wednesday, 6 april 2016 · 2020-02-06 · wednesday, 6 april 2016 - 2 2. today’s bounce lacked...

Wednesday, 6 April 2016- 1

Wednesday, 6 April 2016 4:29 PM

Richard CopplesonBell Potter Securities Ltd

ABN 25 006 390 7721AFSL 243480

This communication has been prepared by the Institutional Sales and Trading Desk and is not the product of the Research Department. It is not a research report and is not intended as such.

MAJOR MARKET DATA

AUSTRALIAN MARKET OVERVIEW

1. The ASX 200 after getting smashed -3% in the last 3 days down to 4900 was wobbly today as market bounced back +21 points or +0.44%. But it wasn’t a convincing bounce, the market hit a high after lunch of +33 points, but as we have seen so often lately, just couldn’t hold it. Value ok at $5 billion .

ASX 200 4945.9 21.5 0.44% SPI 4932 13 0.26%

ASX High 4958.2 33.8 SPI Fair Value ‐13

ASX Low 4906.3 ‐18.1 SPI Volume 38201

Value $5.04 Bn $A/$US 0.7560 0.0017 0.22%

Specials 10 yr Bonds Futures 97.55 0.02 0.02%

52 Weeks Hi/Lows 6 Hi 14 Low 90 Day Bills Futures 97.82 0.02 0.02%

Momentum (Top 500) 365 Up 135 Down Best Sector Today 1 Energy 3.19%

Asia Today 2 Discretion 1.27%

New Zealand 6743 18 0.27% 3 HealthCare 1.17%

China 3056 ‐14 ‐0.45% Worst Sector Today 1 Telecoms ‐0.47%

Hong Kong 20248 13 0.07% 2 Fin Prop Trusts ‐0.17%

Japan 15752 ‐38 ‐0.24% 3 Staples ‐0.13%

After US trading After US trading

Dow Futures 17584 58 0.33% Gold in Asian trade 1229.6 ‐2.70 ‐0.22%

S&P 500 Futures 2047 8.0 0.39% Oil in Asian trade 36.9 0.90 2.51%

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Wednesday, 6 April 2016 - 2

2. Today’s bounce lacked conviction, lacked strength and lacked any volume behind it – it was anemic and weak. One thing that stood out was that ANZ {22.55 0.08 0.35%} may have been attacked last week – but today the market turned its attention to Westpac {28.68 -0.45 -1.57%} …

3. I’m still concerned about the market, we have been smacked on all fronts & with the US market just 3% odd from its record high looking like it may have a big -5% to -10% correction if earnings or eco data are not supportive – then unfortunately we may (will) get caught up in their fall. If that happens then the ASX 200 could come back to anywhere between 4800 to 4600 (if it became very nasty & I guess if it did hit 4600 it’d be an intra-day low as the buying would come in at this level – it’s be a very oversold level). But if we did get back that far then we are right at the bottom of the trading range & the market would be a BUY ..

4. Helping today was US Futures with the Dow futures up +50 points or +0.28% (S&P 500 futures +0.35%) & Oil after falling -14.5% for 10 straight days bounced back +2.4% last night to US$36.60 & then after hours in Asian trade it rallied another +2.6% to US$36.90 after API crude inventories (came out after mkt) reported a DRAW of -4.3m vs week-ago BUILD of +2.6m

5. Markets have been hit as global growth concerns continued with oil looking vulnerable to a US$US30 target. The US was off -1% led by the heavily-weighted financials (-1.4%) and health care (-1.2%) while below-consensus economic data out of Europe hurt as well. Predominantly, disappointing German Factory Orders and a weaker than expected reading of the March Markit Composite PMI (53.1; expected 53.7) for the eurozone dampened investor sentiment. The German DAX was smacked -2.5% back to its 50day moving average - one to watch. Not helping was German Factory Orders had a shock fall to -1.2% vs mkt at +0.3% as exports declined… In Europe it was a serious risk off night with Steels -6%, Miners -4%, Autos -3.6%, Banks -3.3% hit In Greece talks with creditors (EU, ECB, IMF) resumed – will it ever end >? Also hurting markets was in Europe PMI’s at 52.1 vss mkt at 53.7 driven by downward revisions to French and German PMIs. Autos fell, -4% % after the unexpected drop in German factory

6. IMF Director Christine Lagarde provided no comfort to investors apprehensive over global growth. The downside risks have increased and “we don’t see much by way of upside,” while Fed Bank of Chicago President Charles Evans said the U.K.’s “Brexit” vote and the U.S. presidential elections are fueling uncertainty, complicating decisions for policy makers as well as businesses and investors

7. Yesterday’s trade deficit was weaker – but one concern was that Exports retreated in February (-1.2%, vs

+1.8% in Jan), to now the lowest level in 3 years, with the -8.5% year on year drop the worst since April- 2015– which suggests the recent rebound of the $A is already hurting exports..

8. Overhanging the misery of the banks was a reminder again today with Arrium’s future looking increasingly

bleak with the company's shares suspended from trading this morning. Arrium was due to come out of a halt before ASX trading started, after marathon talks with its bankers. But the trading suspension has heightened speculation that the firm could be headed for a voluntary administration and a likely break-up of the business as assets are sold off. Arrium is buckling under $2.8 billion in debt. Australia's big four banks - ANZ, Westpac, Commonwealth Bank and NAB - are owed a combined $1 billion and together with other offshore banks and private debt holders from the United States offered to lend a further $400 million to Arrium in last-ditch talks with the board and their advisers on Tuesday.

What is going on ?? Maybe nothing .. but …

CSR {3.22 -0.02 -0.62%} can anyone tell me what is going on ? Their buyback could begin on the on 21sty March - up to $150m worth of shares – or about 50 million shares. We saw a 3 day flurry, on the 22nd they bought 150,000 shares, then 23rd 100,000 shares & then 24th March 50,000 – started high & got lower each day.


Well it’s now the 6th April & the CSR buyback has been inactive for 7 trading days – they have bought back a total of 250,000 shares – 99.5% still to go.

Why would they cease ??

I understand buybacks cease for 3 reasons 1. If they are going to report earnings then they must cease 2 weeks prior – but they normally don’t report

until mid May so that’s still 5 weeks away 2. If they have a major announcement imminent 3. or (3) If they begin working on a M&A deal – they can’t be buying back their own stock – seen as

supporting the share price – at a time when a deal is being worked on.

So I have no idea what it is – I’m just putting it out there. Over the years we have seen a number of companies quietly stop their buybacks & then we find out they have an M&A deal. !! So my challenge to CSR (anf their buyback broker UBS) is to buyback some shares soon – just so I don’t keep talking about this… The CSR buyback was announced as it was underpinned by strong operating cash flow and a net cash balance sheet position ..

To avoid FIRB restrictions around the repatriation of capital (asbestos liability related), the buyback is expected over a two-year period (ok they can take their time – but still 3 days on & then 7 off??) and subject to "surplus cash" generation – some believe that this implies they could slow down if they return to a net debt position – which could arise from a big cap ex spend or they make an acquisition. Brokers have estimated that being “conscious of a lack of franking credits, a buyback is the most tax effective way of returning capital to shareholders.

Subject to price / timing, if the full $150m is executed at $3.20/share (avg) over two years, it would be 4.3% and 4.4% EPS accretive in FY16-17, respectively.

Brokers prudently assume that only $100m of the $150m buyback is executed over two years which is 2.5% and 2.6% accretive over FY16-17. But it is a wild held view that CSR's preferred strategy to gear-up the balance sheet through M&A. –

So are they looking now ?? or just taking their time ??

Oil price weakness – what was going on in markets earlier in the year (part 1 of 3)

I think the volatility that we saw in the 1st qtr could remerge & some of the same issues that saw markets savaged are still out there.. Many investors were on summer holidays when all this unfounded & numerous investors may have missed some of the under themes that I think need to be pointed out again – as one in particular – the oil price – could cause a repeat of some events & the results – may not be quite as ruthless – but they could still be bad.

So it’s a bit long – it took me a long time to get a lot of the figures together – but it tells a story – still once I have it out there then I can refer to it later is events transpire again. I hope they don’t but if they do we just need to be aware of what I worry could be huge issues for the markets & see a selloff. Again it may not happen – but if it does we just have to be aware.. China gets a mention – but that seems to be a bright spot now (I’ll look at why China is not the major worry as many are still pushing – annoyer time) ..

Now this is going to be as unpleasant for me as it is you (unless you were short) as I quickly look at what went wrong early in the year . I don’t cover everything but the main issues -

The markets looked terrible in the first 3 weeks of 2016 – this is what we had thrown at us ..

On the first trading day China smacked -7%, its worst start of a new calendar year in the history of the Chinese equity markets. The reason for the initial selloffs in China were due to (1) a slightly weaker Caixin PMI


for December, which came in at 49.7 vs mkt 49.8, below 50 for the 10th consecutive month – many cited weak Chinese growth & the spiral down had began + (2) also concerns after the Chinese sudden & unexpected devaluation of their currency - the continuing weakness of the Yuan and the related concerns regarding capital outflows, domestic monetary tightening, and corporate earnings;

So what caused the initial 2 day slump in China came about because after watching a stock-market collapse wipe out US$5 trillion of wealth in less than 3 months last year, Chinese authorities hatched a plan to stem the pain: circuit breakers that would be triggered by daily declines of 5%. The new system went into effect on Jan. 4. These guys must have thought they were geniuses – well sort of .. as their bright idea lasted all of four days.

After two terrifying sessions -- where markets stopped trading after only 30 minutes, ending the shortest trading day in their history -- that tripped the circuit breaker repeatedly and convulsed global markets, officials suspended the system after 2 consecutive -7% falls . It is clear now that those 7% stops actually became magnets for the sellers and thus only exacerbated investor anxiety and deepening the selloff. So hopefully the Chinese won’t make that mistake again….

And so it all began there & then we had a plethora of bad news that just destroyed markets & confidence… gee it was bad…

We saw the yuan weaken for 8 consecutive days – but after the markets fell so dramatically they ceased the devaluation – but there were then some adding to fears saying they may just do a 15% devaluation in one go – and if so that would decimated world markets – but we now know that didn’t eventuate – but the fear of it caused addition selling in world markets. This was and in a way continues to worry some (but most in market now don’t see this as a threat any more).

The worry came because was saw in early 2016 major concerns after the People’s Bank of China reported that its foreign exchange reserves fell by US$108bn in December (vs. a US$87bn decrease in November), to US$3.3tn at the end of the month. The large drop in FX reserves suggests the FX outflow picked up significantly from November, and is consistent with a significant increase in onshore FX trading volume during that month.

Then as turmoil emanating from China spread around the world billionaire George Soros warned that a larger crisis may be brewing – these headlines always get a lot of airplay and just add to the nerves of investors.

But also back then at the same time we had U.S. December ISM Manufacturing Index coming in at 48.2, below expectations and down from November's 48.6.

With US reporting season approaching we were also reminded that it was going to be a shocker … Analysts then were estimating profits for S&P 500 members fell -6.7% in the Dec quarter (more on this another time – this is the big issue still out there and about to hammer home soon.)

While all this was happening oil and iron ore were being smashed every single day & Copper also hit a 7 year low – it looked like the selling (and massive shorting) would never stop …

But after so much poor economic news we saw the first bit of good news where we saw stabilization in the Chinese yuan & finally some positive Chinese news with China December Trade data came in well above expectations Exports +2.3% vs cons -4.1%, Imports -4.0% vs cons -7.9% ^ the Trade balance $382.05bn vs cons $338.8bn. Everyone had been so nervous on China after a few soft growth prints the previous week and the big sudden falls in Chinese market – was this enough to arrest the falls??

No it wasn’t the global sell off continued now with fears that the Chinese GDP would come in well below the 7% estimate.

Plus we also had some idiot broker saying “sell everything” that got headlines – that stuff when markets are nervous does 2 things (1) it causes weak or uncertain traders to throw in the towel and sell & (2) historically it has


coincided with a near term bottom approaching (as it did again this time – looking back in history – many will remember a famous journo (seems like a really nice guy as well) many years ago – right as the Aussie market was being massacred – telling investors to “sell everything” as another massive fall was about to hit. The market – almost that day – bottomed & then staged a great rally. When he said that – so many agreed – but market psychology at the time said – which is easy in retrospect – that the bottom was then. )

Now back to the horrors of the market s – as if all that wasn’t enough we then had Iran and Saudi Arabia got into a global spat after the Saudi’s did some executions that Iran didn’t like. Talk then of War in the Middle East added to the markets overall fear – but then the world’s most hated nation – North Korea – decided to add even more global geopolitical uncertainty after they detonated a nuclear bomb that was said to be 50 odd times stronger than the one that fell on Hiroshima. Fears of War between the South Korea (and thus the US) and North Korea reached levels not seen for many years. Which was heighted after a top North Korean official has warned the North Korea was being pushed to the "brink of war" - after South Korea continued to blare propaganda through loudspeakers across the border. In a way you can understand the North Korean’s tensions and talk of war when you hear that the South were bombarding them with karaoke favorites such as the upbeat dance hit Bang, Bang, Bang. That’d send anyone mad.

In fact – a small digression during the Waco siege the FBI blasted loud music at the compound – they played “ Tibetan chats” and there was also talk that they played that horrible song “Achy Breaky Heart” by Billy Ray Cyrus – but I have since heard the FBI decided to reject it - perhaps because officials feared some of the cult members would like it .. Given Waco is in Texas & they all drink ‘home brew’ I think the FBI had a good point.

Back to what was killing markets – yes time to mention the elephant in the room – oil price !!! This has a lot to answer for & I’ll deal with it later on – but in early January (and all February) it continued its free fall hitting a low of US$27.56 on the 20th January – it then bounced off that level up to US$34.82 8 days later. But as we often see stocks or markets in volatile times tend to re test their lows & so it was with oil. The oil price resumed its free fall dropping to an intra-day low of US$27.24 on the 10th Feb – its lowest level in 13 years – since 2003.

It seemed the oil price was going straight to US$10 and anyone short oil and oil stocks was making a killing.

With oil going into a free fall many argued that it was stimulatory for consumers & great for transport companies … ok but what about …. the financials

The really big problem (and this is the one I fear could easily resurface) is … financial risks were now a big threat with worries about the big US banks bracing for energy loan losses was now an added concern thrown out there.

I did some rough numbers and saw that the big US Investment Banks have exposures of around US$100 billion to US$133 billion to the energy companies (depends on numbers out there as to the real exposures) but either way it’s a lot !!!

America's biggest banks warned recently that oil prices will continue to create headaches on Wall Street -- especially if doomsday scenarios of US$20 or even US$10 oil play out.

Look at these numbers – if oil gets back to even the low US$30 level then these numbers will be requoted…

1. JPMorgan Chase No.1 U.S. bank by assets. Energy exposure assumed at 1.6% of total loans. JPM is setting aside an extra $124 million to cover potential losses in its oil and gas loans. It warned that figure could rise to $750 million if oil prices unexpectedly stay at their current $30 level for the next 18 months.

2. Bank of America Corp No.2 U.S. bank by assets Energy exposure assumed at 2.4% of total loans "Energy portfolio stress analysis shows $30 oil for 9 quarters would result in about $700 million of losses." "As we continue to assess and react to future changes in the energy sector, we could see lumpiness that could potentially drive provision expense over $900 million."


3. Wells Fargo. No.3 U.S. bank by assets. Energy exposure assumed at 1.9% of total loans – they are sitting on more than $17 billion in loans to the oil and gas sector. The bank is setting aside $1.2 billion in reserves to cover losses because of the "continued deterioration within the energy sector."

4. Citigroup. No.4 U.S. bank by assets. Energy exposure assumed at 3.3% of total loans - Citi built up loan loss reserves in the energy space by $300 million. The bank said the move reflects its view that "oil prices are likely to remain low for a longer period of time." If oil stays around $30 a barrel, Citi is bracing for about $600 million of energy credit losses in the first half of 2016. Citi said that figure could double to $1.2 billion if oil dropped to $25 a barrel and stayed there.

5. Goldman Sachs Group Inc No.5 U.S. bank by assets. Energy exposure assumed at 2.1% of total loans. Goldman Sachs has $10.6 billion in total oil sector exposure. Goldman Sachs only 3 weeks ago came out and said that about 40% of its oil and gas loans and lending commitments are to junk-rated firms. The figure, which counts both loans made and future promises to lend, accounted for $4.2 billion of a total $10.6 billion as of the end of December, the New York-based bank said Monday in its annual regulatory filing. Goldman Sachs has $1.5 billion in loans to energy companies rated below investment grade and $2.7 billion in unfunded commitments. The total exposure jumps $1.9 billion counting derivatives and other receivables, which were “primarily" to investment-grade firms, Goldman Sachs said. The bank’s market exposure to oil and gas firms was negative $677 million compared with $805 million a year earlier.

6. Morgan Stanley No.6 U.S. bank by assets. Energy exposure assumed at 5% of total loans, US$4.8 billion of loans which is the biggest at 5% of their total loans… Morgan Stanley don’t seem to have said too much except this .. "We've seen an increase in negative marks within corporate loan book, focus is around energy."

So looking at it this way … one US broker summarized the exposures on 20th Jan as follows..

How much have the big banks funded in outstanding debt to the oil & gas sector?

Bank of America leads the list with $21.3 billion. Citigroup is next at $20.5 billion (but analysts at Susquehanna Financial Group say Citigroup Inc.’s funded and unfunded commitments amounted to $58 billion) . Wells Fargo is third at $17 billion. JP Morgan Chase is at $13.8 billion. Morgan Stanley is at $4.8 billion, PNC Bank has $2.6 billion and US Bancorp is at $3.1 billion.

How much is that, as a percentage of the bank's total loans?

Morgan Stanley leads the way at 5%, followed by Citi at 3.3%, Bank of America at 2.4%, Wells Fargo at 1.9%, JP Morgan Chase at 1.6%, PNC at 1.3%, and US Bancorp at 1.2%.

Which banks have stowed away the most reserves relative to their oil exposure?

Wells Fargo leads the way here with 7.1% of the value of its exposure in reserve. US Bancorp is second with 5.4%, and JP Morgan Chase is third with 4%. Morgan Stanley, Citi, and PNC are all at 3% and Bank of America has 2.3% in reserve.

Adding to these concerns that 2016 could well be a nasty year for miners & banks exposed to this - Mining.com reported recently, that ….Already high bankruptcy and default rates in mining & metals and oil & gas will only accelerate this year as the prolonged downturn in commodities begin to spill over into other sectors. Overall, global speculative-grade corporate defaults will increase by more than 30% in 2016 and reach the highest level since 2009, says Moody's Investors Service in a new report. And 2015 already saw close to a doubling of companies defaulting on corporate bonds or loans.


What was also worrying market was a note by Morgan Stanley saying that Australia's large banks face up to an 18% increase in losses on loans from the tanking oil price. MS said that said the lower price would increase losses by 18% at Commonwealth Bank, which has the biggest exposure to the oil and gas industry at $11.6 billion, 11% at ANZ Bank and 13% at Westpac. The losses would occur in the first half of the financial year, Morgan Stanley said. Australia's banks have $31 billion in loans to oil and gas companies. "We would expect the material decline in the oil price to lead to risk migration and higher collective provisions, or 'overlays', in the first-half 2016 results," Its analysts said oil and gas accounted for 45% of the banks' lending to the resources sector and it assumed the big four banks would need to raise their proportion of impaired loans by 2% for the half year to take account of the oil price fall. Earnings per share would fall by about 1.5% at CBA, 1.5% at ANZ and 1% at Westpac. The majority of CBA's commodity lending is in oil and gas. At the other three big banks it is a significant minority, with NAB having the lowest levels at $4.5 billion out of a total mining book of $12.1 billion. Total loans to resources accounts for just 1.5% of the big four Australian banks' non-mortgage credit exposure.

Now since then the banks have come out & all the bank analysts have done their own numbers & we all know its tiny – but in a nervous market – perception & reality are things that can play out in very perverse ways…

MS - Major Aussie Banks Mining Exposure

Other Mining = iron ore, gold, coal & mining services … Source MS

Also what is worrying is the way the oil-price drop is compounding the effect of financial fragility worldwide.

Low interest rates in America and Europe after 2009 drew rich-world investors into emerging markets, creating a lending boom. Corporate debt in emerging markets rose from 50% of GDP in 2008 to 75% in 2014.

The Economist commented that the lesson of recent history is that a rapid build-up in debt leads to trouble.

Along with construction, the oil and gas industry saw a big increase in corporate debt, according to the IMF’s latest Global Financial Stability Report. Lower oil revenues make it harder to service this burden.


OTHER

U.K. Poll Shows 51% of voters support remaining in EU, 44% want to exit ..

The default rate for high-yield bonds has risen to the highest level in six years, and a top bond

analyst sees more bad news ahead for investors in so-called junk bonds. According to S&P's fixed income research team, 3.8 percent of companies with "speculative-grade" debt have defaulted over the past 12 months through March, which is the highest that rate has been since 2010. This as 12 companies with poor credit ratings (hence their "speculative" nature as well as their high yields) defaulted in March.

Credit Suisse (CS). Chief Executive Officer Tidjane Thiam said the Swiss bank has been "underweight" in China and would look to build its wealth management capabilities in the world's second-biggest economy, despite slowing growth. Separately, the bank dismissed suggestions that they were actively using offshore structures to help clients cheat on their taxes. Tesla Motors . The company said on Monday that parts shortages hampered vehicle production and sales in the first quarter, but the electric car maker still plans to build 80,000 to 90,000 vehicles this year.

IPO

Logistics software firm WiseTech Global has the attention of investors around the world as it sets about raising up to $220 million in a bookbuild starting Wednesday morning.

It's understood pre-IPO backers Fidelity and Smallco will increase their stakes at the IPO bookbuild, which should help bookrunners Morgan Stanley and Credit Suisse build momentum.

WiseTech is seeking to raise $100 million to $220 million, including up to a $150 million primary raise and up to a $70 million selldown, at $2.58 to $4.12 a share.

The wide range would value WiseTech at $699 million to $1.08 billion on an enterprise value basis and see it list with a $763 million to $1.19 billion market capitalisation.

Books are scheduled to close on Thursday. (AFR)

US GDP - - being downgraded. It may turn out the economy did not grow at all in the first quarter. Trade data released last night in the US showed the U.S. deficit widened more than expected to

$47.1 billion in February and was a bigger drag on growth than expected. It's the latest economic metric that chiseled away at the tracking model for first quarter growth.

The median of economists who participate in the CNBC/Moody's Analytics Rapid Update is now 0.5% for tracking GDP growth, down from 0.9% last week. Their average forecast for growth is 1.1%.

Given the average, and substantial, revisions to government GDP data, that 0.5% could easily turn into a negative number, or a much higher number. That is based on a CNBC study that examined every report going back to 1990 and found an average error rate of 1.3% in either direction.

The trend has been down for the last 3 months


Now look at this – this was Atlanta Fed – looking at 0.5% GDP – but that was last week – BEFORE last night’s disasterous

Banks

ANZ {22.55 0.08 0.35%}, CBA {71.15 -0.10 -0.14%}, NAB {25.50 -0.06 -0.24%}, Westpac {28.68 -0.45 -1.57%}, Bendigo & Adelaide Bank {8.50 -0.05 -0.59%}& Bank of Queensland {11.59 0.09 0.78%}

Financial Services / Market Related Stocks

Macquarie Bank {63.65 -0.07 -0.11%}, QBE {10.75 0.10 0.93%}, IAG {5.44 0.06 1.10%}, Suncorp {11.82 0.16 1.35%}, Austbrokers {8.49 -0.01 -0.12%}, Computershare {9.45 -0.07 -0.74%}, ASX {41.50 0.10 0.24%}, Cabcharge {3.13 0.03 0.96%}, Flexigroup {2.55 0.13 5.10%} & Iress {11.55 0.24 2.08%}..

Fund Managers / Brokers


Challenger {8.43 0.25 2.97%} , BT Investment {9.31 0.00 0.00%}, Henderson {hgi}, Platinum Asset {6.20 0.04 0.65%}, Bell Financial {0.51 0.00 0.00%}, K2 Asset Mgt {0.41 0.01 2.44%} Wilson Group {0.90 0.00 0.00%}, AMP {5.54 -0.03 -0.54%} Perpetual {41.64 0.06 0.14%}, IOOF {8.33 -0.11 -1.32%} & Magellan {21.74 0.31 1.43%}

Insurers

AMP {5.54 -0.03 -0.54%}, IAG {5.44 0.06 1.10%}, Medibank {2.94 0.03 1.02%}, NIB Holdings {3.88 0.04 1.03%}, QBE {10.75 0.10 0.93%}, Suncorp {11.82 0.16 1.35%}, Ausbrokers {8.49 -0.01 -0.12%}, Steadfast {1.79 0.03 1.40%}, Tower {1.52 0.00 0.00%}

Retailers

Harvey Norman {4.58 0.06 1.31%}, JB Hi-Fi {23.09 0.37 1.60%}, Myer {1.14 0.00 0.00%}, Metcash {1.68 -0.04 -2.09%}, Adairs {2.42 0.02 0.83%}, Automotive Holdings {3.91 0.01 0.26%}, Burson {4.65 0.12 2.58%}, Breville {7.61 0.17 2.23%}, Oroton Group {2.75 -0.01 -0.36%}, Pacific Brands {1.00 0.06 5.50%}, Premier Investments {16.28 0.25 1.54%}, RCG Corp {1.58 0.00 0.00%}, Super Retail {8.18 0.03 0.37%}, Specialty Fashion {0.66 0.00 0.00%}, The Reject Shop {13.56 0.01 0.07%}, Thorn Group {1.72 -0.05 -2.62%}, Godfreys {1.10 0.00 0.00%}, Wesfarmers {40.50 0.00 0.00%}, Woolworths {21.34 -0.02 -0.09%} , Webjet {6.06 0.01 0.17%} Kathmandu {1.47 -0.06 -3.74%}, Billabong {1.53 -0.08 -5.25%}, Fantastic Furniture {1.94 0.02 1.03%}

Healthcare

Ansell {17.24 0.24 1.39%}, Australian Pharmaceutical {1.92 0.06 2.86%}, Cochlear {102.20 1.27 1.24%}, CSL {100.35 0.96 0.96%}, Capital Health {0.12 0.00 0.00%}, Healthscope {2.69 0.08 2.97%}, Invocare {12.06 -0.05 -0.41%}, Mesoblast {2.51 0.01 0.40%}, Mayne Pharma {1.46 0.02 1.03%}, Primary Healthcare {3.75 0.00 0.00%}, Ramsay Healthcare {61.62 0.73 1.18%}, Resmed {7.73 0.06 0.78%}, Sonic Healthcare {18.10 0.22 1.22%} , Sigma {1.07 0.00 0.00%}, Sirtex Medical {30.10 1.04 3.46%}, Virtus Health {6.38 0.16 2.51%}, Fisher & Paykel Health {8.82 0.20 2.27%}

Media

APN News & Media {0.58 -0.01 -0.86%}, APN Outdoor {6.90 0.11 1.59%}, Carsales {11.66 0.13 1.11%}, Fairfax {0.80 0.03 3.13%},iCar Asia {0.90 -0.01 -0.56%}, Newscorp {17.22 -0.06 -0.35%}, Nine Entertainment {1.19 0.03 2.11%}, REA Group {53.46 0.47 0.88%}, STW Group {0.96 -0.01 -1.04%}, Seek {15.71 0.22 1.40%}, Seven West Media {0.91 0.01 1.10%}, Sky Network TV {4.36 -0.07 -1.61%}, Southern Cross Media {1.04 0.02 1.92%}, Trade Me {3.91 -0.01 -0.26%}, Ten Network {0.95 -0.03 -3.16%}

Telcos

Telstra {5.22 -0.04 -0.77%}, Hutchison {0.08 0.00 0.00%}, Nexdc {2.78 0.08 2.88%}, Spark NZ {3.21 0.10 3.12%}, NZ Telecom {tel}, Chorus {3.61 0.02 0.55%}, TPG telecom {11.29 0.11 0.97%} & Macquarie Telecom {9.30 0.00 0.00%}

Transport

Brambles {12.11 0.06 0.50%}, Recall {7.96 0.01 0.13%}, Aurzion {3.89 0.06 1.54%}, Qantas {4.11 0.06 1.46%}, Qube {2.30 0.00 0.00%}, Virgin {0.36 -0.01 -1.41%}, Alliance Aviation {0.48 0.01 1.05%} MMA Offshore {0.36 0.00 0.00%}, Sydney Airport {6.66 0.04 0.60%} , Auckland Airport {5.80 0.06 1.03%}, Air NZ {2.67 0.09 3.37%}, Macquarie Atlas Road {4.68 0.04 0.85%}, Transurban {11.15 0.10 0.90%}, Virgin {0.36 -0.01 -1.41%}

Travel & Tourism Qantas {4.11 0.06 1.46%}, Sydney Airport {6.66 0.04 0.60%}, Auckland Airport {5.80 0.06 1.03%} Air NZ {2.67 0.09


3.37%}, Virgin {0.36 -0.01 -1.41%}, Webjet {6.06 0.01 0.17%} , Ardent Leisure {2.09 -0.05 -2.39%}, Event Hospitality {15.02 -0.18 -1.20%}, Corporate Travel Management {13.92 0.86 6.18%}, Cover-More {1.45 0.02 1.38%}, Flight Centre {42.63 0.20 0.47%}, Sea Link Travel {4.33 0.05 1.15%}, Mantra Group {4.41 0.06 1.36%},

Building Materials

Adelaide Brighton {5.12 0.10 1.95%}, Boral {6.33 0.12 1.90%}, CSR {3.22 -0.02 -0.62%}, Hardies {18.18 0.12 0.66%}, GWA {2.18 0.05 2.29%}, Reece {33.57 -0.23 -0.69%}, Fletcher Building {6.97 0.16 2.30%}, Nuplex Industries {4.62 -0.04 -0.87%} Brickworks {15.71 -0.09 -0.57%}

Vehicles

AP Eagers {9.76 -0.04 -0.41%}, Automotive Group {3.91 0.01 0.26%}, ARB Corp {15.24 0.04 0.26%}, McMillan Shakespeare {12.40 0.12 0.97%}, Smartgroup {4.85 0.05 1.03%}, SG Fleet {3.36 -0.01 -0.30%}, Eclipx {3.01 0.00 0.00%}

Business Services

Aconex {6.41 0.17 2.65%}, MYOB {3.19 0.04 1.25%}, McMillan Shakespeare {12.40 0.12 0.97%}, SG Fleet {3.36 -0.01 -0.30%}, Spotless Group {1.19 -0.01 -0.42%}, Broadspectrum {1.28 0.03 2.34%},

Food & Beverages

Coke-Cola Amatil {8.55 0.01 0.12%}, Collins Foods {3.85 0.00 0.00%}, Dominos Pizza {55.94 -0.03 -0.05%}, Fonterra {5.25 0.00 0.00%}, Graincorp {7.27 -0.03 -0.41%}, Select Harvest {4.20 0.07 1.67%} Treasury Wines {9.07 -0.22 -2.43%}

Engineering & Construction

ALQ {3.88 0.12 3.09%}, Boart Longyear {0.08 0.00 -4.82%}, CIMIC Group {36.56 1.70 4.65%}, Downer EDI {3.49 0.11 3.15%}, GWA {2.18 0.05 2.29%},Lend Lease {13.40 0.00 0.00%}, Monadelphous {6.89 0.00 0.00%}, Programmed Maintenance Services {1.43 0.02 1.05%}, McMillan Shakespeare {12.40 0.12 0.97%}, NRW Holdings {0.20 0.00 0.00%}, SVW {5.21 0.01 0.19%}, Broadspectrum {1.28 0.03 2.34%}, Skilled Group {1.64 0.00 0.00%}, SAI Global {3.52 -0.16 -4.55%}, United Group {3.11 0.00 0.00%}, Worley {5.17 0.25 4.84%}

REITS

Abacus Property {2.97 0.03 1.01%}, BWP Trust {3.35 0.00 0.00%},Charter Hall Group{4.57 0.00 0.00%}, Cromwell Property {1.03 0.02 1.46%}, Charter Hall Retail {4.53 0.04 0.88%},Dexus {7.76 0.05 0.64%}, Vicnity Centres {3.13 0.01 0.32%}, Goodman Group {6.60 0.05 0.76%}, GPT {4.88 0.04 0.82%}, Lend Lease {13.40 0.00 0.00%}, IOF {4.12 0.04 0.97%}, Mirvac {1.88 0.02 0.80%}, Peet {0.97 0.00 0.00%} SCA Property {2.22 -0.01 -0.45%}, Scentre Group {4.39 0.06 1.37%}, Stockland {4.19 0.06 1.43%}, Westfield {9.85 0.09 0.91%}

Steel

Arrium {0.02 0.00 0.00%}, Bluescope {6.10 0.09 1.48%} Sims {8.53 0.08 0.94%}

Paper & Packaging

Amcor {14.64 -0.07 -0.48%}, Orora {2.49 0.04 1.61%} , Pact Group {4.94 0.07 1.42%}

Utilities


AGL {18.14 0.12 0.66%}, APA Group {8.47 0.01 0.12%}, AusNet Services {1.45 -0.01 -0.34%}, DUET Group {2.22 0.01 0.45%} Origin {4.64 0.07 1.51%}, Spark Infrastructure {2.02 -0.02 -0.99%}

Infrastructure

APA {8.47 0.01 0.12%}, SKI {2.02 -0.02 -0.99%}, Transurban {11.15 0.10 0.90%}

Chemicals

Dulux {6.14 -0.02 -0.33%}, Incitec Piviot {2.95 0.00 0.00%} , Orica {14.78 0.15 1.01%}

IT, Software Services

Aconex {6.41 0.17 2.65%}, Computershare {9.45 -0.07 -0.74%}, Isentia {3.47 0.16 4.61%}, MYOB {3.19 0.04 1.25%}, Melbourne IT {2.03 0.00 0.00%}, SMS {1.91 0.09 4.46%}, Technology One {4.84 0.02 0.41%}

Agricultural

Capilano Honey {20.60 0.16 0.78%}, Graincorp {7.27 -0.03 -0.41%}, Ridley Corp {1.30 0.00 0.00%}, Tassal Group {3.81 0.09 2.36%}, Fonterra {5.25 0.00 0.00%}, Incitec {2.95 0.00 0.00%}, Nufarm {7.04 -0.10 -1.42%}, Aust Ag {1.28 0.01 0.78%} Elders {3.96 0.02 0.51%}, Primeag Australia {0.44 0.00 0.00%} & Webster {1.13 -0.02 -1.77%}

Baby Formula + stocks leveraged to Chinese consumer

A2 Milk {1.72 0.02 1.16%} Blackmores {191.45 6.03 3.15%}, Bellamy’s {9.83 -0.25 -2.54%} Bega Cheese {5.97 -0.01 -0.17%} BWX {4.49 -0.01 -0.22%}, Treasury Wines {9.07 -0.22 -2.43%}, Traditional Therapy {0.54 0.00 0.00%} & Vitago {1.71 -0.03 -1.46%}

RESOURCES

Resources:

Iron Ore coys. BHP {16.14 0.16 0.99%},S32 {1.44 0.06 4.18%}, RIO {42.34 0.38 0.90%}, Mt Gibson {0.19 -0.01 -2.63%}, Fortescue {2.60 0.06 2.31%}, , Atlas Iron {0.02 0.00 4.35%},

Others… Alumina {1.30 0.00 0.00%} , Iluka {6.45 0.04 0.62%}, OZ Minerals {5.17 0.16 3.09%} ERA {0.35 -0.01 -1.43%}, Aquarius Platinum{0.25 0.00 0.00%}, Aditya Birla {0.20 0.01 5.13%}, Sandfire Resources {5.53 0.07 1.27%}, Independence Group {2.76 0.05 1.81%}, Western Areas {2.05 0.04 1.95%}, Base Resources {0.06 0.00 0.00%} Lynas {0.09 0.01 5.81%}, Mineral Deposits {0.32 0.00 0.00%} & Alkane {0.22 -0.01 -4.65%}

Energy Stocks

Caltex {34.53 1.03 2.98%}, Origin {4.64 0.07 1.51%}, Oil Search {6.37 0.32 5.02%}, Santos {3.69 0.14 3.79%}, Worley Parsons {5.17 0.25 4.84%}, Woodside {24.62 0.68 2.76%}, AWE {0.59 0.04 6.78%}, Beach Energy {0.59 0.01 1.69%}, New Hope Corp{1.31 0.00 0.00%}, Senex Energy {0.25 0.01 2.04%}, Whitehaven Coal {0.61 0.03 4.13%}

Mining Services: Bradken {0.58 -0.01 -1.74%}, Monadelphous {6.89 0.00 0.00%}, United Group {3.11 0.00 0.00%}, Orica {14.78 0.15 1.01%}, Downer {3.49 0.11 3.15%}, Worley {5.17 0.25 4.84%}, Imdex {0.21 0.00 0.00%}, Seven Group Holdings {5.21 0.01 0.19%}, Emeco {0.03 0.00 3.23%}, Sedgman {0.95 0.00 0.00%}, Ausenco {0.23 -0.01 -4.44%} Matrix Composites & Engineering {0.34 0.00 0.00%} & NRW Holdings {0.20 0.00 0.00%}


Coal Stocks: Whitehaven Coal {0.61 0.03 4.13%}, Terracoml {0.01 0.00 0.00%}

Golds … Newcrest {16.69 -0.23 -1.38%}, Kingsgate {0.32 0.00 0.00%}, , St Barbara {2.18 0.05 2.29%}, Resolute {0.61 -0.02 -2.46%}, Alacer {2.40 -0.10 -4.17%}, Evolution Mining {1.51 -0.05 -2.99%}, Northern Star {1.56 0.00 0.00%} Teranga Gold {0.76 -0.02 -1.97%}, Regis Resources {2.37 -0.03 -1.27%} Perseus {0.41 -0.01 -1.23%}, OceanaGold {3.70 0.04 1.08%}, Medusa Mining {0.74 -0.02 -2.70%}

Uranium Stocks... ERA {0.35 -0.01 -1.43%}, Paladin {0.24 0.01 4.17%}, Deep Yellow {0.01 0.00 14.29%}, Leigh Creek Energy {0.30 0.00 0.00%}

Lithium / Graphite Stocks Galaxy {0.27 -0.02 -5.66%}, Orocobre {2.90 0.00 0.00%}, Pilbara Minerals {0.50 0.00 0.00%}, Magnis {0.40 0.03 7.50%} & Syrah {3.68 -0.11 -2.99%}


RISES

1. Corporate Travel {13.92 0.86 6.18%} John O’Shea likes this one & it’s been a cracker – stock today rallied hard after they announced this morning the launch of an on-line booking website with flybuys travel (Coles) called flybuystravel.com.au. The Company but a couple of points (1) Consistent with what they have been saying in relation to growing the loyalty business following the acquisition of Montrose Travel which has a well-established loyalty business (~70-80% of earnings) (2) Clearly see material global opportunity in the loyalty space and are looking to move quickly in this area 93) Makes sense to leverage off CTD’s increasing buying power and offer services to loyalty program providers

2. Broadspectrum {1.28 0.03 2.34%} hit a high of $1.36 +8% - but eased off that high … after Spanish infrastructure group Ferrovial raised its hostile takeover bid for Broadspectrum by 15¢ to $1.50 and declared the revised $813 million offer final, putting pressure on investors to accept the bid or risk a fall in the contractor's share price. Broadspectrum's board immediately rejected the new offer, and told shareholders to take no action. "The increase in the offer is welcome, but unfortunately is not sufficient to be capable of being supported by the board," said Broadspectrum chairman Diane Smith-Gander. "As such, the board unanimously recommends that shareholders reject the revised offer." The board has also rejected two previous offers from Ferrovial. Broadspectrum's board turned down Ferrovial in late 2014 when it first approached the Australian contractor, offering $2 per share. The revised offer, which is open for acceptance until May 2, is below the "fair value" range for Broadspectrum of between $1.60 and $1.85 a share suggested by independent expert EY. Only 2% investors have accepted the $1.35 bid but will be entitled to received the revised offer of $1.50 per share.

3. Tabcorp {4.45 0.07 1.57%} / South 32 {1.44 0.06 4.18%} last week CS did some changes to their model

portfolio .. Tabcorp went out: they added Tabcorp to our long portfolio just seven weeks ago. CS liked the company's ability to generate cash, and the recent sell-off provided an opportune entry point. The company faces new concerns that are likely to weigh on the stock price in the near term. Since we added TAH to our Long Portfolio, the stock has returned 2%, while the ASX 200 Accumulation Index has returned 6%. South 32 went into the CS portfolio: In place of Tabcorp, CS added South 32 to our Long Portfolio. The stock


provides obvious exposure to commodity prices and helps diversify our current overweight position in iron ore. They are particularly impressed with the company's cost-out targets, which are expected to total $1.3bn in the two years to FY17. This compares to current revenues of $6bn. Falling capex also helps drive an increase in free cash-flow and the stock trades on a FY17 FCF yield of 14%. The company is currently sitting on net cash.

4. BHP {16.14 0.16 0.99%} has plans to increase production at Olympic Dam much more quickly and cheaply than expected and in time to fully capitalize on a predicted shortfall in global copper supply. (AFR)

5. Bluescope {6.10 0.09 1.48%}/ Sims {8.53 0.08 0.94%} both downgraded by CLSA - BlueScope

downgraded to Outperform vs Buy after recent share price strength. Sims Metal from Underperform to Sell on the basis that returns are likely to remain below its weighted average cost of capital. While steel prices and equities have rallied hard in 2016 on the back of a restocking event driven by Chinese government stimulus favouring growth over reform, and trade cases in the US driving increased demand for locally produced product, CLSA is worried that weak global demand and the apparent delays in Chinese supply side reform will see the recent strength in prices unwind as underlying fundamentals reassert themselves. While utilisation rates are likely to tick up further in 2Q’16, global utilisation rates remain at historical lows and 400mt of capacity closures are needed to restore industry pricing power, the broker says. China’s decision to delay supply side reform will see a supply side response meaning spreads will once again come under pressure as fundamentals reassert themselves. And in the scrap market low inventory levels, rising buy-prices and increased competition for available tonnes are expected to limit the margin benefit from the recent rally in pricing.

6. Bluescope {6.10 0.09 1.48%}/ Sims {8.53 0.08 0.94%} last night Posco was upgraded by at JPMorgan from

a "neutral" rating to an "overweight" rating. 7. Hardies {18.18 0.12 0.66%} / Boral {6.33 0.12 1.90%} - Pulte (+2%) cut at JPM and MSCO cuts target on

Lennar (-0.12%). PulteGroup was downgraded by analysts at JPMorgan from an "overweight" rating to a "neutral" rating. They now have a $18.00 price target on the stock, down previously from $21.50. 4.6% upside from the previous close of $17.21.

8. Nine Entertainment {1.19 0.03 2.11%} UBS dropped earnings by -20%, -18% & -13% for 16/17/18, but

kept their buy as stock is trading on a FY16E PE of 10x, with a 9% net dividend yield. They see the potential catalysts … affiliate fee renegotiations, license fee cuts to be potentially considered at the 3-May budget, and potential changes in media ownership laws. Federal Election spend may additionally aid sector growth in the short term – they note it's unlikely NEC's FY16 market growth expectations factor any uplift from the Federal Election. Conversely SWM's broadcast of the Olympics looks likely to hurt NEC 1H17 share, particularly given NEC has pulled forward programming (e.g. 'The Voice'). While DB cut earnings by -10% & PT from $1.95 to $1.75 Also we saw MB downgrades of -10.3%, -15.5% & -16.7% for 16/17/18, they dropped their PT by -19% to $1.45

9. Qantas {4.11 0.06 1.46%} / Vigin {0.36 -0.01 -1.41%} continues to standout even more as we saw with Air

New Zealand looking at selling its 25.8% stake in Virgin – it just puts more pressure on Virgin & makes many wonder what are they going to do given they are seen as being cash constrained. If they need to rise cash then the only real option will have to be a discounted rights issue & all the other major shareholders will have to participate. Given Air NZ are sellers – they probally have to wait until they have exited before doing it as Air NZ don’t seem too keen on putting any more money into Virgin.. Virgin’s balance sheet looks stretched at 4.5x NetDebt/EBITDA and the market is becoming more convinced that sooner or later they need to address this & re-capitalize the balance sheet..


10. Qantas {4.11 0.06 1.46%}/ Virgin {0.36 -0.01 -1.41%} Alaska Air Group, was upgraded at Bank of America from an "underperform" rating to a "neutral" rating. Virgin America was upgraded at Morgan Stanley from an "underweight" rating to an "equal weight" rating.

11. Suncorp Group {11.82 0.16 1.35%} with the banks on the nose & yes cheap – but not really going to run too

hard with all the uncertainty it’s time to look at other financials that may fill the gap .. TS Lim points out Better quality loan book. SUN lost ~$400m in market value last week after getting caught up in the major banks’ negative credit quality sentiment and fears over pockets of stress in QLD. We believe the concerns are unwarranted as SUN remains a de-risked financial with a better quality loan book. Unlike the majors, SUN has steered clear of construction/development finance and unsecured consumer lending while its mining and energy exposures are negligible at only 0.2% of the total portfolio (preferring the higher growth soft commodity/agribusiness space instead that is currently 8% of the total portfolio). SUN’s mortgage book has the highest proportion of owner occupied loans in the sector and healthy average LVR in the 50-60% range.. No capital and dividend constraints. Unlike the majors, SUN also remains conservative and yet flexible in its capital management policy. It recently reaffirmed its target payout ratio of 60-80% and the intention of returning surplus capital to shareholders ($506m Group surplus capital or ~40cps with nearly half residing in the bank). Assuming a 30% mortgage risk weight upon accreditation, SUN’s APRA CET1 capital ratio would be 10.5% and this would place it ahead of the majors’ 9.4-10.2% range. Taking our long-held view that Life is a non-core business to SUN, its divestment would release over $400m CET1 capital and further improve residual ROE. General Insurance heading into the sweet spot. The GWP outlook continues to improve suggesting the rate cycle is close to the bottom. Our estimates of December Personal GWP growth suggest this is back to 2013 levels while Commercial GWP is now firmly back into positive territory. The notion that El Nino would still influence the current Southern Hemisphere autumn will also be positive for the sector in general. Maintain $12.50 price target and Buy rating. Our forecasts and $12.50 price target are unchanged. The Buy rating is underpinned by SUN’s ultra-conservative risk settings, surplus capital, further cost-outs, value add from divesting the non-core Life business and expected 5cps special dividend in 2H16.

12. oOh!media's {4.70 0.20 4.26%} largest shareholder, CHAMP Private Equity, has signed a one-month escrow as part of a hotly-contested block trade through UBS on Tuesday night. AFR understands CHAMP assured broker UBS and fellow oOh! shareholders that it would retain its 21 million odd shares for at least one month, after signing a deal to sell its other 21 million for $4.50 each. Fund managers were questioning whether such an escrow would be good for oOh!'s share price over the coming month, although if recent bidding is any indication, the stock has some way to run yet. Investor sources said rival broker Macquarie's equities desk was seeking to buy CHAMP's whole line of shares at $4.40 each - which would have been a tight 2.3 per cent discount to the close. CHAMP decided to go with the higher offer even though it meant a smaller payday, for the time being at least. (AFR) Champ offloaded half its 36.2m shares in oOh!Media, which is targeting an 8-11 percent increase in revenue for the 2016 calendar year.(Aust)

13. APA Group {8.47 0.01 0.12%} / AGL {18.14 0.12 0.66%} Sixteen-years after setting out for life on its own,

APA Group is back working with former parent AGL Energy on a joint-bid for Australia's fourth largest energy generator and utilities company Alinta Energy. As Alinta Energy adviser Lazard prepares to receive indicative bids on Wednesday, Street Talk can reveal AGL and APA have been working together on a joint offer which would see AGL buy Alinta's Western Australian retail gas business and APA take Alinta's assortment of pipelines and other assets. It's understood the pair have advisers lined up to work on the bid, however are waiting to see whether they make it into the auction's second and final round before signing any formal mandates. Deutsche Bank is believed to be close to the group. The ASX-listed heavyweights shape as the leading local contender in Alinta's auction, which is expected to be dominated by Chinese utilities companies. As Street Talk has revealed, Alinta and Lazard spent plenty of time marketing the auction in China and are understood to have secured the interest of China Resources, Beijing Clean Energy and China Huadian Corporation, among others. China Shenhua Energy Company is also believed to be interested. Other Australian parties kicking tyres and expected to at least lob an indicative offer include ASX-


giant Wesfarmers. Wesfarmers, however, could run into competition problems given it owns the No.2 player in WA's retail gas market, Kleenheat. Infrastructure fund managers Morgan Stanley Infrastructure and QIC are also believed to be watching closely, while Brookfield Infrastructure Partners is understood to have dropped out. Bankers are also waiting on the shortlisting process before signing formal mandates. It's understood Morgan Stanley, Goldman Sachs, Macquarie Capital and UBS are among banks likely to work with the interested Chinese parties, should they be taken through to the second round. Alinta's business consists of two main parts; a Western Australian gas retailer and a contracted generation portfolio with about 2000 megawatts capacity. It's understood Lazard has told buyers it is willing to consider options for all or part of the business, however bidders expect Alinta's owners, headed by private equity giant TPG, to prefer a bid for the whole business. Alinta's expected to be worth about $4 billion. Chinese interest in Australian energy has intensified in recent years, with State Grid Corporation of China becoming a major player in energy infrastructure and China State Power Investment snapping up the country's largest renewable energy portfolio, Pacific Hydro, late last year. (AFR) ‘’

14. Crown {12.12 0.12 0.99%} Control the issue for potential Packer-backers (AFR) As James Packer struggles

to find a private equity backer willing to accept his terms on a Crown Resorts privatisation, succession planning has become front of mind for investors. Talk that Crown Resorts chief executive Rowen Craigie may be on the way out has been in the market since 2014 when it emerged the racing industry was looking to nab one of the Packer family's most loyal lieutenants. Craigie held firm but with the wily operative now nearly 10 years into his reign as chief executive, a keen talking point for investors is succession planning at the casino operator. One executive emerging near the top of the list is strategy and development chief Todd Nisbet who earned his stripes under legendary Las Vegas tycoon Steve Wynn and is the brains behind the design and construction of Crown's bulging casino pipeline. While his exposure to investors has been minimal, Street Talk understands Nisbet ran an investor roadshow in Asia last year connected with the sell-down of Crown's Alon casino in Las Vegas. While it did not yield immediate results, it suggests Crown's chairman Rob Rankin is actively strategizing about the day when Craigie does move on. Institutional investors have also noted that talk of fresh approaches from Packer's private investment vehicle, Consolidated Press Holdings, have dried up in recent weeks. Street Talk understands several potential partners for the buyout may have baulked due to the level of control the billionaire casino magnate wanted to retain in the reworked structure. The most likely structure was expected to have seen a split between Crown's property empire with the management rights to the casino and resorts a separate entity. However, with Macau showing no signs of meaningful improvement, Crown's 34 per cent stake in Melco Crown Entertainment is also thought to be proving an obstacle to any buyout proposal. Macau may prove a good long-term bet but insiders say it is unlikely to ever replicate the incredible growth of the last decade again. (AFR)

15. CSL {100.35 0.96 0.96%} since 8th March stock has come off -2% despite after - privately-held US flu vaccine manufacturer, Protein Sciences Corporation, announced plans to significantly expand its supply of product into the US market. GS commented at the time . It currently has two FDA approved plants in the US with capacity for more than 1mn doses pa, but has reached agreement for Japan-based, UMN Pharma to supply it with up to 25mn doses (subject to FDA approval). GS has kept this stock on their Conviction Buy list – noting that their forecast of double-digit EPS CAGR in FY17 and FY18 is based on (1) solid growth in plasma products, (2) a successful launch of its recombinant portfolio, and (3) a narrowing of flu vaccine losses. We maintain our 12-month price target of $116, based on 23x 1-year forward P/E (unchanged). Its worth highlighting that their very good healthcare analyst Ian Abbott- has a Conviction Buy on CSL


FALLS

1. Treasury Wine Estates {9.07 -0.22 -2.43%} is stepping up plans to divert funds into higher returning assets with the sale of vineyards, vacant land and homesteads in Australia's prime wine regions in the second tranche of a broader sell-off that will deliver a combined $10 million-plus. (AFR)

2. Westpac {28.68 -0.45 -1.57%} Westpac has become the 2nd Australian bank formally accused by the

corporate watchdog of manipulating the bank bill swap rate in a claim singling out the MD of its treasury. (Aust)

3. Metcash {1.68 -0.04 -2.09%} stock off -4% in last 2 days since retail sales number that showed

Supermarket sales were only up +2.6% - which was the slowest rise in 4yrs and February sales growth for Supermarkets was poor up just 2.6% y/y, and below the 12 month trend of +3.5% and the weakest rise since Jan-2012.

4. Aristocrat {9.82 -0.01 -0.10%} down -5% in the last 3 days since Credit Suisse downgraded to stock from

a BUY to NEUTRAL – as share price got to their target – and as good as the operations are going the F/X translations wiped out the gains – but of more interest to me was that they are looking for the $A to be 74c in 2017 up from a 69c target before.

5. JB H-Fi {9.82 -0.01 -0.10%} / Harvey Norman {4.58 0.06 1.31%} after respective -1.5% fall & -2% fall

yesterday – both of again – following retail sales numbers showed that Electronics sales decelerated to 0.9% from 3.8% in Jan. The leap year may skew these results, as January is traditionally a strong month for furniture and thus some are expecting a rebound in March ..

6. Macquarie {63.65 -0.07 -0.11%} Credit Suisse was downgraded by t BNP Paribas from a "neutral" rating to

an "underperform" rating.

7. Macquarie {63.65 -0.07 -0.11%} weaker as we saw US financial sector (-1.4%) demonstrated broad-based weakness as the group extended its 2016 decline to -6.7%. Wells Fargo (47.51, -0.99) and Bank of America (13.19, -0.32) outpaced the losses in the broader sector while Morgan Stanley (MS 24.38, -0.66) extended its weekly loss to -4.5%.

8. Arrium – TRADING HALT - Arrium has now been suspended from trading on the stock exchange pending an announcement on the outcome of talks with lenders, which it expects within a week. It had been due to update the market and resume trading today, so this further delay suggests the issues are indeed hard to resolve and the risk of bankruptcy is growing. The resignation of CFO Robert Bakewell is a bad sign in this regard.

9. Virgin {0.36 -0.01 -1.41%} Virgin Australia’s credibility has taken another battering after -ratings agency

Moody’s put the airline’s credit rating under review for a downgrade because of continued uncertainties surrounding its financial future. The credit rating review comes five days after Standard & Poor’s, the world’s largest ratings agency, downgraded its outlook for Virgin from stable to negative as Air New Zealand prepares to exit the airline’s share registry. Adjusted debt/EBITDA for the 12 months to December 31 was 7.2 times, a level that exceeded Moody’s tolerance of 6.5 times for its B2 corporate family rating, the agency said. Virgin is in the midst of a capital review to focus on how it can find new sources of funding to continue growing after an intense period of investment to transform its business to battle Qantas’s dominance of the corporate and business markets. Moody’s said that should the outcome of the capital review bring Virgin’s metrics into line with expectations for a B2 rating, Moody’s would affirm the current rating. If not,


the airline would be downgraded to B3. Air NZ shocked the market last week when it revealed it had brought on First NZ Capital and Credit Suisse to manage a review of its 25.9 per cent stake in the Australian airline that could see it sell its 914 million shares in the company. The announcement — which triggered the immediate resignation of Air NZ chief Christopher Luxon from the Virgin board — came just a week after Virgin Australia had secured a $425m loan to keep its business humming while it undertook its capital review. The probable exit of Air NZ from Virgin’s share register has met with nonchalance by many industry analysts who agreed that the Kiwi flag carrier’s reluctance to be a minority shareholder made sense. “There’s no doubt that Air New Zealand is doing a lot of soul searching as to what return shareholders will get from any possible capital raising,” Citi analyst Anthony Moulder said. “It’s quite clear that Air New Zealand is saying it would rather spend money on its own business.” (Aust)

HOW THE TOP 20 STOCKS MOVED

ASX Code % Move Points Move

CBA -0.14% -10.0

WBC -1.54% -45.0

NAB -0.23% -6.0

ANZ 0.36% 8.0

TLS -0.76% -4.0

BHP 1.00% 16.0

CSL 0.97% 96.0

WES 0.00% 0.0

WOW -0.09% -2.0

SCG 1.39% 6.0

TCL 0.90% 10.0

MQG -0.11% -7.0

BXB 0.50% 6.0

WFD 0.92% 9.0

RIO 0.91% 38.0

AMC -0.48% -7.0

WPL 2.84% 68.0

AMP -0.54% -3.0

SUN 1.37% 16.0

SYD 0.60% 4.0

-2.00% -1.00% 0.00% 1.00% 2.00% 3.00% 4.00%


ASX 200 MOVERS TODAY

Stock Last Price +/‐

% Change Stock

Last Price +/‐

% Change

CTD 1392 86 6.58% SAI 352 ‐16 ‐4.35%

MIN 615 35 6.03% EVN 150.5 ‐5 ‐2.90%

PBG 100 6 5.82% SYR 368 ‐11 ‐2.90%

FXL 255 13 5.37% BAL 983 ‐25 ‐2.48%

OSH 637 32 5.29% TWE 907 ‐22 ‐2.37%

WOR 517 25 5.08% AAD 209 ‐5 ‐2.34%

CIM 3656 170 4.88% MTS 167.5 ‐4 ‐2.05%

ISD 347 16 4.83% SKT 436 ‐7 ‐1.58%

CWY 77.5 4 4.73% WBC 2868 ‐45 ‐1.54%

ALU 625 28 4.69% NUF 704 ‐10 ‐1.40%

S32 143.5 6 4.36% NCM 1669 ‐23 ‐1.36%

WHC 60.5 3 4.31% IFL 833 ‐11 ‐1.30%

IPH 683 28 4.27% HGG 465 ‐6 ‐1.27%

STO 369 14 3.94% RRL 237 ‐3 ‐1.25%

OFX 212 8 3.92% JHC 284 ‐3 ‐1.05%

GEM 383 14 3.79% SKI 202 ‐2 ‐0.98%

SRX 3010 104 3.58% APN 58 ‐1 ‐0.85%

DOW 349 11 3.25% NST 351 ‐3 ‐0.85%

BKL 19145 603 3.25% TLS 522 ‐4 ‐0.76%

FXJ 80 3 3.23% CPU 945 ‐7 ‐0.74%

SPK 321 10 3.22% AIO 865 ‐6 ‐0.69%

OZL 517 16 3.19% CSR 322 ‐2 ‐0.62%

ALQ 388 12 3.19% BEN 850 ‐5 ‐0.58%

CTX 3453 103 3.07% BKW 1571 ‐9 ‐0.57%

HSO 269 8 3.07% AMP 554 ‐3 ‐0.54%

CGF 843 25 3.06% AMC 1464 ‐7 ‐0.48%

SGR 579 17 3.02% SCP 222 ‐1 ‐0.45%

API 192 6 2.95% SPO 119 ‐1 ‐0.42%

WPL 2462 68 2.84% REG 478 ‐2 ‐0.42%

ACX 641 17 2.72% IVC 1206 ‐5 ‐0.41%


INTRA DAY CHART OF ASX 200

DIVIDENDS / EVENTS TONIGHT & TOMORROW Economic – zero

Roadshow Mirvac in US - Day 4

Site Trip SHV site tour (Mildura)

Ex Dividends: ARB 14.5c ff, HVN 13c ff, JHC 5.75c fff, MLB 4c 80% franked, NUF 4c uf

Companies Reporting

Code Mkt DPS

BOQ $188.0m 38c

US Tonight

Sydney Time Release Period Forecast Previous

1:30 AM EIA Crude Oil Stocks Change 1/APR 1.7M 2.299M

1:30 AM EIA Gasoline Stocks Change 1/APR -1527.2K -2514K

5:00 AM FOMC Minutes

11:30 PM Continuing Jobless Claims 26/MAR 2167K 2173K

11:30 PM Initial Jobless Claims 2/APR 272K 276K


US Tomorrow night (Thursday)

Sydney Time Release Period Forecast Previous

11:30 PM US Continuing Jobless Claims 26/MAR 2167K 2173K

11:30 PM US Initial Jobless Claims 2/APR 272K 276K

HIGHS & LOWS TODAY

LOWS -

All Time Lows NEC

SHARE BUYBACKS

Stock Bought back

previous day

Total Bought

Back

Total to be bought

back Shares left to buyback

% of buyback to

go Notice last

lodged Buyback Broker

ANN 25,000 4,131,518 6,525,000 2,393,482 36.7% 6-Mar

AZJ 840,000 7,244,565 32,193,620 24,949,055 77.5% 6-Mar

CSL 100,000 7,594,224 9,800,000 2,205,776 22.5% 6-Mar

CSR 250,000 50,300,031 50,050,031 99.5% 24-Mar UBS

MAH 2,000,000 39,488,375 126,169,99

6 86,681,621 68.7% 6-Mar

NEC 64,649,302 170,395,60

3 105,746,30

1 62.1% 31-Mar

NVT 150,000 2,776,316 28,252,585 25,476,269 90.2% 6-Mar

PMP 56,000 7,328,648 15,748,678 8,420,030 53.5% 6-Mar

QAN 2,061,811 30,817,622 125,313,38

3 94,495,761 75.4% 6-Mar

SGM 66,392 5,651,476 20,546,114 14,894,638 72.5% 5-Mar

SVW 233,668 16,366,332 16,132,664 98.6% 24-Mar

TWR 6,720,607 10,513,071 3,792,464 36.1% 30-Mar


SUBSTANTIAL SHAREHOLDER CHANGES

Company Shareholder Change Previous Holding %

Current Holding %

Sims Metal Mng Ltd Perpetual -1.46% 13.60% 12.14%

Super Retail Group Perpetual 1.33% 7.26% 8.59%

Super Retail Group Ellerston Capital Ceased 8.59%

Western Areas Ltd Wellington Mng Grp Ceased

Orica Ltd The Vanguard Group Became 5.00%

Nine Entertainment Grp

National Australia Bank

Became 5.24%

Cover-More Grp National Australia Bank

Ceased

DIRECTORS’ INTEREST NOTICES

Company Shareholder Change Number of shares

Previous Holding

New Holding

Date of Change

BC Iron Ltd Morgan Ball SOLD 100,000 132,990 32,990 30/03/2016

Magnis Resources

Johann Jooste-Jacobs

Acquired 560,000 4,850,169 5,410,169 5/04/2016

Reva Medical Robert Thomas

Acquired 2,500 75,000 77,500 31/03/2016

UNUSUAL VOLUMES THROUGH THE MARKET

- looking at “5 day unusual today”

ASX Code 5 Day Avg. Vol 30 Day Avg. Vol Difference % Difference 5 Day Price Move%REC 2,802,791 1,063,790 1,739,001 163% 8.2%GMA 5,863,747 3,339,348 2,524,399 76% 7.8%AST 11,562,350 7,656,767 3,905,583 51% -3.3%SUL 2,779,528 1,983,572 795,956 40% -3.6%VRT 520,004 371,275 148,729 40% -0.4%SHV 1,762,690 1,279,157 483,533 38% -1.2%MMS 796,125 578,983 217,142 38% -0.2%PMV 612,758 469,943 142,814 30% -2.4%SKT 675,746 519,626 156,120 30% -0.7%APA 4,822,700 3,941,679 881,021 22% -2.6%SIP 5,123,602 4,300,524 823,078 19% 2.9%IPL 10,275,670 8,757,449 1,518,221 17% -8.0%ALL 2,738,260 2,337,341 400,919 17% -2.5%NVT 1,174,187 1,010,554 163,633 16% 0.2%SPK 1,580,975 1,364,701 216,274 16% -1.2%SUN 5,359,028 4,665,121 693,907 15% 1.8%


BROKER UPGRADES / DOWNGRADES

Nine Entertainment {1.19 0.03 2.11%} downgraded to neutral from outperform at Credit Suisse Nine Entertainment {1.19 0.03 2.11%} downgraded to underweight from neutral at JP Morgan Nine Entertainment {1.19 0.03 2.11%} Price target cut to $1.75 from $1.95 – buy rating maintained – at

Deutsche Bank Nine Entertainment {1.19 0.03 2.11%} Price target cut to $1.30 from $1.55 – buy rating maintained – at

UBS Nine Entertainment {1.19 0.03 2.11%} Price target cut to $1.45 from $1.72 – outperform rating maintained

– at Macquarie Bluescope {6.10 0.09 1.48%}both downgraded by CLSA to Outperform vs Buy Sims Metal downgraded by CLSA from Underperform to Sell


BIGGEST SHORTS IN THE MARKET – today by biggest % of coy short

BLOCK TRADES OVER $3M

Stock Price Volume Value ($Am)

NAB 25.62 2,700,00 69,100,000

WOW 21.35 1,926,68 41,100,000

OML 4.50 7,320,25 32,900,000

OML 4.50 6,330,71 28,400,000

AIO 8.72 3,140,03 27,300,000

OML 4.50 5,228,82 23,500,000

OML 4.50 5,228,82 23,500,000

WOW 21.30 1,000,00 21,300,000

AIO 8.72 2,110,47 18,400,000

AIO 8.73 2,000,00 17,400,000

WES 40.50 388,000 15,700,000

NAB 25.49 572,000 14,500,000

CSL 100.26 134,000 13,400,000

SAI 3.51 3,650,57 12,800,000

BLD 6.33 2,000,00 12,600,000

CCL 8.53 1,460,73 12,400,000

OML 4.50 2,157,02 9,710,000

OML 4.50 2,157,02 9,710,000

ASX Code Company Name SI % Float Shares Short Days to Cover Price Short Value Market CapMTS METCASH LTD 16.48% 152,955,395 33.2 1.69$ 257,729,841$ 1,564,283,021$ MYR MYER HOLDINGS LTD 14.35% 117,857,462 17.2 1.13$ 133,178,932$ 928,045,061$ WOR WORLEYPARSONS LTD 14.05% 34,457,347 8.7 5.19$ 178,833,631$ 1,287,563,979$ ORI ORICA LTD 12.08% 45,110,682 18.7 14.76$ 665,833,666$ 5,511,858,992$ PRY PRIMARY HEALTH CARE LTD 12.06% 62,905,449 7.0 3.76$ 236,209,961$ 1,957,980,551$ MND MONADELPHOUS GROUP LTD 11.91% 11,154,122 25.4 6.85$ 76,405,736$ 641,777,959$ FLT LIGHT CENTRE TRAVEL GROUP 11.76% 11,868,302 29.9 42.48$ 504,165,469$ 4,286,319,891$ WSA WESTERN AREAS LTD 9.73% 25,626,325 23.7 2.05$ 52,533,966$ 540,021,055$ AWE AWE LTD 9.70% 51,081,732 15.2 0.59$ 30,010,518$ 309,457,314$ CAB CABCHARGE AUSTRALIA LTD 9.66% 11,628,902 39.2 3.13$ 36,398,463$ 376,948,038$ AWC ALUMINA LTD 9.52% 274,214,104 29.6 1.29$ 354,421,729$ 3,722,197,721$ JBH JB HI-FI LTD 9.20% 9,102,278 13.1 22.98$ 209,170,348$ 2,273,809,161$

WOW WOOLWORTHS LTD 8.80% 111,900,696 30.9 21.33$ 2,386,841,846$ 27,109,089,026$ MIN MINERAL RESOURCES LTD 7.68% 14,339,696 5.2 6.17$ 88,475,924$ 1,152,739,866$ OSH OIL SEARCH LTD 7.62% 116,086,113 21.1 6.35$ 737,146,818$ 9,669,097,927$ GUD G.U.D. HOLDINGS LTD 7.58% 6,466,575 20.8 7.06$ 45,654,020$ 602,409,425$ SEK SEEK LTD 7.43% 25,578,324 19.9 15.62$ 399,533,421$ 5,380,119,717$ RFG RETAIL FOOD GROUP LTD 7.07% 11,625,760 22.2 5.07$ 58,942,603$ 833,220,262$ IVC INVOCARE LTD 7.06% 7,764,403 40.3 12.07$ 93,716,344$ 1,328,065,697$ SGH SLATER & GORDON LTD 6.85% 24,148,176 3.9 0.25$ 6,037,044$ 88,094,483$ BEN BENDIGO AND ADELAIDE BANK 6.77% 31,404,921 9.5 8.51$ 267,255,878$ 3,946,620,203$ IGO INDEPENDENCE GROUP NL 6.55% 33,491,273 8.0 2.77$ 92,603,370$ 1,414,084,238$


REC 7.95 1,178,00 9,370,000

MYO 3.16 2,907,76 9,190,000

AIO 8.73 1,000,00 8,730,000

ISD 3.40 2,000,00 6,800,000

RIO 42.45 154,000 6,540,000

CCL 8.54 755,000 6,450,000

CCL 8.54 750,000 6,400,000

CCL 8.53 700,000 5,970,000

MQG 63.76 84,508 5,390,000

SUN 11.79 455,000 5,360,000

BLD 6.20 793,100 4,920,000

AIO 8.72 552,257 4,820,000

ANZ 22.65 207,000 4,690,000

CBA 80.00 57,200 4,580,000

ANZ 22.65 200,000 4,530,000

ANZ 22.65 200,000 4,530,000

ANZ 22.65 193,842 4,390,000

AIO 8.72 500,000 4,360,000

NAB 25.52 170,000 4,340,000

BKL 190.20 22,564 4,290,000

VOC 8.43 509,313 4,290,000

TCL 11.15 381,673 4,260,000

ISD 3.36 1,229,06 4,130,000

S32 1.42 2,896,90 4,110,000

QAN 4.10 1,000,00 4,100,000

QAN 4.10 1,000,00 4,100,000

WPL 23.94 149,576 3,580,000

SUN 11.75 300,000 3,530,000

IOF 4.12 824,000 3,390,000

ANZ 22.62 150,000 3,390,000

CSL 100.30 33,800 3,390,000

NCM 16.93 200,000 3,390,000

NCM 16.70 200,000 3,340,000

CCL 8.55 383,597 3,280,000

MQG 64.21 50,000 3,210,000

MQG 63.61 50,000 3,180,000

MQG 63.62 50,000 3,180,000

OSH 6.32 500,000 3,160,000

WES 40.08 75,000 3,010,000

TOTAL $ 587,390,000

% of Mkt Value 11.6%


BELL POTTER RESEARCH Smartpay Holdings (SMP) Buy, TP$0.25 – Chris Savage Just too cheap Current EBITDA run-rate of c.NZ$9m p.a. Smartpay Holdings (Smartpay) is scheduled to report its FY16 result next month and we forecast EBITDA for the year of NZ$8.3m which is consistent with the guidance range of NZ$8.0-8.5m. Perhaps more significantly, however, we forecast 2HFY16 EBITDA of NZ$4.6m compared to 1HFY16 EBITDA of NZ$3.7m so that there is notable improvement in 2HFY16 and the trough in earnings was indeed in 1HFY16. If our 2HFY16 EBITDA forecast is accurate then this will imply an annualised EBITDA run-rate of approximately NZ$9.2m and make our FY17 EBITDA forecast of NZ$11.2m look well achievable with the momentum now in the business. Looks too cheap on FY17 EV/EBITDA of 4x. The current EV of Smartpay is approximately NZ$46m which comprises a market cap of c.NZ$25m and net debt of c.NZ$21m. The FY16 EV/EBITDA multiple is therefore around 6x (assuming the company reports within the guidance range) which is now the historical multiple given the year end has just passed. The FY17 EV/EBITDA multiple is only around 4x which is now the multiple for the current forecast period and, as mentioned, assumes forecast EBITDA of NZ$11.2m as well as a further modest reduction in net debt. In our view an EV/EBITDA multiple of 4x for the current forecast period is too cheap for a company that has turned the corner and is now expected to achieve solid earnings growth for the short to medium term. Investment view: Retain BUY, PT A$0.25. We retain our BUY recommendation and A$0.25 price target on Smartpay. We have updated each valuation we use in the determination of our price target and there is no net change. We believe the FY16 result next month could be a catalyst for the stock if the company is able to achieve its guidance (which we believe it will) as this will signify that the trough in earnings has passed and the outlook is now for earnings growth. In our view both the historical and forecast EV/EBITDA multiples are too low for a company with a positive outlook and instead suggest the trough has not yet passed. Flash Starpharma (SPL) Buy (Speculative), TP$1.12 – Tanushree Jain SPL’s DEP cabazitaxel shows sustained anticancer activity in mice study Additional data from breast cancer mice study continues to be positive SPL has released additional data from a preclinical study in breast cancer of its DEP cabazitaxel. The results build on the previously reported ~65 days data extending it now to 150 days post dosing. The final results continue to be positive, demonstrating that the improved activity and survival benefit of treatment with SPL’s DEP cabazitaxel over the marketed agent from Sanofi Aventis (Jevtana), is sustained out to 150 days. DEP cabazitaxel significantly prolonged survival compared to Jevtana (p=0.001), with 100% of the mice treated with SPL’s DEP cabazitaxel being alive at Day 150. Mice treated with SPL’s drug had no evidence of tumour (complete regression) within 4 weeks of dosing and the treatment effect was maintained out to 150 days. Comparatively the mice treated with Jevtana exhibited significant tumour regrowth from Day 60 onwards. We view the improved activity of SPL’s DEP cabazitaxel over the marketed agent as highly encouraging. The key highlight for us is that this data provides further validation of SPL’s DEP platform with similar preclinical activity now seen across various drugs and across different animal models. Rationale for targeting cabazitaxel with SPL’s DEP technology Jevtana is currently marketed for hormone-refractory metastatic prostate cancer in docetaxel-resistant patients in combination with steroid prednisone. The drug is in clinical development for various other indications including breast, head and neck, bladder etc. Jevtana generated revenue of US$430m in 2015. While the size of the opportunity makes it commercially attractive for SPL to target, the key reason in our view which makes it particularly attractive for targeting is its dose limiting toxicities. Cabazitaxel has several similarities to docetaxel which make it an attractive candidate for reformulation with SPL’s DEP technology. These include:


Like Taxotere (docetaxel), Jevtana (cabazitaxel) is marketed by Sanofi Aventis and is a type of taxane chemotherapy drug. Being a taxane, like docetaxel it suffers from poor solubility in water, which therefore necessitates the use of a solvent called polysorbate 80 to solubilize it, prior to administration.

Like Taxotere (docetaxel), Jevtana (cabazitaxel) is marketed by Sanofi Aventis and is a type of taxane. Being a

taxane, like docetaxel it suffers from poor solubility in water, which therefore necessitates the use of a solvent called polysorbate 80 to solubilize it, prior to administration.

Like docetaxel, cabazitaxel has several dose limiting toxicities. There is a ‘black box’ warning for Jevtana on the

package insert because it can cause a possibly fatal drop in a person's infection-fighting white blood cells (neutropenia) or trigger a severe allergic reaction (anaphylactic reaction).

It is hypothesized that the anaphylactic reactions were caused by the detergent polysorbate 80. We note that interim data from SPL’s Phase I DEP-docetaxel trial suggest a more favourable safety profile of SPL’s DEP docetaxel versus the original drug Taxotere with no evidence of dose limiting toxicity neutropenia and also provides preliminary suggestion of anticancer activity. Given, the similarities between docetaxel and cabazitaxel and DEP cabazitaxel being free of polysorbate 80 like DEP docetaxel, there is reasonable grounds to suggest that the safety profile of DEP cabazitaxel should also be favourable. DEP cabazitaxel could be in the running as second clinical candidate from DEP platform One of the use of funds raised last December by SPL was to progress new DEP candidates (behind DEP docetaxel) through preclinical studies and into the clinic. We expect SPL will choose 1 to 2 new candidates to progress into the clinic during the course of the next 12-18 months. To date SPL has released encouraging preclinical data on DEP oxaliplatin, DEP Cabazitaxel and its HER2 (antibody)-targeted DEP conjugate. With the encouraging data on DEP Cabazitaxel released today demonstrating its improved anticancer activity over marketed Jevtana and its similarities to docetaxel in terms of its dose limiting toxicity profile, we believe DEP cabazitaxel could be in the running as second candidate selected by SPL to take into the clinic. Maintain Buy and Valuation of $1.12 No changes to our forecasts. We retain our Buy recommendation and DCF valuation of A$1.12/sh. Key stock price catalysts in CY16 will be clinical data from ongoing Phase I DEP docetaxel trial (1HCY16) and the two Phase III prevention of recurrence of Bacterial Vaginosis (R-BV) trials (2HCY16). Disclosure: Bell Potter Securities acted as lead manager in the October 2011 and September 2014 placement and joint lead manager in the December 2015 placement and received fees for that service.


IMPORTANT INFORMATION AND DISCLAIMER This is a confidential and private communication intended solely for clients of Bell Potter Securities Limited ABN 25 006 390 772 AFSL 243480 and its related bodies corporate (“Bell Potter”) who have subscribed to The Coppo Report. It is not intended for public circulation or for the use of any third party. Copyright in The Coppo Report belongs to Bell Potter and the information in this report cannot be reproduced, sold or redistributed without our express written consent. We reserve the right to intercept and monitor the content of email messages to and from our systems. The information in The Coppo Report is of a general nature only and has been prepared without taking into account any particular individual’s investment objectives, financial situation or particular needs (‘relevant circumstances’). Before acting on this information, you should carefully consider the appropriateness of it having regard to your own relevant circumstances and if necessary, seek appropriate professional advice. We cannot guarantee the performance or return on investments and those acting on this information do so at their own risk. This report is not an offer or solicitation to buy or sell any security and we are not soliciting any action based on this report. We believe this information is correct at the time of its compilation however no warranty is made as to its accuracy, reliability or completeness. Bell Potter has no obligation to tell you when opinions or information in this report change. Any estimates of future performance are based on assumptions that may not be realised. Past performance is not necessarily a guide to future performance. The information in this report may not reflect information known to, or the opinions of, professionals in other Bell Potter departments, including Research and Corporate Finance. To the maximum extent permitted by law, Bell Potter and our officers, employees and consultants do not accept any liability or responsibility for any loss or damage arising from the use of this report. Bell Potter, our officers, employees and agents may receive commission and fees from transactions involving securities and other investments referred to in this report which our representatives may directly share. We have effected or may effect transactions for our own account on securities and other investments in this report and may make investment decisions that are inconsistent with the recommendations or views in this report. This report is approved for distribution in Hong Kong to professional investors by Bell Potter Securities (HK) Limited, SFC CE No. AZW955. It is not for release, publication or distribution to any persons in any other country outside Australia (including the United States and the United Kingdom), unless they are institutional investors. Note: Bell Potter Securities Limited is participating in the WiseTech Global IPO via distribution to its retail network. © 2016 Bell Potter Securities Limited. All rights reserved.

wednesday, 6 april 2016 · 2020-02-06 · wednesday, 6 april 2016 - 2 2. today’s bounce lacked...

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