Hope this Research Insight artical written on the 30 July 2009...

Hope this Research Insight artical written on the 30 July 2009 raises some smiles.

BKN is likely to win at least 50% of QR’s wagon orders (approx $55m). We have already highlighted AIO wagon orders totalling $261m; together rail wagon orders for BKN could total at least $316m. If this were to occur this would lock in BKN's rail revenues for FY10, making a breach of its banking covenants highly unlikely. Our BKN DCF valuation is $5.06 (up 13c for DCF roll forward), and we have upgraded our price target to $5.72 (10% premium to current valuation). BKN is now trading above our valuation, having increased 193% since the 1H09 result. Given the steep valuation discount in BKN has closed and earnings risks remain in mining and Americast, we have downgraded our recommendation from Accumulate/Outperform to ACCUMULATE/MARKET PERFORM. We will review our call again at the FY09 result on 6 August 2009.