$35M profit, which includes $91M of non-recurring financing expenses and $190M-$210M from Prominent Hill. At the current price, we have retained our 12-month and long-term recommendations at NEUTRAL. - less

Western Areas (WSA) Hoping to pay dividends 08/02/2010 16:55
WSA has provided 1H10 profit guidance of $10.7M, a considerable improvement on last year's $12.3M loss. The improvement has been... + more WSA has provided 1H10 profit guidance of $10.7M, a considerable improvement on last year's $12.3M loss. The improvement has been driven by increased nickel sale volumes and prices. The 1H10 accounts are still subject to audit. Subject to bank lenders' consent, WSA expects to declare the maiden interim dividend with the final results on 15 February 2010. Dividend policy remains as 50% of NPAT. We have maintained our short-term recommendation for WSA at NEUTRAL and ADD on a long-term basis. - less

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Industrials

Industrials Miscellaneous Industrials: February 2010 results preview 08/02/2010 16:56
With 1H10 results coming up, we preview the miscellaneous industrials sector, comprised of CXP, IVC, ISF, SAI and SPT. As... + more With 1H10 results coming up, we preview the miscellaneous industrials sector, comprised of CXP, IVC, ISF, SAI and SPT. As there is no common theme linking these companies, we do not propose to provide a sector overview or make generalisations between them. - less

Construction & Engineering 1H10 Construction/Engineering, Commercial Services/Suppliers Preview 08/02/2010 08:21
Commencing February 2010, most listed construction/engineering and commercial services/supplier companies will release earnings results for the period ended 31 December... + more Commencing February 2010, most listed construction/engineering and commercial services/supplier companies will release earnings results for the period ended 31 December 2009. Following an exteremly turbulent CY09 for the resources sector, the focus of the reporting season will be on how well companies have adjusted to the more difficult trading environment and how quickly they expect to recover from the downturn. - less

Bradken (BKN) 1H10 Result: Bottom of the cycle (we hope) but strong cash generation 09/02/2010 22:52
BKN reported 1H10 sales of $463M, down 26% on pcp. However, BKN did well to boost EBITDA margins, resulting in... + more BKN reported 1H10 sales of $463M, down 26% on pcp. However, BKN did well to boost EBITDA margins, resulting in NPAT of $25.7M, also down 26% on 1H09. A 13cps interim dividend (ff) was declared (+30%). We have increased margins in each division but lowered near term sales growth forecasts due to the extremely weak 1H10 sales results. The net effect has been a fall in our forecast FY10 and FY11 EPS by 6% and 10% respectively. Our 12 month target price has increased 13%. ST and LT NEUTRAL retained. - less

ConnectEast (CEU) Continued strong traffic growth in January 2010 08/02/2010 15:52
CEU has posted another solid set of traffic results, with the previously observed high rates of annual traffic growth being... + more CEU has posted another solid set of traffic results, with the previously observed high rates of annual traffic growth being maintained. Average Daily Trips (ADT) increased in Jan-10 by 12.6% on the pcp to 151,442, although this figure was lower than December 2009 due to Christmas, and to the Victorian school holidays being weighted to January. Average daily revenue increased by 16.9% to $496,494 compared to the pcp but fell by 9.5% relative to December 2009. - less

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Consumer Discretionary

David Jones (DJS) 2Q10 Sales result: Like-for-like sales momentum continuing 09/02/2010 21:58
DJS' 2Q10 sales of $635M were up 2.4% on 2Q09. Like-for-like sales were up 3.1% building on the 1Q10 sales... + more DJS' 2Q10 sales of $635M were up 2.4% on 2Q09. Like-for-like sales were up 3.1% building on the 1Q10 sales momentum. DJS also said EBIT margins would be stronger in 1H10 versus pcp due to strict cost controls. DJS increased PAT growth guidance for 1H10 to 10% from 5-10%, and for 2H10 to 5-10% from 0-5%. Our FY10 forecasts are largely in line with DJS' upgraded guidance and minor cuts in longer term forecasts have dropped our 12 month target price by 3%. We upgrade to ST ADD on valuation grounds. - less

JB Hi-Fi (JBH) 1H10 Result: Continues blistering pace of growth; we upgrade our views 08/02/2010 18:34
JBH grew 1H10 sales by 23% on pcp to $1.55B, with strong comparable sales growth of 9.9%. NPAT increased by... + more JBH grew 1H10 sales by 23% on pcp to $1.55B, with strong comparable sales growth of 9.9%. NPAT increased by 29%, in line with our forecasts. EPS was up 25%. JBH's 1H10 dividend of 33cps (ff) was up 120%. CEO Richard Uechtritz will retire after FY10, to be replaced by COO Terry Smart. JBH has produced yet another outstanding result despite continued weakness in the retail environment and the cycling of the first government handout in Dec-08. JBH has a strong growth profile to ST ADD and LT BUY. - less

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Australian Equity Strategy

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Consumer Staple

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