Overnight Report - Welcome to MW James & Co · 2017-04-27 · Aluminium LME USD/t 2005 -3.3 -0.162 -20.9 ... week versus expectations for claims to rise, though a reading ... Friday,

Friday, 11 May 2012 Page 1

Ord Minnett Research Friday, 11 May 2012

Global Markets

Stockmarkets Close +/- %12 mth %

moveDow Jones 12,855 +20 +0.2 +2.3S&P 500 1,358 +3 +0.3 +1.3Nasdaq 2,934 -1 - +4.2FTSE 100 5,544 +14 +0.3 -6.4Hang Seng 20,227 -103 -0.5 -12.1Nikkei 9,010 -35 -0.4 -6.8Dax Index 6,518 +43 +0.7 -10.8CAC40 3,130 +12 +0.4 -21.3MSCI 1,245 +4 +0.3 -7.2

SPI Futures 4,295 -6 -0.1 +6.7

Interest Rates Close +/- %12 mth %

move

$A Official Cash Rate 3.750 - - -21.1$A 90 Day Bill Swap 3.712 -0.53 -12.495 -25.6$A 3 Yr Bond 2.711 - - -45.8$A 10 Yr Bond 3.351 - - -37.3$US Federal Funds Rate 0.000 - - -$US 10 Year Bond 1.877 +0.045 +2.46 -41.1$US 30 Year Bond 3.052 +0.027 +0.893 -28.9

Currencies Close +/- %12 mth %

move

$A / $US 1.006 -0.002 -0.201 -5.4$US / ¥ Yen 79.866 -0.049 -0.061 -2.2UK₤ / $US 1.613 -0.001 -0.061 -0.2Euro / $US 1.293 - -0.028 -9.2Euro / $A 1.286 +0.002 +0.184 -4.1

Commodities Close +/- %12 mth %

move

CRB Index Futures* 294.59 -0.24 -0.081 -14.4Oil (Brent Crude) $US/bbl 113 - -0.4 +6.4Gold Futures US$ (+1M) 1,593.5 -2 -0.125 +6.5Spot Gold US$ 1,594.08 +0.55 +0.035 +6.5Spot Silver US$ 29.024 +0.001 +0.003 -17.3Aluminium LME USD/t 2005 -3.3 -0.162 -20.9Copper LME USD/t 8207 +42.0 +0.514 -9.7Lead LME USD/t 2089 +29.8 +1.445 -16.0Nickel LME USD/t 17121 -15.0 -0.088 -30.5Tin LME USD/t 20375 -177.8 -0.865 -27.4Zinc LME USD/t 1966 +28.3 +1.458 -10.6Iron Ore (63.5% grade) $/t 148 -1 -0.3 +3.9Source: IRESS

Today’s Research

Company Recommendation Risk Rating

Crown Limited Accumulate (▼) High BT Investment Management Limited Hold Medium

AMP Limited Lighten High

National Australia Bank Hold Medium

Miclyn Express Offshore Accumulate High

Seek Limited Hold High

Centro Retail Australia Accumulate High

DuluxGroup Limited Lighten Medium

Incitec Pivot Ltd Hold Medium

Newspapers - -

Overnight Report

New York The Dow industrials broke a six-session losing streak Thursday as a potential breakthrough by Greek political leaders eased immediate concerns about the country's exit from the euro zone.

But the technology-heavy Nasdaq Composite fell 1.07 points, or less than 0.1%, as Cisco Systems slumped 11%. The networking-equipment company gave a downbeat outlook for the quarter ahead, warning that big customers were exercising caution with technology spending.

In economic news, a weekly labour-market report beat expectations. Claims for unemployment benefits fell slightly last week versus expectations for claims to rise, though a reading on the previous week was revised slightly higher. Separately, the U.S. trade deficit widened in March, as a wave of oil imports and Chinese goods overwhelmed record exports.

Crude-oil futures rose 0.3% to US$97.08 barrel, breaking a six-day streak of declines. Gold futures rose 0.1% to US$1595.10 a troy ounce. The U.S. dollar slipped against the euro but gained ground against the yen.

London U.K. stocks advanced, with the benchmark FTSE 100 Index snapping three days of losses, led by a rebound in mining companies and banks.


Overnight Report (Continued)

The following are news reports from overseas markets incorporating major European and Asian commentary.

Bank of England officials halted stimulus expansion after seven months of bond purchases as the threat of inflation trumped concerns about the economy.

The nine-member Monetary Policy Committee led by Governor Mervyn King held its quantitative easing target at £325 billion (US$525 billion), a move forecast by the majority of economists in a Bloomberg News survey. Officials also left the benchmark interest rate at a record low of 0.5 percent.

Kazakhmys rose 2.2 percent, Vedanta Resources Plc increased 2.7 percent and Rio Tinto Group gained 0.7 percent.

Copper advanced for the first time in six days on speculation China may take steps to spur expansion after data showed imports and exports rose less than economists estimated and inbound shipments of the metal dropped last month.

Lloyds Banking Group jumped 4.3 percent, rebounding from the previous day’s biggest two-day selloff since November. Barclays Plc rallied 3.2 percent, snapping a five-day selloff, and Royal Bank of Scotland Group Plc advanced 1.9 percent.

Hong Kong Hong Kong stocks fell, with the benchmark index closing at its lowest level in a month, after a weaker-than-expected trade report in China added to evidence the world’s second-largest economy is slowing.

Companies that do business overseas declined. Cosco Pacific Ltd., which operates port facilities, fell 1.6 percent. PetroChina Co., the nation’s second-largest oil refiner, fell 2.1 percent after regulators cut fuel prices. Cathay Pacific Airways Ltd., Asia’s largest international carrier, slumped 6.3 percent after forecasting “disappointing” earnings.

Among stocks that rose, Esprit Holdings Ltd., a clothing retailer, surged 5.4 percent, the steepest gain on the Hang Seng Index. The company rose after reporting same-store sales increased 0.5 percent in the three months ended 31 March. That follows a 4.6 percent decline in the six months ended 31 December.

American Depository Receipts

Security ADR $A $A Diff. Vol Price Performance Over The Last

Price Equiv Close % '000 Day Week Month Quarter Year

Amcor Ltd 30.98 7.70 7.68 0.2% 4.9 1.8% -0.4% -0.5% 5.4% 3.3%

AngloGold Ashanti Ltd 34.07 6.77 6.35 6.6% 2513.7 4.7% 4.0% 2.1% -24.5% -25.1%

ANZ 22.90 22.76 22.15 2.7% 81.7 -1.5% -5.1% -2.1% 0.7% -9.3%

BHP Billiton Ltd 70.18 34.87 34.62 0.7% 3182.1 1.2% -4.4% 1.7% -9.0% -27.9%

Coca-Cola Amatil Ltd 25.41 12.63 12.61 0.1% 13.2 0.8% -0.7% 0.0% 3.1% -2.5%

James Hardie Industries 36.32 7.22 7.32 -1.4% 1.2 0.0% -5.7% -6.2% -4.8% 23.1%

National Australia Bank 24.86 24.71 24.57 0.6% 49.3 0.2% -3.3% 0.0% 2.3% -17.4%

ResMed Inc 34.20 3.40 3.35 1.5% 1229.2 1.9% -0.6% 14.6% 15.0% 5.2%

Rio Tinto PLC ADR* 50.97 50.66 61.94 -18.2% 4555.2 0.6% -5.6% -2.7% -14.1% -26.8%

Sims Group Limited 13.63 13.55 13.58 -0.3% 28.0 1.9% -2.0% -6.3% -9.4% -31.4%

Telstra Corp Ltd 18.40 3.66 3.64 0.5% 62.4 0.3% 0.2% 7.1% 1.8% 14.6%

Westpac Banking Corp 115.85 23.03 22.90 0.6% 15.1 0.9% -1.2% 4.4% 4.4% -10.2%

Source: Bloomberg

*Rio Tinto ADR relate London listed stock which currently trades at a discount to the Australian listing.


Upcoming Ex Dividend Stocks

Security Code Ex Date Pay Date Franking Amount (cents)

Exchange Traded Sec - Ets Ei Du Pont ETSDUP 11-May 19-Jun 0 18.16Bt Investment Mngmnt BTT 14-May 2-Jul 100 5.5Westpac Banking Corp WBC 14-May 2-Jul 100 82Whitefield Ltd WHF 15-May 6-Jun 100 8.5Buderim Ginger BUGDA 16-May 31-May 0 2Source: IRESS

Trading Diary Friday, 11 May 2012

Previous OML Consensus

Non-Japan

Asia

China CPI (%oya) (Mar) 3.6 Apr 3.5 3.4

China PPI (%oya) (Mar) -0.3 Apr -0.4 -0.5

China FAI (%oya, ytd) (Mar) 20.9 Apr 19.8 20.4

China IP (%oya) (Mar) 11.9 Apr 11.9 12.1

China retail sales (%oya) (Mar) 15.2 Apr 15.1 15.1

Hong Kong GDP (%oya) (4Q11) 3.0 1Q12 0.7 0.7

India IP (%oya) (Feb) 4.1 Mar 1.0

BNM monetary policy meeting (Apr) 3.00 May no change no change

US PPI (%m/m, sa) (Mar) 0.0 Apr 0.0 0.0

Consumer sentiment prelim. (Index, nsa) (Apr) 76.4 May 76 76.4

Dallas Fed President Fisher speaks on “too big to fail” in Texas (9:15am)

Source: IRESS

222

Crown Limited

▼

Recommendation: Accumulate Risk: High Previous: Accumulate CWN.AX

Melco Crown earnings above our expectations $9.06

Price Target: $10.10

YTD 1m 3m 12m Abs 12.0% 5.5% 9.3% 7.2% Rel 6.6% 5.5% 9.1% 17.1%

Crown Limited (Reuters: CWN.AX, Bloomberg: CWN AU) Year-end Jun ($) FY10A FY11A FY12E FY13E FY14E Total Revenue ($ mn) 2,331.1 2,400.3 2,845.2 3,084.3 3,339.2 EBITDA ($ mn) 682.5 636.5 760.9 813.7 862.0 Net profit after tax ($ mn) 281.9 335.5 494.8 497.4 560.1 EPS ($) 0.372 0.442 0.669 0.683 0.769 P/E (x) 24.5 20.6 13.6 13.3 11.8 EV/EBITDA 10.7 11.9 10.8 9.9 8.9 Dividend ($) 0.370 0.370 0.370 0.370 0.378 Net Yield (%) 4.1% 4.1% 4.1% 4.1% 4.1% Normalised* EPS ($) 38.002 0.416 0.578 0.648 0.724 Normalised* EPS chg (%) 11021.9% -98.9% 38.8% 12.3% 11.7% Normalised* P/E (x) 0.2 21.9 15.8 14.0 12.6 Source: Company data, Bloomberg, Ord Minnett estimates.

Company Data 52-week range ($) 9.29 - 7.45 Market capitalisation ($ bn) 6.64 Market capitalisation ($ bn) 6.67 Fiscal Year End Jun Price ($) 9.11 Date Of Price 10 May 12 Shares outstanding (mn) 728.4 ASX100 3,511.8 ASX200-Ind 6,046.4 NTA/Sh ($) 3.27 Net Debt^ ($ bn) 1.60

6.5

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9.5

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May-11 Aug-11 Nov-11 Feb-12 May-12

CW N.AX share price (A$)ASX100 (rebased)

11 May 2012 Private Client Research

Melco Crown Entertainment (MPEL) reported first quarter operating earnings of US$242.5m, above our estimate of US$216.8m. The outperformance was driven by Macau casino City of Dreams’ stronger mass volumes and higher than expected margins.

City of Dreams: Operating earnings of ~US$198m were higher than our US$173.4m forecast. The key highlight at City of Dreams was a better-than-expected property margin of 27.6%, above our 25.2% forecast and up on the fourth quarter of FY11 which was 26.8%.

Altira: Property operating earnings of ~US$55.1m were above our US$50.3m estimate. VIP gaming revenues were ~US$338m, US$8m above our US$330m estimate.

Studio City: MPEL indicated that Studio City “continues to work with the government, moving forward with approvals required to restart construction.” Construction of Studio City “could begin sometime this quarter, assuming government approval comes through”.

Increasing MPEL earnings: We are raising our 2012 net operating earnings to $876m, up from $809m, driven by the first quarter beat, as well as higher volumes (VIP, mass, and slot) and margins at City of Dreams. Our 2012 City of Dreams operating earnings increase to $736m, up ~$100m. Our earnings per share forecasts have increased by 8% in FY12 and 7% in FY13. Altira operating earnings decrease to $180m (-$23m) and Mocha Clubs operating earnings decrease to $38m, from $46m. Our 2013 operating earnings estimate is $882m, up $74m, again driven by higher volumes and margins at City of Dreams, partially offset by lower than previously expected volumes at Altira.

Our normalised earnings per share forecasts for Crown rise by 3.3%, 0.9% and 2.4% in FY12, FY13 and FY14 respectively. We downgrade our recommendation to Accumulate on outperformance.

222

BT Investment Management

Initiating coverage

Equity Ratings and Price Targets Mkt Cap Rating Price Target Company Symbol ($ mn) Price ($) Cur Prev Cur Prev BT Investment Management Limited BTT.AX 570.64 2.13 Hold NC 2.25 Source: Company data, Bloomberg, Ord Minnett estimates. n/c = no change. All prices as of 10 May 12.


We initiate coverage of investment manager BT Investment Management (BTT) with a Hold recommendation and medium risk rating due to its middle-of-the-peer-group valuation. Our preference in the funds management sector is Henderson Group (HGG – Accumulate) due to its greater short-term leverage to market movements via performance fees.

Longer term, growth in the Australian funds management industry is underpinned by growth in the superannuation system which is projected to triple in real terms by 2035. However, cyclical issues and structural change are pressuring margins and flows in the near term.

Given this industry dynamic, we believe that in the short term the main driver of earnings will be market performance. This is driven by the relatively fixed-cost base of these businesses which provides earnings leverage to both rising and falling fund levels. Longer term, the leverage to markets should lead to earnings margin expansion. The key in achieving margin expansion is controlling staff costs.

In the short term, HGG has the largest earnings leverage to equity markets due to a potential for substantial performance fees. BTT’s earnings leverage to market comes mainly through margin expansion due to a relatively high cost-to-income ratio and less reliance on performance fees.

We initiate our coverage of BTT with a Hold recommendation and a 31 December 2012 share price target of $2.25 per share. The basis for our recommendation is its middle-of-the-peer group price/earnings and structural issues in the Australian investment management industry offsetting positive momentum in the UK business.

Table 1: Earnings Leverage to Equity Market Growth

Company Rating Yr 1 Yr 2 HGG Accumulate **** ** BTT Hold ** **** PPT Hold * **

Source: Ord Minnett estimates.

222

AMP Limited

Recommendation: Lighten Risk: High AMP.AX

First quarter cash flows and Annual General Meeting $4.03

Price Target: $4.46

YTD 1m 3m 12m Abs -1.0% -6.7% -8.4% -23.7% Rel -6.4% -6.7% -8.6% -13.8%

AMP Limited (Reuters: AMP.AX, Bloomberg: AMP AU) Year-end Dec ($) FY09A FY10A FY11A FY12E FY13E Net profit after tax ($ mn) 739.0 774.6 688.0 627.7 937.5 EPS ($) 0.365 0.372 0.259 0.217 0.322 P/E (x) 11.1 10.8 15.6 18.6 12.5 Dividend ($) 0.300 0.300 0.290 0.224 0.256 Net Yield (%) 7.4% 7.4% 7.2% 5.6% 6.3% Franking (%) 50.0% 60.0% 39.7% 72.6% 85.0% Normalised* Profit ($ mn) 734.0 754.6 859.0 925.3 1,065.4 Normalised* EPS ($) 0.362 0.363 0.323 0.320 0.365 Normalised* EPS chg (%) 57.9% 0.2% -10.9% -1.1% 14.2% Normalised* P/E (x) 11.1 11.1 12.5 12.6 11.0 Source: Company data, Bloomberg, Ord Minnett estimates.

Company Data 52-week range ($) 5.36 - 3.61 Market capitalisation ($ bn) 11.67 Market capitalisation ($ bn) 11.81 Fiscal Year End Dec Price ($) 4.03 Date Of Price 09 May 12 Shares outstanding (mn) 2,894.9 ASX100 3,496.0 ASX200-Ins 2,736.3 NTA/Sh ($) 1.07

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AMP.AX share price (A$)ASX100 (rebased)


AMP announced cash flows for the first quarter and also held its Annual General Meeting. Overall, cash flow trends appear weak – but this is not surprising to us, given recent history, investment sentiment, and budget changes. AMP’s Financial Services division funds under management balances, however, were up 5% in the first quarter, given equity market increases. AMP expressed concerns at the AGM about changes in the budget potentially undermining flows and confidence in the system. Positive prospects for the stock in the near term, we suspect, rest with equity markets and the possibility of a change in government.

Financial Services net flows were -$292m in the first quarter (-331m in the fourth quarter of FY11 and -$133m for the first quarter of FY11). We believe the trend of weak flows on an aggregate level is continuing. AMP Contemporary Wealth Management net cash flows lost $138 in the first quarter, with net inflows in North (+$228m) and Flexible Super (+581m) – but with closed products understandably showing net outflows. New Zealand showed net inflows at $47m in the first quarter, up from $26m at the same time last year, driven by continued inflows into the lower-margin KiwiSaver. Inforce Premium in AMP Financial Protection was steady at $1.65bn.

Australian equities were up 8.4% over the first quarter on December 2011, helping to more than offset weak flows. Contemporary Wealth Management assets under management were up 5% to $83.4bn. Total AMP Capital Investors funds under management were up only 1.5% over the first quarter to $124.9bn from $123bn.

At its AGM, the company made it clear that it wasnot impressed with some aspects of the budget that delayed increasing / maintaining caps on contributions. In AMP’s view this increases the prospects of weak flows continuing. As such, the key driver of stock earnings in the near term will be an uplift in markets.

Government change implications? An increasingly likely potential catalyst for the stock is the possibility of a change in government occurring before MySuper and the Future of Financial Advice rules are passed through Parliament. While we do not think there will be big changes in the policy of the Liberal Party (except for opt-in) in super, we suspect the Liberals Party is much more likely to listen to the wishes of the retail funds. We believe: (1) the Liberals would fast-track the opening up of awards to all participants; (2) may delay the implementation of MySuper and; (3) may scrap opt-in (which would otherwise have hurt flows through planners.

While we have been very cautious on the negative implications of the reforms on AMP and its business model, we equally are of the view that a change in government in the near term could be a sharp catalyst for the stock. We marked earnings to markets (small changes). Maintain Lighten.

222

National Australia Bank

Recommendation: Hold Risk: Medium NAB.AX

First half FY12 result ▼ $24.57

Price Target: $26.21 Previous: $26.66

YTD 1m 3m 12m Abs 5.4% 0.1% 7.0% -11.6% Rel -3.3% -2.0% 1.4% -6.6%

National Australia Bank Limited (Reuters: NAB.AX, Bloomberg: NAB AU) Year-end Sep ($) FY10A FY11A FY12E FY13E FY14E Total Revenue ($ mn) 16,725.1 17,636.9 18,389.9 18,993.6 19,811.3 Net profit after tax ($ mn) 4,009.0 4,994.0 4,916.8 6,128.8 6,559.8 EPS ($) 1.791 2.198 2.083 2.514 2.623 P/E (x) 13.7 11.2 11.8 9.8 9.4 Dividend ($) 1.520 1.720 1.820 1.900 1.980 Net Yield (%) 6.2% 7.0% 7.4% 7.7% 8.1% Franking (%) 100.0% 100.0% 100.0% 100.0% 100.0% Normalised* Profit ($ mn) 4,581.0 5,460.0 5,797.8 6,128.8 6,559.8 Normalised* EPS ($) 2.163 2.516 2.566 2.603 2.709 Normalised* EPS chg (%) 8.2% 16.4% 2.0% 1.4% 4.1% Normalised* P/E (x) 11.4 9.8 9.6 9.4 9.1 Source: Company data, Bloomberg, Ord Minnett estimates.

Company Data 52-week range ($) 27.91 - 19.64 Market capitalisation ($ bn) 55.02 Market capitalisation ($ bn) 55.30 Fiscal Year End Sep Price ($) 24.57 Date Of Price 10 May 12 Shares outstanding (mn) 2,239.2 ASX100 3,511.8 ASX200-Bnk 5,994.4 NTA/Sh^ ($) 14.40 Tier 1 Ratio 10.5%

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A$


NAB.AX share price (A$)ASX200-Bnk (rebased)


National Australia Bank released its first half profit result yesterday, in line with guidance it provided at the UK Review update on 30 April, with cash earnings of $2,828m. Compositionally, the result was consistent with themes highlighted by ANZ and WBC’s results last week, with weak underlying revenues offset by a better trading outcome, with costs well managed. Looking forward, our outlook for earnings per share growth remains muted as modest earnings growth continues to be diluted by a rising share count.

Growth: Recent APRA statistics highlight NAB’s domestic housing credit growth rate has returned to system levels at ~6% (three-month annualised), after around 24 months of relative outperformance. We see this as a function of NAB increasingly turning towards maximising the profitability of the book as highlighted by the 18bp out of cycle re-pricing of the domestic mortgage portfolio in May.

Margin: NAB’s management highlighted that it expects elevated deposit pricing and higher wholesale funding costs to provide around a 5 basis point headwind to margins per quarter going forward. However, its recent initiative to re-price the domestic mortgage portfolio is expected to recover around 80% of this headwind. Accordingly our second half FY12 and full year 2013 margin forecasts are consistent with a 1–2 basis point decline in margin trajectory per half, largely attributable to: 1) a continuing trend of elevated deposit competition and higher wholesale funding spreads; 2) deposit compression in a falling rates environment; and 3) lower returns on liquids.

Provisioning: With the UK portfolio in ‘run-off’, downside risk to bad and doubtful debt charges remains. Importantly, NAB’s provisioning coverage will likely remain sharply in focus, particularly with respect to the commercial real estate portfolios in the UK (specific provision coverage at ~25%) and domestically in Qld (specific provision coverage at ~16%) which are currently subject to a weak operating environment.

Capital: NAB’s pro-forma Basel 3 first half Core Tier 1 position of 7.58% will benefit from an approximate $1.1bn of conversion of hybrids into common equity during the second half. However, with management electing to continue to operate the dividend reinvestment plan discount at 1.5%, the outlook for earnings per share growth remains muted with our full year forecast of ~2% well below the equivalent 6% earnings growth outcome due to a rising share count trajectory.

222

Miclyn Express Offshore

Recommendation: Accumulate Risk: High MIO.AX

Chevron Thailand Contract & CEO Employment Contract Extended for Two More Years

$1.93

Price Target: $2.58

YTD 1m 3m 12m Abs -2.8% -10.5% -1.0% 32.8% Rel -7.6% -10.9% -2.6% 41.7%

Miclyn Express Offshore (Reuters: MIO.AX, Bloomberg: MIO AU) Year-end Jun ($) FY10A FY11A FY12E FY13E FY14E Total Revenue ($ mn) 116.5 167.2 258.2 283.7 310.8 EBITDA ($ mn) 59.2 77.6 96.6 112.0 124.3 Net profit after tax ($ mn) 27.7 54.7 63.4 72.5 82.3 EPS ($) 0.101 0.200 0.231 0.265 0.302 P/E (x) 19.2 9.7 8.4 7.3 6.4 EV/EBITDA 11.2 8.4 7.4 6.2 5.3 Dividend ($) 0.000 0.061 0.058 0.066 0.076 Net Yield (%) 0.0% 3.2% 3.0% 3.4% 4.0% Normalised* EPS ($) 0.101 0.200 0.230 0.263 0.299 Normalised* EPS chg (%) 129.6% 98.0% 15.2% 14.3% 13.5% Normalised* P/E (x) 19.2 9.7 8.4 7.4 6.5 Source: Company data, Bloomberg, Ord Minnett estimates.


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ce e o a ce

MIO.AX share price (A$)ASX100 (rebased)


Miclyn Express Offshore (MIO) announced it has been awarded a US$130m contract over five years for 21 crew/utility boats to service Chevron’s production logistics operating in the Gulf of Thailand. The contract gives MIO some visibility over crew boat revenue in Asia over the medium term.

Chevron is MIO’s largest customer and it has been working with Chevron Thailand and its predecessor entities for more than 25 years. Services include personnel transfer and cargo transfer operations.

The company also announced it had extended CEO Diederik de Boer’s employment contract for two more years and that full year 2012 operating earnings guidance had been maintained.

We believe Diederik de Boer’s contract extension to September 2014 is positive for two reasons: he has extensive industry experience and a deep understanding of the company having worked for MIO and its predecessor companies since 1991; and leadership stability is advantageous for shareholders given the likelihood of future corporate activity with both Headland Capital Partners and Macquarie holding large equity stakes in Miclyn Offshore.

The company maintained full year operating earnings guidance of 20–25% operating earnings growth on FY11.

Our estimates are unchanged as we assume the Chevron contract replaces existing work rolling-off. Our recommendation remains Accumulate and our December 2012 price target is $2.58.

222

SEEK Limited

Recommendation: Hold Risk: High SEK.AX

51 Job’s first quarter result: What it means for SEEK’s Zhaopin

$6.66

Price Target: $7.16

YTD 1m 3m 12m Abs 15.8% -3.5% 21.1% -4.9% Rel 11.0% -3.9% 19.5% 4.0%

SEEK Limited (Reuters: SEK.AX, Bloomberg: SEK AU) Year-end Jun ($) FY10A FY11A FY12E FY13E Total Revenue ($ mn) 280.7 343.1 428.1 471.5 EBITDA ($ mn) 123.8 143.7 178.1 205.8 Net profit after tax ($ mn) 89.5 97.7 119.7 145.0 EPS ($) 0.265 0.289 0.355 0.431 P/E (x) 25.1 23.0 18.8 15.5 EV/EBITDA 18.6 16.9 13.1 11.2 Dividend ($) 0.119 0.143 0.177 0.215 Net Yield (%) 1.8% 2.2% 2.7% 3.2% Normalised* EPS ($) 0.247 0.311 0.355 0.431 Normalised* EPS chg (%) -3.4% 25.7% 14.3% 21.2% Normalised* P/E (x) 26.9 21.4 18.7 15.5 Source: Company data, Bloomberg, Ord Minnett estimates.


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ce e o a ce

SEK.AX share price (A$)ASX100 (rebased)


Chinese job classified company 51 Job (not covered), Zhaopin’s (56% owned by Seek) main competitor in the Chinese Job classified market, reported its first quarter result. 51 Job’s online employment revenue increased by 32.6% on the previous year, and commented that it had seen a ‘moderation in recruitment activity’ and expected pricing to be stable in 2012.

Print revenue declined by -44.7% in the first quarter to RMB47.8m, mainly due to a reduction in the number of cities where 51 Job Weekly is published (discontinued in Beijing, Changsha and Wuhan in March) and a 48% decline in the number of print advertising pages. 51 Job forecast a more than 50% decline in second quarter print revenue as it continues to reduce cities. Average revenue per page increased by 7% with a higher proportion of pages coming from higher priced cities.

Online revenue increased by 32.6% in the first quarter to RMB229.1m, driven by a greater number of unique employers using online (+10.8%) and a 19.7% increase in average revenue per user. The increase in average revenue per user was due to strong demand and the April 2011 price rise. Pricing is expected to be stable in 2012, although 51 Job has adopted a wait and see approach. Modest average revenue per user growth is expected from bundling and increased online use.

51 Job said it has seen a ‘moderation in recruitment activity’, with small to medium businesses more cautious than large corporations. The moderation has been seen nationwide, with global macro conditions and Chinese growth given as the main reasons. 51 Job expects the online market to consolidate over the longer term.

The company is targeting second quarter revenue of RMB360–375m (8–13% growth) and diluted earnings per share of RMB1.90–2.05 (2–10% growth) (ex-share based comp & FX gains/losses).

For Chinese online employment classifieds a slowing in online revenue growth is expected, due to more modest customer demand. Pricing is expected to be stable in 2012, although 51 Job has adopted a wait and see approach. 51 Job expects the structural shift from print to online to accelerate in the second quarter (50%+ revenue decline) and believes the Chinese job classified market is still in the early stages of development/penetration.

222

Centro Retail Australia

Recommendation: Accumulate Risk: High CRF.AX

Settles class action ▼ $1.89

Price Target: $1.97 Previous: $2.10

YTD 1m 3m 12m Abs 3.8% 3.6% 3.3% -0.8% Rel -7.0% -2.1% -4.6% -3.8%

Centro Retail Australia (Reuters: CRF.AX, Bloomberg: CRF AU) Year-end Jun ($) FY11A FY12E FY13E FY14E Net Property Rental ($ mn) 317 192 331 341 Net profit after tax ($ mn) 331.4 0.1 212.9 224.7 Reported EPU ($) - 0.000 0.149 0.157 Normalised* EPU ($) - 0.092 0.144 0.154 Normalised* P/E (x) - 20.5 13.1 12.3 Normalised* EPU chg (%) - - 57.1% 6.4% DPU ($) 0.000 0.123 0.120 0.128 Net Yield (%) 0.0% 6.5% 6.3% 6.8% NTA per share ($) 2.35 2.24 2.35 2.47 Price To NTA ($) 0.80 0.84 0.81 0.77 Source: Company data, Bloomberg, Ord Minnett estimates.

Company Data 52-week range ($) 2.09 - 1.32 Market capitalisation ($ bn) 2.53 Market capitalisation ($ bn) 2.55 Fiscal Year End Jun Price ($) 1.89 Date Of Price 10 May 12 Shares outstanding (mn) 1,340.7 ASX200-Prp 870.3 ASX100 3,511.8 NPV ($) 1.75

1.3

1.5

1.7

1.9

2.1

A$


CRF.AX share price (A$)ASX200-Prp (rebased)


Shopping centre owner Centro Retail (CRF) has settled its class action litigation and will contribute $85m to the $200m settlement plus $10m in expected costs.

The class action was undertaken by law firms Slater and Gordon and Maurice Blackburn against Centro Group and its auditor PricewaterhouseCoopers more than four years ago. Investors involved accused Centro of misleading and deceptive conduct by not disclosing in its 2007 financial report that it had at least $3bn of interest-bearing debt falling due within 12 months. Centro Group has since restructured, renaming itself Centro Retail Australia.

Removing the litigation uncertainty is a clear positive, though it is somewhat balanced by our earnings per share downgrade of 8.8%. We believe CRF can deliver above-peer earnings growth from our revised FY13 level, driven by assumed debt margin reductions. Our revised Price Target is $1.97 (-13¢), we think CRF looks reasonably priced vs. its REIT retail peers, and we retain our Accumulate recommendation.

The assumed $95m litigation payment and costs and the 87m new CRF units dilutes net tangible asset value by 16¢ or 6.8% to $2.19. CRF’s book net asset value is similarly diluted from $2.50 to $2.33. CRF closed at a 13.7% discount to net tangible asset value. Based on the payment and security issuance as well as some other changes, including assuming the $88.5m stamp duty contingent liability is debt funded in FY13, we have lowered our earnings per share forecasts by 8.8% in FY13 to 14.4¢ and by 6.6% in FY14 to 15.4¢. In addition our FY13 distribution per share forecast has been reduced 9.3% to 12.0¢. Of our revised FY13 earnings per share forecast, we assume strong +6.4% earnings per share growth in FY14 and +6.0% earnings per share growth in FY15 as we assume CRF’s high debt margins will normalise.

CRF will need to refinance debt or sell assets in FY13 to fund a worst case liquidity shortfall of $337m. We expect debt refinancing as a normal course of business for CRF and it is marketing 50% stakes in its three best assets valued at $655m so we are not overly concerned. These asset sales would lower gearing by ~9% to ~28% and enable CRF to get a credit rating which would help to diversify and extend its debt book as well as getting more reasonable pricing.

We believe ~50% of CRF’s register was hedge funds prior to the announcement, and with ~16.5% of the stock turning over post the announcement, hedge fund ownership is now likely ~35%. CRF has two further index inclusions coming, it is being included in the MSCI index this month and the FTSE/EPRA NAREIT index in June. These should help facilitate further register change.

222

DuluxGroup Limited

Recommendation: Lighten Risk: Medium DLX.AX

First half result preview - ALERT $3.04


DuluxGroup is due to announce its half year profit result on 14 May. We expect first half operating earnings and net profit before significant items of $69.5m and $40.9m respectively. We expect the company to declare a final dividend of 8.25cps.

What could surprise?

Paints Australia and New Zealand could be weaker than expected due to input cost pressures and the weak consumer environment. The average titanium dioxide price in the first half of FY12 was 26% higher than the previous year. Recovery of rising input costs through price increases is likely to have been difficult given the volume impact of adverse weather conditions, deteriorating housing data and the weak consumer environment. Margins may therefore disappoint. We highlight that Paints Australia earnings in the previous year were impacted by one-off flood-related costs incurred in sourcing product from New Zealand (New Zealand Paints benefited).

Selleys Yates could be weaker than expected given the weak consumer environment and the significant amount of rainfall recorded across eastern Australia. Additionally, the business is cycling a strong comp which benefited from the positive impact of favourable range reviews and the successful launch of several new products.

Outlook Commentary

We expect management to reiterate guidance for net profit (before individually material items) to be higher than that reported in FY11 subject to economic conditions.

What to look for

• Comments on the acquisition of Alesco.

• Comments on input costs, in particular titanium dioxide.

• Comments on the retail environment following the rollout of Woolworth’s Masters big box hardware stores (e.g. pricing pressure).

• Comments on the consumer environment.

• Comments on organic growth opportunities including expansions into new product categories or geographies.

Table 1: DLX- FY11 Results Forecasts $ in millions

1H11 1H12E % Change EBIT 67.0 69.5 3.7% NPAT Pre Significant Items 39.3 40.9 4.1% EPS Pre Significant Items (¢) 10.9 11.3 3.7% Normalised EPS (¢) 10.9 11.3 3.7% DPS (¢) 7.5 8.2 9.3% Source: Company reports and Ord Minnett estimates

222

Incitec Pivot Ltd

Recommendation: Hold Risk: Medium IPL.AX

First half result preview - ALERT $3.24


Fertiliser and explosives producer Incitec Pivot (IPL) is due to report its first half profit result on 14 May. We expect operating earnings of $223.7m and net profit before significant items of $138m. IPL has not provided quantitative guidance. We expect the company to declare an interim dividend of 2.8cps.

What Could Surprise?

• While Dyno Americas volumes may disappoint, operating earnings could surprise. While the market is aware of the issues, volumes may disappoint due to the mild winter, the structural shift from thermal coal to gas fired power generation and the weakness in Q&C. We note that while ORI reported a 4% decline in volumes, only 24% of its North American explosives revenue is derived from thermal coal and 17% from Q&C, compared to IPL's 60% and 17% exposures. Pricing in these markets has been weaker than in metals and coking coal. The impact is likely to be more than offset by the benefit derived from the significant supply squeeze driven spike in US urea prices given earnings from IPL’s 160kt St Helens urea plant is captured in Dyno America's earnings. We estimate this could potentially add $16m to operating earnings depending on the timing of sales.

• Fertilisers operating earnings may disappoint due to weaker than expected urea margins. Given IPL only manufactures approximately a third of its nitrogen requirement, the company typically imports urea in October and November. We believe imports during this period would have been strong given the expectation of a large summer top dress due to farmers under-applying during the pre plant. This large top dress never materialised due to the significant rainfall that fell over the east coast in December. Pricing subsequently fell as demand disappeared. While urea prices have rebounded significantly, which will benefit the second half if they remain elevated, urea margins are likely to be lower than expected in the first half.

Outlook Commentary

• We expect management to highlight that FY12 earnings will be biased to the second half. IPL is likely to announce increased activity in explosives and fertiliser markets with the latter supported by strong soft commodity prices and elevated subsoil moisture profiles. We do not expect management to issue quantitative earnings guidance.

What to look for

• Comments on the outlook for ammonium nitrate demand and pricing and the impact of high coal inventories in North America on the second half outlook for Dyno Nobel Americas.

• Comments on di-ammonium phosphate and urea demand and pricing. • An update on the Bex cost savings program. • An update on IPL’s growth projects including:

- Moranbah; - The feasibility study on the Kooragang Island ammonium nitrate plant; - Potential expansions into new jurisdictions.

222

Treasury Wine Estates Limited

Recommendation: Lighten Risk: High TWE.AX

US Nielsen data – volume recovery at the expense of price

$4.55

Price Target: $3.40

YTD 1m 3m 12m Abs 23.0% 10.7% 27.8% 35.4% Rel 18.2% 10.3% 26.2% 44.3%

Treasury Wine Estates Limited (Reuters: TWE.AX, Bloomberg: TWE AU) Year-end Jun ($) FY11A FY12E FY13E FY14E Total Revenue ($ mn) 1,770 1,710 1,786 1,862 EBITDA ($ mn) 243.6 248.5 267.1 254.2 Net profit after tax ($ mn) 169.87 103.10 125.82 109.64 EPS ($) 0.262 0.159 0.194 0.169 P/E (x) 17.4 28.6 23.4 26.9 EV/EBITDA 12.4 12.1 11.2 12.0 Dividend ($) 0.060 0.123 0.135 0.118 Net Yield (%) 1.3% 2.7% 3.0% 2.6% Normalised* EPS ($) 0.201 0.207 0.208 0.169 Normalised* EPS chg (%) -9.2% 2.7% 0.7% -18.8% Normalised* P/E (x) 22.6 22.0 21.8 26.9 Source: Company data, Bloomberg, Ord Minnett estimates.


2.5

3.5

4.5

A$


ce e o a ce

TW E.AX share price (A$)ASX100 (rebased)


Nielsen data shows a second consecutive period of volume growth for TWE’s US sales. We are concerned, however, that this volume growth has been driven by a significant reduction in pricing, similar to February 2010, when average pricing growth declined 4.8%. We note this is in line with management’s strategy announced at the FY11 result to increase promotional activity, which typically impact sales with a lag. We remain concerned with TWE's US sales given the lack of underlying momentum, the rising input cost base and its difficulty in building momentum in the US portfolio vs more vertically integrated players such as Wine Group and Gallo.

TWE’s Australian portfolio volumes increased by 7.4%, compared with last month's 2.7% increase. TWE’s US portfolio volumes increased by 12.6%, compared with last month’s 2.1% increase. Average unit price decline in the Australian portfolio continued its downward trend, declining 7.4%, compared with last month’s 7.2% decrease. The US portfolio average price declined 2.6%, compared with last month's 1.2% decrease. On a year-on-year basis, TWE’s percentage of sales on promotion increased 3.6ppt vs the market increasing 1.8ppt.

US wine market sales increased 10.4% year-on-year in the four weeks ended 14 Apr 2012, following a 4.6% increase in the preceding period. Volumes increased 5.4% year-on-year, following a 1.2% increase in the prior period. Average pricing increased 4.8%.

TWE underperformed the overall US market in terms of sales (TWE +6.7% vs. market +10.4%) and pricing growth (TWE -3.8% vs. market +4.8%). But outperformed in terms of volume growth (TWE +10.9% vs. market +5.4%).

222

Australian Newspapers

March quarter newspaper circulation data


Newspaper circulation in the March quarter declined -4.8% year-on-year, showing an acceleration relative to the December quarter’s -3.9%. The acceleration was primarily driven by further deterioration in the trends affecting FXJ’s mastheads (low double digit declines), partly due to the introduction of phone/tablet apps in 2011 but also a result of the rationalisation of its print circulation within metro markets.

We remain cautious on the medium-term outlook for the listed Australian publishing companies and flag potential downside risk to Fairfax Media Group (FXJ) FY12 consensus earnings. We are maintaining our Lighten recommendations on FXJ and APN.

FXJ’s total metro circulation declined -11.8% in the March quarter, a significant acceleration on the decline seen in the December quarter (-7.5%). In particular, The Sydney Morning Herald was down -14% (Monday–Saturday). Digital – Given the nature of the data reporting, it remains unclear how much of the strong take up in digital apps (466k SMH/Age tablet downloads, 69k average daily unique browsers) is cannibalising as opposed to adding to print circulation.

Newscorp (NWS) showed a relatively better performance (The Australian Monday–Friday -1.6%, Daily Telegraph -1.4% and Herald Sun -3.0%), explained in part by NWS’s less aggressive strategy than FXJ in terms of rationalisation of its print circulation base and introduction of phone/tablet apps.

Monday–Friday circulation at the West Australian (SWM – Hold) declined by -2.5% on the previous year; the Saturday edition increased +0.5%. The West Australian continues to outperform relative to the eastern states’ mastheads.

APN’s regional newspapers continue to experience mid to high single digit circulation declines (Qld-based newspapers mostly).

The outlook for both traditional publishers (FXJ and APN) continue to remain challenging on the back of what is now an undeniable acceleration in the pace of structural change, combined with cyclical weakness in advertising markets. Accordingly, we have recently downgraded our FY12–13 earnings for both FXJ and APN. While recognising the potential attractiveness of deeply discounted valuation metrics (~7x earnings), we believe the medium-term earnings outlook on both stocks continue to present downside risk.

Table 1: Key mastheads circulation during the Mar-12 Qtr

Frequency % change vs pcp SMH (FXJ) Mon-Fri -13.6% Age (FXJ) Mon-Fri -13.4% Daily Telegraph (NWS) Mon-Fri -1.4% The Herald Sun (NWS) Mon-Fri -3.0% The West Australian (SWM) Mon-Fri -2.5% Total Metro average daily circulation Mon-Fri -4.8% Source: ABC

Figure 1: Avg. daily metropolitan circulation since 2000 (millions)

Source: ABC, Ord Minnett

2.02.12.22.32.42.52.6

Jun-00 Dec-03 Jun-07 Dec-10


League Tables

20 Best Performers of ASX200 Over Past 90 Days Close 3 mth +/- 3 mth %12 mth %

move

(OST) Onesteel Limited 1.200 +45.500 +61.074 -37.8(CAB) Cabcharge Australia 6.400 +154.000 +31.687 +20.8(EGP) Echo Entertainment 4.570 +97.000 +26.944 -(AUT) Aurora Oil & Gas 3.860 +80.000 +26.144 +44.6(NVT) Navitas Limited 3.720 +77.000 +26.102 -9.0(TEL) Telecom Corporation 2.080 +42.000 +25.301 +51.6(ACR) Acrux Limited 4.150 +82.000 +24.625 +19.3(TPM) Tpg Telecom Limited 1.855 +35.500 +23.667 +10.4(AAD) Ardent Leisure Group 1.340 +25.500 +23.502 -7.6(CSL) CSL Limited 37.450 +708.000 +23.312 +9.8(ALL) Aristocrat Leisure 2.910 +55.000 +23.305 +9.8(RMD) Resmed Inc 3.350 +63.000 +23.162 +12.0(ERA) Energy Resources 1.575 +29.500 +23.047 -50.6(TWE) Treasury Wine Estate 4.550 +85.000 +22.973 +28.2(SUL) Super Ret Rep Ltd 7.440 +135.000 +22.167 +10.4(GFF) Goodman Fielder 0.640 +11.500 +21.905 -32.2(IAG) Insurance Australia 3.470 +61.000 +21.329 -2.3(SEK) Seek Limited 6.660 +101.000 +17.876 -3.8(SXL) Sthn Cross Media 1.290 +19.500 +17.808 -10.1(SVW) Seven Group Holdings 9.540 +144.000 +17.778 +8.8Source: IRESS

20 Worst Performers of ASX200 Over Past 90 Days Close 3 mth +/- 3 mth %12 mth %

move

(MBN) Mirabela Nickel Ltd 0.260 -68.000 -72.340 -87.3(RMS) Ramelius Resources 0.470 -60.000 -56.075 -62.8(IAU) Intrepid Mines 0.740 -57.000 -43.511 -59.0(GRY) Gryphon Minerals Ltd 0.755 -51.500 -40.551 -49.3(DTE) Dart Energy Ltd 0.235 -14.500 -38.158 -65.4(EWC) Energy World Corpor 0.445 -22.500 -33.582 -7.3(LNC) Linc Energy Ltd 0.890 -43.500 -32.830 -68.1(SAR) Saracen Mineral 0.515 -19.500 -27.465 -24.8(IDL) Industrea Limited 0.845 -30.500 -26.522 -43.7(KCN) Kingsgate Consolid 5.690 -198.000 -25.815 -25.9(NCM) Newcrest Mining 25.130 -864.000 -25.585 -33.3(RSG) Resolute Mining 1.520 -48.000 -24.000 +51.2(AQA) Aquila Resources 4.020 -124.000 -23.574 -45.5(SLR) Silver Lake Resource 2.690 -77.000 -22.254 +45.4(EVN) Evolution Mining Ltd 1.425 -40.500 -22.131 -14.7(SWM) Seven West Media Ltd 2.690 -75.000 -21.802 -38.2(BPT) Beach Energy Limited 1.290 -33.970 -20.845 +43.5(BDR) Beadell Resource Ltd 0.605 -15.500 -20.395 -24.8(LYC) Lynas Corporation 0.970 -24.500 -20.165 -55.7(OZL) Oz Minerals 8.850 -222.000 -20.054 -33.8Source: IRESS


Glossary ACE - Adjusted common equity

APRA - Australian Prudential Regulation

Authority

BBSR - Bank bill swap rate

BOE - Bank of England

BOJ - Bank of Japn

CAGR - Compound annual growth rate

CAPEX - Capital expenditure

CC - Constant currency

CDO - Collaterised debt obligation

CFO - Chief Financial Officer

CIT - Corporate Income Tax

CMO - Collaterised mortgage obligation

cps - Cents per share

CY - Calendar year

DDM - Dividend discount model (valuation

technique)

DPS - Dividend per share, in cents.

DRP - Dividend reinvestment plan

EBIT - Earnings Before Interest and Tax

EBITDA - Earnings before interest, tax

depreciation and amortisation.

EPS - Earnings per share, in cents.

EV - Enterprise value

FY - The company’s month end financial

year.

FCF - Free cash flow

FED - US Federal Reserve

FHB - First Home Buyer

FID - Final Investment Decision

FOMC - Federal Open Market Committee

Franking - The % of the dividend that is

franked.

FY - Financial Year

Gearing - Net debt to shareholders’ equity.

GICS - Global industry clasification

standards

IBES - International broker’s estimate

system

IFRS - International financial reporting

standards

IRR - Internal rate of return

ISM - Institute of Supply Management

LFL - Like-for-Like

MBS - Mortgage backed security

MD&A - Management discussion and

analysis

MER - Maximum Event Retention

(Insurance)

MER - Management Expense Ratio (Funds

Management)

MIS - Managed Investment Scheme

mom – Month-on-month

MSCI - Morgan Stanley Captial

International Index

NABERS - Environmental performance

rating system for existing buildings

NAV - Net Asset Value

Net - Value – Valuation using discounted

cashflows.

NII - Net interest income

NIM - Net interest margin

NPAT - Net profit after tax

NPV – Net present value

NTA - Net tangible assets

OPEX - Operating expense

oya - one year anualised

P&L - Profit and loss statement (income

statement)

PAX - Passenger

pcp - Previous Corresponding Period

pcp - Previous corresponding period.

PEG - Price earnings ratio / EPS growth

PER - Price earnings ratio

PHI - Private health Insurance

PMI - Purchasing Manager’s Index

PPI - Producer Price Index

qoq – Quarter-on-quarter

QTD/YTD - Quarter/Year to date

RAB - Regulatory asset base

REIT - Real estate investment trust

ROA - Return on assets

ROCE - Return on capital employed

ROE - Return on equity

ROIC - Return on invested capital

ROTE - Return on tangible equity

RWA - Risk weighted assets

S&P - Standard and Poors (Rating agency)

SME - Small and medium-sized enterprise

Sum-of-the-parts (SOTP) - Valuing the

company’s various assets and liabilities

separately and then adding them together

TSR - Total shareholder return

VWAP - Volume weighted average price

WALE - Weighted average lease expriy

YLD - Dividend per share divided by the

market price.

yoy – Year-on-year


Please contact your Ord Minnett Adviser for further information on our document. Guide to Ord Minnett Recommendations SPECULATIVE BUY We expect the stock’s total return (nominal yield plus capital appreciation) to exceed 20% over 12

months. The investment may have a strong capital appreciation but also has high degree of risk and there is a significant risk of capital loss.

BUY The stock is undervalued and we expect it to exceed the total return by 15% over the next 12 months..

ACCUMULATE We expect a total return of between 5% and 15%. Investors should consider adding to holdings or taking a position in the stock on share price weakness.

HOLD We expect the stock to return between 0% and 5%, and believe the stock is fairly priced.

LIGHTEN We expect the stock’s return to be between 0% and negative 15%. Investors should consider decreasing their holdings.

SELL We expect the total return to lose 15% or more.

RISK ASSESSMENT Classified as High, Medium or Low, denotes the relative assessment of an individual stock’s risk based on an appraisal of its disclosed financial information, volatility, nature of its operations and other relevant quantitative and qualitative criteria.

Ord Minnett Limited ABN 86 002 733 048 ASX Market Participant AFS Licence Number 237121

Head Office Level 8 NAB House 255 George Street Sydney NSW 2000 Australia Tel: (61-2) 8216 6300 Fax: (61-2) 8216 6311

Ord Minnett Branches

Adelaide Level 11 13 Grenfell Street Adelaide SA 5000 Tel: (08) 8203 2500 Fax: (08) 8203 2525

Brisbane Level 31 10 Eagle St Brisbane QLD 4000 Tel: (07) 3214 5555 Fax: (07) 3214 5550

Buderim Sunshine Coast 1/99 Burnett Street Buderim QLD 4556 Tel: (07) 5430 4444 Fax: (07) 5430 4400

Caloundra, Sunshine Coast 79-81 Bulcock Street Caloundra QLD 4551 Tel: (07) 5491 3100 Fax: (07) 5491 3222

Canberra 101 Northbourne Avenue Canberra ACT 2600 Tel: (02) 6206 1700 Fax: (02) 6206 1720

Coffs Harbour Suite 4 21 Park Avenue Coffs Harbour NSW 2450 Tel: (02) 6652 7900 Fax: (02) 6652 5716

Gold Coast Level 7, 50 Appel Street Surfers Paradise QLD 4217Tel: (07) 5557 3333 Fax: (07) 5557 3377

Mackay 45 Gordon Street Mackay QLD 4740 Tel: (07) 4969 4888 Fax: (07) 4969 4800

Melbourne Level 23 120 Collins Street Melbourne VIC 3000 Tel: (03) 9608 4111 Fax: (03) 9608 4142

Newcastle 426 King Street Newcastle NSW 2300 Tel: (02) 4910 2400 Fax: (02) 4910 2424

Sydney Level 8, NAB House 255 George Street Sydney NSW 2000 Tel: (02) 8216 6300 Fax: (02) 8216 6311

Tamworth Suite 3 344-346 Peel Street Tamworth NSW 2340 Tel: (02) 6761 3333 Fax: (02) 6761 3104

Wollongong Level 1 17 Flinders Street Wollongong NSW 2520 Tel: (02) 4226 1688 Fax: (02) 4226 1604

Disclosure: Ord Minnett is the trading brand of Ord Minnett Limited ABN 86 002 733 048, holder of AFS Licence Number 237121, and an ASX Market Participant. Ord Minnett Limited and/or its associated entities, directors and/or its employees may have a material interest in, and may earn brokerage from, any securities referred to in this document. This document is not available for distribution outside Australia and New Zealand and may not be passed on to any third party or person without the prior written consent of Ord Minnett Limited. Further, Ord Minnett and/or its affiliated companies may have acted as manager or co-manager of a public offering of any such securities in the past three years. Ord Minnett and/or its affiliated companies may provide or may have provided corporate finance to the companies referred to in the report.

Disclaimer: Ord Minnett Limited believes that the information contained in this document has been obtained from sources that are accurate, but has not checked or verified this information. Except to the extent that liability cannot be excluded, Ord Minnett Limited and its associated entities accept no liability for any loss or damage caused by any error in, or omission from, this document. This document is intended to provide general securities advice only, and has been prepared without taking account of your objectives, financial situation or needs, and therefore before acting on advice contained in this document, you should consider its appropriateness having regard to your objectives, financial situation and needs. If any advice in this document relates to the acquisition or possible acquisition of a particular financial product, you should obtain a copy of and consider the Product Disclosure Statement for that product before making any decision. Investments can go up and down. Past performance is not necessarily indicative of future performance.

Analyst Certification: The analyst certifies that: (1) all of the views expressed in this research accurately reflect their personal views about any and all of the subject securities or issuers; and (2) no part of their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed herein.

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