Aus Tin 20105575

Produced and issued by: RBS Equities (AustraIia) Limited
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Important discIosures can be found in the DiscIosures Appendix.

Daily Bulletin

IN BRIEF.
A summary of today's research 2
AUSTRALIA
STRATEGY & ECONOMICS

AustraIia Strategy
Short alpha mail
AIva DeVoy (+61 2 8259 5831) 3

INDUSTRIALS

AirIines
Global October traffic softens*
Mark WiIIiams (+61 2 8259 6921) 21

Construction MateriaIs
Will the cut provide a lift?
Andrew Scott (+61 2 8259 5847) 37

TP! EPS!
iiNet ! (A$2.55) Buy TP! A$3.28
Another Transaction
AIan Stuart (+61 2 8259 5834) 49

DPS!
TP"
! TechnoIogy One ! (A$1.09) HoId TP" A$1.07
Good result in a difficult market
Nick Harris (+61 7 3334 4557) 51
RBS Morgans

RESOURCES
Rec!
Discovery MetaIs ! (A$1.34) Buy! TP! A$1.43
Exploration keeps delivering
Chris Brown (+61 7 3334 4885) 55

TP!

Precious MetaIs Review
Johnson Matthey nterim Review Palladium Deficit in
2012*
Nick Moore (+44 20 7678 0555) 61

GLOBAL

GIobaI WeekIy Preview
Euro crisis - focus on politics
Jan Dubsky (+44 20 7085 9119) 75

Circuit Breaker
Never-ending Europe woes
DyIan Cheang (+65 6518 5936) 83

GIobaI Action Pack RBS Research 95

DATABASE
Company financial forecasts
Sector valuation aggregates
Price performance
Thiva Nagaratnam (+61 2 8259 5373) 103
111
115

* Extract. For further details please refer to our website (http://research.rbsm.com/Research).

22 November 2011

RBS Equities (Australia) Limited
ABN 84 002 768 701, AFS Licence 240530
Level 29, RBS Tower, 88 Phillip Street
Sydney NSW 2000, Australia

http://research.rbsm.com

! = ex-100 company ! = result " = flashnote Rec = recommendation TP = target price

!" = change in EPS or DPS of at least 5%, or any change in recommendation or target price.

REPORTING 22 NOV
Code NPAT DPS DPS
(pcp) (pcp) (2H)
RHL FY 15.1 18.0c 9.0c
(Buy) A$m 13.0 16.0c
TGA 1H 13.7 3.7c
(Buy) A$m (11.0) (3.54c)
1H = interim, FY = full year
Source: Company data, RBS forecasts

AGMs
Company Where Time
CGF Sydney 10.30am
CND Sydney 3.00pm
DML Brisbane 11.00am
N Subiaco 10.30am
NVT Perth 11.00am
RC Melbourne 10.00am
SLX Sydney 9.30am
WBB Bundaberg 11.00am
Source: RESS

EX DIVs
Code DPS Frnkd Ex date
CSR 1H 6.0c 100% 21 Nov
DLX 2H 7.5c 100% 21 Nov
NCM S 20.0c 0% 21 Nov
SPN 1H 4.0c 33% 21 Nov
TRU 1H 17.0c 100% 22 Nov
BTT 2H 10.0c 100% 28 Nov
1H = interim, 2H = final; SP = special
Source: RESS

TRADING ALERTs
Code Open Open Indictv Exp
(ST rec) date price cIose date
TEN (Sell) 27 Sep 0.87 0.81-0.83 27 Nov
Catalyst: 27 October trading update
WOW (Buy) 27 Oct 24.08 25.29-25.77 26 Dec
Catalyst: November strategy day impact

Daily Bulletin | 22 November 2011 2

IN BRIEF.

STRATEGY & ECONOMICS
AustraIia Strategy AIva DeVoy (+61 2 8259 5831) 3
Top trade: shorts in TLS continue to be covered, with short interest halving in the past six weeks to 25bp. One of the key
positives from the investor day was progress on Project New. We believe risks to FY12 guidance are on the upside,
driven by strong mobile growth and better than expected productivity savings.
INDUSTRIALS
AirIines* Mark WiIIiams (+61 2 8259 6921) 21
This note summarises the latest data from the global airline industry. October traffic softened and risks remain for the
months ahead. We continue to prefer low-cost carriers to network carriers given the risks related to long-haul premium
travel.
Construction MateriaIs Andrew Scott (+61 2 8259 5847) 37
Feedback from 20 of Australia's largest homebuilders has indicated that there has been little increase in traffic or inquiry
levels after the November interest rate cut. Builders suggested that confidence remains low and that additional cuts
were needed to meaningfully impact activity levels.
iiNet ! (A$2.55) Buy TP! A$3.28 AIan Stuart (+61 2 8259 5834) 49
iiNet's acquisition of Transact fits the company's strategy to acquire scale ahead of the NBN and is at an attractive
multiple of 3.5x EV/EBTDA. Our EPS forecasts increase 6.2% in both FY12F and FY13F. Accretive acquisitions such
as this one, strong free cashflow and ROC > 20% support our Buy rating, TP $3.28.
! TechnoIogy One ! (A$1.09) HoId TP" A$1.07 Nick Harris (+61 7 3334 4557) 51
TNE reported an FY11 result that was in-line with our expectations. EBTDA was up 17% to A$31.1m and the Board
declared another 1.5c special dividend that was not in our forecasts but was flagged as likely in the absence of M&A.
TNE looks set for long-term growth but we maintain our Hold on valuation grounds.
RESOURCES
Discovery MetaIs ! (A$1.34) Buy! TP! A$1.43 Chris Brown (+61 7 3334 4885) 55
Boseto is on track to commission early CY12. Exploration drilling continues to report success, importantly with high
grade (>2% Cu) intercepts, which will provide flexibility and faster payback. Wth recent share price weakness, DML is
now a Buy, with upside from successful commissioning and exploration success.
Precious MetaIs Review* Nick Moore (+44 20 7678 0555) 61
Johnson Matthey (JM) has published its Platinum 2011 nterim Review. The group's outlook for the platinum, palladium
and rhodium (PGMs) markets is broadly aligned with our own. JM is particularly constructive towards the outlook for
palladium. JM is forecasting an average price of $1,650/oz for platinum over the next six months and a range of $1,450-
1,800/oz. For palladium, the group targets $650/oz, with a $500-800/oz range.
GLOBAL
GIobaI WeekIy Preview Jan Dubsky (+44 20 7085 9119) 75
Very busy week ahead, with politics in many euro area countries at the centre stage. Spain held political elections on
Sunday, and at the time we write, the Partido Popular led by Mariano Rajoy is firmly on track to achieve a solid majority
that would allow it to form a new government. Austerity has been the punching line of Rajoy's electoral campaign and
his programme should provide continuity to the fiscal efforts of the previous government.
Circuit Breaker DyIan Cheang (+65 6518 5936) 83
True to form, after merely two weeks of positive momentum, Asia ex-Japan registered net outflow of funds again as the
spike in European bond yields drove investors out of risk assets. This resonates with our view that the recent bounce
was mainly tactically driven. We expect the volatility to persist.
GIobaI Action Pack RBS Research 95
Monday 21 November 2011
* Extract. For further details please refer to our website (http://research.rbsm.com/Research).

2

Produced by: RBS Equities (Australia) Limited
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Important disclosures can be found in the Disclosures Appendix.

Australia Strategy
Short alpha mail
Top trade: shorts in TLS continue to be covered, with short interest halving in the
past six weeks to 25bp. One of the key positives from the investor day was
progress on Project New. We believe risks to FY12 guidance are on the upside,
driven by strong mobile growth and better than expected productivity savings.

Table 1 : RBS short-interest screen
Ticker Company name Short
interest
(bp)
Abnormal
short level
(bp)
Shorts
chg 1w
(bp)
Shorts
chg 1m
(bp)
Borrowing
cost chg 1w
(bp)
Utility rate
chg 1w
(%)
PDN Paladin 548 367 +189 +209 +1.5 +6.5
TRS The Reject Shop 598 516 +45 +119 -10.7 +8.6
FLT Flight Centre 747 657 +49 +249 -2.0 -2.7
OGC OceanaGold Corp. 27 -48 -9 +2 -43.9 +44.2
BBG Billabong 1079 937 -45 +156 +1.0 +2.4
BPT Beach Energy 61 -42 +45 +50 -134.0 -0.1
SGT SingTel 365 314 +1 +23 +2.8 +27.9
BSL BlueScope Steel 467 302 +23 +130 +0.4 +3.2
KCN Kingsgate 261 154 +60 +102 +7.3 -0.5
MMX Murchison Metals 496 389 +12 +72 +2.3 +0.0
Source: ASIC, Data Explorer, RBS

We chart a number of stocks that display an increasing level of short interest
Additions this week include Paladin Energy, BlueScope Steel, Lynas Corp., Murchison
Metals, Kingsgate Consolidated and Henderson Group.
Stocks that continue to flag increasing short interest include Flight Centre, The Reject Shop,
APA Group and Aurora Oil and Gas.
and a number of stocks that display a decreasing level of short interest
These include Telstra, Commonwealth Bank, AMP Limited, Leighton Holdings, Boral, James
Hardie, Monadelphous Group, Bathurst Resources, FKP Property Group, Goodman Fielder,
Commonwealth Property and Oz Minerals.
RBS short-interest screen
The table above highlights the top 10 stocks in the S&P/ASX 200 flagged by the RBS short
interest screen as at 21 November 2011. These are stocks with a combination of an
abnormally high level of short interest, increasing short interest over the previous week and
month, and changes in borrowing costs and utility rates.

21 November 2011
Analysts
Alva DeVoy
+61 2 8259 5831
alva.devoy@rbs.com
Jonathon Brycki
+61 2 8259 6831
jonathon.brycki@rbs.com
Daniel Blake
+61 2 8259 5016
daniel.blake@rbs.com
Eben van Wyk, CFA
+61 2 8259 5492
eben.van.wyk@rbs.com

RBS Equities (Australia) Limited, ABN
84 002 768 701, AFS Licence 240530
Level 29, RBS Tower, 88 Phillip Street,


3

Australia Strategy | Analysis | 21 November 2011 2

RBS short screen
This screen is based on RBSs quantitative analysis, which demonstrated that ASIC short-interest
data, in combination with proprietary data from our equity finance team on utility rates and
borrowing costs, provides a powerful tool to identify short-sell candidates (see Appendix 2).
The screen combines our calculation of the abnormal level of short interest (the abnormal level of
short interest is the difference between the current level and that expected given a stocks market
cap and turnover), the one-week and one-month change in short interest, and the one-week
change in borrowing costs and utility rates (the percentage of the available borrow taken up by the
market).
Table 2 : RBS short screen , 21 November 2011
Ticker Company Weighted
average*
Short
interest
(bp)
Abnormal
short level
(bp)
Shorts
chg 1w
(bp)
Shorts
chg 1m
(bp)
Borrowing
cost chg 1w
(bp)
Utility rate
chg 1w
(%)
PDN Paladin Energy 2.62 548 367 +189 +209 +1.5 +6.5
TRS The Reject Shop 2.24 598 516 +45 +119 -10.7 +8.6
FLT Flight Centre 2.20 747 657 +49 +249 -2.0 -2.7
OGC OceanaGold Corp. 1.66 27 -48 -9 +2 -43.9 +44.2
BBG Billabong 1.57 1079 937 -45 +156 +1.0 +2.4
BPT Beach Energy 1.54 61 -42 +45 +50 -134.0 -0.1
SGT SingTel 1.46 365 314 +1 +23 +2.8 +27.9
BSL BlueScope Steel 1.44 467 302 +23 +130 +0.4 +3.2
KCN Kingsgate 1.15 261 154 +60 +102 +7.3 -0.5
MMX Murchison Metals 0.98 496 389 +12 +72 +2.3 +0.0
LYC Lynas Corp. 0.97 610 312 +18 +86 +0.9 -1.7
AUT Aurora Oil and Gas 0.94 303 212 +2 +96 +0.6 +3.0
MQG Macquarie Group 0.90 144 10 +16 -13 -46.2 -1.4
ALL Aristocrat 0.84 493 394 -7 +61 +0.1 +1.0
RRL Regis Resources 0.83 18 -69 -1 -2 +1.8 +74.7
SGM Sims Metal Mgt 0.80 130 31 -14 -6 -49.3 -0.4
WSA Western Areas NL 0.70 628 532 -5 +27 +3.8 -1.0
MYR Myer 0.58 986 840 -114 +101 +1.1 +0.0
HGG Henderson Group 0.57 201 123 +12 +47 -0.3 +0.5
EHL Emeco 0.57 24 -60 -8 -15 -43.2 -0.6
FMG Fortescue Metal 0.56 234 114 +29 +48 +15.5 +4.4
BOQ Bank of Queensland 0.56 508 418 +4 +8 +6.3 +1.2
BLY Boart Longyear 0.51 152 15 +38 +26 +1.8 +0.8
UGL UGL 0.48 292 198 +26 +5 +2.2 -0.2
CPB Campbell Brothers 0.45 59 -33 +8 +42 +7.0 +8.0
PPT Perpetual 0.43 665 579 -29 -14 +0.1 +0.2
IRE IRESS 0.42 93 20 +28 +30 +2.1 +0.0
ANN Ansell 0.41 210 103 +3 +9 +0.4 +5.1
CFX CFS Retail Property 0.40 229 130 +6 +32 -0.4 -0.8
TOL Toll Holdings 0.37 321 220 +4 -1 +0.7 +1.3
* Weighted average metric is calculated using standard deviation from mean (z-score), with the following weights: Abnormal short level
30%, shorts chg 1w 35%, shorts chg 1m 35%, borrowing cost chg 1w -30%, utility rate chg 1w 30%.
Source: ASIC, Data Explorer, RBS

4

Increasing short interest
Chart 1 : Paladin Energy Chart 2 : BlueScope Steel
1.0
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
20-Sep 04-Oct 18-Oct 01-Nov 15-Nov
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
PDN (lhs) PDN short interest (rhs)
A$

0.60
0.65
0.70
0.75
0.80
0.85
0.90
0.95
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
BSL (lhs) BSL short interest (rhs)
A$
Source: ASIC, IRESS, RBS Source: ASIC, IRESS, RBS

Chart 3 : Lynas Corporation Chart 4 : Murchison Metals
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
LYC (lhs) LYC short interest (rhs)
A$

0.20
0.25
0.30
0.35
0.40
0.45
0.50
0.55
0.60
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
MMX (lhs) MMX short interest (rhs)
A$

Chart 5 : Flight Centre Chart 6 : Kingsgate Consolidated
14
15
16
17
18
19
20
21
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
FLT (lhs) FLT short interest (rhs)
A$

5.5
6.0
6.5
7.0
7.5
8.0
8.5
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
2.2%
2.4%
2.6%
2.8%
KCN (lhs) KCN short interest (rhs)
A$
5

Increasing short interest
Chart 7 : Henderson Group Chart 8 : The Reject Shop
1.50
1.55
1.60
1.65
1.70
1.75
1.80
1.85
1.90
1.95
1.4%
1.5%
1.6%
1.7%
1.8%
1.9%
2.0%
2.1%
HGG (lhs) HGG short interest (rhs)
A$

8.5
9.0
9.5
10.0
10.5
11.0
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
TRS (lhs) TRS short interest (rhs)
A$

Chart 9 : APA Group Chart 10 : Aurora Oil and Gas
3.9
4.0
4.1
4.2
4.3
4.4
4.5
4.6
0.80%
0.85%
0.90%
0.95%
1.00%
1.05%
1.10%
1.15%
1.20%
1.25%
1.30%
APA (lhs) APA short interest (rhs)
A$

2.0
2.2
2.4
2.6
2.8
3.0
3.2
3.4
3.6
1.5%
1.7%
1.9%
2.1%
2.3%
2.5%
2.7%
2.9%
3.1%
3.3%
AUT (lhs) AUT short interest (rhs)
A$

6

Decreasing short interest
Chart 11 : Telstra Chart 12 : Commonwealth Bank
2.95
3.00
3.05
3.10
3.15
3.20
3.25
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
TLS (lhs) TLS short interest (rhs)
A$

40
42
44
46
48
50
52
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
2.2%
2.4%
CBA (lhs) CBA short interest (rhs)
A$

Chart 13 : AMP Limited Chart 14 : Leighton Holdings
3.6
3.7
3.8
3.9
4.0
4.1
4.2
4.3
4.4
4.5
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
AMP (lhs) AMP short interest (rhs)
A$

16
17
18
19
20
21
22
23
2.0%
2.2%
2.4%
2.6%
2.8%
3.0%
3.2%
3.4%
3.6%
3.8%
4.0%
LEI (lhs) LEI short interest (rhs)
A$

Chart 15 : Boral Limited Chart 16 : James Hardie
3.0
3.2
3.4
3.6
3.8
4.0
4.2
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
BLD (lhs) BLD short interest (rhs)
A$

5.0
5.2
5.4
5.6
5.8
6.0
6.2
6.4
6.6
6.8
4.0%
4.5%
5.0%
5.5%
6.0%
6.5%
7.0%
JHX (lhs) JHX short interest (rhs)
A$
7

Decreasing short interest
Chart 17 : Monadelphous Group Chart 18 : Bathurst Resources
16.5
17.0
17.5
18.0
18.5
19.0
19.5
20.0
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
MND (lhs) MND short interest (rhs)
A$

0.55
0.60
0.65
0.70
0.75
0.80
0.85
1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
2.2%
BTU (lhs) BTU short interest (rhs)
A$

Chart 19 : FKP Property Group Chart 20 : Goodman Fielder
0.42
0.44
0.46
0.48
0.50
0.52
0.54
1.7%
1.8%
1.9%
2.0%
2.1%
2.2%
2.3%
2.4%
FKP (lhs) FKP short interest (rhs)
A$

0.44
0.46
0.48
0.50
0.52
0.54
0.56
0.58
0.60
1%
2%
2%
3%
3%
4%
4%
5%
5%
6%
6%
GFF (lhs) GFF short interest (rhs)
A$

Chart 21 : Commonwealth Property Chart 22 : Oz Minerals
0.84
0.86
0.88
0.90
0.92
0.94
0.96
0.98
0.9%
1.0%
1.1%
1.2%
1.3%
1.4%
1.5%
1.6%
1.7%
1.8%
CPA (lhs) CPA short interest (rhs)
A$

8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
12.0
12.5
2.2%
2.4%
2.6%
2.8%
3.0%
3.2%
3.4%
3.6%
3.8%
4.0%
OZL (lhs) OZL short interest (rhs)
A$
8

Short interest as a proportion of free float
The ASIC short-interest data expresses shares sold short as a proportion of total shares on issue.
We highlight an alternative measure of the magnitude of short interest in a stock by expressing
shares sold short as a proportion of the free float (calculated using the index weight factor). The
table below highlights the 30 stocks in the S&P/ASX 200 with the highest level of short interest as
a proportion of their free float.
Table 3 : Short interest proportion of free float
Ticker Company Short interest (% of
total shares on issue)
Short interest (% of
free float)
Difference Index weight
factor
JBH JB Hi-Fi 20.2% 20.2% 0.0% 100%
FLT Flight Centre 7.5% 13.4% 5.9% 56%
BBG Billabong 10.8% 12.7% 1.9% 85%
FXJ Fairfax Media 12.4% 12.4% 0.0% 100%
WTF Wotif.com 6.2% 10.9% 4.8% 56%
MYR Myer 9.9% 9.9% 0.0% 100%
DJS David Jones 9.4% 9.4% 0.0% 100%
HVN Harvey Norman 4.6% 8.6% 3.9% 54%
TEN Ten Network 4.6% 8.0% 3.3% 58%
WSA Western Areas NL 6.3% 7.9% 1.6% 80%
CRZ Carsales 6.3% 6.8% 0.6% 92%
ERA Energy Resources 2.1% 6.7% 4.6% 32%
PPT Perpetual 6.7% 6.7% 0.0% 100%
MMX Murchison Metals 5.0% 6.5% 1.5% 77%
LYC Lynas Corp. 6.1% 6.1% 0.0% 100%
TRS Reject Shop 6.0% 6.0% 0.0% 100%
PDN Paladin 5.5% 5.9% 0.4% 93%
APN APN 4.0% 5.8% 1.9% 68%
ALL Aristocrat 4.9% 5.6% 0.7% 88%
RIO Rio Tinto 5.4% 5.4% 0.0% 100%
GNS Gunns 5.1% 5.1% 0.0% 100%
COH Cochlear 5.1% 5.1% 0.0% 100%
BOQ Bank of Queensland 5.1% 5.1% 0.0% 100%
BSL BlueScope Steel 4.7% 4.9% 0.3% 95%
SEK SEEK 4.8% 4.8% 0.0% 100%
BLD Boral 4.6% 4.6% 0.0% 100%
JHX James Hardie 4.4% 4.4% 0.0% 100%
CTX Caltex 2.2% 4.4% 2.2% 50%
LEI Leighton 2.1% 4.3% 2.2% 49%
FMG Fortescue Metals 2.3% 4.3% 1.9% 55%
Source: ASIC, IRESS, RBS

9

In the table below we highlight the 30 stocks where there is the largest difference between the
ASIC-reported short interest (proportion of total shares on issue) and short interest as a proportion
of the free float.
Table 4 : Difference between short interest calculations
Ticker Company Short interest (% of
total shares on issue)
Short interest
(% of free float)
Difference Index weight
factor
FLT Flight Centre 7.5% 13.4% 5.9% 56%
WTF Wotif.com 6.2% 10.9% 4.8% 56%
ERA Energy Resources 2.1% 6.7% 4.6% 32%
HVN Harvey Norman 4.6% 8.6% 3.9% 54%
TEN Ten Network 4.6% 8.0% 3.3% 58%
LEI Leighton 2.1% 4.3% 2.2% 49%
CTX Caltex 2.2% 4.4% 2.2% 50%
FMG Fortescue Metal 2.3% 4.3% 1.9% 55%
BBG Billabong 10.8% 12.7% 1.9% 85%
AQA Aquila 1.5% 3.4% 1.9% 45%
MSB Mesoblast 2.3% 4.2% 1.9% 55%
APN APN 4.0% 5.8% 1.9% 68%
WSA Western Areas NL 6.3% 7.9% 1.6% 80%
MMX Murchison Metals 5.0% 6.5% 1.5% 77%
PTM Platinum Asset Mgt 1.1% 2.5% 1.4% 43%
VBA Virgin Blue 1.9% 3.2% 1.3% 59%
FKP FKP Property 1.8% 3.0% 1.2% 60%
OMH OM Holdings 1.6% 2.8% 1.2% 58%
GBG Gindalbie Metals 2.1% 3.2% 1.2% 64%
EWC Energy World Corp 1.0% 2.0% 1.0% 49%
SFR Sandfire Resources 1.6% 2.5% 0.9% 63%
TPM TPG Telecom 0.5% 1.3% 0.8% 37%
GCL Gloucester Coal 0.5% 1.3% 0.8% 37%
LNC Linc Energy 1.3% 2.0% 0.8% 61%
WEC White Energy Company 2.8% 3.6% 0.7% 79%
NUF Nufarm 1.5% 2.3% 0.7% 68%
MGX Mount Gibson Iron 1.0% 1.7% 0.7% 60%
ALL Aristocrat 4.9% 5.6% 0.7% 88%
GWA GWA Group 3.1% 3.7% 0.6% 84%
MBN Mirabela Nickel 3.3% 3.9% 0.6% 85%
Source: ASIC, IRESS, RBS

10

RBS short-interest ratio
As an additional metric for presenting the level of short interest in a stock, we calculate a short
interest days to cover ratio. The calculation is the current number of short-sold shares divided by
the 30-day average daily volume. This ratio provides an indication of how long (in days) it may
take short sellers to cover their positions.
Table 5 : RBS short interest ratio
Ticker Company RBS short interest
days to cover ratio
Short interest
(million shares)
30-day average daily
volume (million shares)
TRS The Reject Shop 23.9 1.6 0.1
WTF Wotif.com 19.4 13.0 0.7
PPT Perpetual 19.2 2.8 0.1
CRZ Carsales 19.1 14.7 0.8
APN APN 19.1 25.0 1.3
FLT Flight Centre 19.0 7.5 0.4
JBH JB Hi-Fi 19.0 20.0 1.1
AQA Aquila 17.7 5.9 0.3
WSA Western Areas NL 16.7 11.3 0.7
DJS David Jones 16.4 49.4 3.0
ALL Aristocrat 16.2 26.7 1.6
BOQ Bank of Queensland 15.0 11.5 0.8
PTM Platinum Asset Mgt 14.4 5.9 0.4
HVN Harvey Norman 13.9 49.0 3.5
BBG Billabong 13.8 27.5 2.0
FXJ Fairfax Media 13.5 291.5 21.6
TOL Toll Holdings 12.7 23.1 1.8
OMH OM Holdings 12.1 8.2 0.7
MQA Macquarie Atlas 12.0 13.2 1.1
GWA GWA Group 11.5 9.3 0.8
JHX James Hardie 11.2 19.1 1.7
SEK SEEK 11.1 16.2 1.5
FKP FKP Property 10.3 21.7 2.1
MTS Metcash 9.4 30.5 3.2
DLX Duluxgroup 9.3 8.6 0.9
MYR Myer 9.0 57.5 6.4
IGO Independence Gp 8.9 5.0 0.6
MMX Murchison Metals 8.8 21.9 2.5
CFX CFS Retail Property 8.3 64.5 7.8
TEN Ten Network 8.2 48.2 5.9
Source: ASIC, Bloomberg, IRESS, RBS

11

S&P/ASX 200 sectors average short interest
Chart 23 : Diversified Resources (BHP and RIO) Chart 24 : Other Resources
1.7%
2.2%
2.7%
3.2%
3.7%
May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11

0.9%
1.1%
1.3%
1.5%
1.7%
1.9%
2.1%
2.3%
Source: ASIC, RBS. Average short interest in: BHP, RIO. Source: ASIC, RBS. Average short interest in: AGO, AWC, ERA, FMG, IGO, MGX, OZL,
PDN, AQA, ILU, GBG, MIN, OMH.

Chart 25 : Gold Chart 26 : Steel
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%

1.3%
1.8%
2.3%
2.8%
3.3%
Source: ASIC, RBS. Average short interest in: NCM, KCN, PRU, RRL. Source: ASIC, RBS. Average short interest in: BSL, OST, SGM.

Chart 27 : Energy Chart 28 : Utilities
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%

0.3%
0.4%
0.5%
0.6%
0.7%
0.8%
Source: ASIC, RBS. Average short interest in: OSH, STO, WPL Source: ASIC, RBS. Average short interest in: AGK, APA, ORG, SKI, SPN, DUE, ENV,
HDF
12

Chart 29 : Banks Chart 30 : Insurance and Diversified Financials
0.7%
0.9%
1.1%
1.3%
1.5%
1.7%
1.9%
2.1%
2.3%

1.2%
1.4%
1.6%
1.8%
2.0%
2.2%
Source: ASIC, RBS. Average short interest in: ANZ, CBA, MQG, NAB, WBC, BEN,
BOQ
Source: ASIC, RBS. Average short interest in: AMP, ASX, CPU, IAG, PPT, QBE, SUN

Chart 31 : Building Materials Chart 32 : Capital Goods
2.0%
2.5%
3.0%
3.5%
4.0%

1.0%
1.2%
1.4%
1.6%
1.8%
Source: ASIC, RBS. Average short interest in: ABC, BLD, CSR, FBU, JHX Source: ASIC, RBS. Average short interest in: BLY, DOW, GMG, LEI, LLC, MND, TSE,
UGL, WOR

Chart 33 : Chemicals Chart 34 : Transport
0.6%
0.7%
0.8%
0.9%
1.0%
1.1%
1.2%
1.3%

1.1%
1.2%
1.3%
1.4%
1.5%
1.6%
1.7%
1.8%
Source: ASIC, RBS. Average short interest in: ORI, NUF, IPL Source: ASIC, RBS. Average short interest in: AIO, BXB, QAN, QRN, TOL, VBA
13

Chart 35 : Retail Discretionary Chart 36 : Retail Staples
4%
6%
8%
10%
12%

1.4%
1.6%
1.8%
2.0%
2.2%
2.4%
Source: ASIC, RBS. Average short interest in: BBG, DJS, HVN, JBH, MYR Source: ASIC, RBS. Average short interest in: MTS, WES, WOW

Chart 37 : Food & beverages Chart 38 : Gaming
0.8%
1.3%
1.8%
2.3%
2.8%
3.3%

1.0%
1.2%
1.4%
1.6%
1.8%
2.0%
Source: ASIC, RBS. Average short interest in: CCL, GFF Source: ASIC, RBS. Average short interest in: ALL, CWN, TAH, TTS, EGP

Chart 39 : Media Chart 40 : Telecommunications
2.2%
2.7%
3.2%
3.7%
4.2%
4.7%

0.7%
1.2%
1.7%
2.2%
Source: ASIC, RBS. Average short interest in: APN, AUN, CMJ, FXJ, NWS, SEK, TEN,
SWM, CRZ, SXL
Source: ASIC, RBS. Average short interest in: TEL, SGT, TLS

14

Chart 41 : Healthcare Chart 42 : Infrastructure
1.1%
1.3%
1.5%
1.7%
1.9%
2.1%
2.3%

0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
Source: ASIC, RBS. Average short interest in: ANN, COH, CSL, PRY, RHC, RMD, SHL Source: ASIC, RBS. Average short interest in: AIX, MAP, MQA, TCL

15

Short-squeeze candidates
RBS quantitative research by Eben van Wyk (New alpha in big shorts, 5 November 2010)
demonstrated that, on average, a significant one-week increase in borrowing cost (volume-
weighted average stock borrowing fee, VWAF) and utility rate (the percentage of available
borrowing taken up by the market) pre-empts a period (one to two months) of outperformance,
possibly the result of a short squeeze. As such, the combination of these metrics may provide a
useful contrarian short-term indicator for heavily shorted stocks.
The definitions used to categorise a significant weekly increase in the borrowing cost and utility
rate are more than 5bp and more than 1%, respectively. On average, stocks with a significant
increase in borrowing cost (more than 5bp in a week) were shown to outperform their sectors in
excess of 50bp in the next month.. In the table below, we highlight stocks that experienced an
increase in the borrowing cost of more than 5bp over the previous week.
Table 6 : Significant increase in one-week borrowing cost
Ticker Company Borrow cost -1w (bp) Borrow cost (bp) 1w change (bp)
IPL Incitec Pivot 25.5 102.8 +77.3
ESG Eastern Star 66.9 136.6 +69.7
NAB National Australia Bank 37.6 82.3 +44.7
SDL Sundance Resources 31.0 49.9 +19.0
FMG Fortescue Metal 21.1 36.6 +15.5
ERA Energy Resource 169.7 183.2 +13.5
RSG Resolute Mining 51.3 61.8 +10.5
MML Medusa Mining 72.9 80.8 +7.9
DLX Duluxgroup 35.6 43.4 +7.8
KCN Kingsgate 48.1 55.4 +7.3
OMH OM Holdings 33.6 40.7 +7.1
CPB Campbell Brothers 26.1 33.1 +7.0
SMX SMS Mgt & Technology 72.1 78.5 +6.5
GUD GUD Holdings 70.4 76.7 +6.3
BOQ Bank of Queensland 88.1 94.4 +6.3
CSR CSR Ltd 21.3 27.4 +6.0
SIP Sigma Pharma 22.2 28.1 +5.9
ANZ ANZ Banking Group 76.2 81.9 +5.7
CPL Coalspur Mines 175.6 180.8 +5.2
TPI Transpacific Industries 34.9 39.9 +5.0
TEN Ten Network 52.1 146.7 +94.6
Source: Data Explorer, RBS
In instances when an increase in the borrowing fee (more than 5bp in a week) coincided with an
increase in the utility rate (more than 1%), a stock outperformed its sector by an average of 167bp
over the following two months. In the table below, we highlight stocks that experienced a
combined increase in borrowing cost and utility rate of more than 5bp and more than 1%,
respectively, in the previous week.
Table 7 : Significant increase in one-week borrow cost and utility rate
Ticker Company Borrow
cost -1w
(bp)
Borrow
cost
(bp)
Borrow cost
chg 1w
(bp)
Utility
rate -1w
(%)
Utility
rate
(%)
Utility rate
chg 1w
(%)
IPL Incitec Pivot 25.5 102.8 +77.3 0.3% 2.8% +2.5%
ESG Eastern Star 66.9 136.6 +69.7 1.3% 63.2% +61.9%
FMG Fortescue Metal 21.1 36.6 +15.5 28.7% 33.1% +4.4%
ERA Energy Resource 169.7 183.2 +13.5 72.6% 80.8% +8.2%
MML Medusa Mining 72.9 80.8 +7.9 2.0% 3.2% +1.2%
DLX Duluxgroup 35.6 43.4 +7.8 19.8% 20.8% +1.1%
CPB Campbell Brothers 26.1 33.1 +7.0 5.3% 13.2% +8.0%
BOQ Bank of Queensland 88.1 94.4 +6.3 74.1% 75.3% +1.2%
CSR CSR Ltd 21.3 27.4 +6.0 15.7% 18.5% +2.9%
SIP Sigma Pharma 22.2 28.1 +5.9 1.1% 2.4% +1.4%
Source: Data Explorer, RBS
16

S&P/ASX 200 average and index-weighted short interest
Chart 43 : S&P/ASX 200 average short interest
1.1%
1.2%
1.3%
1.4%
1.5%
1.6%
1.7%
1.8%
1.9%
2.0%
May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11
3,800
4,000
4,200
4,400
4,600
4,800
5,000
2 week MA average short interest (lhs) Average short interest (lhs) S&P/ASX 200 (rhs)
Index
Source: ASIC, Bloomberg, RBS

Chart 44 : S&P/ASX 200 index-weighted short interest
0.8%
0.9%
1.0%
1.1%
1.2%
1.3%
1.4%
1.5%
1.6%
May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11
3,800
4,000
4,200
4,400
4,600
4,800
5,000
2 week MA average short interest (lhs) Average short interest (lhs) S&P/ASX 200 (rhs)
Index
Source: ASIC, Bloomberg, RBS

Chart 45 : S&P/ASX 200 average short-sold volume as a proportion of total volume
3,800
4,000
4,200
4,400
4,600
4,800
5,000
Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11
10%
15%
20%
25%
30%
S&P/ASX 200 (LHS) Short volume ratio 5 day centred moving average (RHS, inverted)
Source: ASIC, ASX, Bloomberg, RBS
17

Appendix 1 RBS 130/30 Model Portfolio
Table 8 : RBS 130/30 Model Portfolio November 2011
Sector Ticker Company Portfolio
weight
(%)
S&P/ASX
200 weight
(%)
Active
weight
(%)
Price (A$)
17 November
2011
Banks 22.9% 24.7% -1.8%
ANZ ANZ Banking Group 8.0% 5.3% 2.7% 20.58
NAB National Australia Bank 7.4% 5.2% 2.2% 24.34
CBA Commonwealth Bank 7.5% 7.5% 0.0% 48.61
Materials and Mining 34.0% 25.7% 8.3%
BHP BHP Billiton 11.6% 11.6% 0.0% 37.04
NCM Newcrest Mining 6.5% 2.7% 3.8% 36.62
RIO Rio Tinto 5.0% 2.9% 2.1% 68.07
LYC Lynas Corporation 3.5% 0.2% 3.3% 1.25
IPL Incitec Pivot 4.0% 0.5% 3.5% 3.25
OZL OZ Minerals 3.4% 0.4% 3.0% 11.13
RRL Regis Resources 3.0% 0.1% 2.9% 3.4
AQA Aquila Resources -3.0% 0.1% -3.1% 6.77
Industrials 17.6% 6.8% 10.8% 5.82
JHX James Hardie Industries 3.5% 0.3% 3.2% 6.48
BLY Boart Longyear 3.0% 0.2% 2.8% 3.33
QAN Qantas Airways 1.6% 0.4% 1.2% 1.69
AIO Asciano Group 3.0% 0.5% 2.6% 1.57
BKN Bradken 3.5% 0.1% 3.4% 7.52
AMC Amcor 4.5% 0.9% 3.6% 7.23
SKE Skilled Group 2.0% 2.0% 1.97
MND Monadelphous Group 3.5% 0.2% 3.3% 19.12
BXB Brambles -3.0% 1.0% -4.0% 6.81
BLD Boral -4.0% 0.3% -4.3% 6.82
Consumer Disc 4.0% 3.7% 0.3%
AUN Austar United Comms 3.0% 0.1% 2.9% 1.15
NWS News Corporation 3.0% 0.8% 2.2% 17.09
JBH JB Hi-Fi 4.0% 0.2% 3.8% 15.91
CWN Crown 3.0% 0.3% 2.7% 3.06
DJS David Jones -3.0% 0.2% -3.2% 3.18
BBG Billabong International -3.0% 0.1% -3.1% 4.4
TAH Tabcorp Holdings -3.0% 0.2% -3.2% 3.72
Consumer Staples 4.6% 9.1% -4.5%
WOW Woolworths 6.6% 3.0% 3.6% 24.84
CCL Coca-Cola Amatil 1.0% 0.6% 0.4% 12.02
GFF Goodman Fielder -3.0% 0.1% -3.1% 0.55
Energy 11.5% 7.4% 4.1%
ORG Origin Energy 7.7% 1.5% 6.2% 14.52
OSH Oil Search 5.8% 0.7% 5.1% 6.34
STO Santos -2.0% 1.2% -3.2% 13.14
Insurance & Div Fins 0.0% 5.9% -5.9%
Healthcare -1.6% 3.4% -5.0%
SHL Sonic Healthcare 1.4% 0.4% 1.0% 11.54
CSL CSL Ltd -3.0% 1.6% -4.6% 31.5
Property 2.5% 6.5% -4.0%
LLC Lend Lease Corporation 2.5% 0.4% 2.1% 7.33
Utilities -3.0% 1.5% -4.5%
SKI Spark Infrastructure -3.0% 0.1% -3.1% 1.26
Telcos 7.5% 4.1% 3.4%
TLS Telstra Corporation 7.5% 3.9% 3.6% 3.19
IT 0.0% 0.6% -0.6%
Total 100% 100%
Source: IRESS, RBS

18

Appendix 2 New alpha in big shorts
RBS quantitative research by Eben Van Wyk (New alpha in big shorts, 5 November 2010)
demonstrated that ASIC short-interest data, borrowing costs and utility rates (as provided by the
RBS Equity Finance team) can be used to successfully predict medium-term stock performance.
ASIC short-interest data
ASIC standardised the reporting of short positions in ASX-listed securities and products earlier
this year. The new ASIC guidelines ensure that short sellers cannot net-off long and short
positions when they are held in different capacities within an organisation. All outstanding short
positions must now be reported to increase the transparency of short-sale activity, and we
suggest this could enhance the information value of the data. The short interest reporting changes
took effect on 17 January 2011.
Chart 46 : Large increase in short interest Chart 47 : Large increase in utility rate
-0.5%
-0.3%
-0.1%
0.1%
0.3%
0.5%
0.7%
0.9%
1.1%
1.3%
1.5%
t-12 t-10 t-8 t-6 t-4 t-2 t0 t2 t4 t6 t8 t10 t12
# weeks surrounding event
Cumulative event return

-1.2%
-1.0%
-0.8%
-0.6%
-0.4%
-0.2%
0.0%
0.2%
0.4%
t-12 t-10 t-8 t-6 t-4 t-2 t0 t2 t4 t6 t8 t10 t12

Chart 48 : Large increase in borrowing fee Chart 49 : Large increase in borrowing fee and utility rate
-1.6%
-1.4%
-1.2%
-1.0%
-0.8%
-0.6%
-0.4%
-0.2%
0.0%
0.2%
t-12 t-10 t-8 t-6 t-4 t-2 t0 t2 t4 t6 t8 t10 t12

-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
t-12 t-10 t-8 t-6 t-4 t-2 t0 t2 t4 t6 t8 t10 t12
Contact details: RBS Equity Finance
Peter Pittar Head of Equity Financing and Collateral Trading: +61 2 8259 2014
Jeff Brewer Director, Equity Financing: +61 2 8259 6828
Contact details: RBS Quantitative Research
Eben van Wyk Director, Head of Quantitative Research: +61 2 8259 5492

19

Produced by: RBS Equities (AustraIia) Limited
E
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u
i
t
y

|

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I
o
b
a
I
*RBS Hoare Govett Ltd is broker to this company.
mportant disclosures can be found in the Disclosures Appendix.

Airlines
Global October traffic softens
This note summarises the Iatest data from the gIobaI airIine industry. October
traffic softened and risks remain for the months ahead. We continue to prefer
Iow-cost carriers to network carriers given the risks reIated to Iong-hauI premium
traveI.
This is an extract from our report published today. For further details please refer to our website
(http://research.rbs.com/Research).
Key recommendations & forecasts
Company Rec Target
price
Share
price
Company Rec Target
price
Share
price
Air Berlin Sell C 2.25 C 2.60 Air China Hold HK$7.10 HK$6.20
Air France Sell C 4.75 C 3.96 China Eastern Airlines Hold HK$3.10 HK$2.96
easyJet* Buy 4.50 3.57 China Southern Airlines Buy HK$5.75 HK$4.17
Finnair Buy C 3.30 C 2.70 Asiana Airlines Sell W5,900 W7,130
Flybe Buy 1.50 0.67 Cathay Pacific Hold HK$16.50 HK$13.22
AG Hold 1.65 1.41 Korean Air Hold W47,000 W43,750
Lufthansa Hold C 10.00 C 9.12 Malaysian Airlines Hold RM1.60 RM1.41
Ryanair Buy C 4.00 C 3.63 Singapore Airlines Sell S$9.50 S$10.84
SAS Sell SKr9.50 SKr9.35 AirAsia Sell RM2.90 RM3.80
Qantas Airways Hold A$1.57 A$1.69 Tiger Airways Buy S$1.15 S$0.68
Virgin Australia Buy A$0.41 A$0.38
Priced at close of business 17 November 2011.
1. Normalised EPS - pre non-recurring items and post preference dividends

Load factor decIines show softening demand
Across our global data set, passenger load factors worsened in October, with 80% of carriers
reporting declines (at an average of 1.5ppt), up from only 42% of carriers reporting weaker
load factors in September. European carriers performed better on this measure (-0.5ppt),
while Asia Pacific carriers were the weakest (-2.7ppt). Capacity growth cannot be blamed
with only 5.6% growth in October (vs 6.1% in September), indicating softening demand is the
key driver of this trend.
Low-cost carriers hoIding up better than their network counterparts
Premium travel appears to be softening, as corporates tighten their belts into the end of a
challenging year. Yield pressure is therefore increasing on full-service carriers. However, we
note that some of the European carriers are flagging a slightly better outlook for November and
December, providing some level of optimism. Low-cost carriers (LCCs) have faired much better
than their network counterparts, sustaining better growth and typically better load factors.
Cargo weakness continues to point to weak outIook, however
As a traditional forward indicator of passenger demand, cargo volumes continue to weaken,
particularly within the Asia Pacific region. Load factors and yields are weaker as the seasonal
pickup is not as evident this year. However, passenger data (while weaker) has held up
better than the cargo data would suggest. Potentially, this points to a glimmer of hope over
the next few months.
RBS stiII prefers Iow-cost carriers to networks
We continue to see greater risk for carriers with long-haul premium traffic exposure and prefer
LCCs in this macro environment where global growth is under pressure. Key Buy
recommendations across our global coverage are unchanged from last month Ryanair,
Tiger, VBA and China Southern while our key Sells are Air France and SA.

21 November 2011
AnaIysts
Mark WiIIiams
+61 2 8259 6921
mark.williams@rbs.com
Andrew Lobbenberg
+44 20 7678 1488
Andrew Orchard
+852 3988 7191
John Rachmat
+65 6518 7996
Vince Ng, CFA
+60 3 2168 8093

84 002 768 701, AFS Licence 240530


21
Airlines | nvestment View | 21 November 2011 2

October traffic descending
GIobaIIy, weaker outIook commentary from September began to show up in October
numbers, with Ioad factors in decIine. LCCs are hoIding up better than network carriers
and this is where we retain our gIobaI preference within the airIine space.
Key findings
Capacity trimmed a IittIe
On the whole, capacity growth appears to be becoming slightly more rational with a slight decline
in capacity in October. The unweighted average increase in capacity across the carriers reviewed
was 5.6%, slightly lower than the 6.1% increase from September. Europe added the most
capacity with 7.7% growth driven by 20%-plus growth from Norwegian and Turkish airlines. Asia
Pacific growth of 4.3% continues to be weighed down by JAL cuts; ex-JAL capacity increased
6.1%. Capacity growth in the Americas region (+4.9%) was driven by South American carriers,
with North American carriers growing at only 1.7%.
Traffic took a bigger step down
Overall, traffic growth took a step down in October. Growth of 3.6% compared to 5.9% in
September and 6.3% in August. Asia Pacific was responsible for the most sluggish traffic growth,
with 1.1% growth continuing the trend from September. European traffic growth of 7.3% was
reasonably in-line with capacity growth, while North American carriers had a more rational
capacity environment to cater for only 1.5% growth.
October was weaker for premium travel, but not a disaster and perhaps suggests that the coming
months will be slightly better than expected. t is clear though that Network carriers are suffering
more than their LCC counterparts.
Load factors weaker as a resuIt
Load factors were weaker across the world, with 33 out of 41 carriers in our coverage set (80%)
reporting declining load factors. This compared to only 17 carriers (42%) reporting declines in
September. On average, load factors declined 1.5ppt with Asia-Pacific showing the largest
average decline of 2.7ppt (influenced by Tiger declining 10ppt), and Europe holding up the best,
declining 0.5ppt. Americas declined 1.2ppt, although North American carriers were relatively
stable at only a 0.2ppt decline. The declining load factors indicate that capacity growth will likely
be rationalised further over coming months.
YieIds aIso softer
Reflecting weakening demand, yields were broadly weaker than in September from those carriers
that report them (see table 2). Much of this will be related to the softening in premium demand we
are seeing, so we expect yields to weaken further over coming months.
Cargo potentiaIIy showing more pain to come
Cargo traffic weakened further in October, with an average 3.6% decline across our global data
set vs 0.4% in September. Excluding airlines that are expanding their cargo businesses (Finnair,
China Eastern, and LAN), average cargo traffic fell by 6.6%. Asia-Pacific is notably weaker than
Europe at this point, with a 5.2% decline compared to 0.5% increase in Europe.
TabIe 1 : October passenger operating statistics (average growth on pcp)
ASKs RPKs Pax LF LF change
Europe 7.7% 7.3% 7.0% 79.7% -0.5ppt
Asia Pacific 4.3% 1.1% -0.2% 77.6% -2.7ppt
Americas 4.9% 3.2% 2.6% 79.3% -1.2ppt
North America 1.7% 1.5% 0.0% 81.7% -0.2ppt
GIobaI 5.6% 3.6% 2.7% 78.9% -1.5ppt

Network carriers 4.9% 2.4% 1.5% 78.3% -1.9ppt
LCCs 7.1% 6.0% 4.9% 79.9% -0.9ppt
Source: Company data
Capacity becoming more
rationaI?
CIear evidence of weakening
traffic growth
80% of carriers reported Iower
Ioad factors
YieIds refIecting weakening
demand
Cargo aIso getting worse
22
LCCs outperforming Network carriers
Not surprisingly, LCCs reported higher growth than Network carriers in October. LCCs capacity
grew at 7.1%, but importantly traffic grew at only a slightly lower rate (6.0%), indicating that LCCs
are not experiencing the same level of declining demand. Network carriers on the other hand are
growing capacity at a slower rate (+4.9%), but are still not able to grow traffic to the same level.
The impact is evident in load factor performance. LCCs are outperforming their network
counterparts, with only 6 out of 13 reporting declining load factors, compared to 25 out of 28
network carriers. With concerns around premium travel going forward, we expect this trend to
continue.
Chart 1 : GIobaI network carrier Ioad factor change
-0.3
-3.9-3.9
-0.7
-0.5
-1.1
0.5
-0.6-0.6
-0.3
-5.4
-0.9
-3.1
-1.0
-0.7
-2.8
-2.9
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Chart 2 : GIobaI LCC Ioad factor change
0.6 pt 0.6 pt
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LCCs remain better pIaced than
Network carriers
23
RegionaI summary
Europe
European network carriers generally saw a weak October as capacity growth outstripped demand
growth while LCCs fared better in the volatile conditions. Lufthansa was particularly weak with
load factor down 3.9pp while Norwegian Air Shuttle continues to see strong growth, reflecting
route expansion. Finnair commented that it is starting to see the impact of global economic
uncertainty in Asian demand which has an obvious negative read-through for Asian carriers. For
LCCs, load factor was more stable with easyJet consistently operating at a higher load factor than
Ryanair.
Cargo also looks to be continuing its negative trend, with cargo load factor down across the board
for the third straight month.
While October was weak, commentary from airlines suggests that November and December are
likely to be better despite the ongoing weakness in cargo.
Chart 3 : European passenger traffic growth Chart 4 : European passenger capacity growth
-4.1%
5.7%
2.8%
7.8%
9.1%
1.9%
4.2%
-3.1%
4.0%
2.6%
25.0%
27.7%
5.9%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
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-3.4%
6.1%
8.0%
7.1%
14.8%
2.7%
4.8%
-1.9%
4.8%
3.3%
21.0%
28.8%
3.5%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
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Source: Company data Source: Company data

Chart 5 : European passenger Ioad factor Chart 6 : European passenger Ioad factor change
80%
84%
77%
89%
74%
80% 79%
82%
84%
75%
81%
75%
77%
0.0%
10.0%
20.0%
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40.0%
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24
Chart 7 : European cargo traffic growth Chart 8 : European cargo capacity growth
-5.2%
-1.4%
8.5%
0.2%
-6.0%
-4.0%
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0.0%
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0.6%
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12.0%
14.0%
16.0%
18.0%
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Chart 9 : European cargo Ioad factor Chart 10 : European cargo Ioad factor change
66.3%
66.0%
63.4%
74.3%
56.0%
58.0%
60.0%
62.0%
64.0%
66.0%
68.0%
70.0%
72.0%
74.0%
76.0%
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Lufthansa (HoId, TP C10.00): Worse than expected
October traffic was up 2.8% on a capacity increase of 8.0% leading to load declining 3.9ppt to
77%. We had expected load down a point or two and this was worse than expected with load
factor deteriorating across all group carriers. Whilst we are used to poor trading at bmi (load
factor down 6.2ppt), loads fell notably at mainline Lufthansa (down 4.1ppt) and at the hitherto
bastion of strength Swiss (down 3.3ppt).
Cargo was down 1.4% on capacity up 1.8%. All told, poor data.
Air France-KLM (SeII, TP C4.75): DifficuIt conditions evident
Passenger load factor declined 0.3pp on the back of 5.7% traffic growth, though both the current
period and comparatives were also impacted by strikes (Cabin/ATC). Company flagged unit
revenue as less dynamic into October at its September update and the company has reported
such. Europe load factor declined 1.1%, though capacity grew 7.4% particularly driven by the
Base de Province project, which in theory as a low-cost operation should have higher load factors
than the mainstream average.
Overall traffic was in line with expectations, though clearly the environment is difficult given the
unit revenue declines and the higher cost of petrol yoy. Cargo also looks very weak with a 5.2%
decline in traffic but a 4ppt decline in load factor to 66.3%.

25
IAG (HoId, TP 1.65): SIowing as expected
AG reported October traffic growth of 1.9%, with premium up 1.9% and non premium up 1.8%.
Capacity grew 2.7% and hence load factor fell 0.7ppt to 80.1%. BA traffic growth of 4.2% with load
factor slightly down, beria traffic down 3.1% with loads down. For the group, we had expected low
single-digit capacity growth, traffic close to flat and loads down somewhat year on year. We
expected premium and leisure traffic to be broadly similar.
The traffic data is therefore in line with our expectations, albeit delivering on the company
guidance from last month that premium growth would slow markedly from recent growth levels.
SAS (SeII, TP SKr9.50): ReIativeIy poor
October traffic data was relatively poor with unit revenues down 6% in September and down by a
similar amount in October.
Finnair (Buy, TP C3.30): Demand in Asia seeing pressure
Traffic was disappointing with Group load factor down 4.1ppt and load factors to Asia down a
significant 8.6ppt on the back of a 26.9% capacity increase. Company comments that "t is
particularly alarming that the impact of global economic uncertainty has started to show in
demand in Asia. Load factors declined in nearly all traffic categories due to an unstable economic
situation and the overall load factor decreased by nearly 4% year-on-year.
Ryanair (Buy, TP C4.00): As expected
Ryanair reported October traffic growth of 4% with load factor down 1 point to 84%. This was
precisely in line with our expectations for a shoulder month as Ryanair transitions from summer
growth to winter capacity reduction.
easyJet (Buy, TP 4.50): Strong October traffic
October traffic up 7.8%, with the load factor up 0.6ppt to 88.8%. This was slightly ahead of our
expectations in terms of capacity and load factor. The data is consistent with the trend throughout
this year of easyJet operating at a higher load factor than Ryan. We imagine traffic in the month
will have benefitted from the industrial relations challenges at Air France. One has to be cautious
in over-interpreting traffic data: last year easyJet had very good traffic data through the December
quarter but its yields in the month disappointed.
Thinking about this quarter, the trends have been strong into September, the Lufthansa
withdrawal from Milan should support talian yields and Air France's instability should help French
trading. We imagine the business travel strategic is continuing to make progress, and not only
with increased UK military traffic. However economic trends are unfavourable across Europe.
Air BerIin (SeII, TP C2.25): Traffic Iower on capacity cuts
October traffic data down on capacity cuts. October traffic data released today, traffic down 4.1%,
load factor down 0.6ppt to 79.7%. We had anticipated flat traffic and flat load factor, but the
capacity cuts are coming in faster than we anticipated. A drop in load on the falling capacity is,
however, marginally disappointing.
26
Asia
Some Asian carriers such as MAS, ANZ and JAL (amongst others) report data with a lag. Based
on the data reported, Asia Pacific carriers saw an unweighted average 4.3% in capacity growth
but only 1.1% uplift in demand, leading to a 2.7pp decline in load factor. Excluding the impact of
JAL in the period (which underwent a reconstruction earlier this year) capacity growth was on
average 6.1% and demand growth a smaller 2.7%. Tiger was particularly weak during the period
due to its reduced flying schedule in Australia and new routes in Singapore while Jetstar
continues to grow strongly as it ramps up its presence in Asia. Capacity growth still appears
reasonably strong across the Asian carriers. But with load factor clearly under pressure in the
volatile economic conditions, we expect carriers to start reassessing further capacity growth.
Freight remains under pressure with only China Eastern (CEA) and Jet Airways seeing growth in
demand, and only CEA seeing load factor improvement. Other carriers in the region saw load
factor declines of between 0.1% (Singapore) and 8.9% (Cathay).
Chart 11 : AustraIia/Asia passenger traffic growth Chart 12 : AustraIia/Asia passenger capacity growth
4.0%
0.9%
13.4%
6.9%
-5.2%
7.4%
5.9%6.2%
3.4%
9.0%
-0.6%
1.0%
-10.0%
2.7%
-23.5%
6.9%
-7.5%
-30.0%
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4.8%
1.2%
15.1%
5.8%
1.2%
10.0%
7.1%
10.3%
0.8%
9.9%
3.0%
5.0%
1.3%
8.6%
-23.2%
8.1%
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Note: September data for QAN, VBA, MAS, ANZ, Air Asia, JAL and JA, October for
others
others

Chart 13 : AustraIia/Asia passenger Ioad factor Chart 14 : AustraIia/Asia passenger Ioad factor change
82%
83%
79%
82%
81%
78%
82%
80%80%
82%
78%
77%
77%
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27
Chart 15 : Asian October cargo traffic growth Chart 16 : Asian October cargo capacity growth
-8.3%
-15.9%
8.0%
-0.9%
-17.6%
-2.0%
6.2%
-11.5%
-20.0%
-15.0%
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1.8%
-4.7%
5.0%
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-14.4%
-1.0%
7.4%
-1.7%
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5.0%
10.0%
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Note: September data for MAS and JA, October for others

Chart 17 : Asian October cargo Ioad factor Chart 18 : Asian October cargo Ioad factor change
56.1%
66.2%
61.0%
69.3%
68.6%
66.3%
61.3%
56.3%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
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Cathay Pacific (HoId, TP HK$16.50): A mixed bag
Revenue passenger kilometres (RPK) rose 6.2% yoy in October, lower than the pace of capacity
growth of 10% yoy. Commentary from the company flags that premium travel remained robust last
month, as October is usually a peak month for business travel. However, it notes that the outlook
is "very uncertain. n economy cabins, the company highlights escalating yield pressures
although traffic to Japan is gradually recovering.
Freight tonne kilometres (FTK) fell 18% yoy, the steepest decline in cargo traffic volumes the
company has seen since the trough of the previous crisis in May 2009. Capacity did shrink in
October, but only by 5% yoy, causing a steep 9ppt fall in cargo load factors. The company now
believes it is unlikely that there will be the usual year-end peak in air freight markets. However, it
is still looking for new opportunities to grow the business, primarily in emerging markets.
We view October's cargo figures as extremely poor. On the flip side, passenger traffic continued
to grow even though this was the seventh consecutive month of cargo volume declines. n both
2001 and 2008, RPKs turned negative after about six months of negative FTK growth, and we had
imagined that this relationship would continue. Thus, we construe the passenger traffic figures to
be more resilient than expected, although passenger volumes may yet tail off, as we expect
corporate travel to deteriorate towards the end of the year.

28
Singapore AirIines (SeII, TP S$9.50): Continuing concerns
October saw passenger traffic in revenue passenger kilometres on the main carrier rise 0.7% yoy
on a 5% yoy increase in capacity (ASKs). As a consequence, load factors fell 3ppt to 77% with all
route regions witnessing weaker utilisation except for the South West Pacific. Load factors fell
more than 3ppt on key sectors such as East Asia, Europe and the Americas.
Silkair remains a strength, although load factors fell too as RPKs were up only 8% on an 11%
increase in ASKs. As with the main carrier, however, loads to East Asian are coming off more
drastically than loads to West Asia.
Cargo traffic fell 2% yoy, the third consecutive month of volume declines. nterestingly, SA
reported falling cargo load factors only on East Asian sectors (-4ppt yoy). We believe this
weakness on East Asian routes potentially explains why North Asian peers such as Cathay Pacific
reported such appalling cargo volumes in October.
MaIaysia AirIines (HoId, TP Rm160): InternationaI strength
MAS passenger traffic for 9M11 was 3.8% higher than the corresponding period last year. The
improvement came mainly on the back of a recovery in international traffic, which was up 8.4% in
the period under view, but this was negated by a 4% drop in domestic traffic. Despite the
recovery, its passenger traffic volumes are still about 15% below the passenger numbers the
national airline carried between 2001 and 2006, due to a significant reduction in unprofitable
routes and competition from LCCs like AirAsia. Load factors were steady at about 76%.
On the cargo side, volumes (measured by load tonne kilometres) were down 14.6% for 9M11, due
to a 5.5% reduction in capacity and 7.3ppt decline in load factors. This compares to 18% growth in
cargo volumes in 2010. Management indicated to us that the decline was largely due to stiffer
competition for air freight market, but cargo yields improved by 2% during the same period due to
a higher percentage of belly cargo as opposed to freighters. Belly tonnage carried for the 9M11
was down by a lesser 8.2% compared to freighter tonnage carried, which fell 19.3%.
Air China (HoId, TP HK$7.10): SmaII signs of a sIowdown
As winter approaches, volumes are appearing to slow. Overall revenue passenger kilometres
(RPK) grew 6% yoy despite a 7% increase in available seat kilometres (ASK). Load factors of
82% overall represented a continued slip from highs of 87% over summer.
Domestic RPKs rose just 1.6% yoy on ASK growth of 1.8% yoy last month. This is disappointing
in our view. Travel growth in October is usually strong, and this pace of growth was the slowest on
record in the month. However, load factors of 85% are still historically high. We suspect some
high-base effects due to the expo from last year caused the slowdown in volumes, but we believe
that yields should be resilient since loads remain high.
nternational RPKs grew 12% yoy against a 15% yoy increase in capacity. We think that the pace
of ASK growth should moderate over the rest of the year as schedules are adjusted downwards
over winter.
Regional routes did provide a little spark. RPKs up 14% yoy even though ASKs jumped just 8%
yoy. Judging from CAAC commentary that travel to Taiwan, Hong Kong and Macau was strong
over the Golden Week, this was not totally unexpected.
Cargo volumes continue to be lacklustre. Overall traffic was 8% lower yoy. We are surprised that
there continues to be capacity growth (1.8% yoy in the period), and we would imagine some
companies will pull back on freighter schedules as we head into the winter lull.
China Southern (Buy, TP HK$5.75): SIightIy ahead of the pack
Domestic revenue passenger kilometres (RPK) traffic increased 4.0% yoy against a 3.8% yoy rise
in available seat kilometres (ASK) capacity. Load factors grew marginally to 83%, although these
loads are the highest on record for October.
nternational traffic volumes continue their meteoric rate of growth, rising 41% yoy as the company
continues to expand its Australian business. However, international capacity growth of 45% yoy
means that load factors fell 2.5ppt to 75%.
Regional traffic growth was slightly disappointing, as RPKs rose just 13% despite a 20% jump in
ASKs. Additionally, we had expected that travel to Macau, Hong Kong and Taiwan would be more
29
positive due to the Golden Week holiday.
China Southern's cargo numbers are beginning to show more weakness as well. nternational
cargo volumes (FTK) were unchanged yoy, the weakest pace of growth since June 2009. With
international capacity (AFTK) growth at 7% yoy last month, load factors fell 5ppt to 57%. Overall
FTK fell 1% yoy, as opposed to an increase in AFTKs of 3% yoy. This caused load factors to
deteriorate 2ppt to 48%.
China Eastern (HoId, TP HK$3.10): Getting Ieft behind
Domestic revenue passenger kilometre (RPK) traffic rose 0.8% yoy against a 3.4% yoy increase
in available seat kilometre (ASK) capacity. Amongst the Chinese airlines, this was the slowest
pace of domestic traffic growth recorded even though capacity growth was similar to that of China
Southern's and higher than that of Air China's. Load factors fell 2ppt to 82%.
nternational RPK and ASKs both grew around 5%, with load factors remaining at 75% in October.
Again, the pace of volume growth was the slowest amongst the Big three airlines. Regional traffic
continues to wane, with RPK falling 16% yoy against a 21% decline in ASK. We found this to be
disappointing as the CAAC had earlier indicated that travel to Macau, Hong Kong and Taiwan
over the Golden Week holiday would be strong.
Cargo trends remain benign. Although international cargo traffic growth in freight tonne kilometres
(FTK) was 11% higher yoy due to the company's new cargo joint venture, the pace of growth has
slowed for four consecutive months. However, it was encouraging that capacity only rose 10%
yoy, allowing load factors to improve 1ppt to 67% last month.
Tiger Airways (Buy, TP S$1.15): Impacted by AustraIia grounding
Tiger Airways posted a 10% yoy decline in passengers for October 2011, with load factor also
falling 10ppt to 77%. Unfortunately, Tiger does not separate its Singapore and Australian
operations. Much of the damage arose from the suspension of its Australian operations for six
weeks starting in early July. Even now that the suspension has been lifted, Tiger Airways Australia
is only operating 22 sectors per day compared to the 66 sectors a day prior to the suspension.
However, we believe the airline has seen the worst of this problem. Tiger Airways Australia said
that CASA (Civil Aviation Safety Authority) is allowing an increase from 22 sectors to 32 sectors,
and we expect the permitted maximum number of sectors per day will gradually rise as the
Australian authorities gain increasing confidence that Tiger Airways has resolved the various
safety-related issues that resulted in its AOC's suspension in July.
AustraIia/New ZeaIand
Australian carriers report with a greater lag than other carriers. QAN's statistics were impacted
negatively by industrial action during the period while VBA benefited from this action. Looking on a
domestic market share by demand basis, VBA picked up 0.8ppt of market share on QAN (to
31.4%) compared to the pcp and we expect further improvement in October with QAN's industrial
action escalating in that period and culminating in the fleet grounding on 30 October.
Qantas (HoId, TP A$1.57): Impacted by industriaI action
Group capacity growth of 4.8% steady compared to previous months, with 3.3% growth in
passengers. Load factor continued the trend of marginal weakness, down 0.6ppt but still at a
healthy 81.9%. Yields seemed relatively steady too, with domestic yields +6.7% and international
yields +5.0%, both slightly up on August. Some impacts from the industrial action were already
seen in the Qantas Domestic business, with load factor falling 1.2ppt on a 1.4% reduction in
capacity. Jetstar Domestic's growth was lower at 9.8% but more a consequence of beginning to
cycle higher growth comparisons from last year.
Overall, the market seemed to look through this month's statistics, with the outcome of the wage
negotiations and potential arbitration of the disputes the key focus. Furthermore, given the
industrial action culminated in the grounding of the entire Qantas Domestic and nternational fleets
on 31 October, we expect October's statistics to see a more significant impact.

30
Virgin BIue (Buy, TP A$0.41): Continuing to trend positiveIy
VBA's September traffic benefited from industrial action at QAN. At the Group level, demand
growth of 6.9% outpaced 5.8% capacity growth, leading to a 0.9ppt increase in load factor to
82.2%. Load factors for both Domestic and nternational saw improvement on the pcp, despite the
5-7% increase in capacity. Time performance, an important measure for corporates (which VBA is
looking to improve market share of) also saw improvement, up 6.6ppt on the pcp (to 85.6%) and
up 3.5ppt for the year to date.
With traffic trending positively for VBA, we expect October's load factors to show further
improvement in October as VBA picked up customers trying to avoid strike action at QAN (though
VBA did put additional seats in the market to soak up this extra demand and potentially much of
the yield benefit).
Air New ZeaIand (NR): Weaker across the board
Traffic continues to be impacted by the Japan and Christchurch earthquakes, though this was
offset to a degree in the period by the Rugby World Cup tournament which saw an influx of foreign
visitors. Group capacity increased 1.2% though demand fell 5.2% leading to a 5.4ppt decline in
load factor. Domestic was particularly weak (demand -6.1%, load factor -8.1ppt) as New
Zealanders deferred local travel while the rugby tournament was being played and New Zealand
school holidays were shifted from September to October. Trans-Tasman/Pacific saw the only
demand improvement in the period (+2.7%) but this was offset by stronger capacity growth
(+6.7%), leading to a 3.2ppt decline in load factor.
While the September's traffic looked poor across all geographies, the pcp was a particularly tough
comparable and YTD statistics look more robust with the load factor down only 1.4ppt to a still
strong 82.8%. Yield growth is also solid with short haul yields up 3.1% and long haul yields up
5.5%.
31
Americas
RBS does not cover the US airlines from a research perspective. Therefore the commentary
below is purely factual and serves to give context to our global commentary.
Traffic statistics for US carriers was mixed in October with US network carriers (excluding
Southwest) largely seeing reductions in capacity of between 0.7 to 3.4%, while LCCs largely saw
capacity growth. Load factor change was also mixed, although it remains in the low 80% range.
South American airlines saw the most adverse change in load factor, each down over 3ppt as 8-
10% capacity growth outstripped 3-5% growth in demand.
Chart 19 : Americas October passenger traffic growth Chart 20 : Americas October passenger capacity growth
2.0%
5.5%
-1.1%
-3.8%
7.6%
3.5%
-5.1%
-1.7%
6.7%
14.7%
4.4%
5.5%
3.0%
-10.0%
-5.0%
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5.0%
10.0%
15.0%
20.0%
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3.2%
4.2%
-0.7%
-3.1%
6.5%
4.0%
-3.4%
-1.7%
6.7%
20.8%
9.4%9.6%
8.0%
-5.0%
0.0%
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Note September data for GOL and TAM, October for others

Chart 21 : Americas October passenger Ioad factor Chart 22 : Americas October passenger Ioad factor
change
79%
82%
83%83%84%
81%82%
83%
77%
74%
69%
80%
72%
0.0%
10.0%
20.0%
30.0%
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90.0%
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-0.9 pt
1.0 pt
-0.3 pt
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0.9 pt
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-1.5 pt
0.0 pt0.0 pt
-3.9 pt
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32
Chart 23 : Americas October cargo traffic growth
-12.0%
-2.7%
-14.9%
12.5%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
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American AirIines (NR): Traffic and Ioad factor down
American airlines reported 1.1% decline in October traffic on a capacity cut of 0.7% yoy. Load
factor at 83.2% was 0.3% below last year.
Load factor increased by 0.3ppt to 84.9% due to a decline in domestic capacity and traffic by 2.1%
yoy and 1.8% yoy, respectively. nternational traffic was unchanged over last year while capacity
increased 1.5% yoy. Declines of 0.6% in Atlantic traffic and 0.2% in Latin American traffic were
offset by a 2.4% increase in Pacific traffic. Capacity increased 1.5% on Atlantic routes, declined
1.4% on Latin American and increased 11.3% on Pacific. nternational load factor was down
1.3ppt to 80.8%, including a 6.8ppt decline on Pacific routes.
American's cargo traffic declined 12% yoy.
DeIta AirIines (NR): Traffic and Ioad factor down
Delta Airlines October load factor declined 0.6ppt to 82.8%. Capacity was cut 3.1% yoy, while
traffic declined 3.8% yoy.
Domestic traffic declined 1.6% while capacity was down 3.2%. These capacity cuts caused the
domestic load factor to increase by 1.3ppt to 84.3%. nternational traffic was down 7% yoy;
Atlantic traffic dropped 10.3% and Pacific decreased 6.0% while Latin American traffic increased
6.6%. nternational capacity declined 3% yoy. nternational load factor dropped 3.5ppt to 80.6%.
Pacific load factor was down 6.1ppt.
Delta's cargo decreased 2.7% yoy.
United ContinentaI (NR): Traffic and Ioad factor down, PRASM up
United and Continental's combined traffic decreased 5.1% in October versus the same period last
year. Capacity was down 3.4%, reducing the load factor by 1.5ppt to 82%. Consolidated and
mainline passenger revenue per available seat mile (PRASM) increased 9.5ppt to 10.5% and
8.5ppt to 9.5% respectively, on management estimates.
Domestic traffic was down 6.3% yoy on a 5.5% capacity cut, bringing down the load factor by
0.7ppt to 85%. nternational load factor dropped 2.4ppt yoy to 79.8% due to a 4.4% decline in
traffic and 1.5% decline in capacity. Traffic was down 7.9% and 1.9% on Atlantic and Pacific
routes and up 1.2% on Latin American routes, while capacity was down 4.6% on Atlantic and up
0.6% and 3.7% on Pacific and Latin American, respectively.
United Continental's cargo declined 12% yoy.
US Airways (NR): Traffic down, Ioad factor unchanged, PRASM up
US airways reported an October traffic and capacity drop of 1.7% yoy, leading to an unchanged
load factor at 83.4%. Consolidated (mainline and Express) passenger revenue per available seat
mile (PRASM) increased approximately 10% versus the same period last year, as per
33
management estimates.
Domestic traffic was down 3.3% on a capacity cut of 4.3%, bringing up the load factor by 0.9ppt to
84.3%. nternational traffic increased 3.7% yoy on a capacity addition of 6.6%, leading to a 2.2ppt
drop in load factor to 80.8%. Atlantic traffic and capacity were up 5.4% and 7.9% while Latin traffic
was down 1.3% and capacity was up 2.7%.
Southwest (NR): Traffic and PRASM up, Ioad factor down
Southwest Airlines and AirTran's combined October traffic and capacity increased by 3.5% and
4.0% respectively, reducing the load factor by 0.4ppt to 81.4%. For October 2011, the company
estimated a 6% increase in passenger revenue per ASM (PRASM) as compared to October
2010's combined PRASM.
JetBIue (NR): Traffic, Ioad factor and PRASM up
JetBlue's reported a 7.6% increase in October traffic on a 6.5% increase in capacity leading to a
0.9ppt increase in load factor at 83.5%. JetBlue's preliminary passenger revenue per available
seat mile for the month of October increased 11% yoy.
Unit revenue and quaIitative data
Monitored qualitative measures appear to have weakened in October with the majority of regions
seeing lower readings than in September. AG's premium traffic growth fell from 9.5% in
September to 1.9% in October, while Air New Zealand's system yields fell back and PRASM was
generally lower in the Americas. With global economic conditions volatile, we expect premium air
travel to come under pressure over coming months which may see these qualitative measures
weaken further.
TabIe 2 : QuaIitative data
Region AirIine Metric Time period
Europe AG Premium traffic growth Oct yoy 1.9%
Non premium traffic growth Oct yoy 1.8%
SAS Scandinavian Airlines yield Oct yoy est Under pressure
Scandinavian Airlines total RASK Oct yoy est Under pressure
Norwegian Yield Oct yoy -4.0%
RASK Oct yoy -1.0%
Oceana Qantas Group Domestic yield Sep yoy 6.7%
nternational yield Sep yoy 5.0%
Air New Zealand System yield Sep YTD yoy 5.7%
Short haul yield Sep YTD yoy 3.1%
Long haul yield Sep YTD yoy 5.5%
Americas United Continental PRASM Oct yoy est 10.0%
US Airways PRASM Oct yoy 10.0%
JetBlue PRASM Oct yoy 11.0%
Southwest PRASM Oct yoy 6.0%
GOL PRASM Sep yoy -5.3%
Yield Sep yoy 0.0%

YieId data is aIso weakening
34
VaIuation tabIes
The varying capital structures of carriers globally and the varying nature of competitive pressures
lead to different relative rankings of the carriers, depending on whether PE multiples,
EV/EBTDAR or dividend multiples are considered.
Among the network carriers, the American carriers have the lowest Bloomberg consensus PE
multiples on average. The lowest consensus EV/EBTDAR multiples are generally found in
Europe, while the Asian airlines overall have the highest consensus dividend yields.
TabIe 3 : GIobaI network carriers
Ticker RBS
recom
Dividend
yieId
(%)
EV/EBIT
(x)
EV/
EBITDA
(x)
EV/
EBITDAR
(x)
2yr fwd
EPS
CAGR
P/E
(x)
P/B
(x)
P/CF
(x)
Asia-Pacific network carriers
Qantas QAN AU Hold 0.0 11.6 3.6 2.6 41.1% 10.8 0.6 2.0
Air New Zealand AR NZ 6.7 6.1 2.6 2.3 7.2% 7.8 0.7 2.7
Singapore Airlines SA SP Sell 4.2 12.1 3.5 n/a 32.9% 16.9 1.0 5.1
Cathay Pacific 293 HK Hold 3.6 7.4 4.4 4.3 16.1% 5.4 0.8 3.9
China Eastern 670 HK Hold 0.0 15.8 6.2 6.3 9.7% 4.3 1.0 2.1
China Southern 1055 HK Buy 0.0 14.0 5.7 5.5 -1.2% 6.8 0.9 2.3
Air China 753 HK Hold 2.0 14.5 6.8 n/a 0.7% 7.2 1.1 4.1
Malaysian MAS MK Hold 0.0 n/a 26.6 3.2 n/a n/a 2.5 6.0
Asiana 020560 KS 1.3 9.1 5.7 3.8 18.1% 5.2 1.0 2.5
Korean 003490 KS Hold 0.3 26.2 7.7 2.1 n/a 9.1 1.2 2.0
Thai THA TB 4.2 13.1 4.9 4.5 209.3% 8.6 0.5 1.6
All Nippon Airways 9202 JP 1.1 16.6 5.5 n/a n/a 19.9 1.1 3.5
Average 2.1% 13.5 7.2 4.0 0.4% 9.1 1.0 3.3

Europe network carriers
AG AG LN Hold 0.3 25.0 3.4 n/a 10.2% 36.4 0.6 268.5
Air France-KLM AF FP Sell 0.0 n/a 3.4 3.4 n/a n/a 0.2 0.9
Lufthansa LHA GR Hold 3.1 21.0 3.8 2.0 7.6% 28.4 0.5 1.9
Average 1.1% 23.0 3.5 2.7 0.1% 32.4 0.4 90.5

North America network carriers
American Airlines AMR US 0.0 20.9 5.5 4.0 -94.4% n/a -0.1 0.7
Delta DAL US 0.0 6.1 3.6 3.8 59.3% 3.2 1.9 1.8
United Continental UAL US 0.0 3.9 2.3 3.2 31.4% 3.3 1.3 1.6
US Airways LCC US 0.0 4.7 3.4 1.8 175.4% 2.7 2.2 1.2
Air Canada AC/A CN 0.0 9.3 2.5 1.9 n/a n/a -0.2 0.5
Average 0.0% 9.0 3.5 2.9 0.4% 3.1 1.0 1.2

GIobaI average 1.4% 13.3 5.7 3.5 0.3% 11.0 0.9 16.5
Source: RBS forecasts (where recommendation exists); Bloomberg (all others)
Among the low-cost carriers, the lowest consensus PE multiples are seen on average at the
European LCCs. However, we note that the more established carriers such as Ryanair, Easyjet,
AirAsia and Virgin Blue are all trading above median PEs.

35
TabIe 4 : GIobaI LCC peers
Ticker RBS
recom
Dividend
yieId
(%)
EV/EBIT
(x)
EV/
EBITDA
(x)
EV/
EBITDAR
(x)
2yr fwd
EPS
CAGR
P/E
(x)
P/B
(x)
P/CF
(x)
Asia-Pacific LCCs
Virgin Australia VBA AU Buy 0.0 11.6 4.5 3.2 58.3% 12.9 0.8 2.5
Air Asia ARA MK Sell 0.8 13.7 9.0 n/a 12.8% 14.9 1.7 6.0
Tiger TGR SP Buy 0.0 n/a 20.8 n/a n/a 18.6 1.9 7.9
Spicejet SJET N 0.0 7.6 4.3 n/a n/a 9.5 1.9 4.0
Average 0.3% 10.6 11.4 n/a 0.1% 14.3 1.8 6.0

Europe LCCs
Ryanair RYA D Buy 12.7 9.0 5.4 n/a 8.3% 10.7 1.4 6.1
Easyjet EZJ LN Buy 2.1 7.5 4.1 3.1 18.4% 9.4 0.9 n/a
Air Berlin AB1 GR Sell 0.0 n/a 4.2 1.4 -40.3% n/a 0.7 7.0
Norwegian NAS NO 0.0 7.0 4.3 4.1 47.4% 5.9 1.0 3.1
Vueling VLG SM 0.0 -6.3 -4.7 n/a 67.3% 8.6 0.6 3.4
Average 3.0% 4.3 2.7 2.8 0.2% 8.7 0.9 4.9

North America LCCs
Jetblue JBLU US 0.0 6.7 4.2 4.3 67.9% 7.7 0.6 2.4
Southwest LUV US 0.3 5.4 3.4 3.7 65.8% 9.9 0.9 4.3
Westjet WJA CN 1.7 4.6 2.7 2.4 17.6% 10.2 1.1 4.4
Gol GOL US 1.6 n/a n/a n/a n/a 26.2 0.8 2.7
Average 0.9% 5.6 3.4 3.4 0.5% 13.5 0.9 3.4

GIobaI average 1.6% 6.1 5.2 3.1 0.3% 12.0 1.1 4.7
Source: RBS forecasts (where recommendation exists); Bloomberg (all others)

36

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Construction Materials
Will the cut provide a lift?
Feedback from 20 of Australia's largest homebuilders has indicated that there
has been little increase in traffic or inquiry levels after the November interest rate
cut. Builders suggested that confidence remains low and that additional cuts
were needed to meaningfully impact activity levels.

Table 1 : Key forecasts

Reuters Year end Recom Price Target
price
Upside/
downside
FY12F
EPS
FY12F
P/E
CSR Ltd CSR.AX Mar 2012 Buy A$2.19 A$2.84 29.8% 0.17 13.0
Adel Brighton ABC.AX Dec 2011 Hold A$2.87 A$3.20 11.5% 0.26 11.0
Boral BLD.AX Jun 2012 Hold A$3.55 A$4.04 13.8% 0.28 12.6
James Hardie JHX.AX Mar 2012 Buy A$6.60 A$7.03 6.5% 0.33 19.8
Fletcher Bldg FBU.NZ Jun 2012 Hold NZ$6.00 NZ$7.32 22.1% 0.53 11.2
Priced at close 21 November 2011.

Getting ahead of the data
Our prior analysis has indicated that a change in monetary policy is often associated with an
inflection point in residential building approvals. In the past this has often been echoed by
anecdotal commentary that homebuilders saw an increase/decrease in traffic levels in the
first weekends immediately following an interest rate move. We were interested to see
whether any change had been experienced following the November rate cut and asked 20 of
Australias top 100 homebuilders whether they had seen a noticeable improvement in traffic
levels. We also sought to determine whether the rate cut had altered their levels of
confidence for the coming six months.
A step in the right direction
A majority (70%) of respondents indicated that the rate cut was little more than a step in the
right direction. These respondents saw little evidence of an uptick in traffic or inquires since
the rate cut. With a typical seasonal slow-down likely as we come to the end of the year,
there now appears little chance of improvement until activity ramps up early in 2012.
Further cuts required to build confidence
Most (65%) builders found little in the RBAs decision that raised their level of confidence for
the coming six months. While the decision was encouraging, they pointed out that further
rate cuts would be required for them to be more positive on the medium-term outlook. We
note that some builders highlighted issues beyond RBA policy that were factoring into
confidence levels. For example, conditions appeared to be improving in QLD prior to the rate
announcement, while in VIC concerns around land prices were front of mind.
Choose your exposures wisely
While the cut is encouraging and history shows that this provides a positive data point,
conditions are likely to decline further before they improve. We continue to expect a
traditional, deep-cycle housing trough of 133k starts for FY12. Beyond this, we expect a
sharp recovery. We would need to see a further rate cut and an improvement in traffic to gain
confidence around the timing of this recovery. Against this backdrop, we retain our Buy
recommendations on JHX (US rather than Australian exposure) and CSR (greatest upside to
our valuation) and our Hold recommendations for ABC, FBU and BLD.

21 November 2011
Analysts
Andrew Scott
Australia
+61 2 8259 5847
andrew.g.scott@rbs.com
Niraj Shah, CFA
Australia
+61 2 8259 5836
niraj.shah@rbs.com
Andrew Hodge
Australia
+61 2 8259 6608
andrew.hodge@rbs.com

84 002 768 701, AFS Licence 240530


37

Construction Materials | Industry Dynamics | 21 November 2011 2

Change in monetary stance a trigger for an inflection point
In our opinion housing affordability is perhaps the key leading indicator for the Australian housing
market. Within this equation, interest rates are obviously an integral component and a key driver
of housing activity.
The chart below shows the last direction of a move in interest rates on a binary scale, +1 for a rate
rise or tightening cycle and -1 for a rate reduction or easing cycle. This level is held until a change
of rate direction occurs. The chart clearly shows that the change in the RBAs stance has provided
a timely indicator of an inflection point in approvals, albeit with a timing lag in some instances. We
therefore view the change in stance on 1 November with the interest rate cut as a crucial data
point.
Chart 1 : Interest rate direction vs building approvals
-1
0
1
Sep-90 Sep-92 Sep-94 Sep-96 Sep-98 Sep-00 Sep-02 Sep-04 Sep-06 Sep-08 Sep-10
110,000
120,000
130,000
140,000
150,000
160,000
170,000
180,000
190,000
200,000
U
p
D
o
w
n
Approvals MAT
Getting ahead of the leading indicators homebuilder traffic
Focusing solely on published leading indicators, it remains too early to tell whether the November
rate cut has translated into increased activity levels. In an effort to get ahead of this data, we have
surveyed our panel of 20 home builders to determine whether they have seen an increase in
traffic or inquiry levels since the 1 November decision. Levels of homebuyer interest generally
react quickly and often we hear anecdotally of material shifts in traffic at inquiry levels directly after
an interest rate move (in many cases on the first weekend after the announcement).
Chart 2 : Have you seen an increase in traffic or inquiries since the November rate cut?
Yes
30%
No
70%
Most (70%) of respondents indicated that there had been little increase in traffic and inquiry levels
in the first weekends following the cut. The feedback was best captured with the following
comments:
38

# Its done next to nothing. The best thing would be if the RBA went again in December. (QLD)
# We are of the opinion that the rate cut was too small to have any tangible impact. (VIC)
# We saw an increase in the first weekend, but its fallen back again since then. (WA)
# There had been a little improvement prior to the rate cut, but I haven't seen an increase in
traffic following the cut. (QLD)
The feedback above highlights the perception that further cuts are required before any meaningful
impact on housing activity will be seen. This view is reinforced with the following comments:
# We need at least another 25 basis points to make a difference. (WA)
# While the rate cut is positive, it was too small. (NSW)
# More of a rate cut is needed as we believe affordability is still a problem. (QLD)
# I think customers are going to need to see another cut and a positive trend before this
translates to a shift in sentiment. (VIC)
While the results of our survey and the associated commentary suggests there has been little
positive impact from the rate cut, we note that the market is entering a seasonal lull. We believe
that this could delay any benefit from the RBA decision. The following comments suggest that this
dynamic may be at play:
# It is getting to the end of the year and people have other things on their mind. We'll see
whether it makes a difference early next year. (QLD)
# Our forecast for traffic is 25% lower than the monthly average for the year for November and
50% for December but this is usual. (NSW)
We note that 30% of participants did see an increase in traffic levels since the rate reduction.
However, as illustrated in the following feedback, most of these respondents noted that the
increase was minor:
# There has been an increase but it is marginal. (NSW)
# There has been a slight increase, but not by much. (QLD)
# We've seen a slight improvement. (NSW)
We also asked participants whether the RBAs decision has increased their level of confidence for
the next six months. Given the lack of response in buyer traffic, it is not surprising to find that
most (65%) of our respondents stated that their confidence levels had not changed.
Chart 3 : Has the rate cut increased you level of confidence for the next six months?
Yes
35%
No
65%
Once again, a key theme to emerge from the feedback was that further rate cuts were required
before builders could gain further confidence.
# My confidence hasnt improved just yet, but if we get another 25bps things will really get
going. (WA)
39

# There needs to be another rate cut before I change my level of confidence. (NSW)
Wed also note that there are issues beyond RBA policy, which were factoring into builders
confidence. For example, one builder in QLD indicated that the $10k Building Boost Grant was
gaining traction among buyers. On the flip side, a builder in VIC suggested there were bigger and
more worrying issues than interest rates that were dampening confidence.
The rate cut was a step in the right direction but where do we stand?
Having recovered from a recent trough of 129.9k starts in the year to September 2009, starts
recovered to a high of 171k in the year to September 2010, reflecting benefits of government
stimulus such as the first home buyer grant boost. However, towards the end of 2010, housing
activity turned down with starts for the year ended June 2011 totalling 156.4k.
Chart 4 : June quarter housing starts by state Chart 5 : National housing starts (MAT)
NSW
18%
Vic
40%
Qld
16%
SA
7%
WA
13%
Tas
2%
ACT
4%
NT
0%

100,000
120,000
140,000
160,000
180,000
200,000
Dec-82 Dec-86 Dec-90 Dec-94 Dec-98 Dec-02 Dec-06 Dec-10
Starts (MAT)
Source: RBS Source: ABS, RBS
VIC, which has been the engine room of domestic housing activity in recent years, now appears to
be a key source of deterioration. Our prior survey highlighted that at this stage in the cycle the
leading indicators in VIC appear to have been between bad and worse. In our opinion one of the
key drivers of the depth in the Australian cycle will be whether the recent period of overbuild will
be followed by a return to mid-cycle levels, or is the state headed for a harder landing?
Importantly, amongst the other states there does not appear to be an obvious candidate to fill the
void left by a likely slowdown in VIC in the medium term and ongoing weakness in domestic
activity is evident in the published leading indicators.
Building approvals down trend likely to continue
Building approvals have declined relative to the pcp in eight of the last 10 months. The most
recent data point for September saw a 15% decline. Building approvals tend to lead housing starts
by 3-6 months, indicating that housing activity is likely to slow for some time.
Chart 6 : National building approvals chg vs pcp Chart 7 : National building approvals MAT
-60%
-40%
-20%
0%
20%
40%
60%
80%
Sep-91 Sep-95 Sep-99 Sep-03 Sep-07 Sep-11

100,000
110,000
120,000
130,000
140,000
150,000
160,000
170,000
180,000
190,000
Jul-97 Jul-99 Jul-01 Jul-03 Jul-05 Jul-07 Jul-09 Jul-11
No. Approvals (MAT)
Source: ABS, RBS Source: ABS, RBS
40

Finance approvals leading the way lower
Ongoing weakness in housing finance approvals suggest that building approvals are likely to
remain lower for some time. The number of loans for construction and purchase of newly
constructed homes has declined in 10 of the last 12 months. While finance approvals increased
5% in August, this was followed by an uninspiring 0.7% decline in September.
Chart 8 : National finance approvals chg vs pcp Chart 9 : National finance approvals MAT
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
Sep-79 Sep-83 Sep-87 Sep-91 Sep-95 Sep-99 Sep-03 Sep-07 Sep-11

40,000
60,000
80,000
100,000
120,000
140,000
Jul-81 Jul-86 Jul-91 Jul-96 Jul-01 Jul-06 Jul-11
No. of loans
(MAT)
Source: ABS, RBS Source: ABS, RBS
Our view on Australian residential construction
We remain cautious in our outlook for Australian housing activity over the next 6-12 months. Our
forecasts call for a 15% decline in starts in FY12 to a traditional, deep-cycle trough of 132.5k.
Table 2 : Housing starts - history & forecasts
Australia - June YE FY09 FY10 FY11 FY12 FY13 FY14
Total number of starts 131,681 164,785 156,411 132,530 154,638 174,741
% chg -16.9% 25.1% -5.1% -15.3% 16.7% 13.0%
Source: ABS, RBS forecasts
Beyond FY12, we expect relatively rapid recovery to a peak of ~190k starts in FY16. We note that
the timing of this recovery will be predicated on a sustained interest rate decrease and/or
improved housing affordability, as well as an improvement in NSW housing construction. Longer
term, we forecast mid-cycle housing activity of around 157k starts.
Chart 10 : Housing starts - history & forecasts
100,000
120,000
140,000
160,000
180,000
200,000
Jun-85 Jun-90 Jun-95 Jun-00 Jun-05 Jun-10 Jun-15 Jun-20
Starts (MAT)
Source: ABS, RBS forecasts

41

Share price implications retaining a cautious overall outlook but
watching carefully
Given our outlook for residential construction activity, we believe Australian building materials
stocks will continue to face a difficult macro backdrop. We retain our Buy recommendations on
JHX (US rather than Australian exposure) and CSR (greatest upside to our valuation) and our
Hold recommendations for ABC, FBU and BLD.
Table 3 : Comparative valuation metrics
PE EV/EBITDA Dividend Yield Stock Recommendation Share Price Target Price Upside/Downside
to Target
FY1 FY2 FY1 FY2 FY1 FY2
EBIT Interest
Cover
JHX Buy $6.60 $7.03 6.5% 19.8x 15.0x 11.0x 9.2x 1.2% 1.8% 18.4x
CSR Buy $2.19 $2.84 29.8% 13.0x 10.4x 4.1x 3.5x 5.9% 7.2% 6.6x
FBU Hold $6.00 $7.32 22.1% 11.2x 8.2x 7.1x 5.7x 5.8% 6.2% 4.0x
ABC Hold $2.87 $3.20 11.7% 11.9x 11.0x 8.2x 7.6x 6.6% 8.2% 10.7x
BLD Hold $3.55 $4.04 13.8% 12.6x 9.3x 6.9x 5.5x 4.5% 4.8% 2.9x
Source: RBS forecasts

42

JHX financial summary
Year to 31 Mar (US$m) USGAAP USGAAP USGAAP USGAAP USGAAP Stock Code JHX
Income statement 2010A 2011A 2012F 2013F 2014F Recommendation Buy
Divisional sales 1124.6 1161.2 1224.3 1414.6 1674.9 Price target (A$) 7.03
Total revenue 1130.9 1157.5 1225.9 1416.2 1676.5 Closing price (A$) 6.60
EBITDA 270.4 246.9 262.3 312.3 381.9 Projected Return 6.5%
Associate income 0.0 0.0 0.0 0.0 0.0
Depreciation -61.7 -62.9 -60.0 -58.4 -58.4 Shares on Issue 436.7
EBITA 208.7 184.0 202.3 253.9 323.5 JHX Market Cap 2882.2
Amortisation/impairment 0.0 0.0 0.0 0.0 0.0
EBIT 208.7 184.0 202.3 253.9 323.5 USD/AUD exchange rate 1.00
EBIT(incl associate profit) 208.7 184.0 202.3 253.9 323.5
Net interest expense -7.3 -8.7 -11.0 -3.1 -3.8 Valuation Summary A$ per share
Pre-tax profit 201.0 171.6 191.3 250.7 319.7 DCF (Beta 1.1, RF Rate 5.25%, LTG 2.5%, WACC 10.78%) 7.03
Income tax expense -68.0 -54.9 -49.5 -68.3 -87.1 MRP 6%, Kd 7.25%, Ke 13.23%)
After-tax profit 133.0 116.7 141.8 182.4 232.6 Average Valuation 7.03
Minority interests 0.0 0.0 0.0 0.0 0.0
NPAT 133.0 116.7 141.8 182.4 232.6 Multiples 2011A 2012F 2013F 2014F
Significant items -217.9 -463.7 47.8 0.0 0.0 PE (pre-goodwill) (x) 24.8 19.8 15.0 11.8
NPAT post abnormals -84.9 -347.0 189.6 182.4 232.6 PE (pre-goodwill incl asbestos) (x) 30.7 24.6 18.6 14.8
EV/EBITDA (x) 11.5 10.9 9.1 7.5
Divisional sales revenue 2010A 2011A 2012F 2013F 2014F EV/EBIT (x) 15.5 14.1 11.2 8.8
USA 828.1 814.0 850.6 987.9 1188.6
Australia 296.5 347.2 373.6 426.7 486.3 At target price 2011A 2012F 2013F 2014F
Total 1124.6 1161.2 1224.3 1414.6 1674.9 PE (pre-goodwill) (x) 26.4 21.1 16.0 12.5
EV/EBITDA (x) 12.3 11.7 9.8 8.1
Divisional EBIT 2010A 2011A 2012F 2013F 2014F
USA 208.5 160.3 174.2 219.7 276.2 Comparable company data (x) 2012F 2013F 2014F
Australia 58.7 79.4 85.1 93.4 106.5 CSR Ltd EV/EBITDA 4.2 3.6 3.0
Research and Development -19.0 -20.1 -20.4 -20.4 -20.4 Year to 31 Mar EV/EBIT 6.6 5.4 4.2
General Corporate -39.5 -35.6 -36.6 -38.8 -38.8 PE 13.3 10.7 8.0
Total 208.7 184.0 202.3 253.9 323.5 PEG -0.7 -0.6 -0.4
Saint Gobain EV/EBITDA 5.0 4.4
Cash flow statement 2010A 2011A 2012F 2013F 2014F Year to 31 Dec EV/EBIT 7.0 6.1
EBITDA 270.4 246.9 262.3 312.3 381.9 PE 7.3 6.1
Change in working capital -52.0 10.0 -13.6 -41.4 -38.9 PEG
Net interest (pd)/rec -7.3 -8.7 -11.0 -3.1 -3.8 Per share data 2011A 2012F 2013F 2014F
Taxes paid -66.2 -443.6 -49.5 -68.3 -87.1 No. shares 435.7 414.0 414.0 414.0
Other oper cash items 38.2 342.6 -17.1 -49.1 -69.8 EPS (cps) -79.3 44.6 44.1 56.2
Cash flow from ops (1) 183.1 147.2 171.1 150.3 182.3 EPS (normalised) (c) 26.7 33.4 44.1 56.2
Capex (2) -50.5 -50.3 -77.6 -88.4 -158.4 Dividend per share (c) 0.0 8.0 12.0 16.0
Disposals/(acquisitions) 0.0 0.7 0.2 0.0 0.0 Dividend payout ratio (%) 0.0 24.3 27.2 28.5
Other investing cash flow 0.0 0.0 0.0 0.0 0.0 Dividend yield (%) 0.0 1.2 1.8 2.5
Cash flow from invest (3) -50.5 -49.6 -77.4 -88.4 -158.4 NTA/share -1.0 -0.9 -0.5 -0.1
Incr/(decr) in equity 10.1 4.9 -78.9 0.0 0.0
Incr/(decr) in debt -170.0 -95.0 56.4 -19.9 34.1 Growth ratios 2011A 2012F 2013F 2014F
Ordinary dividend paid 0.0 0.0 -17.4 -42.0 -58.0 Sales growth 3.3% 5.4% 15.5% 18.4%
Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Operating cost growth 7.0% 5.2% 14.6% 17.3%
Other financing cash flow 0.9 0.4 1.5 0.0 0.0 EBITDA growth -8.7% 6.2% 19.0% 22.3%
Cash flow from fin (5) -159.0 -89.7 -38.3 -61.9 -23.9 EBITA growth -11.8% 10.0% 25.5% 27.4%
Forex and disc ops (6) 3.2 -8.5 -3.0 0.0 0.0 Divisional EBIT growth
Inc/(decr) cash (1+3+5+6) -23.2 -0.6 52.3 0.0 0.0 USA -23.1% 8.7% 26.1% 25.7%
Equity FCF (1+2+4) 132.6 96.9 93.5 61.9 23.9 Australia 35.3% 7.2% 9.7% 14.0%
Research and Development -5.8% -1.5% 0.0% 0.0%
Balance sheet 2010A 2011A 2012F 2013F 2014F General Corporate 9.9% -2.8% -6.0% 0.0%
Cash & deposits 77.6 81.3 97.8 97.8 97.8
Trade debtors 155.0 138.1 147.8 177.4 205.2 EBIT growth -11.8% 10.0% 25.5% 27.4%
Inventory 149.1 161.5 172.8 207.4 239.9 NPAT growth -12.3% 21.5% 28.7% 27.5%
Investments 0.0 0.0 0.0 0.0 0.0 Pre-goodwill NPAT growth -12.3% 21.5% 28.7% 27.5%
Other intangible assets Pre-goodwill EPS growth -13.1% 25.1% 32.1% 27.5%
Fixed assets 710.6 707.7 725.1 755.1 855.1 Normalised EPS growth -13.1% 25.1% 32.1% 27.5%
Other assets 1086.5 872.0 787.7 787.7 787.7
Total assets 2178.8 1960.6 1931.2 2025.4 2185.7 Key assumptions
Short-term borrowings 95.0 0.0 0.0 0.0 0.0 Australian Housing Starts 165,561 137,065 149,365 169,950
Trade payables 100.9 106.4 113.9 136.6 158.1 Australian Housing Starts % ch 9.4% -17.2% 9.0% 13.8%
Long-term borrowings 59.0 59.0 115.4 95.5 129.6 Australian Non-Res Spend % ch -5.4% -7.2% 0.1% 7.5%
Provisions 180.5 175.2 168.7 168.7 168.7 New Zealand Housing Starts 14,611 15,726 20,101 23,578
Other liabilities 1861.3 2074.5 1891.6 1842.5 1772.7 New Zealand Housing Starts % ch -5.0% 7.6% 27.8% 17.3%
Total liabilities 2296.7 2415.1 2289.6 2243.3 2229.0 US Housing Starts ('000) 578 633 791 960
Share capital 221.1 222.5 143.6 143.6 143.6 US Housing Starts % ch 0.7% 9.4% 25.0% 21.3%
Additional Paid in Capital 39.5 52.5 55.2 55.2 55.2 US Non-Res Spend % ch -2.1% -0.5% 1.7% 5.4%
Accumulated Other Income 59.2 55.2 55.3 55.3 55.3 US R&R Spend % ch 5.8% 2.0% 1.4% 1.6%
Retained earnings -437.7 -784.7 -612.5 -472.1 -297.4 USD/AUD Exchange Rate 0.951 1.054 1.082 1.055
Other equity 0.0 0.0 0.0 0.0 0.0
Total equity -117.9 -454.5 -358.4 -217.9 -43.3 Return metrics
Minority interest ROA (%) 8.9 10.4 12.8 15.4
Total shareholders' equity -117.9 -454.5 -358.4 -217.9 -43.3 ROE (%) -40.8 -34.9 -63.3 -178.0
Total liabilities & SE 2178.8 1960.6 1931.2 2025.4 2185.7 ROIC (%) 166.2 -40.7 -79.9 -212.5
Balance sheet debt metrics
Net debt (US$m) 76.4 -22.3 17.6 -2.3 31.8
Gearing (ND/E) (%) -64.8 4.9 -4.9 1.1 -73.3
Gearing (ND/ND+E) (%) -184.1 4.7 -5.2 1.0 -275.1
Net interest/EBIT cover (x) 28.6 21.1 18.4 80.8 85.5
ND/EBITDA 0.28 -0.09 0.07 -0.01 0.08

43

CSR financial summary
Year to 31 Mar (A$m) AIFRS AIFRS AIFRS AIFRS AIFRS Stock Code CSR
Income statement 2010A 2011A 2012F 2013F 2014F Recommendation Buy
EBITA 353.3 201.5 156.4 188.4 238.0 CSR Market Cap 1497.7
EBIT 353.3 201.5 156.4 188.4 238.0 Valuation Summary A$ per share
EBIT(incl associate profit) 364.1 212.0 166.9 200.1 252.8 DCF (Beta 1.25, RF Rate 5.25%, LTG 2.5%, WACC 10.07%) $3.75
Net interest expense -101.1 -57.0 -23.7 -25.2 -25.8 MRP 6%, Kd 7.25%, Ke 12.76%)
Pre-tax profit 263.0 155.0 143.1 175.0 227.1 Sum of the Parts $2.47
Income tax expense -53.2 -41.8 -40.4 -49.7 -64.7 PE Relative $2.33
After-tax profit 209.8 113.2 102.7 125.2 162.4 Average Valuation $2.85
Minority interests -36.4 -23.0 -17.4 -18.8 -20.9
Significant items incl disc ops -285.1 413.2 -15.7 0.0 0.0 PE (pre-goodwill) 12.3 13.0 10.4 7.8
NPAT post abnormals -111.7 503.4 69.6 106.4 141.5 EV/EBIT (x) 4.6 5.8 4.8 3.8
EV/EBITDA (x) 3.1 3.8 3.3 2.8
Divisional sales revenue 2010A 2011A 2012F 2013F 2014F
Building Products ex Viridian 1134.9 1049.3 989.5 1030.2 1184.6
Viridian 379.7 348.8 316.4 328.7 378.9
Aluminium 513.6 519.6 503.4 497.1 523.3 At target price 2011A 2012F 2013F 2014F
Sugar 1758.4 0.0 0.0 0.0 0.0 PE (pre-goodwill) (x) 15.9 16.9 13.5 10.2
Property 14.1 16.4 26.4 25.0 25.0
Corporate 10.2 0.0 0.0 0.0 0.0 Comparable company data (x) 2012F 2013F 2014F
Total Revenue 3810.9 1934.0 1835.7 1881.1 2111.8 Boral EV/EBITDA 6.9 5.5 4.7
Total Trading Revenue 3753.6 1878.0 1817.6 1881.1 2111.8 Year to 30 Jun EV/EBIT 13.0 8.9 7.0
PE 12.6 9.4 6.9
Divisional EBIT 2010A 2011A 2012F 2013F 2014F PEG 0.8 0.6 0.4
Building Products ex Viridian 116.6 103.8 92.5 105.1 132.7 James Hardie Industries EV/EBITDA 10.9 9.1 7.5
Viridian -1.6 3.6 -13.5 -3.1 12.5 Year to 31 Mar EV/EBIT 14.1 11.2 8.9
Aluminium 123.5 111.9 83.8 89.5 99.4 PE 19.5 14.8 11.6
Sugar 135.7 0.0 0.0 0.0 0.0 PEG 1.5 1.2 0.9
Property 12.8 14.6 25.0 25.0 25.0 Per share data 2011A 2012F 2013F 2014F
Corporate -18.6 -19.0 -16.0 -16.4 -16.8 No. shares 506.0 506.0 506.0 506.0
Restructuring and Provisions -4.3 -2.9 -5.0 0.0 0.0 EPS (cps) 99.6 13.8 21.0 28.0
Total 364.1 212.0 166.9 200.1 252.8 EPS (normalised) (c) 17.8 16.9 21.0 28.0
Dividend per share (c) 14.3 13.0 15.8 19.4
Cash flow statement 2010A 2011A 2012F 2013F 2014F Dividend payout ratio (%) 233.8 77.1 75.1 69.4
EBITDA 511.3 297.5 246.9 278.9 328.5 Dividend yield (%) 18.6 5.8 7.1 8.7
Change in working capital 23.8 -106.3 -24.8 -27.8 -53.0 NTA/Share 2.44 2.47 2.52 2.61
Net interest (pd)/rec 1.4 13.3 2.4 -6.1 -4.6
Taxes paid -39.2 -64.6 -51.9 -49.7 -64.7 Growth ratios 2011A 2012F 2013F 2014F
Other oper cash items -119.1 45.4 -7.0 -7.1 -6.1 Sales growth -49.2% -5.1% 2.5% 12.3%
Cash flow from ops (1) 378.2 185.3 165.6 188.2 200.2 Operating cost growth -50.4% -2.9% 0.8% 11.3%
Capex (2) -239.7 -143.1 -128.6 -90.5 -90.5 EBITDA growth -41.8% -17.0% 12.9% 17.8%
Disposals/(acquisitions) 34.3 1860.0 11.5 0.0 0.0 EBITA growth -43.0% -22.4% 20.4% 26.3%
Other investing cash flow -2.0 2.3 -13.0 0.0 0.0 Divisional EBIT growth
Cash flow from invest (3) -207.4 1719.2 -130.1 -90.5 -90.5 Building Products ex Viridian -11.0% -10.9% 13.6% 26.3%
Incr/(decr) in equity 363.7 -658.7 0.0 1.0 2.0 Viridian -325.0% 473.7% -77.1% -504.7%
Incr/(decr) in debt -383.7 -794.5 -27.6 18.1 -28.7 Aluminium -9.4% -25.1% 6.8% 11.1%
Ordinary dividend paid -65.7 -307.2 -57.2 -73.9 -89.1 Sugar -100.0% n.m. n.m. n.m.
Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Property 14.1% 71.2% 0.0% 0.0%
Other financing cash flow -59.0 -41.4 -8.4 0.0 0.0 Corporate 2.2% -15.8% -2.5% -2.5%
Cash flow from fin (5) -144.7 -1801.8 -93.2 -54.8 -115.7 Restructuring and Provisions 32.6% -72.4% n.m. n.m.
Forex and disc ops (6) 3.5 -4.3 1.8 0.0 0.0 EBIT growth -43.0% -22.4% 20.4% 26.3%
Inc/(decr) cash (1+3+5+6) 29.6 98.4 -55.9 41.4 -6.1 NPAT growth -48.0% -5.4% 24.7% 33.0%
Equity FCF (1+2+4) 138.5 42.2 37.0 97.7 109.7 Pre-goodwill NPAT growth -48.0% -5.4% 24.7% 33.0%
Pre-goodwill EPS growth -53.1% -5.5% 24.7% 33.0%
Balance sheet 2010A 2011A 2012F 2013F 2014F Normalised EPS growth -53.1% -5.5% 24.7% 33.0%
Cash & deposits 43.9 143.6 72.0 115.0 108.9
Trade debtors 491.9 302.4 317.6 342.0 383.6 Construction Forecasts
Inventory 455.9 281.9 282.9 304.2 341.2 Australian Housing Starts 165,561 137,065 149,365 169,950
Investments 33.4 14.5 16.4 16.4 16.4 Australian Housing Starts % ch 9.4% -17.2% 9.0% 13.8%
Other intangible assets 106.1 45.9 56.5 56.5 56.5 Australian Non-Res Spend % ch -5.4% -7.2% 0.1% 7.5%
Fixed assets 2246.4 1134.5 1161.1 1161.1 1161.1 Aluminium Spot Price US$/lb 1.02 1.14 1.23 1.35
Other assets 497.0 293.2 340.9 340.9 340.9 USD/AUD Exchange Rate 0.946 1.028 1.065 1.083
Total assets 3874.6 2216.0 2247.5 2336.0 2408.6
Short-term borrowings 25.6 3.1 0.7 0.7 0.7 Return metrics
Trade payables 408.0 201.6 193.0 210.8 236.5 ROA (%) 7.0 7.5 8.7 10.7
Long-term borrowings 785.2 1.4 -23.8 -5.7 -34.4 ROE (%) 6.2 6.9 8.4 10.9
Provisions 700.5 661.1 655.1 655.1 655.1 ROIC (%) 4.1 9.5 10.8 13.6
Other liabilities 137.1 67.5 115.7 141.8 174.1
Total liabilities 2056.4 934.7 940.7 1002.8 1032.0 Balance sheet debt metrics
Net debt (A$m) -139.1 -95.2 -120.0 -142.6
Share capital 1,700.9 1,042.2 1,042.2 1,042.2 1,042.2 Gearing (ND/E) (%) -10.9 -7.3 -9.0 -10.4
Other reserves 31.5 21.2 31.8 31.8 31.8 Gearing (ND/ND + E) (%) -12.2 -7.9 -9.9 -11.6
Retained earnings -49.8 170.3 174.2 200.6 244.0 Net interest/EBIT cover (x) 3.5 6.6 7.5 9.2
Other equity 0.0 0.0 0.0 0.0 0.0 ND/EBITDA -0.5 -0.4 -0.4 -0.4
Total equity 1682.6 1233.7 1248.2 1274.6 1318.0
Minority interest 135.6 47.6 58.6 58.6 58.6
Total shareholders' equity 1818.2 1281.3 1306.8 1333.2 1376.6
Total liabilities & SE 3874.6 2216.0 2247.5 2336.0 2408.6

44

ABC financial summary
Year to 31 Dec (A$m) AIFRS AIFRS AIFRS AIFRS AIFRS Stock Code ABC
Income statement 2009A 2010A 2011F 2012F 2013F Recommendation Hold
EBITA 157.7 184.1 191.1 207.1 243.9 ABC Market Cap 1826.1
EBIT(incl associate profit) 185.3 216.2 225.6 243.5 286.5 DCF (Beta 1.25, RF Rate 5.25%, LTG 2.5%, WACC 10.07% $3.86
Net interest expense -16.7 -14.0 -17.9 -22.7 -22.9 MRP 6%, Kd 7.25%, Ke 12.76%)
Minority interests -0.1 0.1 0.1 0.0 0.0
Significant items 0.0 0.0 0.0 0.0 0.0 PE (pre-goodwill) (x) 12.0 11.9 11.0 9.2
NPAT post abnormals 123.1 151.5 153.1 165.5 197.4 EV/EBIT (x) 9.5 9.1 8.4 7.1
EV/EBITDA (x) 7.6 7.3 6.7 5.8
Cement 634.2 700.5 709.8 731.1 843.5 At target price 2010A 2011F 2012F 2013F
Lime 186.5 183.9 203.4 219.7 250.4 PE (pre-goodwill) (x) 13.4 13.3 12.3 10.3
Concrete 186.5 200.0 192.3 189.9 208.1 EV/EBITDA (x) 9.2 9.1 8.4 7.3
Concrete Products 132.8 131.5 121.8 121.7 138.0
Other 54.2 61.6 64.6 64.6 64.6 Comparable company data (x) 2011F 2012F 2013F
Total 1194.2 1277.5 1292.0 1327.1 1504.6 Boral PE 14.8 12.6 9.4
Year to 30 Jun EV/EBIT 13.6 13.0 8.9
Divisional EBIT 2009A 2010A 2011F 2012F 2013F EV/EBITDA 6.6 6.9 5.5
Cement, Lime and Concrete 185.1 223.7 229.6 242.3 283.7
Concrete Products 4.4 3.8 -0.2 3.8 4.8 CSR Ltd PE 12.6 13.3 10.7
Other -4.2 -11.3 -3.8 -2.5 -2.0 Year to 31 Mar EV/EBIT 4.9 6.6 5.4
Total 185.3 216.2 225.6 243.5 286.5 EV/EBITDA 3.3 4.2 3.6
Cash flow statement 2009A 2010A 2011F 2012F 2013F Per share data 2010A 2011F 2012F 2013F
EBITDA 214.5 236.9 247.1 269.7 307.7 No. shares 635.1 635.1 635.1 635.1
Change in working capital 5.2 -1.2 -2.7 -6.1 -27.3 EPS (cps) 23.9 24.1 26.1 31.1
Net interest (pd)/rec -14.2 -11.2 -17.9 -22.7 -22.9 EPS (normalised) (c) 23.9 24.1 26.1 31.1
Taxes paid -30.9 -47.5 -54.7 -55.3 -66.3 Dividend per share (c) 21.5 19.0 23.6 21.4
Other oper cash items 13.5 11.5 25.6 36.4 42.6 Ord Dividend payout ratio (%) 69.1 62.4 62.4 62.4
Cash flow from ops (1) 188.1 188.5 197.4 222.0 233.8 Total Dividend yield (%) 7.4 6.6 8.1 7.4
Capex (2) -43.1 -51.7 -135.9 -107.6 -57.4 NTA/share 1.19 1.24 1.27 1.36
Disposals/(acquisitions) 4.1 4.5 0.5 0.0 0.0
Other investing cash flow -2.1 -0.1 2.5 0.0 0.0 Growth ratios 2010A 2011F 2012F 2013F
Cash flow from invest (3) -41.1 -47.3 -132.9 -107.6 -57.4 Sales growth 7.0% 1.1% 2.7% 13.4%
Incr/(decr) in equity 113.5 0.0 0.0 0.0 0.0 Operating cost growth 6.2% 0.4% 1.2% 13.2%
Incr/(decr) in debt -210.0 -50.5 93.3 29.5 -37.0 EBITDA growth 10.4% 4.3% 9.1% 14.1%
Ordinary dividend paid -45.6 -114.2 -120.7 -143.9 -139.4 EBITA growth 16.7% 3.8% 8.4% 17.8%
Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Divisional EBIT Growth
Other financing cash flow -2.5 0.0 0.0 0.0 0.0 Cement, Lime and Concrete 20.9% 2.6% 5.5% 17.1%
Cash flow from fin (5) -144.6 -164.7 -27.4 -114.4 -176.4 Concrete Products -13.6% -106.1% -1728.3% 28.3%
Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0 Other -169.0% 66.4% 34.2% 20.0%
Inc/(decr) cash (1+3+5+6) 2.4 -23.5 37.1 0.0 0.0 EBIT growth 16.7% 3.8% 8.4% 17.8%
Equity FCF (1+2+4) 145.0 136.8 61.5 114.4 176.4 NPAT growth 23.1% 1.0% 8.1% 19.3%
Pre-goodwill NPAT growth 23.1% 1.0% 8.1% 19.3%
Balance sheet 2009A 2010A 2011F 2012F 2013F Pre-goodwill EPS growth 17.5% 1.0% 8.1% 19.3%
Cash & deposits 25.5 2.8 39.9 39.9 39.9 Normalised EPS growth 17.5% 1.0% 8.1% 19.3%
Trade debtors 162.8 153.3 155.8 161.4 186.7
Inventory 107.8 117.8 119.7 124.0 143.5 Key assumptions 2010A 2011F 2012F 2013F
Investments 72.5 87.7 94.8 94.8 94.8 Aust Housing Starts 169,573 142,685 146,606 165,173
Other intangible assets 169.0 179.1 179.6 179.6 179.6 Aust Housing Starts % ch 22.0% -15.9% 2.7% 12.7%
Fixed assets 774.3 760.6 787.0 788.0 789.1 Aust Non-Res spend % ch -4.9% -4.9% -5.0% 0.5%
Other assets 43.1 30.6 64.8 108.9 101.4 Aust E&C Spend % ch 3.9% 3.9% 4.5% 6.6%
Total assets 1355.0 1331.9 1441.6 1496.6 1534.9 Aust Roads Spend % ch -2.8% -2.8% 7.4% 4.3%
Short-term borrowings 0.4 1.0 0.1 0.1 0.1
Trade payables 106.1 105.4 107.1 111.0 128.4 Return metrics
Long-term borrowings 200.5 150.2 244.4 273.9 236.9 ROA (%) 16.1 16.3 16.6 18.9
Provisions 114.1 111.2 112.8 112.8 112.8 ROE (%) 16.6 16.2 17.0 19.5
Other liabilities 36.9 29.8 11.4 11.4 11.4 ROIC (%) 11.4 11.8 11.8 13.4
Total liabilities 458.0 397.6 475.8 509.2 489.6
Share capital 690.4 692.7 692.7 692.7 692.7
Other reserves 2.9 2.6 1.7 1.7 1.7
Retained earnings 200.6 236.0 268.4 290.0 347.9
Other equity 0.0 0.0 0.0 0.0 0.0
Total equity 893.9 931.3 962.8 984.4 1042.3
Balance sheet debt metrics
Net debt (A$m) 175.4 148.4 204.6 234.1 197.1
Gearing (ND/E) (%) 19.6 15.9 21.2 23.7 18.9
Gearing (ND/ND+E) (%) 16.4 13.7 17.5 19.2 15.9
ND/EBITDA 0.8 0.6 0.8 0.9 0.6

45

FBU financial summary
Year to 30 Jun (NZ$m) AIFRS AIFRS AIFRS AIFRS AIFRS Stock Code FBU
Divisional sales 6799.0 7403.9 9712.7 11034.8 12453.5 NZ$ per share A$ per share
Total revenue 6801.0 7403.9 9712.7 11034.8 12453.5 Price target 7.32 5.55
EBITDA 701.0 767.9 842.0 1046.6 1203.6 Closing price 6.00 4.57
Associate income 26.0 33.0 26.5 32.7 39.9 Projected return 22.0% 21.5%
Depreciation -206.0 -205.0 -229.5 -228.9 -229.7
EBITA 495.0 562.9 612.5 817.7 973.9 Shares on Issue 688.1
Amortisation/impairment 0.0 0.0 0.0 0.0 0.0 FBU Market Cap (A$m) 3144.6
EBIT 495.0 562.9 612.5 817.7 973.9 FBU Market Cap (NZ$m) 4128.6
EBIT(incl associate profit) 521.0 595.9 639.0 850.5 1013.8
Net interest expense -107.0 -118.0 -152.7 -152.7 -148.2 Valuation Summary NZ$ per share A$ per share
Pre-tax profit 414.0 477.9 486.4 697.7 865.6 DCF (Beta 1.25, RF Rate 5.25%, LTG 2.5%, WACC 10.07% $8.20 $6.22
Income tax expense -103.0 -111.0 -113.0 -184.9 -225.1 MRP 6%, Kd 7.25%, Ke 12.76%)
After-tax profit 311.0 366.9 373.4 512.8 640.6 Sum of the Parts $7.59 $5.76
Minority interests -10.0 -8.0 -6.3 -11.0 -16.1 PE Relative $6.29 $4.77
NPAT 301.0 358.9 367.1 501.8 624.5 Average Valuation $7.32 $5.55
Significant items -29.0 -76.0 0.0 0.0 0.0
NPAT post abnormals 272.0 282.9 367.1 501.8 624.5 Multiple Analysis 2011A 2012F 2013F 2014F
PE (pre-goodwill) (x) 10.8 11.2 8.2 6.6
Divisional sales revenue 2010A 2011A 2012F 2013F 2014F EV/EBIT (x) 10.8 9.4 7.1 5.9
Building Products 798.0 692.0 713.1 869.9 1004.9 EV/EBITDA (x) 10.8 6.9 5.6 4.8
Steel 1172.0 1214.0 1243.3 1376.8 1516.8
Distribution 878.0 843.9 941.3 1118.6 1250.7 At target price 2011A 2012F 2013F 2014F
Infrastructure 2020.0 2052.0 2242.8 2680.8 2917.9 PE (pre-goodwill) (x) 13.1 13.7 10.0 8.1
Laminates & Panels 1930.0 1979.0 1906.1 2184.5 2522.8 EV/EBITDA (x) 9.0 8.2 6.6 5.6
Crane Group 0.0 623.0 2659.2 2797.2 3233.3
Other (Corporate) 1.0 0.0 7.0 7.0 7.0 Comparable company data (x) 2012F 2013F 2014F
Total 6799.0 7403.9 9712.7 11034.8 12453.5 Boral PE 12.6 9.4 6.9
Year to 30 Jun EV/EBIT 13.0 8.9 7.0
Divisional EBIT 2010A 2011A 2012F 2013F 2014F EV/EBITDA 6.9 5.5 4.7
Building Products 114.0 111.0 89.1 119.7 138.2
Steel 82.0 83.0 68.3 92.2 102.4 CSR Ltd PE 13.3 10.7 8.0
Distribution 38.0 39.0 37.3 62.0 99.6 Year to 31 Mar EV/EBIT 6.6 5.4 4.2
Infrastructure 164.0 184.9 194.1 264.7 312.5 EV/EBITDA 4.2 3.6 3.0
Laminates & Panels 141.0 168.0 136.4 171.0 219.7
Crane Group 0.0 29.0 131.9 158.8 159.4 Per share data 2011A 2012F 2013F 2014F
Other (Corporate) -18.0 -19.0 -18.0 -18.0 -18.0 No. shares 688.1 688.1 688.1 688.1
Total 521.0 595.9 639.0 850.5 1013.8 EPS (cps) 43.9 53.3 72.9 90.8
EPS (normalised) (c) 55.7 53.3 72.9 90.8
Cash flow statement 2010A 2011A 2012F 2013F 2014F Dividend per share (c) 33.0 35.0 37.0 39.0
EBITDA 701.0 767.9 842.0 1046.6 1203.6 Dividend payout ratio (%) 75.1 65.6 50.7 43.0
Change in working capital 56.0 -140.9 -40.2 -188.3 -210.8 Dividend yield (%) 5.4 5.8 6.1 6.4
Net interest (pd)/rec -108.0 -122.0 -152.7 -152.7 -148.2 NTA/Share 2.7 2.9 3.3 3.9
Taxes paid -90.0 -86.0 -113.0 -184.9 -225.1
Other oper cash items -37.0 -17.0 20.2 21.7 23.8 Growth ratios 2011A 2012F 2013F 2014F
Cash flow from ops (1) 522.0 402.0 556.3 542.5 643.4 Sales growth 8.9% 31.2% 13.6% 12.9%
Capex (2) -189.0 -249.0 -289.5 -288.9 -229.7 Operating cost growth 8.8% 33.7% 12.6% 12.6%
Disposals/(acquisitions) 36.0 -1389.0 0.0 0.0 0.0 EBITDA growth 9.5% 9.6% 24.3% 15.0%
Other investing cash flow 0.0 0.0 0.0 0.0 0.0 EBITA growth 13.7% 8.8% 33.5% 19.1%
Cash flow from invest (3) -153.0 -1638.0 -289.5 -288.9 -229.7 Divisional EBIT growth
Incr/(decr) in equity 2.0 645.0 0.0 0.0 0.0 Building Products -2.6% -19.7% 34.3% 15.5%
Incr/(decr) in debt -145.0 754.0 -52.4 -12.7 -159.1 Steel 1.2% -17.7% 35.0% 11.0%
Ordinary dividend paid -151.0 -189.0 -214.4 -240.8 -254.6 Distribution 2.6% -4.4% 66.3% 60.7%
Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Infrastructure 12.7% 5.0% 36.4% 18.0%
Other financing cash flow -60.0 27.0 0.0 0.0 0.0 Laminates & Panels 19.1% -18.8% 25.4% 28.4%
Cash flow from fin (5) -354.0 1237.0 -266.8 -253.5 -413.7 Crane Group 20.4% 0.4%
Forex and disc ops (6) -2.0 -2.0 0.0 0.0 0.0 Other (Corporate) -5.6% -5.3% 0.0% 0.0%
Inc/(decr) cash (1+3+5+6) 13.0 3.0 0.0 0.0 0.0 EBIT growth 13.7% 8.8% 33.5% 19.1%
Equity FCF (1+2+4) 333.0 153.0 266.8 253.5 413.7 NPAT growth 19.2% 2.3% 36.7% 24.5%
Pre-goodwill NPAT growth 19.2% 2.3% 36.7% 24.5%
Balance sheet 2010A 2011A 2012F 2013F 2014F Pre-goodwill EPS growth 15.5% -4.3% 36.7% 24.5%
Cash & deposits 112.0 115.0 115.0 115.0 115.0 Normalised EPS growth 15.5% -4.3% 36.7% 24.5%
Trade debtors 1114.0 1517.0 1542.3 1734.9 1950.5
Inventory 1091.0 1527.0 1510.5 1699.1 1910.3 Key Assumptions
Investments 259.0 281.0 281.0 281.0 281.0 New Zealand housing starts 13,539 14,919 18,847 21,874
Goodwill 820.0 1424.0 1424.0 1424.0 1424.0 New Zealand housing starts % ch -16.3% 10.2% 26.3% 16.1%
Other intangible assets 409.0 404.0 404.0 404.0 404.0 New Zealand non-res spend % ch -6.1% 5.8% 8.2% 6.0%
Fixed assets 1909.0 2218.0 2196.7 2212.7 2228.0 New Zealand eng & infra % ch 0.0% 11.6% 24.0% 6.0%
Other assets 0.0 6.0 6.0 6.0 6.0 Australian housing starts 157,482 135,030 157,138 174,741
Total assets 5714.0 7492.0 7479.5 7876.7 8318.8 Australian housing starts % ch -4.4% -14.3% 16.4% 11.2%
Short-term borrowings 86.0 139.0 139.0 139.0 139.0 Australian non-res spend % ch -6.0% -6.0% 7.0% 9.0%
Trade payables 1116.0 1435.0 1545.1 1738.0 1954.0 Australian eng & infra spend % ch 4.0% 3.0% 10.2% 4.0%
Long-term borrowings 1133.0 1868.0 1815.6 1802.9 1643.8 Australian roads spend % ch 7.7% 5.1% 3.5% -2.8%
Provisions 127.0 101.0 101.0 101.0 101.0 US housing starts 570 674 842 1,024
Other liabilities 229.0 249.0 26.2 -17.8 -2.5 US housing starts % ch -3.8% 18.2% 25.0% 21.6%
Total liabilities 2691.0 3792.0 3626.9 3763.1 3835.3 NZD/AUD exchange rate 1.292 1.268 1.278 1.269
Share capital 1912.0 2553.0 2553.0 2553.0 2553.0 EUR/NZD exchange rate 0.581 0.640 0.618 0.585
Retained earnings 999.0 1031.0 1183.6 1444.6 1814.5 CNY/NZD exchange rate 5.094 5.313 5.169 4.784
Reserves 78.0 82.0 82.0 82.0 82.0 USD/NZD exchange rate 0.791 0.854 0.843 0.768
Total equity 2989.0 3666.0 3818.6 4079.6 4449.5 EUR/AUD exchange rate 0.725 0.790 0.804 0.804
Total shareholders' equity 3023.0 3700.0 3852.6 4113.6 4483.5 Return Metrics
Total liabilities & SE 5714.0 7492.0 7479.5 7876.7 8318.8 ROA (%) 9.0 8.5 11.1 12.5
ROE (%) 10.8 9.8 12.7 14.6
Balance sheet debt metrics ROIC (%) 10.3 8.4 10.6 12.1
Net Debt 1107.0 1892.0 1839.6 1826.9 1667.8
Gearing (ND/E) (%) 36.6 51.1 47.7 44.4 37.2
Gearing (ND/ND+E) 26.8 33.8 32.3 30.8 27.1
ND/EBITDA 1.6 2.5 2.2 1.7 1.4
46


BLD financial summary
Year to 30 Jun (A$m) AIFRS AIFRS AIFRS AIFRS AIFRS Stock Code BLD
EBITA 250.2 232.2 309.8 454.6 586.7 BLD Market Cap 2551.5
EBIT(incl associate profit) 270.5 274.6 344.2 482.7 623.1 DCF (Beta 1.25, RF Rate 5.25%, LTG 2.5%, WACC 10.07% $5.27
Net interest expense -97.0 -63.7 -106.0 -137.3 -138.9 MRP 6%, kd 7.25%, ke 12.76%)
Minority interests -1.2 2.3 3.0 1.4 -2.4
Significant items -235.0 -5.8 395.0 0.0 0.0 PE (pre-goodwill) (x) 14.8 12.6 9.3 6.9
NPAT post abnormals -90.5 167.7 598.2 275.6 372.9 EV/EBITDA (x) 5.9 4.9 4.0 3.4
EV/EBIT (x) 11.1 8.9 6.3 4.9
Australian Construction Materials 2266.2 2420.2 2430.3 2662.4 2807.0 At target price 2011A 2012F 2013F 2014F
Cement 706.3 732.4 762.0 840.2 910.2 EV/EBITDA (x) 7.4 7.5 6.0 5.1
Building Products 1212.6 1157.4 1034.3 1100.4 1210.4 PE (pre-goodwill) (x) 16.8 14.3 10.6 7.8
USA 363.7 431.2 463.1 523.6 648.1
CRB/Other 293.8 285.5 266.4 289.8 318.6 Comparable company data (x) 2012F 2013F 2014F
Asian Plasterboard 0.0 0.0 314.6 629.2 692.1 Adelaide Brighton EV/EBITDA 7.7 6.6 5.7
Discontinued Operations 108.0 29.7 0.0 0.0 0.0 Year to 31 Dec EV/EBIT 10.0 8.4 7.1
Total 4950.6 5056.5 5270.6 6045.6 6586.4 PE 11.1 9.3 8.0
PEG 1.3 1.1 0.9
Divisional EBIT 2010A 2011A 2012F 2013F 2014F CSR Ltd EV/EBITDA 4.2 3.6 3.0
Australian Construction Materials 201.0 203.9 245.2 300.7 335.2 Year to 31 Mar EV/EBIT 6.6 5.4 4.2
Cement 87.9 95.9 90.9 103.1 117.1 PE 13.3 10.7 8.0
Building Products 100.7 84.5 58.0 64.7 101.5 PEG -0.7 -0.6 -0.4
USA -103.7 -99.0 -76.0 -50.6 -10.0 Per share data 2011A 2012F 2013F 2014F
CRB 6.3 7.6 7.5 9.6 13.7 No. shares 718.7 724.4 724.4 724.4
Asian Plasterboard 0.0 0.0 39.5 76.1 86.5 EPS (cps) 23.2 82.9 38.0 51.5
Discontinued Operations 0.0 0.0 0.0 0.0 0.0 EPS (normalised) (c) 24.0 28.2 38.0 51.5
Other -21.7 -18.3 -21.0 -21.0 -21.0 Dividend per share (c) 14.5 16.0 17.0 20.0
Total 270.5 274.6 344.2 482.7 623.1 Dividend payout ratio (%) 60.4 56.8 44.7 38.9
Dividend yield (%) 4.1 4.5 4.8 5.6
Cash flow statement 2010A 2011A 2012F 2013F 2014F NTA/share 4.04 4.41 4.63 4.96
EBITDA 502.8 477.2 585.0 736.3 874.3
Change in working capital 109.3 13.9 -15.1 -76.5 -65.7 Growth ratios 2011A 2012F 2013F 2014F
Net interest (pd)/rec -101.5 -43.6 -106.0 -137.3 -138.9 Sales growth 2.1% 4.2% 14.7% 8.9%
Taxes paid -11.7 -21.5 -38.0 -71.2 -108.9 Operating cost growth 3.0% 2.3% 13.3% 7.6%
Other oper cash items -39.8 -66.0 38.8 29.5 33.9 EBITDA growth -5.1% 22.6% 25.9% 18.7%
Cash flow from ops (1) 459.1 360.0 464.7 480.8 594.8 EBITA growth -7.2% 33.4% 46.7% 29.1%
Capex (2) -179.9 -345.0 -439.3 -440.8 -326.7 Divisional EBIT growth
Disposals/(acquisitions) 44.7 -73.3 -852.0 0.0 -44.7 Australian Construction Materials 1.4% 20.3% 22.6% 11.4%
Other investing cash flow -1.5 36.6 0.0 0.0 0.0 Cement 9.1% -5.2% 13.4% 13.6%
Cash flow from invest (3) -136.7 -381.7 -1291.3 -440.8 -371.4 Building Products -16.1% -31.3% 11.5% 56.9%
Incr/(decr) in equity 0.7 479.8 0.0 0.0 0.0 USA 4.5% 23.3% 33.4% 80.3%
Incr/(decr) in debt -224.1 9.7 935.9 79.1 -89.3 CRB 20.6% -1.6% 28.4% 43.1%
Ordinary dividend paid -42.4 -47.9 -108.2 -119.1 -134.0 Asian Plasterboard n.m. n.m. 92.8% 13.7%
Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 Discontinued Operations n.m. n.m. n.m. n.m.
Other financing cash flow 0.0 2.6 0.0 0.0 0.0 Other 15.7% 14.8% 0.0% 0.0%
Cash flow from fin (5) -265.8 444.2 827.6 -40.0 -223.3 EBIT growth -7.2% 33.4% 46.7% 29.1%
Forex and disc ops (6) -0.1 -9.0 0.0 0.0 0.0 NPAT growth 20.1% 17.1% 35.6% 35.3%
Inc/(decr) cash (1+3+5+6) 56.5 413.5 1.0 0.0 0.0 Pre-goodwill NPAT growth 20.1% 17.1% 35.6% 35.3%
Equity FCF (1+2+4) 279.2 15.0 25.4 40.0 268.1 Pre-goodwill EPS growth -0.4% 17.3% 35.1% 35.3%
Normalised EPS growth -0.4% 17.3% 35.1% 35.3%
Balance sheet 2010A 2011A 2012F 2013F 2014F
Cash & deposits 157.0 561.2 561.2 561.2 561.2 Key assumptions
Trade debtors 783.7 784.1 796.2 884.2 959.8 Australian Housing Starts 157,482 132,530 154,638 174,741
Inventory 548.5 596.1 560.1 621.9 675.1 Australian Housing Starts % ch -4.4% -15.8% 16.7% 13.0%
Investments 294.1 240.2 0.0 0.0 0.0 Australian Non-Res Spend % ch -6.0% 0.0% 8.9% 1.9%
Other intangible assets 277.6 255.9 449.9 449.9 449.9 Australian Eng & Infra spend % ch 4.0% 1.0% 8.2% -8.3%
Fixed assets 2785.1 2894.9 3774.5 4133.6 4217.4 US housing starts 581 696 870 1,061
Other assets 363.4 335.6 855.6 598.7 706.9 US housing starts % ch -1.8% 19.8% 25.0% 21.9%
Total assets 5209.4 5668.0 6997.5 7249.5 7570.2 US Non-Res spend % ch -1.7% -0.2% 3.1% 5.1%
Short-term borrowings 8.9 163.4 163.4 163.4 163.4 US Engineering Spend % ch -0.6% -1.9% 0.2% 4.3%
Trade payables 640.9 702.8 663.8 737.2 800.1 AUD/USD Exchange Rate 0.995 1.062 1.097 1.033
Long-term borrowings 1330.7 903.2 1781.7 1803.9 1827.8 Balance sheet debt metrics
Provisions 471.9 486.2 486.2 486.2 481.2 Net debt (A$m) 505.4 1383.9 1406.1 1430.0
Other liabilities 130.9 256.0 256.0 256.0 256.0 Gearing (ND/E) (%) 16.0 38.0 37.0 35.4
Total liabilities 2583.3 2511.6 3351.1 3446.7 3528.5 Gearing (ND/ND+E) (%) 13.8 27.5 27.0 26.1
Share capital 1724.0 2261.3 2261.3 2261.3 2261.3 Net interest/EBIT cover (x) 4.3 3.2 3.5 4.5
Other reserves -38.9 -159.5 -159.5 -159.5 -159.5 ND/EBITDA 1.1 2.4 1.9 1.6
Retained earnings 938.4 1007.0 1497.0 1653.5 1892.3
Other equity 0.0 0.0 0.0 0.0 0.0 Return metrics
Total equity 2623.5 3108.8 3598.8 3755.3 3994.1 ROA (%) 5.0 5.4 6.8 8.4
Minority interest 2.6 47.6 47.6 47.6 47.6 ROE (%) 6.1 6.1 7.5 9.6
Total shareholders' equity 2626.1 3156.4 3646.4 3802.9 4041.7 ROIC (%) 4.8 6.8 7.0 8.5

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iiNet
Another Transaction
The acquisition of Transact fits iiNet's strategy to acquire scale ahead of the NBN
and is at an attractive multiple of 3.5x EV/EBITDA. Our EPS forecasts increase
6.2% in both FY12 and FY13. Accretive acquisitions such as this one, strong free
cash flow and ROIC of more than 20% support our Buy rating, TP A$3.28.

Key forecasts
FY10A
!
FY11A
!
FY12F
!
FY13F
!
FY14F
!
EBITDA (A$m) 80.70! 104.8! 126.3" 137.3" 141.2"
Reported net profit (A$m) 34.60! 32.30! 47.20" 52.40" 57.00!
Normalised net profit (A$m)! 34.80! 38.00! 47.20" 52.40" 57.00!
Normalised EPS (c)! 22.90! 24.95! 31.64" 35.99" 39.10!
Normalised EPS growth (%) 35.40! 8.95! 26.80! 13.70! 8.66!
Dividend per share (c) 9.00! 12.00! 16.00" 18.00" 20.00"
Dividend yield (%) 3.53! 4.71! 6.27! 7.06! 7.84!
Normalised PE (x) 11.13! 10.22! 8.06! 7.09! 6.52!
EV/EBITDA (x) 5.38! 4.63! 4.16! 3.48! 3.11!
Price/net oper. CF (x) 5.19! 4.05! 3.59! 3.13# 3.29#
ROIC (%) 21.60! 22.70! 21.90! 21.50! 23.60!
Use of "# indicates that the line item has changed by at least 5%.
1. Pre non-recurring items and post preference dividends
Accounting standard: IFRS
year to Jun, fully diluted

Transact acquisition fits strategy and adds a mix bag of assets at the right price
iiNets acquisition of Transact for A$60m is at an attractive 3.5x EV/EBITDA and will be debt
funded. The acquisition is in line with managements strategy to build scale ahead of the
NBN, adding 40k broadband customers. Transact differs slightly from previous ISP
acquisitions in that A$30m of Transacts revenue is from SME, corporate and government
customers and it owns an HFC/Fibre-to-the-premise access network passing 270k premises
as well as data centres. iiNet reports Transact generates annual recurring revenue of A$80m
and EBITDA of A$17m and expects growth to be driven by data centre expansion and FTTP
rollouts to new housing developments. Capex of A$15m in FY11 is expected to be the peak;
we forecast this to fall to A$10m in FY13 and remain at that level.
Synergies predominantly from leveraging scale, rather than off-net migrations
The majority of customers are on-net, but there still should be material synergies supporting
margin improvements from: 1) bringing A$3m of IT outsourcing in-house; 2) leveraging
iiNets backhaul and international bandwidth; and 3) head office savings. In addition to these
synergies, iiNet expects to benefit from Transacts tax losses, subject to ATO approval.
NBN impact on the access network the wildcard
The impact of NBN on Transacts network is the wildcard in this acquisition; we see limited
downside as the risk of overbuild is low in our view with Transact already offering access
speeds of >50Mbps. Upside risks include NBN Co acquiring it or paying to migrate
customers.
Acquisitions and synergies key to investment case, maintain Buy
We upgrade our FY12F and FY13F EPS forecasts both by 6.2%. Our price target has
increased 2.5% to A$3.28 and we maintain our Buy rating on the stock. The company
generates strong free cash flow, maintains ROIC of more than 20% and has scope for further
acquisitions to drive earnings growth, in our view.

21 November 2011
Analysts
Alan Stuart
+61 2 8259 5834
alan.stuart@rbs.com
Ian Martin
+61 3 9612 1585
ian.jx.martin@rbs.com
Fraser McLeish
+61 2 8259 5543
fraser.mcleish@rbs.com

84 002 768 701, AFS Licence 240530


Price performance
(1M) (3M) (12M)
Price (A$) 2.59 2.20 2.58
Absolute (%) -1.5 15.9 -1.2
Rel market (%) -1.3 18.0 9.8
Rel sector (%) 1.2 27.0 15.6

0.8
1.2
1.6
2.0
2.4
2.8
3.2
Nov 08 Nov 09 Dec 10
IIN.AX S&P/ASX200

Market capitalisation
A$389.21m (US$385.40m)
Average (12M) daily turnover
A$0.89m (US$0.91m)
Sector: BBG AP Software
RIC: IIN.AX, IIN AU
Priced A$2.55 at close 21 Nov 2011.
Source: Bloomberg

Buy
Target price
A$3.28 (from A$3.20)
Price
A$2.55
Short term (0-60 days)
n/a

49

iiNet | Investment View | 21 November 2011 2

IIN financial summary
Year to 30 Jun (A$m) AIFRS AIFRS AIFRS AIFRS AIFRS Closing price (A$) 2.550 3.28
Income statement 2010A 2011A 2012F 2013F 2014F Valuation metrics
Divisional sales 473.3 697.2 768.2 803.6 811.4 Preferred methodology Val'n (A$) 3.26 $
Total revenue 474.6 698.7 769.8 805.1 812.9 DCF valuation inputs
EBITDA 80.7 104.8 126.3 137.3 141.2 Rf 5.25% 10-year rate 5.25%
Associate income 0.0 0.0 0.0 0.0 0.0 Rm-Rf 6.00% Margin 2.0%
Depreciation -32.7 -43.6 -50.6 -52.1 -50.9 Beta 1.41 Kd 7.25%
EBITA 48.0 61.2 75.7 85.2 90.3 CAPM (Rf+Beta(Rm-Rf)) 13.7% Ke 13.7%
Amortisation/impairment 0.0 0.0 0.0 0.0 0.0 E/EV*Ke+D/EV*Kd(1-t) NPV cash flow (A$m) 583
EBIT 48.0 61.2 75.7 85.2 90.3 Equity (E/EV) 60.0% Minority interest (A$m) 0.0
EBIT(incl associate profit) 48.0 61.2 75.7 85.2 90.3 Debt (D/EV) 40.0% Net debt (A$m) 96.4
Net interest expense -2.2 -6.5 -8.3 -10.4 -8.9 Interest rate 7.25% Investments (A$m) 0
Pre-tax profit 45.8 54.7 67.4 74.9 81.5 Tax rate (t) 30.0% Equity market value (A$m) 487
Income tax expense -10.9 -16.6 -20.2 -22.5 -24.4 WACC 10.3% Diluted no. of shares (m) 149.2
After-tax profit 34.8 38.0 47.2 52.4 57.0 DCF valuation (A$) 3.26 $
Minority interests
NPAT operating 34.8 38.0 47.2 52.4 57.0 Multiples 2011A 2012F 2013F 2014F
Significant items -0.2 -5.7 0.0 0.0 0.0 Enterprise value (A$m) 485.6 524.9 478.0 439.3
Reported NPAT post abnormals 34.6 32.3 47.2 52.4 57.0 EV/Sales (x) 0.7 0.7 0.6 0.5
EV/EBITDA (x) 4.6 4.2 3.5 3.1
EV/EBIT (x) 7.9 6.9 5.6 4.9
PE (pre-goodwill) (x) 10.2 8.1 7.1 6.5
PE growth (x)
At target price 2011A 2012F 2013F 2014F
EV/EBITDA (x) 5.7 5.0 4.3 3.9
PE (pre-goodwill) (x) 13.1 10.4 9.1 8.4
Cash flow statement 2010A 2011A 2012F 2013F 2014F Comparable company data (x) 2012F 2013F 2014F
EBITDA 80.7 104.8 126.3 137.3 141.2 Amcom EV/EBITDA 5.9 5.1 4.6
Change in working capital 16.5 0.0 6.1 10.2 0.3 Year to 30 Jun EV/EBIT 8.2 7.0 6.2
Net interest (pd)/rec -2.2 -6.5 -8.3 -10.4 -8.9 PE 12.4 10.7 9.7
Taxes paid -20.2 -9.9 -18.3 -18.4 -19.6
Cash flow from ops (1) 74.7 96.0 105.9 118.8 113.0 TPG Telecom EV/EBITDA 5.0 4.3 3.8
Capex (2) -33.4 -40.1 -44.3 -44.3 -43.9 Year to 31 Jul EV/EBIT 7.3 6.0 5.2
Disposals/(acquisitions) -40.0 -78.9 -60.0 0.0 0.0 PE 10.0 8.8 8.1
Cash flow from invest (3) -74.8 -130.9 -108.2 -48.3 -48.0
Incr/(decr) in equity 0.5 0.4 -17.4 1.1 1.3 Per share data 2011A 2012F 2013F 2014F
Incr/(decr) in debt 23.0 48.1 60.0 0.0 0.0 No. shares 152.9 145.5 145.7 145.9
Ordinary dividend paid -12.1 -16.7 -19.6 -24.6 -27.6 EPS (cps) 21.2 31.6 36.0 39.1
Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 EPS (normalised) (c) 25.0 31.6 36.0 39.1
Cash flow from fin (5) 11.4 31.8 23.0 -23.6 -26.3 Dividend per share (c) 12.0 16.0 18.0 20.0
Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0 Dividend payout ratio (%) 48.0 49.6 49.9 51.0
Inc/(decr) cash (1+3+5+6) 11.4 -3.1 20.7 46.9 38.7 Dividend yield (%) 4.7 6.3 7.1 7.8
Equity FCF (1+2+4) 41.4 55.9 61.5 74.5 69.1
Growth ratios 2011A 2012F 2013F 2014F
Balance sheet 2010A 2011A 2012F 2013F 2014F Sales growth 47.3% 10.2% 4.6% 1.0%
Cash & deposits 8.6 5.5 26.2 73.0 111.8 Operating cost growth 50.9% 8.4% 3.8% 0.6%
Trade debtors 25.2 40.0 46.2 48.3 48.8 EBITDA growth 29.9% 20.5% 8.7% 2.8%
Inventory 1.3 4.6 3.8 2.2 2.2 EBITA growth 27.6% 23.7% 12.6% 6.0%
Investments 0.0 0.0 0.0 0.0 0.0
Goodwill EBIT growth
Other intangible assets 242.2 305.5 297.7 290.3 283.3 EBIT growth 27.6% 23.7% 12.6% 6.0%
Fixed assets 71.0 82.0 147.4 151.0 155.1 NPAT growth 9.3% 24.1% 11.0% 8.8%
Other assets 22.6 18.9 24.6 25.3 25.5 Pre-goodwill NPAT growth 9.3% 24.1% 11.0% 8.8%
Total assets 371.0 456.5 545.9 590.2 626.6 Pre-goodwill EPS growth 8.9% 26.8% 13.7% 8.7%
Short-term borrowings 3.4 1.3 1.3 1.3 1.3 Normalised EPS growth 8.9% 26.8% 13.7% 8.7%
Trade payables 56.3 69.0 77.2 86.8 87.3
Long-term borrowings 49.9 100.6 160.6 160.6 160.6 Operating performance 2011A 2012F 2013F 2014F
Provisions 7.8 13.3 13.3 13.3 13.3 Asset turnover (%) 42.1 38.3 35.4 33.3
Other liabilities 28.3 29.8 38.9 40.7 41.1 EBITDA margin (%) 15.0 16.4 17.1 17.4
Total liabilities 145.6 214.0 291.3 302.7 303.6 EBIT margin (%) 8.8 9.9 10.6 11.1
Share capital 223.1 223.6 206.1 207.2 208.5 Net profit margin (%) 5.5 6.1 6.5 7.0
Other reserves 3.8 3.9 3.9 3.9 3.9 Return on net assets (%) 25.2 29.7 29.6 28.0
Retained earnings -1.6 15.0 44.6 76.4 110.7 Net debt (A$m) 96.4 135.7 88.8 50.1
Other equity 0.0 0.0 0.0 0.0 0.0 Net debt/equity (%) 39.7 53.3 30.9 15.5
Total equity 225.3 242.5 254.6 287.5 323.1 Net interest/EBIT cover (x) 9.4 9.2 8.2 10.2
Minority interest ROIC (%) 22.7 21.9 21.5 23.6
Total liabilities & SE 371.0 456.5 545.9 590.2 626.6 Internal liquidity 2011A 2012F 2013F 2014F
Current ratio (x) 0.6 0.8 1.1 1.4
Receivables turnover (x) 21.4 17.8 17.0 16.7
Payables turnover (x) 9.5 8.8 8.1 7.7
Price target (A$)
DCF

50

Produced by: RBS Morgans Limited
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Technology One
Good result in a difficult market
TNE reported an FY11 result that was in-line with our expectations. EBITDA was
up 17% to A$31.1m and the Board declared another 1.5c special dividend that
was not in our forecasts but was flagged as likely in the absence of M&A. TNE
looks set for long-term growth but we maintain our Hold on valuation grounds.

Key forecasts
FY10A
!
FY11A
!
FY12F
!
FY13F
!
FY14F
!
EBITDA (A$m) 26.80! 31.10! 36.20! 40.80! 44.20!
Reported net profit (A$m) 17.80! 20.30! 22.90! 26.00! 27.90"
Normalised net profit (A$m)! 17.80! 20.30! 22.90! 26.00! 27.90"
Normalised EPS (c)! 5.94! 6.71! 7.53! 8.53! 9.11"
Normalised EPS growth (%) 13.20! 13.00! 12.20! 13.20! 6.83!
Dividend per share (c) 5.66! 6.20! 5.27! 5.97! 6.38"
Dividend yield (%) 5.19! 5.69! 4.83! 5.48! 5.85!
Normalised PE (x) 18.40! 16.20! 14.50! 12.80! 12.00!
EV/EBITDA (x) 11.30! 9.73! 8.22! 7.14! 6.42!
Price/net oper. CF (x) 10.50! 15.60! 12.50# 10.90# 10.10#
ROIC (%) 46.30! 54.00! 55.40! 60.50! 63.70!
Use of #" indicates that the line item has changed by at least 5%.
Source: Company data, RBS Morgans forecasts
year to Sep, fully diluted

Technology One delivered a good result as expected
TNEs FY11 result was a good quality result with 17% EBITDA growth which was in-line with
our expectations. Revenue of A$157m was up 15% yoy and in-line with our A$156m
forecast. EBITDA of A$31.1m was inline with our A$32.1m as was NPAT of A$20.3m (up
14% yoy). The Board declared a 1.5c special dividend in additional to a 3.16cps ordinary 2H
dividend. The special dividend was not in our forecasts but was largely expected as TNE had
previously flagged they would pay a special dividend in the absence of M&A opportunities
and no M&A activity took place this year. TNE goes ex-entitlement on 2-Dec. Operating cash
flow was a touch lighter than expected as TNE paid a small deferred tax liability. Otherwise
this was a difficult to fault result which sees TNE end the year with A$29.5m in net cash
(9.7cps). On the divisional composition initial and annual license fees drove most of the
growth, up 15% while consulting services was soft, flat yoy. Despite having a suite of nearly
one dozen core products, nearly 80% of TNEs profit comes from its Financial, and Corporate
and Performance Management software which leaves plenty of room for growth elsewhere.
Costs will increase in 1H but good continued growth is expected for the year
The Board has guided for an expense rise in the 1H but "good continuing growth" for the full
year. TNE has traditional grown its earnings in the low double-digits and while overall
business conditions are uncertain, Enterprise Services remains robust. We have reduced our
FY12 and FY13 EPS forecasts by about 3.5% and now forecast 12% EPS growth in FY12.
Investment view Hold recommendation maintained, price target set at A$1.07
We value TNE at A$1.07 per share (previously A$1.09) based on an equally weighted
DCF:PE compco methodology. The key risk to our forecasts relates to improvements or
declines in business and government technology spend with positive catalysts relating to a
greater-than-expected customer demand.

21 November 2011
Analysts
Nick Harris
+61 7 3334 4557
nick.harris@rbsmorgans.com
Scott Power
+61 7 3334 4884
scott.power@rbsmorgans.com

84 002 768 701, AFS Licence 240530


Price performance
(1M) (3M) (12M)
Price (A$) 1.11 1.04 1.04
Absolute (%) -1.4 4.8 4.3
Rel market (%) -1.1 6.7 15.9
Rel sector (%) 1.4 14.8 22.0

0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
Nov 08 Nov 09 Nov 10
TNE.AX S&P/ASX200

A$332.14m (US$332.46m)
A$0.16m (US$0.16m)
Sector: BBG AP Software
RIC: TNE.AX, TNE AU
Source: Bloomberg

Hold
Target price
A$1.07 (from A$1.09)
Price
A$1.09
n/a

51

Technology One | Investment View | 21 November 2011 2

Investment view quality business but fairly priced, in our opinion
The bull points
# Sitting on net cash balance of A$29.5m (9.7cps) which is likely to result in either:
1) opportunistic acquisitions; or 2) ongoing special dividends (as we have seen for the last two
years and are likely to see again).
# Fantastic ROIC at 55.4% for FY11.
# High-quality management Executive Chairman and CEO Mr Adrian Di Marco has
consistently managed double-digit earnings and dividend growth (excluding a few unforeseen
events such as the global financial crisis).
# Plenty of areas of potential upside; however, most are longer-term in their nature: 1) TNEs
suite of one dozen plus products has large upside if it can get greater customer traction;
2) lower relative expense growth is likely as TNE continues moving the more medial tasks
offshore where they can be performed with substantially lower staff and overhead costs; and
3) the large opportunity in the United Kingdom which lost A$1.5m in FY11 (unchanged yoy)
and looks unlikely to turn profitable for at least a few more years.
The bear points
# TNE is fairly valued by most long-term measures including P/E, EV/EBITDA and DCF.
# While consumer confidence remains shaky, parts of our economy will struggle and businesses
may be able to delay upgrades for a while longer. Government expenditure remains under
pressure and with Queensland and New South Wales state elections due shortly, this may
have an adverse impact on signing government deals.
# The continual and capital-intensive need for R&D investment, although off-shoring looks likely
to improve business leverage.
Product summary
# TNE provides preconfigured Enterprise applications to over 900 large corporations,
government departments and statutory authorities.
# Overall business confidence and capex intension remains weak; however, TNEs core area
(Enterprise Services) remains reasonably robust as growing business are increasingly
investing in business analytics which TNE provides.
# License fees were up 15% across the board while consulting services were flat yoy and other
revenue grew by about 50%.
Figure 1 : Licence fee revenue split
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Source: Company data, RBS Morgans estimates

52

Table 1 : Technology One results snapshot
A$m
1H10 2H10 FY10 1H11 2H11 FY11A yoy gth Actual vs
RBSM F
2H11 vs
1H11
2H11 vs
2H10
RBSM
FY11F
Operating revenue 59.2 75.9 135.1 70.9 85.8 156.7 16.0% 0.7% 21.0% 13.1% 155.6
Ops expenses (excl
R&D)
39.6 42.0 81.6 43.8 54.5 98.3 20.5% 4.6% 24.2% 29.7% 93.9
Ops expenses (inc
R&D)
52.3 56.2 108.5 58.8 66.9 125.6 15.8% 1.7% 13.8% 18.9% 123.5
EBITDA 9.0 17.5 26.5 12.2 18.9 31.1 17.1% -3.1% 55.4% 8.1% 32.1
PBT 6.9 16.4 23.3 9.1 17.6 26.7 14.6% -1.2% 93.1% 7.3% 27.0
Tax 1.2 4.3 5.469 1.7 4.6 6.3 16.1% -9.3% 163.6% 7.8% 7.0
NPAT 5.7 12.1 17.8 7.4 13.0 20.3 14.1% -0.8% 76.3% 7.1% 20.5
EPS (c) 1.86 3.9 5.80 2.39 4.3 6.7 15.7% -1.3% 80.8% 9.6% 6.8
DPS (c) 1.33 4.4 5.70 1.46 4.7 ## 6.1 7.4% 27.5% 219.2% 6.6% 4.8
## inc 1.5c special dividend, basic 2H DPS was 3.16c fully franked
R&D spend 12.7 14.3 27.0 14.9 12.4 27.3 1.4% -16.3% -16.7% -12.9% 32.7
Operating cash flow 9.1 22.5 31.6 6.7 14.6 21.2 -32.8% -14.1% 118.8% -35.3% 24.7

Key ratios
EBITDA margin 15.3% 23.1% 19.7% 17.2% 22.1% 19.8% 20.6%
Payout ratio 71.5% 110.9% 98.3% 61.1% 107.9% 91.2% 70.6%
R&D as % of revenue 21.5% 18.8% 20.0% 21.0% 14.5% 17.4% 21.0%
Tax rate 17.4% 26.1% 23.5% 19.2% 26.2% 23.8% 25.9%
Source: Company data, RBS Morgans estimates
Changes to our forecasts and valuation
Our compco is based on 13.8x FY12F EPS (previously 15.1x FY11 EPS) while our DCF-based
valuation has fallen marginally due to our lower EPS growth assumptions. Our equally weighted
DCF\PE compco valuation has fallen from A$1.09 to A$1.07 and we retain our Hold
recommendation.
Table 3 : Changes to our forecasts and valuation
(A$m) FY11F FY11A Old FY12F New FY12F Old FY13F New FY13F
Revenue 155.6 156.7 175.8 177.1 196.9 198.4
% change 0.8% 0.8% 0.8%
EBITDA 32.1 31.1 36.8 36.2 41.8 40.8
% change -3.1% -1.8% -2.6%
EBIT 26.1 25.9 30.5 30.7 35.3 35.0
% change -0.8% 0.7% -1.0%
NPAT 20.5 20.3 23.7 22.9 27.3 26.0
% change -0.9% -3.5% -4.6%
EPS (c) 6.8 6.7 7.8 7.5 9.0 8.5
% change -1.3% -3.6% -4.9%
DPS (c) 4.8 6.2 5.5 5.3 6.3 6.0
% change 30.3% -3.7% -4.9%

Old New
DCF A$1.15 A$1.10
% change -4.7%
PE A$0.98 A1.04
% change 6.4%
Weighted A$1.09 A1.07
% change -2.0%
DCF weighting 50% 50%
% change 0
PE weighting 50% 50%
% change 0

Table 2 : Peers comparison

FY12F PE FY12F EPS
growth
RKN 16.4 16.1%
DTL 11.9 10.2%
ASX 13.5 7.5%
IRE 13.4 17.4%
Average 13.8 12.8%
TNE 14.5 12.2%
RBS and RBS Morgans Forecasts

53

Risks and catalysts
Potential catalysts relate to the signing of further substantial contracts and the possibility of further
corporate activity (TNE now holds A$29.5m in net cash). Key risks relate to the possibility of
further delays in Australian IT expenditure, which could result in cost overruns as TNE invests in
staff ahead of customer demand.
TNE financial summary
Year to 30 Sep (A$m) AIFRS AIFRS AIFRS AIFRS AIFRS Closing price (A$) 1.10 1.07
Income statement 2010A 2011A 2012F 2013F 2014F Valuation metrics
Divisional sales 135.1 156.7 177.1 198.4 214.2 Preferred methodology Val'n (A$) 1.07 $
Total revenue 135.1 156.7 177.1 198.4 214.2 DCF valuation inputs
EBITDA 26.8 31.1 36.2 40.8 44.2 Rf 5.25% 10-year rate 5.25%
Associate income 0.0 0.0 0.0 0.0 0.0 Rm-Rf 6.00% Margin 2.0%
Depreciation -4.2 -5.2 -5.5 -5.8 -6.1 Beta 1.11 Kd 7.25%
EBITA 22.7 25.9 30.7 35.0 38.1 CAPM (Rf+Beta(Rm-Rf)) 11.9% Ke 11.9%
Amortisation/impairment 0.0 0.0 0.0 0.0 0.0 E/EV*Ke+D/EV*Kd(1-t) NPV cash flow (A$m) 298.4
EBIT 22.7 25.9 30.7 35.0 38.1 Equity (E/EV) 90.0% Minority interest (A$m) 0.0
EBIT(incl associate profit) 22.7 25.9 30.7 35.0 38.1 Debt (D/EV) 10.0% Net debt (A$m) -34.8
Net interest expense 0.6 0.7 0.9 1.1 1.4 Interest rate 7.25% Investments (A$m) 0.0
Pre-tax profit 23.3 26.7 31.6 36.1 39.5 Tax rate (t) 30.0% Equity market value (A$m) 333.2
Income tax expense -5.5 -6.3 -8.7 -10.1 -11.6 WACC 11.2% Diluted no. of shares (m) 304.0
After-tax profit 17.8 20.3 22.9 26.0 27.9 FY11 PE compco 1.04 $ DCF valuation 1.10 $
Minority interests 0.0 0.0 0.0 0.0 0.0 Weighted valuation 1.07 $
NPAT 17.8 20.3 22.9 26.0 27.9
Significant items 0.0 0.0 0.0 0.0 0.0 Multiples 2011A 2012F 2013F 2014F
NPAT post abnormals 17.8 20.3 22.9 26.0 27.9 Enterprise value (A$m) 305.7 300.4 294.0 287.1
EV/Sales (x) 2.0 1.7 1.5 1.3
Cash flow statement 2010A 2011A 2012F 2013F 2014F EV/EBITDA (x) 9.8 8.3 7.2 6.5
EBITDA 26.8 31.1 36.2 40.8 44.2 EV/EBIT (x) 11.8 9.8 8.4 7.5
Change in working capital 10.0 -3.0 -1.7 -1.2 -0.9 PE (pre-goodwill) (x) 16.4 14.6 12.9 12.1
Net interest (pd)/rec 0.9 1.0 0.9 1.1 1.4 PEG (pre-goodwill) (x) 1.3 1.2 1.0 1.0
Taxes paid -6.6 -7.8 -8.7 -10.1 -11.6
Other oper cash items At target price 2011A 2012F 2013F 2014F
Cash flow from ops (1) 31.1 21.2 26.6 30.5 33.1 EV/EBITDA (x) 9.5 8.0 7.0 6.3
Capex (2) -12.7 -4.7 -5.3 -5.9 -6.6 PE (pre-goodwill) (x) 15.9 14.2 12.5 11.7
Disposals/(acquisitions) 1.1 2.1 0.0 0.0 0.0
Other investing cash flow 0.0 0.0 0.0 0.0 0.0 Comparable company data (x) 2012F 2013F 2014F
Cash flow from invest (3) -11.6 -2.7 -5.3 -5.9 -6.6 Reckon EV/EBITDA 8.9 8.2 7.5
Incr/(decr) in equity 0.0 0.0 0.0 0.0 0.0 Year to 31 Dec EV/EBIT 11.8 10.5 9.2
Incr/(decr) in debt -6.7 -21.8 -5.2 -6.4 -7.0 PE 16.4 15.0 14.0
Ordinary dividend paid -12.6 -17.7 -16.0 -18.2 -19.5 PEG 0.8 0.8 0.7
Preferred dividends (4) 0.0 0.0 0.0 0.0 0.0 IRESS EV/EBITDA 8.2 7.2 6.5
Other financing cash flow -0.2 20.9 0.0 0.0 0.0 Year to 31 Dec EV/EBIT 8.7 7.6 6.8
Cash flow from fin (5) -19.5 -18.6 -21.3 -24.6 -26.5 PE 13.4 12.3 11.5
Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0 PEG 2.7 2.5 2.3
Inc/(decr) cash (1+3+5+6) 0.0 0.0 0.0 0.0 0.0
Equity FCF (1+2+4) 18.4 16.5 21.3 24.6 26.5 Per share data 2011A 2012F 2013F 2014F
No. shares 301.8 304.0 305.2 306.2
Balance sheet 2010A 2011A 2012F 2013F 2014F EPS (cps) 6.7 7.5 8.5 9.1
Cash & deposits 32.7 43.4 48.7 55.1 62.0 EPS (normalised) (c) 6.7 7.5 8.5 9.1
Trade debtors 16.5 18.3 21.8 24.5 26.4 Dividend per share (c) 6.2 5.3 6.0 6.4
Inventory 0.0 1.8 0.0 0.0 0.0 Dividend payout ratio (%) 2297.1 70.0 70.0 70.1
Investments 0.0 0.0 0.0 0.0 0.0 Dividend yield (%) 5.6 4.8 5.4 5.8
Goodwill 0.0 0.0 0.0 0.0 0.0
Other intangible assets 16.7 16.5 14.0 11.5 9.0 Growth ratios 2011A 2012F 2013F 2014F
Fixed assets 18.8 18.7 21.1 23.7 26.7 Sales growth 16.0% 13.0% 12.0% 8.0%
Other assets 13.6 12.5 12.5 12.5 12.5 Operating cost growth 16.1% 12.2% 11.8% 7.9%
Total assets 98.3 111.2 118.0 127.2 136.6 EBITDA growth 15.8% 16.4% 12.7% 8.5%
Short-term borrowings 1.2 6.5 1.4 1.4 1.4 EBITA growth 14.4% 18.4% 13.9% 8.9%
Trade payables 9.3 11.6 11.6 13.0 14.0 EBIT growth 14.4% 18.4% 13.9% 8.9%
Long-term borrowings 1.7 7.4 12.5 12.5 12.5 NPAT growth 14.0% 12.6% 13.7% 7.2%
Provisions 0.0 0.0 0.0 0.0 0.0 Pre-goodwill NPAT growth 14.0% 12.6% 13.7% 7.2%
Other liabilities 22.7 17.3 17.3 17.3 17.3 Pre-goodwill EPS growth 13.0% 12.2% 13.2% 6.8%
Total liabilities 34.9 42.8 42.8 44.2 45.2 Normalised EPS growth 13.0% 12.2% 13.2% 6.8%
Share capital 24.3 25.3 32.2 40.0 48.3
Other reserves 14.3 16.6 16.6 16.6 16.6 Operating performance 2011A 2012F 2013F 2014F
Retained earnings 24.8 26.4 26.4 26.4 26.4 Asset turnover (%) n.m. 38.6 40.4 40.6
Other equity 0.0 0.0 0.0 0.0 0.0 EBITDA margin (%) 19.8 20.4 20.5 20.7
Total equity 63.4 68.4 75.2 83.0 91.4 EBIT margin (%) 16.6 17.3 17.6 17.8
Minority interest 0.0 0.0 0.0 0.0 0.0 Net profit margin (%) 13.0 12.9 13.1 13.0
Total shareholders' equity 63.4 68.4 75.2 83.0 91.4 Return on net assets (%) 37.9 40.8 42.1 41.7
Total liabilities & SE 98.3 111.2 118.0 127.2 136.6 Net debt (A$m) -29.5 -34.8 -41.2 -48.1
Net debt/equity (%) -43.2 -46.2 -49.6 -52.7
Net interest/EBIT cover (x) -35.4 -34.0 -31.4 -27.9
ROIC (%) 54.0 55.4 60.5 63.7
Internal liquidity 2011A 2012F 2013F 2014F
Current ratio (x) 2.5 3.4 3.5 3.8
Receivables turnover (x) 9.0 8.8 8.6 8.4
Payables turnover (x) 12.0 12.1 12.8 12.6
Price target (A$)
Blended DCF:PE
Source: Company data, RBS Morgans forecasts; priced at COB 18 November

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Produced by: RBS Morgans Limited
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Discovery Metals
Exploration keeps delivering
Boseto is on track to commission early CY12. Exploration drilling continues to
report success, importantly with high grade (>2% Cu) intercepts, which will
provide flexibility and faster payback. Wth recent share price weakness, DML is
now a Buy, with upside from successful commissioning and exploration success.

Key forecasts
FY10A
!
FY11A
!
FY12F
!
FY13F
!
FY14F
!
EBITDA (A$m) -4.62! -14.7! -16.7! 138.8" 208.9"
Reported net profit (A$m) -3.26! -2.47! -26.0! 65.90" 113.9"
Normalised net profit (A$m)! -3.26! -2.47! -26.0! 65.90" 113.9"
Normalised EPS (c)! -0.75! -0.57! -5.87! 14.85" 25.69"
Normalised EPS growth (%) n/a! -24.2! 938.0! n/a! 73.00!
Dividend per share (c) 0.00! 0.00! 0.00! 0.00! 0.00!
Dividend yield (%) 0.00! 0.00! 0.00! 0.00! 0.00!
Normalised PE (x) -179! -236! -22.8! 9.02! 5.22!
EV/EBITDA (x) -119! -33.8! -31.3! 3.16! 1.44!
Price/net oper. CF (x) -39.7! -68.6! -22.8! 6.01# 3.89#
ROIC (%) n/a! -35.4! -10.1! 63.90! 121.4!
Use of #" indicates that the line item has changed by at least 5%.
year to Jun, fully diluted

Boseto commissioning and first production in June 2012 half
The Boseto copper project has a resource of 102.8Mt at 1.4% copper and 17.3g/t silver in
the Zeta, Plutus and Petra deposits. Discovery Metals (DML) financed a five-year operation
based on reserves, with annual production of 34.4kt of copper and 1Moz of silver in
concentrate at a C1 cash cost of US$1.28/lb of copper. The Development Plan for a 15-year
operation is based on resources, which fall within pit shells defined at US$2.50/lb copper.
DML has hedged 40kt of copper at US$4.01/lb and 1.85Moz of silver at US$36.07/oz (40%
and 65%, respectively, of production over the 2.5 year life of the US$205m facility to fund
development. At 30 September 2011, DML reported cash of US$118m, with US$115m of its
facility drawn down.
High grade hits 6.0m @ 3.9% Cu, 4.7m @ 2.2% Cu
DML holds 14 tenements covering 10,100sq km in NW Botswana, containing 1,300 strike km
of favourable geology and mineralising structures. First pass soil sampling has covered less
than 400km of this horizon, and drilling tested 70km, delineating the Boseto project resource
(Zeta, Plutus and Petra), and a number of other prospects, with drill intersections comparable
with those in the Boseto deposits. Drilling at Zeta NE, 5km northeast from the Zeta resource
of 35.4mt at 1.4% Cu and 22.3g/t Ag now reports results from 6 of the 12 holes drilled, with
the best so far 6.0m @ 3.9% Cu and 74g/t Ag, 4.7m @ 2.2% Cu and 109g/t Ag and 3.2m @
2.7% Cu and 71g/t Ag from intersections to 130m below surface along 3km of strike.
We maintain a neutral outlook into commissioning
DML let a fixed price EPC contract to Sedgman Limited for the Boseto processing plant and
has secured debt funding. Our valuation remains at A$1.68ps and we apply a 15% discount
to set our target price at A$1.43ps with the share price weakening, DML is now a Buy.
Successful commissioning of Boseto would value DML at A$1.68ps.

21 November 2011
Analysts
Chris Brown
Australia
+61 7 3334 4885
chris.brown@rbsmorgans.com
Tom Sartor
Australia
+61 7 3334 4503
tom.sartor@rbsmorgans.com

84 002 768 701, AFS Licence 240530


Price performance
(1M) (3M) (12M)
Price (A$) 1.37 1.25 1.09
Absolute (%) -2.2 6.8 22.9
Rel market (%) -2.0 8.7 36.6
Rel sector (%) 2.1 27.2 70.2

0.00
0.25
0.50
0.75
1.00
1.25
1.50
Nov 08 Jan 10 Dec 10
DML.AX S&P/ASX200

A$585.73m (US$586.30m)
A$3.07m (US$3.14m)
Sector: BBG AP Steel & Others
RIC: DML.AX, DML AU
Source: Bloomberg

Buy (from Hold)
Target price
A$1.43 (from A$1.30)
Price
A$1.34
n/a

Change of recommendation
55

Discovery Metals | Investment View | 21 November 2011 2

Higher grade copper and silver
Drill results from Zeta North East
Drilling in 2007 at Zeta North East located a 2km long zone of copper-silver mineralisation. A
detailed review in mid 2011 resulted in a 12-hole drill programme to test a 3km zone to a depth of
up to 130m. Results are reported for the first six holes. All but one of the holes- which reported
two intersections each of 1m at 0.3% cu and with 6g/t and 11g/t Ag reported good intersections
of copper and silver, with the better three 5.0m @ 4.5% Cu and 85g/t Ag, 3.5m @ 2.8% Cu and
145g/t Ag and 3.2m @ 2.7% cu and 71g/t Ag. These three are well above the Zeta resource grade
of 1.4% Cu and 22.3 g/t Ag. The best section is shown below.
Figure 1 : Cross Section 48450N Zeta NE
Source: Discovery Metals Announcement November 2011
The Boseto Copper Project
The September 2011 quarter construction, finance and exploration
Construction commenced late in 2010, with commissioning scheduled for early 2012, and
concentrate production from the June 2012 quarter.
The Banking Syndicate previously approved the US$175m facility for the Boseto development,
and the US$75m funding for the mobile mining fleet. The US$175m facility for the project is a
floating rate loan at 3.75% above LIBOR, to be repaid over 10 quarters. As a condition of the
facility, DML has hedged 40,000t of copper at US$4.01/lb and 1.85moz of silver at US$36.07/oz.
This represents 40% of the budgeted production over the life of the loan.
For the Boseto project development, at 30 September 2011 DML reported that construction had
advanced significantly.

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# Engineering and procurement neared completion;
# Work commenced on the Toteng housing contracts;
# Delivery of mine mobile equipment (including spare parts and tyres) is on schedule;
# Structural concrete for the process plant is complete;
# Erection of structural steelwork for the process plant continued;
# Installation of plant, equipment, piping and electrical commenced;
# Construction of the mine offices and workshops continued;
# Pipe and power lines for the projects water supply progressed;
Subsequent to the end of the quarter the first two of the eight 2.5 megawatt diesel powered
generators arrived on site in early October.
DML also continued to refine its exploration programme with the definition of three zones, each
with its own exploration dynamic. In the Boseto zone, within 30km of the Bosseto plant, DML
continued to explore for satellites for the Boseto plant, with drill testing of geochemical anomalies
and further drill testing of prospects. In the Mid-Kalahari zone, centred on Keke, DML is drill
testing identified targets, and continues to drill prospects with the objective of defining resources
to support a second standalone copper plant. In the South West Kalahari, it will undertake
geochemical exploration beneath extensive sand cover with a longer term exploration objective.
Overview
DMLs wholly owned tenement package covers 10,100sq km of the Ghanzi-Chobe Fold Belt. The
Petra, Plutus and Zeta copper deposits currently form the Boseto project, with a resource of 102.8
million tonnes at 1.4% copper plus silver credits (17.3g/t), with extensive zones of the copper-
bearing horizon yet to be fully explored. The copper mineralogy is commonly zoned upward from
basal Cu-rich, Fe-poor chalcocite-bornite through chalcopyrite to pyrite (with some sphalerite and
galena) in the hanging wall. Higher grade and thicker zones, with 2% Cu over 10m widths may
have formed in deeper sub-basins, or may be related to post-depositional structural events.
Figure 2 : Kalahari copper and the Boseto project

Source: Discovery Metals Announcement November 2011
The 2010 Bankable Feasibility Study was undertaken for a plant treating 3mtpa of ore to produce
34,400t copper and 1 million ounces of silver per year in concentrate with initial production from
open cut mining, augmented from Year 3 by underground production from the 25Mt Zeta resource
(included in the total resource of 102.8Mt) at a grade of 1.4% Cu and 23.1g/t Ag over a 270m
vertical interval. The capital cost was estimated at US$175m, and the projected full cycle C1 cash
cost (to LME grade) was US$1.28/lb copper.

57

In the Boseto project area, the mineralisation forms a 2m-10m wide steeply dipping layer, and
these shoots, which reach the surface, are open at depth. At Zeta, the major deposit, ore zones
are both thicker and of higher grade than elsewhere, ranging from 5m-10m in width, with grades
of 1.5-2.0% copper, and a consistent dip of approximately 70
o
to the northwest. Drilling to date
has intersected the mineralisation at up to 260m below surface.
With chalcocite and bornite the primary copper minerals, Boseto will produce an attractive copper
concentrate, with a projected grade above 40% Cu, compared with chalcopyrite-derived
concentrates of approximately 25% Cu. To date, less than 400km of the 1,300km of prospective
strike have been explored by soil sampling. Of this, less than 70km has been tested by drilling,
with a number of prospects identified but not yet fully evaluated. The balance of approximately
1,000km is yet to be sampled using the handheld Niton XRF Analyzer.
Bankable Feasibility Study and Development Plan
The Bankable Feasibility Study basics
The Bankable Feasibility Study and Development Plan report was released in August 2010.
Snowdon Mining Consultants was the overall study leader, and responsible for resource and
reserve estimation, mining engineering and mine planning. GRD Minproc was responsible for
metallurgical testwork and SRK Consulting responsible for an independent project review.
Sedgman Limited was responsible for process plant design and projected plant operating costs,
and committed to a fixed price EPC contract. The Bankable Feasibility Study was based on the
ore reserve of 21.8Mt at 1.4% copper and 18.2g/t gold, with 4.2Mt in the Proved category, and
17.6Mt classified as Probable.
The Development Plan for a 15 year mine life is based on the resource of 102.8Mt contained in
the Zeta, Plutus and Petra deposits. At the end of the five-year life, which supports the bankability
of the Boseto project, mining will exploit 40Mt remaining in the pit shells defined using a
US$2.50/lb copper price. The study has incorporated detailed pit design and production
scheduling.
Table 1 : Boseto project BFS and Development Plan
BFS Development Plan
Throughput 3Mtpa 3Mtpa
Initial Mine Life 5 Years 15 Years
Average Copper Grade 1.46% 1.44%
Average Silver Grade 18.7g/t 20.2g/t
Copper Recovery 81.1% 84%
Silver Recovery 61% 61%
Concentrate grade 40% Cu 41% Cu
Annual Copper Production 34,400t 34,400t
Annual Silver Production 1Moz 1Moz
Capital Cost per annual lb US$2.55 US$2.55
Capital Cost US$/lb produced US$0.35/lb Cu US$0.20/lb Cu
C1 Cash Costs (after silver credits) US$1.28/lb Cu US$1.23/lb Cu
Source: Discovery Metals August 10, RBS Morgans estimates
Boseto upside and current drilling
As was noted above, soil sampling to date has evaluated less than 400km of the estimated
1,300km of prospective strike, and continuation of this programme is expected to add further
prospects for evaluation, both for the provision of ore from satellite pits to the proposed Boseto
mill, and as potential standalone projects comparable with the 3mtpa Boseto project.
In the immediate Boseto area, at a number of prospects Nexus, Quirinus, Zeta NE, and the
closure in the structure shown as SW Petra/SW Nexus in Figure 1 the current drilling
programme continues to intersect ore-grade mineralisation, which is expected to add to resources
and reserves.
DML is also evaluating the depth extensions of higher grade zones, which are expected to prove
amenable to underground extraction, also adding to the resource base, and either the scope of
the project, and/or the mine life.

58

Valuation & risks
Our valuation of A$1.68ps is derived using a DCF methodology. Our price target applies a
discount reflecting construction/commissioning/ramp-up risk. We also use an exchange rate of
A$/US$1.05 for the conversion of US dollars, rather than the long-term projected rate of US$0.75.
There is risk associated with bringing the Boseto project into successful production, when it will
carry the usual commodity price and exchange rate risks, as well as the operational risks. There is
potential for a major upgrade in valuation, with exploration success in the Kalahari copper belt
tenements, with discovery of satellite tonnage, or deposits sufficient to support a Boseto No. 2
project.
Company overview
DML is developing the Boseto open-cut copper project in Botswana, with production to commence
in mid-2012. DML has a secondary listing on the Botswana Stock Exchange, with Botswanan
interests holding 28% of the issued capital. The Boseto project hosts resources of +100Mt at 1.4%
copper and 17.3 g/t silver. A definitive feasibility study evaluated a 3mtpa mine producing
34.4ktpa of copper and 1Mozpa of silver. The capital cost estimate was US$175m, and the
projected operating cost US$1.28/lb of copper, with commissioning in mid 2012. DML also has a
100% interest in the Kanye Basin manganese exploration project, south Botswana, and a 40%
interest in the Dikoloti nickel project, which is diluting as JOGMEC maintains its exploration
programme, also in Botswana.

59

DML financial summary
Year to 30 Jun (A$m) AIFRS AIFRS AIFRS AIFRS AIFRS Price target (A$) 1.43
Income statement 2010A 2011A 2012F 2013F 2014F Val'n (A$) 1.68
Divisional sales 0.0 0.0 0.0 260.1 341.8
Total revenue 0.1 0.2 0.2 260.3 342.0 Valuation summary A$m A$ps DCF valuation inputs
EBITDA -4.6 -14.7 -16.7 138.8 208.9 Boseto Copper Project 366.1 0.84 Rf 5.25%
Depreciation & amortisation -0.1 -0.3 0.0 -33.0 -39.0 Boseto Exploration 324.9 0.74 Rm-Rf 6.00%
EBIT -4.7 -15.0 -16.7 105.8 169.9 Dikoloti & Other 10.0 0.02 Beta 1.54
Net interest expense 0.6 3.1 -18.0 -18.0 -18.0 Net cash 118.0 0.27 CAPM (Rf+Beta 14.5%
Pre-tax profit -3.3 -2.1 -34.7 87.8 151.9 Corporate & Other -85.0 -0.19 Tax rate (t) 30.0%
Income tax expense 0.0 -0.3 8.7 -22.0 -38.0 Total Value $m 733.9 1.68 WACC 11.18%
After-tax profit -3.3 -2.5 -26.0 65.9 113.9 Shares 443.5
Minority interests 0.0 0.0 0.0 0.0 0.0
NPAT -3.3 -2.5 -26.0 65.9 113.9
Significant items 0.0 0.0 0.0 0.0 0.0 Production (Mt) 2011A 2012F 2013F 2014F
NPAT post abnormals -3.3 -2.5 -26.0 65.9 113.9 Copper Production (mlbs) 60.33 78.29
Silver Production (moz) 0.83 1.10
Growth ratios 2010A 2011A 2012F 2013F 2014F Key assumptions 2011A 2012F 2013F 2014F
Sales growth 0.3 USD / AUD exchange rate 0.99 1.01 1.09 1.07
Operating cost growth 10% Copper price (US$/lb) 3.93 3.73 3.95 4.05
Silver price (US$/lb) 29.01 37.22 32.50 28.50
Cash flow statement 2010A 2011A 2012F 2013F 2014F Per share data 2011A 2012F 2013F 2014F
EBITDA -4.6 -14.7 -16.7 138.8 208.9 No. shares 437.1 443.5 443.5 443.5
Cash flow from ops (1) -14.7 -8.5 -26.0 98.9 152.9 EPS (cps) -0.6 -5.9 14.9 25.7
Capex (2) -0.8 -73.5 0.0 -15.0 -15.0 EPS (normalised) (c) -0.6 -5.9 14.9 25.7
Disposals/(acquisitions) 0.0 0.0 0.0 0.0 0.0 Dividend per share (c) 0.0 0.0 0.0 0.0
Cash flow from invest (3) -0.8 -74.1 0.0 -15.0 -15.0 Dividend payout ratio (%) 0.0 0.0 0.0 0.0
Incr/(decr) in equity 40.9 142.4 0.0 0.0 0.0 Dividend yield (%) 0.0 0.0 0.0 0.0
Incr/(decr) in debt 0.0 0.0 100.0 -50.0 -20.0
Ordinary dividend paid 0.0 0.0 0.0 0.0 0.0 Operating performance 2011A 2012F 2013F 2014F
Other financing cash flow -0.6 -4.5 0.0 0.0 0.0 EBIT growth 218% 12% n.m. 61%
Cash flow from fin (5) 40.3 137.9 100.0 -50.0 -20.0 NPAT growth n.m. n.m. n.m. 73%
Forex and disc ops (6) 0.0 0.0 0.0 0.0 0.0 Normalised EPS growth -24% 938% n.m. 73%
Inc/(decr) cash (1+3+5+6) 24.8 55.3 74.0 33.9 117.9 Asset turnover (%) 0% 0% 84% 94%
Equity FCF (1+2) 24.8 55.3 74.0 33.9 117.9 EBITDA margin (%) n.m. n.m. 53% 61%
EBIT margin (%) n.m. n.m. 41% 50%
Net profit margin (%) n.m. n.m. 25% 33%
Balance sheet 2010A 2011A 2012F 2013F 2014F Return on net assets (%) -7% -9% 43% 47%
Cash & deposits 33.5 88.8 162.8 196.6 314.6 Net debt / (cash) (A$m) -88.7 -62.7 -146.6 -284.5
Trade debtors 0.4 3.9 3.9 3.9 3.9 Net debt/equity (%) n.m. n.m. n.m. n.m.
Inventory 0.0 0.0 0.0 0.0 0.0 Net interest/EBIT cover (x) n.m n.m 9.0 5.2
Investments 0.0 0.0 0.0 0.0 0.0 ROIC (%) -59% 0% 869% 12264%
Other intangible assets 0.0 0.6 0.6 0.6 0.6
Fixed assets 1.1 94.6 94.6 76.6 52.6 Comparable multiples (x) 2012F 2013F 2014F
Other assets 29.2 39.8 39.8 39.8 39.8 Discovery Metals EV/EBITDA -31.3 2.3 0.9
Total assets 64.2 227.6 301.6 317.4 411.4 Year to 30 Jun PE -22.8 6.1 3.8
Short-term debt 0.0 0.1 0.1 0.1 0.1
Trade payables 0.8 19.4 19.4 19.4 19.4 PanAust EV/EBITDA 3.7 2.5 2.0
Long-term borrowings 0.0 0.0 100.0 50.0 30.0 Year to 31 Dec PE 7.1 5.9 6.1
Provisions 0.0 3.1 3.1 3.1 3.1
Other liabilities 0.3 0.6 0.6 0.6 0.6 Mirabela Nickel EV/EBITDA 6.5 4.2 2.7
Total liabilities 1.1 23.2 123.2 73.2 53.2 Year to 31 Dec PE 21.5 9.4 5.4
Share capital 75.5 213.0 213.0 213.0 213.0
Other reserves 0.0 0.0 0.0 0.0 0.0 Earnings Sensitivity 2012F 2013F 2014F
Retained earnings -16.6 -31.1 -57.2 8.7 122.6 Copper sensitivity (+10%) 0.00 17.51 23.31
Total equity 63.1 204.4 178.3 244.2 358.1 Copper sensitivity (US10c/lb) 0.00 4.43 5.75
Minority interest 0.0 0.0 0.0 0.0 0.0 AUD sensitivity (+10%) 0.00 0.00 0.00
Total shareholders' equity 63.1 204.4 178.3 244.2 358.1 AUD sensitivity (+1c) 0.00 0.00 0.00
Valuation sensitivity to discount rate (A$/share) Total revenues and EBIT (A$m)
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
WACC 0.00% 5.00% 10.00% 12.50% 15.00%
-50
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150
200
250
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350
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2010A 2011A 2012F 2013F 2014F
Total revenue EBIT


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18 November 2011

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Nick Moore
Head of Commodity Research
+44 20 7678 0555
nick.metals.moore@rbs.com

Nikos Kavalis
Commodity Strategist
+44 20 7085 9314
nikos.kavalis@rbs.com

www.rbsm.com/strategy
Bloomberg: RBSR<GO>

Johnson Matthey Interim Review
Palladium Deficit in 2012
Johnson Matthey (JM) has published its Platinum 2011 Interim Review. The
groups outlook for the platinum, palladium and rhodium (PGMs) markets is
broadly aligned with our own. JM is particularly constructive towards the
outlook for palladium. JM is forecasting an average price of $1,650/oz for
platinum over the next six months and a range of $1,450-1,800/oz. For
palladium, the group targets $650/oz, with a $500-800/oz range.
JM expects platinum to generate a small surplus of 195,000 oz this year
(equivalent to just over one weeks global gross demand) and in a surplus in
2012 but not by a significant amount. Despite obvious downside risks in the
world economy, JM is looking for another rise in automotive demand next year,
but also increasing mine supply from South Africa and Zimbabwe.
The palladium market is forecast to be in a 725,000 oz surplus this year, or
just over four weeks global gross demand. JM is looking for Russian stock sales
of 750,000 oz this year and net disinvestment of 215,000 oz. Without these two
stock flows, the market would be in deficit. JM forecasts that Russian stock
sales will collapse in 2012-13, that auto-catalyst and industrial uses will grow and
investment will turn positive. As such, JM forecasts a return to deficit next year.
JM forecast that rhodium down 35% since end 2010 at just $1,575/oz will
be in a surplus of 123,000 oz in 2011, or seven weeks global gross demand.
Tightening conditions are expected for 2012 on the back of increased auto use
(notably in Japan, where auto manufacturers are the heaviest rhodium catalyst
users). Chemical applications should increase, but purchasing is likely to soften
in the glass sector in line with slower expansion in global melting capacities.
Based on the above, palladium clearly has the best fundamentals among
the three PGMs. The collapse of Russian inventory sales removes an essential
and consistent part of global palladium supply. While South African mine
production and autocatalyst recycling supply are expected to grow, we do not
believe that they will do so sufficiently to offset the loss of Russian stock sales.
Moving to demand, JM noted it expected palladium will continue to benefit
from ongoing substitution of, still much more expensive, platinum in diesel
autocatalysts and estimated that this year, palladium will account for as much
as 30% of the PGM loading of a typical European light duty vehicle catalyst.
Ongoing efforts by car manufacturers to reduce CO2
emissions should also
boost demand, due to increased catalyst loadings. JM forecasts that global
autocatalyst demand for palladium in 2011 will rise by 6% to 5.92mozs, double
the rate of platinum, and expects an increase at least as strong will take place
next year. JM are typically conservative in their pronouncements, but in our view
this is one of the most bullish palladium scenarios we can remember.
The above all support RBSs view that palladium is about to enter a period of
sustained structural supply deficits. We agree with JMs expectation of sharp
declines in Russian stock sales and we already have in our forecasts that sales
will cease post 2013. Russias Gokhran in October said it planned to cut its sales
61
The Royal Bank of Scotland
of ~24t (770kozs) in 2011 by over 80% to 4.5t (145kozs) in 2012. While
sufficient above-ground stocks of palladium to fill the gap for a good few
years exist, we expect that investors will require significantly higher prices
to release their holdings. As such, RBS forecast palladium (currently $600/oz)
will average $900/oz in 2012 with an upward bias thereafter. Palladium remains
our most preferred exposure amongst all the precious and base metals.
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The platinum outlook is less dramatic and JM is looking for another small
surplus next year. But, crucially, the size of the expected surplus is limited and
JM is cautiously optimistic on platinum prices. JM expects automotive demand
will weather the current crisis, even though light duty diesel demand growth in
Europe is likely to slow. Support is expected to come from heavy duty fleet
renewals and a recovery in Japan. CO
2
emissions reduction efforts are also
supportive. Finally, JM said that platinums downside is protected by strong
physical (jewellery and investment) buying at dips and noted evidence of regular
and exceptionally strong Chinese demand at levels below the $1,500/oz marker.
Purchases of platinum for industrial applications are expected to fall next year.
JM expects the downside will be limited, cushioned by commitments already in
place for construction or expansion of LCD glass manufacturing capacity in Asia,
coupled with improved demand for platinum in hard disk manufacture. Chinese
platinum jewellery demand remains robust and has been boosted by the
platinum price moving into a discount (now $140/oz) compared to gold.
World Gold Council - Q311 Gold Demand Trends
The World Gold Council (WGC) has published its Q311 Gold Demand
Trends. The figures compiled by Thomson Reuters GFMS, show a 6% yoy
rise in global demand to a Q3 total of 1,054t. This comprised 466t of
jewellery demand (down 10% yoy), 468t of physical and ETF investment (up
33% yoy) and a 120t balance of technology demand.
2
Source: Thomson Reuters GFMS, RBS

Gold jewellery and investment
demand, tonnes
0
1,000
2,000
3,000
4,000
2001 2003 2005 2007 2009 2011*
Jewellery Bar+coin ETF etc

The data is an excellent illustration of the point we have often made in our
reports, that gold demand is now far more reliant on investment demand than
it used to be, at the expense of jewellery, once the bedrock of the gold market.
ETF and physical investment exceeded jewellery demand for the third time in
recent history. This is a dramatic change from a decade ago, when GFMS
estimated jewellery accounted for 77% of global demand.
From a regional perspective, China continued to provide fuel to demand growth.
Both jewellery and investment demand were up by double-digit percentage rates
and the WGC expects offtake in the country to reach a record 750t this year,
making it a close second to the largest consumer India. Consumption in the
latter, particularly for jewellery, was disappointing in Q3, hampered by the high
price volatility and weak rupee over the period. India was not alone jewellery
demand in tonnage terms suffered double-digit declines across most key
markets. In contrast, when measured in US$ terms, jewellery offtake enjoyed
healthy gains. The desire to buy gold jewellery seems to be there, even though
tonnages are affected by the income effect of the higher price (gold averaged
~$1,700/oz in Q3, up 39% yoy). European bar and coin investment stole the
show, with Germany and Switzerland enjoying yoy gains of 146% and 121
respectively. Note also that the gold gifting season is now in full swing.
Source: Thomson Reuters GFMS, RBS

Investment vs jewellery, shares of
their sum
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Mar-06 Mar-08 Mar-10
Physical & ETF Investment Jewellery

Gold mine production of 746t was up 5% with scrap supply of 427t up 13% yoy.
Finally, the thirst by the official sector for gold remains unquenched; lower prices
are also helping. Purchases rose to a recent record high of 148t. This takes net
central bank purchases in the first three quarters to 349 tonnes compared
with just 77t in 2010 and throws into stark contrast the 20 years of net sales
prior to 2010. If we get net purchases of 400t in 2011, this would represent
and impressive ~10% of world gold demand, which was 4,000t in 2010.

62
Precious metal market buzz.
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Source: Thomson Reuters, RBS
Gold snapped below the floor of its recent $1,740-$1,800 trading band,
sliding to $1,710/oz before strong buying drove it back to $1,725/oz. The
physical market is fluid with investors featuring on both sides of the market.

Gold in local currencies
90
100
110
120
130
140
150
Jan-11 Apr-11 Jul-11 Oct-11
US$
Rupee
Yen
CHF
! Gold repeatedly tested its overhead resistance level of $1,800 in early
November as the yield on Italian bonds reached extreme levels in excess
of 7%. The markets then turned tail as investors became ever more nervous
and risk-off hit gold as well as other commodities and equities.
! Meanwhile the Indian physical market resumed some strength in early
November, after a disappointing Diwali. The post-monsoon Indian Marriage
Season gold gifting demand is so far proving strong.
! However, with gold having fallen through $1,740, Indian stockists will likely
await further weakness before returning to the fray. Local gold is trading at
parity with the international market despite this reduction in purchasing.
! Elsewhere physical demand declined in the price-elastic buying regions
as gold approached $1,800, but the subsequent slip towards $1,740 has
seen a resumption of interest.
! At the professional level, the spreading fear that boosted French bond yields
has clearly triggered some selling. At the same time, it is our understanding
that the core of gold safe haven longs has been intact, which explains the
limited extent of the price decline so far.
Source: US Mint, RBS

United States Silver Eagles sales
0
50
100
150
200
0
50
100
150
200
Jan-06 Jan-08 Jan-10
tonnes $M

! Sentiment was perhaps further unsettled by the quarterly release of the SEC
gold ETF filings in mid-November. These show that John Paulsons hedge
fund reduced its SPDR gold ETF holding by 11.2M shares in the quarter to
June 30, equivalent to redemption of 35t of gold. The fund retained 20.3M
shares at end-June, or 63t, suggesting to us that these sales were a portfolio
balancing exercise rather than an abandonment of the metal as an investment
tool.
! According to Bloomberg, the Royal Canadian Mint is planning to enter the
physically-backed gold fund arena with Exchange Traded Receipts (ETRs), to
be listed on the Toronto Stock Exchange.
! Gold lending continues to increase, as investors scramble to get dollars
approaching the year-end. As a result, forward rates across all but the very
nearest tenors have moved to the right.
! In the silver market, the price has traded in a narrow range between $32
and $36 in the first half of November, India is still at a slight premium to
loco London. This reflecting a sustained strength in jewellery and investment
demand (remember that sliver fared better in Diwali than gold), but also strong
local industrial demand. US Silver Eagles sales have slowed.
! The Silver Insitutes recent investment update to its annual Silver Review
(prepared by Thomson Reuters GFMS) makes an interesting reference to the
increase in the participation of High Net Worth (HNW) individuals in the silver
market. These invstors tend to favour the OTC market (including allocated
account) and ETFs rather than bar and coin. With silver this week testing the
$31/oz marker, a one month low, we expect HNW purchases to be a feature.

63

! Gold and silver ETFs see fresh investment in November, but gold has
been the more vibrant. The major gold ETFs added almost 30t in the first half
of November, while the silver funds added a similar amount. Silver ETFs have
yet to recuperate the losses sustained in Q2.
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! A new element of PGM cost pressure has appeared with the Zimbabwe
power utility ZESA planning a 47% increase in power tariffs, following the
recent 31% rise, to cover infrastructure costs for two power stations. Zimplats
has already expressed concern over the previous hike, reporting a US$1.6M
power cost in the September quarter. The company is in negotiation with the
utility. Zimbabwe platinum production in 2011 is estimated by JM at
335kozs, up 20% yoy and 5% of world primary refined pt production.
4
Source: Johnson Matthey, RBS forecasts

Palladium autocatalyst demand by region
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2007 2008 2009 2010 2011
China Europe North America RoW Japan
Source: Johnson Matthey, RBS

Palladium demand (purchases) by
end-use
Chemical
5%
Electrical
16%
Other
1%
Jewellery
6%
Dental
7%
Autoc
65%
atalyst

Source: Johnson Matthey, RBS

Platinum demand (purchases) by
end-use, 2011
Glass
5%
Jewellery
31%
Other
19%
Autocat
39%
Electrical
3%
Petroleum
3%

alyst
! Whether the tariff hikes make a difference to Zimplats expansion plans
remains to be seen. JM notes that Zimplats Phase 1 expansion and the new
portal at the Bimha mine completed in May should allow output to meet
180kozs. Further expansion of 90kozs will take Zimplats output to 270kozs by
2014, with further expansion thereafter. The tariff hikes may add further
complications over and above the governments indigenisation plans, which
are aiming for a 51% national ownership of foreign enterprises. Anglo
American Platinums new Unki mine was commissioned in H111 and JM
expect the mine to achieve production levels of ~60kozs by end 2011.
! Sharp rise in North American supply on Sudbury strike impact. JM forecast
that North American platinum supplies would rise in 2011 by 80% to
360kozs as a result of the July 2010 end of the over 12 month strike at Vales
Sudbury nickel operations. Vale along with Xstrata both mine polymetallic ore
bodies, where platinum and palladium are produced as a by-product of
primary nickel production.
! Finally in the auto sector, Toyota has announced the cessation of
production of 20 models as a result of the flooding in Thailand, which has
affected electronic component manufacture. Local analysts believe that the
overall loss of production in Japan will be relatively constrained, but the
problem is that Japanese producers cannot relocate to onshore plants as they
are already flat out following the earthquake and tsunami of earlier this year.
We doubt that there will be a noticeable overall impact on the PGM sector as
there may be fewer than 100,000 vehicles affected.
64
RBS Technical Commodity Strategy
William Moore, +44 20 7085 9174, William.moore@rbs.com
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Source: RBS

Gold USD Daily candle chart with retracements and 5 and 10 MAs with Ichimoku Cloud

An awkward short term trend, but bullish nonetheless. Maintain the stance
of buying dips to key support levels, targeting the $1,841 and $1,920 levels.
The $1,712 - $1,791 range has been the predominant theme in the short term.
These are both the significant retracement levels from the sell off from 1920 to
1583 during the month of September. (Ive ignored the low at 1538 given how
quickly the market rallied from there.) The price of Gold has somewhat begun to
lose its negative correlation with the USD, the correlation (based on the last 6
months closing prices) is around +0.14 now compared to -0.89 which it was
back in June of this year. In the environment of a strengthening USD, Gold
should be higher. Its progress has still been relatively consistent from the
September lows and is well supported at $1,712 and at $1,694, which is the
previous high on the 17
th
of October. The resistance levels are quite clearly
defined at $1,752 and the cluster of the recent highs at $1,791, but once these
are cleared then the subsequent retracement at $1,841 is the big level to
overcome. Note too how the cloud was crossed at its thinnest point and has just
begun to act supportive.

RES: $1,752 $1,791 $1,841
SUP: $1,712 $1,694 $1,663

65

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Source: RBS

Platinum Weekly candle chart with retracements, BBs and RSI (9,14)

Watch very closely for a weekly close above the $1,661 level for the signal
of an aggressive move up to $1,876
Price action suggests to me that the platinum price wants to recover back to the
highs around $1,876 but is becoming increasingly frustrated by the resistance
level, which incidentally is the 61.8% retracement from the 2008 sell off, at
$1,660.9. So much so that the high of each of the last 4 weeks has been within
$20 of it but none of the weeks managed to close above it. It seems that
pressure is building on this level and when it breaks, we expect the move
upwards to $1,876 will be aggressive. There appears to be some very strong
support at $1,486 and just below there the recent lows at $1,432 should be
supportive too, so moves back down here should be seen as good buying
opportunities. Only on consecutive closes beneath the latter should this short-
term bullish trend be deemed over.

RES: $1,661 $1,876 $1,915
SUP: $1,487 $1,447 $13,12

66
Appendix of some of our favourite precious metal charts

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Source: Bloomberg, LBMA, RBS

Precious metals price performance YTD (US$) Silver
has lost top slot to gold, PGMs are the laggards
-31%
-24%
-10%
3%
22%
-40% -30% -20% -10% 0% 10% 20% 30%
Rhodium
Palladium
Platinum
Silver
Gold

Gold vs the trade-weighted dollar (DXY) index

500
750
1,000
1,250
1,500
1,750
2,000
Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11
70
75
80
85
90
Gold $/oz US$ Index (rhs)
Source: Product providers, WGC, Bloomberg, RBS

Gold ETF holdings

400
900
1,400
1,900
2,400
2,900
Nov-08 Nov-09 Nov-10 Nov-11
t
o
n
n
e
s
700
950
1,200
1,450
1,700
1,950
U
S
D
/
o
z
GLD-NYSE Swiss Funds Others Price (rhs)

Gold vs US Inflation expectations 5 Year treasuries
vs TIPS Treasury inflation protected securities (%)
-1.0
0.0
1.0
2.0
3.0
4.0
Nov-08 May-09 Nov-09 May-10 Nov-10 May-11 Nov-11
500
800
1,100
1,400
1,700
2,000
5Y Treasuries - TIPS (%) Gold US$/oz (rhs)

Silver price and the gold silver price ratio

5
15
25
35
45
55
30
45
60
75
90
Silver $/oz Ratio (rhs)

Gold in Indian Rupee and CNY

20,000
40,000
60,000
80,000
100,000
4,000
6,500
9,000
11,500
14,000
Gold - Indian Rupee/Oz Gold - Chinese CNY/Oz (RHS)
67

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Platinum:gold premium (US$/oz) Gold continues to
trade at a premium to platinum of US$130/oz
-200
0
200
400
600
800
1,000
1,200
1,400
Platinum:Gold Premium Period Average - $410

Platinum:palladium ratio Palladium has strongly
outperformed platinum over the past two years
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
Source: CFTC, Bloomberg, RBS

Silver: Price and net speculative position on COMEX

0
4,000
8,000
12,000
8
22
36
50
Tonnes Price US$/oz (rhs)

Gold: Price and net speculative position on COMEX

100
325
550
775
1,000
1,225
700
950
1,200
1,450
1,700
1,950

Palladium: Price and net speculative position on
NYMEX
10
20
30
40
50
60
70
150
275
400
525
650
775
900

Platinum: Price and net speculative position on NYMEX

0
12
24
36
48
60
800
1,000
1,200
1,400
1,600
1,800
2,000
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Key precious metal data average prices and ETF holdings
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Monthly average gold prices and physically backed ETF holdings
Monthly Average Prices US$/oz Physically backed ETF holdings - end month tonnage and value (US$m )
2008 2009 2010 2011 2008 2009 2010 2011
Tonnes Value Tonnes Value Tonnes Value Tonnes Value
Jan 890 859 1,118 1,356 926 27,501 1,330 39,327 1,851 64,166 2,191 93,490
Feb 922 943 1,095 1,373 945 29,529 1,551 47,477 1,884 67,127 2,179 98,853
Mar 968 924 1,113 1,424 973 29,204 1,686 49,673 1,917 68,759 2,197 101,660
Apr 910 890 1,149 1,474 913 25,561 1,689 47,959 1,960 74,306 2,250 111,101
May 889 929 1,205 1,510 934 26,323 1,732 54,324 2,124 82,469 2,231 110,187
Jun 889 946 1,233 1,529 979 29,277 1,756 52,751 2,211 88,416 2,244 108,603
Jul 940 934 1,193 1,573 1,042 30,764 1,717 51,843 2,180 81,945 2,344 122,738
Aug 839 949 1,216 1,756 1,021 27,356 1,734 53,272 2,221 88,970 2,346 136,773
Sep 830 997 1,271 1,772 1,126 32,025 1,797 57,545 2,243 94,270 2,335 121,614
Oct 807 1,043 1,342 1,665 1,165 27,363 1,846 61,721 2,238 96,906 2,365 130,937
Nov 761 1,127 1,370 1,183 30,977 1,878 70,991 2,242 99,743
Dec 819 1,132 1,392 1,225 34,265 1,871 65,416 2,260 102,107
Average 872 973 1,225 1,548
Monthly average silver prices and physically backed ETF holdings
Monthly Average Prices US$/oz Physically backed ETF holdings - end month tonnage and value (US$m)
2008 2009 2010 2011 2008 2009 2010 2011
Jan 15.96 11.29 17.79 28.40 5,837 3,141 9,116 3,666 12,449 6,520 15,468 13,800
Feb 17.57 13.41 15.87 30.77 6,068 3,827 9,832 4,176 12,690 6,577 15,739 16,947
Mar 19.50 13.12 17.11 35.81 6,357 3,677 10,220 4,308 12,608 7,094 16,295 19,840
Apr 17.50 12.51 18.10 41.97 6,606 3,498 10,415 4,229 12,295 7,360 16,143 25,276
May 17.05 14.03 18.42 36.75 6,833 3,702 10,443 5,211 12,811 7,632 14,735 18,310
Jun 16.97 14.65 18.46 35.80 7,016 3,981 10,870 4,872 12,865 7,751 14,422 16,238
Jul 18.03 13.36 17.99 37.92 7,314 4,110 11,121 4,873 12,944 7,349 15,039 19,161
Aug 14.69 14.35 18.37 40.30 7,610 3,367 11,114 5,196 13,146 7,975 14,950 19,875
Sep 12.37 16.39 20.66 38.16 8,147 3,395 11,267 5,959 13,848 9,826 15,351 15,028
Oct 10.44 17.24 23.53 31.97 8,070 2,408 11,450 6,100 14,944 11,512 15,236 16,773
Nov 9.87 18.95 26.54 8,081 2,629 12,270 7,156 15,630 13,633
Dec 10.29 17.67 29.35 8,253 2,863 12,442 6,796 15,971 15,728
Average 14.99 14.75 20.18 35.77
Monthly average platinum prices and physically backed ETF holdings
2008 2009 2010 2011 2008 2009 2010 2011
Jan 1,586 950 1,563 1,787 7.4 409 9.9 311 28.3 1,377 40.0 2,293
Feb 2,000 1,036 1,520 1,826 11.1 765 11.9 405 29.1 1,433 42.1 2,442
Mar 2,046 1,081 1,599 1,770 11.6 763 14.6 529 29.8 1,576 43.0 2,452
Apr 1,988 1,163 1,716 1,794 12.3 765 15.7 553 32.0 1,788 43.3 2,554
May 2,055 1,130 1,622 1,784 13.4 865 14.3 541 32.8 1,640 42.5 2,500
Jun 2,038 1,218 1,554 1,769 14.6 971 15.3 582 32.6 1,606 43.6 2,416
Jul 1,904 1,162 1,528 1,760 13.3 751 15.8 603 31.3 1,563 44.7 2,557
Aug 1,489 1,245 1,543 1,804 8.9 423 16.1 644 31.5 1,536 46.2 2,740
Sep 1,223 1,289 1,592 1,748 8.6 277 17.6 728 31.1 1,662 44.4 2,158
Oct 913 1,333 1,689 1,535 7.5 197 18.8 798 32.8 1,791 43.0 2,253
Nov 840 1,401 1,693 7.5 210 20.6 953 34.7 1,848
Dec 839 1,444 1,710 9.2 266 21.2 995 38.3 2,162
Average 1,572 1,204 1,611 1,756

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Monthly average palladium prices and physically backed ETF holdings
2008 2009 2010 2011 2008 2009 2010 2011
Jan 374 188 434 793 9.8 122 21.5 135 47.0 633 72.4 1,875
Feb 469 206 426 821 16.6 304 24.6 154 49.8 689 73.5 1,868
Mar 489 202 461 762 17.9 256 25.0 173 53.6 826 68.1 1,676
Apr 446 227 533 772 18.0 243 26.0 182 56.5 1,002 68.5 1,711
May 435 230 489 736 19.2 265 26.4 200 56.6 856 66.7 1,667
Jun 450 246 463 770 19.9 298 27.4 220 56.9 817 68.3 1,670
Jul 426 249 457 789 20.4 250 27.9 229 54.0 846 67.9 1,800
Aug 316 276 489 764 20.4 198 29.1 270 54.4 863 64.7 1,628
Sep 248 293 539 709 20.6 132 33.6 317 53.7 990 60.6 1,197
Oct 191 322 592 616 21.7 138 34.1 356 58.8 1,211 57.3 1,213
Nov 207 352 683 20.1 121 35.6 413 61.8 1,394
Dec 176 374 755 20.6 122 36.3 459 68.6 1,758
Average 351 264 527 752
Precious metal offtake by key end use sector

10
Source: GFMS - Platinum & Palladium Survey 2011

Platinum 2010 global off-take incl. ETFs

Autocatalyst
40%
ETFs
7%
Chemical
6%
Jewellery
25%
Glass
5%
Other
16%
Retail investment
1%
Source: GFMS - Platinum & Palladium Survey 2011

Palladium 2010 global off-take incl. ETFs

Autocatalyst
54%
Electronics
15%
ETFs
11%
Jewellery
8%
Other Industrial
1%
Retail Investment
1%
Chemical
3%
Dental
7%
Source: GFMS - Gold Survey 2011

Gold 2010 global off-take incl. ETFs

Jewellery
46%
Bar and Coin
27%
ETFs
8%
other
8%
Industrial and
dental
11%
Source: GFMS World Silver Survey 2011

Silver 2010 global off-take incl. ETFs

Industrial
46%
Jewellery
16%
Coins and
Medals
10%
Photographic
7%
Physical Bar
5%
Silverware
5%
ETFs
11%
70

Precious metals five year historical view of top producers and consumers
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Top gold producers and consumers ranked by 2010 market share
Global Gold Mine Production (tonnes) Global Gold Fabrication Demand (tonnes)
2006 2007 2008 2009 2010 %Mkt. 5yrs %pa 2006 2007 2008 2009 2010 %Mkt. 5yrs %pa
China 247 281 292 324 351 13% 8.8%
India 634 684 708 571 783 28% 2.4%
Australia 247 247 215 224 261 10% -0.1%
China 278 340 379 428 509 18% 14.1%
United States 252 238 234 221 234 9% -2.2%
USA 211 179 176 173 181 7% -3.7%
South Africa 296 270 234 220 203 8% -8.4%
Japan 175 178 164 141 158 6% -0.8%
Russia 173 169 189 205 203 8% 3.1%
Italy 236 229 187 135 126 5% -15.3%
Global 2,482 2,476 2,408 2,590 2,689 100% 1.1% Global 2,956 3,102 3,023 2,511 2,779 100% -3.4%
Source: GFMS Gold Survey 2011, RBS

Top silver producers and consumers ranked by 2010 market share
Global Silver Mine Production (tonnes) Global Silver Fabrication Demand (tonnes)
Mexico 2,970 3,135 3,236 3,554 3,999 17% 6.7% USA 5,778 5,558 5,771 5,169 5,897 22% 0.0%
Peru 3,456 3,501 3,681 3,844 3,612 16% 2.5% China 2,832 3,242 3,556 3,424 3,957 14% 9.0%
China 2,341 2,448 2,578 2,775 3,085 13% 8.2% Japan 4,097 3,995 3,372 2,195 3,175 12% -3.8%
Australia 1,729 1,879 1,926 1,633 1,864 8% -5.0% India 2,575 2,770 2,868 3,244 2,926 11% 0.5%
Chile 1,602 1,929 1,396 1,301 1,276 6% -1.5% Germany 1,275 1,249 1,271 1,028 1,233 5% -0.4%
Global 19,960 20,697 21,209 22,342 22,889 100% 2.9% Global 26,858 27,070 27,206 24,234 27,333 100% 0.1%
Source: GFMS Silver Survey 2011, RBS

Top platinum producers and consumers ranked by 2010 market share
Global Platinum Mine Production (000oz) Global Platinum Fabrication Demand (000oz)
South Africa 5,447 5,075 4,676 4,602 4,751 77% -1.2% Europe 2,558 2,702 2,419 1,833 2,000 30% -3.8%
Russia 948 917 830 793 784 13% -4.0% Japan 1,497 1,249 1,384 866 956 14% -11.1%
North America 366 324 342 303 238 4% -7.8% N America 1,385 1,400 1,226 973 947 14% -8.3%
Others 263 268 308 350 413 7% 10.4% Others 2,216 2,580 2,386 2,743 2,822 42% 5.9%
Global 7,024 6,584 6,156 6,048 6,186 100% -1.4% Global 7,656 7,931 7,415 6,415 6,725 100% -2.7%
Source: GFMS Platinum and Palladium Survey 2011, RBS

Top palladium producers and consumers ranked by 2010 market share
Global Palladium Mine Production (000oz) Global Palladium Fabrication Demand (000oz)
Russia 3,164 3,049 2,701 2,677 2,721 41% -2.8% N America 2,345 2,343 2,116 1,776 2,099 24% -2.1%
South Africa 2,857 2,677 2,365 2,477 2,647 40% 0.4% Europe 1,722 1,830 1,799 1,623 1,972 23% 4.2%
North
America
1,024 995 908 688 726 11% -4.8% Japan 1,647 1,707 1,737 1,423 1,612 19% 1.6%
Others 310 329 407 478 519 8% 11.6% Others 2,461 2,648 2,733 2,769 2,935 34% 4.6%
Global 7,355 7,050 6,381 6,320 6,613 100% -1.0% Global 8,175 8,528 8,385 7,591 8,618 100% 2.1%
Source: GFMS Platinum and Palladium Survey 2011, RBS
11
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Top 10 Precious Metal Producing Companies
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Source: GFMS Gold Survey 2011

Top five gold mine production. Companies ranked by
2010 global market share
Barrick
9%
Newmont
6%
AngloGold
Ashanti
5%
Gold Fields
4%
Other
73%
Goldcorp
3%
Top 10 Gold mine production. Compani s ranked by
e
Rank Company tonnes Market share
Cumulative
share
1 Barrick 242 9% 9%
2 Newmont 168 6% 15%
3 AngloGold Ashanti 140 5% 20%
4 Gold Fields 102 4% 24%
5 Goldcorp 78 3% 27%
6 Newcrest 73 3% 30%
7 Kinross 68 3% 32%
8 Navoi MMC 63 2% 35%
9 Freeport McMoRan 53 2% 37%
10 Polyus Gold 43 2% 38%
Other 1,659 62% 100%
World mine
production
2,689 100%
Source: GFMS Gold Survey 2011

Top five silver mine production. Companies ranked by
BHP Billiton
6%
Fresnillo
5%
KGHM
5%
Other
78%
Pan American
Silver
3%
Goldcorp
3%
Top 10 silver mine production. Companies ranked by
Rank Company tonnes Market share
Cumulative
share
1 BHP Billiton 1,449 6.3% 6%
2 Fresnillo 1,201 5.3% 12%
3 KGHM 1,160 5.1% 17%
4 Pan American Silver 756 3.3% 20%
5 Goldcorp 715 3.1% 23%
6 Volcan 622 2.7% 26%
7 Hochschild Mining 554 2.4% 28%
8 JSC Polymetal 538 2.4% 31%
9 Coeur d'Alene Mines 523 2.3% 33%
10 Sumitomo Corp 448 2.0% 35%
Other 14,895 65% 100%
World mine
production
22,861 100%
Source: GFMS Platinum and Palladium Survey 2011

Top five platinum mine production. Companies ranked
by 2010 global market share
Implats
20%
Norilsk
11%
Lonmin
11%
Other
22%
Anglo Platinum
32%
Aquarius
4%
Top 10 platinum mine production. Companies ranked
Rank Company 000 oz Market share
Cumulative
share
1 Anglo Platinum 1,989 32% 32%
2 Implats 1,265 20% 53%
3 Norilsk 693 11% 64%
4 Lonmin 656 11% 74%
5 Aquarius 266 4% 79%
6 Xstrata 179 3% 82%
7 ARM Platinum 152 2% 84%
8 Northam 150 2% 87%
9 Royal Bafokeng 126 2% 89%
10 Stillwater 111 2% 90%
Other 593 10% 100%
World mine production 6,180 100%
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Top five palladium mine production. Companies ranked
Norilsk
43%
Implats
11%
Stillwater
6%
Other
18%
Anglo Platinum
17%
Lonmin
5%
Top 10 palladium mine production. Companies ranked
Rank Company 000 oz Market share
Cumulative
share
1 Norilsk 2,861 43% 43%
2 Anglo Platinum 1,133 17% 60%
3 Implats 759 11% 72%
4 Stillwater 374 6% 78%
5 Lonmin 305 5% 82%
6 Xstrata 220 3% 85%
7 Aquarius 147 2% 88%
8 ARM Platinum 131 2% 90%
9 North American Palladium 95 1% 91%
10 Northam 77 1% 92%
Other 511 8% 100%
World mine production 6,613 100%
73

21 November 2011

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Editors
Jan Dubsky
RBS Economics
jan.dubsky@rbs.com

Silvio Peruzzo
Editors
Silvio Peruzzo
RBS Economics
silvio.peruzzo@rbs.com
www.rbsm.com/strategy
Bloomberg: RBSR<GO>

Global Weekly Preview
Euro crisis - focus on politics
Main economic data releases & events: 21 Nov 2011 25 Nov 2011
Time Country Indicator Period
RBS
GBM
Median Previous
Monday, 21 November
15:00 US Existing Home Sales, USD mn Oct 4.80 4.80 4.91
Tuesday, 22 November
09:30 UK Public Finances (PSNB), GBP bn Oct 4.5 11.384
09:30 UK PSNB ex Financial Interventions, GBP bn Oct 7.2 14.14
13:30 US GDP (Annualized), % qoq 3Q S 2.3 2.5 2.5
Wednesday, 23 November
09:00 EA PMI Services Nov 45.5 46 46.4
09:00 EA PMI Manufacturing Nov 46 46.5 47.1
09:00 EA PMI Composite Nov 45.5 46 46.5
09:30 UK BoE MPC minutes
13:30 US Durable Goods Orders, % Oct -2.8 -1.1 -0.6
13:30 US Personal Income, % Oct 0.2 0.3 0.1
Thursday, 24 November
09:00 GE IFO Business Climate Nov 104.7 105.5 106.4
09:00 GE IFO Current Assessment Nov 115 115.5 116.7
09:00 GE IFO Expectations Nov 95.3 96 97
23:30 JP National CPI, Total, % yoy Oct -0.2 -0.1 0.0
23:30 JP National CPI, ex. Seasonal food, % yoy Oct -0.2 -0.1 0.2
S = second revision p = preliminary Source: RBS Research, RBS Strategy, Bloomberg

Very busy week ahead, with politics in many euro area countries at the centre
stage. Spain held political elections on Sunday, and at the time we write, the
Partido Popular led by Mariano Rajoy is firmly on track to achieve a solid majority
that would allow it to form a new government. Austerity has been the punching
line of Rajoys electoral campaign and his programme should provide continuity
to the fiscal efforts of the previous government.
Greece is also in the spotlight, while it attempts to secure the next payment of
the support package, due by mid-December to avoid bankruptcy. On Sunday,
the new prime minister and ex ECBs vice-President Lucas Papademos flew to
Brussels to negotiate the payment. New Democracy party leader Samaras
continues to refuse signing off a written commitment to the terms of the next
bailout package, a precondition for each of the parties backing the Papademos
government set by the Troika to release the payment. Negotiations are likely to
continue unsettling the markets.
In Italy, both Houses of the Parliament voted confidence to the new Technocratic
government led by Mario Monti last week. This week he will initiate the process
of fiscal reform implementation and will also hold meetings with Van Rompuy on
Wednesday and with French President Nicolas Sarkozy and German Chancellor
Angela Merkel in Strasbourg on Friday.
On the data front, key survey data for November will be released in the euro
area. On Wednesday we get the flash estimate of the PMI and on Thursday the
IFO survey. We expect slightly below market consensus outturns for both release
(see linked pdf for previews).
75
In the UK, on Wednesday the MPC Minutes of the November meeting are due.
The value added in last week's Inflation Report was the growth and inflation
projections. The growth projections were much as expected - growth had to be
lower in the short run than projected in August, and it seemed unlikely that
growth could be weaker in the medium term. The inflation fan chart was
something else. The MPC decided to stick with the plan of asset purchases
that it had unveiled a month earlier in the November policy meeting. So it came
as something of a surprise that an inflation fan chart conditioned on that asset
purchase programme showed such a marked undershoot of the target in the
medium term.
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The fan charts are nothing if not a communication device. They tell you more
about where the Committee thinks policy is heading than where the Committee
thinks growth and inflation will be three years from now. They are the graphic
equivalent of President Trichet's code words (see "ECB language, projections
and rate hikes: What to look for"). So the message seems clear enough: dove-
ish pictures = dove-ish Committee, a clear signal that more QE is coming in
February, as Martin Weale more or less confirmed last week. But we suspect it
signals that some of the Committee are already signed up for more bond
purchases. We think that two members of the Committee will have voted for an
extension of QE in the November meeting - Adam Posen (the man who called it
right from the get go) and Paul Fisher (the man who changed his mind on the
domestic economy) - and the risks are tilted towards more dissenters not less in
our view.
Other than that, we think the text of the policy discussion will look quite a bit like
the September minutes.
In the US, of note are the October release of the existing home sales on Monday,
the second release of the Q3 GDP on Tuesday, durable goods orders and
Personal Income data for October on Wednesday.
- please see our data previews and our Global Weekly Calendar which includes
the full set of RBS Economics forecasts - RBS Economics
2

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The Week Ahead
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Monday, 21 November
US: Existing home sales, October
Released: 15:00 Forecast: 4.8m Market: 4.8m Previous: 4.9m

For the RBS US Strategy view please click here
Tuesday, 22 November
US: GDP, Q3 revised
Released: 13:30 Forecast: 2.3% Market: 2.5% Previous: 2.5% (qoq ar)

Wednesday, 23 November
Euro area: PMI, November flash estimate
Released: 09:00 Forecast: 45.5 Market: 46 Previous: 46.5 (composite)
We forecast the flash estimate of the euro area composite PMI to decline in
October, to 45.5 from 46.5, this would be the seventh consecutive monthly fall
and the lowest number since June 2009. In September, the index has declined
by 2.6 points (2 standard deviations of historical changes) and we expect a
slowdown of the pace of decline to 1 point. Already the September level of the
index was consistent with an underlying pace of GDP growth of -0.4/0.5% q/q
(according to OLS regression analysis) and a fall of a further 1 point would firm
up the forecast at -0.5% q/q, in line with our most recent forecast for euro area
GDP growth in Q4, outlined in Global Economic Forecasts, 15th November.
We expect the manufacturing PMI index to fall in 46 from 47.1 in September and
the services PMI index to decline by 1 point to 45.5. The decline would point to
further economic slowdown in Europe, as highlighted in our most recent RBS
Business Cycle Screener | Europe remains the weak link, 14th November. JD
UK: BoE MPC minutes
Released: 09:30
The value added in last week's Inflation Report was the growth and inflation
projections. The growth projections were much as expected - growth had to be
lower in the short run than projected in August, and it seemed unlikely that
growth could be weaker in the medium term (without driving a coach and horses
through the output gap). The inflation fan chart was something else. The MPC
decided to stick with the plan of asset purchases that it had unveiled a month
earlier in the November policy meeting. So it came as something of a surprise
that an inflation fan chart conditioned on that asset purchase programme
showed such a marked undershoot of the target in the medium term.
The fan charts are nothing if not a communication device. They tell you more
about where the Committee thinks policy is heading than where the Committee
thinks growth and inflation will be three years from now. They are the graphic
equivalent of President Trichet's code words ( insert link to "ECB language,
projections and rate hikes: What to look for"
http://strategy.rbsm.com/Tools/Resources/152104.pdf?menuKey=53&contentid=
193784). So the message seems clear enough: dove-ish pictures = dove-ish
Committee.
3

77
It would have been easier to explain away the inflation fan chart if the MPC had
chosen to include the tail risk of contagion from catastrophe on the Continent.
But the Committee stuck to its guns and chose to once again exclude this key
risk from the fan chart - which we continue to believe is a big mistake (Insert link
to "communication
breakdown" http://strategy.rbsm.com/Tools/Resources/190295.pdf?menuKey=53
&contentid=233280). So the mean for inflation was already far below
inflation even when the low probability high impact deflationary risk was
excluded. At the very least this is a clear signal that more QE is coming in
February, as Martin Weale more or less confirmed last week. But we suspect it
signals that some of the Committee are already signed up for more bond
purchases. We think that two members of the Committee will have voted for an
extension of QE in the November meeting - Adam Posen (the man who called it
right from the get go) and Paul Fisher (the man who changed his mind on the
domestic economy) - and the risks are tilted towards more dissenters not less in
our view.
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Other than that, we think the text of the policy discussion will look quite a bit like
the September minutes, with reference to the decision to do more bond
purchases being 'finely balanced', and the merits of announcing an increase in
the scale of asset purchases when there is a finite limit on what the Bank can
purchases each week, rather than waiting for February. Despite the continued
discussion in the market about Plan B for QE, we don't expect to see the
Committee re-opening the debate over cuts in Bank Rate or buying private
sector assets. RB
US: Durable goods orders, October
Released: 13:30 Forecast: -2.8% Market: -1.1% Previous: -0.6%

US: Personal Income, October
Released: 13:30 Forecast: 0.2% Market: 0.3% Previous: 0.1%

Thursday, 24 November
Germany: IFO Survey, November
Released: 09:00 Forecast: 104.7 Market: 105.5 Previous: 106.4 (bus climate)
We forecast a fall of 1.7 points on both the current conditions and the
expectations indices in November, to 115 and 95.3 respectively. This implies a
level of 104.7 for the headline index in November. Our forecast is supported by
the fall of the German ZEW Expectations survey last week, that hit the lowest
level since October 2008. Moreover, the industry subcomponents of the ZEW
survey (namely autos, chemicals, steel and electronics) all fell in November and
we expect this to be reflected on the IFO this week. The 3 month moving
average of the forward looking IFO export expectations over the next 3 months
has been declining since March. Historically the current conditions index, lags
movements of this subcomponent. Furthermore the current conditions index is
still well above its long term average of 101 and we believe the index will fall
below that average over time reflecting weaker economic activity already
captured by the decline in the manufacturing PMI. The cyclical weakening of the
German economy is captured by other available survey data, incluing the
Economic Sentiment Indicator that we use to construct our RBS Business Cycle
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Screener | Europe remains the weak link (14th November), further corroborating
our forecasts. JD
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Japan: Nationwide CPI, October
Released: 23:30 Forecast: -0.2% Market: -0.1% Previous: 0.2% (core yoy)
We believe Japans nationwide core CPI turned negative in October, falling from
0.2% yoy to -0.2% yoy. While utility fees have risen for ten consecutive
months due to increasing international commodity prices, the price of gasoline
fell for a second consecutive month in October. In our view, the two biggest
drivers of core CPIs decline to negative territory are the October 2010 tobacco
tax hike and the accident insurance fee increase. We expect inflation to remain
negative at least until mid-2012 as we do not see non-energy item prices rising in
the near future. JN

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Weekly Data Calendar
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Time BST Country Release Month RBS Forecast Median forecast Previous
Sunday 20 November
23:50 JP Custom-cleared trade, NSA, JPY 110mn Oct 603 399 2962
23:50 JP Custom-cleared trade, SA, JPY 110mn Oct -2797 -2040 -218
Monday 21 November
* JP BoJ MPC meeting minutes (Oct 27)
04:30 JP All industry activity index, % mom Sep -01.0 -0.5
13:30 CA Wholesale Trade Tot. Sales, % mom Sep 0.5 0.2
15:00 US Existing Home Sales, USD mn Oct 4.80 4.80 4.91
Tuesday 22 November
09:00 NO GDP Real Prices, % qoq sa Q2 0.4
09:30 UK Public Finances (PSNCR), GBP bn Oct -1.0 19.9
09:30 UK Public Finances (PSNB), GBP bn Oct 4.5 3.8 11.384
09:30 UK PSNB ex Financial Interventions, GBP bn Oct 7.2 6.5 14.14
13:30 US GDP (Annualized), % qoq 3Q S 2.3 2.5 2.5
13:30 US GDP Price Index, % 3Q S 2.5 2.5 2.5
13:30 CA Retail Sales, % mom Sep 0.5 0.5
13:30 CA Retail Sales ex Vehicles, % Sep 0.3 0.4
15:00 EA Consumer Confidence Nov -21.0 -19.9
19:00 US Minutes of FOMC Meeting
Wednesday 23 November
00:30 AU Real construction work done, % qoq Q3 3.0 2.0 -0.4
02:30 CN HSBC Flash Manufacturing PMI Nov 51.1
07:45 FR Own company outlook Nov 4
07:45 FR INSEE Business Survey Nov 95 97
08:00 FR PMI Services Nov 45 44.6
08:00 FR PMI Manufacturing Nov 48 48.5
08:30 GE PMI services Nov 50 50.6
08:30 GE PMI Manufacturing Nov 48.5 49.1
09:00 EA PMI Services Nov 45.5 46 46.4
09:00 EA PMI Manufacturing Nov 46 46.5 47.1
09:00 EA PMI Composite Nov 45.5 46 46.5
09:30 UK BoE MPC minutes
09:30 UK BBA Loans for House Purchase SA Oct 32500 33000 33130
13:30 US Durable Goods Orders, % Oct -2.8 -1.2 -0.6
13:30 US Personal Income, % Oct 0.2 0.3 0.1
13:30 US Personal Spending, % Oct 0.3 0.3 0.6
13:30 US PCE Core, % mom Oct 0.2 0.1 0.0
13:30 US Initial Jobless Claims 18-Nov
14:55 US U. of Michigan Confidence Nov F 64.5 64.2
Thursday 24 November
07:00 GE GDP, % yoy nsa Q3 2.5 2.5 2.5
07:00 GE GDP, % qoq Q3 0.5 0.5 0.5
07:00 GE Pan GDP, % yoy Q3 2.6 2.6 2.6
09:00 IT Consumer Confidence Index Nov 92.7 92.9
09:00 GE IFO Business Climate Nov 104.7 105.2 106.4
09:00 GE IFO Current Assessment Nov 115 115.0 116.7
09:00 GE IFO Expectations Nov 95.3 96 97
09:30 UK Index of services, % mom Sep 0.0 0.3
09:30 UK Index of services 3mth/3mth Sep 0.7 0.6 0.6
09:30 UK GDP, % qoq Q3 0.5 0.5 0.5
09:30 UK GDP, % yoy Q3 0.5 0.5 0.5
09:30 UK Business investment, % qoq Q3 11.6
09:30 UK Business investment, % yoy Q3 3.8
14:00 BE Business confidence Nov -11 -10.4
23:30 JP National CPI, Total, % yoy Oct -0.2 -0.1 0.0
23:30 JP National CPI, ex. Seasonal food, % yoy Oct -0.2 -0.1 0.2
23:30 JP National CPI, ex. Food and energy, % yoy Oct -1.0 -0.9 -0.4
23:30 JP Tokyo CPI, Total % yoy Nov -0.4 -0.5 -0.5
23:30 JP Tokyo CPI, ex. Seasonal food, % yoy -0.2 -0.3 -0.4
23:30 JP Tokyo CPI, ex. Food and energy, % yoy -0.9 -0.9 -1.0
23:50 JP CSPI, % yoy Oct -0.1 -0.1
All times are GMT. = no fixed date * = no fixed time F = final S = second revision r = revised # = consensus forecast e = estimate Source: RBS Research, RBS Strategy, Bloomberg

6

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Economists
Chief European Economist Jacques Cailloux +44 207 085 4757
Senior European Economist Nick Matthews +44 207 085 0173
UK Economist Ross Walker +44 207 085 3670
UK Economist Richard Barwell +44 207 085 5361
UK Economist (Analyst) Gareth Anderson +44 207 085 2999
Euro area Economist Silvio Peruzzo +44 207 085 7520
Euro area Economist Jan Dubsky +44 207 085 9119
Head of Research & Strategy Non-Japan Asia Sanjay Mathur +65 6518 5165
Chief Japan Economist Junko Nishioka +81 3 6266 3589
Chief China Economist Li Cui +852 2966 2531
Chief Economist Australia Kieran Davies +61 2 8259 5171
Australian Economist Felicity Emmett +61 2 8259 5835

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Produced by: The Royal Bank of Scotland Asia Securities (Singapore) Pte Limited
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Circuit Breaker
Never-ending Europe woes
True to form, after merely two weeks of positive momentum, Asia ex-Japan
registered net outflow of funds again as the spike in European bond yields drove
investors out of risk assets. This resonates with our view that the recent bounce
was mainly tactically driven. We expect the volatility to persist.

Table 1 : Strategic diary

Spains Finance Minister expects
the economy to grow about 0.8%
this year and this is less than the
governments target of 1.3%; in
addition it is also too early to tell if
the regions can meet their deficit
goal this year

Europes structural problems
remain
Peripheral Europes sovereign debt
woes to be an ongoing source of
volatility and pose risks to financial
markets, Asia included

(The Asian Angle: The rain in Spain
24 June 2011)

Avoid stocks with significant
exposure to Europe

Sumitomo Metal Mining expects
global nickel surplus to increase in
2012 to the highest in four years due
to slower demand

Underweight Materials

Underweight materials as the sector
faces profit-taking given unwinding of
speculative trades and demand-
supply imbalances

(The Asian Angle: Material cross
currents, 24 March 2011)
Underweight Materials,
especially industrial metals

Facebook expects the next 1 billion
users will be added mainly on
mobile devices rather than desktop
computers

China Mobile plans to have 10
million users of its new Wireless
City data plan this year

Telecom Italia reported 3Q profit
growth of 33% which came in higher
than Bloomberg estimates due to
growth in Latin America and cost
cutting

Overweight Telecom

Overweight Telecom as the sector
enters a new growth phase driven by
strong data growth

(The Asian Angle: Call options,
10 June 2011)

Overweight Telecom

U.S. Department of Agriculture
expects palm oil production in
Indonesia to increase 7.6% yoy to
25.4 mn mt in the 2011-2012
season

Consumer Staples upgraded to
Neutral
Consumer staples upgraded
from Underweight to Neutral on
moderating food input costs and
less demanding valuations

(The Asian Angle: Regional asset
allocation guide, 5 July 2011)

We see stock-picking
opportunities in the
Consumer Staples space
Source: Press reports, RBS

18 November 2011
Analyst
Dylan Cheang
Singapore
+65 6518 5936
dylan.cheang@rbs.com

RCB Reg 198703346M, Permit MICA
(P) 155/08/2011, Level 21, One Raffles
Quay, South Tower, 048583, Singapore


83
Circuit Breaker | Analysis | 18 November 2011 2

Weekly summary
Fund flows
! Funds flows for Asia ex-Japan turned negative: True to form, after merely two consecutive
sessions of positive momentum, capital flows to Asia ex-Japan funds turned negative again as
US$222m left the region this week. This time round, both ETF and non-ETF funds shared the
spoils with outflows of US$87m and US$135m, respectively. The latest data highlights the
fragility of prevailing investors sentiments, where investment decisions continue to be dictated
by developments on the European debt crisis front. This week, government bond yields for
Italy, Spain and Portugal trended higher and intervention efforts by the ECB to push down
yields through bond purchases were largely ineffective. Meanwhile, macro conditions in the
region continue to deteriorate with industrial production in September plunging 2% mom, the
largest decline since 2009. Essentially, growing scepticism on policy makers ability to stem
the crisis and bring back some form of stability will continue to dominate this space. More
likely than not, investors will be quick to embrace negative news flow at this juncture and take
flight from risky assets.
The volatile swing in sentiments was particularly evident among institutional investors in the
Asia ex-Japan space, where after the strong inflow of US$1.0bn last week, this segment made
an abrupt u-turn and registered net outflow of US$5m. This resonates with our view that last
weeks inflow was mainly driven by investors trying to chase performance in the market even
though conviction remains lacking. GEM funds, for some time the most resilient segment
within the emerging markets space, is also starting to see deteriorating investors interest.
Over the last four sessions, inflows for GEM funds have averaged US$1.7bn. However this
week, inflows have plunged to US$32m, a 97% wow decline. In fact within this space, the
longer-term non-ETFs investors have already pulled out US$128m in capital, the first time in
five weeks.
Hence, all in all, the latest flow data suggests that risk aversion is on the rise again and Asian
markets are poised to trade lower as investors continue to de-risk their portfolios and exit from
equities. Do note that even at the current level, while valuations for Asian equities are
inexpensive, neither have they reached base-bargain levels and hence, further downside is
plausible from here.
! Major outflows from Korea and Hong Kong: This week, with the exception of Taiwan,
Indonesia and Thailand, the rest of the markets in the region all registered a net exit of capital.
The largest outflow was seen in Hong Kong and Korea, where US$152m and US$132m left
these markets, respectively. Outflows from India and Singapore came in lower at US$65m and
US$22m, respectively, while the likes of Malaysia, Philippines and China registered largely
insignificant outflows of US$4m on average. On the other hand, Taiwan led the region in terms
of inflows at US$39m, marking the fifth consecutive week of positive momentum for the
market. In Southeast Asia, Indonesia and Thailand managed to eke out positive flows of
US$17m and US$5m, respectively, during the week.
Comparing the percentage share of outflows registered by each market this week with its
average share of inflows in 2010, again, China registered a significant improvement in terms
of positioning. Back in 2010, China accounted for 33.7% of the regions inflow. However this
week, the small outflow of US$1m for China constitutes only 0.4% of the aggregate net
outflow for the region. The positive flow momentum is due to rising expectations that the
Chinese government will soon embark on policy easing in light of the slowing macroeconomic
momentum and moderating inflationary pressure. However, judging from recent PBOC moves,
nothing is cast in stone at this juncture. Earlier this week, the PBOC sold one-year bills at a
lower yield of 3.4875%, fuelling speculations that more aggressive policy easing is on the
cards. However on Thursday, there was seemingly a change in stance as the PBOC sold
three-month bills at an unchanged yield of 3.1618%.
Other than China, the other markets that registered an improvement in market positioning
were Taiwan, Indonesia and Thailand. The net inflow of funds into Indonesia was particularly
fuelled by the surprise cut in policy rate by 50bp to 6.0%, which is a record low. In our view,
while the aggressive easing stance could benefit the domestic equity markets in the near term,
it could however create unnecessary inflationary pressure going forward.
84
(Note: This dataset consists of total capital flows into a particular market within Asia ex-Japan.
Apart from contributions from Asia ex-Japan and dedicated country funds, this dataset also
includes flows from other global and emerging market funds. Therefore, the aggregation of
these country flows will differ from the Asia ex-Japan fund flow data highlighted earlier.)
! Emerging markets (EM) vs developed markets (DM) flows: DM funds registered their
fourth consecutive session of net inflows at US$1.1bn this week. This is however 81% lower
than the last weeks inflow of US$5.9bn. The net inflows were due to the US: US$3.1bn
entered this space. On the other hand, Western Europe and Japan funds saw net outflows of
US$603m and US$238m, respectively.
Meanwhile, EM funds registered its first outflow in five weeks at US$183m. This was due to
outflows of US$222m from Asia ex-Japan funds as well as US$7m from EMEA funds. GEM
and LatAm on the other hand managed to garner average inflows of US$23m.
! Cross-asset class flows: For the second consecutive week, all asset classes registered net
inflow of capital although the magnitude has declined substantially. Fixed income funds
registered the largest inflow of US$2.4bn, although this is a 42% decline from the prior weeks
level. Equities funds in aggregate registered its fifth consecutive session of inflow at
US$1.5bn, an 84% decline compared to the last weeks level of US$9.6bn. Lastly, capital
flows to money markets funds fell 95% wow to US$2.0bn.
(Note: The preceding fund flow comments are based on data from EPFR Global for 10
November 2011 to 16 November 2011)
Tactical indicators
! Risk aversion on the rise: Risk aversion is on the rise again as concerns over the sovereign
debt crisis in Europe come to the fore. Rising bond yields coupled with recession fears in
Europe continue to dominate investors sentiments. The VIX index rose from 30.0 last Friday
to 34.5 as of yesterdays close, while the CBOE put-call ratio also increased from 0.9 to 1.3, a
level which is markedly higher than its long-term average of 0.9.
However in Hong Kong, the level of short selling activities saw no increase in terms of
intensity. Short turnover as a percentage of total turnover on the Hang Seng index moderated
slightly from 9.8% last Friday to 9.7% as of yesterdays close. Although this is higher than its
long-term average of 6.6%, the mere fact that short-selling has not intensified this week
suggests that investors are sanguine that Chinese policy makers may potentially undertake
policy easing going forward, which will benefit China-related Hong Kong equities.
! Dollar index traded higher: The Dollar index traded slightly higher this week, rising from 76.9
last Friday to 78.3 as of yesterdays close. As with last week, the up-move was mainly due to
gains made against the euro, as the currency continued to be dragged by concerns over the
European debt crisis. Meanwhile, the 14-day RSI stayed neutral at 59.6.
! Negative earnings momentum continues: Earnings momentum in Asia-Pacific ex-Japan
continues to stay negative, with 720 upgrades compared to 1,792 downgrades. As with last
week, the key markets contributing to the negative momentum were Taiwan, Australia, Korea
and China. In terms of sectors, the ones contributing most to the negative momentum were
technology and materials.
Stock screens
! Defensive screens: The recent pullback in regional markets shows that substantial downside
risks remain, especially in light of the ongoing lack of clarity in Europe. From a strategy
standpoint, we have for some time been advising investors to further de-risk their portfolios by
increasing their exposure to non-cyclical sectors. Indeed, this strategy is likely to garner
relative outperformance for investors in the current environment. Hence in this weeks Circuit
Breaker, we have highlighted two baskets of non-cyclical stocks, ranking them by forward P/E.

85
Key events
! US and Europe macro data: The key US macro data to look out for next week will be the
GDP numbers for 3Q and existing home sales, durable goods orders, personal spending and
PCE core data for October. Bloomberg consensus expects PCE core to increase by 1.7% yoy.
In Europe, the key data due for release will be the current account and industrial new orders
numbers for September, and PMI Composite data for November. Bloomberg consensus
expects a reading of 46.0 for PMI Composite and industrial new orders to rise by 8.0% yoy.
! Asia macro data: A slew of Southeast Asian macro data coming out next week and this
include the 3Q GDP numbers for Thailand, Malaysia and Singapore, October trade data for
Thailand and the October industrial production number for Singapore. Bloomberg consensus
is expecting the following: Singapore GDP (+6.0% yoy), Thailand GDP (+4.5% yoy), Malaysia
GDP (+4.8% yoy), Singapore industrial production (+9.1% yoy) and Thailand exports (+9.8%
yoy). In North Asia, keep a lookout for Taiwans 3Q GDP and October industrial production
data, where Bloomberg consensus is expecting growth of 3.42% and 2.5% yoy, respectively.
Table 2 : Regional asset allocation
Overweight Neutral Underweight
Country China Hong Kong India
Malaysia Indonesia
New Zealand Korea
Singapore Australia
Taiwan Philippines
Thailand

Sector Telecoms Consumer Staples Consumer Discretionary
Financials Energy Healthcare
Utilities Technology Materials
Industrials

Asia-Pacific vs world Underweight
Source: RBS

86
Go with the flow
Chart 1 : GEM fund flows Chart 2 : Asia ex-Japan fund flows
-5
-4
-3
-2
-1
0
1
2
3
4
Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11
(US$ bn)
GEM fund flows (US$ bn) 4-week moving average

-3
-2
-1
0
1
2
3
(US$ bn)
Asia ex-Japan fund flows 4-week moving average
Note: This data consists of capital flows into BRIC and Global Emerging Markets funds.
Source: EPFR Global, RBS
Note: This data consists of capital flows into ASEAN, Asia ex-Japan, Greater China and
dedicated country funds in the region.

Chart 3 : Total country flows and weekly averages I Chart 4 : Total country flows and weekly averages II
(200)
(100)
-
100
200
300
400
500
China Hong Kong India Taiwan Korea
(US$ m)
Net fund flows this week 4wma

(30)
(10)
10
30
50
70
Malaysia Thailand Singapore Indonesia Philippines
(US$ m)
Net fund flows this week 4wma
Note: This data consists of capital flows into each market from all fund types.
Note: This data consists of capital flows into each market from all fund types.

Chart 5 : DM vs EM fund flows Chart 6 : Equity vs fixed income fund flows
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
(US$bn)
Total DM fund flows - 3mma Total EM fund flows - 3mma

-6
-4
-2
0
2
4
6
(US$ bn)
Total Equity Funds - 3mma Total Bond Funds - 3mma
Source: EPFR Global, RBS Source: EPFR Global, RBS
87

Chart 7 : Total fund flows China Chart 8 : Total fund flows India
(2,000)
(1,500)
(1,000)
(500)
-
500
1,000
1,500
Jun-09 Dec-09 May-10 Nov-10 Apr-11 Oct-11
(200)
(100)
0
100
200
300
400
500
600
(US$m)
Total funds flow - China - LHS 6mma - RHS

(1,000)
(800)
(600)
(400)
(200)
-
200
400
600
800
(200)
(150)
(100)
(50)
0
50
100
150
200
250
300
(US$m)
Total funds flow - India - LHS 6mma - RHS

Chart 9 : Total fund flows Korea Chart 10 : Total fund flows Taiwan
(1,000)
(800)
(600)
(400)
(200)
-
200
400
600
800
1,000
(100)
(50)
0
50
100
150
200
250
300
(US$m)
Total fund flows - Korea - LHS 6mma - RHS

(1,500)
(1,000)
(500)
-
500
1,000
1,500
2,000
2,500
(20)
0
20
40
60
80
100
120
140
160
180
200
(US$m)
Total fund flows - Taiwan - LHS 6mma - RHS

Chart 11 : Total fund flows Indonesia Chart 12 : Total fund flows Thailand
(400)
(300)
(200)
(100)
-
100
200
300
(40)
(20)
0
20
40
60
80
100
120
(US$m)
Total funds flow - Indonesia - LHS 6mma - RHS

(250)
(200)
(150)
(100)
(50)
-
50
100
150
200
250
(30)
(20)
(10)
0
10
20
30
40
50
60
70
80
(US$m)
Total funds flow - Thailand - LHS 6mma - RHS

88
Trend is your friend
Chart 13 : Dollar index Chart 14 : VIX index
70
72
74
76
78
80
82
84
86
88
90
Jan-00 Jun-09 Dec-09 May-10 Nov-10 Apr-11 Oct-11
(index)
15
25
35
45
55
65
75
85
DXY index - LHS 14-day RSI - RHS

10
20
30
40
50
60
70
80
90
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11
Source: Bloomberg, RBS Source: Bloomberg, RBS

Chart 15 : CBOE put-call ratio Chart 16 : Asia-Pacific ex-Japan earnings momentum
0.5
0.7
0.9
1.1
1.3
1.5
(x)
Last Price Average 4wma

-50
-40
-30
-20
-10
0
10
20
Earnings momentum 12 Week Moving Average
(%)
Source: Bloomberg, RBS Source: Datastream, RBS

Chart 17 : Short turnover as a percentage of total turnover
on the Hang Seng index
Chart 18 : AAII bull-to-bear indicator
2
3
4
5
6
7
8
9
10
11
12
13
14
15
(%)
Last Price Average 4wma

-80
-60
-40
-20
0
20
40
60
Jan-92 Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-10
AAII bull to bear indicator 6-month moving average
Source: Bloomberg, RBS Source: Bloomberg, RBS

89
New issues and lock-up schedules

Table 3 : New issues summary
Issuer Pricing
Date
Size (US$m) Deal
Type
Disc/
Prem (%)
Aftermarket
Perf (%)
ICBC 9-Nov-11 1,100 FO -6.0 -6.1
Hankook Tire 9-Nov-11 559 FO -12.1 7.9
United Laboratories International 7-Nov-11 125 CB 20.0 na
CapitaMall Trust 1-Nov-11 198 Rights -4.8 0.6
CapitaMalls Malaysia Trust 28-Oct-11 106 FO -3.8 10.3
Parkson Retail Asia 28-Oct-11 1,109 IPO na 28.7
Atlas Resources 24-Oct-11 110 IPO na na
Hyundai Glovis 17-Oct-11 230 ABB -3.9 9.7
Samsung Life 17-Oct-11 296 ABB -5.0 -0.6
Hong Leong Bank 11-Oct-11 829 Rights -26.6 22.1
Nexolon Co 4-Oct-11 72 IPO na 5.0
Belle Corp 4-Oct-11 103 Rights -38.3 46.3
Bank Danamon Indonesia 28-Sep-11 557 Rights -17.3 10.5
CITIC Securities 28-Sep-11 1,800 IPO na 7.1
China Hanking 26-Sep-11 148 IPO na -2.4
Puregold Price Club 21-Sep-11 173 IPO na 30.6
RexLot Holdings 21-Sep-11 105 CB 30.0 na
Tenfu 20-Sep-11 160 IPO na -10.8
Hongguo International 17-Sep-11 200 IPO na -29.1
Belle International 7-Sep-11 470 FO -6.0 -3.1
Source: Bloomberg

90
Table 4 : Asia ex-Japan lock-up schedules

Ticker Lock-up expiry Offer Price
(LCY)
Current Share
Price (LCY)
Performance
since issue (%)
Total Market Cap
(US$m)
Hong Kong
Billion Industrial 2299 HK Equity 11/14/2011 5.18 4.43 -14.5 1,308
Shanghai Pharmaceuticals 2607 HK Equity 11/16/2011 23.00 15.18 -34.0 5,974
Glencore International 805 HK Equity 11/21/2011 66.53 50.20 -24.5 44,632
China Flooring 2083 HK Equity 11/22/2011 2.95 1.72 -41.7 333
MGM China 2282 HK Equity 11/30/2011 15.34 10.10 -34.2 4,929
Dragon Crown 935 HK Equity 12/7/2011 1.10 0.82 -25.5 117
Huaneng Renewables 958 HK Equity 12/7/2011 2.50 1.97 -21.2 2,141
Samsonite International 1910 HK Equity 12/13/2011 14.50 10.42 -28.1 1,883
Prada SpA 1913 HK Equity 12/21/2011 39.50 37.20 -5.8 12,225
Shuang Hua Holdings 1241 HK Equity 12/27/2011 1.16 1.30 12.1 109
Modern Educataion Group 1082 HK Equity 12/31/2011 1.30 1.13 -13.1 58
Newton Resources Ltd 1231 HK Equity 12/31/2011 1.75 1.04 -40.6 534
Mascotte Holdings 136 HK Equity 1/11/2012 0.40 0.31 -23.8 179
China Hanking 3788 HK Equity 3/28/2012 2.51 2.45 -2.4 576
Citic Securities 6030 HK Equity 4/3/2012 13.30 14.24 7.1 20,297
AGTech Holdings 8279 HK Equity 4/11/2012 1.77 0.35 -80.5 165
Shanghai Pharmaceuticals 2607 HK Equity 5/14/2012 23.00 15.18 -34.0 5,974
MGM China 2282 HK Equity 5/28/2012 15.34 10.10 -34.2 4,929
Shunfeng Photovoltaic International 1165 HK Equity 7/7/2012 1.11 0.44 -60.4 88
Zall Development Cayman Holding 2098 HK Equity 7/7/2012 2.89 3.37 16.6 1,515
Sun Art Retail Group 6808 HK Equity 7/21/2012 7.20 11.92 65.6 14,341
Malaysia
UOA Development UOAD MK Equity 12/5/2011 2.90 1.56 -46.2 590
MSM Malaysia Holdings MSM MK Equity 12/25/2011 3.38 4.70 39.1 1,046
Eversendai Corp Bhd EVSD MK Equity 12/28/2011 1.62 1.65 1.9 404
Bumi Armada Bhd BAB MK Equity 1/17/2012 3.03 3.03 0.0 3,670
Indonesia
Garuda Indonesia GIAA IJ Equity 2/11/2012 750 425 -43.3 1,061
Buana Listya Tama BULL IJ Equity 5/22/2012 155 106 -31.6 206
Singapore
Perennial China PCRT SP Equity 12/6/2011 0.70 0.46 -34.3 398
Malacca Trust MTL SP Equity 1/22/2012 0.22 0.20 -9.1 53
Sheng Siong Group SSG SP Equity 2/13/2012 0.33 0.41 24.2 437
Korea
Korea Electronic Power Industry 130660 KS Equity 12/16/2011 5500 6260 13.8 179
Doosan Engine 082740 KS Equity 1/4/2012 19300 14500 -24.9 886
Hyundai Wia 011210 KS Equity 2/21/2012 65000 160000 146.2 3,620
Iljin Materials 020150 KS Equity 3/3/2012 15800 19300 22.2 665
TK Chemical 104480 KS Equity 4/25/2012 5000 2390 -52.2 189
SeAH Special Steel 019440 KS Equity 5/31/2012 28000 30750 9.8 232
Korea Aerospace Industries 047810 KS Equity 6/29/2012 15500 38600 149.0 3,309
Shinsegae International 031430 KS Equity 7/13/2012 65000 137500 111.5 863
Nexolon Co 110570 KS Equity 10/13/2012 4000 4200 5.0 292
Source: Bloomberg

91
Thematic screens
Table 5 : North Asia Non-cyclical stocks ranked by forward P/E
Ticker Name M-Cap
(US$bn)
BEst
P/E (x)
P/B
(x)
EV/ EBITDA
(x)
OPM
(%)
ROE (%) Net D/E
(%)
Dvd Yld
(%)
Sector Country
017670 KS Equity SK Telecom 10.4 6.4 0.9 - 12.6 12.3 34.4 6.3 Telecom South Korea
030200 KS Equity KT Corp 8.2 6.6 0.8 - 10.2 10.9 74.4 6.6 Telecom South Korea
606 HK Equity China Agri-Industries 3.0 7.9 1.1 12.5 3.2 10.4 123.0 1.8 Cons. Staples Hong Kong
2877 HK Equity China Shineway Pharma 1.1 8.5 2.0 4.4 51.6 26.5 -61.5 2.8 Health Care China
036460 KS Equity Korea Gas 2.6 8.6 0.5 - 4.4 4.0 308.7 1.6 Utilities South Korea
1068 HK Equity China Yurun Food 2.8 8.8 1.4 5.6 10.5 22.0 -13.1 3.5 Cons. Staples China
2380 HK Equity China Power International Dev. 1.1 8.9 0.5 10.5 16.2 6.5 244.9 2.8 Utilities Hong Kong
1798 HK Equity China Datang 1.3 9.2 0.9 9.0 63.9 7.5 195.5 0.0 Utilities China
941 HK Equity China Mobile 195.5 10.0 2.1 3.8 30.3 21.5 -49.1 3.7 Telecom Hong Kong
43 HK Equity CP Pokphand 1.8 10.7 3.0 10.0 6.3 34.2 31.7 3.4 Cons. Staples Hong Kong
8 HK Equity PCCW 2.8 11.3 - 7.4 14.8 - - 5.1 Telecom Hong Kong
097950 KS Equity CJ CheilJedang 3.3 11.5 1.3 - 7.8 29.1 48.3 1.4 Cons. Staples South Korea
033780 KS Equity KT&G 9.1 11.6 2.1 7.6 31.6 24.2 -19.9 4.0 Cons. Staples South Korea
270 HK Equity Guangdong Investment 3.9 11.7 1.5 6.9 56.8 15.2 -4.3 3.4 Utilities Hong Kong
980 HK Equity Lianhua Supermarket 1.4 11.8 3.1 2.7 2.0 23.2 -217.0 2.0 Cons. Staples China
000100 KS Equity Yuhan 1.1 12.4 1.1 9.1 12.5 12.5 -32.2 0.8 Health Care South Korea
000080 KS Equity Hite Jinro 1.8 12.7 1.9 - 12.2 8.9 43.2 5.2 Cons. Staples South Korea
836 HK Equity China Resources Power 8.8 12.8 1.6 10.5 14.6 11.8 126.0 2.3 Utilities Hong Kong
1038 HK Equity Cheung Kong Infrastructure 13.0 13.2 2.0 114.8 39.8 15.5 6.6 3.1 Utilities Hong Kong
991 HK Equity Datang International 8.6 13.6 0.7 12.2 13.4 7.7 330.8 3.0 Utilities China
Source: Bloomberg

Table 6 : Southeast Asia & India Non-cyclical stocks ranked by forward P/E
Ticker Name M-Cap
(US$bn)
BEst P/E
(x)
P/B
(x)
EV/ EBITDA
(x)
OPM
(%)
ROE (%) Net D/E
(%)
Dvd Yld
(%)
Sector Country
RELI IN Equity Reliance Infrastructure 2.2 6.8 0.5 11.0 10.1 7.0 30.3 1.7 Utilities India
EGCO TB Equity Electricity Generating 1.5 7.6 0.8 20.1 10.5 8.5 8.1 5.6 Utilities Thailand
IFAR SP Equity Indofood Agri Resources 1.5 8.4 1.1 5.6 21.5 14.4 4.5 0.0 Cons. Staples Singapore
NLC IN Equity Neyveli Lignite 2.4 9.4 1.1 7.7 31.9 12.1 6.2 3.1 Utilities India
GGR SP Equity Golden Agri-Resources 6.2 9.5 0.9 7.1 11.1 26.1 8.7 1.1 Cons. Staples Singapore
LSIP IJ Equity London Sumatra 1.8 10.0 3.2 6.8 42.7 33.5 -39.1 2.5 Cons. Staples Indonesia
SIMP IJ Equity Salim Ivomas Pratama 2.0 10.4 - - 26.8 13.3 64.9 0.0 Cons. Staples Indonesia
RATCH TB Equity Ratchaburi Electricity Gen. 1.9 10.4 1.3 9.4 13.0 11.4 62.5 5.0 Utilities Thailand
TPWR IN Equity Tata Power 4.5 10.7 1.7 10.9 17.4 16.8 155.3 1.3 Utilities India
AP PM Equity Aboitiz Power 5.0 10.8 3.7 11.2 33.6 44.3 90.1 4.4 Utilities Philippines
ADANI IN Equity Adani Power 3.1 11.1 2.5 32.8 48.8 8.5 347.9 0.0 Utilities India
FR SP Equity First Resources 1.7 11.1 2.0 7.2 53.6 25.4 20.0 1.9 Cons. Staples Singapore
TEL PM Equity Philippine Long Distance Tel. 11.8 11.3 5.4 7.0 37.4 46.4 66.5 6.5 Telecom Philippines
JSW IN Equity JSW Energy 1.4 11.4 1.2 - 32.0 16.1 146.4 2.2 Utilities India
PGAS IJ Equity Perusahaan Gas Negara 8.3 11.6 5.2 7.7 42.0 45.5 1.3 5.0 Utilities Indonesia
YTLP MK Equity YTL Power 4.1 11.6 1.5 8.8 12.0 16.8 165.9 4.2 Utilities Malaysia
GLO PM Equity Globe Telecom 3.0 12.3 2.7 2.4 26.7 21.6 86.8 6.3 Telecom Philippines
TLKM IJ Equity Telekomunikasi Indonesia 16.7 12.5 3.2 5.1 29.0 24.8 14.3 4.3 Telecom Indonesia
EXCL IJ Equity XL Axiata 4.6 12.5 3.2 5.4 22.7 25.0 68.2 2.2 Telecom Indonesia
TUF TB Equity Thai Union Frozen Products 1.8 12.7 2.4 11.8 8.8 19.6 152.5 2.1 Cons. Staples Thailand
Source: Bloomberg

92
Asia macro calendar
Table 7 : Asia macro calendar
Date Country Month Events Survey Last
21 Nov SI 3Q F GDP (yoy) 6.10% 5.90%
21 Nov TH 3Q Gross Domestic Product (yoy) 4.50% 2.60%
21 Nov TA OCT Export Orders (yoy) 3.80% 2.72%
21 Nov TA 3Q Current Account Balance (USD) - - 9015M
21-25 Nov PH OCT Budget Deficit/Surplus - - -18.5B
21-25 Nov TH OCT Customs Exports (yoy) 9.80% 19.10%
21-25 Nov TH OCT Customs Imports (yoy) 29.20% 41.90%
21-25 Nov TH OCT Customs Trade Balance -$498M $238M
22 Nov TA OCT Unemployment Rate - sa 4.28% 4.27%
22 Nov HK OCT CPI - Composite Index (yoy) - - 5.80%
23 Nov CH NOV HSBC Flash China Manufacturing PMI - - 51.1
23 Nov SI OCT CPI (yoy) 5.20% 5.50%
23 Nov TA OCT Industrial Production (yoy) 2.50% 1.62%
23 Nov MA OCT CPI yoy - - 3.40%
23 Nov SK NOV SK Consumer Confidence - - 100
24 Nov IN 12-Nov Food Articles WPI yoy - - 10.63%
24 Nov HK OCT Exports yoy% - - -3.00%
24 Nov HK OCT Imports yoy% - - 2.30%
24 Nov HK OCT Trade Balance - - -40.0B
24 Nov TA 3Q F GDP - Constant Prices (yoy) 3.40% 3.37%
25 Nov PH SEP Total Imports (yoy) - - 10.40%
25 Nov PH SEP Trade Balance - - -$804M
25 Nov SI OCT Industrial Production yoy 8.60% 12.80%
25-28 Nov TH OCT Mfg. Production Index ISIC (yoy) - - -0.51
25-28 Nov TH OCT Mfg. Production Index ISIC (SA) - - 188.57
Source: RBS, Bloomberg

93
Results diary
Table 8 : Results diary
Date Bloomberg Market Company Analyst Period Report type*
Monday 21 Nov
21-Nov-11 970 HK China Sparkle Roll Group not covered S1 (C)
21-Nov-11 UPL MK Malaysia United Plantations Vince Ng, CFA Q3 (C)
21-Nov-11 000810 KS South Korea Samsung Fire & Marine# Y C Mok Q2 (E)

Tuesday 22 Nov
22-Nov-11 (HKT) PWRD US China Perfect World Wendy Huang Q3 (C)
22-Nov-11 2266 HK Hong Kong Kosmopolito Hotels Intl Fan Tso S1 (C)
22-Nov-11 MPHL IN India MphasiS# Sandeep Shah Y (E)
22-Nov-11 SIEM IN India Siemens India Harish Bihani Y (C)
22-Nov-11 AIRA MK Malaysia AirAsia# John Rachmat Q3 (C)
22-Nov-11 HLBK MK Malaysia Hong Leong Bank# Chehan Perera, CFA Q1 (E)
22-Nov-11 IGB MK Malaysia IGB Corp# Diana Teo Q3 (E)
22-Nov-11 IJMLD MK Malaysia IJM Land# Diana Teo Q2 (E)
22-Nov-11 MAS MK Malaysia Malaysian Airline System Vince Ng, CFA Q3 (C)
22-Nov-11 MRC MK Malaysia Malaysian Resources Corp# Kwok Yan Chue Q3 (E)
22-Nov-11 MASEG MK Malaysia Masterskill Education# Annuar Rahman Q3 (E)
22-Nov-11 006800 KS South Korea Daewoo Securities# Young Bae Kwon Q2 (E)
22-Nov-11 071050 KS South Korea Korea Investment# Young Bae Kwon Q2 (E)
22-Nov-11 KTB TB Thailand Krung Thai Bank# David Beller Q3 (E)
22-Nov-11 PTTGC TB Thailand PTT Global Chemical# Avin Sony Q3 (E)

Wednesday 23 Nov
23-Nov-11 AXIATA MK Malaysia Axiata Group Kwok Yan Chue Q3 (C)
23-Nov-11 HLFG MK Malaysia Hong Leong Fin Group# Chehan Perera, CFA Q1 (E)
23-Nov-11 LLB MK Malaysia Lion Industries# Diana Teo Q1 (E)
23-Nov-11 MBC MK Malaysia Malaysian Bulk Carriers# Vince Ng, CFA Q3 (E)
23-Nov-11 MPR MK Malaysia Media Prima# Dharmini Thuraisingam Q3 (E)
23-Nov-11 MISC MK Malaysia MISC# Vince Ng, CFA Q2 (T)
23-Nov-11 034220 KS South Korea LG Display# Jeffrey Toder, CFA Q3 (E)

Thursday 24 Nov
24-Nov-11 1688 HK China Alibaba.com Wendy Huang Q3 (C)
24-Nov-11 3888 HK China Kingsoft Corp Thomas Chong Q3 (C)
24-Nov-11 2314 HK Hong Kong Lee & Man Paper not covered S1 (C)
24-Nov-11 AEON MK Malaysia Aeon Annuar Rahman Q3 (E)
24-Nov-11 GENM MK Malaysia Genting Malaysia# Kwok Yan Chue Q3 (E)
24-Nov-11 GENP MK Malaysia Genting Plantations# Vince Ng, CFA Q3 (E)
24-Nov-11 HAPL MK Malaysia Hap Seng Plantations# Vince Ng, CFA Q3 (E)
24-Nov-11 KFC MK Malaysia KFC Holdings# Annuar Rahman Q3 (E)
24-Nov-11 KNMG MK Malaysia KNM Group# Dharmini Thuraisingam Q3 (E)
24-Nov-11 MMC MK Malaysia MMC Corp# Kwok Yan Chue Q3 (E)
24-Nov-11 MSM MK Malaysia MSM Malaysia Annuar Rahman Q3 (E)
24-Nov-11 NHB MK Malaysia Naim Holdings# Diana Teo Q3 (E)
24-Nov-11 PETR MK Malaysia Petra Perdana# Dharmini Thuraisingam Q3 (E)
24-Nov-11 UMWH MK Malaysia UMW Holdings Annuar Rahman Q3 (E)
24-Nov-11 005940 KS South Korea Woori Investment & Secs# Young Bae Kwon Q2 (E)

Friday 25 Nov
25-Nov-11 AHB MK Malaysia Affin Holdings# Chehan Perera, CFA Q3 (E)
25-Nov-11 AMRB MK Malaysia Alam Maritim# Dharmini Thuraisingam Q3 (E)
25-Nov-11 AJR MK Malaysia Ann Joo Resources# Diana Teo Q3 (E)
25-Nov-11 GENT MK Malaysia Genting# Kwok Yan Chue Q3 (E)
25-Nov-11 IJM MK Malaysia IJM Corporation Kwok Yan Chue Q2 (C)
25-Nov-11 IJMP MK Malaysia IJM Plantations Vince Ng, CFA Q2 (C)
25-Nov-11 MCIL MK Malaysia Media Chinese Intl# Dharmini Thuraisingam Q2 (C)
25-Nov-11 MUHI MK Malaysia Muhibbah Engineering# Kwok Yan Chue Q3 (E)
25-Nov-11 PETD MK Malaysia Petronas Dagangan# Dharmini Thuraisingam Q2 (E)
25-Nov-11 PROH MK Malaysia Proton# Annuar Rahman Q2 (E)
25-Nov-11 SIME MK Malaysia Sime Darby# Vince Ng, CFA Q1 (E)
25-Nov-11 TAH MK Malaysia Ta Ann Holdings# Vince Ng, CFA Q3 (E)
25-Nov-11 T MK Malaysia Telekom Malaysia# Kwok Yan Chue Q3 (E)
25-Nov-11 067250 KS South Korea STX Offshore & Shipbldg# K J Hwang Q3 (E)
* (C)confirmed, (E)estimated, (T)tentative
Source: #Bloomberg, Company data, RBS

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Produced by: The Royal Bank of Scotland plc
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21 November 2011

Global Action Pack
Monday 21 November 2011

Table 1 : This mornings research
Subject Title No of pages
European Research
Bayer Flash: Ambitious China target achievable 5
BMW Flash: BMW Roadshow feedback 5
Boskalis Westminster Flash: Boskalis - 3Q11 trading update in line 4
Brammer Flash: Strong 3Q11 IMS, FY in line 5
Catlin Group Flash: SPV announced with China Re 5
Credit Agricole S.A. Living on a prayer 13
IAG Investor day good - world scary 18
Imtech Flash: Unjustified underperformance 5
Marks & Spencer Flash: Fashion Preview 4
Media It's a SLOG 24
Morgan Sindall Risk discounting seems overdone 24
Real Estate Europe Flash: Think outside the box 4
Regus Flash: Positive Q3, reaffirming FY11 guidance 4
Standard Chartered Flash: Analyst Trip Diaries: final volume 5
Telecom Italia Flash: Harsher Italian MTR cuts 5
The Money Bin Insurance and financials weekly 8
The Week Ahead (Europe) 21-25 November 2011 11
Tullow Oil Flash: Teak-3 success/Suriname farm-out 4
UBS Flash: Small apple after all 5
Vivendi Flash: I can see clearly now the rain has gone 5
Asian Research
Ahead Of The Curve Taiwan data points 29
Asia Cement Expect a declining 2012 9
Circuit Breaker Never-ending Europe woes 15
Construction & Eng Korea Flash: Another deregulation under discussion 4
Doosan Infracore Flash: Refinancing reduces liquidity concerns 4
Financials India Flash: Light at the end of the tunnel 4
Hana Financial Group Flash: Taking a step forward 5
Hindustan Unilever Flash: Cost pressures to sustain 5
IOI Corporation Getting back in shape 10
Jiangxi Copper Flash: Small impact from higher 2012 TCRC 4
Kingsoft Corp 3Q11 results preview 5
Malaysia Marine & Heavy Riding on Petronas spending 17
Media India Well poised for structural growth 26
>Dish TV India On a roll 23
>Eros International Media Strong tailwinds 18
>Sun TV Network Some EPS risk, but good value 29
>Zee Entertainment Contrasting signals 28
Media Prima Special dividend surprise 5
Parkson Retail Group 3Q11/9M11 results no surprise 10
Perfect World 3Q11 results preview 5
Reliance Industries Flash: KG-D6 profit sharing back in focus 5
Shanda Games Legacy games drive growth in 3Q 12
Telco Services India Flash: Is CBI case against Bharti significant? 5
Utilities India Flash: Important judgment by APTEL 4
Source: RBS

Analyst
RBS European Research

250 Bishopsgate, London, EC2M 4AA,
United Kingdom


95

Global Action Pack summaries

Table 2 : Europe Upgrades/downgrades and initiations
Company Ticker Last Actual EPS new EPS old Change (%) Curr Price Target Recom

Year End
FY1 FY2 FY3 FY1 FY2 FY3 FY1 FY2 FY3 New Old Chg (%) New Old
Credit Agricole S.A. ACA FP Dec-10 0.80 1.41 1.42 1.27 1.57 1.76 -37.5 -9.9 -19.3 ! 4.00 6.00 -33.3 Sell Sell
Reason for EPS Change: Lowering forecasts to reflect slower macro environment
IAG IAG LN Dec-10 0.14 0.03 0.17 0.14 0.05 0.17 n/a -31.6 -2.0 1.55 1.65 -6.1 Hold Hold
Reason for EPS Change: Rising fuel costs in FY12
Morgan Sindall* MGNS LN Dec-10 78.51 74.03 76.64 75.87 75.04 81.78 3.5 -1.3 -6.3 7.28 8.95 -18.7 Buy Buy
Reason for EPS Change: Latest IMS showed stability but Eurozone risk and uncertainty reduces FY12F

Table 3 : Asia Upgrades/downgrades and initiations
Company Ticker Last Actual EPS new EPS old Change (%) Curr Price Target Recom

Year End
FY1 FY2 FY3 FY1 FY2 FY3 FY1 FY2 FY3 New Old Chg (%) New Old
Asia Cement 1102 TT Dec-10 3.27 2.81 3.56 3.31 3.30 3.91 -1.1 -14.9 -8.9 NT$ 35.00 45.00 -22.2 Hold Buy
Reason for EPS Change: Forecasts cut on lower China profit and investment income.
Dish TV India DITV IN Mar-11 -0.52 1.44 2.54 n/a n/a n/a n/a n/a n/a Rs 88.00 n/a n/a Buy n/a
Reason for EPS Change: Initiation of coverage
Eros International Media EROS IN Mar-11 17.92 22.54 26.58 16.74 20.39 23.47 7.0 10.5 13.2 Rs 296.00 220.00 34.5 Buy Buy
Reason for EPS Change: Higher theatre and TV rights realisation; higher release slate assumptions
Malaysia Marine & Heavy MMHE MK Dec-10 0.23 0.20 0.28 0.25 0.33 0.41 -7.1 -38.3 -31.2 RM 7.10 7.90 -10.1 Buy Buy
Reason for EPS Change: We cut estimates to account for delays in new job wins and higher taxes.
Shanda Games GAME US Dec-10 5.44 5.67 6.12 5.37 6.00 6.81 1.2 -5.4 -10.1 US$ 8.70 9.10 -4.4 Buy Buy
Reason for EPS Change: lower EPS on slower game growth
Sun TV Network SUNTV IN Mar-11 18.65 21.98 25.24 n/a n/a n/a n/a n/a n/a Rs 363.00 n/a n/a Buy n/a
Zee Entertainment Z IN Mar-11 6.44 7.36 8.64 n/a n/a n/a n/a n/a n/a Rs 121.00 n/a n/a Hold n/a

Global Action Pack | 21 November 2011 2
96
Europe
Bayer (Buy, TP !55.00) - Ambitious China target achievable
Bayer China investor event suggests the ambitious 2015 sales target is achievable. Bayer has
the potential to grow faster than the market given: long history/brand/relationships, tailored
strategy, portfolio and 12th 5-year plan focus areas. The commitment of executives to talent
management is impressive.
http://track.sumnet.com/home/00000275/T038E2F/bayer_20105512.pdf

BMW (Buy, TP !71.00) - BMW Roadshow feedback
We took BMWs investor relations road-showing post the presentation in Barcelona of the new
BMW 3 series.
http://track.sumnet.com/home/00000275/T038E3B/bmw_20105515.pdf

Boskalis Westminster (Buy, TP !29.00) - Boskalis - 3Q11 trading update in line
Boskalis 3Q11 trading update was in line with expectations. Orderbook of !3bn was flat
compared to 1H11 with a small increase for Dredging & Earthmoving. FY 2011 net profit outlook
of !230-250m was reiterated. Buy.
http://track.sumnet.com/home/00000275/T038D8A/bos_ter_10086929.pdf

Brammer (Buy, TP 2.95) - Strong 3Q11 IMS, FY in line
Brammer has, as we expected, this morning issued a strong 3Q11 IMS. Revenues for the period
are strongly ahead yoy, highlighting market share gains and a successful Key Account strategy.
Gross margins and cash flow are in line with management's expectations also. We expect no
change to FY consensus
http://track.sumnet.com/home/00000275/T038D74/bra_mer_10086919.pdf

Catlin Group (Hold, TP 4.00) - SPV announced with China Re
Catlin has this morning announced the formation of an special purpose vehicle (syndicate) with
China Re. This will provide Catlin with some 50m of capacity from 2012 and marks the first foray
of China Re into the Lloyd's market, so a 'coup' for Catlin in terms of profile
http://track.sumnet.com/home/00000275/T038DA6/cat_oup_10086934.pdf

Credit Agricole S.A. (Sell, TP !4.00) - Living on a prayer
We think 3Q operating performance (ex-Emporiki) was fine but that exposure to Greece via
cross-border funding to Emporiki and sovereign debt holdings create meaningful share count risk.
We see little evidence of balance sheet progress or evidence of executing on the de-leveraging
plan. Sell, with a new !4 TP.
http://track.sumnet.com/home/00000275/T038DED/cre_a_10086961.pdf

IAG (Hold, TP 1.55) - Investor day good - world scary
We return from IAG's inaugural investor day happy to reiterate our Hold recommendation. Our
vision of the IAG equity story is a blend of positive and negative with the positives weighted to the
longer term. We think the time to buy flag carriers is when news flow is dire. Which it is not . . . yet.
http://track.sumnet.com/home/00000275/T038E80/iag_20105532.pdf

Imtech (Buy, TP !26.00) - Unjustified underperformance
Imtech shares underperformed the Europestoxx 600 by 11% in November following investor
concerns about accounting changes, which inflated sales and EBITA in 2010. As a result, Imtech
would fail to meet its 2015 target. We believe these concerns are overdone and reiterate our Buy
recommendation.
http://track.sumnet.com/home/00000275/T038DFD/imt_ech_20105495.pdf

Marks & Spencer (Hold, TP 3.50) - Fashion Preview
No Game Changers here but confident statement underlining move to greater fashion aimed
higher in price architecture.
http://track.sumnet.com/home/00000275/T038D82/mar_cer_10086924.pdf

97
Media - Europe - It's a SLOG
We identify themes from the 3Q reporting season: agency growth proved remarkably resilient;
broadcasters saw a North-South divergence in ad trends; professional publishers saw little sign of
late-cycle recovery. The outlook seems set for a SLOG (slow growth), stock picking remains key.
http://track.sumnet.com/home/00000275/T038E7C/media_20105534.pdf

Morgan Sindall (Buy, TP 7.28) - Risk discounting seems overdone
We find current multiples undemanding, at 5.5x FY11F and 5.6x FY12F earnings ex-PPP, with a
forecast yield of 7.4% for both years. We believe the UK construction sector faces continued
tough trading but the risks look overly discounted. We cut our TP to 728p, implying 29% upside
potential. Maintain Buy.
http://track.sumnet.com/home/00000275/T038E78/mor_all_20105531.pdf

Real Estate - Europe - Think outside the box
Today is the last day of the MAPIC in Cannes. Corio announced an interesting potential
partnership with Boxpark, providing pop-up malls built using containers. Also, end October
Altarea announced the takeover of online retailer Rue du Commerce. Some Friday food for
thought.
http://track.sumnet.com/home/00000275/T038DE5/rea_ate_10086960.pdf

Regus (Buy, TP 0.95) - Positive Q3, reaffirming FY11 guidance
Positive Q3, with 17% revenue growth in July-October 2011 and 7% LFL revenue growth from
mature centres, which should underpin consensus FY11 PBT/EPS expectations of 50.0m/EPS
4.27p.
http://track.sumnet.com/home/00000275/T038D96/regus_10086933.pdf

Standard Chartered (Buy, TP 17.50) - Analyst Trip Diaries: final volume
We agree that STAN is likely to be a relative winner given its 'new world' friendly balance sheet
and business model. STAN, trading at 1.5x 2011 p/TCE, is a relative safe haven amongst
European banks. However, absolute re-rating is likely to remain elusive until the earnings
downgrade cycle runs its course.
http://track.sumnet.com/home/00000275/T038DC8/sta_red_10086946.pdf

Telecom Italia (Buy, TP !1.05) - Harsher Italian MTR cuts
After EU concerns, AGCOM has revised its proposal and materially lowered MTRs from 2H12.
We initially calculate a potential impact to TI's group EBITDA of ~0.3% and ~2%, but 2% and 5%
hits to group FCF in 2012 and 2013 respectively. While negative for TI, we believe the valuation
discount remains clear.
http://track.sumnet.com/home/00000275/T038DB6/tel_lia_10086936.pdf

The Money Bin - Insurance and financials weekly
Fears over the euro zone contagion dominated the news last week. [Non-life?] insurance
outperformed, falling 1.5%, whilst the FTSE All Share dropped 2.5% and Financials declined
4.9%. The best performer was Amlin (+6.7%), which reported its 3Q IMS last week. The worst
performer was Jupiter (-5.9%).
http://track.sumnet.com/home/00000275/T038E84/the_bin_20105533.pdf

The Week Ahead (Europe) - 21-25 November 2011
US existing home sales data is due on Monday, followed by preliminary GDP numbers and the
release of FOMC minutes on Tuesday. Euro area PMI numbers, US durable goods order,
personal income and outlays data will be released on Wednesday. US markets are closed on
Thursday - Thanksgiving Day. German IFO survey numbers and UK 3Q GDP on Thursday will be
announced on Thursday.
http://track.sumnet.com/home/00000275/T038E21/the_pe_10086977.pdf

Tullow Oil (Buy, TP 14.65) - Teak-3 success/Suriname farm-out
The Teak -3A well encountered 35m of hydrocarbon pay in multiple good quality reservoirs.
Supports the current resource range ahead of further appraisal drilling next year. Elsewhere,
Statoil has farmed in for a 30% interest on Block 47 offshore Suriname. Both positive for
sentiment.
http://track.sumnet.com/home/00000275/T038D6E/tul_oil_10086918.pdf

98
UBS (Hold, TP SFr13.00) - Small apple after all
By 2013, UBS will still have over 60% of group RWA in an investment bank that targets an ROE
of 9-13% (unexciting vs COE, yet ambitious vs current performance). Hopes for more than
nominal dividends will have to wait until 2014, we believe.
http://track.sumnet.com/home/00000275/T038D5E/ubs_20105472.pdf

Vivendi (Hold, TP !19.00) - I can see clearly now the rain has gone
Universal Music held an investor seminar yesterday. The message from management was that
while it hasn't quite stopped 'raining', an inflection point should be reached in the music industry
'toward the end of 2013'. Contingent on this, management believes a 15% operating margin is
achievable.
http://track.sumnet.com/home/00000275/T038D6A/viv_ndi_20105475.pdf

Asia
Ahead Of The Curve - Taiwan data points
Taiwan releases a number of economy-related metrics next week that we expect to show the
country's dependence on global activity. We expect export orders, unemployment data, industrial
production and 3Q GDP growth to demonstrate Taiwan's cyclical export mix.
http://track.sumnet.com/home/00000275/T038D66/ahe_rve_20105473.pdf

Asia Cement (Hold, TP NT$35.00) - Expect a declining 2012
We lower 2011-13F earnings 1-15% and, so, downgrade ACC to Hold with a new target price of
NT$35. We estimate its bottom line will drop 14% in 2012, vs flat according to Bloomberg. Its
major investments (China Cement, FENC, U-Ming) will face few upside risks, in our view. We
suggest switching to TW Cement.
http://track.sumnet.com/home/00000275/T038E0D/asi_ent_20105498.pdf

Circuit Breaker - Never-ending Europe woes
True to form, after merely two weeks of positive momentum, Asia ex-Japan registered net outflow
of funds again as the spike in European bond yields drove investors out of risk assets. This
resonates with our view that the recent bounce was mainly tactically driven. We expect the
volatility to persist.
http://track.sumnet.com/home/00000275/T038E1D/cir_ker_10086970.pdf

Construction & Eng - Korea - Another deregulation under discussion
According to Ministry of Construction, the government may announce construction market
boosting measures as early as 24 November. We expect this is sentiment-positive for the
construction sector, but unlikely to include meaningful measures ahead of elections.
http://track.sumnet.com/home/00000275/T038E5C/con_eng_20105528.pdf

Doosan Infracore (Buy, TP W27000.00) - Refinancing reduces liquidity concerns
DI refinanced US$2.29b syndicated loan at DII (Bobcat) by paying back US$90m, issuing bond of
US$480m, and getting a new syndicated loan of US$1.72b. We believe this should reduce
liquidity concerns by postponing debt maturity to 2014-17 and relaxing debt covenant to gearing
ratio below 200% of DII's equity.
http://track.sumnet.com/home/00000275/T038E40/doo_ore_20105517.pdf
Financials - India - Light at the end of the tunnel
The Appellate tribunal, in response to a request from the Ministry of Power, has passed a
judgement directing state electricity commissions to ensure timely tariff determination, else must
initiate suo-moto proceedings for the same. In our view, this is structurally positive for PFC.
http://track.sumnet.com/home/00000275/T038E05/fin_als_20105496.pdf

Hana Financial Group (Buy, TP W51000.00) - Taking a step forward
Regulators ordered Lone Star to sell its stake in KEB to below 10% within six months. We believe
Hana FG's acquisition of KEB is imminent and will be successful. Given long-term ROE accretion
potential, we see a wider valuation premium. Buy.
http://track.sumnet.com/home/00000275/T038E33/han_oup_20105513.pdf

99
Hindustan Unilever (Buy, TP Rs425.00) - Cost pressures to sustain
The QTD 11% upmove in palm oil spot prices coupled with 4.6% INR depreciation, can pose
some margin challenges for HUL. While, HUL typically would have forward contracts for 1-2
quarters, but the 16.2% INR move from August would impact costs. We advise buying only on
dips.
http://track.sumnet.com/home/00000275/T038D62/hin_ver_20105474.pdf

IOI Corporation (Buy, TP RM7.00) - Getting back in shape
IOI posted a normalised net profit of RM587m in 1QFY12 which was near its record of RM603m
in 1QFY09. We see the strong earnings delivery as a key re-rating catalyst for the stock as IOI
has been perceived by the market as lacking growth, judging by its dismal share price
performance this year.
http://track.sumnet.com/home/00000275/T038E50/ioi_ion_20105524.pdf

Jiangxi Copper (Hold, TP HK$21.00) - Small impact from higher 2012 TCRC
Bloomberg reported that Jiangxi Copper and Freeport McMoRan have agreed to a 12.4%
increase in copper smelting treatment and refining charges for 2012. This is a surprise to us, as
we had expected lower settlements. Nonetheless, we estimate only a small impact on the
company's 2012 earnings.
http://track.sumnet.com/home/00000275/T038E58/jia_per_20105527.pdf

Kingsoft Corp (Buy, TP HK$5.25) - 3Q11 results preview
3Q11 results will be reported after the HK market close on Thursday. We expect revenue to rise
2% qoq on steady online game growth driven by expansion packs and op margin decline to 28%
on higher marketing costs. The call will focus on the new management's strategy and updates on
new games and game pipeline.
http://track.sumnet.com/home/00000275/T038E88/kin_orp_20105540.pdf

Malaysia Marine & Heavy (Buy, TP RM7.10) - Riding on Petronas spending
MMHE's share price has fallen 31% from its July 2011 peak. Apart from market weakness, we
believe there were concerns on order book replenishment. Current share price levels are
attractive as we see activity picking up, while we think the market has not fully appreciated
benefits coming from the Sime yard acquisition.
http://track.sumnet.com/home/00000275/T038DE9/mal_avy_20105492.pdf

Media - India - Well poised for structural growth
Structural drivers such as underpenetration, economic growth and digitisation should help
overcome subdued near-term demand in the Indian media sector. We prefer stocks with strong
competitive positions. We rate Dish TV, Sun TV and Eros as Buy, and rate ZEE Entertainment as
Hold.
http://track.sumnet.com/home/00000275/T038E44/media_20105518.pdf

> Dish TV India (Buy, TP Rs88.00) - On a roll
While we see significant roadblocks for mandatory digitisation, the DTH industry has already
achieved critical mass for sustained growth. We believe industry leader Dish TV is particularly
well positioned and expect revenues and EBITDA to post 26% and 58% CAGR respectively over
FY11-14. We initiate coverage at Buy.
http://track.sumnet.com/home/00000275/T038E45/dis_dia_20105519.pdf

> Eros International Media (Buy, TP Rs296.00) - Strong tailwinds
We believe the economics of big-ticket films has improved significantly in FY12 to date. We raise
our FY13F revenues/EPS by 12%/11%, conservatively assuming immediate expensing of
overflow costs. We lower WACC due to our belief that Eros now has a lower risk profile. Buy with
a revised TP of Rs296.
http://track.sumnet.com/home/00000275/T038E48/ero_dia_20105522.pdf

> Sun TV Network (Buy, TP Rs363.00) - Some EPS risk, but good value
We see 5-8% risk to Bloomberg consensus FY12/13 EPS, but believe the share price reflects the
worst case in legal/political issues for SUNTV. We expect Sun TV to deliver strong EPS growth,
RoE and cash flow from FY13, driven by ad revenues, stable core margins and improving radio
economics. Buy.
http://track.sumnet.com/home/00000275/T038E46/sun_ork_20105520.pdf

100
> Zee Entertainment (Hold, TP Rs121.00) - Contrasting signals
While we view the sluggish ad market as transitory, viewership slippage in Hindi GEC and tough
competition in other genres could hurt ZEEL when ad spend improves. Strong subscription
revenue growth will be driven by MediaPro, in our view. We initiate at Hold given reasonable
valuations and the buyback plan.
http://track.sumnet.com/home/00000275/T038E47/zee_ent_20105521.pdf

Media Prima (Buy, TP RM3.30) - Special dividend surprise
Media Primas 3Q11 earnings grew by 20% qoq, 4% yoy and 24% in 9M11. More important was
the special dividend that was declared, taking total dividends for the year up to 11sen, translating
to a net yield of 4.2%. We have a Buy on the stock with a RM3.30 price target.
http://track.sumnet.com/home/00000275/T038E5F/med_ima_20105526.pdf

Parkson Retail Group (Buy, TP HK$11.50) - 3Q11/9M11 results no surprise
9M11 earnings grew 11.5% yoy to Rmb842m, accounting for 72.9% of our FY11 forecast, in line
with historical contribution. SSSG was 12.9% for 9M11, within our expectations and company
guidance. Commission rates and margins remained stable in 3Q11/9M11. We maintain our
earnings forecasts and TP at HK$11.50.
http://track.sumnet.com/home/00000275/T038DF8/par_oup_20105494.pdf

Perfect World (Buy, TP US$34.00) - 3Q11 results preview
3Q11 results will be reported after the US market close on Monday. We expect revenue to fall 5%
qoq on delayed monetisation of Immortal series games and op margin decline to 27% on higher
marketing costs. We expect the call to focus on performance of the Immortal series, margin trend
and overseas expansion.
http://track.sumnet.com/home/00000275/T038DAA/per_rld_20105480.pdf

Reliance Industries (Buy, TP Rs925.00) - KG-D6 profit sharing back in focus
News reports indicate that the oil ministry may disallow a portion of cost recovery (US$1.85bn) on
KG-D6 due to lower production. If true, this issue could go to arbitration where RIL has a strong
case. In any case, negative impact on RIL earnings is 1-2% and our valuation of the KG-D6 block
is Rs103/RIL share.
http://track.sumnet.com/home/00000275/T038E74/rel_ies_20105539.pdf

Shanda Games (Buy, TP US$8.70) - Legacy games drive growth in 3Q
3Q revenue was in line and earnings ahead of our estimates on higher non-op items. We expect
revenue to stay flattish qoq in 4Q due to the decline of Mir2 after in-game promotions in summer,
offset by recovery in Dragon Nest, and contributions from Legend of Immortals and new game
Mir3. Buy, TP US$8.70.
http://track.sumnet.com/home/00000275/T038DD9/sha_mes_20105488.pdf

Telco Services - India - Is CBI case against Bharti significant?
As per media reports, CBI has filed a case against Bharti Airtel, Vodafone India and former
officials. CBI alleged spectrum allocation to these companies beyond 8.0MHz caused a loss of
Rs5.08bn as companies paid lower spectrum fees as % of adjusted gross revenue.
http://track.sumnet.com/home/00000275/T038E36/tel_ces_20105514.pdf
Utilities - India - Important judgment by APTEL
In a landmark judgment, the APTEL has directed SERCs to ensure that tariff determination/true-
up of expenses are carried out every year; in case of delays in submission of tariff petition by
licensee, the SERC should initiate a suo-moto proceedings. This will likely ensure tariff hike at
regular intervals and is positive.
http://track.sumnet.com/home/00000275/T038DF3/uti_ies_20105493.pdf

Note: Links to research are valid for 30 days from the date of publication

101

RBS Top 100 Earnings Forecasts
ASX code Company name Market
cap
(A$m)
Last
year
end
Price
(A$)
Target
price
(A$)
FV (A$) Up/
down
Rec
12m
YTD -
Abs.
YTD -Rel. Earnings
Quality*
IBES 3m
EPS
revisions
EPS
CAGR
Div yield Div
frank
(%)
PEG EV/
EBIT (x)
EV /
EBITDA (x)
P/ NTA ROE ND/EBITDA Gearing (Tier 1
ratio for
banks)
Analyst
Actual Fcst 1 Fcst 2 Actual Actual Fcst 1 Fcst 2 12m fwd Fcst 1 Fcst 2 3 yr Actual Fcst 1 Fcst 2 Fcst 1 Fcst 1 Fcst 1 Fcst 2 Fcst 1 Fcst 1 Fcst 2 Fcst 1 Fcst 1 Fcst 1 Fcst 1 Fcst 1 Fcst 1
Banks
ANZ ANZ Banking Group 51,279 Sep 11 19.75 24.32 27.02 23% Buy -15% -3% 5,594.0 6,125.8 6,482.3 n.a. 209.4 221.7 229.6 -2.3% 6% 4% 5% 140.0 148.0 154.0 7.5% 100 8.9 8.6 1.9 0.81 0.85 6.0 5.2 1.7 15.7% n.a. 11.2% Andrew Lyons
BEN Bendigo & Adelaide Ban 3,265 Jun 11 9.13 9.32 9.81 2% Hold -8% 4% 336.2 337.2 364.7 n.a. 87.0 85.7 90.5 0.2% -2% 6% 2% 60.0 61.0 63.0 6.7% 100 10.7 10.1 5.1 0.97 0.99 6.6 6.0 1.6 8.3% n.a. 8.4% John Buonaccorsi
BOQ Bank of Queensland 1,859 Aug 11 8.25 12.38 13.75 50% Buy -21% -8% 166.9 262.9 292.7 n.a. 71.3 104.3 112.3 -6.3% 46% 8% 18% 54.0 69.0 75.0 8.4% 100 7.9 7.3 0.4 0.72 0.72 4.8 3.8 1.1 10.7% n.a. 8.3% John Buonaccorsi
CBA Commonwealth Bank 74,112 Jun 11 47.55 51.05 60.06 7% Hold -6% 6% 6,793.0 7,303.7 7,833.3 n.a. 420.7 444.7 468.8 -1.3% 6% 5% 5% 320.0 339.0 358.0 7.1% 100 10.7 10.1 2.0 0.97 1.00 7.2 6.6 2.7 19.0% n.a. 10.2% Andrew Lyons
NAB National Australia Bank 50,336 Sep 11 23.20 30.18 33.54 30% Buy -2% 10% 5,460.0 6,155.2 6,715.9 n.a. 249.5 273.0 289.9 -0.5% 9% 6% 7% 172.0 188.0 200.0 8.1% 100 8.5 8.0 1.3 0.77 0.79 5.7 4.8 1.6 15.9% n.a. 9.9% Andrew Lyons
WBC Westpac Banking Corp 61,440 Sep 11 20.42 23.69 27.87 16% Hold -8% 4% 6,301.0 6,655.2 7,128.5 n.a. 202.1 209.7 221.8 -0.9% 4% 6% 5% 156.0 166.0 174.0 8.1% 100 9.7 9.2 2.1 0.88 0.91 6.5 5.8 2.0 15.8% n.a. 9.9% Andrew Lyons
Chemicals
IPL Incitec Pivot 5,131 Sep 11 3.15 4.30 4.30 37% Buy -20% -8% 530.1 557.2 572.8 1.1 32.5 34.2 35.2 -2.6% 5% 3% 4% 11.5 12.0 14.1 3.8% 50 9.2 9.0 2.4 0.84 0.88 7.7 6.4 4.5 14.4% 1.1 27.3% Belinda Moore
ORI Orica 8,998 Sep 11 24.85 28.64 28.64 15% Buy 0% 12% 620.0 773.6 823.2 0.9 170.8 212.5 226.2 1.3% 24% 6% 14% 90.0 94.0 97.0 3.8% 35 11.7 11.0 0.8 1.06 1.08 9.1 7.5 12.8 22.2% 1.3 56.7% Andrew Scott
Commercial Services & Supplies
BXB Brambles 10,148 Jun 11 6.86 7.17 7.17 5% Hold -4% 9% 532.1 631.9 731.1 1.0 36.6 42.4 49.0 -0.8% 16% 16% 15% 25.9 30.0 34.0 4.4% 20 16.0 12.9 1.0 1.45 1.26 12.7 8.2 16.1 25.0% 2.0 120.9% Mark Williams
DOW Downer EDI 1,395 Jun 11 3.25 5.01 5.01 54% Buy -27% -14% 155.9 190.1 221.3 0.5 42.6 44.3 51.5 -6.3% 4% 16% 14% 0.0 21.0 27.0 6.5% 0 7.3 6.3 0.5 0.67 0.62 5.7 3.4 1.5 12.7% 1.1 40.6% Andrew Hodge
SEK SEEK 2,039 Jun 11 6.05 7.15 7.15 18% Buy -9% 4% 104.6 131.1 153.9 1.0 31.0 38.8 45.6 -3.7% 25% 17% 19% 14.3 21.4 27.4 3.5% 100 15.6 13.3 0.8 1.41 1.31 12.6 9.9 - 28.8% 0.9 37.0% Fraser McLeish
TSE Transfield Svcs 1,248 Jun 11 2.27 2.13 2.24 -6% Hold -32% -20% 128.2 126.3 144.0 0.5 26.0 23.4 28.4 -17.2% -10% 21% 6% 14.0 14.0 15.5 6.2% 100 9.7 8.0 1.5 0.88 0.79 8.7 6.1 3.1 11.9% 1.2 28.6% Andrew Hodge
Consumer Services
EGP Echo Entertainment 2,589 Jun 11 3.75 3.80 3.80 1% Hold 232.7 145.5 158.0 0.8 33.8 21.1 22.8 -0.3% -37% 8% -9% 0.0 10.6 11.4 2.8% 100 17.7 16.4 -2.1 1.61 1.61 12.1 8.6 4.2 6.0% 2.7 46.8% Michael Nolan
CWN Crown 6,173 Jun 11 8.14 9.00 9.00 11% Buy -1% 11% 335.9 386.9 422.4 0.8 44.3 52.6 58.0 2.9% 19% 10% 15% 37.0 37.0 37.0 4.5% 60 15.5 14.0 1.0 1.41 1.38 15.2 10.6 2.6 12.1% 2.0 45.4% Michael Nolan
TAH Tabcorp 2,099 Jun 11 2.83 2.90 2.90 2% Hold -9% 4% 302.3 333.3 131.6 1.5 45.7 46.5 17.5 -5.1% 2% -62% -27% 43.0 41.3 15.7 14.6% 100 6.1 16.2 -0.2 0.55 1.59 5.6 4.6 - 25.6% 1.6 81.1% Michael Nolan
TTS Tatts Group 3,059 Jun 11 2.32 2.20 2.44 -5% Hold -10% 2% 279.5 329.8 197.4 1.0 21.5 25.0 15.0 -3.2% 16% -40% -8% 21.5 22.5 13.5 9.7% 100 9.3 15.5 -1.2 0.84 1.52 7.0 6.0 - 12.8% 1.4 36.8% Michael Nolan
Construction
BLD Boral 2,644 Jun 11 3.55 4.04 4.04 14% Hold -27% -14% 173.5 203.2 275.6 0.9 24.0 28.2 38.0 -12.4% 17% 35% 29% 14.5 16.0 17.0 4.5% 100 12.6 9.3 0.4 1.15 0.92 13.0 6.9 0.8 6.1% 2.4 38.0% Andrew Scott
CSR CSR Ltd 1,108 Mar 11 2.19 2.84 2.84 30% Buy -57% -44% 90.2 85.3 106.4 1.0 17.8 16.9 21.0 -30.3% -5% 25% 16% 41.7 13.0 15.8 5.9% 100 13.0 10.4 0.8 1.18 1.02 6.5 4.1 0.9 6.9% 0.4 - -7.3% Andrew Scott
FBU.NZ Fletcher Bldg 4,129 Jun 11 6.00 7.32 5.67 22% Hold -22% -9% 275.1 286.4 393.0 0.7 42.7 41.6 57.1 -19.5% -3% 37% 18% 33.0 35.0 37.0 5.8% 100 11.2 8.2 0.6 1.02 0.81 9.7 7.1 2.1 9.8% 2.2 47.7% Andrew Scott
JHX James Hardie 2,876 Mar 11 6.60 7.03 7.03 6% Buy -3% 10% 123.4 137.9 171.3 0.8 28.2 32.5 41.4 -3.7% 15% 27% 23% 0.0 8.0 12.0 1.2% 0 19.8 15.0 0.9 1.80 1.47 14.3 11.0 - -34.9% 0.1 -4.9% Andrew Scott
Containers, Packaging & Paper
AMC Amcor 8,897 Jun 11 7.26 7.54 7.54 4% Buy 8% 20% 570.3 659.2 741.1 0.7 46.5 53.7 60.4 -2.1% 15% 12% 14% 35.0 36.0 40.0 5.0% 0 13.5 12.0 1.0 1.23 1.18 10.6 7.5 4.5 17.5% 1.9 75.6% Andrew Scott
Diversified Financials
ASX Aust Securities Exchang 5,055 Jun 11 29.56 31.77 31.77 7% Hold -22% -9% 356.6 385.9 424.8 0.9 204.0 219.3 239.2 -0.9% 7% 9% 7% 183.2 196.5 214.3 6.6% 100 13.5 12.4 1.8 1.22 1.22 9.2 8.8 7.0 12.7% 0.8 - -13.6% Richard Coles
CGF Challenger Financial Svc 2,068 Jun 11 4.09 5.10 5.10 25% Buy -13% -1% 248.0 275.4 300.6 4.8 48.1 51.2 53.4 2.6% 6% 4% 6% 16.5 18.5 19.5 4.5% 100 8.0 7.7 1.3 0.73 0.75 5.4 5.3 1.7 16.9% 0.4 - -8.9% Richard Coles
MQG Macquarie Group 8,143 Mar 11 23.38 29.75 29.75 27% Buy -37% -25% 956.0 863.0 1,067.3 n.a. 275.0 242.4 295.3 -11.4% -12% 22% 8% 186.0 160.0 180.0 6.8% 30 9.6 7.9 1.2 0.88 0.78 6.8 6.4 0.7 7.2% n.a. - Andrew Lyons
PPT Perpetual 862 Jun 11 20.54 23.13 23.13 13% Hold -34% -22% 72.9 59.6 61.3 1.2 165.5 137.6 144.3 -22.2% -17% 5% 1% 185.0 140.0 144.0 6.8% 100 14.9 14.2 11.9 1.36 1.40 7.2 6.3 7.8 18.0% 0.6 - -25.4% Richard Coles
SUN Suncorp Group 10,807 Jun 11 8.40 9.80 9.80 17% Buy -2% 10% 637.6 1,054.3 1,219.8 n.a. 49.7 81.9 94.8 -1.6% 65% 16% 29% 35.0 49.2 56.9 5.9% 100 10.3 8.9 0.4 0.93 0.87 46.4 29.0 1.3 6.8% n.a. 382.1% Richard Coles
Food Beverage & Tobacco
CCL C-C Amatil 9,178 Dec 10 12.14 13.43 13.43 11% Buy 12% 24% 506.6 543.5 600.0 0.8 67.3 71.7 78.8 -0.4% 7% 10% 9% 48.5 55.0 58.5 4.5% 100 16.9 15.4 1.8 1.36 1.40 11.8 9.5 19.8 28.8% 1.1 64.8% Michael Nolan
GFF Goodman Fielder 915 Jun 11 0.52 0.60 0.80 15% Hold -58% -46% 135.2 128.9 141.5 1.0 9.8 7.1 7.2 -36.0% -27% 2% -9% 7.8 5.7 5.8 10.9% 40 7.4 7.3 -0.8 0.67 0.71 6.1 4.7 28.3 8.9% 2.1 43.4% Michael Nolan
Healthcare
ANN Ansell 2,034 Jun 11 14.68 13.92 13.92 -5% Hold 16% 28% 122.9 134.6 139.5 0.8 92.4 101.6 107.3 -0.3% 10% 6% 11% 32.4 42.2 49.9 2.9% 0 14.3 12.6 1.3 1.30 1.24 13.2 11.1 13.4 22.7% 0.2 6.0% Dr Derek Jellinek
COH Cochlear 3,113 Jun 11 55.00 63.05 63.97 15% Buy -32% -19% 180.1 139.1 183.2 1.0 316.1 244.0 321.4 -22.2% -23% 32% 9% 225.0 240.0 240.0 4.4% 100 22.5 17.1 2.5 2.05 1.68 15.6 13.7 16.7 30.7% 0.4 26.3% Dr Derek Jellinek
CSL CSL Ltd 16,316 Jun 11 30.93 29.31 29.31 -5% Hold -15% -3% 940.6 954.9 1,004.2 1.0 173.6 180.9 190.7 2.0% 4% 5% 5% 80.0 81.0 88.0 2.6% 0 17.1 16.2 3.2 1.55 1.60 13.0 11.3 5.1 24.6% 0.2 - -7.6% Dr Derek Jellinek
PRY Primary Health 1,668 Jun 11 3.39 3.20 3.20 -6% Hold -10% 2% 96.5 115.7 132.9 1.1 19.5 23.2 26.2 -3.0% 19% 13% 14% 8.0 18.0 20.0 5.3% 100 14.6 12.9 1.1 1.33 1.27 10.5 7.8 - 4.6% 3.0 41.5% Dr Derek Jellinek
RHC Ramsay Health 3,825 Jun 11 18.93 17.95 18.14 -5% Hold 6% 19% 204.7 227.7 252.1 1.2 101.1 112.4 124.4 -0.3% 11% 11% 11% 52.0 58.0 64.0 3.1% 100 16.8 15.2 1.5 1.53 1.50 11.0 8.3 7.5 16.6% 1.7 71.5% Dr Derek Jellinek
RMD ResMed Inc 4,031 Jun 11 2.64 2.84 2.84 8% Hold -24% -12% 231.4 229.7 227.1 0.8 14.7 15.0 15.3 2.4% 2% 2% 5% 0.0 0.0 0.0 0.0% 0 17.3 15.9 3.7 1.58 1.56 12.8 9.8 2.7 13.4% 1.6 - -33.0% Dr Derek Jellinek
SHL Sonic Health 4,463 Jun 11 11.49 13.12 13.13 14% Buy -1% 11% 294.5 308.0 338.1 1.0 75.5 78.6 86.3 -2.9% 4% 10% 8% 59.0 61.0 67.0 5.3% 32 14.6 13.3 1.8 1.33 1.31 11.9 9.5 - 12.1% 2.3 56.3% Dr Derek Jellinek
Infrastructure
MAP MAp Airports 6,421 Dec 10 3.45 3.68 3.68 7% Buy 15% 28% 127.2 120.0 131.9 1.1 7.1 6.4 7.1 -23.2% -9% 10% 6% 33.5 21.0 21.0 6.1% 0 53.5 48.7 8.6 4.30 4.42 21.6 13.9 - 2.5% 6.0 95.7% William Allott
TCL Transurban 7,882 Jun 11 5.46 5.90 5.90 8% Buy 7% 19% 112.5 110.6 187.8 0.9 7.9 7.7 13.0 10.1% -3% 70% 27% 27.0 29.5 32.0 5.4% 0 71.2 42.0 2.6 6.47 4.13 37.0 18.5 - 3.1% 6.4 115.2% William Allott
IT
CPU Computershare 4,484 Jun 11 8.07 9.40 9.40 16% Buy -25% -13% 312.3 299.9 343.0 0.8 55.9 53.7 61.4 3.0% -4% 14% 8% 28.0 28.0 32.0 3.5% 60 14.9 12.1 1.8 1.35 1.19 13.0 11.0 - 23.4% 2.7 105.1% Richard Coles
Insurance
AMP AMP Ltd 8,019 Dec 10 4.25 5.50 5.50 29% Buy -20% -7% 752.0 898.0 1,082.2 n.a. 35.9 34.0 38.3 -7.5% -5% 13% 6% 30.0 28.6 31.5 6.7% 60 12.5 11.1 2.2 1.09 1.10 - - 3.3 18.2% n.a. 169.6% Richard Coles
IAG IAG 6,172 Jun 11 2.98 3.27 3.27 10% Hold -23% -11% 425.0 545.9 756.7 n.a. 20.4 26.3 36.4 -8.8% 28% 39% 26% 16.0 18.0 23.0 6.0% 100 11.3 8.2 0.4 1.09 0.84 22.7 22.7 2.3 11.5% n.a. 30.2% Richard Coles
QBE QBE Insurance 15,629 Dec 10 14.01 16.91 16.91 21% Buy -23% -11% 1,447.0 1,449.3 1,764.2 n.a. 133.1 124.9 147.9 -10.1% -6% 18% 4% 121.2 132.0 140.7 9.4% 10 10.9 9.1 2.7 0.98 0.92 15.4 15.4 3.3 12.3% n.a. 42.9% Richard Coles
Source: Company data, RBS forecasts, RBS Morgans forecasts.
* Share prices as at close of trading on 21 November 2011. Target prices, forecasts and recommendations for some companies featured in 'The Bulletin' may have been updated overnight.
++ Share prices as at close of trading on 21 November 2011. Financial forecasts in NZD.
# JHX, ANN and BXB price and market cap reported in AUD. Financial forecasts in USD.
* Earnings Quality: Net Operating Cash Flow/(Net Profit + Depreciation & Amortisation)
21 November 2011
VALUATION
DPS (c)
EPS ANALYSIS
EPS growth
(pre goodwill)
NPAT pre abnormals (A$m)
B/SHEET ANALYSIS DIVIDEND ANALYSIS
PE rel
(pre goodwill)
PE (x)
(pre goodwill)
EPS pre goodwill (c)
103
cap
(A$m)
Last
year
end
Price
(A$)
Target
price
(A$)
FV (A$) Up/
down
Rec
12m
YTD -
Abs.
YTD -Rel. Earnings
Quality*
IBES 3m
EPS
revisions
EPS
CAGR
Div yield Div
frank
(%)
PEG EV/
EBIT (x)
EV /
EBITDA (x)
ratio for
banks)
Analyst
21 November 2011
VALUATION
DPS (c)
EPS ANALYSIS
EPS growth
(pre goodwill)
PE rel
(pre goodwill)
PE (x)
(pre goodwill)
Management and development
LLC Lend Lease Corp 4,019 Jun 11 7.04 10.75 10.75 53% Buy -18% -6% 485.3 476.3 560.9 0.1 - 90.3 87.7 102.5 -2.1% -3% 17% 10% 35.0 44.0 51.5 6.3% 70 8.0 6.9 0.8 0.73 0.68 7.9 7.0 1.5 12.8% 1.8 35.6% Andrew Hodge
Media
FXJ Fairfax Media 1,882 Jun 11 0.80 1.37 1.51 71% Buy -43% -31% 273.8 273.2 309.8 1.2 11.6 11.6 13.2 -6.6% 0% 13% 7% 3.0 7.6 8.6 9.4% 100 6.9 6.1 0.9 0.63 0.60 5.9 5.0 - 6.1% 1.7 21.5% Fraser McLeish
NWS News Corp 44,117 Jun 11 16.80 19.70 23.97 17% Buy 5% 17% 2,929.6 3,346.0 3,458.0 1.1 111.3 135.9 148.3 2.5% 22% 9% 14% 17.0 18.7 20.6 1.1% 0 12.2 10.4 0.8 1.11 1.02 8.4 6.0 9.6 11.9% 0.6 15.6% Fraser McLeish
TEN Ten Network 925 Aug 11 0.88 0.81 0.90 -8% Sell -38% -25% 74.1 53.6 75.2 1.8 7.1 5.1 7.2 -22.0% -28% 40% 6% 5.3 3.8 5.4 4.3% 100 17.3 12.3 2.7 1.57 1.21 11.5 9.8 - 6.6% 2.8 49.7% Fraser McLeish
SWM Seven West Media 2,116 Jun 11 3.25 3.47 4.77 7% Hold -49% -37% 115.1 281.3 293.6 0.8 37.5 41.9 41.8 -7.8% 12% 0% 5% 45.0 35.0 35.0 10.8% 100 7.8 7.8 1.5 0.70 0.76 7.0 6.3 - 10.8% 2.9 66.1% Fraser McLeish
Other Capital Goods
BLY Boart Longyear 1,462 Dec 10 3.17 4.26 3.86 34% Buy -30% -18% 91.8 145.1 186.0 0.3 20.1 31.9 40.9 2.8% 58% 28% 29% 5.5 9.8 12.8 3.1% 35 9.7 7.5 0.3 0.78 0.68 7.5 5.2 1.8 13.4% 0.9 25.6% Andrew Hodge
LEI Leighton 6,882 Jun 11 20.45 21.67 21.67 6% Hold -32% -20% -107.7 609.7 672.2 1.7 -35.1 181.2 199.7 -1.3% - 10% 84% 60.0 116.0 128.0 5.7% 100 11.3 10.2 0.1 1.03 1.01 7.2 3.8 2.8 25.0% 0.1 6.5% Andrew Hodge
UGL UGL 2,244 Jun 11 13.40 14.63 13.15 9% Buy -7% 5% 164.4 171.2 196.7 0.7 98.8 102.4 117.3 -3.2% 4% 15% 10% 70.0 71.5 81.5 5.3% 100 13.1 11.4 1.3 1.26 1.17 9.0 7.6 13.2 13.8% 0.4 9.1% Andrew Hodge
Real Estate
WDC Westfield Group 18,459 Dec 10 7.99 8.69 8.69 9% Hold -17% -4% 1,745.7 1,482.4 1,575.7 1.0 75.7 64.2 68.2 -2.1% -15% 6% -2% 63.6 48.4 50.6 6.1% 0 12.5 11.7 -8.0 1.00 1.06 16.3 16.3 1.1 8.8% 7.0 79.9% Andrew Hodge
GMG Goodman Group 4,400 Jun 11 0.60 0.81 0.76 35% Buy -8% 5% 383.9 476.3 527.9 0.8 5.3 6.2 6.6 -1.6% 17% 7% 9% 3.5 3.8 4.2 6.3% 0 9.6 9.0 1.1 0.87 0.88 17.5 17.3 1.2 10.2% 4.5 30.2% Andrew Hodge
Retail
BBG Billabong 1,102 Jun 11 4.32 3.65 3.65 -16% Hold -47% -35% 118.0 111.7 124.6 0.2 46.3 43.7 48.6 -20.3% -6% 11% 3% 29.0 29.0 31.0 6.7% 100 9.9 8.9 3.3 0.90 0.87 9.3 7.4 - 9.2% 2.3 40.6% Daniel Broeren
DJS David Jones 1,541 Jul 11 3.06 2.95 2.95 -4% Hold -31% -19% 168.1 147.6 158.3 0.9 33.0 28.8 30.7 -2.2% -13% 7% -3% 28.0 24.0 27.0 7.8% 100 10.6 10.0 -3.7 0.97 0.98 7.8 6.3 2.1 19.0% 0.5 18.1% Daniel Broeren
HVN Harvey Norman 2,208 Jun 11 2.07 2.50 2.50 21% Buy -30% -17% 242.0 227.8 256.9 1.1 22.8 21.4 24.2 -10.4% -6% 13% 6% 12.0 11.0 12.0 5.3% 100 9.7 8.6 1.5 0.88 0.84 6.8 5.4 1.0 10.1% 0.7 13.7% Daniel Broeren
JBH JB Hi-Fi 1,542 Jun 11 15.61 17.25 17.25 11% Buy -13% -1% 134.4 137.7 155.6 0.7 120.2 138.4 155.1 -1.6% 15% 12% 12% 77.0 85.0 96.0 5.4% 100 11.3 10.1 1.0 1.02 0.99 8.2 7.1 13.4 79.4% 0.7 88.0% Daniel Broeren
MTS Metcash 3,160 Apr 11 4.11 4.25 4.25 3% Hold 0% 12% 248.3 276.9 304.4 1.2 32.3 36.0 39.6 -0.1% 12% 10% 8% 27.0 29.0 32.0 7.1% 100 11.4 10.4 1.4 1.04 1.02 8.0 7.2 216.3 19.9% 1.2 44.2% Daniel Broeren
MYR Myer 1,481 Jul 11 2.54 2.80 2.80 10% Buy -28% -16% 163.2 142.0 160.7 0.9 28.0 24.3 27.6 -6.9% -13% 13% 2% 22.5 20.0 22.5 7.9% 100 10.4 9.2 4.3 0.95 0.91 8.1 5.9 - 16.9% 1.3 50.8% Daniel Broeren
WES Wesfarmers 37,298 Jun 11 32.12 29.45 29.45 -8% Hold 0% 13% 1,870.0 2,370.4 2,787.9 1.0 161.6 203.1 234.6 -3.0% 26% 16% 18% 150.0 180.0 200.0 5.6% 100 15.8 13.7 0.9 1.44 1.35 10.6 8.5 6.2 9.1% 0.9 16.8% Daniel Broeren
WOW Woolworths 30,438 Jun 11 24.65 29.80 29.80 21% Buy -9% 4% 2,124.0 2,222.8 2,490.2 1.0 171.5 179.5 201.1 -5.4% 5% 12% 9% 122.0 131.0 143.0 5.3% 100 13.7 12.3 1.5 1.25 1.21 10.2 7.9 10.4 28.2% 0.9 48.7% Daniel Broeren
Telecommunication Services
TLS Telstra 39,445 Jun 11 3.17 3.50 3.50 10% Buy 14% 26% 3,231.0 3,551.0 3,666.1 1.0 25.9 28.5 29.4 0.7% 10% 3% 5% 28.0 28.0 28.0 8.8% 100 11.1 10.8 2.1 1.01 1.06 8.7 5.0 7.9 29.3% 1.3 107.3% Fraser McLeish
Transportation
AIO Asciano Group 4,448 Jun 11 1.52 1.86 2.05 22% Buy -5% 7% 189.9 259.0 349.7 1.3 6.5 8.8 11.9 0.1% 36% 35% 30% 2.0 3.0 3.5 2.0% 0 17.2 12.7 0.6 1.56 1.25 11.2 7.6 6.9 7.8% 2.7 71.8% Mark Williams
QAN Qantas Airways 3,715 Jun 11 1.64 1.57 2.19 -5% Hold -35% -23% 416.0 354.6 530.2 1.1 18.4 15.7 23.4 -17.0% -15% 49% 19% 0.0 0.0 6.0 0.0% 100 10.5 7.0 0.5 0.95 0.69 11.4 3.6 0.6 5.6% 1.7 51.9% Mark Williams
QRN QR National 8,442 Jun 11 3.46 3.31 3.45 -4% Hold 26% 38% 172.4 371.6 466.0 0.9 7.1 15.2 19.1 3.6% 116% 25% 41% 3.7 8.3 8.6 2.4% 0 22.7 18.1 0.6 2.06 1.78 17.3 9.4 1.2 5.3% 1.6 23.3% Mark Williams
TOL Toll Holdings 3,430 Jun 11 4.83 5.42 5.49 12% Buy -16% -3% 269.0 309.4 356.9 1.1 38.1 42.7 48.6 -4.1% 12% 14% 13% 25.0 27.0 31.0 5.6% 100 11.3 9.9 0.9 1.03 0.98 10.0 6.4 3.1 10.8% 1.8 43.4% Mark Williams
Utilities
AGK AGL Energy 6,698 Jun 11 14.52 16.55 16.55 14% Buy -5% 8% 431.1 486.2 533.6 1.0 94.4 105.0 114.4 0.5% 11% 9% 10% 60.0 64.0 68.0 4.4% 100 13.8 12.7 1.4 1.26 1.25 10.5 8.7 2.0 7.5% 1.2 16.8% Jason Mabee, CFA
APA APA Group 2,877 Jun 11 4.50 4.80 - 7% Buy 11% 23% 108.5 117.4 132.9 1.4 19.7 18.2 20.1 -10.3% -7% 10% 4% 34.4 35.4 36.5 7.9% 0 24.7 22.4 6.9 2.24 2.21 13.7 10.7 3.4 7.3% 5.4 189.2% Jason Mabee, CFA
DUE DUET 1,894 Jun 11 1.74 2.00 2.00 15% Buy 4% 16% 124.9 90.7 89.0 1.0 14.1 9.2 8.1 -8.2% -35% -11% -17% 20.0 16.0 16.5 9.2% 0 19.0 21.4 -1.1 1.72 2.11 12.4 9.2 - 6.5% 6.8 292.3% William Allott
SKI Spark Infra 1,685 Dec 10 1.27 1.35 1.35 6% Hold 12% 25% 78.4 153.0 165.2 0.6 6.7 11.5 12.4 -0.4% 73% 8% 23% 13.5 9.5 9.7 7.5% 0 11.0 10.2 0.5 0.89 0.93 10.4 10.4 1.2 10.7% 3.8 67.6% William Allott
Source: Company data, RBS forecasts, RBS Morgans forecasts
++ Share prices as at close of trading on 21 November 2011. Financial forecasts in NZD.
104
cap
(A$m)
Last
year
end
Price
(A$)
Target
price
(A$)
FV (A$) Up/
down
Rec
12m
YTD -
Abs.
YTD -Rel. Earnings
Quality*
IBES 3m
EPS
revisions
EPS
CAGR
Div yield Div
frank
(%)
PEG EV/
EBIT (x)
EV /
EBITDA (x)
ratio for
banks)
Analyst
21 November 2011
VALUATION
DPS (c)
EPS ANALYSIS
EPS growth
(pre goodwill)
PE rel
(pre goodwill)
PE (x)
(pre goodwill)
Aluminium & Steel
AWC Alumina 3,403 Dec 10 1.39 1.81 1.81 30% Buy -44% -32% 39.9 148.7 35.0 5.5 1.6 6.1 1.4 -43.4% 273% -76% 52% 6.0 6.0 2.0 4.3% 100 22.3 93.7 0.4 1.79 8.51 20.8 20.8 1.0 4.8% 2.3 13.3% Lyndon Fagan
BSL BlueScope Steel 1,124 Jun 11 0.61 0.94 1.26 55% Buy -73% -61% -113.8 -68.9 94.4 0.1 -6.2 -3.8 5.1 -47.2% 65% - 15% 2.0 0.0 2.6 0.0% 100 - 11.9 - - 1.17 201.1 7.5 0.4 -1.7% 3.9 32.4% Todd Scott
OST OneSteel 1,244 Jun 11 0.93 1.08 1.20 16% Hold -64% -52% 235.0 144.7 214.9 1.0 17.6 10.8 16.1 -26.9% -38% 48% 9% 10.0 4.3 8.0 4.7% 51 8.6 5.8 1.0 0.78 0.57 11.1 6.7 0.6 3.2% 4.4 52.4% Todd Scott
SGM Sims Metal Mgt 2,592 Jun 11 12.62 19.10 19.10 51% Buy -41% -29% 182.0 279.6 364.1 0.5 88.9 136.1 177.3 -10.5% 53% 30% 32% 47.0 68.0 88.6 5.4% 45 9.3 7.1 0.3 0.84 0.70 6.2 4.9 1.3 9.3% 0.2 4.1% Todd Scott
Energy
OSH Oil Search 7,953 Dec 10 6.12 7.50 7.50 23% Buy -13% -1% 156.6 181.8 150.3 2.1 11.9 13.7 11.2 -9.0% 15% -18% -12% 4.0 4.0 4.0 0.7% 0 43.4 52.4 -3.7 3.49 4.76 22.9 20.3 2.7 6.5% 2.0 29.4% Jason Mabee, CFA
ORG Origin Energy 15,449 Jun 11 14.50 16.50 18.35 14% Buy -10% 2% 673.0 911.4 1,038.6 0.6 71.0 84.1 92.5 -5.1% 18% 10% 11% 50.0 52.0 56.0 3.6% 100 17.2 15.7 1.6 1.57 1.54 12.0 8.6 2.2 7.3% 2.0 33.3% Jason Mabee, CFA
PDN Paladin 1,159 Jun 11 1.49 1.53 1.70 3% Hold -70% -58% -59.5 -69.8 -9.3 4.5 -8.0 -9.0 -1.2 -62.9% -11% 653% -13% 0.0 0.0 0.0 0.0% 0 - - - - - -93.4 104.3 1.0 -5.9% 41.7 63.1% Lyndon Fagan
STO Santos 12,137 Dec 10 12.76 15.00 16.50 18% Buy -3% 9% 356.1 520.5 558.5 1.4 50.3 61.0 61.2 -5.2% 21% 0% 13% 30.0 30.0 31.0 2.4% 100 20.9 20.9 1.6 1.68 1.89 13.6 8.0 1.4 6.6% 0.0 - -0.1% Jason Mabee, CFA
WPL Woodside 28,320 Dec 10 35.33 39.00 46.00 10% Buy -17% -5% 1,540.5 1,755.2 2,013.5 1.1 201.1 219.0 245.5 -6.9% 9% 12% 6% 105.0 110.0 130.0 3.1% 100 15.7 13.9 2.8 1.26 1.26 12.7 10.4 2.2 14.8% 1.5 36.6% Jason Mabee, CFA
WOR WorleyParsons 6,609 Jun 11 26.90 26.60 21.81 -1% Hold 1% 13% 321.6 377.7 443.5 0.7 130.0 152.4 178.9 0.8% 17% 17% 17% 86.0 93.0 113.0 3.5% 55 17.7 15.0 1.0 1.76 1.53 12.7 11.4 21.1 18.6% 0.6 19.3% Andrew Hodge
Diversified Metals & Mining
BHP BHP Billiton 191,116 Jun 11 35.90 45.87 45.87 28% Buy -21% -8% 21,889.8 23,130.0 22,678.9 1.2 411.2 438.6 430.0 -9.6% 7% -2% 2% 101.0 116.0 124.0 3.2% 100 8.1 7.7 5.0 0.73 0.75 5.8 5.0 2.7 36.6% 0.4 25.7% Lyndon Fagan
FMG Fortescue Meta 15,256 Jun 11 4.90 7.57 7.57 54% Buy -25% -13% 1,649.2 2,122.6 1,729.3 1.6 53.0 68.2 55.5 -10.4% 29% -19% 13% 6.9 8.0 8.0 1.6% 0 7.1 8.1 0.5 0.65 0.80 5.8 5.5 3.3 60.8% 1.5 121.3% Lyndon Fagan
ILU Iluka Resources 6,218 Dec 10 14.85 18.80 18.80 27% Hold 62% 75% 36.1 509.1 1,275.9 0.8 8.6 121.6 304.7 4.0% 1310% 151% - 8.0 50.0 152.0 3.4% 100 12.2 4.9 - 0.98 0.44 8.1 6.4 3.4 34.6% 0.2 - -12.8% Sam Berridge
LYC Lynas 1,996 Jun 11 1.16 1.83 1.83 58% Buy -44% -31% -59.1 -18.1 613.3 0.6 -3.4 -1.1 35.8 -60.3% 227% - - 0.0 0.0 0.0 0.0% 0 - 3.3 - - 0.32 -406.4 -406.4 3.2 -2.9% n.a. -7.3% Sam Berridge
MCC Macarthur Coa 4,897 Jun 11 16.21 16.00 12.88 -1% Hold 27% 39% 241.4 255.8 283.9 0.1 79.9 84.7 94.0 - 6% 11% 11% 40.0 42.3 47.0 2.6% 100 19.1 17.2 1.8 1.74 1.70 13.3 11.9 2.5 13.7% 0.9 - -17.9% Tom Sartor
OZL OZ Minerals 3,472 Dec 10 10.72 12.10 12.10 13% Hold -38% -25% 398.2 273.6 252.4 1.1 127.6 88.4 81.5 -23.5% -31% -8% -16% 190.0 42.3 36.7 3.9% 0 12.1 13.1 -0.7 0.98 1.19 8.0 5.4 1.3 9.5% 1.3 - -26.3% Lyndon Fagan
PNA PanAust 1,900 Dec 10 3.20 4.14 4.14 29% Buy -28% -16% 173.9 169.2 275.0 1.3 5.9 28.1 44.9 -11.3% 378% 60% - 0.0 0.0 1.0 0.0% 0 11.1 6.9 - 0.89 0.62 7.4 6.1 2.4 24.3% 0.3 - -8.6% Tom Sartor
RIO Rio Tinto 126,277 Dec 10 65.90 102.72 102.72 56% Buy -23% -11% 15,195.0 16,830.9 17,236.3 1.0 770.3 900.2 934.3 -8.6% 17% 4% 5% 108.0 119.0 125.5 1.8% 100 7.1 6.8 1.5 0.57 0.62 5.9 5.1 2.6 26.7% 0.3 9.1% Lyndon Fagan
Gold & Precious Metals
NCM Newcrest Mining 26,972 Jun 11 35.25 38.31 27.36 9% Buy -13% -1% 908.0 1,660.5 1,790.9 1.2 118.7 217.0 234.0 17.5% 83% 8% 31% 18.0 43.0 47.0 1.2% 100 16.2 15.1 0.5 1.48 1.48 11.1 9.0 1.7 11.3% 0.2 4.4% Sam Berridge
Exchange Gold Oil Zinc Nickel
rate WTI LME LME coking steaming lump fines
(A$/US$) (US$/oz) (US$/bbl) (US$/lb) (US$/lb) (US$/t) (US$/t) (US$/t) (US$/t)
FY10 0.88 1092 77.2 0.94 8.79 146.0 76.3 86.4 73.7
CY10 0.92 1223 82.6 0.98 9.89 190.5 90.0 219.9 118.1
FY11 0.99 1370 93.2 1.02 10.87 247.3 108.3 279.3 154.1
CY11 1.03 1637 94.4 1.05 10.92 287.5 120.0 219.9 162.9
FY12 1.01 1838 87.8 1.04 10.41 301.3 118.8 281.0 161.8
CY12 1.04 1750 91.0 1.10 11.00 305.0 116.3 219.9 153.2
FY13 1.09 1600 94.3 1.18 11.95 290.0 112.5 252.9 145.4
CY13 1.09 1525 96.0 1.33 12.98 270.0 107.5 219.9 137.9
LT (2015+) 0.80 1100 90.0 1.00 8.50 180.0 100.0 151.5 84.8
Share prices as at close of trading on 21 November 2011. Target prices, forecasts and recommendations for some companies featured in 'The Bulletin' may have been updated overnight.
** BHP, LGL, PDN & RIO price and market cap reported in AUD. Financial forecasts in USD.
LME
Coal
(US$/lb)
Aluminium Copper
LME
Iron ore
4.33
4.50
(US$/lb)
3.03
3.42
3.00 1.15
0.91
0.99
1.08
1.15
1.15
1.19
3.93
4.25
4.65 1.25
4.86 1.35
105
RBS Ex-100 Earnings Forecasts
B/SHEET ANALYSIS
cap
(A$m)
Last
year
end
Price
(A$)
Target
price
(A$)
FV (A$) Up/
down
Rec
12m
YTD -Abs. YTD -
Rel.
Earnings
Quality *
IBES 3m
EPS
revisions
EPS
CAGR
Div yield Div
frank
(%)
PEG EV/
EBIT (x)
EV /
EBITDA (x)
P/ NTA ROE
ND/EBITDA
Gearing (Tier 1
ratio for banks)
Analyst
Chemicals
DLX Duluxgroup 999 Sep 11 2.72 3.12 3.12 15% Buy -1% 11% 77.6 79.7 84.9 0.3 21.1 21.7 23.1 -0.8% 3% 7% 5% 15.0 16.0 17.0 5.9% 100 12.5 11.8 2.7 1.14 1.16 8.8 7.5 15.2 55.0% 1.2 123.0% Julian Guido
NUF Nufarm 1,157 Jul 11 4.42 5.05 5.05 14% Buy -14% -2% 86.1 101.9 118.5 1.0 32.9 38.9 45.3 -9.1% 18% 16% 15% 0.0 11.7 13.6 2.6% 50 11.4 9.8 0.8 1.03 0.96 7.5 5.7 1.2 6.4% 1.6 27.4% Andrew Scott
Commercial Services & Supplies
CAB Cabcharge 553 Jun 11 4.59 6.63 6.63 44% Buy -21% -9% 65.6 66.0 70.6 0.3 54.5 54.8 58.7 -1.8% 0% 7% 4% 30.0 37.5 38.0 8.2% 100 8.4 7.8 1.9 0.76 0.77 9.2 7.5 2.2 20.8% 1.3 34.7% Julian Guido
CPB Campbell Bros 3,310 Mar 11 49.03 44.77 44.77 -9% Hold 24% 36% 132.1 176.3 199.6 0.9 202.4 261.1 295.7 3.0% 29% 13% 14% 140.0 157.0 177.0 3.2% 50 18.8 16.6 1.3 1.71 1.63 13.4 11.3 8.5 20.5% 1.0 36.5% Roger Leaning
CND Clarius Group 42 Jun 11 0.49 0.65 0.65 32% Hold -31% -19% 4.7 6.9 8.2 1.6 5.4 8.0 9.4 - 48% 18% 23% 4.0 5.5 6.5 11.2% 100 6.1 5.2 0.3 0.56 0.51 3.5 3.3 1.9 7.7% 0.4 - -5.3% Matthew Nicholas
CLQ Clean TeQ 2 Jun 10 0.04 0.30 0.30 641% Buy -56% -43% 1.3 1.3 1.7 1.1 1.8 2.1 2.7 - 20% 29% 24% 0.0 0.0 0.0 0.0% 0 5.0 3.9 0.2 0.16 0.14 -1.3 -0.8 1.3 8.5% 1.7 - -29.1% Roger Leaning
COF Coffey 93 Jun 11 0.39 0.46 0.46 18% Hold -60% -48% 4.8 17.6 25.9 0.6 3.5 7.4 10.8 -22.1% 107% 47% 50% 0.0 0.0 3.0 0.0% 100 5.3 3.6 0.1 0.48 0.35 4.4 3.6 3.6 11.7% 1.5 37.9% Roger Leaning
CUS Customers 146 Jun 11 1.09 1.68 1.68 54% Buy -41% -28% 21.5 17.0 23.8 1.1 15.9 12.6 17.7 -4.9% -20% 40% 9% 5.0 6.5 10.2 6.0% 0 8.6 6.1 1.0 0.78 0.60 6.1 3.7 10.4 9.9% 0.6 16.9% Julian Guido
CLH Collection Hse 73 Jun 11 0.74 0.87 0.87 18% Buy 9% 21% 10.1 11.5 12.7 1.0 10.3 11.5 12.3 - 12% 7% 9% 6.2 6.7 7.0 9.1% 100 6.4 6.0 0.7 0.58 0.59 7.0 2.4 0.9 11.7% 1.3 87.2% Scott Murdoch
DCG Decmil Group 279 Jun 11 2.25 2.51 2.51 12% Buy -16% -3% 23.5 26.4 29.8 1.1 18.9 21.2 24.0 -9.5% 12% 13% 12% 6.0 7.0 8.0 3.1% 0 10.6 9.4 0.9 0.96 0.92 5.5 5.0 3.4 21.4% 1.8 - -56.7% Alexandra Clarke
MIN Mineral Resources 2,198 Jun 11 11.96 10.75 10.75 -10% Hold -3% 9% 151.0 190.1 211.7 0.7 89.8 104.9 116.8 5.2% 17% 11% 4% 42.0 52.6 57.6 4.4% 0 11.4 10.2 2.8 1.04 1.01 7.9 6.4 3.1 27.8% 0.1 - -4.5% Todd Scott
PRG Programmed Group 233 Mar 11 1.98 2.14 2.14 8% Hold 14% 27% 28.6 29.1 33.7 0.1 24.2 24.7 28.5 1.3% 2% 16% 9% 9.0 11.0 13.0 5.6% 100 8.0 6.9 0.9 0.73 0.68 6.0 5.0 2.0 8.1% 1.5 27.9% Julian Guido
RUL Runge 50 Jun 11 0.40 0.64 0.64 59% Buy -29% -16% 4.9 6.4 6.7 0.7 3.9 5.2 5.4 - 31% 4% 12% 2.0 4.0 4.0 10.0% 100 7.7 7.4 0.7 0.70 0.73 4.2 3.1 2.8 13.3% 0.5 - -13.2% Roger Leaning
SAI SAI Global 915 Jun 11 4.59 5.20 5.20 13% Buy -6% 6% 57.8 66.4 77.9 0.8 29.8 33.3 39.0 0.5% 12% 17% 16% 14.3 16.3 20.3 3.6% 100 13.8 11.8 0.9 1.25 1.16 10.8 9.6 - 20.1% 1.3 39.1% Julian Guido
SLM Salmat 415 Jun 11 2.60 4.49 4.49 73% Buy -40% -28% 51.6 60.7 68.2 0.5 32.4 37.9 42.6 -1.6% 17% 12% 11% 24.0 27.1 31.2 10.4% 100 6.9 6.1 0.6 0.74 0.70 6.1 4.9 - 18.0% 1.7 75.5% Julian Guido
SKE Skilled Group 439 Jun 11 1.88 2.30 2.30 22% Buy 3% 16% 26.1 43.8 51.9 1.0 12.5 18.3 21.7 -0.5% 47% 18% 27% 3.0 7.0 13.0 3.7% 100 10.3 8.7 0.4 0.96 0.87 7.4 6.1 7.8 9.8% 1.1 22.0% Julian Guido
SPT Spotless Group 623 Jun 11 2.37 2.25 2.25 -5% Hold 13% 25% 43.1 52.0 58.8 0.7 16.5 19.8 22.3 -7.4% 20% 13% 13% 11.0 13.0 14.5 5.5% 40 12.0 10.6 1.0 1.09 1.04 8.0 4.7 - 11.3% 1.2 45.8% Julian Guido
TOX Tox Free 202 Jun 11 2.10 2.44 2.44 16% Buy -1% 11% 13.1 18.1 19.1 0.9 13.9 18.3 18.8 1.4% 32% 3% 13% 3.0 4.0 4.0 1.9% 100 11.5 11.1 0.9 1.04 1.10 8.1 5.4 2.2 16.0% 0.5 16.1% Alexandra Clarke
TPI Transpacific Industries 882 Jun 11 0.69 0.79 1.18 14% Buy -43% -31% 50.0 84.2 111.4 1.1 4.4 6.0 8.6 -16.3% 35% 43% 30% 0.0 0.0 0.0 0.0% 100 11.6 8.1 0.4 1.05 0.80 7.9 4.7 6.7 4.8% 2.8 56.9% Roger Leaning
TWO Talent2 155 Jun 11 1.07 1.65 1.65 54% Buy -30% -17% 13.8 14.5 19.5 0.5 9.7 9.9 13.1 -10.6% 2% 32% 20% 5.5 5.5 6.5 5.1% 50 10.8 8.2 0.5 0.98 0.80 8.9 5.5 8.4 8.8% 0.2 4.1% Matthew Nicholas
WLL Wellcom Group 87 Jun 11 2.22 2.74 2.74 23% Buy 2% 14% 9.1 9.8 10.4 1.1 23.3 24.9 26.6 - 7% 7% 6% 16.5 17.5 18.6 7.9% 100 8.9 8.4 1.5 0.81 0.82 5.1 4.6 3.6 18.0% 1.3 - -34.2% Josephine Little
Construction
ABC Adel Brighton 1,823 Dec 10 2.87 3.20 3.20 12% Hold -13% -1% 151.5 153.1 165.5 0.9 23.9 24.1 26.1 -1.8% 1% 8% 9% 21.5 19.0 23.6 6.6% 100 11.9 11.0 1.3 0.96 1.00 10.6 8.2 2.3 16.2% 0.8 21.2% Andrew Scott
BKW Brickworks 1,660 Jul 11 11.25 10.13 10.13 -10% Hold 0% 12% 100.8 111.4 128.0 0.7 68.3 75.5 86.8 -23.6% 10% 15% 8% 40.5 42.5 44.5 3.8% 100 14.9 13.0 1.8 1.35 1.28 23.4 17.4 1.2 6.5% 2.1 13.2% Alexandra Clarke
CLO Clough 602 Jun 11 0.78 0.92 0.92 18% Buy 4% 16% 53.6 58.6 64.0 0.7 - 6.7 7.4 8.0 -1.4% 9% 9% 8% 3.0 3.0 3.0 3.8% 0 10.6 9.7 1.4 0.96 0.95 7.9 7.5 1.9 18.2% 3.6 - -58.7% Alexandra Clarke
EAL E&A 17 Jun 10 0.17 0.18 0.18 4% Hold -15% -3% 2.5 3.1 4.2 1.3 2.7 3.2 4.4 - 21% 36% 23% 1.5 1.5 1.5 8.6% 0 5.4 4.0 0.2 0.44 0.36 5.9 4.9 - 5.9% 2.8 41.7% Alexandra Clarke
MAH Macmahon 426 Jun 11 0.58 0.64 0.64 11% Hold 12% 24% 1.0 42.8 45.7 1.0 0.2 5.8 6.1 3.8% 2453% 7% - 0.0 3.0 3.0 5.2% 100 10.1 9.4 - 0.91 0.93 6.4 3.4 1.4 12.6% 0.2 6.1% Scott Murdoch
MND Monadelphous 1,708 Jun 11 19.50 23.09 23.09 18% Buy 7% 19% 96.3 114.5 135.1 0.7 110.2 130.3 153.2 2.3% 18% 18% 17% 95.0 112.0 130.0 5.7% 100 15.0 12.7 0.9 1.36 1.25 9.8 8.6 8.1 55.7% 0.9 - -74.6% Andrew Hodge
NWH NRW Holdings 697 Jun 11 2.50 3.08 3.08 23% Buy 16% 28% 41.2 68.0 78.4 1.1 16.1 24.4 28.1 5.4% 52% 15% 24% 9.0 13.0 15.0 5.2% 0 10.3 8.9 0.4 0.93 0.87 7.0 4.5 2.5 23.7% 0.4 20.5% Scott Murdoch
Consumer products
GUD GUD Holdings 525 Jun 11 7.60 9.00 9.00 18% Buy -24% -12% 49.0 49.7 55.3 1.0 71.7 71.6 79.5 -4.3% 0% 11% 6% 64.0 64.0 70.0 8.4% 100 10.6 9.6 1.7 0.96 0.94 7.7 6.3 5.5 18.9% 0.9 32.3% Matthew Nicholas
MCP McPherson's 151 Jun 11 2.08 2.17 2.17 4% Hold -34% -22% 28.0 21.2 21.7 1.1 39.0 29.6 30.2 -10.8% -24% 2% -8% 26.0 19.0 20.0 9.1% 100 7.0 6.9 -0.9 0.64 0.68 5.6 4.8 5.8 10.4% 1.2 23.3% Josephine Little
SYM Symex 49 Jun 11 0.36 0.53 0.53 47% Buy -31% -18% 10.0 12.3 12.8 0.2 7.3 6.5 6.8 - -11% 4% -1% 2.5 3.0 3.4 8.3% 100 5.5 5.3 -4.4 0.50 0.52 4.7 4.2 2.6 11.0% 2.3 52.5% Josephine Little
Diversified Financials
BTT BT Investment Mgt 427 Sep 10 2.18 3.02 3.02 39% Buy -24% -12% 30.9 30.5 35.9 0.7 19.3 15.6 22.4 -18.9% -19% 44% 8% 28.0 16.0 20.0 7.3% 100 14.0 9.7 1.7 1.13 0.88 3.3 3.3 2.2 7.8% 6.5 - -56.4% Julian Guido
EQT Equity Trustees 114 Jun 11 13.36 13.17 14.63 -1% Hold -15% -3% 7.8 9.2 10.0 1.0 91.7 106.9 114.3 -6.8% 17% 7% 10% 100.0 96.0 100.0 7.2% 100 12.5 11.7 1.2 1.14 1.15 8.2 7.6 7.3 16.5% 0.4 - -11.1% Scott Murdoch
HGG Henderson Group 1,903 Dec 10 1.77 2.72 2.72 54% Buy -15% -3% 142.1 191.0 234.1 1.3 16.7 18.5 21.3 -31.1% 11% 15% 12% 6.5 7.2 9.2 6.4% 0 9.5 8.2 0.8 0.86 0.82 7.3 7.2 - 20.9% 0.0 - -0.8% Julian Guido
IMF IMF Aust 188 Jun 11 1.38 2.17 2.17 57% Buy -5% 7% 22.9 36.4 27.5 0.6 - 16.8 29.2 22.0 7.9% 74% -25% 0% 15.0 32.0 18.4 23.1% 100 4.7 6.3 -16.2 0.43 0.62 2.9 2.9 3.5 37.1% 0.8 - -37.7% Julian Guido
IFL IOOF Holdings 1,379 Jun 11 6.00 7.50 7.50 25% Buy -23% -11% 111.5 120.2 130.7 1.2 48.1 51.6 55.8 -5.0% 7% 8% 7% 43.0 47.0 50.0 7.8% 0 11.6 10.7 1.6 1.06 1.06 7.6 7.4 9.0 13.5% 1.1 - -20.4% Julian Guido
MOC Mortgage Choice 156 Jun 11 1.30 1.38 1.38 6% Hold -2% 10% 15.9 16.2 16.8 0.8 13.2 13.4 13.9 3.8% 2% 4% 4% 13.0 13.4 13.9 10.2% 100 9.7 9.4 2.4 0.88 0.92 5.1 4.9 1.8 17.9% 1.5 - -40.6% Julian Guido
PTM Platinum Asset Mgt 2,104 Jun 10 3.75 5.25 5.25 40% Hold -25% -13% 155.0 190.5 211.2 1.3 26.6 32.4 35.9 -9.1% 22% 11% 13% 23.5 27.5 30.5 7.3% 100 11.6 10.4 0.9 0.93 0.95 6.6 6.6 5.8 63.3% 1.4 - -96.7% Julian Guido
TRU The Trust Company 184 Feb 11 5.69 5.41 5.41 -5% Hold -10% 3% 12.4 12.1 13.1 0.8 38.4 36.7 38.7 -17.8% -4% 5% 2% 35.0 35.0 36.0 6.2% 100 15.5 14.7 6.3 1.41 1.45 10.5 9.4 4.8 10.9% 0.1 - -2.7% Scott Murdoch
TSM ThinkSmart 59 Dec 10 0.44 1.00 1.00 127% Buy -40% -27% 8.9 8.7 12.0 0.5 8.3 6.6 9.1 - -20% 38% 17% 3.5 3.5 4.8 7.9% 0 6.7 4.9 0.4 0.54 0.44 4.5 3.9 1.8 19.7% 0.2 - -8.5% Matthew Nicholas
SOL WH Soul Pattinson & Co 3,365 Jul 11 14.10 16.06 20.07 14% Buy 12% 24% 161.2 226.3 215.6 1.1 67.5 94.8 90.3 -7.6% 40% -5% 7% 40.0 46.0 52.0 3.3% 100 14.9 15.6 2.1 1.35 1.54 5.2 4.4 1.2 7.9% 8.2 - -53.4% Roger Leaning
WHG WHK Group 237 Jun 11 0.88 1.15 1.15 31% Buy -19% -6% 25.8 29.6 32.8 1.1 9.6 11.0 12.2 -2.8% 14% 11% 10% 7.0 7.6 8.6 8.6% 100 8.0 7.2 0.8 0.73 0.71 6.1 5.2 5.2 10.5% 0.8 14.2% Julian Guido
Consumer Services
ALL Aristocrat 1,280 Dec 10 2.35 2.60 2.60 11% Buy -21% -9% 54.4 56.6 94.6 1.8 - 10.2 10.5 17.4 1.6% 3% 66% 28% 5.0 5.4 8.7 2.3% 0 22.4 13.5 0.8 1.80 1.23 16.5 11.8 9.7 26.7% 1.8 102.8% Michael Nolan
CTD Corp Trave 136 Jun 11 1.91 2.50 2.50 31% Buy 12% 25% 8.6 12.0 14.8 1.3 14.0 16.9 20.7 - 20% 23% 19% 5.0 8.4 10.3 4.4% 100 11.3 9.2 0.6 1.03 0.91 7.4 6.9 38.2 28.6% 0.5 - -22.0% Belinda Moore
DMP Domino's Pizza 513 Jun 11 7.50 7.54 7.54 1% Buy 20% 32% 21.4 25.0 27.7 1.2 31.3 36.6 40.4 0.8% 17% 11% 14% 21.9 25.6 28.3 3.4% 100 20.5 18.5 1.5 1.86 1.82 14.1 10.9 7.8 22.9% 0.4 - -14.3% Josephine Little
FWD Fleetwood 692 Jun 11 12.08 13.56 15.05 12% Buy -7% 5% 52.1 58.2 64.0 0.8 90.0 100.6 109.7 3.8% 12% 9% 8% 73.0 86.0 93.0 7.1% 100 12.0 11.0 1.4 1.09 1.08 8.2 7.0 4.6 27.4% 0.0 - -1.0% Alexandra Clarke
FLT Flight Centre 1,932 Jun 11 19.32 25.25 25.25 31% Buy -22% -10% 170.7 193.5 210.2 0.7 169.6 192.2 208.9 3.4% 13% 9% 10% 84.0 96.1 104.4 5.0% 100 10.1 9.2 1.0 0.91 0.91 6.2 5.3 3.9 24.5% 0.8 - -29.7% Belinda Moore
IVC Invocare 779 Dec 10 7.17 7.60 7.60 6% Hold -2% 11% 34.1 40.4 46.7 1.0 33.6 38.9 43.1 -0.4% 16% 11% 12% 28.3 31.3 36.0 4.4% 100 18.4 16.6 1.6 1.48 1.51 13.8 11.8 34.2 40.4% 2.6 209.7% Julian Guido
JET Jetset 329 Jun 11 0.75 1.16 1.16 55% Buy -17% -4% 25.6 35.5 38.5 1.6 6.6 8.1 8.8 1.0% 22% 9% 12% 3.0 3.8 4.4 5.1% 100 9.3 8.5 0.8 0.84 0.84 5.9 4.9 14.0 8.0% 0.2 - -3.4% Belinda Moore
NVT Navitas 1,463 Jun 11 3.90 4.12 4.12 6% Hold 1% 13% 76.0 88.0 103.8 0.8 21.3 23.4 27.6 0.1% 10% 18% 14% 20.7 23.5 27.6 6.0% 100 16.6 14.1 1.2 1.51 1.39 11.9 10.8 - 36.3% 0.7 44.7% Julian Guido
SGH Slater & Gordon 277 Jun 11 1.82 2.50 2.50 37% Buy -9% 3% 27.9 37.3 41.2 0.7 18.3 23.6 25.5 -5.0% 29% 8% 16% 5.5 7.5 8.6 4.1% 0 7.7 7.1 0.5 0.70 0.70 5.5 5.3 1.8 17.8% 0.7 20.6% Julian Guido
WEB Webjet 185 Jun 11 2.47 2.50 2.50 1% Buy 2% 15% 11.3 12.6 14.0 1.3 14.5 17.0 19.5 2.2% 17% 15% 14% 11.0 12.4 13.7 5.0% 100 14.5 12.6 1.0 1.32 1.24 9.7 9.4 7.0 34.1% 2.2 - -105.2% Belinda Moore
VALUATION
DPS (c)
EPS ANALYSIS
EPS growth
(pre goodwill)
DIVIDEND ANALYSIS
PE rel
(pre goodwill)
PE (x)
(pre goodwill)
21 November 2011
106
B/SHEET ANALYSIS
cap
(A$m)
Last
year
end
Price
(A$)
Target
price
(A$)
FV (A$) Up/
down
Rec
12m
YTD -Abs. YTD -
Rel.
Earnings
Quality *
IBES 3m
EPS
revisions
EPS
CAGR
Div yield Div
frank
(%)
PEG EV/
EBIT (x)
EV /
EBITDA (x)
P/ NTA ROE
ND/EBITDA
Gearing (Tier 1
ratio for banks)
Analyst
VALUATION
DPS (c)
EPS ANALYSIS
EPS growth
(pre goodwill)
DIVIDEND ANALYSIS
PE rel
(pre goodwill)
PE (x)
(pre goodwill)
21 November 2011
Food Beverage & Tobacco
AAC Aust Agricultural Co 432 Dec 10 1.38 1.55 2.07 12% Hold -3% 9% 0.9 7.2 9.6 5.0 - 0.3 2.5 3.1 3.5% 627% 23% - 0.0 0.0 0.0 0.0% 0 55.7 45.1 - 4.48 4.10 18.1 15.0 0.6 1.1% 6.0 42.8% Belinda Moore
ELD Elders 101 Sep 11 0.22 0.26 0.26 18% Hold -62% -50% 4.7 12.0 19.0 0.8 - 1.0 2.7 4.2 -31.0% 156% 58% 69% 0.0 0.0 0.0 0.0% 0 8.4 5.3 0.1 0.76 0.52 8.5 5.7 0.3 2.0% 4.3 47.9% Belinda Moore
GNC GrainCorp 1,507 Sep 10 7.60 9.25 9.25 22% Buy 15% 27% 80.2 167.0 163.5 0.7 39.4 83.1 82.5 2.4% 111% -1% 19% 30.0 41.5 41.2 5.5% 100 9.1 9.2 0.5 0.74 0.84 6.5 5.0 1.6 12.6% 0.5 12.6% Belinda Moore
MSF MSF Sugar 310 Dec 10 4.48 4.06 4.06 -9% Buy 31% 44% 6.9 -2.5 11.1 2.3 13.5 -3.6 16.1 -18.9% -127% - 11% 6.5 5.9 8.0 1.3% 100 - 27.9 - - 2.53 277.3 41.9 1.8 -1.5% 5.9 28.3% Belinda Moore
PAG PrimeAg Australia 301 Jun 11 1.13 1.25 1.57 11% Hold -15% -3% 5.9 17.4 20.9 0.2 - 3.9 6.8 7.9 -12.4% 73% 16% 24% 1.0 2.7 3.1 2.4% 100 16.7 14.4 0.7 1.52 1.41 8.9 8.0 0.9 4.8% 6.6 - -31.6% Belinda Moore
RIC Ridley Corp 342 Jun 11 1.11 1.33 1.33 20% Buy -10% 3% 29.3 31.5 33.8 0.8 9.5 10.2 11.0 0.6% 7% 7% 6% 7.5 7.8 8.0 7.0% 25 10.8 10.1 1.7 0.99 0.99 9.0 7.0 1.3 10.7% 1.7 36.3% Belinda Moore
TGR Tassal Group 231 Jun 11 1.58 1.30 1.30 -18% Hold -7% 5% 21.6 25.0 27.4 1.2 14.8 17.1 18.6 -0.9% 16% 9% 11% 2.0 6.0 7.0 3.8% 100 9.3 8.5 0.9 0.84 0.84 7.9 5.8 0.9 8.8% 1.5 28.7% Matthew Nicholas
WCB Warrnambool Cheese 214 Jun 11 3.96 4.05 4.05 2% Hold 13% 25% 18.5 15.0 15.0 1.5 38.5 27.9 27.9 -15.1% -28% 0% -7% 15.0 11.2 11.1 2.8% 100 14.2 14.2 -2.2 1.29 1.40 11.1 6.9 1.4 9.7% 0.8 17.9% Belinda Moore
Healthcare
ACR Acrux 483 Jun 11 3.03 4.59 4.59 51% Buy -14% -2% 57.1 5.5 28.1 1.1 34.4 3.3 16.9 -66.5% -90% 415% 16% 60.0 1.0 7.0 0.3% 0 92.2 17.9 5.9 8.37 1.76 93.6 58.5 10.0 0.0% 5.6 - -84.0% Scott Power
ACL Alchemia 58 Jun 11 0.30 1.06 1.06 253% Buy -52% -40% -13.4 -10.0 14.8 1.0 -7.0 -4.5 6.7 - 55% - 51% 0.0 0.0 0.0 0.0% 0 - 4.5 - - 0.44 -5.4 -5.5 158.4 -54.7% n.a. -11.9% Scott Power
API Aust Pharma 124 Aug 11 0.25 0.35 0.35 40% Hold -43% -31% 20.8 22.8 28.8 1.2 4.3 4.7 5.9 -9.0% 9% 26% 12% 2.5 3.0 3.0 11.8% 100 5.5 4.3 0.5 0.50 0.43 4.3 3.0 0.3 4.0% 1.3 16.3% Scott Power
BTA Biota 133 Jun 11 0.75 1.98 2.47 164% Buy -24% -12% -28.1 -9.3 20.0 1.5 -15.7 -5.2 11.2 - 202% - 4% 0.0 0.0 0.0 0.0% 100 - 6.7 - - 0.65 -5.9 -9.8 2.0 -12.9% n.a. -97.1% Scott Power
BKL Blackmores 483 Jun 11 28.82 29.86 29.86 4% Hold 3% 15% 27.3 30.4 33.4 0.7 162.9 181.8 199.7 3.1% 12% 10% 11% 122.0 136.0 150.0 4.7% 100 15.9 14.4 1.4 1.44 1.42 10.9 10.0 5.7 36.5% 0.3 14.8% Scott Power
IPD ImpediMed 87 Jun 11 0.64 1.14 1.50 78% Buy -21% -9% -14.8 -13.2 4.5 0.8 -9.5 -8.4 2.9 - 12% - 32% 0.0 0.0 0.0 0.0% 100 - 22.2 - - 2.19 -6.1 -6.4 17.5 -93.2% n.a. -60.2% Scott Power
MSB Mesoblast 995 Jun 10 7.26 2.08 2.08 -71% Buy 55% 68% -13.2 -14.5 -1.6 0.8 -9.6 -9.4 -1.0 -139.3% 2% 800% -24% 0.0 0.0 0.0 0.0% 0 - - - - - -78.1 -78.1 41.4 -51.9% n.a. -88.9% Dr Derek Jellinek
PXS Pharmaxis 278 Jun 11 1.13 2.46 3.08 118% Buy -60% -48% -45.8 -22.4 -16.2 0.9 -20.0 -9.1 -6.6 - 121% 38% -8% 0.0 0.0 0.0 0.0% 0 - - - - - -11.2 -12.9 4.4 -33.3% n.a. -26.0% Scott Power
QRX QRxPharma 195 Jun 11 1.55 2.95 2.95 90% Buy 12% 24% -25.6 -22.5 4.2 0.9 -20.5 -15.6 2.9 - 31% - -29% 0.0 0.0 0.0 0.0% 0 - 52.8 - - 5.19 -8.1 -8.2 21.6 -267.1% n.a. -86.8% Scott Power
TIS Tissue Therap 91 Jun 11 0.54 0.95 0.95 76% Buy -24% -12% -5.3 -3.3 6.4 0.8 -3.4 -2.0 3.8 - 73% - 39% 0.0 0.0 0.0 0.0% 0 - 14.3 - - 1.41 -19.2 -19.2 6.8 -21.7% n.a. -89.2% Scott Power
Infrastructure
AIX Aust Infrastructure Fund 1,182 Jun 11 1.90 1.92 1.92 1% Hold 1% 13% 212.3 160.6 166.5 0.2 34.2 25.9 26.8 -8.3% -24% 4% -8% 10.0 10.5 11.0 5.5% 50 7.4 7.1 -0.9 0.67 0.70 6.3 6.3 0.6 8.9% 0.3 - -3.2% William Allott
AIA.NZ Auckland Int'l Airport 3,010 Jun 11 2.32 2.20 1.87 -5% Hold 6% 19% 92.6 104.1 115.6 1.0 7.0 7.9 8.7 -0.1% 12% 11% 11% 8.7 9.5 10.5 4.1% 100 23.0 20.8 2.1 2.09 2.04 15.4 12.4 1.2 5.4% 3.3 42.0% William Allott
LAU Lindsay 25 Jun 11 0.14 0.20 0.20 45% Buy -26% -14% 1.4 3.2 5.2 0.9 0.6 1.5 2.4 - 131% 62% 79% 0.7 1.0 1.6 6.6% 100 9.8 6.0 0.1 0.89 0.59 10.3 3.8 0.7 6.2% 2.5 94.5% Alexandra Clarke
MQA Macquarie Atlas 645 Dec 10 1.42 1.88 1.88 32% Buy -7% 6% -281.7 -57.0 108.5 0.0 - -62.3 -12.6 24.0 -47.9% 394% - -57% 0.0 0.0 7.0 0.0% 0 - 5.9 - - 0.54 -226.0 -251.0 - 20.5% n.a. -865.2% William Allott
SWL Seymour Whyte 144 Jun 11 1.85 2.70 2.70 46% Buy -16% -4% 12.2 14.8 17.9 0.7 15.6 19.0 22.9 -11.0% 22% 21% 21% 8.0 11.0 11.0 6.0% 100 9.7 8.0 0.5 0.88 0.79 5.0 4.7 3.2 36.1% 1.8 - -89.8% Alexandra Clarke
IT
ASZ ASG Group 139 Jun 11 0.86 1.30 1.30 51% Buy -28% -15% 15.7 18.7 21.7 0.9 9.7 10.7 12.0 -1.1% 11% 12% 9% 7.5 8.0 9.0 9.3% 100 8.0 7.2 0.9 0.73 0.70 6.0 4.7 - 16.8% 0.9 29.1% Nick Harris
CRZ Carsales 1,093 Jun 11 4.67 5.38 5.38 15% Buy -1% 12% 58.2 67.1 76.0 1.0 24.9 28.5 32.0 -0.4% 14% 12% 12% 19.9 22.8 25.6 4.9% 23 16.4 14.6 1.4 1.49 1.43 11.1 10.7 22.6 56.2% 0.6 - -41.3% Ashley Wallace
CSV CSG Ltd 304 Jun 11 1.07 1.20 1.36 12% Hold -28% -16% 40.6 41.8 45.3 0.3 15.6 14.7 15.8 -8.1% -6% 8% 4% 6.0 5.6 6.1 5.2% 100 7.3 6.8 2.0 0.66 0.67 7.6 5.8 129.8 13.5% 1.9 45.8% Nick Harris
DTL Data#3 20 Jun 11 1.27 1.44 14.40 13% Buy 4% 16% 15.0 16.5 17.6 0.3 97.5 107.4 114.4 - 10% 7% 7% 77.0 85.0 90.0 66.7% 100 1.2 1.1 0.2 0.11 0.11 -2.0 -1.9 0.7 51.4% 2.7 - -196.1% Nick Harris
DWS DWS Adv Business Soln 165 Jun 11 1.25 1.42 1.42 13% Hold -12% 0% 17.4 19.1 20.7 0.8 13.1 14.4 15.6 -3.4% 10% 9% 8% 12.0 11.0 12.0 8.8% 100 8.7 8.0 1.0 0.79 0.78 5.6 5.6 4.7 32.0% 0.5 - -21.1% Julian Guido
IRE IRESS 998 Dec 10 7.64 8.70 8.70 14% Hold -12% 0% 58.4 63.0 75.2 1.2 46.3 48.6 57.0 -6.4% 5% 17% 10% 41.5 39.0 45.5 5.1% 100 15.7 13.4 1.5 1.26 1.22 10.6 9.9 13.2 46.4% 0.8 - -53.0% Julian Guido
MLB Melbourne IT 113 Dec 10 1.40 1.50 1.50 7% Hold -26% -14% 16.1 13.2 15.4 0.8 20.2 16.4 18.9 -14.3% -19% 16% -2% 15.0 11.0 13.0 7.9% 100 8.6 7.4 -4.9 0.69 0.67 7.5 4.8 - 14.2% 1.0 32.5% Nick Harris
NXT NEXTDC 247 Jun 11 1.72 2.44 2.44 42% Buy -2% 11% -1.7 -8.3 0.3 0.5 - -1.7 -5.8 0.2 - -70% - 83% 0.0 0.0 0.0 0.0% 0 - - - - 77.48 -19.6 -28.3 1.7 -6.6% n.a. -7.5% Nick Harris
OKN Oakton 145 Jun 11 1.54 2.43 2.43 57% Buy -35% -23% 16.8 19.6 23.4 0.7 18.0 20.8 24.8 -5.8% 16% 19% 16% 8.5 16.0 19.5 10.4% 100 7.4 6.2 0.5 0.67 0.61 4.9 4.4 4.7 18.0% 0.5 - -13.8% Julian Guido
OTH Onthehouse 35 Jun 11 0.44 1.50 1.50 241% Buy -1.8 2.0 3.7 0.4 -19.1 2.4 4.6 - - 91% -30% 0.0 0.6 1.1 1.4% 0 18.2 9.5 -0.6 1.65 0.93 10.0 4.0 14.7 3.3% 0.4 - -5.1% Belinda Moore
RKN Reckon 346 Dec 10 2.59 2.37 2.37 -9% Hold 11% 23% 15.7 18.1 21.0 1.2 11.8 13.6 15.8 0.3% 16% 16% 13% 8.0 8.5 9.5 3.3% 90 19.1 16.4 1.4 1.53 1.49 13.4 10.0 40.7 34.9% 0.3 - -16.2% Julian Guido
SLX Silex Systems 359 Jun 11 2.22 8.51 8.51 283% Buy -62% -49% -31.5 -15.1 -29.7 1.2 -19.5 -9.4 -18.4 -1093.5% 108% -49% 31% 0.0 0.0 0.0 0.0% 100 - - - - - -14.4 -25.5 3.0 -10.2% n.a. -42.4% Scott Power
SMX SMS Mgt & Technology 351 Jun 11 5.18 6.82 6.82 32% Buy -22% -10% 29.8 35.5 39.6 0.7 44.3 52.3 58.2 -4.5% 18% 11% 13% 30.0 35.5 39.5 6.9% 100 9.9 8.9 0.7 0.90 0.88 6.7 6.6 8.1 32.0% 0.5 - -20.8% Julian Guido
TNE Technology One 332 Sep 10 1.09 1.09 1.09 0% Hold 14% 26% 17.8 20.5 23.7 1.4 5.9 6.8 7.8 -1.1% 14% 15% 15% 5.7 4.8 5.5 4.4% 100 16.0 13.9 1.1 1.29 1.27 11.3 9.2 6.2 30.9% 1.1 - -51.2% Nick Harris
Insurance
AUB Austbrokers 344 Jun 11 6.21 6.46 6.46 4% Buy 21% 34% 23.9 26.8 29.5 1.2 43.6 48.4 53.1 0.6% 11% 10% 8% 25.5 30.0 32.0 4.8% 0 12.8 11.7 1.6 1.34 1.30 16.2 14.4 4.1 16.1% 3.3 - -37.5% Julian Guido
Media
APN APN 522 Dec 10 0.85 1.37 1.53 61% Buy -56% -44% 103.1 83.1 96.4 1.2 17.2 13.5 15.6 -5.4% -21% 15% 0% 12.0 8.1 9.3 9.6% 30 6.2 5.4 -43.7 0.50 0.49 6.2 6.1 - 9.2% 2.9 59.3% Fraser McLeish
AUN Austar United Comms 1,462 Dec 10 1.15 1.37 1.20 19% Buy 21% 33% 54.1 82.4 98.0 1.0 4.2 6.3 7.5 2.4% 51% 19% 32% 0.0 0.0 0.0 0.0% 0 18.2 15.3 0.6 1.46 1.39 14.2 7.7 - -39.2% 1.9 -279.8% Fraser McLeish
CMJ Consolidated Media 1,371 Jun 11 2.44 2.68 2.98 10% Hold -22% -10% 94.8 92.7 96.6 1.3 16.6 16.5 17.2 1.0% -1% 4% 5% 16.5 16.5 16.5 6.8% 0 14.8 14.2 3.2 1.34 1.40 -231.2 6.8 4.2 28.3% n.a. -25.4% Fraser McLeish
SXL Southern Cross Media 794 Jun 11 1.13 1.50 1.79 33% Buy -41% -29% 68.6 98.9 110.3 0.6 14.8 14.0 15.6 -5.4% -6% 11% 7% 10.0 9.1 10.9 8.1% 100 8.0 7.2 1.2 0.73 0.71 7.1 6.2 - 6.5% 2.7 39.1% Ashley Wallace
PRT Prime Media 242 Jun 11 0.66 0.72 0.80 9% Hold 2% 14% 27.2 28.8 29.2 0.9 7.4 7.9 8.0 -0.6% 6% 1% 3% 4.5 5.5 5.6 8.4% 100 8.4 8.3 3.3 0.76 0.81 7.1 5.9 - 18.3% 2.0 75.8% Ashley Wallace
REA REA Group 1,639 Jun 11 12.57 11.25 11.77 -11% Hold 2% 14% 68.7 80.2 95.0 1.0 53.1 61.1 71.3 -1.4% 15% 17% 15% 26.0 30.5 42.8 2.4% 100 20.6 17.6 1.4 1.87 1.73 13.4 12.0 10.4 37.4% 1.4 - -70.4% Ashley Wallace
SGN STW Group 281 Dec 10 0.79 1.44 1.44 82% Buy -25% -13% 38.7 40.6 43.1 2.0 10.8 11.4 12.3 -0.5% 6% 8% 6% 6.5 7.4 8.6 9.5% 100 6.9 6.4 1.1 0.55 0.58 5.9 5.3 297.4 11.1% 1.1 20.1% Matthew Nicholas
TEN Ten Network 925 Aug 11 0.88 0.81 0.90 -8% Sell -38% -25% 74.1 53.6 75.2 1.8 7.1 5.1 7.2 -22.0% -28% 40% 6% 5.3 3.8 5.4 4.3% 100 17.3 12.3 2.7 1.57 1.21 11.5 9.8 - 6.6% 2.8 49.7% Fraser McLeish
107
B/SHEET ANALYSIS
cap
(A$m)
Last
year
end
Price
(A$)
Target
price
(A$)
FV (A$) Up/
down
Rec
12m
YTD -Abs. YTD -
Rel.
Earnings
Quality *
IBES 3m
EPS
revisions
EPS
CAGR
Div yield Div
frank
(%)
PEG EV/
EBIT (x)
EV /
EBITDA (x)
P/ NTA ROE
ND/EBITDA
Gearing (Tier 1
ratio for banks)
Analyst
VALUATION
DPS (c)
EPS ANALYSIS
EPS growth
(pre goodwill)
DIVIDEND ANALYSIS
PE rel
(pre goodwill)
PE (x)
(pre goodwill)
21 November 2011
Other Capital Goods
AJL AJ Lucas 89 Jun 11 1.35 2.28 2.28 69% Hold -44% -32% -8.5 6.2 10.4 1.4 -12.5 9.0 15.2 -14.4% - 68% 17% 0.0 0.0 0.0 0.0% 100 15.0 8.9 0.9 1.36 0.88 8.3 4.4 1.0 3.0% 2.4 49.6% Alexandra Clarke
ALS Alesco 124 May 11 1.32 1.33 1.33 1% Hold -51% -38% 15.6 14.0 16.9 1.2 16.5 14.8 17.8 -40.3% -10% 20% 14% 14.0 8.5 10.5 6.4% 100 8.9 7.4 0.6 0.81 0.73 7.0 4.7 1.4 3.0% 1.7 16.0% Julian Guido
AAX Ausenco 344 Dec 10 2.80 3.97 6.08 42% Buy -9% 3% 0.8 22.9 35.5 1.8 0.7 18.6 28.9 -7.6% 2719% 55% - 0.0 9.3 14.4 3.3% 75 15.0 9.7 - 1.21 0.88 9.6 7.1 4.7 9.5% 0.1 - -1.0% Roger Leaning
ASB Austal 416 Jun 11 2.21 3.75 3.75 70% Buy -37% -24% 40.5 49.7 50.2 3.3 21.5 26.4 26.7 -11.7% 23% 1% 12% 6.0 7.0 8.0 3.2% 100 8.4 8.3 0.7 0.76 0.81 5.3 4.3 1.3 15.7% 0.8 - -20.0% Julian Guido
ASL Ausdrill 880 Jun 11 2.92 3.80 3.80 30% Buy -6% 6% 78.5 96.7 116.0 0.7 29.0 32.1 38.5 2.6% 11% 20% 13% 12.0 13.0 14.5 4.5% 100 9.1 7.6 0.7 0.86 0.76 6.7 4.1 1.3 13.7% 0.4 11.9% Matthew Nicholas
BOL BOOM Logistics 128 Jun 11 0.28 0.49 0.49 74% Buy -26% -14% 5.4 17.4 21.6 0.9 1.2 3.7 4.6 17.7% 219% 24% 62% 0.0 0.0 0.0 0.0% 100 7.4 5.9 0.1 0.67 0.58 7.0 3.7 0.5 5.7% 1.8 40.3% Matthew Nicholas
BKN Bradken 1,201 Jun 11 7.42 9.85 9.85 33% Buy -18% -5% 90.1 120.3 143.9 0.2 63.5 72.3 84.0 0.4% 14% 16% 17% 39.5 45.0 52.5 6.1% 100 10.3 8.8 0.6 0.93 0.87 8.0 6.5 2.2 16.6% 1.7 56.2% Matthew Nicholas
CDD Cardno 565 Jun 11 5.15 7.10 7.10 38% Buy -7% 5% 58.8 69.3 72.8 1.0 55.4 63.2 65.9 2.6% 14% 4% 8% 34.0 36.0 38.5 7.0% 60 8.2 7.8 1.0 0.74 0.77 6.7 6.0 - 18.3% 1.0 29.9% Roger Leaning
EGN Engenco 122 Jun 11 0.98 1.25 1.33 27% Buy -35% -22% 7.2 15.9 21.2 1.5 - 0.6 12.5 16.7 - 2071% 34% - 0.0 0.0 0.0 0.0% 0 7.9 5.9 - 0.71 0.58 5.3 3.7 0.9 8.5% 0.5 9.6% Alexandra Clarke
EHL Emeco 622 Jun 11 0.99 1.23 1.23 24% Buy -8% 4% 56.3 68.7 78.2 1.2 8.9 10.9 12.4 -1.8% 22% 14% 14% 10.0 6.0 6.5 6.1% 100 9.1 8.0 0.6 0.82 0.78 7.9 3.8 1.4 11.1% 1.4 56.0% Matthew Nicholas
GWA GWA Group 718 Jun 11 2.38 2.16 2.16 -9% Hold -22% -10% 63.4 56.6 60.4 1.1 21.0 18.8 20.0 -16.4% -11% 7% 1% 18.0 18.0 18.0 7.6% 100 12.7 11.9 9.0 1.15 1.17 9.4 7.8 12.0 12.8% 1.6 41.7% Julian Guido
HST Hastie Group 1,381 Jun 11 1.01 1.20 0.12 19% Hold -88% -76% 18.7 23.6 31.8 1.8 - 7.4 1.7 2.3 - -77% 35% -27% 0.0 0.0 0.3 0.0% 100 58.6 43.4 -2.1 5.32 4.27 29.5 23.1 18.1 6.9% 1.8 29.4% Julian Guido
HIL Hills 287 Jun 11 1.16 1.07 1.53 -7% Hold -38% -26% 24.7 26.8 31.7 0.3 9.9 11.0 13.3 -12.7% 11% 21% 16% 10.0 10.0 11.5 8.6% 100 10.5 8.7 0.7 0.96 0.86 8.4 5.8 0.8 7.0% 1.6 26.9% Matthew Nicholas
LDW Ludowici 98 Dec 10 3.68 4.92 4.92 34% Buy -25% -13% 11.6 13.5 16.7 0.5 44.7 46.0 57.0 - 3% 24% 13% 20.0 23.0 29.0 6.3% 100 8.0 6.5 0.6 0.64 0.59 6.2 4.9 1.5 13.9% 1.4 36.2% Roger Leaning
NFK Norfolk Group 173 Mar 11 1.09 1.65 1.65 52% Buy -14% -2% 21.1 24.4 27.9 1.1 13.3 15.4 17.5 -1.0% 16% 14% 14% 2.0 4.0 6.0 3.7% 100 7.1 6.2 0.5 0.64 0.61 4.0 3.2 3.0 24.7% 0.5 - -22.9% Julian Guido
RFX Redflow 67 Jun 11 0.81 2.04 2.04 151% Buy -52% -40% -7.3 -10.8 3.4 0.9 -8.8 -13.0 4.1 - -32% - 9% 0.0 0.0 0.0 0.0% 100 - 19.8 - - 1.95 -5.4 -6.5 6.5 -61.9% n.a. -35.1% Scott Power
RQL Resource Equip 78 Jun 11 0.37 0.99 1.28 167% Buy -36% -24% 12.2 13.4 14.4 0.9 5.6 5.7 6.1 - 2% 8% 5% 0.0 0.0 1.0 0.0% 0 6.5 6.0 1.4 0.59 0.59 4.9 3.8 1.1 15.1% 0.4 9.7% Alexandra Clarke
SDM Sedgman 424 Jun 11 2.02 1.93 1.93 -4% Hold -11% 1% 28.9 36.7 37.9 0.6 13.8 17.5 18.1 13.1% 27% 3% 11% 7.0 8.0 8.5 4.0% 100 11.5 11.2 1.0 1.12 1.17 7.9 5.8 3.0 21.5% 0.7 - -27.1% Roger Leaning
WTP Watpac 191 Jun 11 1.04 1.96 1.96 88% Buy -43% -31% 16.8 28.3 35.0 1.3 9.2 15.4 18.9 -7.8% 67% 23% 31% 6.0 10.0 12.0 9.6% 100 6.8 5.5 0.2 0.61 0.54 5.7 3.8 0.7 9.1% 1.0 21.6% Scott Murdoch
Property
AAD Ardent Leisure 342 Jun 11 1.08 1.45 1.45 34% Buy 7% 19% 39.4 41.3 44.7 1.0 12.5 13.0 13.8 -9.9% 3% 6% 6% 11.5 11.7 12.4 10.8% 0 8.3 7.8 1.3 0.75 0.77 8.8 5.7 1.1 9.6% 1.8 37.5% Josephine Little
CWP Cedar Woods 223 Jun 11 3.61 5.24 5.24 45% Buy 3% 15% 28.1 34.6 38.4 1.4 45.8 55.2 60.8 3.0% 20% 10% 15% 23.0 28.0 30.0 7.8% 100 6.5 5.9 0.4 0.59 0.58 5.4 5.4 1.5 24.9% 1.0 34.4% Scott Murdoch
CMW Cromwell 632 Jun 11 0.65 0.76 0.76 18% Buy -14% -2% 65.3 71.5 74.0 1.0 7.1 7.4 7.6 -2.6% 4% 3% 6% 7.0 7.0 7.1 10.7% 18 8.9 8.6 1.6 0.81 0.85 11.6 11.5 0.9 10.1% 6.4 109.2% Fiona Buchanan
DVN Devine 136 Jun 11 0.83 1.10 1.10 32% Buy -27% -15% 20.2 21.0 23.4 3.6 12.6 12.9 14.2 -27.1% 2% 11% 9% 8.0 8.4 9.3 10.1% 100 6.5 5.8 0.7 0.59 0.57 6.2 6.1 0.4 6.0% 2.8 32.8% Scott Murdoch
FKP FKP Property 581 Jun 11 0.49 0.87 0.87 77% Buy -43% -31% 121.0 121.5 125.2 0.4 10.3 10.1 10.4 -7.3% -2% 2% 5% 3.0 3.3 3.3 6.8% 70 4.8 4.7 0.9 0.43 0.46 7.3 7.2 0.5 10.9% 4.2 49.9% Josephine Little
PPC Peet 246 Jun 11 0.78 1.45 1.45 86% Buy -61% -49% 44.0 19.8 31.2 1.3 - 14.5 6.3 9.8 -13.9% -57% 57% -10% 8.5 3.5 6.0 4.5% 100 12.5 7.9 -1.3 1.13 0.78 12.4 11.7 0.9 7.5% 5.3 72.0% Matthew Nicholas
SDG Sunland Group 193 Jun 11 0.98 0.92 0.92 -6% Hold 31% 43% 17.9 18.7 21.0 2.1 7.8 9.4 12.9 3.3% 22% 37% 26% 0.0 0.0 4.0 0.0% 100 10.3 7.6 0.4 0.94 0.74 7.0 6.4 0.6 5.6% 0.3 3.0% Fiona Buchanan
Retail
APE AP Eagers 378 Dec 10 12.00 15.00 15.00 25% Buy -4% 8% 32.6 39.3 39.6 0.8 108.7 124.5 125.4 3.4% 15% 1% 7% 64.0 78.0 80.0 6.5% 100 9.6 9.6 1.3 0.78 0.87 7.0 6.3 1.5 10.7% 4.3 108.0% Josephine Little
ARP ARB Corp 572 Jun 11 7.89 8.65 8.65 10% Hold 7% 20% 37.9 42.0 46.1 0.9 52.2 58.0 63.6 2.0% 11% 10% 10% 23.0 26.5 29.5 3.4% 100 13.6 12.4 1.4 1.24 1.22 9.3 8.3 4.1 29.9% 0.7 - -28.6% Matthew Nicholas
AHE Automotive Holdings 505 Jun 11 1.95 2.23 2.22 14% Hold -20% -8% 52.4 59.7 69.5 0.9 22.7 23.0 26.8 -4.5% 1% 17% 8% 17.0 17.0 19.0 8.7% 100 8.5 7.3 1.0 0.77 0.72 8.1 6.6 1.8 13.0% 3.1 95.3% Josephine Little
KMD Kathmandu 380 Jul 11 1.90 2.16 2.16 14% Hold 40% 52% 30.0 34.6 39.0 0.9 14.7 17.3 19.5 3.6% 17% 13% 12% 10.0 11.3 12.7 4.5% 0 11.4 10.1 0.9 1.03 0.99 7.9 7.1 16.0 16.6% 0.5 13.6% Josephine Little
ORL OrotonGroup 330 Jul 11 8.10 8.87 8.86 10% Buy -6% 7% 24.8 26.8 29.9 0.7 60.8 65.7 73.4 5.3% 8% 12% 9% 50.0 54.0 60.0 6.7% 0 12.3 11.0 1.4 1.12 1.09 8.5 7.1 11.1 82.7% 0.1 18.0% Josephine Little
PBG Pacific Brands 516 Jun 11 0.56 0.92 0.92 64% Buy -43% -31% 103.4 86.5 104.3 0.8 11.1 9.3 11.2 -12.6% -16% 20% 2% 6.2 6.1 7.4 10.9% 100 6.0 5.0 2.7 0.54 0.49 4.5 4.1 3.9 7.2% 1.2 16.8% Julian Guido
PMV Premier Inv 803 Jul 11 5.18 5.58 5.58 8% Hold -16% -4% 61.1 61.1 71.3 1.0 39.4 39.4 46.0 -4.2% 0% 17% 8% 36.0 35.5 36.5 6.9% 0 13.1 11.3 1.6 1.20 1.11 7.7 6.1 2.3 4.9% 2.0 - -16.4% Julian Guido
TRS Reject Shop 262 Jun 11 10.10 12.70 12.70 26% Hold -27% -15% 16.1 23.7 29.1 0.7 61.4 89.6 109.4 -3.4% 46% 22% 25% 31.0 68.0 83.0 6.7% 100 11.3 9.2 0.5 1.02 0.91 8.2 6.1 3.9 39.1% 0.8 61.9% Julian Guido
RFG Retail Food 283 Jun 11 2.62 2.65 2.83 1% Hold -10% 3% 28.0 30.4 32.7 0.9 26.1 27.9 29.5 -0.8% 7% 6% 5% 14.5 16.7 18.0 6.4% 100 9.4 8.9 1.7 0.85 0.87 6.9 6.7 - 18.2% 1.1 32.3% Scott Murdoch
RHL Ruralco 183 Sep 10 3.32 3.80 3.80 14% Buy 20% 33% 13.0 15.1 17.0 1.5 23.5 27.5 30.9 -8.9% 17% 12% 12% 16.0 18.0 20.0 5.4% 100 12.1 10.7 1.0 0.97 0.98 6.5 5.7 2.2 10.0% 1.0 23.0% Belinda Moore
SUL Super Retail 721 Jun 11 5.38 7.40 7.40 38% Buy -6% 6% 55.6 89.8 114.9 0.5 43.1 51.4 58.8 1.0% 19% 14% 16% 29.0 31.0 35.0 5.8% 100 10.5 9.2 0.7 0.95 0.90 7.5 6.2 23.9 18.5% 2.2 59.1% Josephine Little
TGA Thorn Group 238 Mar 11 1.63 2.15 2.15 32% Buy -18% -5% 23.0 26.8 30.4 0.6 17.6 18.3 20.7 -6.4% 4% 13% 10% 8.5 9.2 10.4 5.6% 100 8.9 7.9 0.9 0.81 0.77 5.8 5.2 2.3 22.8% 0.1 - -3.0% Scott Murdoch
WTF Wotif.com 756 Jun 11 3.58 4.07 4.07 14% Hold -28% -16% 51.0 56.0 61.7 1.5 23.9 26.3 29.0 -9.1% 10% 10% 10% 22.0 24.0 26.5 6.7% 100 13.6 12.3 1.3 1.24 1.21 7.7 7.2 138.9 60.7% 1.7 - -153.5% Belinda Moore
Telecommunication Services
AMM Amcom 201 Jun 11 0.84 0.97 0.97 15% Buy 18% 31% 21.6 16.3 18.9 0.8 9.0 6.8 7.8 -3.8% -25% 16% -2% 4.8 3.5 4.1 4.2% 0 12.4 10.7 -7.9 1.13 1.06 8.2 5.9 2.2 11.6% 0.2 - -4.8% Alan Stuart
HTA Hutchison Telecom (Aus 760 Dec 10 0.06 0.13 0.13 117% Buy -40% -28% 41.5 -90.6 28.0 0.0 - 0.3 -0.7 0.2 - -318% - 37% 0.0 0.0 0.0 0.0% 0 - 50.9 - - 2.47 -581.2 -581.2 1.0 -6.4% n.a. -0.3% Alan Stuart
IIN iiNet 389 Jun 11 2.55 3.20 3.38 25% Buy -12% 0% 38.0 44.4 49.2 1.2 25.0 29.8 33.8 0.0% 19% 14% 15% 12.0 15.0 17.0 5.9% 0 8.6 7.5 0.6 0.78 0.74 6.6 4.0 - 18.8% 0.7 34.3% Alan Stuart
MAQ Macq Telecom 167 Jun 11 7.95 13.51 15.01 70% Buy -11% 2% 17.7 18.6 22.5 1.2 84.5 89.2 107.6 -7.9% 6% 21% 9% 22.0 24.0 28.0 3.0% 100 8.9 7.4 0.9 0.81 0.73 5.4 3.1 2.0 22.0% 0.7 - -32.0% Nick Harris
SGT SingTel 49,665 Mar 11 3.12 3.16 2.48 1% Hold 2% 15% 3,024.8 2,962.8 3,193.8 1.0 19.0 18.6 20.0 -0.2% -2% 8% 4% - - - 5.1% 0 13.5 12.7 3.3 1.22 1.25 10.3 7.5 3.4 15.0% 0.9 18.3% Ian Martin
TEL.NZ Telecom Corp 4,760 Jun 11 2.48 2.45 1.90 -1% Hold 14% 27% 296.6 356.6 384.3 1.0 15.5 18.5 20.0 6.3% 20% 8% 13% 18.0 21.0 23.0 8.5% 100 10.5 9.7 0.8 0.95 0.96 8.9 4.0 4.0 19.9% 1.3 101.9% Alan Stuart
TPM TPG Telecom 1,113 Jul 11 1.42 1.64 1.64 15% Buy -13% -1% 78.2 111.9 127.1 0.8 10.1 14.3 16.1 -2.8% 42% 13% 20% 4.5 7.0 8.0 4.9% 100 10.0 8.8 0.5 0.90 0.87 7.3 5.0 18.5 20.4% 0.7 29.8% Nick Harris
Transportation
MRM Mermaid Marine Aust 585 Jun 11 2.98 3.58 3.58 20% Buy -1% 11% 43.2 52.1 56.3 1.3 20.8 23.5 25.2 -0.1% 13% 7% 10% 9.0 10.0 11.0 3.4% 0 12.7 11.8 1.3 1.15 1.16 8.6 6.7 2.2 18.2% 1.0 32.9% Alexandra Clarke
RCR RCR Tomlinson 235 Jun 11 1.78 2.13 2.13 20% Buy 21% 33% 19.5 21.2 25.8 0.4 14.8 16.0 19.5 1.7% 8% 22% 14% 4.0 5.0 6.0 2.8% 100 11.1 9.1 0.8 1.01 0.90 7.9 5.3 1.6 9.8% 0.1 1.0% Alexandra Clarke
REX Regional Express 114 Jun 11 1.03 1.26 1.58 23% Buy -6% 6% 17.4 21.7 24.0 1.2 15.7 19.7 21.9 12.5% 26% 11% 16% 7.1 7.6 8.6 7.3% 100 5.3 4.7 0.3 0.48 0.47 3.5 2.4 0.7 12.9% 0.1 - -1.8% Michael Newbold, CFA
VBA Virgin Blue 828 Jun 11 0.38 0.41 0.45 9% Buy -12% 1% -48.1 64.5 114.9 1.4 -2.2 2.9 5.2 -0.8% - 79% 50% 0.0 0.0 0.0 0.0% 0 12.9 7.2 0.3 1.17 0.71 11.6 4.5 0.9 6.7% 2.5 100.8% Mark Williams
Utilities
CIF Challenger Infrastructure 345 Jun 11 1.09 1.35 1.35 24% Buy -9% 3% -0.8 11.0 22.3 1.6 -0.3 3.5 7.0 -57.2% - 102% - 14.0 10.0 10.0 9.2% 0 31.4 15.5 - 2.85 1.53 15.3 9.5 - 3.6% 7.3 268.8% William Allott
ENV Envestra 951 Jun 11 0.67 0.80 0.80 19% Buy 29% 41% 47.2 63.0 69.7 1.4 3.3 4.1 4.3 9.7% 25% 4% 13% 5.8 5.9 6.1 8.9% 0 16.0 15.5 1.2 1.46 1.52 10.9 9.0 20.1 10.5% 6.1 299.1% William Allott
EPW ERM Power 244 Jun 11 1.50 1.90 2.32 27% Buy -24% -12% 2.0 31.5 36.7 6.6 1.5 19.4 22.6 -14.4% 1224% 17% - 3.5 7.7 8.1 5.1% 0 7.7 6.6 - 0.70 0.65 5.6 4.8 1.4 19.2% 2.0 105.0% Jason Mabee, CFA
GDY Geodynamics 60 Jun 10 0.20 1.48 1.74 638% Buy -47% -35% -14.8 -50.9 -52.8 0.4 -5.1 -13.8 -11.9 - -63% 16% - 0.0 0.0 0.0 0.0% 0 - - - - - -0.1 -0.4 0.3 -18.1% n.a. -18.4% Roger Leaning
HDF Hastings Diversified 903 Dec 10 1.74 1.95 1.95 12% Buy 3% 15% 35.6 39.7 26.8 1.6 7.1 7.7 5.1 24.8% 8% -33% -19% 12.0 10.0 10.0 5.8% 0 22.6 33.9 -1.2 1.82 3.08 24.7 18.7 1.6 7.1% 9.6 169.9% William Allott
SPN SP AusNet 2,655 Mar 11 0.95 1.00 1.15 5% Hold 9% 21% 252.9 233.5 245.0 0.9 9.0 8.3 8.5 -4.0% -9% 3% 0% 8.0 8.0 8.0 8.4% 0 11.5 11.2 -57.0 1.04 1.10 11.7 8.1 10.6 39.6% 5.1 159.3% William Allott
108
B/SHEET ANALYSIS
cap
(A$m)
Last
year
end
Price
(A$)
Target
price
(A$)
FV (A$) Up/
down
Rec
12m
YTD -Abs. YTD -
Rel.
Earnings
Quality *
IBES 3m
EPS
revisions
EPS
CAGR
Div yield Div
frank
(%)
PEG EV/
EBIT (x)
EV /
EBITDA (x)
P/ NTA ROE
ND/EBITDA
Gearing (Tier 1
ratio for banks)
Analyst
VALUATION
DPS (c)
EPS ANALYSIS
EPS growth
(pre goodwill)
DIVIDEND ANALYSIS
PE rel
(pre goodwill)
PE (x)
(pre goodwill)
21 November 2011
Aluminium & Steel
GBG Gindalbie Metals 632 Jun 11 0.51 0.72 0.72 41% Buy -62% -50% -5.3 18.2 93.8 0.5 -0.6 1.5 7.6 21.4% - 416% - 0.0 0.0 0.0 0.0% 100 34.7 6.7 - 3.16 0.66 31.2 25.9 1.0 3.0% 10.7 67.2% Todd Scott
Energy
AZT Aston 1,997 Jun 11 9.30 11.85 11.85 27% Buy 16% 28% -11.1 -11.7 -5.8 12.3 -5.1 -5.4 -2.7 - -5% 102% 90% 0.0 0.0 0.0 0.0% 0 - - - - - -175.4 -175.4 3.2 -1.8% n.a. -35.6% Tom Sartor
ESG Eastern Star 857 Jun 11 0.87 0.77 1.24 -11% Hold 7% 20% -4.5 1.1 9.5 15.5 -0.4 0.1 0.9 - - 757% - 0.0 0.0 0.0 0.0% 0 - 93.6 - 72.80 9.20 -424.2 -2,727.8 3.3 0.4% n.a. 8.0% Chris Brown
ERA Energy Resource 828 Dec 10 1.60 1.81 1.81 13% Sell -78% -66% 52.8 39.5 92.5 0.5 27.7 7.6 17.9 -54.7% -72% 134% -83% 8.0 0.0 0.0 0.0% 100 20.9 9.0 -0.3 1.68 0.81 1.5 - 0.7 3.3% 6.4 - -49.8% Lyndon Fagan
GCL Gloucester Coa 1,481 Jun 11 7.30 9.47 9.47 30% Buy -40% -28% 54.6 55.1 82.0 0.9 26.9 26.8 39.9 -44.1% 0% 49% 45% 0.0 0.0 0.0 0.0% 0 27.2 18.3 0.6 2.47 1.80 13.5 8.2 1.4 5.3% 0.0 - -0.2% Tom Sartor
HZN Horizon Oil 237 Jun 11 0.21 0.33 0.33 58% Buy -28% -15% 16.4 24.2 40.6 1.6 1.4 2.0 3.4 -12.8% 41% 68% 79% 0.0 0.0 0.0 0.0% 0 10.2 5.6 0.1 0.92 0.55 9.5 6.4 1.4 14.9% 1.1 26.9% Chris Brown
IFN Infigen Energy 183 Jun 11 0.24 0.80 0.80 233% Buy -56% -43% -26.0 -42.7 -24.4 0.6 -3.4 -5.6 -3.2 - -39% 75% - 1.0 0.0 0.0 0.0% 0 - - - - - 27.4 6.6 0.7 -6.9% 5.4 144.6% William Allott
LNC Linc Energy 926 Jun 11 1.84 2.60 2.60 41% Buy -31% -18% -204.0 -25.3 29.3 0.7 -41.1 -5.0 5.8 -2.8% 717% - -36% 0.0 0.0 0.0 0.0% 100 - 31.6 - - 3.11 -32.6 -62.4 1.6 -3.5% n.a. -25.9% Jason Mabee, CFA
MAD Maverick Drilling 90 Jun 11 0.24 0.36 0.89 50% Buy 9% 21% 1.7 14.7 25.8 0.1 0.6 3.9 6.9 - 551% 75% - 0.0 0.0 0.0 0.0% 0 6.0 3.2 - 0.55 0.31 4.6 4.2 2.7 49.8% 0.2 12.4% Roger Leaning
NCR NuCoal 181 Jun 11 0.28 0.78 0.78 177% Buy -54% -42% -4.7 -5.7 -6.7 1.0 -0.7 -0.9 -1.0 - -18% -15% - 0.0 0.0 0.0 0.0% 0 - - - - - -31.8 -31.8 8.8 -24.3% n.a. 2.4% Tom Sartor
NHC New Hope Corp 5,064 Jul 11 6.10 5.87 5.87 -4% Buy 26% 38% 133.4 209.4 194.7 0.4 16.1 25.2 23.4 -7.0% 57% -7% 12% 25.3 12.0 11.0 2.0% 100 24.2 26.0 2.1 2.20 2.56 17.4 14.3 2.2 9.0% 6.6 - -67.4% Tom Sartor
NXS Nexus Energy 358 Jun 11 0.27 0.12 0.60 -56% Hold -39% -26% 26.1 -18.7 -2.8 0.4 - 2.0 -1.4 -0.2 -788.8% -172% 575% -19% 0.0 0.0 0.0 0.0% 0 - - - - - -73.6 8.4 0.6 -3.0% 1.8 15.6% Chris Brown
SMR Stanmore Coal 118 Jun 11 0.90 2.03 2.03 126% Buy -35% -23% -2.0 -4.3 -5.6 1.0 -1.5 -3.3 -4.3 - -54% -22% - 0.0 0.0 0.0 0.0% 0 - - - - - -13.1 -13.1 2.0 -9.7% n.a. -48.0% Tom Sartor
SXY Senex Energy 494 Jun 11 0.54 0.63 0.63 16% Buy 32% 44% -2.4 22.6 48.7 3.7 -0.3 2.5 5.3 8.0% - 115% - 0.0 0.0 0.0 0.0% 0 21.8 10.1 - 1.98 1.00 19.2 17.8 2.7 13.4% 2.4 - -33.1% Roger Leaning
WHC Whitehaven Coal 2,720 Jun 11 5.50 7.00 6.23 27% Buy -18% -6% 73.3 173.3 243.9 0.7 14.8 34.4 48.4 -10.0% 132% 41% 54% 7.4 18.0 24.0 3.3% 100 16.0 11.4 0.3 1.45 1.12 10.5 8.7 2.5 15.8% 0.2 - -5.6% Tom Sartor
Diversified Metals & Mining
ALK Alkane Resources 292 Dec 10 1.09 1.92 1.92 76% Buy 9% 21% 7.8 -5.4 -9.9 1.0 2.9 -2.0 -3.7 - -169% -45% - 0.0 0.0 0.0 0.0% 0 - - - - - -32.9 -32.9 5.0 -10.3% n.a. -32.7% Sam Berridge
AQA Aquila 2,415 Jun 11 6.45 5.12 5.12 -21% Sell -35% -22% -63.5 -29.2 -160.2 1.4 -17.0 -7.8 -42.8 616.1% 118% -82% - 0.0 0.0 0.0 0.0% 0 - - - - - 896.1 289.6 7.4 -8.4% 5.7 14.8% Sam Berridge
AGO Atlas Iron 2,515 Jun 11 3.04 4.06 4.06 34% Buy 3% 15% 168.6 233.2 215.2 1.1 20.4 28.2 26.0 -22.9% 38% -8% 21% 3.0 6.0 6.0 2.0% 0 10.8 11.7 0.5 0.98 1.15 6.4 5.7 1.3 12.4% 1.4 - -24.5% Lyndon Fagan
GRR Grange Resources 548 Dec 10 0.47 0.62 0.62 33% Buy -37% -25% 33.9 86.1 102.7 1.8 3.0 7.5 8.9 -9.6% 153% 19% 33% 0.0 3.7 2.2 7.8% 0 6.4 5.3 0.2 0.51 0.48 2.2 1.8 0.7 12.7% 1.3 - -29.4% Todd Scott
GRY Gryphon Minerals 473 Jun 11 1.50 2.36 2.36 57% Buy -17% -4% -2.9 -7.0 6.2 1.0 -0.9 -2.2 2.0 - -59% - - 0.0 0.0 0.0 0.0% 0 - 76.5 - - 7.53 -86.8 -88.6 3.5 -6.5% n.a. -22.3% James Wilson
IRD Iron Road 92 Jun 11 0.65 0.70 0.70 8% Hold -12% 0% -17.5 -17.2 -17.1 0.9 -13.6 -12.2 -12.1 - 11% 1% - 0.0 0.0 0.0 0.0% 0 - - - - - -6.4 -6.4 19.7 ####### n.a. 218.3% Todd Scott
IGO Independence Gp 917 Jun 11 4.64 5.92 5.92 28% Buy -42% -29% 30.3 28.9 38.6 1.0 18.7 14.3 19.0 -43.1% -24% 33% 41% 7.0 5.0 0.0 1.1% 0 32.5 24.4 0.8 2.96 2.40 25.0 14.0 1.7 4.2% 0.5 - -5.4% Sam Berridge
IMD Imdex 367 Jun 11 1.84 2.83 2.83 54% Buy 3% 15% 31.0 47.0 54.1 0.8 15.6 23.1 26.5 12.5% 48% 15% 23% 4.5 5.5 6.5 3.0% 100 8.0 6.9 0.4 0.77 0.72 5.7 5.0 3.5 31.1% 0.3 13.9% Matthew Nicholas
MDL Mineral Deposits 485 Jun 11 5.81 8.00 9.40 38% Buy 7% 20% 39.0 20.3 21.4 0.4 46.7 24.3 25.6 25.9% -48% 5% 7% 0.0 0.0 0.0 0.0% 0 23.6 20.8 3.3 2.14 2.05 10.7 9.5 1.2 5.4% 4.1 - -37.0% Chris Brown
OMH OM Holdings 244 Dec 10 0.49 0.48 0.48 -2% Sell -65% -53% 47.2 4.1 17.3 0.4 9.4 0.8 3.4 -63.4% -91% 321% -18% 2.8 1.0 0.9 2.1% 0 59.6 14.2 -3.4 4.79 1.29 31.3 14.5 1.0 1.5% 4.4 44.4% Todd Scott
Gold & Precious Metals
AMX Ampella Mining 419 Jun 11 1.93 2.84 2.84 47% Buy -42% -30% -24.0 -13.6 -13.6 0.8 -11.9 -6.5 -5.7 -758.8% 82% 14% -11% 0.0 0.0 0.0 0.0% 0 - - - - - -18.2 -18.2 7.5 -31.5% n.a. -104.2% James Wilson
EVN Evolution Mining 1,234 Jun 11 1.76 2.02 2.02 15% Buy -9% 3% 2.9 177.8 129.3 0.2 - 0.5 25.4 18.4 35.4% 5069% -27% - 0.0 0.0 0.0 0.0% 0 6.9 9.5 - 0.63 0.94 4.2 3.4 2.6 47.2% 0.9 - -46.0% Chris Brown
IAU Intrepid Mines 640 Dec 10 1.23 1.62 2.70 32% Buy -39% -27% 5.3 -6.0 -10.3 0.1 1.0 -1.1 -2.0 - -211% -42% - 0.0 0.0 0.0 0.0% 0 - - - - - -55.7 -90.0 3.5 -3.2% n.a. -83.9% Chris Brown
IGR Integra Mining 472 Jun 11 0.56 0.77 0.77 37% Buy -21% -9% 41.1 47.8 38.1 0.4 4.9 5.7 4.5 51.1% 16% -20% -22% 0.0 0.0 0.0 0.0% 0 9.9 12.4 -0.5 0.90 1.22 5.7 4.5 2.2 25.3% 0.9 - -36.7% Chris Brown
KCN Kingsgate 855 Jun 11 6.32 7.77 7.77 23% Hold -42% -30% 32.0 172.4 202.9 0.4 23.6 127.4 149.9 15.6% 439% 18% 77% 15.0 30.0 58.0 4.7% 0 5.0 4.2 0.1 0.45 0.41 3.8 3.1 1.2 25.9% 0.3 - -11.1% Sam Berridge
KGL Kentor Gold 122 Dec 10 0.12 0.22 0.24 84% Buy -33% -21% 0.1 -2.0 16.2 1.0 0.0 -0.3 2.8 -61.6% -4070% - - 0.0 0.0 0.0 0.0% 0 - 4.1 - - 0.37 -54.4 -54.4 2.0 -5.9% n.a. -31.7% Chris Brown
MML Medusa Mining 1,127 Jun 11 5.98 7.46 7.46 25% Buy -8% 5% 112.5 126.6 111.1 0.8 59.9 67.4 59.1 18.7% 13% -12% 8% 10.0 10.0 10.0 1.7% 0 8.8 9.3 1.1 0.80 0.91 8.1 7.2 3.0 39.2% 0.6 - -24.2% Phillip Chippindale
OGC OceanaGold 613 Dec 10 2.22 2.89 2.89 30% Buy -39% -27% 32.5 46.4 73.5 0.5 12.4 17.7 28.1 65.5% 43% 58% -7% 0.0 0.0 0.0 0.0% 0 12.2 7.6 -1.8 0.98 0.69 7.5 3.8 3.8 8.1% 0.2 5.3% Phillip Chippindale
PRU Perseus Mining 1,234 Jun 11 2.90 3.37 2.93 16% Hold -14% -2% -30.0 132.9 114.7 0.6 -7.1 31.2 27.0 32.4% - -14% 83% 0.0 0.0 0.0 0.0% 0 9.3 10.8 0.1 0.84 1.06 7.1 6.3 3.3 45.2% 0.6 - -30.8% Sam Berridge
RRL Regis Resources 1,437 Jun 11 3.31 2.89 2.51 -13% Hold 38% 50% 36.3 52.9 193.5 0.9 8.4 12.2 44.6 11.4% 46% 266% 80% 0.0 0.0 20.0 0.0% 0 27.2 7.4 0.3 2.47 0.73 26.1 18.2 10.8 38.7% 0.2 14.4% Sam Berridge
SAR Saracen Minera 530 Jun 11 0.86 1.07 1.07 24% Buy 2% 15% 47.7 66.2 73.8 0.7 9.2 12.1 13.0 70.4% 32% 8% 16% 0.0 0.0 0.0 0.0% 0 7.1 6.6 0.4 0.65 0.65 4.8 4.6 2.5 41.7% 0.9 - -43.2% James Wilson
Miscellaneous Metals & Mining
DML Discovery 564 Jun 11 1.29 1.30 1.73 1% Hold -9% 3% -2.5 -26.0 96.8 3.9 -0.6 -5.9 21.8 -10.8% -90% - - 0.0 0.0 0.0 0.0% 0 - 5.9 - - 0.58 -30.0 -30.0 3.2 -13.6% n.a. -35.2% Chris Brown
FND Finders Resources 103 Dec 10 0.37 0.67 0.67 82% Buy -5% 7% -7.4 -7.9 59.3 1.0 -2.6 -2.7 20.4 - -3% - - 0.0 0.0 0.0 0.0% 0 - 1.8 - - 0.16 -17.5 -17.5 1.2 -8.7% n.a. -9.1% Chris Brown
HSK Heemskirk 22 Sep 10 0.14 0.16 0.16 17% Hold -42% -29% -5.4 -3.4 5.0 2.6 - -3.5 -2.2 3.2 - 59% - 6% 0.0 0.0 1.0 0.0% 100 - 4.4 - - 0.40 34.2 6.8 0.7 -11.9% 2.5 39.1% Chris Brown
MBN Mirabela Nicke 757 Dec 10 1.54 2.03 2.18 32% Buy -32% -20% -51.7 -66.2 33.8 7.1 -10.5 -13.5 6.9 -35.1% -22% - 12% 0.0 0.0 0.0 0.0% 0 - 21.6 - - 1.96 -61.6 32.1 1.2 -10.9% 9.8 53.0% Tom Sartor
MGX Mount Gibson Iron 1,303 Jun 11 1.21 1.77 1.77 46% Buy -43% -31% 233.8 410.9 384.0 0.8 21.7 38.2 35.7 -6.6% 76% -7% 4% 4.0 4.0 4.0 3.3% 0 3.2 3.4 0.7 0.29 0.33 1.2 1.1 0.8 30.0% 1.0 - -38.3% Lyndon Fagan
PSH Penrice Soda 13 Jun 11 0.14 0.13 0.13 -4% Sell -62% -50% -26.1 0.5 1.8 0.3 - -28.6 0.6 2.0 - - 231% -53% 0.0 0.0 0.0 0.0% 0 23.3 7.0 -0.4 2.11 0.69 8.5 4.5 0.2 0.8% 3.9 110.7% Alexandra Clarke
TXN Texon 148 Dec 10 0.61 1.28 1.28 111% Buy -10% 2% 2.1 9.6 17.4 1.8 1.2 3.7 6.6 - 212% 82% 75% 0.0 0.0 0.0 0.0% 0 16.7 9.2 0.2 1.34 0.83 8.3 6.2 2.6 20.2% 2.0 - -59.1% Chris Brown
Exchange Gold Oil Zinc Nickel
rate WTI LME LME coking steaming lump fines
(A$/US$) (US$/oz) (US$/bbl) (US$/lb) (US$/lb) (US$/t) (US$/t) (US$/t) (US$/t)
FY10 0.88 1092 77.2 0.94 8.79 146.0 76.3 86.4 73.7
CY10 0.92 1223 82.6 0.98 9.89 190.5 90.0 138.5 118.1
FY11 0.99 1370 93.2 1.02 10.87 247.3 108.3 176.0 154.1
CY11 1.03 1637 94.4 1.05 10.92 287.5 120.0 138.5 162.9
FY12 1.01 1838 87.8 1.04 10.41 301.3 118.8 177.0 161.8
CY12 1.04 1750 91.0 1.10 11.00 305.0 116.3 138.5 153.2
FY13 1.09 1600 94.3 1.18 11.95 290.0 112.5 159.3 145.4
CY13 1.09 1525 96.0 1.33 12.98 270.0 107.5 138.5 137.9
LT (2015+) 0.80 1100 90.0 1.00 8.50 180.0 100.0 95.4 84.8
** BHP, LGL, PDN & RIO price and market cap reported in AUD. Financial forecasts in USD.
4.50 1.19
4.65 1.25
4.86 1.35
3.00 1.15
LME
3.42 0.99
Aluminium Copper Iron ore Coal
LME
3.93 1.08
(US$/lb) (US$/lb)
3.03 0.91
4.25 1.15
4.33 1.15
109

S&P/ASX 200 - Sector Aggregations (RBS)
Prices updated: 18 November 2011
Sector 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
200 CONS DISCRET 14.0 13.3 11.6 10.7 9.7 7.8 4.8 12.6 8.4 10.0
200 ENERGY 25.5 23.4 19.1 17.9 13.7 3.1 9.2 22.4 6.1 30.5
200 HEALTHCARE 15.4 15.4 15.3 13.8 12.3 11.9 -5.0 1.2 10.8 12.6
200 INFO TECHNOL 15.7 15.4 14.8 12.5 11.2 13.0 1.9 4.3 18.5 11.5
200 MATERIALS 15.8 10.5 9.0 8.4 8.0 45.1 54.7 16.6 7.9 4.5
200 INDUSTRIALS 20.9 21.7 15.1 12.6 11.0 37.2 -4.3 42.9 19.6 14.1
200 PROPERTY 10.6 12.2 11.2 10.5 10.3 -19.7 -12.7 8.5 6.0 1.9
200 CONS STAP 17.7 16.2 14.4 12.8 11.6 9.2 9.6 12.2 12.2 10.5
200 TELECOMS 11.5 12.6 12.1 11.6 10.9 2.2 -9.1 4.0 4.8 6.5
200 UTILITIES 15.8 14.6 15.0 14.5 13.5 3.9 8.0 -1.3 4.0 7.6
200 FIN EX PROP 11.2 10.4 9.7 9.0 8.6 17.8 6.9 7.8 7.0 5.4
S&P/ASX 200 14.1 12.3 10.9 10.1 9.4 18.2 15.6 12.4 8.2 7.4
Sector 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
200 CONS DISCRET 3.2 3.3 3.8 3.8 4.1 9.4 9.1 8.5 8.0 7.1
200 ENERGY 2.4 2.4 2.8 3.2 3.5 14.8 16.6 11.9 11.0 8.2
200 HEALTHCARE 3.1 3.0 3.3 3.6 4.1 11.5 11.7 12.7 11.3 10.1
200 INFO TECHNOL 3.7 3.9 4.1 4.7 5.2 12.4 14.8 12.7 11.0 10.1
200 MATERIALS 2.1 2.3 2.7 3.0 3.2 6.9 4.6 4.4 4.1 4.3
200 INDUSTRIALS 3.5 3.4 4.3 5.1 5.7 7.5 8.3 7.7 6.3 5.6
200 PROPERTY 7.6 6.0 6.4 6.6 7.2 11.6 13.3 12.7 11.6 11.0
200 CONS STAP 4.4 4.9 5.5 6.1 6.7 10.7 10.8 9.3 9.1 8.3
200 TELECOMS 6.6 6.7 6.8 7.1 7.3 6.1 6.4 6.3 6.2 6.0
200 UTILITIES 6.9 6.6 6.7 6.9 7.2 9.6 8.7 8.7 8.4 7.3
200 FIN EX PROP 6.4 7.0 7.6 8.0 8.4 na na na na na
S&P/ASX 200 4.3 4.6 5.1 5.5 5.8 8.1 6.8 6.5 6.0 5.8
Sector 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
200 CONS DISCRET 1.6 1.5 1.4 1.3 1.2 11.8 11.4 12.3 12.6 13.1
200 ENERGY 2.0 1.8 1.8 1.6 1.6 8.2 8.2 9.4 9.5 12.3
200 HEALTHCARE 2.6 2.5 2.4 2.2 2.0 16.4 16.1 16.1 16.7 17.5
200 INFO TECHNOL 5.2 4.5 4.1 3.7 3.3 35.3 31.1 28.9 30.9 30.7
200 MATERIALS 2.9 2.3 1.9 1.6 1.4 21.7 26.1 24.4 21.7 17.9
200 INDUSTRIALS 1.6 1.6 1.5 1.5 1.4 9.1 7.4 10.5 11.9 13.9
200 PROPERTY 1.1 1.1 1.0 0.9 0.8 8.6 8.9 9.1 8.9 8.1
200 CONS STAP 2.1 2.1 2.0 1.9 1.9 12.4 13.2 14.3 15.4 16.4
200 TELECOMS 2.4 2.4 2.4 2.2 2.1 21.9 19.1 19.7 19.9 20.1
200 UTILITIES 1.4 1.4 1.4 1.4 1.3 9.4 9.7 9.3 9.5 10.4
200 FIN EX PROP 1.6 1.5 1.4 1.3 1.3 14.5 14.8 15.0 15.2 15.2
S&P/ASX 200 2.0 1.8 1.7 1.5 1.4 15.4 16.6 16.9 16.5 16.0
Sector 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
200 CONS DISCRET 21.1 21.0 21.8 16.0 8.2 6.8 6.9 7.3 7.7 8.0
200 ENERGY 10.5 14.6 20.8 24.1 24.7 4.7 4.9 5.5 5.1 6.6
200 HEALTHCARE 18.1 18.1 17.0 11.9 6.1 10.6 10.7 10.6 10.9 11.3
200 INFO TECHNOL 29.1 25.2 41.7 34.7 26.6 32.1 32.8 33.3 32.8 32.0
200 MATERIALS 9.2 10.8 13.4 6.7 1.0 12.8 15.8 15.2 14.1 12.8
200 INDUSTRIALS 31.2 31.9 33.8 33.4 31.7 4.9 4.2 5.4 6.1 6.7
200 PROPERTY 37.5 38.2 35.8 34.2 31.4 5.5 5.1 5.6 5.8 5.9
200 CONS STAP 22.7 22.2 22.4 21.9 20.6 7.8 8.0 8.4 9.0 9.5
200 TELECOMS 37.0 35.4 32.3 28.9 25.3 11.3 10.3 10.5 10.6 11.0
200 UTILITIES 51.4 49.6 50.9 51.6 52.0 5.7 5.9 5.7 5.8 6.1
200 FIN EX PROP na na na na na 3.9 4.6 4.4 4.7 5.2
S&P/ASX 200 22.0 22.0 22.8 19.1 15.1 8.9 9.9 10.1 10.0 9.9
Sector 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
200 CONS DISCRET 9.6 9.3 8.4 7.6 6.2 7.2 7.0 6.4 5.8 4.8
200 ENERGY 20.0 16.1 13.2 12.8 8.9 13.6 11.8 9.8 9.3 6.6
200 HEALTHCARE 12.8 12.9 12.6 11.3 9.9 10.7 10.7 10.3 9.3 8.2
200 INFO TECHNOL 12.8 11.1 9.3 8.1 7.2 12.2 10.6 8.9 7.8 7.0
200 MATERIALS 9.7 7.1 6.0 5.3 5.2 7.8 6.0 5.1 4.5 4.4
200 INDUSTRIALS 14.6 15.6 11.7 10.0 8.4 8.2 8.4 7.0 6.2 5.3
200 PROPERTY 13.1 17.5 14.9 13.8 12.5 13.0 17.5 14.9 13.8 12.4
200 CONS STAP 11.9 11.0 10.1 9.1 8.2 9.4 8.7 8.0 7.3 6.6
200 TELECOMS 9.3 9.9 9.4 8.9 8.3 6.0 6.1 5.8 5.6 5.4
200 UTILITIES 12.7 12.6 11.8 11.3 10.6 10.0 9.8 9.2 8.9 8.4
200 FIN EX PROP 8.8 7.6 7.8 7.1 6.1 8.2 7.2 7.1 6.6 5.6
S&P/ASX 200 10.9 9.3 8.0 7.2 6.7 8.2 7.1 6.3 5.7 5.3
* When comparing to consensus (IBES), RBS forecasts include BHP and RIO, but only a limited number of property stocks
PE (x)
EV/EBIT (x)
Dividend yield (%)
PB (x)
Gearing - net debt/(net debt+equity) (%)
EPS growth (%)*
EV/EBITDA (x)
PCF (x)
ROE (%)
ROA (%)
111
S&P/ASX 200 - Sector Aggregations (IBES)
Sector 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
200 CONS DISCRET 11.6 11.2 11.5 10.9 10.0 5.5 -1.2 2.4 5.8 8.9
200 ENERGY 27.1 24.5 19.5 16.7 14.5 -23.5 10.6 19.2 17.2 15.1
200 HEALTHCARE 18.2 17.0 17.1 15.0 13.1 6.3 6.7 -0.5 13.8 14.9
200 INFO TECHNOL 15.5 15.3 17.8 14.7 12.7 10.8 1.0 -1.6 20.6 16.1
200 MATERIALS 17.0 11.4 9.8 8.4 7.7 37.1 49.5 16.6 16.2 9.2
200 INDUSTRIALS 21.4 20.8 14.6 12.3 10.9 19.0 -15.1 43.9 18.9 13.0
200 PROPERTY 11.8 13.0 13.0 12.4 11.7 -21.2 -9.4 0.3 4.8 5.3
200 CONS STAP 17.1 15.6 15.1 13.9 13.0 -0.8 3.3 10.2 8.3 6.9
200 TELECOMS 10.3 12.1 11.1 10.7 10.4 -5.5 -15.1 9.4 4.0 2.9
200 UTILITIES 17.4 11.8 15.7 14.9 13.8 -5.0 46.7 -24.9 5.9 7.5
200 FIN EX PROP 11.2 10.9 10.0 9.3 8.5 17.9 2.3 9.4 7.8 9.2
S&P/ASX 200 14.1 12.7 11.5 10.3 9.5 10.5 9.9 11.5 11.0 9.3
Sector 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
200 CONS DISCRET 6.3 6.5 7.9 7.1 6.3 5.0 5.2 6.4 5.8 5.2
200 ENERGY 18.9 17.3 12.7 11.1 9.5 12.7 12.2 9.2 8.1 7.0
200 HEALTHCARE 13.1 12.7 12.5 11.0 9.5 11.0 10.7 10.3 9.1 7.9
200 INFO TECHNOL 11.7 12.4 12.0 9.8 8.3 10.6 10.6 10.7 8.8 7.7
200 MATERIALS 5.8 6.0 6.4 5.6 5.2 4.7 5.1 5.4 4.7 4.3
200 INDUSTRIALS 14.5 16.1 11.3 9.6 8.4 8.2 8.7 6.8 6.0 5.4
200 PROPERTY 15.0 12.7 12.9 12.5 12.2 14.7 12.6 12.8 12.5 12.2
200 CONS STAP 11.4 11.1 10.5 9.7 9.1 9.1 8.9 8.4 7.8 7.3
200 TELECOMS 5.2 5.3 8.8 8.4 8.0 3.2 3.2 5.5 5.3 5.1
200 UTILITIES 12.7 13.1 11.8 11.1 10.6 10.0 10.6 9.2 8.7 8.3
200 FIN EX PROP na na na na na na na na na na
S&P/ASX 200 8.3 8.1 8.2 7.3 6.8 6.2 6.4 6.5 5.8 5.3
Sector 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
200 CONS DISCRET 4.9 4.9 5.1 5.4 6.0 0.90 0.77 0.90 0.83 0.77
200 ENERGY 2.3 2.6 2.9 3.2 3.6 2.12 1.79 1.60 1.46 1.32
200 HEALTHCARE 3.2 2.9 3.2 3.6 4.0 2.75 2.80 2.68 2.48 2.29
200 INFO TECHNOL 3.9 4.2 4.7 5.3 5.7 4.39 4.64 4.09 3.59 3.12
200 MATERIALS 2.3 2.9 3.3 3.7 3.7 1.59 1.41 1.15 0.96 0.81
200 INDUSTRIALS 3.5 4.4 5.1 5.8 6.1 1.66 1.64 1.50 1.43 1.34
200 PROPERTY 6.6 6.8 7.0 7.3 7.7 1.07 0.98 0.83 0.80 0.76
200 CONS STAP 3.2 5.2 5.7 6.1 6.5 2.34 2.14 2.02 1.94 1.85
200 TELECOMS 8.7 8.5 8.6 8.9 9.0 3.06 3.19 1.31 1.25 1.20
200 UTILITIES 6.1 6.3 6.5 6.8 7.3 1.79 1.63 1.16 1.12 1.05
200 FIN EX PROP 5.4 7.0 7.5 8.1 8.8 1.59 1.79 1.62 1.51 1.40
S&P/ASX 200 4.2 5.1 5.5 6.0 6.4 1.63 1.57 1.38 1.25 1.13
Sector 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
200 CONS DISCRET 8.1 8.0 11.8 12.2 13.1 10.5 10.4 11.1 12.5 12.7
200 ENERGY 3.5 4.9 8.2 9.2 10.6 7.5 7.6 9.1 10.0 10.6
200 HEALTHCARE 10.4 15.3 17.4 19.8 22.4 17.3 18.4 15.8 16.8 17.7
200 INFO TECHNOL 20.4 20.5 27.5 30.2 31.8 30.4 29.6 28.5 30.0 30.4
200 MATERIALS 11.1 16.6 20.1 20.0 18.9 20.2 25.5 23.6 21.8 19.5
200 INDUSTRIALS 5.1 5.2 9.6 10.7 11.1 7.5 7.6 10.9 12.1 12.8
200 PROPERTY 3.8 5.1 5.6 5.7 6.0 8.4 8.4 7.7 7.4 7.5
200 CONS STAP 7.8 9.3 14.0 14.8 15.5 14.3 14.4 14.8 15.3 15.7
200 TELECOMS 9.4 8.3 15.0 15.3 17.2 56.1 50.7 20.7 21.2 21.2
200 UTILITIES 3.0 3.8 7.0 7.3 7.6 10.2 10.2 9.1 8.2 8.9
200 FIN EX PROP 2.9 2.9 3.2 3.4 3.7 14.6 14.6 14.6 14.6 14.7
S&P/ASX 200 6.3 8.1 10.6 11.0 11.2 14.9 16.2 15.7 15.7 15.3
Source: IBES
Dividend yield (%) Price to Book Value (x)
ROA (%) ROE (%)
PE (x) EPS growth (%)
EV/EBIT (x) EV/EBITDA (x)
112
Sector Aggregations (RBS)
Sector 2010 2011 2012 2013 2014 2012 2013 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
Energy 26.0 24.3 19.6 18.2 13.9 1.78 1.79 5.4 7.6 23.6 7.2 30.8 2.5 2.5 2.7 3.0 3.4
Energy 26.0 24.3 19.6 18.2 13.9 1.78 1.79 5.4 7.6 23.6 7.2 30.8 2.5 2.5 2.7 3.0 3.4
Aluminium & Steel 21.4 11.3 8.9 8.4 6.7 0.81 0.83 100.0 91.9 28.4 5.7 25.8 1.6 2.5 2.1 3.0 3.3
Chemicals 13.5 12.8 10.9 10.3 9.5 0.99 1.01 1.8 6.1 17.3 5.8 8.3 3.0 3.5 3.8 4.1 4.4
Div Metals & Mining 15.0 9.1 8.2 7.6 7.7 0.74 0.75 48.8 63.6 11.5 7.0 -0.8 2.1 2.3 2.8 2.9 3.1
Gold, Precious Metals 27.2 31.0 14.5 13.6 11.5 1.31 1.33 100.0 -12.8 100.0 6.5 18.1 0.6 0.5 1.1 1.5 1.6
Packaging & Paper 20.5 15.5 13.4 11.9 10.4 1.22 1.17 -18.2 32.1 15.4 12.4 14.9 4.1 4.9 5.0 5.5 6.1
Materials 16.0 10.6 9.0 8.4 8.0 0.82 0.83 45.5 55.5 17.2 7.5 4.7 2.1 2.3 2.7 3.0 3.2
Construction 13.4 19.1 11.7 9.8 8.6 1.06 0.97 19.2 -30.8 62.6 18.6 14.5 4.4 3.7 4.9 5.4 6.0
Other Capital Goods 11.7 20.2 10.8 9.5 8.5 0.98 0.93 20.7 -42.7 86.4 14.0 11.0 5.4 4.2 5.5 6.1 6.8
Services & Supplies 16.3 15.1 12.9 10.9 9.9 1.18 1.07 -8.8 7.7 15.7 19.0 9.6 3.4 3.5 4.4 5.2 5.8
Transportation 38.5 26.4 20.0 16.1 13.4 1.82 1.58 100.0 46.8 32.1 24.2 20.1 2.7 3.1 3.7 4.5 5.2
Industrials 20.3 21.0 14.8 12.4 10.9 1.34 1.22 29.7 -3.8 41.1 19.3 14.0 3.5 3.4 4.3 5.1 5.7
Consumer Producers 9.2 10.0 10.3 9.4 9.0 0.94 0.93 -0.5 -7.8 -3.0 9.9 4.8 7.6 7.2 7.3 7.9 8.3
Consumer Services 12.4 12.7 11.7 13.3 11.8 1.06 1.30 -4.5 -2.7 7.4 -11.9 12.1 5.6 5.5 6.3 5.1 5.5
Media 16.8 14.7 12.1 10.4 9.4 1.09 1.02 14.7 13.7 19.5 15.8 9.9 1.7 1.8 2.3 2.6 2.8
Consumer Discretionary 14.1 13.3 11.7 10.8 9.8 1.06 1.06 7.3 5.4 12.5 8.7 10.0 3.2 3.3 3.8 3.9 4.2
Food Bev & Tobacco 15.5 14.2 13.4 12.7 12.0 1.22 1.24 39.6 10.1 4.6 5.7 5.1 4.6 4.9 5.0 5.3 5.7
Retail 16.4 15.3 13.8 12.1 11.0 1.25 1.19 8.2 7.3 10.9 13.5 10.8 4.6 5.1 5.7 6.3 6.9
Consumer Staples 17.8 16.2 14.4 12.8 11.6 1.31 1.26 12.3 9.7 12.4 12.3 10.5 4.4 4.9 5.5 6.0 6.6
Healthcare 16.3 16.8 16.2 13.9 11.7 1.47 1.37 10.1 -6.9 4.4 16.9 18.5 3.1 3.0 3.3 3.6 4.1
Healthcare 16.3 16.8 16.2 13.9 11.7 1.47 1.37 10.1 -6.9 4.4 16.9 18.5 3.1 3.0 3.3 3.6 4.1
Banks 11.1 10.2 9.6 9.1 8.7 0.87 0.89 23.9 8.9 6.2 5.3 4.5 6.4 7.1 7.6 8.0 8.4
Diversified Financials 10.6 10.9 10.7 9.6 8.7 0.97 0.94 2.3 -3.3 1.7 11.5 10.0 6.0 6.4 6.3 6.9 7.5
Insurance 12.7 13.1 10.3 9.1 8.6 0.93 0.89 -4.6 -3.7 27.3 13.6 5.9 6.3 6.8 7.7 8.4 8.3
Financials ex Property 11.2 10.4 9.7 9.0 8.6 0.88 0.89 17.8 6.9 7.9 7.0 5.3 6.4 7.0 7.6 8.0 8.4
Mgmnt & Development 10.3 10.8 10.3 9.5 8.9 0.93 0.93 -17.7 -5.6 4.9 8.3 5.8 7.1 6.0 6.4 6.8 7.5
Property 4.5 6.6 6.5 5.8 5.0 0.59 0.57 100.0 -32.0 1.8 10.8 16.2 4.8 9.6 10.1 11.2 13.0
Property & Development 10.6 12.2 11.2 10.5 10.3 1.02 1.04 -19.7 -12.7 8.5 6.0 1.9 7.6 6.0 6.4 6.6 7.2
IT 15.3 15.4 14.3 12.4 9.9 1.30 1.22 15.5 -0.8 7.4 15.2 24.8 3.9 4.0 4.4 5.0 5.5
Information Technology 15.3 15.4 14.3 12.4 9.9 1.30 1.22 15.5 -0.8 7.4 15.2 24.8 3.9 4.0 4.4 5.0 5.5
Telecommunications 11.5 12.9 12.2 11.5 10.7 1.11 1.13 2.8 -10.3 5.6 6.1 7.2 6.5 6.7 6.7 7.0 8.6
Telecommunications 11.5 12.9 12.2 11.5 10.7 1.11 1.13 2.8 -10.3 5.6 6.1 7.2 6.5 6.7 6.7 7.0 8.6
Utilities 22.1 15.6 15.6 14.7 13.2 1.42 1.44 -31.8 40.5 0.4 6.9 11.3 6.9 6.7 6.6 6.9 7.1
Utilities 22.1 15.6 15.6 14.7 13.2 1.42 1.44 -31.8 40.5 0.4 6.9 11.3 6.9 6.7 6.6 6.9 7.1
INDUSTRIAL ex Banks 14.6 14.2 12.4 11.1 10.0 1.13 1.10 5.7 2.7 14.4 11.2 11.4 4.6 4.8 5.2 5.6 6.3
INDUSTRIAL SECTOR 13.3 12.7 11.3 10.4 9.5 1.03 1.02 11.7 5.0 11.2 9.0 8.9 5.1 5.5 5.9 6.4 6.9
RESOURCE SECTOR 17.5 12.1 10.4 9.7 9.2 0.94 0.95 40.0 50.9 17.6 7.2 5.3 2.0 2.1 2.6 2.8 3.0
S&P/ASX 100 13.9 12.1 10.8 10.0 9.3 0.98 0.98 19.6 16.5 12.0 8.0 6.8 4.3 4.6 5.1 5.5 5.8
SMALL ORDINARIES 16.6 15.1 12.7 11.5 9.9 1.15 1.14 2.9 12.1 18.7 9.8 16.3 3.9 4.3 4.5 5.1 5.4
SMALL INDUSTRIALS 14.4 12.9 11.8 10.8 9.7 1.07 1.06 0.4 11.1 9.4 9.6 11.3 4.5 5.0 5.3 5.8 6.3
SMALL RESOURCES 101.2 149.5 20.7 18.6 11.4 1.88 1.83 100.0 49.9 100.0 11.7 63.3 0.3 0.3 0.4 1.0 1.0
MARKET AVERAGE 14.2 12.4 11.0 10.2 9.4 1.00 1.00 17.4 15.6 13.0 8.3 7.8 4.3 4.6 5.0 5.4 5.9
EPS growth (%) Dividend yield (%) PE (x) PE rel
113
Sector Aggregations (RBS)
Sector 2011 2012 2013 2014 2011 2012 2013 2014 2012 2013 2014 2012 2013 2014 2012 2013 2014
Energy 16.8 13.4 12.9 9.0 12.3 10.0 9.4 6.7 1.8 1.6 1.6 9.3 9.4 12.2 5.5 5.1 6.7
Energy 16.8 13.4 12.9 9.0 12.3 10.0 9.4 6.7 1.8 1.6 1.6 9.3 9.4 12.2 5.5 5.1 6.7
Aluminium & Steel 8.2 6.9 6.3 5.8 6.5 5.8 5.3 4.2 1.2 1.0 0.9 14.4 13.3 7.4 10.7 10.0 11.3
Chemicals 9.5 8.5 7.8 7.0 7.7 7.0 6.4 5.7 1.8 1.6 1.5 16.5 16.7 15.8 10.4 10.6 10.9
Div Metals & Mining 6.3 5.4 4.8 4.8 5.4 4.7 4.1 4.1 2.1 1.7 1.4 28.4 24.3 19.4 17.4 15.7 13.5
Forestry products 0.0 10.1 8.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.8 3.3 0.0 0.0 0.0 0.0
Gold, Precious Metals 22.6 10.3 9.2 8.2 15.7 8.3 7.3 6.7 1.9 1.7 1.5 14.1 13.1 12.2 11.4 10.6 11.1
Packaging & Paper 12.5 10.6 9.6 8.5 8.2 7.5 6.9 6.3 2.3 2.1 2.0 17.5 18.6 19.9 7.7 8.3 9.1
Materials 7.1 6.0 5.3 5.2 6.0 5.1 4.5 4.4 1.9 1.6 1.4 24.4 21.6 17.9 15.2 14.1 12.8
Construction 14.9 8.9 7.5 6.5 8.1 5.8 5.1 4.6 1.7 1.5 1.4 14.7 16.0 17.0 7.5 8.4 9.1
Other Capital Goods 13.2 7.3 6.5 5.7 6.8 4.7 4.3 3.8 1.7 1.5 1.4 15.9 16.8 17.4 8.1 8.9 9.4
Services & Supplies 11.7 9.8 8.4 7.7 8.0 6.7 5.9 5.4 2.0 1.8 1.7 16.4 17.9 18.2 8.8 9.6 10.0
Transportation 18.1 15.7 12.9 10.6 9.3 8.4 7.4 6.3 1.2 1.2 1.2 6.3 7.6 9.4 3.6 4.2 4.9
Industrials 15.2 11.5 9.8 8.3 8.3 6.9 6.1 5.3 1.5 1.4 1.4 10.6 12.0 13.9 5.5 6.2 6.8
Consumer Producers 8.9 8.4 7.7 6.8 7.3 6.9 6.4 5.7 1.3 1.3 1.2 12.7 13.6 13.7 7.6 8.0 8.5
Consumer Services 9.8 9.2 10.2 7.7 7.8 7.3 7.8 6.6 1.7 1.6 1.5 14.6 12.4 16.9 8.8 8.1 8.5
Media 9.9 8.5 7.2 6.2 7.0 6.2 5.3 4.6 1.3 1.2 1.1 11.4 12.4 12.5 6.9 7.4 7.7
Consumer Discretionary 9.4 8.4 7.6 6.2 7.0 6.4 5.8 4.8 1.4 1.3 1.2 12.3 12.7 13.4 7.4 7.8 8.1
Food Bev & Tobacco 10.3 9.5 9.0 8.4 8.1 7.4 7.0 6.5 1.7 1.7 1.6 13.6 13.4 14.1 8.1 8.2 8.2
Retail 10.5 9.7 8.6 7.8 8.4 7.8 6.9 6.3 1.9 1.8 1.7 13.9 15.1 16.4 8.2 8.9 9.4
Consumer Staples 11.0 10.1 9.1 8.2 8.8 8.0 7.3 6.6 1.9 1.9 1.8 13.9 15.0 15.9 8.1 8.7 9.3
Healthcare 13.6 13.0 11.2 9.6 11.1 10.5 9.2 8.0 2.4 2.2 2.0 15.0 16.4 18.0 9.7 10.5 11.5
Healthcare 13.6 13.0 11.2 9.6 11.1 10.5 9.2 8.0 2.4 2.2 2.0 15.0 16.4 18.0 9.7 10.5 11.5
Banks na na na na na na na na 1.5 1.4 1.3 16.3 16.2 19.7 0.0 0.0 0.0
Diversified Financials 6.0 6.1 6.0 6.1 5.5 5.5 5.4 5.4 1.0 1.0 1.0 9.9 10.6 13.2 6.4 6.0 5.6
Insurance 17.2 16.7 13.3 12.3 15.8 14.8 12.0 11.2 1.2 1.2 1.2 12.2 13.5 16.5 7.7 7.9 7.5
Financials ex Property 7.5 7.6 7.0 6.0 7.1 7.0 6.5 5.6 1.4 1.3 1.3 15.0 15.2 15.3 4.4 4.7 5.2
Mgmnt & Development 14.2 12.8 11.7 10.4 13.9 12.5 11.4 10.2 1.0 0.9 0.8 9.6 9.7 9.3 5.2 5.4 5.6
Property 6.6 6.2 5.6 4.8 6.5 6.1 5.5 4.8 0.4 0.4 0.4 6.0 6.5 7.5 4.7 5.0 5.4
Property & Development 17.5 14.9 13.8 12.5 17.5 14.9 13.8 12.4 1.0 0.9 0.8 9.1 8.9 8.1 5.6 5.8 5.9
IT 11.3 9.3 8.4 6.2 9.3 7.7 7.0 5.5 3.2 2.9 2.6 23.0 24.5 27.5 14.4 14.7 18.7
Information Technology 11.3 9.3 8.4 6.2 9.3 7.7 7.0 5.5 3.2 2.9 2.6 23.0 24.5 27.5 14.4 14.7 18.7
Telecommunications 9.9 9.4 8.9 8.4 6.1 5.9 5.7 5.4 2.3 2.2 2.1 19.0 19.5 19.8 10.3 10.5 10.9
Telecommunications 9.9 9.4 8.9 8.4 6.1 5.9 5.7 5.4 2.3 2.2 2.1 19.0 19.5 19.8 10.3 10.5 10.9
Utilities 12.9 11.9 11.4 10.5 9.5 9.0 8.7 8.3 1.3 1.3 1.3 8.6 9.0 10.5 5.2 5.4 5.8
Utilities 12.9 11.9 11.4 10.5 9.5 9.0 8.7 8.3 1.3 1.3 1.3 8.6 9.0 10.5 5.2 5.4 5.8
INDUSTRIAL ex Banks 11.2 9.9 9.0 8.0 7.9 7.2 6.6 6.0 1.6 1.5 1.4 12.9 13.6 14.4 7.5 7.9 8.4
INDUSTRIAL SECTOR na na na na na na na na 1.5 1.4 1.4 13.9 14.4 14.4 7.5 7.9 8.4
RESOURCE SECTOR 7.8 6.5 5.8 5.5 6.5 5.5 4.9 4.6 2.0 1.7 1.5 22.9 20.4 17.6 14.1 12.8 11.8
S&P/ASX 100 9.0 7.8 7.0 6.6 7.0 6.2 5.6 5.2 1.7 1.5 1.4 17.2 16.7 16.1 10.4 10.2 10.0
SMALL ORDINARIES 11.7 9.7 8.7 7.3 8.2 7.0 6.4 5.5 1.7 1.6 1.4 13.7 14.1 15.4 8.1 8.3 9.1
SMALL INDUSTRIALS 10.4 9.3 8.3 7.4 7.4 6.7 6.1 5.6 1.6 1.5 1.4 14.3 14.7 15.6 8.2 8.5 9.0
SMALL RESOURCES 78.9 13.3 12.6 5.1 29.2 9.3 8.7 3.8 1.9 1.8 1.5 9.9 9.9 13.7 7.5 7.0 9.8
MARKET AVERAGE 9.3 8.0 7.2 6.7 7.2 6.3 5.7 5.2 1.7 1.5 1.4 16.8 16.4 16.0 10.0 9.9 9.8
P/BV (x) ROE (%) ROA (%) EV/EBIT (x) EV/EBITDA (x)
114
Absolute performance to 21 Nov 11
Stock/sector Price % return over ... Stock/sector Price
last 4Q 3Q 2Q 1Q CY last 4Q 3Q 2Q 1Q CY
21/11/11 2011 2011 2011 2011 2010 21/11/11 2011 2011 2011 2011 2010
Materials 11,225.6 +3.6 -19.3 -5.5 +0.9 +10.2 Consumer Disc 1236.1 +4.6 -14.2 -8.2 -0.1 -8.3
Adelaide Brighton $2.87 +8.7 -14.6 -4.0 -1.7 +20.0 APN News & Media $0.85 +0.6 -36.1 -15.4 -19.6 -16.6
Alumina Ltd $1.40 -5.7 -29.9 -14.2 -0.8 +34.8 Aristocrat Leisure $2.35 +11.9 -13.2 -25.5 +8.7 -25.6
Amcor $7.26 +4.8 -3.8 +2.0 +4.6 +8.3 Austar United $1.15 -0.9 -13.8 +2.3 +37.7 -32.7
Aquarius Platinum $2.78 -6.4 -36.8 -12.8 +0.7 -27.2 Billabong $4.32 +30.1 -44.8 -20.4 -7.4 -25.6
Atlas Iron Limited $3.04 +6.7 -23.6 0.0 +26.4 +56.1 Consolidated Media $2.44 +1.7 -8.0 -7.4 -9.6 +2.0
BHP Billiton $35.90 +2.5 -20.0 -5.9 +2.9 +4.9 Crown $8.14 +2.1 -10.8 +9.6 -1.2 +2.6
BlueScope Steel $0.61 -16.4 -39.4 -39.0 -12.2 -27.7 David Jones $3.06 +1.3 -25.6 -14.5 +6.5 -17.4
Boral $3.55 +1.4 -20.5 -12.0 +3.5 -16.6 Fairfax Media $0.80 -3.0 -15.8 -24.0 -7.9 -19.5
Fortescue Metals $4.90 +10.9 -30.4 -0.9 -2.0 +47.3 Flight Centre $19.32 +13.6 -21.4 -3.0 -10.1 +34.5
Gindalbie Metals Ltd $0.51 +6.3 -40.9 -26.4 -18.3 +31.1 Fleetwood Corp $12.08 +6.6 0.0 -6.4 -6.8 +62.6
Gunns $0.19 +26.7 -44.4 -56.5 -0.8 -33.5 GUD Holdings $7.60 +6.6 -21.6 -5.0 -4.0 +10.9
Iluka Resources $14.85 +18.7 -25.4 +26.2 +45.5 +155.3 Harvey Norman $2.07 -4.2 -13.3 -17.0 +2.0 -30.3
Incitec Pivot $3.15 -3.7 -15.3 -10.9 +9.3 +11.5 InvoCare $7.17 +3.9 -10.3 +8.6 -2.7 +18.2
Independence Group $4.64 +7.4 -23.3 -14.6 -17.1 +65.4 JB Hi-Fi $15.61 +2.7 -11.0 -15.2 +12.5 -20.8
James Hardie Indust $6.60 +14.8 -1.9 -3.9 -10.0 -20.2 News Corp $16.80 +3.1 -2.0 -6.8 +11.3 -10.4
Kagara Ltd $0.33 -17.5 -29.8 -7.3 -24.1 -22.9 Pacific Brands $0.56 -17.2 -3.6 -17.8 -13.8 -13.3
Kingsgate Consolid. $6.32 -12.0 -10.3 -7.9 -20.1 +18.1 Seven Network $7.16 -9.9 -17.4 +7.1 +2.2 +27.4
Lynas Corporation $1.17 +6.9 -44.9 -12.0 +9.2 +274.5 STW Communications $0.79 -12.8 -12.2 -15.3 +14.2 +41.3
Macarthur Coal $16.21 +1.8 +45.4 -5.6 -9.4 +13.8 Tabcorp Holdings $2.83 +9.7 -21.6 -24.6 +5.3 +2.3
Minara Resources +17.4 -2.6 -19.5 +32.2 Tatts Group $2.32 +4.0 -7.1 +2.6 -9.3 +10.8
Mincor Resources $0.79 +13.7 -23.2 -34.2 -27.1 +5.9 Ten Network Holdings $0.89 0.0 -16.5 -18.8 -7.8 -10.4
Mount Gibson Iron $1.21 -9.7 -27.2 -7.5 -6.1 +28.5 Wotifcom Holdings $3.58 -9.8 -15.4 -14.1 +9.6 -28.3
Murchison Metals $0.28 -17.9 -56.2 -23.1 -22.0 -49.0
Newcrest Mining $35.25 +3.4 -9.6 -5.3 -1.5 +14.5
Nufarm $4.42 +3.3 -4.7 -13.2 +0.6 -50.7
OM Holdings Limited $0.49 -18.5 -35.3 -34.3 -0.4 -27.9
OneSteel $0.93 -25.0 -33.0 -24.2 -5.8 -22.7 Cons Staples 7,617.9 +0.7 -4.2 +2.1 +0.2 -1.2
Orica $24.85 +5.8 -12.8 +2.2 +5.9 +0.5 Coca-Cola Amatil $12.14 +1.8 +4.5 -2.7 +8.1 -5.8
PaperlinX $0.08 +13.7 -54.4 -54.9 -13.4 -35.9 Foster's Group $5.35 +1.3 +2.5 +23.4 +0.7 +3.3
Platinum Australia $0.12 -25.0 -59.0 -33.9 -7.1 -37.8 Goodman Fielder $0.53 +9.4 -51.3 -13.8 -8.6 -17.5
Rio Tinto $65.90 +6.6 -25.5 -2.1 -0.8 +14.1 Metcash $4.11 0.0 -1.0 -0.2 +1.2 -8.1
Sims Group $12.62 +1.8 -29.7 +0.8 -18.8 -2.8 Wesfarmers $32.12 +1.7 -0.8 +0.2 -0.7 +2.3
St Barbara Limited $2.33 +13.7 +4.9 -10.3 +6.9 +15.3 Woolworths $24.65 -0.8 -10.4 +3.2 -0.3 -3.7
Sundance Resources $0.42 -2.3 +26.5 -26.9 -19.1 +271.0
Western Areas NL $5.56 +28.7 -26.8 -12.7 +13.2 +19.4
Inform Tech 508.7 +5.7 -14.0 -4.8 -8.8 -4.2
Health Care 7,882.5 +3.7 -11.1 -3.8 -0.5 +2.1 Computershare $8.07 +8.0 -15.8 -4.2 -14.1 -5.9
Ansell $14.68 +12.4 -7.8 +4.7 +6.6 +16.0 DWS Advanced $1.25 +2.9 -8.3 -8.7 +2.4 -7.8
Cochlear $55.00 +18.6 -35.6 -13.2 +3.2 +16.4 GBST $0.95 -2.1 +21.3 -20.0 +7.5 -3.6
CSL Ltd $30.93 +4.2 -10.2 -7.5 -1.5 +11.7 Iress $7.64 +9.1 -22.3 -3.6 +7.5 +1.6
Ramsay Health Care $18.93 -0.4 +4.5 -4.8 +7.2 +63.5 Oakton $1.55 -12.2 -15.8 -9.1 -3.4 -24.7
ResMed Inc $2.64 -10.2 +2.4 -1.4 -16.6 +17.7 SMS Mgmt & Tech $5.18 -4.3 -14.1 -2.6 -2.9 +18.7
Sigma Pharma $0.65 0.0 +22.6 +56.6 +22.5 -59.6 Technology One $1.09 +1.9 +4.9 +6.3 0.0 +18.2
Sonic Hlthcare $11.49 +0.8 -11.4 +7.4 +3.3 -24.5
Source: RBS, IRESS
% return over ...
115
Absolute performance to 21 Nov 11
Stock/sector Price % return over ... Stock/sector Price
last 4Q 3Q 2Q 1Q CY last 4Q 3Q 2Q 1Q CY
21/11/11 2011 2011 2011 2011 2010 21/11/11 2011 2011 2011 2011 2010
% return over ...
Industrials 3,415.9 +8.5 -11.0 -6.1 +0.8 -6.7 Finan ex Prop 4,484.2 +3.0 -12.7 -5.1 +3.8 -9.7
AJ Lucas Group $1.35 0.0 0.0 -25.4 -25.2 -41.7 Aust Educ Trust $0.92 +6.4 +8.1 -0.6 -6.2 +81.4
Alesco Corporation $1.32 -2.9 -49.1 -14.7 +19.4 -43.6 AMP Ltd $4.25 +7.6 -19.2 -9.9 +2.6 -21.9
Asciano Group $1.52 +4.8 -11.6 -5.7 +9.1 -12.4 ANZ Banking $19.75 +1.2 -11.3 -7.6 +2.0 +2.1
Ausenco Limited $2.80 +25.6 -21.8 -14.9 +8.8 -32.5 Aust Secur Exch $29.56 -2.5 -0.4 -11.5 -8.7 +7.8
Aust Infrastructure $1.91 +5.0 -5.5 +0.3 +1.9 +5.6 Bank of Qld $8.25 +14.7 -12.0 -17.6 -4.5 -9.7
Boart Longyear $3.17 +21.0 -34.3 -14.7 +2.6 +28.5 Bendigo Bank $9.13 +7.5 -4.2 -7.0 -4.2 +1.1
BOOM Logistics $0.28 +22.2 -25.0 -22.1 0.0 -7.2 Comm Bank $47.55 +4.4 -12.9 -0.2 +3.2 -7.4
Bradken $7.42 +12.4 -17.1 +1.4 -12.9 +32.1 Challenger Fin $4.09 -3.8 -13.1 -0.8 +4.9 +11.1
Brambles $6.86 +6.0 -10.4 +2.0 -0.6 +5.0 Cromwell Corp $0.66 -2.2 -2.9 -2.1 -7.2 +4.1
Cabcharge $4.59 +5.3 -15.3 -6.7 -5.5 -2.8 Equity Trustees $13.36 +15.2 -16.5 -11.5 -0.6 -12.2
ConnectEast +18.5 +1.1 +7.1 -2.3 FKP Property $0.49 +7.8 -35.7 -17.6 -0.6 +8.2
CSR Ltd $2.19 -6.0 -19.7 -11.6 -34.9 -6.9 IAG $2.98 -1.3 -11.2 -5.3 -7.5 -3.7
Downer EDI $3.25 +13.2 -22.4 -2.4 -14.5 -50.9 IOOF Holdings $6.00 +10.3 -17.6 -9.0 -7.1 +28.5
Emeco Holdings $0.99 +0.5 -13.3 -7.0 +17.4 +36.7 Lend Lease Corp $7.04 0.0 -21.5 -1.1 +5.1 -13.0
GWA Intl $2.38 +19.0 -27.3 -16.9 +7.8 -3.8 Macquarie Bank $23.38 +2.2 -26.8 -14.6 -1.1 -23.5
Hastie Group Limited $1.01 +974.5 -32.9 -84.9 -3.1 -49.6 NAB $23.20 +3.7 -12.7 -0.9 +9.1 -13.5
Hills Industries $1.16 +14.9 -15.5 -21.9 -18.0 -8.6 Oaks Hotels 0.0 +43.1 +18.0 -25.6
Leighton $20.45 +9.5 -10.4 -27.7 -4.2 -19.2 Perpetual $20.54 -1.4 -16.4 -14.3 -6.8 -15.9
Macmahon Hldgs $0.58 -3.3 +7.1 -0.9 +7.6 -14.6 QBE Insurance $14.01 +8.8 -25.3 -2.4 -2.6 -29.1
Macq Airports $3.45 +6.8 -3.3 +9.9 +1.7 +2.8 Suncorp $8.40 +5.3 -2.0 -4.0 -1.5 -0.9
Monadelphous Grp $19.50 +12.1 -5.4 -14.0 +16.9 +27.8 Sunland Group $0.98 +27.5 +24.4 -11.5 -7.3 -9.1
PMP $0.55 -16.7 +6.5 -15.6 -21.0 +20.0 Treasury Group $3.88 +21.3 -19.2 -13.9 -8.0 -6.5
Qantas Airways $1.64 +16.3 -23.4 -15.6 -14.2 -15.1 Trinity Group $0.20 0.0 +8.3 +38.5 +23.8 -22.2
SEEK $6.05 +13.7 -17.4 -4.7 +2.0 -3.9 Trust Company $5.69 +7.4 -3.6 -10.9 -2.1 -2.8
Spotless Group $2.37 +32.0 -23.0 +20.1 -7.6 -28.8 Westfield Group $7.99 +3.1 -10.5 -7.3 -2.5 -2.2
Toll Holdings $4.83 +9.5 -9.1 -18.2 +3.5 -34.4 Westpac $20.42 +0.4 -8.6 -8.5 +9.5 -12.2
Transfield Svcs $2.27 +19.8 -43.4 0.0 -0.3 -18.8 WH Soul Patt $14.10 +10.2 -2.3 +3.6 +0.4 -6.3
Transpacific $0.70 +12.1 -23.9 -27.2 -17.6 +0.4 WHK Group $0.88 +7.3 -10.9 -4.2 -11.1 +0.9
Transurban $5.46 +0.7 +3.6 -2.6 +4.9 -7.1
United Group $13.40 +17.1 -17.6 -11.5 +8.7 +1.0 Energy 13,772.7 +10.4 -17.3 -11.1 +5.3 -0.0
Virgin Blue Holdings $0.38 +17.2 +14.3 -11.1 -26.7 -27.1 Aust Wwide Expl $1.37 +31.9 -18.8 -26.5 -2.0 -36.8
Wesfarmers $32.12 +1.7 -0.8 +0.2 -0.7 +2.3 Caltex $12.94 +19.5 -7.9 -24.6 +8.6 +54.5
Aquila Res $6.45 +29.5 -30.5 -23.2 -5.2 -2.5
Beach $1.40 +28.0 +19.1 -5.7 +12.1 -6.0
Infra & Utilities 4,463.3 +4.6 -2.7 +3.2 -3.7 +2.0 Carnarvon $0.12 -20.7 -17.1 -48.5 -28.4 -22.8
AGL Energy $14.52 +1.5 -2.4 +2.4 -6.0 +8.3 Eastnstar $0.87 +11.6 +28.1 -19.9 -6.2 -2.4
APA Group $4.50 +11.1 -0.5 -3.3 +4.0 +15.7 Extract $7.56 -0.9 -3.5 +0.1 -16.0 +13.0
DUET $1.74 +7.1 -3.9 +1.5 -0.6 -6.4 Karoon $5.02 +76.1 -45.5 -27.0 -2.6 -30.7
Energy Wld $0.61 +18.4 +3.0 +3.1 -14.9 +44.3 Linc Enrgy $1.84 -4.2 -33.1 -1.7 +10.2 +75.4
Envestra $0.67 0.0 -3.6 +15.0 +14.3 +2.9 Molopo $0.71 -0.7 -6.6 -15.1 -15.6 -19.0
Hastings Diversified $1.74 +12.3 -2.2 -1.3 -5.3 +53.6 Nexus $0.27 +92.9 -57.6 -28.2 +7.9 +41.3
SP AusNet $0.95 +1.6 -1.1 +7.4 +1.1 -4.9 Energy Resource $1.60 -45.2 -28.8 -48.4 -28.6 -53.4
Spark Infra $1.27 +2.0 -3.5 +15.2 -1.3 -18.1 Gloucester Coal $7.30 +8.1 -20.5 -21.7 -10.9 +35.7
Horizon Oil $0.21 +13.5 -44.8 -9.5 +25.4 -19.2
New Hope Corp $6.10 +13.2 +3.3 +4.8 +2.7 +6.0
Oil Search $6.12 +8.1 -14.9 -6.6 +1.1 +14.8
Telecoms 1,083.3 +1.9 +7.1 +3.1 +0.4 -18.4 Origin Energy $14.50 +8.2 -15.1 -2.7 +0.2 -1.0
Amcom $0.84 +8.4 -30.2 +10.4 +1.5 +17.9 Paladin $1.49 +22.6 -51.8 -30.2 -26.8 +17.9
Hutchison Telecom $0.06 -3.4 -14.7 -26.9 -6.1 -17.5 Roc Oil $0.29 -8.1 -3.1 -19.0 -3.7 -38.8
iiNet $2.55 +17.0 -16.5 -1.5 -8.6 +55.9 Santos $12.76 +12.2 -16.0 -12.9 +18.3 -6.7
Singapore Tel. $2.43 -2.8 +11.2 +3.5 -1.7 -4.9 Woodside $35.33 +8.8 -20.8 -12.4 +10.0 -9.8
Telecom NZ $1.46 -28.8 +9.8 +27.0 -9.8 -18.8 WorleyParsons $26.90 +2.3 -6.9 -8.8 +15.9 -8.0
Telstra Corporation $3.17 +2.3 +7.3 +2.5 +1.1 -18.7
TPG Telecom $1.43 +0.4 -15.7 +0.9 +2.5 -2.1
S&P / ASX 100 3,395.2 +3.8 -13.1 -4.5 +2.3 -3.4
S&P / ASX 200 4,163.0 +3.9 -13.0 -4.8 +2.0 -2.6
S&P / ASX 300 4,161.4 +3.9 -13.1 -5.0 +1.9 -2.2
Source: RBS, IRESS
116

Daily Bulletin | Disclosures Appendix | 22 November 2011

Recommendation structure
Absolute performance, short term (trading) recommendation: A Trading Buy recommendation implies upside of 5% or more and a Trading Sell indicates downside of 5% or more. The
trading recommendation time horizon is 0-60 days. For Australian coverage, a Trading Buy recommendation implies upside of 5% or more from the suggested entry price range, and a
Trading Sell recommendation implies downside of 5% or more from the suggested entry price range. The trading recommendation time horizon is 0-60 days.
Absolute performance, long term (fundamental) recommendation: The recommendation is based on implied upside/downside for the stock from the target price. A Buy/Sell implies
upside/downside of 10% or more and a Hold less than 10%. For UK Small/Mid-Cap Analysis a Buy/Sell implies upside/downside of 10% or more, an Add/Reduce 5-10% and a Hold less
than 5%. For UK-based nvestment Funds research the recommendation structure is not based on upside/downside to the target price. Rather it is the subjective view of the analyst based
on an assessment of the resources and track record of the fund management company. For listed property trusts (LPT) or real estate investment trusts (RET) the recommendation is
based upon the target price plus the dividend yield, ie total return.
Performance parameters and horizon: Given the volatility of share prices and our pre-disposition not to change recommendations frequently, these performance parameters should be
interpreted flexibly. Performance in this context only reflects capital appreciation and the horizon is 12 months. Sector relative to market: The sector view relative to the market is the
responsibility of the strategy team. Overweight/Underweight implies upside/downside of 10% or more and Neutral implies less than 10% upside/downside. Target price: The target price is
the level the stock should currently trade at if the market were to accept the analyst's view of the stock and if the necessary catalysts were in place to effect this change in perception within
the performance horizon. n this way, therefore, the target price abstracts from the need to take a view on the market or sector. f it is felt that the catalysts are not fully in place to effect a
re-rating of the stock to its warranted value, the target price will differ from 'fair' value.
Distribution of recommendations
The tables below show the distribution of recommendations (both long term and trading). The first column displays the distribution of recommendations globally and the second column
shows the distribution for the region. Numbers in brackets show the percentage for each category where there is an investment banking relationship. These numbers include
recommendations produced by third parties with which RBS has joint ventures or strategic alliances.

ReguIatory discIosures

Subject companies: DML.AX, IIN.AX, TNE.AX
RBS currently maintains a market in the security of this company and otherwise purchases and sells securities of this company as principal.: RYA.I
RBS trades or may trade as principal in the debt securities that are the subject of the research report.: CSR.AX
An analyst or a member of any analyst's household who participated in the preparation of this report has a shareholding/financial interest in this company.: DML.AX

Long term recommendations (as at 21 Nov 2011)
GIobaI totaI (IB%) Asia Pacific totaI
(IB%)
Buy 839 (11) 541 (4)
Hold 445 (7) 254 (4)
Sell 92 (5) 50 (0)
Total (B%) 1376 (9) 845 (3)
Source: RBS

Trading recommendations (as at 21 Nov 2011)
GIobaI totaI (IB%) Asia Pacific totaI
(IB%)
Trading Buy 1 (0) 1 (0)

Trading Sell 1 (0) 1 (0)
Total (B%) 2 (0) 2 (0)
Source: RBS

Daily Bulletin | Disclosures Appendix | 22 November 2011

GIobaI discIaimer

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