Foster Stockbroking

Talking Point is a daily commentary on stocks and market dynamics. It aims to provide our clients with trading opportunities and strategies resulting from events which are yet to be fully reflected in market prices.

Talking Point is not designed to be a comprehensive research report, rather it enables our research team to respond quickly to mispricing windows.

Please follow the links below to access some of our recent Talking Points.

For further information, or to receive Talking Points immediately as they are released, please contact us on +612 9221 8711.

25 August 2010: M&A Activity – What trends are we seeing?

The past few months have eventuated in a spate of takeover activity for ASX-listed stocks, following a considerable drought of M&A during 2009.

10 August 2010: CMJ Ltd (CMJ) – Consolidation play. BUY

We recommend buying CMJ for exposure to the likely privatisation. At $3.14/share, the stock is trading well below our $4.07/share valuation.

09th August 2010: West Africa Gold: ASX-listed gold company valuations post the Kinross-Red Back bid.

Red Back bid for by Kinross. Kinross Gold Corp, one of the world’s largest gold companies, has bid for the remainder of shares in Red Back Mining that it did not own (the company had a 9% stake initially).

Equity Capital Markets Update- July 2010

Please find attached our monthly Equity Capital Markets Update for July 2010.

August 2010: FSB Copper Book

This report sheds light on a select group of copper stocks that are near term producers or in the exploration stage of the company’s lifecycle.

China Macro Views - Don’t get spooked by sensationalist news.

We refresh our China macro views ahead of tomorrow’s eco data and in light of recent concerns about a hard landing.

Equity Capital Markets Update – June 2010

Please find attached our monthly Equity Capital Markets Update for June 2010. The attached document provides you with our commentary on the equity markets for June 2010, including sector performance and analysis for selected small caps across Coal, Gold, Iron Ore, Copper and Resource Services.

29 June 2010: AUN - Add TLS to the list of likely consolidators, BUY.

Recent comments made by Telstra CEO, David Thodey, increase the possibility that Telstra will move to consolidate Austar with Foxtel (TLS 50%), in our view.

29 June 2010: MCC - The one coal stock to buy.

We revisit our Buy recommendation on MacArthur Coal (MCC). Since our last Talking Point on MacArthur Coal (dated 21 May 2010) which highlighted that the MCC share price traded at discounts to various multiples when compared to its peers, the stock has outperformed.

June 2010: FSB Gold Book – Juniors…Going for Gold!

This report sheds light on a select number of small to mid cap emerging gold stocks operating across four geographic regions.

May 2010: Equity Capital Markets Update

The attached document provides you with our commentary on the equity markets for May 2010, including sector performance and analysis for selected small caps across Coal, Gold, Iron Ore, Copper and Resource Services.

21 May 2010: MCC-The one coal stock to buy.

The rejection by the Macarthur board of Peabody’s offer has resulted in the share price falling 24% over the last three days.

20 May 2010: FND- Closer to final approval with Environmental Permit in place. Buy.

On 9 April 2010 FND announced that the Environmental Impact Assessment has been approved clearing the way for final project approval for the 23ktpa Wetar copper project in Indonesia.

03 May 2010: NWS– Buying into the news, BUY.

We are buyers of News Corp. heading into the result. The 3QFY10 result is scheduled for Wednesday 5 May 2010, 6.00 am Sydney time.

16 April 2010: JBH– This bright star will continue to shine, BUY.

We view the recent JBH share price weakness as an attractive buying opportunity. Although we are cautious on near-term domestic discretionary consumption, we believe JBH will outperform for a number of reasons:

14 April 2010: SEV– Trading buy now deal looks certain, BUY.

We recommend SEV as a trading buy now that the WesTrac deal looks certain.

14 April 2010: FMS– Growing Resources near key infrastructure, BUY.

Both on fundamental and relative valuation grounds, we believe FMS offers investors significant value in the current climate of higher iron ore prices.

12 April 2010: SGM–Schnitzer result signals a turning point for Sims, BUY.

Schnitzer Steel result suggests turning point. Schnitzer Steel, Sims’ most comparable peer, last week reported a good 2nd quarter result that exceeded analyst expectations.

05 March 2010: CPL- Scoping Study confirms potential,
BUY.

Our outlook for bulks is bullish. Newcastle thermal contract prices are close to US$100/t, coking coal 12 month benchmark prices look like they might settle above US$200/t, while we understand BHP has settled quarterly pricing at US$200/t.

03 March 2010: SLR-A clear path to ~200koz pa production,
BUY.

One of our key picks from the RIU Explorers Conference in Perth last week was Silver Lake Resources (SLR).

22 February 2010: GRR-Punching with pellets, BUY.

GRR is one of the iron ore sector’s best kept secrets. One reason is because of the significant leverage the company has to iron ore prices via its production of pellets.

22 February 2010: MGX- Our key pick for leverage to higher iron ore prices, BUY.

With spot iron ore prices hovering ~90% higher than last year’s contract prices, it is looking more likely that JFY10 contract prices will settle significantly higher than the 30-40% increase on JFY09 prices that the market appears to be factoring in.

17 February 2010: GLA-Unique iron ore opportunity, SPEC BUY.

Gladiator Resources Ltd (GLA) has struck an iron ore deal which, in our view, will act as a key driver for the share price in the coming months.

08 February 2010: EXT– Competitive tension to drive share price.
BUY.

Extract Resources (EXT) owns the 267Mlb Rossing South project in Namibia and is currently assessing strategic partners in developing the asset, which, in our view, will only add to tension over control issues and provide a catalyst for the share price.

05 February 2010: MYR- Bottom line, looks cum-upgrade, BUY.

Although Myer reported softer than anticipated 2QFY10 sales, 1HFY10 EBIT significantly outperformed, providing a strong buffer for the second half and upside risk for FY10 guidance.

02 February 2010: AUN- Pullback presents buying opportunity, BUY

We believe the recent pullback in the AUN share price presents investors with an attractive buying opportunity in one of our favoured industrials.

19 January 2010: FND- Undervalued emerging copper producer. BUY

FND’s Wetar project (94% FND) in Indonesia contains 205kt of copper at 2.5% in Reserves and plans to produce 23ktpa of copper cathode over ~9 years.

18 January 2010: BLD-New CEO may raise for US acquisitions.SELL.

We recommend investors Sell BLD as we suspect the new CEO may raise capital to fund US acquisitions.

15 January 2010: CAZ- Iron ore production in late 2011.
Speculative BUY.

With spot iron ore prices trading ~80% above JFY09 contract prices and JFY10 contract prices expected to settle anywhere up to 50% higher, it is little wonder there is renewed enthusiasm in the small cap iron ore space.

08 January 2010: CZA- Undervalued pure coal exposure. BUY.

Further to our Talking Point on 30 October 2009, we reiterate our Buy on CZA and note its relative underperformance given the recent rally in coal stocks.

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