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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Murchison Metals (MMX) 1H10 Result: Crosslands loss impacts the bottom line 15/03/2010 15:18
MMX's 1H10 result was significantly impacted by the $20.3M loss from Crosslands Resources (MMX 50%) which was a result of...
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MMX's 1H10 result was significantly impacted by the $20.3M loss from Crosslands Resources (MMX 50%) which was a result of comparatively weaker iron ore prices and negative F/X impacts. Looking forward, the outlook for global steel manufacturing appears promising, with Chinese output underpinning demand and while this has shown signs of tempering, demand from other regions including Europe, the USA, Japan and Russia is looking stronger. We maintain our ST- and LT- recommendations at NEUTRAL.
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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...
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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.
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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....
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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.
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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...
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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.
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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...
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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 $160M and FY10 dividend of 20.5-21.2cps. We are broadly in line with guidance. ST and LT BUY retained.
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Health Care
iSOFT (ISF) Tracking in line with guidance, but currency headwinds continue to impact 15/03/2010 17:14
ISF has reaffirmed its FY10 guidance and now expects revenue growth in local currency terms to be at the upper...
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ISF has reaffirmed its FY10 guidance and now expects revenue growth in local currency terms to be at the upper end of its 6-10% guidance range. However, the company noted that the appreciation of the A$ since its guidance in mid-February would negatively impact EBITDA by $5M in 2H10. We have not made any changes to our forecasts which already allow for some slippage in A$ EBITDA. We have added a discount to our price target and maintain our NEUTRAL long-term and 12-month recommendations.
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more Health Care reports Financials
ING Real Estate Community Living Group (ILF) 1H10 result: Occupancy improvements critical 15/03/2010 17:33
With a new management team that has achieved the critical refinancing of the Australian Facility, it can now refocus its...
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With a new management team that has achieved the critical refinancing of the Australian Facility, it can now refocus its energy on where it is most needed, the operating side of the business. Cap rates will continue to be a major value driver. However, equally important to asset values will be the rate of occupancy recovery/deterioration, which is much more problematic to anticipate. Adjusting for further downside risk on our NAV analysis, our price-target increases from $0.02 to $0.04, SELL.
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Insurance Australia Group (IAG) Earnings impacted by Victorian storms 12/03/2010 16:37
IAG confirmed it has received more than 24,000 claims following the severe weather in Victoria on 6-9 March and the...
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IAG confirmed it has received more than 24,000 claims following the severe weather in Victoria on 6-9 March and the claim cost is expected to reach its maximum event retention (MER) of $135M under the group’s reinsurance cover. Natural peril costs are now likely to exceed IAG’s 2H10 budget of $184M by $105M, thereby reducing the FY10 insurance margin guidance range to 10.5%-12.0% from previous guidance of 11.5% - 13.0%. The MER for a second event in CY2010 is now $75M.
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Hybrids Hybrid Research February 2010 (Brief Report) 09/03/2010 17:54
Hybrids research (full report) for February 2010 including recommendation changes, outlook and comparative yields, new issues, maturities and resets. ...
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Hybrids research (full report) for February 2010 including recommendation changes, outlook and comparative yields, new issues, maturities and resets.
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