who can understand this logic, page-26

Peter you have had a very positive post below:

I AM VERY CONFIDENCE ABOUT AIO now.

Goldman Sachs 12 November 2008 BUY 12 Month target $4.15

"• AIO has released an update to the market following today's significant security price decline.
• Operational performance to October continues to track in line with AIO's budget, with normalised EBITDA increasing 6% on pcp (vs GSJBW FY09 est ~4.2%). However, we note that company guidance at the FY08 result was for ~10-15% growth pa across FY09 and FY10 combined.
• AIO stated that the asset monetisation process is "well advanced" with a high level of interest from potential financial partners. It also confirmed recent media speculation (as per AFR) that its preferred strategy involves a partial monetisation of its Pacific National coal
haulage business. Further updates will be provided in coming weeks.
• AIO reiterated its FY09 DPS guidance of 24-30¢/security (GSJBW est 26¢), which will now be paid in one installment in September 2009 to avoid issuing stock via the DRP at a depressed security price.
Earnings and Valuation Impact:
• No change to our earnings estimates or valuation of $5.76/security.
Investment View:
• We retain our BUY recommendation on AIO. Whilst the ongoing share price volatility would test the conviction of the most ardent supporters of the stock, we continue to expect AIO to successfully navigate its way through its obvious challenges.
• We believe a solid outcome from its asset monetisation process and subsequent deleveraging, coupled with a solid 1H09 result and an ongoing gradual improvement in credit markets should see this stock slowly trade back towards fair value over time.
• Whilst it may now seem like a lifetime ago, it is worth bearing in mind that only in August this year AIO received an unsolicited, non-binding offer of $4.40 from the consortium of TPG/GIP. The offer was deemed by the Board to be opportunistic and consequently negotiations were not progressed any further.
• However in such a volatile market, we still see this as the best proxy for the floor market value of AIO as a whole, as opposed to using global trading comps which can often be misleading or even irrelevant.
• More importantly, our own DCF valuation of $5.76/security already factors in a material (and unprecedented) slowing of growth in container port volumes over the next two years, coupled with minimal to no growth in Pacific National volumes (outside of coal).
• Clearly an investment in AIO in this uncertain environment is not for the faint hearted and carries an uncomfortable level of risk for some, but we still believe the risk/reward balance is firmly tilted in investors’
favour at current prices.

BUY
Key Information
Stock Code AIO
Share Price $0.69
12 Month Price Target $4.15
Expected 12M Total Return 539.1%
Investment Data
Issued Capital 698.8m
Market Capitalisation $482m
% of S&P 200 Index 0.1%
Free Float 90.17%
Turnover $423.9m/month
12 Month Price Range 887¢-167¢
Debt/Equity 249.0%
Investment Arithmetic
Jun year end 08A 09E 10E 11E
Net Profit Rep. ($m) -188 40.1 24.7 46.0
NPAT Pre-NRI's ($m) 51.2 40.1 24.7 46.0
EPS Adj. (¢) 15.7 13.6 11.2 14.3
EPS Growth (%) 44.0 -13.4 -17.6 27.7
Dividend (¢) 46.0 26.0 27.0 31.0
Yield (%) 66.7 37.7 39.1 44.9
Franking (%) 0 0 0 0
BV (¢) 322 297 273 249
P/BV (x) 0.2 0.2 0.3 0.3
Av. Full Dil. Shares (m) 656.6 690.8 698.8 698.8
Share Price Chart
Relative Price Performance
1m 3m 12m
vs. S&P 200: -32.0% -46.7% -43.4%
vs. MSCI - World: -27.8% -57.8% -60.1%
Source: Company data, IRESS, and GSJBW Research estimates"