Aus Tin 20107559

Equities | Australia
24 January 2012
Daily Bulletin
In brief
A summary of todays research
2
Strategy & Economics

Economics Comment PPI, Q4 2011
Kieran Davies (+61 2 8259 5171) 3
Industrials
Australia Small/Mid Caps Sticking to familiar faces
Julian Guido (+61 2 8259 5838) 5
Resources
Metals & Mining Navigating the storm Sims Metal Management (A$14.78) Buy TP A$18.25 Nyet positive Mirabela Nickel (A$1.215) Buy TP& A$1.78 Financial turnaround pushes out Commodity Compendium Year of the Dragon Gung Hei Fat Choy!*
Lyndon Fagan (+61 2 8259 5870) 19
Todd Scott (+61 2 8259 5865)
33
Tom Sartor (+61 7 3334 4503) RBS Morgans Nick Moore (+44 20 7085 5470)
39
TP&
45
Global
Global Weekly Preview Focus on Eurogroup and Ecofin meetings Circuit Breaker Huge funds flow into China Global Action Pack
Jan Dubsky (+44 20 7085 9119) 49
Dylan Cheang (+65 6518 5936)
59
RBS Research
73
Database
Company financial forecasts Sector valuation aggregates Price performance
Thiva Nagaratnam (+61 2 8259 5373) 83 91 95
* Extract. For further details please refer to our website (http://research.rbsm.com/Research).
Reporting 24 JAN
Code GUD (Hold) NPAT (pcp) 26.0 (27.5) DPS (pcp) 28.0c (29.0c)
1H = interim, FY = full year Source: Company data, RBS forecasts
Other events
Company Event NCM Quarterly production PNA Quarterly production
= 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.
Produced by: RBS Equities (Australia) Limited ABN 84 002 768 701 AFS licence 240530 Important disclosures can be found in the Disclosures Appendix.
In brief Strategy & Economics

Economics Comment
Kieran Davies (+61 2 8259 5171) 3 The PPI was a little below expectations, with a dramatic supply-driven drop in food prices keeping broad-based strength elsewhere in check.
Industrials
Australia Small/Mid Caps
Julian Guido (+61 2 8259 5838) 5 Heading into reporting season, we retain a preference for either defensive businesses or cyclicals with good earnings visibility and supportive macro. Our initial 2012 top picks are SAI, DLX, BKN, ASL, EHL and PRG. While our preference is for defensive exposures, we are becoming increasingly optimistic on a recovery in CY12. Residual downside earnings risks means we think the switch into cyclicals is still too early, however, key candidates that should outperform when macro visibility improves include GWA, SMX, SKE, SGN.
Resources
Metals & Mining
Lyndon Fagan +61 2 8259 5870) 19 The issues from 2011 have not gone away. Concerns around slowing Chinese growth are still acute, while the EU debt crisis is far from resolved. In such an uncertain environment, our key picks for 2012 are quality miners with cheap valuations, strong balance sheets, production growth and operations well placed on the cost curve. We believe investors in these stocks will benefit in the event of a recovery, and be somewhat protected if the downturn worsens. We stay overweight gold and the diversifieds in the near term, and will look to increase exposure to the pure plays as we head into the middle of the year.
Sims Metal Management (A$14.78) Buy TP A$18.25
Todd Scott (+61 2 8259 5865)
33
Russia has decided to ban ferrous scrap exports to East Asia from 13 February. We estimate this could reduce regional supply by about 1Mtpa, roughly 5% of annual East Asian import volumes. We see this as another positive for SGM, which should stand to benefit from stronger volume demand and potentially higher scrap prices - Buy maintained.
Mirabela Nickel (A$1.215) Buy TP& A$1.78
Tom Sartor (+61 7 3334 4503)
39
MBN has largely delivered on its 7.2Mtpa production expansion. However, high costs still frustrate investors with unexpected contributors (higher fines/mine planning one-offs) prolonging MBN's financial turnaround. Management is attacking these where it can, but we now don't expect a material turnaround in profitability until 2H12. Nickel is not our favourite metal, however we do identify longer-term value for patient investors. MBN is also likely to figure as a potential M&A target should it prove that costs can be reigned in.
Commodity Compendium*
Nick Moore (+44 20 7085 5470)
45
Commodities have continued to rally, with most up 6-10% up on their year-end levels. Better-than-expected Chinese economic data prints and expectations of monetary policy easing in the country have helped the sector, as have good economic data from the United States. A data-heavy week just passed, with Thomson Reuters GFMS publishing its Gold Survey Update 2, confirming strong buying by central banks, and the IEA releasing its monthly Oil Market Report, showing Q411 demand fell for the first time since the banking crisis of 08/09.
Global
Global Weekly Preview
Jan Dubsky (+44 20 7085 9119) 49 The week begins with the focus on the EcoFin and Eurogroup meetings on Monday and Tuesday respectively where the Greek PSI deal is going to be high on the agenda.
Circuit Breaker
Dylan Cheang (+65 6518 5936)
59
Asia ex-Japan registered its second consecutive sessions of net inflows this week as sentiments continue to rebound on the back of positive US/Asian macro data and the successful bond auction by Spain and France. Investors' enthusiasm on China was particularly pronounced as the market again garnered a large proportion of regional flows.
Global Action Pack

Monday 23 January 2012
RBS Research
73
* Extract. For further details please refer to our website (http://research.rbsm.com/Research).
Daily Bulletin | 24 January 2012 Page 2 Page 2
Australia/NZ Strategy and Economics

23 January 2012
Australia PPI, Q4 2011

Market reaction*
Before
AUD ASX-200 30D cash futures 90D BB futures 3Y bond futures 10Y bond futures Odds 25bp move at next RBA mtg Change in cash rate priced for next 12 months 1.0465 4,232 4.10 4.14 3.25 3.92
-80% -101bp
After
1.0469 4,230 4.10 4.14 3.26 3.93
-80% -101bp
A massive drop in food prices kept broad strength in check

The PPI was a little below expectations, with a dramatic supply-driven drop in food prices keeping broad-based strength elsewhere in check. Kieran Davies and Felicity Emmett
Key facts
Unit SoP PPI % qoq Previous +0.6 Revised .. RBS +0.4 Market +0.4 Actual +0.3
Source: ABS, Bloomberg, Dow Jones, RBS and Reuters
* 15 minutes before and after the release Futures yields are from the nearest contract Source: Bloomberg and RBS
The PPI continued to slow, up 0.3% in Q4.

SoP PPI final stage, all goods
% qoq
Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 0.3 1.3 0.1 1.2 0.8 0.6 0.3
% yoy
1.0 2.2 2.7 2.9 3.4 2.7 2.9
The headline PPI grew at a slower rate in Q4, up 0.3% (RBS & market: +0.4%) after a 0.6% rise in Q3. Mindful that there is some seasonality in the raw data, this saw quarterly inflation ease through the course of 2011 after the PPI started the year with a strong 1.2% rise. The Q4 result was the smallest increase since the PPI rose by 0.1% in Q4 2010. Annual inflation picked up slightly, increasing from 2.7% to 2.9%. A dramatic drop in food prices masked widespread strength in the PPI. The PPI showed broad strength that was only kept in check by sharply lower food prices. The weakness in food prices was driven by lower fruit and vegetable prices, which took the most off the PPI (-0.4pp). The sharp fall in fruit and vegetable prices reflected supply returning to normal after the severe flooding in Queensland earlier in 2011. Meat and flour prices were also lower (less than -0.1pp each). Most other prices added to the PPI, including industrial machinery (0.1pp), other manufacturing (0.1pp), petrol (0.1pp), motor vehicles (0.1pp), clothing (0.1pp), and fishing (0.1pp). The strength in some of these categories particularly clothing, motor vehicles and electronics is unusual and suggests that the high dollar failed to hold down imported prices in the quarter (the exchange rate fell from 105 US cents in Q3 to 101 cents in Q4, but was above parity all through 2011). The core PPI rose a strong 0.8%. The core PPI, measured by excluding food and energy, rose by 0.8% after a flat result for Q3. This was the largest rise in the core PPI since Q3 2010. Annual core inflation picked up from 0.6% to 1.6%. Food prices fell by 2.5%, which was the largest fall in the more than twenty years for which we have data (prices were up 4.7% over the preceding three flood-affected quarters). Energy prices rose by 0.8% after a 5.1% rise in Q3. We have lowered our headline CPI forecast to -0.1%, with the forecast for underlying unchanged at 0.6%.
Source: ABS and RBS
Core SoP PPI final stage, excluding food and energy

% qoq
Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 0.9 0.3 0.8 -0.2 0.3 0.0 0.8
% yoy
-1.7 -0.4 1.5 1.7 1.1 0.6 1.6
Source: ABS and RBS
Analysts
Kieran Davies +61 2 8259 5171
Felicity Emmett +61 2 8259 5835
After looking at the detail of the PPI, we have lowered our forecast for the unadjusted CPI from flat to -0.1% (market: +0.2%; implied RBA forecast: +0.2 to 0.3%), with the risk of a 0.2% decline. This revision was driven by a larger drop in fruit and vegetable prices than the already big decline we had factored in, as well as a smaller rebound in new house prices than we had anticipated (while there were unusual rises in many PPI categories, these generally do not track across to their CPI equivalents). Our forecast for the seasonally adjusted CPI is unchanged at 0.2%. Measuring underlying inflation
Important disclosures can be found on the last page of this publication.
Page 3
www.rbsm.com/strategy Bloomberg: RBSR<GO>
as the average of the weighted median CPI, the trimmed mean CPI and the CPI exvolatile items, we still expect a 0.6% increase in Q4 (market and implied RBA forecast: +0.6%), with some chance of a revision to Q3s estimates of the weighted median and trimmed mean CPIs. If this forecast proves accurate, then the Reserve Bank is likely to keep rates steady in February, barring a significant worsening in the European crisis.
PPI and core PPI

The headline PPI slowed in Q4 on dramatically lower food prices
Core PPI (%)
Headline PPI (%)
6 Annual growth
6 Annual growth 4
4
2
2
0
-2
-2
Quarterly growth
-4
Quarterly growth
-4 90 95 00 05 10
-6 90 95 00 05 10
10 8
Annual inflation (% yoy)
8 6 CPI 4 2 0 -2
Annual inflation (% yoy) Underlying CPI inflation
6 4 2 0 -2 -4 90 95 00 05 10
Core PPI PPI -4 -6 90 95 00 05 10
Source: ABS, RBA and RBS
Australia PPI, Q4 2011 Page 4 Page 2
Equities | Australia
23 January 2012
Australia Small/Mid Caps

Sticking to familiar faces
Heading into reporting season, we retain a preference for either defensive businesses or cyclicals with good earnings visibility and supportive macro. Our initial 2012 top picks are SAI, DLX, BKN, ASL, EHL and PRG. While our preference is for defensive exposures, we are becoming increasingly optimistic on a recovery in CY12. Residual downside earnings risks means we think the switch into cyclicals is still too early, however, key candidates that should outperform when macro visibility improves include GWA, SMX, SKE, SGN.
Australian Small Caps top picks
Company Bradken Emeco Holdings Programmed Grp Ausdrill SAI Global DuluxGroup Code BKN EHL PRG ASL SAI DLX Year end Jun Jun Mar Jun Jun Sep Rec Buy Buy Buy Buy Buy Buy Share price (A$) 7.55 1.00 2.06 3.38 4.83 2.95 Target price (A$) 9.85 1.23 2.34 3.80 5.34 3.25 Upside/ downside 30.5% 22.9% 13.7% 12.3% 10.6% 10.2% EPS 1fcst 72.3 10.9 26.5 32.1 33.3 21.7 PE (x) 1fcst 10.4 9.2 7.8 10.9 14.5 13.6 EPS 2fcst 84.0 12.4 30.3 38.5 39.0 23.1 PE (x) 2fcst 9.0 8.1 6.8 8.9 12.4 12.8
Priced at close of business 23 January 2012. Source: RBS forecasts
Down year but Industrials did better than Resources Performance in CY11 was weak with the Small Ords (down 24%) underperforming the All Ords (down 16%) by 8%. In contrast to CY10, underperformance was most pronounced in the Small Resources Index (down 32%) with the Small Industrials (down 17%) in line with the All Ords Index. From a valuation standpoint the Small Ords one-year forward PE is trading at an 11% premium to the All Ords PE (Datastream) vs the eight year average of in line. Yet the overall market continues to trade below its long-term average one-year forward PE. 1H12 preview is the downgrade cycle over? 1H12 has seen significant downgrade activity across our coverage universe (ex-mining services). Sectors that have experienced much of the downgrade pain range from housing plays (PPC, ALS), retail exposures (GUD, TGR) to businesses leveraged to corporate discretionary spend (SMX, OKN, SGN, HIL). In some cases, stocks are looking cheap relative to historical averages and appear attractive on the surface. However, given ongoing macro headwinds and the threat of rising unemployment, we are not convinced the downgrade cycle is complete. Our preference for defensive and earnings certainty remains Near term, we maintain preference for stocks that are either defensive by nature or cyclicals with earnings certainty and a supportive macro. SAI (target price upgraded) remains our standout defensive play, and despite relatively strong performance in 2012, valuation looks reasonable given both track record and market risk appetite. We continue to prefer DLX (target price upgraded) in the housing/consumer space given the resilience of its business model to a range of macro challenges. Within mining services (where we see sector-wide earnings upside), we prefer BKN given its evolving off-shoring strategy, and ASL as a pure-play exposure to buoyant production drilling activity. but warming up for rotation into growth
Analysts
Julian Guido +61 2 8259 5838 [email protected] Matthew Nicholas +61 2 8259 6168 [email protected] Brewin Kwong +61 2 8259 6891 [email protected]
While our preference remains for defensive exposures, we are becoming more optimistic on a recovery in CY12 based on greater European cooperation, a soft landing in China, a US recovery which seems to be gaining traction and continued capex spend and RBA support in Australia. Downside risk to short-term consensus earnings means the switch into cyclicals is still too early, in our view, however we believe investors need to start preparing for sector rotation. With this in mind we highlight key candidates in cyclical sectors that should outperform when visibility on macro factors improves: Housing (GWA), IT (SMX), Recruitment (SKE), Ad Spend (SGN). Produced by: RBS Equities (Australia) Limited ABN 84 002 768 701 AFS licence 240530 Page 5 Important disclosures can be found in the Disclosures Appendix.
Small Cap 2011 performance

The Small Ords (-24% in CY11) has underperformed the All Ords by 8% in CY11
Table 1 : Small-cap vs large-cap performance
1 week Small Ordinaries Small Industrials Small Resources All Ordinaries S&P/ASX 300 Industrials S&P/ASX 300 Resources Relative performance (bps) Small Ords v All Ords Small Ind. v ASX300 Ind. Small Res. v ASX300 Res. Small Ind v Small Res -2.4% -1.9% -3.2% -1.9% -1.7% -2.7% 1 month -4.6% -2.8% -7.1% -1.8% -0.3% -4.7% 3 months -1.1% -0.8% -1.4% 1.0% 2.7% -2.5% 6 months -13.7% -12.7% -15.0% -11.8% -7.5% -21.7% CY11 -23.8% -17.0% -32.1% -15.9% -9.9% -27.1% 2012 YTD 5.8% 3.7% 9.3% 4.1% 2.1% 8.7%
-50 -24 -48 126
-283 -248 -250 434
-210 -353 107 58
-196 -521 668 227
-794 -708 -493 1507
171 157 62 -559

Source: IRESS
with the Small Resources suffering a significant drop in CY11 of 32%
Chart 1 : Sector performance in 2011

110
100 90
80
70
60 Jan 11
Feb 11
Mar 11
Apr 11
May 11
Jun 11
Jul 11
Aug 11
Sep 11
Oct 11
Nov 11
Dec 11
All Ords
Small Ords
Small Industrials
Small Resources
Source: IRESS
The Small Ords one-year-forward PE is 12x vs the S&P/ASX 100 at 10.7x (source: Datastream)
Chart 2 : Small-cap vs large-cap PE (x)

18 17 16
Although RBS FY12 earnings estimates yield a Small Ords PE of 13.1x and an S&P/ASX 100 PE of 11.6x
15 14 13 12 11 10 9 8 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Small Ords Index
S&P ASX 100 Index

Source: Datastream
Since the beginning of CY2011, the gap between small and large caps has crept higher with a PE point differential of 0.2x at the beginning of CY2011, and finishing up with a PE point differential of 1.24x
Australia Small/Mid Caps | 23 January 2012 Page 2 Page 6
Small Ords one-year forward PE relative is 111.6% vs the eight year average of 99.7%
Chart 3 : Small-cap PE relative

140% 130% 120% 110% 100% 90% 80% 70% Jan-04
Jan-05
Jan-06 Average
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Small Ords PE rel
Source: Datastream
Yet the overall market continues to trade below its long-term average one-year forward PE
Chart 4 : Australian market (All Ords) PE (x)

20 18 16 14 12 10 8 6 Dec 91
Dec 93
Dec 95
Dec 97
Dec 99 +1.5 SD
Dec 01 -1.5 SD
Dec 03
Dec 05
Dec 07
Dec 09
Dec 11
Market PE
Average
Source: Datastream
Table 2 : 2011 stocks a year in review

Rank Best Stocks 1 2 3 1 2 3 Small Industrials SIP MSB SPL HST GNS BBG + 99.1% + 47.5% + 36.5% -93.3% -80.0% -78.3% Small Resources FMS AUT SSN WEC PLA ERA + 86.7% + 51.3% + 47.7% -89.0% -87.1% -83.4% Small Ords SIP FMS AUT HST WEC PLA + 99.1% + 86.7% + 51.3% -93.3% -88.9% -87.1% Small Ords Attribution (bp) AUT BPT RRL IGO WEC KCN + 11.58 + 9.91 + 8.93 -18.84 -18.82 -16.31
Worst Stocks
Mentioned companies: Sigma Pharmaceutical (SIP), Mesoblast (MSB), Starpharma (SPL), Hastie Group (HST), Gunns Limited (GNS), Billabong (BBG), Flinders Mines (FMS), Aurora Oil & Gas (AUT), Samson Oil & Gas (SSN), White Energy Company (WEC), Platinum Australia (PLA), Energy Resources of Australia (ERA), Beach Energy Ltd (BPT), Regis Resources Ltd (RRL), Independence Group NL (IGO), and Kingsgate Consolidated Ltd (KCN) Source: IRESS
1H12 reporting season themes to focus on

Small cap industrials a microcosm of a two-speed economy - within our universe, we expect the strong results, positive outlook statements and upwards forecast revisions to be largely confined to those businesses with material exposure to the resources sector. Outside this select group, we expect organic top-line growth to be anaemic, with profit growth driven by further cost out initiatives (mainly headcount) in response to the weak demand environment. Retail reflective of heightened consumer caution - Given the scale of downgrades/profit warnings in this sector during the half (eg, BBG, JBH, KMD), stocks with exposure to the domestic consumer will reflect this impact at the upcoming results, whether it be top line headwinds (GUD) or margin pressures (TGR). We expect that even businesses with niche positions and solid track records (eg, ARP) will show weaker top-line growth than historical averages. Of focus will be any early indications of demand recovery following the RBA's rate cuts late in the half, although concerns over rising unemployment are likely to temper any optimism. Housing weak, but 2Q momentum key - the difficult environment for companies leveraged to the housing space has been reflected through a range of cautious trading updates throughout the half (GWA, ALS and, in particular, PPC). Whilst expectations have been set low for the most recent half, similar to the retail space, focus will centre on outlook statements and management's view on the initial impact of consecutive interest rate cuts on aggregate demand (noting that each of the companies mentioned above have exposure to the housing cycle at different stages). Mining Services the only bright spot - we expect a strong set of results across our coverage universe, reflecting a solid operating environment for those exposed to all facets of the mining lifecycle - exploration, mine development/capex and finally, production. Notwithstanding positive trading updates in 2Q12, we see scope for further upgrades in ASL and note yesterdays prerelease confirming a particularly strong 1H for IMD. Even businesses where we expect meaningful skews to the 2H (BKN, EHL) will not be unduly punished given that the drivers of a stronger 2H have been well articulated, and, equally important, the cycle is working in their favour. Whilst concerns around China/global macro have resulted in subdued multiples for BKN, EHL, ASL and IMD, providing commodity prices remain at existing levels (ie well above average global cash costs) and mining balance sheets strong, earnings momentum for the mining services sector is likely to continue. IT reflective of corporate budgetary pressures - despite cuts to our forecasts in 2Q12 and share price declines in the corresponding period, we remain cautious on the IT names (SMX, OKN, DWS) heading into reporting season. Whilst we had cited projected deferrals behind our initial downgrades, in an environment of cautious corporate spend, the risk exists that these deferrals turn into cancellations and the anticipated recovery is pushed out further. Against a backdrop of stocks trading below historical multiples, we note that these businesses have all traded at consistent discounts to market in previous downturns and remain cautious given ongoing earnings risks. Discretionary business spend appears weak right across the board - whilst we have seen evidence across our coverage universe for 12 months of subdued corporate discretionary spend, it would appear this took another leg down in 2Q12. The list of companies with some degree of exposure to this space is significant, however names such as HST, HIL, GUD (via its Dexion business), PRG, SGN stand out. Furthermore, the extent of the downturn in business confidence is such that companies which provide services which will result in a long term benefit to the client, however involve an upfront investment (TWO, IT Services), will also show weakness in these areas. Recruiters at the forefront, however some better positioned than others - in an environment of subdued corporate confidence, job shedding has been a feature of the domestic (non-resources) economy throughout the half. As per recent updates, we expect very weak
results from those businesses exposed to white collar recruitment (TWO, CND), with TWO particularly impacted given its dependence on permanent hires and, specifically, cost blowouts in its outsourcing arm. Across our universe of recruiters, SKE looks best positioned given its overweight exposure to mining/oil & gas - markets where there is a significant labour shortage and high wage inflation. Whilst SKE is not totally immune to subdued labour markets given its other exposures, the added benefits of cost-out provides us increased confidence heading into the 1H result. Balance sheets in good shape - relative to the previous GFC-related downturn, corporate balance sheets remain extremely healthy. Even companies with challenging macro conditions, in the main, run conservative balance sheets (SMX, GUD, HIL, ALS, TWO, OKN, ARP) - we believe this has two implications. Firstly, given subdued asset values, acquisitions are likely to be a core strategy in the medium term (especially in an environment of soft top line organic growth). Secondly, despite potentially soft 1H results, we see scope for higher payout ratios as companies seek to reward shareholders (or alternatively renew buybacks in the case of RKN, SKE and SGN).
Table 3 : RBS ex-100 1H12 earnings preview
Date Analyst 1H11 sales (A$m) 300.1 475.6 535.1 90.1 147.9 1H11 NPAT (norm) A$m 27.5 10.7 38.2 15.7 6.0 1H11 EPS (c) 40.3c 11.4c 26.9c 11.8c 4.2c 1H11 1H12 DPS sales (c) (A$m) 29.0c 1.5c 18.5c 8.0c 0.0c 302.0 272.0 641.7 93.5 155.0 1H12 NPAT (norm) (A$m) 25.5 7.5 46.5 18.1 2.1 1H12 EPS (c) 36.8c 8.0c 27.9c 13.6c 1.5c 1H12 DPS (c) 28.0c 1.5c 21.0c 8.5c 0.0c FY12 EPS (c) 67.2c 14.8c 72.2c 6.9c 4.4c FY12 DPS (c) 61.0c 8.5c 45.0c 5.0c 2.0c Our view
GUD ALS BKN RKN* TWO
24 Jan 25 Jan 7 Feb 7 Feb 8 Feb
Nicholas Guido Nicholas Guido Nicholas
HIL DWS BOL
13 Feb 13 Feb 14 Feb
Nicholas Guido Nicholas
558.5 48.5 171.0
14.8 9.0 5.1
6.0c 6.8c 1.1c
5.5c 5.0c 0.0c
543.1 52.9 173.8
14.4 9.4 7.7
5.9c 7.1c 1.7c
5.0c 5.0c 0.0c
11.0c 14.4c 3.7c
10.0c 11.0c 0.0c
GWA OKN SAI SGN* IMD
14 Feb 14 Feb 14 Feb 14 Feb 20 Feb
Guido Guido Guido Nicholas Nicholas
368.2 90.3 208.6 304.1 95.9
33.2 8.7 24.5 38.7 13.1
11.0c 9.2c 12.9c 10.8c 6.6c
9.5c 3.5c 6.3c 6.5c 1.8c
321.0 89.7 205.0 317.5 134.0
25.9 7.3 26.4 40.6 23.3
8.6c 7.7c 13.2c 11.4c 11.4c
9.5c 4.5c 7.3c 7.4c 2.5c
18.8c 16.8c 33.3c 6.6c 23.1c
18.0c 10.5c 16.3c 4.4c 5.5c
EHL
21 Feb
Nicholas
253.6
29.6
4.7c
2.0c
270.0
28.3
4.5c
2.5c
10.9c
6.0c
TGR SKE SMX PPC HST ARP ASL
21 Feb 22 Feb 22 Feb 23 Feb 29 Feb tba tba
Nicholas Guido Guido Nicholas Guido Nicholas Nicholas
117.7 936.0 145.9 98.7 900.5 130.2 411.8
10.3 13.5 15.2 22.2 14.8 18.0 38.5
7.1c 7.1c 22.5c 7.3c 6.2c 24.8c 14.2c
0.0c 0.0c 13.5c 4.0c 0.0c 10.0c 5.5c
124.0 932.0 162.5 43.3 900.0 134.0 505.9
11.1 21.7 14.8 6.0 -2.6 18.4 50.6
7.6c 9.3c 21.8c 1.9c -0.2c 25.4c 16.7c
2.5c 0.0c 14.0c 0.0c 0.0c 10.5c 6.5c
16.3c 18.3c 46.4c 6.3c 1.7c 58.0c 34.2c
5.5c 7.0c 31.5c 3.5c 0.0c 26.5c 14.0c
TSM*
tba
Nicholas
42.1
8.9
8.5c
3.5c
47.3
8.7
6.7c
3.5c
4.0c
3.5c
Expect subdued result reflecting tough retail climate and cool east coast weather RBS within weak 1H12 guidance range. Negative risk to consensus 2H12 earnings Expect a solid initial contribution from new acquisitions. Key focus will be on order book update. Another solid result expected mostly driven by Professional Div. Weak result expected in line with December guidance. Focus will be on outlook for Managed Services margins Weak result, highlighted by ongoing steel difficulties and subdued corporate capex spend DWS should deliver growth in 1H12 above peers SMX and OKN. Expect a much improved result, following a solid 2Q update and a relatively uninterrupted 2Q in key coal regions RBS at the bottom end of 1H EBIT guidance (i.e down 5-10%). Looking for weak 1H (EBITDA -15%) on client deferral. Still -ve risk on 2H12. Expect the usual 45/65 1H/2H split which will drive 8% NPAT growth in 1H12. Expect a result at the bottom end of management's 5-10% guidance range Expect a very strong 1H result. Key focus on outlook commentary and the speed of activity post the Christmas slowdown. Forecast a 40/60 split at NPAT level, with an update on deployment of new Canadian kit important for confidence on 2H expectations First half to be impacted by price declines in export markets. Margins to come under focus again Strong result expected driven by lower D&A, Interest and cost savings. Looking for flat 1H EBITDA (impacted by NSW govt. deferral.) Still -ve risk on 2H12. Weak result already guided to. Focus will be on any improvement in sentiment post 2 RBA rate cuts Messy result expected given restructuring and writedowns - Forecast risk is high. Expect 1H growth to be constrained by patchy macro and disruption to car sales from Thai floods Management have recently guidance to A$48-50m NPAT. Look for any update on expansion into underground Key focus will be on the rollout and impact of new funding model
* Dec year-end companies Source: RBS forecasts/opinion
Bradken
Buy recommendation, TP A$9.85
Analyst Matthew Nicholas Bradken is a leading mining and industrial products manufacturer and supplier specialising in consumable cast steel products to the Australian resources industry, with a long operating history dating back to the 1920s. At present, Bradken consists of five operating divisions (Mining Consumables, Rail, Industrial, Power & Cement and Engineered Products), which are largely grouped based on the customer industry profile. Key reasons supporting the Buy call Various positive operational metrics we note that: 1) Bradken is overweight consumable products (about 50% of sales) and thus leveraged to stable production volume trends; 2) it offers direct exposure to recovering US-based OEMs, and 3) longer term, there is a positive outlook for the globalisation of its consumables business underpinned by the new Chinese foundry. Margin upside from China expansion post completion, the Chinese foundry will account for ~35% of BKNs global capacity. With the cost of Chinese manufacturing (particularly for GET) c30% below existing options, we believe this will leave BKN as the lowest-cost producer of GET worldwide and facilitate significant gross margin expansion once fully functional. Short-term ESCO uncertainty presents opportunity we believe concerns around the upcoming ESCO licence transition have been overplayed. In addition, the key upside to the expiry of BKNs ESCO licence is BKNs ability to sell its own GET range in offshore markets. Only minor penetration in major international mining markets should, in the medium term, more than offset the short-term impact of local market share losses. Valuation metrics we believe the stock offers value at FY12F PE of 10.3x, or a discount to Mining Services peers, despite FY12F earnings growth being somewhat constrained by the one-off impacts of the ESCO licence. Key investment risks Threat of cheaper Asian imports like many other Australian industrial manufacturers, Bradken faces some longer-term structural threats from cheaper Asian imports (which impacted Rail in 2H11). Reliance on lumpy rail contracts a major driver (about 70%) of rail divisional sales and gross margins come from large wagon manufacturing contracts which can be described as lumpy (about A$100m at a time) with sometimes unpredictable timing. Acquisition/integration risk One of Bradkens areas of future growth will come from acquisitions (eg, Almac) which generally involve some level of financial and integration risk. ESCO licence from 30 June, 2011, Bradken will no longer own the licence to manufacture and distribute ESCOs Ground Engaging Tools. Whilst we believe the initial downside from this license loss will be modest, the transition is not without near-term risk.
Emeco Holdings
Analyst Matthew Nicholas Emeco is a leading Australian based heavy earth moving equipment business that mostly provides rental services to mining customers in addition to providing maintenance and service operations. The company has 900+ pieces of equipment in its rental fleet and operations in Australia, Indonesia and Canada. Recent restructuring has led to the closure/downsizing of EHLs US (Appalachian coal market), European and certain pockets of the Australian business (Victorian civil rental, sales and parts). Key reasons supporting the Buy call Major progress in reconfiguring fleet the combination of: 1) disposing 245 pieces of underperforming civil assets, and 2) the purchase of 39 larger assets (mainly 190t and 240t trucks) has accelerated the repositioning of the asset fleet to markets with stronger fundamentals. EHL strategically in a sound position given this redeployment of capital, over 90% of EHLs invested fleet capital is directly exposed to mining markets. Furthermore, the majority of this exposure (75%) represents equipment expected to be deployed into core production and overburden, which is generally more predictable new mine development or construction. In addition, whilst commodity exposure is well diversified, we note exposure to bulk commodities (47% of 1H11 sales). Recent capex confirms FY12 growth the confirmation of committed orders for delivery in FY12F positions EHL well to capitalise on the strong outlook in its markets over the next 3 years. We see: 1) increased utilisation of existing kit, 2) the contribution of recently purchase kit, and 3) potential price rises given ongoing market tightness. Tightening OEM market given the sharp recovery in mining markets, the lead time to purchase equipment has continued to increase. We see this positive on two fronts: 1) increases the attractiveness of the rental option to the end-customer (providing EHL can supply the equipment in a more timely manner), 2) increases EHLs bargaining power, giving the company the opportunity to obtain more favourable contract terms. Undemanding valuation given the outlook in EHLs key markets and a successful asset redeployment strategy, we regard the current valuation (FY12F PE of 9.2x) as attractive at this stage of the cycle. Key investment risks Mining production volumes given an overweight exposure to mining volumes, a downturn in these markets (impacting customer profitability) would likely cause a medium-term decline in utilisation. Weather adverse weather conditions have historically impacted activity levels and have the potential to provide a one-off impact, however we note an increasing proportion of minimum usage terms for EHLs fleet provides downside protection.
Programmed Maintenance Group

Analyst Julian Guido Programmed Maintenance is a leading provider of staffing, maintenance and project services in Australia. The business is separated into three divisions, Property & Infrastructure (facilities management, painting, and KLM), Resources & Industrial (Total Marine Services and Construction & Maintenance), and Workforce (providing staffing solutions). Employing more than 10,000 employees and over 100 offices around Australia and NZ, PRGs competitive advantages lie in its ability to recruit, deploy and manage a large skilled workforce (over 30,000 people p.a), possessing over 5,000 contracts and exposure to a wide range of industry sectors. Key reasons supporting the Buy call Leverage to WA resources boom beyond FY12, PRGs positive growth trajectory stems from the significant opportunities for the Resources division (37% of 1H12 EBITA), specifically, marine services supporting offshore oil and gas development. Of particular note, with the Gorgon contract set to commence in Dec 2011, we expect to see incremental EBITA gains in 2H12 (+27.1% on pcp) and FY13 (+17.4% on pcp). New cost reduction initiatives flowing through although the property services division is currently experiencing tough trading conditions, both cost retention strategies and the effect of the new programmes have been profound in supporting PRGs performance. To quantify the magnitude of these initiatives, 1H12 EBITA was up 46% and NPAT up 24% on the pcp. Management credibility on the mend with the 1H12 result, management has continued the trend from the FY11 result in terms of restoring credibility. Initiating cost reduction measures, introducing new maintenance programmes, getting the Gorgon contract off its feet, and winning a significant contract with the WA Water Corporation are only but a few initiatives that will reap benefits from FY12 and beyond. Successful re-fi in early October, PRG successfully refinanced its lending facilities with WBC and NAB which were due to expire in October 2012. The total size of the new A$250m facility is broadly unchanged, but the structure now consists of three tranches, a working capital facility of A$70m (rolling one year term); 2) a revolving debt facility of A$120m (three year term); and 3) a bank guarantee facility of A$60m (rolling one year term). Importantly, overall funding costs are on more favourable terms with benefits to be seen in 2H12. Attractive valuation sitting at 8.0x FY12F PE (vs. RBS Small Industrials of 12.0x), we see valuation as appealing. Key investment risks The key risks to our target price for PRG include: 1) fluctuations in the levels of discretionary capex spend in Australia and New Zealand (particularly the Property Services division); 2) employment demand but mitigated by PRGs diligent approach to contract bidding and executing on contracts which provide sufficient margin; 3) potential delays at Gorgon the risk of contract slippage is ever present with PRGs work originally slated to start in Dec 2010 only starting in Dec 2011; 4) a deterioration in the resources/mining industries; and 5) acquisition risk.
Ausdrill Limited
Analyst Matthew Nicholas Ausdrill (ASL) is a diversified mining services company with operations in Australia and various African nations including Mali, Ghana, Zambia and Tanzania. Services provided include drill and blast, grade control, load and haul, equipment hire and a limited supply of manufactured goods (eg, drill bits, consumables and light weight truck trays). The company sources 55% of its earnings from Australian contract mining services, 34% from the African mining services business, with manufacturing and supply/logistics accounting for the remaining 11%. Key reasons supporting the Buy call Exposure to high growth commodities with an estimated 70% of ASLs revenues leveraged to iron ore and gold, we anticipate material growth in the production of these commodities over the next five years. Moreover, we expect ASLs revenues to grow in line with increased production levels from contract wins and further penetration into a high-growth African gold market. Exposure largely geared to production 65% of ASLs revenues are directly sourced from drill and blast activity in the production process, rather than the less predictable exploration market. As a consequence, we believe that ASL is well positioned to weather potential commodity price volatility. Given the order book, guidance may be conservative considering the sharp growth in work-inhand, guidance for A$1bn of revenue (up 20% on pcp) seems potentially conservative (as does commentary for flat margins given the costs encountered in the FY11 result). That said, we set our initial forecasts in line with guidance given: 1) labour cost pressures are rising, and while rise and fall provisions exist in most contracts, there may be some lag between the two effects, which may constrain margin growth, and 2) equipment lead times are not shortening, and delays could potentially cause execution issues. Undemanding valuation given risks ASL currently trades on an undemanding FY12F PE of 10.5x, a discount to both the RBS Small Industrials (12.0x) and its Mining Services comparables. We consider this as an attractive entry point given: 1) ASL has less earnings risk than the sector, 2) we see strong growth over the next three to five years, and 3) a healthy balance sheet. Key investment risks A downturn in commodity markets may not necessarily affect ASLs production-centred operations, but will have an impact on sentiment in the mining services sector. Labour pressures these pressures relate more to the companys ability to source and retain skilled labour, rather than cost pressures, as increases in labour costs are passed through to end clients. Integration risk following a successful capital raising recently, ASL possesses a very strong balance sheet and as a result, acquisitions are now a distinct possibility. While we see this as a positive opportunity, we cannot discount integration risk, particularly for larger purchases.
SAI Global
Analyst Julian Guido SAI Global (SAI) is a unique services provider of business standards (technical business guides and codes of practice) and related services. The company operates three integrated business lines comprising: 1) Information Services Publishing & distribution of standards and technical information; 2) Certification (auditing) and training services; and 3) Electronic compliance-based training services. Key reasons supporting the Buy call Unique defensive and growth qualities a high portion of ongoing subscribers in both business publishing & compliance training and the long-term nature of contracts within certification generate high annual recurring revenue streams. Given the remainder is subject to high amounts of non-discretionary spend (eg, regulatory demand), we believe SAI should deliver despite macro-economic uncertainty. SAIs publishing and licence agreement with Standards Australia ensures its monopoly on the global distribution and publishing of all Australian standards. High margin with low capital requirements SAI generates robust profits with EBITDA margins of 20%. Cash flow generation is strong with low ongoing capex requirements besides that allocated to expansion. Positive outlook despite volatile markets management is realistic in its assessment of stalling major economies, however understandably has more confidence than most given: 1) demonstrated track record (as seen in the GFC results of FY09); and 2) reasonable visibility across its business, which allows SAI to respond should conditions change. Notwithstanding the current global turmoil, management highlights exciting opportunities from the UK AntiBribery Act, Food Safety and Banking workflow solutions. To capitalise on these, some investment (capex and opex) is required which will temper the FY12F EBITDA margin expansion. Enviable growth profile with 3yr EPS CAGR post Integrity acquisition we believe SAIs growth profile is now significantly strengthened post Integrity, with a 3-year EPS CAGR of 16% to FY14F. High-quality, core portfolio holding with undemanding valuation SAI trades on an undemanding valuation, on our estimates, especially in light of the premium EPS growth profile. Long-term takeover candidate SAIs global footprint in what is still a largely fragmented global industry puts in on the radar of larger European and US players. Investment risks The key risks to our target price for SAI include: 1) acquisition and integration risk; 2) retention of key personnel; 3) potential litigation and claims (certification); 4) increasing market competition; and 5) currency risk. Target price change Our target price has increased to A$5.34ps (from A$5.20ps) driven by the roll forward of our DCF and PE valuations. Our 12-month target price continues to be derived from an equal blend of PE, sum-of-the-parts (SOTP) and DCF metrics. On a PE basis, we value SAI at A$5.01 (previously A$4.94ps). In setting our target PE multiple (15.0x), we apply a 25% premium to the RBS Small Industrials PE of 12.0x FY12F (previously 11.7x) to account for SAIs premium track record, defensive earnings stream and solid management team. Our SOTP valuation is A$4.95ps (previously A$4.90ps) and uses comparable FY12F EBITDA multiples across each division.
DuluxGroup
Analyst Julian Guido DLX is a manufacturer and marketer of premium branded products with leading positions (by revenue) in the coatings, home improvement and garden care markets in Australia and New Zealand. Although DLX has a small start-up operation in China, the business is essentially focused on the domestic Australian and New Zealand markets. Its key competitive advantage is a number of very powerful consumer brands, supported by ongoing research and development, and a strong focus on customer service. Brands include Dulux paints, Selleys and Yates (garden care). Key reasons supporting the Buy call Exposure to less volatile end markets from an end-market perspective, 75% of sales are derived from the much less cyclical maintenance and home improvement sector, which in addition is the highest yielding segment from a margin perspective. The balance of which is exposure to building and construction (20%) and industrial (5%). Solid management track record despite operational change (floods), customer change (Masters), competitor change (entry and exits), economic uncertainty and higher input costs, DLX continues to deliver strong results with consistent EBITDA margins of c.15%, thus demonstrating managements ability to adapt to a constantly changing environment. Strong market share DLX is the No.1 player across many segments including decorative coatings, woodcare coatings, powder coatings, DIY adhesives and paint accessories, and consumer garden care products. Furthermore, DLX possesses high share in an already concentrated market, with market share in its core sectors (ex-Asia) at about 40%. With a solid history of product innovation, DLX also has a track record of taking market share through innovation. Re-fi complete with the FY11 result, management disclosed that it successfully renegotiated its facilities. Total debt capacity remains unchanged at A$400m, but, maturities change from April 2013 (A$300m) and April 2015 (A$100m) to November 2014 (A$150m) and November 2016 (A$150m). The net effect of the refi is a lower cost of funding by at least 1% pa (before incorporating changes in the official cash rate). Amble balance sheet capacity in the FY11 result, higher capex drove a A$17m increase in net debt to A$222m (vs. March 31). While gearing remains high at 62% (vs. 71% in FY10), interest cover metrics remain strong at 6.7x EBITDA and 5.8x EBIT. Key investment risks The key risks to our target price for DLX include: 1) the threat of new entrants or increased competition from existing players in saying this though, DLX possesses vast experience and a solid earnings track record in an environment where competitor change has occurred; 2) the changing retail hardware landscape; 3) adverse movements in currency and input costs; 4) a fall in market demand but mitigated by DLXs diverse end markets; and 5) Acquisition risk. Target price change Our target price has increased to A$3.25ps (from A$3.12ps) and is driven by the roll forward of our DCF and PE valuations. Our 12-month target price continues to be derived from an equal blend of PE and DCF metrics. Our PE valuation lifts to A$3.27ps (from A$3.12ps). In setting our target PE multiple (15.0x), we apply a 25% premium to the RBS Small Industrials PE of 12.0x FY12F to account for DLXs leading market position and strong earnings track record.
Table 4 : RBS small-cap/mid coverage

ASX Code Company Name RBS analyst Share price (A$) 0.75 2.62 1.16 2.69 3.61 1.13 0.65 12.50 5.49 0.89 3.62 2.47 0.87 Price target (A$) 1.20 2.60 1.37 2.68 3.80 1.45 0.72 11.26 7.00 1.34 3.47 2.40 0.81 Rec Mkt Cap (A$m) 466 1,369 1,494 1,500 2,463 790 238 1,664 1,854 325 2,338 3,325 920 NPAT (A$m) Pre abormals FY11A FY12F FY13F 76.0 56.6 82.4 94.8 232.7 68.6 27.2 66.3 104.6 40.6 115.1 279.6 74.1 91.0 94.6 98.0 92.7 145.5 96.6 28.9 80.3 125.7 40.4 264.6 325.4 52.9 100.3 117.6 126.7 96.6 158.0 108.1 29.3 95.9 148.7 42.6 270.0 185.3 74.1 EPS (cps) Pre goodwill FY14F FY11A FY12F FY13F 109.5 139.1 153.2 106.7 180.1 121.6 29.4 110.2 169.4 44.5 281.7 201.8 88.2 12.4 10.5 6.3 16.6 33.8 14.8 7.4 51.2 31.0 11.4 37.5 21.5 7.1 14.7 17.4 7.5 16.5 21.1 13.7 7.9 61.1 37.2 11.5 39.4 24.3 5.1 16.2 21.5 9.7 17.2 22.8 15.3 8.0 71.9 44.1 12.2 38.4 13.6 7.1 FY14F 17.7 25.4 11.7 19.0 25.9 17.2 8.0 81.4 50.2 12.7 38.7 14.6 8.4 FY11A 6.1 24.9 18.4 16.2 10.7 7.6 8.8 24.4 17.7 7.8 9.6 11.5 12.3 PER (x) Pre goodwill FY12F FY13F 5.1 15.1 15.4 16.3 17.1 8.2 8.2 20.4 14.7 7.7 9.2 10.2 17.2 4.6 12.2 11.9 15.6 15.8 7.4 8.1 17.4 12.5 7.3 9.4 18.2 12.3 FY14F 4.2 10.3 9.9 14.2 13.9 6.6 8.1 15.4 10.9 7.0 9.4 16.9 10.3 EV/EBIT (x) Ex assoc. FY11A FY12F FY13F 6.2 18.1 14.3 n/a 9.8 10.8 7.6 16.5 15.1 6.4 20.4 8.8 9.3 5.4 11.0 12.9 n/a 11.8 7.3 7.1 13.3 11.9 6.6 7.9 7.6 11.5 4.8 8.9 10.6 n/a 10.7 6.6 6.9 10.9 10.1 6.3 7.6 12.0 9.2 Dividends (cps) FY12F FY13F 8.8 8.7 0.0 16.5 10.6 8.9 5.5 30.6 20.5 8.1 35.0 21.7 3.8 9.6 10.8 0.0 16.5 11.4 10.7 5.6 43.1 26.5 8.5 35.0 12.2 5.3 Net yield (%) FY12F 11.8 3.3 0.0 6.1 2.9 7.9 8.5 2.4 3.7 9.1 9.7 8.8 4.4 FY13F 12.8 4.1 0.0 6.1 3.2 9.5 8.6 3.5 4.8 9.6 9.7 4.9 6.1
CONSUMER DISCRETIONARY (Media/Gaming) APN APN Fraser McLeish ALL Aristocrat Michael Nolan AUN Austar Fraser McLeish CMJ Consolidated Media Fraser McLeish EGP Echo Entertainment Michael Nolan SXL Southern Cross Media Fraser McLeish PRT Prime TV Alan Stuart REA REA Group Alan Stuart SEK SEEK Limited Fraser McLeish STW Communications Matthew Nicholas SGN Seven West Media Ltd. Fraser McLeish SWM Tatts Group Michael Nolan TTS TEN Ten Network Fraser McLeish CONSUMER DISCRETIONARY (Retail) ARP ARB Corporation BBG Billabong DJS David Jones GUD GUD Holdings HVN Harvey Norman JBH JB Hi-Fi Myer MYR Pacific Brands PBG Premier Investments PMV TRS The Reject Shop
Buy Buy Buy Hold Hold Buy Hold Hold Buy Buy Hold Hold Sell
Matthew Nicholas Daniel Broeren Daniel Broeren Matthew Nicholas Daniel Broeren Daniel Broeren Daniel Broeren Julian Guido Julian Guido Julian Guido
8.15 1.99 2.42 7.35 2.05 12.00 2.11 0.63 4.75 11.20
8.65 1.80 2.15 8.10 2.05 14.05 2.35 0.92 5.58 12.70
Hold Hold Sell Hold Buy Buy Buy Buy Hold Hold
593 476 1,249 515 2,157 1,184 1,254 580 741 294
37.9 118.0 168.1 49.0 242.0 134.4 163.2 103.4 61.1 16.1
42.0 63.0 140.8 46.6 212.1 124.7 142.6 86.5 61.1 23.7
46.1 83.8 135.9 53.2 238.7 132.5 153.3 104.3 71.3 29.1
50.0 83.7 138.5 58.3 268.2 146.4 160.8 110.2 76.9 31.8
52.2 46.3 33.0 71.7 22.8 120.2 28.0 11.1 39.4 61.4
58.0 24.6 27.5 67.2 20.0 125.3 24.5 9.3 39.4 89.6
63.6 32.7 26.4 76.4 22.5 132.1 26.3 11.2 46.0 109.4
69.0 32.6 26.7 83.7 25.2 145.9 27.6 11.8 49.6 119.1
15.6 4.3 7.3 10.2 9.0 10.0 7.5 5.7 12.1 18.2
14.0 8.1 8.8 10.9 10.3 9.6 8.6 6.8 12.0 12.5
12.8 6.1 9.2 9.6 9.1 9.1 8.0 5.6 10.3 10.2
11.8 6.1 9.1 8.8 8.1 8.2 7.7 5.3 9.6 9.4
11.1 6.5 5.4 7.9 6.7 7.8 6.2 4.4 8.7 12.7
9.6 9.3 6.6 8.0 7.2 7.9 7.0 5.0 6.9 8.9
8.4 7.6 6.9 7.0 6.4 7.4 6.6 4.2 5.7 7.4
26.5 0.0 23.0 61.0 10.0 77.0 20.0 6.1 35.5 68.0
29.5 0.0 22.0 68.0 11.0 82.0 22.5 7.4 36.5 83.0
3.3 0.0 9.5 8.3 4.9 6.4 9.5 9.6 7.5 6.1
3.6 0.0 9.1 9.3 5.4 6.8 10.7 11.7 7.7 7.4
CONSUMER STAPLES (Agriculture + Food/Beverage) GFF Goodman Fielder Michael Nolan MTS Metcash Daniel Broeren TGR Tassal Group Matthew Nicholas FINANCIALS (Banks) BOQ Bank of Queensland Bendigo & Adelaide Bank BEN FINANCIALS (Diversified) AUB Austbrokers BTT BT Investment Mgmt CGF Challenger Fin.Group HGG Henderson Group PLC IFL IOOF Limited IMF IMF Australia MOC Mortgage Choice PPT Perpetual PTM Platinum Asset Mgmt Think Smart TSM WHK Group WHG HEALTHCARE ANN Ansell COH Cochlear PRY Primary Health Care RHC Ramsay Health Care RMD Resmed
0.50 4.10 1.28
0.60 4.10 1.28
Hold Hold Hold
978 3,147 189
135.2 248.3 21.6
128.9 257.5 23.8
141.5 276.8 26.4
143.5 292.1 30.0
9.8 32.3 14.8
7.1 33.5 16.3
7.2 36.0 17.9
7.3 38.0 19.9
5.1 12.7 8.7
7.0 12.2 7.9
6.9 11.4 7.2
6.8 10.8 6.4
6.1 8.9 7.9
6.0 9.6 7.1
5.7 9.3 6.3
5.7 27.5 5.5
5.8 29.0 6.5
11.5 6.7 4.3
11.6 7.1 5.1
John Buonaccorsi John Buonaccorsi
7.51 8.17
12.92 8.07
Buy Sell
1,743 3,120
166.9 336.2
263.2 335.6
293.4 370.3
320.4 387.4
71.3 87.0
104.5 84.2
112.6 86.9
118.9 89.0
10.5 9.4
7.2 9.7
6.7 9.4
6.3 9.2
6.9 6.2
4.4 5.9
4.0 5.3
69.0 60.0
75.0 62.0
9.2 7.3
10.0 7.6
Julian Guido Julian Guido Richard Coles Julian Guido Julian Guido Julian Guido Julian Guido Richard Coles Julian Guido Matthew Nicholas Julian Guido
6.00 1.84 4.52 1.69 5.48 1.35 1.36 20.82 3.45 0.39 0.83
6.46 3.02 5.10 2.72 7.50 2.17 1.38 23.13 5.25 1.00 1.15
Buy Buy Buy Buy Buy Buy Hold Hold Hold Buy Buy
334 493 2,507 1,994 1,275 167 160 864 1,987 51 223
23.9 30.5 248.0 122.4 111.5 22.9 15.9 72.9 190.5 8.7 25.8
26.8 35.9 275.4 151.2 120.2 36.4 16.2 59.6 211.2 12.0 29.6
29.5 39.3 300.6 163.6 130.7 27.5 16.8 61.3 227.8 17.9 32.8
30.5 43.4 323.2 171.9 139.6 20.9 17.9 74.4 245.5 18.4 34.3
43.6 15.6 48.1 11.9 48.1 16.8 13.2 165.5 32.4 6.6 9.6
48.4 22.4 51.2 13.8 51.6 29.2 13.4 137.6 35.9 9.1 11.0
53.1 24.6 53.4 14.8 55.8 22.0 13.9 144.3 38.7 13.4 12.2
54.7 27.1 57.4 15.6 59.4 16.7 14.8 171.8 41.7 13.8 12.7
13.8 11.8 9.4 14.2 11.4 8.0 10.3 12.6 10.7 5.9 8.6
12.4 8.2 8.8 12.3 10.6 4.6 10.1 15.1 9.6 4.3 7.5
11.3 7.5 8.5 11.4 9.8 6.1 9.7 14.4 8.9 2.9 6.8
11.0 6.8 7.9 10.9 9.2 8.1 9.2 12.1 8.3 2.8 6.5
16.1 1.8 7.0 7.4 7.4 5.2 6.8 5.7 6.0 3.9 6.2
15.6 1.7 6.0 6.1 6.8 2.8 5.4 7.3 5.4 2.7 5.8
12.4 1.5 5.5 5.7 6.2 3.9 5.0 7.2 4.9 1.3 5.3
30.0 20.0 18.5 9.2 47.0 32.0 13.4 140.0 30.5 4.8 7.6
32.0 22.0 19.5 10.0 50.0 18.4 13.9 144.0 32.9 7.0 8.6
5.0 10.9 4.1 5.5 8.6 23.7 9.8 6.7 8.8 12.2 9.1
5.3 12.0 4.3 5.9 9.1 13.6 10.3 6.9 9.5 17.9 10.4
Australia Small/Mid Caps | 23 January 2012 16 Page 18
Dr Derek Jellinek Dr Derek Jellinek Dr Derek Jellinek Dr Derek Jellinek Dr Derek Jellinek
14.96 59.84 2.96 19.06 2.49
16.71 66.59 3.27 18.88 2.73
Buy Buy Hold Hold Hold
1,956 3,431 1,511 3,991 3,891
121.7 180.1 96.5 204.7 229.3
137.2 148.4 119.9 230.2 232.6
156.1 186.7 137.5 253.1 247.5
177.1 232.3 150.2 281.7 267.6
91.5 316.1 19.5 101.1 145.9
103.6 260.4 24.0 113.6 152.3
120.1 327.4 27.1 124.9 166.5
136.2 407.3 29.7 139.0 180.1
16.3 18.9 15.2 18.8 1.7
14.4 23.0 12.3 16.8 1.6
12.5 18.3 10.9 15.3 1.5
11.0 14.7 10.0 13.7 1.4
15.7 13.9 10.7 12.3 12.5
14.0 15.9 9.5 10.9 12.6
11.9 13.0 8.8 10.1 11.2
40.5 240.0 18.0 59.0 0.0
51.2 240.0 21.0 65.0 0.0
2.7 4.0 6.1 3.1 0.0
3.4 4.0 7.1 3.4 0.0
Priced at close of business 23 January 2012. Recommendations may lie outside the structure outlined in the disclosure page. Source: Company data, RBS forecasts
Table 4 : RBS small-cap/mid coverage (contd)

ASX Code Company Name RBS analyst Share price (A$) Price target (A$) Rec Mkt Cap (A$m) NPAT (A$m) Pre abormals FY11A FY12F FY13F EPS (cps) Pre goodwill FY14F FY11A FY12F FY13F FY14F FY11A PER (x) Pre goodwill FY12F FY13F FY14F EV/EBIT (x) Ex assoc. FY11A FY12F FY13F Dividends (cps) FY12F FY13F Net yield (%) FY12F FY13F
IT & TELCOS AMM Amcom CRZ Carsales CUS Customers DWS DWS Advanced Business Hutchison Telec HTA iiNet IIN IRESS Market Tech IRE Oakton OKN Reckon RKN SGT SingTel SMX SMS Management TEL Telecom Corp INDUSTRIALS (Construction) BLY Boart Longyear BLD Boral CSR CSR Ltd JHX James Hardie INDUSTRIALS (Miscellaneous) ALS Alesco ASB Austal Limited Ausdrill Limited ASL DuluxGroup DLX GWA International GWA Hills Industries HIL Imdex Limited IMD IVC Invocare NVT Navitas PPC Peet REX Regional Express SAI SAI Global VAH Virgin Blue INDUSTRIALS (Support Services) CAB Cabcharge Australia CND Clarius Group PRG Programmed Maintenance SGH Slater & Gordon SKE Skilled Group SLM Salmat SPT Spotless Group Talent2 International TWO
Alan Stuart Alan Stuart Julian Guido Julian Guido Ian Martin Ian Martin Julian Guido Julian Guido Julian Guido Ian Martin Julian Guido Alan Stuart
0.86 4.92 0.90 1.24 0.05 2.98 7.08 1.24 2.24 3.05 5.04 1.62
1.09 5.38 1.68 1.42 0.13 3.50 8.70 1.52 2.37 3.16 5.26 1.53
Buy 206 Buy 1,152 Buy 121 Hold 163 746 Buy 444 Buy 913 Hold 116 Hold 298 Hold Hold 48,622 Hold 343 Sell 3,119
21.6 58.2 21.5 17.4 -90.6 38.0 63.0 16.8 18.1 3,800.0 29.8 242.6
16.4 66.9 17.0 19.1 28.0 45.7 75.2 15.8 21.0 3,691.7 31.5 264.6
21.2 75.7 23.8 20.7 107.4 63.7 83.6 17.3 22.9 3,910.1 34.4 272.0
25.0 82.9 27.6 22.2 157.1 69.6 90.8 20.0 24.6 4,275.5 39.7 291.0
9.0 24.9 15.9 13.1 -0.7 25.0 48.6 18.0 13.6 23.9 44.3 12.6
6.8 28.5 12.6 14.4 0.2 29.1 57.0 16.8 15.8 23.2 46.4 13.7
8.8 31.9 17.7 15.6 0.8 39.5 62.4 18.3 17.2 24.5 50.5 14.1
10.3 34.7 20.5 16.7 1.2 43.1 66.8 21.1 18.4 26.8 58.2 15.1
9.5 19.7 5.7 9.5 n/a 11.9 14.6 6.9 16.5 12.8 11.4 12.9
12.6 17.3 7.1 8.6 24.2 10.2 12.4 7.4 14.2 13.2 10.9 11.8
9.8 15.4 5.1 7.9 6.3 7.5 11.3 6.8 13.0 12.4 10.0 11.5
8.3 14.2 4.4 7.4 4.3 6.9 10.6 5.9 12.2 11.4 8.7 10.7
9.8 13.8 5.9 6.3 n/a 9.0 9.8 5.1 11.5 10.3 7.7 11.5
8.9 11.7 5.2 5.6 n/a 8.5 8.0 4.7 10.2 10.1 7.4 10.9
6.8 10.3 3.6 5.0 n/a 5.9 7.0 4.0 9.0 9.4 6.5 10.3
3.4 22.8 6.5 11.0 0.0 16.0 45.5 10.5 9.5 31.5 12.7
4.4 25.5 10.2 12.0 0.0 20.0 50.0 13.5 10.5 34.5 13.1
4.0 4.6 7.2 8.9 0.0 5.4 6.4 8.5 4.2 6.3 7.8
5.1 5.2 11.3 9.7 0.0 6.7 7.1 10.9 4.7 6.8 8.1
Andrew Hodge Andrew Scott Andrew Scott Andrew Scott
3.40 4.00 2.09 7.40
4.37 3.91 2.84 7.03
Buy Hold Buy Buy
1,531 2,979 1,063 3,268
149.4 173.5 90.2 116.7
210.6 178.2 85.4 141.8
248.6 241.8 105.6 182.4
244.1 329.5 140.7 232.6
32.8 24.0 17.8 26.7
46.3 24.4 16.9 33.4
54.7 32.5 20.9 44.1
53.7 44.2 27.8 56.2
10.4 16.7 11.7 27.7
7.3 16.4 12.4 22.2
6.2 12.3 10.0 16.8
6.3 9.0 7.5 13.2
8.3 15.0 4.6 18.2
6.0 16.2 6.2 16.8
4.9 11.3 5.0 13.3
13.9 16.0 13.0 8.0
16.4 17.0 15.7 12.0
4.1 4.0 6.2 1.1
4.8 4.3 7.5 1.6
Julian Guido Julian Guido Matthew Nicholas Julian Guido Julian Guido Matthew Nicholas Matthew Nicholas Julian Guido Julian Guido Matthew Nicholas Michael Newbold, CFA Julian Guido Mark Williams
1.11 2.04 3.38 2.95 2.37 1.05 2.10 7.56 3.38 0.80 1.13 4.83 0.31
1.33 3.75 3.80 3.25 2.16 1.07 2.83 7.60 4.12 1.45 1.26 5.34 0.41
Hold Buy Buy Buy Hold Hold Buy Hold Hold Buy Buy Buy Buy
106 386 1,022 1,095 700 256 416 848 1,276 259 136 985 674
15.6 40.5 78.5 77.6 63.4 24.7 31.0 40.4 76.0 44.0 17.4 57.8 -48.1
14.0 49.7 96.7 79.7 56.6 26.8 47.0 46.7 88.0 19.8 21.7 66.4 60.2
16.9 50.2 116.0 84.9 60.4 31.7 54.1 51.1 103.8 31.2 24.0 77.9 102.6
23.3 56.7 125.4 89.0 66.1 36.9 59.0 55.8 119.2 33.9 26.8 91.8 151.8
16.5 21.5 29.0 21.1 21.0 9.9 15.6 38.9 21.3 14.5 15.7 29.8 -2.2
14.8 26.4 32.1 21.7 18.8 11.0 23.1 43.1 23.4 6.3 19.7 33.3 2.7
17.8 26.7 38.5 23.1 20.0 13.3 26.5 46.9 27.6 9.8 21.9 39.0 4.6
24.7 30.2 41.6 24.2 21.9 15.4 28.9 50.9 31.8 10.7 24.4 46.0 6.9
6.7 9.5 11.7 14.0 11.3 10.6 13.4 19.4 15.9 5.5 7.2 16.2 n/a
7.5 7.7 10.5 13.6 12.6 9.5 9.1 17.5 14.4 12.8 5.7 14.5 11.4
6.2 7.6 8.8 12.8 11.8 7.9 7.9 16.1 12.2 8.1 5.2 12.4 6.7
4.5 6.8 8.1 12.2 10.8 6.8 7.3 14.8 10.6 7.5 4.6 10.5 4.5
5.0 6.3 9.3 9.7 8.5 8.6 10.0 14.4 12.4 6.3 5.9 12.8 n/a
6.3 4.8 7.6 9.4 9.4 7.8 6.5 12.2 10.4 12.6 3.8 11.3 11.7
5.4 4.2 6.4 8.9 8.7 6.7 5.2 11.3 8.8 8.2 3.0 9.5 8.5
8.5 7.0 13.0 16.0 18.0 10.0 5.5 36.0 23.5 3.5 7.6 16.3 0.0
10.5 8.0 14.5 17.0 18.0 11.5 6.5 39.5 27.6 6.0 8.6 20.3 0.0
7.7 3.4 3.8 5.4 7.6 9.5 2.6 4.8 7.0 4.4 6.7 3.4 0.0
9.5 3.9 4.3 5.8 7.6 11.0 3.1 5.2 8.2 7.5 7.6 4.2 0.0
Julian Guido Matthew Nicholas Julian Guido Julian Guido Julian Guido Julian Guido Julian Guido Matthew Nicholas
4.55 0.43 2.06 1.77 1.71 2.40 2.31 0.52
6.63 0.65 2.34 2.50 2.30 4.49 2.25 0.48
Buy Hold Buy Buy Buy Buy Hold Hold
552 39 249 267 397 384 621 81
65.6 4.7 28.6 27.9 26.1 51.6 43.1 13.8
66.0 6.9 31.3 37.3 43.8 60.7 52.0 6.4
70.6 8.2 35.8 41.2 51.9 68.2 58.8 13.8
74.9 8.8 39.8 46.9 61.8 71.0 62.6 20.7
54.5 5.4 24.2 18.3 12.5 32.4 16.5 9.7
54.8 8.0 26.5 23.6 18.3 37.9 19.8 4.4
58.7 9.4 30.3 25.5 21.7 42.6 22.3 9.3
62.2 10.1 33.7 28.5 25.8 44.3 23.5 13.8
8.3 7.9 8.5 9.7 13.7 7.4 14.0 5.4
8.3 5.4 7.8 7.5 9.3 6.3 11.7 11.8
7.8 4.6 6.8 6.9 7.9 5.6 10.3 5.6
7.3 4.3 6.1 6.2 6.6 5.4 9.8 3.8
9.5 4.7 7.5 6.8 8.6 7.4 8.8 4.9
9.1 3.1 6.1 5.4 6.9 5.8 7.9 15.9
8.4 2.6 5.4 4.7 5.9 5.1 7.3 4.8
37.5 5.5 13.0 7.5 7.0 27.1 13.0 2.0
38.0 6.5 15.0 8.6 13.0 31.2 14.5 4.5
8.2 12.8 6.3 4.2 4.1 11.3 5.6 3.8
8.4 15.1 7.3 4.9 7.6 13.0 6.3 8.7
INDUSTRIALS (Engineering contractors) Bradken Matthew Nicholas BKN BOOM Logistics Matthew Nicholas BOL EHL Emeco Matthew Nicholas DOW Downer EDI Andrew Hodge HST Hastie Group Julian Guido MND Monadelphous Andrew Hodge NFK Norfolk Group Julian Guido TSE Transfield Services Andrew Hodge UGL United Group Andrew Hodge MATERIALS ABC Adelaide Brighton NUF Nufarm SGM Sims Group
7.55 0.26 1.00 3.52 0.56 21.81 1.06 2.06 13.87
9.85 0.49 1.23 5.01 1.20 23.14 1.49 2.13 14.07
Buy Buy Buy Buy Hold Buy Buy Hold Hold
1,245 120 631 1,519 79 1,926 170 1,138 2,302
90.1 5.4 56.3 155.9 18.7 96.3 21.1 128.2 164.4
120.3 17.4 68.7 190.1 23.6 114.5 22.2 126.3 171.7
143.9 21.6 78.2 221.3 31.8 135.1 24.7 144.0 199.1
173.2 23.3 84.1 269.1 38.6 154.7 29.2 158.7 228.9
63.5 1.2 8.9 42.6 7.4 110.2 13.3 26.0 98.8
72.3 3.7 10.9 44.3 1.7 130.3 14.0 23.4 102.7
84.0 4.6 12.4 51.5 2.3 153.2 15.5 28.4 118.7
100.9 5.0 13.3 62.6 2.8 175.5 18.4 31.4 136.2
11.9 22.2 11.2 8.3 7.6 19.8 8.0 7.9 14.0
10.4 7.0 9.2 7.9 32.5 16.7 7.6 8.8 13.5
9.0 5.6 8.1 6.8 24.1 14.2 6.8 7.3 11.7
7.5 5.2 7.5 5.6 19.8 12.4 5.8 6.6 10.2
9.5 10.6 9.1 6.7 21.3 13.7 4.9 8.5 9.9
8.1 6.8 8.0 6.0 17.5 11.0 4.5 8.0 9.8
6.8 5.7 6.8 5.3 15.3 9.2 3.6 7.1 8.3
45.0 0.0 6.0 21.0 0.0 112.0 3.5 14.0 71.5
52.5 0.0 6.5 27.0 0.3 130.0 4.5 15.5 82.5
6.0 0.0 6.0 6.0 0.0 5.1 3.3 6.8 5.2
7.0 0.0 6.5 7.7 0.4 6.0 4.2 7.5 5.9
Andrew Scott Andrew Scott Todd Scott
3.09 4.57 14.78
3.11 5.08 18.25
Hold Hold Buy
1,947 1,163 3,051
148.5 86.1 182.0
158.9 101.8 254.5
191.4 120.7 326.3
215.6 132.6 382.1
23.4 32.9 88.9
25.0 38.9 124.2
30.1 46.1 159.7
33.9 50.6 187.0
13.2 13.9 16.6
12.4 11.8 11.9
10.3 9.9 9.3
9.1 9.0 7.9
11.9 8.7 10.8
11.0 7.9 8.0
9.2 6.8 6.3
18.6 11.7 62.3
21.4 13.8 79.8
6.0 2.6 4.2
6.9 3.0 5.4
Priced at close of business 23 January 2012. Recommendations may lie outside the structure outlined in the disclosure page. Source: Company data, RBS forecasts
Table 4 : RBS small-cap/mid coverage (contd)

ASX Code Company Name RBS analyst Share price (A$) Price target (A$) Rec Mkt Cap (A$m) NPAT (A$m) Pre abormals FY11A FY12F FY13F EPS (cps) Pre goodwill FY14F FY11A FY12F FY13F FY14F FY11A PER (x) Pre goodwill FY12F FY13F FY14F EV/EBIT (x) Ex assoc. FY11A FY12F FY13F Dividends (cps) FY12F FY13F Net yield (%) FY12F FY13F
UTILITIES/INFRASTRUCTURE AIX Aust Infrastructure Fund APA APA Group CIF Challenger Infrastructure DUE DUET Group ENV Envestra EPW ERM Power Limited Hastings Diversified Util HDF Infigen Energy IFN MQA Macquarie Atlas Roads SPN SP Ausnet SKI Spark Infrastructure ENERGY (Oil & Gas) LNC Linc Energy OTHER RESOURCES AGO Atlas Iron AQA Aquila Resources ERA Energy Resources GBG Gindalbie Metals Grange Resources GRR ILU Iluka Resources IRD Iron Road MIN Mineral Resources MML Medusa Mining Ltd OceanaGold OGC OM Holdings OMH KCN Kingsgate Consolidated MGX Mount Gibson Iron PDN Paladin PRU Perseus Mining ALK Alkane Resources RRL Regis Resources
William Allott Jason Mabee, CFA William Allott William Allott William Allott Jason Mabee, CFA William Allott William Allott William Allott William Allott William Allott
2.02 4.60 1.13 1.82 0.76 1.55 2.00 0.27 1.54 0.95 1.37
1.92 4.80 1.35 2.00 0.80 2.00 2.12 0.80 1.88 1.00 1.35
Hold Hold Buy Buy Buy Buy Buy Buy Buy Hold Hold
1,254 2,896 356 1,992 1,176 256 1,060 198 699 2,780 1,804
212.3 108.5 -0.8 124.9 47.2 2.0 39.7 -26.0 -57.0 252.9 153.0
160.6 117.4 11.0 86.5 63.0 31.5 26.8 -42.7 108.5 233.5 165.2
166.5 132.9 22.3 80.9 69.7 37.2 21.1 -24.4 23.0 245.0 165.9
162.8 147.0 50.2 78.3 83.2 43.2 17.2 -7.2 12.8 265.6 174.0
34.2 19.7 -0.3 14.1 3.3 1.5 7.7 -3.4 -12.6 9.0 11.5
25.9 18.2 3.5 8.7 4.1 19.3 5.1 -5.6 24.0 8.3 12.4
26.8 20.1 7.0 7.4 4.3 22.6 4.0 -3.2 5.1 8.5 12.5
26.2 21.9 15.8 6.5 4.8 26.2 3.2 -1.0 2.8 9.0 13.1
5.9 23.4 n/a 12.9 22.9 105.6 26.0 n/a n/a 10.5 11.9
7.8 25.2 32.6 20.9 18.3 8.0 39.1 n/a 6.4 11.5 11.0
7.5 22.9 16.1 24.7 17.7 6.9 50.3 n/a 30.3 11.2 11.0
7.7 21.0 7.1 28.0 15.8 5.9 62.5 n/a 54.4 10.6 10.4
5.3 14.6 13.1 13.7 12.6 8.1 26.6 39.1 n/a 11.6 10.9
6.7 13.8 15.4 12.7 11.4 4.7 16.8 28.0 31.3 11.7 10.4
6.3 12.9 14.5 12.6 11.0 4.4 14.9 17.0 29.9 11.4 10.4
10.5 35.4 10.0 16.0 5.9 7.7 10.0 0.0 7.0 8.0 9.7
11.0 36.5 10.0 16.5 6.1 8.1 10.3 0.0 16.0 8.0 10.0
5.2 7.7 8.8 8.8 7.8 5.0 5.0 0.0 4.5 8.4 7.1
5.4 7.9 8.8 9.1 8.0 5.2 5.1 0.0 10.4 8.4 7.3
Jason Mabee, CFA
1.41
2.05
Buy
737
-204.0
-41.0
0.9
39.4
-41.1
-8.1
0.2
7.8
n/a
n/a
807.1
18.0
n/a
n/a
30.7
0.0
0.0
0.0
0.0
Lyndon Fagan Sam Berridge Lyndon Fagan Todd Scott Todd Scott Sam Berridge Todd Scott Todd Scott Phillip Chippindale Phillip Chippindale Todd Scott Sam Berridge Lyndon Fagan Lyndon Fagan Sam Berridge Sam Berridge Sam Berridge
3.19 6.27 1.42 0.63 0.58 18.62 0.55 11.62 5.42 2.31 0.40 6.75 1.43 1.82 2.83 1.03 3.76
4.06 4.61 0.96 0.71 0.67 20.24 0.70 10.75 7.46 3.00 0.36 7.37 1.77 1.83 3.37 1.92 2.89
Buy Sell Sell Buy Buy Buy Hold Hold Buy Buy Sell Buy Buy Hold Hold Buy Hold
2,890 2,598 751 792 687 7,604 77 2,137 1,037 623 202 972 1,537 1,491 1,324 287 1,715
168.6 -63.5 -32.2 -5.3 70.9 506.8 -17.5 151.0 111.5 45.8 -13.2 32.0 233.8 -59.0 -30.0 -5.4 36.3
233.2 -29.2 -100.9 11.0 107.3 1,380.6 -17.2 190.1 128.2 53.4 16.2 158.6 410.9 -14.3 132.9 -9.9 52.9
215.2 -158.5 -63.8 80.7 82.1 1,495.9 -17.1 211.7 121.1 69.9 25.1 192.9 384.0 15.4 114.7 -50.1 193.5
298.7 -223.2 -55.1 154.1 70.6 1,506.2 -45.3 183.2 150.9 89.8 14.2 170.6 266.2 51.5 185.9 25.3 211.2
20.4 -15.4 -6.2 -0.6 6.1 121.1 -13.6 89.8 59.3 17.5 -2.6 23.6 21.7 -7.9 -7.1 -2.0 8.4
28.2 -7.1 -19.5 0.9 9.3 329.7 -12.2 104.9 68.2 20.4 3.2 117.2 38.2 -1.8 31.2 -3.7 12.2
26.0 -38.5 -12.3 6.5 7.1 357.3 -12.1 116.8 64.4 26.7 5.0 142.5 35.7 2.0 27.0 -18.6 44.6
36.1 -54.2 -10.6 12.4 6.1 359.7 -32.1 101.1 80.3 34.3 2.8 126.1 24.7 6.6 43.7 9.4 48.7
15.6 n/a n/a n/a 9.4 15.4 n/a 12.9 9.1 13.2 n/a 28.6 6.6 n/a n/a n/a 44.9
11.3 n/a n/a 71.7 6.2 5.6 n/a 11.1 7.9 11.3 12.4 5.8 3.7 n/a 9.1 n/a 30.9
12.3 n/a n/a 9.7 8.1 5.2 n/a 9.9 8.4 8.7 8.0 4.7 4.0 92.1 10.5 n/a 8.4
8.8 n/a n/a 5.1 9.5 5.2 n/a 11.5 6.8 6.7 14.2 5.4 5.8 27.5 6.5 10.9 7.7
12.4 n/a n/a n/a 4.8 10.3 n/a 9.8 9.1 8.6 n/a 28.3 3.7 n/a n/a n/a 42.3
6.8 957.0 n/a 50.8 3.3 3.4 n/a 7.6 7.7 8.2 9.2 4.5 1.7 69.2 6.9 n/a 29.6
6.5 n/a n/a 10.3 4.3 2.8 n/a 6.5 8.1 6.2 6.5 3.3 1.1 23.2 7.1 n/a 5.7
6.0 0.0 0.0 0.0 3.0 165.0 0.0 52.6 10.0 0.0 0.4 27.0 4.0 0.0 0.0 0.0 0.0
6.0 0.0 0.0 0.0 2.0 179.0 0.0 57.6 10.0 0.0 1.2 56.0 4.0 0.0 0.0 0.0 20.0
1.9 0.0 0.0 0.0 5.2 8.9 0.0 4.5 1.8 0.0 1.1 4.0 2.8 0.0 0.0 0.0 0.0
1.9 0.0 0.0 0.0 3.4 9.6 0.0 5.0 1.8 0.0 3.1 8.3 2.8 0.0 0.0 0.0 5.3
Priced at close of business 23 January 2012. Recommendations may lie outside the structure outlined in the disclosure page Source: Company data, RBS forecasts
Equities | Mining | Australia

23 January 2012
Metals & Mining

Navigating the storm
The issues from 2011 have not gone away. Concerns around slowing Chinese growth are still acute, while the EU debt crisis is far from resolved. In such an uncertain environment, our key picks for 2012 are quality miners with cheap valuations, strong balance sheets, production growth and operations well placed on the cost curve. We believe investors in these stocks will benefit in the event of a recovery, and be somewhat protected if the downturn worsens. We stay overweight gold and the diversifieds in the near term, and will look to increase exposure to the pure plays as we head into the middle of the year.
Italian 10-year bond yield vs BHP share price

55 8
50
45
40
35
30 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 BHP share price (A$)
3 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Dec-11 Italian 10 year bond yield (%) - RHS
Source: Bloomberg
Questions over the fundamentals: Chinese growth slowing

In our view, the critical issue for the miners remains the outlook for Chinese economic growth the main driver of global commodity demand and, ultimately, the determining factor for most metal prices. 2011 showed signs that the China engine was beginning to slow, providing a significant headwind for commodities. RBS predicts China GDP growth of 8.5% in 2012 (vs 9.1% in 2011).
Sentiment and confidence have taken a beating: Europe and China

Adding to the concerns about Chinese growth has been the EU debt crisis. We believe this is primarily a sentiment issue, with emerging economies accounting for around 80% of commodity demand growth. Nevertheless, until there is some level of stability across the region, we believe the risk off trade is likely to continue.
Back to basics: quality miners appear cheap

Many of the quality miners look extremely cheap to us based on NPV, historical P/NPV averages and PE multiples. On the back of changes to our commodity price forecasts, we have made a number of revisions to earnings, recommendation and target prices (see Table 3). We expect once the global economy begins to recover, the miners will re-rate back towards their intrinsic value.
Analysts
Lyndon Fagan +61 2 8259 5870 [email protected] Sam Berridge [email protected] Phillip Chippindale [email protected] Todd Scott [email protected]
Diversified miners preferred over pure plays in the near term

We think investors are best placed in the diversified miners in the near term as they should outperform the S&P/ASX 200 Index if the global situation begins to recover, while at the same time providing more downside protection than the pure plays if the macro deteriorates further. We recommend a higher weighting in the pure plays around mid year as economies begin to recover. Produced by: RBS Equities (Australia) Limited ABN 84 002 768 701, AFS Licence 240530 Page 19 Important disclosures can be found in the Disclosures Appendix.
RBS base case: 3.4% global growth in 2012

Over the next 12 months, we believe the sector will respond strongly to an eventual economic recovery. However, in the short term, volatility is likely to continue with large swings in stock prices occurring based on the timing and content of macroeconomic events. The RBS economics team forecasts a modest slowdown in global growth of 3.5% in 2011, to 3.4% in 2012. Under this scenario, we are positive on the miners. This forecast incorporates recoveries in the US (from 1.8% in 2011 to 2.6% in 2012), Japan (from -0.8% to +1.8%), with recession in the eurozone (-0.4% in 2012 vs 1.5% growth in 2011). RBS also forecasts a modest slowdown in China, from 9.1% to 8.5%. These are relatively benign estimates. The primary risk to our central scenario is a hard landing, and lower growth in China. Further, ongoing problems in the eurozone could continue to act on business and consumer confidence, and have a greater negative impact than we currently anticipate on global economic activity and, therefore, on commodity offtake and prices.
Current state of play cheap sector without a near-term catalyst

Miners look cheap to us at the moment. But they could stay looking cheap for some time without an improvement in the macro. Further, if sentiment worsens, miners are likely to be sold off as a proxy for global growth.
Table 1 : RBS Mining coverage (post commodity price update)
Company BHP Billiton Rio Tinto Fortescue Metals Mount Gibson Iron Atlas Iron Gindalbie Metals Grange Resources Iron Road OM Holdings Mineral Resources Alumina OZ Minerals Iluka Resources Lynas Corporation Alkane Resources Independence Group Newcrest Mining Kingsgate Consolidated Perseus Mining Regis Resources OceanaGold Medusa Mining Energy Resources of Aust Paladin Energy Aquila Resources Exposure Diversified Diversified Iron ore Iron ore Iron ore Iron ore Iron ore Iron ore Manganese Steel materials Aluminium & alumina Copper Mineral sands REE Zirconium, REE, Nb Nickel & gold Gold Gold Gold Gold Gold Gold Uranium Uranium Coal Mkt cap (A$m) 195,881 95,031 16,161 1,537 2,890 792 687 77 202 2,137 3,197 3,482 7,604 3,489 287 935 24,844 972 1,324 1,715 623 1,037 751 1,491 2,598 Rec Buy Buy Buy Buy Buy Buy Buy Buy Sell Hold Buy Hold Hold Buy Buy Buy Buy Buy Hold Hold Buy Buy Sell Hold Sell Price (A$ps) 37.48 67.53 5.19 1.42 3.23 0.63 0.60 0.55 0.40 11.57 1.31 11.06 18.16 1.28 1.07 4.02 32.44 6.90 2.90 3.91 2.37 5.49 1.45 1.78 6.31 NPV (A$ps) 43.76 97.40 7.39 1.69 4.07 0.71 0.67 0.70 0.36 10.60 1.62 11.94 18.77 1.83 1.92 5.64 27.58 7.69 2.70 2.70 3.00 7.73 0.96 1.83 4.77 Target (A$ps) 43.76 97.40 7.39 1.69 4.07 0.71 0.67 0.70 0.36 10.60 1.62 11.94 18.77 1.83 1.92 5.64 38.61 7.69 2.70 3.51 3.00 7.73 0.96 1.83 4.77 Upside/ downside 17% 44% 42% 19% 26% 13% 11% 27% -10% -8% 24% 8% 3% 43% 80% 40% 19% 11% -7% -10% 27% 41% -34% 3% -24% P/NPV -14% -31% -30% -16% -21% -11% -10% -21% 11% 9% -19% -7% -3% -30% -44% -29% 18% -10% 8% 45% -21% -29% 50% -3% 32% PE FY13F (x) 9 8 9 4 12 10 8 n/m 8 11 19 13 5 5 n/m 23 13 4 18 8 9 7 n/m 94 n/m EV/EBITDA FY13F (x) 5 5 7 1 5 8 3 n/m 5 5 18 5 3 4 n/m 7 7 2 7 5 3 6 4 15 n/m
10yr bond yields for PIGS also measure sentiment towards the miners
Italian and Greek bond yields have been the barometer for the EU financial crisis over the past year. Yields rise when the market fears the crisis is deepening, and fall when the market perceives a resolution, or some stability to the situation may be near. The charts below show BHP and copper have a high correlation to these yields. This makes sense as the bond yields equate to sentiment towards European and, to some extent, global GDP growth (miners clearly do better in times of high global GDP growth). Obviously China is another issue, but the relatively high correlation to PIGS 10yr bond yields shows the miners are unlikely to re-rate materially until these
Metals & Mining | 23 January 2012 Page 2 Page 20
bond yields come down. We do not believe this will happen until we see signs of a Germanybacked EU bond, or another signal of collective support across Europe. The timing is difficult to predict, but it is possible we could get greater clarity in 1Q12. Investors have a bit of time up their sleeves, but 2H12 could see a significant relief rally for the miners in our view.
Chart 1 : BHP vs Greek 10yr bond yield R squared is 0.74
55 35
Chart 2 : Copper vs Greek 10yr bond yield R squared is 0.76

5.0 35
50
30
4.5
30
45
25 4.0
25
40
20 3.5
20
35
15
15
30 Jan-11
10 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Dec-11
3.0 Jan-11
10 Mar-11 May-11 Jul-11 Sep-11 Oct-11 Dec-11
BHP share price (A$) - RHS
Greek 10 year bond yield (%)

Source: Bloomberg
LME Copper (US$/lb) - RHS
Greek 10 year bond yield (%)

Source: Bloomberg
Investment views: stock picking to match the macro

We see 2012 very much as a year of two different halves. 1H12 is likely to be dominated by the issues that surfaced in 2011, ie, slowing Chinese growth and the EU debt crisis. 2H12 should provide a glimmer of hope that global economies will begin to recover, with miners re-rating as the risk on trade comes back into vogue. As shown in the charts below, the majors outperform the pure plays in uncertain times, but underperform as sentiment and confidence improves.
Chart 3 : BHP vs pure plays in 2008/09 financial crisis
8000 7000 6000 5000 4000 3000 2000 Jan-08 Mar-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 ASX small resources index
Small resources underperformed BHP by circa 30% in the 2008/09 financial crisis
Chart 4 : BHP vs pure plays in 2010

50 45 40 35 30 25 20 15 10 7500 7000 6500 6000 5500 5000 4500 4000 3500 Jan-10 35 30 Dec-10 50 45 40
In 2010, the small resources index outperformed BHP by 25%
60 55
Mar-10
May-10
Jun-10
Aug-10
Oct-10

Source: Bloomberg, RBS
ASX small resources index

Quality, defensive names near term risk off

We cant see how the sector will re-rate in the near term in the face of the EU debt crisis and concerns around Chinese growth. In this environment miners are likely to trade sideways with significant levels of volatility. News flow is likely to be bearish, including speculation of an EU meltdown. BHP and RIO are likely to outperform the pure plays due to healthy levels of cash flow, low-cost operations, production growth and cheap valuation metrics. We also like the gold space due to its safe haven status, with our preferred play being NCM for high liquidity, diversification, and long-term growth.
Rio Tinto Buy PT$97.40 / BHP Billiton Buy PT$43.76 The large diversified miners provide an attractive investment opportunity, in our view. The stocks are cheap relative to our NPV, are trading at historically low P/NPV multiples, offer strong cash flow, and have a parade of growth opportunities. In an environment where downside risk is as important as upside risk, we believe the larger miners would not be hit as hard as their pure play peers in the event the macro situation worsens. At the same time, once there is some levels of stability achieved and investor confidence begins to return, we believe the stocks will re-rate quickly. There may be more upside in the longer term in some of the pure-play miners that have been beaten up recently. However, for some of these miners it may get worse before it gets better. BHP is more defensive than RIO due to its greater diversification by commodity. For those investors with more conservative disposition, we recommend BHP over RIO. However, in the longer term we believe RIO looks cheaper and ultimately has greater upside potential.
Chart 5 : RIO P/NPV
120% 100% 80% 60% 40% 20% 0% -20% -40% -60% -80% 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
Source: RBS, Bloomberg
Chart 6 : BHP P/NPV

120% 100% 80% 60% Average 40% 20% 0% Average -20% -40% -60% 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
Source: RBS, Bloomberg
Leveraged pure plays moving into 2H12 risk on

Our preferred picks for leverage to the recovery are FMG, AGO, AWC, OZL, LYC, and ILU, funded through lightening up in the diversifieds and gold miners We estimate that by mid year we should have reached some level of stability in Europe. The critical events, as we see it, will be several large debt auctions for Italy in 1Q12, which may be make or break outcomes. Once we are in a situation where investors generally agree that the world has avoided a catastrophic sovereign debt default, we believe the risk trade will be back. Our preferred picks for leverage to the recovery are FMG, AGO, AWC, OZL, LYC, and ILU. We would fund these purchases through lightening up in the diversifieds and gold miners.
Fortescue Metals Buy, TP A$7.39

In our view, the market continues to place a large discount on FMGs expansion plans. We expect the stock to re-rate significantly as projects move from concept to reality over the next 12-18 months and this discount begins to unwind. FMG offers attractive valuation metrics and strong production growth potential.
Atlas Iron Buy, TP A$4.07

AGO is our best pick among the mid-cap iron ore plays. Management has developed a good track record on operational performance, and we see a solid growth outlook and an enviable port position at Port Hedland, which may make it an attractive takeover target. The stock offers exposure to strong cash flow, with relatively cheap valuation metrics.
Alumina Ltd Buy, TP A$1.62

We maintain our long-term Buy on AWC, on the basis that: 1) AWAC is well placed on the cost curve; 2) the stock is trading below our NPV; 3) we expect strong aluminium/alumina long-term demand growth; 4) there is significant cost curve support in aluminium, which should limit downside to prices. Once the macro improves, we believe AWC could be one of the best performers.
Lynas Corp Buy, TP A$1.83

LYC is trading at a significant discount to NPV and low PEs. We believe the market is factoring in a 15-20% discount for permit uncertainty, which we are increasingly confident about after a more definitive timeline was recently provided by the Malaysian government. We expect permit approval by mid to late February. This is a just over a month later than we had initially anticipated, but that in itself is excusable in the context of mining permits, in our view. We see limited downside from current levels and consider the company an attractive investment option amidst volatile macro conditions.
Medusa Mining Buy, TP A$7.73

MML is our preferred pick among the mid-cap gold stocks. It is one of the few gold stocks trading at a significant discount to NPV (over 30%). MML is undertaking an expansion with the aim of expanding its flagship Co-O mine from 100kozpa to 200kozpa by end FY14. Potential catalysts include: 1) a rebound in gold production in 1Q12 (with underground development work now nearing completion), and 2) completing a feasibility study for its Bananghilig project later in 2012.
Commodity update
Commodity analysis provided by RBS commodity research team: See commodity update Labyrinth (10 January 2012) for more details Welcome to 2012 and what is soon to be the Chinese Year of the Dragon! There is much to look forward to, but also much unfinished business. Commodity markets begin the year frazzled by the suffocating top-down gloom of the European debt crisis. Worse, that even after months of marketwrenching ping-pong in 2011, we still seem little closer to finding a solution. Rating downgrades loom for some euro area countries, a hard Greece default seems increasingly possible and a move to full fiscal union remains a distant prospect. Elsewhere, activity in the worlds emerging market manufacturing hubs, such as China and India, looks to be slowing. Better US data seems the only bright spot. Even there, with demand supported by a falling savings ratio, the sustainability of the upturn remains in question. Uncertainty and lack of visibility have created an impenetrable fog. Some commodity prices are at levels which cut deep into the industry cost curve and producer cutbacks are already beginning. The euro zone crisis remains hostile, but RBS forecasts aggregate world GDP growth in 2012 of 3.4%. Some metal inventories are at multi-month lows and Chinese buying has returned, notably for copper. This is classic accumulation territory for a number of commodities. We favour exposure to copper for its supply shortfall and to aluminium for cost curve support. All the precious metals look attractive, but platinum and palladium notably so. Although we expect iron ore, thermal and coking coal prices to remain elevated (relative to historical levels) in the coming years; we believe the pricing tension seen in 2010/11 is unlikely to return to the bulk commodity markets in the near term.
Nick Moore [email protected] Nikos Kavalis [email protected]
Outlook value has been uncovered across commodities

Positive factors Following the declines seen across most metals and bulks prices in the second half of last year, value has been uncovered in the sector. Earlier this month we revised down the majority of our commodity price projections out to 2015, to reflect the lower starting point and an uncertain economic outlook. However, we maintain our positive outlook for most commodities. We expect that the following factors will offer support to prices and eventually help them rally from the second half of this year. Prices for many commodities are near or have fallen below cost curve support levels. The closure of high-cost capacity has started and further cutbacks are possible. Disruptions, for instance relating to technical problems and strikes, procurement delays, falling head-grades and infrastructure issues are all limiting production growth for a number of commodities. Ever-rising production and capital costs mean that for output growth to be maintained, higher long-term commodity prices will be needed to stimulate investment in new capacity. Growing concerns about resource nationalism may deter future investment in production capacity and in turn limit production growth. This is becoming increasingly important as many of the new projects are in difficult jurisdictions. There are no transformational mega-projects on the horizon for base and precious metals. In some cases, notably lead and zinc, key mines are near their end of life. Demand growth should remain healthy. We expect emerging markets to account for ~80% of gains, and growth there should be resilient regardless of what is happening in mature markets. Further tightening of monetary policy in China seems to us unlikely and the opposite is possible. Fiscal policy in the country remains expansionary.
Notwithstanding the euro zone troubles, robust growth in developing economies and betterthan-expected results in the US should see global GDP growth remain in positive territory (RBS forecasts a healthy 3.4%). Investor positioning is light longs liquidated and shorts have been built. A change in sentiment towards the sector could see hefty net inflows. Reported inventories for a number of exchange-traded commodities have been declining, while warehouse financing deals continue to lock material out of the market.
Chart 7 : Commodity comparative performance All sub-sectors shared the pain in 2011
350 300 250 200 150 100 50 Jan-06
Jan-07
Jan-08
Jan-09
Crude Oil
Jan-10
RBS Bulks Index
Jan-11
Jan-12
RBS Base Metals Index
Negative factors
Against these positive factors for commodity prices, it is worth noting some potential headwinds to keep an eye on. Volume growth is underway and for a number of commodities (eg nickel, copper, iron ore and coal) seems inevitable. All base metals (except copper), all precious metals (except palladium) and bulk commodities (iron ore, metallurgical and thermal coal) look set to suffer from fundamental surpluses in the next two to three years. Inventory levels are onerous for aluminium, zinc and nickel. Some of this is currently locked in financing deals, but if/when financing costs rise, material could be released into the market. Record Chinese iron ore port inventories and weak demand from steelmakers provide nearterm headwinds for iron ore. Demand weakness in 2H11 has allowed steelmakers to rebuild metallurgical coal stocks after supply disruptions pushed stocks to critical levels in 1H11. Major thermal coal customers have built sufficient coal stocks to provide a buffer through the northern hemisphere winter. Chinas NDRC will limit contract thermal coal price increases to 5%; this is potentially positive for domestic demand but at the expense of the seaborne market. The possibility of deeper and more prolonged recessions in Western economies cannot be ruled out, and this would continue to affect commodity prices. Our base case is for robust growth in China. If a hard landing were to occur, commodities would suffer both through weaker fundamentals and a dramatic worsening of investor sentiment towards the sector. Rising risk aversion on the back of the euro zones woes, coupled with a resilient US economy, have led to a stronger US dollar, which weighs on commodity prices. If the greenback were to strengthen further, commodities could struggle to recover. Further Middle Eastern troubles are positive for the oil price and potentially gold and silvers safe haven attributes, but not for the rest of the sector. High and rising oil prices point to weaker
economic growth and geopolitical concerns add fuel to risk aversion, all of which would put pressure on industrial commodity prices.
Table 2 : Key commodity price changes
2011F Base metals Copper (US$/lb) Previous Revised % change Previous Revised % change Previous Revised % change Previous Revised % change Previous Revised % change Previous Revised % change Previous Revised % change Previous Revised % change Previous Revised % change Previous Revised % change Previous Revised % change Previous Revised % change Previous Revised % change 3.97 4.00 1% 1.11 1.06 -4% 1.00 0.99 0% 10.49 10.37 -1% 1569 1571 0% 35 35 0% 1724 1720 0% 726 733 1% 174 168 -4% 120 119 -1% 288 286 0% 1.28 1.28 0% 93.2 95.3 2% 2012F 3.83 3.80 -1% 1.13 1.06 -7% 0.99 0.95 -4% 9.90 9.59 -3% 1750 1750 0% 37 32 -14% 1950 1650 -15% 900 800 -11% 158 147 -7% 116 114 -2% 301 221 -27% 1.25 1.18 -6% 91.0 89.5 -2% 2013F 4.13 4.20 2% 1.28 1.25 -3% 1.20 1.20 0% 11.68 11.80 1% 1525 1625 7% 30 29 -2% 2200 1950 -11% 1125 1000 -11% 145 145 0% 108 108 0% 270 235 -13% 1.36 1.28 -6% 96.0 93.0 -3% 2014F 3.66 3.81 4% 1.18 1.16 -2% 1.17 1.19 2% 11.03 10.90 -1% 1400 1500 7% 27 26 -2% 2000 1950 -3% 1225 1125 -8% 136 136 0% 100 105 5% 265 245 -8% 1.30 1.25 -4% 92.0 91.0 -1% 2015F 3.28 3.45 5% 1.10 1.09 -1% 1.11 1.26 13% 10.42 11.35 9% 1250 1350 8% 24 23 -4% 1850 1850 0% 1300 1225 -6% 123 123 0% 95 100 5% 223 233 4% 1.26 1.21 -4% 92.0 89.0 -3% 2016F 2.95 3.14 6% 1.12 1.12 0% 1.04 1.12 8% 9.14 9.74 7% 1138 1175 3% 20 20 -2% 1831 1850 1% 925 906 -2% 111 111 0% 104 100 -4% 195 223 14% 1.21 1.20 -1% 91.7 89.2 -3% LT 3.00 3.00 0% 1.15 1.15 0% 1.00 1.00 0% 8.50 8.50 0% 1100 1100 0% 18 18 0% 1850 1850 0% 700 700 0% 100 100 0% 100 100 0% 180 180 0% 1.20 1.20 0% 90.0 90.0 0%
Aluminium (US$/lb)
Zinc (US$/lb)
Nickel (US$/lb)
Precious metals Gold (US$/oz)
Silver (US$/oz)
Platinum (US$/oz)
Palladium (US$/oz)
Bulks Iron ore (US$/t - China CFR 62%)
Thermal coal (US$/t)
Coking coal (US$/t)
Ferrochrome (USc/lb)
Oil WTI crude oil (US$/bbl)
Source: RBS forecasts
Changes to earnings, valuations and recommendations

We have made a number of changes to our earnings forecasts, valuations and recommendations (see Table 3 below for more details). We have made the two recommendation changes: Iluka Resources (ILU): Due to ILUs recent share price increase, we move from a Buy to a Hold recommendation, with the share price now 3% below our NPV-based target price. Iron Road (IRD): Due to the recent fall in IRDs share price, the stock is now trading below our NPV which has triggered a move to a Buy from a Hold recommendation.
Table 3 : Changes to earnings and valuation
Company Alkane Resources (A$) Y/E Dec Alumina (A$) Y/E Dec Aquila Resources (A$) Y/E Dec Atlas Iron (A$) Y/E Jun BHP Billiton (US$) Y/E Jun Energy Resources of Aust (A$) Y/E Dec Fortescue Metals Group (US$) Y/E Jun Gindalbie Metals (A$) Y/E Jun Grange Resources (A$) Y/E Dec Iluka Resources (A$) Y/E Dec Independence Group (A$) Y/E Jun Iron Road (A$) Y/E Jun Kingsgate Consolidated (A$) Y/E Jun Lynas Corporation (A$) Y/E Jun Mineral Resources (A$) Y/E Jun Mount Gibson Iron (A$) Y/E Jun Scenario Pre Post % change Pre Post % change Pre Post % change Pre Post % change Pre Post % change Pre Post % change Pre Post % change Pre Post % change Pre Post % change Pre Post % change Pre Post % change Pre Post % change Pre Post % change Pre Post % change Pre Post % change Pre Post % change NPAT 2011A/F -5 -5 0% 127 127 0% -64 -64 0% 169 169 0% 21,684 21,684 0% -32 -32 0% 1,634 1,634 0% -5 -5 0% 71 71 0% 507 522 3% 30 30 0% -18 -18 0% 32 32 0% -59 -59 0% 151 151 0% 234 234 0% NPAT 2012F -10 -10 0% -4 -4 0% -29 -43 47% 233 197 -16% 19,603 19,603 0% -101 -101 0% 1,648 1,648 0% 11 11 0% 107 107 0% 1,381 1,311 -5% 29 15 -46% -17 -17 0% 159 134 -16% -18 -18 0% 190 175 -8% 411 359 -13% NPAT 2013F -50 -50 0% 177 177 0% -158 -178 12% 215 218 1% 21,722 21,722 0% -64 -64 0% 1,776 1,776 0% 81 81 0% 82 82 0% 1,496 1,426 -5% 39 42 9% -17 -17 0% 193 217 12% 613 413 -33% 212 192 -9% 384 346 -10% NPV (A$ps) 1.92 1.92 0% 1.62 1.62 0% 4.61 4.77 4% 4.06 4.07 0% 43.76 43.76 0% 0.96 0.96 0% 7.39 7.39 0% 0.71 0.71 0% 0.67 0.67 0% 20.24 18.77 -7% 5.92 5.64 -5% 0.70 0.70 0% 7.37 7.69 4% 1.83 1.83 0% 10.75 10.60 -1% 1.77 1.69 -5% Target price (A$ps) 1.92 1.92 0% 1.62 1.62 0% 4.61 4.77 4% 4.06 4.07 0% 43.76 43.76 0% 0.96 0.96 0% 7.39 7.39 0% 0.71 0.71 0% 0.67 0.67 0% 20.24 18.77 -7% 5.92 5.64 -5% 0.70 0.70 0% 7.37 7.69 4% 1.83 1.83 0% 10.75 10.60 -1% 1.77 1.69 -5% Reco Buy Buy Buy Buy Sell Sell Buy Buy Buy Buy Sell Sell Buy Buy Buy Buy Buy Buy Buy Hold Buy Buy Hold Buy Buy Buy Buy Buy Hold Hold Buy Buy
(Continued)
Table 3 : Changes to earnings and valuation (contd)

Company Medusa Mining (A$) Y/E Jun Newcrest Mining (A$) Y/E Jun OM Holdings (A$) Y/E Dec OceanaGold (US$) Y/E Dec OZ Minerals (A$) Y/E Dec Paladin Resources (US$) Y/E Jun Perseus Mining (A$) Y/E Jun Regis Resources (A$) Y/E Jun Rio Tinto (US$) Y/E Dec Scenario Pre Post % change Pre Post % change Pre Post % change Pre Post % change Pre Post % change Pre Post % change Pre Post % change Pre Post % change Pre Post % change NPAT 2011A/F 111 111 0% 908 908 0% -13 4 -131% 46 55 19% 302 274 -9% -59 -59 0% -30 -30 0% 36 36 0% 14,928 17,329 16% NPAT 2012F 128 99 -23% 1,661 1,406 -15% 16 16 0% 53 53 0% 207 207 0% -14 -14 0% 133 63 -53% 53 49 -8% 13,622 13,622 0% NPAT 2013F 121 145 19% 1,791 1,923 7% 25 25 0% 70 70 0% 267 267 0% 15 15 0% 115 74 -36% 193 216 12% 16,085 16,085 0% NPV (A$ps) 7.46 7.73 4% 27.36 27.58 1% 0.36 0.36 0% 3.00 3.00 0% 11.94 11.94 0% 1.83 1.83 0% 2.93 2.70 -8% 2.51 2.70 8% 97.40 97.40 0% Target price (A$ps) 7.46 7.73 4% 38.31 38.61 1% 0.36 0.36 0% 3.00 3.00 0% 11.94 11.94 0% 1.83 1.83 0% 3.37 2.70 -20% 2.89 3.51 22% 97.40 97.40 0% NPAT 2011A/F Buy Buy Buy Buy Sell Sell Buy Buy Hold Hold Hold Hold Hold Hold Hold Hold Buy Buy
Table 4 : Summary of valuation metrics

Company Ticker Asset beta 1.0 1.3 1.4 1.1 1.0 1.0 1.0 1.2 1.1 1.0 1.3 1.1 1.0 1.2 1.1 1.1 1.0 1.3 1.0 1.1 0.9 1.2 1.1 1.1 1.1 Cost of debt 6.3% 7.5% 8.0% 7.0% 5.8% 5.0% 7.0% 5.0% 6.0% 5.2% 8.0% 5.2% 5.2% 10.0% 7.5% 7.0% 9.0% 6.1% 7.5% 9.0% 7.5% 8.3% 10.0% 8.6% 5.8% Cost of equity 12.7% 14.7% 15.4% 13.0% 11.0% 13.6% 12.7% 14.2% 13.1% 13.1% 14.2% 13.6% 13.1% 13.2% 12.6% 13.3% 11.8% 14.7% 12.2% 12.6% 11.2% 13.7% 12.4% 13.2% 11.7% WACC Recom Share price (A$) 1.31 1.07 6.31 3.23 37.48 1.45 5.19 0.63 0.60 18.16 4.02 0.55 6.90 1.28 11.57 1.42 5.49 32.44 0.40 2.37 11.06 1.78 2.90 3.91 67.53 Target price (A$) 1.62 1.92 4.77 4.07 43.76 0.96 7.39 0.71 0.67 18.77 5.64 0.70 7.69 1.83 10.60 1.69 7.73 38.61 0.36 3.00 11.94 1.83 2.70 3.51 97.40 Upside/ downside 24% 81% -24% 26% 17% -34% 42% 12% 12% 3% 40% 28% 11% 43% -8% 19% 41% 19% -10% 27% 8% 3% -7% -10% 44%
Alumina Alkane Resources Aquila Resources Atlas Iron BHP Billiton Energy Resource Fortescue Metal Gindalbie Metals Grange Resources Iluka Resources Independence Gp Iron Road Kingsgate Consolidated Lynas Corporation Mineral Resources Mount Gibson Iron Medusa Mining Newcrest Mining OM Holdings OceanaGold OZ Minerals Paladin Energy Perseus Mining Regis Resources Rio Tinto
AWC ALK AQA AGO BHP ERA FMG GBG GRR ILU IGO IRD KCN LYC MIN MGX MML NCM OMH OGC OZL PDN PRU RRL RIO
10.2% 11.9% 12.5% 10.6% 8.9% 10.7% 10.4% 11.5% 10.8% 10.3% 11.6% 10.6% 10.9% 11.3% 11.1% 10.8% 10.2% 11.6% 10.8% 10.7% 9.4% 11.3% 10.8% 11.1% 9.4%
Buy Buy Sell Buy Buy Sell Buy Buy Buy Hold Buy Buy Buy Buy Hold Buy Buy Buy Sell Buy Hold Hold Hold Hold Buy
Risks to target prices

Table 5 : Valuation and risks
Stock AGO Valuation and risks We value AGO using a DCF methodology on which we base our target price. Our target price is set at our NPV. Key downside risks to our target price include lower-than-estimated sales, higher-than-expected capex, and variations in costs and iron ore prices relative to our forecasts. Upside risks include a fasterthan-expected ramp-up in production at all operations. We value ALK using a DCF methodology. Upside risks to our valuation include lower capex and operating costs than we have forecast and higher commodity prices. Downside risks include delays in the finalisation of the DFS, securing project finance and lower commodity prices than we forecast. We value AQA using a DCF methodology on which we base our target price. Medium-term upside to our valuation and target price could result from asset sales above our valuations and commodity price increases. Downside risks include ongoing JV disputes, potential project development delays, financing difficulties and higher-than-anticipated capital costs. We value AWC using a DCF methodology on which we base our target price. Potential upside and downside risks to our target price relate to the performance of the aluminium price, operating costs and the AUD/USD exchange rate relative to our expectations. Further downside risks are associated with a potential oversupply in the aluminium industry due to capacity restarts. The key risks to our NPV-derived target price (upside and downside) relate to fluctuations in prices for iron ore and coal, China infrastructure spend, higherthan-expected costs, significant disruptions to production, and any change of conditions in the global economy. We value ERA using a DCF methodology on which we base our target price. Downside risks to our target price are lower-than-expected uranium prices, worse-than expected weather impacts and higher costs. Upside risks are around board approval of the heap leach/Ranger 3 Deeps project and a faster-thanexpected recovery in ERA's production. We value FMG using a DCF methodology on which we base our target price. Key downside risks to our forecasts and target price include higher-thanbudgeted capex and lower than-forecast prices. Upside risks include a faster ramp-up in production than we currently model. We value GBG using a DCF methodology. Our target price is based on a discount to our NPV to account for potential equity raising risks. Upside risks to our target price are a more rapid progression of construction activities at Karara, higher-than-forecast commodity prices and exploration success at GBG's tenement holdings outside the Karara JV. Downside risks include project delays at Karara, higher-than-expected capital costs and a sustained downturn in commodity prices below our current assumptions. Our NPV-based target price reflects GRR's 100% interest in the Savage River operations and 70% interest in the Southdown iron ore project. We ascribe no value to a proposed pellet plant or Mineral Resources Tax. Medium-term downside risks include higher capital costs at Southdown, higher Savage River mining costs and lower iron ore prices than forecast. Upside risks include faster progression of Southdown, sustained higher iron ore prices and potential resource exploration success. We value ILU using a DCF methodology on which we base our target price. Key downside risks to our target price are a rally in the AUD, increases in operating costs, lower-than-forecast zircon and rutile prices, and a more significant build-up of product stockpiles than we expect. Upside risks lie in strengthening Asian demand leading to sustainably higher zircon and TiO2 prices, and a drawdown of product stockpiles. Our target price for IGO is based on our NPV. Upside risks to our target price include reserve increases in excess of our forecasts and greenfield exploration success. Downside risks include an increase in capex or a delay in Tropicana's development schedule. We value IRD based on a DCF methodology. Key risks to our target price relate to: 1) changes in material movement costs and their impact on total operating costs; 2) changes in capital costs for mine development; and 3) movements in the long-term iron ore price. We value KCN using a DCF methodology from which we derive our target price. Upside risks to our target price include underground resource potential below old Chatree and higher-than-forecast gold prices. Downside risks relate to higher-than-expected operating costs and higher capex for the expansion of the Chatree plant. We value LYC using a DCF methodology. Upside risks to our target price include production and commodity prices exceeding our expectations. Downside risks include higher-than-forecast capex, commissioning and development delays, and lower-than-forecast commodity prices. We base our MGX target price on our DCF valuation. Key risks to our target price both to the upside and the downside are movements in iron ore prices and operating costs relative to our forecasts. Changes to capital expenditure plans also create both upside and downside risks. A major reserve extension at one of the operations would result in a material upgrade to our NPV, as current mine lives are relatively short. We value MIN using a DCF methodology on which we base our target price. Upside risks to our target price include a more rapid ramp-up of proposed mining projects than forecast, greater port capacity allotments than current estimates and increased commodity prices. Downside risks include more project delays than we forecast, higher-than-expected capital costs and port access restrictions above present estimates. We value MML using DCF methodology on which we base our target price. Upside risks to our target price include production and mine life exceeding our expectations and a higher-than-forecast gold price. Downside risks include higher-than-forecast capex, commissioning and development delays, and a lowerthan-forecast gold price. We value NCM using a DCF methodology. Our target price is based on the long-term premium of the share price to our assessed NPV over time (40%). The key downside risks to our target price are a decline in the gold market, a stronger AUD, capital expenditure increases and issues with the integration of Lihir Gold. Upside risks stem from a stronger bullion price and weaker AUD, and exploration success in Cadia Valley, Wafi-Golpu, Namosi and Hidden Valley. We value OGC using a DCF methodology, on which we base our target price. Upside risks to our target price include production and mine life exceeding our expectations and higher-than-forecast gold price. Downside risks include higher-than-forecast capex, commissioning and development delays and a lowerthan-forecast gold price. We value OMH using a NPV methodology on which we base our target price. Upside/downside risks to our target price relate to: 1) production, manganese prices or AUD higher or lower than our forecasts; 2) the ability to extend the resources at Bootu Creek or the Helen and Renner Creek tenements; and 3) any delays in production at the Tshipi Project. We value OZL using a DCF methodology on which we base our target price. Changes in copper and gold prices and operating costs relative to our forecasts provide both upside and downside risks to our target price. Any potential acquisition that the market does not react favourably to would also be a downside risk. We value PDN using a DCF methodology. Downside risks to our NPV include delays in ramping up to full capacity, further funding requirements, lower uranium prices relative to our forecasts and higher costs. Upside risks to our price targets include higher than anticipated uranium prices and M&A activity. We value PRU using a DCF methodology on which we base our target price. Upside risks to our target price include higher than forecast commodity prices and a positive reserve reconciliation. Downside risks to valuation include higher than forecast costs, and lower than forecast gold prices. We value RIO using a DCF methodology on which we base our target price. Downside risks to our target price relate to lower-than-forecast commodity prices, particularly for iron ore. A higher-than-estimated AUD could also have a negative effect on our operating cost estimates. Other risks are delays to growth plans and higher-than-forecast capex. Our target price is set at a 30% premium to our DCF valuation to account for its corporate appeal. Upside risks to our target price include production and mine life exceeding our expectations and higher-than-forecast gold price. Downside risks include higher-than-forecast capex, commissioning and development delays and a lower-than-forecast gold price.
Source: RBS estimates
ALK AQA
AWC
BHP ERA
FMG GBG
GRR
ILU
IGO IRD KCN
LYC MGX
MIN
MML
NCM
OGC
OMH
OZL
PDN PRU RIO
RRL
Bear case scenario prices at 90th percentile cash costs for 1yr
Under a more bearish scenario with GDP growth in China slowing materially, combined with a worsening of the EU financial crisis, we believe commodity demand, and prices, could fall significantly. We assume that this could be modelled by assuming commodity prices average 90th percentile cash costs for a year, before reverting back to our long-term prices. The charts below illustrate this profile for copper, iron ore, gold, and the AUD. For gold we have assumed it rallies by 10% as investors seek a safe haven.
Chart 8 : Copper price (US$/lb) RBS bear-case price profile
4.50 4.00 3.50 3.00 2.50 2.00 1.50 2011F Bear case 2012F 2013F 2014F 2015F 2016F LT
Chart 9 : Gold price (US$/oz) RBS bear-case price profile

2000 1800 1600 1400 1200 1000 800 2011F Bear case 2012F 2013F 2014F 2015F 2016F LT
RBS house forecasts

RBS house forecasts

Chart 10 : Iron ore fines (US$/t CFR) RBS bear-case price profile
180 160
Chart 11 : AUD/USD RBS bear-case currency profile

1.15 1.10 1.05
140 120
1.00 0.95 0.90
100 80
0.85 0.80 0.75
60 2011F Bear case 2012F 2013F 2014F 2015F 2016F LT
0.70 2011F Bear case

2012F
2013F
2014F
2015F
2016F
LT
RBS house forecasts
RBS house forecasts

Impact on NPAT and NPV RBS bear-case scenario

Ticker BHP Scenario Base Bear case % change Base Bear case % change Base Bear case % change Base Bear case % change Base Bear case % change Base Bear case % change 2012F 19,603 16,760 -15% 13,622 8,423 -38% 1,648 12,80 -22% -4 -10 155% 207 5 -98% 1,406 1,523 9% 2013F 21,722 12,682 -42% 16,085 8,308 -48% 1,776 851 -52% 177 -20 -111% 267 60 -77% 1,923 1,705 -11% 2014F 22,764 13,780 -39% 15,155 9,123 -40% 2,520 1,544 -39% 143 52 -64% 225 115 -49% 2,137 1,934 -10% NPV 43.76 38.07 -13% 97.4 85.7 -12% 7.39 6.09 -18% 1.62 1.55 -4% 11.94 10.48 -12% 27.587 27.01 -2%
RIO
FMG
AWC
OZL
NCM
Bull case scenario back to 2011 commodity price highs in 2012

We believe the best-case scenario for 2012 involves a speedy resolution of the EU financial crisis (Germany-backed bailout), combined with renewed support for Chinese property demand (policy response). In our view, this situation could see the property market in China reinvigorated and lead to rising commodity demand and prices. Under this scenario, we assume commodity prices rise to their 2011 highs and stay there for six months before reverting to our long-term prices.
Chart 12 : Copper price (US$/lb) RBS bull-case price profile
4.50
Chart 13 : Gold price (US$/oz) RBS bull-case price profile

1800 1700
4.00
1600 1500
3.50
1400 1300
3.00
1200 1100
2.50
1000 900
2.00 2011F Bull case 2012F 2013F 2014F 2015F 2016F LT
800 2011F Bull case

2012F
2013F
2014F
2015F
2016F
LT
RBS house forecasts
RBS house forecasts

Chart 14 : Iron ore fines (US$/t CFR) RBS bull-case price profile
180 160
Chart 15 : AUD/USD RBS bull-case currency profile

1.15 1.10 1.05
140 120
1.00 0.95 0.90
100 80
0.85 0.80 0.75
60 2011F Bull case 2012F 2013F 2014F 2015F 2016F LT
0.70 2011F Bull case

2012F
2013F
2014F
2015F
2016F
LT
RBS house forecasts
RBS house forecasts

Impact to NPAT and NPV RBS bull-case scenario

Ticker BHP Scenario Base Bull macro % change Base Bull macro % change Base Bull macro % change Base Bull macro % change Base Bull macro % change Base Bull macro % change 2012F 19,603 19,596 0% 13,622 14,915 9% 1,648 1,348 -18% -4 47.5 -12,95% 207 208 0% 1,406 1,412 0% 2013F 21,722 25,495 17% 16,085 18,668 16% 1,776 2,058 16% 177 115.8 -34% 267 248 -7% 1,924 1,594 -17% 2014F 22,764 25,125 10% 15,155 17,155 13% 2,520 3,383 34% 143 147.3 3% 225 225 0% 2,137 1,925 -10% NPV 43.76 44.96 3% 97.4 100.71 3% 7.39 7.84 6% 1.62 1.71 6% 11.94 11.89 0% 27.58 26.85 -3%
RIO
FMG
AWC
OZL
NCM
Equities | Australia | Metals & Mining

23 January 2012
Buy
TP A$18.25
Sims Metal Management

Nyet positive
Russia has decided to ban ferrous scrap exports to East Asia from 13 February. We estimate this could reduce regional supply by about 1Mtpa, roughly 5% of annual East Asian import volumes. We see this as another positive for SGM, which should stand to benefit from stronger volume demand and potentially higher scrap prices - Buy maintained.
RBS Refiner
Price (close 23 Jan) A$14.78 3M high/low A$14.95/11.90 Market cap A$3.02bn Av (12M) turnover A$12.68m Freefloat 83% Reuters SGM.AX Bloomberg SGM AU Net debt (cash) FY11 A$126.20m 3yr EPS CAGR 12-14F 28.1% Income (2013F div yield) 5.4%
Source: Bloomberg, RBS forecasts
Event: SGM likely to benefit from Russian ban on Far East scrap exports The Russian government is closing all Far Eastern ports for scrap export, except ice-locked Magadan. The export ban is scheduled to take effect from 13 February and we estimate this move could reduce regional ferrous scrap supply by at least 1Mtpa. We estimate this is roughly 5% of annual import volumes in East Asia. East Asia accounts for 40% of SGM revenue, and we estimate SGM has 20-25% market share of import volumes in the region. In our view, SGM is well placed to benefit as Asian steel mills look for new sources of scrap supply, with the potential for both additional cargos sold and higher prices. Forecasts: Potential upside risks to our earnings forecasts We have left our earnings forecasts unchanged. However, we see upside risks to forecasts should the Russian export ban increase ferrous volumes or prices above our current estimates. We estimate our FY13 ferrous volumes would lift about 2%, assuming SGMs market share remains constant. In our view, however, a more significant impact could be created by potentially higher prices. A previous export ban in 2009 corresponded with scrap prices increasing US$110/t. Valuation: Buy recommendation key earnings drivers keep improving
RBS vs consensus
NPAT (A$m) 2012F 2013F 2014F RBS 255 326 382 Cons 224 295 345 % diff 14% 10% 11%
Source: RBS, IBES
Price performance
(1M) Price (A$) Absolute (%) Rel to mkt*(%) 13.08 13.0 8.0 (3M) (12M) 13.38 10.5 8.0 19.84 -25.5 -15.9
*S&P/ASX200 Source: Bloomberg
Key events
Date Feb-12 Apr-12 Apr-12 Event 1H FY12 Result Schnitzer Feb-Q Result CMC Feb-Q Result
Source: SGM, RBS
In our view, SGMs key earnings drivers continue to strengthen due to: 1) improving scrap volumes; 2) a recent rally in ferrous scrap prices, which we believe could extend further as mills restock ahead of seasonal winter supply tightness and Asian mills return to market post Chinese New Year; and 3) leverage to a recovering US economy, as evidenced by improving employment trends and the ISM survey. Trading at 12x FY12F PE, with an EPS CAGR of 29% over the next three years and a share buy back underway, we believe SGM is cheap. We retain our Buy recommendation with an NPV-based target price of A$18.25 per share.
Key forecasts
year to Jun EBITDA (A$m) Normalised net profit (A$m) Norm fully diluted EPS (c) Normalised EPS growth Dividend per share (c) Dividend yield (%) Normalised PE
1. Pre non-recurring items and post preference dividends Accounting standard: IFRS
FY10A 354.8 126.7 65.69 192.0 33.00 2.23 22.50
FY11A 432.0 182.0 88.93 35.40 47.00 3.18 16.60
FY12F 547.2 254.5 124.2 39.70 62.30 4.21 11.90
FY13F 660.6 326.3 159.7 28.50 79.80 5.40 9.26
FY14F 745.2 382.1 187.0 17.10 93.50 6.33 7.90
Source: Company data, RBS forecasts
Analysts
Todd Scott +61 2 8259 5865 [email protected] Lyndon Fagan [email protected] Sam Berridge [email protected] Phillip Chippindale [email protected]
Produced by: RBS Equities (Australia) Limited ABN 84 002 768 701, AFS Licence 240530 Page 33 Important disclosures can be found in the Disclosures Appendix.
RBS Equities Forecasts: Sims Metal Management

Income statement
A$m, year to June Revenue Cost of sales Gross profit Operating costs EBITDA DDA & Impairment (ex gw) EBITA Goodwill (amort/impaired) EBIT Net interest Associates (pre-tax) Other pre-tax items Reported PTP Taxation Minority interests Other post-tax items Reported net profit Tot normalised items Normalised EBITDA Normalised EBIT Normalised PTP Normalised net profit FY10A 7484 -7129 354.8 n/a 354.8 -143.9 210.9 0.00 210.9 -16.4 n/a -20.3 174.2 -67.8 0.00 0.00 106.4 -20.3 354.8 210.9 194.5 126.7 FY11A 8895 -8463 432.0 n/a 432.0 -141.1 290.9 n/a 290.9 -27.1 n/a 10.1 273.9 -81.8 0.00 0.00 192.1 10.1 432.0 290.9 263.8 182.0 FY12F 10198 -9651 547.2 n/a 547.2 -130.0 417.2 n/a 417.2 -10.3 n/a 0.00 406.9 -152.4 0.00 0.00 254.5 0.00 547.2 417.2 406.9 254.5 FY13F 11177 -10516 660.6 n/a 660.6 -134.0 526.6 n/a 526.6 -14.3 n/a 0.00 512.3 -186.0 0.00 0.00 326.3 0.00 660.6 526.6 512.3 326.3 FY14F 12064 -11319 745.2 n/a 745.2 -136.0 609.2 n/a 609.2 -16.4 n/a 0.00 592.9 -210.8 0.00 0.00 382.1 0.00 745.2 609.2 592.9 382.1
Balance sheet
A$m, year ended June Cash & market secs (1) Other current assets Tangible fixed assets Intang assets (incl gw) Oth non-curr assets Total assets Short term debt (2) Trade & oth current liab Long term debt (3) Oth non-current liab Total liabilities Total equity (incl min) Total liab & sh equity Net debt FY10A 132.3 1362 925.8 1347 472.9 4240 0.60 642.4 119.9 198.0 960.9 3279 4240 -11.8 FY11A 165.5 1601 865.5 1126 422.0 4180 0.50 785.7 291.2 181.9 1259 2921 4180 126.2 FY12F 109.4 1821 935.5 1126 554.0 4546 0.50 889.3 441.2 181.9 1513 3033 4546 332.3 FY13F 112.3 1885 1003 1126 554.0 4680 0.50 919.4 421.2 181.9 1523 3157 4680 309.4 FY14F 110.2 2033 1053 1126 554.0 4876 0.50 989.4 221.2 181.9 1393 3483 4876 111.5
Cash flow statement

A$m, year to June EBITDA Change in working capital Net interest (pd) / rec Taxes paid Other oper cash items Cash flow from ops (1) Capex (2) Disposals/(acquisitions) Other investing cash flow Cash flow from invest (3) Incr / (decr) in equity Incr / (decr) in debt Ordinary dividend paid Preferred dividends (4) Other financing cash flow Cash flow from fin (5) Forex & disc ops (6) Inc/(decr) cash (1+3+5+6) Equity FCF (1+2+4) FY10A 354.8 -351.6 -13.4 -67.8 24.2 -53.8 -120.9 -121.5 -22.4 -264.8 441.9 -41.2 -29.4 0.00 -12.0 359.3 -0.40 40.3 -174.7 FY11A 432.0 -177.7 -12.1 -75.1 n/a 167.1 -84.1 -105.8 -35.2 -225.1 3.60 179.9 -52.4 0.00 -6.90 124.2 -24.5 41.7 83.0 FY12F 547.2 -116.2 -20.6 -140.8 n/a 269.7 -200.0 -132.0 0.00 -332.0 0.00 150.0 -117.5 0.00 0.00 32.5 0.00 -29.8 69.7 FY13F 660.6 -33.8 -21.3 -242.0 n/a 363.5 -201.5 0.00 0.00 -201.5 0.00 -20.0 -150.2 0.00 0.00 -170.2 0.00 -8.17 162.0 FY14F 745.2 -78.4 -10.3 -105.4 n/a 551.1 -186.0 0.00 0.00 -186.0 0.00 -200.0 -163.1 0.00 0.00 -363.1 0.00 1.98 365.1
Sims Metal Management | 23 January 2012 Page 34 Page 2
Russia closes the door to Far East scrap exports

Event There is no time frame or indications the export ban will be removed Last week Russian Prime Minister Vladmir Putin signed an order banning scrap exports from Far East Russian ports. The ban is effective from 13 February 2012. Only the port of Magadan will be allowed to remain open for exports, however, ice-locked conditions and the longer distance of the port situated in North-East Russia will materially increase the cost of exports. There is no time frame or indications the export ban will be removed in the future. Rationale The ban was put in place to reduce scrap costs for Russias only Far East steel producer Amurmetal, which is an EAF mill with a crude steel capacity of 2Mtpa. Scrap procurement costs for the mill have been notoriously high due to dealers preference for export and high delivery costs due to its locative and railway tariffs. The facility is the only steelworks in Russias Far East and is currently owned by state controlled Vnesheconombank after it was bailed out in 2009. Impact We estimate the ban on Russian scrap could reduce exports to East Asia by slightly more than 1Mtpa. Over the past 12 months ending September 2012, Russia exported 3.9Mt of ferrous scrap. Russian ports in the Far East export scrap primarily to Korea and Taiwan. The two largest users of Russian scrap in Korea import roughly 900ktpa (Hyundai and Dongkuk Steel). When volumes exported to China and Taiwan are included, we estimate total volumes impacted could easily exceed 1Mtpa. Based on data provided by CRU, we estimate this is equivalent to roughly 5% of East Asian import volumes. During a previous export ban in 2009, East Asian ferrous scrap prices increased US$110/t The Russian government previously implemented a ban on scrap exports from Far East ports in 2009. Over the period, when the export ban started at the end of March 2009 to when it was lifted on 15 October 2009, East Asian ferrous scrap prices increased 46% (US$110/t). While we recognise scrap prices are influenced by numerous factors and prices were near three-year lows at the start of the ban, the price rally appears was well aligned to the timing of the export ban. The previous export ban had also been started in support of Amurmetal, and was only lifted after a Russian supreme arbitration court decision.
Chart 2: East Asian ferrous scrap price over 2009 export ban
400
US$/t
Chart 1: Russian ferrous scrap exports by destination

China & Taiwan 6% EU 30%
Previous export ban removed
Total 3.9Mt (12 months, Sept 2011) Korea 24%
350 300 250 200 150 Previous export ban start 100 50 0 Jan-09
Turkey 40%
Source: CRU, OECD, Metal Expert, SBB, RBS
Apr-09
Jul-09
Oct-09
Jan-10
Source: SBB, RBS
SGM well placed to benefit from additional Asian demand

We estimate SGM will sell slightly more than 5Mt of ferrous scrap into Asia in FY12. This makes Asia SGMs largest market for ferrous scrap by geography. Based on import volumes of key regional scrap destinations of South Korea, China, and Taiwan, we believe SGM may have an up to 20-25% market share of the ferrous scrap import market in the region. In our view, this puts SGM in an attractive position to benefit from tighter supply-demand fundamentals for ferrous scrap once the export ban is in place next month. Assuming SGM maintains its market share for the ~1Mtpa of Russian export volumes, this would lift ferrous sales by 250kt, resulting in a 2% lift to our FY13 ferrous scrap volume forecasts. In our view, however, a greater impact would be created by a potential spike in ferrous scrap prices. If a rally in ferrous scrap prices occurs similar to the 2009 export ban, this should expand SGM trading margins through the appreciation of selling prices relative to the costs of inventories held.
Chart 3: SGM revenues by destination (FY11)
Europe 23%
Asia
Chart 4: SGM ferrous volumes by destination (FY12 RBS est)
Domestic sales 31%
Europe
US
South/Central Amercia 2% USA/Canada 1% Middle East 3% SE Asia & Oceania 10%
NE Asia 14%
Other
Australia
Mt 0.0 1.0 2.0 3.0 4.0 5.0 6.0
China & HK 16%

Source: SGM
Source: SGM, RBS estimates
Investment view
Trading at 12x FY12F PE, with an EPS CAGR of 29% over the next three years, we believe SGM is cheap. In our view, SGM remains a best-in-class operator in the scrap metal recycling industry and we anticipate a trend towards strong historic average ROE of 15% (the average since FY95). With an accretive share buyback ongoing and only about 5% complete, we retain our Buy recommendation with an NPV-based target price of A$18.25 per share.
Downside risks to our target price

Downside risks to our target price include: risk of lower margins due to tighter scrap availability than anticipated; potential weakness in ferrous scrap prices; and potentially accretive M&A transactions cannot be found, limiting growth prospects.
SGM financial summary

Capital Profile Number of shares (m) Market capitalisation (A$m) Enterprise value (A$m) Enterprise value (US$m) Valuation - DCF Description Ferrous Trading & NFSR Ferrous Brokerage Non-Ferrous Recycling Solutions Manufacturing & Other Total Operations Net debt (cash) Corporate overheads Total Valuation P/NPV Operational NPV split
Other 5% SRS 21%
June year end 204 3020 3146 3146 NPAT Reported (A$m) NPAT Normalised (A$m) EPS () CFPS () DPS () P/E (x) P/CF (x) Fe EV/EBITDA (x) Fe EPS Growth NoYield (%) SRScrap metal sales (kt) Ot Ferrous (including NFSR) Non-ferrous Other Total volumes Assumptions AUD/USD Heavy Melt Scrap (US$/t) Non-ferrous Zobra (US$/t) Profit & Loss (A$m) Sales revenue Operating costs EBITDA Depreciation & Amortisation EBIT Net interest expense Pre-tax profit Tax Profit after tax Minorities NPAT (underlying) Significant items NPAT (reported) Operational EBIT (A$m) Ferrous Trading & NFSR Ferrous Brokerage Non-Ferrous Recycling Solutions Manufacturing & Other Operational EBIT (US$/t) Ferrous Trading & NFSR Ferrous Brokerage Non-Ferrous Profitability Analysis (%) EBIT margin EBITDA margin Effective tax rate ROA - EBIT / (total assets - cash) ROE - NPAT / equity Cashflow
Other 7%
FY10A 127 147 72 -155 33 20.5 -9.5 8.9 221% 2.2% FY10A 12,294 565 38 12,897 FY10A 0.88 369 2130 FY10A 7,484 7,129 355 144 211 16 195 68 147 0 147 -20 127 FY10A 133 21 99 89 29 FY10A 13 6 154 FY10A 3% 5% 35% 5% 4% FY10A 355 -48 -121 -168 -249 359 63 FY10A 117 3279 4240 132 -15 0% 0% 0.0 12.9 21.6
FY11A 192 182 89 -58 47 16.7 -25.6 7.3 23% 3.2% FY11A 13,592 571 36 14,199 FY11A 0.99 446 2573 FY11A 8,895 8,463 432 131 301 27 274 82 182 0 182 10 192 FY11A 182 23 95 114 31 FY11A 18 7 164 FY11A 3% 5% 30% 7% 6% FY11A 432 159 -143 16 -225 124 58 FY11A 292 2921 4180 166 126 4% 4% 0.3 11.1 15.9
FY12F 255 255 125 -31 62 11.9 -47.9 5.7 41% 4.2% FY12F 14,592 608 40 15,240 FY12F 1.01 513 2491 FY12F 10,198 9,651 547 130 417 10 407 152 255 0 255 0 255 FY12F 247 27 110 132 37 FY12F 23 8 183 FY12F 4% 5% 37% 9% 8% FY12F 547 269 -200 69 -332 7 -56 FY12F 442 3033 4546 109 332 11% 10% 0.6 40.5 53.1
FY13F 326 326 160 85 80 9.3 17.5 4.8 28% 5.4% FY13F 15,360 640 40 16,040 FY13F 1.09 575 2727 FY13F 11,177 10,516 661 134 527 14 512 186 326 0 326 0 326 FY13F 329 26 122 152 37 FY13F 31 7 207 FY13F 5% 6% 36% 12% 10% FY13F 661 375 -202 173 -202 -170 3 FY13F 422 3157 4680 112 309 10% 9% 0.5 36.8 46.1
FY14F 382 382 187 177 94 7.9 8.4 4.2 17% 6.3% FY14F 15,840 660 40 16,540 FY14F 1.07 583 2928 FY14F 12,064 11,319 745 136 609 16 593 211 382 0 382 0 382 FY14F 390 28 129 165 37 FY14F 35 8 208 FY14F 5% 6% 36% 13% 11% FY14F 745 547 -186 361 -186 -363 -2 FY14F 222 3483 4876 110 111 3% 3% 0.1 37.2 45.5
Source: RBS
A$m 2528 178 806 993 238 4742 -126 -887 3729
A$ps 12.37 0.87 3.94 4.86 1.16 23.21 -0.62 -4.34 18.25 0.81
Non-Ferrous 17% Ferrous Brokerage 4%
Valuation inputs Rf rate MRP Ke Kd Gearing Ferrous Trading rate Tax 53% WACC DCF (A$) Prem/disc Target (A$)
5.3% 6.0% 12.5% 7.5% 30% 30% 11.0% 18.25 0% 18.25
Group EBIT and margins

800 700 600 500 400 300 200 100 0 -100 FY00A FY02A FY04A FY06A FY08A FY10A FY12F FY14F -200 EBIT EBIT margin (RHS) 0% -2% 4% 2% 8% 6%
A$m
12% 10%
FY12 EBIT by Division
SRS 24%
Ferrous Trading 44%
EBITDA Operating cashflow Capex Free cashflow Investing cashflow Financing cashflow Net Change in cash Balance Sheet Analysis Debt Equity Assets Cash Net debt Gearing - net debt/equity Gearing - net debt/ (net debt + equity) Net debt / EBITDA EBIT / net interest EBITDA / net interest
Non-Ferrous 20%
Ferrous Brokerage 5%
Page 38
Equities | Australia | Metals & Mining

23 January 2012
Buy
TP A$1.78 (from A$2.03)
Mirabela Nickel
Financial turnaround pushes out
MBN has largely delivered on its 7.2Mtpa production expansion. However, high costs still frustrate investors with unexpected contributors (higher fines/mine planning one-offs) prolonging MBN's financial turnaround. Management is attacking these where it can, but we now don't expect a material turnaround in profitability until 2H12. Nickel is not our favourite metal, however we do identify longer-term value for patient investors. MBN is also likely to figure as a potential M&A target should it prove that costs can be reigned in.
Event: Record 4Q11 production, but costs are still concerning Record 4Q11 nickel production of 5.0kt (including 2.0kt in December) reflects MBNs successful ramp-up to 7.2Mtpa of mining/processing capacity. However, reported 4Q C1 costs of US$7.42 were disappointing to us versus a target below US$6.70 (from the 3Q report) despite higher nickel production (+9%) and a higher Real/US$ exchange rate (+10%). Some one-offs which were unforeseen by MBN including higher fines in the plant feed (geological planning) and contract terminations (drilling), combined with key management changes suggest a steady state cost structure is indeed a long way off. Completion of the de-sliming circuit and primary crusher upgrades post 1Q will help, but MBNs new cost guidance of around US$6.00 is around 12 months away, disappointing patient holders. Forecasts: Breaking even in 2012 We have trimmed our FY12 production forecasts to 21.9kt (from 23.2) at the upper end of guidance, and lifted out C1 cost assumption to above US$6.50/lb. Weve also extended higher costs through to the long term at Santa Rita, resulting in 10-15% downgrades in earnings. We forecast total costs (after royalties and interest) of US$7.92/lb in 2012 resulting in consumption of all our forecast net free cash flow by the 2012 capital programme. Valuation: Still a six- to 12-month story Our DCF-based valuation falls to A$1.78ps (from A$2.18) based on the changes above. In 2012, MBN is likely to remain a highly sensitive producer, with a 10% lift in our assumed nickel price curve adding US$30m-35m to our NPAT forecasts and 57cps to our NPV. The longer term value in both MBN and the nickel market is clear, in our view, however holders are being asked to remain patient. For these reasons, along with recent changes to board and management, we believe MBN is a potential takeover target for the major base metals miners and/or their customers.
Key forecasts
year to Dec Reported net profit (US$m) Normalised net profit (US$m) Norm fully diluted EPS (US$) Dividend per share (US$) Dividend yield (%) Normalised PE EV/EBITDA 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
RBS Refiner
Price (close 23 Jan) A$1.215 3M high/low A$1.720/1.090 Market cap A$599.97m Av (12M) turnover A$3.23m Freefloat 80% Reuters MBN.AX Bloomberg MBN AU Net debt (cash) FY10 US$160.39m 3yr EPS CAGR 11-13F (100.0)% Income (2012F div yield) (0.0)%
Source: RBS forecasts, Bloomberg
RBS vs consensus
NPAT (US$m) RBS 2011F 2012F 2013F -74.6 -7.7 70.4 Cons -52.9 41.1 79.5 % diff 41% -119% -11%
Source: RBS forecasts, Capital IQ
Price performance
(1M) Price (A$) Absolute (%) Rel to mkt*(%) 1.20 1.2 -3.2 (3M) (12M) 1.30 -6.5 -8.6 2.29 -46.9 -40.1
*S&P/ASX200 Source: Bloomberg
Key events
Date Feb 12 1Q12 Apr 12 Event FY11 result Complete plant upgrades 1Q12 production report
Source: Bloomberg
FY09A -37.6 -37.6 -0.33 0.00 0.00 -3.85 -55.6
FY10A -47.6 -47.6 -0.10 0.00 0.00 -13.2 25.00
FY11F
FY12F FY13F -74.6 & -7.67 & 70.40 & -74.6 & -7.67 & 70.40 & -0.15 -0.02 & 0.14 0.00 0.00 0.00 0.00 0.00 0.00 -8.43 -82.0 8.93 62.40 10.90 4.48
Analysts
Tom Sartor +61 7 3334 4503 [email protected] James Wilson +61 8 6462 1974 [email protected]
Produced by: RBS Morgans Limited ABN 84 002 768 701, AFS Licence 240530 Important disclosures can be found in the Disclosures Appendix.
Page 39
RBS Equities Forecasts: Mirabela Nickel

Income statement
US$m, year to December Revenue Cost of sales Gross profit Operating costs EBITDA DDA & Impairment (ex gw) EBITA Goodwill (amort/impaired) EBIT Net interest Associates (pre-tax) Other pre-tax items Reported PTP Taxation Minority interests Other post-tax items Reported net profit Tot normalised items Normalised EBITDA Normalised EBIT Normalised PTP Normalised net profit FY09A 0.00 0.00 0.00 -16.3 -16.3 -3.65 -20.0 n/a -20.0 -29.5 0.00 -0.00 -49.5 11.8 0.00 0.00 -37.6 0.00 -16.3 -20.0 -49.5 -37.6 FY10A 179.2 -134.3 44.9 -13.3 31.6 -37.1 -5.46 n/a -5.46 -21.1 0.00 -14.7 -41.3 -6.33 0.00 0.00 -47.6 0.00 31.6 -5.46 -41.3 -47.6 FY11F 258.5 -234.0 24.5 -8.79 15.7 -59.9 -44.2 n/a -44.2 -31.0 0.00 0.56 -74.6 0.00 0.00 0.00 -74.6 0.00 15.7 -44.2 -74.6 -74.6 FY12F 356.1 -255.7 100.4 -9.79 90.6 -62.0 28.6 n/a 28.6 -36.3 0.00 0.00 -7.67 0.00 0.00 0.00 -7.67 0.00 90.6 28.6 -7.67 -7.67 FY13F 448.0 -243.1 204.9 -10.8 194.1 -69.0 125.1 n/a 125.1 -35.4 0.00 0.00 89.7 -19.3 0.00 0.00 70.4 0.00 194.1 125.1 89.7 70.4
Balance sheet
US$m, year ended December Cash & market secs (1) Other current assets Tangible fixed assets Intang assets (incl gw) Oth non-curr assets Total assets Short term debt (2) Trade & oth current liab Long term debt (3) Oth non-current liab Total liabilities Total equity (incl min) Total liab & sh equity Net debt FY09A 42.1 2.17 813.0 0.00 50.9 908.2 24.7 80.8 296.7 41.9 444.1 464.1 908.2 279.3 FY10A 102.1 93.3 883.6 0.00 41.2 1120 16.4 124.9 246.1 113.6 501.0 619.3 1120 160.4 FY11F 52.6 101.3 969.7 0.00 67.4 1191 8.25 85.3 396.2 77.9 567.8 623.3 1191 351.9 FY12F 40.3 101.3 967.7 0.00 67.4 1177 8.25 85.3 389.6 77.9 561.1 615.6 1177 357.5 FY13F 126.1 101.3 920.7 0.00 67.4 1216 8.25 85.3 358.0 77.9 529.5 686.0 1216 240.1
Cash flow statement

US$m, year to December EBITDA Change in working capital Net interest (pd) / rec Taxes paid Other oper cash items Cash flow from ops (1) Capex (2) Disposals/(acquisitions) Other investing cash flow Cash flow from invest (3) Incr / (decr) in equity Incr / (decr) in debt Ordinary dividend paid Preferred dividends (4) Other financing cash flow Cash flow from fin (5) Forex & disc ops (6) Inc/(decr) cash (1+3+5+6) Equity FCF (1+2+4) FY09A -16.3 11.7 0.00 0.00 0.00 -4.64 -506.3 0.00 14.1 -492.2 183.0 314.4 0.00 0.00 1.18 498.6 0.00 1.76 -510.9 FY10A 31.6 -107.1 1.00 0.00 0.00 -74.5 -38.4 0.00 0.00 -38.4 214.1 -41.1 0.00 0.00 -23.5 149.5 0.00 36.6 -112.9 FY11F 15.7 -60.6 -11.7 0.00 0.00 -56.6 -95.5 0.00 0.00 -95.5 0.00 148.0 0.00 0.00 -56.7 91.3 0.00 -60.8 -152.1 FY12F 90.6 0.00 -36.3 0.00 0.00 54.3 -53.7 0.00 0.00 -53.7 0.00 -6.65 0.00 0.00 0.00 -6.65 0.00 -6.05 0.60 FY13F 194.1 0.00 -35.4 -19.3 0.00 139.4 -15.7 0.00 0.00 -15.7 0.00 -31.6 0.00 0.00 0.00 -31.6 0.00 92.1 123.7
Mirabela Nickel | 23 January 2012 Page 40 Page 2
Quarterly sales and cash costs

We forecast average CY12 C1 costs of US$6.50/lb MBNs 4Q production was strong in terms of material movement and production but weak on cost control, despite favourable exchange rate movements and higher unit production. Key initiatives that MBN intend to implement to meet its end CY13 cost target of US$6.00/lb include: further review of the Organisation structure, operational and admin support - immediate further optimisation of the use of mine contractors 1H12 efficient commissioning of the de-sliming circuit 2Q12
Chart 1 : Ore milled vs ramp-up target
Mt 2.0 Mining is now running at the 7.2Mtpa expanded rate
Chart 2 : Ni production vs recovery

6.0 5.0 4.0 3.0 kt RBSM assumed 70% 65% 60%
1.5
55% 50% 45% 40%
1.0 2.0 0.5 1.0 0.0 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 4Q12 1Q12
35% 30%
0.0
Ore mined
Ore milled
MBN target
Source: MBN, RBS Morgans
Ni in concentrate - lhs RBSM forecast recovery - rhs
% Recovery - rhs
Chart 3 : Ni production and sales (kt)

6.0 5.0 4.0
Chart 4 : Ni costs and margins

14.0 US$/lb 12.0 10.0 8.0
3.0 6.0 2.0 1.0 0.0 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 4.0 2.0 0.0 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1.58 2.27 1.43 4.59 3.63 2.58 2.51 0.80
Ni in concentrate produced
Ni in concentrate sold
Cash margin
Avg. Received Price
Unit Cash Cost

Nickel: medium term optimism

Refer to Labyrinth, 10 January for RBSs house view on the hard commodities and energy Fully supplied nickel has long been one of RBSs least preferred commodity exposures. The metal also exhibits higher volatility due to its relatively small size (vs other base markets) and linkage with construction and therefore macro economic activity. However much of nickels 2011 losses have now been recovered in early 2012, with spot nickel now trading 5-6% above our 1H12 house forecasts. Near term, nickel may see some interest from commodity fund index re-balancing as funds buy the 2011 price laggards. The market will also be watching for signs of more project slippage.
After a balanced market in 2011, RBS now forecasts a world supply surplus in 2012 of 50kt and a further 45kt in 2013. The supply surge then wanes with a small 20kt supply shortfall by 2015F. Beyond this, we do identify value in the nickel market with RBS forecasting a 2013 price average nickel price target of US$11.80lb, offering room for optimism.
Changes to forecasts
We have made adjustments to production, costs and our FY12 nickel price assumption based on revisions to RBSs house commodity forecasts as per the Labyrinth report (10 January). The sensitivity of our forecasts has increased by virtue of our higher C1 cost assumptions which range from US$6.50-5.90/lb through end CY13.
Table 1 : Changes to NPAT and NPV
(US$m) NPAT normalised previous NPAT normalised revised Change Change (%) 2010A -47.6 -47.6 0.0 0% 2011F -68.1 -74.6 -6.5 9% 2012F 35.1 -7.7 -42.8 -122% 2013F 80.6 70.4 -10.1 -13% NPV (A$ps) 2.18 1.78 -0.40 -19%
Source: Company data, RBS
Upcoming catalysts
Completion of the de-sliming and primary crushing circuit upgrades 2Q12 Results from open-pit extension drilling 2Q12 Initial findings from the 9Mtpa scenario pre-feasibility study 1H12 Steady state cost metrics 4Q12
Valuation and risks

Our target price equates to our DCF based valuation. We no longer apply a discount to our DCF valuation as we believe the market is closer to valuing the recovery stage of the next cycle. Production costs still need to be materially reduced to rebuild investor interest and the relieve potential balance sheet pressure though 2012, should the nickel market become depressed. Unfortunately for value investors, this still looks like a six to 12 month exercise. We have modelled production of 23-24kpta of nickel in concentrate from CY13, in line with the CY11 Independent Technical Report. We also apply a conservative cost structure relative to MBNs assumptions and assume a step-up in Brazilian mining royalties from 2015. We believe upside to our valuation is achievable via: de-risking of the project enough to relax our WACC assumption; evaluation of expanded production rates (9Mtpa) or underground feed sources; and MBNs simple corporate structure creating possible future corporate appeal. Upside and downside risks to our target price are linked to fluctuations in commodity and currency prices, de-risking of open-cut operations during the ramp-up period and the ability to control costs.
Company overview
Mirabela Nickel (MBN) is a relatively simple, single-project nickel miner. In late 2009, the company commissioned the Santa Rita open-cut nickel project 360km southeast of Salvador, Brazil. By end-CY11, MBN aims to expand production to a sustainable 7.2Mt of throughput producing 23ktpa of nickel in concentrate, with by-products of copper, cobalt and platinum, for a minimum 20 years. The company is evaluating underground expansion potential at Santa Rita and a number of near-mine exploration options for satellite feed.
MBN financial summary

Year to 31 Dec (A$m) Income statement Divisional sales Total revenue EBITDA Depreciation & amortisation EBIT Net interest expense Pre-tax profit Income tax expense After-tax profit Minority interests NPAT Significant items NPAT post abnormals Growth ratios Sales growth Operating cost growth Cash flow statement EBITDA Cash flow from ops (1) Capex (2) Disposals/(acquisitions) Cash flow from invest (3) Incr/(decr) in equity Incr/(decr) in debt Ordinary dividend paid Other financing cash flow Cash flow from fin (5) Forex and disc ops (6) Inc/(decr) cash (1+3+5+6) Equity FCF (1+2) Balance sheet Cash & deposits Trade debtors Inventory Investments Other intangible assets Fixed assets Other assets Total assets Interest bearing debt Trade payables Long-term borrowings Provisions Other liabilities Total liabilities Share capital Other reserves Retained earnings Total equity Minority interest Total shareholders' equity Total liabilities & SE Earnings Sensitivity Nickel sensitivity (+10%) Nickel sensitivity (+10c/lb) Valuation sensitivity to discount rate (A$/share)
9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 WACC 0.00% 5.00% 10.00% 12.50% 15.00% 100.0 0.0 -100.0 2009A 2010A 2011F Total revenue 2012F EBIT 2013F 300.0 200.0
AIFRS 2009A 0.0 0.0 -16.3 -3.7 -20.0 -29.5 -49.5 11.8 -37.6 0.0 -37.6 0.0 -37.6 2009A ^MISSING #REF! 2009A -16.3 -4.6 -506.3 0.0 -492.2 183.0 314.4 0.0 1.2 498.6 0.0 1.8 -510.9 2009A 42.1 2.2 0.0 0.0 0.0 813.0 50.9 908.2 321.4 57.7 296.7 36.9 -268.6 444.1 452.3 34.4 -22.6 464.1 0.0 464.1 908.2
AIFRS 2010A 179.2 179.2 31.6 -37.1 -5.5 -21.1 -41.3 -6.3 -47.6 0.0 -47.6 0.0 -47.6 2010A ^MISSING 803% 2010A 31.6 -74.5 -38.4 0.0 -38.4 214.1 -41.1 0.0 -23.5 149.5 0.0 36.6 -112.9 2010A 102.1 43.0 34.5 0.0 0.0 883.6 57.0 1120.3 262.5 32.7 246.1 14.4 -54.7 501.0 681.3 -1.0 -60.9 619.3 0.0 619.3 1120.3
AIFRS 2011F 258.5 258.5 15.7 -59.9 -44.2 -31.0 -74.6 0.0 -74.6 0.0 -74.6 0.0 -74.6 2011F 44% 65% 2011F 15.7 -56.6 -95.5 0.0 -95.5 0.0 148.0 0.0 -56.7 91.3 0.0 -60.8 -152.1 2011F 52.6 53.2 48.1 0.0 0.0 969.7 67.4 1191.0 404.5 40.6 396.2 14.8 -288.4 567.8 682.1 70.4 -129.2 623.3 0.0 623.3 1191.0 2011F 0.00 0.00
AIFRS 2012F 356.1 356.1 90.6 -62.0 28.6 -36.3 -7.7 0.0 -7.7 0.0 -7.7 0.0 -7.7 2012F 38% 9% 2012F 90.6 54.3 -53.7 0.0 -53.7 0.0 -6.6 0.0 0.0 -6.6 0.0 -6.1 0.6 2012F 40.3 53.2 48.1 0.0 0.0 967.7 67.4 1176.7 397.8 40.6 389.6 14.8 -281.7 561.1 682.1 70.4 -136.9 615.6 0.0 615.6 1176.7 2012F 29.89 3.29
AIFRS 2013F 448.0 448.0 194.1 -69.0 125.1 -35.4 89.7 -19.3 70.4 0.0 70.4 0.0 70.4 2013F 26% -4% 2013F 194.1 139.4 -15.7 0.0 -15.7 0.0 -31.6 0.0 0.0 -31.6 0.0 92.1 123.7 2013F 126.1 53.2 48.1 0.0 0.0 920.7 67.4 1215.5 366.2 40.6 358.0 14.8 -250.1 529.5 682.1 70.4 -66.5 686.0 0.0 686.0 1215.5 2013F 30.88 2.83
Price target (A$) Valuation (A$) Valuation summary Santa Rita reserves Santa Rita extension Exploration Total operations Cash + equivalents Debt Corporate Overheads Total valuation A$m 1000.5 65.2 237.5 1303.1 61.0 -395.0 -96.2 873.0
1.78 1.78 A$ps 2.03 0.13 0.48 2.65 0.12 -0.80 -0.20 1.78 DCF valuation inputs Rf 5.75% Rm-Rf 4.50% Beta 1.31 11.6% CAPM (Rf+Be Tax rate (t) 25.0% 10.46% WACC Shares 491.8
Production (Mt) Ore mined (kt) Nickel in concentrate (kt) Copper in concentrate (kt) Cobalt in concentrate (kt) C1 Cash Costs after credits (US$/lb payable Total Costs after credits (US$/lb payable Ni) Key assumptions AUD / USD exchange rate Nickel price (US$/lb) Copper price (US$/lb) Cobalt price (US$/lb) Per share data No. shares EPS (cps) EPS (normalised) (c) Dividend per share (c) Dividend payout ratio (%) Dividend yield (%) Operating performance EBIT growth NPAT growth Normalised EPS growth Asset turnover (%) EBITDA margin (%) EBIT margin (%) Net profit margin (%) Return on net assets (%) Net debt / (cash) (A$m) Net debt/equity (%) Net interest/EBIT cover (x) ROIC (%) Comparable multiples (x) Mirabela Nickel Year to 31 Dec PanAust Year to 31 Dec Discovery Metals Year to 30 Jun Total revenues and EBIT (A$m)
500.0 400.0
2010A 3.09 10.4 3.2 0.2 7.04
2011A 5.96 15.9 4.9 0.3 7.27
2012F 7.10 21.9 6.5 0.4 6.51 7.92 2012F 1.02 9.09 3.68 15.19 2012F 491.8 -1.6 -1.6 0.0 0.0 0.0 2012F n.m. n.m. -90% 30% 25% 8% -2% 5% 357.5 58% 79% 2% 2012F 6.0 19.0 4.5 8.4 -35.2 -25.4
2013F 7.10 23.2 6.5 0.4 5.92 7.47 2013F 1.09 10.90 4.05 16.68 2013F 491.8 14.3 14.3 0.0 0.0 0.0 2013F 337% n.m. 129% 37% 43% 28% 16% 18% 240.1 35% 359% 10% 2013F 3.8 8.3 3.2 7.1 3.6 10.0
2010A 0.88 8.79 3.03 20.49 2010A 491.6 -9.7 -9.7 0.0 0.0 0.0 2010A -73% n.m. -71% 18% 18% -3% -27% -1% 160.4 26% -25% -1%
2011F 0.99 10.87 3.93 19.27 2011F 491.8 -15.2 -15.2 0.0 0.0 0.0 2011F 709% n.m. 57% 22% 6% -17% -29% -7% 351.9 56% -119% -4% 2011F 29.4 -9.8 7.5 13.6 -38.2 -263.5
EV/EBITDA PE EV/EBITDA PE EV/EBITDA PE
Page 44
Commodity Weekly No.141 | RBS Commodity Research

23 January 2012
Year of the Dragon Gung Hei Fat Choy!

Commodities to the fore with yet another strong week for prices
Commodities have continued to rally, with most up 6-10% up on their year-end levels. Better-than-expected Chinese economic data prints and expectations of monetary policy easing in the country have helped the sector, as have good economic data from the United States. A data-heavy week just passed, with Thomson Reuters GFMS publishing its Gold Survey Update 2, confirming strong buying by central banks, and the IEA releasing its monthly Oil Market Report, showing Q411 demand fell for the first time since the banking crisis of 08/09.
The tone remains buoyant across commodity markets, as prices have continued to march on. As of 20th January, silver, copper, aluminium and zinc are all up 9-13% YTD. This is filtering through to producer currencies, most of which have appreciated against the dollar. Copper last week hit a four-month high of $8,410/t. Chile is the largest copper producer and accounts for 35% of total mine output. Chile's copper export earnings result in a strong correlation between copper and the Chilean peso, which has already this year gained 6% against the US dollar, to reach threemonth highs of ~490. RBS forecasts further strength for the currency over the rest of 2012, to a 480 Q412 average. The past week saw a wealth of data released on the fundamental markets. Rio Tinto and BHP Billiton, two of the worlds biggest diversified Copper and the Chilean peso A copper price at 4 month highs has boosted the worlds largest copper mine producing countrys currency miners, and Freeport McMoRan, a copper and gold producer, published their production results. GFMS released the Second Update to its Gold 800 12,000 Survey, confirming that strong central bank sales, healthy investment demand and resilient jewellery are supporting gold prices. (For our review 700 9,000 of the GFMS survey, please see our 19th January Precious Metals Review GFMS Gold Update 2.) The IAI published its aluminium output estimates, confirming cutbacks are underway. Finally, the International 600 6,000 Energy Agency (IEA) released its monthly Oil Market Report. The IEA report notes that oil demand fell by 300 kbpd in Q411, the first yoy decline since the credit crunch. The agency said that a mild winter following a very cold winter in 2010 explained part of the fall, as did the weakening global economy and high oil price. The IEA also revised down its forecast for 2012, when it expects demand will rise by 1.2% yoy to 90.6mbpd. The IEA projections come close to our own target of 1.0% growth this year. Despite indications of slow demand growth, the oil price
3,000 500
Analysts
Nick "Metals" Moore Head of Commodity Research +44 20 7085 5470 [email protected]
Nikos Kavalis Commodity Strategist +44 20 7085 9314 [email protected]
0 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10
400 Jan-12
LME Copper 3M (US$/t)
Chilean Peso (RHS)

Source: LME, Bloomberg, RBS
www.rbsm.com/strategy Bloomberg: RBSR<GO>
Page 45
has fared well in the first few weeks of 2012, supported by concerns of supply tightness, not least fuelled by heightened tensions between Iran and the West. The price was also boosted by a decline in the Department of Energy (DOE) reported inventories, against expectations of an increase. The DOE reported that inventories fell by 3.4mbbl (~1%) to 331.2mbbl during the week ending 13th January. RBS expects that against the backdrop of only modestly rising consumption gains, oil supply growth should come in at a more robust 2%, making for an oversupplied market. This assumes that the Iran crisis will eventually calm and that it will not sustainably affect oil supply. As such, we are cautious towards the oil price and believe that its current strength will prove temporary. Rio Tintos Q411 production review brought no surprises. Iron ore production reached a record in 2011 at 192mt (attributed to Rio Tinto total production at the companys iron ore operations was 245mt). Hard and semi-soft coking coal production, were down 2% and 7% to 8.8mt and 2.9mt, respectively, in 2011. Thermal coal output fell 3% to 17.8mt. Copper production fell 23% yoy in 2011, to 520kt, mainly reflecting lower grades at key operations. Finally, aluminium production was flat yoy and Rio Tinto noted that a total of 462kt of its aluminium production capacity would be shut or idled. RBS have for some time noted that aluminium producers are struggling, with ~50% of global capacity being cash-negative, and that a supply response is underway. Rio Tintos cutbacks, as well as those of Alcoa and Chinese smelters, confirm this is the case.
Commodity price performance in 2012 YTD (20th January close)
Silver Nickel Aluminium Zinc Platinum Copper Lead Gold S&P 500 Palladium Brent Oil Rhodium -4% -2% -2% 0% 2% 4% 6% 8% 10% 12% 14% 2% 3% 4% 7% 6% 10% 10% 9% 9% 8% 13%
BHP Billions production report showed a 7% decline in Q411 copper output, to 280kt over the period and the company stated it expected gains in 2012, as production at Escondida is boosted by rising ore grades. Pilbara iron ore production hit a quarterly record of 38.2mt (up 4% yoy) and BHP said that FY12 (year to June 2012) output seems set to marginally exceed guidance of 159mt. Finally, Freeports results confirmed the losses that copper and gold production suffered last year as a result of the 3 month strike at Grasberg the company said that 235mlbs (107kt) of copper and 275koz (8.6t) of gold production was lost due to the strikes. Aluminium cuts beginning to bite. The International Aluminium Institute (IAI) noted that total 2011 world aluminium production by its members was 43.40mt. This was up 7.4% or 2.98mt more than the 40.42mt produced in 2010 and a record year. In tonnage terms China accounted for 41% of world output at 17.786mt, and 56% or 1.655mt of the total extra metal. Chinas output was up 10%, but it was the Middle East Gulf region where some huge smelters are coming on-stream that saw the biggest percentage increase at +27% or 0.750mt to 3.473mt. At 119ktpd the world daily average rate of production was at an 8-month low. As further cutbacks are announced the daily rate should continue to decline. Chinese output dropped 1% in December to a daily average of 48,419tpd, down 8% from the record 52,700tpd seen in September. In tonnage terms, this represents a cutback of 1.6mtpa. Cost curve support remains a bullish feature for aluminium.
Chinese and other aluminium production mtpa, annualised
28 20
26
15
24
10
22
20 Nov 01 Nov 03 Nov 05 Nov 07 Nov 09
0 Nov 11
World ex China mtpa (lhs)
China mtpa (rhs)
Source: LME, LBMA, Bloomberg, RBS
Source: International Aluminium Institute, RBS
Year of the Dragon Gung Hei Fat Choy! | 23 January 2012 Page 46 Page 2
RBS Technical Commodity Strategy

William Moore, +44 20 7085 9174, [email protected]
Silver Daily candle chart with Ichimoku cloud
Oil Weekly candle chart with Fibonacci retracements, B bands and MACD (4,13)
Source: Tradermade
Source: Tradermade
Silver Price action looks set to go higher to $33.23/35.65 after the reversal pattern. The positive commodity story continues across the board as the trend line of resistance that kept price action at bay for most of 2011 is in the process of breaking in the CRB Index. Silver too is approaching an important level, where it is trading now around 30.40. This is the level that intersects a trend line of resistance formed by the highs from the Oct Dec sell-off, but as set out above it appears to be in the process of playing out one of the more reliable reversal patterns in the form of an inverse head and shoulders. This should propel the price to the important level at $33.22, which was has been a series of highs and lows for the past year. This level could present a real challenge for the metal and my bias would be that upward momentum dramatically slows around here, before pushing on to a potential Q1 12 high at $35.63. Should I be wrong and the market sell off from here there is plenty of support in the form of previous lows at $26.62, $28.14 and the December low at $26.20 RES: $33.22 $35.65 $44.18 SUP: $28.62 $28.14 $26.20
Brent Oil Momentum wanes, price stagnates and the $113.55 level obstructs. The recent break out from the trendline formed by the series of highs throughout 11 was broken as noted a couple of weeks ago in this document, but the follow through has been disappointingly muted. In fact, the market has failed to produce a higher high since that of the week commencing the 5th of September last year! Last week was also the 7th independent week that has traded above $113.55 but failed to close above it! Do not forget it is the 76.4% retracement from the Aug 10 to the Apr 11 high. The Bollinger bands are at their thinnest that they have been for a long time and the MACD indicator continues to do very very little. So whilst the bias remains positive, the forecast is for a slow grind higher as opposed to anything dramatic. Top side targets once the $113.55 is broken lie at $119.60 and $126.46, whilst the support levels lie at the lower Bollinger band around $102.41 and $99.11. RES: $113.55 $119.60 $126.46 SUP: $105.56 $102.46 $92.65
World Reported Base Metal Inventory and Base and Precious Metal Price Performance
Copper Inventories Global demand 2012F mt One day of demand - tonnes LME warehouse Comex warehouse Shanghai warehouse Producer/Consumer - ICSG Total reported inventory Aluminium Inventories Global demand 2012F mt One day of demand - tonnes LME warehouse Shanghai warehouse Japanese Ports - WBMS Producer Primary - IAI Total reported inventory Zinc Inventories Global demand 2012F mt One day of demand - tonnes LME warehouse Shanghai warehouse Producer/Consumer - ILZSG Total reported inventory Lead Inventories Global demand 2012F mt One day of demand - tonnes LME warehouse Producer/Consumer - ILZSG Shanghai Warehouse Total reported inventory Nickel Inventories Global demand 2012F mt One day of demand - tonnes LME warehouse Producer/consumer - CRU Total reported inventory 1.64 4,493t 91,668t 143,500t 235,168t 1,875 2,935 4,809 20.4 31.9 52.3 1,662t 1.8% Weeks of stock = 90,006t 7.5 20.0 10.35 28,356t 347,525t 242,500t 29,434t 619,459t 758 529 64 1,350 Value US$m 12.3 8.6 1.0 21.8 Days of Inventory Weeks of stock = Cancelled Warrants and % of total 3.1 Available Adjusted days 43,150t 12.4% 304,375t 10.7 13.00 35,616t 843,325t 369,698t 594,900t 1,807,923t 1,701 745 1,200 3,646 Value US$m 23.7 10.4 16.7 50.8 Days of Inventory 19.80 54,247t 348,750t 89,827t 131,645t 688,800t 1,259,022t 47.75 130,822t 5,005,050t 237,425t 238,000t 1,456,000t 6,936,475t 11,081 526 527 3,224 15,357 Value US$m 38.3 1.8 1.8 11.1 53.0 Days of Inventory Weeks of stock = Cancelled Warrants and % of total 22,400t 2.7% Weeks of stock = Cancelled Warrants and % of total 7.2 Available Adjusted days 820,925t 23.0 7.6 Available Adjusted days 866,600t 17.3% 4,138,450t 31.6 2,872 740 1,084 5,673 10,369 Value US$m 6.4 1.7 2.4 12.7 23.2 Days of Inventory Weeks of stock = Cancelled Warrants and % of total 3.3 Available Adjusted days 68,600t 19.7% 280,150t 5.2 Value US$m Days of Inventory Cancelled Warrants and % of total Available Adjusted days Tonnes Copper Aluminium Zinc Nickel Zinc Aluminium Lead Lead Copper Base 3 month Tin Aluminium Zinc Copper Nickel Exchange Shanghai Shanghai LME LME Shanghai LME LME Shanghai LME $/tonne End 11 19,200 2,020 1,845 7,600 18,710 End 11 93,219 207,966 821,700 90,048 364,186 4,970,400 353,075 30,586 370,900 $/lb End 11 8.71 0.92 0.84 3.45 8.49 0.92 3,306 27.84 1,401 1,564 655 107.4 99 2.99 Current 131,645 237,425 843,325 91,668 369,698 5,005,050 347,525 29,434 348,750 $/tonne Current 21,900 2,214 2,017 8,236 20,451 2,180 Current 31.41 1,528 1,664 678 110 98 2.33 Change 38,426 29,459 21,625 1,620 5,512 34,650 -5,550 -1,152 -22,150 $/lb 9.93 1.00 0.91 3.74 9.28 0.99 3,640 Change 3.56 127.3 100.0 22.5 2.4 -0.5 -0.66 YTD % 41% 14% 3% 2% 2% 1% -2% -4% -6% YTD % 14% 10% 9% 8% 9% 7% 10% YTD % 13% 9% 6% 3% 2% -0% -22% YTD % 5.6% 5.4% 2.3% 1.1% -0.0% -0.2% -0.5%
Current Change
Lead 2,035 LME Metal Index - LMEX Precious Silver Platinum Gold Palladium Brent oil WTI oil US$/oz US$/oz US$/oz US$/oz US$/oz US$/bbl US$/bbl
HH N. Gas US$/MMBTu Producer Brazil - BRL Chile - CLP Russia - RUB Australia - AUD South Africa - ZAR Norway - NOK Canada - CAD
Commodity producer & consumer currency performance YTD% Consumer 5.8% India - INR 5.5% Mexico - MXN 2.7% Korea - KRW 2.5% Taiwan - TWD 1.9% Japan - JPY 0.7% Eurozone - EUR 0.7% China - CNY
RBS Economics
23 January 2012
Global Weekly Preview

Focus on Eurogroup and Ecofin meetings
Main economic data releases & events: 23 Jan 2012 27 Jan 2012
Time
Country Indicator Period RBS GBM Median Previous
Monday, 23 January 00:30 08:30 16:00 * 09:30 09:30 09:00 09:00 09:00 08:00 00:30 09:30 09:30 09:00 09:00 09:00 Analysts
Jan Dubsky RBS Economics +44 20 7085 9119 [email protected] AU EA EA SoP PPI, % qoq EU Foreign Ministers Meet in Brussels Euro-Area Finance Ministers Meet in Brussels Q4 0.4 0.4 0.6
Tuesday, 24 January
JP UK UK EA EA EA EA BoJ MPC meeting (BoJ Target Rate), % Public Finances (PSNB), GBP bn PSNB ex Financial Interventions, GBP bn PMI Services PMI Manufacturing PMI Composite EU Finance Ministers Meet in Brussels Jan Dec Dec Jan Jan Jan 0-0.1 12.7 15.5 48.8 47.4 48.7 0.1 12.1 14.9 49 47.2 48.5 0.1 15.2 18.09 48.8 46.9 48.3
Wednesday, 25 January
AU UK UK GE GE GE Unadjusted CPI, % qoq BoE MPC minutes GDP, % qoq IFO Business Climate IFO Current Assessment IFO Expectations Q3 Jan Jan Jan 0.1 107.6 116.9 98.8 -0.1 107.6 116.8 99 0.6 107.2 116.7 98.4 Q4 0.0 0.2 0.6
Thursday, 26 January 13:30 15:00 20:00 23:30

US US NZ JP Durable Goods Orders, % New Home Sales, thousands RBNZ cash rate decision, % National CPI, ex. Seasonal food, % yoy Dec Dec Jan Dec 2.50 330 2.5 -0.1 2.2 320 2.5 -0.1 3.7 315 2.5 -0.2
Friday, 27 January
Silvio Peruzzo RBS Economics +44 20 7085 7520 [email protected]
13:30
US
GDP QoQ (Annualized), %
4Q A
3.00
3.0
1.8
Source: RBS Research, RBS Strategy, Bloomberg
www.rbsm.com/strategy
The week begins with the focus on the EcoFin and Eurogroup meetings on Monday and Tuesday respectively where the Greek PSI deal is going to be high on the agenda. Negotiations did not conclude over the weekend amid disputes on the coupon rate for the new bonds. Investors have made the last proposal containing the maximum losses they are willing to accept on a voluntary basis and the Troika and the Greek government are now due to pronounce their position. It is crucial that the deal will be agreed and a bond swap executed before the next bail
Page 49
We would like to thank Kapil Shukla and Nishit Mittal for their contribution to the weekly.
out tranche is paid out in the second half of March. In the US, on Wednesday the FOMC minutes will be released. A WSJ article last Friday made clear that the Fed will not embark on a new round of asset purchases at the January 24-25 FOMC meeting. The December meeting minutes indicated that the Summary of Economic Projections table would be expanded to show the FOMC participants forecast for the federal funds rate for Q4 2012, Q4 2013, and Q4 2014, as well as the longer run. In addition, participants will submit their current projections of the likely timing of the first increase in the target rate given their projections of future economic conditions. There will also be an accompanying narrative describing the factors underlying their assessments, as well as qualitative information on participants expectations for the Feds balance sheet. It also seems very likely that the Fed will introduce a statement on its longer-run policy objectives that will (according to the WSJ article) state more directly than before that it has a goal of about 2% inflation over the long run." See the US Economics Weekly for more details. On he data side, US initial unemployment claims, durable goods orders and new home sales are released on Thursday. On Friday, we expect the preliminary Q4 GDP to post 3.0% in line with consensus. In the UK, The BoE MPC minutes are released on Wednesday. The Committee voted in January to continue with the asset purchase programme it announced last October. The Minutes will reveal whether that decision was unanimous. We suspect that it was. The Committee has acted as one of late, with all nine willing to commit to a 75 billion QE2 package in October despite what look to be meaningful differences of opinion about the economic outlook between say Posen and Dale. We think that the new spirit of unanimity will survive into the New Year. We expect the Bank of Japan to maintain its current policy stance and keep the size of the asset purchase programme at JPY55trn and the policy rate at 0-0.1% at the monetary policy meeting on Monday and Tuesday. On the data front, flash PMIs for the euro area are released on Tuesday. We expect a slight rise from 48.3 to 48.7 on the composite index. The IFO survey is released on Wednesday and we also forecast a slight increase from 107.2 to 107.6 on the headline index. Japanese inflation data are released on Thursday and Australia inflation data come out on Wednesday. - please see our data previews and our Global Weekly Calendar which includes the full set of RBS Economics forecasts and the most important earnings releases - RBS Economics
Global Weekly Preview | 23 January 2012 Page 50 Page 2
The Week Ahead

Monday, 23 January
Australia: SoP PPI, Q4
Released: 00:30 Forecast: 0.4% Market: 0.4% Previous: 0.6% (qoq)
Our simple partial model points to a similar increase in the SoP PPI to last quarter, although we think it will come in slightly lower at 0.4% because of the impact of sharply falling fruit and vegetable prices given supply has largely returned to normal after the severe disruptions from the flooding in Queensland earlier in 2011. If this forecast proves right, annual inflation should pick up from 2.7 to 3.0%. KD
Tuesday, 24 January
Japan: BoJ monetary policy meeting
Released: Forecast: 0-0.1% Market: 0.1% Previous: 0.1%
We expect the BoJ (Bank of Japan) to maintain its current policy stance and keep the size of the asset purchase programme at JPY55trn and the policy rate at 0-0.1%. Rather than discussing policy changes in the near term, the BoJ, we believe, will focus on the extent of its inflation-forecast lowering to project the future path of the central bank's monetary policy. The review of the BoJs outlook report is scheduled to be released after the policy decision announcement. We expect the BoJ to lower its inflation forecast to zero for 11FY, to -0.1% for 12FY and to around 0.3% (from +0.5%) for 13FY. At this moment, we forecast the BoJ will normalise its policy rate only after 4QFY13 at the earliest, but if the BoJ increasingly stresses on downside risks to price conditions going forward, the policy duration effect should be expanded from the current one-and half years to two years, or to even longer. LHW
Euro area: PMI, January flash estimate

Released: 09:00 Forecast: 48.7 Market: 48.5 Previous: 48.3 (Composite)
We forecast the flash estimate of the euro area composite PMI to increase slightly to 48.7, consistent with an underlying pace of GDP growth of -0.2% q/q. While this is above our euro area GDP for Q1 (-0.4% q/q), as we pointed out in our Business Cycle Screener | Improving Momentum Likely a Blip, 9 January 2012, we are not convinced yet the recent improvement will be sustained and believe the economy will likely deteriorate further. We are forecasting the Manufacturing PMI to increase to 47.4 and Services PMI to increase to 48.8. JD
UK: Public finances, December

Released: 09:30 Forecast: 12.7bn Market: 12.1bn Previous: 15.2bn (PSNB)
Two-thirds of the way through the 2011-12 financial year, cumulative public sector borrowing (PSNB-ex) stands at 88.3bn, a 10.4bn reduction vs the same point a year ago. An extrapolation of these trends over the remainder of the FY yields a full-year deficit of 121bn vs the OBRs revised forecast of 127bn (RBS: 126bn). Our expectation is that we will see some deterioration in the remainder of the year (though it is worth noting that the data have matched or beaten ie, lower than expected borrowing expectations in each of the past three months). December typically yields a sizeable deficit it does not benefit from major quarterly corporation tax payment
inflows and, on the expenditure side, is one of the four main months of the year where interest payments on government debt are made. Our forecast for December assumes a continuation of the underlying trends in the public finances data note that the November expenditure data were unusually low as a result of a one-off repayment from the EU. On the tax receipts side, we look for some easing in growth rates, reflecting the slowdown in the wider economy. Overall, we forecast a PSNB-ex deficit of 15.5bn in December, which would raise cumulative borrowing to 103.8bn, 10.8bn lower than a year ago. On the PSNB measure which includes financial interventions, we forecast a deficit of 12.7bn in December. RKW
Wednesday, 25 January
Australia: Unadjusted CPI, Q4
Released: 00:30 Forecast: 0.0% Market: 0.2% Previous: 0.6% (qoq)
We will finalise our forecasts after the PPI, but at this stage we expect: The unadjusted CPI to be flat after a 0.6% increase in Q3, with some risk of a 0.1% fall and with annual inflation nudging down to 3.1%. The seasonally adjusted CPI to rise by 0.2% after a 1.0% rise in Q3, with annual inflation easing to 2.9%. Underlying inflation measured as the average of the seasonally adjusted trimmed mean CPI, weighted median CPI and CPI ex-volatile items should rise by 0.6% after a 0.4% rise in Q3. Annual inflation should be 2.6%. Note that there may be material revisions to the history of underlying inflation as the Bureau of Statistics now seasonally reanalyses the data every quarter. For example, the Q2 weighted median CPI was initially estimated at 0.9% before being revised to 0.5% and then revised up to 0.8%. As for the CPI itself, the biggest driver of the weakness in Q4 inflation will be fruit prices. They are set to take around 0.3pp off the unadjusted CPI as banana and other prices unwind the sharp increases from earlier in the year as supply returns to normal after the disruptions associated with the floods and Cyclone Yasi. Likewise, vegetable prices should take off a hefty 0.1pp as they also unwind. Prices for TVs and computers will continue to fall, while drug prices will also take a small slice off the CPI. Offsetting this weakness, will be higher prices for domestic holiday travel, as well as the rising housing costs in the form of rents and new house prices. Insurance prices are also likely to make a significant contribution given higher insurance premiums resulting from the floods and cyclones earlier in the year. For what it is worth, the TDMI inflation gauge points to an increased in the unadjusted CPI of between 0.1 and 0.2%, although its predictive performance has been poor over recent quarters. FE
Germany: IFO Survey, January

Released: 09:00 Forecast: 107.6 Market: 107.6 Previous: 107.2 (business climate)
We forecast the flash estimate of the euro area composite PMI to increase slightly to 48.7, consistent with an underlying pace of GDP growth of -0.2% q/q. While this is above our euro area GDP for Q1 (-0.4% q/q), as we pointed out in our Business Cycle Screener | Improving Momentum Likely a Blip, 9 January 2012, we are not convinced yet the recent improvement will be sustained and believe the economy will likely deteriorate further. We are forecasting the Manufacturing PMI to increase to 47.4 and Services PMI to increase to 48.8. JD
UK: GDP, preliminary, Q4

Released: 09:30 Forecast: 0.1% Market: -0.1% Previous: 0.6% (qoq)
The UK economy rebounded by 0.6% q/q in Q3 after stagnating in Q2. The final quarter of 2011 will mark a further underlying deterioration; the question is the extent of the slowdown and whether the UK economy cranks into reverse. Our forecast is for GDP to grow by 0.1% q/q, 1.1% y/y, in Q4, narrowly avoiding a relapse into recession. Industrial production will be weak in the final quarter of the year (we forecast -1.4% q/q), in part dragged down by a sharp decline in energy output (this has been one of the mildest winters on record). By contrast, the benign weather should have supported construction activity and both business surveys and the Eurostat/ONS data suggest the sector is on course for another quarter of respectable expansion (+1.2%). As ever, services the largest sector of the economy, but the one with the least amount of available official data will be the decisive factor. There is currently only a solitary data point for the ONS index of services: an inauspicious 0.7% m/m decline in October. This sits uneasily with generally more buoyant survey data (PMI, BoE Agents Scores) and more resilient-than-feared retail sales data and surveys over Christmas. The provisional ONS services data are rather revision-prone and the surveys suggest upside scope. The services survey outturns are consistent with non-retail private services output growth of 0.5% q/q, but we trim this to take some account of the risks from the weaker ONS outturn in October. Overall, services output is forecast to rise by 0.3%, giving GDP growth of 0.1% q/q, 1.1% y/y, in Q4. RKW
UK: BoE MPC minutes

Released: 09:30 The Committee voted in January to continue with the asset purchase programme it announced last October. The Minutes will reveal whether that decision was unanimous. We suspect that it was. The Committee has acted as one of late, with all nine willing to commit to a 75 billion QE2 package in October despite what look to be meaningful differences of opinion about the economic outlook between say Posen and Dale. We think that the new spirit of unanimity will survive into the New Year. Just because no-one voted for an extension to the asset purchase programme, it does not mean that a 50 billion extension in February is off the agenda. It is impossible to be sure what the Committee was trying to communicate with the November double whammy of an inflation projection with a 50 basis point undershoot in Year 3 and a statement to the effect that the Committee did not consider a miss on that scale at that horizon to be a big deal. We don't believe the Committee wants to undershoot the target to compensate for past over-shoots; nor do we believe that there has been a fundamental change of strategy (in the good old days, policy was set to ensure the inflaiton forecast was locked on the target in the medium term). We continue to believe that the Committee was signalling more QE was necessary, but for some reason it felt unable to commit in November. We expect some dove-ish signals in the Minutes to reinforce that expectation, paving the way for the policy decision next month. One explanation for the Committee's communication strategy is that Committee members feel constrained in the amount of gilts the Bank can purchase each month. Ben Broadent chastised market participants for putting too much emphasis on these the so-called 'speed limit effect', but he may have had a different target in mind. After all the December Minutes noted that 'market capacity made it difficult to increase the monthly rate of purchases substantially above what was already under way' and several Committee members have recognised the constraints that market capacity imposes on the flow of purchases. Whatever the constraint, we think that it will have lifted by February. RB
Thursday, 26 January
US: Durable Goods, December
Released: 15:00 Forecast: 2.5% Market: 2.0% Previous: 3.7%
For the RBS US Strategy view please click here
US: New Home Sales, December

Released: 15:00 Forecast: 330k Market: 320k Previous: 315k
New Zealand: RBNZ cash rate decision, January

Recent economic data have been mixed GDP grew more strongly in Q3 than the RBNZ had expected, although the headline CPI fell sharply in Q4 on lower food prices as annual underlying inflation edged down to 1.9%. The domestic outlook still seems positive as major reconstruction work should pick up later this year as the aftershocks from last years earthquake recede. However, moderate underlying inflation gives the RBNZ room to keep rates at a record low of 2.5% for an extended period. The market is pricing in a small chance of a rate cut we think the likely trigger for a cut would be severe bank funding stress, which is not present. KD
Japan: Nationwide core CPI, December

Released: 23:30 Forecast: -0.1% Market: -0.1% Previous: -0.2%
We expect Japans nationwide core CPI to have slightly shrunk yoy, from -0.2% to 0.1% in December. After gasoline prices had fallen for three consecutive months, they rose again in December, which seems to have pushed up CPI. However, considering utility fees will fall in January due to the cost adjustments applied to calculate the utility rate on commodity prices, we do not believe the core CPI will keep rising and be in positive territory in the coming months. While upward pressure of energy-related cost abates, we believe the core CPI will widen its yoy negative rate through 2012-13 and will return to a stable rise only after 2014. LHW
Friday, 27 January
US: GDP, Preliminary, Q4 (annualized)
Weekly Data Calendar

Time BST Country Release
SoP PPI, % qoq SoP PPI, % yoy Own company outlook INSEE Business Survey EU Foreign Ministers Meet in Brussels Leading Indicators Consumer Confidence Euro Area Finance Ministers Meet in Brussels BoJ MPC meeting (BoJ Target Rate), % Siemens AG EU Finance Ministers Meet in Brussels PMI Services PMI Manufacturing PMI services PMI Manufacturing PMI Services PMI Manufacturing PMI Composite Public Finances (PSNCR), GBP bn Public Finances (PSNB), GBP bn PSNB ex Financial Interventions, GBP bn Retail Sales, % mom Retail Sales ex Vehicles, % Business confidence Customs-cleared trade, NSA, JPY bn Customs-cleared trade, SA, JPY bn Yahoo! Inc Apple Inc CPI All Groups Goods, % qoq Unadjusted CPI, % qoq Unadjusted CPI, % yoy Seasonally adjusted CPI RBA underlying inflation, % qoq RBA underlying inflation, % yoy IFO Business Climate IFO Current Assessment IFO Expectations Index of services, % mom Index of services, % 3mth/3mth GDP, % qoq GDP, % yoy BoE MPC minutes BBA Loans for House Purchase SA Motorola Solutions Inc Boeing Co/The House Price Index, % mom Pending Home Sales, % mom FOMC Rate Decision, % CSPI, % yoy Nationwide House Prices, % mom Nationwide House Prices, % yoy GfK Consumer Confidence Trade Balance Exports Consumer Confidence Index CBI Reported Volume of Sales Durable Goods Orders, % Initial Jobless Claims, thousands Leading Indicators, % New Home Sales, thousands RBNZ cash rate decision, % National CPI, Total, % yoy National CPI, ex. Seasonal food, % yoy National CPI, ex. Food and energy, % yoy Tokyo CPI, Total, % yoy Tokyo CPI, ex. Seasonal food, % yoy Tokya CPI, ex. Food and energy, % yoy BoJ MPC meeting minutes (Dec 20-21)
Month
Q4 Q4 Jan Jan Dec Jan
RBS Forecast
0.4 3.0
Median forecast
0.4 3.0 95
Previous
0.6 2.7 -2 94 0.8 -21.1
Monday 23 January 00:30 AU 00:30 AU 07:45 FR 07:45 FR 08:30 EA 13:30 CA 15:00 EA 16:00 EA Tuesday 24 January * JP 06:30 GR 08:00 EA 08:00 FR 08:00 FR 08:30 GE 08:30 GE 09:00 EA 09:00 EA 09:00 EA 09:30 UK 09:30 UK 09:30 UK 13:30 CA 13:30 CA 14:00 BE 23:50 JP 23:50 JP Aft-mkt US Aft-mkt US Wednesday 25 January 00:30 BE 00:30 AU 00:30 AU 00:30 AU 00:30 AU 00:30 AU 09:00 GE 09:00 GE 09:00 GE 09:30 UK 09:30 UK 09:30 UK 09:30 UK 09:30 UK 09:30 UK 12:00 US 12:30 US 15:00 US 15:00 US 17:30 US 23:50 JP Thursday 26 January * UK * UK 07:00 GE 08:30 SE 09:00 IT 11:00 UK 13:30 US 13:30 US 15:00 US 15:00 US 20:00 NZ 23:30 JP JP 23:30 JP 23:30 JP 23:30 JP 23:30 JP 23:30 23:50 JP
-21.4
Jan 0-0.1 0.1 0.1 --------------------------------- Earnings release ----------------------------Jan 50.0 50.3 Jan 48.6 48.9 Jan 52.5 52.4 Jan 49 48.4 Jan 48.8 49 48.8 Jan 47.4 47.2 46.9 Jan 48.7 48.5 48.3 Dec 19 10.6 Dec 12.7 12.1 15.2 Dec 15.5 14.9 18.09 Nov 0.2 1 Nov 0.1 0.7 Jan -10.6 Dec -1965 -1549 -6876 Dec -5063 -3765 -5379 --------------------------------- Earnings release ------------------------------------------------------------- Earnings release ----------------------------Q3 Q4 Q4 Q4 Q4 Q4 Jan Jan Jan Nov Nov Q3 Q3 0.2 0.2 3.3 0.5 2.4 107.6 116.8 99 0.4 -0.1 -0.1 0.8 0.6 0.6 3.5 0.4 0.3 2.3 107.2 116.7 98.4 -0.7 0.2 0.6 0.5
0.0 3.1 0.2 0.6 2.6 107.6 116.9 98.8
0.1 1.1
Dec 35000 34738 --------------------------------- Earnings release ------------------------------------------------------------- Earnings release ----------------------------Nov -0.2 Dec 0.0 7.3 25-Jan 0.25 0.25 Dec -0.1 -0.2 Jan Jan Feb Dec Jan Jan Dec 21-Jan Dec Dec Jan Dec Dec Dec Jan Jan Jan -0.2 1 5.6 3.5 91.6 9 3.7 352 0.5 315 2.5 -0.5 -0.2 -1.1 -0.4 -0.3 -1.1
2.50 355 330 2.5 -0.2 -0.1 -1.0 -0.5 -0.4 -1.1
5.6 6.5 92 -6 2.2 0.7 320 2.5 -0.2 -0.1 -1.1 -0.4 -0.3 -1.0
All times are GMT. = no fixed date * = no fixed time p = provisional r = revised # = consensus forecast e = estimate
Time BST
Country
Release
Month
RBS Forecast
Median forecast
Previous
Friday 27 January CN 01:35 08:00 CH 08:30 SE 08:30 SE 09:00 EA 09:00 EA 13:30 US 13:30 US 14:55 US
MNI January Business Condition Survey KOF Leading Eco. Indicator Retail Sales, % mom sa Retail Sales, % yoy nsa M3, % yoy, 3 mth avg M3, % yoy sa GDP QoQ (Annualized), % GDP Price Index U. of Michigan Confidence
Jan Jan Dec Dec Dec Dec 4Q A 4Q A Jan F
3.00 1.50
-0.09 -0.5 0.8 2.3 2.1 3.0 2.0 74
0.0 0.8 0.7 2.5 2 1.8 2.6 74
All times are GMT. = no fixed date * = no fixed time p = provisional r = revised # = consensus forecast e = estimate
Economists
Jacques Cailloux Chief European Economist +44 207 085 4757 [email protected] Nick Matthews Senior European Economist +44 207 085 0173 [email protected] Ross Walker UK Economist +44 207 085 3670 [email protected] Richard Barwell UK Economist +44 207 085 5361 [email protected] Gareth Anderson UK Economist (Analyst) +44 207 085 2999 [email protected] Silvio Peruzzo Euro area Economist +44 207 085 7520 [email protected] Jan Dubsky Euro area Economist +44 207 085 9119 [email protected] Sanjay Mathur Head of Research & Strategy Non-Japan Asia +65 6518 5165 [email protected] Junko Nishioka Chief Japan Economist +81 3 6266 3589 [email protected] Li Cui Chief China Economist +852 2966 2531 [email protected] Kieran Davies Chief Economist Australia +61 2 8259 5171 [email protected] Felicity Emmett Australian Economist +61 2 8259 5835 [email protected]
Page 58
Equities | Asia Pacific

20 January 2012
Circuit Breaker
Huge funds flow into China
Asia ex-Japan registered its second consecutive sessions of net inflows this week as sentiments continue to rebound on the back of positive US/Asian macro data and the successful bond auction by Spain and France. Investors' enthusiasm on China was particularly pronounced as the market again garnered a large proportion of regional flows.
Chart 1 : Another week of strong funds inflow into China

900 800 700 600 (US$mn) 500 400 300 200 100 0 Malaysia Philippines Singapore Thailand Indonesia Taiwan India Hong Kong Korea China
Source: EPFR Global, RBS
Asia ex-Japan fund flows Asia ex-Japan registered a second consecutive week of funds inflow at US$703m as sentiments continue to rebound on the back of strong Chinese GDP numbers and successful bond auction by Spain and France. Further reinforcing the positive momentum is the latest US initial jobless claims data, which has fallen to 352,000, the lowest since early 2008. On a country basis, China accounted for an enormous 62% share of net inflows this week and this is substantially larger than its average share of 30% registered during 2010-2011. Apart from positive macro numbers, the positive stance on China is also tactically-driven as the market is the third most under-owned market in the region, while its forward P/E of 9.1x is currently even lower than Korea. DM versus EM and cross-asset class fund flows DM funds continued to register net inflows this week at US$1.2bn and this was again due to strong inflows of US$2.1bn into US funds. However, this was partly offset by outflows of US$773m from western Europe and US$219m from Japan. Meanwhile, EM funds maintained positive momentum, with inflows increasing 4% wow to US$1.9bn, paced by inflows into GEM funds at US$1.3bn, Asia ex-Japan at US$703m and LatAm at US$50m. On a cross-asset-class basis, equity and fixed income funds saw respective inflows of US$2.8bn and US$4.4bn, while money market funds registered net outflows of US$11.9bn. Tactical indicators As with last week, the latest risk indicators continue to suggest that investors appetite is on the mend. In the US, the VIX index fell from 20.9 last Friday to 19.9 as of yesterdays close, while the CBOE put-call ratio declined from 0.72 to 0.68. In Germany, the VDAX index similarly continued to trend lower, falling from 24.9 to 23.3 over this period. In Hong Kong, however, the intensity of short selling remained unchanged as the short turnover as a percentage of total turnover on the Hang Seng index stayed at 9.6%. Produced by: The Royal Bank of Scotland Asia Securities (Singapore) Pte Limited Important disclosures can be found in the Disclosures Appendix.
Page 59
Analyst
Dylan Cheang +65 6518 5936 [email protected]
Weekly summary
Fund flows
Fund flows into Asia ex-Japan gathering momentum: The inflow of funds into Asia ex-Japan continued for a second consecutive session at US$703m this week, a 165% wow increase. Unlike last week where inflows were predominantly driven by ETFs, the reverse is happening this week as non-ETFs dominate the flow of funds at 65%, suggesting that longer-term investors are gradually turning constructive towards the region. In terms of retail versus institutional flows, institutional investors continue to drive the momentum by accounting for 89% of the inflows (vs. 74% last week). The positive flow of funds is in line with our constructive view on the markets as sentiments continue to rebound on the back of strong Chinese GDP numbers and successful bond auction by Spain and France. Further reinforcing the positive momentum is the latest US initial jobless claims data, which has fallen to 352,000, the lowest since early 2008. Since the beginning of the week, Asia ex-Japan has gained 3.2% on a US$-based total returns basis over four trading sessions. Notable gains were seen in India (+5.6%) and North Asian markets like Hong Kong (+4.6%), Korea (+4.0%) and China (+3.9%). On a sectoral basis, cyclical plays have been particularly strong with materials, industrials, energy and financials registering average returns of 3.6%. This is again broadly in line with our strategy view that cyclical stocks are poised to do well this year.
Table 1 : Asia ex-Japan fund flows
(US$m) Asia ex-Japan fund flows total (1,389.7) (704.0) (124.6) 265.5 702.9 19,066.0 19,563.5 (17,388.0) 843.7 Asia ex-Japan Asia ex-Japan fund flows ETF fund flows non-ETF (663.1) (189.4) (40.7) 162.6 246.7 7,299.5 9,108.0 (2,388.3) 368.6 (726.5) (514.6) (83.9) 102.9 456.1 11,766.6 10,455.5 (14,999.7) 475.1 Asia ex-Japan fund flows institutional (755.4) (245.5) 9.4 196.6 624.7 9,649.0 13,117.2 (5,629.2) 830.7 Asia ex-Japan fund flows non-institutional (620.3) (451.8) (129.7) 72.5 80.8 9,623.0 6,973.9 (11,543.8) 23.6
Fund flows over the past five weeks 21-Dec-11 28-Dec-11 4-Jan-12 11-Jan-12 18-Jan-12 Annual fund flows Total flows - 2009 Total flows - 2010 Total flows - 2011 Total flows - 2012 YTD
Huge inflows into China: For the second consecutive session, Asian markets again registered net inflows of funds across the board. On an absolute basis, inflows into China were particularly robust this week at US$836m. This is followed by Korea at US$107m, Hong Kong at US$106m and India at US$100m. In Southeast Asia, Indonesia and Thailand registered inflows of US$41m and US$36m respectively, while Malaysia, Singapore and Philippines averaged US$13m. Comparing the percentage share of outflows registered by each market this week with its respective average shares of aggregate net inflows in 2010 and 2011, one can see that the positive investors sentiment towards China continues to persist this week. At US$836m, China accounted for an enormous 62% share of net inflows and this is substantially larger than its average share of 30% registered during 2010-2011. The optimism on Chinese equities stemmed from a myriad of valuation and macro factors. Indeed, macro news flow has been extremely positive of late, with 4Q11 GDP coming in better than Bloomberg consensus at 8.9% yoy, while December retail sales (+18.1% yoy) and industrial production (+12.8% yoy) were also better than market expectations. The latest flash PMI also shows a pickup from 48.7 in December to 48.8 in January, suggesting that the Chinese economy is on the mend and hence allaying concerns of an economic hard landing. Apart from positive macro numbers, the decision to turn bullish on China also makes sense from a tactical standpoint. China is currently the third most under-owned market in the region after Korea and Taiwan. In terms of valuation, Chinas forward P/E of 9.1x is currently even lower than Korea.
Circuit Breaker | 20 January 2012 Page 60 Page 2
We believe as the macro outlook for China becomes less bearish, investors will incrementally address their underweight positioning in this market.
Chart 2 : Consensus positioning
8 6 4 2 0 -2 -4 -6 -8 TH HK IJ SG IN PH MY CH TW KR
Chart 3 : Forward P/E

16 14 12 10 8 6 4 2 0 CH KR TH SG TW IJ HK IN MY PH
(% pts)
(X)
CH: China; HK: Hong Kong; IN: India; IJ: Indonesia; KR: South Korea; MY: Malaysia; PH: the Philippines; SG: Singapore; TW: Taiwan; TH: Thailand Source: EPFR Global, Datastream, RBS
CH: China; HK: Hong Kong; IN: India; IJ: Indonesia; KR: South Korea; MY: Malaysia; PH: the Philippines; SG: Singapore; TW: Taiwan; TH: Thailand Source: Bloomberg, RBS
The improvement in positioning for China in turn came at the expense of Korea and Taiwan. Korea accounted for 8% of the inflows this week and this is substantially lower than its 22% share in 2010-11. The same can be said for Taiwan, whose 7% share of inflows is 13 ppt lower than its 2010-11 average of 20%.
Table 2 : Total country flows Asia ex-Japan
(US$m) China Hong Kong (174.3) (22.40) 34.8 102.4 106.5 2,211.3 3,089.7 (1,097.9) 243.7 India (303.0) (48.75) 13.4 102.1 100.3 6,258.6 7,466.1 (5,416.1) 215.8 Indonesia (102.6) (17.36) 42.1 163.2 41.2 1,089.2 2,832.0 (673.7) 246.5 Korea (494.4) (35.13) 115.3 231.7 106.8 5,144.0 8,102.4 (2,168.3) 453.8 Malaysia (109.7) (1.98) 2.9 43.3 9.0 708.9 1,351.5 (544.5) 55.2 Philippines (26.1) 3.61 4.6 24.4 12.4 226.4 451.1 (29.7) 41.4 Singapore (147.3) (26.11) (13.0) 19.0 17.1 885.9 667.4 (1,506.3) 23.1 Taiwan (346.1) 32.47 73.8 28.3 91.8 4,002.4 5,317.5 210.6 193.9 Thailand (91.3) 2.84 22.0 72.1 36.0 1,014.8 1,943.0 (749.3) 130.1
Fund flows over the past five weeks 21-Dec-11 (973.5) 28-Dec-11 (151.04) 4-Jan-12 93.2 11-Jan-12 437.2 18-Jan-12 835.9 Annual fund flows Total flows - 2009 14,584.3 Total flows - 2010 15,860.9 Total flows - 2011 (7,533.5) Total flows - 2012 YTD 1,366.3
EM versus DM flows: DM funds continued to register net inflows this week at US$1.2bn and this was again due to strong inflows of US$2.1bn into US funds. However, this was partly offset by outflows of US$773m from western Europe and US$219m from Japan. Meanwhile, EM funds maintained positive momentum, with inflows increasing 4% wow to US$1.9bn. As with last week, this was paced by inflows into GEM funds at US$1.3bn, followed by Asia ex-Japan funds at US$703m. After five consecutive sessions of net outflows, LatAm funds registered inflows of US$50m, while EMEA was the only EM segment that registered net outflow this week at US$101m.
Table 3 : DM versus EM fund flows

(US$m) DM US Japan Western Europe (967.5) (1,121.9) 221.3 (756.4) (773.0) 2,531.1 (10,088.5) (7,575.3) (1,308.1) EM Asia ex-Japan (1,389.7) (704.0) (124.6) 265.5 702.9 19,066.0 19,563.5 (17,388.0) 843.7 GEM EMEA LatAm
Fund flows over the past five weeks 21-Dec-11 2,678.1 28-Dec-11 1,405.0 4-Jan-12 (1,841.9) 11-Jan-12 4,006.4 18-Jan-12 1,156.7 Annual fund flows Total flows - 2009 (35,489.8) Total flows - 2010 (14,740.3) Total flows - 2011 (5,731.3) Total flows - 2012 YTD 3,321.1
5,285.5 2,500.0 (1,672.8) 4,335.7 2,089.7 (41,692.8) (2,830.9) (246.0) 4,752.6
(277.0) (127.5) (72.8) (112.7) (219.4) (5,457.8) (840.0) 1,871.7 (404.9)
(4,322.6) (304.3) 462.7 1,849.2 1,929.0 64,462.0 84,085.6 (34,260.3) 4,240.9
(2,300.4) 758.7 803.1 1,615.9 1,277.2 34,498.1 56,101.3 (3,951.3) 3,696.2
(371.3) (182.6) (149.5) 41.7 (101.3) 2,111.9 6,578.8 (5,492.8) (209.1)
(261.2) (176.4) (66.3) (73.9) 50.2 8,786.0 1,841.9 (7,428.2) (90.0)
Cross-asset-class flows: On a cross-asset-class basis, capital flows into equity funds continue to stay positive at US$2.8bn and fixed income funds similarly registered inflows of US$4.4bn. Money markets funds however registered net outflows of US$11.9bn after two consecutive sessions of inflow. On a ytd basis, fixed income funds saw the largest inflow at US$14.2bn, followed by equities at US$7.5bn and money markets at US$6.0bn.
Table 4 : Cross-asset-class fund flows
(US$m) Fund flows over the past five weeks 21-Dec-11 28-Dec-11 4-Jan-12 11-Jan-12 18-Jan-12 Annual fund flows Total flows - 2009 Total flows - 2010 Total flows - 2011 Total flows - 2012 YTD Equity (2,844.2) 412.7 (1,643.8) 6,313.8 2,800.3 38,461.1 84,335.8 (36,093.7) 7,470.3 Fixed income 1,829.9 1,987.7 3,457.2 6,399.5 4,359.6 157,867.6 182,591.1 79,187.4 14,216.2 Money markets 5,655.0 (6,129.4) 2,072.7 15,837.4 (11,913.3) (468,331.9) (443,931.4) (120,061.7) 5,996.8
Tactical indicators
Risk appetite continues to improve: As with last week, the latest risk indicators continue to suggest that investors appetite is on the mend. In the US, the VIX index fell from 20.9 last Friday to 19.9 as of yesterdays close, while the CBOE put-call ratio declined from 0.72 to 0.68. In Germany, the VDAX index similarly continued to trend lower, falling from 24.9 to 23.3 over this period. In Hong Kong, however, the intensity of short selling remained unchanged as the short turnover as a percentage of total turnover on the Hang Seng index stayed at 9.6%. Negative earnings momentum continues: Earnings momentum in Asia-Pacific ex-Japan remains negative, with 661 downgrades compared with 326 upgrades. Australia, New Zealand and Hong Kong registered the most negative momentum, while on a sector basis, telecom, materials and consumer staples showed the worst earnings momentum.
Stock screens
Regional 14-day RSI screens: Asia ex-Japan has started the year on a positive note, gaining 7.3% on a ytd basis. The up-moves in markets like India and China were particularly strong, with gains averaging at 12.0%. However, many of the stock counters are now trading at overbought positions and we believe that regional markets could soon be due for a period of consolidation. Hence in this weeks Circuit Breaker, we screened two lists of stocks in North Asia and Southeast Asia/India, ranking them by 14-day RSI.
Key events
US and Europe macro data: Key US macro data results to watch next week are the FOMC rate decision, followed by durable goods orders and new home sales for December, and the 4Q GDP data. Based on Bloomberg consensus, the policy rate is expected to stay unchanged at 0.25%. In Europe, the key data coming out includes industrials new orders for November, euro-zone money supply (M3) for December and the PMI Composite and consumer confidence data for January. Bloomberg consensus is expecting the following: industrial new orders (-2.7% yoy), money supply (+2.1% yoy) and PMI Composite (48.5). Asia macro data: The key macro data coming out from Asia next week includes the reverse repo rate for India, the December inflation and industrial production data for Singapore, and the 4Q GDP number for Korea. Bloomberg consensus is expecting the following: India reverse repo rate (no change at 7.5%), Singapore industrial production (+6.4% yoy), Koreas 4Q GDP (+3.5% yoy).
Table 5 : RBS regional asset allocation
Overweight Country China Malaysia Taiwan Thailand Neutral Hong Kong Indonesia New Zealand Underweight India Korea Australia Philippines Singapore Consumer Discretionary Materials
Sector
Telecoms Financials Utilities Industrials
Consumer Staples Energy Technology Health care
Source: RBS
Go with the flow

Chart 4 : GEM fund flows
4 3 2 1 0 0 -1 -2 -3 -2 -4 -5 Jan-09 -3 Jan-09 -1 1 (US$ bn) 2
Chart 5 : Asia ex-Japan fund flows

3 (US$ bn)
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
GEM fund flows (US$ bn)
4-week moving average
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. Source: EPFR Global, RBS
Chart 6 : Total country flows and weekly averages I

1,000 (US$ m)
Chart 7 : Total country flows and weekly averages II

60 (US$ m) 50
800 40 600 30 20 10 200 0 China Hong Kong India Taiwan 4wma Korea (10) Malaysia Thailand Singapore Indonesia 4wma Philippines Net fund flows this week Net fund flows this week
400
Note: This data consists of capital flows into each market from all fund types. Source: EPFR Global, RBS
Note: This data consists of capital flows into each market from all fund types. Source: EPFR Global, RBS
Chart 8 : DM versus EM fund flows

6 5 4 3 2 1 0 -1 -2 -3 -4 -5 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 (US$bn)
Chart 9 : Equity versus fixed income fund flows

6 4 2 0 -2 -4 -6 Jan-09
(US$ bn)
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Total DM fund flows - 3mma
Total EM fund flows - 3mma

Total Equity Funds - 3mma
Total Bond Funds - 3mma

Chart 10 : Total fund flows China

1,500 1,000 500 300 (500) (1,000) (100) (1,500) (2,000) Jun-09 (200) (300) Dec-09 May-10 Nov-10 Apr-11 Oct-11 200 100 0 600 500 400
Chart 11 : Total fund flows India

800 600 400 200 (200) (400) (600) (800) (1,000) Jun-09 300 250 200 150 100 50 0 (50) (100) (150) (200) Dec-09 May-10 Nov-10 Apr-11 Oct-11
(US$m)
(US$m)
Total funds flow - China - LHS
6mma - RHS
Total funds flow - India - LHS
6mma - RHS
Chart 12 : Total fund flows Korea

1,000 (US$m) 800 600 400 200 (200) (400) (600) (800) (1,000) Jun-09 50 0 250 200 150 100 300
Chart 13 : Total fund flows Taiwan

600 400 200 50 (200) 0 (400) (600) (50) (800) (100) (150) (1,000) Jun-09 (150) Dec-09 May-10 Nov-10 Apr-11 Oct-11 (100) (50) 200 150 100
(US$m)
Dec-09
May-10
Nov-10
Apr-11
Oct-11
Total fund flows - Korea - LHS
6mma - RHS
Total fund flows - Taiwan - LHS
6mma - RHS
Chart 14 : Total fund flows Singapore

150 (US$mn) 100 50 20 (50) (100) (20) (150) (200) Jun-09 (30) (40) Dec-09 May-10 Nov-10 Apr-11 Oct-11 6mma - RHS
Chart 15 : Total fund flows Malaysia

50 40 30 200 150 100 50 (50) (100) (150) (200) (250) Jun-09 60 50 40 30 20 10 0 (10) 0 (10) (20) (30) (40) Dec-09 May-10 Nov-10 Apr-11 Oct-11 6mma - RHS
(US$mn)
10
Total fund flows - Singapore - LHS
Total funds flow - Malaysia - LHS
Trend is your friend

Chart 16 : Dollar index
92 90 88 86 84 82 80 78 76 74 72 70 Jan-09 15 Jun-09 Dec-09 May-10 Nov-10 Apr-11 Oct-11 35 25 25 20 15 10 Jan-09 55 45 75 65 85
Chart 17 : VIX index

60 55 50 45 40 35 30
(index)
DXY index - LHS
14-day RSI - RHS

Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Chart 18 : CBOE put-call ratio

1.5 (x)
Chart 19 : Asia-Pacific ex-Japan earnings momentum

20 10
(%)
1.3
0
1.1
-10 -20
0.9
-30
0.7
-40 -50 Jan-07
0.5 Jan-09
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11 4wma
Jan-12
Earnings momentum 12 Week Moving Average
Source: Datastream, RBS
Last Price
Average
Chart 20 : Short turnover as a percentage of total turnover on the Hang Seng index
15 14 13 12 11 10 9 8 7 6 5 4 3 2 Jan-09 Jul-09 Jan-10 Last Price Jul-10 Jan-11 Jul-11 4wma
Chart 21 : AAII bull-to-bear indicator

60
(%) 40 20 0 -20 -40 -60 -80 Jan-93
Jan-12
Jan-96
Jan-99
Jan-02
Jan-05
Jan-08
Jan-11
Average
AAII bull to bear indicator
6-month moving average

New issues and lock-up schedules

Table 6 : New issues summary
Issuer Hyundai Heavy Industries Wistron Corp Huili Resources (Group) Ltd Kencana Petroleum Bhd PT Pakuwon Jati Tbk Goldin Properties Holdings Ltd. PICC Property & Casualty Hyundai Securities LG Electronics Inc GMG Global Ltd China Tianrui Group Cement Co Ltd Beijing Jingneng Clean Energy SPT Energy Group Inc Lai Sun Development Co Ltd GS Retail Co Ltd Hosa International Ltd Chow Tai Fook Jewellery Co Ltd China Polymetallic Mining Ltd New China Life Insurance Co Ltd Pricing Date 12-Jan-12 12-Jan-12 11-Jan-12 11-Jan-12 10-Jan-12 9-Jan-12 30-Dec-11 28-Dec-11 22-Dec-11 19-Dec-11 19-Dec-11 19-Dec-11 19-Dec-11 15-Dec-11 12-Dec-11 12-Dec-11 9-Dec-11 9-Dec-11 8-Dec-11 Size (US$m) 606 180 55 65 63 63 245 516 851 267 124 244 53 68 262 82 2,050 143 1,895 Deal Type FO CONV IPO FO FO FO FO FO FO FO IPO IPO IPO FO IPO IPO IPO IPO IPO Disc/ Prem (%) -3.1 na na -3.3 -15.6 -10.4 -42.1 0.8 -32.3 -61.3 na na na -43.0 na na na na na Aftermarket Perf (%) 8.4 na 2.4 2.8 21.5 5.8 84.7 13.9 41.1 na 14.9 -1.2 -0.8 36.7 9.7 -4.4 -1.5 -17.6 1.6
Source: Bloomberg
Table 7 : Asia ex-Japan lock-up schedules

Ticker Lock-up expiry Offer Price (LCY) 2.51 13.30 1.77 23.00 4.53 15.34 2.65 8.50 28.50 15.00 1.60 2.95 2.41 1.10 1.11 2.89 1.70 7.20 2.70 1.67 1.23 1.75 3.03 0.88 750 155 1000 0.33 65000 15800 5000 28000 15500 65000 4000 65000 19500 Current Share Price (LCY) Performance since issue (%) Total Market Cap (US$m)
Hong Kong China Hanking Citic Securities AGTech Holdings Shanghai Pharmacauticals HKT Trust MGM China China Lifestyle Food and Beverage Baoxin Auto Group New China Life Insurance Chow Tai Fook Jewellery Hosa International Sitoy Group Holdings China Tianrui Group Sino Harbour Property Shunfeng Photovoltaic International Zall Development Cayman Holding Huili Resources Group Sun Art Retail Group China First Chemical Holdings Beijing Jingneng Clean Energy SPT Energy Newton Resources Ltd Malaysia Bumi Armada Bhd Pavilion REIT Indonesia Garuda Indonesia Buana Listya Tama Erajaya Swasembada Tbk PT Singapore Sheng Siong Group Korea Hyundai Wia Iljin Materials TK Chemical SeAH Special Steel Korea Aerospace Industries Shinsegae International Nexolon Co Sapphire Technology GS Retail Co. Ltd
3788 HK Equity 6030 HK Equity 8279 HK Equity 2607 HK Equity 6823 HK Equity 2282 HK Equity 1262 HK Equity 1293 HK Equity 1336 HK Equity 1929 HK Equity 2200 HK Equity 1023 HK Equity 1252 HK Equity 1663 HK Equity 1165 HK Equity 2098 HK Equity 1303 HK Equity 6808 HK Equity 2121 HK Equity 579 HK Equity 1251 HK Equity 1231 HK Equity BAB MK Equity PREIT MK MYR GIAA IJ Equity BULL IJ Equity ERAA IJ Equity SSG SP Equity 011210 KS Equity 020150 KS Equity 104480 KS Equity 019440 KS Equity 047810 KS Equity 031430 KS Equity 110570 KS Equity 123260 KS equity 007070 KS Equity
3/28/2012 4/3/2012 4/11/2012 5/14/2012 5/27/2012 5/28/2012 6/6/2011 6/11/2012 6/12/2012 6/12/2012 6/13/2012 6/13/2012 6/20/2012 7/16/2012 7/7/2012 7/7/2012 7/10/2012 7/21/2012 12/3/2012 12/16/2012 12/17/2012 12/31/2012 1/17/2012 1/6/2012 2/11/2012 5/22/2012 12/13/2012 2/13/2012 2/21/2012 3/3/2012 4/25/2012 5/31/2012 6/29/2012 7/13/2012 10/13/2012 12/4/2012 12/22/2012
2.54 15.00 0.33 13.28 4.85 11.68 2.23 8.49 28.95 14.78 1.53 2.66 2.77 0.82 0.39 3.24 1.74 9.96 2.48 1.65 1.22 0.90 4.14 1.00 560 101 1090 0.47 131000 16000 2505 28500 33000 117500 5050 47850 21400
1.2 12.8 -81.6 -42.3 7.1 -23.9 -15.8 -0.1 1.6 -1.5 -4.4 -9.8 14.9 -25.5 -64.9 12.1 2.4 38.3 -8.1 -1.2 -0.8 -48.6 36.6 13.6 -25.3 -34.8 9.0 40.9 101.5 1.3 -49.9 1.8 112.9 80.8 26.3 -26.4 9.7
599 19,182 161 4,749 4,011 5,720 323 2,767 13,836 19,047 315 343 857 122 78 1,461 224 12,245 256 1,308 210 464 3,907 952 1,413 199 352 505 2,970 553 199 215 2,834 739 352 259 1,452
Source: Bloomberg
Thematic screens
Table 8 : North Asia stocks ranked by 14-day RSI
Ticker Name M-Cap (US$bn) 1.5 6.4 6.5 6.4 4.1 36.8 2.1 195.7 31.0 1.2 9.5 3.5 1.5 11.2 128.7 3.9 5.4 5.5 3.1 10.3 Px Chg Pct YTD (%) 20.2 29.5 20.4 12.1 18.1 12.1 19.4 12.2 12.6 14.9 12.9 15.4 16.7 29.0 14.4 26.6 12.5 15.2 29.1 14.0 14-day RSI 83.7 80.2 80.2 79.0 78.8 77.0 76.5 76.3 76.1 76.1 75.6 75.5 75.5 75.4 75.4 75.3 75.1 75.0 74.8 74.3 P/B (x) BEst P/E (x) 13.1 7.5 25.4 17.2 24.8 13.6 6.9 7.3 10.8 15.7 15.9 7.3 10.1 9.0 6.2 5.8 9.9 8.5 9.9 13.2 OPM (%) ROE (%) Dvd Yld (%) 3.6 4.7 1.3 6.5 2.5 3.1 3.5 0.0 2.9 2.1 3.3 4.4 4.6 2.0 4.8 3.8 3.2 0.0 3.3 0.0 Sector Country
2227 TT Equity 17 HK Equity 69 HK Equity 2308 TT Equity 14 HK Equity 16 HK Equity 917 HK Equity 939 HK Equity 1 HK Equity 8299 TT Equity 83 HK Equity 363 HK Equity 3044 TT Equity 1157 HK Equity 3988 HK Equity 3383 HK Equity 683 HK Equity 3618 HK Equity 1068 HK Equity 2727 HK Equity
Yulon Nissan Motor New World Development Shangri-La Asia Delta Electronics Hysan Development Sun Hung Kai Properties New World China Land China Construction Bank Cheung Kong Holdings Phison Electronics Sino Land Shanghai Industrial Tripod Technology Zoomlion Heavy Ind. Bank of China Agile Property Kerry Properties Chongqing Rural Com. Bank China Yurun Food Shanghai Electric
2.4 0.3 1.2 2.5 0.7 0.9 0.3 1.6 0.8 3.7 0.9 0.8 1.9 1.6 1.1 1.2 0.7 1.5 1.5 1.5
4.5 19.6 14.5 6.4 80.3 38.6 28.3 59.2 33.6 7.4 48.7 23.2 11.7 22.9 52.7 45.8 17.5 50.4 10.5 6.3
18.2 9.5 6.6 15.6 20.0 16.9 7.6 23.4 17.5 22.4 14.4 12.7 21.9 30.5 19.7 26.8 11.7 19.3 22.0 11.2
Cons. Dis. Financials Cons. Dis. Technology Financials Financials Financials Financials Financials Technology Financials Industrials Technology Industrials Financials Financials Financials Financials Cons. Stap. Industrials
Taiwan Hong Kong Hong Kong Taiwan Hong Kong Hong Kong Hong Kong China Hong Kong Taiwan Hong Kong Hong Kong Taiwan China China China Hong Kong China China China
Source: Bloomberg
Table 9 : Southeast Asia and India stocks ranked by 14-day RSI

Ticker Name M-Cap Px Chg 14-day RSI (US$bn) Pct YTD (%) 1.3 1.0 1.3 1.1 2.6 1.9 8.9 6.3 4.4 5.0 1.1 1.4 4.8 1.1 1.9 1.6 3.8 6.3 17.2 1.2 18.6 31.4 8.1 5.5 50.4 16.9 58.4 16.1 12.4 18.6 10.3 46.5 16.8 31.4 26.0 48.2 48.7 29.9 9.8 32.9 88.8 87.3 85.0 82.8 81.6 81.1 80.7 78.2 78.1 77.4 77.3 76.8 76.6 76.4 75.8 75.8 75.7 75.6 75.3 75.0 P/B (x) BEst P/E (x) 12.1 17.6 8.9 8.0 20.0 14.2 22.6 13.4 24.0 7.5 12.7 19.9 6.3 17.0 15.1 14.5 17.2 14.3 14.1 OPM (%) ROE (%) Dvd Yld (%) 0.9 2.2 1.1 2.6 1.5 5.2 0.2 2.5 0.2 1.8 3.5 0.0 1.2 6.4 3.8 2.0 0.0 0.7 4.0 1.8 Sector Country
SECB PM Equity ALFA IN Equity CER SP Equity CHIB PM Equity RELI IN Equity SCMA IJ Equity ADE IN Equity HPHT SP Equity JGS PM Equity SMPH PM Equity UBP PM Equity UT IN Equity AC PM Equity IBULL IN Equity COS SP Equity RCAPT IN Equity ADANI IN Equity MSIL IN Equity PCHEM MK Equity TMX IN Equity
Security Bank Alfa Laval India Cerebos Pacific China Banking Reliance Infrastructure Surya Citra Media Adani Enterprises Hutchison Port H. Trust JG Summit SM Prime Holdings Inc Union Bank Of Philippines Unitech Ayala Corp Indiabulls Financial Ser. Cosco Corp Reliance Capital Adani Power Maruti Suzuki India Petronas Chemicals Thermax
2.0 28.8 4.1 1.3 0.5 13.7 2.6 0.7 1.5 3.6 1.2 0.6 2.0 1.2 1.9 1.0 3.0 2.2 2.7 4.4
59.4 19.3 13.2 38.7 10.1 57.3 14.0 34.8 10.0 51.1 55.3 28.5 13.1 61.9 5.3 15.8 48.8 6.7 23.9 9.0
32.1 38.4 23.2 13.0 7.0 65.1 21.0 10.3 15.6 0.0 5.2 9.8 16.8 16.4 3.8 8.5 18.0 16.3 31.9
Financials Industrials Cons. Stap. Financials Utilities Cons. Dis. Industrials Industrials Industrials Financials Financials Financials Financials Financials Industrials Financials Utilities Cons. Dis. Materials Industrials
Philippines India Singapore Philippines India Indonesia India Singapore Philippines Philippines Philippines India Philippines India Singapore India India India Malaysia India
Source: Bloomberg
Asia macro calendar

Table 10 : Asia macro calendar
Date 24 Jan 25 Jan 25 Jan 25 Jan 25 Jan 26 Jan 26 Jan 26 Jan 26 Jan 26 Jan 27 Jan 27 Jan Country IN PH PH SI TH SK SI HK HK HK SK TH Month 24-Jan NOV NOV DEC 25-Jan 4Q P DEC DEC DEC DEC JAN DEC Events India REPO Cutoff Yld Total Imports (YoY) Trade Balance CPI (YoY) Benchmark Interest Rate GDP (YoY) Industrial Production YoY Trade Balance Exports YoY% Imports YoY% SK Consumer Confidence Mfg. Production Index ISIC (YoY) Survey 8.50% --5.50% 3.00% 3.50% 6.40% -55.5B 3.80% 7.30% --33.4 Last 8.50% 2.30% -$932M 5.70% 3.25% 3.50% -9.60% -44.1B 2.00% 8.80% 99 -48.59
Results diary
Table 11 : Results diary
Date Monday 23 Jan 23-Jan-12 23-Jan-12 23-Jan-12 23-Jan-12 23-Jan-12 23-Jan-12 23-Jan-12 23-Jan-12 Tuesday 24 Jan 24-Jan-12 24-Jan-12 24-Jan-12 24-Jan-12 24-Jan-12 Wednesday 25 Jan 25-Jan-12 25-Jan-12 25-Jan-12 25-Jan-12 25-Jan-12 25-Jan-12 25-Jan-12 25-Jan-12 Thursday 26 Jan 26-Jan-12 26-Jan-12 26-Jan-12 26-Jan-12 26-Jan-12 26-Jan-12 26-Jan-12 Friday 27 Jan 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 27-Jan-12 Saturday 28 Jan 28-Jan-12 Bloomberg CRIN IN FB IN GAIL IN IDEA IN LT IN MSIL IN STLT IN 002380 KS Market India India India India India India India South Korea Company Coromandel Intl Federal Bank GAIL (India) Idea Cellular Larsen & Toubro Maruti Suzuki India Sterlite Industries KCC Corp# Analyst Atul Rastogi Aditi Thapliyal Avadhoot Sabnis Piyush Choudhary Harish Bihani Pramod Amthe Rahul Jain Sok Hee Lee Period Q3 Q3 Q3 Q3 Q3 Q3 Q3 Y Report type* (C) (C) (C) (C) (C) (C) (C) (E)
CAIR IN GRASIM IN IBREL IN LPC IN YES IN
India India India India India
Cairn India Grasim Industries Indiabulls Real Estate Lupin Yes Bank
Avadhoot Sabnis Mohan Swamy Prakash Agarwal Prakash Agarwal Aditi Thapliyal
Q3 Q3 Q3 Q3 Q3
(C) (C) (C) (C) (C)
BOB IN SESA IN TCOM IN TGBL IN MPI MK PBK MK 002550 KS 051310 KS
India India India India Malaysia Malaysia South Korea South Korea
Bank of Baroda Sesa Goa Tata Communications Tata Global Beverages Malaysian Pacific Inds# Public Bank# LIG Insurance# Sungjin Geotec#
Jatinder Agarwal Rahul Jain Piyush Choudhary Mohan Swamy Vince Ng, CFA Chehan Perera, CFA Y C Mok K J Hwang
Q3 Q3 Q3 Q3 Q2 Y Q3 Y
(C) (C) (C) (C) (E) (E) (E) (E)
KEP SP 2353 TT 3189 TT 6239 TT 2325 TT 2303 TT SCC TB
Singapore Taiwan Taiwan Taiwan Taiwan Taiwan Thailand
Keppel Corp Acer Inc# Kinsus Interconnect Tech# Powertech Technology# Siliconware Precision# UMC# Siam Cement#
Gina Kim, CFA Wanli Wang Jack Lu Jack Lu Jack Lu Jeffrey Toder, CFA Avin Sony
Y Y Y Y Y Y Y
(C) (E) (E) (E) (E) (E) (E)
BOI IN BHE IN BHEL IN CBK IN NHPC IN NTPC IN PLNG IN EXCL IJ 000640 KS 000150 KS 082740 KS 042670 KS 012330 KS 004020 KS 030200 KS 034220 KS 060980 KS 010140 KS 010950 KS 000100 KS GLOW TB MBKET TB PHATRA TB
India India India India India India India Indonesia South Korea South Korea South Korea South Korea South Korea South Korea South Korea South Korea South Korea South Korea South Korea South Korea Thailand Thailand Thailand
Bank of India Bharat Electronics BHEL Canara Bank NHPC NTPC Petronet LNG XL Axiata Dong-A Pharmaceutical# Doosan Corp# Doosan Engine# Doosan Infracore# Hyundai Mobis# Hyundai Steel# KT Corp# LG Display Mando# Samsung Heavy Ind# S-Oil Corporation# Yuhan Corp# Glow Energy# Maybank Kim Eng Secs# Phatra Capital#
Jatinder Agarwal not covered Harish Bihani Jatinder Agarwal Harish Bihani Harish Bihani Avadhoot Sabnis Gina Kim, CFA Angela Choi K J Hwang K J Hwang Simon Park Simon Park Simon Park Samuel Martens Jeffrey Toder, CFA Simon Park K J Hwang Angela Choi Angela Choi Avin Sony Marcin Spiewak Marcin Spiewak
Q3 Q3 Q3 Q3 Q3 Q3 Q3 Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y
(C) (C) (C) (C) (C) (C) (C) (C) (E) (E) (E) (E) (E) (E) (E) (E) (E) (E) (E) (E) (E) (E) (E)
IOB IN
India
Indian Overseas Bank
Vivek Verma
Q3
(C)
* (C)confirmed, (E)estimated, (T)tentative Source: #Bloomberg, Company data, RBS
Page 72
Equities | Global
23 January 2012
Global Action Pack

Monday 23 January 2012
Table 1 : This mornings research

Subject European Research Prudential Semiconductors - Europe Asian Research Ahead Of The Curve Asian Paints Axis Bank Bajaj Auto Banks India >Allahabad Bank >Andhra Bank >Corporation Bank >Indian Bank >Indian Overseas Bank >Jammu & Kashmir Bank >OBC CapitaCommercial Trust Casinos & Gaming Asia Pacific Circuit Breaker Hindustan Construction Hindustan Zinc ITC JSW Steel Mahindra Finance Mando NMDC Petrochemicals Journal >Esso Thailand >Formosa Chems & Fibre >Formosa Petrochemical >Formosa Plastics >Indorama Ventures >IRPC Pcl >Nan Ya Plastics >PTT Global Chemical >PTT Pcl >Siam Cement >Thai Oil Polaris Financial Rallis India Reliance Industries SITC International UltraTech Cement Winsway Coking Coal Wipro Zee Entertainment India reports on 3Q Flash: Underlying growth drivers intact Allays perceived concerns Await unveiling of new product Value plays Strong regional player Strong metrics, but stronger headwinds Multiple headwinds Healthy fundamentals, attractive valuations Margin and asset-quality headwinds Strong regional play Attractive valuations Bad news priced in, but limited positive catalysts Flash: 4Q11: Pre-results commentary Huge funds flow into China Sequential loss reduction in 3Q Silver is the key Transitional volume softness Margins to expand Flash: 3Q earnings ahead of estimates Strong FY12 order flow intact Flash: Collateral disruption Leverage and be picky All optimism likely priced in Hold for dividend potential Looks expensive with unstable operations Best of the Formosa Looking ahead Back in the spotlight Overshadowed by non-core assets Top pick in the sector A safer way to play the O&G sector The worst seems to be behind us Downgrade to Hold Flash: 3QFY12: strong margin performance Flash: 3Q- one offs mar decent performance Buyback overshadows results A strong December rebound Flash: Strong EBITDA growth as expected Follow up on inventory statement Back in the saddle Flash: 3QFY12: More resilient than expected 30 5 9 6 29 11 10 10 10 10 10 12 6 4 16 6 6 8 6 5 5 4 29 7 5 7 6 5 6 7 5 6 6 7 5 4 13 6 5 7 7 5 A tale of two continents Flash: Thoughts post Intel results/guidance 7 5 Title No of pages
Analyst
RBS Equities Research
Produced by: The Royal Bank of Scotland plc Important disclosures can be found in the Disclosures Appendix.
Page 73
Global Action Pack summaries

Table 2 : Europe Upgrades/downgrades and initiations
No Upgrades/downgrades and initiations
Table 3 : Asia Upgrades/downgrades and initiations

Company Ticker Last Actual Year End Allahabad Bank Andhra Bank Axis Bank Bajaj Auto CapitaCommercial Trust Corporation Bank Esso Thailand Formosa Chems & Fibre Formosa Petrochemical Formosa Plastics Hindustan Construction Hindustan Zinc Indian Bank Indian Overseas Bank Indorama Ventures IRPC Pcl ITC Jammu & Kashmir Bank JSW Steel Mando Nan Ya Plastics OBC PTT Global Chemical EPS new FY1 FY2 FY3 EPS old FY1 FY2 FY3 Change (%) FY1 FY2 FY3 Curr Price Target New Recom Old Chg (%) New Old n/a n/a 1423 1226 1.21 n/a 11.80 92.00 70.00 104.00 51.60 138.00 n/a n/a 60.00 7.80 240.00 n/a 785.00 205000 81.00 n/a 90.00 n/a Buy Buy n/a
ALBK IN Mar-11 34.04 34.65 38.84 n/a n/a n/a n/a n/a n/a Rs 210.00 Reason for EPS Change: Initiation of coverage ANDB IN Mar-11 23.20 23.82 26.68 n/a n/a n/a n/a n/a n/a Rs 102.00 Reason for EPS Change: Initiation of coverage AXSB IN Mar-11 96.88 104.72 120.86 94.68 109.12 127.19 2.3 -4.0 -5.0 Rs 1411 Reason for EPS Change: We cut loan growth estimates, which leads to a cut in earnings. BJAUT IN Mar-11 108.36 115.72 124.34 102.38 111.45 121.60 5.8 3.8 2.3 Rs 1331 Reason for EPS Change: Impressive results and favourable currency raise EPS. CCT SP Dec-11 0.07 0.06 0.07 0.06 0.06 n/a 1.6 1.5 n/a S$ 1.21 Reason for EPS Change: Rolling forward of numbers and change in lease expiry profile CRPBK IN Mar-11 91.68 90.81 105.23 n/a n/a n/a n/a n/a n/a Rs 429.00 Reason for EPS Change: Initiation of coverage ESSO TB Dec-10 0.74 0.61 0.95 1.70 2.23 2.43 -56.6 -72.7 -60.9 B 9.30 Reason for EPS Change: Changes in petrochemical price assumption 1326 TT Dec-10 6.01 7.31 6.99 8.97 9.43 9.66 -33.0 -22.4 -27.6 NT$ 88.00 Reason for EPS Change: Changes in our petrochemical price assumptions. 6505 TT Dec-10 2.78 3.87 3.93 4.65 5.59 6.04 -40.4 -30.7 -35.0 NT$ 69.00 Reason for EPS Change: changes in petrochemical price assumption 1301 TT Dec-10 6.28 6.81 7.27 8.96 10.19 10.58 -29.9 -33.2 -31.3 NT$ 96.00 Reason for EPS Change: changes in petrochemical price assumption HCC IN Mar-11 -0.90 0.14 0.57 0.24 1.31 2.34 n/m -89.2 -75.4 Rs 42.30 Reason for EPS Change: Downward revision in our sales growth and margin forecasts HZ IN Mar-11 13.23 16.64 18.52 13.36 17.09 19.18 -1.0 -2.7 -3.5 Rs 155.00 Reason for EPS Change: Lowered commodity price estimates INBK IN Mar-11 41.62 41.08 47.75 n/a n/a n/a n/a n/a n/a Rs 259.00 Reason for EPS Change: Initiation of coverage IOB IN Mar-11 20.17 25.50 31.59 n/a n/a n/a n/a n/a n/a Rs 91.00 Reason for EPS Change: Initiation of coverage IVL TB Dec-10 2.60 2.92 3.45 2.75 3.50 3.54 -5.3 -16.4 -2.4 B 43.00 Reason for EPS Change: changes in petrochemical price assumption IRPC TB Dec-10 0.29 0.44 0.67 0.61 0.71 0.94 -51.9 -38.3 -28.8 B 6.40 Reason for EPS Change: changes in petrochemical price assumption ITC IN Mar-11 7.85 9.17 10.90 7.75 9.21 10.96 1.3 -0.5 -0.5 Rs 237.73 Reason for EPS Change: Higher other income in FY12, slightly lower volume estimates in FY13 and 14 JKBK IN Mar-11 144.82 147.78 175.41 n/a n/a n/a n/a n/a n/a Rs 948.00 Reason for EPS Change: Initiation of coverage JSTL IN Mar-11 77.62 106.72 152.42 79.33 106.72 152.42 -2.1 n/a n/a Rs 785.00 Reason for EPS Change: Increased sales volume estimates 060980 KS Dec-10 13488 18565 22372 13615 18155 21733 -0.9 2.3 2.9 W 229000 Reason for EPS Change: Revise up FY12 & 13 revenue growth on better-than-expected FY11 new orders 1303 TT Dec-10 2.90 3.81 3.74 5.55 6.42 6.63 -47.8 -40.7 -43.7 NT$ 67.00 Reason for EPS Change: changes in petrochemical price assumption OBC IN Mar-11 44.09 52.99 62.31 n/a n/a n/a n/a n/a n/a Rs 251.00 Reason for EPS Change: Initiation of coverage PTTGC TB Dec-10 7.59 8.09 8.01 8.08 9.07 9.56 -6.1 -10.8 -16.2 B 82.00 Reason for EPS Change: changes in petrochemical price assumption
n/a Hold -0.8 8.6
Buy Buy Sell Sell
n/a Hold Hold n/a Hold -21.2 n/a
Sell Buy
-4.3 Hold Buy -1.4 -7.7 -18.0 12.3 n/a Sell Sell Buy Buy Buy Buy Buy Buy Buy Buy
n/a Hold Hold -28.3 -17.9 -0.9 n/a n/a 11.7 Buy Buy Buy Buy Buy Buy Buy Buy Buy Buy Buy Buy
-17.3 Hold Buy n/a -8.9 Buy n/a
Buy Buy
Global Action Pack | 23 January 2012 Page 2 Page 74
Table 4 : Asia Upgrades/downgrades and initiations (Contd)

Company Ticker Last Actual Year End PTT Pcl Reliance Industries SITC International Thai Oil Wipro EPS new FY1 FY2 FY3 EPS old FY1 FY2 FY3 Change (%) FY1 FY2 FY3 Curr Price Target New Recom Old Chg (%) New Old -2.6 n/a -2.7 Buy Buy Buy Buy Buy Buy
PTT TB Dec-10 39.94 43.13 52.12 44.39 45.90 49.55 -10.0 -6.0 5.2 B Reason for EPS Change: Changes in petrochemical price assumption RIL IN Mar-11 69.77 85.13 86.20 78.42 83.45 87.93 -11.0 2.0 -2.0 Rs Reason for EPS Change: change in petchem, refining margin, forex and gas volume assumptions 1308 HK Dec-10 0.04 0.04 0.04 0.04 0.04 0.04 -1.5 -1.4 -0.8 HK$ Reason for EPS Change: Better-than-expected December volume, offset by higher fuel costs. TOP TB Dec-10 7.69 6.46 7.75 8.97 9.59 9.98 -14.3 -32.6 -22.3 B Reason for EPS Change: changes in petrochemical price assumption WPRO IN Mar-11 22.68 28.27 31.56 22.44 25.79 29.08 1.0 9.6 8.5 Rs Reason for EPS Change: Change in currency assumtion and slowdown in discretionary spend
408.00 419.00 925.00 925.00 3.55 66.00 3.65 85.00
-22.4 Hold Buy 11.8 Buy Buy
475.00 425.00
Europe
Prudential (Buy, TP 9.00) - A tale of two continents M&A interest in ING's Asian operations reinforces the attraction of the region, with low levels of market penetration and strong GDP growth forming a stark contrast to more challenging conditions in Europe. With fast-growing and cash-generative Asian businesses, Prudential is extremely well placed, in our view, to benefit from these trends. We reiterate our Buy rating and 9.00 target price. http://track.sumnet.com/home/00000275/T03AE77/pru_ial_20107530.pdf Semiconductors - Europe - Thoughts post Intel results/guidance We see Intel's revenue and capex guidance as positive for the sector, most particularly ASML, which should benefit from further capex war between the x86 camp and the ARM camp. http://track.sumnet.com/home/00000275/T03ADA3/sem_ors_20107495.pdf
Asia
Ahead Of The Curve - India reports on 3Q Many markets in Asia will be closed next week, on Monday and Tuesday, for the Lunar New Year holidays. A large proportion of our India coverage universe will report third quarter results during that period and investors will be focusing their attention on the subcontinent. Also, a number of IT firms in the US will report full-year numbers which may provide some guidance for Korean and Taiwanese IT firms yet to report their results. http://track.sumnet.com/home/00000275/T03ADCA/ahe_rve_20107503.pdf Asian Paints (Buy, TP Rs3458.00) - Underlying growth drivers intact Strong 20% sales growth in a difficult quarter indicates that structural growth drivers are intact. Sequentially margins improved 187bps to 17.2%, driven by price hikes taken in 3Q against no price hikes in previous quarter. Maintain Buy. http://track.sumnet.com/home/00000275/T03AE57/asi_nts_10089755.pdf Axis Bank (Buy, TP Rs1411.00) - Allays perceived concerns Axis Bank continued to show strength in core earnings, aided by largely stable margins and the continued surge in fee income. The asset quality held up reasonably well with no alarming rise in restructured loans. Loan book grew 20% yoy, but maintaining this growth yoy in FY12 looks like an uphill task, in our view. We cut our loan growth estimates and marginally trim our earnings forecasts. At our new target price of Rs1411.00 (down from Rs1423), the stock would trade at 2.3x FY13F BV and 13.5x earnings. Maintain Buy. http://track.sumnet.com/home/00000275/T03AE3B/axi_ank_10089730.pdf Bajaj Auto (Sell, TP Rs1330.80) - Await unveiling of new product Bajaj's 3Q results surprised us and consensus on better than expected export realisations. Factoring in rupee depreciation and our economist's new currency estimate, we upgrade our FY12 EPS forecast and target price by about 5%, despite marginal volume cuts. We are concerned its domestic sales volume slowdown was sharper than its peers' in the two- (Hero Moto) and three-wheeler (Piaggio and Mahindra) segments and that it is relying on new products to revive future growth. We will wait for these products to hit the market in the coming months before reviewing our Sell rating. http://track.sumnet.com/home/00000275/T03AE37/baj_uto_10089729.pdf Banks - India - Value plays The macroeconomic environment is challenging, but we believe that current valuations (stocks trading at -1x standard deviations to five-year average book value) capture the near-term cyclical pain. We prefer quality over valuations and thus banks with a strong operating metrics - ie relatively diversified loan books, healthy deposit mixes, comfortable capital adequacy and asset quality. We initiate coverage of Allahabad Bank, Indian Bank, J&K Bank and Oriental Bank of Commerce at Buy; and Andhra Bank, Corporation Bank and Indian Overseas Bank at Hold. http://track.sumnet.com/home/00000275/T03AE33/banks_10089727.pdf > Allahabad Bank (Buy, TP Rs210.00) - Strong regional player The operating environment is challenging, and we expect asset quality to be affected by the bank's exposure to the small and medium enterprise (SME) space, textiles and the iron and steel industry. Near-term margin pressures remain, but given the focus on high-yielding loans coupled with moderating stress on the liability mix, we believe the bank will be able to sustain sufficient momentum in the top line to absorb higher loan losses and yet generate sound profitability. We initiate coverage at Buy with a Rs210 target price, at which it would trade at 1x FY13F book value. http://track.sumnet.com/home/00000275/T03AE3C/all_ank_10089728.pdf
> Andhra Bank (Hold, TP Rs102.00) - Strong metrics, but stronger headwinds The loan book skew towards sectors such as iron and steel, power, SEBs and textiles increases risks to asset quality and challenges to growth, in our view. We expect the slowdown in highyielding loans and the low CASA ratio to put downward pressure on net interest margins. Therefore, we expect pressure on profitability and initiate coverage on the bank at Hold. At our target price, the stock would trade at 0.6x FY13F book value, based on our forecasts. http://track.sumnet.com/home/00000275/T03AE45/and_ank_10089737.pdf > Corporation Bank (Hold, TP Rs429.00) - Multiple headwinds We believe Corporation Bank's low proportion of CASA, higher dependence on wholesale deposits, low loan loss provision coverage, large restructured loan book, low tier-1 ratio and relatively higher leverage justify a discount to its peers. We initiate with a Hold. We note that if the interest rate cycle reverses sharply it could provide a positive delta for Corporation Bank's earnings. Furthermore, a successful execution of SME strategy should support net interest margins in the medium term. http://track.sumnet.com/home/00000275/T03AE41/cor_ank_10089733.pdf > Indian Bank (Buy, TP Rs259.00) - Healthy fundamentals, attractive valuations We like Indian Bank due to its high profitability (24% ROE in FY11), low net NPL rate (0.5% of loans), healthy deposit mix (bulk deposits below 10%) and moderate leverage (15x). These positives, along with what we see as an attractive valuation (0.8x FY13F book), lead us to initiate coverage with a Buy rating. Our GGM-based target price of Rs259 implies an FY13F PB of 1x, in line with its five-year average. http://track.sumnet.com/home/00000275/T03AE42/ind_ank_10089734.pdf > Indian Overseas Bank (Hold, TP Rs91.00) - Margin and asset-quality headwinds Low profitability (0.7% ROA in FY11); high exposure to sectors such as iron and steel, SEBs, textiles, etc; high leverage (20x); and a modest deposit mix (26% CASA, 22% wholesale deposits) are key concerns in the current environment. We initiate coverage on Indian Overseas Bank with a Hold rating and a target price of Rs91. At our target price, the stock would trade at 0.5x FY13F book value. http://track.sumnet.com/home/00000275/T03AE46/ind_ank_10089738.pdf > Jammu & Kashmir Bank (Buy, TP Rs948.00) - Strong regional play Dominance in the state of J&K, superior deposit mix, stable asset quality, low leverage and a high operating profitability outlook make J&K Bank a unique asset class in current market conditions, in our view. Barring exposure to commercial real estate, the bank's exposure to other sectors is generally below the industry average. We initiate at Buy, valuing the stock at Rs948, at which level it would trade at 1x FY13F book value. http://track.sumnet.com/home/00000275/T03AE43/jam_ank_10089735.pdf > OBC (Buy, TP Rs251.00) - Attractive valuations We believe OBC is one of the better plays in falling interest rate environment, due to its low CASA and high wholesale funded deposit mix. A key positive we see for OBC is its high tier-1 ratio of 9.92%. At 0.5x FY13F BV, we believe valuations capture concerns about asset quality and low profitability. We initiate coverage at Buy. http://track.sumnet.com/home/00000275/T03AE44/obc_10089736.pdf CapitaCommercial Trust (Hold, TP S$1.21) - Bad news priced in, but limited positive catalysts In view of our negative outlook on the office sector, we expect CCT to continue to face negative rent reversion and a fall in occupancy rates in 2012. This should be mitigated by higher income from HSBC Building. We believe that the bad news has been priced in. However, we see few positive catalysts for the stock. Maintain Hold; we prefer Suntec REIT in the commercial REIT space. http://track.sumnet.com/home/00000275/T03ADA7/cap_ust_20107496.pdf Casinos & Gaming - Asia Pacific - 4Q11: Pre-results commentary DICJ 4Q11 data reveals (1) yoy growth in mass/slots (38%) exceeded that of VIP (32%) for the first time in eight quarters and (2) licensed/in play tables contracted by 1.4% to 5,302 vs. the end3Q level (Sands will be happy). In terms of operators, Sands looks to have performed best in the period. Buy GEG, MPEL, MGMC. http://track.sumnet.com/home/00000275/T03ADAF/cas_ing_20107497.pdf Circuit Breaker - Huge funds flow into China Asia ex-Japan registered its second consecutive sessions of net inflows this week as sentiments continue to rebound on the back of positive US/Asian macro data and the successful bond auction by Spain and France. Investors' enthusiasm on China was particularly pronounced as the market again garnered a large proportion of regional flows. http://track.sumnet.com/home/00000275/T03AE23/cir_ker_10089719.pdf
Hindustan Construction (Buy, TP Rs42.30) - Sequential loss reduction in 3Q In 3QFY12, HCC managed to reduce its normalised net loss by 47% qoq to Rs192m though that was still 12% higher than our forecasts. We forecast the falling loss trend will continue in 4QFY12. We believe that cleaning up the balance sheet and easing employee costs are steps in the right direction while easing interest rates should also play out well for a highly leveraged company in FY13. We believe the stock has reached its trough and that the resumption of construction at Lavasa, improvement in Stiner AG's performance and good order inflow for parent bode well for the future. We lower our target price to Rs42.30, but maintain Buy. http://track.sumnet.com/home/00000275/T03AE40/hin_ion_10089732.pdf Hindustan Zinc (Buy, TP Rs155.00) - Silver is the key Hindustan Zinc reported 3Q12 EBITDA of Rs14.0bn (-4% qoq and -5% yoy), higher than our estimate of Rs13.2bn. Production volumes were above our estimates, driven by the highly anticipated ramp-up of the new 100KT Dariba smelter. We lower our FY13/14F EBITDA by 3%/4% based on our new commodity and currency estimates. We expect HZ to deliver an earnings CAGR of 18% over FY14, driven largely by growth in silver output of more than 100%. Based on peer valuation, our target price is now Rs155 (from Rs138). http://track.sumnet.com/home/00000275/T03AE4A/hin_inc_10089739.pdf ITC (Buy, TP Rs237.73) - Transitional volume softness ITC's 3QFY12 18% EBITDA growth was in line with our expectations, but cigarette volume growth slowed to 4% (from 8% in 1HFY12) due to the full impact of ITC's 6% price hike and the higher base effect. EBIT performance across businesses was strong, and the trend of declining losses in other FMCG businesses continued. While concerns about likely changes in the next union budget could lead to a price correction, we note that in three of the last 10 years in which excise hikes were over 10% in the budget, ITC's EBITDA growth was strong. We maintain our Buy rating with a new TP of Rs237.73 (down from Rs240). http://track.sumnet.com/home/00000275/T03AE1A/itc_10089714.pdf JSW Steel (Buy, TP Rs785.00) - Margins to expand JSW Steel reported standalone 3Q12 results, which beat our forecasts on higher volumes and lower-than-expected raw material costs. Capacity utilisation rebounded to 84% in December, from 68% in November. We raise our FY12 EBITDA forecasts by 2% because we expect higher sales volumes. Our FY13-14 forecasts remain unchanged. The recent softening of iron ore and coking coal coal prices should ensure strong margin expansion over the next few quarters. However, we believe an early resolution to the mining ban in Karnataka is crucial to ensure earnings visibility. Maintain Buy. http://track.sumnet.com/home/00000275/T03AE2F/jsw_eel_10089723.pdf Mahindra Finance (Buy, TP Rs805.00) - 3Q earnings ahead of estimates Mahindra Finance's 3Q pre provision profit was largely in line with our estimates. However, net profit at Rs 15.5bn exceeded estimates due to lower credit costs. Increased leverage inspite of lower ROA (annualised 9MFY12 ROA of 3.25% vs. 3.7% in 9MFY11) led to ROE of 19.9% as of Dec 2011 vs. 20.7% as of Dec 2010. http://track.sumnet.com/home/00000275/T03AE63/mah_nce_10089759.pdf Mando (Buy, TP W229000.00) - Strong FY12 order flow intact We expect Mando's 4Q11 revenue and OP to have grown higher than our forecasts and in line with Bloomberg consensus on the back of solid demand from its major customers, such as HMC/Kia and GM. We estimate an OP margin of about 7%. In FY12, we expect Mando to continue to enjoy strong new order momentum from non-HMC/Kia order expansion and 38% earnings growth. We maintain our Buy rating with a higher W229,000 target price. http://track.sumnet.com/home/00000275/T03ADAB/mando_20107494.pdf NMDC (Buy, TP Rs246.00) - Collateral disruption NMDC's iron ore despatches from the Chhattisgarh sector (80% of output) have come to a complete halt since the last four days due to closure of railway lines. The railway lines have closed due to local protests demanding better railway connectivity in the region. Management expects the issue to get resolved soon. http://track.sumnet.com/home/00000275/T03AD88/nmdc_20107483.pdf Petrochemicals Journal - Leverage and be picky We reiterate our overweight call on the sector. In our view exposure to the petrochemical sector offers the biggest leverage to improving demand (i.e. economic growth) more than anywhere else in the Energy space. However we do believe that investors will have to be picky as not all products are created equal. Within the sector we are picking those names that have the right exposure but also have robust corporate fundamentals (good earnings growth and strong balance sheet) to weather any potential storm better than their peers. Our top picks are PTTGC and FPC while our top sell is FPCC. http://track.sumnet.com/home/00000275/T03ADC5/pet_nal_20107502.pdf
> Esso Thailand (Sell, TP B9.30) - All optimism likely priced in We have reduced our earnings forecasts 56-72% for 2011-2013 and cut our target price to B9.30 from B11.80. We believe Esso's heavy exposure to the refining business and its policy of adjusting utilisation rates based on global demand make it very vulnerable to global risks. Also, we believe the current share price largely reflects the possibility of Esso being an acquisition target. Hence, we downgrade our recommendation to Sell. http://track.sumnet.com/home/00000275/T03ADD2/ess_and_20107508.pdf > Formosa Chems & Fibre (Hold, TP NT$88.00) - Hold for dividend potential We downgrade FCFC to Hold with a new target price of NT$88 (down from NT$92) following our earnings cuts. We are positive on the PX chain but believe FCFC's exposure to PTA will be a drag on its share price. Also, we see no material catalysts to drive share-price outperformance vs FCFC's peers. Nonetheless, based on our earnings forecasts, FCFC does offer a dividend yield of 7.3% in 2013, which we see as attractive. Its valuation also looks cheap at a 1.5x 2012F PB. http://track.sumnet.com/home/00000275/T03ADDD/for_bre_20107516.pdf > Formosa Petrochemical (Sell, TP NT$69.00) - Looks expensive with unstable operations FPCC is our top Sell in the sector. The company trades at FY12F PB of 3.4x and PE of 23.4x, twice our sector average. At less than 5%, its dividend yield also looks unattractive vs 8-10% for other Formosa names. In addition, FPCC's operations have also been unreliable recently - the company experienced eight fire accidents in the past 12 months resulting in disappointing earnings. We maintain our Sell on the stock and lower our target price to NT$69 following our earnings downgrade. http://track.sumnet.com/home/00000275/T03ADD4/for_cal_20107510.pdf > Formosa Plastics (Buy, TP NT$96.00) - Best of the Formosa We rate FPC as our only Buy in the Taiwan petrochemical space. We believe the company's diversified product mix makes its earnings less cyclical than peers. Our preference for FPC is also reaffirmed by our positive outlook on the polyolefins and PVC business, which accounts for 7580% of FPC's revenues. We believe FPC is undervalued as it trades at a FY12F PB of 1.8x. Our target price of NT$96 implies 14% potential upside and a 7% dividend yield. http://track.sumnet.com/home/00000275/T03ADD3/for_ics_20107509.pdf > Indorama Ventures (Buy, TP B43.00) - Looking ahead IVL's share price was among the worst performers in the sector in 2011, falling 51% vs a flat SET index. In our view, weak PTA spreads and anaemic demand in Europe are the key reasons for this decline. We attribute share price weakness so far in 2012 to anticipation of weak 4Q11 earnings. We believe all the bad news is now priced in and that it is time to look forward. We expect 14% normalised earnings growth in 2012 on the back of 25% volume growth and no inventory losses. http://track.sumnet.com/home/00000275/T03ADCD/ind_res_20107507.pdf > IRPC Pcl (Buy, TP B6.40) - Back in the spotlight Recent news articles suggest PTT is interested in buying an additional 9.54% stake in IRPC from Government Savings Bank. Such a deal would raise PTT's stake to 49% and remove a major overhang from IRPC's shares. Operationally, we forecast 50% earnings growth in 2012 based on cost savings, rising volume and improving petrochemical spreads. We maintain Buy but lower our target price to B6.40 to reflect earnings forecast revisions. http://track.sumnet.com/home/00000275/T03ADD7/irp_pcl_20107513.pdf > Nan Ya Plastics (Hold, TP NT$67.00) - Overshadowed by non-core assets We remain positive on NPC's core business operations, which have been overshadowed by the company's exposure to non-core assets (its tech business). NPC's exposure to the tech business has been a drag and is the key driver of our downgrade to Hold (from Buy). We believe a better way to play the MEG theme is to buy Honam Petrochemical in Korea, which has similar exposure to MEG and trades at comparable valuations, but does not have similar tech exposure. http://track.sumnet.com/home/00000275/T03ADCB/nan_ics_20107504.pdf > PTT Global Chemical (Buy, TP B82.00) - Top pick in the sector PTTGC is our top pick in the regional petrochemical space. We believe its shares are good value at a FY12F PB of 1.3x and PE of 7.8x. We expect earnings to grow by 7% in 2012 supported by an 8% increase in sales volume. We are encouraged by PTTGC's exposure to polyolefins, MEG and PX, as we remain positive on the outlook for these petrochemical products. We maintain our Buy recommendation but, based on our revised earnings forecasts, we lower our target price to B82. http://track.sumnet.com/home/00000275/T03ADD5/ptt_cal_20107511.pdf
> PTT Pcl (Buy, TP B408.00) - A safer way to play the O&G sector We see PTT as a more defensive way to get exposure to the entire oil and gas sector. Its earnings are almost equally divided between the E&P, refining and petrochemical, and gas businesses. Its valuations are inexpensive trading at 1.3x FY12 PBV and 6.9x FY12 PE. Following our earnings revision, we expect PTT to post earnings growth of 17% in 2012, strong when compared to peers in the industry. We maintain our Buy on the stock, with a target price of B408. http://track.sumnet.com/home/00000275/T03ADD6/ptt_pcl_20107512.pdf > Siam Cement (Buy, TP B428.00) - The worst seems to be behind us SCC's share price performance has been lacklustre recently as a result of its weak petrochemical spreads and lower cement sales following heavy flooding in Thailand. However, we believe that the worst is behind us with 4Q11 earnings being the bottom, in our view. Cement sales are showing signs of a pick-up following post-flood recovery efforts and we believe demand for petrochemical products is likely to recover strongly in 2H12. We maintain our Buy rating on SCC with a target price of B428. http://track.sumnet.com/home/00000275/T03ADCC/sia_ent_20107505.pdf > Thai Oil (Hold, TP B66.00) - Downgrade to Hold We downgrade TOP to Hold as we see no major catalysts to drive the stock higher. We have a neutral view on the refining sector. Although PX spreads are strong, we believe they will fail to match 2011 levels. We forecast TOP's earnings will fall 16% in 2012. We also see TOP's valuation as expensive at FY12 PBV of 1.5x vs PTTGC's 1.3x. We believe investors with a positive outlook towards PX or the refining sector will be better rewarded by PTTGC, which is more defensive due to its cheap gas-based feedstock and more attractive in terms of valuation. http://track.sumnet.com/home/00000275/T03ADD8/tha_oil_20107515.pdf Polaris Financial (Buy, TP Rs207.00) - 3QFY12: strong margin performance 3QFY12 US$ revenues (+1.0% qoq) were slightly below our forecast. However license income from a large US$20m deal helped margin rise of 624bp qoq. While this is not sustainable qoq, we believe large deal success for Intellect (US$120m+ run rate) bodes well for margins structurally. http://track.sumnet.com/home/00000275/T03AE1F/pol_ial_10089718.pdf Rallis India (Buy, TP Rs210.00) - 3Q- one offs mar decent performance Q3 results were marred by two exceptional charges - (1) closure expenses relating to Turbhe plant of Rs242m, and (2) forex loss of Rs82m. Otherwise revenue growth at 20% was in line, EBITDA% declined 200bps on Metahelix and reported PAT was Rs77m vs RBSe of Rs390m. Maintain Buy http://track.sumnet.com/home/00000275/T03ADFC/ral_dia_20107524.pdf Reliance Industries (Buy, TP Rs925.00) - Buyback overshadows results 3QFY12 results were in line with our ests, though substantially lower on a qoq basis. Key negatives were lower GRMs, which we expect to bounce back in subsequent quarters. Our estimates for FY13/14 are largely unchanged as we expect the rupee depreciation to largely offset any weakness in margins and gas volumes. The key positive is the buyback at Rs870 (17% premium to pre-announcement closing price), which should assuage concerns on use of cash and could absorb up to 7.1% of free float. At an estimated 9.6x 1yr fwd PE and 1.4x PB, the stock is trading at trough valuations and we retain our Rs925 TP and Buy rating. http://track.sumnet.com/home/00000275/T03AE4E/rel_ies_10089744.pdf SITC International (Buy, TP HK$3.55) - A strong December rebound We view strong December figures positively as they reflect healthy mom and yoy growth, thanks to SITC's solid foothold in the intra-Asia market. While FY11 volumes are 0.9% ahead of our forecast, the average freight rate is in line. SITC's performance was more resilient than other long-haul container shipping companies we cover. Management confidence has also been reflected in the share buyback since December. We consider the stock inexpensive at 0.9x P/B, with a 14.4% FY12F ROE. SITC has lagged during the recent rebound in shipping stocks but we believe it will soon catch up. We reiterate Buy with a new target price of HK$3.55. http://track.sumnet.com/home/00000275/T03AE0F/sit_nal_20107529.pdf UltraTech Cement (Sell, TP Rs878.71) - Strong EBITDA growth as expected UT reported 36% EBITDA growth and sharp EBITDA margin improvement to Rs993/mt. Cost pressures continue to intensify with the recent sharp coal price hikes. While industry, despite operating at 72%, continues to enjoy pricing power so far. But given rich valuations and persistent risk to pricing, we maintain Sell. http://track.sumnet.com/home/00000275/T03AE5B/ult_ent_10089756.pdf
Winsway Coking Coal (Hold, TP HK$2.00) - Follow up on inventory statement The key focus from investors on Winsway's conference call was the inventory statement. Winsway stands by its audited inventory balance. It believes Jonestown has incorrectly calculated the inventory by using annual average COGS instead of the period-end cost of inventory, and Jonestown has used an inaccurate yield assumption. Our calculation suggests the implied 1H11 cost of Mongolian coal inventory seems higher than the Mongolian coal producers' selling prices. This could be due to insufficient data on cost of coal type inventory and annual yield. http://track.sumnet.com/home/00000275/T03ADF6/win_oal_20107523.pdf Wipro (Buy, TP Rs475.00) - Back in the saddle Wipro's 3Q12 IT services revenue (+4.5% qoq) and industry leading 4Q12 guidance (+1-3% qoq) corroborates our view that Wipro is regaining competitive edge post the restructuring initiated a year back. Despite the share price having increased more than 20% since September 2011, we are optimistic about Wipro's growth prospects given: 1) increased client satisfaction (up 9% ytd as per management survey) which should result in improved client mining; and 2) its diversified business model. With improved earnings visibility and our updated currency assumptions, we raise our FY13F EPS 10% and our TP to Rs475. http://track.sumnet.com/home/00000275/T03AE2B/wipro_10089722.pdf Zee Entertainment (Hold, TP Rs121.00) - 3QFY12: More resilient than expected Zees 3Q12 revenues (+5.1% qoq) were better than expected. Ad revenues were flat qoq, while domestic subscriptions was up 14%, helping stabilize EBITDA margins, despite rising programming costs. Commentary on advertising outlook remains guarded. High tax rates drove PAT (-10.7% qoq) closer to our forecast. http://track.sumnet.com/home/00000275/T03AE5F/zee_ent_10089757.pdf
Note: Links to research are valid for 30 days from the date of publication
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RBS Top 100 Earnings Forecasts

23 January 2012
ASX code Company name Market cap (A$m) Last year end Price (A$) Target FV (A$) Up/ price down (A$) Rec 12m YTD - YTD -Rel. Abs.
NPAT pre abnormals (A$m) Earnings Quality* Actual EPS pre goodwill (c) EPS ANALYSIS IBES 3m EPS growth EPS (pre goodwill) revisions 12m fwd Fcst 1 Fcst 2 EPS CAGR 3 yr Actual DIVIDEND ANALYSIS Div yield DPS (c) Div frank (%) Fcst 1 PE (x) (pre goodwill) Fcst 1 Fcst 2 PEG VALUATION PE rel (pre goodwill) Fcst 1 Fcst 2 EV/ EV / P/ NTA EBIT (x) EBITDA (x) Fcst 1 Fcst 1 Fcst 1 B/SHEET ANALYSIS ROE ND/EBITDA Gearing (Tier 1 Analyst ratio for banks) Fcst 1 Fcst 1 Fcst 1
Actual
Fcst 1
Fcst 2
Actual
Fcst 1
Fcst 2
Fcst 1
Fcst 2
Fcst 1
Fcst 1
Banks
ANZ BEN BOQ CBA NAB WBC ANZ Banking Group Bendigo & Adelaide Ban Bank of Queensland Commonwealth Bank National Australia Bank Westpac Banking Corp 54,187 2,922 1,693 77,526 51,746 61,561 Sep 11 Jun 11 Aug 11 Jun 11 Sep 11 Sep 11 20.87 8.17 7.51 49.74 23.85 20.46 24.27 8.07 12.92 50.42 29.98 23.27 26.97 9.49 14.35 59.32 33.31 27.26 16% -1% 72% 1% 26% 14% Buy Sell Buy Hold Buy Hold 2% 2% 3% 1% 2% 2% -2% -2% -1% -3% -2% -2% 5,594.0 336.2 166.9 6,793.0 5,460.0 6,301.0 6,090.3 335.6 263.2 7,290.9 6,060.2 6,611.2 6,428.0 370.3 293.4 7,793.4 6,690.2 7,031.1 n.a. n.a. n.a. n.a. n.a. n.a. 209.4 87.0 71.3 420.7 249.5 202.1 220.4 84.2 104.5 444.0 268.9 208.1 227.8 86.9 112.6 466.5 288.8 217.2 -1.0% -5.2% -0.8% -1.4% -0.9% -1.6% 5% -3% 46% 6% 8% 3% 3% 3% 8% 5% 7% 4%
5% 1% 19% 6% 7% 4%
140.0 60.0 54.0 320.0 172.0 156.0
148.0 60.0 69.0 339.0 188.0 166.0
154.0 62.0 75.0 358.0 200.0 174.0
7.1% 7.3% 9.2% 6.8% 7.9% 8.1%
100 100 100 100 100 100
9.5 9.7 7.2 11.2 8.9 9.8
9.2 9.4 6.7 10.7 8.3 9.4
2.0 12.7 0.4 2.0 1.2 2.5
0.80 0.82 0.61 0.94 0.75 0.83
0.86 0.88 0.63 1.00 0.78 0.89
6.4 5.9 4.4 7.6 6.0 6.5
5.5 5.4 3.4 6.9 5.0 5.9
1.8 1.4 1.0 2.8 1.6 2.0
15.6% 8.2% 10.7% 18.9% 15.7% 15.7%
n.a. n.a. n.a. n.a. n.a. n.a.
11.4% 8.4% 8.2% 10.3% 10.0% 10.2%
Andrew Lyons John Buonaccorsi John Buonaccorsi Andrew Lyons Andrew Lyons Andrew Lyons
Chemicals
IPL ORI Incitec Pivot Orica 5,277 9,053 Sep 11 Sep 11 3.24 25.00 4.30 28.02 4.30 28.02 33% 12% Buy Buy 4% 3% 0% -1% 530.1 620.0 557.2 738.2 572.8 821.7 1.1 0.9 32.5 170.8 34.2 202.8 35.2 225.7 -5.2% -0.8% 5% 19% 3% 11%
4% 14%
11.5 90.0
12.0 91.0
14.1 97.0
3.7% 3.6%
50 35
9.5 12.3
9.2 11.1
2.5 0.9
0.80 1.04
0.87 1.04
7.8 9.5
6.5 7.8
4.6 13.6
14.4% 21.3%
1.1 1.4
27.3% Belinda Moore 58.4% Andrew Scott
Commercial Services & Supplies

BXB CPB DOW SEK TSE Brambles Campbell Bros Downer EDI SEEK Transfield Svcs 10,711 3,325 1,511 1,850 1,132 Jun 11 Mar 11 Jun 11 Jun 11 Jun 11 7.24 49.25 3.52 5.49 2.06 8.76 48.88 5.01 7.00 2.13 8.35 48.88 5.01 7.00 2.24 21% -1% 42% 28% 3% Buy Hold Buy Buy Hold 1% 1% 10% -3% -5% -3% -4% 6% -7% -9% 532.5 132.1 155.9 104.6 128.2 622.5 207.9 190.1 125.7 126.3 738.0 231.0 221.3 148.7 144.0 1.0 0.9 0.5 1.0 0.5 36.7 202.4 42.6 31.0 26.0 41.7 307.9 44.3 37.2 23.4 49.5 342.2 51.5 44.1 28.4 -2.4% 11.9% -2.8% -1.5% -1.7% 14% 52% 4% 20% -10% 19% 11% 16% 18% 21%
16% 21% 14% 17% 6%
25.9 140.0 0.0 14.3 14.0
30.0 200.0 21.0 20.5 14.0
34.0 222.0 27.0 26.5 15.5
4.0% 4.1% 6.0% 3.7% 6.8%
20 50 0 100 100
18.0 16.0 7.9 14.7 8.8
14.1 14.4 6.8 12.5 7.3
1.2 0.8 0.6 0.8 1.4
1.51 1.35 0.67 1.24 0.74
1.32 1.35 0.64 1.17 0.68
13.8 11.6 6.0 11.9 8.0
8.9 10.1 3.6 9.2 5.7
18.6 8.5 1.6 2.8
24.7% 24.2% 12.7% 27.7% 11.9%
1.8 0.8 1.1 1.0 1.2
109.6% 31.7% 40.6% 37.7% 28.6%
Mark Williams Roger Leaning Andrew Hodge Fraser McLeish Andrew Hodge
Consumer Services
EGP CWN TAH TTS Echo Entertainment Crown Tabcorp Tatts Group 2,492 6,204 2,151 3,346 Jun 11 Jun 11 Jun 11 Jun 11 3.61 8.18 2.90 2.47 3.80 9.00 2.90 2.40 3.80 9.00 2.90 2.40 5% 10% 0% -3% Hold Buy Hold Hold 1% 1% 6% 1% -4% -3% 2% -3% 232.7 335.9 302.3 279.6 145.5 386.9 333.3 325.4 158.0 422.4 131.6 185.3 0.8 0.8 1.5 1.0 33.8 44.3 45.7 21.5 21.1 52.6 46.5 24.3 22.8 58.0 17.5 13.6 -3.1% -0.9% -3.7% -2.8% -37% 19% 2% 13% 8% 10% -62% -44%
-9% 15% -27% -12%
0.0 37.0 43.0 21.5
10.6 37.0 41.3 21.7
11.4 37.0 15.7 12.2
2.9% 4.5% 14.3% 8.8%
100 60 100 100
17.1 15.6 6.2 10.2
15.8 14.1 16.6 18.2
-2.0 1.0 -0.2 -0.8
1.44 1.31 0.53 0.86
1.48 1.33 1.56 1.71
11.8 15.3 5.7 7.6
8.4 10.6 4.7 6.5
4.0 2.6 -
6.0% 12.1% 25.6% 12.5%
2.7 2.0 1.6 1.4
46.8% 45.4% 81.1% 34.8%
Michael Nolan Michael Nolan Michael Nolan Michael Nolan
Construction
BLD CSR FBU.NZ JHX MND Boral CSR Ltd Fletcher Bldg James Hardie Monadelphous 2,979 1,058 4,314 3,224 1,910 Jun 11 Mar 11 Jun 11 Mar 11 Jun 11 4.00 2.09 6.27 7.40 21.81 3.91 2.84 7.32 7.03 23.14 3.91 2.84 5.67 7.03 23.14 -2% 36% 17% -5% 6% Hold Buy Hold Buy Buy 11% 7% 2% 9% 8% 7% 2% -2% 4% 4% 173.5 90.2 275.1 123.4 96.3 178.2 85.4 286.4 137.9 114.5 241.8 105.6 393.0 171.3 135.1 0.9 1.0 0.7 0.8 0.7 24.0 17.8 42.7 28.2 110.2 24.4 16.9 41.6 32.5 130.3 32.5 20.9 57.1 41.4 153.2 -5.8% -10.7% -8.2% 0.2% 3.0% 1% -5% -3% 15% 18% 33% 24% 37% 27% 18%
23% 16% 18% 23% 17%
14.5 41.7 33.0 0.0 95.0
16.0 13.0 35.0 8.0 112.0
17.0 15.7 37.0 12.0 130.0
4.0% 6.2% 5.6% 1.0% 5.1%
100 100 100 0 100
16.4 12.4 11.8 23.2 16.7
12.3 10.0 8.6 17.6 14.2
0.7 0.8 0.6 1.0 1.0
1.38 1.04 0.99 1.96 1.41
1.16 0.94 0.81 1.65 1.34
16.2 6.2 10.0 16.8 11.0
8.0 3.9 7.3 13.0 9.7
1.0 0.9 2.2 9.1
5.4% 6.9% 9.8% -34.9% 55.7% -
2.6 0.3 2.2 0.1 0.9
40.7% -6.4% 47.7% -4.9% -74.6%
Andrew Scott Andrew Scott Andrew Scott Andrew Scott Andrew Hodge
Containers, Packaging & Paper

AMC Amcor 8,566 Jun 11 6.99 7.54 7.54 8% Buy -3% -7% 570.3 659.2 741.1 0.7 46.5 53.7 60.4 -1.2% 15% 12%
14%
35.0
36.0
40.0
5.2%
13.0
11.6
0.9
1.10
1.09
10.3
7.3
4.4
17.5%
1.9
75.6% Andrew Scott
Diversified Financials
ASX CGF MQG PPT SUN Aust Securities Exchang Challenger Financial Svc Macquarie Group Perpetual Suncorp Group 5,222 2,285 8,683 873 10,692 Jun 11 Jun 11 Mar 11 Jun 11 Jun 11 30.54 4.52 24.93 20.82 8.31 31.40 5.10 29.75 23.13 9.48 31.40 5.10 29.75 23.13 9.48 3% 13% 19% 11% 14% Hold Buy Buy Hold Buy 0% 9% 5% 2% -1% -4% 5% 1% -2% -5% 357.2 248.0 956.0 72.9 637.6 374.9 275.4 863.0 59.6 954.0 417.0 300.6 1,067.3 61.3 1,157.4 0.9 4.8 n.a. 1.2 n.a. 204.4 48.1 275.0 165.5 49.7 213.1 51.2 242.4 137.6 74.1 234.8 53.4 295.3 144.3 90.0 -2.8% -0.2% -6.0% -15.0% -3.7% 4% 6% -12% -17% 49% 10% 4% 22% 5% 21%
7% 6% 8% 1% 27%
183.6 16.5 186.0 185.0 35.0
190.9 18.5 160.0 140.0 44.5
210.4 19.5 180.0 144.0 54.0
6.2% 4.1% 6.4% 6.7% 5.4%
100 100 30 100 100
14.3 8.8 10.3 15.1 11.2
13.0 8.5 8.4 14.4 9.2
2.1 1.5 1.2 12.1 0.4
1.21 0.74 0.87 1.27 0.94
1.22 0.80 0.79 1.36 0.87
9.9 6.0 7.3 7.3 178.1
9.4 5.9 6.8 6.4 53.4
7.3 1.9 0.7 7.9 1.3
12.3% 16.9% 7.2% 18.0% 6.1%
0.8 0.4 n.a. 0.6 n.a.
-12.7% -8.9% -25.4% 383.2%
Richard Coles Richard Coles Andrew Lyons Richard Coles Richard Coles
Food Beverage & Tobacco

CCL GFF GNC C-C Amatil Goodman Fielder GrainCorp 8,755 880 1,579 Dec 10 Jun 11 Sep 11 11.58 0.50 7.96 13.10 0.60 9.05 13.10 0.80 9.05 13% 20% 14% Buy Hold Buy 1% 14% 1% -4% 9% -3% 506.6 135.2 171.6 531.5 128.9 162.4 587.6 141.5 131.5 0.8 1.0 1.2 67.3 9.8 86.6 70.1 7.1 82.0 77.1 7.2 66.4 -2.6% -0.3% 5.0% 4% -27% -5% 10% 2% -19%
9% -9% -13%
48.5 7.8 55.0
55.0 5.7 49.2
58.5 5.8 36.5
4.7% 11.4% 6.2%
100 40 100
16.5 7.1 9.7
15.0 7.0 12.0
1.9 -0.8 -0.8
1.28 0.60 0.82
1.27 0.66 1.13
11.6 6.0 7.4
9.3 4.6 5.6
21.1 27.2 1.4
28.5% 8.9% 11.5%
1.2 2.1 0.9
69.4% Michael Nolan 43.4% Michael Nolan 20.9% Belinda Moore
Healthcare
ANN COH CSL PRY RHC RMD SHL Ansell Cochlear CSL Ltd Primary Health Ramsay Health ResMed Inc Sonic Health 2,073 3,387 16,484 1,457 3,852 3,802 4,409 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 14.96 59.84 31.25 2.96 19.06 2.49 11.35 16.71 66.59 30.97 3.27 18.88 2.73 13.48 16.71 66.59 30.97 3.27 18.88 3.03 13.48 12% 11% -1% 10% -1% 10% 19% Buy Buy Hold Hold Hold Hold Buy 3% -3% -2% -4% -1% 1% 1% -1% -8% -6% -8% -5% -3% -4% 122.9 180.1 940.6 96.5 204.7 231.4 294.5 135.5 148.4 970.4 119.9 230.2 229.7 321.8 143.2 186.7 1,011.5 137.5 253.1 227.1 344.0 0.8 1.0 1.0 1.1 1.2 0.8 1.0 92.4 316.1 173.6 19.5 101.1 14.7 75.5 102.3 260.4 186.6 24.0 113.6 15.0 82.2 110.2 327.4 199.7 27.1 124.9 15.3 87.8 -0.2% -3.2% 0.0% -0.6% 0.6% -2.4% 0.4% 11% -18% 7% 23% 12% 2% 9% 8% 26% 7% 13% 10% 2% 7%
11% 9% 9% 15% 11% 5% 8%
32.4 225.0 80.0 8.0 52.0 0.0 59.0
40.5 240.0 84.0 18.0 59.0 0.0 64.0
51.2 240.0 92.0 21.0 65.0 0.0 69.0
2.6% 4.0% 2.7% 6.1% 3.1% 0.0% 5.6%
0 100 0 100 100 0 32
15.1 23.0 16.7 12.3 16.8 17.1 13.8
13.1 18.3 15.6 10.9 15.3 15.7 12.9
1.3 2.6 2.0 0.8 1.5 3.6 1.7
1.28 1.94 1.41 1.04 1.41 1.44 1.16
1.23 1.72 1.47 1.02 1.43 1.47 1.21
14.0 15.9 13.2 9.5 10.9 12.6 11.3
11.7 14.1 11.5 7.0 8.3 9.6 9.1
13.9 17.4 5.7 7.6 2.7 -
22.8% 32.5% 26.4% 4.8% 16.8% 13.4% 12.6%
0.1 0.4 0.1 2.9 1.7 1.6 2.3
4.8% 26.1% 4.1% 41.5% 71.3% -33.0% 56.1%
Dr Derek Jellinek Dr Derek Jellinek Dr Derek Jellinek Dr Derek Jellinek Dr Derek Jellinek Dr Derek Jellinek Dr Derek Jellinek
Infrastructure
SYD TCL Sydney Airports Transurban 4,951 7,867 Dec 10 Jun 11 2.66 5.45 2.88 5.90 2.88 5.90 8% 8% Buy Buy 0% -3% -4% -7% 127.2 112.5 120.0 110.6 131.9 187.8 1.1 0.9 7.1 7.9 6.4 7.7 7.1 13.0 -22.9% 22.0% -9% -3% 10% 70%
6% 27%
33.5 27.0
21.0 29.5
21.0 32.0
7.9% 5.4%
0 0
41.3 71.1
37.5 41.9
6.6 2.6
3.20 5.99
3.16 3.94
18.8 37.0
12.1 18.5
2.5% 3.1%
6.0 6.4
95.7% William Allott 115.2% William Allott
IT
CPU Computershare 4,334 Jun 11 7.80 9.08 9.08 16% Buy -3% -7% 312.3 284.7 333.2 0.8 55.9 51.0 59.7 -0.5% -9% 17%
7%
28.0
28.0
32.0
3.4%
60
15.8
12.6
2.2
1.34
1.19
13.9
11.7
22.4%
2.8
108.1% Richard Coles
Insurance
AMP IAG QBE AMP Ltd IAG QBE Insurance 8,057 6,130 12,851 Dec 10 Jun 11 Dec 10 4.27 2.96 11.52 5.50 3.26 13.50 5.50 3.26 13.50 29% 10% 17% Buy Hold Buy 5% -1% -11% 1% -5% -15% 752.0 425.0 1,447.0 898.0 490.8 798.0 1,082.2 740.3 1,625.3 n.a. n.a. n.a. 35.9 20.4 133.1 34.0 23.6 68.8 38.3 35.6 137.0 -5.5% -7.1% -14.7% -5% 15% -48% 13% 51% 99%
6% 25% 3%
30.0 16.0 121.2
28.6 16.0 87.0
31.5 23.0 110.0
6.7% 5.4% 7.2%
60 100 10
12.6 12.5 17.1
11.1 8.3 8.5
2.2 0.5 5.5
1.05 1.12 1.55
1.02 0.81 0.80
399.3 25.4
399.3 25.4
3.3 2.3 3.0
18.2% 10.3% 6.5%
n.a. n.a. n.a.
169.6% Richard Coles 35.6% Richard Coles 43.6% Richard Coles
Source: Company data, RBS forecasts, RBS Morgans forecasts. * Share prices as at close of trading on 23 January 2012. 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 23 January 2012. 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)
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Management and development

LLC
Lend Lease Corp
4,247
Jun 11
7.44
10.75
10.75
45%
Buy
4%
0%
485.3
476.3
560.9 -
0.1
90.3
87.7
102.5
-4.3%
-3%
17%
10%
35.0
44.0
51.5
5.9%
70
8.5
7.3
0.9
0.72
0.68
8.2
7.3
1.6
12.8%
1.8
35.9% Andrew Hodge
Media
FXJ NWS TEN SWM
Fairfax Media News Corp Ten Network Seven West Media
1,787 49,500 909 2,357
Jun 11 Jun 11 Aug 11 Jun 11
0.76 18.85 0.87 3.62
1.30 20.50 0.81 3.47
1.43 24.10 0.90 4.41
71% 9% -7% -4%
Buy Buy Sell Hold
6% 5% 4% 12%
1% 1% -1% 8%
273.8 2,929.6 74.1 115.1
254.9 3,346.0 52.9 264.6
291.3 3,458.0 74.1 270.0
1.2 1.1 1.8 0.8
11.6 111.3 7.1 37.5
10.8 135.9 5.1 39.4
12.4 148.3 7.1 38.4
-5.7% 1.6% -12.5% -3.2%
-7% 22% -29% 5%
14% 9% 40% -2%
5% 14% 6% 1%
3.0 17.0 5.3 45.0
6.5 18.7 3.8 35.0
8.1 20.6 5.3 35.0
8.6% 0.9% 4.4% 9.7%
100 0 100 100
7.0 14.4 17.2 9.2
6.1 12.2 12.3 9.4
1.3 1.0 2.9 8.8
0.59 1.21 1.45 0.77
0.58 1.15 1.15 0.88
6.1 9.8 11.5 7.9
5.1 7.0 9.8 7.0
11.3 -
5.7% 11.9% 6.5% 10.2%
1.8 0.6 2.8 3.0
21.9% 15.6% 49.7% 67.1%
Fraser McLeish Fraser McLeish Fraser McLeish Fraser McLeish
Other Capital Goods

BLY LEI UGL
Boart Longyear Leighton UGL
1,568 7,639 2,322
Dec 10 Jun 11 Jun 11
3.40 22.70 13.87
4.37 21.67 14.07
3.80 21.67 12.82
28% -5% 1%
Buy Hold Hold
22% 19% 17%
18% 15% 12%
91.8 -107.7 164.4
145.1 609.7 171.7
202.5 672.2 199.1
0.3 1.7 0.7
20.1 -35.1 98.8
31.9 181.2 102.7
44.5 199.7 118.7
1.2% 2.6% 0.0%
58% 4%
40% 10% 16%
35% 84% 11%
5.5 60.0 70.0
9.8 116.0 71.5
13.9 128.0 82.5
2.8% 5.1% 5.2%
35 100 100
10.9 12.5 13.5
7.7 11.4 11.7
0.3 0.1 1.2
0.84 1.06 1.21
0.65 1.07 1.14
8.3 8.0 9.8
5.7 4.2 7.7
2.1 3.1 13.6
13.4% 25.0% 13.8%
0.9 0.1 0.8
25.6% Andrew Hodge 6.5% Andrew Hodge 22.0% Andrew Hodge
Real Estate
WDC GMG
Westfield Group Goodman Group
18,944 4,843
Dec 10 Jun 11
8.20 0.65
8.69 0.81
8.69 0.76
6% 25%
Hold Buy
5% 14%
1% 10%
1,745.7 383.9
1,482.4 476.3
1,575.7 527.9
1.0 0.8
75.7 5.3
64.2 6.2
68.2 6.6
-1.0% 0.1%
-15% 17%
6% 7%
-2% 9%
63.6 3.5
48.4 3.8
50.6 4.2
5.9% 5.7%
0 0
12.8 10.5
12.0 9.9
-8.3 1.2
0.99 0.89
1.01 0.93
16.6 18.8
16.6 18.5
1.1 1.3
8.8% 10.2%
7.0 4.5
79.9% Andrew Hodge 30.2% Andrew Hodge
Retail
DJS HVN JBH MTS MYR WES WOW
David Jones Harvey Norman JB Hi-Fi Metcash Myer Wesfarmers Woolworths
1,219 2,186 1,316 3,152 1,230 35,150 30,537
Jul 11 Jun 11 Jun 11 Apr 11 Jul 11 Jun 11 Jun 11
2.42 2.05 12.00 4.10 2.11 30.27 24.73
2.15 2.05 14.05 4.10 2.35 29.45 29.80
2.15 2.05 14.05 4.10 2.35 29.45 29.80
-11% 0% 17% 0% 11% -3% 21%
Sell Buy Buy Hold Buy Hold Buy
2% 11% 6% 1% 9% 3% -1%
-2% 7% 2% -3% 5% -2% -6%
168.1 242.0 134.4 248.3 163.2 1,870.0 2,124.0
140.8 212.1 124.7 257.5 142.6 2,319.3 2,222.8
135.9 238.7 132.5 276.8 153.3 2,786.5 2,490.2
0.9 1.1 0.7 1.2 0.9 1.0 1.0
33.0 22.8 120.2 32.3 28.0 161.6 171.5
27.5 20.0 125.3 33.5 24.5 198.7 179.5
26.4 22.5 132.1 36.0 26.3 234.5 201.1
-3.5% -8.2% -12.9% -2.3% -1.7% -2.7% -0.8%
-17% -12% 4% 4% -13% 23% 5%
-4% 13% 5% 7% 7% 18% 12%
-7% 3% 7% 6% 0% 18% 9%
28.0 12.0 77.0 27.0 22.5 150.0 122.0
23.0 10.0 77.0 27.5 20.0 180.0 131.0
22.0 11.0 82.0 29.0 22.5 200.0 143.0
9.5% 4.9% 6.4% 6.7% 9.5% 5.9% 5.3%
100 100 100 100 100 100 100
8.8 10.3 9.6 12.2 8.6 15.2 13.8
9.2 9.1 9.1 11.4 8.0 12.9 12.3
-1.3 2.9 1.4 2.2 -17.8 0.9 1.5
0.74 0.87 0.81 1.03 0.73 1.28 1.16
0.86 0.86 0.85 1.07 0.75 1.21 1.16
6.6 7.2 7.9 9.6 7.0 10.3 10.2
5.3 5.6 6.7 8.6 5.1 8.2 7.9
1.7 1.0 11.4 5.9 10.5
18.2% 9.5% 74.2% 18.8% 17.0% 8.9% 28.2%
0.6 0.7 0.8 2.3 1.3 0.9 0.9
18.6% 14.3% 98.7% 81.6% 50.6% 17.0% 48.7%
Daniel Broeren Daniel Broeren Daniel Broeren Daniel Broeren Daniel Broeren Daniel Broeren Daniel Broeren
Telecommunication Services
TLS
Telstra
41,311
Jun 11
3.32
3.50
3.50
5%
Buy
0%
-4%
3,231.0
3,551.0
3,666.1
1.0
25.9
28.5
29.4
0.0%
10%
3%
5%
28.0
28.0
28.0
8.4%
100
11.6
11.3
2.2
0.98
1.06
9.1
5.2
8.3
29.3%
1.3
107.3% Fraser McLeish
Transportation
AIO QAN QRN TOL
Asciano Group Qantas Airways QR National Toll Holdings
4,594 3,568 9,004 3,423
Jun 11 Jun 11 Jun 11 Jun 11
4.71 1.58 3.69 4.82
5.64 1.63 3.61 5.27
6.17 1.92 3.61 5.18
20% 3% -2% 9%
Buy Hold Hold Buy
5% 8% 8% 14%
1% 4% 4% 10%
189.9 416.0 172.4 269.0
262.1 255.9 371.6 301.1
353.7 410.8 473.6 342.7
1.3 1.1 0.9 1.1
19.5 18.4 7.1 38.1
26.9 11.3 15.2 41.5
36.2 18.1 19.4 46.7
-2.2% -28.9% -0.6% -3.5%
38% -38% 116% 9%
35% 60% 27% 12%
30% 13% 42% 12%
6.0 0.0 3.7 25.0
9.0 0.0 8.3 27.0
10.5 6.0 8.6 31.0
1.9% 0.0% 2.2% 5.6%
0 100 0 100
17.5 13.9 24.2 11.6
13.0 8.7 19.0 10.3
0.6 1.1 0.6 1.0
1.48 1.18 2.04 0.98
1.22 0.82 1.79 0.97
11.3 14.5 18.3 9.8
7.7 3.8 9.8 6.3
7.2 0.6 1.2 3.1
7.9% 4.1% 5.3% 10.6%
2.7 1.9 1.5 1.5
71.9% 54.4% 23.3% 35.6%
Mark Williams Mark Williams Mark Williams Mark Williams
Utilities
AGK APA DUE SKI
AGL Energy APA Group DUET Spark Infra
6,735 2,941 1,987 1,811
Jun 11 Jun 11 Jun 11 Dec 10
14.60 4.60 1.82 1.37
16.55 4.80 2.00 1.35
16.55 2.00 1.35
13% 4% 10% -1%
Buy Hold Buy Hold
2% 2% 4% -1%
-2% -2% 0% -5%
431.1 108.5 124.9 78.4
486.2 117.4 86.5 153.0
533.6 132.9 80.9 165.2
1.0 1.4 1.0 0.6
94.4 19.7 14.1 6.7
105.0 18.2 8.7 11.5
114.4 20.1 7.4 12.4
0.9% 2.4% 2.0% 2.6%
11% -7% -38% 73%
9% 10% -16% 8%
10% 4% -23% 23%
60.0 34.4 20.0 13.5
64.0 35.4 16.0 9.5
68.0 36.5 16.5 9.7
4.4% 7.7% 8.8% 7.0%
100 0 0 0
13.9 25.2 20.9 11.8
12.8 22.9 24.7 11.0
1.4 7.0 -0.9 0.5
1.17 2.13 1.76 0.92
1.20 2.15 2.32 0.92
10.6 13.8 12.7 10.9
8.8 10.8 9.4 10.9
2.0 3.5 1.2
7.5% 7.3% 6.2% 10.7%
1.2 5.4 6.9 3.8
16.8% 189.2% 293.3% 67.6%
Jason Mabee, CFA Jason Mabee, CFA William Allott William Allott
Source: Company data, RBS forecasts, RBS Morgans forecasts * Share prices as at close of trading on 23 January 2012. 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 23 January 2012. Financial forecasts in NZD. * Earnings Quality: Net Operating Cash Flow/(Net Profit + Depreciation & Amortisation)
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Aluminium & Steel

AWC BSL OST SGM Alumina BlueScope Steel OneSteel Sims Metal Mgt 3,269 1,423 1,124 3,020 Dec 10 Jun 11 Jun 11 Jun 11 1.34 0.43 0.84 14.78 1.62 0.46 0.82 18.25 1.62 0.71 1.18 18.25 21% 7% -2% 23% Buy Hold Hold Buy 20% 5% 20% 17% 15% 1% 16% 13% 39.9 -113.8 235.0 182.0 123.2 -89.9 150.1 254.5 -3.8 87.9 226.2 326.3 5.5 0.1 1.0 0.5 1.6 -6.2 17.6 88.9 5.1 -3.3 11.2 124.2 -0.2 2.6 16.9 159.7 -41.9% -57.5% -27.8% -8.7% 209% 88% -36% 40% -103% 51% 29%
59% -6% 9% 28%
6.0 2.0 10.0 47.0
3.0 0.0 4.5 62.3
1.0 0.9 8.5 79.8
2.1% 0.0% 5.3% 4.2%
100 100 55 45
27.0 7.5 11.9
16.2 5.0 9.3
0.5 0.8 0.4
2.10 0.63 1.00
1.52 0.47 0.87
24.7 -65.9 10.3 8.0
24.7 8.0 6.3 6.1
1.1 0.4 0.6 1.6
4.0% -2.1% 3.3% 8.6%
2.9 2.7 4.2 0.6
14.2% 16.4% 50.2% 11.0%
Lyndon Fagan Todd Scott Todd Scott Todd Scott
Energy
OSH ORG PDN STO WHC WPL WOR Oil Search Origin Energy Paladin Santos Whitehaven Coal Woodside WorleyParsons 8,655 14,718 1,412 12,907 2,775 27,645 6,759 Dec 10 Jun 11 Jun 11 Dec 10 Jun 11 Dec 10 Jun 11 6.66 13.55 1.82 13.57 5.61 33.70 27.51 8.20 15.80 1.83 15.60 6.50 32.65 26.60 8.20 17.55 1.83 16.40 6.28 36.25 21.81 23% 17% 1% 15% 16% -3% -3% Buy Buy Hold Buy Buy Hold Hold 7% 2% 33% 11% 6% 10% 7% 2% -3% 29% 7% 2% 6% 3% 156.6 673.0 -59.5 356.1 73.3 1,540.5 321.6 183.6 910.4 -14.1 415.5 162.0 1,796.4 377.7 148.5 1,038.6 14.1 555.7 277.1 1,754.8 443.5 2.2 0.6 4.5 1.6 0.7 1.0 0.7 11.9 71.0 -8.0 50.3 14.8 201.1 130.0 13.8 84.0 -1.8 48.7 32.1 224.1 152.4 11.1 92.5 1.8 60.9 55.0 213.9 178.9 7.0% -1.7% -15.7% 3.3% -7.8% -7.0% -1.6% 16% 18% 340% -3% 117% 11% 17% -20% 10% 25% 71% -5% 17%
-12% 11% -8% 10% 62% 3% 17%
4.0 50.0 0.0 30.0 7.4 105.0 86.0
4.0 52.0 0.0 30.0 18.0 110.0 93.0
4.0 56.0 0.0 31.0 24.0 125.0 113.0
0.6% 3.8% 0.0% 2.2% 3.2% 3.1% 3.4%
0 100 0 100 100 100 55
49.1 16.1 27.9 17.5 15.3 18.1
60.5 14.6 96.3 22.3 10.2 15.9 15.4
-4.2 1.5 2.8 0.3 4.4 1.1
3.81 1.36 2.16 1.47 1.19 1.67
5.10 1.38 9.05 1.88 0.96 1.34 1.50
25.7 11.6 69.2 16.8 11.5 12.4 13.0
22.9 8.3 27.1 9.1 9.5 9.8 11.7
3.1 2.1 1.5 1.6 2.6 2.2 21.5
6.6% 7.3% -1.2% 5.3% 14.9% 15.2% 18.6%
2.0 2.0 8.9 0.1 0.2 1.3 0.6
28.7% 33.3% 67.8% 2.2% -4.4% 35.0% 19.3%
Jason Mabee, CFA Jason Mabee, CFA Lyndon Fagan Jason Mabee, CFA Tom Sartor Jason Mabee, CFA Andrew Hodge
Diversified Metals & Mining

AGO BHP FMG ILU LYC OZL PNA RIO Atlas Iron BHP Billiton Fortescue Meta Iluka Resources Lynas OZ Minerals PanAust Rio Tinto 2,639 198,250 15,567 7,796 2,193 3,556 2,215 130,090 Jun 11 Jun 11 Jun 11 Dec 10 Jun 11 Dec 10 Dec 10 Dec 10 3.19 37.24 5.00 18.62 1.28 10.98 3.73 67.89 4.06 43.76 7.39 20.24 1.83 11.94 4.14 97.40 4.06 43.76 7.39 20.24 1.83 11.94 4.14 97.40 27% 18% 48% 9% 43% 9% 11% 43% Buy Buy Buy Buy Buy Hold Buy Buy 18% 8% 17% 20% 23% 10% 17% 13% 14% 4% 13% 16% 19% 6% 12% 8% 168.6 233.2 215.2 21,889.8 19,357.1 19,928.6 1,649.2 1,627.8 1,629.3 36.1 506.8 1,380.6 -59.1 -18.1 613.3 398.2 301.6 206.8 173.9 169.2 275.0 15,195.0 14,498.4 13,097.9 1.1 1.2 1.6 0.8 0.6 1.1 1.3 1.0 20.4 411.2 53.0 8.6 -3.4 127.6 5.9 770.3 28.2 367.0 52.3 121.1 -1.1 97.4 28.1 775.4 26.0 377.9 52.3 329.7 35.8 66.8 44.9 710.0 -12.6% -9.5% -9.5% 13.7% -48.9% -21.8% -1.2% -11.7% 38% -11% -1% 1304% 227% -24% 378% 1% -8% 3% 0% 172% -31% 60% -8%
21% 0% 13% -12% 1%
3.0 101.0 6.9 8.0 0.0 190.0 0.0 108.0
6.0 116.0 8.0 50.0 0.0 46.3 0.0 119.0
6.0 124.0 8.0 165.0 0.0 30.1 1.0 125.5
1.9% 3.0% 1.5% 2.7% 0.0% 4.2% 0.0% 1.7%
0 100 0 100 0 0 0 100
11.3 10.5 9.9 15.4 11.3 13.5 8.9
12.3 9.5 9.2 5.6 3.6 16.4 8.4 9.6
0.5 -21.3 0.8 -0.9 7.8
0.95 0.89 0.83 1.19 0.87 1.05 0.69
1.15 0.89 0.86 0.48 0.34 1.39 0.71 0.81
6.8 7.5 8.0 10.3 -447.5 7.3 9.0 7.6
6.0 6.2 7.4 8.1 -447.5 5.2 7.5 6.4
1.4 3.2 4.0 4.3 3.5 1.3 3.0 3.1
12.4% 32.2% 50.6% 34.5% -2.9% 10.3% 24.3% 23.7%
1.4 0.6 2.0 0.2 n.a. 1.2 0.3 0.5
-24.5% 33.3% 150.8% -12.7% -7.3% -26.8% -8.6% 14.5%
Lyndon Fagan Lyndon Fagan Lyndon Fagan Sam Berridge Sam Berridge Lyndon Fagan Tom Sartor Lyndon Fagan
Gold & Precious Metals

NCM Newcrest Mining
Exchange rate (A$/US$)
24,639
Gold
Jun 11
32.20
38.31
Copper LME (US$/lb)
27.36
19%
Buy
9%
Nickel LME (US$/lb) 8.79 9.89 10.87 10.37 8.94 9.59 10.90 11.80 8.50
5%
908.0
1,660.5
1,790.9
1.2
118.7
217.0
234.0
-6.3%
83%
8%
31%
18.0
43.0
47.0
1.3%
100
14.8
13.8
0.5
1.25
1.29
10.1
8.3
1.6
11.3%
0.2
4.4% Sam Berridge
Oil WTI (US$/oz) (US$/bbl) 1092 1223 1370 1571 1709 1750 1713 1625 1100 77.2 82.6 93.2 93.6 87.0 91.0 94.3 96.0 90.0
Aluminium Zinc LME LME (US$/lb) (US$/lb) 0.91 0.99 1.08 1.06 0.97 1.06 1.16 1.25 1.15 0.94 0.98 1.02 0.99 0.91 0.95 1.08 1.20 1.00
Coal coking steaming (US$/t) (US$/t) 146.0 190.5 247.3 286.3 258.8 221.3 227.5 235.0 180.0 76.3 90.0 108.3 118.7 114.9 113.8 112.5 107.5 100.0
Iron ore lump fines (US$/t) (US$/t) 86.4 219.9 279.3 219.9 257.6 219.9 238.7 219.9 151.5 73.7 118.1 154.1 163.0 147.1 131.0 136.3 135.1 84.8
FY10 CY10 FY11 CY11 FY12 CY12 FY13 CY13 LT (2015+)
0.88 0.92 0.99 1.03 1.02 1.04 1.09 1.09 0.80
3.03 3.42 3.93 4.00 3.68 3.80 4.05 4.20 3.00
Source: Company data, RBS forecasts, RBS Morgans forecasts. Share prices as at close of trading on 23 January 2012. 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. * Earnings Quality: Net Operating Cash Flow/(Net Profit + Depreciation & Amortisation)
Page 85
RBS Ex-100 Earnings Forecasts

23 January 2012
ASX code Company name Market cap (A$m) Last year end Price (A$) Target FV (A$) Up/ price down (A$) Rec YTD -Abs. 12m YTD Rel.
NPAT pre abnormals (A$m) Earnings Quality * Actual EPS pre goodwill (c) EPS ANALYSIS EPS growth IBES 3m EPS (pre goodwill) revisions 12m fwd Fcst 1 Fcst 2 EPS CAGR 3 yr Actual DIVIDEND ANALYSIS Div yield DPS (c) Div frank (%) Fcst 1 PE (x) (pre goodwill) Fcst 1 Fcst 2 PEG VALUATION PE rel (pre goodwill) Fcst 1 Fcst 2 EV/ EV / P/ NTA EBIT (x) EBITDA (x) Fcst 1 Fcst 1 Fcst 1 B/SHEET ANALYSIS ROE Gearing (Tier 1 Analyst ND/EBITDA ratio for banks) Fcst 1 Fcst 1 Fcst 1
Actual
Fcst 1
Fcst 2
Actual
Fcst 1
Fcst 2
Fcst 1
Fcst 2
Fcst 1
Fcst 1
Chemicals
DLX NUF Duluxgroup Nufarm 1,084 1,197 Sep 11 Jul 11 2.95 4.57 3.12 5.08 3.12 5.08 6% 11% Buy Hold 2% 10% -2% 6% 77.6 86.1 79.7 101.8 84.9 120.7 0.3 1.0 21.1 32.9 21.7 38.9 23.1 46.1 -0.1% -1.5% 3% 18% 7% 19%
5% 16%
15.0 0.0
16.0 11.7
17.0 13.8
5.4% 2.6%
100 50
13.6 11.8
12.8 9.9
2.9 0.8
1.15 0.99
1.20 0.93
9.4 7.9
8.0 6.0
16.4 1.3
55.0% 6.4%
1.2 1.7
123.0% Julian Guido 30.0% Andrew Scott
Commercial Services & Supplies

CAB CND CLQ COF CUS CLH DCG MIN PRG RUL SAI SLM SKE SPT TOX TPI TWO WLL Cabcharge Clarius Group Clean TeQ Coffey Customers Collection Hse Decmil Group Mineral Resources Programmed Group Runge SAI Global Salmat Skilled Group Spotless Group Tox Free Transpacific Industries Talent2 Wellcom Group 548 37 2 122 121 74 361 2,135 243 43 963 383 397 607 225 1,066 76 91 Jun 11 Jun 11 Jun 10 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Mar 11 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 4.55 0.43 0.04 0.51 0.90 0.75 2.18 11.62 2.06 0.35 4.83 2.40 1.71 2.31 2.22 0.84 0.52 2.33 6.63 0.65 0.30 0.46 1.68 0.87 2.98 10.75 2.34 0.64 5.20 4.49 2.30 2.25 2.60 0.79 0.48 2.74 6.63 0.65 0.30 0.46 1.68 0.87 2.98 10.75 2.34 0.64 5.20 4.49 2.30 2.25 2.60 1.18 0.48 2.74 46% 50% 641% -10% 87% 16% 37% -8% 14% 82% 8% 87% 34% -3% 17% -6% -8% 18% Buy Hold Buy Hold Buy Buy Buy Hold Buy Buy Buy Buy Buy Hold Buy Buy Hold Buy 2% 13% 0% 19% -9% 7% 6% 6% -7% 0% 7% 0% 4% -3% 2% 4% 4% -1% -3% 9% -4% 14% -13% 3% 2% 1% -11% -4% 3% -4% -1% -7% -2% 0% 0% -5% 65.6 4.7 1.3 4.8 21.5 10.1 23.5 151.0 28.6 4.9 57.8 51.6 26.1 43.1 13.1 50.0 13.8 9.1 66.0 6.9 1.3 17.6 17.0 11.5 30.3 190.1 31.3 6.4 66.4 60.7 43.8 52.0 19.1 84.2 6.4 9.8 70.6 8.2 1.7 25.9 23.8 12.7 43.8 211.7 35.8 6.7 77.9 68.2 51.9 58.8 22.8 111.4 13.8 10.4 0.3 1.6 1.1 0.6 1.1 1.0 1.1 0.7 0.1 0.7 0.8 0.5 1.0 0.7 0.9 1.1 0.5 1.1 54.5 5.4 1.8 3.5 15.9 10.3 18.9 89.8 24.2 3.9 29.8 32.4 12.5 16.5 13.9 4.4 9.7 23.3 54.8 8.0 2.1 7.4 12.6 11.5 20.4 104.9 26.5 5.2 33.3 37.9 18.3 19.8 19.0 6.0 4.4 24.9 58.7 9.4 2.7 10.8 17.7 12.3 26.5 116.8 30.3 5.4 39.0 42.6 21.7 22.3 21.2 8.6 9.3 26.6 0.7% -7.0% -2.1% 1.5% 2.2% 4.4% 1.1% -13.4% -0.3% -6.9% 3.2% -13.4% -55.9% 0% 48% 20% 107% -20% 12% 8% 17% 9% 31% 12% 17% 47% 20% 37% 35% -55% 7% 7% 18% 29% 47% 40% 7% 30% 11% 14% 4% 17% 12% 18% 13% 12% 43% 111% 7%
4% 23% 24% 50% 9% 9% 22% 4% 12% 12% 16% 11% 27% 13% 17% 30% 12% 6%
30.0 4.0 0.0 0.0 5.0 6.2 6.0 42.0 9.0 2.0 14.3 24.0 3.0 11.0 3.0 0.0 5.5 16.5
37.5 5.5 0.0 0.0 6.5 6.7 7.0 52.6 13.0 4.0 16.3 27.1 7.0 13.0 4.0 0.0 2.0 17.5
38.0 6.5 0.0 3.0 10.2 7.0 8.0 57.6 15.0 4.0 20.3 31.2 13.0 14.5 4.0 0.0 4.5 18.6
8.2% 12.8% 0.0% 0.0% 7.2% 8.9% 3.2% 4.5% 6.3% 11.4% 3.4% 11.3% 4.1% 5.6% 1.8% 0.0% 3.8% 7.5%
100 100 0 100 0 100 0 0 100 100 100 100 100 40 100 100 50 100
8.3 5.4 5.0 6.9 7.1 6.5 10.7 11.1 7.8 6.8 14.5 6.3 9.3 11.7 11.7 14.0 12.0 9.3
7.8 4.6 3.9 4.7 5.1 6.1 8.2 9.9 6.8 6.5 12.4 5.6 7.9 10.3 10.5 9.8 5.7 8.8
1.8 0.2 0.2 0.1 0.8 0.7 0.5 2.8 0.7 0.6 0.9 0.6 0.3 0.9 0.7 0.5 1.0 1.6
0.70 0.45 0.13 0.58 0.60 0.55 0.90 0.93 0.66 0.57 1.22 0.63 0.81 0.98 0.98 1.18 1.01 0.79
0.73 0.43 0.11 0.44 0.48 0.57 0.77 0.93 0.64 0.61 1.16 0.62 0.75 0.97 0.98 0.92 0.53 0.82
9.1 3.1 -1.4 5.2 5.2 7.1 8.1 7.6 6.1 3.6 11.3 5.8 6.9 7.9 9.2 8.5 15.9 5.5
7.4 2.9 -0.9 4.2 3.2 2.5 7.3 6.3 5.1 2.7 10.0 4.6 5.7 4.6 6.2 5.1 5.4 4.9
2.2 1.7 1.3 4.7 8.6 1.0 1.9 3.0 2.1 2.5 7.0 1.9 8.1 4.9 3.8
20.8% 7.7% 8.5% 11.7% 9.9% 11.7% 18.2% 27.8% 8.7% 13.3% 20.1% 18.0% 9.8% 11.3% 15.0% 4.8% 1.4% 18.0%
1.3 0.4 1.7 1.5 0.6 1.3 1.5 0.1 1.6 0.5 1.3 1.7 1.1 1.2 1.3 2.8 0.9 1.3
34.7% -5.3% -29.1% 37.9% 16.9% 87.2% -27.6% -4.5% 30.2% -13.2% 39.1% 75.5% 22.0% 45.8% 40.1% 56.9% 14.1% -34.2%
Julian Guido Matthew Nicholas Roger Leaning Roger Leaning Julian Guido Scott Murdoch Alexandra Clarke Todd Scott Julian Guido Roger Leaning Julian Guido Julian Guido Julian Guido Julian Guido Alexandra Clarke Roger Leaning Matthew Nicholas Josephine Little
Construction
ABC BKW CLO EAL MAH NWH Adel Brighton Brickworks Clough E&A Macmahon NRW Holdings 1,963 1,614 540 17 488 789 Dec 10 Jul 11 Jun 11 Jun 10 Jun 11 Jun 11 3.09 10.94 0.70 0.18 0.67 2.83 3.11 11.15 0.80 0.18 0.75 3.37 3.11 11.15 0.80 0.18 0.75 3.37 1% 2% 14% -1% 12% 19% Hold Hold Hold Hold Buy Buy 7% 1% 1% 0% 20% 10% 3% -3% -3% -4% 15% 6% 151.5 100.8 53.6 2.5 1.0 41.2 148.5 102.3 51.0 3.1 55.7 83.3 158.9 121.2 65.2 4.2 62.5 91.6 0.9 0.7 0.7 1.3 1.0 1.1 23.9 68.3 6.7 2.7 0.2 16.1 23.4 69.3 6.4 3.2 7.5 29.9 25.0 82.1 8.2 4.4 8.4 32.9 -0.6% -2.0% -9.2% 18.1% 17.9% -2% 1% -5% 21% 3214% 86% 7% 18% 28% 36% 12% 10%
8% 8% 7% 23% 29%
21.5 40.5 3.0 1.5 0.0 9.0
16.5 42.5 3.0 1.5 3.7 16.0
18.6 44.5 3.0 1.5 4.1 18.0
5.3% 3.9% 4.3% 8.3% 5.6% 5.7%
100 100 0 0 100 0
13.2 15.8 10.9 5.6 8.9 9.5
12.4 13.3 8.6 4.1 8.0 8.6
1.6 1.9 1.6 0.2 0.3
1.03 1.33 0.92 0.43 0.75 0.80
1.04 1.25 0.80 0.35 0.75 0.81
11.9 25.9 8.7 6.0 5.8 6.5
9.2 18.7 8.0 4.9 3.5 4.5
2.5 1.1 1.7 1.5 2.7
15.7% 6.0% 16.0% 5.9% 16.1% 28.5%
1.1 2.4 4.3 2.8 0.4 0.3
26.5% 13.8% -57.9% 41.7% 17.1% 19.0%
Andrew Scott Alexandra Clarke Alexandra Clarke Alexandra Clarke Scott Murdoch Scott Murdoch
Consumer products
GUD MCP SYM GUD Holdings McPherson's Symex 508 128 28 Jun 11 Jun 11 Jun 11 7.35 1.77 0.14 8.10 2.17 0.24 8.10 2.17 0.24 10% 23% 74% Hold Hold Hold 4% 4% 0% 0% -1% -4% 49.0 28.0 10.0 46.6 21.2 2.7 53.2 21.7 3.6 1.0 1.1 0.2 71.7 39.0 7.3 67.2 29.6 1.4 76.4 30.2 1.9 -5.6% -18.9% -6% -24% -81% 14% 2% 35%
5% -8% -32%
64.0 26.0 2.5
61.0 19.0 1.0
68.0 20.0 1.0
8.3% 10.7% 6.9%
100 100 100
10.9 6.0 10.3
9.6 5.9 7.6
2.1 -0.8 -0.3
0.92 0.50 0.87
0.90 0.55 0.72
8.0 4.9 8.7
6.5 4.2 6.7
5.4 5.0 1.5
17.8% 10.4% 2.5%
1.0 1.2 4.6
32.9% Matthew Nicholas 23.3% Josephine Little 58.2% Josephine Little
Diversified Financials
BTT EQT HGG IMF IFL MOC PTM TRU TSM SOL WHG BT Investment Mgt Equity Trustees Henderson Group IMF Aust IOOF Holdings Mortgage Choice Platinum Asset Mgt The Trust Company ThinkSmart WH Soul Pattinson & Co WHK Group 361 118 1,812 184 1,259 162 1,935 167 52 3,262 224 Sep 10 Jun 11 Dec 10 Jun 11 Jun 11 Jun 11 Jun 10 Feb 11 Dec 10 Jul 11 Jun 11 1.84 13.79 1.69 1.35 5.48 1.36 3.45 5.17 0.39 13.67 0.83 3.02 13.17 2.72 2.17 7.50 1.38 5.25 5.41 1.00 16.06 1.15 3.02 14.63 2.72 2.17 7.50 1.38 5.25 5.41 1.00 20.07 1.15 64% -5% 61% 61% 37% 1% 52% 5% 156% 17% 39% Buy Hold Buy Buy Buy Hold Hold Hold Buy Buy Buy 2% 3% 11% 4% 7% 6% -2% 3% -5% -1% 1% -2% -1% 7% 0% 3% 2% -6% -1% -9% -5% -3% 30.9 7.8 142.1 22.9 111.5 15.9 155.0 12.4 8.9 161.2 25.8 30.5 9.2 191.0 36.4 120.2 16.2 190.5 12.1 8.7 226.3 29.6 35.9 10.0 234.1 27.5 130.7 16.8 211.2 13.1 12.0 215.6 32.8 0.7 1.0 1.3 0.6 1.2 0.8 1.3 0.8 0.5 1.1 1.1 19.3 91.7 16.7 16.8 48.1 13.2 26.6 38.4 8.3 67.5 9.6 15.6 106.9 18.5 29.2 51.6 13.4 32.4 36.7 6.6 94.8 11.0 22.4 114.3 21.3 22.0 55.8 13.9 35.9 38.7 9.1 90.3 12.2 -10.0% -0.1% 3.5% -0.1% -6.3% 1.5% -11.2% -11.9% -0.1% -1.4% -19% 17% 11% 74% 7% 2% 22% -4% -20% 40% 14% 44% 7% 15% -25% 8% 4% 11% 5% 38% -5% 11%
8% 10% 12% 0% 7% 4% 13% 2% 17% 7% 10%
28.0 100.0 6.5 15.0 43.0 13.0 23.5 35.0 3.5 40.0 7.0
16.0 96.0 7.2 32.0 47.0 13.4 27.5 35.0 3.5 46.0 7.6
20.0 100.0 9.2 18.4 50.0 13.9 30.5 36.0 4.8 52.0 8.6
8.7% 7.0% 6.3% 23.7% 8.6% 9.9% 8.0% 6.8% 9.0% 3.4% 9.1%
100 100 0 100 0 100 100 100 0 100 100
11.8 12.9 9.6 4.6 10.6 10.1 10.7 14.1 5.9 14.4 7.6
8.2 12.1 8.3 6.1 9.8 9.7 9.6 13.4 4.3 15.1 6.9
1.4 1.2 0.8 -15.8 1.5 2.5 0.8 5.7 0.3 2.0 0.8
0.92 1.09 0.84 0.39 0.90 0.85 0.83 1.19 0.46 1.22 0.64
0.69 1.13 0.77 0.58 0.92 0.91 0.81 1.26 0.36 1.42 0.64
1.8 8.5 7.4 2.8 6.8 5.4 6.0 9.5 3.9 4.7 5.8
1.8 7.9 7.3 2.8 6.6 5.1 6.0 8.5 3.4 4.0 5.0
1.8 7.5 3.4 8.2 1.8 5.3 4.3 1.6 1.1 4.9
7.8% 16.5% 20.9% 37.1% 13.5% 17.9% 63.3% 10.9% 19.7% 7.9% 10.5%
6.5 0.4 0.0 0.8 1.1 1.5 1.4 0.1 0.2 8.2 0.8
-56.4% -11.1% -0.8% -37.7% -20.4% -40.6% -96.7% -2.7% -8.5% -53.4% 14.2%
Julian Guido Scott Murdoch Julian Guido Julian Guido Julian Guido Julian Guido Julian Guido Scott Murdoch Matthew Nicholas Roger Leaning Julian Guido
Consumer Services
ALL CTD DMP FWD FLT IVC JET NVT SGH WEB Aristocrat Corp Trave Domino's Pizza Fleetwood Flight Centre Invocare Jetset Navitas Slater & Gordon Webjet 1,427 132 523 691 1,922 821 303 1,268 270 188 Dec 10 Jun 11 Jun 11 Jun 11 Jun 11 Dec 10 Jun 11 Jun 11 Jun 11 Jun 11 2.62 1.85 7.65 12.06 19.22 7.56 0.69 3.38 1.77 2.50 2.60 2.50 7.54 13.56 25.25 7.60 1.16 4.12 2.50 2.50 2.60 2.50 7.54 15.05 25.25 7.60 1.16 4.12 2.50 2.50 -1% 35% -1% 12% 31% 1% 68% 22% 41% 0% Buy Buy Buy Buy Buy Hold Buy Hold Buy Buy 19% 3% -3% 1% 19% -2% -1% -3% -1% 0% 15% -1% -7% -4% 15% -6% -6% -8% -5% -4% 54.4 8.6 21.4 52.1 170.7 34.1 25.6 76.0 27.9 11.3 56.6 12.0 25.0 58.2 193.5 40.4 35.5 88.0 37.3 12.6 94.6 14.8 27.7 64.0 210.2 46.7 38.5 103.8 41.2 14.0 1.8 1.3 1.2 0.8 0.7 1.0 1.6 0.8 0.7 1.3 10.2 14.0 31.3 90.0 169.6 33.6 6.6 21.3 18.3 14.5 10.5 16.9 36.6 100.6 192.2 38.9 8.1 23.4 23.6 17.0 17.4 20.7 40.4 109.7 208.9 43.1 8.8 27.6 25.5 19.5 -1.1% 0.4% 1.8% 1.9% -0.3% 1.1% -4.1% 0.5% 3.1% 3% 20% 17% 12% 13% 16% 22% 10% 29% 17% 66% 23% 11% 9% 9% 11% 9% 18% 8% 15%
28% 19% 14% 8% 10% 12% 12% 14% 16% 14%
5.0 5.0 21.9 73.0 84.0 28.3 3.0 20.7 5.5 11.0
5.4 8.4 25.6 86.0 96.1 31.3 3.8 23.5 7.5 12.4
8.7 10.3 28.3 93.0 104.4 36.0 4.4 27.6 8.6 13.7
2.1% 4.6% 3.3% 7.1% 5.0% 4.1% 5.5% 7.0% 4.2% 5.0%
0 100 100 100 100 100 100 100 0 100
24.9 11.0 20.9 12.0 10.0 19.4 8.5 14.4 7.5 14.7
15.1 9.0 18.9 11.0 9.2 17.5 7.9 12.2 6.9 12.8
0.9 0.6 1.5 1.4 1.0 1.6 0.7 1.0 0.5 1.0
1.93 0.92 1.76 1.01 0.84 1.51 0.72 1.21 0.63 1.24
1.27 0.84 1.78 1.03 0.86 1.48 0.74 1.15 0.65 1.20
18.1 7.2 14.4 8.2 6.2 14.4 5.4 10.4 5.4 9.9
13.0 6.6 11.1 6.9 5.2 12.3 4.5 9.5 5.1 9.5
10.8 37.0 8.0 4.6 3.8 36.0 12.9 1.8 7.1
26.7% 28.6% 22.9% 27.4% 24.5% 40.4% 8.0% 36.3% 17.8% 34.1%
1.8 0.5 0.4 0.0 0.8 2.6 0.2 0.7 0.7 2.2
102.8% -22.0% -14.3% -1.0% -29.7% 209.7% -3.4% 44.7% 20.6% -105.2%
Michael Nolan Belinda Moore Josephine Little Alexandra Clarke Belinda Moore Julian Guido Belinda Moore Julian Guido Julian Guido Belinda Moore
Source: Company data, RBS forecasts, RBS Morgans forecasts. * Share prices as at close of trading on 23 January 2012. Target prices, forecasts and recommendations for some companies featured in 'The Bulletin' may have been updated overnight. * Earnings Quality: Net Operating Cash Flow/(Net Profit + Depreciation & Amortisation)
Page 86

23 January 2012
NPAT pre abnormals (A$m) Earnings Quality * Actual EPS pre goodwill (c) EPS ANALYSIS IBES 3m EPS growth EPS (pre goodwill) revisions 12m fwd Fcst 1 Fcst 2 EPS CAGR 3 yr Actual DIVIDEND ANALYSIS Div yield DPS (c) Div frank (%) Fcst 1 PE (x) (pre goodwill) Fcst 1 Fcst 2 PEG VALUATION PE rel (pre goodwill) Fcst 1 Fcst 2 EV/ EV / P/ NTA EBIT (x) EBITDA (x) Fcst 1 Fcst 1 Fcst 1 B/SHEET ANALYSIS ROE Gearing (Tier 1 Analyst ND/EBITDA ratio for banks) Fcst 1 Fcst 1 Fcst 1
Actual
Fcst 1
Fcst 2
Actual
Fcst 1
Fcst 2
Fcst 1
Fcst 2
Fcst 1
Fcst 1
Food Beverage & Tobacco

AAC ELD MSF PAG RIC TGR WCB Aust Agricultural Co Elders MSF Sugar PrimeAg Australia Ridley Corp Tassal Group Warrnambool Cheese 427 112 308 280 312 187 209 Dec 10 Sep 11 Dec 10 Jun 11 Jun 11 Jun 11 Jun 11 1.37 0.25 4.45 1.05 1.01 1.28 3.88 1.55 0.26 4.06 1.25 1.26 1.28 4.05 2.07 0.26 4.06 1.57 1.26 1.28 4.05 13% 4% -9% 19% 25% 0% 4% Hold Hold Buy Hold Buy Hold Hold 3% -4% 0% -2% -4% -9% 6% -1% -8% -4% -6% -8% -13% 2% 0.9 4.7 6.9 5.9 29.3 21.6 18.5 7.2 12.0 -2.5 17.4 26.6 23.8 15.0 9.6 19.0 11.1 20.9 31.7 26.4 15.0 5.0 0.8 2.3 0.2 0.8 1.2 1.5 0.3 1.0 13.5 3.9 9.5 14.8 38.5 2.5 2.7 -3.6 6.8 8.6 16.3 27.9 3.1 4.2 16.1 7.9 10.3 17.9 27.9 -1.0% -3.9% -36.5% 2.3% -9.0% -2.3% 0.1% 627% 156% -127% 73% -9% 10% -28% 23% 58% 16% 19% 10% 0%
69% 11% 24% 6% 10% -7%
0.0 0.0 6.5 1.0 7.5 2.0 15.0
0.0 0.0 5.9 2.7 7.5 5.5 11.2
0.0 0.0 8.0 3.1 7.8 6.5 11.1
0.0% 0.0% 1.3% 2.6% 7.4% 4.3% 2.9%
0 0 100 100 50 100 100
55.1 9.3 15.5 11.7 7.9 13.9
44.6 5.9 27.7 13.4 9.9 7.2 13.9
0.1 0.7 2.1 0.8 -2.1
4.27 0.79 1.31 0.99 0.66 1.17
3.76 0.56 2.34 1.26 0.93 0.67 1.31
18.0 8.8 275.7 7.8 9.3 7.1 10.9
14.9 5.9 41.7 6.9 7.0 5.1 6.8
0.6 0.3 1.8 0.8 1.2 0.7 1.3
1.1% 2.0% -1.5% 4.8% 9.1% 8.4% 9.7%
6.0 4.3 5.9 6.6 1.8 1.6 0.8
42.8% 47.9% 28.3% -31.6% 35.3% 29.1% 17.9%
Belinda Moore Belinda Moore Belinda Moore Belinda Moore Belinda Moore Matthew Nicholas Belinda Moore
Healthcare
ACR ACL API BTA BKL IPD MSB PXS QRX TIS Acrux Alchemia Aust Pharma Biota Blackmores ImpediMed Mesoblast Pharmaxis QRxPharma Tissue Therap 554 92 139 149 481 78 873 253 185 67 Jun 11 Jun 11 Aug 11 Jun 11 Jun 11 Jun 11 Jun 10 Jun 11 Jun 11 Jun 11 3.48 0.34 0.28 0.83 28.73 0.58 6.37 1.02 1.48 0.40 4.31 0.89 0.35 1.98 29.86 1.14 2.08 2.46 2.91 0.87 4.31 0.89 0.35 2.47 29.86 1.50 2.08 3.08 2.91 0.87 24% 161% 25% 138% 4% 96% -67% 141% 97% 118% Buy Buy Hold Buy Hold Buy Buy Buy Buy Buy 21% 13% 8% 4% 1% 12% -8% -2% -2% 5% 17% 9% 4% 0% -3% 7% -12% -6% -6% 1% 57.1 -13.4 20.8 -28.1 27.3 -14.8 -13.2 -45.8 -25.6 -5.3 5.5 -10.0 22.8 -9.3 30.4 -13.2 -14.5 -22.4 -22.7 -8.3 28.1 11.7 28.8 20.0 33.4 4.5 -1.6 -16.2 9.1 -4.7 1.1 1.0 1.2 1.5 0.7 0.8 0.8 0.9 0.9 0.8 34.4 -7.0 4.3 -15.7 162.9 -9.5 -9.6 -20.0 -20.5 -3.4 3.3 -3.6 4.7 -5.2 181.8 -8.4 -9.4 -9.1 -15.7 -4.9 17.0 4.3 5.9 11.2 199.7 2.9 -1.0 -6.6 6.3 -2.8 -12.5% -0.4% -0.5% -90% 92% 9% 202% 12% 12% 2% 121% 30% -31% 416% 26% 10% 800% 38% 76%
16% 41% 12% 4% 11% 32% -24% -8% -34% 8%
60.0 0.0 2.5 0.0 122.0 0.0 0.0 0.0 0.0 0.0
3.0 0.0 3.0 0.0 136.0 0.0 0.0 0.0 0.0 0.0
7.0 0.0 3.0 0.0 150.0 0.0 0.0 0.0 0.0 0.0
0.9% 0.0% 10.5% 0.0% 4.7% 0.0% 0.0% 0.0% 0.0% 0.0%
0 0 100 100 100 100 0 0 0 0
6.1 15.8 -
20.5 7.8 4.8 7.5 14.4 20.1 23.5 -
0.5 1.4 -
8.92 0.51 1.33 -
1.93 0.74 0.45 0.70 1.35 1.89 2.20 -
108.6 -7.7 4.6 -7.4 10.9 -5.5 -68.2 -10.1 -7.6 -6.4
67.9 -7.9 3.2 -12.1 10.0 -5.7 -68.3 -11.7 -7.6 -6.4
11.3 11.3% 8.1 -42.1% 0.4 4.0% 2.2 -12.9% 5.7 36.5% 15.9 -93.2% 36.3 -51.9% 4.0 -33.3% 20.9 -271.8% 8.0 -64.8%
5.7 n.a. 1.3 n.a. 0.3 n.a. n.a. n.a. n.a. n.a.
-84.2% -45.4% 16.3% -97.1% 14.8% -60.2% -88.9% -26.0% -102.8% -95.0%
Scott Power Scott Power Scott Power Scott Power Scott Power Scott Power Dr Derek Jellinek Scott Power Scott Power Scott Power
Infrastructure
AIX AIA.NZ LAU MQA SWL Aust Infrastructure Fund Auckland Int'l Airport Lindsay Macquarie Atlas Seymour Whyte 1,254 3,360 26 699 149 Jun 11 Jun 11 Jun 11 Dec 10 Jun 11 2.02 2.59 0.15 1.54 1.92 1.92 2.20 0.20 1.88 2.70 1.92 1.87 0.20 1.88 2.70 -5% -15% 36% 22% 41% Hold Hold Buy Buy Buy 5% 3% 7% 14% 7% 1% -1% 3% 10% 3% 212.3 92.6 1.4 -281.7 12.2 160.6 104.1 3.2 -57.0 14.8 166.5 115.6 5.2 108.5 17.9 0.2 1.0 0.9 0.0 0.7 34.2 7.0 0.6 -62.3 15.6 25.9 7.9 1.5 -12.6 19.0 26.8 8.7 2.4 24.0 22.9 -10.6% 0.0% -90.2% 0.3% -24% 12% 131% 394% 22% 4% 11% 62% 21%
-8% 11% 79% -57% 21%
10.0 8.7 0.7 0.0 8.0
10.5 9.5 1.0 0.0 11.0
11.0 10.5 1.6 7.0 11.0
5.2% 3.7% 6.4% 0.0% 5.7%
50 100 100 0 100
7.8 25.7 10.1 10.1
7.5 23.2 6.3 6.4 8.4
-0.9 2.3 0.1 0.5
0.66 2.16 0.85 0.85
0.71 2.18 0.59 0.54 0.79
6.7 16.7 10.4 -230.7 5.3
6.7 13.5 3.8 -256.3 5.0
0.7 1.4 0.7 3.4
8.9% 5.4% 6.2% 20.5% 36.1% -
0.3 3.3 2.5 n.a. 1.8
-3.2% 42.0% 94.5% -865.2% -89.8%
William Allott William Allott Alexandra Clarke William Allott Alexandra Clarke
IT
ASZ CRZ CSV DTL DWS IRE MLB NXT OKN OTH RKN SLX SMX TNE ASG Group Carsales CSG Ltd Data#3 DWS Ltd IRESS Melbourne IT NEXTDC Oakton Onthehouse Reckon Silex Systems SMS Mgt & Technology Technology One 138 1,152 192 196 165 925 130 244 116 29 299 394 342 308 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Dec 10 Dec 10 Jun 11 Jun 11 Jun 11 Dec 10 Jun 11 Jun 11 Sep 11 0.85 4.92 0.68 1.27 1.24 7.08 1.61 1.70 1.24 0.36 2.24 2.44 5.04 1.01 1.30 5.38 0.98 1.46 1.42 8.70 1.50 2.44 1.52 1.50 2.37 6.87 5.26 1.07 1.30 5.38 1.31 1.46 1.42 8.70 1.50 2.44 1.52 1.50 2.37 6.87 5.26 1.07 53% 9% 44% 15% 14% 23% -7% 43% 23% 317% 6% 181% 4% 6% Buy Buy Buy Buy Hold Hold Hold Buy Hold Buy Hold Buy Hold Hold -2% 3% 13% 11% -1% 2% 4% 6% 0% 0% -4% 0% 12% 1% -6% -1% 9% 7% -5% -2% 0% 1% -4% -4% -8% -5% 7% -3% 15.7 58.2 40.6 15.0 17.4 58.4 16.1 -1.7 16.8 -1.8 15.7 -31.5 29.8 20.3 18.7 66.9 33.0 16.5 19.1 63.0 13.2 -8.3 15.8 2.0 18.1 -33.1 31.5 22.9 21.7 75.7 36.5 17.6 20.7 75.2 15.4 0.3 17.3 3.7 21.0 -5.8 34.4 26.0 0.9 1.0 0.3 0.3 0.8 1.2 0.8 0.5 0.7 0.4 1.2 1.2 0.7 0.8 9.7 24.9 15.6 9.8 13.1 46.3 20.2 -1.7 18.0 -19.1 11.8 -19.5 44.3 6.7 10.7 28.5 11.6 10.7 14.4 48.6 16.4 -5.8 16.8 2.4 13.6 -20.5 46.4 7.5 12.0 31.9 12.7 11.4 15.6 57.0 18.9 0.2 18.3 4.6 15.8 -3.6 50.5 8.5 -1.9% -0.1% -12.6% -3.9% -1.6% -3.7% 2.2% -13.2% -2.2% -8.1% -4.1% 11% 14% -26% 10% 10% 5% -19% -70% -7% 16% -5% 5% 12% 12% 12% 10% 7% 9% 17% 16% 9% 91% 16% 470% 9% 13%
9% 12% -1% 7% 8% 10% -2% 83% 6% -30% 13% 10% 11%
7.5 19.9 6.0 7.8 12.0 41.5 15.0 0.0 8.5 0.0 8.0 0.0 30.0 6.2
8.0 22.8 4.5 8.5 11.0 39.0 11.0 0.0 10.5 0.6 8.5 0.0 31.5 5.3
9.0 25.5 4.9 9.1 12.0 45.5 13.0 0.0 13.5 1.1 9.5 0.0 34.5 6.0
9.4% 4.6% 6.7% 6.7% 8.9% 5.5% 6.8% 0.0% 8.5% 1.7% 3.8% 0.0% 6.3% 5.2%
100 23 100 100 100 100 100 0 100 0 90 100 100 100
7.9 17.3 5.8 11.9 8.6 14.6 9.8 7.4 15.0 16.5 10.9 13.4
7.1 15.4 5.3 11.1 7.9 12.4 8.5 6.8 7.9 14.2 10.0 11.8
0.9 1.5 -4.6 1.7 1.0 1.4 -5.6 1.3 -0.5 1.2 1.1 1.3
0.67 1.46 0.49 1.00 0.73 1.13 0.76 0.62 1.27 1.28 0.92 1.13
0.66 1.45 0.50 1.05 0.75 1.05 0.72 73.15 0.64 0.74 1.20 0.94 1.11
5.9 11.7 6.2 5.5 5.6 9.8 8.4 -19.4 4.7 8.1 11.5 -8.8 7.4 8.9
4.6 11.4 4.6 5.2 5.6 9.1 5.3 -28.0 4.1 3.3 8.6 -11.5 7.3 7.5
23.9 6.6 4.7 12.2 1.7 3.6 12.1 35.2 3.9 8.1 5.0
16.8% 56.1% 10.8% 51.4% 32.0% 46.4% 14.2% -6.6% 14.4% 3.3% 34.9% -23.8% 28.5% 31.9%
0.9 0.6 1.9 2.7 0.5 0.8 1.0 n.a. 0.7 0.4 0.3 n.a. 0.5 1.0
29.1% -41.3% 44.1% -196.3% -21.1% -53.0% 32.5% -7.5% -14.4% -5.1% -16.2% -42.2% -18.8% -46.2%
Nick Harris Alan Stuart Nick Harris Nick Harris Julian Guido Julian Guido Nick Harris Nick Harris Julian Guido Belinda Moore Julian Guido Scott Power Julian Guido Nick Harris
Insurance
AUB Austbrokers 333 Jun 11 6.00 6.46 6.46 8% Buy -1% -5% 23.9 26.8 29.5 1.2 43.6 48.4 53.1 0.3% 11% 10%
8%
25.5
30.0
32.0
5.0%
12.4
11.3
1.6
1.20
1.20
15.6
13.8
3.9
16.1% -
3.3
-37.5% Julian Guido
Media
APN AUN CMJ SXL PRT REA SGN TEN APN Austar United Comms Consolidated Media Southern Cross Media Prime Media REA Group STW Group Ten Network 460 1,481 1,512 797 238 1,630 318 909 Dec 10 Dec 10 Jun 11 Jun 11 Jun 11 Jun 11 Dec 10 Aug 11 0.75 1.16 2.69 1.13 0.65 12.50 0.89 0.87 1.20 1.37 2.68 1.45 0.72 11.26 1.34 0.81 1.32 1.20 2.98 1.75 0.80 11.26 1.34 0.90 60% 18% 0% 28% 11% -10% 51% -7% Buy Buy Hold Buy Hold Hold Buy Sell 6% -3% 3% 5% 0% 0% 6% 4% 1% -7% -1% 0% -4% -4% 2% -1% 103.1 54.1 94.8 68.6 27.2 66.3 38.7 74.1 76.0 82.4 92.7 96.6 28.9 80.3 40.6 52.9 91.0 98.0 96.6 108.1 29.3 95.9 40.4 74.1 1.2 1.0 1.3 0.6 0.9 1.0 2.0 1.8 17.2 4.2 16.6 14.8 7.4 51.2 10.8 7.1 12.4 6.3 16.5 13.7 7.9 61.1 11.4 5.1 14.7 7.5 17.2 15.3 8.0 71.9 11.5 7.1 -7.0% 0.6% 0.4% -2.8% -1.1% 0.0% -1.6% -12.5% -28% 51% -1% -8% 6% 19% 6% -29% 19% 19% 4% 12% 1% 18% 1% 40%
-2% 32% 5% 5% 3% 17% 4% 6%
12.0 0.0 16.5 10.0 4.5 26.0 6.5 5.3
7.4 0.0 16.5 8.9 5.5 30.6 7.4 3.8
8.8 0.0 16.5 10.7 5.6 43.1 8.1 5.3
10.0% 0.0% 6.1% 7.9% 8.5% 2.4% 8.4% 4.4%
30 0 0 100 100 100 100 100
6.0 18.4 16.3 8.2 8.2 20.4 7.8 17.2
5.1 15.5 15.6 7.4 8.1 17.4 7.7 12.3
-3.1 0.6 3.6 1.6 3.1 1.2 2.0 2.9
0.47 1.43 1.37 0.70 0.69 1.72 0.60 1.45
0.43 1.31 1.47 0.69 0.76 1.63 0.65 1.15
6.2 14.3 -253.3 7.3 7.1 13.3 6.4 11.5
6.0 7.8 7.5 6.3 5.9 12.0 5.9 9.8
4.6 10.3 337.1 -
8.4% -39.2% 28.3% 6.4% 18.3% 37.4% 11.1% 6.5%
3.1 1.9 n.a. 2.8 2.0 1.4 1.1 2.8
60.0% -279.8% -25.4% 40.9% 75.8% -70.4% 20.1% 49.7%
Fraser McLeish Fraser McLeish Fraser McLeish Fraser McLeish Alan Stuart Alan Stuart Matthew Nicholas Fraser McLeish
Page 87

23 January 2012
Actual
Fcst 1
Fcst 2
Actual
Fcst 1
Fcst 2
Fcst 1
Fcst 2
Fcst 1
Fcst 1
Other Capital Goods

AJL ALS AAX ASB ASL BOL BKN CDD EGN EHL GWA HST HIL LDW NFK RFX RQL SDM WTP AJ Lucas Alesco Ausenco Austal Ausdrill BOOM Logistics Bradken Cardno Engenco Emeco GWA Group Hastie Group Hills Ludowici Norfolk Group Redflow Resource Equip Sedgman Watpac 84 104 367 384 1,019 123 1,222 638 118 634 715 772 260 178 168 59 74 406 203 Jun 11 May 11 Dec 10 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Dec 10 Mar 11 Jun 11 Jun 11 Jun 11 Jun 11 1.27 1.11 2.98 2.04 3.38 0.26 7.55 5.78 0.95 1.00 2.37 0.56 1.05 6.70 1.06 0.71 0.35 1.93 1.11 2.28 1.33 3.97 3.75 3.80 0.49 9.85 7.28 1.25 1.23 2.16 1.20 1.07 4.92 1.49 2.04 0.99 1.93 1.79 2.28 1.33 6.08 3.75 3.80 0.49 9.85 7.28 1.33 1.23 2.16 0.12 1.53 4.92 1.49 2.07 1.28 1.93 1.79 80% 20% 33% 84% 12% 87% 30% 26% 31% 23% -9% 114% 2% -27% 40% 187% 182% 0% 61% Hold Hold Buy Buy Buy Buy Buy Buy Buy Buy Hold Hold Hold Buy Buy Buy Buy Hold Buy 23% -3% 21% -5% 13% 18% 6% 11% -11% 4% 11% 0% -7% 91% 0% -8% 3% 5% 5% 19% -8% 16% -9% 9% 14% 2% 7% -15% 0% 7% -4% -11% 87% -4% -12% -1% 1% 1% -8.5 15.6 0.8 40.5 78.5 5.4 90.1 58.8 7.2 56.3 63.4 18.7 24.7 11.6 21.1 -7.3 12.2 28.9 16.8 6.2 14.0 22.9 49.7 96.7 17.4 120.3 69.2 15.9 68.7 56.6 23.6 26.8 13.5 22.2 -10.8 13.4 36.7 25.6 10.4 16.9 35.5 50.2 116.0 21.6 143.9 75.0 21.2 78.2 60.4 31.8 31.7 16.7 24.7 3.4 14.4 37.9 31.8 1.4 1.2 1.8 3.3 0.7 0.9 0.2 1.0 1.5 1.2 1.1 1.8 0.3 0.5 1.1 0.9 0.9 0.6 1.3 -12.5 16.5 0.7 21.5 29.0 1.2 63.5 55.4 0.6 8.9 21.0 7.4 9.9 44.7 13.3 -8.8 5.6 13.8 9.2 9.0 14.8 18.6 26.4 32.1 3.7 72.3 62.7 12.5 10.9 18.8 1.7 11.0 46.0 14.0 -13.0 5.7 17.5 13.9 15.2 17.8 28.9 26.7 38.5 4.6 84.0 67.4 16.7 12.4 20.0 2.3 13.3 57.0 15.5 4.1 6.1 18.1 17.1 3.7% 1.7% -3.9% -4.1% 4.1% 4.9% 0.6% 1.5% -0.5% -4.7% -15.9% -10.0% -2.5% 0.1% -23.4% -10% 2719% 23% 11% 219% 14% 13% 2071% 22% -11% -77% 11% 3% 5% -32% 2% 27% 52% 68% 20% 55% 1% 20% 24% 16% 7% 34% 14% 7% 35% 21% 24% 11% 8% 3% 23%
17% 14% 12% 13% 62% 17% 9% 14% 1% -27% 16% 13% 11% 9% 5% 11% 29%
0.0 14.0 0.0 6.0 12.0 0.0 39.5 34.0 0.0 10.0 18.0 0.0 10.0 20.0 2.0 0.0 0.0 7.0 6.0
0.0 8.5 9.3 7.0 13.0 0.0 45.0 36.0 0.0 6.0 18.0 0.0 10.0 23.0 3.5 0.0 0.0 8.0 8.6
0.0 10.5 14.4 8.0 14.5 0.0 52.5 38.5 0.0 6.5 18.0 0.3 11.5 29.0 4.5 0.0 1.0 8.5 10.5
0.0% 7.7% 3.1% 3.4% 3.8% 0.0% 6.0% 6.2% 0.0% 6.0% 7.6% 0.0% 9.5% 3.4% 3.3% 0.0% 0.0% 4.1% 7.8%
100 100 75 100 100 100 100 60 0 100 100 100 100 100 100 100 0 100 100
14.1 7.5 16.0 7.7 10.5 7.1 10.4 9.2 7.6 9.2 12.6 32.8 9.5 14.6 7.6 6.2 11.1 7.9
8.4 6.2 10.3 7.6 8.8 5.7 9.0 8.6 5.7 8.1 11.8 24.3 7.9 11.7 6.8 17.6 5.7 10.7 6.4
0.8 0.5 0.6 0.8 0.1 0.6 1.1 0.6 9.0 -1.2 0.6 1.1 0.7 1.3 1.0 0.3
1.19 0.63 1.24 0.65 0.92 0.60 0.88 0.78 0.64 0.78 1.06 2.76 0.80 1.13 0.64 0.52 0.99 0.67
0.79 0.58 0.87 0.72 0.84 0.54 0.84 0.81 0.53 0.76 1.11 2.28 0.74 0.99 0.64 1.66 0.54 1.07 0.61
8.1 6.3 10.2 4.8 7.6 6.8 8.1 7.5 5.1 8.0 9.4 17.5 7.8 9.9 4.5 -4.7 4.6 7.5 6.3
4.3 4.2 7.5 3.9 4.7 3.6 6.6 6.7 3.6 3.8 7.8 13.8 5.4 7.7 3.7 -5.7 3.7 5.6 4.0
0.9 1.2 5.0 1.2 1.5 0.5 2.2 0.8 1.4 12.0 10.1 0.8 2.7 3.1 5.8 1.1 2.9 0.7
3.0% 3.0% 9.5% 15.7% 13.7% 5.7% 16.6% 18.5% 8.5% 11.1% 12.8% 6.9% 7.0% 13.9% 22.6% -61.9% 15.1% 21.5% 8.3%
2.4 1.7 0.1 0.8 0.4 1.8 1.7 1.1 0.5 1.4 1.6 1.8 1.6 1.4 0.4 n.a. 0.4 0.7 0.9
49.6% 16.0% -1.0% -20.0% 11.9% 40.3% 56.2% 32.2% 9.6% 56.0% 41.7% 29.4% 26.9% 36.2% -14.7% -35.1% 9.7% -27.1% 18.6%
Alexandra Clarke Julian Guido Roger Leaning Julian Guido Matthew Nicholas Matthew Nicholas Matthew Nicholas Roger Leaning Alexandra Clarke Matthew Nicholas Julian Guido Julian Guido Matthew Nicholas Roger Leaning Julian Guido Scott Power Alexandra Clarke Roger Leaning Scott Murdoch
Property
AAD CWP CMW DVN FKP PPC SDG Ardent Leisure Cedar Woods Cromwell Devine FKP Property Peet Sunland Group 328 203 771 122 766 252 144 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 1.03 3.29 0.70 0.77 0.64 0.80 0.73 1.45 5.24 0.77 0.77 0.87 1.45 0.92 1.45 5.24 0.77 0.77 0.87 1.45 0.92 41% 59% 10% 0% 36% 82% 26% Buy Buy Buy Hold Buy Buy Hold 1% -2% 3% 5% 33% 0% 11% -3% -6% -1% 1% 29% -4% 6% 39.4 28.1 65.0 20.2 121.0 44.0 17.9 41.3 34.6 76.2 14.4 121.5 19.8 18.7 44.7 38.4 83.0 17.2 125.2 31.2 21.0 1.0 1.4 1.0 3.6 0.4 1.3 2.1 12.5 45.8 7.1 12.6 10.3 14.5 7.8 13.0 55.2 7.3 9.1 10.1 6.3 9.4 13.8 60.8 7.4 10.8 10.4 9.8 12.9 -3.9% 0.0% -0.2% -29.5% -1.9% -41.9% 7.7% 3% 20% 3% -28% -2% -57% 22% 6% 10% 1% 19% 2% 57% 37%
6% 15% 3% 2% 5% -10% 26%
11.5 23.0 7.0 8.0 3.0 8.5 0.0
11.7 28.0 7.0 5.9 3.3 3.5 0.0
12.4 30.0 7.0 7.0 3.3 6.0 4.0
11.3% 8.5% 10.0% 7.7% 5.2% 4.4% 0.0%
0 100 17 100 70 100 100
7.9 6.0 9.6 8.5 6.3 12.8 7.7
7.5 5.4 9.5 7.1 6.2 8.1 5.6
1.3 0.4 3.0 5.3 1.2 -1.3 0.3
0.67 0.50 0.81 0.71 0.53 1.08 0.65
0.70 0.51 0.89 0.67 0.58 0.76 0.53
8.6 5.0 12.4 7.6 8.3 12.6 5.3
5.5 5.0 12.4 7.5 8.2 11.8 4.8
1.1 1.4 0.9 0.4 0.7 0.9 0.4
9.6% 24.9% 10.0% 4.2% 10.9% 7.5% 5.6%
1.8 1.0 6.5 3.6 4.2 5.3 0.3
37.5% 34.4% 103.3% 33.0% 49.9% 72.0% 3.0%
Josephine Little Scott Murdoch Fiona Buchanan Scott Murdoch Josephine Little Matthew Nicholas Fiona Buchanan
Retail
APE ARP AHE BBG KMD ORL PBG PMV TRS RFG RHL SUL TGA WTF AP Eagers ARB Corp Automotive Holdings Billabong Kathmandu OrotonGroup Pacific Brands Premier Inv Reject Shop Retail Food Ruralco Super Retail Thorn Group Wotif.com 376 591 482 507 248 315 586 736 291 265 172 1,119 237 832 Dec 10 Jun 11 Jun 11 Jun 11 Jul 11 Jul 11 Jun 11 Jul 11 Jun 11 Jun 11 Sep 11 Jun 11 Mar 11 Jun 11 12.00 8.15 1.86 1.99 1.24 7.72 0.63 4.75 11.20 2.45 3.12 5.77 1.62 3.94 16.00 8.65 2.23 1.80 1.35 9.18 0.92 5.58 12.70 2.65 4.45 7.40 2.07 4.07 16.00 8.65 2.22 1.80 1.80 9.18 0.92 5.58 12.70 2.83 4.45 7.40 2.07 4.07 33% 6% 20% -10% 9% 19% 46% 17% 13% 8% 43% 28% 28% 3% Buy Hold Hold Hold Hold Buy Buy Hold Hold Hold Buy Buy Buy Hold 2% 5% 8% 12% -5% 2% 15% 0% 9% -1% -5% 9% 1% 10% -2% 1% 3% 8% -9% -2% 10% -4% 5% -5% -9% 5% -4% 6% 32.6 37.9 52.4 118.0 30.0 24.8 103.4 61.1 16.1 28.0 17.6 55.6 23.0 51.0 43.1 42.0 59.7 63.0 31.5 27.0 86.5 61.1 23.7 30.4 19.7 89.4 27.4 56.0 44.4 46.1 69.5 83.8 35.1 30.0 104.3 71.3 29.1 32.7 21.3 113.2 30.4 61.7 0.8 0.9 0.9 0.2 0.9 0.7 0.8 1.0 0.7 0.9 2.3 0.5 0.6 1.5 108.7 52.2 22.7 46.3 14.7 60.8 11.1 39.4 61.4 26.1 32.0 43.1 17.6 23.9 136.4 58.0 23.0 24.6 15.8 66.3 9.3 39.4 89.6 27.9 35.8 51.2 19.1 26.3 141.2 63.6 26.8 32.7 17.5 73.7 11.2 46.0 109.4 29.5 38.7 57.9 20.7 29.0 6.3% -2.7% -2.9% -41.6% -8.4% 0.2% -9.5% -3.7% -4.2% -0.2% 7.7% 4.4% 0.9% -2.3% 25% 11% 1% -47% 7% 9% -16% 0% 46% 7% 12% 19% 8% 10% 4% 10% 17% 33% 11% 11% 20% 17% 22% 6% 8% 13% 9% 10%
10% 10% 8% -11% 9% 9% 2% 8% 25% 5% 9% 16% 10% 10%
64.0 23.0 17.0 29.0 10.0 50.0 6.2 36.0 31.0 14.5 18.0 29.0 8.5 22.0
80.0 26.5 17.0 0.0 10.3 54.0 6.1 35.5 68.0 16.7 20.0 31.0 9.8 24.0
86.0 29.5 19.0 0.0 11.4 60.0 7.4 36.5 83.0 18.0 22.0 35.0 10.7 26.5
6.7% 3.3% 9.1% 0.0% 6.4% 7.0% 9.6% 7.5% 6.1% 6.8% 6.4% 5.4% 6.0% 6.1%
100 100 100 0 0 0 100 0 100 100 100 100 100 100
8.8 14.0 8.1 8.1 8.0 11.6 6.8 12.0 12.5 8.8 8.7 11.3 8.5 15.0
8.5 12.8 6.9 6.1 7.2 10.5 5.6 10.3 10.2 8.3 8.1 10.0 7.8 13.6
0.8 1.4 1.0 -0.7 0.9 1.3 3.1 1.5 0.5 1.6 1.0 0.7 0.9 1.5
0.68 1.18 0.68 0.68 0.67 0.98 0.57 1.02 1.05 0.74 0.73 0.95 0.72 1.26
0.72 1.20 0.65 0.57 0.68 0.98 0.53 0.97 0.96 0.78 0.76 0.94 0.73 1.28
6.6 9.6 7.9 9.3 5.7 8.1 5.0 6.9 8.9 6.5 4.1 10.2 5.6 8.7
5.9 8.6 6.4 6.6 5.1 6.7 4.5 5.4 6.7 6.4 3.6 8.4 5.1 8.0
1.4 4.2 1.7 11.5 10.5 4.4 2.1 4.4 1.7 25.9 2.3 152.9
11.7% 29.9% 13.0% 5.2% 15.2% 83.1% 7.2% 4.9% 39.1% 18.2% 12.2% 18.5% 23.3% 60.7%
4.0 0.7 3.1 3.3 0.5 0.1 1.2 2.0 0.8 1.1 0.2 2.2 0.1 1.7
107.5% -28.6% 95.3% 41.3% 12.7% 17.4% 16.8% -16.4% 61.9% 32.3% 4.9% 59.1% -4.0% -153.5%
Josephine Little Matthew Nicholas Josephine Little Daniel Broeren Josephine Little Josephine Little Julian Guido Julian Guido Julian Guido Scott Murdoch Belinda Moore Josephine Little Scott Murdoch Belinda Moore
Telecommunication Services
AMM BGL CNU HTA IIN MAQ
SGT TEL.NZ
TPM
Amcom BigAir Group Chorus Hutchison Telecom (Aus iiNet Macq Telecom SingTel Telecom Corp TPG Telecom
204 48 1,197 746 455 168 48,551 4,061 1,094
Jun 11 Jun 11 Jun 11 Dec 10 Jun 11 Jun 11 Mar 11 Jun 11 Jul 11
0.86 0.32 3.11 0.05 2.98 8.00 3.05 2.11 1.38
1.09 0.38 3.60 0.13 3.50 10.00 3.16 1.86 1.48
1.09 0.38 3.10 0.13 3.50 12.50 2.48 1.36 1.48
27% 18% 16% 160% 17% 25% 4% -12% 7%
Buy Buy Buy Buy Buy Buy Hold Sell Hold
6% 3% 0% -17% 4% 13% -1% 2% 4%
2% -1% -4% -21% 0% 9% -5% -2% 0%
21.6 1.5 194.7 41.5 38.0 17.7 3,024.8 186.0 78.2
16.4 4.1 189.5 -90.6 45.8 15.0 2,962.8 206.5 110.0
21.2 6.3 190.2 28.0 63.8 16.6 3,193.8 213.1 124.5
0.8 1.3 1.0 0.0 1.2 1.2 1.0 1.1 0.8
9.0 1.2 50.6 0.3 25.0 84.5 19.0 9.7 10.1
6.8 2.7 49.2 -0.7 29.2 71.8 18.6 10.7 13.8
8.8 4.1 49.4 0.2 39.6 79.6 20.0 11.1 15.5
4.8% -216.7% 7.6% -18.7% -0.3% -30.9% -0.2%
-25% 119% -3% -318% 17% -15% -2% 11% 37%
29% 54% 0% 36% 11% 8% 3% 12%
5% 58% -1% 37% 20% 3% 4% 7% 19%
4.8 0.0 0.0 0.0 12.0 22.0 0.0 4.5
3.4 0.7 14.6 0.0 16.0 19.0 12.7 7.0
4.4 1.4 25.0 0.0 20.0 21.0 13.1 8.0
4.0% 2.3% 4.7% 0.0% 5.4% 2.4% 5.2% 6.0% 5.1%
0 1 0 0 0 100 0 100 100
12.6 11.9 4.9 10.2 11.1 13.2 15.3 9.9
9.7 7.8 4.9 50.9 7.5 10.0 12.4 14.9 8.9
2.7 0.2 -3.8 0.5 3.6 3.2 2.2 0.5
1.06 1.01 0.42 0.86 0.94 1.11 1.29 0.84
0.92 0.73 0.46 2.25 0.71 0.94 1.17 1.40 0.83
8.9 7.9 8.1 -570.7 8.5 7.1 10.1 10.9 7.3
6.3 4.9 4.2 -570.7 5.0 3.8 7.3 4.5 4.9
2.7 4.1 9.6 1.0 2.1 3.3 5.9 26.8
11.7% 17.9% 104.0% -6.4% 17.8% 18.1% 15.0% 15.4% 20.1%
0.3 0.4 2.5 n.a. 1.6 0.7 0.9 0.7 0.7
8.4% -16.2% 689.1% -0.3% 81.6% -27.5% 18.3% 49.1% 29.6%
Alan Stuart Nick Harris Alan Stuart Alan Stuart Alan Stuart Nick Harris Ian Martin Alan Stuart Nick Harris
Transportation
MRM RCR REX VAH Mermaid Marine Aust RCR Tomlinson Regional Express Virgin Australia 575 211 124 674 Jun 11 Jun 11 Jun 11 Jun 11 2.93 1.60 1.13 0.31 3.66 2.13 1.26 0.41 3.66 2.13 1.58 0.40 25% 33% 12% 33% Buy Buy Buy Buy 3% 1% 8% 11% -1% -4% 3% 7% 43.2 19.5 17.4 -48.1 53.0 21.2 21.7 60.2 58.3 25.8 24.0 102.6 1.3 0.4 1.2 1.4 20.8 14.8 15.7 -2.2 23.6 16.0 19.7 2.7 25.6 19.5 21.9 4.6 0.7% 8.7% 0.9% 1.0% 13% 8% 26% 8% 22% 11% 71%
11% 14% 16% 47%
9.0 4.0 7.1 0.0
10.0 5.0 7.6 0.0
11.0 6.0 8.6 0.0
3.4% 3.1% 6.8% 0.0%
0 100 100 0
12.4 10.0 5.7 11.3
11.4 8.2 5.1 6.6
1.2 0.7 0.4 0.2
1.05 0.84 0.48 0.95
1.08 0.77 0.48 0.62
8.7 7.1 3.8 11.7
6.8 4.7 2.6 4.3
2.2 1.5 0.8 0.7
18.5% 9.8% 12.9% 6.3%
1.3 0.1 0.1 2.6
46.5% 1.0% -1.8% 99.6%
Alexandra Clarke Alexandra Clarke Michael Newbold, CFA Mark Williams
Utilities
CIF ENV EPW GDY HDF SPN Challenger Infrastructure Envestra ERM Power Geodynamics Hastings Diversified SP AusNet 359 1,087 254 47 1,041 2,669 Jun 11 Jun 11 Jun 11 Jun 10 Dec 10 Mar 11 1.13 0.76 1.55 0.16 2.00 0.95 1.35 0.80 2.00 1.48 2.12 1.00 1.35 0.80 2.23 1.74 2.12 1.15 19% 5% 29% 823% 6% 5% Buy Buy Buy Buy Buy Hold 1% 7% 0% 0% -2% 1% -3% 3% -4% -4% -7% -3% -0.8 47.2 2.0 -14.8 39.9 252.9 11.0 63.0 31.5 -50.9 39.7 233.5 22.3 69.7 37.2 -52.8 26.8 245.0 1.6 1.4 6.6 0.4 1.5 0.9 -0.3 3.3 1.5 -5.1 7.9 9.0 3.5 4.1 19.3 -13.8 7.7 8.3 7.0 4.3 22.6 -11.9 5.1 8.5 3.3% 0.3% -2.1% 9.9% -3.1% 25% 1214% -63% -3% -9% 102% 4% 17% 16% -33% 3%
13% -21% 0%
14.0 5.8 3.5 0.0 12.0 8.0
10.0 5.9 7.7 0.0 10.0 8.0
10.0 6.1 8.1 0.0 10.0 8.0
8.8% 7.8% 5.0% 0.0% 5.0% 8.4%
0 0 0 0 0 0
32.7 18.3 8.0 26.0 11.6
16.2 17.7 6.9 39.1 11.3
1.4 -1.3 -57.3
2.76 1.55 0.68 2.02 0.97
1.52 1.66 0.64 3.30 1.06
15.4 11.4 4.7 26.6 11.7
9.5 9.4 4.0 20.1 8.1
23.0 1.5 0.2 1.9 10.6
3.6% 10.5% 19.2% -18.1% 7.1% 39.6%
7.3 6.1 1.1 n.a. 9.6 5.1
268.8% 299.1% 56.4% -18.4% 169.9% 159.3%
William Allott William Allott Jason Mabee, CFA Roger Leaning William Allott William Allott
Page 88

23 January 2012
Actual
Fcst 1
Fcst 2
Actual
Fcst 1
Fcst 2
Fcst 1
Fcst 2
Fcst 1
Fcst 1
Aluminium & Steel

GBG Gindalbie Metals 780 Jun 11 0.63 0.71 0.71 13% Buy 21% 17% -5.3 11.0 80.7 0.5 -0.6 0.9 6.5 -41.4% 636%
-
0.0
0.0
0.0
0.0%
100
71.2
9.7
6.00
0.91
50.8
38.1
1.1
1.7%
15.5
74.5% Todd Scott
Energy
AZT ERA GCL HZN IFN LNC MAD NCR NHC NXS SMR SXY Aston Energy Resource Gloucester Coa Horizon Oil Infigen Energy Linc Energy Maverick Drilling NuCoal New Hope Corp Nexus Energy Stanmore Coal Senex Energy 2,057 735 1,715 243 206 710 131 176 4,716 299 100 737 Jun 11 Dec 10 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Jul 11 Jun 11 Jun 11 Jun 11 9.58 1.42 8.45 0.22 0.27 1.41 0.35 0.27 5.68 0.22 0.76 0.81 11.85 0.96 9.47 0.33 0.80 2.05 0.36 0.65 5.87 0.12 2.03 0.96 11.85 0.96 9.47 0.33 0.80 2.05 0.89 0.65 5.87 0.60 2.03 0.96 24% -32% 12% 51% 196% 45% 3% 139% 3% -45% 167% 18% Buy Sell Buy Buy Buy Buy Buy Buy Buy Hold Buy Buy 5% 15% -2% 10% 0% 28% 59% 0% 3% 10% 3% 29% 1% 11% -6% 6% -4% 24% 55% -4% -1% 6% -1% 24% -11.1 52.8 54.6 16.4 -26.0 -204.0 1.7 -3.4 133.4 26.1 -2.0 0.7 -11.7 -32.2 55.1 24.2 -42.7 -41.0 14.7 -6.0 209.4 -18.7 -4.3 24.9 -5.8 -100.9 82.0 40.6 -24.4 0.9 25.8 -7.1 194.7 -2.8 -5.6 31.8 12.3 0.5 0.9 1.6 0.6 0.7 0.1 0.9 0.4 0.4 1.0 3.7 -5.1 27.7 26.9 1.4 -3.4 -41.1 0.6 -0.5 16.1 2.0 -1.5 0.1 -5.4 -6.2 26.8 2.0 -5.6 -8.1 3.9 -0.9 25.2 -1.4 -3.3 2.7 -2.7 -19.5 39.9 3.4 -3.2 0.2 6.9 -1.1 23.4 -0.2 -4.3 3.5 -76.5% -125.6% -13.9% -6.7% -91.4% -0.1% 1.5% -5% -123% 0% 41% -39% 404% 551% -44% 57% -172% -54% 2883% 102% -68% 49% 68% 75% 75% -15% -7% 575% -22% 28%
90% 45% 79% -42% 12% -19% -
0.0 8.0 0.0 0.0 1.0 0.0 0.0 0.0 25.3 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 12.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 11.0 0.0 0.0 0.0
0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 2.1% 0.0% 0.0% 0.0%
0 100 0 0 0 100 0 0 100 0 0 0
31.5 10.9 9.2 22.5 29.5
21.2 6.0 4.9 24.2 23.1
0.7 0.1 1.9 -
2.66 0.92 0.77 1.90 2.49
1.99 0.57 75.82 0.46 2.28 2.17
-181.4 -2.4 15.6 10.1 28.0 -24.2 7.0 -28.3 15.6 -64.0 -10.4 27.4
-181.4 9.5 6.9 6.7 -37.6 6.3 -28.3 12.9 7.3 -10.4 17.3
3.3 0.7 1.6 1.5 0.7 1.3 4.1 5.4 2.1 0.5 1.7 4.0
-1.8% -2.8% 5.3% 14.9% -6.9% -6.2% 49.8% -16.8% 9.0% -3.0% -9.7% 14.7%
n.a. 6.7 0.0 1.1 5.4 n.a. 0.2 n.a. 6.6 1.8 n.a. 1.3
-35.6% -50.4% -0.2% 26.9% 144.6% 16.6% 12.4% -17.4% -67.4% 15.6% -48.0% -28.9%
Tom Sartor Lyndon Fagan Tom Sartor Krista Walter William Allott Jason Mabee, CFA Krista Walter Tom Sartor Tom Sartor Krista Walter Tom Sartor Krista Walter
Diversified Metals & Mining

ALK AQA GRR GRY IRD IGO IMD MDL OMH Alkane Resources Aquila Grange Resources Gryphon Minerals Iron Road Independence Gp Imdex Mineral Deposits OM Holdings 277 2,582 669 501 78 782 419 455 202 Dec 10 Jun 11 Dec 10 Jun 11 Jun 11 Jun 11 Jun 11 Jun 11 Dec 10 1.03 6.27 0.58 1.36 0.55 3.96 2.10 5.45 0.40 1.92 4.61 0.67 2.22 0.70 5.92 2.83 8.00 0.36 1.92 4.61 0.67 2.22 0.70 5.92 2.83 9.40 0.36 87% -27% 15% 63% 28% 49% 35% 47% -10% Buy Sell Buy Buy Hold Buy Buy Buy Sell 14% 7% 4% 19% 0% 5% 14% 7% 25% 10% 3% -1% 15% -4% 1% 9% 3% 21% 7.8 -63.5 33.9 -10.6 -17.5 30.3 31.0 39.0 47.2 -5.4 -29.2 70.9 -2.8 -17.2 28.9 47.0 20.3 -13.2 -9.9 -158.5 107.3 13.5 -17.1 38.6 54.1 21.4 16.2 1.0 1.4 1.8 2.4 0.9 1.0 0.8 0.4 0.4 2.9 -15.4 3.0 -3.1 -13.6 18.7 15.6 46.7 9.4 -2.0 -7.1 6.1 -0.7 -12.2 14.3 23.1 24.3 -2.6 -3.7 -38.5 9.3 3.5 -12.1 19.0 26.5 25.6 3.2 -164.0% 7.6% -34.4% 11.3% -43.8% -169% 118% 108% 337% 11% -24% 48% -48% -128% -45% -82% 51% 1% 33% 15% 5% 34% 41% 23% 7% -19%
0.0 0.0 0.0 0.0 0.0 7.0 4.5 0.0 2.8
0.0 0.0 4.0 0.0 0.0 5.0 5.5 0.0 0.8
0.0 0.0 3.0 0.0 0.0 0.0 6.5 0.0 0.4
0.0% 0.0% 6.9% 0.0% 0.0% 1.3% 2.6% 0.0% 1.9%
0 0 0 0 0 0 100 0 0
9.4 27.8 9.1 23.2 -
6.2 38.6 20.8 7.9 20.5 12.4
0.3 0.7 0.4 3.2 -
0.73 2.34 0.82 1.95 -
0.53 3.63 1.96 0.78 1.92 1.05
-31.1 957.0 4.8 369.3 -5.5 21.3 6.5 10.2 -36.9
-31.1 309.3 3.5 342.5 -5.5 11.9 5.7 9.0 61.8
4.7 -10.3% 7.9 -8.4% 1.0 11.4% 2.9 -1.8% 16.7 ####### 1.4 4.2% 4.0 31.1% 1.2 5.4% 0.9 -4.9%
n.a. 5.7 1.2 20.1 n.a. 0.5 0.3 4.1 23.6
-32.7% 14.8% -24.7% -15.3% 218.3% -5.4% 13.9% -37.0% 56.4%
Sam Berridge Sam Berridge Todd Scott James Wilson Todd Scott Sam Berridge Matthew Nicholas Chris Brown Todd Scott
Gold & Precious Metals

AMX EVN IAU IGR KCN KGL MML OGC PRU RRL SAR Ampella Mining Evolution Mining Intrepid Mines Integra Mining Kingsgate Kentor Gold Medusa Mining OceanaGold Perseus Mining Regis Resources Saracen Minera 384 1,157 666 510 914 133 1,022 638 1,205 1,632 530 Jun 11 Jun 11 Dec 10 Jun 11 Jun 11 Dec 10 Jun 11 Dec 10 Jun 11 Jun 11 Jun 11 1.77 1.65 1.28 0.61 6.75 0.13 5.42 2.31 2.83 3.76 0.86 2.84 2.02 1.62 0.77 7.37 0.22 7.46 3.00 3.37 2.89 1.07 2.84 2.02 2.70 0.77 7.37 0.24 7.46 3.00 2.93 2.51 1.07 60% 23% 26% 26% 9% 69% 38% 30% 19% -23% 24% Buy Buy Buy Buy Buy Buy Buy Buy Hold Hold Buy 19% 10% 17% 13% 18% 8% 22% 11% 18% 11% 15% 15% 6% 13% 9% 14% 4% 18% 6% 14% 7% 11% -24.0 2.9 5.3 41.1 32.0 0.1 112.5 32.5 -30.0 36.3 47.7 -13.6 177.8 -6.0 47.8 158.6 -2.0 126.6 44.5 132.9 52.9 66.2 -13.6 129.3 -10.3 38.1 192.9 16.2 111.1 51.3 114.7 193.5 73.8 0.8 0.2 0.1 0.4 0.4 1.0 0.8 0.5 0.6 0.9 0.7 -11.9 0.5 1.0 4.9 23.6 0.0 59.9 12.4 -7.1 8.4 9.2 -6.5 25.4 -1.1 5.7 117.2 -0.3 67.4 17.0 31.2 12.2 12.1 -5.7 18.4 -2.0 4.5 142.5 2.8 59.1 19.6 27.0 44.6 13.0 82% -10.8% 5069% - -211% 11.9% 16% 0.3% 396% -43.9% -4070% 1.5% 13% -13.5% 37% -4.8% -1.0% 46% -0.6% 32% 14% -27% -42% -20% 22% -12% 15% -14% 266% 8%
-11% -22% 75% 8% 25% 83% 80% 16%
0.0 0.0 0.0 0.0 15.0 0.0 10.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 27.0 0.0 10.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 56.0 0.0 10.0 0.0 0.0 20.0 0.0
0.0% 0.0% 0.0% 0.0% 4.0% 0.0% 1.8% 0.0% 0.0% 0.0% 0.0%
0 0 0 0 0 0 0 0 0 0 0
6.5 10.7 5.8 8.3 13.9 9.1 30.9 7.1
8.9 13.4 4.7 4.4 8.8 11.9 10.5 8.4 6.6
-0.5 0.1 1.0 0.5 0.1 0.4 0.4
0.55 0.90 0.49 0.70 1.08 0.76 2.60 0.60
0.84 1.26 0.44 0.37 0.83 1.00 0.99 0.79 0.62
-16.4 3.8 -61.5 6.3 4.5 -59.6 7.7 8.6 6.9 29.6 4.8
-16.4 3.1 -99.3 4.9 3.6 -59.6 6.7 4.2 6.1 20.7 4.6
6.9 2.4 3.8 2.4 1.4 2.2 2.8 4.3 3.2 12.3 2.5
-31.5% 47.2% -3.2% 25.3% 24.9% -5.9% 39.2% 7.8% 45.2% 38.7% 41.7%
n.a. 0.9 n.a. 0.9 0.1 n.a. 0.6 0.2 0.6 0.2 0.9
-104.2% -46.0% -83.9% -36.7% -5.1% -31.7% -24.2% 7.9% -30.8% 14.4% -43.2%
James Wilson Chris Brown Chris Brown James Wilson Sam Berridge Chris Brown Phillip Chippindale Phillip Chippindale Sam Berridge Sam Berridge James Wilson
Miscellaneous Metals & Mining

DML FND HSK MBN MGX PSH TXN Discovery Finders Resources Heemskirk Mirabela Nicke Mount Gibson Iron Penrice Soda Texon
Exchange rate (A$/US$)
706 98 19 598 1,539 10 147
Jun 11 Dec 10 Sep 10 Dec 10 Jun 11 Jun 11 Dec 10
1.62 0.35 0.12 1.22 1.43 0.11 0.61
1.43 0.67 0.16 2.03 1.77 0.13 1.28

Copper LME (US$/lb)
1.68 0.67 0.16 2.18 1.77 0.13 1.28
-12% 92% 36% 66% 24% 22% 111%
Buy Buy Hold Buy Buy Sell Buy
24% 0% -14% 9% 28% 0% 9%

Nickel LME (US$/lb) 8.79 9.89 10.87 10.37 8.94 9.59 10.90 11.80 8.50
20% -4% -18% 5% 24% -4% 5%
-2.5 -7.4 -5.4 -51.7 233.8 -26.1 2.1
-26.0 -7.9 -3.4 -66.2 410.9 0.5 9.6
65.9 59.3 5.0 33.8 384.0 1.8 17.4
3.9 1.0 2.6 7.1 0.8 0.3 1.8
-0.6 -2.6 -3.5 -10.5 21.7 -28.6 1.2
-5.9 -2.7 -2.2 -13.5 38.2 0.6 3.7
14.9 20.4 3.2 6.9 35.7 2.0 6.6
-15.3% 8.1% -7.6% -
-90% -3% 59% -22% 76% 212%
-7% 231% 82%
6% 12% 4% -53% 75%
0.0 0.0 0.0 0.0 4.0 0.0 0.0
0.0 0.0 0.0 0.0 4.0 0.0 0.0
0.0 0.0 1.0 0.0 4.0 0.0 0.0
0.0% 0.0% 0.0% 0.0% 2.8% 0.0% 0.0%
0 0 100 0 0 0 0
3.7 18.3 16.5
10.9 1.7 3.7 17.8 4.0 5.5 9.1
0.8 -0.3 0.2
0.32 1.54 1.28
1.02 0.14 0.32 1.50 0.38 0.52 0.77
-38.5 -16.4 31.1 -55.0 1.7 8.3 8.2
-38.5 -16.4 6.2 28.7 1.5 4.4 6.1
4.0 1.2 0.6 1.0 1.0 0.2 2.5
-13.6% -8.7% -11.9% -10.9% 30.0% 0.8% 20.2% -
n.a. n.a. 2.5 9.8 1.0 3.9 2.0
-35.2% -9.1% 39.1% 53.0% -38.3% 110.7% -59.1%
Chris Brown Chris Brown Chris Brown Tom Sartor Lyndon Fagan Alexandra Clarke Krista Walter
Gold Oil WTI (US$/oz) (US$/bbl) 1092 1223 1370 1571 1709 1750 1713 1625 1100 77.2 82.6 93.2 93.6 87.0 91.0 94.3 96.0 90.0
Zinc Aluminium LME LME (US$/lb) (US$/lb) 0.91 0.99 1.08 1.06 0.97 1.06 1.16 1.25 1.15 0.94 0.98 1.02 0.99 0.91 0.95 1.08 1.20 1.00
Coal coking steaming (US$/t) (US$/t) 146.0 190.5 247.3 286.3 258.8 221.3 227.5 235.0 180.0 76.3 90.0 108.3 118.7 114.9 113.8 112.5 107.5 100.0
Iron ore lump fines (US$/t) (US$/t) 86.4 138.5 176.0 138.5 162.3 138.5 150.4 138.5 95.4 73.7 118.1 154.1 163.0 147.1 131.0 136.3 135.1 84.8
FY10 CY10 FY11 CY11 FY12 CY12 FY13 CY13 LT (2015+)
0.88 0.92 0.99 1.03 1.02 1.04 1.09 1.09 0.80
3.03 3.42 3.93 4.00 3.68 3.80 4.05 4.20 3.00
Source: Company data, RBS forecasts, RBS Morgans forecasts. * Share prices as at close of trading on 23 January 2012. 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. * Earnings Quality: Net Operating Cash Flow/(Net Profit + Depreciation & Amortisation)
Page 89
Page 90
S&P/ASX 200 - Sector Aggregations (RBS)

Prices updated: 20 January 2012
PE (x) Sector 200 CONS DISCRET 200 ENERGY 200 HEALTHCARE 200 INFO TECHNOL 200 MATERIALS 200 INDUSTRIALS 200 PROPERTY 200 CONS STAP 200 TELECOMS 200 UTILITIES 200 FIN EX PROP S&P/ASX 200 2010 14.7 25.4 15.8 15.4 16.3 21.1 11.2 17.3 11.6 16.2 11.3 14.3 2011 14.0 24.5 15.8 15.1 11.2 22.0 12.9 15.8 12.9 15.0 10.8 12.8 2012 12.4 21.3 15.2 15.1 10.9 15.4 11.8 14.2 12.5 15.5 10.0 11.8 2013 11.5 18.9 13.7 12.6 9.3 12.8 11.1 12.5 11.9 15.0 9.3 10.6 2014 10.5 16.1 12.0 11.3 8.5 11.2 10.9 11.3 11.2 14.1 8.7 9.8 2010 7.8 3.3 11.9 13.0 45.1 31.6 -19.7 9.2 3.5 4.1 17.8 18.2 EPS growth (%)* 2011 4.7 6.8 -5.0 1.9 49.2 -4.3 -12.7 9.5 -9.5 7.6 4.8 13.4 2012 10.9 14.0 4.1 0.1 3.4 41.7 8.5 10.7 3.5 -1.6 8.5 8.1 PCF (x) 2013 3.4 3.1 3.7 4.7 3.0 5.1 6.3 6.2 6.8 6.7 7.8 5.3 2014 3.8 3.2 4.1 5.2 3.2 5.7 6.8 6.9 7.0 7.0 8.1 5.7 2010 9.9 14.3 11.8 12.2 7.1 7.6 12.2 10.1 6.5 9.9 na 8.3 2011 9.6 16.0 12.0 14.5 4.9 8.4 14.1 10.6 6.6 9.0 na 7.1 2012 9.0 12.7 13.1 12.9 5.2 7.8 13.4 9.2 6.5 9.0 na 7.1 ROE (%) 2013 1.4 1.7 2.3 3.7 1.8 1.5 0.9 1.9 2.3 1.4 1.4 1.6 2014 1.3 1.6 2.1 3.3 1.5 1.4 0.8 1.8 2.2 1.4 1.3 1.5 2010 11.8 8.2 16.7 35.3 21.7 9.1 8.6 12.4 22.5 9.4 14.5 15.5 2011 11.4 7.9 16.5 31.1 25.1 7.4 8.9 13.2 19.3 9.7 14.5 16.2 2012 12.1 8.6 16.7 28.0 21.2 10.4 9.1 14.2 19.5 9.3 14.8 15.7 ROA (%) 2014 9.5 22.5 9.9 24.8 6.2 31.5 31.4 22.0 25.3 51.3 na 17.2 2010 6.8 4.7 10.5 32.1 12.8 4.9 5.5 7.8 11.7 5.7 3.9 8.9 2011 6.9 4.7 10.7 32.8 15.1 4.2 5.1 8.0 10.9 5.9 4.6 9.6 2012 7.3 4.9 10.9 32.6 13.1 5.4 5.6 8.2 10.5 5.7 4.4 9.2 2013 7.5 4.9 11.3 32.2 13.5 6.1 5.8 8.8 10.6 5.8 4.7 9.6 2014 7.8 5.8 11.9 31.7 12.8 6.7 5.9 9.4 10.9 6.1 5.2 9.7 2013 12.3 9.2 17.7 30.5 21.1 11.9 8.9 15.4 19.7 9.4 15.1 16.2 2014 13.1 10.7 18.5 30.6 18.2 14.0 8.1 16.4 19.9 10.4 15.2 16.0 2013 8.6 11.1 11.0 11.1 4.3 6.3 12.2 8.9 6.4 8.7 na 6.2 2014 7.4 9.6 10.1 10.1 4.3 5.6 11.7 8.1 6.3 7.6 na 5.9 2013 7.9 12.4 10.8 20.0 17.5 20.0 6.0 13.1 4.7 3.8 7.3 11.3 2014 9.7 16.7 14.1 11.7 9.1 14.6 1.9 10.6 6.2 6.9 6.3 8.6
Dividend yield (%) Sector 200 CONS DISCRET 200 ENERGY 200 HEALTHCARE 200 INFO TECHNOL 200 MATERIALS 200 INDUSTRIALS 200 PROPERTY 200 CONS STAP 200 TELECOMS 200 UTILITIES 200 FIN EX PROP S&P/ASX 200 2010 2.9 2.4 3.1 3.7 2.0 3.5 7.2 4.5 6.3 6.7 6.3 4.2 2011 3.1 2.4 2.9 3.9 2.2 3.4 5.7 5.1 6.4 6.5 6.8 4.5 2012 3.4 2.7 3.3 4.2 2.6 4.3 6.0 5.7 6.6 6.5 7.3 4.9 PB (x) Sector 200 CONS DISCRET 200 ENERGY 200 HEALTHCARE 200 INFO TECHNOL 200 MATERIALS 200 INDUSTRIALS 200 PROPERTY 200 CONS STAP 200 TELECOMS 200 UTILITIES 200 FIN EX PROP S&P/ASX 200 2010 1.7 2.0 2.6 5.1 2.9 1.6 1.2 2.1 2.5 1.4 1.6 2.1 2011 1.5 1.8 2.6 4.4 2.4 1.6 1.1 2.1 2.5 1.4 1.5 1.9 2012 1.5 1.8 2.5 4.1 2.1 1.6 1.0 2.0 2.4 1.4 1.4 1.8
Gearing - net debt/(net debt+equity) (%) Sector 200 CONS DISCRET 200 ENERGY 200 HEALTHCARE 200 INFO TECHNOL 200 MATERIALS 200 INDUSTRIALS 200 PROPERTY 200 CONS STAP 200 TELECOMS 200 UTILITIES 200 FIN EX PROP S&P/ASX 200 2010 20.5 10.5 18.1 29.1 9.1 31.2 37.5 22.7 37.0 51.4 na 21.9 2011 19.9 14.8 18.1 25.2 12.5 31.9 38.2 22.5 35.4 49.6 na 22.5 2012 21.2 19.9 19.7 39.6 18.3 33.2 35.9 23.6 32.3 50.9 na 24.7 EV/EBIT (x) Sector 200 CONS DISCRET 200 ENERGY 200 HEALTHCARE 200 INFO TECHNOL 200 MATERIALS 200 INDUSTRIALS 200 PROPERTY 200 CONS STAP 200 TELECOMS 200 UTILITIES 200 FIN EX PROP S&P/ASX 200 2010 10.3 20.7 13.1 12.7 10.3 14.8 13.5 11.6 9.4 12.9 9.1 11.3 2011 10.0 16.9 13.2 11.0 8.0 15.8 18.1 10.8 10.1 12.8 7.8 9.9 2012 9.1 15.0 12.7 9.4 7.8 12.0 15.5 10.1 9.6 12.0 8.1 9.3 2013 8.4 13.2 11.5 8.3 6.3 10.2 14.3 9.0 9.1 11.6 7.4 8.0 2014 6.8 10.0 10.1 7.3 5.9 8.5 12.9 8.1 8.5 10.7 6.3 7.2 2010 7.7 14.1 11.0 12.1 8.3 8.3 13.5 9.2 6.2 10.1 8.6 8.5 2013 16.7 21.7 15.8 32.7 12.1 33.0 34.2 23.3 29.0 51.7 na 21.3
EV/EBITDA (x) 2011 7.5 11.9 10.9 10.5 6.6 8.5 18.1 8.6 6.2 9.9 7.4 7.6 2012 6.9 10.7 10.4 9.0 6.4 7.1 15.4 8.0 6.0 9.3 7.4 7.1 2013 6.3 9.5 9.5 7.9 5.2 6.2 14.3 7.2 5.8 9.1 6.8 6.2 2014 5.2 7.4 8.4 7.1 4.9 5.4 12.9 6.5 5.6 8.5 5.8 5.6
Source: Company data, RBS forecasts * When comparing to consensus (IBES), RBS forecasts include BHP and RIO, but only a limited number of property stocks
Page 91
S&P/ASX 200 - Sector Aggregations (IBES)

PE (x) Sector 200 CONS DISCRET 200 ENERGY 200 HEALTHCARE 200 INFO TECHNOL 200 MATERIALS 200 INDUSTRIALS 200 PROPERTY 200 CONS STAP 200 TELECOMS 200 UTILITIES 200 FIN EX PROP S&P/ASX 200 2010 11.9 28.4 18.6 16.0 18.4 22.0 12.3 17.1 10.7 18.0 11.4 14.6 2011 11.4 25.8 17.4 15.8 12.5 21.5 13.5 14.8 12.6 12.3 10.5 12.8 2012 12.1 21.3 17.5 18.5 11.5 15.2 13.5 14.4 11.8 16.2 9.8 12.0 EV/EBIT (x) Sector 200 CONS DISCRET 200 ENERGY 200 HEALTHCARE 200 INFO TECHNOL 200 MATERIALS 200 INDUSTRIALS 200 PROPERTY 200 CONS STAP 200 TELECOMS 200 UTILITIES 200 FIN EX PROP S&P/ASX 200 2010 6.5 19.9 13.3 12.1 6.2 14.4 15.3 11.1 5.4 12.9 na 8.6 2011 6.8 17.5 12.9 12.8 6.2 17.0 12.9 10.5 5.6 13.3 na 8.3 2012 8.0 13.4 13.4 11.8 6.8 11.7 13.0 10.3 8.6 12.0 na 8.6 2013 7.3 11.2 11.8 9.6 5.6 9.9 12.6 9.5 8.3 11.4 na 7.4 2014 6.5 9.9 10.5 8.3 5.4 8.7 12.6 8.9 8.0 10.8 na 7.0 2010 5.2 13.2 11.1 10.9 5.0 8.2 15.0 8.7 3.4 10.2 na 6.5 2013 11.4 17.6 15.4 15.5 9.4 12.9 12.8 13.3 11.3 15.3 9.1 10.6 2014 10.6 16.1 13.8 13.5 8.7 11.2 12.1 12.4 11.0 14.2 8.3 9.8 2010 5.2 -24.5 6.1 10.8 38.6 19.0 -21.5 -0.2 -5.5 -5.0 18.1 10.7 EPS growth (%) 2011 -1.4 9.9 6.7 1.2 47.5 -16.0 -9.4 8.4 -15.0 45.9 8.4 12.2 2012 -0.3 14.7 -0.7 -1.8 9.2 42.8 0.4 9.2 7.0 -24.1 7.4 8.2 2013 5.7 21.0 13.5 19.4 22.7 18.3 4.9 8.8 4.2 6.1 7.5 12.5 2014 8.4 9.2 11.6 14.9 9.2 14.8 5.7 6.8 2.7 7.6 9.0 8.9
EV/EBITDA (x) 2011 5.4 12.0 10.9 11.0 5.2 9.1 12.8 8.3 3.4 10.8 na 6.5 2012 6.5 9.4 11.0 10.4 5.7 7.0 12.9 8.2 5.4 9.4 na 6.7 2013 6.0 8.1 9.8 8.7 4.7 6.2 12.6 7.6 5.2 8.9 na 5.9 2014 5.4 7.2 8.7 7.6 4.4 5.6 12.5 7.1 5.1 8.5 na 5.5
Dividend yield (%) Sector 200 CONS DISCRET 200 ENERGY 200 HEALTHCARE 200 INFO TECHNOL 200 MATERIALS 200 INDUSTRIALS 200 PROPERTY 200 CONS STAP 200 TELECOMS 200 UTILITIES 200 FIN EX PROP S&P/ASX 200 2010 4.8 2.3 3.2 3.8 2.2 3.4 6.3 3.1 8.3 5.9 6.6 4.6 2011 4.6 2.4 2.8 4.1 2.6 4.2 6.5 5.5 8.1 6.1 7.1 5.0 2012 4.8 2.8 3.1 4.6 3.0 4.9 6.8 5.9 8.2 6.3 7.5 5.4 ROA (%) Sector 200 CONS DISCRET 200 ENERGY 200 HEALTHCARE 200 INFO TECHNOL 200 MATERIALS 200 INDUSTRIALS 200 PROPERTY 200 CONS STAP 200 TELECOMS 200 UTILITIES 200 FIN EX PROP S&P/ASX 200
Source: IBES
Price to Book Value (x) 2013 5.1 2.9 3.5 5.2 3.3 5.6 7.1 6.4 8.4 6.5 8.1 5.9 2014 5.7 3.2 4.1 5.5 3.5 6.0 7.4 6.8 8.3 7.0 8.6 6.2 2010 0.93 2.19 2.80 4.57 1.76 1.69 0.97 2.17 3.24 1.35 1.64 1.67 2011 0.80 1.85 2.85 4.82 1.56 1.69 0.90 1.86 3.38 1.26 1.85 1.61 2012 0.93 1.69 2.80 4.19 1.29 1.54 0.87 1.76 1.37 1.19 1.69 1.44 ROE (%) 2013 12.1 8.7 20.2 30.6 20.1 10.7 5.7 12.2 14.5 7.2 3.1 10.6 2014 13.0 10.0 21.8 32.1 19.0 10.9 5.9 12.7 17.3 7.6 3.3 10.8 2010 10.6 7.4 17.2 30.5 20.3 7.7 7.4 13.6 55.5 7.7 14.6 14.6 2011 10.5 7.3 18.3 29.8 25.3 7.4 7.5 13.7 50.1 7.5 14.3 15.6 2012 11.0 8.4 16.0 28.2 22.3 10.6 7.3 13.5 21.7 8.0 14.3 14.9 2013 12.4 9.4 17.2 29.6 22.2 11.6 7.4 14.2 22.3 8.2 14.4 15.5 2014 12.6 10.1 17.7 30.3 19.9 12.8 7.4 14.5 22.3 8.9 14.6 15.2 2013 0.87 1.53 2.59 3.76 1.09 1.46 0.83 1.69 1.31 1.15 1.57 1.32 2014 0.81 1.44 2.37 3.32 0.94 1.40 0.79 1.61 1.27 1.06 1.46 1.20
2010 7.9 3.4 10.9 20.3 11.0 5.2 3.8 7.7 9.5 3.0 2.8 6.3
2011 7.8 4.7 15.5 20.7 16.7 5.2 5.0 8.3 8.4 3.8 2.7 7.9
2012 11.6 7.4 17.4 27.8 19.0 9.7 5.6 11.7 13.9 7.0 2.9 9.9
Page 92
Sector Aggregations (RBS)

PE (x) Sector Energy Energy Aluminium & Steel Chemicals Div Metals & Mining Gold, Precious Metals Packaging & Paper Materials Construction Other Capital Goods Services & Supplies Transportation Industrials Consumer Producers Consumer Services Media Consumer Discretionary Food Bev & Tobacco Retail Consumer Staples Healthcare Healthcare Banks Diversified Financials Insurance Financials ex Property Mgmnt & Development Property Property & Development IT Information Technology Telecommunications Telecommunications Utilities Utilities INDUSTRIAL ex Banks INDUSTRIAL SECTOR RESOURCE SECTOR S&P/ASX 100 SMALL ORDINARIES SMALL INDUSTRIALS SMALL RESOURCES MARKET AVERAGE
PE rel 2013 19.0 19.0 9.3 10.5 8.6 12.8 11.6 9.3 10.6 9.9 11.1 16.6 12.6 8.2 13.4 11.5 11.5 12.4 11.9 12.5 13.8 13.8 9.4 9.8 8.6 9.3 10.0 6.7 11.1 12.1 12.1 11.7 11.7 15.2 15.2 11.4 10.7 10.6 10.5 11.7 10.8 21.4 10.6 2014 16.1 16.1 7.3 9.7 8.3 10.5 10.1 8.5 9.3 8.9 10.1 13.5 11.0 7.9 12.1 10.5 10.5 11.8 10.7 11.3 11.5 11.5 8.9 8.9 8.1 8.7 9.5 5.5 10.9 10.8 10.8 11.0 11.0 13.8 13.8 10.2 9.8 9.8 9.7 10.1 9.8 12.4 9.8 2012 1.80 1.80 0.96 0.96 0.86 1.18 1.10 0.92 1.07 0.97 1.12 1.74 1.28 0.81 0.99 1.13 1.05 1.12 1.14 1.20 1.36 1.36 0.84 0.93 0.86 0.84 0.92 0.68 1.00 1.26 1.26 1.04 1.04 1.36 1.36 1.08 0.99 1.03 0.98 1.11 1.01 2.62 1.00 2013 1.78 1.78 0.87 0.98 0.81 1.20 1.09 0.87 0.99 0.93 1.04 1.56 1.19 0.77 1.26 1.08 1.08 1.17 1.12 1.18 1.30 1.30 0.89 0.92 0.81 0.87 0.94 0.63 1.05 1.14 1.14 1.10 1.10 1.43 1.43 1.07 1.00 0.99 0.99 1.10 1.02 2.01 1.00 2010 5.6 5.6 100.0 1.8 48.7 100.0 -18.2 45.5 19.2 16.8 -15.0 100.0 23.6 -0.5 -4.5 14.7 7.3 39.6 8.2 12.3 10.1 10.1 23.9 2.4 -4.6 17.8 -17.7 100.0 -19.7 13.4 13.4 4.1 4.1 -31.6 -31.6 5.5 11.6 41.1 19.5 3.7 1.0 100.0 17.4 2011 5.4 5.4 88.7 6.1 55.0 -10.1 32.1 48.8 -31.0 -41.2 7.6 46.8 -4.4 -7.8 -2.6 13.4 5.3 9.5 7.4 9.6 -6.9 -6.9 8.9 -3.3 -22.0 4.8 -5.6 -32.0 -12.7 -0.1 -0.1 -10.8 -10.8 39.7 39.7 1.1 4.0 43.8 14.0 9.7 9.0 35.7 13.2
EPS growth (%) 2012 15.5 15.5 8.8 14.6 -3.0 100.0 15.4 4.2 62.4 100.0 16.6 25.2 39.2 -23.9 6.8 19.3 10.8 3.1 8.9 10.9 7.2 7.2 5.5 1.2 46.8 8.6 4.7 -27.9 8.5 -0.8 -0.8 4.8 4.8 0.1 0.1 13.6 10.5 4.9 7.7 13.8 7.9 100.0 8.6 2013 12.6 12.6 22.8 8.4 17.3 9.5 12.4 16.9 19.7 15.8 19.8 24.2 19.9 17.3 -12.5 15.8 8.1 6.1 13.7 13.2 16.6 16.6 5.0 11.7 18.2 7.3 8.3 19.2 6.0 23.3 23.3 5.9 5.9 6.8 6.8 12.9 10.0 16.0 11.2 12.9 10.7 45.8 11.5 2014 17.3 17.3 28.4 8.4 4.4 22.0 14.9 9.3 14.1 11.1 9.7 22.2 14.6 3.5 11.4 9.7 9.8 5.1 11.0 10.6 19.9 19.9 5.7 10.1 6.0 6.3 5.7 22.1 1.9 11.7 11.7 6.9 6.9 10.6 10.6 11.5 9.4 7.7 8.1 15.3 10.4 72.3 8.9 2010 2.5 2.5 1.6 2.9 2.0 0.7 4.2 2.0 4.1 5.1 3.3 2.7 3.5 10.6 4.9 1.5 2.9 4.8 4.8 4.5 3.0 3.0 6.2 5.9 6.8 6.3 6.8 5.5 7.2 4.0 4.0 6.3 6.3 6.7 6.7 4.5 5.0 2.0 4.2 3.8 4.4 0.4 4.2
Dividend yield (%) 2011 2.5 2.5 2.2 3.4 2.2 0.5 5.0 2.2 3.4 3.7 3.4 3.2 3.4 9.9 5.5 1.6 3.2 5.3 5.3 5.1 2.9 2.9 6.9 6.2 6.1 6.8 5.7 11.0 5.7 4.2 4.2 6.3 6.3 6.5 6.5 4.5 5.3 2.1 4.5 4.1 4.7 0.3 4.4 2012 2.7 2.7 1.9 3.7 2.7 1.1 5.2 2.6 4.6 5.0 4.4 3.8 4.3 5.8 6.2 2.0 3.5 5.3 5.8 5.6 3.3 3.3 7.4 6.1 7.2 7.3 6.0 8.1 6.0 4.5 4.5 6.5 6.5 6.4 6.4 5.0 5.8 2.5 5.0 4.5 5.2 0.4 4.9 2013 2.9 2.9 2.7 4.1 2.9 1.6 5.7 2.9 5.1 5.7 5.1 4.6 5.0 6.3 5.0 2.3 3.5 5.5 6.4 6.2 3.6 3.6 7.8 6.7 8.0 7.8 6.5 9.7 6.3 5.1 5.1 6.8 6.8 6.7 6.7 5.5 6.2 2.8 5.3 5.0 5.7 1.0 5.3 2014 3.1 3.1 3.0 4.3 3.0 1.7 6.3 3.1 5.7 6.3 5.7 5.4 5.7 9.6 5.4 2.5 3.9 5.9 7.2 6.9 4.1 4.1 8.2 7.3 8.3 8.2 7.1 11.8 6.8 5.6 5.6 8.3 8.3 6.9 6.9 6.1 6.8 2.9 5.7 5.4 6.2 1.0 5.7
2010 25.6 25.6 22.3 13.8 15.4 27.1 19.8 16.4 14.4 12.7 16.8 37.5 20.3 6.6 12.5 18.5 14.8 15.0 15.8 17.3 16.7 16.7 11.4 10.8 11.8 11.3 10.8 3.9 11.2 14.9 14.9 11.7 11.7 22.5 22.5 14.8 13.6 17.6 14.2 16.2 14.2 88.9 14.5
2011 24.9 24.9 12.0 13.0 9.8 29.8 15.0 11.3 20.7 22.0 15.6 25.8 21.1 7.3 12.7 16.2 14.0 13.8 14.7 15.8 17.2 17.2 10.5 11.1 15.0 10.8 11.4 5.8 12.9 14.8 14.8 13.0 13.0 16.0 16.0 14.6 13.0 12.8 12.6 15.0 12.9 282.4 12.9
2012 21.4 21.4 11.4 11.3 10.1 14.0 13.0 10.9 12.7 11.5 13.3 20.6 15.1 9.6 11.7 13.4 12.4 13.3 13.5 14.2 16.1 16.1 9.9 11.0 10.2 10.0 10.9 8.0 11.8 14.9 14.9 12.4 12.4 16.1 16.1 12.9 11.8 12.2 11.7 13.2 12.0 31.1 11.9
Page 93
Sector Aggregations (RBS)

EV/EBIT (x) Sector Energy Energy Aluminium & Steel Chemicals Div Metals & Mining Forestry products Gold, Precious Metals Packaging & Paper Materials Construction Other Capital Goods Services & Supplies Transportation Industrials Consumer Producers Consumer Services Media Consumer Discretionary Food Bev & Tobacco Retail Consumer Staples Healthcare Healthcare Banks Diversified Financials Insurance Financials ex Property Mgmnt & Development Property Property & Development IT Information Technology Telecommunications Telecommunications Utilities Utilities INDUSTRIAL ex Banks INDUSTRIAL SECTOR RESOURCE SECTOR S&P/ASX 100 SMALL ORDINARIES SMALL INDUSTRIALS SMALL RESOURCES MARKET AVERAGE
EV/EBITDA (x) 2013 13.2 13.2 7.1 7.9 5.9 8.7 8.7 9.3 6.3 8.1 6.9 8.6 13.2 10.0 7.0 10.4 8.3 8.3 9.0 8.5 9.0 11.5 11.5 na 5.5 12.4 7.3 12.2 7.0 14.3 7.7 7.7 9.1 9.1 11.6 11.6 9.3 na 6.8 7.9 8.9 8.4 14.1 8.0 2014 10.1 10.1 6.1 7.0 5.7 0.0 7.4 8.3 5.9 7.1 6.1 7.8 10.6 8.4 6.2 6.8 7.1 6.8 8.5 7.7 8.1 9.7 9.7 na 5.5 11.5 6.2 10.8 5.0 12.9 6.8 6.8 8.5 8.5 10.7 10.7 8.3 na 6.3 7.2 7.4 7.5 5.8 7.2 2011 12.3 12.3 7.2 7.8 6.2 0.0 15.1 8.0 6.7 8.7 7.4 8.3 9.1 8.5 5.8 7.8 7.9 7.5 8.0 8.2 8.6 11.4 11.4 na 5.0 14.8 7.3 14.4 6.0 18.1 8.8 8.8 6.2 6.2 9.7 9.7 8.1 na 7.1 7.5 8.2 7.5 28.7 7.6 2012 10.7 10.7 7.2 7.2 6.1 0.0 8.0 7.3 6.4 6.3 5.1 7.0 8.5 7.1 6.4 7.4 7.0 6.9 7.4 7.7 8.0 10.7 10.7 na 5.0 13.8 7.2 12.9 7.3 15.4 7.8 7.8 6.0 6.0 9.1 9.1 7.5 na 6.8 7.1 7.2 6.9 11.1 7.1 2013 9.5 9.5 5.9 6.5 4.9 0.0 6.9 6.8 5.2 5.5 4.5 6.1 7.4 6.2 5.7 7.9 6.1 6.4 7.0 6.9 7.2 9.5 9.5 na 4.9 11.2 6.7 11.9 6.9 14.3 6.5 6.5 5.8 5.8 8.8 8.8 6.8 na 5.6 6.1 6.5 6.2 9.1 6.2 2014 7.4 7.4 4.4 5.8 4.7 0.0 6.1 6.1 4.9 4.9 4.1 5.5 6.3 5.4 5.0 5.8 5.3 5.3 6.6 6.3 6.5 8.1 8.1 na 4.8 10.4 5.8 10.6 4.9 12.9 5.9 5.9 5.6 5.6 8.4 8.4 6.1 na 5.1 5.6 5.7 5.8 3.9 5.6 2012 1.8 1.8 1.3 1.8 2.3 0.0 1.8 2.2 2.1 1.8 1.7 2.0 1.2 1.5 1.0 1.7 1.5 1.5 1.7 1.8 1.9 2.5 2.5 1.5 1.1 1.2 1.4 1.0 0.3 1.0 3.1 3.1 2.4 2.4 1.4 1.4 1.6 1.6 2.2 1.8 1.7 1.6 2.0 1.7
P/BV (x) 2013 1.7 1.7 1.1 1.7 1.9 0.0 1.6 2.1 1.8 1.7 1.6 1.9 1.2 1.5 0.9 1.6 1.4 1.4 1.6 1.7 1.8 2.3 2.3 1.5 1.0 1.1 1.4 0.9 0.3 0.9 2.9 2.9 2.2 2.2 1.3 1.3 1.5 1.5 1.8 1.6 1.6 1.5 1.8 1.6 2014 1.6 1.6 1.0 1.5 1.6 0.0 1.4 1.9 1.5 1.5 1.5 1.7 1.2 1.4 0.9 1.5 1.2 1.3 1.6 1.7 1.8 2.1 2.1 1.4 1.0 1.1 1.3 0.8 0.3 0.8 2.6 2.6 2.1 2.1 1.3 1.3 1.4 1.4 1.6 1.5 1.5 1.4 1.6 1.5 2012 8.5 8.5 11.9 16.1 24.6 2.8 13.8 17.5 21.2 14.6 15.8 16.5 6.0 10.5 10.0 14.6 11.4 12.1 13.5 13.7 13.8 15.5 15.5 16.2 9.9 11.4 14.8 9.6 4.2 9.1 21.7 21.7 19.3 19.3 8.5 8.5 12.6 13.7 20.0 15.9 13.3 14.2 6.6 15.7
ROE (%) 2013 9.1 9.1 13.0 16.7 23.8 3.3 13.1 18.6 21.0 16.1 16.8 18.1 7.2 12.0 11.3 12.2 12.4 12.4 13.5 15.0 15.0 17.2 17.2 16.0 10.6 13.2 15.1 9.6 4.9 8.9 24.9 24.9 19.7 19.7 9.0 9.0 13.5 14.3 19.8 16.4 14.1 14.9 8.8 16.1 2014 10.7 10.7 7.0 15.9 20.0 0.0 12.2 19.9 18.2 17.1 17.5 18.5 9.1 13.9 11.2 25.2 12.4 13.3 14.3 16.3 16.0 18.8 18.8 19.7 13.2 16.5 15.2 9.3 5.9 8.1 25.4 25.4 19.6 19.6 10.5 10.5 14.3 14.3 17.6 16.1 14.9 15.1 11.8 16.0 2012 5.0 5.0 9.1 10.0 14.8 0.0 11.2 7.7 13.1 7.4 8.1 8.8 3.5 5.4 6.1 8.7 6.8 7.4 7.8 8.1 8.0 9.9 9.9 0.0 6.4 7.7 4.4 5.2 3.7 5.6 12.6 12.6 10.4 10.4 5.2 5.2 7.3 7.3 12.1 9.4 7.8 8.1 5.4 9.1
ROA (%) 2013 5.0 5.0 9.8 10.3 15.1 0.0 10.6 8.3 13.5 8.4 8.9 9.7 4.0 6.1 6.9 7.5 7.4 7.6 8.0 8.7 8.6 10.8 10.8 0.0 6.0 7.9 4.7 5.4 4.1 5.8 14.4 14.4 10.6 10.6 5.4 5.4 7.8 7.8 12.3 9.8 8.3 8.5 6.5 9.6 2014 5.9 5.9 11.0 10.6 13.7 0.0 11.4 9.1 12.8 9.0 9.3 10.0 4.8 6.7 7.2 7.9 7.6 7.9 8.1 9.3 9.2 11.9 11.9 0.0 5.6 7.5 5.2 5.6 4.8 5.9 15.1 15.1 10.9 10.9 5.8 5.8 8.3 8.3 11.6 9.8 8.9 8.9 9.4 9.7
2011 17.5 17.5 9.1 9.6 7.3 0.0 21.9 12.2 8.0 16.1 14.2 12.3 17.8 15.4 7.0 9.9 11.2 10.0 10.2 10.2 10.8 13.9 13.9 na 5.5 16.1 7.8 14.7 6.0 18.1 10.6 10.6 10.1 10.1 13.0 13.0 11.5 na 8.6 9.7 11.9 10.6 131.1 10.0
2012 15.0 15.0 8.8 8.8 7.3 10.1 9.9 10.3 7.8 9.7 7.9 10.1 16.1 11.8 8.1 9.3 9.6 9.1 9.5 9.6 10.1 13.1 13.1 na 5.6 15.6 7.8 13.3 7.4 15.5 9.4 9.4 9.6 9.6 12.1 12.1 10.4 na 8.3 9.2 10.1 9.5 19.2 9.3
Page 94
Absolute performance to 23 Jan 12

Stock/sector Price last 23/1/12 11,488.9 $3.09 $1.34 $6.99 $2.72 $3.19 $37.24 $0.43 $4.00 $5.00 $0.63 $0.11 $18.62 $3.24 $3.96 $7.40 $0.35 $6.75 $1.28 $0.78 $1.43 $0.43 $32.20 $4.57 $0.40 $0.84 $25.00 $0.07 $0.09 $67.89 $14.78 $2.11 $0.42 $5.61 1Q 2012 +9.3 +7.3 +20.2 -2.6 +14.3 +17.7 +7.9 +4.9 +10.8 +17.4 +19.0 -16.0 +20.1 +5.5 +5.6 +8.2 +32.7 +18.2 +20.2 +16.5 +26.5 -1.1 +7.9 +11.7 +25.0 +20.0 +2.0 -15.9 -1.2 +12.6 +17.9 +9.3 +7.8 +10.0 % return over ... 4Q 3Q 2011 2011 -3.1 +9.1 -24.7 +3.6 -19.9 -4.9 -1.5 -44.5 +3.1 -3.6 +9.4 -16.7 +23.9 -6.1 -13.2 +19.0 -35.0 -20.5 -2.3 -4.3 -15.7 +29.9 -12.4 -4.4 -46.2 -43.5 +4.3 +12.3 -46.3 -2.4 +1.1 -5.9 -10.5 +18.1 -19.3 -14.6 -29.9 -3.8 -36.8 -23.6 -20.0 -39.4 -20.5 -30.4 -40.9 -44.4 -25.4 -15.3 -23.3 -1.9 -29.8 -10.3 -44.9 -23.2 -27.2 -56.2 -9.6 -4.7 -35.3 -33.0 -12.8 -54.4 -59.0 -25.5 -29.7 +4.9 +26.5 -26.8 Stock/sector 2Q 2011 -5.5 -4.0 -14.2 +2.0 -12.8 0.0 -5.9 -39.0 -12.0 -0.9 -26.4 -56.5 +26.2 -10.9 -14.6 -3.9 -7.3 -7.9 -12.0 -34.2 -7.5 -23.1 -5.3 -13.2 -34.3 -24.2 +2.2 -54.9 -33.9 -2.1 +0.8 -10.3 -26.9 -12.7 CY 2011 -25.4 -1.7 -0.8 +4.6 +0.7 +26.4 +2.9 -12.2 +3.5 -2.0 -18.3 -0.8 +45.5 +9.3 -17.1 -10.0 -24.1 -20.1 +9.2 -27.1 -6.1 -22.0 -1.5 +0.6 -0.4 -5.8 +5.9 -13.4 -7.1 -0.8 -18.8 +6.9 -19.1 +13.2 Consumer Disc APN News & Media Aristocrat Leisure Austar United Billabong Consolidated Media Crown David Jones Fairfax Media Flight Centre Fleetwood Corp GUD Holdings Harvey Norman InvoCare JB Hi-Fi News Corp Pacific Brands Seven Network STW Communications Tabcorp Holdings Tatts Group Ten Network Holdings Wotifcom Holdings Price last 23/1/12 1231.8 $0.75 $2.62 $1.17 $1.99 $2.69 $8.18 $2.42 $0.76 $19.22 $12.06 $7.35 $2.05 $7.56 $12.00 $18.85 $0.63 $7.66 $0.89 $2.90 $2.47 $0.87 $3.94 1Q 2012 +5.7 +4.9 +16.4 -1.7 +11.8 +0.4 +1.9 +1.7 +6.3 +17.3 +0.1 +4.7 +12.9 -1.8 +7.1 +6.8 +15.6 +9.4 +3.5 +6.2 +2.5 +2.4 +9.4 % return over ... 4Q 3Q 2011 2011 -1.3 -15.5 +7.1 +2.2 -46.5 +11.7 +0.8 -21.2 -13.3 -3.6 +6.4 -1.5 -16.0 +11.6 -26.3 +8.3 -18.7 -11.9 -4.4 +5.8 +8.1 -4.0 -9.3 -14.2 -36.1 -13.2 -13.8 -44.8 -8.0 -10.8 -25.6 -15.8 -21.4 0.0 -21.6 -13.3 -10.3 -11.0 -2.0 -3.6 -17.4 -12.2 -21.6 -7.1 -16.5 -15.4 2Q 2011 -8.2 -15.4 -25.5 +2.3 -20.4 -7.4 +9.6 -14.5 -24.0 -3.0 -6.4 -5.0 -17.0 +8.6 -15.2 -6.8 -17.8 +7.1 -15.3 -24.6 +2.6 -18.8 -14.1 CY 2011 -0.1 -19.6 +8.7 +37.7 -7.4 -9.6 -1.2 +6.5 -7.9 -10.1 -6.8 -4.0 +2.0 -2.7 +12.5 +11.3 -13.8 na +14.2 +5.3 -9.3 -7.8 +9.6
Materials Adelaide Brighton Alumina Ltd Amcor Aquarius Platinum Atlas Iron Limited BHP Billiton BlueScope Steel Boral Fortescue Metals Gindalbie Metals Ltd Gunns Iluka Resources Incitec Pivot Independence Group James Hardie Indust Kagara Ltd Kingsgate Consolid. Lynas Corporation Mincor Resources Mount Gibson Iron Murchison Metals Newcrest Mining Nufarm OM Holdings Limited OneSteel Orica PaperlinX Platinum Australia Rio Tinto Sims Group St Barbara Limited Sundance Resources Western Areas NL
Cons Staples Coca-Cola Amatil Goodman Fielder Metcash Wesfarmers Woolworths
7,390.9 $11.58 $0.51 $4.10 $30.27 $24.73
+0.2 -0.2 +16.1 +1.0 +1.7 -1.9
-2.5 -2.8 -9.4 -1.2 -5.8 +1.4
-4.2 +4.5 -51.3 -1.0 -0.8 -10.4
+2.1 -2.7 -13.8 -0.2 +0.2 +3.2
+0.2 +8.1 -8.6 +1.2 -0.7 -0.3
Health Care Ansell Cochlear CSL Ltd Ramsay Health Care ResMed Inc Sigma Pharma Sonic Hlthcare
7,891.7 $14.96 $59.84 $31.25 $19.06 $2.49 $0.62 $11.35
-1.8 +3.0 -4.2 -3.4 -0.5 +1.6 +11.8 -0.1
+5.7 +11.3 +34.6 +9.0 +0.8 -16.7 -15.4 -0.4
-11.1 -7.8 -35.6 -10.2 +4.5 +2.4 +22.6 -11.4
-3.8 +4.7 -13.2 -7.5 -4.8 -1.4 +56.6 +7.4
-0.5 +6.6 +3.2 -1.5 +7.2 -16.6 +22.5 +3.3
Inform Tech Computershare DWS Advanced GBST Iress Oakton SMS Mgmt & Tech Technology One
496.4 $7.80 $1.24 $0.80 $7.08 $1.24 $5.04 $1.01
-0.5 -2.7 -0.8 +13.5 +1.4 +1.2 +11.3 -1.0
+3.7 +7.4 +3.3 -27.3 -0.3 -30.4 -16.3 -4.7
-14.0 -15.8 -8.3 +21.3 -22.3 -15.8 -14.1 +4.9
-4.8 -4.2 -8.7 -20.0 -3.6 -9.1 -2.6 +6.3
-8.8 -14.1 +2.4 +7.5 +7.5 -3.4 -2.9 0.0
Source: RBS, IRESS
Page 95
Absolute performance to 23 Jan 12

Stock/sector Price last 23/1/12 3,507.6 $1.28 $1.11 $4.71 $2.98 $2.02 $3.40 $0.27 $7.55 $7.24 $4.55 $2.09 $3.52 $1.01 $2.37 $0.57 $1.05 $22.70 $0.67 $2.66 $21.81 $0.49 $1.58 $5.49 $2.31 $4.82 $2.06 $0.84 $5.45 $13.87 $0.31 $30.27 1Q 2012 +5.1 +15.9 -3.1 +3.1 +21.1 +4.9 +21.9 +20.5 +4.4 +2.1 +0.4 +5.8 +10.3 +5.8 +9.7 +0.9 -5.8 +17.7 +17.7 na +9.5 -2.0 +7.9 -3.0 -2.9 +12.1 -5.1 +4.3 -2.9 +16.9 na +1.7 % return over ... 4Q 3Q 2011 2011 +6.0 -18.5 -16.2 +215.2 +10.3 +6.1 +6.5 -2.2 +9.5 +9.6 +3.9 -15.2 +11.1 -3.1 +8.0 +495.7 +10.4 +3.2 -5.8 +14.5 -24.2 +3.5 +6.4 +32.6 -2.5 +14.5 +29.8 +3.5 +3.7 -5.8 -11.0 0.0 -49.1 -11.6 -21.8 -5.5 -34.3 -25.0 -17.1 -10.4 -15.3 -19.7 -22.4 -13.3 -27.3 -32.9 -15.5 -10.4 +7.1 -3.3 -5.4 +6.5 -23.4 -17.4 -23.0 -9.1 -43.4 -23.9 +3.6 -17.6 +14.3 -0.8 Stock/sector 2Q 2011 -6.1 -25.4 -14.7 -5.7 -14.9 +0.3 -14.7 -22.1 +1.4 +2.0 -6.7 -11.6 -2.4 -7.0 -16.9 -84.9 -21.9 -27.7 -0.9 +9.9 -14.0 -15.6 -15.6 -4.7 +20.1 -18.2 0.0 -27.2 -2.6 -11.5 -11.1 +0.2 CY 2011 +0.8 -25.2 +19.4 +9.1 +8.8 +1.9 +2.6 0.0 -12.9 -0.6 -5.5 -34.9 -14.5 +17.4 na -3.1 -18.0 -4.2 +7.6 +1.7 +16.9 -21.0 -14.2 +2.0 -7.6 +3.5 -0.3 -17.6 +4.9 +8.7 -26.7 -0.7 Finan ex Prop Aust Educ Trust AMP Ltd ANZ Banking Aust Secur Exch Bank of Qld Bendigo Bank Comm Bank Challenger Fin Cromwell Corp Equity Trustees FKP Property IAG IOOF Holdings Lend Lease Corp Macquarie Bank NAB Perpetual QBE Insurance Suncorp Sunland Group Treasury Group Trinity Group Trust Company Westfield Group Westpac WH Soul Patt WHK Group Energy Aust Wwide Expl Caltex Aquila Res Beach Carnarvon Extract Karoon Linc Enrgy Molopo Nexus Energy Resource Gloucester Coal Horizon Oil New Hope Corp Oil Search Origin Energy Paladin Roc Oil Santos Woodside WorleyParsons Price last 23/1/12 4,564.9 $0.95 $4.27 $20.87 $30.54 $7.51 $8.17 $49.74 $4.52 $0.70 $13.79 $0.64 $2.96 $5.48 $7.44 $24.93 $23.85 $20.82 $11.52 $8.31 $0.73 $4.18 $0.20 $5.17 $8.20 $20.46 $13.67 $0.84 13,757.1 $1.46 $11.86 $6.27 $1.49 $0.13 $8.58 $5.46 $1.41 $0.59 $0.23 $1.42 $8.45 $0.22 $5.68 $6.66 $13.55 $1.82 $0.33 $13.57 $33.70 $27.51 1Q 2012 +0.8 +3.3 +4.7 +1.1 -0.0 +2.6 +0.5 +0.8 +9.7 +4.5 +3.3 +34.7 -2.0 +6.0 +2.6 +4.4 +1.4 +1.2 -11.7 -0.5 +10.7 +16.1 0.0 +3.2 +5.5 +1.5 +0.2 +1.8 +7.4 +9.4 -0.6 +5.0 +19.2 +38.3 +1.2 +16.2 +28.8 -4.8 +12.5 +9.2 -1.2 +7.5 +3.1 +6.4 +2.3 +33.0 +25.0 +10.1 +8.7 +6.0 % return over ... 4Q 3Q 2011 2011 +4.0 +6.4 +3.3 +5.8 +0.7 +1.8 -4.2 +8.3 -3.1 0.0 +15.1 +5.6 0.0 -5.0 +3.0 +4.4 +5.1 -1.2 +1.3 +4.6 -14.4 +12.5 +2.6 -5.5 +0.3 -0.9 +6.6 0.0 +2.7 +28.5 +10.2 +19.9 +14.7 -35.2 +11.1 +64.9 -43.0 -12.7 +42.9 -55.5 +26.7 +8.1 +2.2 +10.6 -1.1 +12.3 -16.1 +8.4 -4.6 -1.3 -12.7 +8.1 -19.2 -11.3 -0.4 -12.0 -4.2 -12.9 -13.1 -2.9 -16.5 -35.7 -11.2 -17.6 -21.5 -26.8 -12.7 -16.4 -25.3 -2.0 +24.4 -19.2 +8.3 -3.6 -10.5 -8.6 -2.3 -10.9 -17.3 -18.8 -7.9 -30.5 +19.1 -17.1 -3.5 -45.5 -33.1 -6.6 -57.6 -28.8 -20.5 -44.8 +3.3 -14.9 -15.1 -51.8 -3.1 -16.0 -20.8 -6.9 2Q 2011 -5.1 -0.6 -9.9 -7.6 -11.5 -17.6 -7.0 -0.2 -0.8 -2.1 -11.5 -17.6 -5.3 -9.0 -1.1 -14.6 -0.9 -14.3 -2.4 na -11.5 -13.9 +38.5 -10.9 -7.3 -8.5 +3.6 -4.2 -11.1 -26.5 -24.6 -23.2 -5.7 -48.5 +0.1 -27.0 -1.7 -15.1 -28.2 -48.4 -21.7 -9.5 +4.8 -6.6 -2.7 -30.2 -19.0 -12.9 -12.4 -8.8 CY 2011 +3.8 -6.2 +2.6 +2.0 -8.7 -4.5 -4.2 +3.2 +4.9 -7.2 -0.6 -0.6 -7.5 -7.1 +5.1 -1.1 +9.1 -6.8 -2.6 na -7.3 -8.0 +23.8 -2.1 -2.5 +9.5 +0.4 -11.1 +5.3 -2.0 +8.6 -5.2 +12.1 -28.4 -16.0 -2.6 +10.2 -15.6 +7.9 -28.6 -10.9 +25.4 +2.7 +1.1 +0.2 -26.8 -3.7 +18.3 +10.0 +15.9
Industrials AJ Lucas Group Alesco Corporation Asciano Group Ausenco Limited Aust Infrastructure Boart Longyear BOOM Logistics Bradken Brambles Cabcharge CSR Ltd Downer EDI Emeco Holdings GWA Intl Hastie Group Limited Hills Industries Leighton Macmahon Hldgs Macq Airports Monadelphous Grp PMP Qantas Airways SEEK Spotless Group Toll Holdings Transfield Svcs Transpacific Transurban United Group Virgin Blue Holdings Wesfarmers
Infra & Utilities AGL Energy APA Group DUET
Energy Wld
Envestra Hastings Diversified SP AusNet Spark Infra
4,632.2 $14.60 $4.60 $1.82 $0.73 $0.76 $2.00 $0.96 $1.37
+1.8 +1.2 +2.4 +4.0 +8.2 +6.3 -1.5 +2.1 -1.8
+6.7 +0.8 +10.9 +8.0 +30.1 +7.5 +31.4 0.0 +11.6
-2.7 -2.4 -0.5 -3.9 +3.0 -3.6 -2.2 -1.1 -3.5
+3.2 +2.4 -3.3 +1.5 +3.1 +15.0 -1.3 +7.4 na
-3.7 -6.0 +4.0 -0.6 -14.9 +14.3 -5.3 +1.1 na
Telecoms Amcom Hutchison Telecom iiNet Singapore Tel. Telecom NZ Telstra Corporation TPG Telecom
1,132.8 $0.86 $0.06 $2.98 $2.29 $1.62 $3.32 $1.38
-0.5 +6.9 -1.8 +3.1 -2.6 +3.2 -0.6 +3.8
+7.1 +3.2 -3.4 +32.6 -6.0 -23.4 +7.7 -6.7
+7.1 -30.2 -14.7 -16.5 +11.2 +9.8 +7.3 -15.7
+3.1 +10.4 -26.9 -1.5 +3.5 +27.0 +2.5 +0.9
+0.4 +1.5 -6.1 -8.6 -1.7 -9.8 +1.1 +2.5
S&P / ASX 100 S&P / ASX 200 S&P / ASX 300

Source: RBS, IRESS
3,445.7 4,225.1 4,222.0
+3.5 +3.8 +3.8
+1.8 +1.6 +1.5
-13.1 -13.0 -13.1
-4.5 -4.8 -5.0
+2.3 +2.0 +1.9
Page 96
Disclosure Appendix
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 and, except as follows, only reflects capital appreciation. A Buy/Sell implies upside/downside of 10% or more and a Hold less than 10%. For UK-based Investment 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 research on Australian listed property trusts (LPT) or real estate investment trusts (REIT), the recommendation is based upon total return, ie, the estimated total return of capital gain, dividends and distributions received for any particular stock over the investment horizon. 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. Market or sector view: This view is the responsibility of the strategy team and a relative call on the performance of the market/sector relative to the region. 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. In this way, therefore, the target price abstracts from the need to take a view on the market or sector. If 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.
Long term recommendations (as at 23 Jan 2012)

Global total (IB%) Buy Hold Sell Total (IB%) 832 (9) 462 (7) 113 (6) 1407 (8) Asia Pacific total (IB%) 545 (3) 269 (4) 63 (0) 877 (3)
Source: RBS
Trading recommendations (as at 23 Jan 2012)

Global total (IB%) Trading Buy Trading Sell Total (IB%) 0 (0) 0 (0) 0 (0) Asia Pacific total (IB%) 0 (0) 0 (0) 0 (0)
Source: RBS
Regulatory disclosures
MBN.AX, SGM.AX
Daily Bulletin | 24 January 2012 Page 3
Global disclaimer
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Daily Bulletin | 24 January 2012 Page 4
RBS Equities (Australia)

Randolf Clinton, Head of Equities +61 2 8259 5247
Research
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Equities | Australia

Strategy & Economics

Todd Scott (+61 2 8259 5865)

Dylan Cheang (+65 6518 5936)

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

1H = interim, FY = full year Source: Company data, RBS forecasts

In brief Strategy & Economics

Sims Metal Management (A$14.78) Buy TP A$18.25

Todd Scott (+61 2 8259 5865)

Mirabela Nickel (A$1.215) Buy TP& A$1.78

Tom Sartor (+61 7 3334 4503)

Nick Moore (+44 20 7085 5470)

Dylan Cheang (+65 6518 5936)

Global Action Pack

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

Daily Bulletin | 24 January 2012 Page 2 Page 2

Australia/NZ Strategy and Economics

Australia PPI, Q4 2011

A massive drop in food prices kept broad strength in check

Source: ABS, Bloomberg, Dow Jones, RBS and Reuters

The PPI continued to slow, up 0.3% in Q4.

Source: ABS and RBS

Core SoP PPI final stage, excluding food and energy

Source: ABS and RBS

Felicity Emmett +61 2 8259 5835

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

PPI and core PPI

Headline PPI (%)

Annual inflation (% yoy)

Annual inflation (% yoy) Underlying CPI inflation

Core PPI PPI -4 -6 90 95 00 05 10

Source: ABS, RBA and RBS

Australia PPI, Q4 2011 Page 4 Page 2

Australia Small/Mid Caps

Priced at close of business 23 January 2012. Source: RBS forecasts

Small Cap 2011 performance

-50 -24 -48 126

-283 -248 -250 434

-210 -353 107 58

-196 -521 668 227

-794 -708 -493 1507

171 157 62 -559

with the Small Resources suffering a significant drop in CY11 of 32%

Chart 1 : Sector performance in 2011

Chart 2 : Small-cap vs large-cap PE (x)

15 14 13 12 11 10 9 8 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

Small Ords Index

S&P ASX 100 Index

Australia Small/Mid Caps | 23 January 2012 Page 2 Page 6

Chart 3 : Small-cap PE relative

Small Ords PE rel

Chart 4 : Australian market (All Ords) PE (x)

Table 2 : 2011 stocks a year in review

Australia Small/Mid Caps | 23 January 2012 Page 3 Page 7

1H12 reporting season themes to focus on

Australia Small/Mid Caps | 23 January 2012 Page 4 Page 8

GUD ALS BKN RKN* TWO

24 Jan 25 Jan 7 Feb 7 Feb 8 Feb

Nicholas Guido Nicholas Guido Nicholas