Company Reports in Today’s Issue Wednesday, 2 July 2008
CPU Computershare Accumulate
Market Overview
�� US stocks rose as unexpected resilience in General Motors' June sales saved the Dow Jones Industrial Average from the bear market, �� One veteran trader said wild intraday swings, rather than a consistent turnaround, would likely be the order of the day for stocks until the economic and financialsystem backdrop improves, �� US overall consumer confidence held steady last week, �� The US manufacturing sector expanded in June for the first time in five months, �� the Reserve Bank of Australia held its target for the overnight cash rate steady at 7.25%, �� A slowdown in Australia's manufacturing industry intensified in June, �� Production, employment and new orders all fell solidly in June, while inventory growth remained firm, according to the survey. The drop in manufacturing activity in June wasn't unexpected, following the sharp deterioration in orders over the past few months.
CPU is the only global share registrar administering more than 80 million shareholder accounts for over 13,000 corporations across 12 countries on five continents. Among other services CPU provides specialised records management for share registers and employee share and stock option plans, document design and communication, strategic investor relations and market intelligence. With its scale, expertise, strong balance sheet and low capital requirements CPU should grow earnings at a high rate for the foreseeable future although cyclical fluctuations in share market activity could generate substantial shorter-term volatility. Its scale including depth of technology confers an important competitive advantage. While diversification across many markets may partially smooth such volatility share markets have a tendency to act in unison. Company Confirmed Guidance • At an investment conference management confirmed earlier guidance that FY08 EPS would increase 40% in US$ terms. Recommendation • The company pointed out that market turbulence generates business for CPU whether the volatility is up or down. • An increase in capital raisings is offsetting fewer takeovers. • And ‘Geographic and business diversification provides a portfolio effect protection when particular markets and product lines suffer.’ We make no change to our recommendation trigger levels. Continued sharemarket volatility may provide more buying opportunities.
CPU Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
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