Macquarie still bullish on QBE - the recent equity raising of...

Macquarie still bullish on QBE - the recent equity raising of 550mill for the takeovers in US will be added May 2nd
This may be the main driver behind the recent pullback (macquarie say also pullback due to profit taking after the unreal result not long ago and also due to currency pressures). They say its an 'outperform' and attractive at current levels.

Hopefully come May 2nd, when the preferred preference shares become official, the overhang on price will be gone.

currency isnt that much of an issue with this one as they provided their giudance after AGM 2 weeks ago when currency was already above 80cents

It has more exposure now to US though, so maybe this plus the new issue are whats keeping it down?

Many ppl ive spoken to tell me not to worry because its the most well-managed blue-chip on the ASX!

Heres what Macquarie said:

Shares in QBE have slumped over seven percent since touching all-time highs in late February. Has the recent weakness in QBE been over-done and does this provide a buying opportunity? Macquarie Research Equities’ (MRE) insurance analysts continue to believe in the outlook for this stock, and at today’s levels, QBE is trading at a ~12 percent discount to their 12-month target price. What’s more, for traders and investors that like the QBE story, Macquarie Warrants offers a numbers of solutions for investors looking to obtain leveraged exposure to the stock. Click through to read up on some ideas!

The news out from yesterday. QBE announced the private placement of US$550m of non cumulative perpetual preferred securities as part of the US$2.7bn funding package for the acquisitions of Praetorian and Winterthur US, which remain on track to be settled by the end of June. MRE said that the notes should receive S&P ‘intermediate equity content’ as they qualify as an insurance Tier 1 capital instrument for regulatory capital purposes. Given the Tier 1 capital status and S&P recognition of the perpetual notes, the group’s balance sheet is expected to be very strong post the completion of the US acquisitions.

Earlier in the month, QBE held its 2007 AGM, where management confirmed recent guidance at the FY06 result is unchanged. QBE’s guidance remains as follows:
1) 17.5–18.5% FY07 insurance margin.
2) 30% increase in FY07 Gross Written Premium (GWP) and 40% increase in FY07 Net Earned Premium (NEP) (subject to no regulatory delays in settling recent US acquisitions)
3) 20% increase in FY07 NPAT and 15% increase in diluted EPS (with
capital gains on equities at a lower level than the past two years)

MRE reiterate their outperform recommendation. QBE offers attractive buying at current levels after its recent pullback from its $33.90ps high due largely to post result profit taking, $855m of equity raisings and A$-related concerns.

Like the QBE story? Macquarie Warrants offer a number of leveraged solutions for both traders and investors looking to gear into QBE and boost their exposure. Below are a quick couple of ideas.

Short-Term Traders should consider QBEJMB Jun07 $18.52 Income Instalment (delta 100%) or QBEWMK Jun07 $32.00 Call (delta 11%).

Medium-Term Traders looking to capture one dividend should consider QBEIMF Nov07 $15.00 Instalment (delta 99%) or QBEIMG Nov07 $19.50 Instalment (delta 99%).

Medium-to-Long Term Investors looking to capture more than one dividend should consider
QBEJMC Jun08 $15.00 Income Instalment and QBEJMD Jun08 $26.00 Income Instalment