Dont know what it will open at but brokers seem to think it...

Dont know what it will open at but brokers seem to think it could go below $4.50 at some stage.

Event05-Feb-2009
SUN today pre-released key details of its 1H09 result, also launched a $900m-$1.3bn equity capital raising at $4.50 per share, and announced the departure of CEO John Mulcahy. 1H09 NPAT should be $250-270m, or $210-230m if SUN loses a dispute with one of its reinsurers.

Business Impact: The NPAT guidance is up to 45% below 1H08 and dramatically below market consensus for the full year, even the $750m bottom end of the range. Full-year dividend guidance is just 40c, split evenly between the halves. This is 63% below pcp! A major equity raising at $4.50 and the drastic cut to the dividend are disastrous outcomes for existing shareholders. SUN’s share price was already back to March 2000 levels but $4.50 is a whole new nadir. Major bank stocks have halved but at $4.50 SUN will be down nearly 80% from its $21.94 peak. And the stock will probably come back on lower than the raising price if experience with other recent capital raisings is any guide. Shareholders are paying a terrible price for the bank’s pursuit of the commercial property development sector and underprovisioning in banking and general insurance. The CEO is paying the ultimate price for the investment tragedy this stock has become.

Forecast Impact: --

Recommendation Impact: Pending further analysis we will keep our Sell rating