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the age 5.44pm... top brokers dump mxg. Forecast confusion hits Multiplex shares
July 6, 2005 - 5:44PM


Shares in Multiplex Group fell on Wednesday after brokers realised the market had misinterpreted the construction company's profit forecasts.

Three broking firms have now downgraded their expectations for the group to adjust for the impact of preferred stock distributions.

It's another blow for Multiplex, which has already suffered this year as its shares plunged on news that its massive reconstruction of the iconic Wembley Stadium in London would make a loss.

Multiplex shares lost 11 cents on Wednesday, closing 3.6 per cent lower at $2.94.

"The company's profit guidance is not defined the way the market had expected profit to be defined," said Shaw Stockbroking research director Scott Marshall.

"That's probably why the share price has been hit again today."

The confusion has come from the way Multiplex treats distributions for its preferred shares, known as SITES.

Multiplex's guidance provided in February and revised in May was for net profit before taking into account distributions for SITES.

However a number of analysts had not included the SITES impact.

"Upon re-reading the May '05 guidance, we believe that our net profit forecasts (and most of those in the market) have over-estimated earnings," Goldman Sachs JBWere analyst Nick Vrondas said in a report.

Credit Suisse First Boston (CSFB) analysts estimated the after-tax cost of SITES to be $17 million during the 2004/05 financial year and $33 million in 2005/06.

CSFB noted that Multiplex could have made this clearer by presenting its forecasts in a different format.

"Our key concern is that such guidance appears to be in stark contrast to the way we believe other listed entities would present it - `net profit attributable to security holders'... We wonder why Multiplex should be any different," the CSFB report said.

UBS has also adjusted its forecasts to reflect the SITES distribution, downgrading earnings per share by 10 per cent for all the financial years right through to 2009/10.

Multiplex's guidance in May was for a pre-SITES net profit of $170 million for the 2004/05 financial year and $200 million to $215 million for 2005/06.

Last Friday the group added that the first result may be $20 million lower and the latter $20 million higher if some expected transactions take longer than expected.

© 2005 AAP