Aegis Equities Research

Energy

Oil Search (OSH) Idle Cash Clips 1H10 02/09/2010 15:01
Adjusted 1H10 earnings rose 43% to US$51.0m. OSH earned next to nothing on its US$1.4bn cash at bank. We can't... + more Adjusted 1H10 earnings rose 43% to US$51.0m. OSH earned next to nothing on its US$1.4bn cash at bank. We can't but marvel at the foregone earnings potential. Aside from this, the result was close to expectations. Headline profit rose 49% to US$52.3m including a US$3.9m pre-tax gain from asset sales. First half oil sales were 8% higher than pcp but the chief profit driver was oil price, up 47% to US$76.30/bbl. The interim dividend of US2cps is lower than expected, equivalent to a 51% payout. - less

Roc Oil (ROC) Half Year Result – Between a ROC and a hard place 02/09/2010 10:53
ROC achieved its first profit since 1H05. Revenue of US$100m produced US$6.7m in NPAT. The result was boosted by a... + more ROC achieved its first profit since 1H05. Revenue of US$100m produced US$6.7m in NPAT. The result was boosted by a reduction in exploration and development (E&D) spending. We expect E&D spend to increase significantly in the second half. Cash flow was stronger than usual due to lower E&D spending. ROC now has a net cash position. ROC is suitable only for high risk tolerant investors. We move to Avoid. - less

Tap Oil (TAP) Losses continue 02/09/2010 12:43
TAP announced its 1H10 result with increased net losses of $17.9m. Exploration spend reduced net cash flows to just $6.2m,... + more TAP announced its 1H10 result with increased net losses of $17.9m. Exploration spend reduced net cash flows to just $6.2m, cash balances increased to $66m. TAP is about to embark on a 'major exploration campaign' which will consume all available cashflows. Exploration success is required to secure its future. TAP falls outside our core ASX200 focus and has become too speculative for us. We maintain coverage for a further three months pending termination in November. - less

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Materials

Minara Resources (MRE) 1H10 result in line 03/09/2010 10:07
Headline 1H10 NPAT of $39.7m was a marked improvement on the $3.1m loss in 1H09. Revenue increased 23% to $233.7m... + more Headline 1H10 NPAT of $39.7m was a marked improvement on the $3.1m loss in 1H09. Revenue increased 23% to $233.7m primarily driven by the higher nickel price. Production volumes declined 7% to 14,512t of nickel and 1,008t of cobalt. A 15% increase in C1 cash costs to US$5.76/lb took a little shine off. EBITDA rose from $9.0m to $78.6m with the margin up from 5% to 34%. Net operating cash flow was strong at $123.8m. - less

Panaust (PNA) 1H10 Result – Copper bottomed 03/09/2010 14:36
PNA announced its 1H10 results to 30 June. Phu Kham production reached 32,017 tonnes of copper in concentrate, up 34%... + more PNA announced its 1H10 results to 30 June. Phu Kham production reached 32,017 tonnes of copper in concentrate, up 34% on the pcp. Revenue climbed 63% to US$224m. Net profit was US$53m, up from a loss of US$18m. Operating cash flow of US$80m was used to retire US$34m of debt. FY10 EBITDA guidance was upgraded by around 19% to US$220m-US$240m. Phu Kham production guidance is now ‘over 63,000 tonnes’ of concentrate. - less

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Industrials

Auckland International Airport (AIA) Poised to deliver profit growth 03/09/2010 15:09
As a result of the recent merger with Morningstar, Aegis now provides research on AIA. AIA reported underlying NPAT of... + more As a result of the recent merger with Morningstar, Aegis now provides research on AIA. AIA reported underlying NPAT of NZ$105m. Revenue was down 2% and underlying EBITDA fell 1.1% to NZ$276m on the back of lower retail income. Management maintained a tight leash on operating costs in FY10 achieving a 3.4% reduction in expenses. Capex was at a multi year low of NZ$54.2m or around NZ$11m less than management’s original forecast. Dividend was maintained at NZ8.2cps, fully imputed for NZ investors. - less

ConnectEast (CEU) Good cost control 03/09/2010 14:54
A good FY10 result with EBITDA post maintenance provision doubling to $104.6m, beating expectations by 4% due to good control... + more A good FY10 result with EBITDA post maintenance provision doubling to $104.6m, beating expectations by 4% due to good control of operating costs which fell 8%. Traffic is ramping up well from low initial levels, growing 15.4% over the year. Volumes are below the latest independent expert’s projections but revenues are higher due to high commercial use. Gearing measured as net debt/EBITDA is 10x, reasonable for ramp-up phase. - less

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Consumer Discretionary

Fairfax Media (FXJ) Business realignment in progress 02/09/2010 11:42
Normalised NPAT is up 10% to $294m with EPS down 10% to 11.5cps. Dilutionary capital raising during the year went... + more Normalised NPAT is up 10% to $294m with EPS down 10% to 11.5cps. Dilutionary capital raising during the year went to reducing debt, with interest cover now at healthier levels of 4x. FY10 revenue is down 2% to $2.5bn with EBITDA up 7% to $639m. These annualised numbers hide the strong volatility in returns between the two halves. FXJ provided no guidance for FY11, saying ‘should current market trends continue, we would anticipate high single-digit earnings growth in the 1H’. - less

Tatts Group (TTS) FY10 Result: Growth prospects emerging amidst regulatory uncertainty 03/09/2010 12:40
TTS’ FY10 revenue of $3.3bn was up 2.6% on FY09. EBITDA and EBIT margins were held relatively flat while underlying... + more TTS’ FY10 revenue of $3.3bn was up 2.6% on FY09. EBITDA and EBIT margins were held relatively flat while underlying NPAT was 1% above pcp, 2% below our forecast and 1.6% above consensus. FY10 benefited from 3 months contribution from NSW Lotteries. The result was marred by a $140m impairment booked on Talarius in the UK and other one-off charges. The company declared a special dividend of 11.0cps, fully franked, rather than an ordinary final dividend due to the impairment charge. - less

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Consumer Staple

Patties Foods (PFL) Tasting a whole lot better! 02/09/2010 15:52
As a result of the recent merger with Morningstar, Aegis now provides research on PFL. Underlying NPAT increased 42% to... + more As a result of the recent merger with Morningstar, Aegis now provides research on PFL. Underlying NPAT increased 42% to $16.8m. New products, range extensions and new customers drove sales revenue 9.9% to $196.9m. PFL made large investments in new manufacturing lines and freezer warehouses, and while dragging margins lower during implementation, the benefits now drive EBIT margin up 200bps to 13.8%. A fully franked final dividend of 3.5c takes full year distributions to 6.5c. - less

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Australian Equity Strategy

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