at 2.8 cents --market cap is 45m, page-9

Late on Friday night, VPG reported 1H09 underlying earnings of $14m (OML estimate: $44m) and underlying EPS of 0.87¢ ps. The result featured more provisions that we had forecast. VPG’s statutory loss was $821m and included asset devaluations and write-downs of $469m, $68m of mark to market of derivatives and $315m impairment of intangibles. Post the write-downs, NTA closed the period at $0.51 and book NAV (inclusive of intangibles) at $0.67, these compare to a closing share price of 3.2¢. Annualise the 1H underlying earnings and VPG is trading on 1.8x P/E. VPG’s operating cash flow was strong due to the timing of realised proceeds from development sales—FCF was 8.2¢ ps. VPG has renegotiated the terms of its domestic corporate debt facility—extending it 12 months to Sep-11 and revisingcovenants to 55% LVR (currently 47%) and 1.5x ICR (currently 2.0x). This was an important achievement as a domestic covenant would have been breached without the renegotiation; however, this has triggered a required repayment of $52.6m in derivatives—payable in progressive payments until Oct-10. Asset values were written down 9% over 2008 (and 5% in the 1H09) to an average cap rate of 8.0%. Trust assets total $1.1bn, development assets total $417m, VCS investments total $361m, intangibles $261m and net debt totals $1.2bn. VPG is in an effective work-out to realize as much shareholder value as possible. It sold $135m of assets over 1H09 and twodevelopment sites for $59m—more of the same is required in 2H09 given that the look-through gearing is 53%. The distribution remains suspended and no earnings guidance has been provided. While there appears valuation support, risks remain such as the deferred payment to the Scarborough vendors which could materially dilute the valuation upside.
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Tuesday, March 03, 2009Page 11League Tables 20 Best Performers of ASX200 Over Past 90 DaysClose3 mth +/- 3 mth %12 mth % move(BNB) Babcock & Brown Ltd 0.325+0.160 +96.970-97.7(MGX) Mount Gibson Iron0.470+0.230 +95.833-86.2(IGO) Independence Group 2.500+1.100 +78.571-73.1(KCN) Kingsgate Consolid 5.000+2.070 +70.649+33.0(AGO) Atlas Iron Limited 1.205+0.495 +69.718-42.3(SBM) St Barbara Limited 0.420+0.170 +68.000-49.6(GCL) Gloucester Coal 4.890+1.630 +50.000-41.9(PNA) Panaust Limited 0.160+0.050 +45.455-84.6(LGL) Lihir Gold Limited 3.510+1.060 +43.265-14.0(GBG) Gindalbie Metals Ltd 0.600+0.180 +42.857-18.9(PLA) Platinum Australia 0.630+0.185 +41.573-78.1(HGG) Henderson Group 1.690+0.490 +40.833-15.9(CTX) Caltex Australia 8.850+2.350 +36.154-26.6(NWH) Nrw Holdings Limited 0.270+0.070 +35.000-87.8(SGX) Sino Gold Mining Ltd 5.750+1.270 +28.348-29.1(RIV) Riversdale Mining 2.940+0.640 +27.826-64.8(JBH) Jb Hi-Fi Limited 10.760+2.260 +26.588+13.1(AQP) Aquarius Platinum 3.860+0.800 +26.144-77.9(AOE) Arrow Energy2.520+0.520 +26.000+17.8(RIO) RIO Tinto Limited 44.230+8.020 +22.149-66.3Source: IRESS 20 Worst Performers of ASX200 Over Past 90 DaysClose3 mth +/- 3 mth %12 mth % move(AWB) AWB Limited 0.835-1.915-69.636-65.9(IOF) Ing Office Fund 0.225-0.465-67.391-78.4(BLY) Boart Longyear 0.076-0.154-66.957-95.6(FCL) Futuris Corporation 0.260-0.500-65.790-87.1(PBG) Pacific Brands 0.175-0.310-63.918-91.5(AIO) Asciano Group 0.445-0.780-63.674-87.2(IIF) Ing Industrial Fund 0.080-0.140-63.636-95.9(ALS) Alesco Corporation 0.855-1.475-63.305-91.6(GMG) Goodman Group 0.235-0.405-63.281-93.7(LYC) Lynas Corporation 0.145-0.210-59.155-90.9(SDG) Sunland Group Ltd 0.315-0.395-55.634-88.0(FLT) Flight Centre 4.190-5.220-55.473-82.7(GPT) GPT Group 0.400-0.495-55.307-82.8(BKN) Bradken Limited 1.180-1.400-54.264-80.3(HIL) Hills Industries Ltd 1.410-1.600-53.156-70.2(LNC) Linc Energy Ltd 1.175-1.275-52.041+46.0(HFA) HFA Holdings Limited 0.059-0.061-50.833-94.4(FKP) FKP Property Group 0.330-0.335-50.376-89.1(TSO) Tishman Speyer0.075-0.070-48.276-94.1(HDF) Hastings Diversified1.100-1.000-47.619-46.1Source: IRESS
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Tuesday, March 03, 2009Page 12Guide to Ord Minnett Recommendations BUYThe stock’s total return (nominal dividend yield plus capital appreciation) is expected to exceed 15% over 12 months. ACCUMULATEThe stock’s total return is expected to be between 5% and 15%. Investors may add to existing holdings, or initiate holdings on share price weakness.HOLD The stock is fairly priced, and its total return is expected to be between 0% and 5%. LIGHTENThe stock’s total return is expected to be less than 0% and possibly down 15%. Investors should consider selling into share price strength. SELL The stock’s total return (nominal dividend yield plus capital appreciation) is expected to exceed -15% over12 months. RISK ASSESSMENTClassified as High, Medium or Low, denotes the relative assessment of an individual stock’s risk based onan appraisal of its disclosed financial information, volatility, nature of its operations and other relevant quantitative and qualitative criteria. GlossaryACE – Adjusted common equityAPRA – Australian Prudential Regulation AuthorityBBSR – Bank bill swap rateBOE –Bank of EnglandBOJ –Bank of JapnCAGR – Compound annual growth rateCAPEX – Capital expenditureCDO – Collaterised debt obligationCFO – Chief Financial OfficerCMO – Collaterised mortgage obligationcps –Cents per share.DDM – Dividend discount model (valuationtechnique)DPS – Dividend per share, in cents.DRP – Dividend reinvestment planEBIT – Earnings before interest and tax.EBITDA – Earnings before interest, tax depreciation and amortisation. EPS – Earnings per share, in cents.EV – Enterprise valueF/Y –The company’s month end financial year.FED – US Federal ReserveFOMC –Federal open market committeeFranking % - The % of the dividend that isfranked.Gearing – Net debt to shareholders’ equity.GICS –Global industry clasification standards IBES –International broker’s estimate system IFRS –International financial reportingstandardsIRR – Internal Rate of ReturnISM – Institute of supply managementLFL –Like for like (comparable)MBS – Mortgage backed securityMD&A – Management discussion and analysis Mkt Cap – The company’s marketcapitalisation.MSCI –Morgan Stanley Captial InternationalIndexNet Present Value –Valuation using discounted cashflows. NPAT – Net Profit After Tax – beforeabnormals. OPEX –Operating expense FCF – Free cash flowP&L – Profit and loss statement (income statement)PAX – Passengerpcp –Previous corresponding period. PEG –Price earnings ratio / EPS growthPER – Price earnings ratio.PMI – Purchasing Manager’s IndexPPI –Producer Price IndexQTD/YTD – Quarter/Year to dateREIT – Real Estate Investment TrustROA – Return on assets ROCE – Return on capital employed ROE – Return on equityROIC –Return on invested capitalRWA – Risk weighted assets S&P – Standard and Poors (Rating agency)Sum-of-the-parts-basis – Valuing the company’s various assets and liabilities separately and then adding them togetherTSR – Total shareholder returnVWAP – Volume weighted average priceWALE – Weighted average lease expriyYLD –Dividend per share divided by themarket price.
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Tuesday, March 03, 2009Page 13Please contact your Ord Minnett Adviser for further information on our document. Guide to Ord Minnett Recommendations BUYThe stock’s total return (nominal dividend yield plus capital appreciation) is expected to exceed 15% over 12 months. ACCUMULATEThe stock’s total return is expected to be between 5% and 15%. Investors may add to existing holdings, or initiate holdings on share price weakness.HOLD The stock is fairly priced, and its total return is expected to be between 0% and 5%. LIGHTENThe stock’s total return is expected to be less than 0% and possibly down 15%. Investors should consider selling into share price strength. SELL The stock’s total return is expected to lose 15% or more. RISK ASSESSMENTClassified as High, Medium or Low, denotes the relative assessment of an individual stock’s risk based onan appraisal of its disclosed financial information, volatility, nature of its operations and other relevant quantitative and qualitative criteria. Ord Minnett LimitedABN 86 002 733 048ASX Market Participant AFS Licence Number 237121 Head OfficeLevel 8 NAB House 255 George Street Sydney NSW 2000Australia Tel: (61-2) 8216 6300Fax: (61-2) 8216 6311Ord Minnett BranchesAdelaideLevel 11 13 Grenfell StreetAdelaide SA 5000 Tel: (08) 8203 2500 Fax: (08) 8203 2525 BrisbaneLevel 10 Waterfront Place1 Eagle St Brisbane QLD 4000 Tel: (07) 3214 5555 Fax: (07) 3214 5550 BuderimSunshine Coast 84 Burnett StreetBuderim QLD 4556 Tel: (07) 5430 4444 Fax: (07) 5430 4400 Bundall, Gold CoastLevel 5, 140 Bundall Road Bundall QLD 4217 Tel: (07) 5557 3333 Fax: (07) 5574 0301 Caloundra, Sunshine Coast79-81 Bulcock Street Caloundra QLD 4551 Tel: (07) 5491 3100 Fax: (07) 5491 3222 Canberra101 Northbourne Avenue Canberra ACT 2600 Tel: (02) 6206 1700 Fax: (02) 6206 1720 Coffs HarbourSuite 4 21 Park AvenueCoffs Harbour NSW 2450 Tel: (02) 6652 7900 Fax: (02) 6652 5716 Mackay45 Gordon StreetMackay QLD 4740 Tel: (07) 4969 4888 Fax: (07) 4969 4800 MelbourneLevel 23 120 Collins Street Melbourne VIC 3000 Tel: (03) 9608 4111 Fax: (03) 9608 4142 Newcastle41-45 Newcomen Street PO Box 486 Newcastle NSW 2300 Tel: (02) 4910 2400 Fax: (02) 4910 2424 SydneyLevel 8, NAB House 255 George Street Sydney NSW 2000 Tel: (02) 8216 6300 Fax: (02) 8216 6311 TamworthSuite 3 344-346 Peel Street Tamworth NSW 2340 Tel: (02) 6761 3333 Fax: (02) 6761 3104 Wollongong3/55 Kembla Street Cnr Market and Kembla Streets Wollongong NSW 2520 Tel: (02) 4226 1688 Fax: (02) 4226 1604 Disclosure: Ord Minnett is the trading brand of Ord Minnett Limited ABN 86 002 733 048, holder of AFS Licence Number 237121, and an ASX Market Participant. Ord Minnett Limited and/or its associated entities, directors and/or its employees may have a material interest in, and may earn brokerage from, any securities referred to in this document. This document is not available for distribution outside Australia and New Zealand and may not be passed on to any third party or personwithout the prior written consent of Ord Minnett Limited. Further, Ord Minnett and/or its affiliated companies may have acted as manager or co-manager of a publicoffering of any such securities in the past three years. Ord Minnett and/or its affiliated companies may provide or may have provided corporate finance to the companies referred to in the report. Disclaimer: Ord Minnett Limited believes that the information contained in this document has been obtained from sources that are accurate, but has not checked or verified this information. Except to the extent that liability cannot be excluded, Ord Minnett Limited and its associated entities accept no liability for any loss or damage caused by any error in, or omission from, this document. This document is intended to provide general securities advice only, and has been prepared without taking account of your objectives, financial situation or needs, and therefore before acting on advice contained in this document, you should consider its appropriateness having regard to your objectives, financial situation and needs. If any advice in this document relates to the acquisition or possible acquisition of aparticular financial product, you should obtain a copy of and consider the Product Disclosure Statement for that product before making any decision. Investments cango up and down. Past performance is not necessarily indicative of future performance.Analyst Certification: The analyst certifies that: (1) all of the views expressed in this research accurately reflect their personal views about any and all of the subject securities or issuers; and (2) no part of their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed herein.