Aegis Equities Research

Australian Equity Strategy

Strategy Australian Share Market Outlook 14/05/2012 12:49
Selected investment opportunities remain despite the market being only modestly undervalued.

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Energy

Origin Energy (ORG) Gas sale agreement with Santos (corrected) 16/05/2012 12:38
Origin Energy will supply 365 petajoules (PJ) of natural gas to the GLNG project for 10 years from 2015. The... + more Origin Energy will supply 365 petajoules (PJ) of natural gas to the GLNG project for 10 years from 2015. The agreement allows Origin to call back 1.8PJ of gas per year during periods of high east coast gas or electricity market demand. Origin will source gas from its 2,500PJ east coast portfolio of uncontracted reserves and third party supply agreements. - less

Caltex Aust (CTX) Changes and benefits but a while coming 15/05/2012 17:54
Refining operations continued to bleed in 1Q12 with EBIT losses of $60m, up from $39m in 1Q11. The Kurnell refinery... + more Refining operations continued to bleed in 1Q12 with EBIT losses of $60m, up from $39m in 1Q11. The Kurnell refinery is the chief culprit and is the focus of the ongoing Refinery Review. A decision on the long-term future of refinery operations is expected in 3Q. Group EBIT declined 7.9% from $124m to $117m with unaudited NPAT on a replacement cost of sales basis (RCOP) down 10.4% from $77m to $69m. - less

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Materials

Mirabela Nickel Limited (MBN) Capital raising lifeline 16/05/2012 16:06
Mirabela’s much anticipated capital raising finally arrived. A placement to US hedge fund Resource Capital Funds (RCF) raised AUD 20... + more Mirabela’s much anticipated capital raising finally arrived. A placement to US hedge fund Resource Capital Funds (RCF) raised AUD 20 million at AUD 0.40 a share, an 18% premium to the last close price of AUD 0.34. An 8 for 13 accelerated pro-rata non-renounceable entitlement offer will raise up to AUD 100 million at AUD 0.30 a share, a 12% discount to the last close price. Shareholders must hold shares on Friday 18 May 2012 to be eligible for the entitlement offer. - less

Incitec Pivot (IPL) 1H12 result: Explosives to the rescue 14/05/2012 21:28
1H12 adjusted NPAT fell 20% to $143.5m, just shy of our $146m forecast. The result was hurt by shutdown of... + more 1H12 adjusted NPAT fell 20% to $143.5m, just shy of our $146m forecast. The result was hurt by shutdown of the Mt Isa sulphuric acid plant and lower fertiliser prices. Partly offsetting this, the Dyno Nobel explosives business performed exceptionally well on the back of strong demand in Asia Pacific and improved performance in the US business. Despite the lower earnings, the dividend was maintained at 3.3cps signaling the directors’ confidence in the full year result. - less

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Industrials

CSR Limited (CSR) Macro headwinds continue to blow 17/05/2012 05:16
FY12 NPAT of $90.7m was well above our $76.5m estimate and $500,000 above FY11. The reason was a fall in... + more FY12 NPAT of $90.7m was well above our $76.5m estimate and $500,000 above FY11. The reason was a fall in tax expense from $41.8m to $23.2m, the rate down from 27% to 17.4% and well below earlier guidance of 28%. At the operating level the result was generally in line with our expectations – Trading revenue $1.802bn against $1.815bn; EBITDA $246.3m against $242.0m and EBIT $156.7m against $150m. Viridian was a disaster with an EBIT loss of $19.3m against our estimate of a $13.0m loss and a positive $3.6m in FY11. - less

Toll Holdings (TOL) Footwork, property, automotives and earnings downgrade 16/05/2012 16:57
TOL provided an earnings update, which includes write-downs on the Footwork Express (Japan) business, domestic property write-downs and the sale... + more TOL provided an earnings update, which includes write-downs on the Footwork Express (Japan) business, domestic property write-downs and the sale of an automotive business. The combined impact is a $148-$168m one-off post-tax charge against reported FY12 NPAT. A deteriorating domestic economic environment has resulted in TOL forecasting FY12 underlying EBIT of between $400-$420m, down 3.7%-8.3% on the prior year. - less

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Consumer Discretionary

News Corporation (NWS) Cable networks boost 3Q - update (corrected) 16/05/2012 17:49
The only negative news we heard on the earnings call was that a few of the company's smaller and less... + more The only negative news we heard on the earnings call was that a few of the company's smaller and less material segments are facing some headwinds. Specifically, the publishing units in Australia and the United Kingdom and its Sky Italia pay TV business are expected to post weak results in the near term. We estimate these businesses contribute less than 10% of operating income, excluding the U.S newspapers. - less

Billabong International (BBG) A new boss to re-vitalise and re-energise 16/05/2012 16:51
BBG appointed Launa Inman as Managing Director, she will replace outgoing CEO Derek O'Neill. Ms Inman spent two months from... + more BBG appointed Launa Inman as Managing Director, she will replace outgoing CEO Derek O'Neill. Ms Inman spent two months from February consulting to the board of BBG. Previously she was Managing Director of Target Australia, a position she held for seven years and earlier the Managing Director of Officeworks. Paul Naude currently the head of North America will take on the expanded role as President of the Americas. - less

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Consumer Staple

Coca-Cola Amatil (CCL) Wet summer slows growth 16/05/2012 15:50
CCL had a slower than expected start to the year with guidance for profit growth of 4-5% in 1H12. The... + more CCL had a slower than expected start to the year with guidance for profit growth of 4-5% in 1H12. The outlook for the core Australian beverages business is improving with an end to the weather affected summer trading period, continuing Project Zero initiatives and promotional activity in the lead up to the Olympics. While not material to earnings, we view beer distribution agreements in the South Pacific positively as relationships can be leveraged as CCL re-enters the Australian beer market late 2013. - less

Coca-Cola Amatil (CCL) Initial Impressions: Wet weather slows growth 15/05/2012 17:27
CCL had a slower than expected start to the year with guidance for profit growth of 4-5% in 1H12. The... + more CCL had a slower than expected start to the year with guidance for profit growth of 4-5% in 1H12. The core Australian business expects volumes to grow 1-2%, impacted by another cool, wet summer, broadly in line with our expectations. The soft economy is also taking a toll with weaker demand in key east coast holiday destinations. Pleasingly, the outlook is improving with an end to the weather affected summer trading period, continuing Project Zero initiatives and promotional activity in the lead up to the Olympics. - less

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