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Jan 25, 2005

Your daily news report on the latest recommendation, valuation, forecast and opinion changes.
This report includes concise but limited reviews of research recently published by Stockbrokers, which should be considered as information concerning likely market behaviour rather than advice on the securities mentioned. Do not act on the contents of this Report without first reading the important information included at the end.

Last updated 10:33am

COMPANIES DISCUSSED IN THIS ISSUE
Click on a symbol for fast access.
The number next to the symbol represents the number of brokers covering it for this report -(if more than 1)

ANZ   APA   ASX   BOQ   BSL (2)   CHY   FXJ   GNS   GPT (2)   HHG   ILU   MIG   NAB   NWS   ORI   OST   RSG   SLM   SMS   SPT   SSX   STO (6)   UGL   WES (3)   ZFX (5)  

ANZ ANZ BANK FPO Overnight Price:$20.20
JP Morgan rates the stock as Overweight - On 21 January ANZ completed the second week of its $350m share buyback having purchased 7.37% of total market volume. 86% remains.

Current Price is $20.20. Target price not assessed.

APA AU PIPELIN UNITS Overnight Price:$3.50
UBS rates the stock as Neutral 1 - Target rises 63c to $3.53 following the buyout of Carpentaria Pipeline minorities. What next? Will the company buyout other minorities, the analysts ask. Low gearing, but also low dividend yield, they say.

Target price is $3.53 Current Price is $3.50 Difference:$0.03 - (brackets indicate current price is over target). If APA meets the UBS target it will return approximately 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

ASX ASX FPO Overnight Price:$21.50
Aspect Huntley rates the stock as Sell/LT Hold - Analyst is reluctant to pay the premium multiple now but can see the logic of adding to positions on retracements in the broader sharemarket, which usually offer the best entry points for all financials.

Current Price is $21.50. Target price not assessed.

BOQ BANK QLD FPO Overnight Price:$10.65
Macquarie rates the stock as Underperform/LT Neutral - Target $10.50 (was $11.00). The broker notes BOQ?s first quarter mortgage growth of 5.4% was less than half the industry?s 13.6% growth, partially explained by the bank?s decision last year to withdraw from using mortgage brokers. Macquarie has cut its earnings forecasts for FY05 by 3% to $67.4m (adjusted) and in FY06 by 5% to $79.3m (adj.), which assumes mortgage growth returns to just above system growth in 2Q05. The broker?s valuation has also fallen to $10.00 from $10.25.

Target price is $10.50 Current Price is $10.65 Difference:($0.15) - (brackets indicate current price is over target). If BOQ meets the Macquarie target it will return approximately -1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

BSL BLUESCOPE FPO Overnight Price:$8.85
SB Citigroup rates the stock as Sell, High Risk - Following an increase to their steel price forecasts, the analysts have lifted their FY05 EPS forecasts by 3% and FY06 and FY07 by 16%. Target rises 40c to $7.40.

Target price is $7.40 Current Price is $8.85 Difference:($1.45) - (brackets indicate current price is over target). If BSL meets the SB Citigroup target it will return approximately -20% (excluding dividends, fees and charges - negative figures indicate an expected loss).

CHY CARTERHOLT FPO NZ Overnight Price:$1.95

FXJ FAIRFAX FPO Overnight Price:$4.34
JP Morgan rates the stock as Neutral - While recent reports suggest a strong appetite in Fairfax being a consolidator in media deregulation, the broker believes FXJ?s limited debt capacity, the 15% limit on stock issuance without stockholder consent and the lack of new CEO will frustrate such ambitions.

Current Price is $4.34. Target price not assessed.

GNS GUNNS Overnight Price:$4.27
SB Citigroup rates the stock as Downgrade to Hold, Medium Risk from Buy - Target rises 82c to $4.70. The analysts have downgraded their recommendation to Hold as the current share price is near their current valuation.

Target price is $4.70 Current Price is $4.27 Difference:$0.43 - (brackets indicate current price is over target). If GNS meets the SB Citigroup target it will return approximately 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

GPT GPT UNIT Overnight Price:$3.88
JP Morgan rates the stock as Neutral - GPT has announced a 10.2% increase in its stated NTA to $3.02pu following substantial increases in the appraised vales of a number of its retail assets, the broker reports.

Current Price is $3.88. Target price not assessed.
Macquarie rates the stock as Restricted - The broker notes GPT has re-valued its retail property portfolio, which has added $583.7m to book value. This has resulted in NTA increasing 10.2% to $3.02 per unit, though the broker expects the market had actually factored in higher valuations for the properties. There is no change to the broker?s earnings.

Current Price is $3.88. Target price not assessed.

HHG HHG PLC CDI Overnight Price:$1.49
Macquarie rates the stock as Neutral/LT Neutral - Target $1.63. The broker notes HHG shares continue to rally on takeover speculation for the Henderson Funds Management business (ex the soon to be sold life business), which the broker views as an obvious takeover target. The broker expects potential acquirers to wait until after the February shareholder vote on approval to sell the life business, with the broker?s valuation of HHG at $1.41 currently, though it notes a price above $1.60 is achievable given the potential 10-20c in cost synergies available to an acquirer.

Target price is $1.63 Current Price is $1.49 Difference:$0.14 - (brackets indicate current price is over target). If HHG meets the Macquarie target it will return approximately 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

ILU ILUKA RES FPO Overnight Price:$6.15
Macquarie rates the stock as Outperform/LT Outperform - Target $6.94. The broker?s recent upgrade of iron ore forecasts means ILU?s royalty on the Mining Area C mine of BHP Billiton (BHP) has increased in value by 10% to $151m or $0.65/share. The broker is also positive on the company?s new zircon discoveries, while it has increased earnings in CY04 by 1% to $87m due to higher production and in CY05 by 2% to $120m due to increased MAC royalty receipts. Valuation is $6.94.

Target price is $6.94 Current Price is $6.15 Difference:$0.79 - (brackets indicate current price is over target). If ILU meets the Macquarie target it will return approximately 11% (excluding dividends, fees and charges - negative figures indicate an expected loss).

MIG MACQ INFRA STAPLE Overnight Price:$3.66

NAB NAT.BANK FPO Overnight Price:$28.72
JP Morgan rates the stock as Underweight - The broker has received institutional investor feedback suggesting there is renewed interest in NAB, but reiterates negative factors including UK back-book repricing, UK pension fund expense, the dilutive impact of the Irish bank sale, increasing competition and a demanding valuation.

Current Price is $28.72. Target price not assessed.

NWS NEWS INC BVOTIN Overnight Price:$22.96
ABN Amro rates the stock as Hold - The broker expects the Film division to deliver more than 50% of NWS?s growth in the second quarter as a result of Christmas DVD sales. FY05 earnings forecasts have been increased by 3%, and the broker believes there is scope for management to increase EBIT guidance. Target up to $25.11.

Target price is $25.11 Current Price is $22.96 Difference:$2.15 - (brackets indicate current price is over target). If NWS meets the ABN Amro target it will return approximately 9% (excluding dividends, fees and charges - negative figures indicate an expected loss).

ORI ORICA FPO Overnight Price:$19.20
Macquarie rates the stock as Neutral/LT Outperform - Target $20.82. The broker views the early retirement of CFO Jim Hall as a negative due to his experience, but doesn?t read anything sinister into the announcement. The broker maintains its view there are structural problems emerging in the fertiliser business, while FY05 growth will be solid due to capacity upgrades at Australian Mining Services. Valuation is unchanged at $20.12.

Target price is $20.82 Current Price is $19.20 Difference:$1.62 - (brackets indicate current price is over target). If ORI meets the Macquarie target it will return approximately 8% (excluding dividends, fees and charges - negative figures indicate an expected loss).

OST ONESTEEL FPO Overnight Price:$2.75
SB Citigroup rates the stock as Hold, High Risk - Target rises 5c to $2.80. With the analysts now including estimates of Project Magnet earnings contributions into their forecasts, FY05 EPS numbers rise 8% and FY06 by 31%. Corporate activity could provide upside to target, the analysts speculate.

Target price is $2.80 Current Price is $2.75 Difference:$0.05 - (brackets indicate current price is over target). If OST meets the SB Citigroup target it will return approximately 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).

RSG RESOLUTE FPO Overnight Price:$1.35

SLM SALMAT FPO Overnight Price:$5.10

SMS SIMS GROUP FPO Overnight Price:$17.40
SB Citigroup rates the stock as Sell, High Risk - Target rises 70c to $13.10 and FY05 EPD forecasts rise 30%, FY06 62% and FY07 3% due to revised scrap metal and AUD forecasts.

Target price is $13.10 Current Price is $17.40 Difference:($4.30) - (brackets indicate current price is over target). If SMS meets the SB Citigroup target it will return approximately -33% (excluding dividends, fees and charges - negative figures indicate an expected loss).

SPT SPOT GRP FPO Overnight Price:$5.06
Macquarie rates the stock as Upgrade to Outperform, L/T Outperform - Target $6.00. The broker expects SPT?s interim profit result to be down on the pcp at $10.3m and it has cut EPS forecasts in FY05 by 5% to 30.3c, in FY06 by 10.2% to 37.3c and in FY07 by 7.3% to 44.2c. However, the broker expects results from both Support Services and Retailer Services to improve in 2H05 and in FY06, suggesting the company is entering a period of potentially strong profit growth. Retail Services in particular is expected to show improvement following its repositioning into a global operation and success in winning new contracts, while increases in volumes and earnings for the Coathanger business remains the key catalyst going forward. Valuation is $4.25-$4.80

Target price is $6.00 Current Price is $5.06 Difference:$0.94 - (brackets indicate current price is over target). If SPT meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges - negative figures indicate an expected loss).

SSX SMORGON FPO Overnight Price:$1.24
CSFB rates the stock as Downgrade to Underperform - Following recent share price movements, the analysts have lowered their recommendation to Underperform as the stock is seen as offering an excess rate of return relative to the market of minus 8.3%.

Target price is $1.10 Current Price is $1.24 Difference:($0.14) - (brackets indicate current price is over target). If SSX meets the CSFB target it will return approximately -13% (excluding dividends, fees and charges - negative figures indicate an expected loss).

STO SANTOS FPO Overnight Price:$9.09
ABN Amro rates the stock as Downgrade to Hold from Add - STO?s 4Q04 report exceeded the broker?s production and sales forecasts. Hence stronger revenues from over-lifted gas volumes and higher realised prices have increased the broker?s FY04 profit forecast by 25%. The price target is increased, but the recommendation downgraded, one assumes due to the current share price. Target $8.70, up from $8.15.

Target price is $8.70 Current Price is $9.09 Difference:($0.39) - (brackets indicate current price is over target). If STO meets the ABN Amro target it will return approximately -4% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Aspect Huntley rates the stock as Lighten - Given limited testing due to mechanical difficulties, the analyst cautions applying too much value to Jeruk at this stage. Increased valuation to $6.31 pending further analysis. This includes $1.20 for Jeruk.

Current Price is $9.09. Target price not assessed.
Macquarie rates the stock as Neutral/LT Neutral - The broker notes STO?s production for the year of 47.1mmboe was above management?s forecast due to successful Stag infill drilling and higher Bayu-Undan production. As a result revenue is 7% higher than market consensus, so the broker has increased earnings for 2004 by 16% to $397m, while 2005 and 2006 have been increased 3% to $446m and $648m. The broker also notes the Jeruk field appraisal is encouraging. Valuation is $7.48.

Target price is $8.18 Current Price is $9.09 Difference:($0.91) - (brackets indicate current price is over target). If STO meets the Macquarie target it will return approximately -11% (excluding dividends, fees and charges - negative figures indicate an expected loss).
UBS rates the stock as Neutral 2 - With sales revenue above the analysts? forecasts, with condensate and LPG production up 22% and 24% respectively, the analysts have lifted their FY04 EPS forecasts by 11.3% and FY05 by 7%.

Target price is $9.21 Current Price is $9.09 Difference:$0.12 - (brackets indicate current price is over target). If STO meets the UBS target it will return approximately 1% (excluding dividends, fees and charges - negative figures indicate an expected loss).

UGL UNITED GRP FPO Overnight Price:$6.18
ABN Amro rates the stock as Upgrade to Hold from Reduce - The broker has upgraded its recommendation ahead of a potential value accretive acquisition in Alstom where UGL are one of the leading contenders for the asset. The broker suggests the purchase may be EPS-accretive at reasonable purchase multiples. Target $5.95, up from $5.75.

Target price is $5.95 Current Price is $6.18 Difference:($0.23) - (brackets indicate current price is over target). If UGL meets the ABN Amro target it will return approximately -4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

WES WESFARMER FPO Overnight Price:$38.93
Macquarie rates the stock as Outperform/LT Outperform - Target $39.55. Factoring in higher coal price forecasts, the broker has lifted its earnings forecasts for WES in FY06 by 8.6% to $1,161m and in FY07 by 7.5% to $1.081m. The stock is trading near the broker?s $37.53 valuation but the broker notes the stock has added yield leverage, meaning the stock trades towards short-term yield valuations as investors attempt to catch the cyclicality of the company?s earnings. ON this approach the broker would expect the stock to trade towards a 5.5-6% yield, implying a FY06 valuation range of $44-$48.00/share.

Target price is $39.55 Current Price is $38.93 Difference:$0.62 - (brackets indicate current price is over target). If WES meets the Macquarie target it will return approximately 2% (excluding dividends, fees and charges - negative figures indicate an expected loss).
UBS rates the stock as Reduce 1 - Target falls 2c to $28.05. Following the quarterly coal production report, the analysts have trimmed their Curragh production by 250,000 in FY05. This sees EBITA forecasts cut by 1.5%. While the Bengalla short fall was well flagged, the analysts say, the Curragh drop may surprise the market.

Target price is $28.05 Current Price is $38.93 Difference:($10.88) - (brackets indicate current price is over target). If WES meets the UBS target it will return approximately -39% (excluding dividends, fees and charges - negative figures indicate an expected loss).

ZFX ZINIFEX FPO Overnight Price:$2.70
CSFB rates the stock as Outperform - Target rises to $2.89. Although quarterly production report was slightly below forecasts, the analysts feel the company should benefit from surging zinc prices which they say could lift the stock above $3.00.

Target price is $2.89 Current Price is $2.70 Difference:$0.19 - (brackets indicate current price is over target). If ZFX meets the CSFB target it will return approximately 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).
Macquarie rates the stock as Upgrade to Neutral (was Underperform), L/T Underperform - Target $2.87. The broker has upgraded its short-term recommendation given improving zinc market fundamentals and expectations for capital management initiatives to be announced at the interim result next month, with the broker expecting a dividend this year of $0.05 and an on-market buyback of 5-10% of issued capital. The broker?s earnings have increased in FY05 by 6.2% to $188.1m and in FY06 by 3% to $208.1m, while valuation is $2.05.

Target price is $2.87 Current Price is $2.70 Difference:$0.17 - (brackets indicate current price is over target). If ZFX meets the Macquarie target it will return approximately 6% (excluding dividends, fees and charges - negative figures indicate an expected loss).
UBS rates the stock as Buy 2 - Target rises 20c to $3.30. Although the Century lead production was down, the analysts point out that all other operations ware on target. Commodity price and currency changes see FY05 EPS forecasts rise by 17% and FY06 by 127%, a testament to ZFX?s sensitivity to commodity prices.

Target price is $3.30 Current Price is $2.70 Difference:$0.60 - (brackets indicate current price is over target). If ZFX meets the UBS target it will return approximately 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).

Summaries
ANZ - ANZ BANK FPO Overweight - JP Morgan Overnight Price $20.20
APA - AU PIPELIN UNITS Neutral 1 - UBS Overnight Price $3.50
ASX - ASX FPO Sell/LT Hold - Aspect Huntley Overnight Price $21.50
BOQ - BANK QLD FPO Underperform/LT Neutral - Macquarie Overnight Price $10.65
Sell, High Risk - SB Citigroup Overnight Price $8.85
FXJ - FAIRFAX FPO Neutral - JP Morgan Overnight Price $4.34
GNS - GUNNS Downgrade to Hold, Medium Risk from Buy - SB Citigroup Overnight Price $4.27
GPT - GPT UNIT Neutral - JP Morgan Overnight Price $3.88
Restricted - Macquarie Overnight Price $3.88
HHG - HHG PLC CDI Neutral/LT Neutral - Macquarie Overnight Price $1.49
ILU - ILUKA RES FPO Outperform/LT Outperform - Macquarie Overnight Price $6.15
NAB - NAT.BANK FPO Underweight - JP Morgan Overnight Price $28.72
NWS - NEWS INC BVOTIN Hold - ABN Amro Overnight Price $22.96
ORI - ORICA FPO Neutral/LT Outperform - Macquarie Overnight Price $19.20
OST - ONESTEEL FPO Hold, High Risk - SB Citigroup Overnight Price $2.75
SMS - SIMS GROUP FPO Sell, High Risk - SB Citigroup Overnight Price $17.40
SPT - SPOT GRP FPO Upgrade to Outperform, L/T Outperform - Macquarie Overnight Price $5.06
SSX - SMORGON FPO Downgrade to Underperform - CSFB Overnight Price $1.24
STO - SANTOS FPO Downgrade to Hold from Add - ABN Amro Overnight Price $9.09
Lighten - Aspect Huntley Overnight Price $9.09
Neutral/LT Neutral - Macquarie Overnight Price $9.09
Neutral 2 - UBS Overnight Price $9.09
UGL - UNITED GRP FPO Upgrade to Hold from Reduce - ABN Amro Overnight Price $6.18
ZFX - ZINIFEX FPO Outperform - CSFB Overnight Price $2.70

RATING Summary
Rating No. Of Recommendations
1. Buy 11
3. Hold 19
4. Reduce 1
5. Sell 7


The content of this information does in no way reflect the opinions of FNArena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FNArena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FNArena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.
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