Aegis Equities Research

Australian Equity Strategy

Strategy Recommended Retail Portfolios: Monthly Review for February 2010 12/03/2010 15:49
We review the performance of our recommended retail portfolios for February 2010.

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Energy

Arrow Energy (AOE) Market reacts strongly to offer; take advantage and REDUCE 08/03/2010 17:21
The market has reacted strongly, sending the stock up over 45% on the opening price. It remains to be seen... + more The market has reacted strongly, sending the stock up over 45% on the opening price. It remains to be seen whether Shell/PetroChina will come back with a higher offer or another suitor may signal an intent. We have applied a 30% premium to our valuation bringing our target price to $4.84/share. We believe this is an opportune time for investors to REDUCE their holding and take some profits but maintain some exposure to potential upside from an increased or counter offer. - less

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Materials

Brickworks (BKW) Could the upcoming result spark a re-rating? 12/03/2010 16:40
We have taken another look at BKW; increased equity-accounted profits from SOL; and modelled in recent acquisitions & the Wollert... + more We have taken another look at BKW; increased equity-accounted profits from SOL; and modelled in recent acquisitions & the Wollert expansion. Comments made at BKW’s Nov-09 AGM and BLD’s Feb-10 results make it seem more likely BKW’s building products division will report a relatively strong 1H10, have an upbeat outlook, or both. BKW’s share price is only little changed from our last note. Hence, we think BKW’s release of 1H10 results on 25-Mar could be a catalyst for its re-rating by the market. - less

Equinox Minerals (EQN) FY09 Result: Hedging losses sour first year of Lumwana operation 11/03/2010 15:44
EQN's Lumwana mine, over the first year of operation, was creditable and with ramp up continuing, we await news of... + more EQN's Lumwana mine, over the first year of operation, was creditable and with ramp up continuing, we await news of the processing plant reaching its nameplate 20Mtpa capacity. Following this, EQN plans to test the facility to achieve a 20% greater throughput without significant modification. Our price target remains at $4.24/share. We continue to see longer term value in this stock and we maintain our short- and long-term recommendations at NEUTRAL and ADD, respectively. - less

Integra Mining Ltd (IGR) 1H10 Result: Ready for Randalls 11/03/2010 15:05
IGR reported an after tax net loss of $3.3M (1H09 loss $1.0M) that included a $116,000 exploration impairment. Exploration expenditure... + more IGR reported an after tax net loss of $3.3M (1H09 loss $1.0M) that included a $116,000 exploration impairment. Exploration expenditure increased 17% to $7.4M as the company increased activities across its Eastern goldfields portfolio. IGR's balance sheet was strengthened via the $69.0M equity raising with the company's cash balance increasing from $18.5M to $73.2M at the end of December 2009. Project finance of $55M has been secured post balance date. - less

North Queensland Metals (NQM) 1H10 result: Strong performance despite Dotswood writedown 12/03/2010 15:38
NQM's 1H10 result was impacted by a writedown of the costs associated with the evaluation of the Dotswood project, but... + more NQM's 1H10 result was impacted by a writedown of the costs associated with the evaluation of the Dotswood project, but excluding this the company still managed to generate a profit. The Pajingo Gold Mine is operating well and the additional unused mill capacity allows NQM the flexibility to introduce ores from its regional exploration program, including the Twin Hills project which has shown a significant resource. - less

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Industrials

Alesco (ALS) Recovery taking longer than expected: Downgrade to Neutral 10/03/2010 18:13
ALS has revised downwards its FY10 EPS guidance (pre-amortisation and sig items) of 28 January 2010 from 34cps-36cps to 24cps-27cps.... + more ALS has revised downwards its FY10 EPS guidance (pre-amortisation and sig items) of 28 January 2010 from 34cps-36cps to 24cps-27cps. If we were convinced this was a temporary aberration, driven solely by ongoing cyclical softness, current levels would be tempting. However, there is the possibility the true culprit is operational. We have opted to play it safe by slashing our earnings forecasts to the low end of guidance, imposing analyst discounts and cutting our investment views to NEUTRAL. - less

GWA International (GWT) Staying cool - purchase of Brivis looks to be at an attractive price 09/03/2010 19:08
GWT has purchased Brivis Climate Systems, subject to conditions precedent which GWT expects to be met by the end of... + more GWT has purchased Brivis Climate Systems, subject to conditions precedent which GWT expects to be met by the end of March. Brivis specialises in ducted climate systems for the residential market and has annual revenue of ~$70M. The $50M purchase price represents ~6x “sustainable EBITDA”. Paying 6x EBITDA and less than 1x sales looks like a good deal, prima facie. Our forecast FY11 and FY12 EPS rise by 4% and 5%, respectively. No change to our investment view. - less

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Consumer Discretionary

Myer Holdings Limited (MYR) 1H10 result: Margin expansion the highlight as growth phase nears 11/03/2010 19:20
MYR reported 1H10 sales of $1.8B, up 2% on pcp. However, EBIT rose 12% driven by a stronger gross margin... + more MYR reported 1H10 sales of $1.8B, up 2% on pcp. However, EBIT rose 12% driven by a stronger gross margin (+34bp) and a sharp drop in the CODB (-159bp). Adjusted NPAT of $115M was up an impressive 38% on pcp (excl. IPO costs). MYR's interim dividend was 10.5cps ff. MYR has delivered a good 1H10 result on margin expansion despite subdued sales growth. MYR's guidance for FY10 is for NPAT of $160M and FY10 dividend of 20.5-21.2cps. We are broadly in line with guidance. ST and LT BUY retained. - less

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Consumer Staple

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