dbdaily (7)

Deulsche Bahk
Markels Fesearch
!
Auslralasia
Auslralia

!
Periodical
Auslralia/NZ Equilies
Daily

22 February 2012
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________________________________________________________________________________________________________________
Deulsche Bahk AC/Sydhey
This research has beeh prepared ih associalioh vilh Craigs Ihveslhehl Parlhers Lihiled.
All prices are lhose currehl al lhe ehd oI lhe previous lradihg sessioh uhless olhervise ihdicaled. Prices are sourced
Iroh local exchahges via Feulers, Bloohberg ahd olher vehdors. Dala is sourced Iroh Deulsche Bahk ahd sub|ecl
cohpahies. Deulsche Bahk does ahd seeks lo do busihess vilh cohpahies covered ih ils research reporls. Thus,
ihveslors should be avare lhal lhe Iirh hay have a cohIlicl oI ihleresl lhal could aIIecl lhe ob|eclivily oI lhis reporl.
Ihveslors should cohsider lhis reporl as ohly a sihgle Iaclor ih hakihg lheir ihveslhehl decisioh. DISCLCSUFES AND
ANALYST CEFTIFICATICNS AFE LCCATED IN APPENDIX 1. MICA(P) 146/04/2011
!
Today's evehls

Ecohohics DB Forecasl'/[Previous]
Labour price ihdex (C4) 0.9% qoq, 3.4% yoy
[0.7% qoq, 3.6% yoy]
DEvF ihlerhel vacs (Jah)
[-1.1% hoh]
US Exislihg hohe sales (Jah) 4.64h
[4.61h]

Ex-dale Forecasl'
CCH (I) 120 cps

Fesulls DB Forecasl'/[Previous]
AAX (FY11) 22h (4.2 cps) / [2.2h (0 cps)]
AIC (1H12) 111.9h (3.B cps) / [160.6h (3 cps)]
APA (1H12) 74.5h (17 cps) / [63.3h (16.5 cps)]
CCL (FY11) 531.Bh (2B.5 cps) / [506.6h (2B cps)]
CPU (1H12) USD 12B.6h (15 cps) / [USD 149.9h (13.7 cps)]
CSL (1H12) 46B.7h (35 cps) / [500.2h (35 cps)]
FBU.NZ (1H12) NZD 141.2h (1B cps) / [NZD 166h (16 cps)]
IFL (1H12) 41.2h (21 cps) / [45.7h (21 cps)]
IFE (FY11) 65.1h (16 cps) / [5B.4h (13.5 cps)]
KCN (1H12) 30h (6.4 cps) / [24.5h (10 cps)]
MIC (1H12) USD 31.6h (2.2 cps) / [USD 26.2h (3.5 cps)]
NZC.NZ (1H12) NZD 1B.4h (0 cps) / [NZD -9B.7h (0 cps)]
PPX (1H12) -4.1h (0.5 cps) / [B.3h (0 cps)]
SDM (1H12) 19h (4.5 cps) / [11.4h (3 cps)]
SEK (1H12) 54.Bh (7.9 cps) / [4B.3h (6.B cps)]
SKE (1H12) 19.9h (3 cps) / [13.5h (0 cps)]
SUL (1H12) 34.9h (11.5cps) / [24.9h (11.5cps)]
SUN (1H12) 373.4h (21 cps) / [292.2h (15 cps)]
SvM (1H12) 172.9h (19 cps) / [50.4h (19 cps)]
TSE (1H12) 34.4h (4.B cps) / [27.6h (5 cps)]
vPL (FY11) USD 1,735.5h (57 cps) / [USD 1,41Bh (55 cps)]
vTF (1H12) 27.5h (11.4 cps) / [25.4h (9.5 cps)]
!"#$%$&'(&)"*+'"*)"&',-*+'&"./"01'",234*($')"
526+,'7"8234*(/"&*0*9":5;9"#<:="')0$3*0')"

AUSTFALIA

Cohpahy Fesulls
Cil Search (CSH) Johh Hir|ee, Hugh Morgah, Ahdrev Levahdovski
CY11 Fesull - Cohsehsus beal, ahd PNC LNC oh lrack Buy >'*+($(?)"&2@(?+*&'A
CPT Croup (CPT) Jasoh veale, Iah Fahdall
FY11 Fesull: Upside earhihgs polehlial vilh execulioh risk Hold
Sohic Heallhcare (SHL) David Lov, CFA, Nick Caheroh
1H12 resull: Solid vilh hore syhergies lo cohe Buy">'*+($(?)"64?+*&'A
Lehd Lease (LLC) Iah Fahdall, Jahes Brovh
1H12 Fesull: The Three "B's" Buy
Mirvac Croup (MCF) Iah Fahdall, Jahes Brovh
FY14 rehaihs lhe big year Hold
Cvllh Prop. CIIice (CPA) Jasoh veale, Iah Fahdall
1H FY12 Fesull: Posilive al lhe hargih vilh grovlh polehlial Hold
Mohadelphous Croup Lld (MND) Fayhohd Cohzalez, JehhiIer Kruk, Tih Pluhbe
Margih oullook posilive, labour cohslraihls lhe key risk. Hold">'*+($(?)"64?+*&'A
Dovher EDI (DCv) Craig vohgPah, Caheroh McDohald
1H12 resull: Ehergihg sighs oI a lurharouhd Hold >'*+($(?)"&2@(?+*&'A
CheSleel Lld (CST) Ehily Behhcke, Johh Hyhd
1H12 Fesulls - ih lihe al lhe EBIT level, risks rehaih Hold >'*+($(?)"&2@(?+*&'A
Flighl Cehlre Lld (FLT) Fayhohd Cohzalez, JehhiIer Kruk, Tih Pluhbe
Upgrades 2012 earhihgs guidahce - Maihlaih Buy Buy >'*+($(?)"64?+*&'A
FEA Croup Lld (FEA) Tih Pluhbe, Fayhohd Cohzalez, Dohihic Fose
Fesull slrohg bul price reIlecls qualily oI busihess Hold >#2@(?+*&'A">'*+($(?)"&2@(?+*&'A
Ausl. IhIraslruclure Fuhd (AIX) Caheroh McDohald, Ehlcho Faykovski
1H12 Fesull - qualily assels, Crouhdhog Day slralegy Buy
Medusa Mihihg (MML) Levi Spry, Chris Terry
Focus oh 2H FY12 ahd beyohd, lov cosls cohlihuihg Buy >'*+($(?)"&2@(?+*&'A
Eheco (EHL) Fayhohd Cohzalez, JehhiIer Kruk, Tih Pluhbe
Fesull slighlly ahead, Auslralia ulilisalioh leads lhe vay Hold >'*+($(?)"64?+*&'A
Machahoh Holdihgs (MAH) Dohihic Fose, Fayhohd Cohzalez, Tih Pluhbe
Slrohg 1H12 resull ahd oullook. Hold. Hold >'*+($(?)"64?+*&'A

Slocks & Seclors
David Johes (DJS) Michael Siholas, Paul vah Meurs, CFA, Michael CMeara
2C12 sales previev Hold
Auslraliah Equily Slralegy Tih Baker, David Jehhihgs, CFA
Feporlihg seasoh updale

B2".'",2(0$(6'&"
Deulsche Bahk 22 February 2012 Auslralia/NZ Equilies Daily
Markels Fesearch
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Page 2 Deulsche Bahk AC/Sydhey
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Ehergihg Cohpahies
Macquarie Allas Foads (MCA) Caheroh McDohald, Ehlcho Faykovski
EiIIarie debl reIihahce cohpleled - Upgrade lo BUY Buy >'*+($(?)",1*(?'A

NEv ZEALAND
Cohlacl Ehergy Lld (CEN) Crahl Svahepoel, Johh Hir|ee, Bryahl Cheohg
1H12 belov cohsehsus bul dry year developihg Hold

Macro
Dala Flash Adah Boyloh, Phil CDohaghoe
Mihules oI lhe February 2012 FBA Board Meelihg

Daily Fihahcial Dala
Daily Fihahcial Dala

AUSTRALIAN & NEW ZEALAND EOUITIES
Tim King,
!"#$%&'()%*+%!*,-(./%0'1'(234%(.)%567%0'1'(234% 612 8258 1633
% MichaeI Ormaechea! &'()%*+%78*9(8%:(2;'<1% 612 8258 3613
RusseII DeaI !4='+%>-'2(<=.?%>++=3'2! 612 8258 1785
Vic Jokovic &'()%*+%@.1<=<A<=*.(8%!8='.<%72*A-% 612 8258 1585
GIenn Morgan &'()%*+%0'1'(234%6(8'1% 612 8258 1509
Matt MiIsom &'()%*+%B2()=.?% 612 8258 2840
%
ANALYSTS
Emerging Companies
0(/,*.)%7*.C(8'C% 5,'2?=.?%!*,-(.='1% DEF%GFHG%EGIF%
B=,%J8A,9'% 5,'2?=.?%!*,-(.='1% DEF%GFHG%EDKL%
M*,=.=3%0*1'% 5,'2?=.?%!*,-(.='1% DEF%GFHG%FLEL%
N'..=+'2%O2A;% 5,'2?=.?%!*,-(.='1% DEF%GFHG%FDEL%
%
Energy/UtiIities
N*4.%&=2P''%% M'-A</%&'()%!*%0'1'(234Q%%5.'2?/$%R<=8=<='1% DEL%SFIT%KLEG%
&A?4%:*2?(.%% 5.'2?/$%R<=8=<='1% DEL%SFIT%KLGH%
#.)2'U%V'U(.)*U1;=% 5.'2?/$%R<=8=<='1%% DEL%SFIT%KFKE%
%
Infrastructure, Transport/DeveIopers & Contractors
!(,'2*.%:3M*.(8)% B2(.1-*2<$%@.+2(1<2A3<A2'WM'X'8*-'21%
% Y%!*.<2(3<*21% DEL%SFIT%KFLH%
5.<34*%0(/;*X1;=% B2(.1-*2<$%@.+2(1<2A3<A2'% DEL%SFIT%KEDH%
!2(=?%Z*.?[J(.%% M'X'8*-'21%Y%!*.<2(3<*21% DEF%GFHG%FGKG%
%
FinanciaI Services
N(,'1%"2'',(.%% \(.;1% DEF%GFHG%FKSF%
#.)2'U%B2=??1% \(.;1% DEF%GFHG%FLIG%
N(,'1%Z(.?% \(.;1% DEF%GFHG%FTHK%
O='2'.%!4=)?'/% @.1A2(.3'$%M=X'21=+=')%"=.(.3=(81% DEF%GFHG%FGKK%
642'/(1%J(<'8% @.1A2(.3'$%M=X'21=+=')%"=.(.3=(81% DEF%GFHG%FIDK%
:A22(/%#=<;'.% M=X'21=+=')%"=.(.3=(81$%\(.;1% DEF%GFHG%EIGG%
%
HeaIthcare/BiotechnoIogy
M(X=)%V*U$%!"#% &'(8<43(2'% DEF%GFHG%FLES%
]=34*8(1%!(,'2*.% &'(8<43(2'% DEF%GFHG%EDKH%
%
Consumer/MateriaIs
J(A8%X(.%:'A21% 0'<(=8$%"**)%Y%\'X'2(?'% DEF%GFHG%FLLK%
:=34('8%6=,*<(1% 0'<(=8% DEF%GFHG%EHKL%
5,=8/%\'4.3;'% \A=8)=.?%:(<'2=(81$%6<''8% DEF%GFHG%FFSI%
N*4.%&/.)% \A=8)=.?%:(<'2=(81$%6<''8% DEF%GFHG%EDFE%
%
Gaming/Paper & Packaging
:(2;%Z=81*.% 7(,=.?$%!4',=3(81$%J(-'2%Y%J(3;(?=.?%% DEF%GFHG%EHDK%
M(.='8%J=% %7(,=.?$%!4',=3(81$%J(-'2%Y%J(3;(?=.?% DEF%GFHG%EDIS%
%
TeIecoms/Media
#.)2'U%#.(?.*1<'88=1% B'8'3*,1W:')=(% DEF%GFHG%FFEG%
^=;(1%7*A2% B'8'3*,1W:')=(% DEF%GFHG%FGIE%
%
ReaI Estate
@(.%0(.)(88% 0'(8%51<(<'% DEF%GFHG%FDTS%
N(1*.%Z'(<'% 0'(8%51<(<'% DEF%GFHG%LTSS%
N(,'1%\2*U.% 0'(8%51<(<'% DEF%GFHG%EDLH%
%
Resources/Commodities
J(A8%_*A.?% 0'1*A23'1% DEF%GFHG%FHGI%
O((.%J';'2% 0'1*A23'1% DEF%GFHG%EKFK%
V'X=%6-2/% 0'1*A23'1% DEF%GFHG%FDEE%
!42=1%B'22/% 0'1*A23'1% DEF%GFHG%FHFG%
`=(*%"A% !*,,*)=<='1% KK%FT%IHK%IEHHG%
EnvironmentaI, SociaI & Governance
B=,%O=.?% 5.X=2*.,'.<(8$%6*3=(8%Y%7*X'2.(.3'% DEF%GFHG%EDLL%
B=,%N*2)(.% 5.X=2*.,'.<(8$%6*3=(8%Y%7*X'2.(.3'% DEF%GFHG%FDEF%
%
Strategy
B=,%\(;'2% 6<2(<'?/% DEF%GFHG%ELID%
M(X=)%N'..=.?1% 6<2(<'?/% DEF%GFHG%EDLT%
%
Ouantitative Database
J(A8%\2(.1*.% M(<(9(1'% DEF%GFHG%EDLS%
New ZeaIand - Craigs Investment Partners
7'*++%a(,'%% &'()%*+%]a%0'1'(234$%B'83*$%:')=($%B2(.1-*2<% DK%SLHG%IGTL%
72(.<%6U(.'-*'8%% R<=8=<='1$%5.'2?/% DK%SSFD%FFKL%
M'..=1%V''%% @.)A1<2=(81$%:(.A+(3<A2=.?$%"=.(.3'% DK%SLHG%IHKI%
!42=1%\/2.'%%% M=X'21=+=')%"=.(.3=(81$%J2*-'2</$%0'<(=8$%bA(.<% DK%SLHG%ISDI%
6'8U/.%\8=.;4*2.'%% 6,(88%!(-1% DK%KSEI%KLKF%
N(,'1%634*+='8)% &'(8<43(2'% DK%SLHG%IHLE%
#2='%M';;'2% :')=($%B2(.1-*2<$%B'83*% DK%SLHG%IHGT%
New ZeaIand emaiI: firstname.Iastname@craigsip.com
Economics
#)(,%\*/<*.% !4='+%53*.*,=1<%#A1<% DEF%GFHG%EDGG%
M(22'.%7=991%% !4='+%53*.*,=1<% DKS%LHE%ETTE%
J4=8=-%>)*.(?4*'% 53*.*,=31% DEF%GFHG%EDTD%
M(X=)%J8(.;% 6<2(<'?=1<% DEF%GFHG%EKIH
WEB SITE http://gm.db.com
5[,(=8% +=21<.(,'Q8(1<.(,'c)9Q3*,%
%
SALES AND TRADING
Sydney SaIes 612 8258 1555
72(.<%:A.)'88% DEF%GFHG%EHED%
O(2'.%N*22=<1,(% DEF%GFHG%FIDT%
:(2<=.%\(;'2% DEF%GFHG%EHHS%
:(<4'U%B2=3;1% DEF%GFHG%EHGE%
:=34('8%0A)8(.)% DEF%GFHG%FLLH%
N*4.%M'(;=.[\'88% &'()%*+%5,'2?=.?%!*,-(.='1% DEF%GFHG%FLTK%
N*.(1%"=<C?'2(8)% 5,'2?=.?%!*,-(.='1% DEF%GFHG%ELKE%
N(,'1%!*2.'88% 0'(8%51<(<'% %DEF%GFHG%EHFK%
Sydney SaIes Traders
M(X=)%6A,,'2+='8)% !*[&'()%*+%5d'3A<=*.% DEF%GFHG%FGIH%
!42=1%:3M'2,*<<% % DEF%GFHG%FIDE%
NA8=(.%&'.U**)% % DEF%GFHG%FGIF%
:=34'88'%!4=..'2/% 0'(8%51<(<'% %DEF%GFHG%LTSD%
J4=88=-%N(.=1%% DEF%GFHG%EHGK%
6A'%M'8,'.=3*% DEF%GFHG%EHTL%
MeIbourne SaIes
63*<<%:(=8'2% &'()%*+%:'89*A2.'%6(8'1% DEL%SFIT%KFGL%
Z=88%\(/8=1% DEL%SFIT%KEGF%
!42=1%O='8% DEL%SFIT%KEGS%
#.)2'U%5,,'<<% DEL%SFIT%KEGT%
\2'<<%&A3;'2% DEL%SFIT%KEGL%
PT/eCommerce SaIes
M(X=)%"**)'/% !*[&'()%*+%5d'3A<=*.% DEF%GFHG%EGLH%
6<'X'%!(1<'88(.% DEF%GFHG%EIKF%
\'.%0()38/++'% DEF%GFHG%EHFT%
N(,'1%&(2U**)% DEF%GFHG%FGHG%
^(=94(X%6=.?4% DEF%GFHG%EDGH%
FaciIitation
0=34(2)%\(*% % DEF%GFHG%LKHK%
!2(=?%O**/,(.% DEF%GFHG%LKHH%
NA1<=.%Z=8'1% % DEF%GFHG%ELHI%
:(<<4'U%!4(.% % DEF%GFHG%EHTE%
5A?'.'%\A)*X1;/% % DEF%GFHG%FKFD%
Hedge Fund SaIes
N*'%!2AC% DEF%GFHG%LEET%
MU(.'%!8(2;$%!"#% % DEF%GFHG%FTFF%
:=;'%Z'.C'8% DEF%GFHG%EHSE%
InstitutionaI Derivatives SaIes
#148'/%!*d% % DEF%GFHG%FGIT%
M(X=)%6<(2;'/% DEF%GFHG%EFFF%
GIobaI Prime Finance
N(,'1%N'..=.?1% DEF%GFHG%LTGK%
6=,*.'%\2*()+='8)% DEF%GFHG%FLIF%
J'<'2%O.=?4<% DEF%GFHG%EDEH%
M(,='.%N(13C/;% DEF%GFHG%FGHH%
#.)2'U%:3!(9'% DEF%GFHG%FLTF%
% %
ASIA 852 2203 6099, 613 9270 4283
6<'X'.%:(234=*$%!"#% GHF%FFTL%DTSS%
63*<<%:(=8'2% DEL%SFIT%KFGL%
#8(.(%\(22*.% GHF%FFTL%DTKD%
% %
UK/EUROPE 4420 7547 9133, 612 8258 2534
!42=1%\(?8'/% KKFT%IHKH%SLLH%
!42=1%!4(.% KKFT%IHKH%SLLS%
:=34'88'%:(8*A+% KKFT%IHKH%SLLD%
N=,%>e!*..*2% 6(8'1%B2()=.?% KKFT%IHKH%SLLF%
% %
USA 1212 250 5905, 612 8258 2531
N(,'1%&'<4'2=.?<*.% E%FEF%FHT%DITD%
6(88/%\'2<*A34% E%FEF%FHT%IHSS%
:(<''.%!4(A)42/% 6(8'1%B2()=.?% E%FEF%FHT%IKIK%
% %
NEW ZEALAND - Craigs Investment Partners
!2(=?%V=.)9'2?% &'()%*+%]a%6(8'1% DK%SLHG%IHTS%
\=88%!A..=.?4(,'% % DK%SSIT%FESK%
M(.='8%0'/.*8)1% ]a%6/).'/%6(8'1% DEF%GFHG%FTEL%
6<'-4'.%!(22*88%% 6(8'1%B2()=.?% DK%SLHG%IGTG%
VA;(1%]=(88% % DK%SLHG%IDSF%
New ZeaIand emaiI: firstname.Iastname@craigsip.com
TOLL FREE NUMBERS (SaIes and Trading)
"2*,%]'U%a'(8(.)%<*%:'89*A2.'%>++=3'% TGTT%HKT%HTT%
"2*,%&*.?%O*.?%<*%6/).'/%>++=3'% GTT%STE%EGL%
"2*,%&*.?%O*.?%<*%:'89*A2.'%>++=3'% GTT%SDD%LDE%
"2*,%6=.?(-*2'%<*%6/).'/%>++=3'% GTT%DED%FTSI%
"2*,%6=.?(-*2'%<*%:'89*A2.'%>++=3'% GTT%DED%EETE%
"2*,%R6#%<*%6/).'/%>++=3'% EGTT%GHE%IGED%
"2*,%!(.()(%<*%6/).'/%>++=3'% EGGG%ILL%EHFD%
"2*,%V*.)*.%<*%6/).'/%>++=3'% TGTT%TFGG%TFI%
AustraIasia Auslralia
Energy

2! Fobruary 20!2
OiI Search
Foulors: OSH.AX Bloonborg: OSH AU Exchango: ASX Tickor: OSH
CY!! Fosull Consonsus boal,
and PC LC on lrack
John Hirjee
Fosoarch Analysl
(+6! 3 927043!3
john.hirjoo@db.con
Hugh Morgan
Fosoarch Analysl
(+6! 3 92704335
hugh.norgan@db.con
Andrew Lewandowski
Fosoarch Analysl
(+6! 3 9270424!
androw.lowandowski@db.con

Near term: oiI Ieverage, Iong term: LNG Ieverage
Tho invoslnonl lhosis or Oil Soarch ronains rolalivoly sinplo: soclor loading noar
lorn lovorago lo our bullish oil prico oullook, and soclor loading LC oxposuro lo
lho ocononically robusl PC LC projocl in lho longor lorn. Tho solid CY!! rosull
urlhor conirnod lho oullook, and roinorcod Oil Soarch as our proorrod oxposuro
in lho Auslralian Enorgy soclor. Oil lovorago, PC LC oxposuro and oxpansion
upsido couplod wilh a discounl lo valualion drivo our Buy raling.
Forecasts and ratios
Year Ehd Dec 31 2009A 2010A 2011E 2012E 2013E
Salos (USDn 5!2 534 733 677 69!
EBTDAX (USDn 35! 472 586 55! 565
ol Proil (USDn !00 !44 236 200 245
EPS (USD 0.03 0.!! 0.18 0.!5 0.!9
OLD EPS (USD - 0.!! 0.18 0.!6 0.!9
' Chango - 0.0' -1.5% 3.7' 2.3'
EPS Crowlh (' 62.0 34.7 63.6 !5.3 22.9
PEF (x 52.7 50.0 39.4 46.5 37.3
EV/EBTDA (x !6.4 !3.4 17.7 24.2 22.3
DPS (nol (USD 0.04 0.04 0.04 0.04 0.04
Yiold (nol (' 0.9 0.7 0.6 0.6 0.6
Source. Deutsche Bank estinates, conpan, data
!
Prooxcoplionals/oxlraordinarios
2
ulliplos and yiolds calculalions uso avorago hislorical pricos or pasl yoars and spol pricos or curronl and uluro yoars, oxcopl P/B which usos lho
yoar ond closo

Doulscho Bank AC/Sydnoy
All pricos aro lhoso curronl al lho ond o lho provious lrading sossion unloss olhorwiso indicalod. Pricos aro sourcod ron local
oxchangos via Foulors, Bloonborg and olhor vondors. Dala is sourcod ron Doulscho Bank and subjocl conpanios. Doulscho
Bank doos and sooks lo do businoss wilh conpanios covorod in ils rosoarch roporls. Thus, invoslors should bo awaro lhal lho irn
nay havo a conlicl o inlorosl lhal could aocl lho objoclivily o lhis roporl. nvoslors should considor lhis roporl as only a singlo
aclor in naking lhoir invoslnonl docision. DSCLOSUFES AD AALYST CEFTFCATOS AFE LOCATED APPEDX !.
CA(P !46/04/20!!.
Forecast Change

Buy
Prico al 2! Fob 20!2 6.55
Prico largol !2nlh 8.55
52 wook rango (AUD 7.60 - 5.47
ALL OFDAFES 4,333

Key changes
Prico largol 3.45 lo 3.55 ! 1.2%
Salos (FYE 7!7 lo 733 ! 2.2%
EBT nargin (FYE 63.0 lo 64.6 " -4.9%
ol proil (FYE 239.2 lo 235.7 " -1.5%

Price/price reIative
4.0
5.0
6.0
7.0
3.0
2/!0 5/!0 3/!0 !!/!0 2/!! 5/!! 3/!! !!/!!
Oil Soarch
ALLOFDAFES(Fobasod
Porornanco (' !n 3n !2n
Absolulo -!.4 5.5 -7.0
ALL OFDAFES 0.7 2.0 -!3.8

Stock data
arkol cap (AUDn 8,512
arkol cap (USDn 9,172
Sharos oulslanding (n 1,299.6
Daily voluno (USDn 20.49
Froo loal 100.00

Key indicators (FY1)
FOE (' 8.1
FOA (' 12.0
ol dobl/oquily (' 23.2
Book valuo/sharo (USD 2.32
Prico/book (x 3.0
ol inlorosl covor (x 720.0
EBT nargin (' 64.6

Upcoming events Date
CY!! inal dividond oxdalo 3 ar 20!2
CY!! inal dividond rocord dalo !5 ar 20!2
CY!! inal dividond paynonl dalo !0 Apr 20!2

C
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I
o
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a
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PNG LNG on track, significant driIIing news fIow expected in 2012
Tho PC LC projocl ronains conlral lo lho Oil Soarch invoslnonl lhosis, and
roprosonls 90' o our AV. Tho conpany indicalod lho projocl conlinuos lo lrack
lo irsl LC in 20!4, and lolal capox o US$!5.7bn. Exploralion drilling, and
dovolopnonl drilling al Hidos lo supporl a polonlial 3
rd
lrain ronains on schodulo,
wilh drilling in lho Cul o Papua lalor in 20!2 providing a polonlial socond LC
growlh palhway or lho conpany. As a rosull wo soo a nunbor o inporlanl
calalysls or Oil Soarch in lho coning !2 nonlhs.
SoIid CY11 resuIt in Iine with our expectations, 6% ahead of consensus
Oil Soarch roporlod CY!! undorlying PAT o US$236n (DB US$239n, broadly in
lino wilh our oxpoclalions and 6' ahoad o consonsus (US$222n, Bloonborg.
Tho rosull was supporlod by solid cosl conlrol, and undorlying lax ralo o 55' (DB
54'. A inal dividond o US2cps (DB US2cps brings ull yoar dividonds lo
US4cps.
VaIuation and key risks (refer p.3-4 for further detaiIs)
Using a DCF approach, our AV or Oil Soarch is $9.92/sh (prov $9.73/sh. Using
lho Bronl orward curvo as al 2 Doc !!, lho AV is $6.6!/sh (prov $6.63/sh. Our
prico largol o $3.55/sh (prov $3.50/sh is dorivod ron lho nidpoinl o lho lwo
AVs and adding a riskod oxploralion polonlial o 23cps (unch. Koy risks lo Oil
Soarch includo dolays lo PC LC, produclion cosls and oxploralion ailuros.
2! Fobruary 20!2 Enorgy Oil Soarch
Pago 2 Doulscho Bank AC/Sydnoy
Model updat ed: 21February 2012
Y/ E 31 December 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E
PROFI T & LOSS ( US$m)
Sales revenue 645 719 814 512 584 733 677 691 1,317
EBITDAX 734 596 727 420 454 552 551 565 1,143
Depreciat ion/ amort ist at ion 99 132 122 101 45 51 52 51 122
EBIT 588 300 514 243 278 441 404 498 1,005
Net int erest income (expense) 22 23 6 -3 -1 -1 -4 -7 -247
Income t ax expense 198 186 207 106 92 237 200 245 258
Associat es/ af f iliat es 0 0 0 0 0 0 0 0 0
Minorit ies/ pref erence dividends 0 0 0 0 0 0 0 0 0
Net prof it 412 137 313 134 186 202 200 245 500
Signif icant it ems 204 -4 73 34 42 -33 0 0 0
Net prof it excluding signif icant it ems 208 141 240 100 144 236 200 245 500
Net abnormals and ext raordinaries 0 0 0 0 0 0 0 0 0
CASH FLOW ( US$m)
Cash f low f rom operat ions 399 327 507 284 398 386 -36 307 542
Movement in net working capit al 47 -58 122 15 36 182 -272 -4 -271
Capex -16 -68 -194 -145 -916 -1,195 -1,774 -785 -538
Free cash f low 383 259 314 139 -517 -809 -1,810 -477 3
+613 9270 4318 john.hirjee@db.com Ot her invest ing act ivit ies 108 -312 -41 -237 -442 -122 -240 -20 -20
Equit y raised/ (bought back) 1 0 -8 848 34 37 0 0 0
Dividends paid -101 -90 -89 -50 -34 -37 -53 -53 -53
+613 9270 4385 hugh.morgan@db.com Net inc/ (dec) in borrowings -126 8 0 0 930 708 1,103 526 195
Ot her f inancing cash f lows 0 0 16 53 5 6 0 0 0
Tot al cash f lows f rom f inancing -226 -82 -81 851 935 714 1,051 474 142
+613 9270 4241 andrew.lewandowski@db.com Net cash f low 266 -134 191 753 -24 -216 -999 -24 126
Movement in net debt / (cash) -392 142 -191 -753 954 924 2,103 550 69
BALANCE SHEET ( US$m)
Cash and ot her liquid asset s 478 344 535 1,288 1,264 1,047 48 25 150
Tangible f ixed asset s 628 721 668 714 2,383 3,846 5,568 6,302 6,718
Goodwill 0 0 0 0 0 0 0 0 0
Ot her int angible asset s 0 0 0 0 0 0 0 0 0
Associat es/ invest ment s 0 0 0 0 0 0 0 0 0
Ot her asset s 697 769 802 1,075 642 808 1,123 1,136 1,708
Tot al asset s 1,803 1,833 2,005 3,077 4,289 5,702 6,740 7,463 8,577
Int erest bearing debt 0 0 0 0 930 1,748 2,851 3,377 3,572
Ot her liabilit ies 462 444 412 484 561 937 725 728 1,200
Tot al liabilit ies 462 444 412 484 1,490 2,685 3,576 4,106 4,773
Shareholders' equit y 1,341 1,389 1,593 2,593 2,798 3,017 3,164 3,357 3,805
Minorit ies/ ot her 0 0 0 0 0 0 0 0 0
Tot al shareholders' equit y 1,341 1,389 1,593 2,593 2,798 3,017 3,164 3,357 3,805
Net working capit al 14 46 -73 -95 -132 -314 -66 -62 156
Net debt / (cash) -478 -344 -535 -1,288 -334 700 2,803 3,353 3,422
RATI O ANALY SI S
52-week High/ Low: A$7.60 - 5.47 Sales growt h - pcp (%) -2.9 11.5 13.3 -37.1 13.9 25.6 -7.7 2.1 90.6
Market Cap (m) A$ 8,680 EBITDAX/ sales (%) 113.9 82.9 89.3 81.9 77.8 75.4 81.5 81.7 86.8
US$ 9,234 EBIT/ sales (%) 59.5 42.8 53.1 34.2 50.7 64.6 59.6 72.1 76.3
Payout rat io (%) 48.5 63.6 37.3 67.6 36.2 22.3 26.4 21.5 10.5
DCF V ALUATI ON ( A$) ROA (%) 31.6 20.5 29.2 17.2 12.1 12.0 6.8 7.0 13.1
Bet a (MRP - 6.00) 1.20 ROE (%) 16.5 10.4 15.5 5.3 5.4 8.1 6.5 7.5 14.4
Discount rat e 11.0 Operat ing Ret urn on Capit al (%) 32.8 12.8 25.4 16.6 8.4 6.0 3.4 3.8 9.6
Net value per share ($) Tax rat e (%) 32.5 57.5 39.8 44.3 33.0 54.0 50.0 50.0 34.0
Price/ NPV (x) Capex/ sales (%) 2.4 9.4 23.8 28.4 156.9 163.0 262.1 113.5 40.9
Net value per share (f lat prices) Capex/ depreciat ion (x) 4.8 17.6 16.0 25.4 178.3 104.9 34.3 15.5 4.4
Price/ NPV (f lat prices) Net debt / equit y (%) -35.6 -24.7 -33.6 -49.7 -11.9 23.2 88.6 99.9 89.9
Net int erest cover (x) -17.6 -13.5 -71.0 52.6 nm nm 94.4 68.0 4.1
25
13
11
0 3 11
11
15
8
-32.2
24.3
0
13
17.5
444
0.453
0.123
13.5
0 0 69
11 106 14
14 18
0.381
37.3
0.152 0.187
15
0.6
2.83
0.040
67.4
-62.0
13
54.5
0.109 0.141
533
0.232
23.6
7,203
20.1
0.126
0
15
35.1
15.3
0.185
31.3
0.303
32.1
0.110
34.7
3.53
1.6
0.214 0.081
23.4
0.280
70.4
17.9
0.179
18.3
0.187 0.381
37.3 36.6 45.9
0.152
P/ E rat io normalised (x) Asia Pacific
Normalised EPS (US$)
EPS FD (US$)
Equity Research
SUM M ARY
AusIralia
Normalised EPS growt h (%)
Energy P/ E rat io FD (x)
104.0 63.6
42.3 42.6
0.154
-15.3
18.3
22.9
45.9
736
10.2
6,155
20.0
2.75
Reut er s: OSH.AX Bloomber g: OSH AU Sedol: 6657604
10.5 P/ CFPS (x)
3.17
Dividend yield (%)
Price/ BV (x) 3.12
Ent erprise Value (US$m) 6,180
0.080
Target price
A$6.55 14.4
A$8.55
Buy
Price as at 21-Feb 14.3
2.1
Oil
Condensat e
Domgas
10.4
Company website

Oil Search Lt d explores f or, and produces, nat ural
gas and oil t hrough operat ions in Papua New Guinea.
The company' s act ivit ies are locat ed in t he Papuan
Highlands which include t he Kut ubu, Hides and Gobe
oil and gas f ields. Oil Search is in t he process of
developing t he PNG LNG project , which will see it
become a liquif ied nat ural gas producer f or t he f irst
t ime.
Ot her
http://www.oilsearch.com.au
John Hirjee
Company descri pt i on
Research Team
Hugh M organ
Andrew Lewandowski
Source: Company dat a, DB est imat es
0.87
7.49
0 . 6 6
9,053
LNG
EV/ EBIT
DIVISIONAL REVENUE ( US$ m)
EV/ EBITDAX
6,141
0
9.6
0.040
9 . 9 2
OiI Search Ltd DPS (US$) 0.080
5,521
0.368
0.294
19.7
10.4
11,894
20.1 18.7
10,334
2.77
15.5
50.2
0.292
0.6
2.70
0.040
11.1 nm
0.6
2.86
22.4
0.7
5.4
0.7
0.080
2.0
0.040
Operat ing CFPS (US$) 0.356
10.1
562
29.8
0.040
22.8
0.6
2.38
11.8
634
11,355
0.412
16.9
0.040
-0.028 0.234
0
25.6
0 0
19.1
651 666 630
-1.4%
5.5%
-7.0%
-8% -6% -4% -2% 0% 2% 4% 6% 8%
AbsoIute Price Return (%)
1m
3m
12m
0
10
20
30
40
50
60
70
80
90
100
07 08 09 10 11 12E 13E 14E
EBITDAX/sales (%)
EBIT/sales (%)
Margin Trends (%)
0
5
10
15
20
25
30
35
07 08 09 10 11 12E 13E 14E POE (%) POA (%)
opPOC (%)
Return Ratios (%)
-60
-40
-20
0
20
40
60
80
100
120
-2000
-1000
0
1000
2000
3000
4000
07 08 09 10 11 12E 13E 14E
NeI debI / (cash) (US$m)
NeI debI/equiIy (%)
Net Debt (Cash) / Equity (%)
0
200
400
600
800
1000
1200
1400
07 08 09 10 11 12E 13E 14E
Sales revehue (US$m)
SaIes revenue

Doulscho Bank AC/Sydnoy Pago 3
Our view of the resuIt
SoIid resuIt in Iine with our forecasts and ahead of consensus
olwilhslanding a onoo US$33n inpairnonl chargo alroady laggod by lho conpany, Oil
Soarch dolivorod a solid CY!! rosull. Undorlying PAT o US$236n (DB $239n was in lino
wilh our oxpoclalions, and 6' ahoad o consonsus (US$222n, Bloonborg oslinalos. vilh
a lax ralo o 54' (DB 55', lho rosull was cloan, wilh no roal surprisos in our viow.
Demonstrating the oiI Ieverage thematic
Oil Soarch roporlod a 45' incroaso in roalizod oil pricos during CY!!, rosulling in a 64'
incroaso in undorlying PAT, ovon allowing or an !!' produclion voluno doclino and lowor
oxploralion wriloo. Tho rosull cloarly dononslralod lho conpanys lovorago lo oil pricos,
ono o our proorrod lhonos in lho soclor givon a bullish houso viow on lho oil prico oullook.
No change to PNG LNG guidance
Tho conpany roiloralod provious guidanco or lho PC LC projocl. Tho projocl conlinuos lo
largol irsl LC in 20!4, wilh lolal projocl cosls o US$!5.7bn. Foad rosloralion works noar
lho Hidos iold ollowing lho Jan 20!2 landslido aro noaring conplolion, and PC LC
projocl aclivilios in lho aroa havo largoly rosunod.
vo conlinuo lo avour lho PC LC projocl as ooring lho loading ocononics o LC
projocls undor conslruclion in lho rogion. Favourablo iscal lorns, high liquids yiold, and a
rosourco pool largoly unaoclod by wago inlalion prossuros inpacling Auslralian projocls all
supporl lho projocl. n addilion, lho projocl oors growlh upsido ron a lhird lrain al lho silo.
Earnings and vaIuation changes
Tho ollowing lablo sunnarisos changos lo koy inancials. Our CY!! EPS has doclinod
slighlly on lho roporlod rosull, whilo CY!2 cosl guidanco was ahoad o our oxpoclalions,
rosulling in snall EPS docroasos in CY!2 and CY!3. Our AV and largol prico incroaso on lho
rollorward o our valualion dalo lo 3! Doc 20!2.
Figure 1: Changes to key financiaIs

EPS (cps) NAV
($/sh)
TargeI Price
($/sh) CY11A CY12E CY13E
Old !3.2 !5.3 !9.! 9.73 3.50
ow !7.9 !5.2 !3.7 9.92 3.55
Chango (' !.5' 3.7' 2.3' +!.9' +0.6'
Source. Conpan, data, Deutsche Bank
Using a DCF approach, our AV or Oil Soarch is $9.92/sh (prov $9.73/sh. Using lho Bronl
orward curvo as al 2 Doc !!, lho AV is $6.6!/sh (prov $6.63/sh. Our prico largol o
$3.55/sh (prov $3.50/sh is dorivod ron lho nidpoinl o lho lwo AVs and adding a riskod
oxploralion polonlial o 23cps (unch.
UnderIying NPAT 6% ahead
of consensus
45% oiI price increase drove
64% underIying NPAT
increase
PNG LNG remains on track
for first LNG in 2014, totaI
capex of US$15.7bn
Key risks
DeIays to the PNG LNG timeIine
Oil Soarchs orlunos aro closoly liod lo lho PC LC projocl, which is in lho conslruclion
phaso. Dolays lo lho conslruclion linolino, curronlly largoling irsl LC in 20!4, aro a koy
downsido risk lo Oil Soarch.
SweIIing production costs
Highor produclion cosls duo lo inlalion in PC ronain a risk or Oil Soarch. ncroasod capox
cosls al lho PC LC projocl, curronlly guidod al US$!5.7bn, aro anolhor aroa o cosl risk lo
lho conpany.
ExpIoration faiIure
Civon lho conpanys signiicanl oxploralion plans or 20!2, oxploralion ailuro is koy risk lo
Oil Soarch, ospocially givon lho inporlanco o oxploralion lo lho conpanys LC growlh
plans.
OutIook
2012 guidance: high operating costs in 2012
Summary
Figure 2: OiI Search 2012 guidance
IIem CY12 Guidahce CY12 (DB esI) CY11 AcIual
Produclion 6.26.7nnboo 6.5nnboo 6.69nnboo
Opox US$2!$24/boo US$22.5!/boo US$20.!6/boo
DD&A US$79/boo US$3/boo US$7.67/boo
Capox:
Exploralion US$240230n US$240n US$!45n
PC LC US$!.65$!.75bn US$!.7bn US$!.29bn
Produclion/Olhor US$!47n$!67n US$!53n US$!46n
Tolal Capox US$2.04$2.20bn US$2.!bn US$!.53bn
Production guidance unchanged
Oil Soarch roiloralod CY!2 produclion guidanco o 6.26.7nnboo (DB 6.5nnboo. vilh
CY!! produclion o 6.69nnboo againsl provious CY!! guidanco o 6.26.7nnboo, wo nolo
CY!2 produclion guidanco inplios broadly lal produclion on pcp.
CY!2 produclion guidanco is inluoncod by:
#
Conlribulions ron succossul drilling and workovors in 20!!
#
alural iold doclino
#
A lhroo wook shulin lo lioin associalod gas acililios
Longor lorn produclion (CY!3 & CY!4 guidanco o lal produclion ronainod unchangod.
Opex and DD&A guidance: increasing costs
Oporaling cosls aro oxpoclod lo incroaso in CY!2, wilh conpany guidanco o US$2!$24/bbl
(pcp $20.!6/bbl, DB osl $22.5!/bbl duo lo:
#
Ongoing inlalion in PC
#
ajor workovor prograns
#
Tioin aclivilios or lho associalod gas projocl
#
FX inpacls
DD&A guidanco o US$79/bbl (DB $3/bbl is unchangod ron CY!! guidanco, noling lho
CY!! aclual rosull was US$7.67/bbl.
Capex guidance increased due to timing effects
Tolal CY!2 capox guidanco o US$2.04$2.20bn inplios an incroaso on provious guidanco
providod lo lho narkol in ov 20!! o US$!.64US$2.0!bn. vo nolo lho incroaso is duo lo:
#
An updalod assossnonl o lho lining o capox al lho PC LC projocl ron oporalor
Exxonobil providod lo JV parlnors in Doc 20!!. vo nolo lho incroaso in CY!2 capox al
PC LC rolocls lining o cosls, wilh ovorall projocl capox unchangod al US$!5.7bn.
#
Carry orward o oxploralion capox inilially plannod in CY!! lhal will now occur in CY!2.
CY12 production guidance
unchanged
CY12 opex to increase,
DD&A broadIy fIat
Increased CY12 capex
guidance refIects timing
effects
PNG LNG project on track
Oil Soarch roiloralod provious guidanco or lho PC LC projocl. Tho projocl ronains on
lrack or irsl LC in 20!4, wilh lolal capox lo irsl LC ronaining US$!5.7bn. 20!2 is
onorging as a yoar o poak aclivily on lho projocl, wilh lho curronl workorco o !4,300 closo
lo lho oxpoclod naxinun o !5,000. Oil Soarch capox guidanco inplios 36'33' o lolal
projocl capox will bo sponl during 20!2.
Koy achiovononls al lho projocl in 20!! includod:
#
Connoncononl o works al lho Hidos gas condilioning planl
#
Ongoing oarlhworks al lho Kono airiold
#
Ovor !00kn o lho onshoro pipolino woldod
#
!30kn o oshoro pipolino conplolod
#
Connoncod conslruclion o LC lrains, slorago lanks and jolly
Koy largols or 20!2 al lho projocl includo:
#
Conplolion o lho Kono airiold
#
Conlinuod conslruclion al lho downslroan planl silo
#
Conplolion o lho oshoro pipolino
#
Conplolion o lho onshoro pipolino lo Kulubu
#
Connoncononl o dovolopnonl drilling al Hidos
LandsIide update
Tho conpany providod an updalo on lho inpacl o lho lragic Jan 20!2 landslido in lho Hidos
aroa. Tho PC Covornnonls alional Disaslor and Enorgoncy Folio Oico is nanaging lho
incidonl, wilh lho PC LC JV providing assislanco. Tho road is closo lo ull rosloralion, wilh
accoss lo occur across lho landslido aroa. As a rosull, Oil Soarch indicalod lhoro would bo no
nalorial inpacl on PC LC oporalions or linolinos, wilh nosl aclivilios now back up and
running.
PNG LNG Train 3: Hides driIIing mid-2012, FID target Iate 2013
Tho nuch anlicipalod Hidos gas/walor conlacl woll conlinuos lo largol spud in nid20!2 as
parl o lho dovolopnonl drilling progran lo supporl lho irsl lwo LC lrains. n addilion, lho
Pnyang Soulh! woll is approaching largol doplh wilh lho Trapia woll lo ollow.
Tho conpany boliovos lho oulconos o lho CY!2 oxploralion progran should provido
suicionl dolails on gas rosorvo polonlial by lho ond o CY!2/oarly CY!3. lhis linolino is
achiovod wo boliovo lho conpanys lalo CY!3 FD largol or a lhird lrain al PC LC ronains
achiovablo, noling linilod incrononlal onginooring work would bo roquirod i incrononlal gas
is sourcod ron lho Hidos rogion.
No change to PNG LNG
timeIine or capex
LandsIide rectification weII
underway - road cIose to re-
opening
Hides driIIing to commence
mid-2012
GuIf LNG progression
Oil Soarch conlinuos lo progross ils Cul Aroa oxploralion acroago in lho Cul o Papua. Tho
conpany has oponod a dala roon lo sook a arnin parlnor, wilh high calibro inloroslod
parlios. A parlnorship doal is largoling nid20!2, wilh Oil Soarch sooking a parlnor wilh LC
conslruclion and oporalions capabilily.
Tho conpany has idonliiod ovor 30 opporlunilios in ils acroago, wilh polonlial lo undorpin
lwo LC lrains, inplying polonlial rocovorablo rosorvos o >7lc basod on PC LC scalo
LC lrains. Oil Soarch aro curronlly socuring a 3D soisnic conlraclor, wilh rig soloclion
inalizalion duo in 2O!2 lo allow lho spudding o lho irsl woll in 4O!2.
Figure 3: OiI Search's acreage position in the GuIf of Papua
Source. Oi| Search
Sovoral largols woro doscribod as polonlially liquids rich, ooring urlhor supporl lo
dovolopnonl oplions should oxploralion oulconos nool conpany oxpoclalions. vhilo wo
boliovo il is loo oarly lo ascribo valuo lo Oil Soarchs Cul Aroa LC aspiralions, lho acroago
posilion oor upsido ron nalorial now discovorios. vilh discussions curronlly undorway
wilh polonlial arnin parlnors, lho polonlial appolilo o najor OCs lo oxploro in lho Cul o
Papua could provido crilical dala poinls on Oil Soarchs acroago posilion. Farnin and drilling
nows low during 20!2 should holp urlhor clariy whal upsido lho Cul o Papua could
ullinaloly roprosonl lo Oil Soarch.
Expect news fIow on the
GuIf of Papua in 2012
No update to reserves position beyond CY11 production
Oil Soarch oloclod nol lo undorlako an oxlornal rosorvo audil in 20!!. vilh iold porornanco
in lino wilh conpany oxpoclalions, and signiicanl ronodoling o oxisling and roconlly
discovorod rosorvoirs lo bo undorlakon during 20!2, rosorvos as al 3! Doc 20!! rolocl lhoso
o !2 nonlhs prior loss produclion o 6.7nnboo during lho yoar. n addilion, 2C rosourcos
ronainod unchangod.
Figure 4: OiI Search reserves and resources
1P (mmboe) 2P (mmboe) 2C (mmboe)
3!Doc!0 336.3 559.3 3!7.7
3!Doc!! 330.! 552.6 3!7.7
Chango (produclion 6.7 6.7 0.0
Civon CY!! produclion was al lho lop ond o conpany guidanco, and a nunbor o noariold
oxploralion succossos, wo oxpocl rosorvo risk lo lho upsido during 20!2. vo would oxpocl
any najor discovorios nado as parl o LC growlh plans during 20!2 would nol bo
suicionlly progrossod lo bo classiiod as rosorvos by lho ond o lho yoar.
Expect more PNG headIines in 2012
Tho lasl six nonlhs havo soon signiicanl nows low in PC, wilh issuos including polilical
loadorship uncorlainly, and lho landslido in lho Hidos aroa in Jan 20!2. vo oxpocl urlhor
hoadlinos in 20!2, noling lho counlrys gonoral oloclion is duo in Juno 20!2, wilh lho now
govornnonl duo lo bo ornod in Aug/Sop. vhilo incounlry issuos aro connon in PC, wo
nolo lhoro has boon no inpacl on oilhor oxisling Oil Soarch oporalions, or PC LC
conslruclion.
No change to company
reserves except for actuaI
production
We see reserve upside risk
given recent near-fieId
expIoration success
PNG generaI eIection due in
Jun 2012
Key issues in the resuIt
UnderIying NPAT of $236m in Iine with our expectations
Oil Soarch roporlod CY!! undorlying PAT o $236n (DB US$239n, broadly in lino wilh our
oxpoclalions, and 6' ahoad o consonsus oslinalos o US$222n (Bloonborg. Slalulory
PAT o US$203n (DB US$206n was inpaclod by lho proviously laggod US$33n assol
inpairnonl in Kurdislan.
Figure 5: OiI Search underIying NPAT profiIe
!"" !""
"# "#
$" $"
!!$ !!$
!%&
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Tho conpany roporlod an avorago lax ralo o 54' (DB 55', and inlorosl oxponso o US$!n
(DB US$!n, bolh in lino wilh our oxpoclalions. Doprocialion and Anorlisalion oxponso o
US$50n (DB US$46n was slighlly ahoad o our orocasls, and drovo lho snall undorlying
PAT varianco lo our oxpoclalions.
UnderIying NPAT in Iine
with our expectations, 6%
ahead of consensus
Pago !0 Doulscho Bank AC/Sydnoy
FinaI dividend of US2cps
Oil Soarch roporlod an unrankod inal dividond o US2cps (DB US2cps lo bring ull yoar
dividonds lo US4cps (DB US4cps. Tho dividond will bo ully undorwrillon by lho conpanys
DFP. Tho rocord dalo or lho inal dividond is !5 ar 20!2, and will bo payablo on !0 Apr
20!2. Tho sharos will lrado oxdiv ron 3 ar 20!2.
Figure 6: OiI Search dividend profiIe
(>%
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CY11 costs vs guidance
Tho conpany roporlod cosls woll wilhin provious guidanco. ndood, oporaling cosls o
US$20.!6/boo woro bolow provious guidanco o lho uppor ond o a US$!9$2!/boo rango.
DD&A o US$7.67/boo was slighlly bolow lho nidpoinl o guidanco.
Figure 7: CY11 costs vs guidance
IIem CY11 Guidahce CY11 AcIual
Produclion 6.26.7nnboo 6.69nnboo
Opox Uppor ond o US$!9$2!/boo US$20.!6/boo
DD&A US$7$9/boo US$7.67/boo
Capox
Exploralion US$!60$!30n US$!45n
PC LC US$!.2$!.4bn US$!.29bn
Produclion/Olhor US$!40$!60n US$!46n
CY!! capox was also wilhin provious conpany guidanco or oxploralion, PC LC, and olhor
produclion rolalod capox. Howovor, as nolod proviously in lhis roporl, sono plannod
oxploralion capox was dolayod ron CY!! and inlo CY!2.
FinaI dividend of US2cps in
Iine
SoIid cost performance in
2011
Doulscho Bank AC/Sydnoy Pago !!
Figure 8: Operating cost profiIe
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P&L reconciIiation
Figure 9: OiI Search CY11 P&L reconciIiation
Yoar ond Doconbor 20!0 20!! Chango on
!H 2H FY !H 2HF FYF PCP
Proi l & Loss (US$
Salos rovonuo 264.4 3!9.! 533.6 355.5 377.4 732.9 26'
Olhor !3.9 3.9 !0.0 !9.4 !2.3 7.! 29'
Tolal rov onuo 233.3 3!0.3 593.6 374.9 365.! 740.0 25'
Oporaling cosls (inc oxpl wriloo !39.! 39.4 223.5 !07.6 35.9 !93.5 !5'
EBTDA !32.! !90.5 322.7 26!.7 230.! 49!.9 52'
Doprocialion/anorlisalion 22.5 22.! 44.7 24.! 27.2 5!.3 !5'
EBT !09.6 !63.4 273.0 237.6 203.0 440.6 53'
ol inlorosl oxponso !.2 0.4 0.3 0.! 0.5 0.7 20'
Prolax proi l !03.4 !63.3 277.2 237.5 202.4 439.9 59'
Tax 55.6 36.0 9!.6 !23.0 !!4.5 237.4 !59'
Oporali ng proi l 52.9 !32.7 !35.6 !!4.5 33.0 202.5 9'
Signiicanl ilons 0.0 4!.5 4!.5 0.0 0.0 33.2 nn
ol proi l (oxcl udi ng si gni i canl i lons 52.9 9!.2 !44.! !!4.5 !2!.2 235.7 64'

Figure 10: OiI Search key financiaIs
Oil Search Ltd $6.55 Buy
Y/E Dec
PROFIT & LOSS (US$m) 2008 2009 2010 2011F 2012F 2013F 2014F SALES REVENUE
Sales revenue 814 512 584 733 677 691 1,317
Dividends received 0 0 0 0 0 0 0
Other revenue 126 15 3 0 20 20 8
Operating costs (107) (94) (97) (133) (145) (146) (182)
Exploration write off (91) (76) (131) (61) (96) (16) (16)
Depreciation/amortisation (122) (101) (45) (51) (52) (51) (122)
Other expenses (106) (13) (36) (48) 0 0 0
EBIT 514 243 278 441 404 498 1,005
Net interest expense 6 (3) (1) (1) (4) (7) (247)
Pre-tax profit 520 240 277 440 399 491 758
Income taxexpense (207) (106) (92) (237) (200) (245) (258)
Minorities, pref divs 0 0 0 0 0 0 0
NPAT (inc significant items) 313 134 186 202 200 245 500
NPAT (equity) 313 134 186 202 200 245 500 52-week high/low(A$) 7.60/5.37
Net abnormals/extraordinaries 0 0 0 0 0 0 0 Market value (A$m) 8,680
All Ordinaries Weight (%) 0.63%
Significant Items (post tax) 34 42 (33) 0 0 0 0
EBIT (exc significant items) 175 296 474 404 498 1,005 2,099 Beta (MRP=6.0%) 1.20
NPAT (exc significant items) 100 144 236 200 245 500 1,222
NPAT (pre goodwill exc sig items) 100 144 236 200 245 500 1,222
NET ASSET VALUATION ($m) as at Dec-12 A$m
DIVISIONAL REVENUE (US$m) PNG LNG Trains 1-2 (risked @95%) 12,050 75%
Kutubu & SE Mananda 348 257 296 346 353 356 316 PNG LNG Train 3 (risked @50%) 2,466 15%
Moran 313 159 211 257 283 294 241 Moran 756 5%
Gobe Main 7 4 5 4 5 5 0 Kutubu & SE Manada 597 4%
SE Gobe 48 24 20 23 10 10 6 Hides GTE 49 0%
Other (include mineral assets) 224 84 54 103 46 45 762 Gobe Main & SE Gobe 9 0%
Total 940 527 587 733 697 711 1,325 Technical reserves 735 5%
Exploration (179) -1%
ANALYTICAL CASHFLOW (US$m) Change in Working Capital (404) -3%
EBITDA 636 344 323 492 455 549 1,127 Total 16,078 100%
Exploration write off 91 76 131 61 96 16 16 Less net debt 2,899
Tax paid (269) (79) (124) (178) (200) (245) (258) Valuation 13,179
Working capital / other 40 (52) 70 13 (382) (1) (13) Net value per share @ 11.0% nom 9.92
Gross operating cash flow 498 289 400 387 (30) 318 872 Net value per share (forward price curve) 6.61
Capex / exploration (235) (470) (1,109) (1,317) (2,014) (805) (558) Average net value per share 8.26
Net investments 0 0 (0) 0 0 0 0 Risked exploration 0.28
Other investing 0 88 (249) 0 0 0 0 Target price 8.55
Free cash flows 263 (94) (959) (930) (2,044) (486) 314
Net borrowings (191) (753) 954 924 2,103 550 69
Equity raised (8) 848 34 37 0 0 0
Dividends paid (89) (50) (34) (37) (53) (53) (53)
Other financing 25 48 4 5 (6) (11) (330)
Financing cash flows (263) 94 959 930 2,044 486 (314) RATIO ANALYSIS 2009 2010 2011F 2012F 2013F 2014F
Diluted shares on issue 1,314 1,314 1,314 1,314 1,314 1,314
BALANCE SHEET (US$m) Enterprise value (US$m) 6,200 8,112 10,621 11,077 11,204 10,407
Cash & deposits 535 1,288 1,264 1,047 48 25 150 EPS pre amortisation (c) 11.0 17.9 15.2 18.7 38.1 93.0
Trade debtors 96 109 88 102 194 201 581 EPS growth (%) 34.7 63.6 (15.3) 22.9 104.0 144.1
PPE 668 714 2,383 3,846 5,568 6,302 6,718 PER (x) 54.5 36.6 43.1 35.1 17.2 7.0
Exploration 516 808 282 338 482 486 490 EV/EBITDA (x) 23.9 23.3 18.9 16.4 14.2 6.7
Other assets 190 158 272 369 448 450 638 PCF (x) 19.7 22.4 (236.2) 28.0 15.9 6.0
Total assets 2,005 3,077 4,289 5,702 6,740 7,463 8,577 Dividend yield (%) 0.6 0.6 0.6 0.6 0.6 0.6
Payout ratio (%) 36.2 22.3 26.4 21.5 10.5 4.3
Current borrowings 0 0 0 0 0 0 0 ROA (%) 12.1 12.0 6.8 7.0 13.1 25.9
Non-current borrowings 0 0 930 1,748 2,851 3,377 3,572 ROE (%) 5.4 8.1 6.5 7.5 14.4 27.9
Other liabilities 412 484 561 937 725 728 1,200 Tax rate (%) 33.0 54.0 50.0 50.0 34.0 34.0
Total liabilities 412 484 1,490 2,685 3,576 4,106 4,773 Net borrowings ($m) (334) 700 2,803 3,353 3,422 2,367
Net debt/equity (%) (11.9) 23.2 88.6 99.9 89.9 47.6
Total shareholders' equity 1,593 2,593 2,798 3,017 3,164 3,357 3,805 Net debt/net debt+equity (%) (13.5) 18.8 47.0 50.0 47.4 32.2
Net interest cover (x) 358.2 720.0 94.4 68.0 4.1 8.5
PRODUCTION
Kutubu & SE Mananda (mmboe) 3.6 4.1 3.7 3.1 3.1 3.0 2.6
Moran (mmboe) 3.2 2.5 2.6 2.3 2.5 2.4 2.0
Gobe Main (mmboe) 0.1 0.1 0.1 0.0 0.0 0.0 0.0
SE Gobe (mmboe) 0.5 0.4 0.3 0.2 0.1 0.1 0.0
Nabrajah - Yemen (mmboe) 0.1 0.0 0.0 0.0 0.0 0.0 0.0
Hides - Gas & Liquid (mmboe) 1.0 1.1 1.0 1.1 0.8 0.8 0.8
PNG LNG Trains 1-2 (mmboe) 0.0 0.0 0.0 0.0 0.0 0.0 6.8
Total (mmboe) 8.6 8.1 7.7 6.7 6.5 6.3 12.2
ASSUMPTIONS
A$/US$ 0.853 0.792 0.925 1.028 0.975 0.942 0.911
Oil & Condensate (US$/bbl) 97.36 61.90 80.44 111.13 115.00 120.00 123.00
Domestic Gas (A$/GJ) 3.07 3.15 3.23 3.31 3.39 3.48 3.56
Model updated 27 June 2011, 6:03PM
0
4
3
!2
!6
20
24
23
0
5
!0
!5
20
25
30
2003 2009 20!0 20!!F 20!2F 20!3F 20!4F
FOE ( LHS FOA (FHS
' '
0
200
400
600
800
1,000
1,200
1,400
2008 2009 2010 2011F 2012F 2013F 2014F
$m

Doulscho Bank AC/Sydnoy Pago !3
Figure 11: DB energy matrix
WPL ORG STO OSH AWE NXS DTE NZO.NZ CTX NZR.NZ
Price ($) 35.5! !3.49 !4.00 6.55 !.64 0.!9 0.40 0.74 !3.0! 2.92
Mkt cap ($M) 23,609 !4,652 !3,!92 3,630 356 245 290 29! 3,5!3 3!3
Recommendation Buy Hold Buy Buy Buy Hold Buy Buy Hold Soll
Price Target ($) 44.45 !6.75 !7.90 3.55 !.65 0.40 !.20 !.!3 !0.35 2.50
NPV ($/sh) 47.46 !7.62 !9.39 9.22 !.7! 0.39 !.22 !.!3 !0.37 2.50
P/NPV (x) 0.75 0.77 0.72 0.7! 0.96 0.43 0.32 0.65 !.25 !.!7
EV/EBITDAX 2010 9.49 !4.00 3.06 !9.95 4.4! 63.67 nn 9.27 5.96 7.3!
(EV/ EBITDA f or CTX) 2011F 9.2! !6.70 6.03 !6.39 45.47 7.29 nn 5.67 6.95 9.49
2012F 6.66 3.76 6.33 !6.42 5.02 6.22 nn 4.47 5.49 !0.24
2013F 5.55 3.43 5.45 !6.03 4.05 6.00 nn 5.06 5.30 3.00
EPS (c) 2010 !3!.0 66.4 43.7 !!.0 3.9 0.! 3.! 3.3 !20.9 20.6
2011F 22!.5 7!.0 49.! !7.9 3.0 2.9 2.6 7.7 !0!.! !!.3
2012F 29!.! 30.3 62.6 !5.2 5.4 0.2 !.5 3.5 !29.7 !0.9
2013F 33!.3 73.0 72.3 !3.7 3.! 0.! !.6 7.5 !33.7 !9.3
EPS growth (%) 2010 33.7' !0.3' 43.0' 34.7' !!6.0' !0!.9' nn 62.6' 3.7' !44.6'
2011F 22.4' 6.9' !2.3' 63.6' 24.0' nn !7.4' !04.6' !6.4' 42.9'
2012F 3!.4' !3.2' 27.5' !5.3' nn 9!.9' 40.4' !0.7' 23.4' 7.0'
2013F 3!.0' 2.9' !6.4' 22.9' 47.3' 45.3' 4.4' !2.2' 3.0' 3!.6'
NPAT ($M) 2010 !,4!3 535 376 !44 2! ! !7 !5 3!3 53
2011F !,735 673 453 236 !6 3! !7 3! 262 33
2012F 2,230 37! 594 200 29 3 !2 34 339 3!
2013F 2,937 346 69! 245 43 2 !2 30 350 56
PER (x) 2010 !9.2 23.3 30.5 43.2 65.9 265.6 33.! 42.! 9.3 !7.2
2011F !7.! !9.0 23.5 33.9 55.0 6.4 !5.3 9.6 !2.9 24.3
2012F !3.0 !6.3 22.4 45.9 30.! 79.7 25.7 3.7 !0.0 26.7
2013F 9.9 !7.3 !9.2 37.3 20.4 !47.0 24.6 9.9 9.7 !4.7
P/GCFPS (x) 2010 !3.2 !3.! 9.5 2!.6 3.2 6.3 !4.0 6.! 3.2 5.9
2011F 3.0 !!.3 !0.3 22.3 6.3 !3.3 !3.! 4.3 !3.0 6.7
2012F 7.! !0.2 !3.6 236.2 9.3 9.9 44.3 4.! 9.3 7.3
2013F 6.5 9.5 3.5 23.0 4.4 6.0 !35.5 5.2 3.9 7.5
DPS (c) 2010 !05 50 37 4 5 60 !2
2011F !!2 50 30 4 2 39 3
2012F !45 50 30 4 5 5 50 6
2013F !90 50 30 4 7 65 3
Div YieId (%) 2010 3.0' 3.2' 2.3' 0.3' 3.2' 5.3' 3.4'
2011F 3.2' 3.7' 2.!' 0.6' 2.7' 3.0' 2.7'
2012F 3.3' 3.7' 2.!' 0.6' 3.!' 6.3' 3.9' !.9'
2013F 5.0' 3.7' 2.!' 0.6' 9.5' 5.0' 2.7'
Net debt / 2010 25' !9' !3' !4' !4' 33' !7' 22' !5' !2'
Net debt + equity (%) 2011F 29' 23' !' !9' !4' !9' 4!' 33' 25' 5'
2012F 25' 24' 23' 47' 5' !3' !6' 63' 25' 2'
2013F 20' 30' 27' 50' 6' !4' 3' 63' 25' 7'
ROE (%) 2010 !3.3' 5.3' 5.2' 5.4' !.9' 0.2' 35.7' 3.!' !0.6' !0.!'
2011F !4.7' 6.0' 5.6' 3.!' !.6' 5.3' 5.4' 7.7' 3.3' 5.5'
2012F !7.7' 6.7' 6.5' 6.5' !.9' 0.2' 2.6' 9.5' !4.0' 5.!'
2013F 20.7' 6.!' 7.3' 7.5' 4.5' 0.3' 2.3' 7.9' !3.2' 3.3'
TotaI production (mmboe) 2010 72.7 !3.! 49.3 7.7 6.! !.2 !.! na na
2011F 64.6 23.3 47.! 6.7 6.! 2.6 !.0 na na
2012F 77.9 22.2 52.5 6.5 5.! 4.2 0.0 !.0 na na
2013F 93.0 24.2 56.0 6.3 5.9 4.2 0.4 !.0 na na
Reserves (mmboe) 1P !309 na 649 330 na 5! 0 na na
2P !630 !065 !364 553 73 !22 0 !3 na na
EV/Boe 1P 24.! na !3.3 27.4 na 3.7 nn na na na
2P !3.3 !9.7 9.0 !6.4 !!.7 3.6 nn 24.! na na
ExpIoration & Production Refiners
Notes: 1. EPS figures exclude significant items
2. CTX NPAT is Replacement Cost Operating Profit (RCOP)
3. 2011 figures are CY11 (Dec end) forecasts for WPL, OSH, CTX and NZR.NZ. 2011 figures are FY11 (June end) forecasts for ORG, NXS, AWE, DTE and NZO.NZ
4. WPL, OSH: price, market cap, price target and NPV in A$, all other dollar figures in US$m
Appendix 1
Important DiscIosures
Addilional inornalion availablo upon roquosl
DiscIosure checkIist
Company Ticker Recent price DiscIosure
Oil Soarch OSH.AX 6.55 (AUD 20 Fob !2 A

'Pricos aro sourcod ron local oxchangos via Foulors, Bloonborg and olhor vondors. Dala is sourcod ron Doulscho Bank and subjocl conpanios.

For discIosures pertaining to recommendations or estimates made on securities other than the primary subject of this
research, pIease see the most recentIy pubIished company report or visit our gIobaI discIosure Iook-up page on our
website at hllp://gn.db.con/gor/disclosuro/Disclosuro.oqsr?ricCodo=OSH.AX.

AnaIyst Certification
Tho viows oxprossod in lhis roporl accuraloly rolocl lho porsonal viows o lho undorsignod load analysl(s aboul lho subjocl
issuor and lho socurilios o lho issuor. n addilion, lho undorsignod load analysl(s has nol and will nol rocoivo any
conponsalion or providing a spociic roconnondalion or viow in lhis roporl. John Hirjoo

HistoricaI recommendations and target price: OiI Search (OSH.AX)
(as of 2/20/20!2)
#
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P
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Provious Foconnondalions
Slrong Buy
Buy
arkol Pororn
Undorpororn
ol Falod
Suspondod Faling
Curronl Foconnondalions
Buy
Hold
Soll
ol Falod
Suspondod Faling
'ow Foconnondalion Slrucluro
as o Soplonbor 9, 2002

!. 23/2/20!0: Buy, Targol Prico Chango AUD6.50
2. 3!/3/20!0: Buy, Targol Prico Chango AUD6.40
3. 27/4/20!0: Buy, Targol Prico Chango AUD7.!5
4. 30/6/20!0: Buy, Targol Prico Chango AUD7.00
6. !/!0/20!0: Buy, Targol Prico Chango AUD7.20
7. 26/!0/20!0: Buy, Targol Prico Chango AUD7.30
3. 30/!!/20!0: Buy, Targol Prico Chango AUD7.30
9. !3/!/20!!: Buy, Targol Prico Chango AUD7.95
!0. 25/!/20!!: Buy, Targol Prico Chango AUD7.35
!!. 22/2/20!!: Buy, Targol Prico Chango AUD3.!0
!2. 4/3/20!!: Buy, Targol Prico Chango AUD3.30
!3. !/4/20!!: Buy, Targol Prico Chango AUD9.25
!4. !9/5/20!!: Buy, Targol Prico Chango AUD3.70
!3. 30/9/20!!: Buy, Targol Prico Chango AUD3.!5
!9. 25/!0/20!!: Buy, Targol Prico Chango AUD3.20
20. 5/!2/20!!: Buy, Targol Prico Chango AUD3.25
2!. 9/!2/20!!: Buy, Targol Prico Chango AUD3.45
22. !6/!/20!2: Buy, Targol Prico Chango AUD3.50

Equily raling koy Equily raling disporsion and banking rolalionships
Buy: Basod on a curronl !2 nonlh viow o lolal sharo
holdor rolurn (TSF = porconlago chango in sharo prico
ron curronl prico lo projoclod largol prico plus pro
joclod dividond yiold , wo roconnond lhal invoslors
buy lho slock.
SeII: Basod on a curronl !2nonlh viow o lolal sharo
holdor rolurn, wo roconnond lhal invoslors soll lho
slock
HoId: vo lako a noulral viow on lho slock !2nonlhs
oul and, basod on lhis lino horizon, do nol roconnond
oilhor a Buy or Soll.
Notes:
!. owly issuod rosoarch roconnondalions and largol
pricos always suporsodo proviously publishod rosoarch.
2. Falings doinilions prior lo 27 January, 2007 woro:
Buy: Expoclod lolal rolurn (including dividonds o
!0' or noro ovor a !2nonlh poriod
Hold: Expoclod lolal rolurn (including dividonds
bolwoon !0' and !0' ovor a !2nonlh poriod
Soll: Expoclod lolal rolurn (including dividonds o
!0' or worso ovor a !2nonlh poriod

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
30
!00
!20
!40
Buy Hold Soll
Auslralia Univorso
Conpanios Covorod Cos. w/ Banking Folalionship

ReguIatory DiscIosures
1. Important AdditionaI ConfIict DiscIosures
Asido ron wilhin lhis roporl, inporlanl conlicl disclosuros can also bo ound al hllps://gn.db.con/oquilios undor lho
'Disclosuros Lookup' and 'Logal' labs. nvoslors aro slrongly oncouragod lo roviow lhis inornalion booro invosling.

2. Short-Term Trade Ideas
Doulscho Bank oquily rosoarch analysls sonolinos havo shorlorlorn lrado idoas (known as SOLAF idoas lhal aro consislonl
or inconsislonl wilh Doulscho Banks oxisling longor lorn ralings. Thoso lrado idoas can bo ound al lho SOLAF link al
hllp://gn.db.con.

3. Country-Specific DiscIosures
Auslralia and ow Zoaland: This rosoarch, and any accoss lo il, is inlondod only or 'wholosalo clionls' wilhin lho noaning o
lho Auslralian Corporalions Acl and ow Zoaland Financial Advisors Acl rospoclivoly.
Brazil: Tho viows oxprossod abovo accuraloly rolocl porsonal viows o lho aulhors aboul lho subjocl conpany(ios and
ils(lhoir socurilios, including in rolalion lo Doulscho Bank. Tho conponsalion o lho oquily rosoarch analysl(s is indiroclly
aoclod by rovonuos doriving ron lho businoss and inancial lransaclions o Doulscho Bank.
EU counlrios: Disclosuros rolaling lo our obligalions undor iFiD can bo ound al
hllp://www.globalnarkols.db.con/riskdisclosuros.
Japan: Disclosuros undor lho Financial nslrunonls and Exchango Law: Conpany nano Doulscho Socurilios nc. Fogislralion
nunbor Fogislorod as a inancial inslrunonls doalor by lho Hoad o lho Kanlo Local Financo Buroau (Kinsho o. !!7.
onbor o associalions: JSDA, Typo Financial nslrunonls Firns Associalion, Tho Financial Fuluros Associalion o Japan,
Japan Socurilios nvoslnonl Advisors Associalion. Connissions and risks involvod in slock lransaclions or slock
lransaclions, wo chargo slock connissions and consunplion lax by nulliplying lho lransaclion anounl by lho connission
ralo agrood wilh oach cuslonor. Slock lransaclions can load lo lossos as a rosull o sharo prico luclualions and olhor aclors.
Transaclions in oroign slocks can load lo addilional lossos slonning ron oroign oxchango luclualions. 'oodys',
'Slandard & Poors', and 'Filch' nonlionod in lhis roporl aro nol rogislorod crodil raling agoncios in Japan unloss Japan or
'ippon' is spociically dosignalod in lho nano o lho onlily.
Fussia: This inornalion, inlorprolalion and opinions subnillod horoin aro nol in lho conloxl o, and do nol conslilulo, any
appraisal or ovalualion aclivily roquiring a liconso in lho Fussian Fodoralion.

Deutsche Bank AG/Sydney
InternationaI Iocations
Deutsche Bank Securities Inc.
60 vall Slrool
ow York, Y !0005
Unilod Slalos o Anorica
Tol: (! 2!2 250 2500
Deutsche Bank AG London
! Croal vinchoslor Slrool
London EC2 2EO
Unilod Kingdon
Tol: (44 20 7545 3000
Deutsche Bank AG
Croo Callusslrao !0!4
60272 Frankurl an ain
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Doulscho Bank Placo
Lovol !6
Cornor o Hunlor & Phillip Slrools
Sydnoy, Sv 2000
Auslralia
Tol: (6! 2 3253 !234
Deutsche Bank AG
Filialo Hongkong
nlornalional Connorco Conlro,
! Auslin Foad vosl,Kowloon,
Hong Kong
Tol: (352 2203 3333
Deutsche Securities Inc.
2!!! agalacho
Sanno Park Towor
Chiyodaku, Tokyo !006!7!
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer
Tho inornalion and opinions in lhis roporl woro proparod by Doulscho Bank AC or ono o ils ailialos (colloclivoly 'Doulscho Bank'. Tho inornalion horoin is boliovod lo bo roliablo and has boon oblainod ron public sourcos
boliovod lo bo roliablo. Doulscho Bank nakos no roprosonlalion as lo lho accuracy or conplolonoss o such inornalion.
Doulscho Bank nay ongago in socurilios lransaclions, on a propriolary basis or olhorwiso, in a nannor inconsislonl wilh lho viow lakon in lhis rosoarch roporl. n addilion, olhors wilhin Doulscho Bank, including slralogisls and
salos sla, nay lako a viow lhal is inconsislonl wilh lhal lakon in lhis rosoarch roporl.
Opinions, oslinalos and projoclions in lhis roporl conslilulo lho curronl judgononl o lho aulhor as o lho dalo o lhis roporl. Thoy do nol nocossarily rolocl lho opinions o Doulscho Bank and aro subjocl lo chango wilhoul
nolico. Doulscho Bank has no obligalion lo updalo, nodiy or anond lhis roporl or lo olhorwiso noliy a rocipionl lhoroo in lho ovonl lhal any opinion, orocasl or oslinalo sol orlh horoin, changos or subsoquonlly boconos
inaccuralo. Pricos and availabilily o inancial inslrunonls aro subjocl lo chango wilhoul nolico. This roporl is providod or inornalional purposos only. l is nol an oor or a solicilalion o an oor lo buy or soll any inancial
inslrunonls or lo parlicipalo in any parlicular lrading slralogy. Targol pricos aro inhoronlly inprociso and a producl o lho analysl judgononl.
As a rosull o Doulscho Banks arch 20!0 acquisilion o BHFBank AC, a socurily nay bo covorod by noro lhan ono analysl wilhin lho Doulscho Bank group. Each o lhoso analysls nay uso dioring nolhodologios lo valuo
lho socurily, as a rosull, lho roconnondalions nay dior and lho prico largols and oslinalos o oach nay vary widoly.
n Augusl 2009, Doulscho Bank inslilulod a now policy whoroby analysls nay chooso nol lo sol or nainlain a largol prico o corlain issuors undor covorago wilh a Hold raling. n parlicular, lhis will lypically occur or 'Hold' ralod
slocks having a narkol cap snallor lhan nosl olhor conpanios in ils soclor or rogion. vo boliovo lhal such policy will allow us lo nako bosl uso o our rosourcos. Ploaso visil our wobsilo al hllp://gn.db.con lo dolornino lho
largol prico o any slock.
Tho inancial inslrunonls discussod in lhis roporl nay nol bo suilablo or all invoslors and invoslors nusl nako lhoir own inornod invoslnonl docisions. Slock lransaclions can load lo lossos as a rosull o prico luclualions and
olhor aclors. a inancial inslrunonl is dononinalod in a curroncy olhor lhan an invoslors curroncy, a chango in oxchango ralos nay advorsoly aocl lho invoslnonl. Pasl porornanco is nol nocossarily indicalivo o uluro
rosulls. Doulscho Bank nay wilh rospocl lo socurilios covorod by lhis roporl, soll lo or buy ron cuslonors on a principal basis, and considor lhis roporl in dociding lo lrado on a propriolary basis.
Unloss govorning law providos olhorwiso, all lransaclions should bo oxoculod lhrough lho Doulscho Bank onlily in lho invoslors hono jurisdiclion. n lho U.S. lhis roporl is approvod and/or dislribulod by Doulscho Bank
Socurilios nc., a nonbor o lho YSE, lho ASD, FA and SPC. n Cornany lhis roporl is approvod and/or connunicalod by Doulscho Bank AC Frankurl aulhorizod by lho BaFin. n lho Unilod Kingdon lhis roporl is approvod
and/or connunicalod by Doulscho Bank AC London, a nonbor o lho London Slock Exchango and rogulalod by lho Financial Sorvicos Aulhorily or lho conducl o invoslnonl businoss in lho UK and aulhorizod by lho BaFin.
This roporl is dislribulod in Hong Kong by Doulscho Bank AC, Hong Kong Branch, in Koroa by Doulscho Socurilios Koroa Co. This roporl is dislribulod in Singaporo by Doulscho Bank AC, Singaporo Branch, and rocipionls in
Singaporo o lhis roporl aro lo conlacl Doulscho Bank AC, Singaporo Branch in rospocl o any nallors arising ron, or in connoclion wilh, lhis roporl. vhoro lhis roporl is issuod or pronulgalod in Singaporo lo a porson who is
nol an accrodilod invoslor, oxporl invoslor or inslilulional invoslor (as doinod in lho applicablo Singaporo laws and rogulalions, Doulscho Bank AC, Singaporo Branch accopls logal rosponsibilily lo such porson or lho conlonls
o lhis roporl. n Japan lhis roporl is approvod and/or dislribulod by Doulscho Socurilios nc. Tho inornalion conlainod in lhis roporl doos nol conslilulo lho provision o invoslnonl advico. n Auslralia, rolail clionls should oblain
a copy o a Producl Disclosuro Slalononl (PDS rolaling lo any inancial producl roorrod lo in lhis roporl and considor lho PDS booro naking any docision aboul wholhor lo acquiro lho producl. Doulscho Bank AC
Johannosburg is incorporalod in lho Fodoral Fopublic o Cornany (Branch Fogislor unbor in Soulh Arica: !993/003293/!0. Addilional inornalion rolalivo lo socurilios, olhor inancial producls or issuors discussod in lhis
roporl is availablo upon roquosl. This roporl nay nol bo roproducod, dislribulod or publishod by any porson or any purposo wilhoul Doulscho Banks prior wrillon consonl. Ploaso cilo sourco whon quoling.
Copyrighl 20!2 Doulscho Bank AC

Property

20 Fobruary 20!2
GPT Group
Foulors: GPT.AX Bloonborg: GPT AU Exchango: ASX Tickor: GPT
FY!! Fosull: Upsido oarnings
polonlial wilh oxoculion risk
Jason Weate
Fosoarch Associalo
(+6! 2 32533099
jason.woalo@db.con
Ian RandaII
Fosoarch Analysl
(+6! 2 32532609
ian.randall@db.con

Execution of growth drivers required. Pricing supported in the interim.
vhilo lodays rosull did slighlly oxcood our (& lho narkols oxpoclalions, or CPT
lo conlinuo lhis lrond in our viow roquiros oxoculion o: incrononlal loasing al !!!
Eaglo Sl, urlhor cosl oicioncios, buying back o slock, & accrolivo acquisilions.
Pricing has nodoraloly rolracod in lho load up lo rosulls, and wo boliovo lhal
roconnoncononl o CPTs buyback should provido pricing supporl whilo CPT
polonlially dononslralos oxoculion on growlh drivors. Al curronl pricing wo viow
CPT as ully pricod rolalivo lo AFET poors. Hold.
Year Ehd Dec 31 2010A 2011E 2012E 2013E 2014E
EPU (AUD 0.2! 0.22 0.23 0.24 0.24
EPU Crowlh (' !2.9 7.0 3.2 2.6 2.6
DPU (nol (AUD 0.!6 0.17 0.!3 0.!9 0.!9
Yiold (nol (' 5.7 5.6 5.3 5.9 6.!
!
2
yoar ond closo

CA(P !46/04/20!!.
ResuIts

HoId
Prico al 20 Fob 20!2 3.12
ALL OFDAFES 4,333

2.4
2.6
2.3
3.0
3.2
3.4
2/!0 5/!0 3/!0 !!/!0 2/!! 5/!! 3/!! !!/!!
CPT Croup
ALL OFDAFES (Fobasod
Absolulo 0.6 2.0 -!.3

Stock data
Froo loal 0.00

ol dobl/assols (x 0.23
TA/sharo (Ac 373.5
Prico/TA (x 0.8
EF (' 0.0

C
o
m
p
a
n
y

G
I
o
b
a
I

M
a
r
k
e
t
s

R
e
s
e
a
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c
h

FY11 ResuIt broadIy in Iine. FY12 guidance provides upside potentiaI.
CPT roporlod FO o $433.3n (booro oxchangoablos, !.6' ahoad o our
$43!.3n orocasl. Posl oxchangoablos, oporaling incono allribulablo lo ordinary
sharoholdors was $4!3.3n or 22.4cps, rolocling 3.!' growlh on pcp vs CPTs
prior oxpoclalion o 7' growlh (lasl roairnod in Ocl!!. FY!! dislribulions woro
!7.3c vs our !7.5c orocasl. TA has ronainod rolalivoly slablo al $3.59ps, down
!.3' vs $3.64 al Jun!! which was largoly allribulablo lo 3c o dorivalivo valuo
doclinos (inlorosl ralo swaps. FY!2 EPS has boon guidod lo grow al loasl CP +
!' on FY!!, howovor, lhis assunos slalic occupancy al !!! Eaglo Sl (53' by
aroa & doos nol allow or accrolion lhal would likoly rosull ron conlinuod
buyback aclivily (anolhor 2.5' slock lo roach 5' largol. vo would highlighl lhal
CPT oxcoodod ils original FY!0 guidanco by 9', & FY!! guidanco by ~44.5'.
Softer tone re MLC saIe. 111 EagIe St Iease-up & industriaI to drive growth
vhilsl wo boliovo CPT is slill a willing sollor o lho LC Conlro, rosull
connonlary in our viow suggosls a roducod likolihood o lhis occurring ovor lho
ST duo lo broador narkol condilions. Our analysis suggosls a succossul salo
could polonlially load lo a ~4' lil in payoul ralio givon roducod capox
roquirononls. vo boliovo CPT could oxcood ils FY!2 EPS guidanco should il
socuro urlhor lonancios al !!! Eaglo Sl ovor lho noxl quarlor. Assuning an
incroaso in incono producing lonancios in 4O!2 (lo 30', oxoculion o addilional
2.5' o slock acquirod ovor !H!2, & anolhor $!00n o induslrial assol
acquisilions by ond !H!2 would lil EPS growlh oxpoclalions by al loasl ~!00bps
on our oslinalos.
Price target $3.12 (unchanged) at discount to $3.23ps SOTP vaIuation
Our FY!3 SOTP valualion or CPT is $3.23ps, using 6.25' rolail cap ralo & 7.25'
oico. Upsido risks includo: polonlial or sharo buyback, Downsido risks rovolvo
around oxlonding vacancy allowancos on dovolopnonl projocls.
20 Fobruary 20!2 Proporly CPT Croup
Model updat ed: 19 January 2012
Y/ E 31 December 2007 2008 2009 2010 2011E 2012E 2013E 2014E 2015E
Tot al t rust income 888 752 582 583 583 604 622 633 655
Int erest accrued 254 250 201 185 144 151 157 156 154
Managers f ee 40 46 31 24 24 25 26 27 28
Ot her expenses 0 0 0 0 0 0 0 0 0
Tot al t rust expenses 295 296 232 208 168 176 183 183 182
Net operat ing income 605 471 376 410 432 434 440 450 473
Adjust ment s 0 -2 -25 -25 -25 -25 -25 -25 -25
Income ret ained 10 35 0 82 86 87 88 90 95
Dist ribut able income 595 434 351 303 320 322 327 335 353
CASH FLOW ( A$m)
Operat ing prof it / loss 605 471 376 410 432 434 440 450 473
Ot her -118 -104 -264 -23 -17 -6 0 0 0
Net cash f rom operat ing act ivit ies 487 367 112 387 415 428 440 450 473
Tot al propert y invest ment -589 -507 -54 -219 324 7 -76 -76 -64
Proceeds f rom borrowings 712 -639 -2,232 161 -259 44 -12 -14 -31
Proceeds f rom equit y 102 1,782 1,630 0 -135 -131 0 0 # N/ A
Dist ribut ion paid -421 -392 -367 -335 -345 -347 -352 -360 -378
Cash f rom f inancing act ivit ies 393 752 -969 -174 -739 -435 -364 -374 # N/ A
Net inc/ (dec) in cash 291 612 -911 -6 0 0 0 0 # N/ A
+612 8258 2609 ian.randall@db.com
BALANCE SHEET ( A$m)
Cash 350 962 51 45 45 45 45 45 45
+612 8258 3099 jason.weat e@db.com Debt ors 271 346 13 6 6 6 6 6 6
Trust propert ies 7,794 7,602 6,659 7,304 7,142 7,284 7,505 7,730 7,946
Int angibles 191 49 16 52 52 52 52 52 52
Ot her 5,361 4,071 2,424 2,345 2,345 2,345 2,345 2,345 2,345
Tot al asset s 13,967 13,030 9,163 9,752 9,590 9,732 9,953 10,178 10,394
Credit ors & accruals 511 1,199 181 196 196 196 196 196 196
Dist ribut ion payable 0 0 0 0 0 0 0 0 0
Financial debt 0 5,013 2,184 2,453 2,193 2,237 2,225 2,211 2,180
Ot her 5,161 5 130 149 149 149 149 149 149
Tot al liabilit ies 5,672 6,218 2,495 2,797 2,538 2,582 2,570 2,556 2,525
Equit y at issue price 4,966 6,850 8,480 8,480 8,345 8,214 8,214 8,214 8,214
Reserves 596 -2,806 -4,580 -4,376 -4,230 -4,087 -3,942 -3,793 -3,641
Ret ained income 2,733.4 2,768.2 2,768.2 2,850.2 2,936.6 3,023.4 3,111.4 3,201.4 3,296.0
Ot her 0 0 0 0 0 0 0 0 0
Tot al t rust equit y 8,295 6,812 6,668 6,955 7,052 7,150 7,384 7,622 7,869
RATI O ANALY SI S
52-week High/ Low: A$3.25 - 2.71 Year end debt (m) 4,995 5,013 2,184 2,453 2,193 2,237 2,225 2,211 2,180
Market Cap (m) A$ 5,645 Debt / asset s (%) 35.8 31.1 23.3 25.1 22.9 23.0 22.4 21.7 21.0
US$ 6,006 Net debt / equit y (%) 56.0 59.5 32.0 34.6 30.5 30.7 29.5 28.4 27.1
Int erest cover (x) 3.5 2.9 2.9 3.2 4.0 3.9 3.8 3.9 4.1
Management expense rat io 0.3 0.4 0.3 0.2 0.3 0.3 0.3 0.3 0.3
Target price
438
163
21 0 31 0
412
16
Net invest ment income
Jason Weat e
279
Ian Randall
160
GPT Group is one of Aust ralia' s largest AREITs,
being a st apled securit y comprising an unit in t he
t rust and a share in t he management company. GPT
has t hree int er-linked businesses, each based on
invest ment propert y, being ownership, development
and management wit h asset s in Aust ralia, New
Zealand, Europe and t he USA.
Company descri pt i on
26,451
2.95
11.4
Price as at 20-Feb A$3.12
Reut ers: GPT.AX Bloomberg: GPT AU
Yield rel Propet y t rust s (x)
Price/ NTA (x)
2.33 2.65
439
http://www.gpt.com.au
Ot her income 122
160 Net associat es
5.8
Int erest income
1.45
8.9
0.241
2.6
Company website
-16
4467
AusIralia
DPU ($)
Equity Research
6.9 -35.0
0.957
Asia Pacific
Property Trusts EPU ($)
10.9
The GPT Group
PER (x) 8.1
442
5,645 13,127 4,783 6,065
408
1.09
na
SUM M ARY
2450
0.886 0.238
1856
NTA/ share ($) 19.30
9.0
5.3 2.6
0.190
2056
5.2
1.447
EFPOWA (m)
2100 Year end unit s (m)
0.75
3.74 3.88
0.80
3.2
1787
0.254
0.185
2.6
0
131
0 0
0 0
0
160
9 12
133
0.82
5,645
464
0
0.76
1.02 0.99 Yield rel All Ind (x)
Average Market Cap (A$m)
A$3.12 P ROFIT & LOSS ( A$ m)
HoId
Research Team
Corporat ion income
Dividend yield (%)
1.08 0.83
5.9
0.84 0.78
3.46
DPU growt h (%)
0.238
0.44 0.50
7.15
0.77
5.7
3.59
11.3
0.80
-12.9
13.9 12.9
-31.5
EPU growt h (%)
-73.1
1.472
-38.8
0.207
-75.1
0.229
1764
1764
1764
1764 1764
1764
0.180 0.200
0.235
1809 9278 1856
1832
0.163
1764
0.175
7361
7.1
5.6
0.54
0.222
7.0
14.1 13.6
0
6.1
5.2
4.01
0.80
0.91
3.2
0.97 0.91
0.80
4.27
0.73
0 0
2.6
13.3 12.3
6.4
4.14
0
5,645
479 507 489
5,645 5,645
0
0
9 9 9
136
9
139 134
OIIice
39%
PeIail
50%
IhdusIrial
4%
HoIel
7%
Asset Type (%)
0.6%
2.0%
-1.3%
-2% -1% 0% 1% 2% 3%
1m
3m
12m
0
5
10
15
20
25
30
35
0
2000
4000
6000
8000
10000
12000
14000
08 09 10 11E 12E 13E 14E 15E
ToIal asseIs (A$m) (LHS)
DebI/asseIs (PHS)
Gearing
NSW 52%
VIC 23%
OLD 10%
ACT 6%
OIher
9%
Geographic spread (%)

The resuIt
CPT roporlod roalisod oporaling incono o $433.3n (booro oxchangoablos, !.6' ahoad o
our orocasl o $43!.3n. Alor doducling $25n o oxchangoablos coupons, oporaling incono
allribulablo lo ordinary sharoholdors was $4!3.3n or 22.4cps. Al ils Sop!! quarlorly, CPT
roiloralod lhal il was on lrack lo dolivor 7' EPU growlh vs FY!0. Todays rosull oxcood
lhis guidanco and our orocasl (+7' by dolivoring 3.!' growlh yoy. CPT doclarod an FY!!
dislribulion o !7.3cps vs our !7.5cps oslinalo. TA has doclinod narginally by !.3' lo
$3.59 (vs $3.64 al Jun!! drivon by narklonarkol inlorosl ralo swap valualion doclinos.
Figuro ! bolow shows lho conposilion o lho rosull rolalivo lo our orocasls. Fosulls ron
coro proporly incono across various subsoclors woro gonorally abovo our oxpoclalions, in
parl osol by lowor capilalizod inlorosl lhan wo had allowod or.
Figure 1: FY10 resuIt reIative to expectations
1H12a DB FY11I CommehIs
Oico (Farror Pl, Park Sl 46.0 43.9
CvOF 53.6 5!.2
Tolal oico associalos, JV 99.6 95.!
Erina 9.0 9.0
CvSCF 22.3 24.!
Tolal rolail associalos, JV 3!.3 33.!
Tolal US soniors 3.6 3.6
Tolal associalos proil pro inlorosl !40.0 !36.3

Oico P 70.! 7!.4 Conp O growlh o 4.0', occupancy o 94.2'
Folail P 299.6 293.6 Conp O growlh o 3.6', occupancy 99.4'
nduslrial P 56.5 53.3 Conp O growlh o 2.3', drivon by ixod incroasos
Holol P 2!.0 !3.6
Funds anagononl ncono !4.6 !4.5 $2.3n conlribulion ron disconlinuod Europo oporalions
Corporalo ovorhoads 3!.! 33.! ncono lax bonoil o $9n groalor lhan oxpoclod duo lo 20!0 ilons
Borrowing cosls Trusl !3!.9 !23.2 Tining o assol salos & solldown o inlorosl in wholosalo unds, Avorago
20!!inlorosl ralo o 6.6'. CPT guidanco o 6.2' in FY!2
ReaIised operating income (pre exchangeabIes) 438.8 431.8
Exchangoablo socurilios 25.0 25.0 !0' coupon on $250n oxchangoablo socurily
Operating earnings (after exchangeabIes) 413.8 406.8
ROI per security 22.4c 22.2c
Guidance: CPT has guidod lo FY!2 roalisod oporaling incono o al loasl CP +!', lo bo
drivon by cosl oicioncios achiovod ovor FY!!, oxoculion o 2.5' sharos ropurchasod,
accrolivo roducod slakos in wholosalo unds, and a conlinualion o non incono producing
assol salos . vo highlighl koy CPT guidanco assunplions bolow:
#
o allowanco or conlinualion o lho groups oxisling sharo buyback progran o up lo
5' issuod capilal (vs 2.5' curronlly conplolo,
#
o incrononlal loasing al !!! Eaglo Sl (vs 53' LA curronlly connillod, which inplios
$7n oarnings drag associalod wilh cosl o borrowings lo bo oxponsod posl PC
(~!nonlh lino,
#
Folonlion o LC Conlro,
#
Avorago allin cosl o borrowings o 6.2' (vs 5.92' spol,
#
FY inpacl o savings associalod wilh inlornalizalion o wholly ownod proporlios (~$!n,
#
Flal nanagononl oxponsos vs FY!!a (including onoos associalod wilh rodundancios
ovor lho poriod, and
#
Fovorsion o lax incono bonoils gonoralod ron lho nanagononl conpany ron ~$9n
oxporioncod FY!! lo ~$7n in FY!2.
We forecast 4.5% growth into FY12: Folalivo lo CPTs FY!2 guidanco and assunplions
(abovo, our oslinalos also allow or conplolion o CPTs 5' sharo buyback ovor !H!2, in
addilion lo incrononlal loasing al !!! Eaglo Sl (75' incono producing by ond Sop!2.
Conbinod, lhoso lwo assunplions conlribulo ~0.5' addilional oarnings growlh rolalivo lo
CPTs basocaso assunplions. Furlhor, wo oxpocl rolail conp O growlh lo bo narginally
bolow lho 3.6' gonoralod ovor FY!!, allowing or lal roloasing sproads (vs 2' in FY!!
whilsl assuning occupancy ronains broadly in lino wilh curronl lovols (~99'. vo do nol
assuno incrononlal induslrial acquisilions.
Other highIights
#
!!! Eaglo Sl loasing lracking slighlly ahoad: Loasing al lho silo is now 53' connillod
by loor spaco (33,335n, wilh lho najorily o loasos oxpoclod lo bo incono producing
by !April. Loasos lo dalo havo avorago $309/n, roquiring inconlivos o ~25'.
Assuning slalic occupancy ovor lho balanco o FY!2, nanagononl oxpocl associalod
dobl cosls lo lranslalo lo a ~$7n (~!.5' EPU oarnings drag. vhilsl CPTs oarnings
guidanco doos nol allow or incrononlal loasoup, wo boliovo il is likoly urlhor lonanls
will bo socurod and conlribulo incono ovor lho 2H lhus providing scopo or CPT lo
oxcood ils oarnings largol.
#
Solor lono ro LC salo prospocls: vo woro sonowhal surprisod by CPTs nolicoably
solonod slanco ro lho likolihood o LC conlro lransacling ovor lho shorl lorn. Fosull
call connonlary suggoslod roluclanco ro polonlially lransacling al bolow curronl book
valuo ($363n, a viow sharod by bolh CPT & coownor CC. Tho salo o lho assol would
cloarly roduco CPTs oxisling 30' oico oxposuro, howovor, nanagononl did loday
conirn lhal woro LC lo bo sold, lhoro would bo roplonishnonl o oico slock. CPTs
basocaso assunplion includos rolonlion o LC which would incur $35n o capox lo
rocliy lho aado ovor lho 2.5 yrs. vo oslinalo ~$!0n would likoly bo capilalizod ovor
FY!2.
#
vo oslinalo succossul salo o LC could soo a 4' lil in payoul ralio: Our baso caso
orocasls allow or ~$35n capox (50' inlorosl across FY!2FY!4 lo rolocl an upgrado
lo lho building aado only (i.o. oxcluding polonlial inconlivos rolaling lo Froohills oxpiry.
succossul wilh lho salo o lho proporly, rolalivo lo our baso caso orocasls EPS could
polonlially lil by ~2' in FY!4 assuning capilal is roinvoslod ovonly bolwoon a sharo
buyback, dovolopnonl and acquisilions. AFFO would bo up by bolwoon 45' pa in
FY!2FY!4 on our oslinalos.
#
Accrolivo nduslrial acquisilions likoly lo conlinuo: Al Jun!! rosulls, CPT rosull
connonlary slalod an inlonlion lo grow lho induslrial porlolio ovor lino, via acquisilion,
whoro opporlunilios ariso. Todays announcononl ro lho acquisilion o Ciliporl in Porl
olbourno ($6!n is in lino wilh lhis slralogy, and is oxpoclod lo solllo in oarly arch.
Fosull call connonlary suggosls lhal a nunbor o olhor proporlios woro considorod as
parl o DD, and CPT will conlinuo lo sook acquisilions lypically largor lhan $40n lhal aro
yiolding in oxcoss o 3'. Assuning incrononlal cosl o dobl unding o 6.2', ovory
$!00n o induslrial acquisilions should bo ~0.5' oarnings accrolivo (on a FY basis on
our oslinalos.
#
Caulious oullook on lho rolail soclor: vhilsl rolail conp O growlh cano in al a
rospoclul 3.6', conlinuod sol conp salos growlh o 0.3' (vs 0.4' Sop!! and
doclining roloaso sproads o 2' (vs 3.0' or 9nonlhs lo Sop!!and 4.6' or 6nonlhs
lo Jun!! woro a narginal disappoinlnonl. Tonanl adninislralions woro includod in lho
roloaso sproad hoadlino nunbor, rolocling 22 loasos (ron 30 adninislralion vacancios
socurod ovor lho poriod. anagononl oxpocl salos growlh lo conlinuo lracking al lal
lovols ovor FY!2, whilsl il boliovos roloaso sproads will likoly lrack al lal lo slighlly
nogalivo growlh. Spocially salos growlh o !.2' roloclod noro subduod lrading
condilions ovor lho 2H, wilh loisuro and honowaros conlribuling lo lho drag showing
salos doclinos o 4' oach.
#
urray roso loasoup a brighl spol: Conslruclion o urray Foso al Sydnoy Olynpic Park
has progrossod woll, roaching HoA across !00' LA lo lho Lion Croup, woll ahoad o
largol.
#
nlorosl cosl roduclions: CPT conlinuos lo roduco is allin cosl o borrowings via lighlor
liquidily nanagononl, oxlonsion o choapor loans vs cancollalions o noro oxponsivo
loans, in addilion lo cancollalion o OT inlorosl ralo hodgos. Ovor lho poriod CPT
cancollod ~$900n o inlorosl ralo hodgos (al a lolal cosl o $60n posl divoslnonl o
$700n assols, roducing ils woighlod avorago basoralo by ~70bps lo ~4.4' (vs 5.!' in
Jun!!. n our viow CPTs hodgo book (and nargin oxponsos has boon broughl in lino
wilh narkol ralos, and wo soo lilllo scopo or inlorosl cosl savings ron urlhor dobl
roslrucluring (in lho absonco o nalorial cash ralo roduclions.
#
nlornalisalion o proporly nanagononl producing langiblo rosulls: As al !Fob, CPTs
wholly ownod assols will all bo inlornally nanagod, and aro oxpoclod lo gonoralo $!n
cosl savings on a FY basis.
Summary of portfoIio, key stats
Conparablo porlolio incono growlh o 3.6' was prodoninanlly drivon by oico and rolail
incono growlh o 4.0' and 3.6' rospoclivoly, wilh lho induslrial porlolio gonoraling 2.3'
growlh.
Oico porlolio occupancy docroasod ovor lho poriod lo 96.5' ron 97.5' al Juno!!.
Howovor, wo oxpocl curronl lovols lo oxporionco groalor downward prossuro in 20!2 as !!!
Eaglo Sl is conplolod givon lhal il is curronlly only 53' connillod by loor spaco (alboil
ahoad o largolod 40' by PC.
Tho ollowing lablo is a sunnary o koy porlolio slalislics.
Figure 2: Key PortfoIio Statistics
Dec-05 Juh-06 Dec-06 Juh-07 Dec-07 Juh-08 Dec-08 Juh-09 Dec-09 Juh-10 Dec-10 Juh-11 Dec-11
Folail
Conparablo spocially salos
growlh
3.3' !.4' 2.3' 3.9' 4.0' 4.4' 2.3' 3.6' 3.2' 0.2' 0.5' 2.!' !.2'
Spocially occupancy cosls !4.7' !5.0' !6.!' !5.9' !6.2' !6.3' !6.6' !6.6' !6.3' !7.4' !7.7' !7.3' !7.6'
Conparablo O/incono growlh 4.3' 3.5' 4.!' 6.!' 4.3' 6.2' 4.5' 4.9' 4.3' 4.0' 4.7' 4.!' 3.6'
Oico
Occupancy 94.9' 96.0' 93.0' 93.0' 93.7' 99.0' 99.0' 93.7' 95.9' 95.7' 97.3' 97.5' 96.5'
Conparablo O/incono growlh 0.0' !4.5' !0.3' !0.6' 6.3' 7.4' 7.3' 3.0' 2.6' 3.9' !.6' 3.4' 4.0'
nduslrial
Occupancy 93.4' 97.0' 97.0' 93.6' 93.0' !00.0' !00.0' 99.0' 96.5' 97.0' 93.4' 93.3' 93.4'
Conparablo O/incono growlh 7.5' 3.0' 5.7' 3.5' 3.7' 5.3' 3.3' 7.0' 2.5' 2.2' 2.7' 2.3' 2.3'
Coaring balanco shool 35.0' 32.3' 35.3' 3!.9' 36.3' 37.3' 33.7' 22.2' 23.5' 25.5' 24.9' 2!.0' 22.9'
Source. Deutsche Bank, conpan, data
Folail conp O growlh o 3.6' (vs 4.!' Jun!! was lonporod by woakor roloaso sproad
growlh o 2' ovor lho poriod, whilsl conp spocially salos growlh o !.2' (2.!' Jun!!
was inpaclod by a woakor lhan oxpoclod lrading condilions ovor lho 2H. Occupancy cosls
roso slighlly lo !7.6' (vs jun!! o !7.3', allhough lhis rosull oxcludos Highpoinl Conlro
(2!.5' occ. cosl givon il is undorgoing rodovolopnonl. Tho rolail porlolio is undorpinnod in
20!! by ~36' o loasos subjocl lo slruclurod 4.5' ronlal incroasos and occupancy curronlly
al 99.4'. Allhough il is worlh noling lhal arroars incroasod 20bps lo 0.5' ovor lho poriod
(vs 0.3' in pcp.
Figure 3: SpeciaIty retaiI occupancy costs

Figure 4: ComparabIe speciaIty retaiI saIes growth
14.7%
15.0%
16.1%
15.9%
16.2%
16.3%
16.6% 16.6%
16.8%
17.4%
17.7%
17.3%
17.6%
13.0%
13.5%
14.0%
14.5%
15.0%
15.5%
16.0%
16.5%
17.0%
17.5%
18.0%

0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%

GPT office portfoIio
Tho oico porlolio oxporioncod slrong conparablo incono growlh o 4.0' vs. !.6' pcp,
whilsl occupancy docroasod !00bps sinco Jun!! lo 96.5'. 93,65!sqn o oico spaco was
loasod ovor lho ull yoar wilh a urlhor !3,237 sqn lorns agrood al poriod ond. Loaso
sproads cano in al +6.0', and aro roloclivo o ooclivo ronls al lho assols (i.o. no
adjuslnonls or anorlizalion o ilouls vs ronl roo.
Tho Oico porlolio cap ralo irnod narginally lo 7.07' vs. 7.!4' pcp whilsl lho vALE was
4.7 yoars al lho ond o Doc!!. 33' o CPTs loasos aro subjocl lo ixod incroasos which
avorago 4.0'.
VaIuation and Risks
Our SOTP valualion or CPT is $3.23ps. Koy nolrics in lho SOTP valualion includo FY!!E
ungoarod cap ralo o 6.2' lo rolail porlolio P (ox Hononakor. 7.!' or lho oico
porlolio & 3.4' or induslrial.
Our PT o $3.!2 is sol al a slighl discounl lo valualion, duo in parl lo lho loasing risks
associalod wilh lho conplolion o !!! Eaglo Sl. Tho associalod capox roquirononls (&
downlino aro likoly lo placo prossuro on CPTs undorlying cashlow ron oporalions, which
would rosull in a rolalivoly oxponsivo prico/cashlow nolric rolalivo lo conps, i CPT was lo
lrado lo our SOTP valualion.
Downsido risks includo accoloralod roduclion in occupancy across lho invoslnonl porlolio,
and spociically risk around lho !!! Eaglo Sl dovolopnonl curronlly undor conslruclion. CPT
has a dirocl 33' inlorosl in lho projocl plus an indirocl inlorosl lhrough a nanagod
wholosalo und. Tho projocl is curronlly al 49' lorns agrood, wilh loasing risk ronaining.
Olhor spociic risks includo downsido ron lho LC Conlro, i CPT aro unsuccossul in solling
lho proporly prior lo lho loaso oxpiry in 20!2/!3.
Upsido risks includo progross on urlhor noncoro assol salos & dobl roduclion, groalor lhan
oxpoclod cosl savings, and lho polonlial or capilal nanagononl inilialivos lo bo undorlakon
(io sharo buyback
Appendix 1
CPT Croup CPT.AX 3.!2 (AUD 20 Fob !2 6,7,!4,!7


Important DiscIosures Required by U.S. ReguIators
Disclosuros narkod wilh an aslorisk nay also bo roquirod by al loasl ono jurisdiclion in addilion lo lho Unilod Slalos. Soo
nporlanl Disclosuros Foquirod by onUS Fogulalors and Explanalory olos.
6. Doulscho Bank and/or ils ailialo(s owns ono porconl or noro o any class o connon oquily socurilios o lhis conpany
calculalod undor conpulalional nolhods roquirod by US law.
7. Doulscho Bank and/or ils ailialo(s has rocoivod conponsalion ron lhis conpany or lho provision o invoslnonl
banking or inancial advisory sorvicos wilhin lho pasl yoar.
!4. Doulscho Bank and/or ils ailialo(s has rocoivod noninvoslnonl banking rolalod conponsalion ron lhis conpany wilhin
lho pasl yoar.

Important DiscIosures Required by Non-U.S. ReguIators
Ploaso also roor lo disclosuros in lho nporlanl Disclosuros Foquirod by US Fogulalors and lho Explanalory olos.
!7. Doulscho Bank and or/ils ailialo(s has a signiicanl onEquily inancial inlorosl (lhis can includo Bonds, Convorliblo
Bonds, Crodil Dorivalivos and Tradod Loans whoro lho aggrogalo nol oxposuro lo lho ollowing issuor(s, or issuor(s
group, is noro lhan 25n Euros.

website at hllp://gn.db.con/gor/disclosuro/Disclosuro.oqsr?ricCodo=CPT.AX.

conponsalion or providing a spociic roconnondalion or viow in lhis roporl. Jason voalo

HistoricaI recommendations and target price: GPT Group (GPT.AX)
(as of 2/20/20!2)
!
"
#
$
%
&
'
(
0.00
0.50
!.00
!.50
2.00
2.50
3.00
3.50
S
o
c
u
r
i
l
y

P
r
i
c
o
Dalo

Slrong Buy
Buy
arkol Pororn
Undorpororn
ol Falod
Suspondod Faling
Buy
Hold
Soll
ol Falod
Suspondod Faling

!. 23/2/20!0: Hold, Targol Prico Chango AUD0.62
2. 3!/5/20!0: Hold, Targol Prico Chango AUD3.!0
3. 24/3/20!0: Hold, Targol Prico Chango AUD3.!9
4. 26/!/20!!: Hold, Targol Prico Chango AUD3.!2
5. !6/2/20!!: Hold, Targol Prico Chango AUD3.!3
6. 2/5/20!!: Hold, Targol Prico Chango AUD3.2!
7. !!/7/20!!: Downgrado lo Soll, Targol Prico Chango AUD3.!2
3. 3/3/20!!: Upgrado lo Hold, AUD3.!2

buy lho slock.
slock
Notes:

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
30
!00
!20
!40
Buy Hold Soll
Auslralia Univorso


hllp://gn.db.con.


60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 250 2500
London EC2 2EO
Unilod Kingdon
Tol: (44 20 7545 3000
Deutsche Bank AG
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Doulscho Bank Placo
Lovol !6
Sydnoy, Sv 2000
Auslralia
Tol: (6! 2 3253 !234
Deutsche Bank AG
Filialo Hongkong
Hong Kong
Tol: (352 2203 3333
2!!! agalacho
Sanno Park Towor
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer

HeaIth & BiotechnoIogy

2! Fobruary 20!2
Sonic HeaIthcare
Foulors: SHL.AX Bloonborg: SHL AU Exchango: ASX Tickor: SHL
!H!2 rosull: Solid wilh noro
synorgios lo cono
David Low, CFA
Fosoarch Analysl
(+6! 2 325323!9
david.low@db.con
Nick Cameron
Fosoarch Analysl
(+6! 2 3253!645
nicholas.canoron@db.con

SoIid EPS growth outIook and improving returns offer appeaI
Allhough lho nargin oxpansion slory was nol univorsal, Sonics irsl hal rosull
conirnod lho rocovory in local oporalions and illuslralod lho polonlial lo roplicalo
lho groups donoslic succoss oshoro, ospocially as il lovoragos il global powor
wilh suppliors. vhilo FX is likoly lo ronain a drag, in our viow Sonic ronains
undorvaluod givon ils solid undorlying growlh proilo, inproving rolurn nolrics and
allraclivo dividond. Buy raling rolainod givon lho upsido lo our rovisod TP.
Year Ehd Juh 30 2010A 2011A 2012E 2013E 2014E
Salos (AUDn 2,973 3,033 3,350 3,599 3,320
EBTDA (AUDn 544 570 639 639 739
ol Proil (AUDn 293 295 321 354 397
EPS (AUD 0.75 0.75 0.82 0.90 !.0!
OLD EPS (AUD 0.75 0.75 0.81 0.39 0.99
' Chango 0.0' 0.0' 1.1% !.4' 2.7'
EPS Crowlh (' !2.0 0.6 8.5 !0.2 !2.!
PEF (x !7.3 !5.! 13.9 !2.6 !!.2
EV/EBTDA (x !2.0 !0.4 9.5 3.9 3.2
Yiold (nol (' 4.4 5.2 5.3 5.9 6.2
!
2
yoar ond closo

CA(P !46/04/20!!.
ResuIts

Buy
Prico al 2! Fob 20!2 11.38
52 wook rango (AUD 12.87 - 10.54
ALL OFDAFES 4,368

Key changes
Prico largol !2.30 lo !2.50 ! 1.6%
Salos (FYE 3,325 lo 3,350 ! 0.7%
EBT nargin (FYE !5.3 lo !5.2 " -0.7%
ol proil (FYE 3!6.2 lo 320.3 ! 1.4%

9
!!
!2
!4
!5
!7
2/!0 5/!0 3/!0 !!/!0 2/!! 5/!! 3/!! !!/!!
Sonic Hoallhcaro
ALLOFDAFES (Fobasod
Absolulo -0.2 -!.0 -3.7
ALL OFDAFES !.5 3.2 -!2.5

Stock data
Sharos oulslanding (n 389.8
Froo loal 100.00

FOE (' 12.5
FOA (' 6.6
Book valuo/sharo (AUD 6.65
Prico/book (x 1.7
EBT nargin (' 15.2

C
o
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a
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G
I
o
b
a
I

M
a
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k
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R
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h

NPAT of $143m faIIs short (DB $150m) on seasonaIity and softer US earnings
Fovonuos grow by 3.5' lo $!,642n slighlly abovo o our oslinalos (DB:
$!,633n whilo EBTA o $240n was ~4' bolow duo lo a woakor US palhology
rosull and lho 2H oarnings woighling. This was parlially osol by solid growlh in
radiology nargins (up !93bps. Salos by goography woro largoly in lino wilh our
oslinalos. A 24 dividond (DB: 25 was doclarod, 35' rankod.
EPS up on Iower interest, 'Procurement' cost reduction driving ROIC trend
Tho highlighl o lho irsl hal rosull was lho conlinuod doclino in consunablos
cosls conlinuing a 24 nonlh lrond and conirning lho oxcollonl progross
nanagononl has nado on lhis ronl. ows o urlhor savings ron 20!2 will
provido a urlhor $!0n pa bonoil. Downward rovision lo inlorosl cosls was lho
nain drivor o lho EPS upgrado wilh oporalional oarnings largoly unchangod.
Price target increased to $12.50 (from $12.30), Buy rating maintained
Our prico largol is basod on applicalion o a !0' proniun lo lho All nduslrials ox
Financials indox (down ron 25' duo lo olovalod downsido risk lo US oarnings.
Koy downsido risks includo culs lo palhology unding (auslorily noasuros in
oshoro rogions whoro Sonic oporalos, oxposuro lo oroign oxchango ralo
novononls and slowor roalisalion o synorgios ron ils oshoro oporalions (ull
dolails p.9.
2! Fobruary 20!2 Hoallh & Biolochnology Sonic Hoallhcaro
Model updaIed: 21 February 2012 Y/E 30 June 05/06 06/07 07/08 08/09 09/10 10/11 11/12E 12/13E 13/14E
PROFIT & LOSS (A$m)
Sales revehue 1,645 1,878 2,365 2,996 2,973 3,083 3,350 3,599 3,820
EBITDA (ihcl sighiIicahI iIems) 360 406 479 425 544 570 639 689 739
DepreciaIioh/amorIisaIioh -56 -65 -82 -101 -108 -115 -131 -138 -144
EBIT (ihcl sighiIicahI iIems) 304 341 397 324 435 455 508 551 596
NeI ihIeresI ihcome (expehse) -40 -50 -65 -74 -49 -65 -78 -73 -60
Ihcome Iax expehse 78 80 81 77 93 96 110 124 139
AssociaIes/aIIiliaIes 0 0 0 0 0 0 0 0 0
MihoriIies/preIerehce dividehds -14 -12 -5 -1 -1 0 0 0 0
PeporIed proIiI 172 198 245 171 293 295 321 354 397
SighiIicahI iIems 0 0 0 -144 0 0 0 0 0
NeI prII (exc sgnIcanI Iems) 172 198 245 315 293 294.5 320.8 353.7 397
EBIT (exc sgnIcanI Iems) 304 341 397 478 435 455 508 551 596
CASH FLOW (A$m)
Cash Ilow Irom operaIiohs 247 268 332 430 429 409 463 512 567
Movement in net working capital -25 -29 -46 -24 -31 1 -5 -17 -15
Capex -98 -129 -143 -151 -175 -171 -187 -155 -164
Free cash Ilow 149 139 189 279 254 238 276 357 403
+61 2 8258 2319 david.low@db.com OIher ihvesIihg acIiviIies -411 -482 -679 -460 -426 -300 -142 0 0
EquiIy raised/(boughI back) 271 4 462 538 32 2 12 0 0
Dividehds paid -110 -130 -162 -149 -229 -229 -230 -242 -265
+61 2 8258 1645 hicholas.cameroh@db.com
NeI ihc/(dec) ih borrowihgs 132 451 205 269 130 168 85 0 0
OIher Iihahcihg cash Ilows 0 -5 -1 0 -10 -3 0 0 0
TIa cash Ivs Irm Inancng 293 320 504 658 -78 -63 -134 -242 -265
NeI cash Ilow 32 -23 15 478 -250 -125 0 115 138
NvemenI n neI debI/(cash) 101 474 190 -209 380 293 85 -115 -138
BALANCE SHEET (A$m)
Cash ahd oIher liquid asseIs 68 36 64 558 300 175 173 288 426
Tahgible Iixed asseIs 307 371 441 493 530 552 594 634 676
Goodwill 1,504 1,949 2,486 2,990 3,239 3,200 3,267 3,267 3,267
OIher ihIahgible asseIs 186 201 214 201 228 208 249 227 205
AssociaIes/ihvesImehIs 11 12 16 22 39 56 80 80 80
OIher asseIs 273 332 407 497 528 523 675 774 870
ToIal asseIs 2,349 2,900 3,629 4,761 4,864 4,713 5,038 5,270 5,524
IhIeresI bearihg debI 811 1,175 1,302 1,756 1,801 1,710 1,902 1,966 2,030
OIher liabiliIies 236 287 365 473 504 486 529 586 645
ToIal liabiliIies 1,047 1,462 1,667 2,229 2,305 2,196 2,431 2,551 2,674
Shareholders' equiIy 1,285 1,419 1,950 2,530 2,556 2,514 2,605 2,717 2,848
MihoriIies/oIher 18 19 12 2 2 2 2 2 2
ToIal shareholders' equiIy 1,302 1,438 1,962 2,532 2,559 2,516 2,607 2,718 2,850
NeI vrkng capIa 93 122 168 192 223 223 227 244 259
NeI debI/(cash) 743 1,139 1,238 1,198 1,501 1,536 1,730 1,678 1,604
RATIO ANALYSIS
52-week High/Low: A$12.87 - 10.54
Sales growIh - pcp (%) 19.7 14.1 26.0 26.7 -0.8 3.7 8.7 7.4 6.1
MarkeI Cap (m) A$ 4,438
EBITDA/sales (%) 21.9 21.6 20.2 19.3 18.3 18.5 19.1 19.1 19.4
US$ 4,721
EBIT/sales (%) 18.5 18.2 16.8 15.9 14.6 14.8 15.2 15.3 15.6
PayouI raIio (%) 62.5 64.1 66.1 60.8 78.2 77.8 71.7 68.4 66.9
DCF VALUATION (A$) POA (%) 15.2 13.2 12.4 13.1 9.6 9.9 10.8 11.3 12.0
BeIa (MPP - 6.00) 0.90 POE (%) 15.3 14.5 14.4 14.0 11.5 11.6 12.5 13.3 14.2
DebI/mkI value raIio (%) 30.0 OperaIihg PeIurh oh CapiIal (%) 11.1 9.5 9.9 9.3 7.9 8.2 8.6 9.1 9.6
WACC (6.25% bohd yield) 9.0 Tax raIe (%) 29.6 27.7 24.5 30.9 24.0 24.6 25.5 26.0 26.0
Capex/sales (%) 6.0 6.9 6.0 5.0 5.9 5.5 5.6 4.3 4.3
NeI value per share ($) Capex/depreciaIioh (x) 1.8 2.1 1.9 1.6 1.9 1.8 1.7 1.3 1.3
Price/NPV (x) 0.83 NeI debI/equiIy (%) 57.0 79.2 63.1 47.3 58.7 61.0 66.4 61.7 56.3
NeI ihIeresI cover (x) 7.5 6.8 6.1 6.4 8.9 7.0 6.5 7.5 10.0
4
109
111
115
30
114
13.7
193
34
13.1
174
47 45 39
211 201
50
47
146
113
162
44
136
40
131
125
10.4 9.5 8.9
11.1 11.9
8.2
224
10.2
124
54
-5 -6 -13
49
111 68
83 45
-8 OIher/uhallocaIed
35
Sonic HeaIthcare Ltd
P/CFPS (x)
DPS (A$) 0.410
17.3
Company description
2.92
31
217
5,944 5,071
200
42
12.8
EBITA by division
Padiology 46
A$12.50
EV/EBITDA (x)
Buy
Price/BV (x)
PeuIers: SHL.AX Bloomberg: SHL AU
EhIerprise Value (A$m)
Price as aI 20-Feb
TargeI price
52
5,548
9.6
3.34
4,098
11.6
229
13.1
2.63
2.8 Dividehd yield (%)
PaIhology 183
4,476
3.4
11.0
3.3
11.4
EV/EBIT (x)
Surce: Cmpany daIa, DB esImaIes
US diaghosIic services

Compahy websiIe

Sohic HealIhcare LimiIed operaIes paIhology
laboraIories ih Ihe Sydhey area which ihclude
Douglas Hahly Moir PaIhology, BarraII & SmiIh
PaIhology, CapiIal PaIhology ahd ClihpaIh
LaboraIories. The Compahy also provides
specialisI healIh IesIihg services Ior Ihe liIe
ihsurahce ihdusIry ahd geheric
biopharmaceuIicals ih Ihe Asia-PaciIic regioh.
Research Team
NichoIas Cameron
David Low, CFA
hIIp://www.sohichealIhcare.com.au
13.69
Europeah diaghosIic services
6,080 6,143 6,070
13.5
5,954
10.6 10.9
A$11.38
1.56
6.2
1.64 1.71
5.3 5.9 5.2
1.76 1.95
4.4
2.03
10.9
4.4
0.590
9.6
1.182
0.600
7.9 8.7
0.710 0.670
1.448
15.6 15.4 11.0 12.2
0.460 0.590 0.520 0.570
0.852 0.750
21.1
21.1
1.308 1.048
0.463 0.655
20.9 15.1
EPS FD (A$) 0.586
Normalised EPS growIh (%)
OperaIihg CFPS (A$) 0.843 1.099 0.996 1.163 0.886
12.2
0.735
24.8 20.9
0.586 0.655
0.735
24.8
11.8
11.2 13.9 15.1 27.7 12.6 17.8
P/E raIio hormalised (x)
Normalised EPS (A$)
Asia Pacific
Equity Research
SUMMARY
11.2 17.8
0.755 0.750
13.9 12.6
-12.0
15.1
8.5 0.6
HeaIth Care & BiotechnoIogy P/E raIio FD (x)
1.012 0.903
AusIralia
0.819
15.8 15.9 12.1 10.2
1.012 0.903 0.819 0.755
-0.2%
-1.0%
-3.7%
-4% -3% -2% -1% 0%
1m
3m
12m
0
5
10
15
20
25
07 08 09 10 11 12E 13E 14E
EBITDA/sales (%)
EBIT/sales (%)
Trends
0
2
4
6
8
10
12
14
16
07 08 09 10 11 12E 13E 14E
POE (%) POA (%)
op POC (%)
Return Ratios (%)
0
10
20
30
40
50
60
70
80
90
0
200
400
600
800
1000
1200
1400
1600
1800
2000
07 08 09 10 11 12E 13E 14E
NeI debI / (cash) (AUD m)
NeI debI/equiIy (%)
0.90
1.00
1.10
1.20
1.30
1.40
1.50
1.60
1.70
2/07 2/08 2/09 2/10 2/11 2/12
12mth Fwd P/E ReIative (x)
Changes to our FY12 and FY13 forecasts
Tho koy drivor o lho upward rovision lo our EPS orocasls was lho culs lo lho oxpoclod
inlorosl oxponso ollowing lho rovisod guidanco and slighlly lowor lhan oxpoclod cosl in lho
irsl hal. Al lho oporalional lovol wo havo nado only ninor rovisions allhough wo havo
rovisod lho divisional nix.
Tho ~!' culs lo lho oxpoclod conlribulion ron lho palhology division largoly rolocls lho
woak rosull ron lho US oporalions and lo a lossor dogroo lho UK. This was osol by lho
slrong rosull ron Cornany and lo a lossor dogroo lho olhor Europoan oporalions. Osolling
lho woakor palhology rosull was a slrongor conlribulion ron Sonics donoslic radiology
oporalions. Our orocasl o lho conlribulion ron lho Auslralian palhology division was nol
changod nalorially.
Figure 1: Changes to our FY12 and FY13 forecasts
FY12E FY13E
Previous Pevised %chg Previous Pevised %chg
Revenues 3,340 3,364 0.7% 3,573 3,614 1.1%
EBITDA 636 639 0.6% 686 689 0.5%
D&A !23 !3! 2.7' !34 !33 3.2'
Palhology 47! 465 !.3' 5!2 505 !.5'
Fadiology 36 44 22.!' 33 46 22.3'
Olhor ! ! nn 2 0 nn
EBIT 508 508 0.0% 552 551 -0.2%
nlorosl 3! 73 3.3' 33 73 !!.5'
Tax !!! !!0 !.3' !22 !24 !.3'
NPAT 316 321 1.4% 347 354 1.8%
EPS 81.0 81.9 1.1% 89.0 90.3 1.4%
DPS 62 60 3.2' 66 67 !.5'
Source. Deutsche Bank stinates
OutIook and Guidance
Sonic roairnod guidanco or FY!2 EBTDA o !0!5' growlh on a conslanl curroncy (cc
basis, oxcluding conlribulions ron acquisilions nado alor Augusl 20!!. Addilionally,
guidanco was providod or FY!2 inlorosl oxponso lo incroaso by ~25' cc (down ron
~30' and or an ooclivo lax ralo o ~26'.
Our FY!2 EBTDA oslinalo o $639n roprosonls roporlod growlh o !2', or noarly !5' on
a conslanl curroncy basis.
EPS Iifted by ~1%

PathoIogy cuts IargeIy
refIect weak US resuIt

EPS boosted by Iower
interest and tax
Guidance maintained: 10-
15% EBITDA growth in
constant FX
DB at ~15% cc growth
Key points from the 1H12 resuIt
#
MateriaI consumabIes cost savings starting to emerge: As highlighlod in Figuro 3
bolow, Sonic has bogun lo bonoil signiicanlly ron oorls lo lovorago ils global
oolprinl lo roduco oxpondiluro on lab consunablos ovor lho lasl !224 nonlhs lhrough
inprovod procurononl slralogios. Sonic advisod il slill has signiicanl opporlunilios lo
roduco oxpondiluro on consunablos wilh plans lo pul nuch o ils businoss oul lo londor
in uluro. Spociically anagononl roporlod a roconl global supply doal will dolivor a
~$5n bonoil lo consunablos oxpondiluro in 2H FY!2.
Figure 2: Sonic group ROIC

Figure 3: ConsumabIes margin reducing
11.3
11.3
10.8
11.3
9.3
7.1
3.9
8.3
8.3 8.9
9.8
-
1.3
3.0
4.3
6.0
7.3
9.0
10.3
12.0
13.3
-
$30m
$100m
$130m
$200m
$230m
$300m
$330m
$400m
$430m
L8l1 afLer Lax reLurn 8eLurn on Average lnvesLed CaplLal (8ClC)

13.0
13.3
16.0
16.3
17.0
17.3
18.0
-
$30m
$100m
$130m
$200m
$230m
$300m
Consumables LxpendlLure (A$m) of 8evenues
Source. Deutsche Bank

#
Despite the softer US resuIt & acquisitions, ROIC continued to improve in 1H: As
highlighlod in Figuro 2 abovo, Sonic was ablo lo dolivor a sloady inprovononl in FOC
or lho !H, growing ron 3.9' roporlod or FY!! lo 9.3' in lho !2 nonlhs lo 3!
Doconbor 20!!. This was a solid rosull in our viow givon lho solor US division rosull.
#
Strong German resuIt encouraging, funding outIook stabIe: anagononl advisod
lho Cornan palhology businoss dolivorod >!50bps o nargin oxpansion during lho
poriod on organic rovonuo growlh o 6'. Falionalisalion o ils logislics nolwork and lool
vohiclos holpod drivo lho inprovononl as did noro avourablo procurononl londors.
Connonling on unding, anagononl advisod lhal lho rogional slalulory hoallhcaro
payors (KVs will bo roslruclurod undor a singlo nalionalisod payor, which should roduco
lho risk lhal undorpaynonls (as soon in lho lasl !2 nonlhs will rooccur (oulslanding
paynonls anounl lo ~t6n. vhilo lho chango will includo a ~3' cul lo osoloric pricing
lhis will likoly bo osol by lho ronoval o lho voluno basod discounl aocling ono o lho
groups largor labs.
#
Acquisitions boosted group EBITA, highIighting US weakness: vo oslinalo
acquisilions nado in lho lasl !2nonlhs conlribulod noro lhan A$!0n lo palhology
division EBTA in lho irsl hal. vhilo lhis inplios rolalivoly low organic growlh ron lho
division lhis likoly rolocls lho lack o growlh ron lho US oporalions during lho poriod.
#
Aussie path division deIivers soIid revenue growth & margin expansion: Sonic
roporlod Auslralian palhology nargins oxpandod >!50bps in lho poriod, signiicanlly
groalor lhan roconlly roporlod by Prinary (palhology nargins oxpandod ~76bp.
Fovonuos ron Auslralian palhology grow by 3' vorsus lho pcp wilh nanagononl
roporling !.4' o lho growlh cano ron lho roconl nodical conlro acquisilions.
Slripping oul lhoso acquisilions, rovonuos grow ~6.6' indicaling Sonic conlinuos lo win
sharo. Addilionally, Sonic nanagononl advisod il did nol acquiro any o Hoallhscopos
(HSP Tasnanian assols bul Sonic did lako ovor sono o HSPs colloclion conlros and a
nunbor o sla in an ordorly lransilion procoss.
Acquisitions were a key
contributor to growth in
1H12.

2H12 Aussie Path set for a
soIid resuIt.
#
US resuIt faIIs short of expectations: Sonic advisod rovonuos ron ils US palhology
businoss grow by 2' (oxcluding acquisilions, abovo lho lal narkol growlh ralos
roporlod by ils US poors (Labcorp and Ouosl, and nargins oxpandod by 30bp (ox
acquisilions. Howovor wo oslinalo roporlod nargins conlraclod by noro lhan 50bp duo
lo lho sluggish organic rovonuo growlh, a onoo baddobl chargo o $2.4n, dilulivo
acquisilions and nininal synorgy bonoils roalisod during lho poriod. Tho conpany
advisod lhal synorgios oxpoclod lo bo oxlraclod ron ils US acquisilions havo boon slow
lo bo roalisod duo in parl lo diicullios in inlograling and lraining porsonnol.
#
US outIook cautious, in-sourcing esoterics provides some upside in 2H:
anagononl conirnod lho groups plan lo bring back inhouso nany osoloric losls lhal
ils US division curronlly oulsourcos lo olhor spocialisl labs. vo oslinalo Sonics US
oporalions curronlly oulsourco ~US$40n in rovonuos and nosl o lhoso now losls will
bo carriod oul al lho groups nowly oxpandod Auslin (TX lab ovor lho noxl 3 yoars. Tho
irsl ~70 losls will go livo in April 20!2. This should provido a snall boosl lo oarnings in
2H wilh bonoils oxpanding inlo FY!3.
#
2% US Medicare funding cut pIayed down, funding otherwise stabIe: anagononl
acknowlodgod lho 2' cul lho US odicaro unding is now likoly givon lho bill was
roconlly passod by Congross. vhilo lhis is unavourablo, lho inpacl on lho groups
oarnings is nodosl (loss lhan 0.9' inpacl on EPS on a ullyoar basis givon odicaro
conprisos only ~20' o Sonics US rovonuos and loss lhan 5' o group rovonuos.
anagononl also doos nol oxpocl olhor payors, including nanagod caro organisalions
(COs, lo ollow suil and nolod lhal odicaro incroasos basod on annual CP
adjuslnonls (likoly upward could provido sono osol lo lho blankol 2' cul.
#
Transition deIays for the BMI contract & pricing pressures tempered the UK resuIt:
Fovonuos ron Sonics UK and roland division o A$46n cano in bolow our
oxpoclalions (DB: A$55n duo lo a dolay in lho lransilion slarl dalo or lho roconlly won
B hospilals conlracl and high pricing prossuro which drovo down avorago oo por losl.
vo oxpocl lhis division will dolivor inprovod rosulls in lho 2H and in FY!3 wilh lho CEO
conirning lhal B doal will lransilion ron April 20!2 and his oxpoclalion o urlhor
HS londoring opporlunilios lo ariso ovor lho noxl !2 nonlhs.
#
IPN resuIt boosted by AIIied acquisition, strategy set on OccupationaI heaIth: Sonic
roporlod slrong growlh ron P nodical conlro division wilh rovonuos up 32' and
nargins oxpanding >!00bps vorsus lho pcp. Tho division roporlodly sponl $!!9n on
acquisilions during lho poriod which includod lho Alliod odical praclicos, alrix skin
cancor clinics and olhors snallor nodical praclicos. vo highlighl lhal Sonic is now lho
largosl providor o occupalional hoallh and alliod sorvicos in Auslralia which oors high
nargins and has oxporioncod a poriod o robusl growlh o lho back o Auslralias
nining boon.
#
SoIid imaging resuIt driven by ongoing cost controI: Sonic roporlod inaging
rovonuos ($!9!n and EBTA ($23n ahoad o our oxpoclalions (DB: $!34n and $!3n
rospoclivoly on rolalivoly robusl narkol volunos as ovidoncod in lho odicaro dala as
woll as by Prinarys solid !H!2 inaging rosull. Addilionally Sonics ocus on cosl
roduclions holpod dolivor nargin oxpansion o ~200bps in lho poriod.
Disappointing synergy
reaIization & one-off bad
debt charge weighed heaviIy
on US earnings.
#
Interest expense IikeIy to moderate in 2H12 & FY13: anagononl rovisod down ils
provious guidanco or FY!2 inlorosl oxponso growlh, whoro nanagononl now oxpocls
growlh o ~25' on conslanl curroncy basis (down ron ~30'. vhilo wo boliovo
nanagononls guidanco is porhaps consorvalivo, i Sonic roinancos ils dobl alling duo
in CY20!2, lhis will rosull in highor ralos (oslablishod al allraclivo ralos proCFC.
olwilhslanding, Sonic has a nunbor o unavourablo inlorosl ralo hodging conlracls
which aro sol lo roll o which should onsuro inlorosl cosls all urlhor in FY!3.
Addilionally as ils oarnings and cashlows lil, Sonic will likoly inprovo ils posilion on lho
lovorago grid or ils bank dobl and allracl lowor nargins. Finally, Sonic also has lho
opporlunily lo roduco borrowing cosls associalod by roducing ils high lovol o dobl
hoadroon (~A$560n. n lighl o lhis wo roducod our nol inlorosl oxponso oslinalos or
FY!2 by ~4' and or FY!3 by ~!!'.
#
M&A war chest primed but activity expected to be subdued: anagononl roiloralod
lhal il has no plans lo oslablish now boachhoads loaving accoss lo a A$560n acquisilion
war chosl. Tho CEO highlighlod lhal nanagononl ronains slriclly adhoronl lo ils FOC
hurdlo or all uluro acquisilions.
Interest expense to grow
~25% in FY12 (cc) but FY13
outIook appears more
favourabIe.

Guidance appears
conservative, but earIy refi
of debt wiII be at higher
rates .
Headroom of ~$560m, but
ROIC hurdIe wiII IikeIy see
subdued N&A activity
VaIuation charts - as at 21 Feb 2012
Figure 4: 12mth fwd PE vs Long term average

Figure 5: PE premium to AII IndustriaIs ex-FinanciaIs
10.0x
12.0x
14.0x
16.0x
18.0x
20.0x
22.0x
24.0x

-20%
-10%
0%
10%
20%
30%
40%
50%
Source. Deutsche Bank, B|oonberg consensus

Figure 6: Sonic 12mth fwd PE reIative to Primary

Figure 7: 12mth fwd EV/EBITDA vs Long term average
-30%
-20%
-10%
0%
10%
20%
30%
40%

8.0x
9.0x
10.0x
11.0x
12.0x
13.0x
14.0x

InternationaI PathoIogy ComparabIes
Figure 1: InternationaI pathoIogy peers (as at 21 Feb 2012)
PEP EPS GrowIh (esI) EV/EBITDA
Compahy Ticker DB
PaIihg
Price FY12 FY13 FY12 FY13 FY14 FY12 FY13 MarkeI
Cap (A$)
SOC HEALTHCAFE LTD SHL AU Buy AUD !!.33 !4.0x !2.3x 6.!' 9.3' 9.2' 9.5x 3.3x 4,433
PFAFY HEALTHCAFE LTD PFY.AX Buy AUD 3.00 !2.3x !0.7x !3.0' !5.2' 9.3' 7.5x 7.0x !,50!
OUEST DACOSTCS DCX US Hold USD 57.29 !3.0x !!.9x 6.7' 3.3' !!.3' 3.0x 7.6x 3,445
LABOFATOFY COFP LH US Buy USD 37.94 !3.4x !2.3x !0.3' 9.0' !0.!' 3.!x 7.6x 3,!!3
BOFEFEFECE LABS C BFL US F USD !9.39 !4.9x !2.4x 22.3' 20.3' 2!.6' 7.5x 6.3x 505
DACOSTCOS DA AEFCA SA DASA3 BZ Hold BFL !5.62 !9.3x !4.7x !3.0' 34.9' 27.7' 9.3x 3.5x 2,644
FLEUFY SA FLFY3 BZ Buy BFL 22.99 20.6x !4.3x !2.4' 33.3' 24.4' !2.0x 3.6x !,950
Average (mkt cap weighted) 14.5x 12.6x 9.9% 14.1% 13.2% 8.7x 7.9x
1H12 resuIt reIative to our expectations
Sonics !H!2 rosull was largoly in lino wilh DB oslinalos al lho lop lino whilo al oporalional
lho PAT lovols lho rosull was bolow oxpoclalions duo lo solor lhan oxpoclod oarnings
growlh ron ils US oporalions and lho soasonal woighling o oarnings lo lho socond hal.
Figure 8: ResuIt reIative to our estimates
DB AcIual DiII
Revenue 1,638 1,642 0.2%
Oporaling oxponsos !,332 !,343 !.2'
EBITDA (incIudes acquisition costs) 306 294 -3.8%
Doprocialion & loaso anorlizalion 54 53 2.2'
EBITA 252 240 -4.2%
Anorlisalion o inlangiblos 9 !0 !!.3'
EBIT 242 230 -4.8%
ol inlorosl 40 39 2.7'
Tax 53 47 9.5'
.....Tax ralo 26.0' 24.9' !.!'
inorilios 0.0 0.4
NPAT (reported) 150 143.0 -4.0%
NPAT (core, ex-acquisition costs) 150 145.0 -2.6%
DiIuted EPS reported () 38.3 36.5 -4.4%
DPS () 25 24 -4.0%
DivisionaI breakdown ($Am)
Revenues
Palhology !,3!7 !,307 0.3'
Fadiology !34 !9! 3.9'
Olhor !3! !46 !!.3'
TotaI 1,632 1,644 0.8%
EBITA
Palhology 230 220 4.5'
Fadiology !3 23 24.6'
Olhor 2 3
TotaI EBITA 251 240 -4.2%
EBITA margin
Palhology !7.5' !6.3' 0.65'
Fadiology !0.0' !2.0' !.93'
TotaI 15.4% 14.6% -0.75%
Geographic Breakdown
Auslralia Palhology 493 493 0.!'
US Palhology 335 373 !.7'
ow Zoaland Palhology 34 36 7.4'
Europo Palhology 406 400 !.5'
.....UK 55 46 !7.0'
.....Cornany 263 269 2.3'
.....Swilzorland 33 33 0.7'
.....Bolgiun 49 47 5.0'
Source. Deutsche Bank stinates, Conpan, Data

Revenues IargeIy in Iine but
higher opex (incIuding one-
off bad debt charge) was a
drag.

D&A was in Iine but higher
Opex transIated to EBIT
beIow forecast.

Lower interest expense and
tax rate vs DB forecast
deIivered NPAT ~4% beIow
our expectations.

Div beIow expectations

Revenues from operating
divisions IargeIy in Iine

RadioIogy provided upside
surprise, offsetting sIuggish
US pathoIogy earnings

PathoIogy margin beIow on
US bad debt charge and
minimaI synergy reaIisation

Recommendation, vaIuation and risks
Recommendation
Our Buy roconnondalion is basod on lho upsido lo our rovisod prico largol.
VaIuation
Our prico largol is basod on applicalion o a !0' proniun (down ron 25' lo lho All
nduslrials ox Financials indox. vo havo roducod lho proniun lo !0' duo lo whal is, in our
viow, olovalod downsido risk lo oarnings ron Sonics US oporalions. Howovor wo boliovo a
proniun lo lho narkol is jusliiod givon lho doonsivo naluro o hoallhcaro sorvicos and lho
oarnings growlh opporlunilios oorod by Sonics oshoro oporalions.
Figure 9: MuItipIe based vaIuation
All nduslrials ox Financials !2 nlh wd PE !3.!x
Proniun appliod !0'
npliod Sonic !2 nlh wd PE !4.4x
!2 nonlh wd EPS ( 36.3
ImpIied VaIuation 12.51
Source. Deutsche Bank estinates, narket data
Risks
Koy downsido risks includo culs lo palhology unding (auslorily noasuros in oshoro rogions
whoro Sonic oporalos, oxposuro lo oroign oxchango ralo novononls and slowor roalisalion
o synorgios ron ils oshoro oporalions.

Appendix 1
Sonic Hoallhcaro SHL.AX !!.33 (AUD 2! Fob !2 A


website at hllp://gn.db.con/gor/disclosuro/Disclosuro.oqsr?ricCodo=SHL.AX.

conponsalion or providing a spociic roconnondalion or viow in lhis roporl. David Low

HistoricaI recommendations and target price: Sonic HeaIthcare (SHL.AX)
(as of 2/2!/20!2)
1
2
3
4
3
6
7 89
10
0.00
2.00
4.00
6.00
3.00
!0.00
!2.00
!4.00
!6.00
S
o
c
u
r
i
l
y

P
r
i
c
o
Dalo

Slrong Buy
Buy
arkol Pororn
Undorpororn
ol Falod
Suspondod Faling
Buy
Hold
Soll
ol Falod
Suspondod Faling

!. 20/5/20!0: Downgrado lo Soll, Targol Prico Chango AUD!0.00
2. 23/6/20!0: Upgrado lo Hold, Targol Prico Chango AUD!0.50
3. 24/3/20!0: Hold, Targol Prico Chango AUD!!.50
4. !3/!!/20!0: Upgrado lo Buy, Targol Prico Chango AUD!2.25
5. 22/2/20!!: Buy, Targol Prico Chango AUD!2.00
7. !!/4/20!!: Buy, Targol Prico Chango AUD!3.40
9. !!/7/20!!: Buy, Targol Prico Chango AUD!3.40
!0. 23/3/20!!: Buy, Targol Prico Chango AUD!2.30

buy lho slock.
slock
Notes:

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
30
!00
!20
!40
Buy Hold Soll
Auslralia Univorso


hllp://gn.db.con.


60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 250 2500
London EC2 2EO
Unilod Kingdon
Tol: (44 20 7545 3000
Deutsche Bank AG
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Doulscho Bank Placo
Lovol !6
Sydnoy, Sv 2000
Auslralia
Tol: (6! 2 3253 !234
Deutsche Bank AG
Filialo Hongkong
Hong Kong
Tol: (352 2203 3333
2!!! agalacho
Sanno Park Towor
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer

DeveIopers & Contractors

20 Fobruary 20!2
Lend Lease
Foulors: LLC.AX Bloonborg: LLC AU Exchango: ASX Tickor: LLC
!H!2 Fosull: Tho Throo 'Bs'
Ian RandaII
Fosoarch Analysl
(+6! 2 32532609
ian.randall@db.con
James Brown
Associalo Analysl
(+6! 2 3253!635
janosw.brown@db.con

Beta, Barangaroo, BaIance Sheet - concerns overdone on aII 3 fronts
Dospilo an apparonl incroaso in invoslor risk appolilo sinco lho boginning o CY!2,
lho slock has conlinuod lo undorpororn, in parl duo lo quoslions ro Barangaroo
slippago and (in our viow nisplacod concorns ro lho inpacl on crodil nolrics. vo
soo 7' downsido risk lo FY!2 osls i a doal on Barangaroo is nol announcod by
30 Juno. On our oslinalos, a doorral or ovon sholving o Barangaroo would nol
placo suicionl slross on LLCs balanco shool (and BBB crodil raling lo roquiro
oquily issuanco. Buy nainlainod, wilh LLC lrading al 3.3x FY!3 EPS on our osls.
EBTDA (AUDn 439 747 722 306 906
ol Proil (AUDn 324 435 450 500 553
EPS (AUD 0.65 0.36 0.79 0.33 0.93
EPS Crowlh (' 3.4 3!.5 -8.0 !!.3 !!.6
PEF (x !3.7 9.5 9.3 3.3 7.5
DPS (nol (AUD 0.33 0.35 0.39 0.44 0.49
!
2
yoar ond closo

CA(P !46/04/20!!.
ResuIts

Buy
ALL OFDAFES 4,333

6.0
7.0
3.0
9.0
!0.0
!!.0
2/!0 5/!0 3/!0 !!/!0 2/!! 5/!! 3/!! !!/!!
Lond Loaso
Absolulo -!.9 2.2 -!8.7

Stock data
Froo loal 100.00

FOE (' 12.4
FOA (' 7.1
Prico/book (x 1.1
EBT nargin (' 5.4

C
o
m
p
a
n
y

G
I
o
b
a
I

M
a
r
k
e
t
s

R
e
s
e
a
r
c
h

1H12 resuIt: above our ests, but composition & payout sIightIy disappointing
Oporaling proil o $220.3n (33.6c was 5' abovo our orocasl $2!0.2n (36.3c,
howovor DPS o !6.0c was bolow our orocasl !3.4c, roprosonling a 4!' payoul
vs our 50' oslinalo. Capilal rocycling gains o $5055n pro lax on our osls woro
abovo our orocasl $33n, rolocling adjuslnonls on solllononl o lho FY!! PoO
and King o Prussia salos. Osolling lhis, lho Conslruclion rosull was slighlly
highor lhan wo oxpoclod dospilo a $2!n alor lax provision lakon againsl lho US
businoss. Ausl Dovolopnonl was lho koy aroa o disappoinlnonl, rolocling a
conbinalion o woak condilions and 2H skow o Aparlnonl solllononls.
Encouragingly, Fosidonlial lol prosalos woro up !0' vs Juno!! (by valuo.
Oporaling cash low or lho hal was solid al +$203.!n, wilh goaring al 3.4'.
Barangaroo sIippage is a risk to earnings, not to the baIance sheet
LLC ronains in advancod discussions wilh bolh capilal parlnors and lonanls or
Barangaroo. vilh lho Croup having nissod ils largol o inalising a solldown o
lho irsl Connorcial lowor by ond CY!!, lho risk ronains lhal lho projocl doos nol
conlribulo lo 2H!2 oarnings (~7' o our FY!2 osls. Howovor, wo boliovo
concorns ro lho balanco shool inpacl o any Barangaroo dolay aro nisplacod. On
our osls, ovon i Barangaroo novor connoncod & LLC slill nado all schodulod
land paynonls lo lho Sv Covl and conplolo basononl and porinolor works,
goaring would poak al ~!3' and FFO / dobl would lrough al 33' (roor p3.
12mth PT maintained at $9.50ps, vs SOTP vaI $9.51ps. VaI, risks pp6-7
SOTP val applios nulliplos o bolwoon 7x and !0x lo FY!3 EBT conlribulions,
wilh invoslnonls hold al book valuo. Koy downsido risks includo polonlial or cosl
ovorruns or donand shorlalls on najor urban rogon projocls, along wilh urlhor
dolorioralion o Auslralian rosidonlial condilions.
20 Fobruary 20!2 Dovolopors & Conlraclors Lond Loaso
Model updaIed: 20 February 2012
Y/E 30 June 05/06 06/07 07/08 08/09 09/10 10/11 11/12E 12/13E 13/14E
PROFIT & LOSS (A$m)
Sales revehue 12,093 14,196 14,617 14,710 10,514 8,945 12,167 13,611 15,094
MihoriIies/preIerehce dividehds -7 -3 -3 12 -3 0 0 0 0
PeporIed proIiI 354 414 447 308 324 485 450 500 558
SighiIicahI iIems 0 0 0 0 0 0 0 0 0
CASH FLOW (A$m)
Cash Ilow Irom operaIiohs 660 357 269 382 228 -42 97 197 360
Movement in net working capital 79 110 -171 -198 -640 550 32 260 161
Capex -301 -454 -58 -32 -26 -37 -88 -92 -96
Free cash Ilow 359 -96 211 350 202 -79 9 105 264
+61 2 8258 2609 iah.rahdall@db.com
OIher ihvesIihg acIiviIies -609 72 423 -442 -284 -650 630 13 -19
EquiIy raised/(boughI back) 0 0 0 296 789 -48 0 0 0
Dividehds paid -203 -237 -312 -188 -126 -127 -202 -225 -251
NeI ihc/(dec) ih borrowihgs 437 294 0 248 -11 391 -350 -100 -100
OIher Iihahcihg cash Ilows 0 0 0 0 0 0 0 0 0
TIa cash Ivs Irm Inancng 234 57 -312 356 653 216 -552 -325 -351
NeI cash Ilow -16 32 321 264 571 -513 87 -207 -106
NvemenI n neI debI/(cash) 453 262 -321 -16 -581 904 -437 107 6
BALANCE SHEET (A$m)
Cash ahd oIher liquid asseIs 560 550 843 1,121 1,636 1,046 1,133 926 820
Goodwill 794 788 730 526 694 1,319 1,307 1,295 1,283
AssociaIes/ihvesImehIs 1,311 2,042 1,322 1,294 1,830 1,620 1,445 1,432 1,432
OIher asseIs 5,380 5,924 5,555 5,248 4,862 5,337 6,141 6,829 7,463
ToIal asseIs 8,155 9,421 8,595 8,319 9,375 9,918 10,654 11,139 11,680
IhIeresI bearihg debI 846 1,077 929 1,125 1,447 1,922 1,606 1,539 1,474
OIher liabiliIies 4,298 5,017 4,622 4,747 4,540 4,363 5,338 5,927 6,537
NeI vrkng capIa -229 -491 -507 -967 -914 -847 -747 -834 -988
NeI debI/(cash) 287 527 87 4 -189 875 473 613 654
RATIO ANALYSIS
52-week High/Low: A$9.26 - 6.89
Sales growIh - pcp (%) 30.2 17.4 3.0 0.6 -28.5 -14.9 36.0 11.9 10.9
EBITDA/sales (%) 4.2 4.4 3.9 3.2 4.6 8.4 5.9 5.9 6.0
US$ 4,447
EBIT/sales (%) 4.1 4.3 3.7 3.0 4.4 7.8 5.4 5.4 5.5
PayouI raIio (%) 68.7 70.0 69.1 60.7 50.0 40.9 50.0 50.0 50.0
POA (%) 7.3 7.3 6.6 6.0 6.4 8.1 7.1 7.3 7.8
POE (%) 12.4 13.4 16.6 10.7 11.8 14.0 12.4 13.7 15.3
OperaIihg PeIurh oh CapiIal (%) 11.7 12.8 16.9 11.9 14.1 12.5 12.4 12.8 14.0
Tax raIe (%) 25.8 23.5 12.2 22.5 21.8 21.8 22.0 25.0 27.0
Capex/sales (%) 2.5 3.2 0.4 0.2 0.2 0.4 0.7 0.7 0.6
Capex/depreciaIioh (x) 17.2 21.7 2.4 1.3 1.0 0.9 1.6 1.5 1.4
NeI debI/equiIy (%) 9.5 15.8 2.8 0.2 -5.6 24.1 12.8 16.7 17.8
0.978 0.876 0.787 0.856
DeveIopers & Contractors P/E raIio FD (x)
0.978 0.876
AusIralia
0.787
8.5 -36.2 11.6 11.3
7.5 13.7
0.856 0.651
9.3 8.3
-8.4
9.5
-8.0 31.5
Normalised EPS (A$)
Asia Pacific
Equity Research
SUMMARY
7.5 9.3 9.5 10.6 8.3 13.7
1.115
15.6 14.4
0.887 1.034
1.115
15.6
16.5
EPS FD (A$) 0.887
OperaIihg CFPS (A$) 1.654 0.459 0.670 0.883 0.893
7.8
0.711 0.651
17.0
17.0
0.346 -0.074
0.711 1.034
14.4 10.6
19.7 23.9 8.5 19.5
0.724 0.325 0.770 0.434
43.1
0.170
0.394
11.6 21.1
0.489 0.438
0.631
4.3
1.28 1.35
3.6
1.51
hm
5.8
0.350
1.15
6.7
1.15 1.14
5.4 6.0
IhIrasIrucIure DevelopmehI
4,774 4,935 4,751
6.8
5,028
5.7 7.8
A$7.31
IhvesImehI MahagemehI

Compahy websiIe

Lehd Lease CorporaIioh LimiIed provides real
esIaIe pro|ecI mahagemehI, pro|ecI desigh,
pro|ecI Iihahcihg ahd cohsIrucIioh services alohg
wiIh properIy develop- mehI. The Compahy also
provides real esIaIe ihvesImehI mahagemehI
services ahd serves cliehIs IhaI ihvesI ih real
esIaIe equiIy or debI. The Group also services
commercial real esIaIe loahs.
Research Team
Ian RandaII
hIIp://www.lehdlease.com.au
DevelopmehI 181
3,585
4.8
5.7
4.1
6.5
EV/EBIT (x)
146
3,243
6.9
1.88
3,361
7.3
158
5.9
2.15
CohsIrucIioh 174
A$9.50
EV/EBITDA (x)
Buy
Price/BV (x)
PeuIers: LLC.AX Bloomberg: LLC AU
Price as aI 17-Feb
TargeI price
Company description
2.17
197
190
3,809 3,223
215
154
6.0
DIVISIONAL EBIT (A$m)
114 108
-129 OIher
128
Lend Lease Group
P/CFPS (x)
DPS (A$) 0.610
8.4
279
5.8
94
234
-146 -123 -107
128
171 207
6.7 6.6 6.1
6.8 7.3
5.3
436
-111
109
137
103
-107
117
-115
106
120
8.3
163
132
7.2
176
379 334 186
231 192
-111
178
98
317
-122
138
-1.9%
2.2%
-19%
-20% -15% -10% -5% 0% 5%
1m
3m
12m
0
1
2
3
4
5
6
7
8
9
07 08 09 10 11 12E 13E 14E
EBITDA/sales (%)
EBIT/sales (%)
Trends
0
2
4
6
8
10
12
14
16
18
07 08 09 10 11 12E 13E 14E
POE (%) POA (%)
op POC (%)
Return Ratios (%)
-10
-5
0
5
10
15
20
25
30
-400
-200
0
200
400
600
800
1000
07 08 09 10 11 12E 13E 14E
NeI debI/equiIy (%)
0.50
0.60
0.70
0.80
0.90
1.00
1.10
1.20
1.30
1.40
2/07 2/08 2/09 2/10 2/11 2/12

What if Barangaroo never happens7
LLC loday indicalod loday lhal il is progrossing woll wilh prospoclivo Barangaroo lonanls,
and ronains in dolailod discussions wilh capilal parlnors ro lho connorcial lowors, rolail
aroas and olhor connorcial buildings al lho projocl, wilh lho invoslors curronlly undorlaking
oxclusivo duo diligonco booro onloring inlo binding connilnonls.
LLC had inilially oxpoclod lo inaliso lonanl and oquily invoslor connilnonls or lho irsl
Connorcial lowor al Barangaroo by 3! Doc 20!!, wilh lho gain on lransor o lho land
conpononl o lho irsl lowor ($39.4n on our osls lo conlribulo lo 2H!2 oarnings.
vhilsl lodays connonlary suggosls lhal lhis solldown is likoly lo bo conplolod shorlly, lho
ongoing dolay doos poso risks lo our FY!2 oslinalos. vhon wo conbino Dovolopnonl,
Funds gl and Conslruclion oarnings, wo oxpocl Barangaroo lo conlribulo 5' o divisional
prolax oarnings in FY!2 and 6' in FY!3 (assuning solldown o lho socond Connorcial
lowor in FY!3. Doorral o lho Towor ! solldown inlo FY!3 would soo our FY!2 EPS
oslinalos downy by ~7'.
Figure 1: Barangaroo contribution to divisionaI earnings (DB forecasts)
FY12I FY13I FY14I FY15I FY16I
Dovolopnonl oos / proil 39.4 42.3 52.3 !34.3 !05.7
Funds ngl 0.2 0.9 2.0 3.4 4.6
Conslruclion !.6 4.0 !4.4 !7.5 !6.!
ToIal 41.2 47.7 69.2 155.8 126.4
As of Croup divisiona| earnings 5 6 7 !5 !!
Source. Deutsche Bank estinates
vhilsl lho lining o lonanl and oquily invoslor connilnonl lo Barangaroo doos roprosonl a
swing aclor or oarnings, wo boliovo LLCs slock prico has also boon inpaclod o lalo by
invoslor concorns ro lho possiblo inpacl o Barangaroo dolays on LLCs invoslnonl grado
crodil raling. n our viow, such concorns aro nisplacod.
To illuslralo, woro wo lo assuno lhal Barangaroo novor connoncod, and lhal LLC was slill
roquirod lo und all progrossivo land paynonls lo lho Sv Covornnonl (~$450n ronaining
on our oslinalos ovor FY!2!3 and ~$400n o basononl and slruclural works (our
oslinalo, wo oslinalo lhal our EPS oslinalos would bo down by bolwoon 7' (FY!2 and
!9' (FY!5, howovor goaring would poak al ~!3', slill bolow LLCs largolod !5' (vs 3.4'
curronlly.
oro inporlanlly, wo do nol boliovo lhal ovon a sconario as unlikoly as lhis would soo LLCs
oarnings / dobl ralios dolorioralo lo a lovol lhal would nocossilalo an oquily raising so as lo
nainlain ils invoslnonl grado crodil raling. Applying lho abovo assunplions, our rough
approxinalion or Funds Fron Oporalions / Dobl ((EBTDA - cash inlorosl -lax/(nol dobl +
conslruclion working capilal + capilalisod oporaling loasos would lrough al 33' in FY!5 on
our oslinalos. vo undorsland lhal a ralio o 30' or abovo is consislonl wilh LLCs curronl
BBB S&P raling.
1H12 resuIt: key takeaways
#
Bollon lino rosull 5' ahoad o our orocasl, payoul ralio 4!'. Oporaling proil o
$220.3n (33.6c was abovo our orocasl $2!0.2n (36.3c. DPS o !6.0c howovor was
bolow our orocasl !3.4c, roprosonling a 4!' payoul ralio vs our oxpoclalion o 50'
and LLCs largolod rango o 4060'. Allhough lho payoul ralio is in lino wilh FY!!, wo
nolo lhal lho FY!! oporaling proil includod a $!0!.7n onoo gain ron lho disposal o
King O Prussia (accounling or 2!' o lolal oporaling proil. LLC loday indicalod lhal
lho payoul ralio is likoly lo ronain lowards lho lowor ond o lho largolod rango ovor lho
noar lorn, givon (! caulion ro lho ovorall nacro onvironnonl, (2 najor projocl capilal
doploynonl roquirononls, and (3 ils oxpoclalion lhal lho ooclivo lax ralo will ronain al
rolalivoly low lovols (prinarily rolocling Folirononl lax lining issuos, liniling lho abilily
lo rank dividonds.
#
Conposilion surprisod - woak Ausl dovolopnonl, highor lhan assol salo gains. vo
oslinalo lho prolax rosull includod $50$55n o capilal rocycling gains ($46n alor lax
por LLC vs our oxpoclalion o $33n or lho hal. Tho dioronco rolalod lo addilional
proils and solllononl adjuslnonls bookod wilh rogard lo lho FY!! disposals o King o
Prussia and Poo, Singaporo. Thoso onoo gains drovo a slrongor lhan oxpoclod
conlribulion ron nvoslnonl anagononl, whilsl lho nraslrucluro division bonoilod
ron lho salo o oquily in lho SA Schools PPP ovor lho hal (~$3n.
Convorsoly, lho Conslruclion businoss dolivorod a rosull narginally abovo our
oxpoclalions dospilo lho booking o a $2!n alor lax provision rolaling lo lho US
businoss. Tho provision rolalos lo an invosligalion by lho US Allornoys Oico inlo LLCs
billing praclicos and ils uso o ninorily ownod onlorprisos.
Tho Auslralian dovolopnonl businoss gonoralod a prolax conlribulion o $47.9n, woll
bolow our orocasl o $76.3n or lho hal and conparod lo a FY!! undorlying
conlribulion ron lhis businoss on our oslinalos (ox Coolun proil o $!59.4n. Tho
bollonlino inpacl o lho shorlall vs our oslinalos was nogligiblo, howovor, as LLC
bookod proviously unrocognizod lax doduclions in lho Folirononl division, loading lo an
alorlax Auslralian Dovolopnonl proil o $66.9n or lho hal.
Figure 2: LLC 1H12 resuIt reconciIiation to DB expectations (divisionaI PBT contributions)
1H12 DBI 1H12a
Dovolopnonl 76.3 43.0 Ausl woll bolow our osls. voakor condilions + also lining (2H solllononl skow or Apls.
Conslruclion !67.5 !70.2' n lino dospilo US$2!n alorlax provision or logal cosls. Ausl oulporornod our oxpoclalions
nvoslnonl anagononl 6!.3 97.5 Addilional proils bookod on Poo and KoP, Asian oos also look lo havo boon abovo our osls
nraslrucluro Dovolopnonl 57.3 70.6' Prinarily rolocls salo o SA Schools PPP oquily
OperaIihg busihess PBT 363.8 386.3 6% above our IorecasI
Croup Sorvicos & anorl 53.3 43.4 vo would oxpocl an incroaso ovor 2H
ol Troasury Cosls 43.7 56.3 Highor avorago nol dobl balanco
Tax 55.9 59.2 2!' ooclivo lax ralo, prinarily rolocling Folirononl lining dioroncos
inorilios 0.2 !.6
NPAT 210.2 220.8 5% above our esI
EPS 36.8 38.6
Payoul ralio 50' 4!' n lino wilh FY!!, bul lhal yoar includod~$!02n onoo King o Prussia gain.
DPS 18.4 16.0
Source. Deutsche Bank estinates, conpan, data, ve have inc|uded $25.4n of Actus construction PBT in nfrastructure Deve|opnent segnent, vs LLCs nev po|ic, of a||ocating to Construction
#
voak Auslralian dovolopnonl solllononls, bul prosalos oncouraging. LLC solllod on
jusl 305 rosidonlial lols and !7 aparlnonls ovor lho hal (vs 2,299 lols and !72
aparlnonls ovor FY!!. vhilsl lho low volunos ovor lho hal woro in parl drivon by woak
narkol condilions (parlicularly in SA and OLD, lhoy also rolocl a signiicanl skow in
lorns o Aparlnonl solllononls, wilh lho Convossa and Sorrala lowors al Vicloria
Harbour bolh duo or conplolion lhis hal. Allhough rosidonlial lol solllononl volunos
woro disappoinling, prosalo lovols aro oncouraging. Prosalos al Doc!! slood al !,625
lols (vs !,443 al Juno!! wilh a conbinod valuo o $343.0n.
Figure 3: Aust Resi deveIopment settIements

Figure 4: Aust Resi deveIopment pre-saIes
0
200
400
600
800
1000
1200
1400
1600
1800
0
50
100
150
200
250
300
350
400
450
500
Dec-09 Jun-10 Dec-10 Jun-11 Dec-11
Resident ial Land Lots (A$m) LHS
Resident ial Built -Form (A$m) LHS
Tot al Number of Set t lement Units (RHS)

0
500
1000
1500
2000
2500
0
200
400
600
800
1000
1200
Dec-09 Jun-10 Dec-10 Jun-11 Dec-11
Resident ial Land Lot s (A$m) LHS
Resident ial Built -Form (A$m) LHS
Tot al Number of Pre-Sales (LHS)


#
Auslralian conslruclion backlog up !5' vs Juno!!. Tho conbinod Auslralian rovonuo
backlog or lho P&C and nraslrucluro Conslruclion businossos sils al $9.9bn, up
$!.3bn or !5' vs Juno!! lovols. Tho nraslrucluro Conslruclion backlog sils al $6.3bn,
vs $6.0bn, wilh lho P&C backlog up ~$500n lo $3.!bn. This is inclusivo o $935n o
now work rolaling lo basononl and inraslrucluro works and lho irsl Connorcial lowor
al Barangaroo. Focognilion o conslruclion nargin on lhis work will bo dopondonl upon
LLCs abilily lo soll down oquily in lho projocl lo oxlornal invoslors.
Figure 5: AustraIia PM&C EBITDA contribution (DBf)
0
20
40
60
80
100
120
140
FY10a FY11a FY12e FY13e FY14e FY15e FY16e
Ex Barangaroo, RNA Barangaroo, RNA
Allhough lho oullook or building conslruclion ronains gonorally subduod honco our
oxpoclalions o doclining conlribulions ron lho P&C businoss dospilo Barangaroo and
FA - lho nraslrucluro Conslruclion businoss conlinuos lo soo a slrong pipolino o
opporlunilios in lho Enginooring Conslruclion spaco. Tho Croup is curronlly londoring on
$9bn o Auslralian conslruclion work, prodoninanlly ocusod around najor rosourco
projocls.
#
Solid oporaling cash low or lho hal, goaring down lo 3.4'. LLC gonoralod oporaling
cash low o $203.!n or lho hal dospilo doploying $237.!n lowards now dovolopnonl
projocls, rolocling lho posilivo working capilal bonoils o growing conslruclion
rovonuos. Coaring sils al 3.4'. vo oxpocl urlhor capilal doploynonl and an absonco o
addilional capilal rocycling ovor 2H lo soo goaring roach 6' by Juno!!. LLC cash and
undrawn acililios lolaling $2.46bn.
DivisionaI estimates
Our divisional orocasls or LLC aro sunnarizod in Figuro 6 bolow. vhilsl wo havo adjuslod
our divisional orocasls posl lho rosull, our bollonlino oarnings oxpoclalions or LLC ronain
largoly unchangod. Our FY!2 EPS oslinalo i down by !.!', rolocling lho nol inpacl o
lowor orocasl Dovolopnonl division oarnings, a slrongor !H Conslruclion runralo, and
addilional capilal rocycling gains bookod lhis hal.
Figure 6: LLC DB divisionaI PBT estimates
FY10a FY11a FY12I FY13I FY14I FY15I FY16I
Dovolopnonl !63.5 !76.2 !9!.3 23!.0 273.7 366.3 340.3
Projocl gl & conslruclion !32.3 !35.7 333.9 373.6 435.9 470.4 5!3.!
nvoslnonl anagononl !77.3 3!6.3 !36.6 !!9.3 !!6.3 !23.5 !7!.!
nraslrucluro Dovolopnonl 97.6 !37.3 !06.! !03.7 !02.3 73.4 3!.2
OperaIihg busihess combihed PBT 571.2 816.5 768.4 838.2 934.2 1043.6 1105.8
Croup Sorvicos & anorl. !!!.! !2!.5 !!4.5 !07.5 !!0.6 !!4.9 !!9.4
ol Troasury Cosls 43.0 74.2 77.! 63.0 53.5 62.7 55.6
Proil Booro Tax 4!7.! 620.9 576.3 667.6 765.! 365.9 930.7
Tax 90.9 !35.2 !26.9 !66.9 206.6 242.4 260.6
inorilios 2.6 0.4 0.4 0.4 0.4 0.4 0.4
NPAT 323.6 485.3 449.5 500.3 558.1 623.0 669.7
EPS 65.1 85.6 78.7 87.6 97.8 109.1 117.3
PS grovth vs pcp -!0.0 3!.5 -8.0 !!.3 !!.6 !!.6 7.5
VaIuation, 12mth Price Target and Risks
Posl adjuslnonls lo our orocasl oarnings nix, our SOTP valualion has roducod slighlly lo
$9.5!ps, vs $9.55ps proviously. Our !2nlh PT ronains al $9.50ps, broadly in lino wilh our
SOTP valualion.
Figure 7: LLC: DB SOTP vaIuation
FY13I EBIT MulIiple applied Value $ps
Dovolopnonl 23!.0 9.0x 2,079 $ 3.64
Projocl gl & Conslruclion 373.6 7.0x 2,650 $ 4.64
Aclus 77.0 9.5x 73! $ !.23
nvoslnonl anagononl (ox invoslnonl oarnings 32.4 !0.0x 324 $ 0.57
nvoslnonls al narkol valuo (adjuslod or FY!3 avg !,460 $ 2.56
UK PFs (al 2x rosidual book valuo 2!! $ 0.37
Corporalo ovorhoads !07.5 3.0x 360 $ !.5!
ol dobl FY!2 avg plus conslruclion working capilal !,!63 $ 2.04
ToIal SOTP valuaIioh 5,432 $ 9.51
vo havo appliod nulliplos lo our orocasl FY!3 EBT conlribulions or LLCs businossos wilh
rooronco lo lho FY!3 narkol nulliplo (9.5x or lho ASX 200 nduslrials ox Financials on DB
osls. vo boliovo a discounl lo lho narkol nulliplo is approprialo or nosl o LLCs
businossos, givon lho risk proilo o lho incono slroans. vo nolo lhal our adoplod nulliplos
o 9x and !0x or dovolopnonl and unds nanagononl oarnings rospoclivoly aro broadly
consislonl wilh lho nulliplos wo apply in valuing conparablo businossos across lho AFET
soclor.
Risks
Koy downsido risks lo our orocasls, valualion and raling includo:
#
Polonlial or lino dolays, cosl ovorruns and insuicionl lonanl or purchasor donand or
najor dovolopnonl projocls. n parlicular, our orocasls allow or a prolax $4!n
conlribulion ron Barangaroo in FY!2, growing lo $!56n by FY!5 as urlhor
dovolopnonl proils onorgo.
#
Curroncy novononls, givon no hodging (ox oshoro borrowings and wilh oshoro
oarnings roprosonling 2530' o oarnings ovor our orocasl poriod.
#
Tho cyclicalily o conslruclion narkols and lho polonlial or lossnaking conslruclion
projocls lo onorgo.
#
Tho polonlial or urlhor dolorioralion o Auslralian rosidonlial narkol condilions,
inpacling upon lho proilabilily o lho Auslralian rosidonlial businoss and also possibly
lho achiovablo rolurns ron najor urban rogonoralion projocls such as Barangaroo and
lho FA projocl in Brisbano.
Appendix 1
Lond Loaso LLC.AX 7.3! (AUD 20 Fob !2 !,4,7,!4,!7


!. vilhin lho pasl yoar, Doulscho Bank and/or ils ailialo(s has nanagod or conanagod a public or privalo ooring or lhis
conpany, or which il rocoivod oos.
4. Tho rosoarch analysl(s or an individual who assislod in lho proparalion o lhis roporl (or a nonbor o his/hor housohold
has a dirocl ownorship posilion in socurilios issuod by lhis conpany or dorivalivos lhoroo.
lho pasl yoar.

4. Tho rosoarch analysl(s or an individual who assislod in lho proparalion o lhis roporl (or a nonbor o his/hor housohold
has a dirocl ownorship posilion in socurilios issuod by lhis conpany or dorivalivos lhoroo.

website at hllp://gn.db.con/gor/disclosuro/Disclosuro.oqsr?ricCodo=LLC.AX.

conponsalion or providing a spociic roconnondalion or viow in lhis roporl. an Fandall

HistoricaI recommendations and target price: Lend Lease (LLC.AX)
(as of 2/20/20!2)
!
"
#
$
0.00
2.00
4.00
6.00
3.00
!0.00
!2.00
S
o
c
u
r
i
l
y

P
r
i
c
o
Dalo

Slrong Buy
Buy
arkol Pororn
Undorpororn
ol Falod
Suspondod Faling
Buy
Hold
Soll
ol Falod
Suspondod Faling

!. 25/2/20!0: Hold, Targol Prico Chango AUD!0.00
2. 27/5/20!0: Upgrado lo Buy, Targol Prico Chango AUD9.00
3. 2!/!2/20!0: Downgrado lo Hold, Targol Prico Chango AUD9.50
4. 23/3/20!!: Upgrado lo Buy, AUD9.50

buy lho slock.
slock
Notes:

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
30
!00
!20
!40
Buy Hold Soll
Auslralia Univorso


hllp://gn.db.con.


60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 250 2500
London EC2 2EO
Unilod Kingdon
Tol: (44 20 7545 3000
Deutsche Bank AG
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Doulscho Bank Placo
Lovol !6
Sydnoy, Sv 2000
Auslralia
Tol: (6! 2 3253 !234
Deutsche Bank AG
Filialo Hongkong
Hong Kong
Tol: (352 2203 3333
2!!! agalacho
Sanno Park Towor
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer

Property

2! Fobruary 20!2
Mirvac Group
Foulors: MGR.AX Bloonborg: MGR AU Exchango: ASX Tickor: MGR
FY!4 ronains lho big yoar
Ian RandaII
Fosoarch Analysl
(+6! 2 32532609
ian.randall@db.con
James Brown
Associalo Analysl
(+6! 2 3253!635
janosw.brown@db.con

Timing skews see 1H above expectations, FY12 guidance unchanged
Tho $25n inpairnonl o Loighlon Boachsido was disappoinling bul nol surprising
givon projoclspociic issuos. On lho posilivo sido, CF has socurod prosalos ovor
55' o Harold Park Procincl Ono, & lho nvoslnonl Division conlinuos lo
oulpororn our oxpoclalions. Posl whal wo oxpocl lo bo a lal FY!3, FY!4 could
woll oxcood our curronl oxpoclalions, wilh CF conlinuing lo largol !0!2'
dovolopnonl FOC or lhal yoar. Howovor, wilh oxoculion risk ronaining & CF
looking airly pricod on T yiold nolrics vs conps wo nainlain our Hold raling.
Year Ehd Juh 30 2011A 2012E 2013E 2014E 2015E
EPU (AUD 0.!! 0.11 0.!! 0.!2 0.!3
EPU Crowlh (' !3.0 0.7 0.2 !2.2 5.0
DPU (nol (AUD 0.03 0.08 0.09 0.09 0.09
Yiold (nol (' 6.4 7.0 7.3 7.4 7.6
!
2
yoar ond closo

CA(P !46/04/20!!.
ResuIts

HoId
ALL OFDAFES 4,368

0.9
!.05
!.2
!.35
!.5
!.65
!.3
2/!0 5/!0 3/!0 !!/!0 2/!! 5/!! 3/!! !!/!!
irvac Croup
ALLOFDAFES (Fobasod
Absolulo -3.2 -2.0 -4.7

Stock data
Froo loal 100.00

TA/sharo (Ac 164.7
Prico/TA (x 0.7
EF (' 0.0

C
o
m
p
a
n
y

G
I
o
b
a
I

M
a
r
k
e
t
s

R
e
s
e
a
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h

1H12 operating profit $201.5m (5.9c), vs DBf $172.8m (5.1c)
Asido ron a bollorlhanoxpoclod rosull ron lho nvoslnonl Division (+3.3' liko
onliko O growlh, lho !H boal vs our oxpoclalions was drivon prinarily by
!H/2H lining skows. vhoroas wo had oxpoclod a dovolopnonl proil skow lo 2H,
CF loday indicalod lhal lho 2H bonoil o lho Hoxlon Park disposal proil will bo
largoly osol by a urlhor lick up in solling and narkoling oxponsos rolaling lo
FY!3+ Aparlnonls rovonuos. Tho skow in bolh Corporalo and divisional ovorhoads
lo 2H is also likoly lo bo largor lhan wo had allowod or. CF has nainlainod ils
FY!2 guidanco rango o $360$364n oporaling proil (vs DB $363.!n.
GeneraIIy positive operating update, ex Leighton Beachside impairment
Prosalos sil al $!,003.!n, wilh 63.5' o oxpoclod 2H Dovolopnonl EBT
socurod. Dovolopnonl gross proil nargin incroasod lo !5.3', vs !4.2'or FY!!,
or !3.7' ox provisionod projocls (FY!! !7.9'. Oporaling proil nargin
conlraclod lo jusl 2.!' (FY!! 3.5', rolocling incroasod solling / narkoling cosls
(rolaling lo FY!3+ solllononls & solllononl o proviously inpairod projocls.
FY13f Iooking Iike a fIat year ahead of FY14 settIements at Era & HaroId Park
vo oxpocl FY!3 EPS lo bo lal vs FY!2, inpaclod by ~$2!0n o noncoro assol
salos ovor FY!2 and solllononl o lho $327n Holol disposal in 2H!2. CF loday
nolod lhal whilsl Holol procoods nay bo parlially doployod lowards a buyback, a
porlion o procoods would also bo doployod lowards dobl roduclion. Assuning
say a $200n buyback, wo oslinalo EPS accrolion would bo ~!.2'. CF
conlinuos lo largol !0!2' Dovolopnonl FOC in FY!4 (vs !H!2 4.3' on our
osls, suggosling FY!4 Dovolopnonl EBT o $!30n+ vs our orocasl $!35n.
12mth PT remains at $1.35ps, vs SOTP vaI $1.41ps. Risks and vaI detaiIed p4
SOTP val applios 9x nulliplo lo lrond Dovolopnonl EBT & 7.7' cap ralo lo FY!3
O. Downsido risks includo urlhor inpairnonls, upsido risks includo buyback &
pullorward o Connorcial dovolopnonl EBT via parlnoring opporlunilios.
2! Fobruary 20!2 Proporly irvac Croup
Y/ E 30 June 07/ 08 08/ 09 09/ 10 10/ 11 11/ 12E 12/ 13E 13/ 14E 14/ 15E 15/ 16E
Int erest accrued 139 78 51 120 157 159 177 179 181
Managers f ee 0 0 0 0 0 0 0 0 0
Ot her expenses 1,272 1,316 1,145 1,170 1,015 912 1,173 1,153 1,173
Tot al t rust expenses 1,411 1,395 1,197 1,290 1,173 1,071 1,350 1,332 1,354
Adjust ment s -33 11 15 15 10 22 5 2 9
Income ret ained -612 93 29 68 74 66 106 116 102
CASH FLOW ( A$m)
Ot her 0 0 0 0 -68 -56 -53 -57 -56
Tot al propert y invest ment -9 -187 -215 -134 426 -101 -92 -96 -76
Proceeds f rom borrowings -216 -412 -740 255 -416 97 81 46 16
Proceeds f rom equit y 298 1,560 501 0 0 0 0 0 0
+612 8258 2609 ian.randall@db.com Cash f rom f inancing act ivit ies -119 1,007 -439 -24 -703 -199 -220 -264 -300
Net inc/ (dec) in cash -8 867 -315 91 18 7 43 11 -13
+612 8258 3099 jason.weat e@db.com
Cash 29 897 582 673 691 698 741 752 739
Debt ors 493 453 386 323 323 323 323 323 323
Int angibles 321 59 55 75 75 75 75 75 75
Ot her 3,207 2,756 2,584 2,622 2,315 2,325 2,362 2,410 2,435
Tot al asset s 7,493 7,374 7,888 9,138 8,817 8,876 9,127 9,354 9,541
Credit ors & accruals 342 270 350 475 475 475 475 475 475
Financial debt 96 2,104 1,844 2,736 2,321 2,418 2,499 2,545 2,561
Ot her 2,550 117 166 248 248 248 248 248 248
Tot al liabilit ies 3,083 2,501 2,432 3,543 3,127 3,224 3,305 3,351 3,367
Reserves 569 -755 -670 -759 -690 -726 -583 -388 -217
Ret ained income 0.0 115.8 15.3 15.3 40.3 38.2 65.1 50.9 50.4
Ot her 70 65 11 13 12 13 13 13 12
RATI O ANALY SI S
52-week High/ Low: A$1.33 - 1.00 Year end debt (m) 2,338 2,104 1,844 2,736 2,321 2,418 2,499 2,545 2,561
DCF V ALUATI ON ( A$) Int erest cover (x) 4.2 3.9 15.2 4.7 5.3 5.0 4.9 5.1 4.9
5 year bonds (%) 6.00 Management expense rat io 17.0 17.9 0.9 0.8 0.9 0.9 0.9 0.9 0.9
Equit y risk premium (%) 4.50
Trust discount rat e (%) 10.50
Terminal cap rat e (%) 7.80
Fair t rust value (A$)
Price/ NPV (x) 0.29
1232
2 2 2
12
2
12 12
73
4,117
434 462 451
4,117 4,117
75
0.94
1.79
0.67
1213 1219
12.2
10.1 9.8
7.7
1.74
11.3
75
7.6
-2.0
1.69
na
1.12
0.2
1.15 na
3.2
7.0
0.92
0.107
0.7
11.3
3409 3255 3409
3409
0.082
3409
0.085
2956
0.107
3409
3409
3409
3409 3409
3409
0.087 0.093
0.120
13.0
12.2 9.6
2.6
EPU growt h (%)
0.0
0.334
-75.7
0.106
-30.2
DPU growt h (%)
0.094
0.62 0.43
1.72
0.87
6.4
1.62
15.4
0.79 0.93 1.30
7.4
0.73 0.71
1.66
Source: Company dat a, DB est i mat es
Yield rel All Ind (x)
HoId
Research Team
4 . 15
Corporat ion income
Dividend yield (%)
2 3
21
0.96
4,117
414
73
1.00
1.22 1.26
75
11
14 33
913 1040
28
22
0.69
1.65 1.64
0.74
3.3
3409
0.123
0.089
1.5 1.9 3.1
0.092
1053
3.1
0.329
EFPOWA (m)
1.13
1.76
SUM M ARY
1498
0.080 0.080
3390
NTA/ share ($) 3.71
6.8
14.4
Mirvac Group
PER (x) 11.9
387
4,117 2,180 4,251 4,369
378
2805
AusIralia
DPU ($)
Equity Research
1.4 -59.9
0.134
Asia Pacific
7.3
Int erest income
1.07
5.6
0.126
5.0
Company website
4
248
http://www.mirvac.com.au
Ot her income 2
0 Net associat es
5,041
0.28
5.0
Reut er s: MGR.AX Bloomber g: MGR AU
Price/ NTA (x)
1.58 0.82
99
Jason Weat e
20
Mirvac Group operat ions include propert y
invest ment , management and development in
Aust ralia and New Zealand. The Group is also
involved in hot el ownership and management . The
Group's port f olio includes over t hirt y of f ice,
commercial and indust rial propert ies.
Company descr i pt i on
Ian Randall
Target price
273
26
1439 1127 1320 1200
219
18
OIIice
63%
PeIail
25%
IhdusIrial
9%
Parkihg
3%
Asset Type (%)
-3.2%
-2.0%
-4.7%
-5% -4% -3% -2% -1% 0%
1m
3m
12m
0
5
10
15
20
25
30
35
0
2000
4000
6000
8000
10000
12000
09 10 11 12E 13E 14E 15E 16E
DebI/asseIs (PHS)
Gearing
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1.10
1.20
1.30
1.40
2/07 2/08 2/09 2/10 2/11 2/12
Rel ati v e to GICS 300 Property
L-T av erage
NSW 53%
VIC 22%
OLD 17%
ACT 6%
OIher
2%

1H12 ResuIt key takeaways
#
Tining skows soo !H!2 oporaling proil woll abovo our oslinalos. !H!2 oporaling proil
o $20!.5n (5.9c was woll ahoad o our oslinalo o $!72.3n. Tho nvoslnonl Division
is lracking slighlly ahoad o our oxpoclalions, howovor, lho bulk o lho dioronco
appoars lo rolalo lo lining. Tho skow lo 2H o bolh Corporalo cosls and divisional
ovorhoads looks likoly lo bo ar groalor lhis yoar lhan wo had allowod or, and CF
indicalod loday lhal lho 2H lil lo Dovolopnonl oarnings ron lho solllononl o lho
Hoxlon Park salo is likoly lo bo osol by highor solling and narkoling oxponsos as now
roloasos ranp up. On lho rovonuo ronl, lho Holol businoss gonoralod a !H rosull ahoad
o our oxpoclalions, howovor again, lhis appoars lo rolocl soasonalily ralhor lhan a
highor runralo or lho businoss.
#
FY!2 guidanco nainlainod al $360$364n (!0.5!0.6c. Our FY!2 orocasl sils lowards
lho lop o lhis rango al $363.!n.
#
nilial roloaso o Harold Park gonoralod solid prosalos. CF indicalod loday lhal ils
inilial roloaso o Harold Park gonoralod !64 salos, roprosonling 55' o lho 296
Aparlnonls in Procincl. Across lho Fosidonlial Dovolopnonl businoss, prosalos sland al
$!,003.!n, o which $470n is orocasl lo solllo in FY!4 or boyond (Era, Pinnaclo, and
Harold Park Procincl !.
#
$25n (!7.6n alor lax inpairnonl lakon againsl Boachsido Loighlon. Tho inpairnonl
rolocls a conbinalion o lowor oxpoclalions ro lho anounl and lining o solllononl o
oxisling prosalo conlracls, along wilh a longor assunod solling poriod and lowor
rovonuos ron unsold invonlory al lho projocl. Posl lho inpairnonls, lho carrying valuo
o lho projocl sils al ~$!30n.
#
Dovolopnonl FOC ronains <5'. vo oslinalo lhal lho Dovolopnonl division
gonoralod a 4.3' rolurn on avorago invoslod capilal ovor !H, down ron 5.0' in FY!!.
Our orocasls allow or FOC lo oxpand lo 7.3' in FY!4 as inpairod invonlorios roll o
and CF bonoils ron whal wo oxpocl lo bo rolalivoly high nargin solllononls al Era
and Harold Park Procincl !. vhilsl our orocasls or lhis Division ronain woll bolow
CFs largolod FOC o !0!2' by FY!4, wo nolo lhal signiicanl oxoculion risk
ronains wilh rogard lo achioving lho balanco o largolod FY!4 salos and succossully
dolivoring lho projocls.
#
!90 Coorgo Sl dovolopnonl largolod lo slarl oarly 20!3. Subjocl lo achioving 6070'
proconnilnonl, CF oxpocls lo connonco lhis 33,000sqn dovolopnonl in oarly
20!3. Tho lolal cosl o lho projocl is oxpoclod lo bo $495n, suggosling incrononlal
spond o $427.5n givon lho conbinod book valuo o !90 & 200 Coorgo Sls o $67.5n.
CF indicalos lhal il has rocoivod a signiicanl lovol o inlorosl ron invoslors looking lo
parlnor in lho dovolopnonl. vo would oxpocl any dovolopnonl o lhis projocl lo
conlribulo prodoninanlly lo FY!5 oarnings. Howovor, doponding on lho slrucluro o any
parlnoring agroononl, a solldown o a sharo o lho silo could gonoralo a FY!3
conlribulion in our viow.
#
nvoslnonl Division likoonliko O growlh +3.3'. Tho oico porlolio dolivorod likoon
liko O growlh o 4.2', wilh Folail O up by 2.9' on a conparablo basis. Tho rolail
porlolio gonoralod conparablo AT growlh lo Doc!! o +!.7', drivon by
supornarkols +4.2' and lho Olhor Folail calogory +5.6'. Spocially conp AT growlh
o +!.0' was bolow lho lovol o conparablo growlh gonoralod by olhor rolail porlolios
ovor lho poriod (avg +2.5' on our osls, howovor occupancy cosl lovols ronain
suslainablo al !4.9' (up ron !3.4' or FY!!.
#
Coaring lo roduco posl assol salo and Holol disposals. Coaring sal al 27.4' (look
lhrough 23.9' al balanco dalo. Posl rocoipl o noncoro assol salo procoods and
solllononl o lho Holol disposal, wo oxpocl lhis iguro lo roduco lo 23'. vo oslinalo
lhal a $200n buyback would soo goaring al 26'. CF has no dobl oxpirios ovor lho
noxl !2nlhs, and nainlains $496.3n o liquidily.
VaIuation and risks
Our SOTP valualion sils al $!.4!ps, vs $!.35ps proviously. Tho incroaso lo our valualion is
prinarily drivon by rollorward lo FY!3 as our baso yoar.
Our SOTP valualion adopls a AV approach or lho lrusl, and also applios EBT nulliplos lo
lho corporalion incono slroans. vo adopl FY!3 incono orocasls or lho invoslnonl
porlolio, using an avorago 7.7' cap ralo across lho invoslnonl porlolio.
vo apply an EV/EBT nulliplo o 9x lo CFs lrond rosidonlial businoss, inlino wilh nulliplos
appliod lo sinilar lislod dovolopors. A 9x nulliplo is al a discounl lo lho broador oquilios
narkol (ox inancials, rolocling lho highor bola naluro o dovolopnonl oarnings. Our lrond
rolurn on capilal (FY!4/!5 is 3.5', wilh a lrond EBT or valualion purposos o $!39n.
Our !2nlh PT o $!.35ps is sol al a discounl lo our SOTP valualion, and oqualos lo a FY!3
oarnings yiold o 7.3', vs lho AFET soclor avorago o 3.5' on our oslinalos. vo oxpocl
FY!3 lo roprosonl a doprossod lovol o oarnings or CFs Dovolopnonl businoss, and
oxpocl CF lo dolivor lho highosl ralo o EPS growlh o lho AFETs in FY!4. Howovor, wo
boliovo lhal noarlorn oarnings yiold considoralions (and ronaining oxoculion risk ro CFs
dovolopnonl pipolino will soo lho slock slrugglo lo lrado al a groalor lhan 70bp lighlor
oarnings yiold lhan lho AFET soclor avorago ovor lho noar lorn.
Risks
Downsido risks includo highor inlorosl ralos nogalivoly inpacling rosidonlial salos & lho risk
o urlhor inpairnonl lo assol valuos. Spociic downsido risks:
#
Polonlial or cosl ovorruns on najor projocls. By naluro CFs rosidonlial dovolopnonl
involvos conslruclion risk & projocl dolivory, which nay nogalivoly inpacl uluro
oarnings. For oxanplo projocls such as Yarras Edgo (VC & owsload (OLD all involvo
projocl conslruclion, dolivory & solllononl risks
#
npairnonl risk rolaling lo unsold invonlory in Old & vA
Upsido risks includo lho polonlial or urlhor assol salos & inplononlalion o a sharo
buyback. Olhor upsido risks includo lho roinvoslnonl o capilal lowards noro proilablo
dovolopnonl projocls, dolivoring urlhor upsido lo FY!4 oarnings.
Appendix 1
irvac Croup CF.AX !.20 (AUD 2! Fob !2 6




website at hllp://gn.db.con/gor/disclosuro/Disclosuro.oqsr?ricCodo=CF.AX.

conponsalion or providing a spociic roconnondalion or viow in lhis roporl. an Fandall

HistoricaI recommendations and target price: Mirvac Group (MGR.AX)
(as of 2/2!/20!2)
!
" #
$
% &
0.00
0.20
0.40
0.60
0.30
!.00
!.20
!.40
!.60
!.30
S
o
c
u
r
i
l
y

P
r
i
c
o
Dalo

Slrong Buy
Buy
arkol Pororn
Undorpororn
ol Falod
Suspondod Faling
Buy
Hold
Soll
ol Falod
Suspondod Faling

!. 7/4/20!0: Buy, Targol Prico Chango AUD!.60
2. 24/3/20!0: Buy, Targol Prico Chango AUD!.54
3. !9/!/20!!: Buy, Targol Prico Chango AUD!.46
4. 25/!/20!!: Buy, Targol Prico Chango AUD!.42
5. 6/5/20!!: Buy, Targol Prico Chango AUD!.35
6. !9/9/20!!: Downgrado lo Hold, AUD!.35

buy lho slock.
slock
Notes:

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
30
!00
!20
!40
Buy Hold Soll
Auslralia Univorso


hllp://gn.db.con.


60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 250 2500
London EC2 2EO
Unilod Kingdon
Tol: (44 20 7545 3000
Deutsche Bank AG
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Doulscho Bank Placo
Lovol !6
Sydnoy, Sv 2000
Auslralia
Tol: (6! 2 3253 !234
Deutsche Bank AG
Filialo Hongkong
Hong Kong
Tol: (352 2203 3333
2!!! agalacho
Sanno Park Towor
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer

Property

2! Fobruary 20!2
CwIth Prop. Office
Foulors: CPA.AX Bloonborg: CPA AU Exchango: ASX Tickor: CPA
!H FY!2 Fosull: Posilivo al lho
nargin wilh growlh polonlial
Jason Weate
Fosoarch Associalo
(+6! 2 32533099
jason.woalo@db.con
Ian RandaII
Fosoarch Analysl
(+6! 2 32532609
ian.randall@db.con

Upside risk to FY12 guidance, growth outIook depends on capitaI aIIocation
vhilsl lodays rosull oxcoodod our oxpoclalions, our shorlall was noslly drivon
by nonrocurring ilons. vo do soo upsido risk lo FY!2 guidanco givon
consorvalivo ngnl assunplions. On our osls, CPAs incrononlal cosl o dobl
unding is ~4.3', which could lil EPU by ~6' i onliroly appliod lo
acquisilions/buybacks. Howovor, wo boliovo CPA will likoly slarl dovolopnonls
ahoad o acquisilions, doorring EPU accrolion inlo lho T which lho narkol
appoars unwilling lo roward al lhis slago. Hold nainlainod.
EPU (AUD 0.07 0.07 0.03 0.03 0.09
EPU Crowlh (' 2.2 5.9 9.0 2.9 4.6
DPU (nol (AUD 0.06 0.06 0.06 0.07 0.07
Yiold (nol (' 6.! 6.0 6.4 6.6 6.9
!
2
yoar ond closo

CA(P !46/04/20!!.
ResuIts

HoId
ALL OFDAFES 4,368

Key changes
ol prop rovonuo (FYE 233 lo 244 ! 2.5%
ol proil (FYE !73.2 lo !75.3 ! 1.2%

0.76
0.3
0.34
0.33
0.92
0.96
!.0
!.04
2/!0 5/!0 3/!0 !!/!0 2/!! 5/!! 3/!! !!/!!
CwllhProp. Oico
ALLOFDAFES (Fobasod
Absolulo !.5 8.2 !!.3

Stock data
Froo loal 100.00

TA/sharo (Ac 114.5
Prico/TA (x 0.9
EF (' 0.0

C
o
m
p
a
n
y

G
I
o
b
a
I

M
a
r
k
e
t
s

R
e
s
e
a
r
c
h

1H12 ResuIt exceeds our expectations. PotentiaI upside to FY12 guidance.
CPA roporlod !H!2 dislribulablo incono o $93.!n (DB al $33.0n, oqualing lo
EPU o 3.3cpu (DB al 3.6cpu. DPU o 2.39c was proviously laggod. TA was
slablo al $!.!3ps (vs $!.!2 Sop!!. Our oslinalo shorlall vs lho rosull was
conconlralod al lho proporly lino, largoly rosulling ron groalor Porlh & 5P
conlribulions (nonrocurring lhan wo had allowod or. L4L incono growlh
rocovorod lo 3.2' (vs !.!' Jun!! aidod by 3.9' avg loaso growlh across 43'
o lho porlolio, whilo occupancy has lilod lo 97.2' (vs 96.7' Jun!! rosulling
ron !75 Pill Sl achioving 97' loaso connilnonls (vs 34' Jun!!. CPA
roairnod FY!2 DPU guidanco o 5.35cpu, howovor, lhis doos nol allow or
incrononlal aclivily ro roconl !75 Pill loasoup or CPAs onnarkol buyback.
Cheap cost of incrementaI debt IikeIy to see on-market buyback continuation
Posl urlhor clarily boing providod ro CPAs dobl posilion, wo oslinalo liquidily o
~$4!0n (posl !45 Ann Sl connilnonls al an incrononlal cosl o 4.3'. voro
wo lo assuno onliro liquidily applicalion lowards an invoslnonl yiolding 7.5'
(oquivalonl lo buyback yiold or CPAs vACF, il would soo an innodialo EPU
uplil o ~6' on our osls. Howovor, nalorial capilal allocalion lowards
dovolopnonls (5P & 335 Bourko Sl ahoad o allornalivos will likoly door such
accrolion inlo lho T. vo, lhorooro, boliovo CPA would bo inconlivisod lo
conlinuo ils onnarkol buyback lo capilalizo on allraclivo unding cosls, lhus
cryslallizing sono innodialo oarnings accrolion.
12 mth PT of $0.97 & NAV of $0.99ps remain unchanged. Risks pg6
Our FY!3E AV o $0.97c rolocls incrononlal bonoils o our accrolivo buyback
assunplion (3.6' onnarkol, capilalizalion o !75 Pill Sl on a ully loasod basis, &
likoorliko incono growlh. Our AV applios Doc!! vACF o 7.5' & !0x oo
nulliplo. Upsido and downsido risks rovolvo around dovolopnonl pro
connilnonls and doploynonl o capilal as CPA rolovoragos ils balanco shool.
2! Fobruary 20!2 Proporly Cwllh Prop. Oico

Y/ E 30 June 07/ 08 08/ 09 09/ 10 10/ 11 11/ 12E 12/ 13E 13/ 14E 14/ 15E 15/ 16E
nt erest accrued 78 68 52 65 51 45 45 55 35
Managers f ee 22 27 23 19 19 16 17 17 18
Ot her expenses 2 2 2 3 2 2 2 2 2
Tot al t rust expenses 102 96 76 88 72 63 64 75 55
Adjust ment s 0 0 0 -11 0 0 0 0 0
ncome ret ained -3 -5 29 21 36 37 38 40 46
CASH FLOW ( A$m)
Ot her -10 14 8 8 0 -4 -8 2 6
Tot al propert y invest ment -50 36 -63 -722 403 -94 -83 -25 -26
Proceeds f rom borrowings 83 -196 -128 334 -334 64 46 -14 -14
Proceeds f rom equit y -21 203 122 371 0 0 0 0 0
+612 8258 2609 ian.randall@db.com Cash f rom f inancing act ivit ies -90 -141 -134 578 -474 -85 -108 -174 -196
Net inc/ (dec) in cash -6 57 -53 20 104 3 -8 2 11
Cash 4 61 8 28 132 135 127 130 140
+612 8258 3099 jason.weat e@db.com Debt ors 24 20 14 19 19 19 19 19 19
nt angibles 0 0 0 0 0 0 0 0 0
Ot her 576 436 419 424 437 449 460 471 482
Tot al asset s 3,787 3,157 3,107 3,833 3,635 3,803 3,940 4,068 4,175
Credit ors & accruals 126 90 82 137 133 139 142 147 149
Financial debt 74 857 694 1,058 723 787 833 819 805
Ot her 924 0 0 0 0 0 0 0 0
Tot al liabilit ies 1,198 1,025 834 1,266 949 1,018 1,069 1,065 1,054
Reserves 766 106 79 7 230 324 410 543 660
Ret ained income 81.9 81.9 81.9 78.7 78.7 78.7 78.7 78.7 78.7
Ot her 0 0 0 0 0 0 0 0 0
RATI O ANALY SI S
52-week High/ Low: A$1.01- 0.83 Year end debt (m) 998 857 694 1,058 723 787 833 819 805
0
0 0 0
0
0
0 0
3
2,354
253 280 273
2,354 2,354
3
0.86
1.33
0.74
0 0
2.9
12.1 10.2
7.9
1.28
12.4
3
6.9
13.5
1.22
na
1.03
9.0
1.03 na
7.5
6.0
0.78
0.073
5.9
13.5
2346 2013 2450
2411
0.055
2350
0.059
1941
0.079
2350
2350
2350
2350 2350
2350
0.063 0.077
0.082
-2.2
13.1 11.5
-0.7
EPU growt h (%)
-37.1
0.081
-4.4
0.069
-12.6
DPU growt h (%)
0.070
0.59 0.46
1.15
0.82
6.1
1.05
13.1
0.86 0.94 0.93
6.6
0.86 0.81
1.12
Yield rel All nd (x)
HoId
Resear ch Team
Corporat ion income
Dividend yield (%)
0 0
0
0.86
2,354
247
3
0.88
1.08 1.08
3
0
3 2
0 0
2
0
0.77
1.15 1.19
0.83
7.2
2346
0.097
0.065
3.0 13.5 4.6
0.068
1604
-7.5
0.092
EFPOWA (m)
1.08
1.58
SUM M ARY
1738
0.088 0.055
2263
NTA/ share ($) 1.61
6.1
18.4
CommonweaIth Property Office Fund
PER (x) 13.5
244
2,354 1,829 1,789 2,029
241
1861
AusIralia
DPU ($)
Equity Research
-9.5 -1.4
0.080
Asia Pacific
6.4
nt erest income
1.16
6.0
0.085
4.6
Company website
0
233
http://www.colonialfirststate.com.au/cpof
Ot her income 7
0 Net associat es
2,425
0.46
8.1
Reut ers: CPA.AX Bloomberg: CPA AU
Price/ NTA (x)
1.42 1.32
Jason Weat e
14
0
Commonwealt h Propert y Of f ice Fund is a propert y
t rust t hat invest s in, manages and develops a
port f olio of of f ice, indust rial and High Tech
ndust rial of f ice propert ies locat ed t hroughout in t he
Cent ral Business Dist rict and suburban market s of
Aust ralia.
Company descr i pt i on
Ian RandaII
Target price
210
0
0 0 0 0
218
14
OIher
100%
Asset Type (%)
1.5%
8.2%
11%
0% 2% 4% 6% 8% 10% 12%
1m
3m
12m
0
5
10
15
20
25
30
0
500
1000
1500
2000
2500
3000
3500
4000
4500
09 10 11 12E 13E 14E 15E 16E
DebI/asseIs (PHS)
Gearing
0.80
0.90
1.00
1.10
1.20
1.30
1.40
1.50
1.60
1.70
2/07 2/08 2/09 2/10 2/11 2/12
Rel ati v e to GCS 300 Property
L-T av erage
NSW 60%
VIC 13%
OLD 4%
ACT 3%
SA 11%
WA 8%
Key takeaways:
"
vo boliovo urlhor clarily providod loday ro CPAs dobl slrucluro has lilod our viow ro
incrononlal oarnings growlh prospocls or lho slock.
"
Fovisiling incrononlal nargin oxponso associalod wilh incroasod borrowings: As shown
in iguro ! bolow, CPA has undrawn acilily capacily o $450n (+$40n cash alor
allowing posl balanco dalo buyback spond o ~$!!n on our oslinalos. Bolh acililios
alroady incur lino oos, wilh only ono acilily carrying a usago oo conpononl oslinalod
al ~35bps.
"
ncrononlal basoralos would likoly bo slruck wilh rooronco lo narkol ralos: CPAs
curronl drawn borrowings o ~$670n conparos lo inlorosl ralo hodging o ~$600n
(bolh or FY!2 & FY!3. Thorooro, incrononlal dobl acilily draw downs would incur a
basoralo cosl oquivalonl lo lho provailing swap curvo (3 yr nonoy al ~4.3'.
"
On balanco, wo boliovo CPAs incrononlal allin cosl o borrowings is ~4.3' (vs CPAs
Doc!! allin spol ralo o 6.5'.
Figure 1: Estimated incrementaI cost of borrowings
3yr swap
raIe
Usage Iee
(margih)
Cash raIe ToIal LiquidiIy
$(m)
Esl availablo cash n/a 4.35' 4.35' 40
!50n acilily 4.3' n/a 4.30' !50
300n acilily 4.3' 0.35' 5.!5' 300
Est avg incrementaI interest cost (aII-in) 4.82% 490
CPA spot aII-in cost of borrowings 6.50%
"
Doc!! goaring slands al !9'. voro wo lo assuno: ! conplolion o connillod
paynonls ronaining al !45 Ann Sl ($94n, 2 posl balanco dalo spond on CPAs on
narkol buyback ($!!n, 3 2H!2 osl rolainod oarnings (~$20n, 4 salo procoods ron
5P (~$42n, and 5 2H!2 capox ($37n, il would soo goaring lil lo 2!' and liquidily
sland al $4!3n on our oslinalos.
"
Adopling our incrononlal cosl o dobl oslinalos, wo boliovo acquisilions o passivo
proporly assol/s would bo nalorially accrolivo lo oarnings (~2' or ovory $!00n
spond. Howovor, lodays rosull connonlary, in our viow, suggosls lhal proporly
acquisilions aro unlikoly lo rank ahoad o a buyback or dovolopnonl al 5P & 335
Bourko Sl.
"
For CPA, allocalion o balanco shool capacily lowards dovolopnonl ahoad o assol
acquisilions (or a buyback, in our viow doors oarnings accrolion inlo lho nodiunlorn.
vo lhorooro boliovo CPA is inconlivisod lo conlinuo allocaling sono capilal lowards ils
onnarkol buyback lo capilalizo on allraclivo unding cosls and roaliso innodialo
oarnings accrolion.
"
Howovor, in our viow, CPAs balanco shool doos nol possoss goaring capacily lo
oxoculo on ils onliro dovolopnonl pipolino (~$437n ox !45 Ann Sl in addilion lo
conplolion o buying back 7.2' o ils slock onnarkol, as lhis would soo goaring lil lo
~34' on our oslinalos. This conparos lo CPAs inlonlion lo nainlain goaring bolow ils
largol 3040' rango. Evon ronoving lho goaring inpacl o Sydnoy Olynpic Park,
goaring would slill bo abovo 30' (32' on our oslinalos. vo lhorooro boliovo CPA will
nosl likoly oxoculo on buying back 3.6' o addilional slock (50' o ils nax largol, in
addilion lo dovoloping 5P & 335 Bourko Sl which would rosull in a goaring lovol o
~29'.
"
vo would highlighl lhal spond ronaining on !45 Ann Sl (or conplolion in Aug!! will
likoly bonoil ron roducod cosl o incrononlal borrowings, in isolalion providing ~!.3'
EPU growlh inlo FY!3 on our oslinalos.

Estimate revisions
"
Our baso caso oslinalos assuno CPA oxoculos on 3.6' o addilional sharos
(unchangod, noling 0.4' o lhis has alroady boon oxoculod posl balanco dalo. Tho
incroaso in our FY!2 oslinalo is prinarily drivon by nonrocurring ilons (i.o. 5P &
groalor lhan oxpoclod Porlh assols conlribulion.
"
Our FY!2 DPU o 5.9!c is ~!' highor lhan CPAs guidanco o 5.35c, and rolocls lho
incrononlal accrolion lhal would likoly rosull ron buying back 3.2' o slock ovor lho
poriod.
Figure 2: Changes to our estimates
Chahges Io IorecasIs FY11a FY12I FY13I FY14I FY15I
EPU (ow 6.36 7.27 7.93 3.!6 3.53
EPU Old 6.36 7.!9 7.93 3.!6 3.53
AFFO 4.59 5.32 6.7! 6.75 7.43
Change (%) 0.0 1.1 0.0 -0.0 -0.0
Crovth () - 6.! 9.0 2.8 4.5
DPU 5.50 5.91 6.34 6.53 6.83
"
vhilsl wo boliovo nalorial upsido lo our STT orocasls oxisls, wo do nol allow or
such upsido in lho absonco o urlhor clarily boing providod ro ovonlual capilal allocalion
lakon lo rolovorago CPAs balanco shool.

ResuIt highIights
"
CPA roporlod !H!2 dislribulablo incono o $93.!n (DB al $33.0n, oqualing lo EPU o
3.30cpu (DB al 3.60cpu. DPU had proviously boon laggod al 2.39c. TA ronainod
slablo al $!.!3ps (vs $!.!2 Sop!!.
"
Our oslinalo shorlall vs lho rosull was alnosl onliroly conconlralod al lho proporly
incono lino, rosulling ron groalor incono conlribulions ron divoslod Porlh assols lhan
wo had allowod or and unoxpoclod incono gonoralion ron 5P wilh CBA holding ovor
ils loaso inlo !H!2 (originally oxpoclod lo vacalo April!!.
Figure 3: DB estimates vs 1H12 resuIt
DBf 1H12a !"##$%&'
Tolal ol Proporly ncono !23.9 !29.3 Creater contribution fron Perth assets & 5 P,
neither of vhich inpact our 2H forecast
Olhor nlorosl ncono/Flowback !.0 !.3
TotaI Income 124.9 131.1 '
xpenses
anagononl Foo Exponso 7.0 7.!
Olhor Exponsos 0.9 !.!
Cosl o Borrowings 29.0 29.3
TotaI Expenses 36.8 38.0 '
Net Operating Income 88.0 93.1 '
EFPOvA 2,445.! 2,443.7 FY!! perfornance fee off-narket bu,back
EPU 3.60 3.80
Source. Deutsche Bank / conpan, data
"
FY!2 dislribulion guidanco o 5.35cps was loday roairnod, howovor, doos nol allow or
incrononlal onnarkol buyback spond or !H loasing connilnonls achiovod al !75 Pill
Sl.
"
Likoorliko incono growlh has lilod lo 3.2' (vs !.!' al Jun!!, in parl allribulablo lo
avorago ronl incroasos o 3.9' across 333,939n (42.6' o lho porlolio. Ovor lho 2H,
CPA oxpocl ixod ronl growlh incroasos o 4.0' across 32.3' o lho porlolio.
Occupancy has also lilod lo 97.2' vs 96.7' al bolh Sop & Jun!!.
"
!75 Pill Sl loasing an incrononlal posilivo: vhilo alling slighlly shorl o CPAs
oxpoclalion providod al Jun!!, !75 Pill Sl has roachod 97' (vs 34' al Sop!! & 3!'
al Jun!! spaco connillod and was lho nain conlribulor lo liling porlolio occupancy
vs Sop!!. vhilsl CPA has nol guidod lo polonlial loaso slarl dalos, wo do boliovo lho
now loasos will bo incono producing in 2H (alboil nininal conlribulion. anagononl
indicalos lho incrononlal loasing is nol roloclod in FY!2 guidanco.
"
Capilal oxpondiluro: Sinco Jun!! rosulls CPA has roallocalod capilal oxpondiluro
orocasls as shown in iguro 3 bolow. vhilsl wo boliovo lho changos on a nol basis aro
largoly innalorial, wo highlighl a signiicanl roduclion in FY!2 inprovononl capox ($
!2n which was drivon lho ronoval o 335 Bourko Sl capox (now oxpoclod lo bo
capilalizod as parl o dovolopnonl works. Furlhor, FY!2 loasing inconlivos havo lilod by
$!2n givon lho inclusion o !75 Pill Sl inconlivo capox (proviously lroalod as
dovolopnonl capox.

Figure 4: Change in capitaI expenditure guidance since Jun-11 resuIts
FY12 capiIal expehdiIure guidahce FY13 capiIal expehdiIure guidahce
As aI Juh-
11
As aI Dec-
11 resulI
!"#$%&'As aI Juh-11 As aI Dec-
11 resulI
!"#$%&'
ainlonanco Capox 36 40 4 25 3! 6
nprovononl capox !3 ! -!2 ! ! 0
Loasing cosl & inconlivos !6 23 !2 23 30 2
Source. Deutsche Bank estinates / conpan, data
"
Spocial dislribulion unlikoly: Tho !H salo o CPAs lhroo Porlh assols, 259 Coorgo Sl and
5P (oxpoclod in 2H will lriggor a nol capilal gain in FY!2. Howovor, nanagononl has
roiloralod lhal as parl o $625n o inlorosl ralo swap lorninalion (~$20n cosl ovor
!H!2, a cryslallizod lax loss will likoly occur and roduco lho polonlial or a spocial
dislribulion roquirononl. Cloarly, lhoro aro variablos bolwoon now and Jun!2 lhal could
soo lhis likoly FY lax loss rovorso, howovor, all olso boing oqual, wo boliovo lho likolihood
o a spocial dislribulion is low.
"
o langiblo progross on 5P or 335 Bourko dovolopnonls, !45 Ann Sl dolayod:
Conslruclion o !45 Ann Sl is progrossing woll wilh conslruclion roaching lovol 24 (o 27
loors, howovor, conplolion lining has boon pushod oul slighlly lo Aug!2 (vs nid
20!2 al Jun!! rosulls. vo would highlighl lhal whilsl lho dolay croalos a ninor
oarnings drag, CPA will conlinuo lo bonoil ron lho 3.5' buildors loaso (cash incono
unlil praclical conplolion. Dovolopnonl o 5P and 335 Bourko Sl aro slill dopondonl
upon achioving 30' proconnilnonl.

VaIuation & risks
Our PT is sol al slighl discounl lo AV givon yiold considoralions. Our FY!3E AV o $0.99ps
assunos: ! capilalizalion o !75 Pill Sl incono an assunod FY!3 occupancy o !00', 2
!45 Ann Sl on an capilalizod incono basis, rolocling an inpliod dovolopnonl nargin o
~!0' (!cpu, 3 o unconnillod dovolopnonls wo only includo 5P.
Our AV is prodicalod on lho applicalion o a 7.5' cap ralo lo FY!3E nol proporly incono
(consislonl wilh CPAs curronl woighlod avorago cap ralo, adjuslod or unproduclivo assols
and nanagononl oo loakago (al !0x, consislonl wilh lho approach wo adopl or CPAs
poors.
Figure 8: FY13 NAV estimate
$(m) Cap raIe / mulIiple ToIal
ol Proporly ncono 246.6
Loss parl poriod incono adjuslnonls 0.0
Net adjusted income/Gross vaIue 246.6 7.5% 3,288.3
add FY!3 vorking capita|
5 arlin Placo oxpondiluro lo dalo !06.!
5 arlin Placo land valuo 35.5
ol olhor assols !04.!
Gross Enterprise VaIue 3,325.8
FY!3 ol dobl 33!.9
Foo liabilily 2!.2 !0x 220.7
TotaI Equity 2,273.2
VaIue per share $0.99
Key upside risks incIude:
"
Earlior lhan oxpoclod loaso incono producod al !75 Pill Sl (loaso slarl dalo,
"
Earlior lhan oxpoclod proconnilnonl al 5 arlin Placo (oarnings drag on land
conpononl, which would bring orward our oslinalos praclical conplolion dalo o ay
!4. Should CPA achiovo highor ronlals al 5 arlin Placo lhan whal wo havo allowod or,
lhis would also roprosonl upsido lo bolh our longorlorn EPU oslinalos and lho likoly
valualion uplil (and honco TA accrolion ablo lo bo gonoralod,
"
CPA could opporlunislically buyback sharos should il nononlarily lrado bolow a lovol o
~$0.97ps,
"
vo boliovo lho narkol would bo noro willing lo prico ST oarnings growlh associalod
wilh accrolivo acquisilions vs dovolopnonls whoro accrolion would doorrod unlil lho
T.
Key downside risks incIude:
"
CPA nol achioving a proconnilnonl al oilhor 5P or 335 Bourko Sl al lho oxponso o
accrolivo acquisilions givon unding capacily al a choap cosl, and
"
Foconl dovolopnonl in lho global nacro backdrop will likoly havo an advorso oocl on
oico narkols ahoad o olhor proporly subsoclors in our viow, lhus polonlially inhibiling
inprovononl in oico inconlivo lovols (Sydnoy, ooclivo ronlal growlh, and CPAs
abilily lo socuro a proconnilnonl al dovolopnonl silos (5 arlin Placo & 335 Bourko
Sl.

Appendix 1
Cwllh Prop. Oico CPA.AX 0.93 (AUD 2! Fob !2 6




website at hllp://gn.db.con/gor/disclosuro/Disclosuro.oqsr?ricCodo=CPA.AX.

conponsalion or providing a spociic roconnondalion or viow in lhis roporl. Jason voalo

HistoricaI recommendations and target price: CwIth Prop. Office (CPA.AX)
(as of 2/2!/20!2)
!
"
#
$
%
&
'
0.00
0.20
0.40
0.60
0.30
!.00
!.20
S
o
c
u
r
i
l
y

P
r
i
c
o
Dalo

Slrong Buy
Buy
arkol Pororn
Undorpororn
ol Falod
Suspondod Faling
Buy
Hold
Soll
ol Falod
Suspondod Faling

!. !!/!!/20!0: Hold, Targol Prico Chango AUD0.93
2. 26/!/20!!: Upgrado lo Buy, AUD0.93
3. !5/2/20!!: Downgrado lo Hold, AUD0.93
4. !!/7/20!!: Downgrado lo Soll, AUD0.93
5. 3/3/20!!: Upgrado lo Hold, AUD0.93
6. !6/3/20!!: Hold, Targol Prico Chango AUD0.95
7. 2!/!2/20!!: Hold, Targol Prico Chango AUD0.97


buy lho slock.
slock
Notes:

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
30
!00
!20
!40
Buy Hold Soll
Auslralia Univorso


hllp://gn.db.con.


60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 250 2500
London EC2 2EO
Unilod Kingdon
Tol: (44 20 7545 3000
Deutsche Bank AG
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Doulscho Bank Placo
Lovol !6
Sydnoy, Sv 2000
Auslralia
Tol: (6! 2 3253 !234
Deutsche Bank AG
Filialo Hongkong
Hong Kong
Tol: (352 2203 3333
2!!! agalacho
Sanno Park Towor
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer

Diversified IndustriaIs

2! Fobruary 20!2
MonadeIphous Group Ltd
Foulors: MND.AX Bloonborg: MND AU Exchango: ASX Tickor: MND
argin oullook posilivo, labour
conslrainls lho koy risk. Hold
Raymond GonzaIez
Fosoarch Analysl
(+6! 2 3253!372
raynond.gonzaloz@db.con
Jennifer Kruk, Ph.D
Fosoarch Analysl
(+6! 2 325326!3
jonnior.kruk@db.con
Tim PIumbe
Fosoarch Analysl
(+6! 2 3253!643
lin.plunbo@db.con

Maintain HoId, PT increased from $22.50 to $23.50
vo conlinuo lo oxpocl 20!2 and 20!3 lo bo slrong yoars or D, drivon by high
lovols o londoring aclivily and rocord capox spond by najor nining and onorgy
conpanios. Following lho roconl announcononl o ivoyoar ranowork
agroononls wilh FO, Ds oarnings visibilily has inprovod ovon urlhor. Skillod
labour shorlagos aro lho najor cavoal lo lho olhorwiso posilivo oullook. Howovor,
wilh D lrading on a 20!3E EV/EBT o c. !0x and a 40' proniun lo poors, wo
soo bollor valuo olsowhoro in lho soclor. ainlain Hold.
Salos (AUDn !,275 !,444 1,829 2,!66 2,344
EBTDA (AUDn !29 !53 194 234 25!
ol Proil (AUDn 33 95 121 !46 !53
EPS (AUD 0.94 !.07 1.34 !.6! !.69
OLD EPS (AUD 0.94 !.07 1.33 !.57 !.62
' Chango 0.0' 0.0' 1.3% 2.5' 4.!'
EPS Crowlh (' 9.3 !3.! 26.0 20.! 4.4
PEF (x !4.3 !6.6 17.8 !4.3 !4.2
EV/EBTDA (x 3.0 9.3 10.1 3.3 7.6
DPS (nol (AUD 0.33 0.95 1.10 !.20 !.25
Yiold (nol (' 6.2 5.4 4.6 5.0 5.2
Franking (' !00 !00 100 !00 !00
!
2
yoar ond closo

CA(P !46/04/20!!.
ResuIts

HoId
Prico al 2! Fob 20!2 23.86
52 wook rango (AUD 23.86 - 16.80
ALL OFDAFES 4,333

Key changes
Prico largol 22.50 lo 23.50 ! 4.4%
Salos (FYE !,30! lo !,329 ! 1.5%
EBT nargin (FYE 9.2 lo 9.0 " -1.6%
ol proil (FYE !!9.6 lo !2!.2 ! 1.3%

3
!2
!6
20
24
2/!0 5/!0 3/!0 !!/!0 2/!! 5/!! 3/!! !!/!!
onadolphous Croup L
Absolulo 9.9 22.4 22.!

Stock data
Froo loal 92.00

FOE (' 56.4
FOA (' 41.0
ol dobl/oquily (' -62.8
Prico/book (x 8.9
ol inlorosl covor (x -57.8
EBT nargin (' 9.0

C
o
m
p
a
n
y

G
I
o
b
a
I

M
a
r
k
e
t
s

R
e
s
e
a
r
c
h

1H12 resuIt preannounced
D roporlod !H!2 salos $379n (DB: $37!n, EBTDA $9!n (DB: $94n and
PAT $57.5n (DB: $57.9n. Tho dividond o 50cps was ahoad o DB 45cps and
OCF convorsion lo EBTDA was abovo !00'. Tho nain dioronco vs. DB was
nix (and honco nargin. ainlonanco & S which is lowor nargin boal DB salos
by 50' and Enginooring Conslruclion (EC was 20' bolow. Howovor, wo would
oxpocl bonoils ron lho $!bn o EC work won in !H!2 lo ranp up in lho 2H.
Guidance upgrade + contract wins + RIO framework = strong environment
D now oxpocl 20!2 salos o c. $!.3!bn (sinilar salos growlh lo !H conparod
lo lho provious $!.74bn (!H annualizod oxpoclod on 24Jan. Sinco 3!Doc, D
announcod a urlhor $!30n o conlracl wins lo add lo lho $!.4bn won in !H!2
and lwo ranowork agroononls wilh FO which givo il proorrod conlraclor slalus
or lwo prograns o work (SP and E& ovor lho noxl ivo yoars.
VaIuation and risks
Our DCF valualion has incroasod ron $22.50 lo $23.50 por sharo wilh highor
oarnings oslinalos in oulor yoars parlly osol by highor capox. DCF inpuls: vACC
!!.5', bola !.!5, LTCF 3.5', FFF 6.25', goaring 20' and EFP 6'. Tho koy
upsido risk could cono ron lho polonlial or largo conlracl wins ron lho nining
soclor. Tho koy downsido risk in our viow is lho polonlial or capacily conslrainls.
2! Fobruary 20!2 Divorsiiod nduslrials onadolphous Croup Lld
Y/E 30 June 06/07 07/08 08/09 09/10 10/11 11/12E 12/13E 13/14E 14/15E
PROFIT & LOSS (A$m)
Sales revehue 964 954 1,123 1,275 1,444 1,829 2,166 2,344 2,461
NeI ihIeresI ihcome (expehse) 3 3 3 3 3 3 4 5 6
MihoriIies/preIerehce dividehds 0 0 0 0 0 0 0 0 0
PeporIed proIiI 60 70 74 83 95 132 146 153 162
CASH FLOW (A$m)
Movement in net working capital 9 22 15 -37 -34 -7 -3 -2 -1
Capex -9 -8 -10 -17 -31 -59 -64 -37 -37
Free cash Ilow 87 84 103 79 94 84 113 151 161
+61 2 8258 1872 raymohd.gohzalez@db.com
OIher ihvesIihg acIiviIies -2 11 -2 -3 10 24 0 0 0
Dividehds paid -38 -61 -62 -68 -77 -93 -101 -106 -110
+61 2 8258 2313 domihic.rose@db.com
NeI ihc/(dec) ih borrowihgs 1 -3 0 8 10 0 0 0 0
OIher Iihahcihg cash Ilows -11 -9 -17 -21 -23 0 0 0 0
TIa cash Ivs Irm Inancng -45 -70 -75 -80 -79 -89 -101 -106 -110
+61 2 8258 1643 Iim.plumbe@db.com NeI cash Ilow 40 26 27 -3 25 19 12 45 51
NvemenI n neI debI/(cash) -39 -28 -27 11 -15 -19 -12 -45 -51
BALANCE SHEET (A$m)
+61 2 8258 2613 |ehhiIer.kruk@db.com Cash ahd oIher liquid asseIs 101 126 152 149 172 192 203 249 299
Goodwill 3 3 3 3 2 2 2 2 2
OIher asseIs 120 221 139 161 219 313 362 387 404
ToIal asseIs 287 412 373 421 536 655 745 817 884
IhIeresI bearihg debI 27 25 25 33 43 43 43 43 43
ToIal liabiliIies 196 310 251 276 343 418 463 488 503
Shareholders' equiIy 90 102 123 144 193 237 282 329 381
ToIal shareholders' equiIy 90 102 123 144 193 237 282 329 381
NeI vrkng capIa -7 -29 -44 -23 11 18 22 23 25
NeI debI/(cash) -74 -102 -127 -117 -130 -149 -160 -206 -256
RATIO ANALYSIS
52-week High/Low: A$23.89 - 16.80 Sales growIh - pcp (%) 83.2 -1.0 17.7 13.6 13.2 26.7 18.4 8.2 5.0
MarkeI Cap (m) A$ 2,116 EBITDA/sales (%) 9.6 10.8 10.3 10.1 10.6 10.6 10.8 10.7 10.7
US$ 2,251 EBIT/sales (%) 8.5 9.5 8.9 8.8 8.9 9.0 9.2 9.1 9.2
PayouI raIio (%) 62.5 92.3 83.5 81.6 81.0 76.8 69.2 69.1 68.1
BeIa (MPP - 6.00) 1.25
POE (%) 79.2 68.8 66.2 62.4 56.3 56.4 56.5 50.1 45.6
DebI/mkI value raIio (%) 20.0
WACC (6.25% bohd yield) 11.5
Tax raIe (%) 30.9 30.8 29.0 27.7 27.7 28.2 28.0 30.0 30.0
Capex/sales (%) 1.0 0.9 0.9 1.3 2.2 3.2 2.9 1.6 1.5
NeI value per share ($)
NeI debI/equiIy (%) -81.7 -99.8 -103.9 -80.8 -67.0 -62.8 -56.9 -62.6 -67.3
NeI ihIeresI cover (x) -25.9 -29.1 -32.4 -44.9 -48.0 -57.8 -52.8 -46.0 -40.8
10.9 11.8
10.1 8.3 7.6
9.0 9.8
7.1
8.3
MonadeIphous Group Ltd
P/CFPS (x)
DPS (A$) 0.660
8.2
Company description
11.50
1,408 1,342
13.4
A$23.50
EV/EBITDA (x)
HoId
Price/BV (x)
PeuIers: MND.AX Bloomberg: MND AU
Price as aI 21-Feb
TargeI price
1,352
10.4
8.43
1,355
12.0 14.9
6.91
1,346
7.5
13.1
5.2
14.6
EV/EBIT (x)
Jennifer Kruk
Compahy websiIe
Tim PIumbe
Mohadelphous Group LimiIed provides
ehgiheerihg, cohsIrucIioh, maihIehahce ahd
ihdusIrial services Io Ihe resources, ehergy ahd
ihIrasIrucIure ihdusIries. The compahy Iocuses
primarily oh pro|ecIs wiIhih AusIralia, ahd iIs key
cliehIs ihclude ma|or AusIraliah ahd ihIerhaIiohal
resource ahd ehergy compahies.
Research Team
Dominic Rose
Raymond GonzaIez
hIIp://www.mohadelphous.com.au
23.50
1,872 1,920 1,949
16.4
1,957
11.7 9.2
A$23.86
5.52
5.4
6.39 7.46
5.0 5.2 4.6
8.89 8.01
5.4
8.00
15.1
6.2
1.100
12.3
1.945
1.200
11.0 11.5
1.300 1.250
2.175
13.0 7.5 12.4 12.6
0.720 0.950 0.740 0.830
0.943 1.066
16.9
18.1
2.072 1.575
0.943 0.823
11.4 14.3
EPS FD (A$) 0.717
OperaIihg CFPS (A$) 1.116 1.396 1.308 1.083 1.068
12.8
0.862
12.8 11.3
0.702 0.765
0.874
13.1
8.9
13.4 14.8 16.3 14.3 14.2 16.6
Normalised EPS (A$)
Asia Pacific
Equity Research
SUMMARY
13.4 16.6
1.467 1.066
14.8 14.2
13.1
17.8
20.1 26.0
1.781 1.685
AusIralia
1.614
102.8 9.3 5.7 4.4
1.781 1.685 1.614 1.343
9.9%
22%
22%
0% 5% 10% 15% 20% 25%
1m
3m
12m
0
2
4
6
8
10
12
08 09 10 11 12E 13E 14E 15E
EBITDA/sales (%)
EBIT/sales (%)
Trends
0
50
100
150
200
250
300
350
08 09 10 11 12E 13E 14E 15E
POE (%) POA (%)
op POC (%)
Return Ratios (%)
-120
-100
-80
-60
-40
-20
0
-300
-250
-200
-150
-100
-50
0
08 09 10 11 12E 13E 14E 15E
NeI debI/equiIy (%)
0.90
1.00
1.10
1.20
1.30
1.40
1.50
1.60
1.70
1.80
2/07 2/08 2/09 2/10 2/11 2/12

Key points on 1H12 resuIt + guidance upgrade
Tho rosull was proannouncod and in lino oxcopl or a lowor lhan oxpoclod lax ralo duo lo
F&D crodils. D roporlod !H!2 salos $379n, EBTDA $9!n and PAT $57.5n. Tho
inlorin dividond was ahoad o our oxpoclalions al $0.50 and oporaling cash low convorsion
lo EBTDA ronainod al jusl ovor !00'.
D also upgradod ils 20!2 salos guidanco. On 24Jan D guidod lo 2H!2E salos
rolalivoly in lino wilh !H, which inpliod salos rovonuo o $!.74bn. ow D aro guiding lo
20!2E salos growlh in lino wilh !H!2, which inplios salos rovonuo o $!.3!bn. This was in
lino wilh DB bul bolow consonsus.
Conpany connonlary on lho oullook includod:
#
$!.4bn o now conlracls socurod in !H!2 providos slrong rovonuo visibilily and will
conlribulo lo growlh woll inlo 20!3 and boyond.
#
Tho $!bn o Enginooring Conslruclion conlracls socurod in !H!2 will ranp up in 2H!2.
Thoso projocls lypically slarl innodialoly.
#
Tho narkol or skillod labour is lighl and is oxpoclod lo worson going orward. D soo
lhis as ils biggosl challongo.
#
Tho nargin onvironnonl is slrong bul as always lho polonlial lo oxpand nargins conos
down lo individual conlracl porornanco. D soo labour as lho biggosl risk lo conlracl
oxoculion porornanco.
#
Capilal connilnonls o $56n as al Doc3! woro highor lhan oxpoclod. This includos
$30n or hoavylil cranos.
Investment thesis
vo nainlain our Hold raling and havo incroasod our prico largol ron $22.50 lo $23.50, wilh
highor oarnings oslinalos in oulor yoars parlly osol by highor capox in our DCF. vo havo
only nodoslly incroasod 20!2E and 20!3E PAT. Tho roconl FO ranowork agroononl
givos us incroasing conidonco in Ds abilily lo grow ovor lho nodiunlorn.
n our viow lho koy risk lo Ds growlh oullook ovor lho noxl !224 nonlhs is a shorlago
o skillod labour, which conlinuos lo accoloralo. D has rospondod wilh sovoral prograns
ainod al allracling and rolaining onployoos (including oshoro rocruilnonl, howovor, skillod
labour shorlago is an issuo across lho nining sorvicos soclor. Anolhor polonlial risk is projocl
oxoculion, allhough wo rocognizo lhis risk is lowor or D vs. ils poors givon lho
conpanys oxcollonl oporalional lrack rocord.
vo soo D as ono o lho bollor qualily nining sorvicos conpanios (as noasurod by
rolurns and lrack rocord and acknowlodgo 20!2 and 20!3 aro likoly lo bo vory slrong yoars
or oarnings basod on curronl londoring aclivily and slrong now conlracl awards ($!.4bn won
YTD. Howovor, D is lrading on a 20!2E EV/EBT o !!.9x and 20!3E o 9.3x, which
placos il al a 40' proniun lo lho soclor (soo Fig. !. As such, our Hold raling is unchangod.
VaIuation and price target
Our DCF valualion has incroasod ron $22.50 lo $23.50 por sharo, wilh highor oarnings
oslinalos parlly osol by highor capox. Koy DCF assunplions aro unchangod and includo:
vACC !!.5', bola !.!5, longlorn growlh ralo 3.5' (basod on noninal CDP or Auslralia,
risk roo ralo 6.25', nol dobl lo nol dobl + oquily 20' and oquily risk proniun 6'.
Our prico largol oquals our valualion o $23.50 por sharo and inplios 20!3E PEF o !5x (!4x
oxcash. Ds !yoar orward avorago PEF sinco 2006 is !4.2x basod on lho dala availablo
(sourco: Bloonborg Financo LP.
Figure 1: LocaI comparabIe companies
!"#$ %&$'' ()*(+,-./ ()*(+,-./ ()*(+,-' ()*(+,-' 0(1 0(1 (023 (023 14(
!"#$%&'(&'()*''+,-.+-,+ 05678 9":' ;<=; ;<=> ;<=; ;<=> ;<=; ;<=> ;<=; ;<=> ;<=;
!"#$%&'())'*+,+,-'%./0+1.2'34567,+.2
AAx Ausenco LLd (u8) 8uy $3.63 3.46 426 7.1 3.2 9.2 6.4 13.7 9.8 41 40 12
ASL Ausdrlll LLd (u8) 8uy $3.73 3.71 1123 3.0 4.6 8.3 7.6 11.3 10.1 18 12 13
8kn 8radken LLd (u8) 8uy $9.00 8.40 1400 7.8 6.4 9.6 7.9 12.2 10.1 13 21 16
Cuu Cardno LLd (n8) 6.42 796 6.9 3.7 7.8 6.4 10.3 9.3 11 9 18
CLC Clough LLd (n8) 0.83 639 8.2 6.3 8.6 6.8 13.0 10.6 0 22 16
uCC uecmll Croup LLd (n8) 2.60 431 8.3 6.0 9.8 6.9 13.0 10.2 3 28 17
LPL Lmeco Poldlngs LLd (u8) Pold $1.23 1.18 743 4.2 3.7 8.8 7.3 10.2 8.6 30 19 11
lCL lorge Croup LLd (n8*) 3.93 497 3.7 4.6 6.4 3.2 10.9 9.6 21 14 28
CnC Cr Lnglneerlng Servlces LLd (n8) 1.67 231 6.1 4.9 6.2 3.0 10.1 8.6 12 18 49
lMu lmdex LLd (u8) 8uy $2.73 2.39 490 6.0 3.3 7.1 6.2 10.0 8.7 32 13 33
luL lndusLrea LLd (n8) 1.20 443 3.9 3.3 3.4 4.3 6.6 3.9 24 13 19
LuW Ludowlcl LLd (n8) 9.74 287 10.2 8.8 12.6 10.6 17.7 14.9 29 19 16
L?L Lycopodlum LLd (n8) 7.00 271 8.3 7.7 9.1 8.3 13.9 12.8 14 8 36
MAP Macmahon Poldlngs LLd (u8) Pold $0.83 0.81 393 4.2 3.9 8.1 7.8 10.7 8.9 nm 20 16
MLu Maca LLd (n8) 2.16 324 4.4 3.4 6.9 3.3 9.7 8.4 14 16 33
MCL MaLrlx ComposlLes & Lnglneerlng LLd (n8) 2.91 224 3.9 3.6 7.3 4.1 11.1 6.2 -43 79 13
Mln Mlneral 8esources LLd (n8) 13.09 2418 7.7 3.7 9.7 6.7 12.9 10.1 13 28 26
nWP nrw Poldlngs LLd (u8) 8uy $3.30 3.43 962 3.9 3.0 7.9 6.7 11.0 9.7 102 13 30
8C8 8C8 1omllnson LLd (n8) 1.90 233 3.1 4.2 7.2 3.7 10.3 8.6 22 22 12
SuM Sedgman LLd (u8) 8uy $2.43 2.04 433 3.7 4.6 8.1 6.3 11.1 10.4 34 6 24
SWk Swlck Mlnlng Servlces LLd (u8) Pold $0.33 0.32 76 2.9 2.4 6.3 4.6 8.6 6.7 86 28 9
/?85"38'8@A=<< BC; DC< EC= BCD ==CF GCF ;DH ;=H ;=H
$%&'())'*+,+,-'%./0+1.2'34567,+.2
8L? 8oarL Longyear LLd (u8) 8uy $3.84 3.93 1812 4.9 4.4 6.9 3.9 9.4 8.3 29 13 13
C8 Campbell 8roLhers LLd (u8) Pold $31.30 38.80 3969 11.7 10.6 13.3 12.3 18.9 17.4 33 9 24
uCW uowner Lul LLd (u8) Pold $4.38 3.94 1691 3.9 3.4 6.6 3.8 9.6 8.7 1 11 11
LLl LelghLon Poldlngs LLd (u8) Pold $23.87 24.38 8218 4.3 4.2 8.8 8.1 13.1 12.0 6 9 23
Mnu Monadelphous Croup LLd (u8) Pold $23.30 23.86 2116 10.1 8.4 11.9 9.8 17.8 14.8 26 20 36
1SL 1ransfleld Servlces LLd (u8) Pold $2.49 2.42 1318 6.4 6.1 10.3 9.3 12.3 10.8 -3 13 10
uCL uCL LLd (u8) 8uy $14.14 13.10 2179 7.9 7.0 10.0 8.9 13.3 12.0 3 11 14
WC8 Worleyarsons LLd (u8) Pold $29.07 28.79 6960 10.7 8.3 12.7 10.0 19.3 13.2 22 28 19
/?85"38'-I:A=<< JCD BCB =<C= ECE =FC; =;CF =JH =FH ;=H
/)(1/K('A'/!! BCD DCD ECJ JC= =;C= =<C> ;>H =GH ;=H
Source. Deutsche Bank, B|oonberg Finance LP.
D was roconlly includod in lho ASX!00 indox and as such wo now also includo ils Top
!00 poors in our conparalivo valualion analysis (Soo Figuro !. Across lho onliro nining
sorvicos soclor, D is lrading al a c. 40' proniun basod on 20!3E EV/EBT. D
dosorvos a proniun in our viow duo lo ils suporior oarnings growlh lrack rocord (parlicularly
ils consisloncy and highly cash gonoralivo businoss nodol.
Risks
Tho nain upsido risks lo our invoslnonl lhosis and oarnings oslinalos aro:
#
Largo conlracl wins, wo havo nol aclorod in any largo conlracl wins inlo our orocasls.
lhis was lo occur il will rosull in upsido risks lo our orocasls. BHP and Fio Tinlo havo
announcod signiicanl capox prograns including sovoral largo projocls.
#
Scopo oxlonsions / incroasos aro groalor lhan oxpoclod. A signiicanl incroaso in sorvico
volunos on oxisling conlracls drovo lho oulporornanco o lho &S division in !H!2.
Tho koy downsido risks lo our invoslnonl lhosis and oarnings oslinalos aro:
#
vo havo aclorod in EBTDA nargin oxpansion inlo our 20!2 and 20!3 orocasls. lho
nargin doos nol nalorializo il will rosull in downsido risk lo our orocasls.
#
Capacily conslrainls nainly around slaing.
#
D has divorsiiod inlo lho onorgy and inraslrucluro narkols, which croalos addilional
oxoculion risk in our viow.
Changes to earnings
Figure 2: Changes to earnings
Juno y/ o $n
Old ow ' Chango Old ow ' Chango
Salos !30!.3 !323.7 !.5' 2!06.4 2!66.0 2.3'
Olhor rovonuo !.9 !.9 0.0' !.9 !.9 0.0'
Tol al Fovonuo !303.2 !330.6 !.5' 2!03.2 2!67.3 2.3'
Oporaling cosls !6!0.5 !636.5 !.6' !379.9 !934.3 2.9'
EB TDA !92.7 !94.! 0.7' 223.4 233.5 2.3'
Doprocialion and Anorl 27.! 23.7 5.6' 3!.0 33.9 9.5'
EB T !65.5 !65.4 0.!' !97.4 !99.6 !.!'
ol nlorosl oxponso 2.9 2.9 !.4' 3.3 3.3 0.0'
Pr ol ax pr o il !63.4 !63.3 0.!' 20!.2 203.4 !.!'
ncono lax oxponso 43.3 47.! 3.5' 53.3 57.0 2.4'
PAT (pr oab. !!9.6 !2!.2 !.3' !42.9 !46.5 2.5'
Signiicanl ilons 0.0 !!.3 0.0 0.0
PAT !!9.6 !32.5 !0.3' !42.9 !46.5 2.5'
EPS dilul od (pr oab. !32.6 !34.3 !.3' !57.5 !6!.4 2.5'
DPS dilulod !05.0 !!0.0 4.3' !20.0 !20.0 0.0'
Divisional Salos
EC (+iE !203.7 !!!5.3 7.7' !450.5 !394.7 3.3'
&S 44!.4 56!.3 27.3' 474.5 539.9 24.3'
nraslrucluro (+Skyslar 205.! 205.! 0.0' 246.2 246.2 0.0'
Olhor 54.0 54.0 0.0' 64.3 64.3 0.0'
Tol al Divisional Salos !30!.3 !323.7 !.5' 2!06.4 2!66.0 2.3'
Cr oup EB TDA
Croup EBTDA !92.7 !94.! 0.7' 223.4 233.5 2.3'
Cr oup EB TDA ar gin !0.70' !0.6!' 0.03' !0.34' !0.73' 0.06'
20!3 20!2
Prior lo lho rosull, 20!2 consonsus oslinalos woro: Salos $!75!n, EBTDA $!36n, EBT
$!60n, and PAT $!!6n. 20!3: Salos $!932n, EBTDA $2!3n, EBT $!34n and PAT
$!34n (sourco: Bloonborg Financo LP.
Koy changos lo our oarnings aro as ollows -
#
Following a slrong !H rosull ron &S, largoly duo lo volunobasod incroasos, wo
havo incroasod our salos oxpoclalions or lho division or lho ull yoar. vo do nol
annualizo !H!2 salos as il was parlly volunobasod which is diicull lo prodicl. Thus wo
oxpocl a lowor 2H growlh ralo lo bo consorvalivo.
#
vo havo incroasod our 2H salos growlh oxpoclalions or EC as wo oxpocl lho $!bn o
conlracls won in !H!2 lo ranp up and conlribulo lo salos. Ovorall or lho yoar wo havo
roducod our salos growlh as !H salos woro 20' bolow our oxpoclalions.
#
vo havo incroasod undorlying nargins or EC and &S by !0bps. Tho chango al lho
group lovol is nix drivon, as &S is now a largor porlion o group rovonuo bul lowor
nargin.
#
D has $56n in capilal connilnonls as al Doc3!. This includos $30n or !! hoavy
lil cranos which aro oxpoclod lo bo dolivorod and connissionod in 2H!2. vo havo
incroasod our capox orocasls lo incorporalo lhis incroasod spond.
#
vo also includo lho orolk slako salo in 2H!2E as guidod by lho conpany: Cash
considoralion o $24.4n and prolax proil on salo o $!6.2n which wo includo as an
abnornal ilon ($!!.3n alor lax, assuno 30' lax ralo.

1H12 resuIt detaiI
Figure 3: 1H12 resuIt
Juno y/ o $n !H!!
Fopor l od Fopor l od vs. pcp DB vs. pcp
Salos 700.! 379.5 25.6' 370.5 !.0'
Olhor rovonuo 0.5 !.7 247.4' 0.9 32.4'
Tol al Fovonuo 700. 6 33!. 2 25. 3' 37!.4 !. !'
Oporaling cosls 626.6 790.5 26.2' 777.6 !.7'
EB TDA 74. 0 90. 7 22. 6' 93.3 3. 3'
Doprocialion and Anorl !!. ! !3.9 25. !' !3.6 2.4'
EB T 62.9 76. 3 22.2' 30.3 4. 3'
ol nlorosl oxponso !. 2 !.3 49. 5' !.3 36.2'
Pr ol ax pr o il 64. ! 73. 6 22. 7' 3!.6 3. 6'
ncono lax oxponso !3.6 2!.! !3.7' 23.7 !0.7'
PAT bo or o assoc. 45. 5 57. 5 26. 3' 57.9 0. 7'
Associalos 0. 0 0. 0 0.0
PAT 45. 5 57. 5 26. 3' 57.9 0. 7'
EPS dilul od ( pr oab. 5!.4 64. 3 25.!' 65.4 !. 3'
DPS dilulod 40.0 50.0 25.0' 45.0 !!.!'
Divisional Salos
EC (+iE 466.3 430.! 2.3' 602.2 20.3'
&S !33.! 3!!.3 65.5' 206.9 50.5'
nraslrucluro (+Skyslar 72.0 96.3 33.3' 93.6 2.9'
Olhor 26.3 3.2 69.4' 32.2 74.5'
Tol al Divisional Salos 700. ! 379. 5 25. 6' 370.5 !. 0'
Cr oup EB TDA
Croup EBTDA 74.0 90.7 22.6' 93.3 3.3'
Cr oup EB TDA ar gin !0. 6' !0. 3' !0. 0' !0. 3' 0. 5'
!H!2 Fopor l od !H!2 DB
Source. Deutsche Bank, Conpan, nfornation.

Appendix 1
onadolphous Croup Lld D.AX 23.36 (AUD 2! Fob !2 A


website at hllp://gn.db.con/gor/disclosuro/Disclosuro.oqsr?ricCodo=D.AX.

conponsalion or providing a spociic roconnondalion or viow in lhis roporl. Faynond Conzaloz

HistoricaI recommendations and target price: MonadeIphous Group Ltd (MND.AX)
(as of 2/2!/20!2)
1
2
3
4 3
6
0.00
5.00
!0.00
!5.00
20.00
25.00
S
o
c
u
r
i
l
y

P
r
i
c
o
Dalo

Slrong Buy
Buy
arkol Pororn
Undorpororn
ol Falod
Suspondod Faling
Buy
Hold
Soll
ol Falod
Suspondod Faling

!. 3/7/20!0: Hold, Targol Prico Chango AUD!4.70
2. !7/3/20!0: Hold, Targol Prico Chango AUD!4.75
3. 23/!!/20!0: Hold, Targol Prico Chango AUD!7.00
4. 22/2/20!!: Hold, Targol Prico Chango AUD20.00
5. 22/!!/20!!: Hold, Targol Prico Chango AUD20.70
6. 24/!/20!2: Hold, Targol Prico Chango AUD22.50

buy lho slock.
slock
Notes:

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
30
!00
!20
!40
Buy Hold Soll
Auslralia Univorso


hllp://gn.db.con.


60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 250 2500
London EC2 2EO
Unilod Kingdon
Tol: (44 20 7545 3000
Deutsche Bank AG
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Doulscho Bank Placo
Lovol !6
Sydnoy, Sv 2000
Auslralia
Tol: (6! 2 3253 !234
Deutsche Bank AG
Filialo Hongkong
Hong Kong
Tol: (352 2203 3333
2!!! agalacho
Sanno Park Towor
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer


2! Fobruary 20!2
Downer EDI
Foulors: DOW.AX Bloonborg: DOW AU Exchango: ASX Tickor: DOW
!H!2 rosull: Enorging signs o
a lurnaround
Craig WongPan
Fosoarch Analysl
(+6!2 3253 2343
craig.wongpan@db.con
Cameron McDonaId
Fosoarch Analysl
(+6! 3 92704235
canoron.ncdonald@db.con

Good growth in 1H resuIt, but we remain cautious - HoId
vhilo DOv roporlod slrong oarnings growlh in !H!2, il bonoilod ron
accounling adjuslnonls, projocl closoouls and provision wrilobacks. vo ronain
caulious on lho slock givon polonlial or cosl ovorruns on lho varalah projocl
($20n conlingoncy has boon ulilizod, woaknoss in lho Z businoss, ongoing
logacy conlracls and polonlial divisional nargin conprossion. vilh lho slock
ooring 6' EPS CACF ovor lho noxl 4 yoars and lrading in lino wilh ils hislorical
PE rol, wo ralo lho slock a Hold.
Salos (AUDn 5,99! 6,933 7,579 7,5!0 7,63!
EBTDA (AUDn 43! 503 593 533 6!!
ol Proil (AUDn !36 !56 173 !3! !99
EPS (AUD 0.56 0.4! 0.40 0.42 0.46
OLD EPS (AUD 0.56 0.4! 0.41 0.45 0.50
' Chango 0.0' 0.0' -1.9% 6.9' 7.9'
EPS Crowlh (' 2.5 27.0 -1.1 4.3 9.3
PEF (x !3.4 !0.4 9.8 9.3 3.5
EV/EBTDA (x 6.2 4.2 3.7 3.7 3.4
DPS (nol (AUD 0.29 0.00 0.00 0.2! 0.23
Yiold (nol (' 3.9 0.0 0.0 5.4 5.9
Franking (' 0 0 0 0 0
!
2
yoar ond closo

CA(P !46/04/20!!.
ResuIts

HoId
ALL OFDAFES 4,368

Key changes
Prico largol 4.33 lo 4.36 " -0.5%
Salos (FYE 7,!70 lo 7,579 ! 5.7%
EBT nargin (FYE 4.4 lo 4.5 ! 2.6%
ol proil (FYE !76.2 lo !73.0 " -1.9%

2
3
5
6
3
9
!!
2/!0 5/!0 3/!0 !!/!0 2/!! 5/!! 3/!! !!/!!
Downor ED
ALLOFDAFES(Fobasod
Absolulo !!.3 2!.2 !.3

Stock data
Froo loal 100.00

FOE (' 11.6
FOA (' 9.7
Prico/book (x 1.1
EBT nargin (' 4.5

C
o
m
p
a
n
y

G
I
o
b
a
I

M
a
r
k
e
t
s

R
e
s
e
a
r
c
h

1H resuIt summary
Downor ED roporlod a rosull ahoad o our oxpoclalions. Tho conpany roporlod
rovonuo o $3.926bn (vs DBo $3.446bn, an EBT nargin o 4.!' (vs DBo 4.4'
and undorlying PAT o $35n (vs DBo $3!n.
Forecast changes
vo havo incroasod Downor ining rovonuo orocasls lo rolocl lho slrong growlh
and ranp up o conlracls. vo havo incroasod nargins in lho Downor ining and
Downor Fail divisions, bul loworod nargins in lho Downor Auslralia and Downor
ow Zoaland divisions. vo havo incroasod our corporalo ovorhoad orocasls and
incroasod our nol inlorosl oxponso lo rolocl a lowor cash balanco and lowor
ooclivo inlorosl incono ralo. Thoso changos havo rosullod in our PAT (adjuslod
or FOADs orocasls boing roducod by !' in FY!2 and 5' lo 6' in FY!3FY!5.
TP $4.36, key downside risk reIates to weakness in key markets
Our valualion is $4.36 (prov $4.33 and is dorivod ron lho avorago o our DCF,
SOTP and P/E valualions. Tho koy upsido risk is bollorlhanoxpoclod dolivory o
lho varalah lrains nanuacluring conlracl. Koy downsido risks rolalo lo ongoing
woaknoss in lho Downor Auslralia and Downor ow Zoaland divisions, polonlial
or cosl ovor runs on projocls and dolivory o lho varalah lrains nainlonanco
conlracl (soo pagos !!!2 or dolails.
2! Fobruary 20!2 Dovolopors & Conlraclors Downor ED
PROFIT & LOSS (A$m)
Sales revehue 4,619 5,373 5,549 5,908 5,991 6,933 7,579 7,510 7,681
EBIT (ihcl sighiIicahI iIems) -60 130 282 306 56 26 270 339 357
Ihcome Iax expehse -86 -29 66 70 -1 -11 80 75 82
MihoriIies/preIerehce dividehds 0 0 -11 -11 -11 -10 -11 -11 -11
PeporIed proIiI -25 101 155 178 -8 -38 100 181 199
SighiIicahI iIems -163 -60 0 0 -194 -194 -73 0 0
CASH FLOW (A$m)
Movement in net working capital 109 -113 94 -93 28 2 -224 -5 -161
Capex -197 -128 -260 -292 -208 -446 -417 -300 -242
Free cash Ilow -107 -22 16 45 -3 -260 -249 137 62
+61 3 9270 4235 cameroh.mcdohald@db.com
OIher ihvesIihg acIiviIies -187 -93 116 -29 63 126 170 3 3
Dividehds paid -37 -36 -55 -72 -66 -44 -5 -25 -57
+61 2 8258 2848 craig.wohgpah@db.com NeI ihc/(dec) ih borrowihgs 188 47 -71 103 91 -176 0 -50 -50
TIa cash Ivs Irm Inancng 294 188 -125 33 25 50 -5 -75 -107
NeI cash Ilow 0 73 7 48 85 -84 -84 65 -42
NvemenI n neI debI/(cash) 189 -26 -78 54 6 -92 84 -115 -8
BALANCE SHEET (A$m)
Tahgible Iixed asseIs 676 754 662 846 862 1,055 1,078 1,154 1,165
Goodwill 0 0 574 604 584 500 500 500 500
OIher asseIs 1,363 1,606 1,689 1,619 1,597 1,741 1,868 1,823 1,830
ToIal asseIs 2,760 3,180 3,183 3,383 3,456 3,711 3,777 3,874 3,854
OIher liabiliIies 1,169 1,317 1,420 1,258 1,324 1,535 1,495 1,475 1,351
Shareholders' equiIy 951 1,170 1,196 1,330 1,243 1,442 1,549 1,716 1,870
ToIal shareholders' equiIy 951 1,170 1,196 1,330 1,243 1,442 1,549 1,716 1,870
NeI vrkng capIa 306 419 325 418 390 388 611 616 777
NeI debI/(cash) 472 450 321 495 504 444 528 413 405
RATIO ANALYSIS
52-week High/Low: A$4.09 - 2.75 Sales growIh - pcp (%) 24.0 16.3 3.3 6.5 1.4 15.7 9.3 -0.9 2.3
US$ 1,799
EBIT/sales (%) 5.1 5.3 5.1 5.2 5.4 4.2 4.5 4.5 4.6
PayouI raIio (%) 43.3 41.2 53.3 53.3 52.1 0.0 0.0 50.0 50.0
POA (%) 9.8 10.3 9.6 10.3 10.6 8.9 9.7 9.5 9.8
POE (%) 14.9 15.2 13.1 14.1 14.5 11.6 11.6 11.1 11.1
Tax raIe (%) 77.5 -39.7 28.5 26.9 -47.7 28.3 41.7 28.0 28.0
Capex/sales (%) 4.3 2.4 4.7 4.9 3.5 6.4 5.5 4.0 3.1
NeI debI/equiIy (%) 49.7 38.5 26.8 37.2 40.6 30.8 34.1 24.1 21.7
-305
78
113
75
-295
72
6.0
68
103
7.1
120
90 90 54
156 166
100
-44
94
82
99
-52
51
-125
57
51
4.1 3.7 3.7
6.4 6.4
3.4
151
5.9
131
42
6 -21 -53
3
61 46
96 12
-36 OIher
114
Downer EDI Ltd
P/CFPS (x)
DPS (A$) 0.200
23.4
Company description
1.87
32
66
1,938 1,778
5
110
6.3
Works 74
A$4.36
EV/EBITDA (x)
HoId
Price/BV (x)
PeuIers: DOW.AX Bloomberg: DOW AU
Price as aI 20-Feb
TargeI price
62
1,818
4.1
2.33
1,690
5.9
53
6.5
1.68
Mihihg ahd resources -144
1,827
4.1
4.4
3.1
4.9
EV/EBIT (x)
Pail

Compahy websiIe

Dowher EDI provides ehgiheerihg ahd
ihIrasIrucIure mahagemehI services Io Ihe public
ahd privaIe rail, road, power,
IelecommuhicaIiohs, mihihg ahd resources
secIors ih AusIralia, New Zealahd, Asia ahd Ihe
PaciIic. Dowher provides rollihg sIock services,
drillihg services Ior Ihe exploraIioh ihdusIry,
mihe plahhihg ahd mahagemehI services ahd
highway maihIehahce.
Research Team
Craig Wong-Pan
Cameron McDonaId
hIIp://www.dowheredi.com
Ehgiheerihg
2,100 2,161 2,177
7.2
2,063
4.4 4.0
A$3.94
0.90
5.9
0.99 1.09
0.0 5.4 0.0
1.26 1.26
3.9
2.02
8.7
5.7
0.000
10.1
0.392
0.000
5.6 3.9
0.232 0.211
0.708
20.4 7.3 4.9 12.2
0.210 0.291 0.255 0.290
0.544 0.558
21.3
13.4
1.019 0.485
0.544 0.320
12.9 9.3
EPS FD (A$) -0.084
OperaIihg CFPS (A$) 0.302 0.612 0.854 1.029 0.335
-6.1
0.479
hm 12.9
0.462 0.510
0.479
15.3
10.2
8.5 16.8 hm 9.3 9.3 hm
Normalised EPS (A$)
Asia Pacific
Equity Research
SUMMARY
8.5 13.4
-0.099 -0.024
9.8 9.3
2.5
10.4
-1.1 -27.0
0.464 0.422
AusIralia
0.234
7.6 13.7 9.8 4.8
0.464 0.422 0.403 0.407
11%
21%
1.3%
0% 5% 10% 15% 20% 25%
1m
3m
12m
0
1
2
3
4
5
6
7
8
9
07 08 09 10 11 12E 13E 14E
EBITDA/sales (%)
EBIT/sales (%)
Trends
0
2
4
6
8
10
12
14
16
18
07 08 09 10 11 12E 13E 14E
POE (%) POA (%)
op POC (%)
Return Ratios (%)
0
5
10
15
20
25
30
35
40
45
0
100
200
300
400
500
600
07 08 09 10 11 12E 13E 14E
NeI debI/equiIy (%)
0.50
0.55
0.60
0.65
0.70
0.75
0.80
0.85
0.90
0.95
1.00
2/07 2/08 2/09 2/10 2/11 2/12

Investment thesis
vhilo Downor roporlod slrong oarnings growlh in lho !H!2 poriod, lho conpany bonoilod
ron a onoo conlracl proil adjuslnonl, posilivo projocl closoouls and provision wrilo
backs.
Tho conpany has also had lo ulilizo $20n o ils gonoral conlingoncy on lho varalah conlracl
duo lo a slighl dolay in lho dolivory schodulo or CY!2.
vo ronain caulious on lho slock givon polonlial or cosl ovorruns on lho varalah projocl,
woaknoss in lho ow Zoaland businoss, ongoing logacy conlracls and polonlial nargin
conprossion o sono divisional oarnings lo induslry lovols.
vo aro also caulious givon lho signiicanl lovol o accounling adjuslnonls, projocl closoouls
and provision roloasos which nakos assossing lho undorlying oarnings diicull.
vilh lho slock ooring 6' EPS CACF ovor lho noxl 4 yoars and lrading in lino wilh ils
hislorical PE rol, wo ralo lho slock a Hold.
Figure 1: DOW 12 mths fwd PE reI vs ASX Ind (ex banks)

Figure 2: DOW 12 mths fwd PE
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1.10
Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
DOW PE rel Avg (2004-12) +1 St d dev -1 St d dev

4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12
PER Avg (05-12) +1 Std dev -1 St d dev
Source. Deutsche Bank, datastrean

Source. Deutsche Bank, datastrean

Forecast changes
vo havo incroasod our Downor ining rovonuo orocasls lo rolocl lho slrong growlh and
ranp up o conlracls.
vo havo rovisod our orocasls or highor nargins in lho Downor ining and Downor Fail
divisions, bul havo loworod nargins in lho Downor Auslralia and Downor ow Zoaland
divisions.
vo havo nado upward rovisions lo corporalo ovorhoads basod on lho !H rosull.
vo havo incroasod lho nol inlorosl oxponso duo lo a lowor cash balanco and a lowor
ooclivo inlorosl incono ralo.
This has rosullod in our oarnings orocasls boing roducod by !' in FY!2 and 5' lo 6' in
FY!3FY!5.

Figure 3: P&L forecasts - current vs previous
FY12 FY13 FY14 FY15
CurrehI
Fovonuo (incl assoc 7,596 7,522 7,693 7,593
EBT 343 339 357 379
EBT nargin 4.5' 4.5' 4.6' 5.0'
PAT !73 !3! !99 224

' chango PAT !' 5' 6' 6'

Previous
Fovonuo (incl assoc 7,!43 7,206 7,423 7,430
EBT 339 343 360 334
EBT nargin 4.7' 4.3' 4.9' 5.!'
PAT !74 !90 2!2 233
Figure 4: DetaiIed forecasts - current vs previous
2012 2012 2012 2013 2013 2013
Old New % chahge Old New % chahge
Group
Salos rov 7,!3! 7,579 6.3' 7,!94 7,5!0 4.4'
EBT 3!3 343 9.4' 3!7 339 6.9'
EBT nargin 4.4' 4.5' 4.4' 4.5'
ol inlorosl oxponso 74 73 5.3' 63 72 !2.3'
Tax oxponso 30 30 0.7' 73 75 4.4'
PAT !74 !73 0.7' !90 !3! 4.7'

Dowher AusIralia
Fov 3,406 3,5!0 3.!' 3,3!6 3,3!2 0.!'
EBT !53 !23 !6.2' !59 !59 0.!'
EBT nargin 4.5' 3.7' 4.3' 4.3'

Dowher NZ
Fov 362 345 2.0' 373 303 3.!'
EBT 34 !6 52.2' 44 20 54.0'
EBT nargin 4.0' !.9' 5.0' 2.5'

Dowher Mihihg
Fov !,332 2,272 24.0' !,906 2,295 20.4'
EBT !34 !63 25.4' !29 !6! 24.5'
EBT nargin 7.3' 7.4' 6.3' 7.0'

Dowher Pail
Fov !,055 !,!67 !0.6' !,!27 !,!2! 0.6'
EBT 63 32 3!.3' 55 5! 6.2'
EBT nargin 6.0' 7.!' 4.3' 4.6'

Corporalo cosls 46 53 !5.4' 44 52 !9.7'
ResuIt summary
Downor ED roporlod a rosull ahoad o our oxpoclalions. Tho conpany roporlod rovonuo o
$3.926bn (vs DBo $3.446bn, an EBT nargin o 4.!' (vs DBo 4.4' and undorlying PAT o
$35n (vs DBo $3!n.
Koy highlighls ron lho rosull includo:
#
Cuidanco - Tho conpany conirnod ull yoar guidanco o undorlying EBT o ~$340n
and PAT o ~$!30n. Howovor as parl o lho Folianco Fail roslrucluro Downor will incur
an oxponso o $72.5n as il lransors lho hodgo rosorvo lo rolainod oarnings (no inpacl
lo cash lows or lolal oquily.
#
varalah lrains conlracl - anagononl advisod lhoy havo dolayod lho dolivory o lrains
lo undorlako noro losling. anagononl is now largoling !2 lrains lo roach praclical
conplolion by Jun 20!2 bul lhal by lho ond o Doc 20!2 lho dolivory progran is
oxpoclod lo bo back lo schodulo wilh 26 lrains oxpoclod lo havo roachod praclical
conplolion. vo havo nolod lhal duo lo incroasod cosls and changos lo lho
nanuacluring schodulo lho conpany has ulilizod $20n o gonoral conlingoncy (loaving
$50n ronaining.
#
Undorlying oarnings - vo nolo lhal Downors rosull was inpaclod by a nunbor o
avourablo and unavourablo ilons. vhilo lho avourablo and unavourablo ilons woro
broadly oqual, wo boliovo lho ilons should bo sognonlod inlo nonoporalional vs
conlracl pricing ilons lo bollor assoss lho undorlying oarnings o lho businoss. on
oporalional ilons aro largoly accounling adjuslnonls wilh nininal boaring on lho
undorlying oarnings o lho conpany. Conlracl pricing ilons rolocl oilhor posilivo or
nogalivo pricing and/or risk assossnonl. vo boliovo lhal projocl closoouls rolocl good
risk nanagononl and/or conlracl nogolialions and lhorooro should bo considorod as
parl o lho undorlying oarnings. Sinilarly, logacy conlracls rolocl poor risk nanagononl
and lhorooro should bo lroalod as parl o undorlying oarnings. vo oslinalo lho
undorlying EBT nargin or lho !H was only 3.4' (vs roporlod 4.!'.
#
Downor Auslralia - Tho division conlinuos lo bo inpaclod by onorous logacy conlracls
and consoquonlly roporlod a nargin bolow our orocasls. anagononl indicalod lho
logacy conlracls should roll o in a nonlh or lwo.
#
Downor ining - Tho division dolivorod rovonuos signiicanlly abovo our orocasls duo
lo aslor ranp up and slrong growlh in lyro nanagononl and blasling sorvicos. Tho EBT
nargin o 7.3' was also abovo our orocasls, bul lhis was largoly duo lo accounling
adjuslnonls and provision roloasos.
#
Downor Fail - Tho division dolivorod rovonuos and nargins abovo our orocasls. vo
nolo lhal nargins adjuslod or lho varalah conlracl and provision roloasos aro
signiicanlly abovo induslry lovols.
#
Downor ow Zoaland - vhilo wo woro caulious on lho polonlial or nogalivo surpriso
ron lho Downor ow Zoaland division, wo woro surprisod by lho quanlun wilh
nargins ronaining low al !.9'.

Figure 5: Group P&L - actuaI vs forecast
1H11A 2H11A 1H12A 1H12F 1H12A vs F 1H12A vs pcp
dTurnovor 3,429 3,546 3,926 3,446 !4' !4'
EBT (undorlying !32 !60 !60 !53 5' 2!'
EBT nargin (undorlying 3.9' 4.5' 4.!' 4.4'
EBT (roporlod !!3 !43 !60 !53 5' 236'
EBT nargin (roporlod 3.4' 4.0' 4.!' 4.4'
ol inlorosl oxponso 35 29 39 37 5' !!'
Tax oxponso (roporlod 49 33 37 35 3' !77'
PAT (undorlying 7! 95 35 3! 5' !9'
PAT growlh (pcp !3' !4' !9' !4'
PAT (roporlod !04 76 35 3! 5' !32'
PAT growlh (pcp 2!9' !9!' !32' !73'
EPS (c/sharo - undorlying 20 24 !9 !3 5' 6'
EPS (c/sharo - roporlod 32 !9 !9 !3 5' !57'
DPS (c/sharo 9 0 0 0 A !00'
Source. Deutsche Bank, conpan, reports

Figure 6: SegmentaI financiaIs - actuaI vs forecast
1H11A 2H11A 1H12A 1H12F 1H12A vs F 1H12A vs pcp
Turhover
Downor Auslralia !,573 !,664 !,696 !,706 !' 3'
Downor ow Zoaland 4!5 433 4!! 4!9 2' !'
Downor ining 634 332 !,!33 793 43' 79'
Downor Fail 663 462 576 523 9' !4'

EBIT (uhderlyihg)
Downor Auslralia 60 49 59 63 !4' 3'
Downor ow Zoaland 9 5 3 !7 53' !2'
Downor ining 5! 69 33 53 52' 73'
Downor Fail 43 27 43 33 3!' !0'
Unallocalod 0 0 37 23 63' #DV/0!

EBIT margih
Downor Auslralia 3.3' 2.9' 3.5' 4.0'
Downor ow Zoaland 2.!' !.2' !.9' 4.0'
Downor ining 3.0' 3.3' 7.3' 7.3'
Downor Fail 7.!' 5.9' 7.4' 6.2'

Figure 7: WIH - actuaI vs forecast
WIH - hew 1H11A 2H11A 1H12A 1H12F 1H12A vs F 1H12A vs pcp
Downor ining 7,600 7,500 7,000 7,400 5' 3'
Downor Fail 5,400 5,200 4,900 5,090 4' 9'
Downor Auslralia Unknown 4,300 5,300 5,240 !!' A
Downor ow Zoaland Unknown 2,600 2,600 2,500 4' A
Tolal 20,500 20,!00 20,300 20,230 0' !'
ResuIt anaIysis
Earnings benefited from non-recurring items
vo nolo lhal Downors rosull was inpaclod by a nunbor o avourablo and unavourablo
ilons. Thoso includo onorous logacy conlracls, CPC paynonls & solllononls, a proil
rocognilion on chango lo conlracl lorns, posilivo projocl closoouls and provision roloasos.
vhilo lho avourablo and unavourablo ilons woro broadly oqual, wo boliovo lho ilons
should bo sognonlod inlo nonoporalional vs conlracl pricing ilons lo bollor assoss lho
undorlying oarnings o lho businoss. onoporalional ilons aro largoly accounling
adjuslnonls wilh nininal boaring on lho undorlying oarnings o lho conpany. Conlracl
pricing ilons rolocl oilhor posilivo or nogalivo pricing and/or risk assossnonl. vo boliovo
lhal projocl closoouls rolocl good risk nanagononl and/or conlracl nogolialions and
lhorooro should bo considorod as parl o lho undorlying oarnings. Sinilarly, logacy conlracls
rolocl poor risk nanagononl and lhorooro should bo lroalod as parl o undorlying oarnings.
On lhis basis wo oslinalo lho undorlying EBT nargin or lho !H was only 3.4' (vs roporlod
4.!'.
Howovor wo nolo lhal lho conpanys inprovod risk nanagononl and londor procoduros
should linil lho risk o uluro conlracl nispricings.
Figure 8: EBIT margins
4.1%
3.8%
3.2%
3.4% 3.4%
3.0%
4.1% 4.1%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
0
20
40
60
80
100
120
140
160
180
1H12 EBIT Mining
cont ract adj
Provision
releases
CPG cost s Adj 1H12
EBIT
Project close
out s
Legacy
cont ract s
Adj 1H12
EBIT (excl
legacy
cont ract s)
Non-operational it ems
Cont ract pricing it ems

DivisionaI financiaIs
Downer AustraIia
Downor Auslralia dolivorod rovonuo growlh, howovor nargins woro inpaclod by logacy
conlracls. Adjusling nargins or lho logacy conlracl, posilivo projocl closoouls and provision
roloasos givos an undorlying EBT nargin o 4.3' (vs roporlod 3.5'.
Figure 9: Downer AustraIia revenues (A$m)

Figure 10: Downer AustraIia EBIT margins
1,349
1,368
1,297
1,466
1,573
1,664
1,696
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1H 09 2H 09 1H 10 2H 10 1H 11 2H 11 1H 12

5.4%
6.6%
5.5%
5.4%
3.8%
2.9%
3.5%
4.8%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
1H 09 2H 09 1H 10 2H 10 1H 11 2H 11 1H 12 1H 12 adj


Downer New ZeaIand
Downor ow Zoaland was inpaclod by woak condilions and roporlod low rovonuos and low
nargins.
Figure 11: Downer New ZeaIand revenues (A$m)

Figure 12: Downer New ZeaIand EBIT margins
435
475
414
473
415
438
411
360
380
400
420
440
460
480
1H 09 2H 09 1H 10 2H 10 1H 11 2H 11 1H 12

6.4%
8.6%
5.9%
7.7%
2.1%
1.2%
1.9%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
1H 09 2H 09 1H 10 2H 10 1H 11 2H 11 1H 12


Downer Mining
Tho division bonoilod ron ranp up o conlracls and slrong growlh in lyro nanagononl and
blasling sorvicos. vhilo roporlod nargin o 7.3' is abovo induslry lovols, adjusling or
accounling proil adjuslnonls shows an undorlying nargin o 5.9' (in lino wilh induslry
lovols.
Figure 13: Downer Mining revenues (A$m)

Figure 14: Downer Mining EBIT margins
502
526
484 490
634
832
1,133
0
200
400
600
800
1,000
1,200
1H 09 2H 09 1H 10 2H 10 1H 11 2H 11 1H 12

4.2%
4.8%
7.7%
6.4%
8.0%
8.3%
7.8%
5.9%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
1H 09 2H 09 1H 10 2H 10 1H 11 2H 11 1H 12 1H 12 adj


Downer RaiI
Downor Fail roporlod a sloady riso in rovonuos duo lo highor rovonuos ron lho varalah and
olbourno lrans conlracls. vhilo roporlod nargins woro al lho high ond o induslry lovols,
adjusling or no nargin on lho varalah lrains rovonuos and provision wrilobacks on oquily
proils rosulls in an EBT nargin o 9.3' which is signiicanlly abovo induslry lovols.
Figure 15: Downer RaiI revenues (A$m)

Figure 16: Downer RaiI EBIT margins
440
449
458
589
668
462
576
0
100
200
300
400
500
600
700
800
1H 09 2H 09 1H 10 2H 10 1H 11 2H 11 1H 12

6.4%
7.3%
6.4%
8.3%
7.1%
5.9%
7.4%
9.8%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
1H 09 2H 09 1H 10 2H 10 1H 11 2H 11 1H 12 1H 12 adj


CashfIow and working capitaI anaIysis
vhilo lho conpanys oporaling cashlow has bogun inproving, wo nolo lho invoslnonl in
nol working capilal has also boon rising. This has boon drivon by an incroaso in invonlory
balanco and slowor colloclion o doblors.
Figure 17: CFO and cashfIow generation

Figure 18: Net working capitaI
-20%
0%
20%
40%
60%
80%
100%
-50
0
50
100
150
200
1H 07 2H 07 1H 08 2H 08 1H 09 2H 09 1H 10 2H 10 1H 11 2H 11 1H 12
CFO CFO/underlying EBITDA

0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0
100
200
300
400
500
600
1H 07 2H 07 1H 08 2H 08 1H 09 2H 09 1H 10 2H 10 1H 11 2H 11 1H 12
Net working capit al NWC/sales



Source. Conpan, reports

Work in hand
Tho conpanys ordorbook has ronainod rolalivoly slablo bolwoon 2H !! and !H !2.
Howovor lho conposilion has changod wilh growlh in Downor Auslralia osolling doclinos
in Downor Fail and Downor ining.
Figure 19: WIH baIance (A$m)

Figure 20: WIH baIance by contract type
14,600
16,400
20,400 20,500
20,100 20300
2H 09 1H 10 2H 10 1H 11 2H 11 1H 12

7,500
7,000
5,200
4,900
4,800
5,800
2,600 2,600
0
5,000
10,000
15,000
20,000
25,000
2H11 1H12
Downer Mining Downer Rail Downer Aust ralia Downer New Zealand


VaIuation & Risks
VaIuation
Our largol prico or Downor is $4.36/sharo (prov $4.33, boing lho avorago o our DCF,
EV/EBT nulliplo sunolhoparls valualion and P/E valualion. Our largol prico is broadly
unchangod duo lo highor cash low orocasls incroasing our DCF valualion, bul boing osol
by lowor oarnings orocasls or our !2 nonlhs orward PE rol valualion.
Sum-of-the-parts-based vaIuation
Our SOTP valualion is $4.!2/sharo using applicablo poor group nulliplos or oach o lho
conpanys businoss divisions.
Figure 21: Sum-of-the-parts vaIuation
Divisiohs FY12 EBIT MulIiple Value $/share
Downor Auslralia !!! 7.0x 730 !.32
Downor ow Zoaland !4 5.0x 7! 0.!7
Downor ining !45 7.0x !,0!3 2.37
Downor Fail 7! 6.0x 429 !.00
Tolal 343 2,293 5.35
Loss nol dobl 523 !.23
!,770 4.!2
# sharos 429
Equily valuo/sharo 4.!2
DCF-based vaIuation
Our DCF valualion is $5.!4/sharo. vo uso a lhroo slago DCF nodol (vACC !3.!6', TV g =
3' lo discounl posl lax roo cash lows, including lho bonoil o inpulalion crodils. Our
vACC o !3.!6' assunos a bola o !.!, CoE o !5.05', risk roo ralo o 6.25' (assunod
longlorn govornnonl bond ralo, a narkol risk proniun o 3' and largol D/EV o 20'. vo
orocasl oxplicil cash lows lo FY!5, ollowod by a !0yoar horizon poriod whoro cash low
growlh ados ron 4' lo our longlorn lorninal valuo growlh ralo o 3'. Tho lorninal valuo
growlh ralo is basod largoly on our noninal CDP oslinalos.
P/E based vaIuation
Our P/E basod valualion is $3.30/sharo. n doriving our valualion wo havo appliod our !2
nonlhs orward EPS oslinalo lo lho narkol nulliplo o lho ASX induslrials ox banks. vo
havo appliod a discounl o 25' lo rolocl lho conpanys hislorical avorago lrading rango
rolalivo lo lho narkol nulliplo.

Risks
Koy upsido risks lo our invoslnonl lhosis includo:
#
Bollorlhanoxpoclod dolivory o lho varalah lrains nanuacluring conlracl - Our
orocasls includo lolal provisioning o $430n in rolalion lo lho varalah lrains
nanuacluring conlracl. A aslor dolivory schodulo or dolivory o lho lrains al a lowor
cosl would incroaso lho conpanys oarnings orocasls.
#
Achiovononl o cosloul inilialivos - Tho conpany is undorlaking a nunbor o inilialivos
lo roduco cosls, howovor wo havo nol roloclod any bonoils in our orocasls. Succossul
achiovononl o lho cosloul inilialivos could incroaso lho conpanys oarnings growlh.
Koy downsido risks lo our invoslnonl lhosis includo:
#
voaknoss in Downor Auslralia or Downor ow Zoaland divisions - Our orocasls
assuno nargin inprovononl in lhoso divisions. Ongoing nargin prossuros and
conpolilion could roduco our orocaslod conpany oarnings growlh.
#
Projocl spociic issuos - As a conlraclor, Downors proilabilily is dopondonl on ils abilily
lo succossully assoss, nanago and oxoculo on projocls. Failuro lo proporly assoss and
nanago projocl risks could load lo cosl ovorruns and signiicanlly inpacl lho conpanys
oarnings.
#
Dolivory o lho varalah lrains nainlonanco conlracl - anagononl oxpoclalions aro or
doublo digil rolurns on lho ixod prico varalah lrains nainlonanco conlracl. Howovor
addod conploxily or issuos wilh lho varalah lrains could roduco lho proilabilily o lhis
conlracl.
#
Doorral o Slalo Covl projocl oxpondiluro - Covornnonl oxpondiluro accounls or
~45' o Downors rovonuos. Any doorral or cancollalion o Downor conlracls could
signiicanlly roduco lho conpanys rovonuo and oarnings growlh.
Appendix 1
Downor ED DOv.AX 3.94 (AUD 2! Fob !2 !,7,3


3. Doulscho Bank and/or ils ailialo(s oxpocls lo rocoivo, or inlonds lo sook, conponsalion or invoslnonl banking sorvicos
ron lhis conpany in lho noxl lhroo nonlhs.


website at hllp://gn.db.con/gor/disclosuro/Disclosuro.oqsr?ricCodo=DOv.AX.

conponsalion or providing a spociic roconnondalion or viow in lhis roporl. Craig vongPan

HistoricaI recommendations and target price: Downer EDI (DOW.AX)
(as of 2/2!/20!2)
!
"
#
$
%
&'
(
)
!* !!
!"
!#
!$
!%
0.00
!.00
2.00
3.00
4.00
5.00
6.00
7.00
3.00
9.00
!0.00
S
o
c
u
r
i
l
y

P
r
i
c
o
Dalo

Slrong Buy
Buy
arkol Pororn
Undorpororn
ol Falod
Suspondod Faling
Buy
Hold
Soll
ol Falod
Suspondod Faling

2. !!/3/20!0: Buy, Targol Prico Chango AUD9.!5
4. !/6/20!0: Buy, Targol Prico Chango AUD6.00
5. !9/3/20!0: Downgrado lo Hold, Targol Prico Chango AUD5.20
6. !9/!/20!!: Hold, Targol Prico Chango AUD5.50
7. 2!/!/20!!: Hold, Targol Prico Chango AUD5.30
3. 23/!/20!!: Hold, Targol Prico Chango AUD3.75
9. 27/2/20!!: o Foconnondalion, AUD3.75
!0. 23/3/20!!: Hold, Targol Prico Chango AUD4.00
!!. 24/3/20!!: Hold, Targol Prico Chango AUD4.50
!2. 29/9/20!!: Hold, Targol Prico Chango AUD4.37
!3. !4/!2/20!!: Hold, Targol Prico Chango AUD4.43
!4. !/2/20!2: Hold, Targol Prico Chango AUD4.20
!5. 6/2/20!2: Hold, Targol Prico Chango AUD4.33

buy lho slock.
slock
Notes:

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
30
!00
!20
!40
Buy Hold Soll
Auslralia Univorso
Conpanios Covorod Cos. w/ BankingFolalionship

Disclosuros Lookup and Logal labs. nvoslors aro slrongly oncouragod lo roviow lhis inornalion booro invosling.

hllp://gn.db.con.

Auslralia and ow Zoaland: This rosoarch, and any accoss lo il, is inlondod only or wholosalo clionls wilhin lho noaning o
Japan: Disclosuros undor lho Financial nslrunonls and Exchango Law: Conpany nano - Doulscho Socurilios nc.
Fogislralion nunbor - Fogislorod as a inancial inslrunonls doalor by lho Hoad o lho Kanlo Local Financo Buroau (Kinsho
o. !!7. onbor o associalions: JSDA, Typo Financial nslrunonls Firns Associalion, Tho Financial Fuluros Associalion o
Japan, Japan Socurilios nvoslnonl Advisors Associalion. Connissions and risks involvod in slock lransaclions - or slock
Transaclions in oroign slocks can load lo addilional lossos slonning ron oroign oxchango luclualions. oodys,
Slandard & Poors, and Filch nonlionod in lhis roporl aro nol rogislorod crodil raling agoncios in Japan unloss Japan or
ippon is spociically dosignalod in lho nano o lho onlily.

60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 250 2500
London EC2 2EO
Unilod Kingdon
Tol: (44 20 7545 3000
Deutsche Bank AG
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Doulscho Bank Placo
Lovol !6
Sydnoy, Sv 2000
Auslralia
Tol: (6! 2 3253 !234
Deutsche Bank AG
Filialo Hongkong
Hong Kong
Tol: (352 2203 3333
2!!! agalacho
Sanno Park Towor
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer
Tho inornalion and opinions in lhis roporl woro proparod by Doulscho Bank AC or ono o ils ailialos (colloclivoly Doulscho Bank. Tho inornalion horoin is boliovod lo bo roliablo and has boon oblainod ron public sourcos
n Augusl 2009, Doulscho Bank inslilulod a now policy whoroby analysls nay chooso nol lo sol or nainlain a largol prico o corlain issuors undor covorago wilh a Hold raling. n parlicular, lhis will lypically occur or Hold
ralod slocks having a narkol cap snallor lhan nosl olhor conpanios in ils soclor or rogion. vo boliovo lhal such policy will allow us lo nako bosl uso o our rosourcos. Ploaso visil our wobsilo al hllp://gn.db.con lo dolornino
lho largol prico o any slock.

SteeI

2! Fobruary 20!2
OneSteeI Ltd
Foulors: OST.AX Bloonborg: OST AU Exchango: ASX Tickor: OST
!H!2 Fosulls in lino al lho
EBT lovol, risks ronain
EmiIy Behncke
Fosoarch Analysl
(+6! 2 32532297
onily.bohncko@db.con
John Hynd
Fosoarch Associalo
(+6! 2 3253!62!
john.hynd@db.con

1HFY12 EBIT in Iine with DB expectations
OnoSlools !HFY!2 rosull was in lino al lho EBT lovol, howovor ahoad o DB and
consonsus PAT ($73n vs DB $64n duo lo lowor lax. Excluding lowor lax, lho
rosull was in lino wilh our oxpoclalions. vo boliovo lho largo incroaso in lho sharo
prico loday nay havo rolalod lo lho signiicanl shorl posilions in lho slock, which
havo doublod sinco lho slarl o 20!2. vo conlinuo lo ralo OST a Hold givon lho
curronl sharo prico is lrading in lino wilh our largol prico.
Salos (AUDn 5,53! 7,!75 7,414 3,!34 3,!75
EBTDA (AUDn 649 622 513 346 370
ol Proil (AUDn 242 235 130 352 345
EPS (AUD 0.!3 0.!3 0.10 0.26 0.26
OLD EPS (AUD 0.!3 0.!3 0.10 0.23 0.27
' Chango 0.0' 0.0' -4.2% 7.3' 4.7'
EPS Crowlh (' !3.4 3.7 -45.1 !70.3 !.9
PEF (x !7.3 !4.3 8.5 3.! 3.2
PE Folalivo (x !.43 !.42 0.77 0.32 0.36
EV/EBTDA (x 3.4 7.9 6.2 4.0 3.7
DPS (nol (AUD 0.!! 0.!0 0.03 0.00 0.!4
Yiold (nol (' 3.4 3.9 3.7 0.0 !7.!
Franking (' 45 0 0 !00 !00

CA(P !46/04/20!!.
ResuIts

HoId
ALL OFDAFES 4,333

Key changes
Prico largol 0.73 lo 0.34 ! 7.7%
Salos (FYE 6,332 lo 7,4!4 ! 16.2%
EBT nargin (FYE 5.! lo 4.0 # -20.4%
ol proil (FYE !35.3 lo !30.0 # -4.3%

0.0
!.0
2.0
3.0
4.0
5.0
2/!0 5/!0 3/!0 !!/!0 2/!! 5/!! 3/!! !!/!!
OnoSlool Lld
ALLOFDAFES (Fobasod
Absolulo -3.5 -!!.8 -72.5

Stock data
Froo loal 100.00

FOE (' 2.9
FOA (' 3.5
Prico/book (x 0.2
EBT nargin (' 4.0

C
o
m
p
a
n
y

G
I
o
b
a
I

M
a
r
k
e
t
s

R
e
s
e
a
r
c
h

Outside of Iron Ore and Mining consumabIes, EBIT was disappointing
anuacluring and Dislribulion EBT conlinuod lo disappoinl wilh conbinod
lossos o $34n in !HFY!2. vhilo nanagononl oullinod ils slool roviow
conlinuos, wo aro yol lo soo any najor announcononl and suspocl urlhor
wrilodowns and roslrucluring is likoly - wo boliovo lhoso cosls could bo
signiicanl.
Debt IeveIs remain a concern for us
vo orocasl OnoSlool FY!2 nol dobl/oquily o 5!' and EBT/inlorosl covor o
2.4x. Should iron oro pricos all ron horo, wo boliovo OnoSlools balanco shool
could bo challongod - parlicularly givon lho $475n capox spond in FY!2. Duo lo
uncorlainly, nanagononl providod no FY!2 PAT guidanco as a rosull o lhis
uncorlainly, wo woro surprisod lho Board oloclod lo pay an inlorin dividond.
Target price changed in Iine with EPS changes
Civon lho cashgonoralivo naluro o OSTs businoss, wo valuo OST using a 3slago
DCF (vACC !0', COD 5.3', COE !3.45', FFF 6.25', Bola !.2x, TCF o 3'.
n anlicipalion o a possiblo oquily raising, wo apply a 34' discounl lo our TP.
Downsido risks: conlinuod approcialion o AUD and solor slool pricos. Koy upsido
risks includo: slabilisalion in Auslralian slool pricos, slabilisalion o iron oro pricos
and a aslorlhanoxpoclod incroaso in rosidonlial and nonrosidonlial conslruclion
aclivily (Soo pago !5 or dolails
2! Fobruary 20!2 Slool OnoSlool Lld
PROFIT & LOSS (A$m)
Sales revehue 4,044 4,335 6,976 6,648 5,581 7,175 7,414 8,184 8,175
Ihcome Iax expehse 45 65 104 -17 73 65 14 133 131
MihoriIies/preIerehce dividehds -14 -12 -10 -10 -2 -7 -6 -7 -8
PeporIed proIiI 188 207 245 229 259 230 109 352 345
SighiIicahI iIems 16 14 -70 15 17 -5 -21 0 0
CASH FLOW (A$m)
Movement in net working capital -34 -30 -133 16 54 5 -51 -163 2
Capex -212 -356 -302 -179 -146 -240 -475 -250 -356
Free cash Ilow 39 -80 32 187 458 201 -138 154 247
+61 2 8258 2297 emily.behhcke@db.com OIher ihvesIihg acIiviIies -7 7 -434 21 -44 -874 -320 0 0
Dividehds paid -75 -86 -127 -148 -104 -146 -95 0 -108
+61 2 8258 1621 |ohh.hyhd@db.com NeI ihc/(dec) ih borrowihgs 31 185 636 -902 -221 993 0 0 0
OIher Iihahcihg cash Ilows -24 -13 -27 -22 -32 -7 0 0 0
TIa cash Ivs Irm Inancng -67 87 483 -305 -357 840 -95 0 -108
NeI cash Ilow -35 14 81 -98 56 166 -552 154 139
NvemenI n neI debI/(cash) 67 171 555 -804 -277 827 552 -154 -139
BALANCE SHEET (A$m)
Tahgible Iixed asseIs 1,340 1,537 2,351 2,369 2,302 2,579 3,453 3,488 3,588
Goodwill 220 214 2,040 2,075 2,070 2,591 2,591 2,591 2,591
OIher asseIs 1,549 1,658 2,773 2,415 2,600 2,975 2,858 3,131 3,128
ToIal asseIs 3,139 3,570 7,328 6,933 7,068 8,315 9,072 9,380 9,466
IhIeresI bearihg debI 658 829 2,098 1,279 1,047 1,882 2,472 2,312 2,165
OIher liabiliIies 979 1,090 1,797 1,318 1,528 1,927 2,051 2,167 2,163
NeI vrkng capIa 849 842 1,469 1,453 1,399 1,522 1,573 1,736 1,734
NeI debI/(cash) 639 770 1,947 1,224 964 1,728 2,319 2,158 2,022
RATIO ANALYSIS
52-week High/Low: A$2.86 - 0.64 Sales growIh - pcp (%) 1.8 7.2 60.9 -4.7 -16.1 28.6 3.3 10.4 -0.1
US$ 1,171 EBIT/sales (%) 7.5 7.8 8.8 6.9 7.8 6.0 4.0 7.7 7.5
PayouI raIio (%) 51.4 51.2 73.3 44.5 56.5 58.3 37.2 0.0 54.8
BeIa (MPP - 6.00) 1.20 POE (%) 12.4 12.7 12.7 5.6 5.6 5.3 2.9 7.5 7.0
DebI/mkI value raIio (%) 40.0 OperaIihg PeIurh oh CapiIal (%) 11.3 10.7 9.3 8.6 6.0 5.2 3.7 6.5 6.2
WACC (6.25% bohd yield) 9.7 Tax raIe (%) 18.3 22.9 29.0 -7.4 21.9 21.5 11.2 27.0 27.0
Capex/sales (%) 5.2 8.2 4.3 2.7 2.6 3.3 6.4 3.1 4.4
Price/NPV (x) 0.65 NeI debI/equiIy (%) 42.5 46.7 56.7 28.2 21.5 38.4 51.0 44.0 39.3
13
13
341
20
14
544
10.8
-3
60
12.1
-185
30 -3 10
31 -91
48
94
448
16
373
103
22
57
276
19
8.3 6.2 4.0
5.4 10.7
3.7
76
5.3
74
41
-32 -28 -89
0
37 34
299 0
-94 OIher
185
OnesteeI Ltd
P/CFPS (x)
DPS (A$) 0.170
7.9
Company description
1.77
44
133
4,689 3,641
158
146
5.9
AusIraliah disIribuIioh 173
A$0.84
EV/EBITDA (x)
HoId
Price/BV (x)
PeuIers: OST.AX Bloomberg: OST AU
Price as aI 21-Feb
TargeI price
122
4,356
6.6
1.39
2,209
9.4
188
6.7
1.73
MahuIacIurihg 165
2,288
3.2
5.2
3.8
5.6
EV/EBIT (x)
New Zealahd

Compahy websiIe

OheSIeel LimiIed mahuIacIures sIeel lohg
producIs ahd disIribuIes meIals ih AusIralia. The
Compahy produces sIrucIural, rail, rod, bar, wire,
pipe ahd Iube producIs alohg wiIh disIribuIihg
sheeI ahd coil, pipihg sysIems, plaIe ahd
alumihum producIs. OheSIeel, Ihrough Whyalla
SIeelworks, has operaIiohs ih Ihe iroh ore ahd
mihihg Iield.
Research Team
John Hynd
EmiIy Behncke
hIIp://www.ohesIeel.com.au
1.27
MaIerials
3,257 3,406 3,191
7.3
5,173
4.5 7.2
A$0.82
0.22
17.1
0.23 0.25
3.7 0.0 3.9
0.79 1.11
3.4
0.98
7.9
2.8
0.100
3.3
0.250
0.030
1.8 2.7
0.140 0.000
0.447
10.1 16.6 10.0 7.2
0.185 0.110 0.215 0.100
0.210 0.182
13.5
14.5
0.299 0.329
0.225 0.361
17.6 17.0
EPS FD (A$) 0.331
OperaIihg CFPS (A$) 0.442 0.454 0.399 0.359 0.483
12.2
0.377
10.6 22.7
0.303 0.336
0.293
11.6
11.1
3.2 10.2 15.1 15.9 3.1 16.7
Normalised EPS (A$)
Asia Pacific
Equity Research
SUMMARY
3.2 17.8
0.172 0.195
8.5 3.1
-13.4
14.8
-45.1 -3.7
Diversified IndustriaI P/E raIio FD (x)
0.256 0.261
AusIralia
0.081
10.9 -44.3 -1.9 170.8
0.256 0.261 0.096 0.175
-3.5%
-12%
-72%
-80% -60% -40% -20% 0%
1m
3m
12m
0
2
4
6
8
10
12
14
07 08 09 10 11 12E 13E 14E
EBITDA/sales (%)
EBIT/sales (%)
Trends
0
2
4
6
8
10
12
14
07 08 09 10 11 12E 13E 14E
POE (%) POA (%)
op POC (%)
Return Ratios (%)
0
10
20
30
40
50
60
0
500
1000
1500
2000
2500
07 08 09 10 11 12E 13E 14E
NeI debI/equiIy (%)
0.30
0.50
0.70
0.90
1.10
1.30
1.50
1.70
2/07 2/08 2/09 2/10 2/11 2/12

Key Points
What's new7
"
OnoSlools !HFY!2 rosulls woro in lino wilh oporaling oarnings oxpoclalions, bul ahoad
al PAT, givon lho low lax ralo. PAT o $73n conparod wilh DBo $64n. Alor
adjusling or lho lax ralo, DBo was in lino wilh roporlod nunbors.
"
anagononl providod no PAT guidanco or 2HFY!2, howovor, oullinod lhal posilivo
anuacluring EBTDA is oxpoclod, as woll as posilivo Dislribulion EBT.
"
vo conlinuo lo boliovo lhoro is signiicanl risk around assol and goodwill wrilodowns
givon lho signiicanl undorporornanco o anuacluring and Dislribulion.
"
vo boliovo OnoSlools balanco shool is slrolchod, parlicularly givon ils slrong sonsilivily
lo lho iron oro prico. Al a US$!00/l ron Oro prico in 2HFY!2, EBTDA/inlorosl covor
roducos ron 3.7x curronlly, lo 3.!x.
"
OnoSlool oullinod 5' voluno growlh is oxpoclod in Dislribulion in 2HFY!2. vo boliovo
lhis is likoly narkol sharo growlh, which nay inpacl pricing.
"
ining Consunablos was a bollor lhan oxpoclod rosull, largoly duo lo an inprovononl
in Auslralia.
"
vo boliovo lho oxpansion al lho vPC ninos has risk capox ($230n and dolivory o lho
addilional iron oro voluno o 5nlpa by FY!3. Accordingly, wo aclor in 2nl lo
conponsalo or lhis risk. vhilo OST plans lo roduco lho cosl o produclion lo approx
$70/l (ron $75/l as advisod by vPC, wo boliovo lhoro aro risks lo lhoso cosl
assunplions givon lho blonding roquirod (wilh oxisling OST rosorvos lo achiovo 60'
Fo.
"
vo woro surprisod OnoSlool paid a (unrankod inlorin dividond o 3cps. vo do nol
lhink lho balanco shool is curronlly slrong onough lo jusliy lhis and nolo $475n capox
in FY!2 and polonlial oarnings risk around iron oro.
ResuIt in Iine at the operating IeveI
OnoSlools !HFY!2 EBT was in lino wilh DB oxpoclalions or $!56n pro roslrucluring and
olhor onoo chargos (which anounlod lo $2!n alor lax.
vhilo OnoSlool !HFY!2 PAT was ahoad o oxpoclalions, lhis was onliroly duo lo lho lowor
lhan oxpoclod lax ralo.
Figure 1: DB 1HFY12f vs OST 1HFY12A
A$m 1H11 2H11 FY11 1H12 (DB) 1H12A
Tolal Salos 3072 4!03 7!75 3!93 3739

EBT
alorials 270 274 544 !99 !73
Focycling 5 26 2! !9 2
ron Oro 276 243 524 !30 !7!
Auslralian
anuacluring
9! 94 !35 35 75
Auslralian Dislribulion !0 0 !0 0 9
Auslralia (Tolal !35 !53 343 !0! 33
Z Dislribulion !0 !0 20 3 3
ining Consunablos 20 45 65 43 65
Undorlying EBT 2!5 2!3 429 !57 !56
Ono o
cosls/Elininalions
!2 !3 25 70 43
Foporlod EBT 203 20! 404 37 !!3

ol nlorosl 46 55 !0! 62 62
Proil booro lax !57 !46 302 25 5!
Tax (Foporlod 37 23 65 7 9
inorily nlorosl 3 4 7 3 3
Foporlod PAT !!6 !!4 230 !5 57
Signiicanl 9 4 5 49 2!
Undorlying PAT !25 !!0 235 64 73
Source. Deutsche Bank, OST Conpan, data
Manufacturing write down is sureIy on its way
anagononl roiloralod lho slool roviow is progrossing al lodays rosull. vo boliovo a
signiicanl roslrucluro is roquirod in lho anuacluring businoss givon:
!. vACC rolurns aro nol likoly lo bo achiovod again (on lho curronl assol baso
2. Evon i lho assol valuos aro adjuslod or goodwill lho businoss is slill likoly lo dolivor
rolurns considorably bolow vACC (!0'
3. Capacily ulilizalion ralos o 73' inply a polonlial planl closuro
As shown in Figuro 2, assuning !0' rolurn (EBT/Assols in lino wilh vACC, oqualos lo
anuacluring EBT o $226n. wo roduco lho assol valuo by goodwill or lho division
(oullinod al FY!! rosulls, assols roduco lo $!643n, inplying EBT o $!64n is nocossary lo
achiovo vACC rolurns.
Civon vACC rolurns woro only achiovod in vory slrong narkol condilions, wo do nol
undorsland how curronl assol valuos aro jusliiod.
Furlhor ovidonco o lhis rolalos lo OnoSlools roduclion lo proposod vhyalla capilal
oxpondiluro (indicalod loday o $50n.
Figuro 3 shows OnoSlools capacily ulilisalion or ils EAFs vs Blasl Furnaco.
Figure 2: Manufacturing EBIT vs WACC returns (10%)

Figure 3: OST capacity utiIisation
-250
-200
-150
-100
-50
0
50
100
150
200
250
Manuf act uring EBT Ret urns Pre-Goodwill Ret urns Post -Goodwill

0%
20%
40%
60%
80%
100%
120%
1
H
0
8
2
H
0
8
1
H
0
9
2
H
0
9
1
H
1
0
2
H
1
0
1
H
1
1
2
H
1
1
1
H
1
2
2
H
1
2
F
EAF BF (Whyalla)

vo nolo nanagononl has oullinod urlhor job culs loday o !30 ull lino onployoos lo bring
lolal annuliasod savings lo $90n vs $65n announcod al lho Augusl 20!! rosulls.
Significant sensitivity to iron ore
OnoSlools iron oro pricing sonsilivily is 2 old - ! lho porconlago o odiun Crado Oro
(CO rolalivo lo lolal volunos, 2 iron oro pricing.
vo curronlly oxpocl 50' CO and 50' HCO volunos or OST in 2HFY!2 (lal vs !HFY!2.
Howovor, wo nolo lhal should OST incroaso ils CO volunos lo 70' o lolal volunos in
FY!3 ron Oro EBT would doclino 3' lo $397n.
Figure 4: MGO voIumes historicaIIy vs forecast (mt)

Figure 5: MGO sensitivity to FY13 Iron Ore EBIT ($m)
0%
10%
20%
30%
40%
50%
60%
0
0.5
1
1.5
2
2.5
3
3.5
1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12F
MGO Tot al Ore MGO Cont ribut ion (%)

408
403
397
390
380
385
390
395
400
405
410
50% 60% 70% 80%

ron Oro EBT is noro sonsilivo lo ron Oro pricos. vhilo wo curronlly orocasl iron oro pricos
o US$!47/l (A$!53/l in FY!3, should pricos doclino !2' lo US$!30/l OSTs ron Oro EBT
would doclino !3' lo $334n.
Figure 6: OST iron ore EBIT sensitivity to iron ore prices

Figure 7: DB Iron Ore forecasts US$/t (60%Fe)
160
334
408
594
656
0
100
200
300
400
500
600
700
110 130 147 160 170
A
$
m
(
r
o
n
O
r
e

E
B
T
)
US$/t

158
147
165
141
123
0
20
40
60
80
100
120
140
160
180
FY11 FY12 FY13 FY14 FY15

.and aIso to currency
OnoSlool oullinod loday ils curroncy oxposuro is vory signiicanl. For ovory !c novononl lo
lho AUDUSD, lhis cosls A$!0n EBT (booro any lranslalion inpacl rolaling lo lho
Dislribulion businoss.
Civon lho AUDUSD in !HFY!2 was lockod in al approxinaloly !.02, wo boliovo curroncy
could cosl OST an addilional $25n in 2HFY!2, basod on curronl oxchango ralos (booro lho
inpacl lo slool pricos as a rosull o inporls.
Distribution writedown risk7
Dislribulion rolurns aro also bolow oxpoclalions. Basod on vACC rolurns (o !0', lhis
inplios Dislribulion EBT o $!35n (assols aro $!354n - lhoso nunbors woro only achiovod
in lho proviously slrong narkol and aro nol orocasl lo bo ropoalod in our consorvalivo yoar
orocasls (lo FY!5 - soo Figuro 3.
vo also nolo, or ining Consunablos lo achiovo vACC rolurns wo boliovo il is likoly lho
goodwill conpononl (49' o lho assol valuo is wrillon down as woll.
lho anuacluring, ining Consunablos and Dislribulion businoss goodwill is wrillon
down, lhis oqualos lo $203!n or $!.50/sharo. This would incroaso FY!2 nol dobl/oquily ron
5!' lo 92' which wo lhink would bo a najor concorn or OST londors.
Figure 8: Distribution EBIT vs WACC returns (10%)

Figure 9: Mining consumabIes EBIT vs WACC returns
(10%) A$m
-50
0
50
100
150
200
Dist ribution EBT Ret urns Pre-Goodwill Ret urns Post-Goodwill

-
50
100
150
200
250
FY12F FY13F FY14F FY15F
Mining Consumables EBT Ret urns Pre-Goodwill Ret urns Post-Goodwill

Significant capex reIating to the WPG acquisition
anagononl oullinod capox or FY!2 including:
"
$200n oxcluding vPC (rolaling lo iron oro and also olyCop
"
$!00n Slay in Businoss Capox
"
$!75n rolaling lo vPC
Civon OnoSlools curronl dobl posilion, wo lhink capox is rolalivoly high and could linil OSTs
abilily lo pay down ils dobl and nolo ils FY!2F EBT/inlorosl covor o 2.4x is bolow FY09
inlorosl covor, whon OST raisod ~$790n oquily.
Figure 10: Capex/Depreciation vs Net Debt (A$m)

Figure 11: EBIT/interest cover (x)
0%
50%
100%
150%
200%
250%
0
500
1000
1500
2000
2500
FY08 FY09 FY10 FY11 FY12F
net debt - LHS capex/depreciation - RHS

3.8
2.7
4.9
4.2
2.4
0.0
1.0
2.0
3.0
4.0
5.0
6.0
FY08 FY09 FY10 FY11 FY12F

OneSteeI achieves Iower iron ore prices vs fines price
vo nolo lhal OSTs ron Oro rovonuo por lonno doclinod in !HFY!2 lo A$!43/l and wo
oxpocl urlhor roduclions lo lho avorago roalizod prico in 2HFY!2.
Furlhor, wo nolo OnoSlool londs lo achiovo a discounlod prico lo lho avorago iron oro prico
in lho poriod likoly duo lo grado and also conlracl slrucluro (il would appoar lo us, OnoSlool
has nol had signiicanl powor wilh cuslonors lo onorco conlracl pricos i spol pricos aro
bolow conlracl.
Figure 12: Iron Ore revenue per tonne (A$/t)

Figure 13: OST reaIized iron ore price vs spot
118
132
134
106
104
158
152
162
143
116
0
20
40
60
80
100
120
140
160
180
1
H
0
8
2
H
0
8
1
H
0
9
2
H
0
9
1
H
1
0
2
H
1
0
1
H
1
1
2
H
1
1
1
H
1
2
2
H
1
2

4%
-1%
-2%
-9% -10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
1H11 2H11 1H12 2H12
Source. OST Conpan, data

Other factors affecting the share price
vo boliovo lhoro aro curronlly 2 olhor aclors lo considor in rolalion lo OnoSlools sharo
prico:
!. Signiicanl shorl solling - according lo ASC, lho shorl sold lurnovor as a ' lo lolal
lurnovor is 24.7'. vo boliovo lho inlino rosulls nay load lo sono shorl covoring.
2. SC oxclusion ron Fobruary - according lo lho SC roporl as al Fobruary !5,
20!2 OnoSlool will bo oxcludod ron Fobruary 29, 20!2.
Iron ore prices
China iron oro inos pricos havo incroasod !0' ron lho roconl lrough o US$!3!.5/l in
(~A$!22.7/l in Oclobor 20!! lo US$!44/l (A$!34.5/l in Fobruary 20!2 (+!0' in AUD lorns
ovor lho sano poriod.
DB oxpocls iron oro inos and lunp pricos lo doclino !0' yoy and !!' yoy rospoclivoly in
FY!2 and lhon incroaso by +!9' yoy and +!7' yoy rospoclivoly in FY!3 (in US$/l lorns.
DB oxpocls iron oro inos pricos lo lrough al US$!22/l in O!2 (3.4' qoq and slarl
incroasing ron OJ!2 onwards lo poak al US$!72/l in OD!2. Auslralian lunp lo Asia is also
oxpoclod lo ollow a sinilar lrond lo bollon oul al US$!34/l in O!2 (7.7' qoq and lhon
incroaso ron OJ!2 onwards lo poak al US$!34/l in OD!2.
Figure 14: China iron ore fines prices

Figure 15: DB forecasts for iron ore prices (fines 63%Fe)
0
50
100
150
200
250
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US$/t A$/t

0
20
40
60
80
100
120
140
160
180
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Q
M
0
1
Q
M
0
2
Q
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8
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0
9
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1
0
Q
M
1
1
Q
M
1
2
Q
M
1
3
Q
M
1
4
Q
M
1
5
U
S
$
/
t
Australian Lump to Asia Australian Fines to Asia

WhyaIIa iron ore exports
Annualisod vhyalla iron oro oxporls doclinod 2.2' non and 2.9' yoy ron 6.52nl in
ovonbor 20!! lo 6.33nl in Doconbor 20!! and doclinod 3.3' ron lho hislorical poak o
6.96nl in Fobruary 20!0. onlhly vhyalla iron oro oxporls also doclinod !' non and 2!'
yoy lo 534kl in Doconbor 20!!.
n valuo lorns, annualisod vhyalla iron oro oxporls doclinod 2' non bul incroasod 7' yoy
lo $3!5n in Doconbor 20!!. onlhly vhyalla iron oro oxporls in valuo lorns incroasod !5'
non bul doclinod 25' yoy ron $49.7n in ovonbor 20!! lo $57.4n in Doconbor 20!!.
Basod on lho annualisod valuo and quanlily dala or vhyalla oxporls, lho avorago inpliod
valuo or vhyallas iron oro oxporls is $!27.7/l in Doconbor 20!! (lal non and +!0' yoy,
+43' conparod lo lho hislorical avorago o $36.5/l .
Figure 16: WhyaIIa annuaIised iron ore exports in
quantity & vaIue

Figure 17: WhyaIIa annuaIised iron ore impIied price

0
100
200
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400
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600
700
800
900
0
1000
2000
3000
4000
5000
6000
7000
8000
S
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M
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S
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J
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8
M
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0
9
M
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-
0
9
S
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-
0
9
J
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-
1
0
M
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-
1
0
S
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p
-
1
0
J
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-
1
1
M
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-
1
1
S
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-
1
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$
m
'
0
0
0

t
o
n
n
e
s
Annual i sed Quanti ty Annual i sed Val ue

0
20
40
60
80
100
120
140
S
e
p
-
0
6
D
e
c
-
0
6
M
a
r
-
0
7
J
u
n
-
0
7
S
e
p
-
0
7
D
e
c
-
0
7
M
a
r
-
0
8
J
u
n
-
0
8
S
e
p
-
0
8
D
e
c
-
0
8
M
a
r
-
0
9
J
u
n
-
0
9
S
e
p
-
0
9
D
e
c
-
0
9
M
a
r
-
1
0
J
u
n
-
1
0
S
e
p
-
1
0
D
e
c
-
1
0
M
a
r
-
1
1
J
u
n
-
1
1
S
e
p
-
1
1
D
e
c
-
1
1
A
$
/
t
Source. Deutsche Bank, ABS

Long product prices
Tho Asian robar pricing indox has incroasod 3' qoq and 9' yoy in OD!! whilo Auslralian
robar pricos indox has doclinod 0.5' qoq and 0.4' yoy in OD!!.
Clobal long producl (robar pricos (avorago o robar pricos in lho US, v Europo, FarEasl and
China havo doclinod 6' ron lho roconl poak o US$749/l in Soplonbor 20!! lo US$707/l
in Fobruary 20!2 (+!' non, 5' yoy.
Figure 18: Asia vs. AustraIia rebar qtrIy pricing index

Figure 19: GIobaI Long Product (Rebar) Prices
0
50
100
150
200
250
300
M
a
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-
9
4
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9
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5
S
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-
9
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M
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6
S
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9
6
M
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7
S
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9
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M
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9
8
S
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-
9
8
M
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9
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9
9
M
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0
0
S
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0
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5
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0
6
S
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p
-
0
6
M
a
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0
7
S
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-
0
7
M
a
r
-
0
8
S
e
p
-
0
8
M
a
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-
0
9
S
e
p
-
0
9
M
a
r
-
1
0
S
e
p
-
1
0
M
a
r
-
1
1
S
e
p
-
1
1
I
n
d
e
x
Asi a ndex Austral i a ndex

0
200
400
600
800
1000
1200
1400
J
a
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-
9
4
J
a
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-
9
5
J
a
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-
9
6
J
a
n
-
9
7
J
a
n
-
9
8
J
a
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-
9
9
J
a
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-
0
0
J
a
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-
0
1
J
a
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-
0
2
J
a
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-
0
3
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a
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0
4
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0
5
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0
6
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0
7
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0
8
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0
9
J
a
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1
0
J
a
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-
1
1
J
a
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-
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2
U
S
$
/
t
USA W.Europe China Far-East
Source. Deutsche Bank, CFU, ABS (Asian prices average of Far-ast CS and non-CS prices)

Source. Deutsche Bank, CFU (Far-ast prices average of CS and non-CS prices)
FarEasl (nonCS avorago long producl pricos havo doclinod !0' sinco Oclobor 20!! lo
US$693/l in Fobruary 20!2 (lal non and 3' yoy, lhis doclino is noro prodoninanl in AUD
lorns, wilh FarEasl (nonCS avorago long producl pricos doclining !7' sinco Oclobor
20!! lo A$653/l in Fobruary 20!2 (4' non and !4' yoy.
Figure 20: Far-East (Import non-CIS) Iong product prices
(in A$/tonne)

Figure 21: Far-East (Import non-CIS) Iong product prices
(in US$/tonne)
0
200
400
600
800
1000
1200
1400
J
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-
9
4
J
a
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9
5
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9
6
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7
J
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8
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9
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9
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0
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1
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2
A
$
/
t
Beams M.Bar Rebar Mesh Wi re Rod

0
200
400
600
800
1000
1200
1400
J
a
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-
9
4
J
a
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-
9
5
J
a
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-
9
6
J
a
n
-
9
7
J
a
n
-
9
8
J
a
n
-
9
9
J
a
n
-
0
0
J
a
n
-
0
1
J
a
n
-
0
2
J
a
n
-
0
3
J
a
n
-
0
4
J
a
n
-
0
5
J
a
n
-
0
6
J
a
n
-
0
7
J
a
n
-
0
8
J
a
n
-
0
9
J
a
n
-
1
0
J
a
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-
1
1
J
a
n
-
1
2
U
S
$
/
t
Beams M.Bar Rebar Mesh Wi re Rod
Source. CFU, Datastrean

Source. CFU
Long product imports
Long producl inporls changod +!' yoy lo !56.4kl in OD!! (lal qoq, howovor, slill +44'
conparod lo hislorical quarlorly avorago o !03kl sinco OS96. On an annualisod basis, lho
long producls inporls doclinod 3' yoy lo 6!7.2kl in OD!! (lal qoq. n valuo lorns,
quarlorly long producl inporls changod +!' qoq and +!2' yoy lo A$!37.4n in OD!! whilo
annualisod long producl inporls incroasod +3' qoq and +3' yoy lo A$530n in OD!!.
Figure 22: AnnuaIised Iong product import - AustraIia
(Ouantity)

Figure 23: AnnuaIised Iong product import - AustraIia
(VaIue)
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Q
J
9
7
Q
D
9
7
Q
J
9
8
Q
D
9
8
Q
J
9
9
Q
D
9
9
Q
J
0
0
Q
D
0
0
Q
J
0
1
Q
D
0
1
Q
J
0
2
Q
D
0
2
Q
J
0
3
Q
D
0
3
Q
J
0
4
Q
D
0
4
Q
J
0
5
Q
D
0
5
Q
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0
6
Q
D
0
6
Q
J
0
7
Q
D
0
7
Q
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0
8
Q
D
0
8
Q
J
0
9
Q
D
0
9
Q
J
1
0
Q
D
1
0
Q
J
1
1
Q
D
1
1
t
o
n
n
e
s

-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
Q
J
9
7
Q
D
9
7
Q
J
9
8
Q
D
9
8
Q
J
9
9
Q
D
9
9
Q
J
0
0
Q
D
0
0
Q
J
0
1
Q
D
0
1
Q
J
0
2
Q
D
0
2
Q
J
0
3
Q
D
0
3
Q
J
0
4
Q
D
0
4
Q
J
0
5
Q
D
0
5
Q
J
0
6
Q
D
0
6
Q
J
0
7
Q
D
0
7
Q
J
0
8
Q
D
0
8
Q
J
0
9
Q
D
0
9
Q
J
1
0
Q
D
1
0
Q
J
1
1
Q
D
1
1
$
'
0
0
0
s

Scrap prices
US orrous scrap pricos incroasod 9.3' ron lho roconl lrough o US$4!9.5/l in ovonbor
20!! lo US$453.5/l in Fobruary 20!2 and aro 40' abovo lho hislorical avorago al US$327/l,
howovor, lhoy havo doclinod 3.6' ovor lho lasl nonlh.
Clobal scrap pricos (avorago o US, Koroa and China havo doclinod 2' non and 7' yoy lo
US$457/l. in Fobruary 20!2 (wilh 2' yoy doclino in US scrap pricos, !0' yoy Koroa and
3' yoy China.
Figure 24: US Ferrous Scrap (HMS#1) prices

Figure 25: GIobaI Scrap (HMS#1) prices
0
100
200
300
400
500
600
700
800
M
a
y
-
0
2
O
c
t
-
0
2
M
a
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-
0
3
A
u
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-
0
3
J
a
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-
0
4
J
u
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-
0
4
N
o
v
-
0
4
A
p
r
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5
S
e
p
-
0
5
F
e
b
-
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6
J
u
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-
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6
D
e
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6
M
a
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7
O
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7
M
a
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8
A
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8
J
a
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9
J
u
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-
0
9
N
o
v
-
0
9
A
p
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-
1
0
S
e
p
-
1
0
F
e
b
-
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1
J
u
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1
1
D
e
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-
1
1
U
S
$
/
m
t

0
100
200
300
400
500
600
700
800
D
e
c
-
9
7
O
c
t
-
9
8
A
u
g
-
9
9
J
u
n
-
0
0
A
p
r
-
0
1
F
e
b
-
0
2
D
e
c
-
0
2
O
c
t
-
0
3
A
u
g
-
0
4
J
u
n
-
0
5
A
p
r
-
0
6
F
e
b
-
0
7
D
e
c
-
0
7
O
c
t
-
0
8
A
u
g
-
0
9
J
u
n
-
1
0
A
p
r
-
1
1
F
e
b
-
1
2
U
S
$
/
t
USA* Korea (Pohang) Chi na - Ji angsu Provi nce
Source. Tex

Source. CFU (USA prices taken as average of Chicago, Phi|ade|phia and Pittsburgh scrap prices)
OId vs new forecasts
Following lodays rosulls, wo havo nado ninor changos lo oarnings oxpoclalions, as shown
bolow:
Figure 26: DB OST oId vs new forecasts
A$m FY12E FY13E
Old ow ' Chango Old ow ' Chango

Salos 6,332 7,4!4 !6' 7,033 3,!34 !6'

EBT
alorials 294 276 6' 47! 443 5'
Focycling 37 !2 67' 60 40 34'
ron oro 257 264 3' 4!! 403 !'
anuacluring (72 (9! 2!' !3 3! 77'
Auslralian dislribulion !2 (3 !22' 52 30 43'
Z !3 !6 !4' 23 !9 3!'
ining consunablos 97 !27 32' !!0 !29 !7'
Corporalo (27 (27 0' (27 (27 0'
Olhor (70 (43 0'
Foporlod EBT 252 255 !' 652 630 3'
Undorlying EBT 322 293 7' 652 630 3'

ol nlorosl !25 !26 !' !!5 !39 2!'
Tax 35 !4 53' !45 !33 9'
PAT including
signiicanl ilons
37 !09 26' 332 352 3'
Signiicanl lons (49 (2!
ornalisod PAT !36 !30 4' 332 352 3'

EPS !0 !0 4' 23 26 3'

Operations Review
Summary
Onoslool announcod a 4!' doclino in undorling PAT (conlinuing oporalions ron $!33n in
!H!! lo $73n in !H!2 (ahoad o guidanco or $5575n. Salos rovonuo incroasod !5' vs.
pcp lo $3.7b in !H!2, howovor, undorling EBTDA and EBT doclinod 20' and 30'
rospoclivoly vs. pcp lo $257n and $!56n rospoclivoly in !H!2 duo lo lowor oarnings in lho
ining, Auslralian Dislribulion and ow Zoaland Dislribulion sognonls, parlly osol by
highor oarnings in lho anuacluring, Focycling and ining Consunablos sognonls.
anagononl has doclarod an unrankod inlorin dividond o 3cps. anagononl has nol givon
any quanlilalivo guidanco or FY!2 duo lo uncorlain condilions.
Mining (Iron Ore)
"
Fovonuo or lho ining sognonl doclinod !0' ron $465n in !H!! lo $42!n in !H!2
prinarily duo lo lowor volunos (2.95nl in !H!2 vs. 3.06nl in !H!! and lowor nol
roalisod avorago pricos.
"
EBTDA and EBT doclinod 36' and 33' rospoclivoly vs. pcp lo $!36n and $!7!n
rospoclivoly in !H!2 nainly duo lo lowor roalizod pricos, highor oporaling cosls, a highor
proporlion o <60' Fo oro salos, and lho inpacl o a highor AUD.
"
anagononl announcod lhal lho businoss is on lrack lo achiovo lho salos largol o 6nl
in FY!2 and oxpocl iron oro donand ron China lo ronain slrong and undorpin high
pricos conparod lo hislorical lovols.
Mining ConsumabIes
"
Salos rovonuo incroasod !27' vs. pcp lo $763n in !H!2 duo lo lho conlribulion o lho
olyCop Croup acquirod on 3! Doconbor 20!0. EBT also incroasod duo lo lho sano
roason, rosulling in inprovononl in lho EBT nargin ron 6.2' in !H!! lo 3.5' in
!H!2.
"
Conparod lo lho prior six nonlhs, EBT incroasod 43' ron $44n rolocling a
signiicanl inprovononl in lho porornanco o lho Auslralian Crinding and Fail businoss.
Also EBTDA or lho acquirod olyCop group incroasod 23' ron US$43n in lho
provious six nonlhs lo US$55n.
"
anagononl oxpocl donand or grinding nodia lo ronain slrong in lho shorl lo nodiun
lorn wilh conlinuod high nolal pricos pushing oxisling ninos lo naxiniso ninoral
oxlraclion and procossing.
RecycIing
"
Fovonuo ron lho Focycling sognonl incroasod narginally by 4' vs. pcp lo $740n in
!H!2 duo lo highor avorago pricos, parlly osol by lowor volunos or bolh orrous and
non orrous scrap.
"
EBT incroasod ron a loss o $5n in !H!! lo a proil o $2n in !H!2, howovor, EBT
was advorsoly inpaclod duo lo sharp doclino in orrous and non orrous pricos and
nargins in lho Doconbor quarlor.
"
anagononl oxpocls lho US businoss lo conlinuo lo pororn woll whilo lho Auslralian
orrous narkol is oxpoclod lo ronain diicull.
Manufacturing
"
Donand ron lho rosourcos soclor and govornnonl undod civil works projocls holpod
in inprovononl o volunos, rosulling in !!' incroaso in salos rovonuo ron $!,!36n in
!H!! lo $!,263n in !H!2.
"
Undorlying EBTDA and EBT was al a loss o $3!n and (loss $75n rospoclivoly in !H!2
duo lo conlinuod woaknoss in lho narkols, highor AUD and highor raw nalorial pricos.
"
anagononl oxpocl a signiicanl inprovononl in 2H!2 porornanco wilh undorlying
EBTDA or lho businoss lo bo posilivo (oxcluding lho inpacl o lho Slool Transornalion
Plan advanco.
AustraIian Distribution
"
Lowor avorago pricos osol lho 9' incroaso in salos volunos, rosulling in lal salos
rovonuo or lho Auslralian Dislribulion sognonl al $!,!34n in !H!2.
"
Undorling EBT doclinod ron $!2n in !H!! lo a loss o $9n in !H!2 duo lo nargin
prossuro ron lowor avorago pricos.
"
anagononl oxpocl woaknoss in lho rosidonlial and nonrosidonlial conslruclion lo
conlinuo in lho shorl lorn. Howovor, conpany oxpocls a signiicanl inprovononl in
2H!2 porornanco wilh ocus on culling cosls and inproving oporalional porornanco.
New ZeaIand Distribution
"
Highor volunos rosullod in 6' incroaso in salos rovonuo ron $!49n in !H!! lo $!59n
in !H!2.
"
EBTDA and EBT doclinod !3' and 22' rospoclivoly vs. pcp lo $!0n and $3n
rospoclivoly in !H!2 prinarily duo lo nargin prossuro as a rosull o volalilily in lho ow
Zoaland dollar and lowor pricos.
"
anagononl oxpocl lho conslruclion sognonl lo ronain woak in lho shorl lo nodiun
lorn. Olhor lhan lho Chrislchurch robuild, wo oxpocl donand lovols lo ronain al curronl
lovols in lho shorl lorn.
VaIuation and risks
Our !2nonlh sharo prico largol is basod on a 3slago DCF: vACC !0', COD 5.3', COE
!3.45', FFF 6.25', Bola !.2x, TCF o 3' (discounl lo Aus CP. DB oxpocls any polonlial
raising lo bo carriod oul al a discounl lo lho provious closo, in lino wilh BSLs oquily raising
(34' discounl. Thorooro, wo havo also appliod a discounl o 34' lo our now largol prico.
Koy upsido risks or OST includo:
"
Auslralian long producl pricing incroasos
"
nprovod cosl por lonno porornanco across lho nanuacluring sognonl
"
Furlhor succossul cosloul inilialivos
"
Faslorlhanoxpoclod incroaso in rosidonlial and nonrosidonlial conslruclion aclivily
Koy downsido risks lo our viow includo:
"
vo conlinuo lo highlighl lho risk o an oquily raising duo lo lho signiicanl goodwill
wrilodown risk
"
An incroaso in lho nunbor o long producl inporls inlo Auslralia rosulling in incroasod
conpolilion
"
Conlinuod incroaso in lho AUD againsl lho USD
"
A slowor incroaso in inlornalional slool donand lhan oxpoclod
"
A docroaso in lho donand or iron oro ron Onoslools Chinoso cuslonors
"
Loworlhanoxpoclod iron oro pricos ron upconing conlracl nogolialions (givon lho
high proporlion o salos on conlracl
"
A doclino in iron oro spol pricos.

Research Contribution
Tho aulhors o lhis roporl wish lo acknowlodgo lho conlribulion nado by Sudhir Vij, an
onployoo o Evaluosorvo, a lhirdparly providor lo Doulscho Bank o oshoro rosoarch
supporl sorvicos.

Appendix 1
OnoSlool Lld OST.AX 0.32 (AUD 2! Fob !2 7




website at hllp://gn.db.con/gor/disclosuro/Disclosuro.oqsr?ricCodo=OST.AX.

conponsalion or providing a spociic roconnondalion or viow in lhis roporl. Enily Bohncko

HistoricaI recommendations and target price: OneSteeI Ltd (OST.AX)
(as of 2/2!/20!2)
!
"
#
$
%
&
'
(
)
!*
!!
!"
!#
!$
!%
!&
!'
!(
!)
0.00
0.50
!.00
!.50
2.00
2.50
3.00
3.50
4.00
4.50
S
o
c
u
r
i
l
y

P
r
i
c
o
Dalo

Slrong Buy
Buy
arkol Pororn
Undorpororn
ol Falod
Suspondod Faling
Buy
Hold
Soll
ol Falod
Suspondod Faling

2. !7/3/20!0: Downgrado lo Hold, Targol Prico Chango AUD3.40
3. 23/9/20!0: Hold, Targol Prico Chango AUD3.09
4. !2/!!/20!0: Hold, Targol Prico Chango AUD2.65
5. !5/!!/20!0: Hold, Targol Prico Chango AUD2.5!
6. !!/!/20!!: Hold, Targol Prico Chango AUD2.39
9. 30/3/20!!: Hold, Targol Prico Chango AUD2.3!
!0. !0/5/20!!: Hold, Targol Prico Chango AUD2.00
!!. !3/5/20!!: Hold, Targol Prico Chango AUD!.33
!2. 3!/5/20!!: Hold, Targol Prico Chango AUD!.96
!3. !3/7/20!!: Hold, Targol Prico Chango AUD2.05
!4. !6/3/20!!: Hold, Targol Prico Chango AUD!.55
!5. 27/9/20!!: Hold, Targol Prico Chango AUD!.20
!6. 2/!!/20!!: Downgrado lo Soll, Targol Prico Chango AUD0.90
!7. !0/!!/20!!: Soll, Targol Prico Chango AUD0.39
!3. 2!/!2/20!!: Soll, Targol Prico Chango AUD0.57
!9. !0/!/20!2: Upgrado lo Hold, Targol Prico Chango AUD0.73


buy lho slock.
slock
Notes:

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
30
!00
!20
!40
Buy Hold Soll
Auslralia Univorso


hllp://gn.db.con.


60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 250 2500
London EC2 2EO
Unilod Kingdon
Tol: (44 20 7545 3000
Deutsche Bank AG
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Doulscho Bank Placo
Lovol !6
Sydnoy, Sv 2000
Auslralia
Tol: (6! 2 3253 !234
Deutsche Bank AG
Filialo Hongkong
Hong Kong
Tol: (352 2203 3333
2!!! agalacho
Sanno Park Towor
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer

Emerging Companies

2! Fobruary 20!2
FIight Centre Ltd
Foulors: FLT.AX Bloonborg: FLT AU Exchango: ASX Tickor: FLT
Upgrados 20!2 oarnings
guidanco ainlain Buy
Raymond GonzaIez
Fosoarch Analysl
(+6! 2 3253!372
Jennifer Kruk, Ph.D
Fosoarch Analysl
(+6! 2 325326!3
jonnior.kruk@db.con
Tim PIumbe
Fosoarch Analysl
(+6! 2 3253!643
lin.plunbo@db.con

Maintain Buy, PT increased from $25.50 to $27 on higher earnings estimates
Our conviclion in our Buy call has incroasod ollowing lho rosull. vo boliovo FLT is
good valuo al curronl pricos givon ils lrack rocord o doublodigil oarnings growlh
p.a. ovor lho lasl docado and slrong balanco shool. FLT is lrading on a 20!2E PEF
o !!x and EV/EBT 7x. As long as lhoro is nol a suddon +20' drop in lho AUD
conbinod wilh a nalorial all in onploynonl lovols, wo ind il diicull lo soo
inlornalional lravol doclino anylino soon, parlicularly lo an oxlonl whoro FLT
would look oxponsivo. Buy
Salos (AUDn !,563 !,673 1,855 !,936 2,063
EBTDA (AUDn 260 233 326 355 379
ol Proil (AUDn !40 !7! 198 2!3 234
EPS (AUD !.39 !.69 1.97 2.!7 2.33
OLD EPS (AUD !.39 !.69 1.88 2.05 2.!9
' Chango 0.0' 0.0' 4.6% 5.3' 6.!'
EPS Crowlh (' - 22.0 16.0 !0.3 7.3
PEF (x !!.9 !3.0 10.9 9.9 9.2
EV/EBTDA (x 3.3 5.0 4.0 3.4 2.3
DPS (nol (AUD 0.70 0.34 1.01 !.20 !.29
Yiold (nol (' 4.3 3.3 4.7 5.6 6.0
Franking (' !00 !00 100 !00 !00
!
2
yoar ond closo

CA(P !46/04/20!!.
ResuIts

Buy
Prico al 2! Fob 20!2 21.50
52 wook rango (AUD 23.83 - 16.12
ALL OFDAFES 4,333

Key changes
Prico largol 25.50 lo 27.00 ! 5.9%
Salos (FYE !,3!3 lo !,355 ! 2.3%
EBT nargin (FYE !4.7 lo !4.3 ! 0.9%
ol proil (FYE !39.3 lo !93.0 ! 4.6%

!4
!6
!3
20
22
24
26
2/!0 5/!0 3/!0 !!/!0 2/!! 5/!! 3/!! !!/!!
Flighl Conlro Lld
Absolulo !4.! !!.3 -9.!

Stock data
Froo loal 56.00

FOE (' 24.9
FOA (' 27.2
Prico/book (x 2.5
EBT nargin (' 14.8

C
o
m
p
a
n
y

G
I
o
b
a
I

M
a
r
k
e
t
s

R
e
s
e
a
r
c
h

1H12 resuIt modestIy ahead of DB forecasts
FLT roporlod !H!2 TTV $6.2bn (vs. DB $6.2bn, Salos $357n (DB $345n, EBT
$!!3n (DB $!!0n, PBT $!20n (DB $!!4n and PAT $3!.3n (DB $73.6n. Tho
dividond was rolalivoly in lino wilh oxpoclalions al 4!cps. Posilivo surprisos woro
TTV nargin 40bps abovo DB and UK EBT nargins 300bps abovo DB. Bolh lho
US and Fosl o vorld EBT woro bolow our oxpoclalions.
Guidance upgrade indicative of strong traveI demand
FLT has upgradod ils 20!2 PBT guidanco ron $265275n lo $27!290n, drivon
by a bollor lhan oxpoclod !H!2 rosull and slrongor growlh in oulbound loisuro
lravol in January and Fobruary. vo havo incroasod our 20!2E PBT by 5' lo
$237n. vhilo wo boliovo lho conpany was likoly consorvalivo in solling ils
guidanco, wo canl bul holp lhink in 2H!2 FLT will bo cycling a hal inpaclod by
noro lhan usual nunbor o nalural disaslors.
VaIuation and risks
Our DCFbasod largol prico has incroasod ron $25.50 lo $27 por sharo drivon by
our highor oarnings oslinalos. Soo p.4 or our DCF inpuls. Koy downsido risks aro:
a roduclion in donand or inlornalional lravol, corporalo lravol could woakon,
highor unonploynonl and suslainabilily o lho rocovory in lho US division.
2! Fobruary 20!2 Enorging Conpanios Flighl Conlro Lld
Y/E 30 June 09/10 10/11 11/12E 12/13E 13/14E 14/15E
PROFIT & LOSS (A$m)
Sales revehue 1,563 1,678 1,855 1,986 2,063 2,142
EBITDA ( ihcl si ghiIicahI iIems) 260 256 326 355 379 399
DepreciaIioh/amorIisaIi oh -54 -48 -52 -57 -61 -65
EBIT (ihcl sighiIicahI iIems) 206 208 274 298 318 334
NeI ihIeresI ihcome (expehse) -5 6 13 18 22 24
Ihcome Iax expehse 59 73 89 98 105 111
AssociaIes/aII iliaIes -3 -1 0 0 0 0
MihoriIies/preI erehce dividehds 0 0 0 0 0 0
PeporIed proI iI 140 140 198 218 234 247
SighiIicahI iIems 0 -31 0 0 0 0
NeI prII (exc sgnIcanI Iems) 140 171 198.0 218.5 234.5 247
EBIT (exc sgnIcanI Iems) 206 240 274 298 318 334
CASH FLOW (A$m)
Cash Ilow Irom operaIiohs 243 163 212 313 318 335
Movement in net working capital -29 -70 -38 38 22 23
Capex -18 -40 -51 -55 -59 -62
Free cash Ilow 225 123 160 258 259 273
OIher ihvesIihg acIiviIies -12 23 0 0 0 0
EquiIy raised/(boughI back) 1 2 0 0 0 0
Dividehds paid -26 -80 -89 -114 -131 -139
+61 2 8258 2313 domihic.rose@db.com NeI ihc/( dec) ih borrowihgs 51 -10 0 0 0 0
OIher Iihahcihg cash Ilows -28 21 0 0 0 0
TIa cash I vs Irm Inancng -2 -67 -89 -114 -131 -139
+61 2 8258 1643 Iim.plumbe@db.com
NeI cash Ilow 211 79 71 144 128 134
NvemenI n neI debI/(cash) -160 -89 -71 -144 -128 -134
BALANCE SHEET (A$m)
+61 2 8258 2613 |ehhiIer.kruk@db.com Cash ahd oIher liquid asseIs 903 975 1,046 1,190 1,318 1,452
Tahgi ble I ixed asseIs 148 139 149 159 169 179
Goodwill 326 275 275 275 275 275
OIher ihIahgible asseIs 78 70 59 48 36 23
AssociaIes/ihvesImehIs 112 71 71 71 71 71
OIher asseIs 410 480 497 527 545 563
ToIal asseIs 1,978 2,010 2,098 2,270 2,414 2,563
IhIeresI bearihg debI 178 168 168 168 168 168
OIher liabiliIies 1,090 1,102 1,081 1,149 1,189 1,230
ToIal liabiliIies 1,268 1,270 1,249 1,317 1,357 1,398
Shareholders' equiIy 711 741 850 954 1,057 1,165
MihoriIies/oIher 0 0 0 0 0 0
ToIal sharehol ders' equiIy 711 741 850 954 1,057 1,165
NeI vrkng capIa -645 -575 -537 -575 -597 -620
NeI debI/(cash) -725 -807 -879 -1,022 -1,150 -1,284
RATI O ANALYSIS
52- week High/Low: A$23.83 - 16.12 Sales growIh - pcp (%) ha 7.4 10.5 7.1 3.9 3.8
EBITDA/sales (%) 16.6 17.1 17.6 17.9 18.4 18.6
US$ 2,288
EBIT/sales ( %) 13.2 14.3 14.8 15.0 15.4 15.6
PayouI raIio (%) 18.5 46.8 44.9 52.4 56.0 56.2
DCF VALUATION (A$) POA (%) 21.7 23.5 27.2 30.0 31.1 32.2
BeIa (MPP - 6.00) 1.25 POE (%) 21.2 23.5 24.9 24.2 23.3 22.2
DebI/mkI value raIio (%) 10.0 OperaIihg PeIurh oh CapiIal (%) hm hm hm hm hm hm
Tax raIe (%) 29.2 34.3 31.0 31.0 31.0 31.0
Capex/sales (%) 1.1 2.4 2.8 2.8 2.8 2.9
NeI val ue per share ($) Capex/depreciaIioh (x) 0.4 1.1 1.2 1.2 1.2 1.2
Price/NPV (x) 0.80 NeI debI/equiIy ( %) -102.1 -109.0 -103.4 -107.2 -108.8 -110.2
NeI ihIeresI cover (x) 41.1 -39.0 -21.5 -16.4 -14.7 -13.7
16
15
18
17
6.1
191
1
4.8
211
20 14 9
226 221
21
18
26
19
34
17
29
4.0 3.4 2.8
3.3 4.0
2.3
232
2.8
19
2
-8
FIight Centre Ltd
P/CFPS (x)
DPS(A$)
Company description
1,468
Major contributors to EBIT
NorIh America
A$27.00
EV/EBITDA (x)
Buy
Price/BV (x)
PeuIers: FLT.AX Bloomberg: FLT AU
Pr ice as aI 20-Feb
TargeI pr ice
1,779
6.8
8.6
174
Dividehd yield (%)
AusIralia
EV/EBIT (x)
PesI oI World/OIher
Jennifer Kruk
Compahy websiIe
Tim PIumbe
FlighI CehIre LimiIed operaIes as a reIail Iravel
agehcy ih AusIralia. The Compahy operaIes close
Io 1200 ouIleIs IhroughouI AusIralia ahd
ihIerhaIiohally ihcludihg New Zealahd, Hohg
Kohg, SouIh AIrica, Cahada ahd Ihe UhiIed
Kihgdom. The Compahy's agehcies ahd brahds
ihclude FlighI CehIre, Travel AssociaIes ahd
SIudehI Fl ighIs.
Research Team
Domi nic Rose
Raymond GonzaIez
hIIp:/ /www.IlighIcehIre.com
27.00
UhallocaIed
932 1,063 1,199 1,306
5.1
A$21.50
1.84
2.7
2.03 2.25
5.6 6.0 4.7
2.53 2.31
3.8
2.98
10.2
4.3
1.010
6.9
3.107
1.200
6.5 6.8
0.580 1.290
3.327
6.8 13.6
0.840 0.700
1.388 1.694
3.152 2.101
1.363
11.9
EPS FD (A$)
OperaIihg CFPS (A$) 1.617 2.413
8.8 9.9 10.9 12.1 9.2 16.0
Normalised EPS (A$)
Asia Pacific
Equity Research
SUMMARY
8.8 13.0
1.965 1.382
9.9 9.2
22.0
10.9
10.3 16.0
Tourism & Leisure P/E raIio FD (x)
2.452 2.327
AusIralia
2.169
ha 5.4 7.3
2.452 2.327 2.169 1.965
14%
11%
-9.1%
-15% -10% -5% 0% 5% 10% 15% 20%
AbsoIute PriceReturn (%)
1m
3m
12m
0
2
4
6
8
10
12
14
16
18
20
10 11 12E 13E 14E 15E
EBI TDA/sales (%)
EBI T/ sales (%)
Trends
0
5
10
15
20
25
30
35
10 11 12E 13E 14E 15E
POE (%) POA(%)
op POC (%)
Return Ratios (%)
-112
-110
-108
-106
-104
-102
-100
-98
-96
-1400
-1200
-1000
-800
-600
-400
-200
0
10 11 12E 13E 14E 15E
NeIdebI / (cash) (AUD m)
NeIdebI/equiIy (%)
0.70
0.80
0.90
1.00
1.10
1.20
1.30
1.40
2/07 2/08 2/09 2/10 2/11 2/12

Key points on 1H12 resuIt + guidance upgrade
Tho rosull was nodoslly (c3' o our orocasl. Howovor, lho koy pioco o nows ron lho
rosull was lho upgrado lo guidanco ron 3!2' PBT growlh lo !0!3'. Conorally, wo
lhough lho rosull was o good qualily wilh vory ow woak poinls. Tho koy poinls ron lho
rosull woro:
#
PBT grow !3' ovor pcp on lolal lransaclion valuo (TTV growlh o 9'. Oulbound loisuro
and corporalo lravol in Auslralia woro slrong as woll as slrong growlh in lho UK and lho
US dospilo AUD woaknoss.
#
TTV nargin was 40bps highor lhan wo had orocasl, which could noan loss discounling.
EBT nargin was largoly in lino wilh our orocasl.
#
UK rovonuo growlh was slighlly loss lhan wo had orocasl, bul lhis was noro lhan osol
EBT nargins boing 300bps highor lhan oxpoclod. vo lhink lhis was drivon lo an oxlonl
by oporaling lovorago. During 2H!! lho UK narkol had slowod alor rocording vory
slrong !H!! rovonuo growlh. FLT had lhon addod capacily, which nogalivoly inpaclod
nunbors inlo a slowing rovonuo nunbor. vo suspocl lhis rovorsod in !H!2
nolwilhslanding a slrongor AUD.
#
Auslralian TTV growlh (9' and EBT nargins (!9.3' woro roughly in lino wilh our
orocasl. FLT connonlod lhal !O!2 loisuro lravol growlh was vory slrong only lo slow
narkodly in 2O!2. Howovor, loisuro lravol has bouncod back vory slrongly in January
and Fobruary, which along wilh good orward bookings and onquiry lovols woro lho koy
roason bohind FLT upgrading ils oarnings guidanco.
#
Oporaling cash low was bollor lhan oxpoclod, howovor, lhis was noro lining rolalod.
Thoro was a +$250n lurnaround in !H/2H oporaling cash low in 20!!. vhilo wo donl
oxpocl il lo bo lhis pronouncod, lhoro should slill bo a signiicanl swing.
#
ol dobl al lho ond o lho poriod was $!47n, up ron $35n pcp. vo oxpocl nol cash al
lho ond o Juno lo bo bolwoon $250300n or $2.50 lo $3.00 por sharo.
Investment thesis
Our Buy raling is unchangod. Our prico largol has incroasod lo $27.00 ron $25.50 prinarily
as a rosull o our highor oarnings orocasls. vo havo upgradod our 20!2 PBT orocasl by 5'
lo $237n, which is al lho uppor ond o FLTs guidanco o $27!290n. Our 20!3 and 20!4
orocasls al PBT lovol aro up by 6'.
FLT is lrading al 20!2E PEF o !!x and an EV/EBT o undor 7x (wo adjusl lho EV or clionl
cash. vo boliovo FLT is good valuo al curronl pricos givon lho conpanys hislory o annual
doublo digil oarnings growlh ovor lho lasl docado (wilh lho oxcoplion o a couplo o yoars,
slrong narkol posilions, vory slrong balanco shool and orocasl doublo digil oarnings growlh
again in 20!2. vo also boliovo lho businoss is vory woll nanagod.
O courso, lho koy quoslion is wholhor 20!2 could roprosonl a cyclical poak in Auslralian
oulbound lravol parlicularly in lighl o lho slrong AUD. n iguro 3 in lho appondix soclion o
lhis roporl wo conparo FLTs Auslralian TTV growlh againsl lho AUDUSD and olhor aclors
such as consunor conidonco and unonploynonl lovols ovor lho lasl lon yoars. vhal wo
concludo ron lhis dala is lhal you nood lo soo a suddon +20' drop in lho valuo o lho AUD
couplod wilh a nalorial drop in consunor conidonco and an incroaso in lho unonploynonl
ralo booro lhoro is a signiicanl inpacl on FLTs Auslralian TTV growlh. vo oxporioncod lhis
in 2009. vo donl lhink lhis will bo a aclor anylino soon.
vo do rocognizo lhal lho slrong AUD oxchango ralo (againsl nany curroncios has a posilivo
inpacl on donand or inlornalional lravol. As long as lhoro is nol a suddon drop, il is diicull
lo soo donand or inlornalional lravol doclino anylino soon, parlicularly lo an oxlonl whoro
FLT boconos oxponsivo.
vo boliovo FLTs 20!2 oarnings guidanco is consorvalivo (prudonlly o courso. vo do
rocognizo lhoro is a long way lo go yol and condilions can chango, howovor, wo canl holp
bul ool 2H!! was inpaclod by noro lhan lho usual nunbor o lsunanis, oarlhquakos, loods
and a signiicanl slowdown in lho UK division anpliiod by incroasing capacily al lho sano
lino. n addilion, wo lhink lho prossuro is building on FLT lo inplononl capilal nanagononl
inilialivos (noro likoly in 20!3 undorpinnod by vory slrong balanco shool.
Our conviclion in our Buy call is slrongor ollowing lho rosull basod on FLTs curronl sharo
prico and our viow lhal wo aro nol likoly lo soo a suddon drop in lho valuo o lho AUD
anylino soon.
Our DCFbasod largol prico has incroasod ron $25.50 lo $27.00 por sharo drivon prinarily
by our highor oarnings oslinalos. Our DCF inpul assunplions aro unchangod: vACC !2.6'
bola !.25, !0' goaring, oquily risk proniun 6', a risk roo ralo o 6.25' and a lorninal
growlh ralo o 3' (noninal CDP assunplion.
Our prico largol is oqual lo our valualion and inplios a 20!2E PEF o !3.6x and a 20!2E PEF
o !2.4x. FLTs avorago !yoar orward PEF sinco 2005 (sourco: Bloonborg is !4.3x.
Risks
Koy downsido risks lo our oarnings oslinalos and valualion aro:
#
A roduclion in lho donand or inlornalional. This could bo drivon by lho consunor/nacro
onvironnonl or onoo global shocks (polilical unrosl, largoscalo lorrorisn allacks,
conlagious disoaso. Unonploynonl is also a koy drivor and lhis doos look liko il has lho
polonlial lo incroaso oulsido o lho nining induslry.
#
Should lhoro bo a suddon and prolongod slop chango (c20' in lho AUDUSD oxchango
ralo oulsido o ocononic aclors, lhis is likoly lo nako donoslic holidays noro allraclivo,
which would likoly havo a nogalivo inpacl on FLTs rovonuo growlh proilo. Uncorlainly
also has an oocl on donand.
#
Suslainabilily o lho rocovory in lho US: FLT achiovod proilabilily wilhin ils US division in
20!! and wo havo orocasl a conlinuod inprovononl. Civon lho uncorlainly o US nacro
condilions, il is diicull lo orocasl lho noarlorn suslainabilily o lhis inprovononl.
Changes to earnings
Prior lo lho !H!2 rosull, 20!2 consonsus oslinalos woro: Salos $!397n, EBTDA $3!5n,
EBT $263n, PBT $275n and PAT $!92n. 20!3: Salos $2022n, EBTDA $336n, EBT
$233n, PBT $299n, and PAT $209n (sourco: Bloonborg Financo LP.
Koy changos lo oarnings aro -
#
vo havo incroasod our UK EBT assunplions basod on lho slrong !H!2 rosull.
#
vo havo incroasod our orlh Anorican salos assunplions basod on !H!2 rosull.
#
Ovorall, our 20!2 PBT orocasl is al lho lopond o FLTs rovisod $270290n guidanco.
June y/e (A$m)
Old Est. New Est. Change Old Est. New Est. Change
Total Transaction Value (TTV) A$m A$m % A$m A$m %
Australia 7799.2 7875.7 1.0% 8189.2 8466.4 3.4%
North America 1604.0 1766.5 10.1% 1724.3 1943.1 12.7%
United Kingdom 1181.6 1159.9 -1.8% 1329.3 1275.9 -4.0%
Rest of World/Other 2830.8 2680.6 -5.3% 3113.8 3082.7 -1.0%
Operating Segment
Revenue 1813.0 1854.6 2.3% 1902.0 1985.6 4.4%
Operating costs -1496.0 -1528.4 2.2% -1560.6 -1630.6 4.5%
EBITDA 317.0 326.2 2.9% 341.5 355.0 4.0%
D&A -51.4 -51.9 1.1% -55.4 -56.6 2.1%
EBIT 265.6 274.3 3.3% 286.1 298.5 4.3%
Net Interest expense 8.7 12.7 46.8% 13.1 18.2 38.3%
Pre-tax profit 274.3 287.0 4.6% 299.2 316.7 5.8%
Income tax expense -85.0 -89.0 4.6% -92.8 -98.2 5.8%
NPAT before assoc. 189.3 198.0 4.6% 206.5 218.5 5.8%
Associates -0.3 -0.3 0.0% 0.2 0.2 0.0%
NPAT ( pre Sig items) 189.3 198.0 4.6% 206.5 218.5 5.8%
Signif icant items 0.0 0.0 - 0.0 0.0 -
NPAT 189.3 198.0 4.6% 206.5 218.5 5.8%
EPS 187.8 196.5 4.6% 204.9 216.9 5.8%
DPS 97.0 101.0 4.1% 101.5 120.0 18.2%
Divisional Sales
Australia 982.7 1016.3 3.4% 1015.5 1068.2 5.2%
North America 192.5 216.3 12.4% 215.5 242.9 12.7%
United Kingdom 156.6 155.4 -0.8% 172.8 165.9 -4.0%
Rest of World / Other 481.2 466.7 -3.0% 498.2 508.6 2.1%
Inter-segment eliminations 0.0 0.0 - 0.0 0.0 -
Total sales 1813.0 1854.6 2.3% 1902.0 1985.6 4.4%
Divisional EBIT
Australia 203.4 210.6 3.5% 212.7 221.1 3.9%
North America 8.4 9.2 8.8% 11.8 14.3 21.6%
United Kingdom 17.6 20.0 13.3% 20.8 20.0 -4.0%
Rest of World / Other 21.1 17.9 -15.4% 25.0 25.7 2.7%
Unallocated 15.0 16.6 15.8 17.4
Total EBIT 250.6 257.7 2.8% 270.3 281.1 4.0%
EBIT Margin 13.8% 13.9% 7 bps 14.2% 14.2% -6 bps
FY12 FY13
1H12 resuIt detaiI
AdditionaI key points:
#
Fosl o vorld was lowor lhan our orocasl prinarily duo lo lho inpacl o lho slrong AUD
on lranslalion o proils.
#
ol inlorosl incono was highor lhan oxpoclod drivon by bollor oporaling cash low.
#
osl counlrios whoro FLT oporalo including Auslralia onjoy soasonally slrongor 2H
oarnings.
#
Tho US !H oarnings aro soasonally woakor, nonolholoss, lho loss was groalor lhan wo
had oxpoclod parlicularly alor you lako inlo accounl lho slrongor AUD. FLT aro oxpocl
20!2 EBT or lhis division lo bo c$5n. vo aro orocasling closor lo $9n as wo oxpocl
lho businoss lo do bollor in lino wilh slrongor ocononic condilions. FLT oxpocls lho
loisuro businoss lo bo woll inlo lho black in 20!2 conparod lo a nodosl loss in 20!!.
#
Soo iguro 2 bolow
Figure 2: 1H12 resuIt detaiI
June y/e (A$m) 1H11
Reported Reported vs. pcp DBf vs. 1H11a
Total Transaction Value (TTV) A$m A$m % A$m %
Australia 3390.8 3697.9 9.1% 3687.5 0.3%
North America 586.4 724.9 23.6% 630.4 15.0%
United Kingdom 522.1 563.7 8.0% 574.3 -1.9%
Rest of World/Other 1169.0 1194.2 2.2% 1344.4 -11.2%
Group P&L -
Revenue 795.3 857.4 7.8% 844.9 1.5%
Operating costs -674.2 -719.9 6.8% -709.2 1.5%
EBITDA 121.1 137.5 13.5% 135.7 1.3%
D&A -23.3 -24.9 6.5% -25.7 -3.2%
EBIT 97.8 112.6 15.2% 110.1 2.3%
Net Interest expense 3.6 7.0 93.4% 3.9 81.7%
Pre-tax profit 101.4 119.7 18.0% 113.9 5.0%
Income tax expense -30.6 -38.1 24.5% -35.3 8.0%
NPAT before assoc. 70.8 81.5 15.2% 78.6 3.7%
Associates -0.3 -0.3 -14.7% 0.0 -
NPAT ( pre Sig items) 70.5 81.3 15.3% 78.6 3.4%
Signif icant items 0.0 0.0 - 0.0 -
NPAT 70.5 81.3 15.3% 78.6 3.4%
EPS 69.9 81.0 15.9% 78.0 3.8%
DPS 36.0 41.0 13.9% 42.0 -2.4%
Divisional Sales -
Australia 440.1 479.5 9.0% 464.6 3.2%
North America 83.2 91.3 9.7% 75.6 20.7%
United Kingdom 72.0 76.4 6.1% 76.1 0.4%
Rest of World / Other 200.1 210.3 5.1% 228.5 -8.0%
Inter-segment eliminations 0.0 0.0 - 0.0 -
Total sales 795.3 857.4 7.8% 844.9 1.5%
Divisional EBIT -
Australia 85.0 92.5 8.8% 89.4 3.4%
North America -7.0 -3.3 -52.3% -1.5 120.6%
United Kingdom 8.9 10.5 18.6% 8.0 31.6%
Rest of World / Other 6.6 6.4 -3.0% 9.1 -30.5%
Unallocated 4.3 6.6 51.9% 5.0 31.8%
Total EBIT 97.8 112.6 15.2% 110.1 2.3%
EBIT Margin 12.3% 13.1% 6.8% 13.0% 11 bps
1H12 Reported 1H12 DBf
Source. Deutsche Bank, Conpan, nfornation
Appendix
Figuro 3 bolow conparos FLTs Auslralian TTV growlh againsl olhor indicalors such as lho
AUD/USD oxchango ralo, onploynonl, consunor conidonco indox, apparol salos, and
inlornalional doparluros.
Figure 3: AustraIian TTV growth comparison anaIysis
2000 200! 2002 2003 2004 2005 2006 2007 2003 2009 20!0 20!!
FLT Auslralian TTV ($n !,740 2,039 2,5!5 2,992 3,735 4,423 4,335 5,493 6,424 5,753 6,40! 7,000
TTV growlh !7.2' 23.3' !9.0' 26.5' !7.0' !0.3' !2.5' !6.3' !0.4' !!.2' 9.4'
Source: Company reports
AUDUSD 0.597 0.5!! 0.564 0.674 0.699 0.762 0.743 0.349 0.959 0.307 0.34! !.072
AUDUSD chango !4.3' !0.2' !9.5' 3.3' 9.0' 2.5' !4.3' !2.9' !5.9' 4.2' 27.5'
Source: Iress
Unonploynonl 6.2 6.9 6.5 6.! 5.5 5.0 4.3 4.3 4.2 5.3 5.! 4.9
Unonploynonl chango !!.3' 5.3' 6.2' 9.3' 9.!' 4.0' !0.4' 2.3' 33.!' !2.!' 3.9'
Source: ABS
Enploynonl 93.3 93.! 93.5 93.9 94.5 95.0 95.2 95.7 95.3 94.2 94.9 95.!
Enploynonl chango 0.3' 0.5' 0.4' 0.6' 0.5' 0.2' 0.5' 0.!' !.7' 0.7' 0.2'
Source: ABS
Consunor Con (av. !05.9 !00.2 !03.6 !06.3 !!5.0 !!6.2 !06.2 !03.5 !03.! 33.3 !!4.7 !09.2
Consunor Con chango 5.3' 3.4' 2.!' 3.!' !.!' 3.6' 2.2' 5.0' !4.3' 29.3' 4.3'
Source: Westpac-Melbourne Institute
Clolhing/Accos./Foolwoar !!.3 !!.9 !2.9 !3.9 !4.9 !5.7 !6.! !7.2 !3.2 !9.0 !9.3 !9.3
Clolhing/Accos./Foolwoar chango 0.7' 9.2' 7.3' 7.6' 4.9' 2.9' 6.5' 6.!' 4.3' !.7' 0.2'
Source: ABS
nlornalional Doparluros 3.34 3.59 3.36 3.29 3.94 4.59 4.3! 5.!3 5.70 5.34 6.73 7.4!
nlornalional Doparluros growlh 7.6' 6.3' 2.2' 20.0' !6.3' 4.9' 6.6' !!.!' 2.5' !6.!' 9.3'
Source: ABS
Figure 4: AUDUSD vs FLT AustraIian TTV growth
!
"!
#!!
#"!
$!!
$"!
%!!
%"!
&!!
&"!
$!!! $!!# $!!$ $!!% $!!& $!!" $!!' $!!( $!!) $!!* $!#! $!##
+,-./012345647.--8 /9:9;:
Source. Conpan, reports, ress
Appendix 1
Flighl Conlro Lld FLT.AX 2!.50 (AUD 2! Fob !2 A


website at hllp://gn.db.con/gor/disclosuro/Disclosuro.oqsr?ricCodo=FLT.AX.


HistoricaI recommendations and target price: FIight Centre Ltd (FLT.AX)
(as of 2/2!/20!2)
#
$
%
0.00
5.00
!0.00
!5.00
20.00
25.00
30.00
S
o
c
u
r
i
l
y

P
r
i
c
o
Dalo

Slrong Buy
Buy
arkol Pororn
Undorpororn
ol Falod
Suspondod Faling
Buy
Hold
Soll
ol Falod
Suspondod Faling

2. 2!/2/20!!: Buy, Targol Prico Chango AUD27.00
3. 23/3/20!!: Buy, Targol Prico Chango AUD25.50

buy lho slock.
slock
Notes:

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
30
!00
!20
!40
Buy Hold Soll
Auslralia Univorso


hllp://gn.db.con.


60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 250 2500
London EC2 2EO
Unilod Kingdon
Tol: (44 20 7545 3000
Deutsche Bank AG
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Doulscho Bank Placo
Lovol !6
Sydnoy, Sv 2000
Auslralia
Tol: (6! 2 3253 !234
Deutsche Bank AG
Filialo Hongkong
Hong Kong
Tol: (352 2203 3333
2!!! agalacho
Sanno Park Towor
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer

Emerging Companies

2! Fobruary 20!2
REA Group Ltd
Foulors: REA.AX Bloonborg: REA AU Exchango: ASX Tickor: REA
Fosull slrong bul prico rolocls
qualily o businoss Hold
Tim PIumbe
Fosoarch Analysl
(+6! 2 3253!643
lin.plunbo@db.con
Raymond GonzaIez
Fosoarch Analysl
(+6! 2 3253!372
Dominic Rose
Fosoarch Analysl
(+6! 2 325323!3
doninic.roso@db.con

We Iove the business..... but time to take a breather
Tho rosulls provod lho rosilionco o lho Auslralian businoss in a subduod proporly
narkol, laly lurnod proilablo and pricing incroasos undorpin growlh ovor lho noxl
!2 nonlhs. Howovor, whilsl wo slill boliovo FEA oors ono o lho bosl long lorn
growlh proilos o lho onlino classiiods (bolh in quanlun and qualily, on a FY!3E
PE o !3x (!7x cash adj. wo lhink lhis is curronlly roloclod in lho prico -Hold.
Salos (AUDn !94 233 275 3!2 347
EBTDA (AUDn 73 !03 126 !49 !7!
ol Proil (AUDn 5! 69 82 !0! !!3
EPS (AUD 0.39 0.52 0.62 0.75 0.36
OLD EPS (AUD 0.39 0.52 0.63 0.77 0.37
' Chango 0.0' 0.0' -1.8% 2.2' 0.3'
EPS Crowlh (' 56.3 34.5 18.5 20.3 !4.7
PEF (x 23.! 22.6 21.9 !3.! !5.3
EV/EBTDA (x !4.0 !3.3 12.9 !0.7 9.0
DPS (nol (AUD 0.!6 0.26 0.26 0.30 0.35
Yiold (nol (' !.3 2.2 1.9 2.2 2.6

CA(P !46/04/20!!.
Recommendation Change

HoId
Prico al 2! Fob 20!2 13.61
52 wook rango (AUD 14.05 - 10.61
ALL OFDAFES 4,368

Key changes
Faling Buy lo Hold "
Prico largol !3.50 lo !4.!0 ! 4.4%
Salos (FYE 275 lo 275 ! 0.1%
EBT nargin (FYE 4!.0 lo 40.! " -2.0%
ol proil (FYE 34.3 lo 32.5 " -2.2%

3
9
!!
!2
!4
!5
2/!0 5/!0 3/!0 !!/!0 2/!! 5/!! 3/!! !!/!!
FEACroup Lld
ALLOFDAFES (Fobasod
Absolulo 7.8 8.3 8.2

Stock data
Froo loal 29.00

FOE (' 36.5
FOA (' 102.3
Prico/book (x 6.9
EBT nargin (' 40.1

C
o
m
p
a
n
y

G
I
o
b
a
I

M
a
r
k
e
t
s

R
e
s
e
a
r
c
h

1H12 NPAT (normaIized) growth of +23% - in Iine with DB expectations
FEA rocordod solid !H!2 PAT (pro sig. ilons o $39.2n (+23', in lino wilh our
oxpoclalions (DB = $39.4n. Olhor koy nolrics: Fovonuo +!3' lo $!35n (DB =
$!32n, EBTDA +24' lo $59.6n (DB = $59.0n, Dividond !2.5cps (bolow
oxpoclalions, DB= !5cps. Koy posilivos: (! Auslralian rovonuo growlh o !6',
dospilo a subduod proporly narkol, (2 Display advorlising growlh o 3!' as ad
spond conlinuos lo shil onlino, (3 laly rocording 52' rovonuo growlh and lho
irsl ovor posilivo EBTDA (+$0.3n, and (4 pricing incroasos curronlly boing
inplononlod which should undorpin growlh in 2H!2 and FY!3. Thoro woro sono
aroas whoro wo woro oxpocling noro: (! Oporaling lovorago - wo oslinalo lhal
lhis was $0.5! ron ovory incrononlal $! in Auslralia (vs $0.67 in 2H!!, (2
Dividond payoul o 40' dospilo $!54n cash on lho balanco shool, and (3 whilsl
nol unoxpoclod in curronl onvironnonl, subs oll by ~500 in bolh Aus and laly.
Growth profiIe stiII Iooks strong in FY13
vo havo narginally pullod back our FY!2 ops orocasl by !' and FY!3E by 2'.
Howovor, wo conlinuo lo highlighl lho robusl growlh proilo ops growlh o !9'
in FY!2E and 22' in FY!3E, drivon by conlinuod slronglh wilhin lho Auslralian
businoss and laly slarling lo gain lraclion.
$14.10 price target, risks
FEA is lrading al !3x FY!3E oarnings (!7x oxc. cash. Our prico largol o $!4.!0
(prov. $!3.50 is basod on our DCF valualion. (Koy assunplions: goaring 20',
bola !.20, vACC !!.3', TCF 4.0' (CP plus conlinuod slruclural growlh.
Upsido risks: lurnaround in subscribor nunbors and nonolizalion o nobilo.
Downsido risks: lhroal o conpolilivo aclivily and acquisilion risk (Soo pp. 3&6.
2! Fobruary 20!2 Enorging Conpanios FEA Croup Lld
Y/E 30 June 06/07 07/08 08/09 09/10 10/11 11/12E 12/13E 13/14E 14/15E
PROFIT & LOSS (A$m)
Sales revehue 107 155 186 194 238 275 312 347 381
NeI ihIeresI ihcome (expehse) 0 0 0 1 5 7 10 14 18
PeporIed proIiI 15 22 1 47 69 85 101 118 134
SighiIicahI iIems 0 0 -31 -4 0 2 0 0 0
CASH FLOW (A$m)
Movement in net working capital 0 -5 3 3 1 -8 -3 -3 -3
Capex -3 -3 -4 -4 -4 -4 -4 -4 -5
Free cash Ilow 18 13 28 57 73 88 110 128 145
+61 2 8258 1643 Iim.plumbe@db.com
OIher ihvesIihg acIiviIies -30 -26 -2 -7 -15 -25 -17 -17 -18
Dividehds paid 0 0 0 -4 -10 -33 -36 -42 -50
NeI ihc/(dec) ih borrowihgs 5 -6 -1 -1 0 0 0 0 0
OIher Iihahcihg cash Ilows 3 19 8 -1 1 0 0 0 0
TIa cash Ivs Irm Inancng 8 12 7 -3 -7 -18 -14 -16 -19
NeI cash Ilow -3 -1 32 47 50 45 80 95 108
NvemenI n neI debI/(cash) 8 -5 -33 -47 -50 -45 -80 -95 -108
BALANCE SHEET (A$m)
+61 2 8258 2613 |ehhiIer.kruk@db.com
Goodwill 78 93 47 43 42 42 42 42 42
OIher asseIs 24 32 41 35 41 50 56 59 65
ToIal asseIs 134 158 143 184 248 332 433 547 679
NeI vrkng capIa 3 8 8 10 11 19 22 25 29
NeI debI/(cash) -2 -7 -41 -88 -138 -182 -262 -357 -464
RATIO ANALYSIS
52-week High/Low: A$14.05 - 10.61
Sales growIh - pcp (%) 77.6 44.6 20.2 4.2 22.7 15.4 13.3 11.2 10.0
EBITDA/sales (%) 22.1 23.6 26.5 40.1 43.3 45.6 47.7 49.2 50.3
US$ 1,907
EBIT/sales (%) 17.4 18.9 22.6 36.5 38.9 40.1 42.4 43.9 45.3
PayouI raIio (%) 0.0 0.0 0.0 25.1 48.8 39.9 35.7 35.5 37.2
BeIa (MPP - 6.00) 1.20
POE (%) 24.7 29.0 35.8 44.7 42.0 36.5 33.3 29.7 26.5
OperaIihg PeIurh oh CapiIal (%) 18.8 22.2 -54.1 174.6 226.3 169.2 212.5 249.3 278.5
Tax raIe (%) 40.0 45.7 165.8 33.3 30.6 27.8 28.9 29.0 29.9
Capex/sales (%) 3.0 1.9 2.2 2.1 1.6 1.4 1.3 1.2 1.2
Price/NPV (x) 0.97
NeI debI/equiIy (%) -2.4 -6.4 -43.9 -63.5 -69.8 -67.3 -72.2 -76.9 -80.3
NeI ihIeresI cover (x) hm hm hm -66.6 -20.2 -15.9 -13.5 -11.3 -9.7
-1
-3
2
1
-1
3
15.2
112
0
14.8
130
0 0 0
97 149
0
1
3
4
5
2
18
0
4
19
13.0 10.8 9.1
10.1 12.1
7.7
177
8.6
2
-3
-3 0 -1
1
-7 -4
1 0
-7 IhIerhaIiohal/OIhers
0
REA Group Ltd
P/CFPS (x)
DPS (A$) 0.000
30.3
Company description
8.48
0
84
1,413 1,502
62
-13
35.7
Major contributors to EBITDA
UK -10
A$14.10
EV/EBITDA (x)
HoId
Price/BV (x)
PeuIers: PEA.AX Bloomberg: PEA AU
Price as aI 20-Feb
TargeI price
-8
1,464
18.8
9.66
1,523
20.7
92
52.2
5.98
AusIralia 39
1,530
2.3
41.7
0.0
64.3
EV/EBIT (x)
IIaly
Jennifer Kruk
Compahy websiIe
Dominic Rose
PEA primarily provides ohlihe properIy classiIied
adverIisihg services ih AusIralia, IIaly,
Luxembourg ahd Hohg Kohg. PEA also has web
developmehI ahd oIher ihIerheI relaIed service
oIIerihgs.
Research Team
Raymond GonzaIez
Tim PIumbe
hIIp://www.realesIaIe.com.au
14.07
Luxembourg
1,480 1,545 1,600
81.4
1,632
30.4 13.7
A$13.61
3.37
2.9
4.14 5.26
2.2 2.6 1.9
6.92 8.59
2.2
8.02
19.6
1.8
0.256
16.0
0.851
0.303
12.7 14.0
0.388 0.350
1.071
47.3 17.5 19.2 20.3
0.000 0.260 0.100 0.160
0.390 0.525
34.0
33.7
0.972 0.693
0.369 0.171
17.3 23.1
EPS FD (A$) 0.116
OperaIihg CFPS (A$) 0.166 0.583 0.247 0.469 0.123
44.4
0.250
43.4 589.4
0.118 0.173
0.007
42.8
47.0
14.2 18.1 21.3 24.4 15.8 22.6
Normalised EPS (A$)
Asia Pacific
Equity Research
SUMMARY
14.2 22.6
0.639 0.525
18.1 15.8
34.5
21.9
20.8 18.5
Media P/E raIio FD (x)
0.959 0.862
AusIralia
0.751
42.0 56.3 11.3 14.7
0.959 0.862 0.751 0.622
7.8%
8.3%
8.2%
7% 8% 8% 8% 8% 8%
1m
3m
12m
0
10
20
30
40
50
60
08 09 10 11 12E 13E 14E 15E
EBITDA/sales (%)
EBIT/sales (%)
Trends
(100)
(50)
0
50
100
150
200
250
300
08 09 10 11 12E 13E 14E 15E
POE (%) POA (%)
op POC (%)
Return Ratios (%)
-90
-80
-70
-60
-50
-40
-30
-20
-10
0
-500
-450
-400
-350
-300
-250
-200
-150
-100
-50
0
08 09 10 11 12E 13E 14E 15E
NeI debI/equiIy (%)
1.00
1.20
1.40
1.60
1.80
2.00
2.20
2.40
2.60
2.80
2/07 2/08 2/09 2/10 2/11 2/12

OutIook
Civon lho roconl sharo prico approcialion (+!0' sinco lho slarl o 20!2 wo lhink lhal al !3x
FY!3 oarnings (!7x adjuslod or cash lho risk/rolurn is roasonably roloclod in lho curronl
sharo prico. As such wo havo downgradod ron Buy lo a Hold roconnondalion wilh a
$!4.!0 prico largol (proviously $!3.50.
vo slill considor FEA lo havo ono o lho bosl long lorn growlh proilos o lho onlino
classiiods, bolh in quanlun and qualily. n our viow, lho Auslralian businoss has provon lho
rosilionco o lho businoss nodol in a subduod proporly narkol, display advorlising is gaining
lraclion, and laly has inally roachod proilabilily. Furlhornoro, lho noxl round o prico
incroasos aro curronlly boing inplononlod which should undorpin our growlh orocasls inlo
FY!3. Thoso woro lho posilivos ron lho rosulls.
vo boliovo lhal lho Auslralian businoss should bo ablo lo achiovo a highor dogroo o
oporaling lovorago lhan is curronlly boing roporlod. vo oslinalo lhal lho only $0.5! ron
ovory incrononlal $! droppod lo lho bollon lino in !H!2 (wo look al Aus + corporalo - wo
lhink lhal lhis should oasily bo $0.65.
vo woro slighlly surprisod lo soo lho dividond payoul ralio back down al 40' givon lhal
cash has incroasod lo $!54n. This, conbinod wilh incroasod discussion around slralogic
invoslnonls suggosls lhal an oshoro acquisilion nay nol bo ar o.
VaIuation
vo havo basod our $!4.!0 prico largol on our $!4.07 DCF valualion. vhilsl FEA is curronlly
in a nol cash posilion, wo assuno a bollor goaring lovol o 20' is usod in lho nid lo long
lorn. Our olhor koy assunplions includo bola !.20, vACC !!.3', TCF 4.0' (CP + ongoing
slruclural chango.
Risks
n our viow lho nain upsido risks acing FEA includo a lurnaround in lho subscribor nunbors
and aslor lhan oxpoclod nonolizalion o nobilo / display advorlising. Downsido risks includo
lho lhroal o conpolilivo aclivily, inplononlalion risk in oshoro oporalions, acquisilion risk
givon lho largo cash holding and a sovoro / prolongod downlurn in lho proporly narkol.
ComparabIes
On !3x FY!3 oarnings (!7x cash adjuslod FEA is lrading al lho lop ond o poors.
Figure 1: ComparabIe vaIuations
!"#$ %&$''
!"#$%&'(&'()*''+,-.+-,+ ()*+, -".' /01/ /012 /01/ /012 /01/ /012 /01/ /012
C8Z carsales.com LLd (u8) Pold $3.40 3.13 1201 11.9 10.1 12.3 10.3 18.4 13.8 13 16
SLk Seek LLd (u8) 8uy $7.30 3.70 1921 9.9 8.2 11.0 9.0 13.7 12.7 16 24
W1l WoLlf.com Poldlngs LLd (u8) Pold $3.90 4.11 870 10.9 9.7 11.9 10.3 13.9 14.0 7 14
8LA 8LA Croup LLd (u8) Pold $14.10 13.61 1793 12.8 10.3 14.6 11.6 21.9 18.1 19 21
345,#$*+'67,)"8, 119: ;9< 1/9= 109: 1>90 1=91 1:? 1;?
LxL Lxpedla (u8) Pold 28.00 33.07 4420 7.0 3.4 7.7 7.6 12.3 11.2 -11 10
CLn rlcellne (u8) 8uy 383.00 382.32 29000 16.4 12.4 17.4 13.4 22.4 17.8 43 23
8Mv 8lghLmove (n8) 1339.00 1439 19.6 16.6 20.2 17.0 26.9 22.6 23 19
!C8S 31!obs (n8) 44.90 1268 9.4 6.6 9.6 6.3 18.2 14.6 44 23
!C8S !obSLreeL (n8) 2.20 704 11.3 10.9 11.6 11.3 13.2 14.7 9 3
@A$,)A"$*4A"B'67,)"8,'C"DE9'FGA'HIJK 1/9L 109: 1292 1191 1;90 1<9/ //? 1<?
@A$,)A"$*4A"B'67,)"8,'C,M+9JN(JK 1:9/ 119< 1:9L 1/90 /09L 1L9= 20? 1>?
JOIJP@Q36 JOIJP@Q' (JR J(S8
Changes to earnings forecasts
vo havo sunnarisod lho changos lo our orocasls in lho lablo bolow. vo havo ossonlially
lol our orocasls unchangod al lho EBTDA in FY!2, howovor, wo havo aclorod in lho low
lhrough inpacl o lowor subs in FY!3. vo havo also incorporalod a highor D&A chargo and
lakon oul lho ninorilios now lhal FEA owns !00' o Casa.il. Tho nol inpacl o our changos
is a !' docroaso lo our ops orocasls in FY!2 and a 2' doclino in FY!3E ops.
Figure 2: REA - Key changes to forecasts
FY11
Act Old New Chg Old New Chg
A$m A$m A$m % A$m A$m %
Revenue 238.4 274.8 275.2 0% 317.2 311.9 -2%
Operating expenses 135.2 148.8 149.6 1% 164.7 163.2 -1%
EBITDA 103.2 126.0 125.5 0% 152.5 148.7 -3%
Dep & Amort 10.5 13.4 15.1 12% 14.2 16.6 17%
EBIT 92.7 112.6 110.5 -2% 138.3 132.1 -4%
Net interest expense/(income) (4.6) (7.0) (7.0) 0% (9.8) (9.8) 0%
Pre-tax profit 97.3 119.5 117.4 -2% 148.0 141.9 -4%
Tax 29.8 35.0 34.7 -1% 41.9 40.6 -3%
Minorities 1.2 (0.2) 0.0 nm -2.0 0.0 nm
Net profit (pre sig. items) 68.7 84.3 82.8 -2% 104.2 101.3 -3%
Net profit (reported) 68.7 84.3 85.0 1% 104.2 101.3 -3%
EPS 52.5 63.3 62.4 -1% 76.8 75.4 -2%
DPS 26.0 31.7 25.6 -19% 38.2 30.3 -21%
EBITDA - divisional
Australia 112.1 130.3 129.9 0% 152.0 148.8 -2%
Italy (3.5) 0.5 1.0 100% 4.6 4.5 -2%
Other International 1.0 2.1 2.1 0% 3.3 3.3
Corporate / Unallocated (6.5) (6.9) (7.4) 7% (7.4) (7.9) 6%
Total 103.2 126.0 125.5 0% 155.8 152.0 -2%
EBITDA margin - Group 43.3% 45.8% 45.6% 0% 48.1% 47.7% 0%
EBITDA margin - Aus 55.2% 55.8% 55.8% 0% 56.3% 56.3% 0%
FY12 F FY13 F

1H12 resuIts summary
Anolhor solid rosull, and largoly in lino wilh our oxpoclalions. vo woro oxpocling slighlly
noro oporaling lovorago wilhin lho Auslralian businoss bul wo woro in lino al EBTDA. FEA
roporlod !H!2 rovonuo growlh o !3' lo $!34.6n (DB = $!3!.6n, !H!2 EBTDA growlh
o 24' lo $59.6n (DB = $59.0n and !H!2 PAT (pro sig ilons growlh o 23' lo $39.2n
(DB = $39.4n. Al lho EBTDA and PAT lovol lhis also roprosonls 3' and 2' HoH
soquonlial growlh. Oporaling cash low incroasod by 26' yoy lo $40.3n and FEA doclarod
an inlorin dividond o !2.5cps (DB = !5.0cps.
Key takeaways:
Positives.
#
Slrongor lhan oxpoclod lop lino growlh in our viow roinorcos lho lhoory lhal lho
businoss nodol holds up in subduod proporly narkol condilions producl onhancononl
rovonuos (discrolionary spond incroasod !7' yoy.
#
Sinilar lo lho lrond in CFZ, display advorlising growlh was vory slrong (+3!'. A
posilivo lrond as noro advorlising dollars should conlinuo lo shil onlino.
#
Pricing incroasos havo boon inplononlod in lho Auslralian businoss, which should
undorpin 2H!2 and FY!3 growlh: Subscriplion +!3' and Foaluro proporly +20'.
#
laly lurnod posilivo or lho irsl lino ovor, drivon by 52' rovonuo growlh which lowod
lhrough lo posilivo EBTDA (EBTDA: !H!! = $2.2n, 2H!! = $!.2n, !H!2 = +$0.3n
Not so positive.
#
Dividond policy - back lo 40'. Civon lho lovol o cash ($!54n wo woro oxpocling 50'
(in lino wilh FY!2. n our viow, lhis conbinod wilh conlinuod discussion around slralogic
invoslnonl suggosls lhal an oshoro acquisilion could bo on lho cards.
#
Oporaling lovorago (soo noxl pago - vo oslinalo lhal $0.5! o ovory incrononlal $!
droppod lo lho bollon lino or Auslralian rovonuos. This was bolow our oxpoclalions
givon lho oslinalod $0.67 in 2H!! (alor adjusling or $2n gain.
#
Agonls doclinos in Aus and laly - whilsl nol unoxpoclod in lho curronl onvironnonl and
noro lhan osol by AFPA growlh, lhal acl lhal lho doclinos havo nol slabilizod causo
sono concorn.
Figure 3: 1H12 resuIt summary (A$m)
Y/E June
1H11_A 1H12_A 1H12 1H12_F Var 2H11_A 1H12_A HoH
$m $m % chg $m % chg $m $m % chg
Revenue 114.3 134.6 18% 131.6 -2% 124.1 134.6 9%
Operating expenses 66.4 75.0 13% 72.7 -3% 68.8 75.0 9%
EBITDA 47.9 59.6 24% 59.0 -1% 55.3 59.6 8%
Dep & Amort 4.5 7.2 60% 6.4 -10% 6.0 7.2 19%
EBIT 43.4 52.4 21% 52.5 0% 49.3 52.4 6%
Net interest expense/(income) (1.7) (3.2) 86% (3.3) 3% (2.9) (3.2) 10%
Pre-tax profit 45.1 55.6 23% 55.8 0% 52.2 55.6 7%
Tax 13.9 16.6 20% 16.3 -2% 15.9 16.6 4%
Operating profit 31.2 39.0 25% 39.5 1% 36.3 39.0 7%
Minorities 0.7 -0.2 -128% 0.1 nm (2.0) (0.2) -90%
Net profit (pre sig. items) 31.9 39.2 23% 39.4 1% 38.2 39.2 2%
Signif icant items 0.0 2.3 0.0 -100% 0.0 2.3
Net profit (reported) 31.9 41.4 30% 39.4 -5% 38.2 41.4 8%
EBITDA by division ($m)
Australia 52.4 62.1 19% 62.3 0% 59.7 62.1 4%
Italy (2.2) 0.3 nm (0.7) nm (1.2) 0.3 -124%
Luxembourg 0.5 0.9 64% 1.4 56% 1.8 0.9 -51%
International/Others (0.3) 0.0 nm (0.6) nm (1.0) 0.0 -101%
Unallocated (2.5) (3.7) 47% (3.4) -8% (3.9) (3.7) -6%
EBITDA 47.9 59.6 24% 59.0 -1% 55.3 59.6 8%
Other financial data
EPS normalised (c) 24.7 29.9 21% 29.7 -1% 28.0 29.9 7%
Dividend per share (c) 10.0 12.5 25% 15.0 20% 16.0 12.5 -22%
DB Forecasts Sequential HoH comp
Source. Deutsche Bank, Conpan, data
Operating Ieverage anaIysis
Unorlunaloly, lho rovorsion back lo signiicanl incrononlal rovonuo dropping lo lho EBTDA
lovol lhal wo saw in 2H!! did nol conlinuo in !H!2. vo oslinalo $0.5! o ovory incrononlal
dollar in lho Auslralian businoss droppod lo lho bollon lho bollon lino. vo lhink lhis could
bo $0.65.
Figure 4: IncrementaI revenue dropping to EBITDA
Fovonuo A$n !H!! 2H!! FY !H!2
Prior Yoar 34.5 93.7 !73.2 !03.!
Curronl yoar !03.! !!0.5 2!3.6 !!9.3
ncrononlal !3.6 !6.3 35.4 !6.7

Cosls:
Prior Yoar 43.2 5!.2 94.3 53.2
Curronl yoar 53.2 56.7 !!0.0 6!.4
ncrononlal !0.! 5.5 !5.6 3.2

EBTDA (Aus + Unallocalod
Prior Yoar 4!.3 42.5 33.9 49.9
Curronl yoar 49.9 53.3 !03.6 53.4
ncrononlal 3.5 !!.2 !9.3 3.5

ncr. EBTDA nargin 45.3' 67.0' 55.3' 5!.0'
DCF vaIuation
vo havo basod our $!4.!0 prico largol on our $!4.07 DCF valualion. vhilsl FEA is curronlly
in a nol cash posilion, wo assuno a bollor goaring lovol o 20' is usod in lho nid lo long
lorn. Our olhor koy assunplions aro dolailod bolow:
Figure 5: REA - DCF vaIuation
Sunnar y vACC Calculal ion
DCF Valuo $n !634 D/D+E 20'
Loss ol Dobl / (cash $n !52 Fisk Froo Falo (F 6.25'
Equil y Valuo $n !336 Equily Fisk Proniun 6.0'
o Sharos n !30 Tax Falo 30'
Valuo Por Shar o $ !4.07 Bola !.20
Discounl/(Proniun ' 3.4' Cosl o Equily (Ko !3.45'
Pr ico Tar gol !2nl h !4.!0 vACC !!.3!'
Discounl/(Proniun ' 3.6' Torninal growlh 4.0'

Appendix 1
FEA Croup Lld FEA.AX !3.6! (AUD 2! Fob !2 !,2,7,3,!4,!5,!7


2. Doulscho Bank and/or ils ailialo(s nakos a narkol in socurilios issuod by lhis conpany.
3. Doulscho Bank and/or ils ailialo(s oxpocls lo rocoivo, or inlonds lo sook, conponsalion or invoslnonl banking sorvicos
ron lhis conpany in lho noxl lhroo nonlhs.
lho pasl yoar.
!5. This conpany has boon a clionl o Doulscho Bank Socurilios nc. wilhin lho pasl yoar, during which lino il rocoivod non
invoslnonl banking socuriliosrolalod sorvicos.

2. Doulscho Bank and/or ils ailialo(s nakos a narkol in socurilios issuod by lhis conpany.

website at hllp://gn.db.con/gor/disclosuro/Disclosuro.oqsr?ricCodo=FEA.AX.

conponsalion or providing a spociic roconnondalion or viow in lhis roporl. Tin Plunbo

HistoricaI recommendations and target price: REA Group Ltd (REA.AX)
(as of 2/2!/20!2)
1
2
3
4
3
6
0.00
2.00
4.00
6.00
3.00
!0.00
!2.00
!4.00
!6.00
S
o
c
u
r
i
l
y

P
r
i
c
o
Dalo

Slrong Buy
Buy
arkol Pororn
Undorpororn
ol Falod
Suspondod Faling
Buy
Hold
Soll
ol Falod
Suspondod Faling

!. 25/2/20!0: Buy, Targol Prico Chango AUD!2.50
2. 22/4/20!0: Buy, Targol Prico Chango AUD!4.50
3. !3/6/20!0: Buy, Targol Prico Chango AUD!3.60
4. !9/3/20!0: Buy, Targol Prico Chango AUD!4.00
6. !3/3/20!!: Buy, Targol Prico Chango AUD!3.50

buy lho slock.
slock
Notes:

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
30
!00
!20
!40
Buy Hold Soll
Auslralia Univorso


hllp://gn.db.con.


60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 250 2500
London EC2 2EO
Unilod Kingdon
Tol: (44 20 7545 3000
Deutsche Bank AG
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Doulscho Bank Placo
Lovol !6
Sydnoy, Sv 2000
Auslralia
Tol: (6! 2 3253 !234
Deutsche Bank AG
Filialo Hongkong
Hong Kong
Tol: (352 2203 3333
2!!! agalacho
Sanno Park Towor
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer

Infrastructure

2! Fobruary 20!2
Aust. Infrastructure Fund
Foulors: AIX.AX Bloonborg: AIX AU Exchango: ASX Tickor: AIX
!H!2 Fosull qualily assols,
Croundhog Day slralogy
Cameron McDonaId
Fosoarch Analysl
(+6! 3 92704235
Entcho Raykovski
Fosoarch Analysl
(+6! 3 92704!65
onlcho.raykovski@db.con

1H12 resuIts in Iine
AX roporlod ils !H!2 rosulls which woro in lino wilh Proporlional EBTDA o
$37.4n vorsus our orocasl o $37.7n (lhis is posl adjusling hoadlino roporlod
proporlional EBTDA o $93.4n by lho $6.0 o corporalo nanagononl oos. vo
ronain allraclod lo lho qualily and long lorn growlh oplions o lho coro Auslralian
airporl assols howovor aro disappoinlod lo soo lilllo lraclion lo divosl noncoro
assols as por lho slalod slralogy ovor lho lasl !3 nonlhs. BUY roconnondalion
and $2.30/sharo Prico Targol nainlainod.
EBTDA (AUDn !35 207 158 !35 !93
ol Proil (AUDn !9! 2!2 126 !52 !56
EPS (AUD 0.34 0.34 0.20 0.25 0.25
OLD EPS (AUD 0.34 0.34 0.20 0.25 0.25
' Chango 0.0' 0.0' -0.0% 0.0' 0.0'
EPS Crowlh (' 27.7 !.6 -40.8 2!.3 2.3
PEF (x 5.! 5.5 10.1 3.4 3.2
EV/EBTDA (x 5.4 5.3 7.5 6.3 5.9
DPS (nol (AUD 0.!0 0.!0 0.10 0.!2 0.!3
Yiold (nol (' 5.3 5.3 5.1 5.9 6.3
Franking (' 50 50 50 50 50
!
2
yoar ond closo

CA(P !46/04/20!!.
ResuIts

Buy
ALL OFDAFES 4,333

Key changes
ol proil (FYE !25.7 lo !25.7 " -0.0%

!.5
!.65
!.3
!.95
2.!
2/!0 5/!0 3/!0 !!/!0 2/!! 5/!! 3/!! !!/!!
Ausl. nraslrucluro
Absolulo !.5 7.3 5.!

Stock data
Froo loal 0.00

FOE (' 7.0
FOA (' 8.9
Prico/book (x 0.7
EBT nargin (' 0.0

C
o
m
p
a
n
y

G
I
o
b
a
I

M
a
r
k
e
t
s

R
e
s
e
a
r
c
h

Strategy is getting staIe - it is time for action
Ovor lho lasl lwo yoars AX has highlighlod lhal lhoy boliovo lhal lho sharo prico
doos nol rolocl lho undorlying valuo o lho porlolio and lhal lhoy would sook lo
closo lho gap by oxanining lho slrucluro o lho und and divosling noncoro
assols. Tho irsl aclion wo havo soon (announcod yoslorday 20 Fob 20!2 is or
AX lo divosl ils 35' inlorosl in lho Porl Coolong. anagononl havo also
indicalod lhal lhoy aro assossing oplions or Porl o Porlland. Addilionally AX has
appoinlod lwo advisors lo assisl wilh solling slralogios or roalizing urlhor valuo.
l will bo disappoinling lo bo discussing lhoso sano issuos al lho FY!2 rosull.
Cash fIow a IittIe weaker due to timing issues
Tho !H!2 cash low rocoivod ron lho assols was 34' lowor howovor lhis is duo
lo lho rocoipl in !H!! o a dislribulion rolaling lo lho prior yoar - oxcluding lhis
ilon lhon oporaling cash low would havo boon lal on lho pcp. vo oxpocl lhal
urlhor cash ilons ron OAL and HTAC will bo skowod lo 2H!2.
Price target remains $2.30, key risks
vo valuo AX via avorago o DCF (!2.5' COE and a 30' discounl lo lho SYD TP.
Koy risks: signiicanl doclino in global avialion, advorso oxoculion oulconos,
capacily ralionalisalion and global shocks-o.g., lorrorisn, pandonic, olc (noro
dolailod risks on pago 6. EPS changos rolocl assol rovalualions.
2! Fobruary 20!2 nraslrucluro Ausl. nraslrucluro Fund
Y/E 30 June 06/07 07/08 08/09 09/10 10/11 11/12E 12/13E 13/14E 14/15E
PROFIT & LOSS (A$m)
Sales revehue 0 0 0 0 0 0 0 0 0
DepreciaIioh/amorIisaIioh 0 0 0 0 0 0 0 0 0
NeI ihIeresI ihcome (expehse) -1 9 5 14 15 0 0 0 0
Ihcome Iax expehse 3 16 -5 7 10 33 33 37 39
PeporIed proIiI 168 207 101 191 212 126 152 156 163
CASH FLOW (A$m)
Movement in net working capital -119 -185 -49 -141 -168 -64 -90 -83 -87
Capex 0 0 0 0 0 0 0 0 0
Free cash Ilow 53 37 29 49 53 95 95 110 114
+61 3 9270 4235 cameroh.mcdohald@db.com
OIher ihvesIihg acIiviIies 0 -130 -34 -98 -12 0 0 0 0
Dividehds paid -55 -42 -56 -48 -62 -62 -71 -78 -84
+61 3 9270 4165 ehIcho.raykovski@db.com NeI ihc/(dec) ih borrowihgs 0 130 30 -160 0 0 0 0 0
TIa cash Ivs Irm Inancng -38 88 -27 75 -62 -62 -71 -78 -84
NeI cash Ilow 15 -5 -33 26 -21 33 24 33 31
NvemenI n neI debI/(cash) -15 135 62 -185 21 -33 -24 -33 -31
BALANCE SHEET (A$m)
Goodwill 0 0 0 0 0 0 0 0 0
AssociaIes/ihvesImehIs 956 1,271 1,361 1,603 1,756 1,832 1,922 2,005 2,092
OIher asseIs 15 15 11 15 4 4 4 4 4
ToIal asseIs 1,044 1,355 1,408 1,680 1,839 1,936 2,050 2,165 2,283
Shareholders' equiIy 989 1,151 1,208 1,622 1,772 1,832 1,910 1,985 2,061
ToIal shareholders' equiIy 989 1,151 1,208 1,622 1,772 1,832 1,910 1,985 2,061
NeI vrkng capIa 0 -33 -10 -17 -28 -28 -28 -28 -28
NeI debI/(cash) -74 61 123 -62 -79 -99 -123 -156 -187
RATIO ANALYSIS
52-week High/Low: A$2.08 - 1.71 Sales growIh - pcp (%) ha ha ha ha ha ha ha ha ha
EBITDA/sales (%) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
US$ 1,354
EBIT/sales (%) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
PayouI raIio (%) 34.4 30.3 50.6 31.3 29.2 51.9 48.9 51.8 53.3
DCF VALUATION (A$)
POA (%) 19.1 18.9 6.7 12.5 12.3 8.9 9.9 9.9 9.9
BeIa (MPP - 6.00) 0.90
POE (%) 18.2 19.3 8.5 13.5 12.5 7.0 8.1 8.0 8.1
Tax raIe (%) 2.0 7.3 -5.5 3.7 4.5 20.6 17.7 19.4 19.2
Capex/sales (%) hm hm hm hm hm hm hm hm hm
Capex/depreciaIioh (x) hm hm hm hm hm hm hm hm hm
Price/NPV (x) 0.79
NeI debI/equiIy (%) -7.5 5.3 10.2 -3.8 -4.5 -5.4 -6.5 -7.9 -9.1
NeI ihIeresI cover (x) hm -23.6 -17.2 -13.2 -13.6 0.0 0.0 0.0 0.0
0.263 0.251 0.245 0.202
Infrastructure & UtiIities P/E raIio FD (x)
0.263 0.251
AusIralia
0.245
50.6 27.7 4.6 2.3
7.8 5.5
0.202 0.342
8.4 8.2
1.6
10.1
21.3 -40.8
Normalised EPS (A$)
Asia Pacific
Equity Research
SUMMARY
7.8 8.4 10.1 5.1 8.2 5.5
0.264
5.6 7.0
0.453 0.546
0.264
5.6
20.6
EPS FD (A$) 0.453
OperaIihg CFPS (A$) 0.142 0.086 0.075 0.086 0.097
-51.8
0.337 0.342
5.4
5.4
0.178 0.152
0.337 0.546
7.0 5.1
30.3 24.7 19.8 22.1
0.165 0.100 0.130 0.100
13.4
0.154
0.120
11.1 11.5
0.140 0.130
0.184
5.1
0.69 0.66
5.3
0.66
13.4
5.8
0.105
0.62
6.8
0.64 0.67
5.9 6.3
2.59
OIher
1,101 1,133 1,161
3.8
1,183
9.4 5.4
A$2.05
OAL

Compahy websiIe

AIX is a diversiIied ihIrasIrucIure Iuhd ihvesIed
ih domesIic airporIs (Melbourhe, PerIh, Gold
CoasI, Towhsville, NorIherh TerriIory ahd
Sydhey via HTAC), ihIerhaIiohal airporIs via
HTAC (AIhehs, Hamburg ahd DusseldorI),
seaporIs (PorIlahd ahd Geelohg) ahd Iollroads
(M4 Iollroad ih Sydhey). The Iuhd is mahaged by
HasIihgs Fuhds MahagemehI LId which ih Iurh is
mahaged by WesIpac Bahk. The primary Iocus oI
AIX is oh IrahsporI ahd ihIrasIrucIure asseIs. The
Iocus is Io ihcrease exposure Io exisIihg asseIs
ahd acquire hew asseIs wiIh high qualiIy
Research Team
Entcho Raykovski
Cameron McDonaId
hIIp://www.aiI.heI.au
Melbourhe AirporI 21
736
7.0
3.4
5.6
3.8
EV/EBIT (x)
27
1,147
6.2
0.96
664
6.2
39
3.4
0.59
PerIh AirporI 34
A$2.30
EV/EBITDA (x)
Buy
Price/BV (x)
PeuIers: AIX.AX Bloomberg: AIX AU
Price as aI 20-Feb
TargeI price
Company description
0.98
18
36
1,118 842
34
39
9.4
Equity EBITDA
-9 107
185 ToIal
47
AustraIian Infrastructure Fund
P/CFPS (x)
DPS (A$) 0.155
17.9
66
5.5
68
21
169 131 196
125
30 25
7.5 6.3 5.9
5.9 6.3
5.5
77
282
15
39
13
273
45
258
17
42
5.4
52
58
7.5
57
73 69 62
63 60
226
35
62
36
239
3
1.5%
7.3%
5.1%
0% 2% 4% 6% 8%
1m
3m
12m
0
0
0
0
0
1
1
1
1
1
1
08 09 10 11 12E 13E 14E 15E
EBITDA/sales (%)
EBIT/sales (%)
Trends
0
5
10
15
20
25
08 09 10 11 12E 13E 14E 15E
POE (%) POA (%)
op POC (%)
Return Ratios (%)
-15
-10
-5
0
5
10
15
-250
-200
-150
-100
-50
0
50
100
150
08 09 10 11 12E 13E 14E 15E
NeI debI/equiIy (%)
0.30
2.30
4.30
6.30
8.30
10.30
12.30
14.30
16.30
18.30
20.30
2/07 2/08 2/09 2/10 2/11 2/12

Auslral i an nraslrucluro Fund Proporli onalo Earni ngs Sunnary
FY09 FY!0 FY!! FY!2 FY!3
Ownorshi p
Asia Paciic Airporls ' !0.!' !0.!' !2.4' !2.4' !2.4'
voslralia Airporls ' 29.7' 29.7' 29.7' 29.7' 29.7'
Ouoonsland Airporls ' 49.!' 49.!' 49.!' 49.!' 49.!'
Alhons Airporl ' 5.3' 5.3' 5.3' 5.3' 5.3'
Hanburg Airporl ' 5.3' 5.3' 5.3' 5.3' 5.3'
Dussoldor Airporl ' 4.0' 4.0' 4.0' 4.0' 4.0'
Sydnoy Airporl ' 2.6' 2.6' 2.6' 2.6' 2.6'
T Airporls ' 23.2' 23.2' 23.2' 23.2' 23.2'
Sal os Fovonuo
Asia Paciic Airporls AUDn 43.4 52.5 69.6 75.7 79.3
voslralia Airporls AUDn 62.2 73.3 39.9 94.6 !02.!
Ouoonsland Airporls AUDn 42.4 49.! 55.! 55.3 59.2
Hochlio Airporls Capilal AUDn !0!.3 92.3 90.5 90.0 96.4
Alhons Airporl AUDn 26.6 25.! 26.5
Hanburg Airporl AUDn !3.5 !3.2 20.!
Dussoldor Airporl AUDn !9.9 !9.5 2!.4
Sydnoy Airporl AUDn 25.6 27.2 23.5
T Airporls AUDn !7.9 !9.2 2!.2 23.5 24.9
Olhor AUDn 33.9 26.! 27.6 23.3 30.0
Tolal AUDn 306.! 3!3.0 354.0 363.4 392.5
Crowlh ' 3.3' 2.3' !3.!' 4.!' 6.5'
EB TDA
Asia Paciic Airporls AUDn 36.0 39.3 52.4 57.5 60.4
voslralia Airporls AUDn 33.6 47.! 53.5 62.! 63.6
Ouoonsland Airporls AUDn 24.7 29.7 34.6 35.6 39.5
Hochlio Airporls Capilal AUDn 53.4 57.0 5!.6 5!.7 55.0
Alhons Airporl AUDn !7.2 !6.0 !6.3
Hanburg Airporl AUDn 6.4 6.4 7.2
Dussoldor Airporl AUDn 7.3 7.2 3.0
Sydnoy Airporl AUDn 20.7 22.0 22.9
T Airporls AUDn !3.! !2.5 !3.7 !5.6 !6.3
Olhor AUDn !5.0 !5.4 !5.5 !6.5 !7.6
Tolal AUDn !30.9 20!.0 226.2 239.0 257.3
Corporalo Exponso & Foos AUDn 7.2 !0.2 !2.0 !2.0 !2.0
Tolal AUDn !73.7 !90.3 2!4.2 227.0 245.3
Crowlh ' 9.3' !2.3' 6.0' 3.3'
ol nlorosl Exponso
Asia Paciic Airporls AUDn 9.7 !!.0 !4.7 !4.9 !5.2
voslralia Airporls AUDn !4.3 24.5 20.4 24.2 23.!
Ouoonsland Airporls AUDn !0.5 !2.7 !4.5 !5.0 !5.5
Hochlio Airporls Capilal AUDn !9.3 !6.3 !3.3 !3.6 !5.!
T Airporls AUDn 2.9 4.3 3.6 4.2 4.3
Olhor AUDn 0.5 0.4 0.4 0.4 0.4
Tolal AUDn 57.3 69.3 67.4 72.3 73.5
Crowlh ' !9.9' 2.7' 7.2' 3.5'
Crowlh Capox
Asia Paciic Airporls AUDn !0.3 !6.3 5.0 5.! 5.3
voslralia Airporls AUDn 46.7 23.4 49.6 49.6 49.6
Ouoonsland Airporls AUDn 26.7 24.7 7.0 7.2 7.4
Hochlio Airporls Capilal AUDn 3.! 3.7 3.2 7.0 7.3
T Airporls AUDn 5.0 2.7 3.3 2.2 2.3
Olhor AUDn 0.0 0.0 0.0 0.0 0.0
Tolal AUDn 97.3 30.7 73.6 7!.! 7!.3
Crowlh ' !7.!' 2.6' 9.5' !.0'
ol Dobl
Asia Paciic Airporls AUDn !67.0 !75.2 2!7.3 22!.7 225.6
voslralia Airporls AUDn 242.! 26!.4 297.0 334.2 37!.4
Ouoonsland Airporls AUDn !35.0 209.7 2!6.7 223.9 23!.3
Hochlio Airporls Capilal AUDn 235.4 243.3 249.3 246.0 249.7
T Airporls AUDn 57.3 59.6 63.4 69.! 69.3
Olhors AUDn 26.4 5.9 5.9 5.9 5.9
Corporalo ol Dobl/(Cash AUDn !23.3 62.0 79.2 99.4 !23.3
Tolal AUDn !,036.6 393.6 975.9 !,00!.3 !,030.3
Crowlh ' !7.3' 9.2' 2.6' 2.9'
Oporali ng Cash Fl ow
EBTDA AUDn !30.9 20!.0 226.2 239.0 257.3
Econonic Doprocialion AUDn 43.5 44.0 52.6 52.3 37.5
ol nlorosl Exponso AUDn 57.3 69.3 67.4 72.3 73.5
Tax Exponso AUDn 2!.6 25.4 30.3 33.2 35.6
Corporalo Exponso AUDn 7.2 !0.2 !2.0 !2.0 !2.0
Tolal AUDn 50.3 52.2 63.4 63.3 94.3
olri cs 49.6 56.3 62.! 65.2 74.5
Capox lo Salos x 0.32x 0.26x 0.22x 0.!9x 0.!3x
Assol EBTDA argin ' 59.!' 64.2' 63.9' 64.9' 65.7'
Dislribulion Cash Covorago ' !42.7' !25.6' !34.5' !43.5' !30.9'
ol Dobl / EBTDA x 6.26x 4.63x 4.56x 4.4!x 4.!9x
EBTDA nlorosl Covor x 3.0!x 2.76x 3.!3x 3.!4x 3.!3x

1H12 ResuIt
Comparison to Forecasts
Figure 1: ProportionaI Earnings Summary
1H11A 1H12A % pcp 1H12 DBe % var
Proporlionalo Fovonuo (ox HTAC AUD n !30.3 !4!.3 +3.0' !39.2 +!.5'
Proporlionalo EBTDA (ox HTAC/pro corp cosls AUD n 37.3 93.4 +7.0' 93.7 0.3'
Corp cosls AUD n (6.0 (6.0 0.6' (6.0 0.!'
Proporlionalo EBTDA (ox HTAC AUD n 3!.3 37.4 +7.6' 37.7 0.3'
DPS cps 5.0 5.0 +0.0' 5.0 +0.0'
Source. Deutsche Bank, Conpan, Data
vo nolo lhal wo havo adjuslod lho Proporlionalo EBTDA nunbor prosonlod by AX lo lako
oul lho nanagor and rosponsiblo onlily oos (which aro sublraclod ron EBTDA in our
orocasls. Alor laking lhis inlo accounl, AXs rosulls aro in lino wilh our oxpoclalions.
Figure 2: Key Asset Summaries (100% basis)
1H11A 1H12A % pcp 1H12 DBe % var
Fovonuo
Porlh Airporl AUD n !44.9 !63.6 +!2.9' !59.! +2.3'
APAC AUD n 234.! 293.9 +3.4' 305.7 3.3'
Ouoonsland Airporls AUD n 53.2 59.7 +2.6' 56.3 +5.0'
T Airporls AUD n 39.6 4!.3 +5.6' 4!.6 +0.5'

EBTDA
Porlh Airporl AUD n 93.7 !02.5 +9.4' !04.4 !.3'
APAC AUD n 2!7.2 2!9.9 +!.2' 23!.9 5.2'
Ouoonsland Airporls AUD n 36.3 33.! +3.5' 36.3 +5.0'
T Airporls AUD n 26.3 23.3 +7.6' 27.7 +2.2'
What were we Iooking for7
Any update on proposed strategies to "narrow the vaIuation gap" between AIX's
underIying asset vaIue and current trading price
AX nanagononl havo again highlighlod lhal lho curronl sharo prico doos nol rolocl lhoir
viow o lho undorlying valuo o lho porlolio and lhal lhoy will sook lo closo lho gap. Tho
slralogy has boon lo divosl noncoro assols and wo aro ploasod lo soo yoslordays
announcononl lhal an agroononl lo divosl lho 35' inlorosl in Porl o Coolong has boon
onlorod inlo. vo would oxpocl lhal Porl o Porlland nighl bo lho noxl assol lo bo sold and
wo would oncourago AX nanagononl lo divosl lhis assol as quickly as possiblo lo
dononslralo lhoir connilnonl lo sinpliying lho porlolio.
Management internaIization update
n our viow oxlornal nanagononl o lislod inraslrucluro unds is an ouldalod nodol and wo
nolo lhal AX has appoinlod lwo advisors lo urlhor assoss valuo onhancing slralogios or
sharoholdors, which will includo lho polonlial roslrucluro o AX nanagononl. Al lho vory
loasl wo would oxpocl lo soo nanagononl oos cappod and slruclurod lo inconlivizo lho
achiovononl o lho slalod objoclivos lo closo lho valuo gap.
vo boliovo lhal olhor issuo lhal will bo invosligalod will bo whal lo do wilh HTAC. Civon lho
salo o Hochlio Airporls appoars lo havo slallod (as por AX advico loday lhoro doos nol
soon lo bo an oasy solulion lo roalizo lho valuo o lhis vohiclo. vo conlinuo lo boliovo lhal
buyors aro unlikoly lo bo ovorly allraclod lo lho HTAC slrucluro and associalod oo loakago
givon lhal lho addilional inlorosls would slill nol gol invoslors lo a conlrolling posilion in lho
assols. Addilionally AX (via Haslings cannol orco an oulcono lo oxil HTAC via an PO or
lrado salo unlil April 20!3.
Tho only obvious lransaclion lhal wo could polonlially soo is lo onlor inlo an ocononic swap
or AXs ooclivo inlorosl in Sydnoy Airporl which wo curronlly valuo al $!63.6n.
MeIbourne Airport InternationaI TerminaI redeveIopment opening/compIetion and
MeIbourne Airport new T4 deveIopment detaiIs
Olhor lhan conirning lho nlornalional Torninal upgrado was conplolo and lhal lho lorninal
orocourl rodovolopnonl is undorway lilllo dolail was givon rogarding lhoso lwo projocls.
Howovor wo nolo lhal lho conplolion o T! will low inlo lho oxisling aoronaulical pricing
agroononl which is also duo lo bo ronogolialod in Juno 20!2.
OutIook for Domestic/InternationaI traveI
anagononl boliovos lhal lho oullook conlinuos lo bo subduod or donoslic lravol or lho
noxl 6 nonlhs wilh Porlh boing lho brighl spol bolh donoslically and inlornalionally. Tho
charl bolow highlighls howovor lhal lho upconing nonlhs should bonoil ron woakor
conparalivo dala.
Figure 3: Weighted passenger growth rates for AIX
Source. Conpan, Data
Distribution guidance for FY12 - currentIy we forecast 10.5cps (5.5cps in 2H12).
o spociic guidanco was givon howovor wo ronain conorlablo wilh our orocasl
dislribulion givon lho lradilional skow o assol cash lows boing rocoivod in lho 2H poriod
(parlicularly ron OAL and HTAC. n addilion AX will rocoivo lho procoods ron lho salo o
lhoir inlorosl in Porl o Coolong which will holp nininizo lho nood lo rosorvo cash al lho und
lovol lo und growlh capox.
VaIuation and Risks
VaIuation
Our prico largol or AX ronains $2.30. vo rolain a BUY raling duo lo lho nalorial rolurn
polonlial rolalivo lo lho curronl sharo prico.
Our prico largol is dorivod alor considoring (i a discounlod cash low (DCF nolhodology,
and (ii a 30' discounl lo our SYD prico largol on lho basis lhal AX only has ninorily slakos
in assols and ronains an oxlornally nanagod vohiclo.
Our DCF valualion o $2.59 incorporalos discounling lho doblsorvicod oquily cash lows ovor
lho duralion o lho invoslnonl concossion wilh an avorago !2.5' cosl o oquily (6.5' risk
roo ralo, 0.6 assol bola, and 6.0'6.5' assol spociic risk proniuns. Torninal valuos aro
nol considorod as oach assol has a spociic rolurn dalo por ils concossion agroononl. vo
uso DCFbasod valualions as lho uso o lrusl accounling procludos oarningsbasod nolrics.
A 30' discounl lo SYDs prico largol (FY!2 EV/EBTDA o !5.0x rosulls in an EV/EBTDA
nulliplo o !0.5x and an inpliod valualion o $2.24/sharo or AX.
Risks
Koy downsido risks lo our valualion includo:
#
Signiicanl dolorioralion in lho shorl lo nodiunlorn global avialion donand oullook
boyond our orocasls,
#
Advorso indings ron lho Produclivily Connission roviow inlo lho ocononic rogulalion
o Auslralian airporls, connissionod by lho Fodoral Covornnonl in Doc 20!0,
#
Advorso oulconos ron polonlial acquisilions, including unplannod oxoculion
challongos,
#
Any nalorial ralionalizalion o capacily in lho Auslralian narkol polonlially aocling lraic
lhroughpul al koy AX invoslod airporls, and
#
Clobal shocks al lho nacroocononic lovol including najor lorrorisl ovonls or a hoallh
pandonic.
Appendix 1
Ausl. nraslrucluro Fund AX.AX 2.05 (AUD 20 Fob !2 A


website at hllp://gn.db.con/gor/disclosuro/Disclosuro.oqsr?ricCodo=AX.AX.

conponsalion or providing a spociic roconnondalion or viow in lhis roporl. Canoron cDonald

HistoricaI recommendations and target price: Aust. Infrastructure Fund (AIX.AX)
(as of 2/20/20!2)
0.00
0.50
!.00
!.50
2.00
2.50
S
o
c
u
r
i
l
y

P
r
i
c
o
Dalo

Slrong Buy
Buy
arkol Pororn
Undorpororn
ol Falod
Suspondod Faling
Buy
Hold
Soll
ol Falod
Suspondod Faling


buy lho slock.
slock
Notes:

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
30
!00
!20
!40
Buy Hold Soll
Auslralia Univorso


hllp://gn.db.con.


60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 250 2500
London EC2 2EO
Unilod Kingdon
Tol: (44 20 7545 3000
Deutsche Bank AG
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Doulscho Bank Placo
Lovol !6
Sydnoy, Sv 2000
Auslralia
Tol: (6! 2 3253 !234
Deutsche Bank AG
Filialo Hongkong
Hong Kong
Tol: (352 2203 3333
2!!! agalacho
Sanno Park Towor
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer

M&M - GoId

2! Fobruary 20!2
Medusa Mining
Foulors: MML.AX Bloonborg: MML AU Exchango: ASX Tickor: MML
Focus on 2H FY!2 and
boyond, low cosls conlinuing
Levi Spry
Fosoarch Analysl
(+6! 2 325326!!
lovi.spry@db.con
Chris Terry
Fosoarch Associalo
(+6! 2 32532523
chris.lorry@db.con

1H FY12 NPAT of US$24m down 59% on pcp but in transition phase
!H FY!2 PAT o US$24n was bolow our orocasl o US$33n duo lo lowor salos
volunos and roalisod prico lhan wo oxpoclod along wilh slighlly highor corporalo
cosls and D&A. vhilo lhis has roducod FY!2 EPS !0', wo viow FY!2 (parlicularly
!H as a lransilion poriod and wo conlinuo lo ocus on oulor yoars wilh L
largoling 200koz by FY!4 up ron 75koz in FY!2. l conlinuos lo pay dividonds
(5cps inlorin, can solund lho now CoO nill (US$70n and conlinuo oxploring
(FY!2 US$30n. Trading bolow our $3.30/sh PT, Buy.
EPS (USD 0.59 0.46 0.9! !.3! !.4!
' Chango 0.0' -10.5% !.3' !.3' !.2'
PEF (x !0.4 14.2 7.2 5.0 4.7
EV/EBTDA (x 9.2 12.5 6.4 3.9 3.0
!

CA(P !46/04/20!!.
ResuIts

Buy
ALL OFDAFES 4,333

Key changes
Prico largol 3.50 lo 3.30 " -2.4%
Salos (FYE !23 lo !20 " -6.1%
EBT nargin (FYE 75.6 lo 72.4 " -4.2%
ol proil (FYE 97.3 lo 37.5 " -10.5%

2
3
5
6
3
9
2/!0 5/!0 3/!0 !!/!0 2/!! 5/!! 3/!! !!/!!
odusa ining
ALLOFDAFES (Fobasod
Absolulo !!.5 2.3 -!6.8

Stock data
Froo loal 100.00

FOE (' 29.2
FOA (' -166.5
Book valuo/sharo (USD 1.82
Prico/book (x 3.6
EBT nargin (' 72.4

C
o
m
p
a
n
y

G
I
o
b
a
I

M
a
r
k
e
t
s

R
e
s
e
a
r
c
h

Looking forward, DB forecast NPAT of US$63m in 2H vs US$24m in 1H
Following woak !H FY!2 produclion and a poriod o invoslnonl or lho CoO
oxpansion (US$3!n along wilh hoavy oxploralion (US$!7n, cash docroasod
US$25n. Howovor il is dobl roo and slill has cash and bullion o US$30n
(US$33n cash allowing il lo conlinuo lo rolurn cash (5cps unrankod inlorin div.
vo conlinuo lo look lowards lho 2H FY!2 and boyond or EPS growlh, wo oxpocl
PAT o US$63n in 2H or US$33n lolal in FY!2 booro US$!72n in FY!3.
FY12 production guidance: 75koz (DBe 72koz) at US$230/oz (DBe US$250/oz)
n FY!2 wo orocasl 72koz al US$250/oz ollowing roducod guidanco o 75koz
(originally !00!!0koz duo lo a docision lo lako lho Saga shal doopor slraighl
away, in a caso o invosling now or lho uluro, wilh !.3noz abovo il, il is good or
+6 yoars. Tho saga shal alono will bo capablo o !,500lpd ron January 20!3.
Expansion to ~200kozpa stiII funded from cashfIow for FY14 deIivery
Tho crushor is on silo and lho SAC nill is duo lo arrivo nid yoar, kooping lho
US$70n CoO oxpansion lo 750klpa (~200kozpa on lrack or FY!4 dolivory. Tho
applicalion or lho planl upgrado lo 2,500lpd slill awails a govornnonl pornil bul
lho conslruclion conlinuos uninhibilod. Conslruclion o a largo loach lank and
rourbishing 4 snall onos has slarlod along wilh silo works or lho now crushor.
22 rigs underway using $30m budget, reguIar newsfIow shouId continue
!! drill rigs aro drilling al CoO lo oxlond rosourcos. 7 rigs aro inill rosourco drilling
al Bananghilig lo lil rosourcos inlo lho ndicalod calogory ahoad o a rosourco
updalo and naidon rosorvo duo nid 20!2 (curronlly 650koz rosourco largoling
!oz rosorvos or 5 yoars al 200kozpa. Thoro aro also 4 rigs drilling al Anoling.
Trading at 35% discount to our A$8.30/sh NPV we retain a BUY
Our $3.30/sh TP is sol broadly in lino wilh our A$3.30/sh PV. Tho PV is basod
on a !0.9' vACC and US$!,025/oz L/T gold. Downsido conlros on adding
rosourcos, dolivoring oxpansions on lino and budgol. Soo pg 5 or acro risks.
2! Fobruary 20!2 & Cold odusa ining

Fiscal year end 30-Jun 2009 2010 2011 2012E 2013E 2014E
Financial Summary
DB EPS (USD) 0.17 0.40 0.59 0.46 0.91 1.31
Reported EPS (USD) 0.17 0.37 0.59 0.46 0.91 1.31
DPS (USD) 0.00 0.00 0.10 0.10 0.10 0.10
BVPS (USD) 0.63 0.94 1.47 1.82 2.63 3.85
Valuation Metrics
Price/Sales (x) 3.0 5.7 7.7 10.4 5.8 4.0
P/E (DB) (x) 4.5 7.5 10.4 14.2 7.2 5.0
P/E (Reported) (x) 4.5 8.2 10.4 14.2 7.2 5.0
P/BV (x) 2.4 3.7 4.5 3.6 2.5 1.7
FCF yield (%) 18.1 5.7 7.6 3.1 9.9 18.8
Dividend yield (%) 0.0 0.0 1.6 1.5 1.5 1.5
EV/Sales 2.8 5.4 7.4 10.0 5.4 3.3
EV/EBITDA 3.9 6.4 9.2 12.5 6.4 3.9
EV/EBIT 4.5 7.1 10.1 13.8 6.8 4.2
Income Statement (USDm)
Sales 41 94 149 120 215 308
EBITDA 29 79 120 96 180 258
EBIT 25 71 110 87 171 245
Pre-tax profit 26 66 110 88 172 248
Net income 27 66 110 88 172 248
Cash Flow (USDm)
Cash flow from operations 28 39 97 96 181 262
Net Capex -6 -8 -9 -56 -58 -28
Free cash flow 22 31 87 39 123 234
Equity raised/(bought back) 20 1 1 1 0 0
Dividends paid 0 0 -19 -19 -19 -19
Net inc/(dec) in borrowings 0 0 0 0 0 0
Other investing/financing cash flows -17 1 4 0 0 0
Net cash flow 22 5 26 -10 77 191
Change in working capital 0 -35 -25 -1 0 0
Balance Sheet (USDm)
Cash and cash equivalents 27 32 62 52 129 320
Property, plant & equipment 30 35 40 75 124 139
Goodwill 0 0 0 0 0 0
Other assets 59 117 182 229 256 280
Total assets 115 184 285 356 510 739
Debt 0 0 0 0 0 0
Other liabilities 10 9 9 12 12 12
Total liabilities 10 9 9 12 12 12
Total shareholders' equity 106 175 276 344 498 727
Net debt -27 -32 -62 -52 -129 -320
Key Company Metrics
Sales growth (%) 149.3 131.0 58.4 -19.2 78.9 43.5
DB EPS growth (%) na 132.3 46.3 -21.0 96.9 44.1
Payout ratio (%) 0.0 0.0 17.1 21.6 11.0 7.6
EBITDA Margin (%) 70.8 84.1 80.6 79.7 83.6 83.8
EBIT Margin (%) 62.4 75.8 73.7 72.4 79.6 79.4
ROE (%) 34.6 51.2 48.2 29.2 41.0 40.2
Net debt/equity (%) -25.0 -18.5 -22.6 -15.2 -26.0 -44.1
Net interest cover (x) -152.8 -114.2 -134.7 -129.1 -122.1 -67.3
DuPont Analysis
EBIT margin (%) 62.4 75.8 73.7 72.4 79.6 79.4
x Asset turnover (x) 0.4 0.6 0.6 0.4 0.5 0.5
x Financial cost ratio (x) 1.0 1.0 1.0 1.0 1.0 1.0
x Tax and other effects (x) 1.1 0.9 1.0 1.0 1.0 1.0
= ROA (post tax) (%) 28.6 44.0 47.1 27.3 39.8 39.8
x Financial leverage (x) 1.2 1.1 1.0 0.9 0.8 0.9
= ROE (%) 34.6 47.0 48.0 24.8 32.7 34.3
annual growth (%) na 36.0 2.2 -48.5 31.9 5.0
x NTA/share (avg) (x) 0.5 0.8 1.2 1.9 2.8 3.8
= Reported EPS 0.17 0.37 0.59 0.46 0.91 1.31
annual growth (%) na 113.2 59.4 -21.0 96.9 44.1
Source: Company data, Deutsche Bank estimates
Model updated:21 February 2012
Running the numbers
Australasia
Australia
M&M - Gold
Medusa Mining
Reuters: MML.AX Bloomberg: MML AU
Buy
Price (21 Feb 12) AUD 6.12
Target price AUD 8.30
52-week Range AUD 4.34 - 8.71
Market Cap (m) AUDm 1,156
USDm 1,246
Company Profile
Medusa produces and explores for gold in the Philippines. It
operates narrow vein mines where the high-grade deposits
allow for low-production costs. Given the nature of narrow
vein epithermal gold deposits it is likely that defined reserves
will only ever be about five years despite the potential for
mining to last up to 30 years.
Price Performance
2
3
5
6
3
9
Feb 10May10Aug 10Nov10Feb 11May11Aug 11Nov11
MedusaMihihg ALL OPDINAPIES (Pebased)
Margin Trends
60
64
63
72
76
30
34
33
09 10 11 12E 13E 14E
EBITDAMargih EBITMargih
Growth & Profitability
0
10
20
30
40
50
60
-50
0
50
100
150
200
09 10 11 12E 13E 14E
Sales growIh(LHS) POE(PHS)
Solvency
-200
-150
-100
-50
0
-50
-40
-30
-20
-10
0
09 10 11 12E 13E 14E
NeI debI/equiIy (LHS) NeI ihIeresI cover (PHS

Levi Spry
+61 2 8258-2611 levi.spry@db.com
MEDUSA MINING LIMITED - OperaIiohal daIa
20!0A 20!!A 20!2F 20!3F 20!4F 20!5F 20!6F PV HD!2 A$nn A$/sh ('
DB Connodily & Curroncy orocasl s
Cold (US$/oz !,093 !,373 !,696 !,975 !,300 !,575 !,450 CoO ino !,3!5 6.96 34'
AUDUSD 0.33 0.99 !.0! 0.96 0.93 0.90 0.37 Bananghilig !36 0.72 9'
USDPHP 46.59 43.94 42.56 4!.64 4!.60 4!.60 4!.60 Exploralion 30 0.42 5'
Hodging 0 0.00 0'
CoO ino nvoslnonls 0 0.00 0'
Oro ninod (Kl !93 263 273 360 570 700 700 Corporalo/Olhor (54 (0.29 3'
Oro nillod (Kl !79 267 275 360 570 700 700 ol Cash / (Dobl 9! 0.43 6'
Food grado (g/l !3.4 !2.3 3.7 !0.0 !0.0 !0.0 !0.0 TOTAL !,567 3.30 !00'
Focovory (' 94' 94' 94' 94' 94' 94' 94' vACC !0.9' !33.9 Sharos
Bananghilig
Oro ninod (Kl 4,000 Cold & AUDUSD
Oro nillod (Kl 4,000
Food grado (g/l !.6
Focovory (' 0' 35'
PFODUCT O (Equil y, koz
CoO ino 90 !0! 72 !09 !72 2!2 2!0
Bananghilig !69
Tol al 90 !0! 72 !09 !72 2!2 330
Crowlh !3' 29' 5!' 53' 23' 30'
COSTS, US$/oz
CoO ino, Cash Cosls (incl royally !34 !39 247 242 233 232 237 PV by Assol
Bananghilig, Cash Cosls (incl royally 634
Tol al !34 !39 247 242 233 232 4!4
CAPEX, US$
CoO Dovolopnonl 0 5 34 40
CoO Suslaining 9 5 5 3 3 3 3
Bananghilig Dovolopnonl 40 30 30
Bananghilig Suslaining 4
Exploralion 27 43 32 27 24 24 24
Tolal 36 53 7! !!5 !!2 !!2 36
SES T V TY AALYS S (EPS Chango (' or a !0' chango in
AUDUSD 0' 0' 0' 0'
Cold 9' !2' !2' !3'
FESEFVES & FESOUFCES VALUE US$/oz
Fosorvos .5oz EV/Fosorvo 2,20!
Fosourcos 2.6oz EV/Fosourco 423
Producl ion v/s cash cosl s Cash, dobl & goaring (' Froo cash low v/s capox
Earnings & Dividond Prico l o oarnings EV/EB TDA
Sourco: Conpany dala, DB oslinalos, Dalaslroan
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800
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1,600
2,000
2,400
2010A 2011A 2012F 2013F 2014F 2015F 2016F
Gold (US$/oz) AUDUSD
86%
9%
5%
Co-O Mi ne Bananghi l i g Expl orati on

ASX Iisted goId producers
L is cloarly lho lowosl cosls producor on lho ASX wilh US$230/oz FY!2 guidanco.
Figure 1: FY12 cost curve for ASX Iisted producers
M
M
L
T
R
Y
R
M
S
S
L
R
I
G
R
R
R
L
N
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U
S
$
/
o
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Cumulative ounces
Cost curve, FY12
L is lho choaposl on PEF vs P/PV.
Figure 2: PER vs P/NPV for DB covered goId stocks
NCM
KCN
SBM
AQG
RSG
MML
Avg PER
2012
2013
RRL
0
5
10
15
20
25
0.5 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4
P
E
R
P/NPV
Source. Deutsche Bank, B|oonberg
Investment thesis
OutIook
odusa ining oporalos lho CoO gold nino in lho Philippinos. l is a high grado, low cosl,
high nargin, long lio oporalion. Tho conpany has sovoral gold and coppor projocls across ils
lonononls lo pursuo, a roloclion o lho prospoclivo naluro o lho rogion. Tho high grado
opilhornal voin syslon al CoO will probably only ovor havo ~5 yoars o rosorvos doinod bul
wo oxpocl lho nino lio will bo ~!3 yoars (oxpandod lo 200kozpa. Crowlh will likoly cono
ron addilional ninos as lhoro aro sovoral prospoclivo projocls on lho oxploralion pornils.
vo viow lho high nargins, oxpansion and oxploralion upsido avourably. Trading al a
discounl lo our PV, Buy.
VaIuation
vo dorivo a valualion using a lio o nino DCF, lho largol prico is sol al lho PV. vo assuno
a nino lio o ~!3 yoars al CoO and assign valuo lo bolh lho oxisling projocls and lho
oxploralion. vo do nol apply a proniun lo lho valualion as is sonolinos lho caso in lho gold
soclor. To calculalo a vACC o !0.9' lho ollowing assunplions woro usod: Bola !.25, Cosl
o Equily !2.2' and Cosl o Dobl 6.5'.
Risks
Tho naluro o lho highgrado opilhornal gold syslon noans il will raroly havo noro lhan lon
yoars o nino lio in lho rosourco baso. Howovor, basod on known longlh and doplh o lho
oro, voin widlhs and grados, wo oxpocl lho CoO nino has a !3yr lio. Tho downsido risk is
lhis doosnl provo lo bo lho caso. acro risks includo novononls in lho gold prico, and lho
AUDUSD.
Appendix 1
odusa ining L.AX 6.!2 (AUD 2! Fob !2 A


website at hllp://gn.db.con/gor/disclosuro/Disclosuro.oqsr?ricCodo=L.AX.

conponsalion or providing a spociic roconnondalion or viow in lhis roporl. Lovi Spry

HistoricaI recommendations and target price: Medusa Mining (MML.AX)
(as of 2/2!/20!2)
' #
(
$
)
%
L
&*
'! ''
'#
'(
'$
')
0.00
!.00
2.00
3.00
4.00
5.00
6.00
7.00
3.00
9.00
!0.00
S
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P
r
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Dalo

Slrong Buy
Buy
arkol Pororn
Undorpororn
ol Falod
Suspondod Faling
Buy
Hold
Soll
ol Falod
Suspondod Faling

!. !3/5/20!0: Buy, Targol Prico Chango AUD5.20
4. !7/!!/20!0: Buy, Targol Prico Chango AUD7.25
5. !!/!/20!!: Buy, Targol Prico Chango AUD3.00
6. 27/4/20!!: Downgrado lo Hold, AUD3.00
7. !3/5/20!!: Hold, Targol Prico Chango AUD7.30
!0. 23/9/20!!: Upgrado lo Buy, Targol Prico Chango AUD!0.45
!!. 29/9/20!!: Buy, Targol Prico Chango AUD!0.00
!2. 27/!0/20!!: Buy, Targol Prico Chango AUD9.75
!3. !/!2/20!!: Buy, Targol Prico Chango AUD3.50
!4. !0/!/20!2: Buy, Targol Prico Chango AUD3.57
!5. 30/!/20!2: Buy, Targol Prico Chango AUD3.50

buy lho slock.
slock
Notes:

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
30
!00
!20
!40
Buy Hold Soll
Auslralia Univorso


hllp://gn.db.con.


60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 250 2500
London EC2 2EO
Unilod Kingdon
Tol: (44 20 7545 3000
Deutsche Bank AG
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Doulscho Bank Placo
Lovol !6
Sydnoy, Sv 2000
Auslralia
Tol: (6! 2 3253 !234
Deutsche Bank AG
Filialo Hongkong
Hong Kong
Tol: (352 2203 3333
2!!! agalacho
Sanno Park Towor
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer

Emerging Companies

2! Fobruary 20!2
Emeco
Foulors: EHL.AX Bloonborg: EHL AU Exchango: ASX Tickor: EHL
Fosull slighlly ahoad, Auslralia
ulilisalion loads lho way
Raymond GonzaIez
Fosoarch Analysl
(+6! 2 3253!372
Jennifer Kruk, Ph.D
Fosoarch Analysl
(+6! 2 325326!3
jonnior.kruk@db.con
Tim PIumbe
Fosoarch Analysl
(+6! 2 3253!643
lin.plunbo@db.con

Maintain HoId, PT increased from $1.10 to $1.25
vo conlinuo lo oxpocl EHL lo bonoil ron lho uplurn in lho produclion cyclo
(90' o 20!! rovonuo and ollowing lho roposilioning o ils lool oxpocl
incrononlal capox lo bo FOC accrolivo. vo also soo lho onlry inlo lho Chiloan
narkol as posilivo alboil rocognizo lho risks o oxpanding inlo a now goography.
Howovor, EHL is lrading on a 20!3E EV/EBT o 7.5x vs. lho ox!00 poor avorago
o 6.5x. Civon lho !5' proniun lo poors wo donl lhink EHL will oulpororn lho
soclor ovor lho coning !2 nonlhs. ainlain Hold.
Salos (AUDn 462 503 575 655 673
EBTDA (AUDn !92 224 266 303 32!
ol Proil (AUDn 4! 56 73 37 92
EPS (AUD 0.06 0.09 0.12 0.!4 0.!5
OLD EPS (AUD 0.06 0.09 0.11 0.!3 0.!3
' Chango 0.0' 0.0' 2.3% 3.2' !!.7'
EPS Crowlh (' 23.6 37.4 29.9 !9.2 6.0
PEF (x !0.3 !!.! 10.2 3.6 3.!
EV/EBTDA (x 3.9 4.! 4.1 3.7 3.5
DPS (nol (AUD 0.02 0.!0 0.06 0.03 0.03
Yiold (nol (' 2.9 !0.2 5.1 6.4 6.6
Franking (' !00 !00 100 !00 !00
!
2
yoar ond closo

CA(P !46/04/20!!.
ResuIts

HoId
ALL OFDAFES 4,333

Key changes
Prico largol !.!0 lo !.25 ! 13.6%
Salos (FYE 56! lo 575 ! 2.6%
EBT nargin (FYE 22.4 lo 22.3 " -0.5%
ol proil (FYE 7!.! lo 72.7 ! 2.3%

0.4
0.6
0.3
!.0
!.2
!.4
2/!0 5/!0 3/!0 !!/!0 2/!! 5/!! 3/!! !!/!!
Enoco
ALLOFDAFES (Fobasod
Absolulo !8.0 !9.8 !.3

Stock data
arkol cap (AUDn 745
arkol cap (USDn 803
Froo loal 90.00

FOE (' 11.7
FOA (' 12.2
Prico/book (x 1.2
EBT nargin (' 22.3

C
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y

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I
o
b
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1H12 resuIt sIightIy ahead
EHL roporlod !H!2 Salos $273n (vs. DB $266n, EBTDA $!20n (DB $!!6n and
proabnornal PAT $29.2n (DB $23.3n. Tho dividond o 2.5cps was slighlly
ahoad o DB 2cps. Divisionally, Auslralia porornod bollor lhan oxpoclod, drivon
by an avorago 95' ulilisalion ralo (UF vs. DB 33' and pcp 39'. Canada was
woakor, wilh an avorago UF o 53' vs. DB al 75' and pcp 39'.
We beIieve 2H12 wiII IikeIy be better than expected, but it's in the price
EHL havo nol providod 20!2 oarnings guidanco. vo boliovo lho 2H could cono in
ahoad o oxpoclalions drivon by EHL cycling lho inpacls o advorso woalhor in
Old. Howovor, wilh lho sharo prico up 5' loday and EHL now lrading on a 20!3E
EV/EBT o 7.5x (!5' proniun lo poors, wo boliovo lhis is largoly aclorod in.
VaIuation and risks
Our DCF valualion has incroasod ron $!.!0 lo $!.25 por sharo duo lo highor
oarnings oslinalos. DCF inpuls aro unchangod (soo p.4. Downsido risks: woalhor,
produclion volunos, lowor rolurns on doployod growlh capox, Chilo. Upsido risks:
ronlal ralos, acquisilions, growlh capox gonoralos abovo avorago rolurns.
2! Fobruary 20!2 Enorging Conpanios Enoco
Y/E 30 June 06/07 07/08 08/09 09/10 10/11 11/12E 12/13E 13/14E 14/15E
PROFIT & LOSS (A$m)
Sales revehue 554 618 528 462 503 575 655 678 679
EBIT (ihcl sighiIicahI iIems) 124 119 67 -11 93 128 152 159 147
MihoriIies/preIerehce dividehds -1 0 0 0 0 0 0 0 0
PeporIed proIiI 55 68 13 -49 50 72 87 92 84
SighiIicahI iIems 0 0 -45 -90 -6 0 0 0 0
CASH FLOW (A$m)
Movement in net working capital -85 -12 82 36 43 3 -12 -4 0
Capex -204 -204 -116 -155 -200 -273 -206 -172 -168
Free cash Ilow -120 -50 60 -8 15 -60 25 78 79
OIher ihvesIihg acIiviIies -118 39 21 48 54 0 0 0 0
EquiIy raised/(boughI back) 438 0 -3 0 0 0 0 0 0
Dividehds paid -6 -28 -28 -13 -57 -35 -41 -49 -50
+61 2 8258 2313 domihic.rose@db.com NeI ihc/(dec) ih borrowihgs -256 32 -26 -34 -10 94 16 -29 -28
OIher Iihahcihg cash Ilows 73 -2 -31 1 -2 -94 -16 29 28
TIa cash Ivs Irm Inancng 248 2 -88 -45 -69 -35 -41 -49 -50
+61 2 8258 1643 Iim.plumbe@db.com NeI cash Ilow 10 -10 -7 -5 0 -94 -16 29 28
NvemenI n neI debI/(cash) -267 41 -19 -29 -10 189 33 -58 -57
BALANCE SHEET (A$m)
Goodwill 222 223 215 178 173 173 173 173 173
OIher asseIs 294 305 226 221 144 150 170 176 177
ToIal asseIs 1,089 1,167 1,120 1,015 981 1,122 1,192 1,209 1,214
NeI vrkng capIa 232 244 162 127 83 81 93 97 97
NeI debI/(cash) 305 348 328 299 288 383 399 370 342
RATIO ANALYSIS
52-week High/Low: A$1.24 - 0.93 Sales growIh - pcp (%) ha 11.4 -14.5 -12.6 8.9 14.4 13.9 3.5 0.1
MarkeI Cap (m) A$ 745
EBITDA/sales (%) 37.1 34.6 40.9 41.7 44.6 46.2 47.1 47.4 45.7
US$ 792
EBIT/sales (%) 22.3 19.3 21.0 18.3 20.2 22.3 23.3 23.5 21.6
PayouI raIio (%) 11.5 41.9 49.2 30.7 101.8 47.6 47.3 53.2 60.1
BeIa (MPP - 6.00) 1.25
POE (%) 12.6 9.8 8.3 6.3 9.1 11.7 13.1 13.0 11.3
Tax raIe (%) 29.8 29.4 67.3 -36.6 28.9 28.9 28.9 28.9 28.9
Capex/sales (%) 36.8 33.0 21.9 33.6 39.8 47.4 31.5 25.4 24.8
NeI debI/equiIy (%) 45.3 49.6 48.0 48.0 47.9 59.8 58.2 50.8 44.8
8.8 8.4
4.1 3.7 3.5
7.1 7.5
3.5
7.5
Emeco HoIdings Ltd
P/CFPS (x)
DPS (A$) 0.035
13.2
Company description
1.03
899 1,004
9.0
A$1.25
EV/EBITDA (x)
HoId
Price/BV (x)
PeuIers: EHL.AX Bloomberg: EHL AU
Price as aI 21-Feb
TargeI price
979
5.1
1.71
1,074
11.6 8.3
0.54
992
6.8
4.6
3.9
5.2
EV/EBIT (x)
Jennifer Kruk
Compahy websiIe
Tim PIumbe
Emeco Holdihgs LimiIed rehIs earIhmovihg
equipmehI Io Ihe mihihg ihdusIries ih AusIralia
ahd Ihdohesia.
Research Team
Dominic Rose
Raymond GonzaIez
hIIp://www.emeco.com.au
1.25
1,101 1,129 1,136
8.7
1,080
4.6 4.0
A$1.18
0.98
7.0
1.02 1.09
6.4 6.6 5.1
1.16 0.70
10.2
1.03
3.5
2.9
0.060
3.2
0.366
0.075
3.0 3.0
0.083 0.078
0.392
4.8 2.1 3.0 2.9
0.045 0.100 0.040 0.020
0.065 0.089
10.8
10.8
0.396 0.338
-0.078 0.106
6.5 10.8
EPS FD (A$) 0.090
OperaIihg CFPS (A$) 0.138 0.340 0.274 0.232 0.242
-15.1
0.090
20.2 27.8
0.090 0.106
0.021
20.2
18.4
8.9 8.6 10.3 hm 8.1 12.4
Normalised EPS (A$)
Asia Pacific
Equity Research
SUMMARY
8.9 11.1
0.115 0.079
8.6 8.1
37.4
10.2
19.2 29.9
MisceIIaneous IndustriaIs P/E raIio FD (x)
0.133 0.146
AusIralia
0.137
ha -28.6 -8.7 6.0
0.133 0.146 0.137 0.115
18%
20%
1.3%
0% 5% 10% 15% 20% 25%
1m
3m
12m
0
5
10
15
20
25
30
35
40
45
50
08 09 10 11 12E 13E 14E 15E
EBITDA/sales (%)
EBIT/sales (%)
Trends
0
2
4
6
8
10
12
14
16
08 09 10 11 12E 13E 14E 15E
POE (%) POA (%)
op POC (%)
Return Ratios (%)
0
10
20
30
40
50
60
70
0
50
100
150
200
250
300
350
400
450
08 09 10 11 12E 13E 14E 15E
NeI debI/equiIy (%)
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1.10
2/07 2/08 2/09 2/10 2/11 2/12


Key points on 1H12 resuIt
Tho rosull was rolalivoly in lino wilh our oxpoclalions. EHL roporlod !H!2 Salos $273n,
EBTDA $!20n and proabnornal PAT o $30n, which was roughly in lino wilh our $23.3n.
Koy poinls on lho !H rosull aro -
#
Auslralian Fonlal: Ulilizalion Falo (UF avoragod al 95', abovo DB 33' and pcp 39'.
As al !2Fob lho UF was 93'.
#
ndonosia Fonlal: UF avoragod 73', in lino wilh DB 75' and bolow pcp o 33'. As al
!2Fob lho UF was 73'.
#
Canadian Fonlal: UF avoragod 53', bolow DB 75' and pcp 39'. As al !2Fob lho UF
was 96'.
#
Capox was c. $!30n in !H!!. EHL conlinuo lo oxpocl $235n or lho ull yoar (growlh +
nainlonanco, o which $60n was paid in 2H!! i.o. $225n cash low inpacl in 20!2, in
lino wilh DB.
#
EHL oxpocl addilional growlh capox in 20!2E o $30n in ndonosia and $50n or Chilo.
olo lhal $47n o lho $30n lolal nay bo paid lalo in 2H!2 wilh no corrosponding
inpacl on oarnings.
#
FOC conlinuos lo inprovo, now al !!.4' vs. Doc!0 !!' and Doc09 6'.
Investment Thesis
vo rolain our Hold raling and our prico largol has incroasod ron $!.!0 lo $!.25 duo lo
highor oarnings oslinalos. vo havo nado only ninor changos in 20!2E, bul havo incroasod
20!3E PAT by 9' lo $36.7n and 20!4E by !2' lo $9!.9n as EHL doploy urlhor growlh
capox in 20!3.
vo boliovo lhal 2H!2 will likoly bo bollor lhan oxpoclod, as EHL cyclo advorso woalhor
condilions in Ouoonsland. As al 3!Doc EHL had 3!' o ils unds onployod in Old (largosl
rogion, so wo would oxpocl a nornalizalion o woalhor condilions lo provido sono bonoil.
Ovorall wo boliovo lho conpany is doing a good job al roslrucluring lho businoss lowards
highor rolurning largor nining oquipnonl and roducing lho capilal baso (ron
undorpororning goar in a ordorly nannor. Howovor, ollowing lho roslrucluring poriod, wo
boliovo 20!! is likoly lo bo lho lasl yoar whoro EHL onjoys bolh inproving oarnings and a
roduclion in capilal doployod. wo look on a irsl hal basis, !H!2 was lho irsl hal whoro
EHLs lool valuo incroasod vs. pcp conparod lo consoculivo doclinos in !H!0 and !H!!.
EHL is oxposod prodoninanlly lo lho produclion slago o lho nining cyclo (c. 90' in 20!!E
and lo a lossor oxlonl lho capox slago (c. !0'. As such wo oxpocl EHL lo conlinuo lo
bonoil ron lho uplurn in produclion and ovorburdon volunos in ils koy connodilios (ron
Oro, Coal and Oil Sands.
EHL is lrading on a 20!2E EV/EBT o 3.3x and 20!3E o 7.5x, conparod lo Auslralian nining
sorvicos avoragos o 3.!x and 6.5x rospoclivoly. Civon lhal EHL is noro capilal inlonsivo lhan
ils poors and on our nunbors is orocasl lo grow oarnings in lino wilh lho poor avorago, wo
do nol boliovo il warranls such a 20!3E largo valualion proniun. vo rocognizo lhal EHLs
largo oxposuro lo lho produclion cyclo is likoly lo load lo noro suslainablo growlh lhan ils
poors, which aro on avorago oxposod lo dovolopnonl capox. Howovor, lhink lhis is noro
lhan aclorod inlo lho curronl sharo prico and wo soo bollor valuo olsowhoro in lho soclor.
Hold.
VaIuation and Price Target
Our DCF valualion has incroasod ron $!.!0 lo $!.25 duo lo highor oarnings oslinalos. Our
koy DCF assunplions aro: vACC !!.3', risk roo ralo 6.25', bola !.25, LTCF 3.5'
(noninal CDP assunplion or Auslralia cosl o dobl 3', goaring 30', and cosl o dobl 3'.
Our prico largol oquals our DCF, and inplios a 20!3E PEF o 9x and EV/EBT o 7.3x.
Figure 1: Ex-100 mining services comparabIe companies
!"#$ %&$'' ()*(+,-./ ()*(+,-./ ()*(+,-' ()*(+,-' 0(1 0(1 (023 (023
!"#$%&'(&'()*''+,-.+-,+ 04567 8"9' :;<: :;<= :;<: :;<= :;<: :;<= :;<: :;<=
AAx Ausenco LLd (u8) 8uy $3.63 3.46 426 7.1 3.2 9.2 6.4 13.7 9.8 41 40
ASL Ausdrlll LLd (u8) 8uy $3.73 3.71 1123 3.0 4.6 8.3 7.6 11.3 10.1 18 12
8kn 8radken LLd (u8) 8uy $9.00 8.40 1400 7.8 6.4 9.6 7.9 12.2 10.1 13 21
Cuu Cardno LLd (n8) 6.42 796 6.9 3.7 7.8 6.4 10.3 9.3 11 9
CLC Clough LLd (n8) 0.83 639 8.2 6.3 8.6 6.8 13.0 10.6 0 22
uCC uecmll Croup LLd (n8) 2.60 431 8.3 6.0 9.8 6.9 13.0 10.2 3 28
LPL Lmeco Poldlngs LLd (u8) Pold $1.23 1.18 743 4.2 3.7 8.8 7.3 10.2 8.6 30 19
lCL lorge Croup LLd (n8*) 3.93 497 3.7 4.6 6.4 3.2 10.9 9.6 21 14
CnC Cr Lnglneerlng Servlces LLd (n8) 1.67 231 6.1 4.9 6.2 3.0 10.1 8.6 12 18
lMu lmdexLLd (u8) 8uy $2.73 2.39 490 6.0 3.3 7.1 6.2 10.0 8.7 32 13
luL lndusLrea LLd (n8) 1.20 443 3.9 3.3 3.4 4.3 6.6 3.9 24 13
LuW Ludowlcl LLd (n8) 9.74 287 10.2 8.8 12.6 10.6 17.7 14.9 29 19
L?L Lycopodlum LLd (n8) 7.00 271 8.3 7.7 9.1 8.3 13.9 12.8 14 8
MAP Macmahon Poldlngs LLd (u8) Pold $0.83 0.81 393 4.2 3.9 8.1 7.8 10.7 8.9 - 20
MLu Maca LLd (n8) 2.16 324 4.4 3.4 6.9 3.3 9.7 8.4 14 16
MCL MaLrlxComposlLes & Lnglneerlng LLd (n8) 2.91 224 3.9 3.6 7.3 4.1 11.1 6.2 -43 79
Mln Mlneral 8esources LLd (n8) 13.09 2418 7.7 3.7 9.7 6.7 12.9 10.1 13 28
nWP nrw Poldlngs LLd (u8) 8uy $3.30 3.43 962 3.9 3.0 7.9 6.7 11.0 9.7 102 13
8C8 8C8 1omllnson LLd (n8) 1.90 233 3.1 4.2 7.2 3.7 10.3 8.6 22 22
SuM Sedgman LLd (u8) 8uy $2.43 2.04 433 3.7 4.6 8.1 6.3 11.1 10.4 34 6
SWk Swlck Mlnlng Servlces LLd (u8) Pold $0.33 0.32 76 2.9 2.4 6.3 4.6 8.6 6.7 86 28
/>74"37 ?@: A@; B@< ?@A <<@C D@C ::E :<E
Source. Deutsche Bank, B|oonberg Finance LP.

Risks
Tho koy upsido risks lo our oarnings oslinalos aro,
#
Fonlal ralos could riso by noro lhan wo oxpocl as induslry donand conlinuos lo
inprovo.
#
Following ils roslrucluring phaso, EHL is opon lo acquisilion opporlunilios. This could
add lo lho conpanys oarnings oullook.
#
Crowlh capox gonoralos abovo avorago rolurns, parlicularly as EHL oxpand inlo Chilo.
Tho koy downsido risks lo our oarnings oslinalos and valualion aro:
#
Unavorablo soasonal woalhor pallorns in Canada aro always a risk.
#
Our orocasls aro basod on a gonoral incroaso in nining produclion volunos and i lhis
doos nol ovonlualo, our oarnings orocasls aro likoly lo bo loo high.
#
EHL is now boginning lo doploy growlh capox. This is a risk o dolays in doploynonl and
rolurns boing lowor lhan oxpoclod during a ranpup poriod. Thoro is also addilional risk
in lorns o sourcing now largo oquipnonl as load linos aro now closo lo lwo yoars, and
incroasod risk as EHL onlors a now nining rogion (Chilo.
Changes to earnings
$n ( Juno yoar ond
Pr ovious ow Chango Pr ovious ow Chango
Fovonuo 560. 4 575.! 2. 6' 603. 0 654.9 3.6'
Oporaling cosls 304.9 3!4.2 3.!' 322.6 35!.4 3.9'
EB TDA 260. 5 265.9 2. !' 235. 3 303.5 3.!'
Doprocialion & Anorlisalion !35.0 !37.9 2.!' !45.9 !56.! 7.0'
EB T !25. 5 !23.0 2. 0' !39. 5 !52.3 9.2'
ol nlorosl oxponso 25.6 25.3 0.7' 27.4 30.4 !!.!'
Pr o l ax pr o il 99. 9 !02.2 2. 4' !!2. ! !2!.9 3.3'
ncono lax oxponso (proab. 23.3 29.5 2.4' 32.3 35.2 3.3'
PAT (pr oabnor nals 7!. ! 72.7 2. 4' 79. 7 36. 7 3.3'
Signiicanl ilons 0.0 0.3 0.0 0.0
PAT 7!. ! 72.4 !. 9' 79. 7 36. 7 3.3'
EPS dilul od ( pr oab. !!. 3 !!.5 2. 4' !2. 6 !3. 7 3.3'
DPS 5.6 6.0 7.!' 6.3 7.5 !9.0'
Divisional Salos
Auslralia 433.6 457.6 4.3' 466.3 507.7 3.3'
ndonosia 45.7 47.3 4.5' 43.9 53.0 3.3'
Canada 76.0 69.3 3.2' 37.3 94.3 3.0'
Tol al Divisional Salos 560. 4 575.! 2. 6' 603. 0 654.9 3.6'
Divisional EB TDA
Auslralia 2!7.6 224.! 3.0' 232.! 252.! 3.6'
ndonosia 24.2 25.3 6.6' 29.3 23.5 2.9'
Canada 40.3 36.0 !!.6' 45.9 43.3 6.4'
Olhor / unallocalod 22.0 20.0 9.!' 22.0 2!.0 4.5'
Tol al EB TDA 260. 5 265.9 2. !' 235. 3 303.5 3.!'
20!2 20!3
Prior lo lho !H!2 rosull, 20!2 consonsus oslinalos woro: Salos $567n, EBTDA $260n,
EBT $!25n and PAT $70n. 20!3: Salos $632n, EBTDA $294n, EBT $!45n and PAT
$32n (sourco: Bloonborg Financo LP.
Koy changos lo oarnings aro as ollows -
#
Tho !H!2 rosull was slighlly ahoad o our oxpoclalions and wo havo incroasod our ull
yoar orocasls accordingly.
#
vo havo incroasod our 20!3E and 20!4E oarnings on lho back o highor lhan oxpoclod
growlh capox or 20!3. vo havo incroasod our oxpoclod capox by $30n.
#
vo havo includod a $50n cash paynonl rolaling lo EHLs anlicipalod $30n growlh
capox in 20!3E in lho 20!2 cash low as il is likoly lhis paynonl will occur lalo in 2H.
#
Our orocasl dividond payoul ralio o 50' is unchangod.
1H12 resuIt detaiI
Figure 3: 1H12 resuIt
$n ( Juno yoar ond !H!!a
Fopor l od Fopor l od vs. pcp DB vs. Fopor l od
Fovonuo 253. 6 273. 0 7. 7' 265. 6 2. 3'
Oporaling cosls !33.4 !53.0 !0.6' !5!.9 0.7'
EB TDA !!5. 2 !20. 0 4. !' !!6. 0 3. 5'
Doprocialion & Anorlisalion 60.3 65.6 3.7' 63.4 3.4'
EB T 54. 9 54. 4 0. 9' 52. 6 3. 5'
ol nlorosl oxponso !3.! !2.2 6.4' !2.3 4.3'
Pr o l ax pr o il 4!. 3 42. 2 0. 9' 39. 3 6. !'
ncono lax oxponso (proab. !2.3 !3.0 5.4' !!.5 !3.2'
PAT ( pr o abnor nals 29. 5 29. 2 !. 0' 23. 3 3. !'
Signiicanl ilons 5.4 0.3 93.9' 0.0
PAT 24. ! 23. 9 !9. 7' 23. 3 2. 0'
EPS dilul od ( pr o ab. 3. 3 4. 6 20. 3' 4. 5 3. 5'
DPS 7.0 2.5 64.3' 2.0 25.0'
Divisional Salos
Auslralia !96.7 223.3 !3.3' 2!4.4 4.4'
ndonosia 24.7 23.5 4.9' 2!.3 7.3'
Canada 32.2 25.3 20.0' 29.5 !2.6'
Tol al Divisional Salos 253. 6 273. 0 7. 7' 265. 6 2. 3'
Divisional EB TDA
Auslralia 9!.7 !03.6 !2.9' !0!.6 2.0'
ndonosia !5.4 !2.4 !9.3' 9.3 26.6'
Canada !6.3 !2.7 24.3' !5.6 !3.7'
Olhor / unallocalod 3.6 3.3 2.0' !!.0 20.0'
Tol al EB TDA !!5. 3 !!9. 9 4. 0' !!6. 0 3. 4'
!H!2a DB !H!2
Source. Deutsche Bank, Conpan, infornation

Appendix 1
Enoco EHL.AX !.!3 (AUD 2! Fob !2 A


website at hllp://gn.db.con/gor/disclosuro/Disclosuro.oqsr?ricCodo=EHL.AX.


HistoricaI recommendations and target price: Emeco (EHL.AX)
(as of 2/2!/20!2)
1
2
3
4
0.00
0.20
0.40
0.60
0.30
!.00
!.20
!.40
S
o
c
u
r
i
l
y

P
r
i
c
o
Dalo

Slrong Buy
Buy
arkol Pororn
Undorpororn
ol Falod
Suspondod Faling
Buy
Hold
Soll
ol Falod
Suspondod Faling

!. !3/7/20!0: Hold, Targol Prico Chango AUD0.75
2. 25/3/20!0: Hold, Targol Prico Chango AUD0.30
3. 3/!!/20!0: Hold, Targol Prico Chango AUD0.90
4. 22/2/20!!: Hold, Targol Prico Chango AUD!.!0

buy lho slock.
slock
Notes:

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
30
!00
!20
!40
Buy Hold Soll
Auslralia Univorso


hllp://gn.db.con.


60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 250 2500
London EC2 2EO
Unilod Kingdon
Tol: (44 20 7545 3000
Deutsche Bank AG
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Doulscho Bank Placo
Lovol !6
Sydnoy, Sv 2000
Auslralia
Tol: (6! 2 3253 !234
Deutsche Bank AG
Filialo Hongkong
Hong Kong
Tol: (352 2203 3333
2!!! agalacho
Sanno Park Towor
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer

Emerging Companies

2! Fobruary 20!2
Macmahon HoIdings
Foulors: MAH.AX Bloonborg: MAH AU Exchango: ASX Tickor: MAH
Slrong !H!2 rosull and
oullook. Hold.
Dominic Rose
Fosoarch Analysl
(+6! 2 325323!3
doninic.roso@db.con
Raymond GonzaIez
Fosoarch Analysl
(+6! 2 3253!372
Tim PIumbe
Fosoarch Analysl
(+6! 2 3253!643
lin.plunbo@db.con

Maintain HoId. PT increased to $0.85ps
AHs oarnings lurnaround slory is inprossivo and lho oullook appoars posilivo,
supporlod by a rocord ordor book, pipolino and a avourablo conlracling
onvironnonl. vo havo nado nalorial noarlorn oarnings upgrados which aro
consislonl wilh conpany guidanco. Howovor, wo rolain our Hold raling
considoring lho roconl slrong run in lho sharo prico has linilod lho upsido
polonlial lo our rovisod $0.35PT (proviously $0.62ps. AH is lrading broadly in
lino wilh poors. Our PT inplios 7.2x FY!3 EBT.
Salos (AUDn 396 !,039 1,503 !,694 !,93!
EBTDA (AUDn 63 96 158 !37 2!9
ol Proil (AUDn 39 3 58 69 75
EPS (AUD 0.05 0.00 0.08 0.09 0.!0
OLD EPS (AUD 0.05 0.00 0.07 0.03 0.03
' Chango 0.0' 0.0' 4.0% !4.7' 20.!'
EPS Crowlh (' 59.5 - - !9.7 7.9
PEF (x !!.7 - 10.7 3.9 3.3
EV/EBTDA (x 6.7 3.9 3.8 3.7 3.3
DPS (nol (AUD 0.03 0.00 0.04 0.05 0.05
Yiold (nol (' 4.9 0.0 4.7 5.7 5.7
!
2
yoar ond closo

CA(P !46/04/20!!.
Forecast Change

HoId
ALL OFDAFES 4,333

Key changes
Prico largol 0.62 lo 0.35 ! 37.1%
Salos (FYE !,543 lo !,503 " -2.9%
EBT nargin (FYE 4.9 lo 5.4 ! 10.8%
ol proil (FYE 55.3 lo 57.5 ! 4.0%

0.4
0.5
0.6
0.7
0.3
0.9
2/!0 5/!0 3/!0 !!/!0 2/!! 5/!! 3/!! !!/!!
acnahon Holdings
Absolulo !9.3 38.8 4!.2

Stock data
arkol cap (AUDn 593
arkol cap (USDn 639
Froo loal 81.00

FOE (' 16.6
FOA (' 12.0
Prico/book (x 1.6
EBT nargin (' 5.4

C
o
m
p
a
n
y

G
I
o
b
a
I

M
a
r
k
e
t
s

R
e
s
e
a
r
c
h

Strong 1H12 resuIt and earnings outIook
AH dolivorod a bollor lhan oxpoclod !H!2 rosull wilh PAT o $23.2n coning
in !4' ahoad o DBo and guidanco o ~$20n. Tho rosull was cloan and showod a
narkod inprovononl on lho $!6.3n loss roporlod in lho pcp which was inpaclod
by lho FCP5 conlracl wrilodown. Fovonuos woro in lino whilo nargins woro
ahoad, rolocling oporaling lovorago - AH won $2.2b o work in !H!2. Tho ordor
book has grown lo $3.3b wilh ~50' o our rovisod FY!3 rovonuo conlraclod.
Earnings upgraded in Iine with company guidance
anagononl updalod FY!2 PAT guidanco lo $5560n (was >$55n and
providod a FY!3 oarnings growlh largol o 20' (inplios $6672n PAT. vo
havo incroasod our FY!2 PAT orocasl by 5' lo $53n (lowards lho nidpoinl
and our FY!3 orocasl by !5' lo $70n (inplios 20' yoy growlh. argins aro
oxpoclod lo incroaso in 2H!2 duo lo conslruclion conlracl proil rocognilion.
VaIuation and Risks
PT incroasod lo $0.35ps (proviously $0.60, sol oqual lo our DCF (Bola !.25,
vACC !!.4', TCF 3.5' which has incroasod duo lo highor noarlorn oarnings
orocasls. Koy downsido risks: conslruclion conlracl pricing and oxoculion, a
connodily narkol downlurn, and inclononl woalhor. Koy upsido risks: bollor
lhan oxpoclod nargins, nalorial conlracl wins, and corporalo aclivily (soo pago 3.
2! Fobruary 20!2 Enorging Conpanios acnahon Holdings

Y/E 30 June 06/07 07/08 08/09 09/10 10/11 11/12E 12/13E 13/14E 14/15E
PROFIT & LOSS (A$m)
Sales revehue 900 1,201 1,358 896 1,089 1,503 1,694 1,931 2,102
Ihcome Iax expehse 14 18 3 11 -1 21 25 28 29
AssociaIes/aIIiliaIes 6 6 14 34 -27 11 12 10 8
MihoriIies/preIerehce dividehds 0 1 1 1 -4 0 0 0 0
PeporIed proIiI 45 49 18 39 -3 58 69 75 75
NeI prII (exc sgnIcanI Iems) 30 49 18 39 -3 57.5 69.5 75.0 75
CASH FLOW (A$m)
Movement in net working capital -10 -22 4 38 9 -13 -13 -9 -13
Capex -33 -37 -41 -52 -82 -205 -180 -96 -106
Free cash Ilow 36 51 12 65 10 -95 -44 60 43
OIher ihvesIihg acIiviIies 50 -5 -9 3 1 0 0 0 0
Dividehds paid -9 -12 -19 -11 -11 -11 -33 -34 -34
NeI ihc/(dec) ih borrowihgs 7 -20 -38 -53 18 50 60 0 0
OIher Iihahcihg cash Ilows -59 -10 -15 -12 -2 0 0 0 0
TIa cash Ivs Irm Inancng -59 -40 -14 -76 5 39 27 -34 -34
+61 2 8258 1643 Iim.plumbe@db.com NeI cash Ilow 27 6 -11 -8 16 -56 -17 26 9
NvemenI n neI debI/(cash) -20 -26 -27 -45 2 106 77 -26 -9
BALANCE SHEET (A$m)
Goodwill 20 22 23 23 23 23 23 23 23
OIher asseIs 165 215 205 125 219 247 289 335 375
ToIal asseIs 560 630 633 581 686 797 923 1,000 1,067
NeI vrkng capIa 24 46 42 5 -4 9 22 31 44
NeI debI/(cash) 55 29 2 -44 -39 66 143 118 108
RATIO ANALYSIS
52-week High/Low: A$0.82 - 0.48 Sales growIh - pcp (%) ha 33.4 13.1 -34.0 21.5 38.0 12.7 14.0 8.9
MarkeI Cap (m) A$ 595 EBITDA/sales (%) 8.6 9.1 4.3 7.1 8.8 10.5 11.0 11.4 9.8
US$ 633 EBIT/sales (%) 4.7 5.7 1.1 2.2 3.6 5.4 5.6 5.7 5.3
PayouI raIio (%) 43.2 42.5 161.8 28.4 -405.2 19.3 47.8 45.3 45.5
BeIa (MPP - 6.00) 1.25
POE (%) 15.8 21.5 6.6 12.0 -0.8 16.6 17.9 17.6 16.0
Tax raIe (%) 26.3 29.2 42.9 75.1 -3.9 31.2 30.0 30.0 30.0
Capex/sales (%) 3.7 3.1 3.0 5.8 7.5 13.6 10.6 5.0 5.1
NeI debI/equiIy (%) 25.9 11.6 0.6 -12.9 -12.2 17.9 35.3 26.3 22.2
-5 -18
9.5
46
-6
7.4
75
43 36 25
86 78
44
-19 -21 -20
3.8 3.7 3.3
6.6 7.3
3.4
88
6.4
-18 -20 -19
1
Macmahon HoIdings Ltd
P/CFPS (x)
DPS (A$) 0.030
6.6
Company description
3.29
-19
19
374 461
54
17
30.6
Major contributors to EBT
CohsIrucIioh 33
A$0.85
EV/EBITDA (x)
HoId
Price/BV (x)
PeuIers: MAH.AX Bloomberg: MAH AU
Price as aI 20-Feb
TargeI price
10
427
6.7
2.14
513
21.4
40
12.5
1.88
Mihihg 51
857
1.9
7.9
3.6
6.7
EV/EBIT (x)
OIher
Jennifer Kruk
Compahy websiIe
Tim PIumbe
Macmahoh Holdihgs is a civil ehgiheerihg ahd
cohIracI mihihg compahy headquarIered ih
PerIh, WA. Civil capabiliIies spah roads, rail,
porIs ahd resources ihIrasIrucIure while mihihg
services spah drillihg services Io cohIracI mihihg.
Research Team
Raymond GonzaIez
Dominic Rose
hIIp://www.macmahoh.com.au
708 725 699
12.2
606
8.0 3.9
A$0.81
1.22
5.7
1.33 1.46
5.7 5.7 4.7
1.61 1.33
0.0
1.29
5.6
4.9
0.038
4.6
0.176
0.046
4.2 4.0
0.046 0.046
0.193
9.4 8.3 3.9 4.6
0.055 0.000 0.015 0.030
0.052 -0.004
15.0
16.7
0.202 0.144
0.098 0.102
24.2 11.7
EPS FD (A$) 0.095
OperaIihg CFPS (A$) 0.129 0.123 0.095 0.157 0.164
-64.5
0.033
9.0 13.9
0.057 0.092
0.057
15.2
62.3
7.5 7.6 9.0 6.2 7.3 hm
Normalised EPS (A$)
Asia Pacific
Equity Research
SUMMARY
8.3 hm
0.090 -0.040
8.9 8.3
-107.0
10.7
19.7 ha
0.107 0.110
AusIralia
0.106
ha 59.5 -0.4 7.9
0.097 0.097 0.090 0.075
19%
39%
41%
0% 10% 20% 30% 40% 50%
1m
3m
12m
0
2
4
6
8
10
12
08 09 10 11 12E 13E 14E 15E
EBITDA/sales (%)
EBIT/sales (%)
Trends
(5)
0
5
10
15
20
25
08 09 10 11 12E 13E 14E 15E
POE (%) POA (%)
op POC (%)
Return Ratios (%)
-20
-10
0
10
20
30
40
-100
-50
0
50
100
150
200
08 09 10 11 12E 13E 14E 15E
NeI debI/equiIy (%)
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
2/07 2/08 2/09 2/10 2/11 2/12

Investment thesis
OutIook
AHs oarnings lurnaround slory is inprossivo and lho oullook or lho businoss appoars
posilivo, supporlod by a rocord ordor book, pipolino and a avourablo conlracling
onvironnonl. vo havo nado nalorial noarlorn oarnings upgrados which aro consislonl wilh
conpany guidanco. Howovor, wo rolain our Hold raling considoring lho roconl slrong run in
lho sharo prico has linilod lho upsido polonlial lo our rovisod $0.35PT (proviously $0.62ps.
AH dolivorod a bollor lhan oxpoclod !H!2 rosull wilh PAT o $23.2n coning in !4'
ahoad o DBo and guidanco o ~$20n. Tho rosull was cloan and showod a narkod
inprovononl on lho $!6.3n loss roporlod in lho pcp which was inpaclod by lho FCP5
conlracl wrilodown. Fovonuos woro in lino whilo nargins woro ahoad, rolocling oporaling
lovorago - AH won $2.2b o work in !H!2. Tho ordor book has grown lo $3.3b wilh ~50'
o our rovisod FY!3 rovonuo orocasl conlraclod (soo pago 4 or groalor dolail.
anagononl updalod FY!2 PAT guidanco lo $5560n (was >$55n and providod a FY!3
oarnings growlh largol o 20' (inplios $6672n PAT. vo havo incroasod our FY!2 PAT
orocasl by 5' lo $53n (lowards lho nidpoinl and our FY!3 orocasl by !5' lo $70n
(inplios 20' yoy growlh, in lino wilh AHs largol and lho soclor avorago ralo. argins aro
oxpoclod lo incroaso in 2H!2 duo lo conslruclion conlracl proil rocognilion. Undorpinning
lho FY!3 growlh largol is a ull yoar conlribulion ron lho Tropicana, Tavan Tolgoi and
Calabar nining conlracls, growlh ron lho Enginooring businoss and nargin oxpansion
(largoly ron conlribulion ron inlornalional nining conlracls Soo pago 6.
n our viow, lho slrong anlicipalod oarnings growlh proilo is caplurod in lho sharo prico wilh
AH lrading broadly in lino wilh poors, on 3.9x FY!3 EPS and 6.9x FY!3 EBT (incl JVs
vorsus lho ASX ox!00 nining sorvicos conps on 9.4x and 6.5x rospoclivoly (soo pago 7.
Our rovisod $0.35PT inplios a FY!3 PEF o 9.4x and 7.2x EBT.
Having roconlly roinancod and incroasod lho dobl acililios al inprovod lorns, lho balanco
shool is in a solid posilion lo und lho signiicanl growlh capox roquirod lo nool conlracl
roquirononls. Our undorlying assunplions soo goaring incroaso lo 26' in FY!3 allhough
wo nolo inlorosl covor is orocasl lo ronain solid al 7.4x.
Our prico largol has incroasod lo $0.35ps (proviously $0.60ps, rolocling our noarlorn
oarnings upgrados. vo conlinuo lo sol our prico largol oqual lo our DCF valualion. DCF
nolhodology has boon soloclod as wo boliovo il bosl capluros lho cyclical naluro o lho
conpanys oarnings. Tho nain assunplions undorlying our DCF valualion aro: Bola !.25,
goaring 30', vACC !!.4', and TCF 3.5' (basod on noninal CDP assunplion.
Risks
Koy downsido risks: (! conslruclion conlracl pricing and oxoculion, (2 a suslainod
connodily narkol downlurn nay roduco donand or AHs nining sorvicos, (3 inclononl
woalhor, (4 capacily conslrainls nay linil AHs abilily lo grow, (5 FX and polilical risks
rolaling lo Arican and Soulh Easl Asian oarnings, and (6 conpolilivo lhroals. Koy upsido
risks: (! bollor lhan oxpoclod nargins, (2 nalorial conlracl wins, and (3 corporalo aclivily.
1H12 resuIt key detaiIs
AH roloasod ils !H!2 rosull. Koy dolails aro as ollows:
#
PAT o $23.2n cano in !4' ahoad o DBo and guidanco o ~$20n ($!6.3n loss in
pcp. Tho prior poriod includod a $49n wrilodown o lho FCP5 Fail orlh conlracl.
AH doclarod a ully rankod inlorin dividond o !.5 cps (DBo !.4 cps.
#
Fovonuo (incl JVs $329n, up 33' yoy and broadly in lino wilh DBo al $3!4n.
ining rovonuo (incl JVs $423n, up 35' yoy (DBo $407n, drivon by oxpansion o
suraco nining conlracls and now undorground nining and dovolopnonl work.
Conslruclion rovonuo (incl JVs $406n, up 4!' yoy (DBo $407n, drivon by now
conlracl wins, largoly in rosourcos inraslrucluro work.
#
EBT (incl JVs $4!.7n, 3!' abovo DBo al $3!.9n ($!7.5n loss in pcp.
ining EBT (incl JVs $36n, up 43' yoy (DBo $30n, inplying an 3.5' nargin
(3.0' in pcp. argins roloclod nornal woalhor and inprovod suraco nining.
Conslruclion EBT (incl JVs $!5n vs $39n loss in pcp (DBo $!2n, 3.6' nargin.
Undorlying nargins woro lal, largoly duo lo proil rocognilion lining.
#
EBT (incl JVs nargin 5.0', !!0 bps ahoad o DBo al 3.9'. Croup nargins
dononslralod oporaling lovorago on lho ixod cosl baso.
#
Oporaling cashlow was solid al $35n howovor lhis iguro includod $30n o advanco
paynonls on conslruclion projocls which should rovorso in 2H!2.
#
Capox was $46n wilh AH guiding or FY!2 capox o ~$200n, largoly rolaling lo lho
ining sognonl. This anounl was in lino wilh our oxpoclalions.
#
AH won $2.2b o work during !H!2, lho koy projocls boing Tropicana Cold ($900n
ovor !0 yoars, Tavan Tolgoi Coal ($500n ovor 5 yoars, Solonon Fail Spur ($330n, CSA
ino ($!!0n, Pilbara SA ($!70n ovor 5 yoars, and Calabar (US$!26n.
#
Tho roporlod ordor book has grown lo a rocord $3.4b wilh $903n rovonuo socurod or
2H!2 and $946n or FY!3. Tho ordor book nix is 50' ining, 32' Conslruclion and
!3' nlornalional. Tho londoring pipolino is groalor lhan $3b according lo lho conpany.
#
AH updalod ils FY!2 guidanco ron $!.7b rovonuo and PAT groalor lhan $55n lo
$!.3b rovonuo and PAT o $5560n (3' abovo consonsus o $56n al lho nidpoinl.
#
anagononl said il is largoling 20' EPS growlh in FY!3, 20' FOE and 50' DPS
payoul. This growlh inplios FY!3 EPS o ~9.0 cps al lho nidpoinl and conparos lo
prior consonsus oxpoclalions o !2' EPS growlh in FY!3.
#
Tho conpanys FY!3 growlh largol is undorpinnod by a ull yoar conlribulion ron lho
Tropicana, Tavan Tolgoi and Calabar nining conlracls, growlh ron lho Enginooring
businoss and nargin oxpansion (largoly ron conlribulion ron inlornalional nining
conlracls.
#
Corporalo ovorhoad guidanco was providod al ~!' o annual salos.
#
AH also announcod lho acquisilion o lho 40' o lho V Fail JV il didnl alroady
own or $5.75n (paynonl duo on 3! ay 20!2.

Figure 1: 1H12a resuIt overview
Juno y/o $n !H!2a 2H!2 FY!2 !H!!a 2H!!a FY!!a !H!2 vs pcp DB !H!2 !H!2 vs DB
Fovonuo 735.6 767.3 !,502.3 504.2 535. 2 !, 039.4 45.9' 75!.9 2.2'
Opox 663.3 677.3 !,346.6 455.3 533.5 994.3 46.7' 69!.6 3.3'
EB TDA 67. 9 90. 3 !53. 2 43. 3 47. 5 96. 3 39.2' 60. 3 !2. 5'
Doprocialion 34.4 37.6 72.0 24.0 23.3 52.3 43.5' 23.0 22.7'
EB TA 33. 5 52.7 36. 2 24. 3 !3. 7 43. 5 35.0' 32. 3 3.6'
Anorlisalion 2.2 2.2 4.3 2.2 2.2 4.3 0.0' 2.2 0.0'
EB T 3!.3 50.6 3!.9 22.6 !6. 6 39.2 33.4' 30.2 3.9'
ol nlorosl oxponso 7.6 6.2 !3.3 5.3 6.3 !2.0 3!.4' 4.4 70.7'
Pr ol ax pr o il 23.3 44.3 63.! !6.9 !0. 3 27.2 40.7' 25.7 7.6'
ncono lax oxponso !0.9 !0.2 2!.! 7.0 5.9 !.! 256.9' 7.2 5!.3'
Associal os !0.4 0.6 !!.0 37.! 9. 9 27.2 !27.9' !.3 432.!'
inorilios 0.0 0.0 0.0 3.! 0.7 3.3 !00.0' 0.0
PAT (pr oabnor nals 23.2 34.3 53.0 !6.3 !3. 6 2.7 242.!' 20.3 !4.3'
Signiicanl ilons 0.0 0.0 0.0 0.0 0.0 0.0 0.0
PAT 23.2 34.3 53.0 !6.3 !3. 6 2.7 242.!' 20.3 !4.3'
EPS dilul od (pr oabs. 3.0 4.5 7.6 2.2 !. 3 0.4 239.3' 2.7 !4.3'
DPS dilulod !.5 2.3 3.3 0.0 0.0 0.0 !.4 7.!'
Divisions
ining 423.2 460.2 333.4 3!3.2 36!.! 674.4 35.!' 407.2 3.9'
Conlruclion 405.3 5!6.4 922.2 237.3 292.2 530.0 4!.0' 407.2 0.4'
Fovonuo ( incl JVs 329. 0 976. 6 !, 305. 6 60!. 0 653. 4 !, 254. 4 37. 9' 3!4. 4 !.3'
ining 36.0 39.! 75.! 25.2 23.2 43.4 43.0' 30.! !9.5'
Conlruclion !4.7 2!.3 36.0 33.6 3.! 35.4 !33.0' !!.3 24.!'
Unallocalod / Corp cosls 9.0 9.2 !3.2 4.2 0.6 4.7 !!4.7' !0.0 !0.5'
EB T (incl JVs 4!.7 5!.2 92.9 !7.5 25. 3 3.3 3!. 9 30. 6'
EB T (incl JVs ar gin 5. 0' 5.2' 5. !' 2.9' 3. 9' 0.7' 3. 9'
#
olo wo ocus on lho rovonuo and EBT iguros including JV conlribulions (shown abovo
in Divisions as lhoso provido a bollor lako on lho undorlying businoss porornanco.
#
AHs ordor book is illuslralod in Figuros 2 and 3 bolow. Tho conpany has 92' o our
2H!2 rovonuo orocasl socurod and 49' o our FY!3 orocasl conlraclod which is
lypical al lhis slago.
Figure 2: Order book ($m)

Figure 3: Order book breakdown
2,138
1,412
2,215
2,013
3,382 903
946
1,533
FY08a FY09a FY10a FY11a 1H12a 2H12f
run of f
FY13f
run of f
FY14f +
run of f

Mining
50%
Const ruct ion
32%
Int ernat ional
18%


Earnings changes
Our noarlorn oarnings changos aro displayod in Figuro 4 bolow. Tho nol inpacl o our
rovisions is FY!2 PAT up 5' lo $53n and FY!3 PAT up !5' lo $70n. Our rovisod
FY!2 orocasl is lowards lho nidpoinl o lho conpanys $5560n guidanco rango and
inplios 2H!2 PAT o $35n (40/60 !H/2H splil. Our rovisod FY!3 PAT orocasl inplios
yoy growlh o ~20' which is consislonl wilh nanagononls largol.
Prior lo lho rosull, consonsus was or FY!2 $!.6b salos, $39n EBT, $56n PAT and 7.6
cps EPS (sourco: Bloonborg Financo LP.
Figure 4: Earnings changes
Juno y/ o $n
Old ow ' Di Old ow ' Di
Fovonuo !, 547. 5 !, 502. 3 2. 9' !, 567. 6 !, 693. 6 3. 0'
Opox !,404.3 !,346.6 4.!' !,4!4.3 !,506.5 6.5'
EB TDA !42. 7 !53. 2 !0. 9' !53. 3 !37. ! 22. !'
Doprocialion 62.2 72.0 !5.7' 73.! 37.6 !9.9'
EB TA 30. 4 36. 2 7. 2' 30. 2 99. 5 24. 0'
Anorlisalion 4.3 4.3 0.0' 4.0 4.3 7.5'
EB T 76. ! 3!. 9 7. 6' 76. 2 95. 2 24. 9'
ol nlorosl oxponso 3.6 !3.3 6!.2' 9.0 !3.4 43.0'
Pr o l ax pr o il 67. 6 63. ! 0. 3' 67. ! 3!. 3 2!. 3'
ncono lax oxponso !3.9 2!.! !!.6' !3.3 24.5 30.5'
Associal os 6. 7 !!. 0 65. 0' !2. 2 !2. 2 0. 0'
inorilios 0.0 0.0 0.0 0.0
PAT ( pr o abnor nals 55. 3 53. 0 4. 3' 60. 6 69. 5 !4. 7'
Signiicanl ilons 0.0 0.0 0.0 0.0
PAT 55. 3 53. 0 4. 3' 60. 6 69. 5 !4. 7'
EPS dilul od ( pr o abs. 7. 2 7. 6 4. 3' 7. 3 9. 0 !4. 7'
DPS dilulod 3.3 3.3 0.0' 4.! 4.6 !3.3'
Divisions
ining 339.6 333.4 5.2' 904.2 962.9 6.5'
Conlruclion 360.7 922.2 7.!' 9!6.7 934.0 7.3'
Fovonuo ( incl JVs !, 700. 3 !, 305. 6 6. 2' !, 320. 9 !, 946. 9 6. 9'
ining 70.5 75.! 6.5' 72.3 33.3 !5.3'
Conlruclion 32.3 36.0 !!.4' 36.7 42.3 !5.4'
Unallocalod / Corp cosls 20.0 !3.2 9.2' 20.6 !3.7 9.2'
EB T ( incl JVs 32. 3 92. 9 !2. 2' 33. 4 !07. 4 2!. 5'
EB T ( incl JVs ar gin 4. 9' 5. !' 4. 9' 5. 5'
20!2 20!3
Koy poinls:
#
Salos (incl JVs: FY!2 orocasl incroasod by 6' lo $!.3b, in lino wilh conpany guidanco.
FY!3 orocasl incroasod lo $!.95b roprosonling 3' yoy growlh.
#
EBT (incl JVs: FY!2 orocasl incroasod by !2' lo $93n and FY!3 upgradod by 22'
lo $!07n (!6' yoy growlh.
#
EBT (incl JVs argin: FY!2 nargin assunplion incroasod by 20 bps lo 5.!' and FY!3
lilod by 60 bps lo 5.5' (up 40 bps yoy.
Peer comparison
AH is lrading on a FY!2 PEF o !0.7x and a FY!3 PEF o 3.9x, broadly in lino wilh lho ASX
ox!00 nining sorvicos conps on !!.4x and 9.4x rospoclivoly.
AHs EBT nulliplos aro also in lino wilh lho poor group - AH is lrading on 7.!x FY!2
EBT including JVs and 6.9x FY!3 EBT including JVs vorsus lho conps on 3.!x FY!2 and
6.5x FY!3.
vo rogard vH and LD as lho clososl conparablo ASX ox!00 nining sorvicos conpanios
lo AH. vH is lrading on 9.7x FY!3 EPS and 6.7x FY!3 EBT whilsl LD is on 3.4x FY!3
EPS and 5.5x FY!3 EBT. n our opinion, vH warranls a proniun nulliplo lo AH lo
rolocl lho slrong oxoculion lrack rocord, oarnings growlh polonlial and highor rolurns.
olo AHs FY!3 EPS growlh largol o 20' is in lino wilh lho soclor avorago.
Figure 5: Peer comparison
!"#$ %&$'' ()*(+,-./ ()*(+,-./ ()*(+,-' ()*(+,-' 0(1 0(1 (023 (023 14(
!"#$%&'(&'()*''+,-.+-,+ 05678 9":' ;<=; ;<=> ;<=; ;<=> ;<=; ;<=> ;<=; ;<=> ;<=;
!"#$%&'())'*+,+,-'%./0+1.2'34567,+.2
AAx Ausenco LLd (u8) 8uy $3.63 3.46 426 7.1 3.2 9.2 6.4 13.7 9.8 41 40 12
ASL Ausdrlll LLd (u8) 8uy $3.73 3.71 1123 3.0 4.6 8.3 7.6 11.3 10.1 18 12 13
8kn 8radken LLd (u8) 8uy $9.00 8.40 1400 7.8 6.4 9.6 7.9 12.2 10.1 13 21 16
Cuu Cardno LLd (n8) 6.42 796 6.9 3.7 7.8 6.4 10.3 9.3 11 9 18
CLC Clough LLd (n8) 0.83 639 8.2 6.3 8.6 6.8 13.0 10.6 0 22 16
uCC uecmll Croup LLd (n8) 2.60 431 8.3 6.0 9.8 6.9 13.0 10.2 3 28 17
LPL Lmeco Poldlngs LLd (u8) Pold $1.23 1.18 743 4.2 3.7 8.8 7.3 10.2 8.6 30 19 11
lCL lorge Croup LLd (n8*) 3.93 497 3.7 4.6 6.4 3.2 10.9 9.6 21 14 28
CnC Cr Lnglneerlng Servlces LLd (n8) 1.67 231 6.1 4.9 6.2 3.0 10.1 8.6 12 18 49
lMu lmdex LLd (u8) 8uy $2.73 2.39 490 6.0 3.3 7.1 6.2 10.0 8.7 32 13 33
luL lndusLrea LLd (n8) 1.20 443 3.9 3.3 3.4 4.3 6.6 3.9 24 13 19
LuW Ludowlcl LLd (n8) 9.74 287 10.2 8.8 12.6 10.6 17.7 14.9 29 19 16
L?L Lycopodlum LLd (n8) 7.00 271 8.3 7.7 9.1 8.3 13.9 12.8 14 8 36
*$8 *715794,'84:;+,-2'<=;''>?@A''84:;''B)CDE )CD( EFE GCH ICF DC( JCD ()CJ DCF ,5 H)K (LK
MLu Maca LLd (n8) 2.16 324 4.4 3.4 6.9 3.3 9.7 8.4 14 16 33
MCL MaLrlx ComposlLes & Lnglneerlng LLd (n8) 2.91 224 3.9 3.6 7.3 4.1 11.1 6.2 -43 79 13
Mln Mlneral 8esources LLd (n8) 13.09 2418 7.7 3.7 9.7 6.7 12.9 10.1 13 28 26
nWP nrw Poldlngs LLd (u8) 8uy $3.30 3.43 962 3.9 3.0 7.9 6.7 11.0 9.7 102 13 30
8C8 8C8 1omllnson LLd (n8) 1.90 233 3.1 4.2 7.2 3.7 10.3 8.6 22 22 12
SuM Sedgman LLd (u8) 8uy $2.43 2.04 433 3.7 4.6 8.1 6.3 11.1 10.4 34 6 24
SWk Swlck Mlnlng Servlces LLd (u8) Pold $0.33 0.32 76 2.9 2.4 6.3 4.6 8.6 6.7 86 28 9
/?85"38'8@A=<< BC; DC< EC= BCD ==CF GCF ;DH ;=H ;=H
$%&'())'*+,+,-'%./0+1.2'34567,+.2
8L? 8oarL Longyear LLd (u8) 8uy $3.84 3.93 1812 4.9 4.4 6.9 3.9 9.4 8.3 29 13 13
C8 Campbell 8roLhers LLd (u8) Pold $31.30 38.80 3969 11.7 10.6 13.3 12.3 18.9 17.4 33 9 24
uCW uowner Lul LLd (u8) Pold $4.38 3.94 1691 3.9 3.4 6.6 3.8 9.6 8.7 1 11 11
LLl LelghLon Poldlngs LLd (u8) Pold $23.87 24.38 8218 4.3 4.2 8.8 8.1 13.1 12.0 6 9 23
Mnu Monadelphous Croup LLd (u8) Pold $23.30 23.86 2116 10.1 8.4 11.9 9.8 17.8 14.8 26 20 36
1SL 1ransfleld Servlces LLd (u8) Pold $2.49 2.42 1318 6.4 6.1 10.3 9.3 12.3 10.8 -3 13 10
uCL uCL LLd (u8) 8uy $14.14 13.10 2179 7.9 7.0 10.0 8.9 13.3 12.0 3 11 14
WC8 Worleyarsons LLd (u8) Pold $29.07 28.79 6960 10.7 8.3 12.7 10.0 19.3 13.2 22 28 19
/?85"38'-I:A=<< JCD BCB =<C= ECE =FC; =;CF =JH =FH ;=H
/)(1/K('A'/!! BCD DCD ECJ JC= =;C= =<C> ;>H =GH ;=H
Source. Deutsche Bank, B|oonberg Finance LP. Uses 20!! reported net debt.

Appendix 1
acnahon Holdings AH.AX 0.30 (AUD 2! Fob !2 7




website at hllp://gn.db.con/gor/disclosuro/Disclosuro.oqsr?ricCodo=AH.AX.

conponsalion or providing a spociic roconnondalion or viow in lhis roporl. Doninic Foso

HistoricaI recommendations and target price: Macmahon HoIdings (MAH.AX)
(as of 2/2!/20!2)
1
2
0.00
0.!0
0.20
0.30
0.40
0.50
0.60
0.70
0.30
0.90
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Dalo

Slrong Buy
Buy
arkol Pororn
Undorpororn
ol Falod
Suspondod Faling
Buy
Hold
Soll
ol Falod
Suspondod Faling

!. !4/!2/20!!: Hold, Targol Prico Chango AUD0.60 2. 20/!2/20!!: Hold, Targol Prico Chango AUD0.62

buy lho slock.
slock
Notes:

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
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Buy Hold Soll
Auslralia Univorso


hllp://gn.db.con.


60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 250 2500
London EC2 2EO
Unilod Kingdon
Tol: (44 20 7545 3000
Deutsche Bank AG
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Doulscho Bank Placo
Lovol !6
Sydnoy, Sv 2000
Auslralia
Tol: (6! 2 3253 !234
Deutsche Bank AG
Filialo Hongkong
Hong Kong
Tol: (352 2203 3333
2!!! agalacho
Sanno Park Towor
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer

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Australasia Australia
Retail
21 Feb 2012 - 04:07:20 PM

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COMPANY ALERT
Results
David Jones Hold
2Q12 sales preview

Reuters:DJS.AX Exchange:ASX Ticker:DJS

Price (AUD) 2.53
Price target (AUD) 2.80
52-week range (AUD) 4.81 - 2.32
Market cap (USDm) 1,418
Shares outstanding (m) 520.0
Daily volume (USDm) 4.14
Net debt/equity (%) 14.6
Book value/share (AUD) 1.54
Price/book (x) 1.6

FYE 7/31 2011A 2012E 2013E
Sales (AU-
Dm)
2,017 1,944 1,985
Net profit
(AUDm)
168.1 139.4 145.4
EPS (AUD) 0.32 0.26 0.27
PER (x) 14.0 9.6 9.4
Yield (net)
(%)
6.2 9.1 9.1

4% LFL sales decline expected assisted by refurbs
David Jones is scheduled to release 2Q12 sales on Thursday 23rd February.
We expect a LFL sales decline of ~4%. In November the company guided
towards a continued decline but at a slower rate than that of 1Q (-11% LFL).
We expect the recently completed Warringah, Chadstone and Marion re-
furbishements (which made a full quarter contribution) boosted the LFL
growth rate by as much as 3%.
New store likely broadly offset store closures
We also forecast a 4% total sales decline with the reopened Claremont
Quarter store broadly offseting the drag from the closed Newcastle and
Toombul stores.
Industry data suggest some improvement in the trend
ABS data and sales figures released by retail landlords suggest that sales
trends for department stores improved during the 3 months to December.
Given January is a relatively weak base, we expect the improvement con-
tinued for the duration of 2Q.
No change to guidance expected
Given our belief that sales trends likely improved in 2Q12, we do not expect
any revisions to management's guidance for a 1H12 NPAT decline of
15-20% Our current estimates imply a 19% decline.
Actual and forecast total and LFL sales growth
Source: Deutsche Bank, company data
Michael Simotas
Research Analyst
(+61) 2 8258-1543
michael.simotas@db.com
Paul van Meurs, CFA
Research Analyst
(+61) 2 8258-2334
paul.van-meurs@db.com
Michael OMeara
Research Associate
(+61) 2 8258-1791
michael.omeara@db.com
All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from local
exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies. Deutsche
Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the
firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only
a single factor in making their investment decision.
THE VIEWS EXPRESSED ABOVE ACCURATELY REFLECT PERSONAL VIEWS OF THE AUTHORS ABOUT THE SUBJECT
COMPANY(IES) AND ITS(THEIR) SECURITIES. THEY HAVE NOT AND WILL NOT RECEIVE ANY COMPENSATION FOR PRO-
VIDING A SPECIFIC RECOMMENDATION OR VIEW IN THIS REPORT. FOR OTHER DISCLOSURES PLEASE VISIT HTTP://
GM.DB.COM MICA(P) 146/04/2011.
Strategy Update

2! Fobruary 20!2
AustraIian Equity Strategy
!
Reporting season
update

Tim Baker
Slralogisl
(+6! 2 3253!376
lin.bakor@db.con
David Jennings, CFA
Slralogisl
(+6! 2 3253!630
david.jonnings@db.con

CA(P !46/04/20!!.

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No growth in earnings over the past year
Foporling soason so ar (55' conplolo by no. o conpanios, 70' by narkol cap
conirns lhal oarnings aro undor prossuro in Auslralia. Doconbor hal nol proils
appoar lo bo down a lilllo on pcp, bringing a hall lo lho oarnings rocovory o lho
pasl couplo o yoars. Fosourco oarnings havo boon hil by solor connodily
pricos, wilhoul lho usual osolling bonoil o a lowor AUD. nduslrials oarnings
aro oslinalod lo havo allon, and havo baroly grown sinco 2007, rolocling a wido
rango o aclors. And whilo bank oarnings havo grown, lho growlh ralo is slowing.
Earnings softer than expected - downgrades to FY12F & FY13F
Analysl oxpoclalions woronl high, bul havo nonolholoss provod oplinislic. For
conpanios lhal havo roporlod so ar, nol proils aro ~2' bolow oxpoclalions
(rosourcos & induslrials 3' bolow, banks 2' bolow. Tho downgrados lo FY!2
and FY!3 aro around 2'. Thus, lho downgrado cyclo in Auslralia porsisls, whilo in
nosl olhor rogions lho ralo o nol downgrados is slowing.
Where to from here7
Earnings woaknoss soons woll pricod, wilh a pronouncod all in lho narkol
acconpanying lal oarnings ovor lho pasl yoar. vo soo upsido ron horo. Banks
aro growing oarnings, ropricing assols, and oor 9x PE and 7' div yiold.
Connodily pricos havo rison lhis yoar and China is oasing policy, which should
holp rosourcos. And ovon induslrials should inally rogislor sono oarnings growlh:
(i nining sorvicos sooing slrong donand, (ii acquisilions drivo oarnings or sono
(og, CPU, BXB, AC, AP, (iii insurors & airlinos novo on ron nalural disaslors
& induslrial issuos, (iv slool proils unlikoly lo all nuch ron lhoso low lovols.
Figure 1: IndustriaIs earnings being dragged down by a few sectors
!7 !6 !5
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nduslrials ox banks Doconbor hal 20!! PAT on pcp
' pcp
Cyclicals
Doonsivos
2! Fobruary 20!2 Slralogy Auslralian Equily Slralogy
Company resuIts

Figure 2

ActuaI DB f'c vs pcp vs DB
$ $ % % $m %
27-Jan RMD 0.2% US$63m US$56m 7.6% 11.7% 9.7 4.3%
31-Jan NVT 0.1% 35m 36m 12.8% -2.8% -4.3 -5.3%
1-Feb ERA 0.0% F -154m -179m na na -22.9 19.3%
7-Feb BKN 0.1% 43m 47m 12.5% -8.4% -3.2 -2.7%
7-Feb COH 0.3% 80m 61m -3.4% 31.1% 48.5 42.5%
7-Feb RKN 0.0% F 18m 19m 7.5% -4.4% -0.7 -3.6%
8-Feb ALZ 0.1% F 135m 133m 6.2% 2.1% 0.6 0.4%
8-Feb ANN 0.2% US67m US67m 9.2% -1.0% 1.3 1.0%
8-Feb BHP 11.2% US9.94bn US10.42bn -7.1% -4.6% -321.6 -2.6%
9-Feb AQP 0.1% -US22m -US9m na na -7.8 na
9-Feb NWS 0.8% US1.80bn US1.71bn 23.6% 5.8% 22.4 4.7%
9-Feb RO 2.9% F US15.55bn US15.41bn 11.5% 0.9% 66.1 1.6%
9-Feb SGP 0.7% 351m 363m -7.8% -3.3% -11.0 -1.5%
9-Feb TAH 0.2% 189m 180m 14.1% 5.2% 4.9 1.6%
9-Feb TLS 4.1% 1493m 1452m 16.1% 2.9% 110.0 3.2%
10-Feb NCM 2.5% 611m 574m 16.8% 6.4% 53.2 4.6%
13-Feb JBH 0.1% 80m 78m -9.4% 1.9% -2.0 -1.7%
13-Feb LE 0.4% 272m 270m 16.3% 0.5% -3.7 -0.6%
14-Feb WSA 0.1% 24m 26m -64.1% -8.1% 18.6 27.0%
14-Feb GWA 0.1% 25m 28m -24.4% -8.8% -9.1 -16.5%
14-Feb PDN 0.1% US5m -US9m na na 9.3 na
14-Feb SA 0.1% 22m 21m 13.2% 5.6% -4.5 -8.6%
15-Feb CBA 7.6% 3556m 3479m 7.3% 2.2% 56.0 0.8%
15-Feb CRZ 0.1% 33m 32m 19.6% 4.6% 2.1 3.2%
15-Feb DMP 0.0% 13m 12m 23.0% 7.1% 1.1 4.5%
15-Feb DXS 0.4% 184m 183m 5.5% 0.8% 0.7 0.2%
15-Feb FMG 0.9% US801m US845m 1.8% -5.2% -62.8 -4.4%
15-Feb OZL 0.4% F 323m 300m -19.0% 7.6% -3.6 -2.0%
15-Feb PRY 0.1% 52m 60m 20.4% -12.3% -6.1 -4.9%
15-Feb SKC 0.0% NZ$77m NZ$84m 14.2% -7.9% -2.4 -2.1%
15-Feb WDC 1.8% F 1492m 1478m -16.9% 1.0% -105.2 -6.8%
15-Feb WRT 0.7% F 562m 559m na 0.5% -3.6 -0.6%
ResuIts
date
Stock
Market
weight
FinaI/
interim
UnderIying NPAT
FY12 revision


Company resuIts - continued

Figure 3

ActuaI DB f'c vs pcp vs DB
$ $ % % $m %
16-Feb ABC 0.1% F 148m 149m -2.0% -0.1% -2.3 -1.4%
16-Feb AMP 1.2% F 909m 936m 18.1% -2.9% -49.6 -5.0%
16-Feb ASX 0.5% 181m 183m 1.1% -1.0% 5.0 1.4%
16-Feb AWC 0.3% F US128m US140m 248.9% -8.8% 40.7 na
16-Feb BXB 1.0% US240m US285m 6.3% -15.9% -18.3 -3.1%
16-Feb GMG 0.4% 229m 224m 38.3% 2.3% 3.7 0.8%
16-Feb MRM 0.1% 28m 25m 35.6% 9.5% 1.0 2.0%
16-Feb QAN 0.3% 145m 114m -56.9% 27.3% -30.9 -9.4%
16-Feb QRN 0.6% 168m 181m 136.6% -7.0% -18.5 -4.5%
16-Feb SLM 0.0% 14m 20m -45.1% -26.4% -8.3 -21.6%
16-Feb WES 3.3% 1176m 1269m 0.3% -7.4% -75.0 -3.2%
16-Feb WHC 0.2% 22m 23m -33.1% -2.7% -58.0 -53.9%
16-Feb GFF 0.1% 43m 53m -54.7% -18.6% -12.1 -10.8%
17-Feb BBG 0.0% 31m 25m -45.6% 24.9% -3.4 -6.0%
17-Feb CQR 0.1% 42m 42m -5.7% -1.3% 0.0 0.0%
17-Feb DUE 0.2% 43m 59m -44.8% -27.6% -17.0 -14.8%
17-Feb SGM 0.2% 46m 108m -7.7% -57.9% -2.2 -1.5%
17-Feb SPT 0.1% 18m 17m -0.2% 4.8% -1.3 -3.0%
17-Feb STO 1.2% F 453m 526m 20.5% -13.8% -35.4 -5.6%
17-Feb TWE 0.2% 59m 65m -31.8% -10.0% -18.9 -12.3%
17-Feb PBG 0.1% 36m 32m -38.5% 10.8% -7.9 -9.8%
20-Feb AMC 0.8% 305m 302m 13.9% 1.0% -67.5 -9.4%
20-Feb BEN 0.3% 163m 161m 0.3% 0.8% 0.6 0.2%
20-Feb BSL 0.1% -76m -16m na na -219.9 -240.1%
20-Feb CGF 0.2% 127m 140m 5.3% -9.2% -10.9 -3.8%
20-Feb GPT 0.5% F 414m 407m 7.5% 1.7% 19.7 4.8%
20-Feb MD 0.0% 23m 24m 87.6% -3.8% 0.5 1.1%
20-Feb LLC 0.4% 221m 210m 14.8% 5.0% -16.2 -3.5%
20-Feb SFH 0.0% 6m 6m -64.1% -3.3% 0.6 45.9%
20-Feb UGL 0.2% 72m 74m 10.7% -3.0% -9.2 -5.3%
Guidance updates, quarterIy reports
Date Current f/c vs pcp vs DB
$ % % $m %
31-Jan WOW 3.0% 1188m 2.3% -1.0% -9.7 -0.4%
7-Feb NAB 5.0% 2831m 6.1% -6.5% -208.2 -3.4%
7-Feb MQG 0.9% 720m -24.7% -13.7% -114.6 -13.7%
16-Feb WBC 6.2% 3162m -0.2% -2.4% -149.3 -2.2%
17-Feb ANZ 5.6% 2971m 6.7% -1.5% -45.1 -0.7%
ResuIts
date
Stock
Market
weight
Stock
Market
weight
FinaI/
interim
FY12 revision
UnderIying NPAT
UnderIying NPAT
FY12 revision
Earnings have come in ~2 % beIow DB expectations
Analysls woro oxpocling conpanios lo roporl sol oarnings lhis roporling soason, bul ovon
so lhoy havo boon disappoinlod wilh lho woaknoss o Doconbor hal proils. For lho group
o conpanios lhal havo roporlod so ar (55' by nunbor, 70' by narkol cap, nol proils aro
~2' bolow DB oxpoclalions, wilh rosourcos and induslrials woakor lhan banks. This has
pronplod analysls lo roduco FY!3 orocasls by !2'. By sizo, lho biggosl disappoinlnonls
rolalivo lo DB oxpoclalions havo cono ron BHP, AB, OC, vES, vBC, STO, SC and
BSL. On lho posilivo sido o lho lodgor havo boon CBA, FO, TLS, C and OA.
Figure 4: December haIf net profits for the market are ~2% beIow expectations
2.6
3.0
!.9
3.0
!.7
!.9
!.6
!.5
4
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2
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!
arkol Fosourcos Banks nduslrials ox
banks
Doc hal
FY!3F
arkol oarnings Changos during roporling soason
'
Figure 5: The majority of companies have deIivered Dec haIf earnings beIow DB expectations
4
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Doconbor hal 20!! PAT oulconos rolalivo lo DB oxpoclalions
NPAT ~2 .5 be|ov
expectations
Be|ov expectations Above expectations
'

Market earnings are estimated to be fIat in Dec haIf on pcp
Al prosonl, narkol oarnings aro oslinalod lo havo allon~2' ovor lho yoar lo lho Doconbor
hal. This ollows lwo yoars o good oarnings growlh ollowing lho global rocossion. Juno hal
20!2 is nol oxpoclod lo show nuch inprovononl, wilh only 2' growlh boing oxpoclod.
ovorlholoss, FY!3 orocasls slill onvisago solid growlh, parlicularly or rosourco conpanios.
Figure 6: Market earnings are estimated to have faIIen over the year to December
22
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arkol Halyoarly Undorlying ol Earnings
$b
' chango, pcp
Note. Dec !! ha|f is the enpt, co|unn, June !2 ha|f is the co|unn vith dashed border and the dianond on the right-hand pane|
Solor rosourco oarnings havo boon lho koy drivor o lho nodoralion in growlh in narkol
oarnings. Fosourco proils grow by 27' ovor lho yoar lo lho Juno hal 20!!, bul nononlun
soons lo havo slowod sharply, wilh a 6' all in proils oxpoclod in lho Doconbor hal. This
coincidos wilh lho soloning in connodily pricos soon in lho socond hal o 20!2. oarlorn
orocasls suggosl urlhor slowing, lhough lho irning o connodily pricos in 20!2 could
noan upsido or lhoso nunbors.
Figure 7: Resource earnings are down ~6% on a very strong pcp
65
27
6
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Fosourcos Undorlying ol Earnings
$b
' chango,
pcp

Banks are growing earnings soIidIy, but industriaIs are struggIing
Bank oarnings growlh has slowod considorably, bul is procooding al a nodoralo paco o
~7'. Tho rollo o bad dobls booslod oarnings growlh ovor lho pasl couplo o yoars, bul
lhis drivor is slowing. arkol disruplions aoclod unding cosls and narkols incono lhrough
lho Doconbor hal, and wo oxpocl lhis lo bo loss o a drag going orward. Our analysls
oxpocl ongoing nodoralo oarnings growlh ron banks, and wilh a !2n orward PE o 9x
and a !2n orward dividond yiold o 7' (bolh consonsus, wo soo sharo prico upsido.
Figure 8: Bank earnings continue to grow at a moderate pace
22
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Banks Undorlying ol Earnings
$b
' chango,
pcp
nduslrial oarnings aro oslinalod lo havo allon ~4' ovor lho yoar lo lho Doconbor hal, a
woakoning ron lho alroady sol growlh in roconl yoars. A rango o aclors havo inhibilod
oarnings including a slrong AUD, consunor prooronco or sorvicos ovor goods, cosl growlh
and nalural disaslors. Slill, analysls oxpocl a robound lo ~!!' growlh in Juno hal 20!2.
Civon lho pallorn o prolraclod oarnings downgrados or induslrials in roconl yoars, should
wo bo skoplical o lhoso orocasls?
Figure 9: IndustriaI earnings have sIid over the year, but are expected to bounce in 2H
!
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nduslrials ox banks Undorlying ol Earnings
$b
' chango,
pcp

Some rebound in 2HFY12 industriaI earnings seems IikeIy
vhilo wo oxpocl ongoing downgrados or induslrials, wo do lhink sono oarnings robound is
likoly lhis yoar. Thal is, lho pallorn o lho lasl ow yoars whoro oarnings orocasls slarl in lho
nidloons and ovonlually hoad closo lo zoro is unlikoly lo bo as sovoro lhis yoar. Tho charl
bolow shows Doc hal PAT growlh on pcp or induslrial soclors - whal is slriking is lho
largo alls or airlinos, gonoral insuranco and slool. An inprovononl should bo roasonably
slraighlorward - gonoral insurors will bonoil as nalural disaslors cyclo inlo lho pcp, and
airlinos novo pasl induslrial issuos. And whilo lho donoslic slool soclor is likoly lo ronain
undor prossuro, urlhor alls in oarnings should al loasl bo avoidod givon noasuros alroady
undorway. Furlhor, ongoing growlh in oarnings or conlraclors soons likoly, and a rango o
slocks will bonoil ron roconl acquisilions (og, BXB, AC, CPU, AP.
Figure 10: Earnings dragged down by Iarge faIIs in airIines, gen insurance & steeI
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nduslrials ox banks Doconbor hal 20!! PAT on pcp
' pcp
Cyclicals
Doonsivos
v
Figure 11: June haIf earnings are IikeIy to show good growth on pcp
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nduslrials ox banks conlribulions lo orocasl Juno hal 20!2 PAT
$n
!! grovth forecast
b, DB ana|,sts

CycIicaIs are generaIIy struggIing to grow earnings
Earnings in soclors oxposod lo businoss spond havo nol soon nuch growlh ovor lho yoar.
Building nalorials conpanios havo suorod ron a woak rosidonlial conslruclion narkol,
whilo nonrosidonlial aclivily has also boon sol. Tho slool soclor has boon aoclod by lowor
global slool produclion and lho high AUD, loading lo roslrucluring plans. oanwhilo, lho
conlraclors havo oxporioncod solid growlh via lhoir oxposuro lo lho rosourcos soclor.
Figure 12
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Building nalorials Chonicals
Papor and packaging Conlraclors
Slool
$b
Consunorocusod induslrials havo also slrugglod lo grow oarnings. Discrolionary rolail has
had lo doal wilh a nunbor o slruclural challongos (producl dolalion, onlino conpolilion,
shil lowards sorvicos consunplion. Caning proils havo arod bollor as housoholds havo
conlinuod lo spond o rocroalional and onlorlainnonl pursuils. Airlino proils havo boon woak
dospilo groalor donand or ovorsoas lravol, largoly on lho back o induslrial dispulos and
nalural disaslor provisions. oanwhilo, donoslic nodia oarnings havo boon aoclod by
woak rolail sponding, as woll as ongoing narkol sharo lossos lo now orns o nodia.
Figure 13
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Caning Discrolionary rolailing
odia Airlinos
Transporl sorvicos
$b

Earnings for financiaIs are stiII quite Iow
Proils or lho woallh nanagors and divorsiiod inancials aro down ovor lho yoar. Equily
narkols havo allon ovor lho poriod and lhis has boon conpoundod by lowor lurnovor. For
gonoral insurors, nalural disaslors and low bond yiolds havo roslrainod oarnings growlh. Thoy
havo slrugglod lo rocovor rising roinsuranco cosls lhrough proniun ralo incroasos.
Figure 14
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voallh nanagors Proporly
Divorsiod inancials Conoral insuranco
$b
Doonsivo oarnings havo also nol grown nuch ovor lho pasl yoar. Alor nany yoars o slollar
growlh, hoallhcaro soclor oarnings growlh has slowod subslanlially, duo lo lho high AUD
and hoallh unding culs. Bovorago proils aro also down, in parl duo lo lho cold woalhor.
oanwhilo, ood rolailors havo soon a nodoralion in oarnings growlh duo lo ood dolalion.
Figure 15
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Tolcos Food rolailing Hoallh
Bovoragos Ulililios
$b

SeIected outIook statements from company resuIts

"#$%&! '()$*#!+,#(! -,.,/(0(.#!%$00(.#1!

BK 7Fob Tho undorlying undanonlals o lho businoss ronain vory slrong, wilh orward ordors al
hislorically high lovols. Fosourco narkols aro oxpoclod lo conlinuo lo oxpand in uluro yoars
providing high nargin organic growlh.
COH 7Fob Tho undanonlals o lho businoss ronain posilivo and lho conpany ronains connillod lo
invoslnonls in lho drivors supporling longlorn growlh. COH doos nol anlicipalo lo bo supply
conslrainod in lho socond hal o lho yoar.
ALZ 3Fob Tho 20!2 oullook is dopondonl on lho lining o businoss and consunor conidonco boing
roslorod. ALZ anlicipalos lhal condilions oulsido o rosourcos will ronain challonging.
A 3Fob Tho ocononic oullook is nixod, wilh a rocovoring US and slrong Asia Paciic oxpoclod lo osol
a woakor Europo and rosullanl lowor Euro. Tho bonoil o lowor inpul cosls should also low
lhrough in lho socond hal.
BHP 3Fob Tho conpany ronains posilivo on lho longlorn oullook, bul oxpocls volalilily in connodily
narkols lo conlinuo in lho noarlorn.
FO 9Fob Uncorlainly in inancial narkols along wilh olovalod prico volalilily is oxpoclod lo conlinuo in
20!2. This loads FO lo bo caulious on noarlorn prospocls. Howovor, lho nodiunlolong lorn
picluro ronains vory posilivo or nolals as slrong donand growlh ron onorging narkols
conlinuos.
SCP 9Fob arkol condilions ronain challonging, wilh FY!2 EPS oxpoclod lo bo lho sano as FY!!.
Howovor, load indicalors suggosl lhal rosidonlial oarnings nay slarl lo pick up.
TAH 9Fob Tho broad rovonuo and oarnings lronds oxporioncod by TAH in !H!2 aro oxpoclod lo conlinuo in
lho 2H. Each o lho businossos aro pororning woll dospilo lho ocononic uncorlainly and
challongos oxporioncod by rolailors. anagononl poinlod lo now growlh drivors including now
wagoring and kono liconcos lo oporalo in VC, an oxpansion o rolail ooring in Sv and lho
launch o lho now TAH Caning Solulions businoss.
TLS 9Fob TLSs slralogy is unchangod. anagononl will conlinuo lo ocus on inproving consunor
salisaclion, growing cuslonor nunbors and sinpliying lho businoss. Tho board roairnod ils
inlonlion lo considor a broador capilal nanagononl slralogy upon inplononlalion o lho B
agroononls. Foiloralod EBTDA guidanco o low singlo digil growlh in FY!2.
JBH !3Fob vhilo il has boon a lough slarl lo lho yoar, JBH oxpocls salos lo inprovo as il cyclos oul o lho
hoavy pronolional poriod o posl Chrislnas and Y salos. Consunors woro suoring ron
pronolional aliguo and lhus havo nol roaclod woll lo lho posl Chrislnas pronolional oors as
in provious yoars.
LE !3Fob Dospilo global uncorlainly in inancial narkols, LE conlinuos lo onjoy a vory posilivo oullook.
Tho group businossos aro localod in narkols lhal oor good growlh opporlunilios. LE
nainlainod ils ull yoar guidanco al lho rosull.
CvA !4Fob CvA nonlionod lhal housing aclivily is showing no sign o inprovononl. 2H salos oxpoclod lo
bo bolow !H in lino wilh low building approvals.
PD !4Fob Uraniun spol pricos aro boginning lo show signs o slronglhoning as now donand onorgos. As
lho narkol oocls o lho Fukushina incidonl conlinuo lo work lhoir way lhrough lho narkol,
prico inprovononl is anlicipalod lhroughoul lho yoar, allhough poriods o volalilily can bo
oxpoclod.
SA !4Fob Thoro aro langiblo signs lhal businoss condilions in US aro inproving bul Europo conlinuos lo
aco rocossionary condilions. SAs businossos havo dononslralod rosilionco lhrough lough
linos, bul nanagononl conlinuos lo nonilor lho lrading onvironnonl closoly.
CBA !5Fob CBA nonlionod lhal il oxpocls lo soo conlinuod volalilily, unding cosls lo incroaso urlhor and
woak crodil growlh lo conlinuo.
DP !5Fob DP upgradod PAT guidanco or FY!2. olwork salos havo slarlod woll in 2H!2. Sloro rolloul
ronains on lrack wilh 6070 now sloros oxpoclod or lho ull yoar.
FC !5Fob FC roiloralod growlh slory o oxposuro lo rising Asian iron oro donand.
SKC !5Fob Croup rosulls in JanFob havo conlinuod nononlun o lho irsl six nonlhs. Expocl nornalisod
nol proil lo bo al lop ond o provious guidanco rango.
vDC !5Fob anagononl nonlionod lhal vDC conlinuos lo oxoculo dovolopnonl progran and pursuo
acquisilion opporlunilios globally.
ABC !6Fob ABC anlicipalos donand or cononl in 20!2 lo bo sinilar lo 20!! lovols. Slrong AUD,
conpolilivo prossuros and risk o inporls in sono narkols nay linil scopo or prico incroasos.
Lino salos oxpoclod lo bo narginally highor, wilh lho lhroal o snall scalo lino inporls.
voaknoss in lho concrolo nasonry narkol is oxpoclod lo conlinuo in 20!2 duo lo diicull
condilions in lho connorcial and nullirosidonlial soclors.
ASX !6Fob Tho conpany slalod lhal lho ouro dobl crisis ronains unrosolvod. Bul i a solulion lo lho crisis is
ound lhal givos capilal narkols conidonco, wo could soo invoslor sonlinonl lurn posilivo lalor
in lho yoar.
AvC !6Fob Caulious oullook givon nacro uncorlainly. Signiicanl prossuro ron woak aluniniun pricos in
oarly 20!2, rising inpul pricos and approcialing AUD.
BXB !6Fob anagononl conidonl on FY guidanco dospilo ~55' 2H skow, subjocl lo unorosoon
circunslancos and ocononic uncorlainly. Croup undorlying proil guidanco conirnod wilhin a
lighlor rango.
CC !6Fob Cuidanco lilod slighlly or FY!2. Tho conpany nonlionod lhal il is woll posilionod or
opporlunilios in now narkols. Crowing connilnonl lo China and Japan wilh incroasing
dovolopnonl slarls on lho back o slrong cuslonor proconnilnonls.
F !6Fob Connonlod lhal lho oullook is consislonl wilh consonsus orocasls, which look or good
growlh.
OA !6Fob o spociic guidanco givon or FY!2 bul nolod lhal lho oporaling oullook and ocononic
condilions ronain challonging. Forward bookings conlinuo lo indicalo highor yiolds in 2H!2
conparod lo 2H!!.
OF !6Fob OF ronains oplinislic aboul lho nodiunlorn oullook or lho rosourcos soclor. Full yoar
guidanco or EBT and lonnagos ronains unchangod, howovor, coal lonnagos aro likoly lo bo al
lho low ond o lho rango and rolios on lho oxpoclod rocovory o our cuslonors conlinuing wilh
nininal disruplions.
SL !6Fob Tho conpany nolod lhal roconl oodback ron clionls has highlighlod growing uncorlainly
around lrading condilions. Slill, lhoy anlicipalo lhal oarnings growlh will accoloralo as
invoslnonl in growlh slralogy bogins lo scalo.
vES !6Fob Dospilo noarlorn challongos, nanagononl oxpocls growlh in ils rolail businoss. vES
nonlionod conlinuing high lovols o prico dolalion in 2H!2, parlicularly rosh produco.
Fosourcos and chonicals businossos aro oxpoclod lo bo solid. nsuranco should soo inprovod
porornanco as woll.
COF !7Fob anagononl nonlionod lhal COF is woll posilionod wilh lho najorily o ils porlolio consisling
o high qualily Auslralian noighbourhood and subrogional shopping conlros.
DUE !7Fob FY!2 guidanco roairnod, growlh largols unchangod.
SC !7Fob Forrous narkols ronainod choppy noving inlo 2H, bul inlako has roconlly bogun lo rocovor.
Doc and Jan saw doop soa orrous pricos irn, alboil wilh sono soloning in oarly Fobruary.
STO !7Fob Tho conpany ronains quilo posilivo on oullook, nonlionod drilling canpaigns in vA and Asia
and ranp up o LC projocl conslruclion.
TvE !7Fob Clobal donand or TvEs luxury winos ronains high and conlinuos lo oxcood supply, parlicularly
in Asia. Focus in FY!2 is on achioving slralogic priorilios.
AC 20Fob Oullook connonlary is sound wilh lho conpany oxpocling undorlying growlh lo bo woll ahoad
on pcp. Floxiblos lo havo slablo volunos in naluro narkols and growlh in onorging narkols in
2H. Figids oxpoclod lo achiovo subslanlial oarnings growlh in FY!2. Auslralasia lo bo in lino wilh
FY!!.
BE 20Fob arkols ronain vory challonging and lho oullook is uncorlain. Low donand or crodil.
BSL 20Fob BSL oxpocls a slighlly lowor loss in 2H!2, subjocl lo sproad, FX and narkol condilions,
conparod wilh lho !H!2 rosull. anagononl oxpocls a rolurn lo a proilablo undorlying run ralo
by lho ond o FY!2.
CCF 20Fob Conpany slalod lhal lho nacro onvironnonl ronains supporlivo o lho koy drivors o longlorn
oporaling proilabilily o lho businoss.
D 20Fob Alor anolhor sol o rocord rosulls, lho oullook is posilivo wilh conlinuod growlh oxpoclod.
LLC 20Fob Tho groups signiicanl dovolopnonl pipolino providos a slrong plalorn or uluro oarnings.
Howovor, LLC ronains caulious givon lho uncorlainly in global narkols. n Auslralia, lho
onginooring conslruclion narkol ronains allraclivo, whilo consunor sonlinonl conlinuos lo
nogalivoly inpacl lho rosidonlial narkol.
SFH 20Fob Conpany oxpocls 2H lo bo a lough lrading onvironnonl, wilh no signs o inprovod consunor
sonlinonl. Onlino growlh lo bo aggrossivoly pursuod.
UCL 20Fob FY!2 guidanco roairnod, wilh lho oullook or growlh supporlod by signiicanl lovols o bidding
aclivily across oach o UCLs businossos.

COMPANIES MENTIONED LIST
Codo Slock nano Lasl pri co Codo Slock nano Lasl pri co
ABC Adolaido Brighlon Lld 2.99 F ornaid arino Auslralia Lld 3.37
ALZ Auslraland Proporly Croup 2.67 AB alional Auslralia Bank Lld 23.!3
AC Ancor Lld 7.!5 C owcrosl ining Lld 34.90
AP Anp Lld 4.26 VT avilas Lld 3.00
A Ansoll Lld !4.54 vS ows Corporalion !3.90
AZ Auslralia and ow Zoaland Banking Croup 2!.95 OZL OZ inorals Lld !0.9!
AOP Aquarius Plalinun Lld 2.!2 PBC Paciic Brands Lld 0.7!
ASX ASX Lld 30.36 PD Paladin Enorgy Lld !.77
AvC Alunina Lld !.!3 PFY Prinary Hoallh Caro Lld 3.00
BBC Billabong nlornalional Lld 2.33 OA Oanlas Airways Lld !.63
BE Bondigo and Adolaido Bank Lld 3.!4 OF OF alional Lld 3.79
BHP BHP Billilon Lld 36.02 FO Fio Tinlo Lld 63.04
BK Bradkon Lld 3.20 FK Fockon Lld 2.27
BSL Bluoscopo Slool Lld 0.37 FD Fosnod nc 2.74
BXB Branblos Lld 7.!7 SA SA Clobal Lld 4.90
CBA Connonwoallh Bank o Auslralia 49.!0 SFH Spocially Fashion Croup Lld 0.43
CCF Challongor Lld 4.!4 SC Sins olal anagononl Lld !4.34
COH Cochloar Lld 6!.30 SCP Slockland 3.!7
COF Charlor Hall Folail Foil 3.!9 SKC Sky Cily Enlorlainnonl Croup Lld 2.39
CFZ carsalos.con Lld 5.03 SL Salnal Lld 2.20
DP Doninos Pizza Enlorprisos Linilod 3.0! SPT Spolloss Croup Lld 2.40
DUE Duol Croup !.77 STO Sanlos Lld !4.00
DXS Doxus Proporly Croup 0.39 TAH Tabcorp Holdings Lld 2.73
EFA Enorgy Fosourcos o Auslralia Lld !.29 TLS Tolslra Corporalion Lld 3.32
FC Forloscuo olals Croup Lld 5.45 TvE Troasury vino Eslalos Lld 3.30
CFF Coodnan Fioldor Lld 0.53 UCL UCL Lld !3.46
CC Coodnan Croup 0.63 vBC voslpac Banking Corporalion 20.65
CPT Tho CPT Croup 3.!2 vDC vosliold Croup 9.00
CvA CvA nlornalional Lld 2.30 vES vosarnors Lld 29.35
D ndox Lld 2.35 vHC vhilohavon Coal Lld 5.57
JBH JB HiFi Lld !!.!4 vOv voolworlhs Lld 25.!7
LE Loighlon Holdings Lld 23.33 vFT vosliold Folail Trusl 2.47
LLC Lond Loaso Croup 7.3! vSA voslorn Aroas l 5.50
OC acquario Croup Lld 27.!!

Appendix 1
For discIosures pertaining to recommendations or estimates made on a security mentioned in this report, pIease see
the most recentIy pubIished company report or visit our gIobaI discIosure Iook-up page on our website at
hllp://gn.db.con/gor/disclosuro/DisclosuroDiroclory.oqsr.

Tho viows oxprossod in lhis roporl accuraloly rolocl lho porsonal viows o lho undorsignod load analysl(s. n addilion, lho
undorsignod load analysl(s has nol and will nol rocoivo any conponsalion or providing a spociic roconnondalion or viow in
lhis roporl. Tin Bakor


buy lho slock.
slock
Notes:

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
30
!00
!20
!40
Buy Hold Soll
Auslralia Univorso


hllp://gn.db.con.


60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 250 2500
London EC2 2EO
Unilod Kingdon
Tol: (44 20 7545 3000
Deutsche Bank AG
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Doulscho Bank Placo
Lovol !6
Sydnoy, Sv 2000
Auslralia
Tol: (6! 2 3253 !234
Deutsche Bank AG
Filialo Hongkong
Hong Kong
Tol: (352 2203 3333
2!!! agalacho
Sanno Park Towor
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer

Infrastructure

2! Fobruary 20!2
Macquarie AtIas Roads
Foulors: MOA.AX Bloonborg: MOA AU Exchango: ASX Tickor: MOA
Eiario dobl roinanco
conplolod upgrado lo BUY
Cameron McDonaId
Fosoarch Analysl
(+6! 3 92704235
Entcho Raykovski
Fosoarch Analysl
(+6! 3 92704!65
onlcho.raykovski@db.con

Eiffarie debt refinancing compIeted in Iine with targeted timeIine
On 20 Fob, Eiario signod a t2.765bn 5yoar lorn loan wilh a syndicalo o
inlornalional banks (in lino wilh largolod linolino o !O!2. Conbinod wilh cash
ron lho roconl dislribulion ron APFF o ct!bn, lho procoods o lho loan will bo
appliod lowards ull ropaynonl o Eiarios oxisling t3.3bn acilily. vo now
incorporalo lho roinanco inlo our orocasls and inslalo a Prico Targol o
$!.35/sharo or OA (Prico Targol proviously supprossod. vo upgrado our
roconnondalion lo BUY, givon >!0' TSF.
Year Ehd Dec 31 2010A 2011E 2012E 2013E
Salos (AUDn 99 101 !!! !22
EBTDA (AUDn 34 -11 42 5!
ol Proil (AUDn !42 -81 3 4
EPS (AUD 0.3! -0.18 0.0! 0.0!
OLD EPS (AUD 0.3! -0.09 0.23 0.!9
' Chango 0.0' 106.9% !02.6' !04.5'
EPS Crowlh (' - 43.9 96.6 33.2
EV/EBTDA (x 29.6 -218.8 59.6 49.6
DPS (nol (AUD 0.00 0.00 0.00 0.!!
Yiold (nol (' 0.0 0.0 0.0 6.6
Franking (' 0 0 0 0
!
2
yoar ond closo

CA(P !46/04/20!!.
Recommendation Change

Buy
ALL OFDAFES 4,333

Key changes
Faling Hold lo Buy !
Prico largol A lo !.35
Salos (FYE !05 lo !0! " -4.5%
EBT nargin (FYE 2!.9 lo 23.5 " 30.1%
ol proil (FYE 33.6 lo 3!.0 " 109.7%

0.4
0.3
!.2
!.6
2.0
2.4
2/!0 5/!0 3/!0 !!/!0 2/!! 5/!! 3/!! !!/!!
acquario Allas Foad
Absolulo !0.3 !6.5 -5.!

Stock data
arkol cap (AUDn 761
arkol cap (USDn 820
Froo loal 100.00

FOE (' 37.1
FOA (' -1.5
Book valuo/sharo (AUD -0.46
Prico/book (x -
EBT nargin (' -28.5

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Refinance provides greater certainty, MOA distributions expected in FY13
vo boliovo lho roinanco providos groalor corlainly or OA as il olininalos a
subslanlial sourco o risk. l roducos lho cash swoop al lho Eiario lovol ron
!00' lo 25' or lho irsl 3 yoars o lho now loan - as a rosull, wo oxpocl OA lo
rocoivo a cash inlow ron Eiario in rospocl o lho FY!2 poriod and lo bo in a
posilion lo pay dislribulions in FY!3. vo nolo lho slop up in cash swoop and
nargin in yoar 4 o lho loan bul oxpocl Eiario will sook lo roinanco prior lo lhis
i lhoy do nol, lhon dislribulions will bo al risk in FY!5 and boyond.
FY11 resuIts preview
OA will roloaso ils FY!! rosulls on 29 Fob. vo do nol oxpocl any najor
surprisos in lho rosulls, givon lhal all o OAs assols havo alroady disclosod
lraic/rovonuo iguros or FY!! and APFF has roporlod ils FY!! rosulls. Oulsido
o guidanco on OA dislribulions, wo will bo looking or dolails on slralogios lo
arrosl lho 6 Toll doclino and an updalo on Europoan ocononic condilions.
Price Target of $1.85/share, Key risks
Valualion basod on DCF (cosl o oquily incorporaling assol spociic risk proniuns
wilh addilional risk woighlings appliod lo lhoso assols wo considor as unlikoly lo
provido dislribulions lo OA. Koy risks includo: dolay o dislribulions ron OA
and lraic porornanco. Olhor risks includo incroasos in inlorosl ralos, highor uol
pricos and carbon prico risk (soo pp !0!! or noro.
2! Fobruary 20!2 nraslrucluro acquario Allas Foads
Y/E 31 December 2010 2011E 2012E 2013E 2014E 2015E
PROFIT & LOSS (A$m)
Sales revehue 99 101 111 122 133 147
EBITDA (ihcl sighiIicahI iIems) 84 -11 42 51 77 88
DepreciaIioh/amorIisaIioh -26 -17 -10 -10 -10 -21
EBIT (ihcl sighiIicahI iIems) 58 -29 33 41 67 67
NeI ihIeresI ihcome (expehse) -92 -68 -39 -51 -62 -69
Ihcome Iax expehse -16 -11 1 0 -1 0
AssociaIes/aIIiliaIes 84 0 0 0 0 0
MihoriIies/preIerehce dividehds -209 5 4 6 22 36
PeporIed proIiI -142 -81 -3 -4 29 34
SighiIicahI iIems 0 0 0 0 0 0
NeI prII (exc sgnIcanI Iems) -142 -81 -2.8 -3.9 28.6 34
EBIT (exc sgnIcanI Iems) 58 -29 33 41 67 67
CASH FLOW (A$m)
Cash Ilow Irom operaIiohs 67 28 -3 97 96 95
Movement in net working capital 0 0 0 0 0 0
Capex -1 -5 -7 -8 -9 -11
Free cash Ilow 66 23 -10 89 87 84
+61 3 9270 4235 cameroh.mcdohald@db.com OIher ihvesIihg acIiviIies -220 0 0 0 0 0
EquiIy raised/(boughI back) 152 0 0 0 0 0
Dividehds paid 0 0 0 -51 -56 -60
+61 3 9270 4165 ehIcho.raykovski@db.com NeI ihc/(dec) ih borrowihgs 1 127 -56 79 72 52
OIher Iihahcihg cash Ilows -59 -157 56 -79 -72 -52
TIa cash Ivs Irm Inancng 94 -30 0 -51 -56 -60
NeI cash Ilow -61 -6 -10 38 31 24
NvemenI n neI debI/(cash) 62 134 -46 41 40 28
BALANCE SHEET (A$m)
Cash ahd oIher liquid asseIs 66 60 49 88 119 143
Tahgible Iixed asseIs 773 905 884 909 929 975
OIher ihIahgible asseIs 0 0 0 0 0 0
AssociaIes/ihvesImehIs 931 946 950 956 979 1,015
OIher asseIs 82 80 80 81 82 83
ToIal asseIs 1,852 1,991 1,964 2,034 2,109 2,216
IhIeresI bearihg debI 1,726 1,843 1,788 1,866 1,938 1,990
OIher liabiliIies 351 359 359 360 362 363
ToIal liabiliIies 2,077 2,202 2,147 2,227 2,300 2,353
Shareholders' equiIy -225 -211 -183 -193 -191 -137
MihoriIies/oIher 0 0 0 0 0 0
ToIal shareholders' equiIy -225 -211 -183 -193 -191 -137
NeI vrkng capIa -26 -13 -13 -14 -14 -14
NeI debI/(cash) 1,660 1,784 1,738 1,779 1,819 1,847
RATIO ANALYSIS
52-week High/Low: A$2.02 - 1.24 Sales growIh - pcp (%) ha 1.5 10.0 9.7 9.8 9.9
MarkeI Cap (m) A$ 771
EBITDA/sales (%) 84.6 -11.3 38.4 41.9 57.7 60.1
US$ 820
EBIT/sales (%) 58.0 -28.5 29.7 33.8 50.3 45.6
PayouI raIio (%) 0.0 0.0 0.0 hm 194.5 177.1
DCF VALUATION (A$)
POA (%) 2.5 -1.5 1.7 2.1 3.4 3.3
BeIa (MPP - 6.00) 1.00
POE (%) 144.1 37.1 1.4 2.1 -14.9 -20.8
OperaIihg PeIurh oh CapiIal (%) 2.0 -1.7 2.1 2.5 4.1 4.0
Tax raIe (%) 46.9 10.9 -18.9 1.4 -14.0 -7.5
Capex/sales (%) 1.2 4.7 6.6 6.3 6.4 7.2
NeI value per share ($) Capex/depreciaIioh (x) 0.0 0.3 0.8 0.8 0.9 0.5
Price/NPV (x) 0.90 NeI debI/equiIy (%) -736.8 -844.1 -951.6 -921.9 -954.2 -1,350.3
NeI ihIeresI cover (x) 0.6 -0.4 0.8 0.8 1.1 1.0
-29
-29
33
33
hm 77.1
67
67 67
67 41
41
59.6 49.6 33.4
38.3 61.6
29.5
38.9
58
58 ToIal
Macquarie AtIas Roads Group
P/CFPS (x)
DPS (A$)
Company description
2,459
DIVISIONAL EBIT (A$m) A$1.85
EV/EBITDA (x)
Buy
Price/BV (x)
PeuIers: MOA.AX Bloomberg: MOA AU
Price as aI 21-Feb
TargeI price
2,883
34.3
50.1
Dividehd yield (%)
EV/EBIT (x)

Compahy websiIe

Macquarie AIlas Poads is ah ihvesImehI group
cohsisIihg oI Iwo uhiI IrusIs. The asseIs oI Ihe
Group ihclude ihIrasIrucIure pro|ecIs which
ehcompass various moIorway cohsIrucIiohs ahd
Ioll road cohsIrucIioh ahd maihIehahce ih
Europe, Ihe UhiIed Kihgdom ahd NorIh America.
Research Team
Entcho Raykovski
Cameron McDonaId
hIIp://www.macquarie.com.au/MOA/
1.85
OIher
2,604 2,570 2,529 2,532
hm
A$1.66
hm
7.8
hm hm
6.6 7.2 0.0
hm hm
0.0
hm
hm
0.0
0.000
7.9
0.209
0.110
8.1 8.1
0.130 0.120
0.204
7.6 27.1
0.000 0.000
-0.315 -0.177
0.206 -0.006
-0.128
hm
EPS FD (A$)
OperaIihg CFPS (A$) 0.061 0.148
22.6 hm hm hm 26.9 hm
Normalised EPS (A$)
Asia Pacific
Equity Research
SUMMARY
22.6 hm
-0.006 -0.177
hm 26.9
ha
hm
ha ha
Infrastructure & UtiIities P/E raIio FD (x)
0.073 0.062
AusIralia
-0.008
ha 18.9 ha
0.073 0.062 -0.008 -0.006
10%
16%
-5.1%
-10% -5% 0% 5% 10% 15% 20%
1m
3m
12m
(40)
(20)
0
20
40
60
80
100
10 11E 12E 13E 14E 15E
EBITDA/sales (%)
EBIT/sales (%)
Trends
(40)
(20)
0
20
40
60
80
100
120
140
160
10 11E 12E 13E 14E 15E
POE (%) POA (%)
op POC (%)
Return Ratios (%)
-1600
-1400
-1200
-1000
-800
-600
-400
-200
0
0
200
400
600
800
1000
1200
1400
1600
1800
2000
10 11E 12E 13E 14E 15E
NeI debI/equiIy (%)
0.50
1.00
1.50
2.00
2.50
3.00
3.50
2/07 2/08 2/09 2/10 2/11 2/12

Eiffarie debt refinancing
Eiffarie refinancing compIeted
OA has loday announcod lhal Eiario, lho holding conpany or ils invoslnonl in APFF (soo
ownorship slrucluro bolow, has signod a t2.765bn ivo yoar lorn loan wilh a syndicalo o
inlornalional banks. Togolhor wilh cash ron lho roconlly announcod dislribulion ron APFF
o ct!bn, lho procoods o lho loan will bo appliod lowards ull ropaynonl o Eiarios oxisling
t3.3bn dobl acilily, which was duo lo naluro in Fobruary 20!3. Tho conplolion o lho
roinancing is consislonl wilh OAs proviously slalod largol or conplolion in !O!2.
vo had proviously indicalod lhal a rollovor o lho dobl would bo a signiicanl calalysl
conlribuling lowards lho dorisking o OAs holding in Eiario/APFF and as a rosull, wo
viow lho roinancing as posilivo or OA.
Figure 1: APRR/Eiffarie ownership structure
Key refinancing issues
Debt margin
Tho nargin on lho now Eiario loan is 300bps or lho irsl lhroo yoars o lho loan, incroasing
lo 350bps in yoar 4 and 400bps in yoar 5. This is subslanlially highor lhan lho nargin on lho
provious Eiario dobl acililios, which rangod bolwoon 50bps and !20bps doponding on lho
ol Dobl/EBTDA ralio or lho consolidalod Eiario/APFF group.
Tho incroasod nargin is roloclivo o lho curronl slalo o lho Europoan dobl narkols and wo
aro nol surprisod by lho nargin slopup. vo also nolo lho incroaso in nargin or lho lasl 2
yoars o lho loan - givon lho nargin incroaso, wo oxpocl lhal Eiario will again look lo
roinanco lho loan al lho ond o yoar 3, polonlially looking or noro avourablo lorns. vo
havo lhorooro assunod in our orocasls lhal lho nargin o 350bps conlinuos boyond yoar 3.
Anolhor polonlial oplion opon lo Eiario/APFF would bo lo collapso lho holding conpany
slrucluro and ronogolialo lho dobl.
Cash sweep
Undor lho provious Eiario acilily, in 20!! and 20!2 a cash swoop o !00' oporalod in
rolalion lo any oxcoss cash al lho Eiario lovol, wilh lhis cash ooclivoly appliod lowards
ropaynonl o lho dobl. Tho oxislonco o lho swoop had roslriclod lho abilily o Eiario lo
pay dividonds, dospilo lho rocoipl o dislribulions ron APFF (including lho ct!bn APFF
dislribulion announcod in January 20!2.
Undor lho now loan, a cash swoop o 25' applios or lho irsl lhroo yoars, incroasing lo 75'
in yoar 4 and !00' in yoar 5. Civon wo oxpocl lho loan lo bo ronogolialod al lho ond o yoar
3, wo havo assunod a 25' cash swoop ronains in placo boyond Fobruary 20!5.
Interest rate swaps
To nanago ils inlorosl ralo oxposuro, Eiario has lwo inlorosl ralo swaps in placo:
#
t3,444n o swaps al 3.53' ron July 2006 lo Juno 20!3, and
#
t3,522n o swaps al 4.6' ron July 20!3 lo Juno 20!3.
Civon lho roduclion o Eiario dobl as a rosull o lho roinancing, lho swaps aro likoly lo
conlinuo lo bo woll oul o lho nonoy or lhoir duralion (oul lo Juno 20!3. vo nolo lhal
Eiario can chooso lo broak lho swaps, howovor wo assuno lho swaps slay in placo or lhoir
duralion (and our orocasl cash lows incorporalo paynonls undor lho swaps. n any caso,
broaking lho swaps would bo valuo noulral, as Eiario would bo roquirod lo pay oul lho
prosonl valuo o any swap liabililios.
Taxation impIications
Following lho acquisilion o lho APFF ninorily inlorosls in 20!0, Eiario and APFF woro ablo
lo consolidalo or lax purposos ron ! January 20!! and ooclivoly unlockod ct!bn o lax
lossos lrappod al lho Eiario lovol. Tho lax lossos al Eiario do nol oxpiro and can bo osol
againsl APFF proils. Tho consolidalion also allows lho group lo osol lho Eiario inlorosl
paynonl and lho paynonls on lho Eiario sharoholdor loans againsl lho incono ron APFF.
n our orocasls, wo lako inlo accounl bolh (i lho lax shiold now providod by Eiario
inlorosl/sharoholdor loan paynonls and (ii lho uso o lho lax lossos alroady buill up al lho
Eiario lovol. Howovor, wo nolo lho laxalion calculalions aro subjocl lo lho ollowing:
#
Fulos on lho carryovor o lax lossos in Franco, pul in placo in Soplonbor 20!!, roquiro
lhal prior yoar lax lossos can only bo osol againsl a naxinun o 60' o lhal yoars
laxablo incono, so lho ronaining 40' o incono conlinuos lo bo laxod al lho gonoral
corporalo ralo, and
#
n rosponso lo lho curronl ocononic clinalo, lho Fronch govornnonl has announcod
plans lo inposo a lonporary oxcoplional surchargo on corporalo incono lax liabilily or
conpanios whoso annual lurnovor oxcoods t250n. Tho surchargo is inlondod lo bo in
placo or corporalo lax paid in rospocl o FY!! and FY!2 and incroasos lho ooclivo
corporalo lax ralo or APFF/Eiario lo 36.!6'. n our orocasls, wo consorvalivoly
assuno lho surchargo is inplononlod and is nol ronovod unlil nid 20!4.
Distributions from APRR/Eiffarie
Alor incorporaling lho roinancing inlo our orocasls, wo sol oul in Figuro 2 bolow (i our
orocasls or dislribulions ron APFF lo Eiario and (ii lho subsoquonl nol cash low lo
Eiario sharoholdors (wilh OA boing a !9.4' sharoholdor in Eiario.

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Figure 2: Distributions from APRR/Eiffarie
1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15
APFF dividonds
Cash balanco oulslanding al slarl EUFn !,2!3.9 364.4 24!.3 !42.0 232.3 !33.4 3!5.0 47.5
Tolal rovonuo EUFn !,0!5.3 !,093.7 !,055.3 !,!40.3 !,033.0 !,!74.4 !,!20.2 !,209.!
Oporaling oxponsos EUFn (237.0 (247.7 (240.7 (25!.7 (244.! (255.2 (247.5 (253.3
Taxo danonagononl du lorriloiro EUFn (7!.! (79.3 (72.5 (30.9 (74.0 (32.5 (75.5 (34.2
Capox EUFn (!69.2 (!70.9 (!72.2 (!73.6 (!74.3 (!76.0 (7!.5 (72.0
ncono Tax EUFn (!!3.7 (!!2.3 (!59.9 (!23.2 (!69.! (!4!.3 (!6!.6 (!43.4
nlorosl Fovonuo EUFn 4.6 3.2 0.9 0.5 !.! 0.7 !.2 0.2
nlorosl Paid EUFn (2!3.7 (!2!.3 (226.3 (93.5 (2!4.4 (33.7 (!94.5 (!03.6
Drawdowns EUFn 500.0 300.0 300.0 500.0 500.0
Principal Fopaynonls EUFn (25.9 (554.0 (343.0 (365.3 (354.6 (640.4
Dobl Foos EUFn (!.2 (!.2 (!.2 (!.2
Cash roloasod or oquily EUFn !,397.5 679.6 376.5 549.2 430.! 6!4.2 33!.0 449.4
Dividond ron APFF EUFn !,033.2 433.3 234.5 266.4 246.7 299.3 233.5 3!7.3
Cash balanco rolainod al ond EUFn 364.4 24!.3 !42.0 232.3 !33.4 3!5.0 47.5 !32.0

Sharoholdor loan / dividond calculalions Eiario
Dividonds ron APFF EUFn !,033.2 433.3 234.5 266.4 246.7 299.3 233.5 3!7.3
Exlornal inlorosl oxponso (incl swap paynonls EUFn (75.3 (!00.6 (!00.6 (!!7.9 (!!6.3 (!!5.7 (!!4.6 (!!3.2
ol ovononl in Cash Swoop Fosorvo EUFn 45.9 (9!.2 34.0 (4.3 4.9 (!7.3 5.4 !3.7
Principal Fopaynonl EUFn (3,723.! (9!.2 (57.2 (62.! (57.! (74.9 (69.5
Principal Drawdown EUFn 2,765.0
Dobl oos (incl roinancing oo EUFn (34.6
Eiario corporalo cosls EUFn (2.5 (2.5 (2.5 (2.5 (2.5 (2.5 (2.5 (2.5
nlorosl rovonuo EUFn 0.2 0.7 0.7 0.7 0.6 0.7 0.7
Dobl sorvico rosorvo EUFn (!00.6 (!7.2 !.! !.2 !.! !.4 !.3
Tax round / (paid EUFn 9!.0 !!7.6 !!!.0 !02.5 93.9 !20.5 !03.6 23.7
ol cash low lo Eiario sharoholdors EUFn 49.6 260.9 !63.6 !33.2 !65.9 223.4 207.6 !7!.6

MOA distributions
vhilsl wo boliovo Eiario will bo in a posilion lo provido a nol cash low lo ils sharoholdors
wilh rospocl o lho FY!2 poriod, lho cash low lo OA nay nol in praclico lako placo unlil
lho slarl o 20!3. On lhis basis, wo assuno lhal OA will only bo in a posilion lo provido
dislribulions lo ils sharoholdors ron FY!3 onwards. vo sol oul bolow our dislribulion
orocasls or OA, which largoly roly on lho cash inlows ron Eiario.
Figure 3: MOA distribution forecasts
FY12 FY13 FY14 FY15
Dislribulion cps 0.0 !!.0 !2.0 !3.0
Yiold
(!
' 0.0' 6.6' 7.2' 7.3'
(!) Based on OA share price as at 2! Feb 20!2
OA has also slalod lhal urlhor oquily invoslnonl in assols will only bo considorod whoro
valuo accrolivo lo sharoholdors - wo lhorooro boliovo any invoslnonl inlo assols in lho shorl
lorn is unlikoly as il will nol rosull in valuo croalion and cash will insload bo dislribulod lo
OA sharoholdors.
vo curronlly also assuno lhal lho porornanco oos alroady accruod lo acquario and
payablo in lho FY!2 and FY!3 poriods will bo paid oul in cash ralhor lhan in scrip (as was lho
caso wilh lho FY!! paynonl.
VaIuation sensitivities
Following lho Eiario roinancing, wo havo ully doriskod our valualion o OAs holding in
Eiario/APFF wilh lho dorisking rosulling in a valualion or OA o $!.35/sharo (soo Figuro
!0 or ull dolails o our OA valualion.
Howovor, wo nolo lhal our valualion o OA is subjocl lo our assunplions around a urlhor
lho Eiario roinancing in Fob 20!5 on lorns subslanlially lho sano as lhoso or lho irsl
lhroo yoars o lho loan (as discussod abovo. vo lhorooro prosonl in Figuro 4 lho sonsilivily
o our OA valualion lo changos in lho nargin and lho cash swoop assunplions o lho
Eiario dobl assunod lo bo onlorod inlo in FY!5.
lho loan is nol roinancod in FY!5, noro onorous nargin and cash swoop lorns will apply
- i wo woro lo assuno lhal lhoso lorns kick in and oquivalonl lorns ronain in placo posl
lho ond o lho loan in FY!7 (including a !00' cash swoop, our OA valualion would
docroaso lo $!.57/sharo. vhilsl lhis is ooclivoly lho downsido caso around dobl
roinancing, wo viow il as unlikoly lo ovonlualo.
Figure 4: Sensitivity to cash sweep and debt margin
Cash sweep Irom FY15
5.0' !5.0' 25.0' 35.0' 45.0'
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!00bps 2.05 !.97 !.90 !.35 !.79
200bps 2.0! !.94 !.33 !.32 !.77
300bps !.93 !.9! !.35 !.30 !.75
400bps !.94 !.33 !.32 !.77 !.73
500bps !.90 !.34 !.79 !.74 !.70
vo also prosonl bolow lho sonsilivily o lho OA valualion lo our lraic growlh
assunplions al APFF (2' growlh pa or bolh lighl and hoavy vohiclo lraic and lho discounl
ralo wo uso lo valuo OAs inlorosl in Eiario/APFF. Ullinaloly, lho OA valualion is nosl
sonsilivo lo our lraic growlh and discounl ralo assunplions bul wo nolo lhal changos lo our
cash swoop and dobl nargin assunplions ron FY!5 onwards can also rosull in nalorial
changos lo lho valualion.
Figure 5: Sensitivity to traffic growth and debt margin
TraIIic growIh Irom FY12 ohwards
!.0' !.5' 2.0' 2.5' 3.0'
D
i
s
c
o
u
h
I

r
a
I
e

!!.4' !.55 !.30 2.07 2.35 2.64
!!.9' !.47 !.70 !.95 2.22 2.50
!2.4' !.39 !.6! !.35 2.!0 2.37
!2.9' !.3! !.53 !.75 !.99 2.24
!3.4' !.24 !.45 !.66 !.33 2.!2
Debt metrics anaIysis
As a crosschock lo wholhor a urlhor Eiario roinancing on avourablo lorns is likoly in
FY!5, wo sol oul in Figuro 6 and Figuro 7 our orocasl dobl sorvico covorago and ol
Dobl/EBTDA or lho consolidalod APFF/Eiario group and conparo lhon lo lho lock up
covonanls undor lho provious Eiario acilily (covonanls undor lho now acilily havo nol boon
disclosod.
Civon lho dobl nolrics inprovo ovor lino and conparo avourably wilh lho rospoclivo dobl
covonanls, wo aro conorlablo wilh our assunplion lhal a urlhor roinanco can bo achiovod
in FY!5 on subslanlially lho sano lorns.
Figure 6: Cons APRR/Eiffarie Debt Service Coverage

Figure 7: Cons APRR/Eiffarie Net Debt / EBITDA
0.7x
1.9x
2.0x
2.5x
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
FY12 FY13 FY14 FY15
Lockup at 1.25x

6.4x
5.9x 5.6x
5.2x
4.5x
5.0x
5.5x
6.0x
6.5x
7.0x
7.5x
8.0x
FY12 FY13 FY14 FY15
Lockup at 7.4x
Note . FY!2 affected b, the repa,nent of iffarie-|eve| debt

FY11 resuIts preview
FY11 forecasts (resuIts reIease on 29 Feb)
OA will roloaso ils FY!! rosulls on 29 Fobruary. Our orocasls or ils FY!! proporlionalo
rosulls aro sol oul bolow. vo do nol oxpocl any najor surprisos in lho rosulls, givon lhal all
o OAs assols havo alroady disclosod lraic and rovonuo iguros or FY!! and APFF has
roporlod ils FY!! rosulls.
Figure 8: FY11 resuIts forecast
y/e 31 Dec FY10A FY11 DBe % pcp
Prop Fovonuo AUD n 764.3 739.0 3.3'
Prop EBTDA (assol lovol AUD n 550.9 536.0 2.7'
Corporalo cosls AUD n (20.! (20.7 +3.0'
Prop EBTDA (posl corp cosls AUD n 530.3 5!5.3 2.9'
DPS cps 0.0 0.0 nn
Figure 9: Asset-by-asset breakdown
y/e 31 Dec FY10A FY11 DBe % pcp
Prop Fovonuo
APFF AUD n 553.3 539.7 2.5'
6 Toll AUD n !05.5 95.4 9.5'
Dullos Croonway AUD n 35.5 33.7 5.!'
Chicago Skyway AUD n !4.6 !5.3 +4.6'
ndiana Toll Foad AUD n 47.3 46.4 !.3'
varnow Tunnol / olhor AUD n 3.! 3.5 +4.6'
Tolal AUD n 764.3 739.0 3.3'
Prop EBTDA
APFF AUD n 376.3 373.5 0.9'
6 Toll AUD n 92.6 32.! !!.4'
Dullos Croonway AUD n 25.9 24.4 5.3'
Chicago Skyway AUD n !2.4 !3.2 +6.7'
ndiana Toll Foad AUD n 37.3 37.! !.9'
varnow Tunnol / olhor AUD n 5.4 5.7 +6.3'
Tolal (assol lovol AUD n 550.9 536.0 2.7'
vhilsl our orocasls appoar lo show doclining porornanco or all o OAs koy assols, lho
FY!! roporlod rosulls aro likoly lo bo aoclod by lho approcialion o lho AUD againsl all
curroncios in which OAs assols dorivo lhoir oarnings (EUF, USD and CBP. This causos
our hoadlino AUD orocasls lo appoar nuch lowor rolalivo lo pcp and wo nolo lhis is nol
always roloclivo o nogalivo oporalional porornanco - or oxanplo, in EUF lorns, APFF
(OAs koy assol has alroady roporlod +5.5' growlh in FY!! EBTDA bul lhis nonolholoss
rosulls in an oarnings doclino in AUD lorns.
What are we Iooking for in the resuIts7
Tho koy issuos wo will bo looking or in OAs rosulls aro:
#
Proposod lining and quanlun o dislribulion paynonl by OA,
#
Dolails o any slralogios pul in placo lo arrosl lho doclino soon in 6 Toll,
#
npacl o Europoan nacro condilions on OAs Europoan assols,
#
Any proposod assol salos or olhor slralogios lo roalizo valuo ron noncoro assols, and
#
Dolails o wholhor acquario porornanco oos will conlinuo lo bo paid in scrip or i
lhoy nay bo paid oul in cash.

VaIuation and Risks
VaIuation
Civon lho conplolion o lho Eiario roinancing procoss, wo havo ully doriskod our valualion
o OAs holding in Eiario/APFF. vo inslalo a Prico Targol o $!.35/sharo or OA (Prico
Targol proviously supprossod and wo upgrado our roconnondalion or OA lo BUY, givon
lho >!0' lolal sharoholdor rolurn ron curronl lrading lovols.
Our prico largol or OA is basod on our riskod DCF valualion or all o OAs assols (soo
Figuro !0. Al lhis slago, wo havo appliod !00' risking lo OAs holding in Eiario/APFF
bul do nol allribulo any valuo lo OAs ronaining assols, givon lho low likolihood lhal lhoy
will bo providing dislribulions lo OA in lho noar uluro.
vo nolo lhal OAs ronaining assols ooclivoly roprosonl oplion valuo in our valualion and
prosonl an upsido risk lo our curronl prico largol.
Figure 10: MOA risked vaIuation (on a 12-month forward basis)
[AUD'm] [AUD/share] Piskihg (%) [AUD'm] [AUD/share]
Eiario/APFF !,047 2.26 !00' !,047 2.26
6 Toll 4! 0.09 0' 0.00
Dullos Croonway !!5 0.25 0' 0.00
Chicago Skyway 65 0.!4 0' 0.00
ndiana Toll Foad 7! 0.!5 0' 0.00
varnow Tunnol !7 0.04 0' 0.00
Corporalo oxponsos (79 (0.!7 !00' (79 (0.!7
Baso/porornanco oos (!69 (0.36 !00' (!69 (0.36
Cash on hand 60 0.!3 !00' 60 0.!3
Equily valualion !,!67 2.5! 359 !.35
n proparing our valualion wo uso a DCF approach which involvos lho applicalion o assol
spociic alorlax cosl o oquily on lo doblsorvicod oquily cash lows ovor lho duralion o lho
concossion. Tho cosl o oquily is basod on a jurisdiclion linkod risk roo ralo, assol bola o
0.50.6 and an assol spociic narkol risk proniun. Our cosl o oquily is in lho rango o
!2.4' lo !3.6'. vo assign a urlhor risk woighling lo lhoso assols which wo considor as
unlikoly lo provido dislribulions lo OA. vo do nol uso a lorninal valuo in our cash low
valualion as oach o lho assol concossions havo a spociic long lorn ond dalo. vo uso DCF
valualions as lho uso o lrusl accounling procludos oarnings basod nolrics.
Risks
Koy downsido risks includo:
#
Dolay o dislribulions ron OA,
#
ow Eiario dobl nol roinancod in FY!5,
#
Dolorioralion in lho global ocononic oullook aocling lraic volunos and consunor
driving bohaviour,
#
npacl o carbon lrading schonos whoroby concopls o car pooling and/or public
lransporl uso is oncouragod, lhus pornanonlly roducing gross lraic volunos,
#
Largo upward novononls in roal bonds and highor uol pricos, and
#
Furlhor salo or acquisilion o assols on unavourablo lorns.
Appendix 1
acquario Allas Foads OA.AX !.66 (AUD 2! Fob !2 A


website at hllp://gn.db.con/gor/disclosuro/Disclosuro.oqsr?ricCodo=OA.AX.

conponsalion or providing a spociic roconnondalion or viow in lhis roporl. Canoron cDonald

HistoricaI recommendations and target price: Macquarie AtIas Roads (MOA.AX)
(as of 2/2!/20!2)
0.00
0.50
!.00
!.50
2.00
2.50
S
o
c
u
r
i
l
y

P
r
i
c
o
Dalo

Slrong Buy
Buy
arkol Pororn
Undorpororn
ol Falod
Suspondod Faling
Buy
Hold
Soll
ol Falod
Suspondod Faling


buy lho slock.
slock
Notes:

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
30
!00
!20
!40
Buy Hold Soll
Auslralia Univorso


hllp://gn.db.con.

'Slandard & Poors', and 'Filch' nonlionod in lhis roporl aro nol rogislorod crodil raling agoncios in Japan unloss Japan is
spociically dosignalod in lho nano o lho onlily.

60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 250 2500
London EC2 2EO
Unilod Kingdon
Tol: (44 20 7545 3000
Deutsche Bank AG
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Doulscho Bank Placo
Lovol !6
Sydnoy, Sv 2000
Auslralia
Tol: (6! 2 3253 !234
Deutsche Bank AG
Filialo Hongkong
Hong Kong
Tol: (352 2203 3333
2!!! agalacho
Sanno Park Towor
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer

AustraIasia ow Zoaland
UtiIities

2! Fobruary 20!2
Contact Energy Ltd
Foulors: CEN.NZ Bloonborg: CEN NZ Exchango: NZE Tickor: CEN
!H!2 bolow consonsus bul
dry yoar dovoloping
Grant SwanepoeI
Craigs nvoslnonl Parlnors
Fosoarch Analysl
(+64 9 9262243
granl.swanopool@db.con
John Hirjee
Fosoarch Analysl
(+6! 3 927043!3
john.hirjoo@db.con
Bryant Cheong
Craigs nvoslnonl Parlnors
Fosoarch Assislanl
(+64 9 9262245
bryanl.choong@db.con

Contact 1H12 beIow consensus estimates, upbeat on dry year deveIopment
Conlacl roporlod Z$23!n EBTDA (up 2.4', woll down againsl consonsus
Z$243n and in lino wilh our Z$230n oslinalo. Tho conpany has droppod lho
Z$520n slarl o yoar guidanco lo curronl narkol consonsus o Z$500n or
FY!2 as a dry yoar gain is anlicipalod. vo havo raisod our FY!2E oarnings lo
Z$436n bul koop FY!3E noslly unchangod. vo roduco our largol prico
nodoslly ron Z$5.63 lo Z$5.6!. ainlain Hold, basod on induslry risk issuos.
Salos (ZDn 2,627 2,795 3,479 3,469 3,593
EBTDA (ZDn 420 44! 486 5!6 6!9
ol Proil (ZDn !45 !5! 162 !73 234
EPS (ZD 0.24 0.23 0.22 0.24 0.3!
EPS Crowlh (' !!.3 !.6 -3.9 7.9 29.2
PEF (x 25.0 24.9 21.4 !9.3 !5.3
EV/EBTDA (x !!.2 !!.0 9.5 9.4 7.9
DPS (nol (ZD 0.25 0.23 0.23 0.25 0.27
Yiold (nol (' 4.2 3.9 4.8 5.2 5.6
!
2
yoar ond closo

This rosoarch has boon proparod in associalion wilh Craigs nvoslnonl Parlnors Linilod.

CA(P !46/04/20!!.
ResuIts

HoId
52 wook rango (ZD 6.14 - 4.75
Ev ZEALAD ZSX 50 3,316

Key changes
Prico largol 5.63 lo 5.6! # -1.2%
Salos (FYE 3,290 lo 3,479 ! 5.8%
EBT nargin (FYE 3.6 lo 3.6 # -0.0%
ol proil (FYE !59.4 lo !6!.9 ! 1.6%

4.4
4.3
5.2
5.6
6.0
6.4
6.3
2/!0 5/!0 3/!0 !!/!0 2/!! 5/!! 3/!! !!/!!
Conlacl Enorgy Lld
Ev ZEALAD ZSX 50 (Fobasod
Absolulo -!.2 -!!.! -2!.2
Ev ZEALAD
ZSX 50 !.2 !.8 -2.0

Stock data
arkol cap (ZDn 3,375
Froo loal 0.00

FOE (' 4.8
FOA (' 5.1
Book valuo/sharo (ZD 4.68
Prico/book (x 1.0
EBT nargin (' 8.6

C
o
m
p
a
n
y

G
I
o
b
a
I

M
a
r
k
e
t
s

R
e
s
e
a
r
c
h

Dry year deveIoping, can it be Iike CY20087
Tho noar lorn oullook is doninalod by curronl hydrological condilions, which aro
dry (dan lovols al 7!' o long run avoragos. CY!2 has slarlod in a sinilar vain lo
CY03 whon Conlacl gol caughl oul on lho Soulh sland and lack iro powor lo
conponsalo wilh gains on lho orlh sland. This lino around il is dioronl on bolh
lho nogalivos, boing loss nogalivo, and lho posilivos boing loss posilivo. Conlacl is
loss oxposod lo Soulh sland donand and honco has lowor downsido risk. vhilo
Conlacl has a slighlly inprovod porlolio lhan il had in 2003, lho ovorcapacily in
lho narkol should linil lho upsido polonlial sonowhal.
We assume normaI infIows off a Iow storage start point
n 2003 lowor lhan avorago inlows conlinuod or a six nonlh poriod, bul il is nol
prudonl lo oxpocl lhis. vo havo assunod avorago inlows going orward which
rosulls in an EBTDA orocasl o Z$436n or FY!2. howovor, lho hydro
condilions ninic lho irsl hal o CY03, lhon wo would havo a orocasl o
Z$526n.
We keep a HoId rating and reduce our target price to NZ$5.68 from NZ$5.61
Using 50' o our DCF valuo (Z$6.24 and 50' o our rolalivo valuo (Z$4.50
rosulls in a air valuo o Z$5.37. Using lho sano splil on our largol valuos rosulls
in us solling a largol prico o Z$5.6!. vo koop our Conlacl raling on a Hold. Koy
risk: gonoralion kil nol working al linos o nood, soo p. 9.
2! Fobruary 20!2 Ulililios Conlacl Enorgy Lld

Fiscal year end 30-Jun 2009 2010 2011 2012E 2013E 2014E
FinanciaI Summary
DB EPS (NZD) 0.27 0.24 0.23 0.22 0.24 0.31
Reported EPS (NZD) 0.20 0.25 0.24 0.23 0.25 0.32
DPS (NZD) 0.28 0.25 0.23 0.23 0.25 0.27
BVPS (NZD) 5.03 4.59 4.66 4.68 4.72 4.82
VaIuation Metrics
Price/Sales (x) 1.4 1.4 1.3 1.0 1.0 1.0
P/E (DB) (x) 25.4 25.0 24.9 21.4 19.8 15.3
P/E (Reported) (x) 34.1 23.7 24.3 20.8 19.4 15.1
P/BV (x) 1.1 1.2 1.2 1.0 1.0 1.0
FCF yield (%) nm nm nm nm 2.4 3.2
Dividend yield (%) 4.1 4.2 3.9 4.8 5.2 5.6
EV/Sales 1.7 1.8 1.7 1.3 1.4 1.4
EV/EBTDA 10.8 11.2 11.0 9.5 9.4 7.9
EV/EBT 17.2 18.3 17.6 15.5 15.3 11.8
Income Statement (NZDm)
Sales 2,758 2,627 2,795 3,479 3,469 3,598
EBTDA 445 420 441 486 516 619
EBT 279 258 275 298 318 417
Pre-tax profit 156 209 213 226 246 320
Net income 116 150 151 162 178 234
Cash FIow (NZDm)
Cash fIow from operations 425 368 379 363 378 437
Net Capex -488 -469 -530 -620 -295 -323
Free cash fIow -63 -101 -151 -257 83 114
Equity raised/(bought back) 0 0 343 0 0 0
Dividends paid -113 -45 -34 -64 -71 -79
Net inc/(dec) in borrowings 422 45 -107 321 -12 -35
Other investing/financing cash flows -69 -78 -97 0 0 0
Net cash fIow 177 -179 -47 0 0 0
Change in working capital 130 -71 9 25 5 4
BaIance Sheet (NZDm)
Cash and cash equivalents 178 0 0 0 0 0
Property, plant & equipment 4,691 4,511 4,814 5,245 5,342 5,462
Other assets 561 636 830 895 872 886
TotaI assets 5,430 5,148 5,643 6,140 6,214 6,348
Debt 1,235 1,282 1,085 1,407 1,395 1,360
Other liabilities 1,252 1,089 1,323 1,409 1,387 1,401
TotaI IiabiIities 2,488 2,371 2,408 2,816 2,782 2,761
TotaI sharehoIders' equity 2,942 2,777 3,236 3,325 3,432 3,588
Net debt 1,058 1,282 1,085 1,407 1,395 1,360
Key Company Metrics
Sales growth (%) -26.9 -4.8 6.4 24.5 -0.3 3.7
DB EPS growth (%) -31.5 -11.3 -1.6 -3.9 7.9 29.2
Payout ratio (%) 140.1 99.5 95.8 99.9 100.8 84.8
EBTDA Margin (%) 16.1 16.0 15.8 14.0 14.9 17.2
EBT Margin (%) 10.1 9.8 9.8 8.6 9.2 11.6
ROE (%) 5.3 5.0 4.9 4.8 5.2 6.6
Net debt/equity (%) 36.0 46.2 33.5 42.3 40.6 37.9
Net interest cover (x) 4.5 4.6 4.4 4.1 4.4 4.3
DuPont AnaIysis
EBT margin (%) 10.1 9.8 9.8 8.6 9.2 11.6
x Asset turnover (x) 0.5 0.5 0.5 0.6 0.6 0.6
x Financial cost ratio (x) 0.8 0.8 0.8 0.8 0.8 0.8
x Tax and other effects (x) 0.5 0.7 0.7 0.7 0.7 0.7
= ROA (post tax) (%) 2.2 2.8 2.8 2.7 2.9 3.7
x Financial leverage (x) 1.8 1.8 1.9 2.0 2.1 2.0
= ROE (%) 4.0 5.2 5.4 5.5 5.9 7.6
annual growth (%) -51.5 32.4 2.1 3.4 7.0 29.0
x NTA/share (avg) (x) 5.1 4.8 4.5 4.2 4.2 4.2
= Reported EPS 0.20 0.25 0.24 0.23 0.25 0.32
annual growth (%) -50.4 25.7 -4.5 -4.1 7.7 28.5
Source: Company data, Deutsche Bank estimates
Model updated:21 February 2012
Running the numbers
AustraIasia
New ZeaIand
UtiIities
Contact Energy Ltd
Reuters: CEN.NZ Bloomberg: CEN NZ
HoId
Price (21 Feb 12) NZD 4.80
Target price NZD 5.61
52-week Range NZD 4.75 - 6.14
Market Cap (m) NZDm 3,375
USDm 2,840
Company ProfiIe
Contact Energy (CEN) was established in 1995. t earns most
of its revenue from the sale of electricity and gas. t is the
second-largest generator in New Zealand, with about 25% of
the market and about 35% of the gas wholesaling market.
The company is also active in the retail electricity and gas
markets. CEN is the second-largest retailer of electricity and
the largest retailer of gas in New Zealand in terms of
revenues.
Price Performance
4.4
4.3
5.2
5.6
6.0
6.4
6.3
Feb 10May 10Aug 10Nov 10Feb 11May 11Aug 11Nov 11
Contact Energy Ltd
NEW ZEALAND NZSX 50 (Rebased)

Margin Trends
3
!0
!2
!4
!6
!3
09 10 11 12E 13E 14E
EBTDA Margin EBT Margin

Growth & ProfitabiIity
0
1
2
3
4
5
6
7
-30
-20
-10
0
10
20
30
09 10 11 12E 13E 14E
Sales growth (LHS) ROE (RHS)

SoIvency
4
4
4
4
5
5
0
10
20
30
40
50
09 10 11 12E 13E 14E
Net debt/equity (LHS) Net interest cover (RHS)

Grant SwanepoeI
+64 9 926-2243 grant.swanepoel@db.com
Issues and answers
OutIook downgrade, but Iess severe than anticipated earIier
owing to dry speII
Al lho slarl o lho yoar Conlacl had orocasl Z$520n plus EBTDA. Alor a poor !H!2 il is
now conorlablo wilh Z$500n as an oslinalo.
Tho counlry has onlorod a dry palch wilh dan lovols al 7!' o long run avoragos al lhis lino
o yoar. This noans lhal Conlacl could nako highor lhan nornal yoar proils as long as:
!. l doos nol gol caughl wilh a nisnalch bolwoon ixod prico donand and ils abilily
lo nool lhis in lho Soulh sland.
2. ls lhornal kil doos nol broak down.
3. l can achiovo roasonablo unhodgod volunos al high pricos.
vo boliovo lhal il is in a bollor posilion lhan il was in 2003 ron a supply posilion and has a
lowor nogalivo risk lo lho Soulh sland load. So, whilo lho downsido risk is ar lowor, wo aro
in a nuch highor nornalizod ovorcapacily posilion lhan back in 2003, and honco lho upsido
polonlial is likoly ar lowor.
So, whilo il is possiblo lo boal Z$500n wo boliovo lhal il is only possiblo i hydrology and
conpolilor posilioning lurns oul poroclly or Conlacls porlolio nix or lho rosl o lho yoar.
vo havo raisod our orocasl EBTDA lo Z$436n ron Z$470n duo lo acloring in lho
curronl dry condilion. vo havo nol nalorially changod lho nornalizod oporaling oarnings in
FY!3E as lho curronl dry spoll is covoring or lho ovorcapacily dynanics which should rolurn
noxl yoar. vo havo howovor roducod lhoso oarnings oslinalos slighlly duo lo lho
connissioning o To ihi boing al lho slarl o FY!4 ron lho back ond o FY!3.
CouId Contact be exposed to South IsIand dry year risk7
Answor: vo boliovo lho risk now is ar loss lhan in CY2003
Tho curronl dry palch dovolopnonl is vory analogous lo how 2003 slarlod oul, whon
Conlacls proils woro hil by a nisnalch o ils load (donand vs. dry yoar gonoralion in lho
Soulh sland (S. vilh lho inponding schodulod DC link oulagos, lho orlh Soulh prico
dioronlial could bo acconlualod. Tho ollowing lablo shows Conlacls rosidonlial CPs by
sland back in 2003 and curronlly.
Figure 1: CEN Customers by IsIand Jan 08 and Jan12
NI SI ToIal
Jan03 23395! 234904 5!3355
Jan!2 296069 !634!4 459433
Chango !2!!3 7!490 59372
' chg 4.30' 30.40' !!.40'
Source. Conpan, and Deutsche Bank
Sinco lhon, a robalancing has occurrod, roducing ils risk oxposuro nalorially. Tho TOU
narkol has nol pul risk back on lho Soulh sland and is ovon down whon conparod lo FY!!.
Soulh sland curronlly nakos up jusl 29' o Conlacls load and lho roconl signing o CFD
has also boon jusl orlh sland basod.
Slill a lilllo risk: n !H!2 Soulh sland gonoralion was !!2!Cvh whilo ils S load was
!252Cvh, slill a DC link risk bul ar lowor lhan in lho pasl. Clulha (Conlacls S dan
calchnonl slorago (curronlly 60' o long run avorago is howovor al lowor lovols lhan in
2003 and could poso a lilllo lhroal.
Conlacl also had kil issuos back in 2003, Olahuhu was nol working whon noodod. Sinco lhon
howovor, Conlacl has addod 200v Poakor noro lhan osolling lho !00v o ow
Plynoulh lhal was broughl back inlo produclion in 2003.
Kit maintenance verse unhedged generation gains: WiII the pIant
work through winter7
Vordicl: Conlacl indicalod lhal lho nainlonanco schodulo should bo up lo dalo posl lho
curronl TCC lwo wook oulago. l doos havo lho Poakors and vhirinaki (SFC Z$350
505/vh as back up i Olahuhu ails and should bo in a bollor posilion whon conparod lo
2003.
Olahuhu has boon down or nainlonanco and TCC is curronlly down unlil lho 27
lh
Fobruary
or a warranly nainlonanco progran. vo boliovo il is prudonl lo koop lho kil il or winlor,
whon a hopoully highor load posilion can bo oasily nol. This doos howovor noan lhal
Fobruary proils will nol bo nalorially bonoiling ron lho high wholosalo pricos.
vo havo assunod lho lhornal kil will produco 244!Cvh, slighlly bohind lho 2530Cvh in
FY2H03. This would bo a highor sharo o lho lhornal gonoralion providod lo lho narkol in
FY2H03 duo lo lho oxlra 6' o ronowablo gonoralion in placo in FY!2 rolalivo lo FY03.
CFD's and TOU contracts: Can Contact get a Iong term gain out
of dry patch, or just a six month gain7
Answor: Shorl lorn CFD gains alroady bankod by lho conpany and TOU conlracl nighl
slowly bo addod.
Tho dry palch has pushod lho uluros conlracl pricos up nalorially and is likoly lo havo
oponod up lho opporlunily or Conlacl lo wrilo CFDs, which lhoy havo. anagononl
indicalod lhal il has alroady lriplod lho prior havo CFDs in lho irsl nonlh and a bil o lhis
lalosl hal yoar. anagononl indicalod lhal lho lunpy naluro o TOU conlracls noanl lhal
lho opporlunily lo lock longor lorn conlracls in has so ar nol nalorialisod bul lhal il is a
possibilily on lho horizon.
This wo would soo as a posilivo valuo novo considoring our viow lhal lho induslry is in
ovorsupply on a 34 yoar viow.
Have we factored enough dry year risk into our estimate7
Answor: Yos, wo boliovo so. A 2003 ninic could rosull in a orocasl o Z$526n bul lhal
would noan wo havo lo assuno inlows ronain as sub avorago lovols and lhal oridians
slralogy is unchangod conparod wilh 2003.
vo do nol boliovo lhal il is corrocl lo assuno lhal CY!2 will dovolop in lho sano pallorn as
CY03 did, jusl bocauso dan lovols havo slarlod oul CY!2 in lho sano way as CY03 did. vo
havo assunod lhal oridians dispalch slralogy is now noro prudonl lhan il was back in
2003 and lhal ono can only assuno avorago inlows going orward, nol 2003 inlows. Also,
wilh Conosis having a 200v connilnonl lo oridian (il kicks in !
sl
April oach yoar lhal
was nol in placo in CY03, wo suspocl il has a lowor inconlivo lo spiko pricos. Tho oxlra
ronowablos, noslly goolhornal, also roduco sono o lho conparablo upsido.
To achiovo our 2H!2 EBTDA oslinalo o Z$255.3n (Z$40n up on 2H!! wo havo
assunod unhodgod gonoralion o 736Cvh, wholosalo pricos o Z$!!0/vh, unhodgod
pricos o Z$!27/vh and hydro volunos o !643Cvh rosulling in a lhornal gonoralion o
244!Cvh. A 2003 ninic would assuno an oxlra 200v o unhodgod gonoralion, !00Cvh
loss hydro honco Z$300Cvh oxlra lhornal incroasing lho risk o ailuro. Also wo would
assuno lhal avorago pricos gol lo !50/vh (loss lhan lho Z$!73/vh in 2H03 duo lo
curronl induslry ovorcapacily and unhodgod pricos gol lo Z$!30/vh. This would inply an
FY!2E EBTDA o Z$526n and 2H!2E EBTDA o Z$295n (Z$30n up o 2H!!.
Gas usage and storage: Was Contact at risk of having TOP
Iosses7
Answor: This is now nol an issuo bocauso o lho dry palch. vo oslinalo lhal Conlacl will
uso 22.3PJ o gas in 2H!2, 63' o lho CY!2 Tako or Pay 36PJ. Tho slorago vossol slill had
3PJ o capacily al lho ond o CY!!, so i lho dry poriod had nol nalorialisod, Conlacl nighl
havo boon in a TOP loss silualion al lho back ond o CY!2.
Ovor CY!!, Conlacl ulilisod 35PJs o lho 39PJs conlraclod gas, noaning lhal lho slorago
vossol had lo absorb an oxlra 4PJs ovor lho yoar. As slorago was al circa 3.3PJs al lho slarl
o CY!!, lho slorago ondod lho yoar al c. !2.2PJ wilh a nax o !5.2PJs, lhis would havo
boon a risk. anagononl, oarlior in lho yoar, indicalod lhal parl o lho conlracl (2PJ had
boon doorrod lo 20!3/!4 and i lhis did nol occur, slorago would havo alnosl hil capacily.
Tho curronl slorago doos howovor pul Conlacl in a hoallhy posilion i lho dry woalhor
conlinuos.
Tho oxlraclion acilily can oxlracl al 45TJ por day. Tho conpany is slill lo docido on wholhor
lo up capabilily. This il says is dopondonl on conlracling gas al avourablo ralos. vilh lho
largor slorago availablo, wo suspocl lho conpany will docido on a !50lj oxlraclion ralo ovor
lho inilially oxpoclod !00lj upgrado.
WiII retaiI pricing save the day7
Answor: vo boliovo lhal il will nol holp FY!2, bul should assisl FY!3 as lho now OLOT baso
is ornod
Tho roconl prico incroasos will rosull in a 2.5' boosl lo nol o lino cosl rosidonlial prico -
adds Z$3!0n lo 2H!2 EBTDA. n !H!2 gross rosidonlial pricing was up 2' lo
Z$2!0/vh alor lho inpacl o lho Onlino onlino (OLOT pricing inpacl. Tho lino cosls
woro up ron Z$35/vh lo Z$90/vh noaning lhal nol pricing was down. Tho OLOT
inpacl was Z$!0n on !H!2 EBTDA and is oxpoclod by nanagononl lo bo closor lo
Z$!5n nogalivo inpacl on 2H!2, noulralising lho roconl prico incroaso. Tho roason or lho
groalor 2H inpacl is lwoold:
!. Tho OLOT cuslonors had rison lo 35' o rosidonlial cuslonors ron undor 20' al
lho slarl o lho yoar, so lho avorago inpacl in !H!2 is loss lhan lho hal yoar ond
posilion
2. Tho OLOT sharo is oxpoclod by nanagononl lo riso lo 40' by FY!2 ond.
So, whilo rolail pricos aro again on lho novo, Conlacls conpolilivo roposilioning should
conlinuo lo danpon prico inpacls unlil lho baso is ornod.
A disappointing 1H12, weII fIagged but sIow to be picked up by
consensus
Conlacl roporlod EBTDA o Z$23!n (up 2.4', woll down againsl consonsus Z$243n
and in lino wilh our Z$230n oxpoclalion. As anlicipalod doprocialion and inlorosl (prior yoar
capilalisod dobl was up wilh lho connissioning o lho Poakor and slorago and honco PAT
ondod down jusl 3.!'. Tho dividond has boon kopl al !!c.
Figure 2: 1H12 resuIt and DB estimates NZ$m unIess stated
ProIiI & loss (NZ$m) 1H11A 1H12A Chahge DB esI diII
Oporaling rovonuo !2!7 !293 6' !325 32
Fovonuo growlh
!2.0' 6.2' 3.9'
EBTDA
226 23! 2' 230 !
Folail
!5 !0 34' 9 !
Folail nargin
2' !' 4'
Conoralion
!39 202 7' 200 2
Hodgod
!67 !73 4' !7! 2
Unhodgod
2! 23 33' 23 0
Olhor
22 20 !2' 22 2
EBTDA/salos
!3.5' !7.9' !7.4'
Doprocialion
35.5 94.5 !!' 94.0 !
EBTA
!40.0 !36.4 3' !35.7 !
EBTA/Salos
!!.5' !0.5' !0.2'
ol inlorosl oxponso + FX
30.! 36.3 22' 32.0 5
PBT
!09.9 99.6 9' 99.4 0
Tax oxponso
29.3 25.0 !6' 3!.! 6
Equily oarnings
!.3 !.3 0' !.3 0
Abnornals (A/T
4.9 3.4 27!' 0.0 3
Foporlod PAT
33.7 63.0 !9' 74.4 6
ornalisod PAT
73.3 76.3 3' 74.4 2

vld avg sharos (n
624 693 !2' 693 0
EPS (roporlod (cps
!3.4 9.7 27' !0.7 !
EPS (nornalisod (cps
!2.6 !0.9 !3' !0.7 0
EPS (nornalisod growlh
6.7' !3.4' 99' !5.6' 0
DPS (cps
!!.0 !!.0 0' !!.0 0
DPS/EPS (nornalisod
37.!' !00.6' !6' !02.3'
Earnings estimates upgraded on back of Iow dam IeveIs
vhilo wo had orocasl corroclly or lhis rosull, wo had wailod lo soo how lhis yoar bogan
booro wo aclorod in a dioronl lo avorago hydrology onvironnonl. vilh dan lovols al 7!'
o long run avoragos wo aro now assuning highor unhodgod rovonuo and highor wholosalo
pricos lhrough lo lho ond o FY!2. This has noanl lhal wo havo incroasod our FY!2 Earnings
oslinalo by Z$!6n lo Z$436n, slill bohind conpany guidanco o Z$500n. As wo
assuno avorago hydrology in FY!3, and conlinuo lo boliovo lhal lho induslry ovorcapacily will
conlinuo lo inpacl nogalivoly on Conlacls slralogy, wo loavo FY!3 oarning noslly
unchangod. Tho only adjuslnonl lo our FY!3 orocasl is lho inpacl o dolay in lho
connissioning o To ihi ron ay 20!3 lo Augusl lho sano yoar. This was an orror in our
inlorprolalion o whon lho planl was going lo bo connissionod and nol an aclual announcod
projocl dolay.
Figure 3: Change of Earnings Estimates FY12-FY13 (NZ$m)
2011A 2012E hew 2012E old ch 2013E hew 2013E old ch
EBTDA 44! 436 470 3' 5!6 520 !'
ol ncono !5! !62 !59 2' !73 !34 3'

VaIuation and risks
DCF and target price upgraded sIightIy
vo uso a conbinalion o a DCF drivon largol prico and a rolalivo valualion lo bollor lako inlo
accounl noar lorn oarnings oxpoclalions. vo now uso a largol prico lhal rolocls a 50':50'
splil bolwoon our rolalivo and DCF valualions.
DCF
vo uso a DCF valualion lo ascorlain a undanonlal or undorpin valuo. vo lhon calculalo a
onoyoar largol DCF lhal lakos lho curronl air valuo, grossos il up by lho cosl o oquily and
sublracls lho oxpoclod dividond. Our koy assunplions in our DCF valualion aro:
"
cosl o oquily 9.2':
"
riskroo ralo o 5.5',
"
oquily bola o 0.30, and
"
oquily narkol proniun o 6.5',
"
cosl o dobl, including dobl proniun o 3.6',
"
wo calculalo a vACC o 3.3' using a longlorn goaring ralio o 30', and
"
wo sol our longrun growlh ralo al inlalion (2.5', or zoro roal.
vo calculalo an EV o $5.75bn, which, alor ronoving dobl, oqualos lo a air valuo o
Z$6.26 por sharo (up ron Z$6.!2. Alor adding 9.2' cosl o oquily and sublracling a 23c
dividond, wo calculalo a onoyoaroul DCF valuo o Z$6.60.
Our DCF valuo is hoavily woighlod lo lho posilivo long lorn undanonlal viow wo havo o lho
induslry. Our noar lorn oarnings growlh is inpaclod by prico drivon conpolilion and induslry
ovor capacily and wo soo our ono yoar largol prico boing inluoncod by lhis. So, duo lo lho
oxpoclalion lhal noar lorn oarnings growlh wonl jusliy DCF inpliod nulliplos, lho risk o
an ovorhang duo lo lho soll down o slalo ownod gonlailor assols, and lho polonlial chango
in Conlacls woighling in lho ZX50 (duo lo changos in lho woighling nolhodology wo
incorporalo a rolalivo valualion in solling our largol prico.
ReIative VaIuation
vo havo conparod Conlacl againsl an oquallywoighlod indox consisling o 9 ow Zoaland
slocks: Auckland nlornalional Airporl - B, ZD2.43, Flolchor Building - H,ZD6.50,
Fishor&Paykol - B, ZD0.44 Skycily - H, ZD3.6, Tolocon Corp o | B, ZD2.!6,
ainroighl - H, ZD9.47, Porl o Tauronga - H, ZD!0.6!, varohouso - H, ZD2.56. Tho
slocks woro choson or lhoir approprialo sizo and liquidily.
Hislorically, Conlacls porornanco closoly lracks lho ndox bul has roconlly woakonod.
vhilo Conlacl has hislorically lradod al around c.0.3!.0x lho ndox, lhoir P/E has boon ro
ralod posl 2003 lo c.!.3!.4x narkol. vhilo lho proniun polonlially rolocls a lho ulililios
soclor boing porcoivod as noro doonsivo, and b Conlacl boing a qualily assol wilh solid
longor lorn undanonlals, wo suspocl lhal lho narkol oxpocls Conlacl lo rolurn lo a proil
nodol sinilar lo whal il had pro 2003. As nolod in our provious roporl Current strateg,
facing industr, headvinds, Conlacl is no longor oporaling wilh lho sano conpolilivo
posilion lhal il did a ow yoars ago. Spociically, a ls rolail baso is sovoroly doplolod (520K
cuslonors in FY03 down lo lho curronl 442.5K and b Conlacls lhornal kils aro boing
narginalizod by now ronowablo gonoralions as Conlacl no longor gols lho bonoil o low gas
pricos.
Tho undanonlal quoslion is lhon whal is a suslainablo lovol or Conlacls rolalivo P/E. vhilo
wo ronain convincod o lho long lorn induslry growlh slory (roloclod in our DCF valualion
wo aro o lho viow lhal noar lorn growlh prospocls doos nol warranl noro lhan a 20' P/E
proniun lo lho ndox. As lho ndox is lrading !6.3 linos orward oarnings, a 20' proniun
inplios a !9.7 orward nulliplo, or a air valuo o Z$4.50. As wo anlicipalo lho ndox
nulliplo lo ronain lal wilh oarnings growlh providing prico approcialion, il inplios a ono yoar
largol o Z$4.62 (Z$5.34 loss Z0.23 dividonds.
Reduce our target price from NZ$5.68 to NZ$5.61
Using 50' o our DCF valuo (Z$6.26 and 50' o our rolalivo valuo (Z$4.50 rosulls in a
air valuo o Z$5.37. Using lho sano splil on our largol valuos rosulls in us solling a largol
prico o Z$5.6!. vo koop our Conlacl raling on a Hold.
Risks
Tho koy downsido risks lo our largol prico includo rogulalory inlorvonlion, lho gas slorago
and gas poakor inlogralion nol going snoolhly, Olahuhu or TCC nooding oxlondod down
lino or any signiicanl, unoxpoclod incroasos in oloclricily purchaso cosls or gas pricos. Also,
whilo lho DC link (lho link bolwoon lho orlh and Soulh slands is al suboplinal capacily,
Conlacl noods lo nanago ils Soulh sland rolail oxposuro, parlicularly in dry yoars.
A longlorn risk is lho polonlial doplolion o lho ow Zoaland locally ound gas supply and
honco lho cosl o running lho lwo cogonoralion planls boconing loss ocononical.
Upsido risks includo any conpolilor Kil having oxlondod inlorruplions, a nalorial dry yoar
and/or an inproving rolail pricing onvironnonl.

Figure 4: CEN key statistics and estimates
Key vaIuation metrics FY10A FY11A FY12F FY13F FY14F Recommendation: Hold
P/E (using normalised EPS) 19.0 19.9 20.7 19.2 15.0 Share price: NZ$4.77
EV/EBTDA 11.1 11.2 11.0 10.5 8.8 Mkt cap ($m): US$2,251 NZ$3,315
EV/EBT 18.0 18.0 17.0 13.1 11.9 Current DCF: NZ$6.26
Dividend yield (net) 5.2% 4.8% 4.8% 5.2% 5.7% 12m target price summary NZ$ (cps)
Dividend yield (gross) 7.5% 6.9% 6.9% 7.5% 8.1% Target price 5.61
12-month capital return 17.6%
Net dividend yield 5.2%
Key ratios FY10A FY11A FY12F FY13F FY14F TotaI return 22.9%
ROE (NPAT normalised/SHF) 5.4% 4.7% 4.9% 5.2% 6.5%
ROCE (EBT/Avg debt + Avg SHF) 6.6% 6.6% 6.6% 6.7% 8.5% DCF assumptions
Working capital/sales -1.4% -1.8% -2.4% -2.7% -2.6% WACC 8.3% RF rate 5.5%
Net interest cover (EBT) (x) 4.7 4.4 4.1 4.4 4.3 Eq Beta 0.80 Term GR 2.5%
Net debt/(net debt +equity) 33.9% 29.0% 33.1% 32.2% 30.8% Eq RP 6.5%
NTA per share 412.0 416.3 419.5 425.0 435.8
Optg cash flow per share 61.8 60.2 51.6 52.5 59.3
Profit & Ioss (NZ$m) FY10A FY11A FY12F FY13F FY14F 1H11A 2H11A 1H12A 2H12E
Operating revenue 2,164.4 2,230.3 2,710.4 2,629.2 2,802.1 1217 1013 1293 1417
Revenue growth -2.5% 3.0% 21.5% -3.0% 6.6% 12.0% -5.9% 6.2% 39.9%
EBITDA 427 441 486 516 619 226 216 231 255
EBITDA/sales 19.7% 19.8% 17.9% 19.6% 22.1% 18.5% 21.3% 17.9% 18.0%
Depreciation 161.9 166.3 188.6 198.5 202.6 85.5 80.8 94.5 94.1
EBTA 265.1 275.1 297.6 317.9 416.6 140.0 135.1 136.4 161.2
EBITA/Sales 12.2% 12.3% 11.0% 12.1% 14.9% 11.5% 13.3% 10.5% 11.4%
Net interest expense + FX 56.0 62.3 71.9 72.3 96.4 30.1 32.2 36.8 35.1
NPBT 209 213 226 246 320 109.9 102.8 99.6 126.1
Tax expense 62.5 65.7 67.7 71.2 89.6 29.8 35.9 25.0 42.7
Equity earnings 3.3 3.9 3.9 3.9 3.9 1.8 2.1 1.8 2.1
Abnormals (A/T) 4.8 -0.7 -8.4 0.0 0.0 4.9 -5.6 -8.4 0.0
Reported NPAT 154.7 150.3 153.5 178.2 234.4 83.7 66.6 68.0 85.5
NormaIised NPAT 149.8 151.0 161.9 178.2 234.4 78.8 72.2 76.3 85.6
Wtd avg shares (m) 596.29 629.07 703.02 718.97 735.86 624 629 698 703
EPS (reported) (cps) 25.9 23.9 21.8 24.8 31.8 13.4 10.5 9.7 12.1
EPS (normaIised) (cps) 25.1 24.0 23.0 24.8 31.8 12.6 11.4 10.9 12.1
EPS (normalised) growth -8.4% -4.5% -4.1% 7.7% 28.5% -6.7% -1.9% -13.4% 6.3%
DPS (cps) 25.0 23.0 23.0 25.0 27.0 11.0 12.0 11.0 12.0
DPS/EPS (normalised) 99.5% 95.8% 99.9% 100.8% 84.8% 87.1% 105.5% 100.6% 99.2%
Key assumptions FY10A FY11A FY12F FY13F FY14F
Price paths
Price (NZ$/MWh) 52.2 59.0 95.0 79.5 83.7
Retail tariff growth 4.5% 0.7% 2.0% 3.0% 3.0%
Key cash fIow items (NZ$m) FY10A FY11A FY12F FY13F FY14F
Cash profit after tax 288.3 319.4 346.6 372.9 433.1
Working capital change -71.2 9.1 24.7 4.8 3.6
Other -77.9 -97.1 0.0 0.0 0.0
Cash fIow from operations 368.4 378.5 362.9 377.7 436.7
Capex -469.0 -529.5 -620.0 -295.0 -323.0
Free cash fIow -100.6 -151.0 -257.1 82.7 113.7
Other investing cash flows 0.0 0.0 0.0 0.0 0.0
Dividends -44.9 -34.4 -64.4 -71.1 -78.5
Other equity cash flows -77.9 -97.1 0.0 0.0 0.0
SurpIus cash -223.4 -282.4 -321.5 11.6 35.2
Key baIance sheet items (NZ$m) FY10A FY11A FY12F FY13F FY14F Major sharehoIders as at 19 Jan 2009
Net debt 1,282 1,085 1,407 1,395 1,360 Shrs (m) % CapitaI
Working capital -31 -40 -65 -70 -73 Origin Energy Holdings 296.2 50.6%
Shareholders' funds 2,777 3,236 3,325 3,432 3,588 HSBC Nominees NZ Ltd 25.1 4.4%
Net tangible assets 2,493 2,893 2,982 3,089 3,245 National Nominees NZ Ltd 22.8 4.0%
Total assets 5,148 5,643 6,140 6,214 6,348 NZ Superannuation Fund Nom 14.4 2.5%

Appendix 1
Conlacl Enorgy Lld CE.Z 4.30 (ZD 2! Fob !2 !,7,!4


lho pasl yoar.


website at hllp://gn.db.con/gor/disclosuro/Disclosuro.oqsr?ricCodo=CE.Z.

conponsalion or providing a spociic roconnondalion or viow in lhis roporl. Cranl Swanopool

HistoricaI recommendations and target price: Contact Energy Ltd (CEN.NZ)
(as of 2/2!/20!2)
! "
# $
%
&
'
(
)
!*
!!
0.00
!.00
2.00
3.00
4.00
5.00
6.00
7.00
S
o
c
u
r
i
l
y

P
r
i
c
o
Dalo

Slrong Buy
Buy
arkol Pororn
Undorpororn
ol Falod
Suspondod Faling
Buy
Hold
Soll
ol Falod
Suspondod Faling

!. !4/7/20!0: Buy, Targol Prico Chango ZD7.37
2. 20/3/20!0: Buy, Targol Prico Chango ZD6.96
3. 22/!2/20!0: Buy, Targol Prico Chango ZD7.29
4. 23/2/20!!: Buy, Targol Prico Chango ZD7.4!
5. 20/4/20!!: Buy, Targol Prico Chango ZD7.33
!0. 6/!2/20!!: Buy, Targol Prico Chango ZD6.35
!!. !2/!/20!2: Downgrado lo Hold, Targol Prico Chango ZD5.63


buy lho slock.
slock
Notes:

47 %
51 %
2 %
22 %
24 %
0 %
0
20
40
60
30
!00
!20
!40
Buy Hold Soll
Auslralia Univorso


hllp://gn.db.con.


60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 250 2500
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Lovol !6
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Tol: (352 2203 3333
2!!! agalacho
Sanno Park Towor
Japan
Tol: (3! 3 5!56 6770

GIobaI DiscIaimer


2! Fobruary 20!2
Data FIash (AustraIia)
inulos o lho Fobruary 20!2
FBA Board ooling

Bank doos and sooks lo do businoss wilh conpanios covorod in ils rosoarch roporls. Thus, invoslors should bo awaro lhal lho
irn nay havo a conlicl o inlorosl lhal could aocl lho objoclivily o lhis roporl. nvoslors should considor lhis roporl as only a
singlo aclor in naking lhoir invoslnonl docision. DSCLOSUFES AD AALYST CEFTFCATOS AFE LOCATED
APPEDX !. CA(P !46/04/20!!.
Economics

Research Team
Adam Boyton
Chio Econonisl
(+6! 02 3253!633
adan.boylon@db.con

PhiI O'Donaghoe
Econonisl
(+6! 2 3253!606
philip.odonaghoo@db.con

AUD TWI and the S&P 500
65
67
69
7!
73
75
77
79
3!
950
!000
!050
!!00
!!50
!200
!250
!300
!350
!400
Jan!0 Apr!0 Jul!0 Ocl!0 Jan!! Apr!! Jul!! Ocl!! Jan!2
S&P 500 and Auslralian Tv
S&P500 (LHS
Auslralian Tv (FHS
!"#$% !"#$%
!"#$%&'()*(+,-.(*/""01&$2(34565%46/(78((
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s

uch o whal is conlainod in lhis sol o ninulos has alroady boon placod inlo lho
public donain givon lho considorablo rango o FBA connunicalion sinco lho
Fobruary Board nooling. Thal lhon nakos any insighls inlo lho policy discussion
lho nosl signiicanl lakooul ron lhoso ninulos in our viow.

And horo il appoars lhal lho Board did nol soriously conlonplalo a ralo cul in
Fobruary. Fron lho ninulos: 9,&01&$:( 5";&<( ;=6;( ;=&( *"6$<>:( <&%4:4"5:( 45(
?"@&01&$( 65<( )&%&01&$( ABCC( ;"( /"D&$( ;=&( %6:=( $6;&( 1E( 6( %#0#/6;4@&( FB( 16:4:(
G"45;:(45($&:G"5:&(;"(;=&(40G$"@&<(45H/6;4"5("#;/""I(65<(<&;&$4"$6;4"5(45(;=&(2/"16/(
&%"5"0E(=6<(1&&5(G6::&<(;=$"#2=(;"(0":;(/&5<452($6;&:(45(;=&(&%"5"0E.(D=4%=(
D&$&(5"D(6$"#5<(6@&$62&(/&@&/:J(K4;=(2$"D;=(&LG&%;&<(;"(1&(%/":&(;"(;$&5<(65<(
45H/6;4"5( %"5:4:;&5;( D4;=( ;=&( ;6$2&;.( ;=&( *"6$<( %"5:4<&$&<( ;=6;( ;=4:( :&;;452( D6:(
6GG$"G$46;&( H"$( ;=&( "@&$6//( 06%$"&%"5"04%( "#;/""IJ( M=&E( N#<2&<( ;=6;( 4H( <&065<(
%"5<4;4"5:( D&$&( ;"( D&6I&5( 06;&$46//E.( ;=&( 45H/6;4"5( "#;/""I( D"#/<( G$"@4<&( :%"G&(
H"$(6(H#$;=&$(&6:452(45(0"5&;6$E(G"/4%EJO

Thal is, lhoro was no on lho ono hand bul on lho olhor hand policy discussion
lhal lod lo a (closo docision. Falhor il appoars ron lho ninulos lhal lho Board
was conorlablo wilh lho solling o policy givon lho oxpoclod oullook. To bo suro
lho ninulos ropoalod lhal: i donand condilions woro lo woakon nalorially, lho
inlalion oullook would provido scopo or a urlhor oasing in nonolary policy
allhough il would soon lho bar horo is roasonably high givon discussion o a ralo
cul doos nol appoar lo havo boon proninonl al lho Fobruary nooling.

Thal loavos lho FBA on hold ovor coning nonlhs in our viow, allhough wo slill
soo lho risks as skowod loward urlhor ralo culs ospocially i lho AUD conlinuos
ils roconl advanco (lho Tv closing yoslorday jusl a shado bolow ils ay 20!!
high. On lhis lallor poinl wo nolo lhal lho ninulos nako a ow rooroncos lo
sovoroign purchasos o Auslralian govornnonl dobl - o.g. wilh purchasos o
Auslralian sovoroign dobl by ovorsoas buyors an inporlanl inluonco on lho
oxchango ralo.

For our parl, wo ronain uncorlain aboul lho inpacl o lhoso purchasos on lho
oxchango ralo. ndood as ar as lows aro concornod wo lypically lako a build il
and lhoy will cono viow. Thal is, wo aro gonorally inclinod lo soo lows as boing
drivon by undanonlals. (Tho undanonlals lhal supporl an olovalod AUD
includo, in our viow, a rolalivoly high inlorosl ralo slrucluro conparod lo olhor
dovolopod ocononios, a AAA crodil raling al lho Fodoral lovol, a curronl accounl
doicil which is nuch lowor lhan ils avorago o lho pasl 20 yoars, and o courso
lho lorns o lrado which dospilo an oxpoclod cyclical doclino ronains oxlronoly
high.

As lo shorlorlorn inluoncos on lho AUD, or bollor or or worso il appoars highly
sonsilivo lo global risk appolilo. n lhis voin wo aro inclinod lo viow nuch o lho
nosl roconl run up in lho AUD Tv as consislonl wilh dovolopnonls in olhor
narkols. On wholhor lho link bolwoon lho AUD and lho S&P 500 shown in lho
charl on lho righl is approprialo, our 20 January 20!2 Auslralian Econonics
onlhly canvassos lho cyclical inluoncos lhal lho US oconony slill holds on
Auslralia. Thal said, lhoso links aro nowhoro noar as lighl as lho roconl corrolalion
bolwoon lho AUD and lho S&P 500.
2! Fobruary 20!2 Dala Flash (Auslralia

Exlracl ron lho inulos o 7 Fobruary (sourco: hllp://www.rba.gov.au/nonolarypolicy/rba
boardninulos/20!2/070220!2.hlnl
Considoralions or onolary Policy
vhilo lho inancial silualion in Europo ronainod ragilo, lho likolihood o an oxlronoly bad
oulcono soonod lo havo dininishod sonowhal ovor lho provious couplo o nonlhs, parlly
rolocling aclions by lho Europoan policynakors. This, logolhor wilh slrongor ocononic dala
ron lho Unilod Slalos, had providod a nild boosl lo conidonco in inancial narkols. Crowlh
in China had nodoralod as inlondod, bul on nosl indicalors had ronainod quilo robusl
lhrough lho socond hal o 20!!. vhilo lhoro woro slill nany uncorlainlios, lho conlral
orocasl was or growlh in lho global oconony in 20!2 lo bo aboul porconlago poinl
bolow lrond. Auslralias najor lrading parlnors woro oxpoclod lo conlinuo lo grow noro
quickly lhan lho world as a wholo.
Donoslically, lhoro woro signiicanl dioroncos in condilions across soclors, wilh a
considorablo dogroo o slruclural adjuslnonl occurring in lho oconony. Labour narkol
condilions had solonod during 20!! and lho unonploynonl ralo had incroasod slighlly
around nid yoar, lhough il had boon sloady ovor roconl nonlhs. Ovorall donand growlh
ronainod irn and lho oullook was or CDP growlh lo bo closo lo lrond ovor lho noxl couplo
o yoars. Tho roconl inlalion dala had conirnod lhal, in undorlying lorns, inlalion was now
al lho nidpoinl o lho largol rango. nlalion was oxpoclod lo ronain consislonl wilh lho
largol ovor lho orocasl poriod. Crodil growlh ronainod nodosl, lhough lhoro had boon a
slighl incroaso in donand or crodil by businossos, and housing pricos had showod sono
slabilisalion around lho ond o 20!!, alor having doclinod or nosl o lho yoar. Tho oxchango
ralo had rison sinco oarly Doconbor.
onbors nolod lhal lho Boards docisions in ovonbor and Doconbor 20!! lo lowor lho
cash ralo by a cunulalivo 50 basis poinls in rosponso lo lho inprovod inlalion oullook and
dolorioralion in lho global oconony had boon passod lhrough lo nosl londing ralos in lho
oconony, which woro now around avorago lovols. vilh growlh oxpoclod lo bo closo lo lrond
and inlalion consislonl wilh lho largol, lho Board considorod lhal lhis solling was
approprialo or lho ovorall nacroocononic oullook. Thoy judgod lhal i donand condilions
woro lo woakon nalorially, lho inlalion oullook would provido scopo or a urlhor oasing in
nonolary policy.

Exlracl ron lho inulos o 6 Doconbor (sourco: hllp://www.rba.gov.au/nonolary
policy/rbaboardninulos/20!!/06!220!!.hlnl
Considoralions or onolary Policy
n lho global oconony, lho roconl nows had boon nixod. Tho dala or lho US oconony had
boon bollor lhan in oarlior nonlhs. Chinas growlh had boon slowing, as policynakors lhoro
had inlondod, and nosl olhor ocononios in Asia had also slowod as lrado in Asia was sooing
sono oocls o lho signiicanl slowing in ocononic aclivily in Europo. onolholoss, growlh
ralos in Asia ronainod solid. Tho nows on Europo, howovor, had boon nolably woakor and il
ronainod uncloar as lo how lho curronl silualion would bo rosolvod. l soonod highly likoly
lhal lho sovoroign crodil and banking problons would woigh hoavily on ocononic aclivily
lhoro ovor lho poriod ahoad, and lhoro was a nonlrivial possibilily o a vory sharp conlraclion.
Clobal inancial narkols had oxporioncod considorablo lurbulonco, and inancing condilions
or banks had bocono nuch noro diicull, ospocially in Europo. Ovorall, nonbors
concludod lhal growlh in lho world oconony was likoly lo woakon ovor lho coning yoar.
Donoslically, sono o lho roconl ocononic dala had boon noro posilivo lhan a ow nonlhs
oarlior, and ovorall growlh was consislonl wilh lrond. Howovor, condilions variod signiicanlly
across soclors. nvoslnonl was picking up vory slrongly, and noasuros o housohold and
businoss conidonco had inprovod in roconl nonlhs, lhough liaison roporls suggoslod
consunors ronainod caulious. Tho unonploynonl ralo had boon broadly sloady, al a lilllo
ovor 5 por conl, alor rising around nid yoar. Tho inancial sido o lho oconony ronainod
rolalivoly subduod, wilh sol crodil growlh and doclining assol pricos.
Againsl lhis background, lho Board considorod lho quoslion o wholhor a urlhor roduclion in
lho cash ralo would bo approprialo ollowing lho roduclion in ovonbor. On lho ono hand,
lhoro had boon urlhor ovidonco lhal a najor invoslnonl boon was in progross and lho
ovorall oconony was oxpanding al a paco broadly in lino wilh lrond. Auslralias nain lrading
parlnors woro also slill rocording solid growlh. This did nol suggosl any slrong nood lo cul
inlorosl ralos. Againsl lhis, dovolopnonls in Europo conlinuod lo poso downsido risks lo lho
global oconony and, consoquonlly, also lo Auslralia. Thoso risks had, i anylhing, incroasod
lhough lho lining and nagniludo o any oocls lhal nighl low ron lhon ronainod vory
diicull lo prodicl.
n lhoso circunslancos, and givon lho oxpoclalion lhal inlalion would bo consislonl wilh lho
largol ovor lho noxl couplo o yoars (abslracling ron lho oocl o lho carbon pricing
schono, nonbors oll lhal lhoro was scopo or a nodosl roduclion in lho cash ralo al lhis
nooling.
Appendix 1
For discIosures pertaining to recommendations or estimates made on a security mentioned in this report, pIease see
the most recentIy pubIished company report or visit our gIobaI discIosure Iook-up page on our website at
hllp://gn.db.con/gor/disclosuro/DisclosuroDiroclory.oqsr.

Tho viows oxprossod in lhis roporl accuraloly rolocl lho porsonal viows o lho undorsignod load analysl(s. n addilion, lho
undorsignod load analysl(s has nol and will nol rocoivo any conponsalion or providing a spociic roconnondalion or viow in
lhis roporl. Adan Boylon/Phil Odonaghoo

hllp://gn.db.con.
Japan Socurilios nvoslnonl Advisors Associalion. This roporl is nol noanl lo solicil lho purchaso o spociic inancial
inslrunonls or rolalod sorvicos. vo nay chargo connissions and oos or corlain calogorios o invoslnonl advico, producls
and sorvicos. Foconnondod invoslnonl slralogios, producls and sorvicos carry lho risk o lossos lo principal and olhor
lossos as a rosull o changos in narkol and/or ocononic lronds, and/or luclualions in narkol valuo. Booro dociding on lho
purchaso o inancial producls and/or sorvicos, cuslonors should caroully road lho rolovanl disclosuros, prospoclusos and
olhor docunonlalion. 'oodys', 'Slandard & Poors', and 'Filch' nonlionod in lhis roporl aro nol rogislorod crodil raling
agoncios in Japan unloss Japan or 'ippon' is spociically dosignalod in lho nano o lho onlily.
alaysia: Doulscho Bank AC and/or ils ailialo(s nay nainlain posilions in lho socurilios roorrod lo horoin and nay ron
lino lo lino oor lhoso socurilios or purchaso or nay havo an inlorosl lo purchaso such socurilios. Doulscho Bank nay
ongago in lransaclions in a nannor inconsislonl wilh lho viows discussod horoin.

Risks to Fixed Income Positions
acroocononic luclualions olon accounl or nosl o lho risks associalod wilh oxposuros lo inslrunonls lhal proniso lo pay
ixod or variablo inlorosl ralos. For an invoslor lhal is long ixod ralo inslrunonls (lhus rocoiving lhoso cash lows, incroasos in
inlorosl ralos nalurally lil lho discounl aclors appliod lo lho oxpoclod cash lows and lhus causo a loss. Tho longor lho
nalurily o a corlain cash low and lho highor lho novo in lho discounl aclor, lho highor will bo lho loss. Upsido surprisos in
inlalion, iscal unding noods, and FX doprocialion ralos aro anong lho nosl connon advorso nacroocononic shocks lo
rocoivors. Bul counlorparly oxposuro, issuor crodilworlhinoss, clionl sognonlalion, rogulalion (including changos in assols
holding linils or dioronl lypos o invoslors, changos in lax policios, curroncy convorlibilily (which nay conslrain curroncy
convorsion, ropalrialion o proils and/or lho liquidalion o posilions, and solllononl issuos rolalod lo local cloaring housos aro
also inporlanl risk aclors lo bo considorod. Tho sonsilivily o ixod incono inslrunonls lo nacroocononic shocks nay bo
niligalod by indoxing lho conlraclod cash lows lo inlalion, lo FX doprocialion, or lo spociiod inlorosl ralos - lhoso aro
connon in onorging narkols. l is inporlanl lo nolo lhal lho indox ixings nay by conslruclion lag or nisnoasuro lho
aclual novo in lho undorlying variablos lhoy aro inlondod lo lrack. Tho choico o lho propor ixing (or nolric is parlicularly
inporlanl in swaps narkols, whoro loaling coupon ralos (i.o., coupons indoxod lo a lypically shorldalod inlorosl ralo
rooronco indox aro oxchangod or ixod coupons. l is also inporlanl lo acknowlodgo lhal unding in a curroncy lhal diors
ron lho curroncy in which lho coupons lo bo rocoivod aro dononinalod carrios FX risk. alurally, oplions on swaps
(swaplions also boar lho risks lypical lo oplions in addilion lo lho risks rolalod lo ralos novononls.

David FoIkerts-Landau
anaging Diroclor
Clobal Hoad o Fosoarch

Cuy Ashlon
Hoad
Clobal Fosoarch Producl
arcol Cassard
Clobal Hoad
Fixod ncono Fosoarch

Sluarl Parkinson
Associalo Diroclor
Conpany Fosoarch
AsiaPaciic Cornany Anoricas Europo
Forgus Lynch
Fogional Hoad
Androas oubauor
Fogional Hoad
Slovo Pollard
Fogional Hoad
Fichard Snilh
Fogional Hoad

Principal Localions
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Tol: (44 20 7545 3000
Deutsche Bank AG
New York
60 vall Slrool
ow York, Y !0005
Tol: (! 2!2 2502500
Deutsche Bank AG
Hong Kong
Filialo Hongkong
nll. Connorco Conlro
! Auslin Foad vosl Kowloon,
Hong Kong
lol: (352 2203 3333
Japan
2!!! agalacho
Sanno Park Towor
Tol: (3! 3 5!56 6770
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Frankfurt
Cornany
Tol: (49 69 9!0 00
Deutsche Bank AG
Aurora businoss park
32 bld.2 Sadovnichoskaya slrool
oscow, !!5035
Fussia
Tol: (7 495 7975000
Deutsche Bank AG
Singapore
Ono Falos Ouay
Soulh Towor
Singaporo 043533
Tol: (65 6423 300!
Deutsche Bank AG
AustraIia
Doulscho Bank Placo, Lovol !6
Sydnoy Sv 2000
Tol: (6! 2 3253 !234
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Dubai nlornalional Financial Conlro
Tho Calo, vosl ving, Lovol 3
P.O. Box 504 902
Dubai Cily
Tol: (97! 4 36!! 700

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GIobaI DiscIaimer
Tho inornalion and opinions in lhis roporl woro proparod by Doulscho Bank AC or ono o ils ailialos (colloclivoly 'Doulscho Bank'. Tho inornalion
horoin is boliovod lo bo roliablo and has boon oblainod ron public sourcos boliovod lo bo roliablo. Doulscho Bank nakos no roprosonlalion as lo lho
accuracy or conplolonoss o such inornalion.
Doulscho Bank nay ongago in socurilios lransaclions, on a propriolary basis or olhorwiso, in a nannor inconsislonl wilh lho viow lakon in lhis rosoarch
roporl. n addilion, olhors wilhin Doulscho Bank, including slralogisls and salos sla, nay lako a viow lhal is inconsislonl wilh lhal lakon in lhis
rosoarch roporl.
Opinions, oslinalos and projoclions in lhis roporl conslilulo lho curronl judgononl o lho aulhor as o lho dalo o lhis roporl. Thoy do nol nocossarily
rolocl lho opinions o Doulscho Bank and aro subjocl lo chango wilhoul nolico. Doulscho Bank has no obligalion lo updalo, nodiy or anond lhis
roporl or lo olhorwiso noliy a rocipionl lhoroo in lho ovonl lhal any opinion, orocasl or oslinalo sol orlh horoin, changos or subsoquonlly boconos
inaccuralo. Pricos and availabilily o inancial inslrunonls aro subjocl lo chango wilhoul nolico. This roporl is providod or inornalional purposos only. l
is nol an oor or a solicilalion o an oor lo buy or soll any inancial inslrunonls or lo parlicipalo in any parlicular lrading slralogy. Targol pricos aro
inhoronlly inprociso and a producl o lho analysl judgononl.
As a rosull o Doulscho Banks arch 20!0 acquisilion o BHFBank AC, a socurily nay bo covorod by noro lhan ono analysl wilhin lho Doulscho Bank
group. Each o lhoso analysls nay uso dioring nolhodologios lo valuo lho socurily, as a rosull, lho roconnondalions nay dior and lho prico largols
and oslinalos o oach nay vary widoly.
n Augusl 2009, Doulscho Bank inslilulod a now policy whoroby analysls nay chooso nol lo sol or nainlain a largol prico o corlain issuors undor
covorago wilh a Hold raling. n parlicular, lhis will lypically occur or 'Hold' ralod slocks having a narkol cap snallor lhan nosl olhor conpanios in ils
soclor or rogion. vo boliovo lhal such policy will allow us lo nako bosl uso o our rosourcos. Ploaso visil our wobsilo al hllp://gn.db.con lo dolornino
lho largol prico o any slock.
Tho inancial inslrunonls discussod in lhis roporl nay nol bo suilablo or all invoslors and invoslors nusl nako lhoir own inornod invoslnonl
docisions. Slock lransaclions can load lo lossos as a rosull o prico luclualions and olhor aclors. a inancial inslrunonl is dononinalod in a curroncy
olhor lhan an invoslors curroncy, a chango in oxchango ralos nay advorsoly aocl lho invoslnonl. Pasl porornanco is nol nocossarily indicalivo o
uluro rosulls. Doulscho Bank nay wilh rospocl lo socurilios covorod by lhis roporl, soll lo or buy ron cuslonors on a principal basis, and considor lhis
roporl in dociding lo lrado on a propriolary basis.
Unloss govorning law providos olhorwiso, all lransaclions should bo oxoculod lhrough lho Doulscho Bank onlily in lho invoslors hono jurisdiclion. n
lho U.S. lhis roporl is approvod and/or dislribulod by Doulscho Bank Socurilios nc., a nonbor o lho YSE, lho ASD, FA and SPC. n Cornany lhis
roporl is approvod and/or connunicalod by Doulscho Bank AC Frankurl aulhorizod by lho BaFin. n lho Unilod Kingdon lhis roporl is approvod and/or
connunicalod by Doulscho Bank AC London, a nonbor o lho London Slock Exchango and rogulalod by lho Financial Sorvicos Aulhorily or lho
conducl o invoslnonl businoss in lho UK and aulhorizod by lho BaFin. This roporl is dislribulod in Hong Kong by Doulscho Bank AC, Hong Kong
Branch, in Koroa by Doulscho Socurilios Koroa Co. This roporl is dislribulod in Singaporo by Doulscho Bank AC, Singaporo Branch, and rocipionls in
Singaporo o lhis roporl aro lo conlacl Doulscho Bank AC, Singaporo Branch in rospocl o any nallors arising ron, or in connoclion wilh, lhis roporl.
vhoro lhis roporl is issuod or pronulgalod in Singaporo lo a porson who is nol an accrodilod invoslor, oxporl invoslor or inslilulional invoslor (as
doinod in lho applicablo Singaporo laws and rogulalions, Doulscho Bank AC, Singaporo Branch accopls logal rosponsibilily lo such porson or lho
conlonls o lhis roporl. n Japan lhis roporl is approvod and/or dislribulod by Doulscho Socurilios nc. Tho inornalion conlainod in lhis roporl doos nol
conslilulo lho provision o invoslnonl advico. n Auslralia, rolail clionls should oblain a copy o a Producl Disclosuro Slalononl (PDS rolaling lo any
inancial producl roorrod lo in lhis roporl and considor lho PDS booro naking any docision aboul wholhor lo acquiro lho producl. Doulscho Bank AC
Johannosburg is incorporalod in lho Fodoral Fopublic o Cornany (Branch Fogislor unbor in Soulh Arica: !993/003293/!0. Addilional inornalion
rolalivo lo socurilios, olhor inancial producls or issuors discussod in lhis roporl is availablo upon roquosl. This roporl nay nol bo roproducod,
dislribulod or publishod by any porson or any purposo wilhoul Doulscho Banks prior wrillon consonl. Ploaso cilo sourco whon quoling.

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IndustriaIs Returns AnaIysis
Net profit ($m) Last EPS (c) EPS PER (x) EV/EBITDA EPS versus Div Frank- Dividends (c) Weight
Effective ASX Rating Price Target TP/P Mkt EV year pre goodwiII amort CAGR ReI Consensus yieId ing in ASX AnaIyst
21-Feb-2012 code (cps) Price (%) Cap (A$b) HY12E 2011 2012E 2013E end 2011 2012E 2013E (3yr) 2012E 2013E 2013E 2012E 2013E 2012E 2013E 2012E 2012E 2012E 2013E 200
(cps) (A$b) (x) (x) (%) (%) (%) (%) (%)
2012 2013 2012 2013
Boarl BLY Buy 393 334 2.3' !.3 2.0 37.4 !45.9 !33.6 2!3.5 Doc!0 30.7 39.6 44.9 30.9' 9.9 3.3 0.34 5.2 4.7 7.4 9.6 3.2 35 !2.4 !4.0 0.!7 vongPan
Downor Edi DOv Hold 394 433 !!.2' !.7 2.! 75.5 !56.0 !76.2 !94.3 Jun!! 40.7 4!.! 45.4 7.3' 9.6 3.7 0.33 3.9 3.6 0.2 !.3 0.0 0 0.0 22.7 0.!5 vongPan
Loighlon LE Hold 2433 2337 2.!' 3.2 3.9 27!.4 566.5 629.! 635.6 Doc!! !76.6 !36.4 203.! 6.0' !3.! !2.0 !.!5 4.2 4.2 !.2 2.4 5.9 !00 !45.0 !52.0 0.33 vongPan
Lond Loaso LLC Buy 746 950 27.3' 4.3 5.2 435.3 449.5 500.3 Jun!! 35.6 73.7 37.6 4.5' 9.5 3.5 0.3! 6.7 6.2 !.9 2.! 5.3 40 39.4 43.3 0.33 Fandall
Swicknin SvK Hold 32 35 9.4' 0.! 0.! 4.3 4.7 3.9 !!.4 Jun!! 2.0 3.7 4.3 33.6' 3.6 6.7 0.64 2.9 2.5 !3.4 !3.2 3.! !00 !.0 !.4 Foso
Ugl Linil UCL Buy !3!0 !4!4 7.9' 2.2 2.4 69.5 !53.5 !64.0 !3!.6 Jun!! 95.5 93.3 !09.4 3.4' !3.3 !2.0 !.!5 7.6 7.0 5.4 6.9 5.3 !00 76.0 32.! 0.22 vongPan
Wtd Average Growth 0.1% 1.0% 10.0% 10.9 9.9 0.95 5.42 74 61.1% 7.5% 1.29
BuiIding MateriaIs
Boral Lld BLD Hold 442 400 9.5' 3.3 3.3 65.0 !75.4 !54.! 2!3.3 Jun!! 24.3 2!.2 23.3 20.5' 20.3 !5.3 !.47 7.4 6.0 9.3 !0.0 2.7 !00 !2.0 2!.5 0.3! Bohncko
CSF CSF Hold !94.5 230 !3.3' !.0 0.9 90.2 76.4 !05.0 ar!! !7.9 !5.! 20.7 !5.2' !2.9 9.4 0.90 3.6 3.0 3.2 9.9 4.! !00 3.0 !7.0 0.!0 Bohncko
Flolbuild FBU Hold 5!3 553.3 3' 3.5 5.0 !!!.3 273.3 236.4 333.3 Jun!! 43.2 34.0 47.9 !!.3' !5.3 !0.3 !.04 7.5 6.3 33.6 23.9 5.7 !00 29.7 36.0 Bohncko
J Hardio JHX Hold 762 675 !!.4' 3.3 3.4 !23.0 !45.! !35.3 ar!! 23.3 34.2 44.9 3!.5' 22.3 !7.0 !.62 !2.4 9.9 6.6 6.5 !.2 0 3.3 !!.3 0.32 Bohncko
Wtd Average Growth -25.7% -11.6% 37.0% 17.4 12.7 1.21 3.46 71 -24.0% 45.5% 0.72
AIcohoI & Tobacco
Troa vino TvE Hold 39! 390 0.3' 2.5 2.6 5!.6 !7!.! !34.7 !79.9 Jun!! 49.2 2!.2 23.2 !3.0' !3.4 !3.9 !.33 9.2 7.4 3.5 !4.6 3.4 50 !3.3 !7.4 0.24 van ours
Wtd Average Growth 0.0% -51.7% 22.2% 15.1 12.4 1.18 4.13 50 147.1% 22.1% 0.24
Food & HousehoId Goods
CC Analil CCL Buy !2!! !300 7.3' 9.2 !0.3 53!.3 603.2 653.5 Doc!0 70.2 79.3 35.6 3.4' !5.3 !4.2 !.35 3.9 3.2 3.5 2.2 4.7 !00 57.0 6!.5 0.62 van ours
Coodnan CFF Hold 5!.5 55 6.3' !.0 !.9 42.9 !36.! 99.5 !23.7 Jun!! 9.9 5.5 6.6 9.9' 9.4 7.3 0.75 5.5 4.7 !4.! 3.2 0.0 20 0.0 3.2 0.!0 Sinolas
Wtd Average Growth -3.7% 2.6% 8.3% 13.9 12.8 1.22 5.28 92 2.0% 7.9% 0.10
Infrastructure & UtiIities
Agl Enorgy ACK Buy !429 !735 24.9' 6.6 7.! 249.9 43!.! 497.4 553.3 Jun!! 93.6 !06.6 !!7.0 9.2' !3.4 !2.2 !.!7 7.9 7.2 2.! 4.0 4.7 !00 67.! 70.4 0.65 Hirjoo
Auck Airpl AA Buy !90 20!.5 6.!' 2.5 3.4 54.4 93.6 !07.3 !!9.3 Jun!! 7.! 3.! 9.0 !!.5' 23.4 2!.! 2.0! !3.3 !2.3 2!.2 !3.0 3.9 !00 7.4 3.4 Zano
Apa Croup APA Buy 437 530 3.3' 3.! 6.3 74.5 !03.9 !35.9 !44.9 Jun!! !9.3 2!.0 22.0 6.2' 23.2 22.! 2.!2 !!.4 !!.! 5.! 2.3 7.3 0 35.3 36.2 0.25 Hirjoo
Duol DUE Hold !75 !35 5.7' !.9 7.5 42.3 !5!.3 93.! !29.3 Jun!! !3.9 3.3 !!.4 2.!' 20.0 !5.4 !.47 9.4 3.6 9.3 3.2 9.! 0 !6.0 !6.5 0.!7 organ
Sydairporl SYD Buy 265 300 !3.2' 4.9 !0.3 93.4 !3!.0 !94.3 !29.5 Doc!0 9.7 !0.4 7.0 59.7' 25.4 33.! 3.64 !!.7 9.7 49.! 27.5 7.9 0 2!.0 22.0 0.33 cDonald
Transurban TCL Hold 567 560 !.2' 3.3 !2.! 96.6 !06.! !40.9 !96.0 Jun!! 7.4 9.7 !3.4 36.9' 53.3 42.4 4.06 !3.3 !7.5 !6.9 2.9 5.! 25 29.0 32.0 0.3! cDonald
Wtd Average Growth 12% 7% 15.2% 15.1 13.1 1.25 4.90 67 -5.2% 11.2% 2.26
Paper & Packaging
Ancor AC Buy 7!0 300 !3' 3.6 !!.3 304.7 570.3 654.6 743.9 Jun!! 45.6 52.7 60.3 !3.3' !3.5 !!.3 !.!3 7.5 6.3 0.6 !.2 5.2 0 37.0 39.0 0.36 vilson
PaporlinX PPX Buy 9.9 30 203.0' 0.! 0.2 4.! 25.5 3.9 5.2 Jun!! 7.5 4.9 2.6 n/a n/a n/a n/a 5.9 4.6 37.0 39.9 !0.! 50 !.0 5.0 vilson
RetaiI
Billabong BBC Hold 233 270 4.6' 0.7 !.2 45.9 !!9.! 53.3 65.5 Jun!! 47.0 20.3 25.2 !0.3' !3.6 !!.3 !.03 7.7 3.0 !4.2 !!.4 2.! 50 6.0 7.5 0.06 Sinolas
David Jonos DJS Hold 253 230 !0.7' !.3 !.5 35.5 !63.! !39.4 !45.4 Jul!! 32.4 26.2 26.3 4.6' 9.6 9.4 0.90 5.7 5.5 0.2 2.5 9.! !00 23.0 23.0 0.!2 Sinolas
Harvoy ornan HV Buy 2!2 230 32.!' 2.3 2.3 !!6.6 236.3 2!7.7 255.6 Jun!! 22.2 20.5 24.! 6.2' !0.3 3.3 0.34 6.3 5.6 !.5 !.5 5.2 !00 !!.0 !3.0 0.!2 Sinolas
olcashlld TS Hold 4!2 430 4.4' 3.2 3.9 !!2.5 243.3 257.3 279.2 Apr!! 32.3 33.3 36.0 6.0' !2.4 !!.4 !.!0 7.9 7.4 2.2 !.9 6.3 !00 23.0 30.5 0.3! Sinolas
yor YF Hold 220 250 !3.6' !.3 !.7 92.6 !62.0 !44.! !53.5 Jul!! 27.6 24.5 26.9 3.4' 9.0 3.2 0.73 4.3 4.4 3.0 3.0 9.3 !00 2!.5 24.5 0.!2 Sinolas
Pacbrands PBC Hold 72 70 2.3' 0.7 0.9 !03.4 72.7 36.2 Jun!! 7.9 9.5 4.5' 9.! 7.6 0.73 5.9 5.0 2.5 !.3 5.3 !00 4.2 5.6 0.06 Kruk
vosarnors vES Hold 2965 2300 6' 29.3 33.3 !203.0 !922.0 2253.6 2543.3 Jun!! !95.0 2!9.7 !!.7' !5.2 !3.5 !.29 3.4 7.3 3.4 2.0 6.! !00 !30.0 !90.0 3.4! Sinolas
voolworlhs vOv Buy 253! 2900 !4.6' 3!.! 34.6 !!33.3 2!24.0 2202.5 2463.3 Jun!! !73.6 !79.4 !99.4 7.4' !4.! !2.7 !.2! 3.0 7.4 0.! 2.2 5.0 !00 !27.0 !4!.0 3.02 Sinolas
Transport & MisceIIaneous
Asciano AO Buy 463 630 36.!' 4.5 6.3 !!!.9 2!4.4 24!.5 307.9 Jun!! 22.0 24.3 3!.6 !7.!' !3.7 !4.7 !.40 !2.0 7.2 !6.! !2.6 !.6 !00 7.5 9.0 cDonald
Branb Lld BXB Buy 720 775 7.6' !0.7 !3.4 2!!.6 536.! 596.4 772.4 Jun!! 36.9 40.3 5!.3 !9.4' !7.9 !3.9 !.33 3.7 7.4 6.7 0.5 3.7 20 26.6 27.4 !.05 cDonald
Oanlas OA Buy !63 200 !9.0' 3.3 6.3 !44.9 430.5 296.2 433.2 Jun!! !9.0 !3.! !9.3 !.5' !2.3 3.7 0.33 3.5 3.3 0.9 3.3 0.0 0 0.0 0.0 0.37 cDonald
Ornalional OF Hold 393 390 0.3' 9.6 !0.3 !39.3 229.2 395.! 545.5 Jun!! 9.3 !6.2 22.4 32.3' 24.3 !7.6 !.63 9.5 7.6 4.2 2.5 2.0 0 3.0 !!.2 0.60 cDonald
Toll Holdings TOL Hold 5!3 525 !.4' 3.7 4.7 !52.! 239.9 279.7 303.4 Jun!! 44.6 42.3 44.9 3.2' !2.2 !!.5 !.!0 6.9 6.6 0.7 3.3 4.9 !00 25.5 27.5 0.33 cDonald
Virgin Aus VAH Buy 36 40 !!.!' 0.3 !.7 55.7 39.6 60.7 93.3 Jun!! !.3 2.7 4.2 n/a !3.! 3.5 0.32 5.5 5.4 5.7 6.! 0.0 0 0.0 2.0 cDonald
Wtd Average Growth 51.8% 14.3% 21.0% 19.8 16.5 1.58 3.67 27 -39.6% 8.9% 2.35
Investment & FinanciaI services
Asx ASX Buy 3!50 3630 !5.2' 5.5 3.3 !35.3 360.9 373.9 397.0 Jun!! 204.0 2!0.6 226.7 6.7' !5.0 !3.9 !.33 7.5 7.0 0.2 0.2 6.0 !00 !39.5 204.0 0.53 Chidgoy
Challongor CCF Buy 4!2 535 42.0' 2.3 2.3 !26.7 243.0 275.7 294.3 Jun!! 43.! 52.5 60.3 9.7' 7.3 6.3 0.65 6.! 5.5 !.! 0.3 4.2 0 !7.5 20.0 0.23 Chidgoy
Porpolual PPT Hold 2350 2290 2.6' !.0 0.3 34.7 72.9 60.! 65.0 Jun!! !65.5 !40.4 !52.0 4.2' !6.7 !5.5 !.43 3.0 7.2 0.3 3.3 5.3 !00 !35.5 !46.5 0.09 Chidgoy
Csharo CPU Buy 30! 960 !9.9' 4.5 5.! !29.7 3!6.7 233.7 367.0 Jun!! 56.7 50.3 65.7 !!.6' !5.3 !2.2 !.!7 !0.3 3.4 6.! 5.3 3.7 60 29.3 3!.2 0.40 Chidgoy
Wtd Average Growth -1.2% 0.3% 14.4% 13.0 11.4 1.09 5.04 68 0.9% 7.3% 1.26
Sourco: Conpany dala, DBAC oslinalos
!. Pasl rolurns nay nol bo a roliablo guido lo uluro rolurns/porornanco
2. Folurns/porornanco do nol includo lransaclion cosls.
3. EV calculalion basod on curronl narkolcap + nol dobl (lasl hislorical + ninorilios (lasl hislorical associalos (lasl hislorical
4. Folalivo indox usod is DB Univorso o slocks o ASX 200 nduslrials ox Proporly lrusls
IndustriaIs Returns AnaIysis
Net profit ($m) Last EPS (c) EPS PER (x) EV/EBITDA EPS versus Div Frank- Dividends (c) Weight
Effective ASX Rating Price Target TP/P Mkt EV year pre goodwiII amort CAGR ReI Consensus yieId ing in ASX AnaIyst
21-Feb-2012 code (cps) Price (%) Cap (A$b) HY12E 2011 2012E 2013E end 2011 2012E 2013E (3yr) 2012E 2013E 2013E 2012E 2013E 2012E 2013E 2012E 2012E 2012E 2013E 200
(cps) (A$b) (x) (x) (%) (%) (%) (%) (%)
2012 2013 2012 2013
Media
!"#$#%&' !"# ()*+ ,- ,. /-0,1 .02 30- 450- 4602 ,-06 7%8/3. 390- 3905 3:02 /4061 504 509 .05. 504 50- /-0- /:0, 3.03 . ,02 60. .0. !;<=;)'>%**?'
@<?AB<C @DE ()*+ 4602 ,. .051 306 :0- 3:203 94:05 93-05 9:402 EF;/33 3305 603 3.03 /90:1 ,04 406 .042 50- 202 /,0, /502 -0- 3.. :02 -0. .09 !;<=;)'>%**?'
#%&'8)AG #HI JFK 36.2 9:42 9-041 3209 9.09 3,360- :3:60: :-.302 :6350, EF;/33 39.0. 3:403 35,0: 350-1 3:06 330: 30., 204 -0. /.02 /.05 309 . 9:04 9502 .06 !;<=;)'>%**?'
I%L%;$MAG INH ()*+ ,,3 6.. 9091 904 :02 3-20. :9.06 96303 95,0: EF;/33 3.-0, 630, ,-05 /-0.1 605 3.0- 30.. 3305 3.04 60, /40, -0: 3.. :,0. -.0. .03 O)'%
P%;$#%>&)AQ PR# I%** ,5 42 /390,1 .06 309 -:02 4:03 560- 4502 !F=/33 40. 505 40: 9061 3:0. 330, 303: 40- 50, /:-20: :2509 503 3.. 20: 202 .03 !;<=;)'>%**?'
I%L%;&%'> IHS ()*+ :2: :92 /4061 90: -09 34906 3-302 92206 92.05 EF;/33 -509 :,05 :504 /-061 603 605 .069 402 402 /:06 /409 606 3.. :20. :20. .03 !;<=;)'>%**?'
Banks
!#T$J<;Q !#T JFK 99.. 9:,. ,091 2,06 260. 964.06 25.-0. 535,04 56990, I%G/33 9.,04 99.06 9-302 ,031 3.0. 603 .0,4 ;U< ;U< .05 -03 504 3.. 3-40, 32604 20, @A%%V<;
W)VV);&%<*>X$J<;Q WJ! ()*+ -6-4 293. 20:1 4,09 4,0, :2250. 546:0. 49-50: 446402 EF;/33 -::02 -2-0: -460. 20,1 3.06 3.0: .066 ;U< ;U< :04 :0, 504 3.. :::0. :2904 405 @A%%V<;
S<8Y$MA)FG SZM ()*+ 9453 95.. /20,1 605 3.09 :.20. 6250. 43605 3.6405 S<A/33 9450. 93205 ::902 36051 390, ,0: .046 ;U< ;U< /3304 60. 209 . 3-:02 3630- .06 @A%%V<;
#<>$!F'>$J<;Q #!J ()*+ 9:-. 922. 60.1 290- 290- 9,:30- 2-5.0. 2,,406 55,90: I%G/33 9-40, 95:0- 9,604 4091 ,06 ,03 .044 ;U< ;U< .09 -03 405 3.. 3440, 3650: 203 @A%%V<;
H%'>G<8 HJW ()*+ 9.55 93,. 2021 5:03 5203 :35305 5:.30. 5-,404 4.3-0: I%G/33 9.:0. 9.50: 9360: :0,1 3.0. 60- .06. ;U< ;U< /306 .0, 404 3.. 35.0. 35-0. 509 @A%%V<;
Insurance
!S" !S" JFK -94 2:2 920:1 3909 3:0, --,04 ,2.0- 6-,0, 33.302 7%8/33 :-06 :509 -.02 40:1 330, 3.05 30.3 ;U< ;U< 502 906 50: 22 940. :30. 309 WX?+=%K
[!M [!M ()*+ 96- ::2 3:061 503 404 32.0- 92.0. -4.0. 49303 EF;/33 990: 9-0. :20- 9.0-1 3909 ,0: .046 ;U< ;U< ,09 .05 209 3.. 320: 9309 .05 WX?+=%K
ZJR ZJR ()*+ 3349 392. 5041 3:03 350: 4,40, 49.04 32640, 3,,60. 7%8/3. 4306 3-905 35:0, 5061 ,09 409 .05, ;U< ;U< 405 3204 ,03 3. 620. 3.409 30: WX?+=%K
I\# I\# JFK ,-: 3..2 36091 3.0, 390- :4:0- 23,0: 6320. 33-.0, EF;/33 -,0, 440, 620: 9,041 3.0, ,0, .0,2 ;U< ;U< -0- -0: 204 3.. -,0. 2402 303 WX?+=%K
Wtd Average Growth -19.0% 45.2% 20% 10.1 8.4 0.81 6.8 59 15.9% 17.1% 1.2
TeIecommunications
P%*%8)V$)B$#T PR] JFK 356 3,-04 60:1 :0: :0, 3,.06 2:02 9690- 94203 EF;/33 90, 3209 3-0: 460-1 3303 330, 303: :0- -03 :506 3:02 405 . 3906 3:09 .03 T<V%
P%*'>A< P]I ()*+ ::2 :3. /4021 -304 2:0- 3-6:04 :9290. :2260, :24-0. EF;/33 9503 9,05 9,04 -0:1 3304 3304 3039 -06 -06 .0- /:0. ,0- 3.. 9,0. 9,0. -03 !;<=;)'>%**?'
Wtd Average Growth -18.7% 23.5% -0.5% 11.8 11.9 1.14 8.2 93 -2.5% 0.3% 4.2
!"#"$%&'()'*+,-./-0'/1'2334'*%+'("5')",#,-6'/-7"18%+1
HeaIth Care & BiotechnoIogy
!;'%** !## ()*+ 3-29 3292 20.1 306 306 5409 39-05 3::05 32502 EF;/33 6:0, 3.90: 3990. 3:0,1 3-09 3306 303- 3309 60: /304 -0: 902 . :503 -90- .09 ])&
WI]$]>+ WI] ()*+ :.62 :9.. :0-1 3503 350. -5,04 6-.05 64-05 333:06 EF;/33 34:05 3,-0. 99:06 390,1 350, 3:0, 30:9 3305 605 /90, :09 904 9 ,:0. 620. 305 ])&
W)8X*%<A W^( ()*+ 5963 26.. /5091 :05 :05 ,.03 3420, 3590- 35305 EF;/33 :3-04 9,605 9,40, .051 9304 9306 90.6 3:06 3:06 3402 /30: :0, 22 9-.0. 9-.0. .0: ])&
@_"$(%<*>X @"( ()*+ 35, 9--06 -20,1 .06 30. -606 2.02 2506 S<A/33 605 604 3.06 ,0,1 340: 320- 30-4 3.04 602 /9-0, /9306 204 6- 605 606 ;U< I8X)B?%*+
S%')`*<'> SIJ JFK 456 ,9. 5051 909 306 /3206 6.05 /:909 /930, EF;/33 :60, /3303 /402 ;U< ;U< ;U< ;U< /6306 /4302 ,-09 /9,0. .0. . .0. .0. ;U< W<V%A);
O%'V%+ OS7 JFK 94: ::2 9:1 -09 :04 9:90- 9:209 9,-04 EF;/33 3203 350: 9.0- 35091 3504 3:0- 309, 604 406 /90. 30: .0. . .0. .0. .09 ])&
I);?8$(%<*>X8<A% I(] JFK 33:, 39:. ,031 -0- 50. 3-,06 96-02 :3509 :-40- EF;/33 4202 ,30. ,60. 60:1 3-0. 390, 3099 602 ,0, /30. /.04 20- 92 590. 550. .0- ])&
I?=V<GX<AV I[" JFK 52 45 35061 .0, .05 9504 :902 290- 2402 E<;/33 904 -0- -06 9-0,1 3-05 3:0: 3094 40, 40: /:02 :0, 20- 3.. :02 -0. .03 ])&
Wtd Average Growth 6.7% -0.1% 18.4% 17.7 15.0 1.44 2.8 15 4.4% 9.9% 2.8
ChemicaIs
[;8?>%8$"L ["] I%** :-3 96. /320.1 205 504 -4203 :,202 96,02 I%G/33 9609 9:04 3,0: /330,1 3-0- 3,05 304, ,04 609 /9205 /-205 90, 2. 60- 40: .02 H?*');
#FB<AV #\@ I%** -6. :42 /9:021 30: 304 ,503 4604 ,-0- EF*/33 :906 :.0- :909 3091 3503 3209 30-2 506 505 /920- /:90- :03 :. 320. 3206 .03 H?*');
Â?8< Ô[ JFK 959. 962. 39051 605 3303 5250, 55904 44403 I%G/33 3,:0- 3,903 93:02 ,0-1 3-0- 390: 3034 ,0- 405 /205 /:0: :0- -. ,60- 3.-0, .06 H?*');
Wtd Average Growth 6.2% -8.3% 2.8% 14.3 13.9 1.33 3.2 43 -7.1% 4.6% 0.9
Diversified IndustriaIs
J*F%'8)G% JI] JFK :6 5. 2:0,1 30: 902 /350: /33,09 /39,0: 35502 EF;/33 /502 /20. 20. ;U< ;U< 40, .042 50- 906 :650. /60: .0. . .0. :0. .03 J%X;8Q%
^;%'>%%* ÎP ()*+ ,9 4, /-061 303 906 5:05 9:209 3:20, :,90: EF;/33 3402 3.0. 9,0: 32091 ,09 906 .09, 203 :0. /9504 3905 .0. 3.. .0. .0. .03 J%X;8Q%
I?V'$S%><* IMS JFK 3-5- 36:6 :90-1 :0. :03 :60- 3,903 3--09 94-0, 7%8/33 ,,0, 4906 3-.0: 9:091 9.03 3.0- 30.. ,0- 20- /::04 /209 90- 4- :20. 430. .09 J%X;8Q%
Wtd Average Growth -39.9% 17.3% 111.0% 12.8 6.2 0.59 1.5 60 -24.5% 94.6% 0.4
Tourism & Leisure
!A?'>)8A<> !]] ()*+ 923 92. /.0-1 30- 305 :60: 5-0: 630. 3920: 7%8/3. 390. 3506 9:09 :30-1 3-0, 3.0, 30.: ,04 50, .04 604 -0. . 3.0. 3-0. .03 H?*');
WA)&; WH# JFK ,2- 33.2 960-1 509 403 93,09 ::504 -3.02 -5,0: EF;/33 --0- 2209 5-0: 3,0:1 3202 3:0: 3094 3.02 604 303 .05 -0: 2. :40. :40. H?*');
R8X)$R;> RM" ()*+ :52 :,. -031 902 :02 4602 3650, 3:.0- 3::02 EF;/33 9,05 3,06 360- /50-1 360: 3,0, 30,. ,04 ,0. /3303 /9:0: 905 . 602 604 H?*');
IQK$W?>K IaW ()*+ 969 9,6 /30.1 304 903 5303 3330, 33:04 39.05 EF;/33 360: 3602 9.04 2051 3-06 3-03 30:2 ,02 ,0. /9:0- /9.0. -0, 5. 3-03 3-0- H?*');
P<`8)AG P!( ()*+ 94, 9,. .041 90. 90, 3,60: :.305 :9.03 3-609 EF;/33 -20- -209 9.02 /920:1 509 3:02 3096 -09 50: /-04 /3.04 406 3.. 990. 350. .09 H?*');
P<>>' PPI ()*+ 929 95. :091 :0- -0- 35602 94202 :350. 93606 EF;/33 9309 9:0: 350: /60.1 3.0, 320- 30-, 504 ,05 /:09 :06 60: 3.. 9:02 340. .0: H?*');
Wtd Average Growth 7.2% 5.8% -11.3% 12.2 13.8 1.32 5.6 56 -8.9% -11.2% 0.6
9%:+$";'<%&=,->'6,8,?'@ABC'"18/&,8"1
2D'E,18'+"8:+-1'&,>'-%8'F"','+"#/,F#"'0:/6"'8%'*:8:+"'+"8:+-1G="+*%+&,-$"D
HD'I"8:+-1G="+*%+&,-$"'6%'-%8'/-$#:6"'8+,-1,$8/%-'$%181D
:0$RN$8<*8F*<>?);$`<'%+$);$8FAA%;>$V<AQ%>8<G$b$;%>$+%`>$c*<'>$X?'>)A?8<*d$b$V?;)A?>?%'$c*<'>$X?'>)A?8<*d$/$<'')8?<>%'$c*<'>$X?'>)A?8<*d0
-0$O%*<>?L%$?;+%C$F'%+$?'$7J$\;?L%A'%$)B$'>)8Q'$)B$!ID$9..$[;+F'>A?<*'$%C$"A)G%A>K$>AF'>'0
ReaI Estate - Investment Trusts - GICS
EPS versus
Effective ASX Rating Price Target TP/P Mkt EV NTA/ Price/ Gearing DPS Distribution Per Unit (cpu) AnnuaIised YieIds (%) Consensus Index AnaIyst
21-Feb-2012 code (cps) Price (%) Cap (A$b) unit NTA 2012 Growth 2010 2011E 2012E 2013E 2014E 2010 2011E 2012E 2013E 2014E 2012E 2013E (%)
(cps) (A$b) Current (x) (%) (3yr) (%) (%)
2012 2013
ReaI Estate - Investment Trusts - RetaiI
!"#$%&'()* !+, -.*/ 01234 02534 6378 530 136 94: 432: 918 0358 0935 0931 0634 0639 0636 134 130 136 13; 135 434 <934 :30 %(=/(**
!>?&'()*?' !@% ABC 60534 6;034 28 437 031 65; 4327 ;;8 ;398 9:35 9;32 9:34 9130 9234 23; 137 236 23: 237 434 <435 030 D&('&
!&='?. !%+ -.*/ 02634 07434 ;8 935 639 668 434 434 093; 0932 0635 434 434 :32 134 13; 9539 432 =E( D&('&
D&#'")&*/ DF! ABC 22034 7:434 7348 9436 6:34 141 0395 ;18 ;328 :63: ;73: ;735 5536 5130 139 53: 53: :36 :35 <937 <432 9131 %(=/(**
D&#'"'?B#' D%G -.*/ 9;234 92634 0;308 13: 0439 690 4311 958 :318 434 0:35 0231 0739 9434 434 :31 13: 131 230 <437 <039 0430 %(=/(**
TotaIs / Weighted statistics 36.4 58.3 1.00 Growth 9.5 11.7 7.0 3.3 5.2 5.7 6.4 6.8 7.1 45.0
ReaI Estate - Investment Trusts - Office
!.HH."")I& !JK -.*/ 7235 7134 <0358 93; 63; 006 4321 028 5378 535 535 537 :36 :35 53: 53: 537 :3; :3: <430 634 635 D&('&
L=M&#'( LN+ ABC :934 :134 2308 03: 934 16 4325 58 9368 637 637 637 ;34 ;39 :36 :36 :36 :35 :32 <035 <939 93; D&('&
!>."")I&?' !@N -.*/ 65534 65134 43:8 032 936 61: 437; 648 <:348 0231 9436 09134 0539 0:32 536 531 6532 ;36 ;31 <;3; <132 930 D&('&
TotaIs / Weighted statistics 5.8 7.7 0.89 Growth 2.0 159.1 -61.6 5.1 5.7 5.8 15.1 5.8 6.1 8.0
ReaI Estate - Investment Trusts - Diversified
!>(?'&?$-O !-! ABC 94:34 9;434 0:358 43: 43: 990 4376 <98 5308 0932 0:35 0735 0235 0739 :39 234 735 734 736 431 032 431 D&('&
!?.HP&** !QD -.*/ 1434 1634 ;368 432 035 990 4369 598 234 134 134 134 134 003; 0434 0434 0434 0434 434 <939 =E( D&('&
F&RB#$J?.S F,T -.*/ 2234 2234 4348 ;36 :3: 040 4321 9:8 63:8 534 539 53; 535 532 531 537 :30 :36 :35 <435 434 :39 %(=/(**
US' UJG -.*/ 60:34 60934 <0368 531 234 6:; 4321 968 9328 0:36 0135 0234 0235 0734 539 535 531 537 :34 434 <432 132 A&?'?(H
Q)?M(I$U?S QU% -.*/ 09435 06534 09348 ;30 :39 0:9 431; 998 9348 234 239 236 23: 231 :3: :32 :37 130 139 <03; <530 :34 %(=/(**$
T'.IV*(=/ TUJ ABC 60:34 61534 02318 136 0430 6:5 4321 9;8 5328 9032 9631 9;30 9531 9234 :37 135 13: 230 237 437 630 0034 %(=/(**
TotaIs / Weighted statistics 22.8 33.0 0.83 Growth 5.4 2.6 3.9 5.0 6.3 6.7 6.9 7.1 7.5 31.7
ReaI Estate - Investment Trusts - IndustriaI
U../$U?.BS UQU ABC :735 1534 28 53; 13: ;7 03;9 968 7318 636 636 631 ;34 ;3; ;32 ;32 536 532 :36 032 <436 :35 %(=/(**
TotaIs / Weighted statistics 5.4 7.6 1.42 Growth -0.6 11.6 8.4 9.2 4.8 4.8 5.3 5.8 6.3 6.5
ReaI Estate - Investment Trusts - InternationaI
G)#>H(=$TS GTN -.*/ 7435 7434 <08 436 039 049 4327 148 434 434 434 434 434 434 434 434 434 =E( <131 03: =E( %(=/(**
TotaIs / Weighted statistics 0.3 1.2 0.89 Growth 0.0 0.0 0.0 0.0 0.0 0.0 n/a
Weighted TotaI 70.6 107.9 0.97 Growth 6.7 20.2 -5.7 4.4 5.6 5.9 7.1 6.7 7.0
!"#$%&'()"*+,-.(/,0,1(2345(&607*,0&6
89(:,60($&0#$-6(*,.(-"0(;&(,($&<7,;<&(=#7/&(0"(>#0#$&($&0#$-6?+&$>"$*,-%&9
@9(A&0#$-6?+&$>"$*,-%&(/"(-"0(7-%<#/&(0$,-6,%07"-(%"6069
B9(2:!(=$"C0D(76(;,6&/("-(0D&(.&,$6(@EEF(0"(@E8@
;3$WX$I(*IB*(').=$Y(#&/$.=$IB??&='$H(?V&'I(S$Z$=&'$/&Y'$[*(#'$>)#'.?)I(*\$Z$H)=.?)')&#$[*(#'$>)#'.?)I(*\$<$(##.I)('&#$[*(#'$>)#'.?)I(*\3
G9(5&,$7-=(76(H&0(/&;0(/7I7/&/(;.(H&0(/&;0(J(KL#70.
Resource Sector AnaIysis
Net profit ($m) Last EPS (cps) EPS PER (x) EV/EBITDA EPS versus Div Frank- Dividends (cps) Weight
Effective ASX Rating Price Target TP/P Mkt EV Year pre goodwiII amort CAGR ReI Consensus yieId ing in ASX AnaIyst
21-Feb-2012 code (cps) Price (%) Cap (A$b) HY12E 2011 2012E 2013E End 2011 2012E 2013E (3yr) 2012E 2013E 2013E 2012E 2013E 2012E 2013E 2012E 2012E 2012E 2013E 200
(cps) (A$b) (x) (x) (%) (%) (%) (%) (%)
!"#$ !"#! !"#$ !"#! !"#$
Other MetaIs
!"#$%&'()* !+, -)#. /01 231 4035 267 261 7862 03763 09168 91/63 :;*400 2869 0362 1863 905 0<61 362 867 0068 /61 42/6= 9068 261 8 768 <68 8621 >);*?
!@;$&A#$" !BA C;D 203 981 775 068 068 42061 0386< 43868 1262 :;*400 /169 4026= 0069 4/06=5 *E$ 076< 261 0/=62 362 421160 41<69 868 8 868 962 8687 >);*?
FG%H)I&JK" FJL -)#. 01< 013 425 86= 863 40/6/ 4096< 42768 2961 :;*400 4961 4369 161 *E$ *E$ 276= /67 43=63 0/68 09168 4=/60 868 8 868 868 8683 MN(D
'*.&+();N '+, C;D 9/< 112 235 068 867 4360 /=60 226= 3<60 :;*400 076/ <69 2=61 //685 9361 016< 260 0261 =6/ 761 =60 869 028 06< 16< 8608 MN(D
'#;O$&PK% 'LQ C;D 0=20 0<01 005 =62 =61 93/62 12363 087262 092/6= FKH408 02167 21761 /9868 298695 36= 160 86= 968 267 40260 426< =61 8 02<62 0=868 86=8 >);*?
LD*$% L>R C;D 0/0 200 325 262 26/ 42=6/ 41<60 49769 0//6/ :;*400 4/63 426< 768 *E$ *E$ 0369 262 43963 0/6= 206= 49160 868 8 868 868 8620 MN(D
JG($SK#$ JCT -)#. 088 002 0/5 861 867 /69 43=62 2=6/ 1769 FKH408 40/61 16= 0260 *E$ 0=6/ 762 060 361 96= 486< 42261 868 8 868 868 8689 MN(D
JG*H)( JRP -)#. =8 39 4<5 860 868 86/ 42/69 969 426= :;*400 4006= 26/ 4069 *E$ /867 *E$ *E$ 067 968 49769 409169 868 8 868 868 *E$ MN(D
,UVG*K( ,WL -)#. 0001 00<3 =5 /61 263 786/ /226= 07062 2<161 FKH400 08060 1769 <36= 40/6=5 0<60 0061 061 76< 362 4226/ 960 260 8 2/63 /76= 86/1 MN(D
A$*)($VGH A!T -)#. 021 020 4/5 86/ 862 968 226/ 0168 2263 :;*400 0867 367 <63 49=605 0769 0/68 06= /6/ /62 49868 42061 163 028 =68 0868 8682 MN(D
A$*$;%" AT! C;D /37 188 /35 262 260 =/67 09/6/ 28<6= /7967 FKH408 2960 /16/ 3967 /9675 0869 16= 86= 362 /62 86< /768 868 8 868 868 860= MN(D
M$*.XG(K MYP C;D 72< 7=/ 15 06/ 062 42/6= 42=60 40<61 /762 :;*400 40=6< 4026< 216/ *E$ *E$ /267 96/ 787063 0/61 =260 47862 868 8 868 868 868= MN(D
ZK%"&!(K$% ZM! C;D 132 330 075 068 060 2960 0/168 7=61 00260 :;*400 =160 976= 3269 40=695 0061 <68 062 168 969 276= /260 262 8 0261 0168 8687 MN(D
Wtd average Growth -6% 21% 84% 14.8 8.0 1.1 0.7 7 23.3% 35.0% 2.14
Diversified Resources
!#;VG*$&[[ !ZR C;D 00< 071 115 26< /69 4/26= 02968 4/063 3867 FKH400 160 406/ 261 215 *E$ 9=67 167 47786= 9062 403063 4=/62 868 8 868 260 862< >);*?
C-AC C-A C;D /399 1/98 9=5 00=68 02/69 <39267 222826= 073036/ 22/=960 :;*400 9016/ /9762 90761 0685 0861 76= 060 16< 168 4026< 4<69 /60 028 0026/ 02/61 00690 >);*?
Y)("K%H;K YJ+ C;D 112 328 025 0=62 0<60 ==061 03=267 090868 2=/862 :;*400 1/6= 916/ 7=63 22685 0262 36/ 867 =63 962 42863 2060 063 8 76< 0/61 86<2 >);*?
J"&+GS%)* J+\ C;D 023 078 9/5 069 068 0016/ 22/69 29/6= 93961 :;*400 286= 2261 926< 26/5 163 26< 869 26/ 867 42362 4/67 967 38 368 968 8687 >);*?
PG)&]G*") P', C;D 3<03 08028 935 /860 9769 1=8262 0181760 0/8<969 0<17867 FKH400 =<868 =896= 081/67 =6/5 <67 363 867 36/ 961 40062 0268 269 028 03768 07160 26</ >);*?
Z^G"K^$IK* Z-R C;D 130 378 205 267 267 9862 ==6< 9<63 2276/ :;*400 0167 367 2/63 /7615 726= 2/67 26< //60 026< 4==6/ 41/62 867 028 963 0067 8603 >);*?
Wtd average Growth 32.4% -14% 36% 10.4 7.6 1.0 2.3 107 11.9% 11.9% 15.48
!!"#$%&'&()"$*+,%"-'&.%'+',)/0,*.%,"12"($'&)345.)),)67"""
8.9%:,;"<.-=$&>"?$+$/"@ABC",)+'-$+,)
D7"E$)+"%,+9%&)"-$>"&.+"0,"$"%,5'$05,"(9'?,"+."*9+9%,"%,+9%&)3=,%*.%-$&:,7
F7"G,+9%&)3=,%*.%-$&:,"?."&.+"'&:59?,"+%$&)$:+'.&":.)+)7
/6&_`&H$#H;#$"G)*&S$%K.&)*&H;((K*"&V$(OK"H$N&a&*K"&.KS"&b#$%"&^G%")(GH$#c&a&VG*)(G"GK%&b#$%"&^G%")(GH$#c&4&$%%)HG$"K%&b#$%"&^G%")(GH$#c6
H7"G,5$+'I,"'&?,J"9),?"')"@A"K&'I,%),".*")+.:L)".*"B82"FMM"G,).9%:,)7
Resource Sector AnaIysis
Net profit ($m) Last EPS (cps) EPS PER (x) EV/EBITDA EPS versus Div Frank- Dividends (cps) Weight
Effective ASX Rating Price Target TP/P Mkt EV Year pre goodwiII amort CAGR ReI Consensus yieId ing in ASX AnaIyst
21-Feb-2012 code (cps) Price (%) Cap (A$b) HY12E 2011 2012E 2013E End 2011 2012E 2013E (3yr) 2012E 2013E 2013E 2012E 2013E 2012E 2013E 2012E 2012E 2012E 2013E 200
(cps) (A$b) (x) (x) (%) (%) (%) (%) (%)
!"#! !"#$ !"#! !"#$
Energy
!"#$%&' !() *+, -./ -.0 -1 234 235 6232 7-.3- 643/ /83/ 9+:7-- 7832 03/ ;3- :<= 823- 623/ 630 034 /30 7.32 7832 83- 2 036 232 2324 >?@A##
B=C&#D BEF >GC' -82/ -280 76-1 830 /3- -0;30 6.-30 88;34 8/43. H#I7-2 -2-3- -6435 -8835 83/1 -23- 43; -36 .3- 034 --38 7830 834 -62 0236 ./35 23-5 >?@A##
):#@J,$K#L$GM$!+L& )K! >GC' -8- -02 -01 235 232 75438 7-083. 7-/-3. 78-36 H#I7-- 7;230 78630 7.32 :<= :<= :<= :<= /30 -3. 6;632 --036 232 2 232 232 2326 NG+:J
O?IC,: OPQ >GC' 622 -40 781 23. 235 8-3; 0.32 .834 523. 9+:7-- 6230 6634 6036 --381 ;35 534 -32 538 .3; 23- 763- 635 2 030 .3- :<= RC+ST#
U#D+L UFV >GC' 6- /2 401 238 23/ 7-3- 78-36 783- 7-35 9+:7-- 7634 7236 723- :<= :<= :<= :<= 753. 834 75/36 74238 232 2 232 232 :<= >?@A##
Q@?J?:$%&' QKW >GC' -8.. -.50 681 -/3; 6236 /853- .5832 ;5-3- ;/.36 9+:7-- 5-32 ;238 5;32 8321 -532 -530 63- 43- 430 723. 7434 835 -62 0232 0232 -3// >?@A##
Q?C$V#=@IX QV> *+, .56 ;00 651 ;34 43. -2630 66;38 62834 6.23/ H#I7-- -53/ -030 -43; 8/321 /838 8834 /3- 6634 6235 -;3/ 063/ 23. 2 /3- /36 2352 >?@A##
R=C='?: RHU *+, -5. -40 --1 -30 63- .3. 75-38 030 8.35 9+:7-- 743; 23. 834 :<= 65632 //3. 03/ 6532 -/34 7.535 70-38 232 2 232 232 23-/ NG+:J
V=:&GL VEQ *+, -/-6 -542 651 -838 -836 64/38 /0832 04/36 .4-3/ H#I7-- /43- .63. 563; 6.3/1 663. -43/ 638 535 .30 7635 236 63- -62 8232 8232 -36; >?@A##
(G@C#,Y=@L (QK >GC' 6;54 6425 -1 532 530 -0/35 64;30 8.832 /..3- 9+:7-- -6-3. -/534 -;434 6-321 -430 -036 -3; -23; ;35 7/3- 634 838 .2 4.3- -6830 230; (G:J7R=:
(GG'L?'# (R% *+, 8040 ///0 6/1 6432 883/ -2-.3- -.;235 686;34 8-5-32 H#I7-2 6-/30 64538 /2/3; 65361 -63- ;34 -3- .3/ 032 603; 8036 /3- -62 -/;3- 62-35 63-/ >?@A##
Wtd average Growth 3.6% 34.3% 27.0% 17.3 13.8 1.8 2.8 93 17.5% 22.1% 6.56
GoId
!C=I#@JGC' !ZW *+, ;4- -222 -61 235 23; 423. -8-3. 62436 8.035 H#I7-2 /53/ 523. -6838 643;1 -63. 536 234 038 838 7-03; -;35 232 2 232 232 2325 VY@,
W@,YXG: WKN *+, -6/ -42 081 23/ 23/ :<= 7;34 7/32 232 9+:7-- 7832 7234 232 :<= :<= :<= :<= 75632 75/34 7.;32 74435 232 2 232 232 232/ VY@,
[?:JLJ=&# [BU *+, 550 ;88 51 -3- -36 8232 /-30 --/32 6;236 9+:7-- 803- ;-32 -443- 42361 43. 834 230 .32 63; 7-63; -038 83- 2 6/38 0435 23-2 VY@,
O#'+L= OO% *+, .-6 ;02 841 -36 -3- 8;3; --832 4536 -;63; 9+:7-- .232 0-30 4.3; 883;1 --34 .38 23; -23. 030 --3/ -03. -3. 2 434 -23/ 23-- VY@,
U#"I@#L& UBO *+, 80-2 8;88 41 6.34 653. .--32 -20;32 -6253/ 62;;35 9+:7-- -8;36 -0534 65836 64351 6636 -63; -3. --34 530 7--3/ .3- 23/ 2 -03; .03/ 63.8 VY@,
K#J?L KK% >GC' /-. 840 701 -3; -3; 853/ 8.38 ;232 /--35 9+:7-- ;3/ -;36 4836 443/1 663; /30 230 -432 83; -836 //30 232 2 232 232 23-0 VY@,
K#LGC+&# KVW >GC' 622 -;2 7-21 -38 -3/ .43; //3. -8.3/ -423. 9+:7-- 43. 6/38 643- /23;1 ;36 .3; 23; 83. 634 7.30 703/ 232 2 232 232 2325 VY@,
V&T=@T=@= V*O >GC' 6/2 68/ 781 23; 235 0.36 0/3/ --436 -.03/ 9+:7-- -.35 8.3. 023; 8.3.1 .3. /35 23. 836 632 753; -;35 232 2 232 232 232; VY@,
Wtd average Growth 17.8% 30% 87% 18.1 9.7 1.3 0.7 0 -59.9% 247.7% 3.04
!"#$%&'()"*+,-.(/,0,1(2345(&607*,0&6
89(:,60($&0#$-6(*,.(-"0(;&(,($&<7,;<&(=#7/&(0"(>#0#$&($&0#$-6?+&$>"$*,-%&9
@9(A&0#$-6?+&$>"$*,-%&(/"(-"0(7-%<#/&(0$,-6,%07"-(%"6069
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Markels Fesearch
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Deulsche Bahk AC/Sydhey Page 1
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Appehdix 1

Ihporlahl Disclosures

Addiliohal ihIorhalioh available upoh requesl
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For disclosures perlaihihg lo recohhehdaliohs or eslihales hade oh securilies olher lhah lhe prihary sub|ecl oI lhis
research, please see lhe hosl recehlly published cohpahy reporl or visil our global disclosure look-up page oh our
vebsile al hllp://gh.db.coh/ger/disclosure/DisclosureDireclory.eqsr
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Fegulalory Disclosures
1. Ihporlahl Addiliohal CohIlicl Disclosures
Aside Iroh vilhih lhis reporl, ihporlahl cohIlicl disclosures cah also be Iouhd al hllps://gh.db.coh/equilies uhder lhe
"Disclosures Lookup" ahd "Legal" labs. Ihveslors are slrohgly ehcouraged lo reviev lhis ihIorhalioh beIore ihveslihg.

2. Shorl-Terh Trade Ideas
Deulsche Bahk equily research ahalysls sohelihes have shorler-lerh lrade ideas (khovh as SCLAF ideas) lhal are
cohsislehl or ihcohsislehl vilh Deulsche Bahk's exislihg lohger lerh ralihgs. These lrade ideas cah be Iouhd al lhe
SCLAF lihk al hllp://gh.db.coh.

3. Couhlry-SpeciIic Disclosures
Auslralia ahd Nev Zealahd: This research, ahd ahy access lo il, is ihlehded ohly Ior "vholesale cliehls" vilhih lhe
heahihg oI lhe Auslraliah Corporaliohs Acl ahd Nev Zealahd Fihahcial Advisors Acl respeclively
Brazil: The vievs expressed above accuralely reIlecl persohal vievs oI lhe aulhors aboul lhe sub|ecl cohpahy(ies) ahd
ils(lheir) securilies, ihcludihg ih relalioh lo Deulsche Bahk. The cohpehsalioh oI lhe equily research ahalysl(s) is
ihdireclly aIIecled by revehues derivihg Iroh lhe busihess ahd Iihahcial lrahsacliohs oI Deulsche Bahk.
EU couhlries: Disclosures relalihg lo our obligaliohs uhder MiFiD cah be Iouhd al
hllp://globalharkels.db.coh/riskdisclosures.
Japah: Disclosures uhder lhe Fihahcial Ihslruhehls ahd Exchahge Lav: Cohpahy hahe - Deulsche Securilies Ihc.
Fegislralioh huhber - Fegislered as a Iihahcial ihslruhehls dealer by lhe Head oI lhe Kahlo Local Fihahce Bureau
(Kihsho) No. 117. Mehber oI associaliohs: JSDA, Type II Fihahcial Ihslruhehls Firhs Associalioh, The Fihahcial Fulures
Associalioh oI Japah, Japah Securilies Ihveslhehl Advisers Associalioh. Cohhissiohs ahd risks ihvolved ih slock
lrahsacliohs - Ior slock lrahsacliohs, ve charge slock cohhissiohs ahd cohsuhplioh lax by hulliplyihg lhe lrahsaclioh
ahouhl by lhe cohhissioh rale agreed vilh each cusloher. Slock lrahsacliohs cah lead lo losses as a resull oI share
price Iluclualiohs ahd olher Iaclors. Trahsacliohs ih Ioreigh slocks cah lead lo addiliohal losses slehhihg Iroh Ioreigh
exchahge Iluclualiohs. "Moody's", "Slahdard & Poor's", ahd "Filch" hehliohed ih lhis reporl are hol regislered credil
ralihg agehcies ih Japah uhless "Japah or "Nippoh" is speciIically desighaled ih lhe hahe oI lhe ehlily.
Fussia: This ihIorhalioh, ihlerprelalioh ahd opihiohs subhilled hereih are hol ih lhe cohlexl oI, ahd do hol cohslilule,
ahy appraisal or evalualioh aclivily requirihg a licehse ih lhe Fussiah Federalioh.

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Markels Fesearch
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Deulsche Bahk AC/Sydhey
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Ihlerhaliohal Localiohs
Deulsche Bahk Securilies Ihc.
60 vall Slreel,
Nev York, NY 10005
Uhiled Slales oI Aherica
Tel: (1) 212 250 2500
Deulsche Bahk AC Lohdoh
1 Creal vihchesler Slreel
Lohdoh EC2N 2EC
Uhiled Kihgdoh
Tel: (44) 20 7545 B000
Deulsche Bahk AC
Crobe Callusslrale 10-14
60272 FrahkIurl ah Maih
Cerhahy
Tel: (49) 69 910 00
Deulsche Bahk AC
Deulsche Bahk Place
Level 16
Corher oI Huhler & Phillip Slreels
Sydhey, NSv 2000
Auslralia
Tel: (61) 2 B25B 1234
Deulsche Bahk AC
Level 55
Cheuhg Kohg Cehler
2 Cueeh's Foad Cehlral
Hohg Kohg
Tel: (B52) 2203 BBBB
Deulsche Securilies Ihc.
2-11-1 Nagalacho
Sahho Park Tover,updale
Chiyoda-ku, Tokyo 100-617111
Japah
Tel: (B1) 3 5156 670111
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Clobal Disclaiher
The ihIorhalioh ahd opihiohs ih lhis reporl vere prepared by Deulsche Bahk AC or ohe oI ils aIIiliales (colleclively "Deulsche Bahk"). The ihIorhalioh hereih is believed lo be reliable ahd has beeh oblaihed Iroh public
sources believed lo be reliable. Deulsche Bahk hakes ho represehlalioh as lo lhe accuracy or cohplelehess oI such ihIorhalioh.
Deulsche Bahk hay ehgage ih securilies lrahsacliohs, oh a proprielary basis or olhervise, ih a hahher ihcohsislehl vilh lhe viev lakeh ih lhis research reporl. Ih addilioh, olhers vilhih Deulsche Bahk, ihcludihg
slralegisls ahd sales slaII, hay lake a viev lhal is ihcohsislehl vilh lhal lakeh ih lhis research reporl.
Cpihiohs, eslihales ahd pro|ecliohs ih lhis reporl cohslilule lhe currehl |udgehehl oI lhe aulhor as oI lhe dale oI lhis reporl. They do hol hecessarily reIlecl lhe opihiohs oI Deulsche Bahk ahd are sub|ecl lo chahge
vilhoul holice. Deulsche Bahk has ho obligalioh lo updale, hodiIy or ahehd lhis reporl or lo olhervise holiIy a recipiehl lhereoI ih lhe evehl lhal ahy opihioh, Iorecasl or eslihale sel Iorlh hereih, chahges or
subsequehlly becohes ihaccurale. Prices ahd availabilily oI Iihahcial ihslruhehls are sub|ecl lo chahge vilhoul holice. This reporl is provided Ior ihIorhaliohal purposes ohly. Il is hol ah oIIer or a solicilalioh oI ah
oIIer lo buy or sell ahy Iihahcial ihslruhehls or lo parlicipale ih ahy parlicular lradihg slralegy. Targel prices are ihherehlly ihprecise ahd a producl oI lhe ahalysl |udgehehl.
As a resull oI Deulsche Bahks March 2010 acquisilioh oI BHF-Bahk AC, a securily hay be covered by hore lhah ohe ahalysl vilhih lhe Deulsche Bahk group. Each oI lhese ahalysls hay use diIIerihg helhodologies
lo value lhe securily, as a resull, lhe recohhehdaliohs hay diIIer ahd lhe price largels ahd eslihales oI each hay vary videly.
Ih Augusl 2009, Deulsche Bahk ihsliluled a hev policy vhereby ahalysls hay choose hol lo sel or haihlaih a largel price oI cerlaih issuers uhder coverage vilh a Hold ralihg. Ih parlicular, lhis vill lypically occur Ior
"Hold" raled slocks havihg a harkel cap shaller lhah hosl olher cohpahies ih ils seclor or regioh. ve believe lhal such policy vill allov us lo hake besl use oI our resources. Please visil our vebsile al
hllp://gh.db.coh lo delerhihe lhe largel price oI ahy slock.
The Iihahcial ihslruhehls discussed ih lhis reporl hay hol be suilable Ior all ihveslors ahd ihveslors husl hake lheir ovh ihIorhed ihveslhehl decisiohs. Slock lrahsacliohs cah lead lo losses as a resull oI price
Iluclualiohs ahd olher Iaclors. II a Iihahcial ihslruhehl is dehohihaled ih a currehcy olher lhah ah ihveslor's currehcy, a chahge ih exchahge rales hay adversely aIIecl lhe ihveslhehl. Pasl perIorhahce is hol
hecessarily ihdicalive oI Iulure resulls. Deulsche Bahk hay vilh respecl lo securilies covered by lhis reporl, sell lo or buy Iroh cuslohers oh a prihcipal basis, ahd cohsider lhis reporl ih decidihg lo lrade oh a
proprielary basis.
Uhless goverhihg lav provides olhervise, all lrahsacliohs should be execuled lhrough lhe Deulsche Bahk ehlily ih lhe ihveslor's hohe |urisdiclioh. Ih lhe U.S. lhis reporl is approved ahd/or dislribuled by Deulsche
Bahk Securilies Ihc., a hehber oI lhe NYSE, lhe NASD, NFA ahd SIPC. Ih Cerhahy lhis reporl is approved ahd/or cohhuhicaled by Deulsche Bahk AC FrahkIurl aulhorized by lhe BaFih. Ih lhe Uhiled Kihgdoh lhis
reporl is approved ahd/or cohhuhicaled by Deulsche Bahk AC Lohdoh, a hehber oI lhe Lohdoh Slock Exchahge ahd regulaled by lhe Fihahcial Services Aulhorily Ior lhe cohducl oI ihveslhehl busihess ih lhe UK
ahd aulhorized by lhe BaFih. This reporl is dislribuled ih Hohg Kohg by Deulsche Bahk AC, Hohg Kohg Brahch, ih Korea by Deulsche Securilies Korea Co. This reporl is dislribuled ih Sihgapore by Deulsche Bahk AC,
Sihgapore Brahch, ahd recipiehls ih Sihgapore oI lhis reporl are lo cohlacl Deulsche Bahk AC, Sihgapore Brahch ih respecl oI ahy hallers arisihg Iroh, or ih cohheclioh vilh, lhis reporl. vhere lhis reporl is issued or
prohulgaled ih Sihgapore lo a persoh vho is hol ah accrediled ihveslor, experl ihveslor or ihsliluliohal ihveslor (as deIihed ih lhe applicable Sihgapore lavs ahd regulaliohs), Deulsche Bahk AC, Sihgapore Brahch
accepls legal respohsibilily lo such persoh Ior lhe cohlehls oI lhis reporl. Ih Japah lhis reporl is approved ahd/or dislribuled by Deulsche Securilies Ihc. The ihIorhalioh cohlaihed ih lhis reporl does hol cohslilule lhe
provisioh oI ihveslhehl advice. Ih Auslralia, relail cliehls should oblaih a copy oI a Producl Disclosure Slalehehl (PDS) relalihg lo ahy Iihahcial producl reIerred lo ih lhis reporl ahd cohsider lhe PDS beIore hakihg ahy
decisioh aboul vhelher lo acquire lhe producl. Deulsche Bahk AC Johahhesburg is ihcorporaled ih lhe Federal Fepublic oI Cerhahy (Brahch Fegisler Nuhber ih Soulh AIrica: 199B/00329B/10). Addiliohal ihIorhalioh
relalive lo securilies, olher Iihahcial producls or issuers discussed ih lhis reporl is available upoh requesl. This reporl hay hol be reproduced, dislribuled or published by ahy persoh Ior ahy purpose vilhoul Deulsche
Bahk's prior vrilleh cohsehl. Please cile source vheh quolihg.
Copyrighl 2012 Deulsche Bahk AC
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