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This material has been produced by RBS sales and trading staff and should not be considered independent.

The Round Up
24 August 2009
Issue No. 161
The Round Up is a comprehensive daily note produced by the RBS Warrants
team providing an overview of market movements along with quality ideas for
warrant traders and investors.

In today’s issue
Global Market Action Scoreboard, commentary
Aussie Market Action SPI Comment, Events & Dividends
CSL (CSLVZO) Trading Update – Good result + Buyback
BSL (BSLKZI) MINI Trading Buy – Buy the dips
TLS (TLSSZX) Self Funding Buy – Future Fund Selldown
Round Up Corner Stocks reporting this week

Equities

Move Last % Move Range Volume


ASX 200 -86.9 4290.6 -2.0% -117 to +2 $10.0 bn(VH)
SPI - yesterday -70.0 4251.0 -1.6% -97 to +27 42,741(H)
Dow Jones +155.9 9506.0 +1.7% -3 to +169 High
S&P 500 +18.8 1026.1 +1.9% +2 to +20 High
Nasdaq +31.7 2020.9 +1.6% +5 to +33 Avg
FTSE +94.3 4850.9 +2.0% -21 to +102 High

Commodities

Move Last % Today % Past Month


Oil-WTI spot +0.98 73.89 +1.3% +14.2%
Gold Spot +13.20 953.85 +1.4% +0.6%
Nickel (LME) +19.14 875.44 +2.2% +21.6%
Aluminium (LME) +1.01 85.91 +1.2% +12.3%
Copper (LME) +9.98 284.43 +3.6% +16.4%
Zinc (LME) +1.35 81.94 +1.7% +10.7%
Silver +0.25 14.18 +1.8% +4.7%
Sugar -0.13 21.84 -0.6% +22.7%
Dual Listed Companies (DLC’s)

Move %Move Last AUD Terms Diff to Aus


NWS (US) +0.20 +1.6% 12.97 15.52 +61.8 c
RIO (UK) +63.0 p +2.7% £23.98 47.35 -895.7 c
BLT (BHP UK) +28.5 p +1.8% £15.910 31.42 -518.6 c
BXB (UK) +2.5 p +0.7% £3.563 7.04 -1.4 c

American Depository Receipts (ADR’s)

Move %Move Last AUD Terms Diff to Aus


BHP (US) +0.89 +1.4% 63.06 37.72 +111.4 c
AWC (US) +0.01 +0.2% 5.48 1.64 +4.4 c
TLS (US) -0.18 -1.2% 14.71 3.52 +5.0 c
ANZ (US) -0.33 -2.0% 16.17 19.35 +31.7 c
WBC (US) -1.17 -1.2% 96.15 23.01 +26.8 c
NAB (US) -0.70 -3.1% 21.72 25.99 +30.7 c
LGL (US) +0.46 +2.3% 20.86 2.50 +4.6 c
RMD (US) +0.06 +0.1% 45.20 5.41 +1.8 c
JHX (US) -0.43 -1.5% 28.08 6.72 +3.9 c
PDN (CAN) -0.02 -0.5% 4.05 4.48 +4.1 c

Overnight Commentary
United States Commentary
US stocks rallied on Friday, their fourth consecutive gain, sending the S&P 500 to it's highest levels since October as existing home
sales jumped above the 5m house level. Dow finishd up 155.9 pts and the S&P 500 gained 1.9% to 1,026, importantly the moves were
on solid volume and closed around their highs.

Eco - Existing Home Sales jumped to their highest level in almost two years, 5.24m vs 5.0m expected, and above the 4.89m in June.
Importantly breaking through the above the 5m homes level it has been flirting with all year. Month-on-month sales increased 7.2%,
better than the 2.1% increase forecast and last month's 3.6% improvement.

Industrials - Comments from Fed Chairman Bernanke that the prospects for a return to growth in the near term appear good, added to
feelings that the economy is stabilizing and helped give industrial names a boost. Merck rose 3.9%, Walt Disney gained 3.5%, Home
Depot up 3.1% and GE put on 2.9%.

Financials - Regions Financial gained 6.7% to top the S&P 100, Citi put on 4.9% and JP Morgan rose 2.9% as the financials were also
caught up in the positivity from both Fed officials and housing prices.

Resources - Oil hit its highest level this year and copper reaching 11-week highs on the back of better eco data in the US and across
Europe. Caterpillar topped the Dow gainers up 4%, Exxon rose 2%, and Chevron up 1.6%, the three adding over 30pts between them.

Treasuries - US Treasuries fell by between 10 and 13 basis points across the 2, 20 and 30 year maturities as Fed Reserve Chairman
Bernanle said the global economy is "beinning to emerge" from recession.

United Kingdom & Europe Commentary


All the right kind of records set on Friday. Crude year highs, Copper 11 week highs and the FTSE up 2% and along the way hitting it's
highest level since October 2008. The moves even more pronounced across broader Europe, the DAX and CAC both finishing 3%
higher.

Airlines - British Airways topped the FTSE, up over 7% on what most put down to a short squeeze. Elsewhere, Easy Jet and Ryan Air
up 4.1% and 2.2%, both moves on heavy turnover.

Insurers - Legal & General up 5.6% and just behind BA on the FTSE leaderboard after one broker added the name to their high
conviction list. Most of the other sector constituents came along for the ride, Aviva up 5.5%, Friends Provident 4.3% and Old Mutual
finished 3.3% higher.
Eco - A better than expected result for German PMI, Manufacturing coming in at 49.0 vs 47.0 expected and July's 45.7, Services
54.1(up thru 50 signalling expansion) vs 48.6 expected and last months 48.1.

Financials - 2nd to the cyclicals but one of the standout sectors across broader Europe. BNP up 6%, Credit Agricole 5.2%, Allianz up
3.6% and Deutsche Banks finished 3.3% higher. All 4 featuring in their corresponding top10's.

Resources Commentary
Miners - Following a better night from the metals and a night punctuated by optimism around global growth, moves from the metal
plays were good without being spectacular. Rio up 2.7%, Billiton 1.8% higher and the UK Mining sector finished 2.6% higher.

Energy - Oil plays among the larger contributors to the FTSE's gains following the bounce from crude. Carin Energy, Royal Dutch and
BP up 4%, 3 % and 2% respectively, together accounting for c20% of the days gains.

SPI Commentary
The SPI traded down 71pts or 1.64% to 4250. Open at 4345 with a high of 4348 and a low of 4230. Volume 46,651. Overnight the SPI
traded up 69pts to 4320.

SPI Intraday SPI Daily

*SPI report taken from the 9:50am open to the 4:30pm close on the previous trading day. Charts taken from IRESS

Upcoming Economic Events for the Week

Monday AUS New motor vehicle sales


US
Tuesday AUS
US S&P/CS composite 20
Wednesday AUS Real construction work done
US Consumer confidence, FHFA house price, durable goods orders
Thursday AUS Real capital expenditure, real equipment investment, expected nominal capex
US New home sales, real GDP
Friday AUS
US Personal income, personal consumption, core PCE deflator, Michigan consumer confidence
*Dates are indicative only and may change

Upcoming Dividends

ExDivDate Security Description Div (c) Yield Frk(%) PayDate


24-Aug-09 AMC Amcor Limited 17 6% 0 18-Sep-09
24-Aug-09 BLD Boral Limited 5.5 2.5% 100 28-Sep-09
24-Aug-09 TLS Telstra Corporation 14 8.07% 100 25-Sep-09
24-Aug-09 WPL Woodside Petroleum 55 2.33% 100 5-Oct-09
25-Aug-09 ORG Origin Energy 25 3.46% 100 23-Sep-09
25-Aug-09 WES Wesfarmers 60 4.37% 100 1-Oct-09
26-Aug-09 QBE QBE Insurance 62 5.49% 20 22-Sep-09
26-Aug-09 STO Santos Limited 22 2.71% 100 30-Sep-09
26-Aug-09 UGL United Group 35 4.39% 100 18-Sep-09
27-Aug-09 ASX ASX Limited 74.5 4.78% 100 24-Sep-09
27-Aug-09 BEN Bendigo & Adelaide Bank 15 4.93% 100 30-Sep-09
28-Aug-09 COH Cochlear 95 2.92% 100 24-Sep-09
31-Aug-09 BHP BHP Billiton 50.07 3.01% 100 25-Sep-09
3-Sep-09 NWS News Corp 6 0.9% 0 14-Oct-09
Trading Update:

CSL Limited (CSLVZO) – Strong result, buyback is back


We have been bullish CSL under $30 and believe the stock is still cheap following the results announcement. Sales
revenue grew by 30.0% to A$4.62bn and total revenue was up 32% to A$5.04bn. Normalised net profit after tax was
A$1,020.4m (up 45.4% on the pcp). Reuters consensus NPAT was A$1019.3m, with a range of A$911m- 1,123m. CSL
hopes to migrate most patients to Privigen, its liquid IVIG, with the aim of selling 10Mg of Privigen in FY10F. Given solid
underlying demand, we continue to believe this is possible. CSL has also recommenced the on market buyback. Buy the
dips. RBS research have a BUY with target price of $37.50

Source: IRESS

CSL has guided to FY10 NPAT of A$1,160m-1,260m in constant-currency terms. RBS have a FY10F NPAT forecast of
A$1169.0m, which implies a growth rate of 14.6% on the pcp.

RBS Research continue to believe CSL is a high-quality franchise. The next catalyst for the stock should be a 9
September US FDA decision whether to reimburse for HPV vaccination in boys.

RBS MINIs over CSL

Security ExPrc Stop Loss CP ConvFac Delta Description


CSLKZG $23.7313 $ 24.83 Long 1 1 MINI Long
CSLKZH $20.8377 $ 21.80 Long 1 1 MINI Long
CSLKZQ $44.6296 $ 40.21 Short 1 1 MINI Short
CSLKZV $48.6188 $ 46.22 Short 1 1 MINI Short
CSLKZW $40.6625 $ 36.64 Short 1 1 MINI Short

RBS Warrants over CSL

Security ExDate ExPrice CP ConvFac Delta Description


CSLJZB 29-Oct-09 $ 20.00 Call 1 1 HOT Instalment
CSLJZC 29-Oct-09 $ 25.00 Call 1 1 HOT Instalment
CSLSZX 4-Feb-19 $17.9302 Call 1 1 Self Funding Instalment
CSLVZN 29-Oct-09 $ 35.00 Call 4 0.07 Trading Call Warrant
CSLVZO 26-Nov-09 $ 34.00 Call 4 0.11 Trading Call Warrant
CSLVZP 29-Oct-09 $ 30.00 Put 4 -0.05 Trading Put Warrant
MINI Trading Buy:

Bluescope Steel (BSLKZI) – Buy the pullback


We believe the recent pullback in BSL is a buying opportunity. BSL FY09 reported NPAT loss of A$66m, closing the
books on a very challenging six months. Whilst we expect continued uncertainty in demand, a return to profit in 2Q10
appears likely as domestic prices and production levels recover and this is what the market is beginning to focus on. We
think earnings leverage and long-term value are both appealing. RBS Research has a buy recommendation with $3.55
target price. Buy BSLKZI..

Source: IRESS

Result well-guided, with cost savings a highlight


The FY09 reported NPAT loss was A$66m with underlying NPAT of A$56m which was in line with RBS expectations.
Also, the lack of a dividend for 2H09 should not have surprised, and we think a distribution is unlikely to be paid until at
least 2H10 as earnings levels firm. Despite this, RBS Research believe news of achieved permanent cost savings of
A$132m set the tone for the earnings recovery story to come into focus.

Management forecasting small NPAT loss for 1H10


BSL has guided for a small reported NPAT loss in 1H10. However, with domestic price increases likely to be announced
for 1 October, and the Port Kembla mills running at ~75% utilisation, we anticipate BSL returning to profit in 2Q10, with
economic indicators stabilising

RBS Research find the stock appealing at these levels given its earnings leverage to a steel market recovery and a
reasonable 0.97x P/B (FY10F). RBS maintain Buy recommendation and target price of $3.55

RBS MINIs over BSL

Security ExPrc Stop Loss CP ConvFac Delta Description


BSLKZI 160.84 193 Long 1 1 MINI Long
BSLKZS 474.35 403 Short 1 1 MINI Short
Self Funding Instalment Buy:

Telstra Corporation (TLSSZX) – Future Fund selldown


TLS is set to go ex-dividend today. The dividend is $0.14 which will be fully franked. Last Friday TLS pulled back after the
Future Fund offered 498mln TLS shares at $3.47, cum dividend. RBS Research consider the Future Fund selldown a
good thign for shareholders despite the ongoing overhang. Use the pullback as a buying opportunity. Buy TLSSZX

Source: IRESS

Telstra Result points and fundamentals

• Broadband ARPU increased 6.5% to A$57.70. MBB SIOs doubled to 1.05m, helping lift mobile ARPU 4.8% to
A$51.84.
• Sales of IP-based products also increased at double-digit rates. With the rate of PSTN erosion reducing in 2H09
(cf 1H09) the speed-driven revenue lines helped keep total revenue growth at 2.7%, a good rate given the
economic slowdown.
• Maintaining comparable revenue growth in FY10 may be harder as unemployment rises, the A$ strengthens and
Sensis sales face a tougher business environment.
• The company says achieving its FY10 targets ‘would give us significant excess free cashflow, and all the
flexibility that brings’. We think there is enough flexibility to contribute to NBN Co, on the right terms, and still pay
an extra 2cps in dividends fully franked.
• RBS Research valuation $4.85 with a target price of $4.30, which is 12.0x FY10F EPS of 35.6c.
• Key downside risks include further margin contraction, tougher regulation and lower access prices.
• Upside risks include faster sales recovery, better cost control and higher access prices. Regulatory issues may
be clearer when proposed legislation is tabled, we think by September.

KEY BENEFITS of the new RBS self funding instalments include:

* NO PUT PROTECTION COST


* Simple, transparent and Cost-effective with a low interest rate of 7.51% per annum
* 1 for 1 movement with the underlying share (delta 1)
* No margin calls
* Non-recourse loan - You can never lose more than your initial outlay
* ATO product rulings - Perfectly suitable to be used in SMSF's
* Listed - Can be sold at anytime
* Can be exercised at any time - simply by paying back loan amount
* RBS are the only product issuer in the market who can offer this product
* Dividends and franking credit benefits as well as interest deductibility
RBS MINIs over TLS

Security ExPrc Stop Loss CP ConvFac Delta Description


TLSKZC 260.58 274 Long 1 1 MINI Long
TLSKZD 289.16 306 Long 1 1 MINI Long
TLSKZP 449.9 405 Short 1 1 MINI Short

RBS Warrants over TLS

Security ExDate ExPrice CP ConvFac Delta Description


TLSJZB 29-Oct-09 250 Call 1 0.88 HOT Instalment
TLSIZA 28-Jan-10 250 Call 1 0.95 HOT Instalment
TLSIZQ 14-Jun-10 250 Call 1 1 Rolling Instalment
TLSIZR 14-Jun-10 225 Call 1 1 Rolling Instalment
TLSSZX 4-Feb-19 193.88 Call 1 1 Self Funding Instalment
TLSSZZ 30-Jun-17 255.18 Call 1 1 Self Funding Instalment
RBS Round Up Corner:

Stocks Reporting This Week


RBS MINIs are a great way to trade company results this reporting season, from both a long or short view.

Date Code Company Y/E NPAT (Abs) Div EPS 2H Long Short
(pre abs) div Product Product
24 Aug WOR WorleyParsons Jun AUD 409.2 0.0 86.0c 172.1c 48.0c WORKZD
25 Aug ALL Aristocrat Leisure Dec AUD 40.9 -5.0 5.0c 30.4c 36.0c ALLKZI
25 Aug FGL Foster's Group Jun AUD 739.8 -349.0 27.0c 38.4c 15.0c FGLKZD
25 Aug OSH Oil Search Dec USD 15.2 0.0 4.0c 8.4c 8.0c OSHKZD OSHKZR
25 Aug SUN Suncorp-Metway Jun AUD 462.0 -414.0 40.0c 41.0c SUNKZM SUNKZP
26 Aug AOE Arrow Energy Jun AUD -24.2 0.0 0.0c -3.3c AOEKZA
26 Aug CMJ Consolidated Media Jun AUD 85.8 0.0 16.5c 12.4c 6.0c CMJKZC
26 Aug HSP Healthscope Jun AUD 83.7 -11.5 21.5c 33.2c 11.0c HSPSZX
26 Aug WDC Westfield Group Dec AUD 1047 0.0 47.5c 97.3c 95.0c WDCKZG WDCKZR
27 Aug CWN Crown Jun AUD 247.0 -610.7 34.6c 34.6c 20.8c CWNKZG CWNKZP
27 Aug LGL Lihir Gold Dec USD 152.3 -186.5 0.0c 12.4c 0.0c LGLKZI LGLKZP
27 Aug TOL Toll Holdings Jun AUD 296.7 -28.8 20.0c 43.7c 8.5c TOLKZH TOLKZP
27 Aug TTS Tatts Group Jun AUD 292.7 0.0 20.8c 23.1c 10.6c TTSSZX
27 Aug WOW Woolworths Jun AUD 1781 0.0 99.5c 145.3c 51.5c WOWKZF WOWKZS
28 Aug SHL Sonic Healthcare Jun AUD 302.2 0.0 54.0c 83.6c 32.0c SHLSZX
*Figures in table based on RBS Research forecasts

Monday
Worley Parsons (WOR) - Watching for lagging margin compression after the fall in oil prices from its peak.

Tuesday
Aristocrat Leisure (ALL) - ALL has guided to 1H09 normalised NPAT of A$35m-45m, with Japan expected to be particularly weak in the period. Focus
will be on an update on ALL's business transformation strategy.

Fosters Group (FGL) - Downside risk to consensus on tough wine (domestic and UK/US) and increased beer competition. Cash flow likely to be the
highlight.

Oil Search (OSH) - (USD) Focus will be on newsflow on PLNG.

Suncorp Metway (SUN) - Key focus will be bad debt deterioration in the bank.

Wednesday
Arrow Energy (AOE) - Looking for consistent production/profitability from the established fields.

Consolidated Media (CMJ) - Dividend will depend on a distribution from Foxtel.

Healthscope (HSP) - Expect a good result driven by ongoing volume increases in pathology and demand growth in hospitals.

Westfield Group (WDC) - Focus will be on status of construction yields, and an update on tenancy at Strathfield and Sydney City.

Thursday
Crown Limited (CWN) - Expect Australian casino revenues to have remained relatively resilient in the six months to June (we forecast 5.6% growth in
2H09).

Lihir Gold (LGL) - (USD) Focus will be on Ivory Coast expansion and the Million Oz project.

Toll Holdings (TOL) - Expect 2H to be marginally down on the pcp, coming in slightly below original guidance.

Tattersalls (TTS) - Tatts should benefit from a strong run in jackpots from its lotteries business, as well as relatively defensive earnings from wagering
and gaming.

Woolworths Limited (WOW) - Strong sales and margin, particularly in Australian F&L. All eyes will be on international acquisition commentary.

Friday
Sonic Healthcare (SHL) - Expect a solid result driven by ongoing volume increases in domestic pathology and margin uplift generated from acquisition
synergies.
MINIs approaching stop loss

Approx. MINI Share:


Underlying MINI Code MINI Type Strike Stop Loss Share Price
Value Stop Loss

QBE QBEKZS Short $25.78 $23.23 $ 23.12 $ 2.66 0.5%


WPL WPLKZX Short $54.05 $48.68 $ 47.15 $ 6.90 3.2%
COH COHKZQ Short $69.42 $62.55 $ 57.85 $ 11.57 8.1%
CPU CPUKZP Short $11.80 $10.72 $ 9.91 $ 1.89 8.2%
XJO XJOKZX Short 4,898.66 4,655.00 4,290.60 $ 6.08 8.5%

For further information please do not hesitate to contact us on the details below

Contact
Equities Structured Products & Warrants
Toll free 1800 450 005 www.rbs.com.au/warrants
Trading Products Team
Ben Smoker 02 8259 2085 ben.smoker@rbs.com
Robbie Taylor 02 8259 2018 robbie.taylor@rbs.com
Ryan Corrigan 02 8259 2425 ryan.corrigan@rbs.com
Investment Products Team
Elizabeth Tian 02 8259 2017 elizabeth.tian@rbs.com
Tania Smyth 02 8259 2023 tania.smyth@rbs.com
Robert Deutsch 02 8259 2065 robert.deutsch@rbs.com
Mark Tisdell 02 8259 6951 mark.tisdell@rbs.com

Disclaimer:
The information contained in this report has been prepared by RBS Equities (Australia) Limited (“RBS”) (ABN 84 002 768 701) (AFS Licence No
240530) (“RBS Equities”) and has been taken from sources believed to be reliable. RBS Equities does not make representations that the information is
accurate or complete and it should not be relied on as such. Any opinions, forecasts and estimates contained in this report are the views of RBS
Equities at the date of issue and are subject to change without notice. RBS Equities and its affiliated companies may make markets in the securities
discussed. RBS Equities, its affiliated companies and their employees from time to time may hold shares, options, rights and warrants on any issue
contained in this report and may, as principal or agent, sell such securities. RBS Equities may have acted as manager or co-manager of a public
offering of any such securities in the past three years. RBS Equities’ affiliates may provide, or have provided banking services or corporate finance to
the companies referred to in this report. The knowledge of affiliates concerning such services may not be reflected in this report. This report does not
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in preparing this report, has not taken into account an individual client’s investment objectives, financial situation or particular needs. Before a client
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© Copyright 2009. RBS Equities. A Participant of the ASX Group.

Explanation of Warrant Tables:


Security – refers to the code ascribed to the warrant, ExDate – refers to the date on which the warrant expires or is reset, ExPrc – refers to the
exercise price, or second instalment payment, CP – tells you whether the warrant is a call or a put, ConvFac – the conversion factor of the warrant
which tells you how many warrants you need to exercise in order to take possession of 1 share, Delta – tells you how much the warrant will move for a
1c move in the underlying security, Description – Tells you the type of warrant.
All charts taken from IRESS unless indicated otherwise