sym oversold, page-3

sym - price fall too severe IMPORTANT NOTICE:
The recommendations on this page are extracted from full research reports produced by Aspect Huntley.

Symex Holdings Limited (SYM)

Price fall too severe

Recommendation 27/04/2006: Buy

Investment Rating
SYM is diversifying from its core chemical products, derived from animal fats. These have wide uses in personal care, textiles and lubricants, benefiting from Australia's large meat industry and an ICI plc management buy-out. Recent acquisitions into branded and home-brand soap, toothpaste, fabric softener and matches help SYM grow sensibly. Gearing and ROE are high but an equity issue is unlikely. Acquisitions and divestments have so far been sound. Plant upgrades will affect short-term cashflow to raise longer-term margins. Market cap and liquidity are both low. SYM needs to expand soundly to gain higher multiples and re-enter the ASX300. With a high fully franked yield, SYM is suitable for conservative investors. The FY06 profit downgrade and price fall before FY07 recovery gives an opportunity.


Event

SYM has unfortunately downgraded shortly after confirming FY06 guidance.

SYM revised its FY06 NPAT to about $7.5m, versus $9.7-10.7m in February. The issues are still concerns over weak glycerine prices, the strong A$, higher fuel-related input costs and weaker consumer demand.

SYM is progressing its plant upgrades.

Full Event Analysis

Impact

We think the problem is short-term, not endemic.

Our FY07 numbers are unchanged.


Recommendation Impact
(Last Updated: 27/04/2006)
SYM now has to regain market confidence by delivering the expected FY07 recovery. More cautious investors may prefer to wait until confirmed. Recovery is likely but the market will take time to be convinced. SYM has doubled EPS since FY02. The price collapse gives an opportunity for the more adventurous. At current weak prices of around 90c, SYM is under-priced at only 6 times FY07. Buy


Event Analysis

SYM has unfortunately downgraded shortly after confirming FY06 guidance. We think despite this the problem is short-term, not endemic.

SYM revised its FY06 NPAT to about $7.5m, versus $9.7-10.7m in February. The issues are still concerns over weak glycerine prices, the strong A$, higher fuel-related input costs and weaker consumer demand. SYM is progressing its plant upgrades. The Shepparton personal care plant will complete a modest $3.5m upgrade this June. Firelighters will be manufactured there, with soap production expanded and improved warehousing - all lowering costs. Extra $1m marketing spend was charged this half before expected higher FY07 sales.

The major oleo plant upgrade at Port Melbourne will increase capacity 14% this June also, once new filter plates are commissioned. Current oleo demand exceeds capacity. This upgrade will benefit FY07. SYM will also have lower energy costs from this June after the AGL co-generation plant starts, hopefully undistracted by AGL's own corporate events.

Our FY07 numbers are unchanged. SYM now has to regain market confidence by delivering the expected FY07 recovery. More cautious investors may prefer to wait until confirmed. Recovery is likely but the market will take time to be convinced. SYM has doubled EPS since FY02. The price collapse gives an opportunity for the more adventurous. At current weak prices of around 90c, SYM is under-priced at only 6 times FY07. Buy