investor newsletter - e.l. & c. baillieu limited · 2017-03-29 · for australian business and...

www.baillieuholst.com.au Please read the disclaimer at the end of this report. Investor Newsletter Baillieu Holst 1

Investor Newsletter April 2017

2 Baillieu Holst Investor Newsletter Please read the disclaimer at the end of this report. www.baillieuholst.com.au

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From the CEO

With the festive season a distant memory, we are now in the process of digesting yet another reporting season. As is normal, company reports provided both upside and downside surprises. The market impact has, however, been minimal, with share indices little changed since the beginning of the calendar year.

During and post reporting season, Baillieu Holst has traditionally hosted numerous company presentations and this year has been no different. During February and March alone, dozens of companies ranging from small caps to blue-chips presented to advisers and clients, providing insights that can only be gained in such circumstances.

Perhaps of more relevance to many clients, however, will be the superannuation reforms passed by Parliament on 23 November 2016. These complex changes are likely to impact many superannuants, presenting challenges and opportunities alike. As with much new legislation the devil is in the detail, and all superannuation experts have spent countless hours interpreting these changes.

Baillieu Holst recently hosted a number of seminars across the country on this topic. We believe it is important our clients gain a better understanding of these issues and the seminars have been the perfect avenue for those in attendance to do just that.

Rather than be surprised once it is too late, I recommend that you speak to your adviser well before 30 June about any changes that might affect you.

In this edition of the Investor Newsletter we discuss the superannuation reforms as well as the political situation in the US and a range of stocks including the major banks, miners and consumer staples.

I trust you will enjoy our latest newsletter.

Gavin Powell,

CEO/Managing Director, Baillieu Holst

Contents 3. From the CEO

4. Economics

5. Economics

6. Financial Planning

7. Financial Planning

8. SMSF Solution

9. Review

10. Outlook

11. Fixed Income

12. Banks

13. Consumer Staples

14. Telecommunications

15. Resources

16. Energy

17. Stock Focus

18. Listed Investment Companies

19. SPS Managed Portfolios

20. Corporate

21. Social

22. Client Adviser list

23. Client Adviser list

24. Disclaimer

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Chief Economist, Darryl Gobbett Trump still heavy on promise, light on detail

The Trump presidency and Republican controlled Congress has seen US share indices propelled to record highs and pushed US 10-year bond yields back up to 2012 levels. By early March, the S&P 500 index had reached a record 2400, 13% higher than before the presidential election, while other share market indices had also moved higher, including the Australian All Ords Index (+7.7%).

Meanwhile, 10-year bonds were at 2.4%, up from post-World War II record lows of 1.37% in July 2016. Improving business and investor confidence, driven by what is expected to be a more business friendly Administration and Congress in the US, seem to have been major factors and have more than offset concerns about likely increased trade protectionism and higher policy uncertainty.

While US investors were the first to react, policymakers globally have revised up their forecasts for inflation, spending and output in the major economies. The US Federal Reserve Board of Governors are now quite openly discussing how many interest rate rises will be necessary in 2017. Meanwhile, the Reserve Bank of Australia has commented a number of times about “major economies” now growing at or above potential.

Local financial markets are no longer pricing in further cuts to the official interest rate from the current 1.5%. Australian Government bond yields and wholesale funding costs have also jumped from record lows in mid-2016. These moves are being reflected in rising term deposit rates and new fixed interest rate home loans.

Commodity prices have lifted and helped push the Australian dollar ($A) up against a firm $US (into the $US0.76 to $US0.80 range) and also higher against most other major currencies. On the measure of the Reserve Bank’s trade weighted basket of currencies, the $A is now up 10% since mid-2016 and is at the highest level since late 2014.

Iron ore is back above $US90 per tonne (up >90% since early 2016), while copper (+30%), thermal coal (+65%) and oil (West Texas Intermediate +75%) prices have also climbed.

A number of these trends were already in place from mid-2016 before there was any real expectation of a Trump election win.

There were signs of output growth and inflation already starting to lift from mid-2016 in the US, the UK and parts of Continental Europe. At the same time, expectations of China’s growth were increasing. These signs strengthened through the new year.

But the election of Donald Trump, while increasing uncertainty on a number of fronts, has sharply boosted expectations of growth and inflation. In a real sense, fuel has been added to an already building fire.

The post-election rise in the major US share market indices has seen increased price to earnings ratios (P/E), i.e. how much investors are prepared to pay for a future $ of earnings. By the start of March the forward P/E for S&P500 companies were on average up over 12%, with the large cap P/E up 12% to 17.9 times and the mid and small cap P/Es at 19-20 times each, up about 15%.

These P/E ratios are above the respective averages for most of the last 15 years and back to the high levels of the late 1990s and early 2000s. Although this has to be seen in the longer term context of 5% US long bond yields in the early 2000s, i.e. a P/E of 20 times, whereas with bond yields now on 2.5% the bond P/E is about 40 times.

In an environment of rising interest rates in the US, the rise in the P/E ratios seems mostly about faster growth in earnings per share than currently incorporated in analysts’ forecasts.

So a big issue for investors is whether this so-called “Trump Bump” can be sustained and built on. Will more business friendly policy changes in the US actually eventuate and will they or won’t they lead to the stronger earnings per share growth now built into US share prices? Alongside this is whether the prospective policy changes, particularly on trade and tax, assist or damage non-US domiciled companies’ earnings per share growth?

Bloomberg research shows that the “Trump Bump” is broadly consistent with 15 of the previous 26 elections where the President changed. Of those 15, US share prices rose on average around 5%. Generally the rises coincided with an improving US economy (as now seems to be in place) through the pre and immediate post-election periods. The “Trump Bump” is about double the average but not the largest.

Importantly, Bloomberg research indicates that historically these presidential change share market gains are no indicator of where the share market will be a year later.

Sustaining and building on these gains, an important issue for Australian investors as well, will depend heavily on the successful implementation of business friendly policies.


To-date the expectations rely heavily on very high level and summary policy directions. In our Weekly Newsletter on 15 November 2016, we described a number of those policy directions and the possible impacts. However, no real additional detail has been provided as yet. President Trump’s Address on 28 February to the US Congress was more “Presidential” but also light on detail.

So on one hand this vacuum creates some risk for investors. Yet, at the same time the current upswing in the US and other major economies is likely to see economic growth last for the next two to three years. This provides faster earnings growth, higher dividend opportunities and higher commodity prices. But inflation and interest rates are also likely to be moving higher. This is a time to be watching investments closely, take profits and be very selective when buying.

On the policy front, corporate tax changes in the US may well be the first to be fleshed out. Some of the changes are likely to be world changing and provide real challenges for Australian businesses, investors and governments. This is particularly pertinent in light of the view of many in the Australian Parliament that there is no need for corporate and personal income tax reform. This is despite the tax rate of 30% for large Australian companies being amongst the highest in the world.

While the tax package is still unknown, implementation of changes would make companies and investors think hard on decisions about location of production, new investments, tax domicile, investment of currently held offshore profits, stock exchange listings etc.

For Australian business and investors, the current impasses and attitudes in the Australian Parliament suggest any adaptive changes could be difficult and protracted. We could easily see a widening gap in company tax structures of the US and other countries such as the UK.

That means we will have to keep a close watch on what this might mean for local businesses, economic and financial outcomes and portfolio management.

For example, funding a cut in the Australian company tax rate may well mean the removal of franking credit rebates. That could change the attractiveness of current high yielding and fully franked dividend stocks, such as the banks, relative to investments not paying franked dividends.

We will provide more information and commentary as the US policy outcomes become clearer.


Financial PlanningChanges to Superannuation to become law

Parliament recently passed legislation to implement the Government’s proposed superannuation reforms. These changes are significant and may mean that many individuals will need to assess their existing superannuation situation and possibly make some changes.

Some of the key changes are outlined below, most of which become applicable from 1 July 2017.

1. Changes to contributions from 1 July 2017

• Concessional Contributions will reduce to $25,000 from $35,000.

• Non-Concessional Contributions will reduce to $100,000 per annum from $180,000.

• Those with $1.6 million or more in superannuation will not be able to make Non-Concessional Contributions.

• All individuals aged under 75 will be able to make tax deductible personal contributions. Those aged over 65 will still need to meet the work test (an individual over 65 must work 40 hours in a 30-day period within the financial year).

2. Reduction in the threshold for the super contributions surcharge (Division 293) tax

• Currently individuals with an ‘income for surcharge purposes’ of more than $300,000 pay an additional 15% tax on Concessional Contributions to super. This means a total tax of 30% is paid by these people.

• From 1 July 2017 the threshold will be reduced to $250,000.

3. Transfer Balance Cap of $1.6 million for existing income streams

• A ‘Transfer Balance Cap’ of $1.6 million will be introduced from 1 July 2017. This means that the most an individual will be able to have in Tax-Free Pension Phase will be $1.6million, from 1 July 2017.

• Individuals who have more than $1.6 million in Pension Phase, will need to commute the excess amount back to Accumulation.

• This cap relates to an individual’s entire pension balance across all funds. As such, if an individual has multiple accounts/super funds, the balances of the pensions across all accounts will need to equal less than $1.6 million.

• For Defined Benefit Pensions, Constitutionally Protected Funds and Term Allocated Pensions, a notional balance is calculated based on a set formula.

• Earnings on the $1.6 million Pension balance do not have to be withdrawn from Pension Phase, but the minimum pension does have to be paid on the balance. This means that the initial $1.6 million can grow without limit should the returns be sufficient.

Contribution Type Current Rules

From 1 July 2017

Concessional Contributions $30,000

(<49) or

$35,000

(49 or

older)

$25,000

Non-Concessional Contributions $180,000 $100,000

Bring Forward (3 Years) $540,000 $300,000*


4. Capital Gains Tax Relief

• There is possible CGT relief that may be applicable depending on the specific situation.

• Whether this relief is applicable and also if the best outcome is to utilise it depends on the specific details and circumstances of each individual and fund.

• Some key aspects that will dictate how and if the relief applies and should be utilised are:

o What the overall balance of the fund is.

o Whether income streams were in place on 9 November 2016.

o What the structure of the fund is with respect to Pension and Accumulation accounts.

o Whether the fund uses the segregated or proportional method.

o Current tax position of the assets within the fund.

o Future plans for assets and when they may be sold.

5. Transition-to-Retirement Income Streams (TTR)

• TTR pensions will lose their tax exempt status from 1 July 2017.

• Individuals that have an existing TTR pension in place should review if it remains appropriate.

• Should the TTR not be appropriate, it is important that the TTR pension is turned off from 1 July 2017.

As outlined, the changes are quite significant and there are some decisions that need to be made prior to 30 June 2017. Baillieu Holst’s Financial Planning team is able to help you assess your current situation and assist in making any decisions in the lead up to the end of the financial year. It is also a good opportunity to ensure that you are utilising the best structures and strategies to reach your financial goals.

Should you require any assistance, please speak to your adviser to arrange a time to meet so that we can discuss your particular circumstances and requirements in more detail.


Baillieu Holst SMSF SolutionTake control with a Self-Managed Superannuation Fund

Every day a growing number of engaged Australian investors are making the switch to SMSFs, driven by the following attractive features and benefits:

• Degree of control

• Wide investment choice

• Cost-effectiveness

• Transparent fees and costs

• Flexible Estate Planning

The downside? SMSF’s involve complex rules and regulations, as well as day-to-day fund administration and compliance tasks. That’s where the Baillieu Holst

SMSF Solution comes in.

The Baillieu Holst SMSF Solution provides you with end-to-end management of your new or previously established SMSF.

We help determine whether a SMSF is right for you. Then the Baillieu Holst SMSF Solution takes care of the setup and ongoing administration responsibilities. Your expert Baillieu Holst Investment Adviser will help develop and implement your investment strategy and provide ongoing investment advice.

You call the shots and Baillieu Holst brings its expertise to bear.


ReviewTrump’s win drives equity markets

A number of markets across the globe have reached record highs in recent months, with the rally that commenced just over 12 months ago continuing despite geopolitical concerns dominating headlines.

The largely unexpected election of Donald Trump as President of the United States only acted as a further catalyst for markets. The Federal Reserve even managed to sneak in an interest rate rise before the end of 2016 after months of speculation about its timing.

The largest impact for investment markets following Trump’s victory has been the rise in global bond yields. The yields on the 10-year US Treasury and Australian government bonds have surged on the prospect of higher interest rates and inflation levels.

Japan’s Nikkei 225 was the standout performer in the December quarter, surging 16.3% as a rising US dollar sent the Yen sharply lower, which is a positive for Japan’s export driven economy. European markets have also benefitted from the stronger US dollar (weaker euro) as investors shrugged off regional concerns, such as the Italian voters’ rejection of constitutional reforms in early December.

In London, most of the concerns over Brexit were shrugged off, with the FTSE 100 hitting all-time highs.

Locally, shares received a boost following the US election and eventually finished 2016 with a total return of 13.4%. There has been a significant swing towards large-caps in the last six months, with the major banks and miners leading the charge. During the December quarter alone the S&P/ASX 20 index added 8.4%, significantly outperforming the S&P/ASX Midcap 50 and S&P/ASX SmallCap Industrials which rose 0.7% and fell 2.7% respectively.

The Reserve Bank of Australia’s 25 basis point rate cut took rates to a record low of 1.50% in August. The rate cut has not had the desired impact on the local currency as the Aussie dollar stubbornly traded above 75USc after rebounding from a fall in the latter stages of 2016.

Since the US presidential election, Australian and global banks have rallied on the back of Trump’s intended deregulation of the US banking sector and plans to spend billions on infrastructure, which have contributed to the sharp rises in government bond yields.

While strong gains were also witnessed in other sectors, including the insurers and utilities, the big standouts have been the materials and energy sectors. The key driver for materials-related stocks

has been a significant improvement in the Chinese economy, with its PMI hitting the highest level in two years during the December quarter. This has resulted in stronger steel and iron ore prices, which in turn have boosted many other metals.

Iron ore producers have been a key beneficiary, buoyed by a surging iron ore price, which logged incredible gains of 41.2% for the December quarter alone. This resulted in strong share price gains for the likes of Rio Tinto (RIO), BHP Billiton (BHP) and Fortescue Metals Group (FMG). Copper prices also contributed, with the base metal rebounding from its lows.

In February, we witnessed the strongest interim reporting period since 2010, with analysts upgrading their EPS forecasts by 1.6%. The reporting season provided enough evidence to confirm the earnings expansion has begun, in our view.

Yet again, the big miners led the charge with both BHP and RIO beating consensus forecasts for both earnings and dividends. This will provide a nice boost to government tax receipts.

Woodside Petroleum (WPL) reported a solid, clean 2016 result. Energy stocks have been helped by rising crude oil prices after OPEC announced it had agreed to its first production cut in eight years.

AGL Energy (AGL) has rallied close to 50% since our last newsletter. The company’s first half result benefited from an uplift in wholesale gas prices, which passed through more swiftly than we had expected.

Supermarket giant Woolworths (WOW) has had a strong run since it first bounced in July. The stock rose 11.4% in the September quarter and has put on another c.11.5% since. WOW reported a reasonable result with earnings broadly in line with our forecasts.

Wesfarmers’ (WES) performance has not been as strong, although the stock has rallied since early February. The diversified consumer staples group reported a 1H17 result that delivered group EPS growth of 13%, however the lowlight of the result was the severity of the margin decline at Coles.

Unfortunately, Telstra Corporation’s (TLS) 1H17 result raised the same concerns as the previous reporting season with profit below our forecast and a flat dividend versus the previous corresponding period. Meanwhile, the decline in mobile retail service revenue worryingly accelerated. The stock is now trading significantly below its highs of two years ago.


Outlook2017 Equity Outlook

We are currently forecasting the fastest year of global growth since 2011. The US administration is promising to stimulate an economy already enjoying considerable momentum. Meanwhile, Chinese authorities are expanding fiscal policy and global PMIs are once again rising in a synchronous manner, as per the chart below.

Following the strongest interim reporting season since 2010, we have broken down the Australian equity market into three building blocks: Australian earnings per share (EPS); dividends per share (DPS); and valuations. In short, we believe the year will be highlighted by expanding earnings and could see total returns of c.10% for the calendar year.

Australian EPS outlook

We note that global equity markets have rallied strongly and believe much of the increase has been justified by improving EPS momentum. Locally, ASX 200 EPS forecasts hit a low around the middle of 2016 and have since started to increase.

The recent reporting season has seen analysts increase their EPS forecast for the ASX 200 by 1.6%. The upgrades have been focused in commodities where analysts have raised the equivalent of June year-end forecasts by more than 7%. There have also been upgrades in the big four banks (+1%). Of course this is important for our market as these four stocks make up 30% of the profits base. While it is not compelling as yet, we think there could be early signs of the earnings expansion broadening into other parts of the equity market.

Australian dividend outlook

Dividend momentum has also hit a low and is now trending higher for all major markets around the world. While analyst expectations are for the ASX 200’s EPS growth to be 15%, they are forecasting around 10% DPS growth.

Analysts upgraded ASX 200 EPS by 1.4% during the February reporting period, while they raised their DPS forecasts by 2.1%. It was the best interim results period for dividends in more than 15 years. While the biggest dividend upgrades were in the commodity stocks, there were some increases elsewhere too. There were clear DPS upgrades for the more cyclical components of the market, however upgrades were lacking for the defensives (Staples, Telecoms, Infrastructure, Utilities and REITs).

Australian valuation outlook

The Australian equity market saw an increase in its P/E through 2H16 and now trades on 16x forward EPS. Only the US is more expensive on this basis, trading on 17x. In Australia, expensive sectors have de-rated while cheap ones have re-rated.

The defensive sector (including property trusts) de-rating has mostly been due to prices falling. Australia continues to be the market for income seeking investors, although, we think global amounts of dividend seeking money will diminish as bond yields rise.

Overall, we believe Australian companies have already entered their earnings expansion phase. This is the last stage of the profits cycle and typically finds that stock indices trend higher during this period but do not surge.


Fixed IncomeThe role of Fixed Income in Retirement

In a recent independent report written by the Australian Centre of Financial Studies and Monash Business School, investment options for those close to retirement were examined against the backdrop of a low-return investment environment.

With ‘baby boomers’ approaching the end of their working lives, there is growing concern current low rates of return will be insufficient in providing retirement income. We note a number of key assumptions were made in the report regarding wages, inflation, transaction costs and policy settings.

Key findings:

• On average, Australians are increasing their net wealth over time but there are notable variations between age groups.

• Superannuation is the second-largest store of wealth among Australians after the primary residence.

• Soon-to-be retirees may be carrying unnecessary levels of risk in their investment portfolios represented by a relatively high weighting to equities.

It is the third finding we believe to be of most interest. According to the Australian Prudential Regulation Authority (APRA), approximately 50% of superannuation funds were invested in equities as of March 2016. This is the second highest equity weighting among global OECD pension systems, behind Poland. For Australians within 10 years of retirement, this significantly increases the risk of capital losses.

While many investors will argue that fixed income returns are insufficient, the report highlighted that it is difficult for these households to now improve their financial wealth by 65. This suggests Australians close to retirement should prioritise capital preservation over wealth accumulation due to sequencing risk.

Sequencing risk is the risk of retiring during a period of suppressed economic and investment activity such as the Global Financial Crisis. Australians close to retiring during this period suffered massive reductions in wealth and were forced to delay retirement.

It goes without saying, this impact would have been less for those with a smaller allocation to equities relative to less volatile assets such as fixed income.

What happens over the longer term?

The study simulated three asset allocation scenarios – 100% equities, 100% fixed income or a 50/50 split between the asset classes – and found that wealth accumulation is driven by superannuation contributions and long-run compounding rather than asset class weightings. In other words, consistent contributions have a greater impact on retirement wealth relative to cyclical investment returns.

Overall, this recent report reflects the current state of the Australian investment market. While the retirement risk zone (ages 55 and above) should reduce their holdings of risky assets such as equities in order to inhibit sequencing risk, the undeveloped Australian fixed income market (relative to other countries) impedes this. The current superannuation pool is estimated to be around $2 trillion but retail access to fixed income products is minimal which is further exacerbated by many Australian companies preferring to issue debt offshore. As a result, portfolio optimisation and dynamic asset allocation is challenging.

While legislative reforms and innovative investment structures are improving Australian fixed income, the retail market still remains relatively small and a major downturn in Australian equities may be needed before investors become aware that capital preservation and regular contributions are equally, if not more, important than wealth accumulation.


BanksSailing downwind

In the six month period since our last newsletter, the major Australian banks have performed strongly, with a number of key concerns that had been weighing on sentiment largely removed.

Previously we spoke of concerns the bad and doubtful debt cycle may be turning for the worse, while there was also talk the big four banks may need to raise further capital to bring them in line with proposed Basel IV regulations.

However, since the election of President Trump and the announced roll back of the Dodd-Frank regulations, Basel IV has been shrouded in an air of uncertainty. This has helped support the recent share price gains.

The overarching themes for the major banks post the reporting season and trading updates shows that top-line revenues remain under pressure due to disappointing margin outcomes. This was somewhat offset by very strong financial markets income. Margins weakness was attributed to funding costs and deposit price competition.

Operating costs were well controlled, fundamentally underpinned by on-going headcount reductions. Management reiterated FY17E cost guidance. Bad debt charges were very low and we noted that management introduced a positive tone to FY17E bad debt charge guidance.

Asset quality ratios remained stable, with deterioration in business offset by improvements in credit cards. Mortgage delinquencies were stable to improving, although they did note some softness in regional areas, in particular Western Australia.

With the big four banks all up more than 13% since the end of October 2016, we adopt more of a neutral stance on the sector and now see the sector as ‘fairly valued’. The dividend per share outlook also looks stable.

Our major bank order of preference reflects a marginal preference for business banking, in acknowledgement of a degree of on-going regulatory risk associated with consumer banking at this juncture.

Our shift to a more neutral stance on the sector is reflected in our major bank stock ratings (one buy and three holds): NAB (BUY), CBA (Hold), ANZ (Hold), WBC (Hold).

We believe it is time for investors to assess their positions in Bendigo and Adelaide Bank (BEN). Over a 10-year period the stock has underperformed the major peer group significantly and we see a number of risks going forward.

At its most recent result, BEN reported 1H17 cash earnings of $224.7m, which was flat versus the previous corresponding period and below our forecast of $234.4m. Subsequently, we reduced our price target from $12.50 to $11.90 and maintained our HOLD rating.

Overall, we viewed it as a disappointing result, highlighting heightened downside earnings risks from dilution and the possibility for further bad debt write-offs.

We believe BEN faces dilution risk from a possible capital raising, which would be implemented to help support growth in its lending business as its Tier 1 capital position is now below 8%. We are also concerned about the potential for more bad debt write-offs within the Great Southern forestry investment scheme. Softer net interest margins were also a negative.

On the flipside, some positives included good cost control and continued improvement in asset quality. Nonetheless, we believe there are better opportunities among the major banks.

As discussed, our preference for an alternative would be either NAB or CBA.

Company ASX Code Rating Last Price P/E FY17 Yield FY17 Franking

ANZ ANZ HOLD $30.77 12.7x 5.3% 100%

Commonwealth Bank CBA HOLD $82.95 14.3x 5.1% 100%

National Australia Bank NAB BUY $31.76 12.7x 6.2% 100%

Westpac WBC HOLD $33.44 13.7x 5.6% 100%

Data as of 23/03/2017

Bendigo & Adelaide Bank Switch


Consumer StaplesHOLD up

It’s been a steady period for the major consumer staples stocks in the Australian market, building on the previous reporting season results. Woolworths (WOW) and Wesfarmers (WES) delivered solid results, however Woolworth’s unparalleled decision to invest in price with fresh produce has led to changes in forecasts and also a response from Wesfarmers.

Coles’ (owned by WES) EBIT margin has been downgraded as a result of increased margin pressure, mainly caused by a price investment which is in response to Woolworths’ cut in retail produce prices. Woolworths’ decision to cut prices has brought added competitive pressure and played a part in the $70 million EBIT decline. Our forecast is for similar reductions in 2H17 EBIT levels as the changes in price set in.

Overall, WES delivered 13% EPS growth in 1H17 along with a strong free cash flow. We’ve upgraded our forecasts for Bunnings Australia and New Zealand and for Kmart on the back of another strong result, while the strength in the coal price benefited the Resources wing of the conglomerate. Aldi’s expansion in South Australia and Western Australia is likely to result in a flattish margin outlook beyond FY17.

We’ve retained our HOLD recommendation on

Wesfarmers with a target price of $41.92.

The WOW result provided good reading with our Food EBIT forecast increasing by $103 million as a result of good operating metrics in the Food sector, while Drinks and Hotels showed steady growth. Sales growth has been boosted by the unprecedented investment price and we forecast sales to settle at 3-4% growth. New Zealand supermarkets showed sequential improvement in like-for-like sales growth. The Kaikoura earthquake impacted EBIT and additional costs resulting from damage to road and rail infrastructure is likely to persist in 2H17.

Nevertheless, the balance sheet is still in need of improvement even after the divestment of Home Improvement assets and property disposals. Further sale of assets are expected but none are included into our forecasts. Big W incurred another $35 million in restructuring costs with concerns over the lack of stabilisation over sales revenue. Competitive risks don’t appear to be abating and the stock looks a touch expensive trading on a PE of 23x and 21x for FY17 and FY18 respectively.

Our HOLD recommendation remains unchanged and our target price is $24.50.


Wesfarmers WES HOLD $43.40 16.3x 4.7% 100%

Woolworths WOW HOLD $25.61 23.2x 2.8% 100%

Data as of 23/03/2017


Six months ago we discussed a number of areas of Telstra Corporation’s (TLS) business that were beginning to cause us some concern. The likes of Amaysim, TPG Optus and Vodafone were putting pressure on Telstra’s mobile division. We also spoke about the sustainability of its dividend.

Unfortunately, it became clear at Telstra’s recent 1H17 result that these same concerns remain and some of them have become even more worrying.

TLS’s 1H17 result was below expectations, with NPAT of $1,907m below our forecast of $2,004m. The dividend of 15.5cps was flat versus the prior corresponding period (pcp) and the company reiterated guidance for EBITDA growth of ‘low to mid’ single digits in FY17.

The decline in mobile retail service revenue worryingly accelerated to -2.7% in 1H17 versus a decline of -2.0% in 2H16. This reflects a 15% fall in wireless broadband revenue and the ongoing high level of competitive intensity across the market.

Mobile EBITDA fell 3.0% in 1H17 and we expect the decline to accelerate in 2H due to the absence of one-off roaming credits that boosted mobile EBITDA in the 2H16 of the pcp. Given this, we have reduced our FY17F mobile EBITDA forecast by 1.7% to $4,128mn, which would be equivalent of a decline of -5.8% versus the pcp.

Postpaid handheld subscriber growth was solid at 79k (vs 80k in pcp), though we note it was well below the +201k branded postpaid subscribers that Optus added in the period.

In the fixed broadband business, TLS added 90,000 subscribers for the 1H17, which was a solid result but below the 121,000 it added in the pcp. With these figures, we believe TLS’s market share slipped from 45.4% in the pcp to 43%.

The capital management strategy review announced at the AGM is ongoing. Telstra emphasised that it is committed to maintaining a strong balance sheet and an A-band credit rating.

As discussed in the last newsletter, the gap between reported earnings and ‘core recurring’ earnings will continue to widen due to the A$2-3bn impact of the transition to NBN. Given this, we continue to believe dividend sustainability is a key risk.

Consequently, our target price fell from $4.80 to $4.60 post the result and our rating remains HOLD.

In the last edition of the newsletter, we discussed the headwinds Telstra was facing and the idea of diversifying large Telstra shareholdings into higher

growth telecommunications names such as Vocus Communications (VOC).

Since then, VOC’s share price performance has been disappointing, as negative news flow (ex-CEO’s selling shares, CFO resigning, board ructions and downgrades) saw the stock punished by the market.

Fast forward to today and we continue to have concerns over Telstra’s business following a disappointing 1H17 result. Meanwhile, VOC has delivered a roughly inline 1H17 result and reaffirmed its full year guidance, with the market finally reacting positively.

VOC reported 1H17 revenue of $888m versus our forecast of $905m and an underlying NPAT of $92m versus our forecast of $95m. This leaves VOC well placed to achieve reaffirmed FY17 guidance for NPAT of $205-215m.

Synergy realisations from the M2 and Nextgen acquisitions look to be on track and there were positive signs in all segments.

After a stormy six months or so, we believe that this result and management’s commentary has drawn a line under the drama. Whilst it’s clear there is much work to be done before smooth sailing, at least the ship is now upright and pointed in the right direction.

In our view, the result and commentary showed that management is now coming firmly to grips with the task of integrating the four businesses (Vocus, M2, Amcom and Nextgen). Increased disclosure has aided visibility and we believe VOC will generate good growth as additional synergies are realised and organic growth comes through.

VOC is trading on a FY18 P/E of 13x, compared with ASX200 industrials at around 16x, and has higher EPS growth (12% vs 6%). We maintain our BUY rating and $6.00 target price.

TelecommunicationsWe still think it’s wise to diversify


Telstra TLS HOLD $4.52 13.8x 6.9% 100%

Vocus Communications VOC BUY $4.19 12.6x 3.3% 100%

Data as of 23/03/2017


ResourcesAnd we’re off

The strong rebound in resources names has continued in the last six months, bringing to an end the five-year downturn. The sector has bounced back with vengeance, catching even the most astute market professionals by surprise.

The main driver has been the stabilisation, and then better-than-expected performance, of the Chinese economy. This occurred after a prolonged downturn and at a point where sentiment was overly negative. This has seen commodity prices rise strongly and the big resources names track them higher.

So the big question on people’s minds is, where to from here?

We think any weakness should be seen as a buying opportunity to increase weightings in the sector. We believe miners have moved beyond balance sheet restructuring and will likely move toward capital management in the year ahead.

Recently, Chinese steel consumption has surprised to the upside as have China’s steel prices. Given we are heading into seasonally strong demand, we think steel prices can support +$90/t iron ore through 1H CY17.

Consequently, we have raised our 2017 year-end iron ore price forecast from US$55/t to US$78/t and CY18 from US$53/t to US$58/t.

In 2018, we expect a slow-down in infrastructure projects may cut steel demand by 1-2%. This demand doesn’t support a price collapse for steel or iron ore, but does suggest that 2018 should be weaker than 2017.

In terms of stocks, Rio Tinto (RIO) is our top sector pick among the large-cap diversified names. We have a BUY rating with a target price of $72.00 on the stock due to its strong balance sheet and the prospect of sustained share buybacks.

RIO recently reported its FY16 result. Underlying earnings of US$5.1bn was ahead of consensus at US$4.86bn. As well as the better-than-expected $1.70 div, Rio also announced a $500m repurchase of London-listed plc shares during 2017.

The recent upgrades to iron ore forecasts have resulted in underlying earnings for FY17 increasing by 47%.

We also have a BUY rating on South32 (S32). The miner reported a solid 1H FY17 result, announcing underlining earnings of $479mn versus consensus of $416mn. Of particular note were comments around capital management where S32 said it is close to having excess capital. Given this, we believe a capital return to shareholders of some sort is on the cards in the not too distant future.

Elsewhere, BHP Billiton (BHP) announced a 1H FY17 underlying NPAT of $3.24bn versus consensus of $3.06bn. An interim dividend of US$0.40cps was declared versus consensus of US$0.34cps.

The recent iron ore upgrades have seen our forecast for underlying FY17 earnings for BHP rise by 15%. We have a HOLD recommendation on BHP with a target price of $26.50.


BHP Billiton BHP HOLD $24.19 10.2x 5.5% 100%

South32 S32 BUY $2.75 8.2x 4.9% -

Rio Tinto RIO BUY $60.00 6.9x 7.5% 100%

Data as of 23/03/2017


EnergyRange bound

Across energy markets, the last six months has been dominated by speculation and the formal agreement from the Organisation of the Petroleum Exporting Countries (OPEC) to cut oil production. In late November, OPEC sent crude oil prices soaring by agreeing to its first production cuts in eight years.

After months of tense negotiations OPEC and its members agreed to cut production by about 1.2 million barrels per day, or 4.5%. OPEC had been producing 32.5 million barrels per day.

In the weeks after the deal non-OPEC producers, notably Russia, also agreed to reduce oil output, again boosting the price.

So the production cuts are basically acting as a floor underneath prices. However, on a positive note the re-emergence of US shale oil production is helping to keep the upside limited too.

As the price of oil rises, more shale oil producers in the US become profitable and hence increase the number of barrels they produce.

This is why we saw the price of crude oil trade within a fairly stable range of US$50 – US$55bbl before a recent drop.

Against this backdrop, Oil Search (OSH), at least on a relative basis, remains the most attractive large cap energy and petroleum name in our coverage universe.

At its recently reported result, CY16 earnings were in line with guidance while reported underlying NPAT of US$106.7mn was ahead of our forecast of US$95.5mn. The 2.5cps dividend was slightly ahead of our 2cps forecast. Following the result, we lifted

our CY17 and CY18 earnings by approximately 5% and 8% respectively.

Looking ahead, by no means do we expect 2017 to be a year of plain sailing for Oil Search, but recent commentary around the potential move forward in LNG market tightness (early 2020s vs mid-2020s) and timing around expansion were incrementally positive. We’re confident that when growth matters again in the sector, OSH is well positioned to capture further value from de-risking its opportunities. We maintain our HOLD rating and $7.25 target price.

Woodside Petroleum (WPL) recently reported a solid and clean 2016 result. Underlying net profit was US$868mn, above our estimates for US$817mn and consensus of ~US$850mn. The declared final dividend of 49cps (1H 34cps) was consistent with ~80% payout ratio.

In terms of growth options, it appears that Senegal is right up the top of Woodside’s agenda. While there are lots of moving pieces, the resource is material and would be adding to WPL’s production profile just as the North West Shelf production volumes roll off.

Looking ahead, the key number in the presentation that surprised us was the implied 100+ million barrels of oil equivalents (mmboe) group production expectation by 2020. This represents 15% growth on CY17 production guidance of 84-90mmboe. We note that WPL has ultimately beaten original production guidance for the past two years.


Oil Search OSH HOLD $6.98 25.1x 1.6% -

Woodside Petroleum WPL HOLD $30.83 22.0x 3.6% 100%

Data as of 23/03/2017


Stock FocusIdeas towards the smaller end of town

Aconex (ACX)

In our October 2016 newsletter, we mentioned Aconex (ACX) as one of our stocks in focus. Unfortunately, it has been a bumpy ride for ACX shareholders for the past six or seven months with the stock price down significantly.

In late January, the company downgraded FY17 forecasts, with the key drivers being: 1) lower than expected 1H sales in the UK and Americas as Brexit and US elections delayed customer decision-making; 2) a higher proportion of longer-term enterprise contracts, meaning lower additional revenue in the short term; and 3) the impact of GBP and EUR exchange rate movements.

More recently, ACX reported its 1H17 result, which was in line with the previously downgraded guidance. The company reported revenue of $77m and EBITDA of $7m versus our forecasts for $78m and $6m respectively.

Most importantly, ACX reaffirmed its FY17 guidance for revenue of $160-165m and EBITDA of $15-18m. Management stated it “expects revenue growth of 20%+ over the medium to long term”.

While all regions experienced growth, the US was a standout. Total revenue grew by 38%, or 45% in constant currency (CC) terms. Excluding the European acquisition of Conject, the legacy ACX business grew by 8% actual (12% estimated in CC), with Australia & New Zealand growing at 6% and International growing at 18% (CC).

We believe that 1H17 was a blip rather than a brick wall and that ACX will get back on track to deliver on the growth target. Fully integrating and re-invigorating Conject will go a long way to achieving this.

Longer term, we firmly believe the story remains intact. We think ACX is a strong, long term growth story due to its huge addressable market (the global market is around 100x the size of the Australian market, where it dominates) and its position as the largest construction collaboration software company globally (by a factor of 3-4x, based on revenue).

High growth stories are always running the gauntlet of weak quarters and halves and we believe this downgrade is just that, rather than a harbinger of a permanent slowdown in growth.

We maintain our BUY rating and $5.41 target price.

Bega Cheese (BGA)

BGA is engaged in the processing, manufacturing and distribution of dairy and associated products to both Australian and international markets. Bega has five production facilities across New South Wales and Victoria. Bega’s two main product lines are Cheese – natural and processed – and the Tatura Milk segment which produces cream cheese, butter, powders and nutritionals.

Post its first half result announcement in February, BGA sold a spray dryer and an infant formula finishing plant for $200million and in conjunction with the deal signed a 10-year ongoing service and access agreement with Mead Johnson in which BGA will earn a fee while maintaining current revenue streams from those assets.

In addition, through its pending acquisition of the Mondelez (MDLZ) grocery business, BGA will become the owner of the iconic Vegemite brand as well as a portfolio of other brands and manufacturing capabilities. Bega expects the MDLZ business to generate between $40-$45million EBITDA in its first full year of operation.

BGA reported a solid first half result in-line with our expectations. The net underlying profit of $20.6m was up 39% on the previous corresponding period, while an interim dividend of 5.0cps fully franked was declared, ahead of our estimate of 4.5cps.

We are buoyed by the earnings potential from the existing and recently acquired businesses and remain comfortable with the financial position post the extraordinary assets sale deal. The stock remains attractive on currents levels. We have a BUY rating and $8.00 target price on BGA.


Aconex ACX BUY $3.55 71.0x - -

Bega Cheese BGA BUY $6.39 37.6x 1.3% 100%

Data as of 23/03/2017


Listed Investment Companies

The LIC sector remains buoyed with corporate activity post a number of recent IPO’s as well as a strong IPO pipeline.

We maintain our investment view of adopting an active approach to investing in LICs, particularly within the large cap sector.

Over a long term view, an active LIC trading strategy can generate excess returns. Selling those LICs that are trading at a premium to Net Tangible Asset (NTA) and above historical average, as well as buying those LICs with a similar underlying portfolio that are trading to a discount to NTA, can generate this return whilst maintaining a similar risk profile.

In order to utilise this strategy, Baillieu Holst provides regular LIC updates on the underlying portfolio movements.

A common theme throughout 1H17 results from our large cap LICs was lower reported profits, primarily driven by a reduction in dividend income received. Despite this lower profit, large cap LICs maintained dividend payouts with the prior corresponding period (pcp).

A key characteristic of the LIC structure is the capability to utilise retained earnings built up over prior years, enabling LICs to smooth dividend payments. Importantly, the average retained earnings balance within the large cap space is 0.9x – 3.0x greater than current cash dividend payments.

Following recent market movements, namely a rotation back towards large capitalisation securities, we believe it prudent to provide investors an overview of the underlying portfolio sector allocations from a number of large cap LICs. The

chart below depicts those LICs which may be best suited to complement existing investor portfolios or for investors to access increased exposure to particular sectors.

Elsewhere, from our domestic coverage universe, we continue to look favourably upon those LICs that are currently ramping out respective dividend profiles, given the attractive entry point on both an absolute and relative basis. The demand for yield within the LIC sector remains high, with a majority of LICs yielding above market yields, commanding a premium to NTA.

Post the US election, the underlying NTA performance from a number of our international LICs have outperformed total shareholder returns, resulting in a discount to NTA expansion. We currently see value in this discount expansion and view the current discounts of PM Capital Global Opportunities Fund (PGF) and MFF Capital Investments (MFF) as attractive points.

Our current top picks from our LIC coverage listed include;

Large Capitalisation: AFIC (AFI), Diversified United Investment (DUI), and Milton Corp (MLT);

Mid-cap: Perpetual Equity Investment (PIC) and WAM Leaders (WLE);

Small Cap: Acorn Capital (ACQ);

International: PM Global Opportunities Fund (PGF) and MFF Capital Investments (MFF); and

Specialist: Blue Sky Alternative Access Fund (BAF).


SPS Managed PortfoliosBaillieu Holst Model Portfolios

A flexible investment made easy for you

Baillieu Holst’s discretionary model portfolios are designed to achieve long term capital growth and consistent income streams without losing sight of wealth preservation.

The professionally managed portfolios provide investors with the benefits of direct equity investing and are ideal for time-poor investors who are comfortable with outsourcing portfolio management to Baillieu Holst’s Investment Committee.

All portfolio administration is undertaken by Baillieu Holst, including the management of corporate actions, dividends statements, tax record-keeping and reporting. With strict investment rules supporting our bias towards wealth preservation, income and absolute return, clients will appreciate quality control.

Benefits of a Managed Discretionary Account include;

• Investor retains beneficial ownership

• Direct share investing with own cost basis

• Full transparency of underlying investments

• Flexibility of existing portfolio and holdings

• Ease of administration

• Risk management via strict rules to ensure quality control

Model Portfolios

Managed by the Investment Committee, investors receive access to Baillieu Holst’s research and investment ideas through the following five model portfolios;

• Australian Equities Growth Portfolio

• Australian Equities Income Portfolio

• Multi-Asset Diversified Conservative Portfolio

• Multi-Asset Diversified Balanced Portfolio

• Multi-Asset Diversified Growth Portfolio

©Baillieu Holst Limited SPS Managed Portfolios https://www.baillieuholst.com.au/spsmanagedportfolios Page 1

Baillieu Holst Model Portfolios – SPS Managed Portfolios

FEBRUARY 2017

A flexible investment made easy for you Baillieu Holst’s discretionary model portfolios are designed to achieve long term capital growth and consistent income streams without losing sight of wealth preservation. The professionally managed portfolios provide investors with the benefits of direct equity investing and are ideal for time-poor investors who are comfortable with outsourcing portfolio management to Baillieu Holst’s Investment Committee. All portfolio administration is undertaken by Baillieu Holst, including the management of corporate actions, dividends statements, tax record-keeping and reporting. With strict investment rules supporting our bias towards wealth preservation, income and absolute return, clients will enjoy our quality control.








Model Portfolios







AUSTRALAIN EQUITIES GROWTH PORTFOLIO PERFORMANCE To 28-Feb-17 1 Mth 3 Mths 6 Mths 1 Year 2 Years 3 Years Since Incep. Au. Equities Growth SPS Managed Portfolio 2.76%* 4.56%* 5.17%* 15.39%* 1.75%* 5.19%* 8.53%*

ASX 300 Acc. Index 2.18% 5.79% 6.94% 21.99% 2.75% 6.43% 7.10%

NB: NB: Perf. figures reflect when invested through SPS to avoid time delay. Inception date = 02-Oct-09, *ex fees

AUSTRALIAN EQUITIES INCOME PORTFOLIO PERFORMANCE To 28-Feb-17 1 Mth 3 Mths 6 Mths 1 Year 2 Years 3 Years Since Incep. Australian Equities Income SPS Managed Portfolio 2.80%* 5.00%* 3.23%* 15.06%* 3.70%* 7.96%* 12.94%*

ASX 200 All Industrials Accumulation Index 3.42% 5.96% 5.54% 18.17% 3.27% 8.85% 12.74%

NB: NB: Perf. figures reflect when invested through SPS to avoid time delay. Inception date = 01-Jul-10, *ex fees

©Baillieu Holst Limited SPS Managed Portfolios https://www.baillieuholst.com.au/spsmanagedportfolios Page 1

Baillieu Holst Model Portfolios – SPS Managed Portfolios

FEBRUARY 2017

A flexible investment made easy for you Baillieu Holst’s discretionary model portfolios are designed to achieve long term capital growth and consistent income streams without losing sight of wealth preservation. The professionally managed portfolios provide investors with the benefits of direct equity investing and are ideal for time-poor investors who are comfortable with outsourcing portfolio management to Baillieu Holst’s Investment Committee. All portfolio administration is undertaken by Baillieu Holst, including the management of corporate actions, dividends statements, tax record-keeping and reporting. With strict investment rules supporting our bias towards wealth preservation, income and absolute return, clients will enjoy our quality control.








Model Portfolios







AUSTRALAIN EQUITIES GROWTH PORTFOLIO PERFORMANCE To 28-Feb-17 1 Mth 3 Mths 6 Mths 1 Year 2 Years 3 Years Since Incep. Au. Equities Growth SPS Managed Portfolio 2.76%* 4.56%* 5.17%* 15.39%* 1.75%* 5.19%* 8.53%*

ASX 300 Acc. Index 2.18% 5.79% 6.94% 21.99% 2.75% 6.43% 7.10%

NB: NB: Perf. figures reflect when invested through SPS to avoid time delay. Inception date = 02-Oct-09, *ex fees

AUSTRALIAN EQUITIES INCOME PORTFOLIO PERFORMANCE To 28-Feb-17 1 Mth 3 Mths 6 Mths 1 Year 2 Years 3 Years Since Incep. Australian Equities Income SPS Managed Portfolio 2.80%* 5.00%* 3.23%* 15.06%* 3.70%* 7.96%* 12.94%*

ASX 200 All Industrials Accumulation Index 3.42% 5.96% 5.54% 18.17% 3.27% 8.85% 12.74%

NB: NB: Perf. figures reflect when invested through SPS to avoid time delay. Inception date = 01-Jul-10, *ex fees


CorporateAnother solid period

The Baillieu Corporate department has enjoyed a busy period with various capital raisings, block trades and corporate advisory mandates being successfully conducted over the past six months.

Following the conclusion of the August 2016 reporting period, Baillieu was appointed Lead Manager to conduct block trades for several companies. The block trade process allows listed companies to increase liquidity, institutional investors to build their shareholding and the introduction of retail investors, all whilst executing the vendors sell down in an orderly and efficient manner that won’t unduly affect market pricing. We were pleased to be able to successfully execute these together with the Baillieu Holst institutional and retail divisions.

October and November continued the trend with capital raisings conducted for key Baillieu Holst clients DTI Group, LogiCamms and Smart Parking

to fund growth initiatives. Support from the Research, Institutional and Retail divisions resulted in successful outcomes for all clients, highlighting the advantages of a whole-of-firm approach.

2016 finished on a strong note, with Baillieu Holst acting as Joint Lead Manager on the IPO of Freedom Insurance Group (it is up more than 100% since listing) and Lead Manager of an institutional placement for QMS Media to fund acquisitions.

Whilst 2017 has only just begun, the Corporate department has built on its hard work in 2016 having already executed an entitlement offer for Animoca Brands Corporation and underwriting the $12m IPO of Bigtincan. Additionally, we are pleased to be working on a strong pipeline of corporate mandates and potential opportunities.

Corporate Activity

A$20 million Placement

Lead ManagerDecember 2016

A$2.5 million Block Trade

Lead ManagerNovember 2016

A$15 million Initial Public Offering

Joint Lead Manager & Underwriter

November 2016

A$11 million Placement & Entitlement

Offer

Lead Manager & UnderwriterNovember 2016

A$4.7 million Placement & SPP

Lead Manager October 2016

A$11.6 million Placement & Accelerated

Entitlement Offer

Lead Manager& UnderwriterNovember 2016


SocialThe DOXA Cadetship Program

The DOXA Cadetship Program is proudly supported by Baillieu Holst, strongly reflecting the firm’s social responsibility values.

Baillieu Holst has been a supporter and sponsor of the Doxa Student Program for the past 23 years. The Cadetship assists talented young people from socially and financially disadvantaged backgrounds who have demonstrated leadership qualities and academic capability during their year 12 VCE studies, and who aspire to complete a tertiary education.

The program provides students with an annual book allowance, a corporate partner organisation relevant to their degree, eight weeks real work experience per year and a work place mentor. The program also provides work attire, professional and personal development, tutoring and counselling support if required.

Baillieu Holst’s current student, Alessia Roujeinikova, is completing her four-year cadetship with some of the firm’s senior advisers as well as in the superannuation administration area.

Alessia was recently selected to speak at a DOXA Student Program function where she spoke about the ways in which the DOXA program and Baillieu Holst had helped her.

Alessia moved to Australia from New Zealand with parents of Russian Émigré. Life has not always been stable for her coming from a disadvantaged background.

Alessia aspired to complete a tertiary education and enter the professional workplace. The DOXA Youth Foundation reached out to her when she needed it most and set her up with a stepping stone in personal life and career.

For most of the four year cadetship with Baillieu Holst, Alessia was part of the Self-Managed Superannuation Fund Administration area also known as SMSF Solutions.

In addition to having the opportunity to gain insights into the financial services industry, Alessia’s personal development has accelerated with the relationships she has been able to develop with her mentors and staff at Baillieu Holst and the DOXA staff.

Doxa CadetshipProgram student

Alessia Roujeinikovawith Baillieu Holst

mentors Bryan Cooper(Equity Partner and

Representative) andBegum Shajahan(SMSF Specialist

Advisor).


MelbourneJonathan Andrews BCom(Ec) BA GDipAppFin ADA2 (03) 9282 8145James Bisinella BCom LLB(Hons) (03) 9602 9237Roger Bryan BCom MSI Dip(1) (03) 9602 9258Chris Christidis BCom MeSAFAA ADA2 (03) 9602 9222Florin Clopovschi BAppSc(IT) MAppFin ProfDipStockbroking ADA2 (03) 9602 9223 Stewart Collingwood AdDipFP AdDipMktg (03) 9282 8106David Comben MSAFAA(1) (03) 9602 9226Bryan Cooper BCom MeSAFAA(1) (03) 9602 9230Trevor Davidson BA BCom GDipAppFin SA Fin MeSAFAA(1) (03) 9282 8117Peter Day Financial Adviser (03) 9602 9377 John Edwards Financial Adviser (03) 9282 8153Ben Ellwood BCom ADA2 (03) 9602 9273James Fletcher BCom(Eco&Fin) GDipArts(History) (03) 9602 9345Stephen Fulton BEng(Civil)(1) (03) 9282 8164Chris Girgis BCom BA ADA1 (03) 9602 9239Alexandar Hay BBus MeSAFAA Director(1) (03) 9602 9341Ronald Hay BCom SFFin FSAFAA(1) (03) 9602 9237Paul Haysey BA LLB MeSAFAA (03) 9282 8110Charlie Heerey BEc(hons.) GDip AppFin GCertBus (Philanthropy) ADA2 (03) 9602 9219Andrew Hellier Diploma in Stockbroking GCertFinPlan MSAFAA(1) (03) 9602 9342Joanna Hill BA GDipW’Health SAFin MeSAFAA (03) 9602 9247Adrian Holst BSc BCom FCPA MSAFAA SFFin Director(1) (03) 9602 9222Charlie Holst GDipAppFin (03) 9602 9317David Holst BEc(1) (03) 9282 8105Laurie Hulse ADA2 (03) 9282 8115Anthony Ives BEc FFin (03) 9602 9392 Tom Jenkins BCom MSAFAA CPA CTA FFin (03) 9282 8186Ian Johnston BBus Dip FS(1) (03) 9602 9386James Journeaux Financial Adviser (03) 9282 8108David Julian BA/BSc MeSAFAA(1) (03) 9602 9236Michael Kent MAgrSc FFin(1) (03) 9602 9215Daphne Lee DipBusMgmt DipFP CTP MasterArts (03) 9282 8125Kim Lee BCom MBA CA Ffin(1) (03) 9282 8114Robert Lodge Financial Adviser MSAFAA (03) 9282 8104Kent Mackieson CFA(1) (03) 9602 9372Hamish Macneil BBus GdipAppFin(1) (03) 9602 9360Robert Makdissi BBus GDipAppFin (03) 9602 9234 Justin Marshall BBus ADA2 (03) 9602 9266Philip Mitchell BEc FFin MeSAFAA ADA2(1) (03) 9602 9251Peter Mitchell BBus ADA1 DipFin(FinPlan) (03) 9602 9208William Morrison FFin GDipAppFin Director(1) (03) 9602 9252Richard Morrow MSAFAA ADA2(1) (03) 9602 9243Lindsay Mott LLB BCom SFFin MSAFAA Director(1) (03) 9282 8102James Nicolaou ProfDipStockbroking SAA (03) 9602 9248Hege Nolan BBusEco/Fin,GDippAppFin ADA2 (03) 9602 9204Vince Novelli CFP CPA FPS SSA CTA ACMA GCertTax GDipFP GDipAppFin BBus PDS ANZIIF FAIM FTIA FFin FAICD MSAFAA SMSF Specialist AdviserTM (03) 9602 9374 Lubos Polakovic MSAFAA ADA2(1) (03) 9602 9269Simon Power BA GDip AppFin FFin MSAFAA Director(1) (03) 9282 8113Benjamin Prisk CFP® MSAFAA GDipAppFin DipFP (03) 9282 8188Bruce Pulbrook BEc LLB GDipAppFin&Inv MeSAFAA FFin ProfDipStockbroking(1) (03) 9282 8116Adam Routledge Financial Adviser (03) 9282 8120Andrew Smith BBus MSAFAA ANZIIF(Fellow), CFP® (1) (03) 9282 8180Adam Spicer BBus(Acc) BBus(Bkg&Fin) DipFS(FinPlan) (03) 9602 9288 Tim Stewart BBus FFin (03) 9602 9347 Ben Taylor BBus(1) (03) 9602 9387Chesley Taylor BCom FFin MeSAFAA(1) (03) 9602 9340Campbell Thompson BSc MeSAFAA ADA1(1) (03) 9602 9245Ian Warner BEc DipFP CFP MeSAFAA(1) (03) 9602 9229John Watkin Financial Adviser (03) 9282 8109Craig Webb MeSAFAA (03) 9602 9249Graeme Whitelaw DipBus CPA MeSAFAA (03) 9602 9307Ross Williams Associate Adviser (03) 9282 8182 Warren Williams BEc(Hons) MAppFin ADA1 (03) 9602 9362

Client Advisers


AdelaideDarryl Gobbett BEc(Hons) GradDipFP(Finsia) SFFIN(Life) MSAA (08) 7074 8401

Travis Adams CFA BEc GDAFI AFP SMSF Specialist AdviserTM (08) 7074 8402

Courtney Biggs BAppFin AdvDipFS(FP) ASA (08) 7074 8400

Alex Butler BEc CFP® (08) 7074 8406

Helen Dundon BAcc CPA(FPS) CFP® MSAFAA SMSF SPECIALIST Adviser SSATM (08) 7074 8407

Alan Hutchinson BEc&Bus(Hons) MeSAFAA AFP GradDipFP (08) 7074 8403

Mike James BA(Hons) CFP® (08) 7074 8405

Matthew Loveder BEc GradDipAppFin DipFP AFP (08) 7074 8404

Benjamin Prisk CFP® MSAFAA GDipAppFin DipFP (08) 7074 8410

Bendigo

Tony Langford ADA2 (03) 4433 3400

Geelong Charles Mackinnon Financial Adviser (03) 5229 4637

Gold Coast

Peter Hickey BBus FCA CFP® GradDipFin(Finsia) (07) 5628 2670

NewcastleMark Haydon BSc DipFinAdvising(ASIA) ADA2 (02) 4037 3503

Brodie Hussain BEc BFin DFS(Fin Plan) ADA1(1) (02) 4037 3502

Steven Perry BMANGT(Farm Bus)SYD GDipFinPlanning(Finsia) Newcastle Manager(1) (02) 4037 3501

PerthOwen Clare BCom CA (08) 6141 9452

John Day Financial Adviser (08) 6141 9458

Ross Fawell Financial Adviser (08) 6141 9457

Travis Hansen Financial Adviser (08) 6141 9453

Karl Laufmann Financial Adviser, WA Manager (08) 6141 9451

Cameron Pratt BBus GDip(AppFin) DIP(FinPlan) (08) 6141 9461

Donald Smith Financial Adviser (08) 6141 9455

Danny Stent BSc MBA DFP (08) 6141 9454

Zachary Stent BCom(Fin&Econ) (08) 6141 9460

Sydney Peter Cameron Financial Adviser (02) 9250 8907

Glenn Crichton BE(Mining) GDipFP AICD SAFin MESAA AusIMM ADA1 (02) 9250 8918

Stephanie Johansen MESAA DipFinMarkets(FINSIA) ADA1(1) (02) 9250 8929

Gregory Kelly MESAA ADA2 (02) 9250 8914

Adrian Leppinus BCom(1) (02) 9250 8935

Gwen Parsons BCom MESAA ADA1 (02) 9250 8912

James Rosenberg MESAA ADA1 (02) 9250 8909(1)Equity Partners with limited liability interests

DISCLOSURE OF POTENTIAL INTEREST AND DISCLAIMER

This document has been prepared and issued by:Baillieu Holst LtdABN 74 006 519 393. AFS Licence No. 245421. Participant of ASX Group. Participant of Chi-X Australia. Participant of NSX.Baillieu Holst Ltd (Baillieu Holst) and/or its associates may receive commissions, calculated at normal client rates, from transactions involving securities of the companies mentioned herein and may hold interests in securities of the companies mentioned herein from time to time. Your adviser will earn a commission of up to 55% of any brokerage resulting from any transactions you may undertake as a result of this advice.This advice is issued on the basis that:1. in preparing the advice, Baillieu Holst did not consider

whether the advice is appropriate in light of the particular investment needs, objectives and financial situation of the investor(s) or prospective investor(s); and

2. before making an investment decision on the basis of the advice contained herein, the investor(s) or prospective investor(s) need to consider whether the advice is appropriate in light of their particular investment needs, objectives and financial circumstances.

When we provide advice to you, it is based on the information you have provided to us about your personal circumstances, financial objectives and needs. If you wish to rely on our advice, it is important that you inform us of any changes to your personal investment needs, objectives and financial circumstances. If you do not provide us with the relevant information (including updated information) regarding your investment needs, objectives and financial circumstances, our advice may be based on inaccurate information, and you will need to consider whether the advice is suitable to you given your personal investment needs, objectives and financial circumstances. Please do not hesitate to contact our offices if you need to update your information held with us. Please be assured that we keep your information strictly confidential.No representation, warranty or undertaking is given or made in relation to the accuracy of information contained in this advice, such advice being based solely on public information which has not been verified by Baillieu Holst Ltd.Save for any statutory liability that cannot be excluded, Baillieu Holst Ltd and its employees and agents shall not be liable (whether in negligence or otherwise) for any error or inaccuracy in, or omission from, this advice or any resulting loss suffered by the recipient or any other person.Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Information, opinions and estimates contained in this report reflect a judgement at its original date of publication and are subject to change without notice. The price, value of and income from any of the securities or financial instruments mentioned in this report can fall as well as rise. The value of securities and financial instruments is subject to exchange rate fluctuation that may have a positive or adverse effect on the price or income of such securities or financial instruments.Baillieu Holst Ltd assumes no obligation to update this advice or correct any inaccuracy which may become apparent after it is given. Authors of company comments may hold shares in companies mentioned.

Baillieu Holst LtdABN 74 006 519 393Australian Financial Services Licence No 245421Participant of ASX GroupParticipant of NSX LtdParticipant of Chi-X Australia Pty LtdParticipant of SIM-VSEwww.baillieuholst.com.au

investor newsletter - e.l. & c. baillieu limited · 2017-03-29 · for australian business and...

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