Paterson's comment:We retain our BUY recommendation. Although...

Paterson's comment:


We retain our BUY recommendation. Although the CEO resignation is a near-term negative, we consider the likely subsequent share price weakness to provide a good medium term buying opportunity.

We believe the company has taken appropriate
measures to ensure business continuity. Importantly, SDM has reaffirmed its positive FY2011 outlook. This outlook is supported by the company's already strong contract visibility - it has secured over 90% of our forecast FY2011 revenues.

Additionally, the project pipeline remains strong. Moving forward, it is important for the Board to appoint a new CEO in the very near term. To this end, we would prefer internal candidates from a continuity perspective.