Commonwealth Bank (CBA)

BUYActive Investor’s Recommendation

Overview: The Commonwealth Bank of Australia is an Australian

multinational bank providing a broad range of banking and financial

services to retail, corporate and institutional clients. Commonwealth

Bank is Australia’s largest bank by market capitalisation and has the

strongest weight on the ASX200 benchmark index of any company listed

in Australia. CBA’s technology is often said to be industry leading.

LONG SHORT DIVIDEND PLAY

Catalysts: CBA is travelling in a long-term ascending channel and has

enjoyed average annual capital growth of ~19% since 2012. CBA

reached an all-time high of $96.69 on 23rd March 2015. Following a

quarterly trading update that missed analyst expectations, showing flat

earnings, the stock has retreated 13% from its high. The recent pull-back

provides investors who do not already have exposure with a buying

opportunity. CBA’s strong income yield remains and attractive asset in

the low interest rate environment. There is scope for the banking sector

to continue to perform strong.

Hurdles: New capital requirements for banks, downside risks in the

housing market and the impact of economic shocks are ongoing risks for

Australia’s banks. Subdued economic conditions and lower growth may

further weigh on sentiment and put pressure on CBA to lift profit margins

in order to satisfy shareholders.

Investment View: CBA’s recent pullback provides a buying opportunity

for investors who do not already own the stock. Whilst our medium to

long-term outlook remains neutral due to regulatory challenges and

subdued economic growth, we believe that CBA provides a trading

opportunity in the short-term.SHARE PRICE

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Yield: 4.9%

Price: $83.50

Target: $94.00

TRADING CHECKLIST

LIQUIDITY Average traded 2.5m shares/day ✔

TREND Long-term ascending ✔

TRIGGER Pullback ✔

CATALYSTS Support at lower end of channel ✔

STRATEGY Short-term rebound ✔

SUMMARY

TICKER ASX:CBA

NAME Commonwealth Bank

INDUSTRY Financials

LAST TRADED $83.80

FINANCIAL OVERVIEW FY14

REVENUE $44.3B

NPAT $8.6B

EPS $5.33

PE 15

DIVIDEND $4.01

DIV YIELD 4.9%

TRADE OVERVIEW

DIRECTION Long

OUTLOOK 3-6m

STRATEGY Continuation

TRIGGER Support

LAST 12 MONTHS +4.8%

14 May 2015

SHORT-TERM TARGET

CAPITAL RETURN 12.17%

DIVIDEND YIELD (FINAL) 2.6%

TOTAL S’HOLDER RETURN 14.77%

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2011 2012 2013 2014 2015

GLOSSARY

ABOUT US

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ARCHIVES

ANALYST

ROBERT LESTER

robertl@wise-owl.com

1300 306 308

www.wise-owl.com

wise-owl.com

2

ARCHIVES - ACTIVE INVESTOR

NEWCREST MINING MAR – 15

ABACUS PROPERTY FEB - 15

CIMIC GROUP FEB - 15

HEALTHSCOPE JAN - 15

PLATINUM ASSET DEC - 15

14 May 2015

Buy Establishing a ‘long’ position in the market and expecting

appreciation of the stock.

Sell Either ‘short-selling’ the stock or alternatively closing out of an

existing position.

Stop Loss The price at which the stock is to be exited should it move in the

adverse direction.

Hold We recommend to hold this position until further notice

Target The price at which a profit target is to be executed.

Limit The limit in which we look to buy or sell the stock to.

Note: The Active Investors Portfolio is predominantly trades based on technical

analysis and short term fundamentals.

These recommendations are used for those looking to gain active exposure in

short term and volatile markets – not long term investment.