Energy
Santos (STO) Pricing/Inventory Offset 2Q10 Production Decline 29/07/2010 16:35
Second quarter production came in below expectations but sales volumes ahead. Production fell 4% to 11.9mmboe, on an already weak...
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Second quarter production came in below expectations but sales volumes ahead. Production fell 4% to 11.9mmboe, on an already weak 1Q10 performance. Cooper Basin flooding still impacts operations and will continue to do so for several months. Gas and liquids production is increasing as recovery continues.
We downgrade our recommendation from Accumulate to Hold. The shares appreciated 15% to $13.75, since May's $12ps lows. Our valuation is little changed at $15.60ps.
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Woodside (WPL) 2Q10 Production Down, Pricing Up 28/07/2010 12:30
2Q production fell 9% to 17.5mmboe, below expectations. Maintenance shut-downs at NWSJV Trains 3 and 5, the sale of Otway...
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2Q production fell 9% to 17.5mmboe, below expectations. Maintenance shut-downs at NWSJV Trains 3 and 5, the sale of Otway gas and natural field decline were only partially offset by higher Vincent and Stybarrow oil output. Production at Stybarrow rose on consistent performance following the 1Q shut-down. Vincent enjoyed higher facilities uptime and production from two new in-fill wells. Enfield oil production was below expectations. Our valuation increases 3% to $77.30ps. Buy maintained.
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more Energy reports Materials
Golden Cross Resources Ltd (GCR) Initation of Coverage 28/07/2010 16:19
Golden Cross Resources (GCR) is an Australian based mineral exploration company with interests in base and precious metals projects. GCR's...
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Golden Cross Resources (GCR) is an Australian based mineral exploration company with interests in base and precious metals projects. GCR's primary focus is the Copper Hill Project located along the Lachlan Fold Belt in central New South Wales. This copper-gold deposit is located about 5km north of Molong in NSW. GCR controls 100% of Copper Hill under a 93 sq km Exploration Licence. Copper Hill has a measured, indicated and inferred resource of 133Mt containing 421,000t of copper and 1.2Moz Au.
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Fortescue Metals (FMG) Costs under pressure 27/07/2010 15:14
Iron ore production volumes improved in 4Q10 by 15%. FMG shipped 10.9Mt compared to 9.4Mt in 3Q10. Volumes were sound...
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Iron ore production volumes improved in 4Q10 by 15%. FMG shipped 10.9Mt compared to 9.4Mt in 3Q10. Volumes were sound but a further increase in cash costs is of some concern. Cash costs were up 10% to US$32.25/t. Our FY10 forecasts are little changed while FY11 is revised upwards with recent improvements in our iron ore price forecasts and a lower A$/US$ exchange rate. Our valuation rises marginally to $4.05. We maintain our Hold recommendation.
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Alesco (ALS) FY10 result – cautious outlook 29/07/2010 16:33
FY10 NPAT before significant items fell 58% to $12m, consistent with last month’s update. With revenues heavily reliant on Australian...
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FY10 NPAT before significant items fell 58% to $12m, consistent with last month’s update. With revenues heavily reliant on Australian housing construction, the sharp decline in activity as deteriorating economic conditions sank revenues 10% and EBITA before significant items down 32% to $47m. FY11-12 pre-amortisation NPAT forecasts are reduced significantly to more conservative estimates of $27.9m and $30.1m. Our valuation is cut by 70c to $2.70. We downgrade our recommendation to Hold.
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MAp Airports Limited (MAP) Sydney Airport: solid 1H10 result 28/07/2010 09:21
Sydney Airport announced 1H10 result in line with expectations. Revenue was up 11.9% to $452.7m with EBITDA lifted 12.7% to...
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Sydney Airport announced 1H10 result in line with expectations. Revenue was up 11.9% to $452.7m with EBITDA lifted 12.7% to $367.2m. We expect strong growth in passenger number to be sustained and full benefits on the redevelopment of retail shops to flow through in 2H. As such, we are comfortable with our FY10 revenue and EBITDA estimates of $934m and $758m, representing growth of 10% and 10.5%. Our fair value of $2.75 for MAP remains unchanged. Hold.
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more Industrials reports Consumer Discretionary
Austar (AUN) First Impressions: Disappointing subscriber growth 29/07/2010 17:21
1H NPAT fell 49% from $35m to $18m. Higher interest expenses associated with the $20m investment in the AUN HD...
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1H NPAT fell 49% from $35m to $18m. Higher interest expenses associated with the $20m investment in the AUN HD platform distorts the comparability of the result. Profit before interest and tax increased 6% to $63m. Revenue increased 6% to $352m. Residential subscriber growth for 2Q10 increased 1.2% to 616k. ARPU increased 5% to $84.70. We revise down our subscriber growth assumptions which mean we lower our intrinsic value and downgrade our recommendation to Hold.
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Specialty Fashion (SFH) Result Preview 29/07/2010 15:54
We have consistently factored a tough 2H10 trading result into our numbers, so bearish feedback from other discretionary retailers over...
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We have consistently factored a tough 2H10 trading result into our numbers, so bearish feedback from other discretionary retailers over the past few months is no real surprise. SFH is very tight-lipped about 2H10 trading. Country Road (CTY) recently guided to a 15-20% fall in FY10 EBIT, which implies a 2H10 fall of around 35-40%, in line with our SFH implied numbers. We have revised our FY10 and FY11 forecasts lower. Despite the downgrades we retain a Speculative Buy on the stock.
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Wesfarmers Ltd (WES) Solid overall performance in 4Q and FY10 retail sales 26/07/2010 16:42
WES released details of 4Q and FY10 sales for its retail operations. In a challenging environment they are generally better...
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WES released details of 4Q and FY10 sales for its retail operations. In a challenging environment they are generally better than expected. Full year and 4Q10 figures compare to periods influenced by the government stimulus packages of November/December 2008 and May 2009. Sales were affected by a lower inflationary to deflationary environment across all retail operations. No change to NPAT estimates, fair value or price triggers. Recommendation downgraded to Hold due to price change.
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Health Care
Sonic Healthcare (SHL) US reports weak pathology volumes 29/07/2010 17:32
The US pathology industry is dominated by two companies, Quest Diagnostics and LabCorp. Quest’s 2Q profit rose 3.5% on lower...
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The US pathology industry is dominated by two companies, Quest Diagnostics and LabCorp. Quest’s 2Q profit rose 3.5% on lower costs, and revenue dropped 1.4%. US pathology volumes across the industry are under pressure mirroring what we see domestically. We still believe diagnostic testing volumes will increase as governments seek to invest in preventative healthcare initiatives to cut the cost of treating disease. An opportunity to pick up a market-leading business at a reasonable price.
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ResMed (RMD) Too popular for our liking 26/07/2010 11:17
RMD has proved itself over the last 15 years as an enduringly high growth business. An attractive feature of RMD...
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RMD has proved itself over the last 15 years as an enduringly high growth business. An attractive feature of RMD is a large untapped market. Obstructive sleep apnea (OSA) is the most common form of SDB. According to RMD, one in five adults has some form of OSA, with only 10% of these diagnosed in the US and a lower percentage in other regions. After a period of impressive growth due to successful new products, the share price has run well ahead of our valuation into the Reduce zone.
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more Health Care reports Financials
Insurance Australia Group (IAG) FY10 result supported by reserve releases; dividend too generous 30/07/2010 14:56
IAG pre-announced key details of its FY10 result. The insurance margin will be 7.0%, down marginally from 7.1% in FY09....
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IAG pre-announced key details of its FY10 result. The insurance margin will be 7.0%, down marginally from 7.1% in FY09. Gross written premium will be steady at $7.8bn. Reported NPAT will be $91m, down from $181m in FY09. We are less confident in management after the latest UK debacle, and the dividend policy is still not conservative enough. Both matters add to underlying volatility in earnings to confirm our longstanding caution on the stock and general advice to limit portfolio weightings.
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Mirvac Group (MGR) Take-over of WOT Accepted 29/07/2010 16:10
On 21 July WOT unitholders voted to accept the take-over offer made by MGR on 28 April 2010. The Offer...
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On 21 July WOT unitholders voted to accept the take-over offer made by MGR on 28 April 2010. The Offer for Westpac Office Trust (WOT) was priced at $0.86 per unit. The Offer was made in the form of a Scrip or Cash Option. WOT unitholders had until close of business on 21 July to return an Election Form nominating which option they wished to take-up otherwise they would automatically receive the Scrip Option. We have a Fair Market Value of $1.60 per unit and a Buy recommendation for this stock.
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Macquarie Group Limited (MQG) First Impressions: Subdued 1Q and cautious outlook for full year 30/07/2010 11:34
Weak market conditions in the quarter resulted in lower contributions from Macquarie Securities, Macquarie Capital and Fixed Income, Currencies and...
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Weak market conditions in the quarter resulted in lower contributions from Macquarie Securities, Macquarie Capital and Fixed Income, Currencies and Commodities. Corporate and Asset Finance, Macquarie Funds and Banking and Financial Services achieved higher contributions. We upgrade to Buy on recent share price weakness. Our forecasts are under review as is our valuation which is expected to be reduced moderately, however still within our Buy zone.
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QBE Insurance Group (QBE) Model not broken – patience required! 29/07/2010 10:35
1H10 NPAT is expected to be 40% below 1H09 levels of A$1.018bn suggesting a figure in the range A$600 -...
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1H10 NPAT is expected to be 40% below 1H09 levels of A$1.018bn suggesting a figure in the range A$600 - $620m. While disappointing, importantly there is nothing wrong with the underlying insurance business model which is reflected in a combined operating ratio of 89.7% and a solid insurance margin. The main factor causing the 40% slide in 1H NPAT is a US$414m fall in gross investment income from US$558m to US$144m. We have reduced our near term forecasts and valuation. We maintain a Buy.
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Westpac Bank (WBC) Home loan strategy to underpin long-term earnings growth 29/07/2010 14:22
WBC has been sold down heavily over the past three months due to market perceptions it is overexposed to the...
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WBC has been sold down heavily over the past three months due to market perceptions it is overexposed to the residential property market and the additional funding required to support its aggressive growth will over the long term continue to increase funding costs and pressure margins – a proposition we don’t agree with. Management is sound with a strong focus on existing businesses. We confirm our Accumulate recommendation and expect WBC to outperform its peers over the next 12-18 months.
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