@@@ full rivkin report 13/12/04 @@@@

MARKET WRAP

Well, didn’t last week give us something different to what we’ve all become accustomed to! The S&P/ASX 200 commenced the week at 3939 points and ended the week at 3898, closing down a touch over 1% for the week. Seeing as it has become a rarity of late for there to be two consecutive down days on our market, last week was a real aberration!

We had some seriously ugly days on the market last week, with resources leading the charge downwards. Commodity prices took a beating last week and most resource stocks gave up some of their recent gains. Oil, gold, copper and nickel all fell, and to add to the pain and woes of resource stocks, the Aussie dollar has remained somewhat firm against the US dollar, and despite being a little off its highs, is still holding around the US75-76c mark.

But it wasn’t just resource stocks heading south last week. Most sectors were off in what proved to be a week where the market took a breather after sustained gains of late. We strongly believe that this is nothing to be concerned about; as we have often said, markets don’t go up in straight lines. We feel the market will, for the time being, continue its upward trend, and so subscribers should be aware that there will be bad days and even weeks, but this is nothing to panic about.

As far as the US dollar goes, which has been the big story of late, some relief may be in sight for the greenback, as the Federal Reserve is set to meet tomorrow and expectations are that there will be a fifth consecutive interest rate rise. Inflation appears to be on the rise, and so another interest rate hike, of a likely 25 basis points, is on the cards, which should also give the US dollar a nudge upwards.

The market is having a slightly positive day today, although there is certainly little going on in terms of excitement. As is almost always the case, as Christmas approaches, activity on the market decreases. Interestingly, with Newscorp’s first reduction in Australian indices this Friday, volumes may be unusual.





AMCOR LTD (AMC)

ASX code AMC Div yield 4.89%
Market Cap 6,114,125,960 Risk med
NTA $2.52 Term med/long
12-month high/low $8.34/$6.51 Closing price $6.95
Forward P/E ratio 11.16 Recommendation Buy around $6.75
% of holdings 5.00% Original rec 08/12/2004 - Buy around $6.75


As you probably know, we at the Rivkin Report call ourselves event-driven investors. This means that we look for events in the market that create mispricing opportunities. Situations that trigger emotional responses in the market often result in a share price moving well away from intrinsic value. If that happens, a potential profit making opportunity appears and ideally, with a margin of safety.

AMC is one of the world’s largest packaging companies with operations in 24 countries. The company is capitalised at a massive $6.1bn (at the current price of $7.00), making it one of the top 20 companies listed on the ASX in terms of market capitalisation. The company has had a tough year, incurring numerous write-offs earlier in the year that led to a profit downgrade, as well as last week’s extraordinary events. The gist of what occurred last week was that the board dumped the group CEO and CEO of Australasian operations after it was revealed that executives in its cardboard box business engaged in cartel conduct, a criminal offence that is a breach of competition laws.

It seems the maximum penalty for the company for such an offence is up to $10m for each charge. While this is an obvious hit to cash in the bank, it has no bearing on the company’s long term operating profitability and we feel had little effect on the dramatic share price falls that ensued after the announcement. More importantly, Russell Jones, the dumped CEO, was a much respected Chief Executive, and many are questioning the management uncertainties stemming from his departure. This is undoubtedly a concern of ours, especially considering the company was in the midst of a two-year restructuring program, but whether this apprehension is enough to knock $700m from the market cap is another story! The final concern is how profitable AMC’s cardboard box business will be in the future now that it will not have the benefit of anti-competitive practices. The business contributed about 9% of AMC’s sales last year, so in the scheme of things it is not a huge part of AMC. The overwhelming view is that the hit to profitability is not a large one, with examples of the analyst reactions being Macquarie Equities downgraded its earnings estimates by 2% for the 2005 financial year, while Goldman Sachs JBWere trimmed its 2005 estimates by 1.7%!

Our view is that the initial reaction to the news was over-done, and while we feel that negative sentiment may hang over the stock in the short-term, the issue will lessen over time. The eventual appointment of a new CEO could be the catalyst for the stock to be re-rated but before committing capital, we needed to examine AMC on a value basis.

Estimates for 2005 earnings (excluding goodwill and one-offs) come in around the $550m mark, putting the stock on a PE ratio of 11 times, which we think is reasonably good value given the risks. However, when adding back depreciation and stripping out capex (which is less than depreciation due to the cost-cutting strategies in place), cash flow is closer to the $720m mark, putting the stock on a cash flow multiple of 8.5 times, thus making this attractive pricing for a company of AMC’s size, market penetration and track record. Also, with AMC’s strong cash generation, we feel it unlikely that its dividends will be cut. AMC’s dividend payout ratio is fairly conservative, so if anything we feel its dividends could continue to increase. At the moment, AMC’s dividend yield is around 5%, which provides some downside protection. With material offshore earnings, AMC reported earnings can be hurt by a rising $AUD, but this should always be transitory as it is a translation rather than being realised in cash flows.

All in all, AMC looks an excellent turn-around prospect which we feel has solid upside over the medium to long-term, and more importantly, limited downside risk. We are aware the stock rallied the day after our initial recommendation, but this stock will undoubtedly be volatile over the coming weeks. While we know many subscribers bought around our limit, for those who did not, we hope patience around the $6.75 level will be rewarded. As we stated when we recommended it, AMC is a medium-risk recommendation which subscribers may allocate 5% of their portfolios to.





ION LTD (ION)

It doesn’t happen often that an industrial company falls over, but lo and behold, ION last week announced that it was placed in voluntary administration. We don’t like to pat our own backs for something as unfortunate (and perhaps avoidable) as this, but didn’t we call ION’s problems perfectly!?!

Subscribers may remember ION as a stock that we recommended subscribers steer well clear of (and even recommended as a short-sell). The reasons we were wary of the company was that the cash generation of the business was very weak, and that it had a huge capital expenditure program planned over the next couple of years. Forward PE ratios and dividend yields were attractive, and for that reason ION was a market darling for a while. Our view was that we felt it would be unlikely that the dividend payouts would be maintained without raising substantial capital.

Well, the company did just that in February this year, raising $55m at a huge discount to market price, which looked to be the beginning of the end. Since then, the stock price had gradually worsened, the company downgraded profit forecasts, and its heavy cash reliance continued. In that time, the company began looking at selling its Cootes energy transport business to raise some much-needed capital.

This was all until last week, when ION’s funding arrangements with its bankers were withdrawn, forcing the company to be placed in administration. It is a remarkable occurrence, and one that does not happen often. But it really does demonstrate the importance of staying away from companies that generate very little cash and that have large levels of capex. Henry Walker Eltin Ltd (HWE) is another company in this vein, and as much upside as a stock like HWE may have if they get it right, when the downside is to zero, then as far as we are concerned, it is an investment always worth avoiding. While we are talking about stocks that worry us, another we definitely feel you should avoid, albeit for slightly different reasons, is Miller’s Retail Ltd (MRL).





WMC RESOURCES LTD (WMR)

ASX code WMR Div yield 4.96%
Market Cap 8,233,478,302 Risk med
NTA $3.82 Term short
12-month high/low $7.39/$4.33 Closing price $7.06
Forward P/E ratio 15.16 Recommendation Hold
% of holdings 5.00% Original rec 19/01/04 - Bought around $5.15


The takeover defence is well and truly underway at WMR, with the company upgrading its full-year profit forecasts last week from $1.1bn to $1.3bn. The upgrade appears to be mostly smoke and mirrors, with the improvements tax-related and one-off in nature, and the market seems to have seen right through it. The company also announced several capital management initiatives (which the market had speculated on of late), which included a capital return of 30c, as well as a share buyback. The obvious intention behind the share buyback is the implication that the WMR board believes the shares to be cheap. It probably wasn’t the wisest way to return the capital this time around after the CEO alluded to the view that the shares weren’t cheap around $5, and not surprisingly, Xstrata (and the media) have jumped on this slip. Regardless, the board is trying every trick to keep Xstrata at bay, and the game is undoubtedly still in its early stages.





MINARA RESOURCES LTD (MRE)

ASX code MRE Div yield .00%
Market Cap 792,554,271 Risk high
NTA $0.00 Term med/long
12-month high/low $3.65/$1.76 Closing price $1.71
Forward P/E ratio 6.10 Recommendation Hold
% of holdings 3.00% Original rec 04/03/04 - Bought up to $2.95


Not surprisingly, we received numerous phone calls from subscribers this morning after the stock was down as much as 9% on the day. After calling round the market to get a feel for what the reason behind the fall was, we heard numerous unsubstantiated rumours, but the one that seemed the most likely was another production downgrade. This afternoon, in response to an ASX query, the company released a production update. It is rather ambiguous on several fronts. It gives production guidance for the December quarter, but having never given such guidance before, it is not clear whether there is a shortfall or not! It also suggested there had been some maintenance difficulties, but goes on to suggest this should not affect ‘performance’ (whatever that is). So, we are feeling none the wiser for MRE’s comments and will investigate this one further. We do re-iterate that this stock is not one for short-termers or risk averse investors given it continues to display massive volatility and the market does seem to have a large question-mark over management’s competence.





SPC ARDMONA LTD (SPC)

ASX code SPC Div yield 3.02%
Market Cap 504,086,844 Risk -
NTA $0.90 Term short
12-month high/low $2.18/$1.27 Closing price $2.15
Forward P/E ratio 17.38 Recommendation Hold
% of holdings Original rec 14/10/2004 - Bought around $1.91


SPC has been looking rather peachey of late - at least in terms of how the scrip offer from Coca-Cola Amatil Ltd (CCA) is faring! Since the takeover was announced, CCA has fallen to as low as $7.20, but has since rallied to the current price of $7.90. At the maximum share option that shareholders will be offered, the SPC takeover price equates to $2.35 (including the 3c dividend). CCL has yet to release its bidders statement, so it is too early to know whether there will be a scale-back or not. We remain confident that the acquisition will be a positive one for CCL, and are therefore happy with the exposure to the CCL share price. The scheme meeting is scheduled for late January or early February, and we are happy for subscribers to hold until then.





PMP LTD (PMP)

ASX code PMP Div yield .00%
Market Cap 631,382,979 Risk med
NTA $0.31 Term med
12-month high/low $2.25/$1.21 Closing price $2.15
Forward P/E ratio 12.63 Recommendation Buy around $1.97 / Hold
% of holdings 4.00% Original rec 31/03/04 - Bought up to $1.42


Today, PMP has sold its sheet fed printing business to the listed printing company Promentum (PPR) for $24m in paper (14m shares) based on a share price of $1.70. The share price of PPR rallied today to $2.10, from $1.95, valuing PMP’s new stake at over $29m. This business was trading around break even.

This business was not the primary focus for PMP and required capex, so it has decided to sell it in order to continue its strategy of focusing on its heat fed, web press printing operation along with its direct marketing division.
PMP will end up with 26% of PPR and a seat on the board. Both companies have agreed to work closely together in referring customers between the two businesses.

The sale will generate a non-cash profit of $12m in the current year and result in a reduction in working capital. There are some sundry assets to be sold, which will result in a neutral cash impact from the transaction. On an operating basis, this sale will probably have little impact in the short-term on earnings. In the bigger picture, the close working environment between the two companies should be a positive in the medium to longer-term and allow management at PMP to focus on where they see the company’s competitive advantage.

We remain comfortable that management is being positive and proactive in the ongoing recovery at PMP, we are comfortable with the underlying earnings and expect further upside for subscribers over the year ahead, although it may go sideways in the short-term.

Subscribers can still buy PMP under $2. (Members of the investment team own shares in PMP).





QANTAS AIRWAYS LTD (QAN)

ASX code QAN Div yield 4.90%
Market Cap 6,854,791,865 Risk high
NTA $3.07 Term med
12-month high/low $3.81/$3.13 Closing price $3.67
Forward P/E ratio 10.55 Recommendation Sell around $3.68
% of holdings 3.00% Original rec 15/12/03 - Bought around $3.38


Last week, we recommended subscribers sell QAN at around $3.68 and as has been the case with this stock before, it has eluded us once again! This stock seems to have a sense of when we are attempting to get subscribers out, and it always eases back the day after a sell recommendation. The stock fell away from $3.68 on the afternoon of our sell recommendation to as low as $3.54 a few days later, but has since made its way to the current level of $3.64.

We are maintaining our sell recommendation on QAN at around $3.68 and reiterate our comments that there is no urgency to sell this one. Whilst the US dollar has firmed a little against the Aussie dollar, oil has weakened further, which is an obvious benefit to this company. We are still keen for subscribers to sell out of this one, but certainly not at any price. Subscribers are advised to keep sell orders in the screen at around $3.68.





MACQUARIE INFRASTRUCTURE GROUP (MIG)

ASX code MIG Div yield 1.91%
Market Cap 7,592,807,450 Risk med
NTA $2.16 Term med
12-month high/low $4.03/$2.71 Closing price $3.92
Forward P/E ratio 20.80 Recommendation Buy around $3.80 / Hold
% of holdings 5.00% Original rec 11/10/2004 - Bought around $3.80


MIG announced the final details of its distribution for the six months to 31 December 2004. MIG will trade ex a 63.75c distribution on 23 December, and the distribution will be paid on 11 February. MIG has stated that the distribution will be majority tax deferred; however we suggest subscribers seek advice on the tax implications on a personal basis.

Subscribers have also been sent details regarding the distribution reinvestment plan (DRP). As we remain bullish on this stock over the medium to long-term, we are happy for subscribers to participate in the DRP. New shares will be issued at a 2.5% discount, with no brokerage to be incurred.





RULE/LESSON OF THE WEEK: GOALS - YOU GOTTA HAVE ‘EM TO SCORE

One of the most common questions we ask people when discussing investing is “what is wealth to you?” In other words, what are your financial objectives? Just about everybody spends a substantial amount of time and energy focusing on their personal financial situation, but most people we talk to don’t have specific goals.

We are sure everybody has heard about the importance of goals a thousand times, but still has not set aside a small amount of time to contemplate specifics.

We believe that financial goals are helpful for several reasons:
1) They help us stay disciplined to our investment process because there is a REASON and OBJECTIVE which we are hoping to achieve. We are not just being disciplined for the sake of it, but in order to satisfy goals which are important to us. Goals also help us build a specific investment system.

2) Everybody has different variables that pertain to their unique situation. Therefore, each and every person should have a slightly different investment system to achieve their unique goals. The underlying tools and principles will be the same, but the specifics will be different.

The underlying variables of any investment process will involve at least the following considerations:
Goals, risk tolerance, availability of fresh capital, requirement for income from investments, time frames.

3) Goals provide purpose and energy. People (usually) need a sense of direction and meaning. Goals can help provide this in your investing process. Long term investing requires discipline and some work. Goals help fuel this drive that results in success and the resilience to recover from failure.

Everybody has different goals and different combinations of goals, but they need to be important to you in order to inspire. Goals can change and should be reconsidered regularly. For those having a hard time setting goals, try thinking about what you would really like to have and do. We have met very, very few people who don’t want to work less, travel more, have more time with friends and family etc. You get the drift. Everybody has dreams and ideas about how they could be happier. We suggest you build your financial goals around the things that are going to lead (we all hope) to a happier life.

For some, a Mercedes Benz is a lifelong dream that is worth saving and working for. For others, it is just a car. For some, to have a passive income source of $50,000 a year in ten years is what will help them create the lifestyle they want. For others, it is a yacht and a year off work to sail it around the world. And the list goes on. We recommend to you to have goals, develop your investing system around those goals and revisit them regularly.

We have included a simple example below;

A 30 year old man decides he wants to own his $500,000 dream home by the time he is 40 years old. He starts his investment system with $20,000 in savings and decides to contribute an additional $12,000 to his capital a year to start with. He increases this annual payment by $1000 each year. He works his money hard and his goal is to get returns of 20% per annum. At the end of 10 years, we can be pretty sure that he will not have done exactly what the numbers suggest, because nothing ever goes exactly according to plan, but if it did, in this case, he would have accumulated funds of about $540,000 (gross).

Now let’s say he decided it was ok to gear up early on… his results would be even better. This is just an example. Obviously everyone is different. But if you have a map, you are more likely to end up at your intended destination. Goals are required to be successful in life because without goals, how can we define what success is?





POWERTEL LTD (PWT)

ASX code PWT Div yield 0.00%
Market Cap 195,328,310 Risk High
NTA $0.00 Term Med
12-month high/low $1.52/3c Closing price $1.46
Forward P/E ratio 13.02 Recommendation Hold
% of holdings Original rec


PWT was recommended as part of a speculative portfolio some time ago. Subscribers are still down on this one, but the recent trend has been encouraging and last week’s announcement offered further positive news for shareholders.

The company provided guidance to revenue figures for the full year (ending December 2004), which represented a modest increase on previous guidance. We expect earnings will probably surprise on the upside (modestly) too, although, the company did not provide earnings figures last week.

Based on an expected EBITDA around $22m for the full year, the stock is on around 10 times EBITDA to EV. This alone is not super cheap, but with the current strong trend in revenue growth, we expect a better result in 05.
We suggest subscribers hold this one for further gains. It remains high-risk, but the odds favour higher prices over coming months





THE AUSSIE DOLLAR

Some time ago, subscribers may remember that we called the top of the oil price when it reached US$50 a barrel due to the market starting to show boom-like characteristics. This call turned out to be right, but as we have always said, there is no precise science to calling exactly when a market trend will end, but booms always bust.

The collapse in the $US is starting to show similar (if not reversed) signs of an irrational market. It seems like everybody is bearish and expecting it to go lower. Given the unlimited and varied global influences which impact currencies, trying to estimate fair values for currencies based on fundamentals is not our area of expertise, but we have had a lot of experience watching markets and when “everybody” in a market expects it to go one way, more often than not it is ready to reverse. Markets are most bullish at the top and most bearish at the bottom and of course, it is best to buy at the bottom and sell at the top.

The intense bearishness in the marketplace surrounding the $US indicates that its strong downtrend may be coming to an end and we would suggest the risk in coming months is to the upside, not the downside as many others are predicting. For a long time, the US80c area has been a ceiling for the $AUD, and it is in that range now.

We are not making significant recommendations around this view, but it is a consideration for us when considering a company’s 1-2 year outlook.





CENTENNIAL COAL COMPANY LTD (CEY)

ASX code CEY Div yield 4.00%
Market Cap 787,273,148 Risk med
NTA $1.95 Term med
12-month high/low $4.62/$2.60 Closing price $4.00
Forward P/E ratio 10.22 Recommendation Buy around $4.10 / Hold
% of holdings 5.00% Original rec 15/11/2004 - Bought around $4.10


Ouch! Coal and steel stocks all had a pretty bad week, with virtually no exclusions. The big sell-off in CEY occurred on one day, Wednesday 8 December, when many cyclical and retail stocks were savaged. It seems institutional investors took a couple of bearish indicators (Japan growth figures, talk of China inflationary pressures etc) as the right opportunity to lock in profits, rather than this being a major turning signal for the market. Many of the hard-hit stocks have had very significant gains over the year and the selling came when there was no-one prepared to step in and buy these stocks. Indeed it does seem the measurement of institutional performance on monthly and quarterly figures does tend to influence their fund inflows, and thus is a material factor in influencing institutional positions. As we come close to year-end (and thus the close-off date for calculating managed fund return figures), the implications for share prices probably become more relevant. So, the price action does not change our fundamental view on the potential for CEY and the quality of this company. Like all such commodity exposures, volatility will always be a larger issue than for more defensive businesses which do not have the daily commodity market moves to influence share prices. Subscribers should continue to hold CEY.





JAMES HARDIE INDUSTRIES N.V. (JHX)

ASX code JHX Div yield 0.96%
Market Cap 2,795,406,125 Risk med/high
NTA $0.00 Term med/long
12-month high/low $7.02/$4.95 Closing price $6.09
Forward P/E ratio 18.65 Recommendation Buy around $5.80 / Hold
% of holdings 5.00% Original rec


JHX provided an update to the market on the negotiations for long-term funding arrangements for asbestos liabilities this week, which was positively received. The release gave some greater detail on the proposed structure but clearly the timing of the resolution remains an unknown. Suffice it to say that JHX also would like a resolution as quickly as possible. JHX also conducted a site tour in the USA for analysts and in its presentation, reiterated its comments made at the time of its 2Q05 profit release regarding expected profits and the 2Q05 issues being largely behind it. Also during this past week, there has been some very strong performances by US listed homebuilding stocks, including a 19% rise in Toll Brothers (the largest US luxury home builder), 11% for KB Homes and a 9% rise for the largest US homebuilder, Lennar Corporation. This followed data showing there is still no softness in the US housing sector. We continue to recommend subscribers hold JHX for strong potential upside.





LEND LEASE CORP LTD (LLC)

ASX code LLC Div yield 3.80%
Market Cap 5,138,926,873 Risk low
NTA $5.35 Term med
12-month high/low $13.15/$9.51 Closing price $12.89
Forward P/E ratio 16.11 Recommendation Sell around $12.80 for short-termers
% of holdings 7.00% Original rec 27/08/2004 - Bought at around $10.85


For those who followed our original LLC recommendation, which was to buy LLC at $10.85 on 30 August 2004, this has been a rewarding investment despite the fact that events have transpired very differently to our presumptions at that time. Indeed, we had felt that the stock had only modest capital upside, but would provide a significant yield return to buyers due to the payment of several merger dividends. We are revisiting this stock due to the material change in the expected business model and outlook now that the GPT merger has failed to occur.

We have looked to see what possible events lie ahead which may provide catalysts for the calculated value to be adjusted and thus the share price to move. Firstly, LLC has reinitiated its on-market buyback programme for up to 10% of issued capital and this is now open, though LLC is yet to begin buying. This should provide some downside protection, but given the Grant Samuel independent expert report commissioned by LLC suggested the value of LLC lay between $11.64 and $12.73, LLC may struggle to justify paying above this level for now.

Secondly, there is an ongoing risk that LLC may lose its income from GPT if Stockland’s takeover offer for GPT is successful. While we expect the market is well aware of this potential earnings risk, it still often translates into price weakness if/when the event occurs and consensus earnings are downgraded.

Thirdly, there has been lots of speculation about LLC as a takeover target itself. We feel LLC has some very attractive assets in its portfolio, especially the Delfin business and the shopping centre investments of Bluewater in the UK and King of Prussia. However, buyers of such assets are unlikely to also want to buy the Bovis construction business, so any purchase would likely be based on the expectation of a divestment of Bovis. However, we struggle to identify potential purchasers of Bovis and it does still have unprofitable Australian contracts to be worked through before earnings issues are fully behind it. Assuming that there is a bid coming, and we do think it is a less than 50% chance, we are suspicious the LLC share price has already moved to partially reflect such an outcome, so the upside is therefore largely already reflected.

Is there much else that could trigger LLC to move significantly from where it is? A surprising 1H05 result in February, a larger than expected dividend given LLC’s surplus capital, or perhaps an update on its strategic intentions now that GPT is not happening are all possibilities. But the predictability on these events is low. So, we seem to be looking at a situation where we feel the downside risk is fairly limited, but the upside may also be fairly limited for the next few months. On our estimates, including GPT in earnings, LLC is trading on an FY2005F PE ratio of around 16 times, FY2006F PE ratio of around 13 to 14 times and a dividend yield in FY2005F and 2006F of 4% and closer to 5% respectively. We think that is about fair value, or a bit above, for now, though the stock is likely to move higher over the next year. Indeed, if one is prepared to hold this stock for another year, we feel it could trade toward $15.50, suggesting from today a potential one year return of around 25% including yield.

Importantly, we advise any subscribers who bought this on our original recommendation simply because they were searching for near term yield to take profits on LLC at these levels. The capital gain should compensate you for the lack of yield in the final event. For the rest of you, we feel this is a matter of your investment style and horizon. Those with a more short-term view, we believe this is the right exit opportunity and we recommend selling LLC at $12.80 or better. Very near term, we do feel there are some clear risks the share price may slide back before regaining its upward momentum. If you are happy to take a one year, or longer, view, we are comfortable with LLC and feel you should continue to hold. We will continue to monitor the stock for those who do choose to hold.





BONLAC FOODS LTD NOTES (BFLH)

ASX code BFLHA Div yield 9.99%
Market Cap 91,100,000 Risk med
NTA $0.00 Term med
12-month high/low $96.00/$82.15 Closing price $91.10
Forward P/E ratio 0.00 Recommendation Hold
% of holdings 7.00% Original rec 14/10/02 - Bought around $76


BFLHA went ex interest distribution last Thursday. It fell $4 due to the $4.52 interest payment. Cheques should be sent out 31 December 2004.

This has been a great investment for subscribers and we remain comfortable for subscribers to continue holding BFLHA.





LION SELECTION GROUP LTD (LSG)

ASX code LSG Div yield 2.80%
Market Cap 214,233,057 Risk med/high
NTA $2.22 Term med
12-month high/low $2.39/$1.26 Closing price $2.14
Forward P/E ratio 13.14 Recommendation Hold
% of holdings 3.00% Original rec 22/09/03 - Bought up to $2.20 (cum 10c return)


LSG announced last week that it will pay a final 10c unfranked dividend, as a continuation of its policy to return crystallised profits to shareholders. The profit being returned is, of course, from its investment in MPI Mines Ltd (MPM), which is currently under takeover. The stock will go ex dividend on 31 January and the dividend will be paid on 25 February.





MACQUARIE AIRPORTS TICKETS

Like most Macquarie infrastructure plays, MAP continues to acquire further assets and must, therefore, fund these purchases. The company has announced a hybrid issue called TICKETS. These securities are forecast to pay an unfranked yield of 6.475% p/a fixed until 2010. That means that holders are basically lending money to MAP at this rate. We just can’t see that this rate is attractive enough to tempt us to lend this company money.
We suggest you avoid these securities if you are still a holder of MAP and have been offered TICKETS.

In terms of the share purchase plan, shareholders have been offered additional shares at $2.78. Given the shares are trading at over $3, this looks attractive and for those who wish to remain shareholders, but do not want to own more shares, you can sell some of your existing shares and replace them with the share purchase plan stock.





COMPLIANCE

N/A





STOCKS HELD

PMP, BPC, MMA, MMAO, BFLHA, PRK, FLT, MGW





STOCKS MENTIONED

AMC, ION, WMR, MRE, SPC, PMP, QAN, MIG, PWT, $AUD, CEY, JHX, LLC, BFLHA, LSG, MAP