JULY 2010 1 ASX RESOURCES - GROUP 150 We are pleased to present the July edition of ‘Group 150’, a ranking of the top 150 ASX listed resources companies (excluding oil and gas), by market capitalisation. If a week is a long time in politics, a year is surely an eternity in the stockmarket. In this edition of the Group 150, we consider developments over what has been a tumultuous year in the history of the ASX, including the “winners and losers” for the past 12 months by both market value and share price performance. The market value of the Group 150 at the end of June was $467 billion, down 0.8% from May. The entry point into the Group 150 for June was $65.6 million versus $69.8 million for May. The ASX/S&P 200 Resources Index fell 1.2% in the month, while the ASX All Ordinaries and ASX/S&P 200 Index both decreased 2.9%. June was another quiet month for M&A, with only two transactions being announced. With so much happening domestically, it is easy to lose sight of some of the bigger picture issues which have the potential to significantly affect world trade and with it, the fortunes of our commodities focussed economy. Significant among these is the announcement during the month of June (just before the G20 Summit in Toronto, which can hardly be a coincidence), that China would return to a form of “managed float” of the Yuan, following a period of nearly two years pegged to the (usually weak) US dollar. Although the Bank of China steadfastly refused to alter the official reference rate, no doubt to muddy the waters slightly for the speculators, the markets clearly interpreted the announcement as a signal that the Yuan would appreciate, albeit slowly, over time. Other things being equal, this could bring benefits for the commodities outlook, by increasing the purchasing power of China’s consumers and industrial sector. The former, in particular, will need to do much of the heavy lifting in terms of global growth, with President Obama unofficially declaring the US consumer to be on a spending strike for the indefinite future, and Europe, after a decade bathing in the cheap money glow of the Euro, now in the grip of new-found austerity. While the return to a managed float of the Yuan is a necessary and positive signal, at least at present, it is competing with a lot of other noise – most of it negative – on the health of the global economy. After a period treading water, markets appear poised for significant movement, although trying the direction of that movement seems fraught with danger. The updated “RSPT-impact” chart from last edition supports a further marked and divergent move between the domestic and international focussed companies and hence continued cost of capital pressures for domestic focussed companies. The average market value of domestic focussed companies since the proposed RSPT was announced has declined 13.6% (vs 12.2% at end of May). International focused companies increased 1.1% (vs a decline of 0.9% at end of May). Globally diversified companies (including BHP Billiton down 7.6% and Rio Tinto down 7.5%) have declined on average 15.5% (vs a decline of 10.0% at end of May). Gresham Advisory Partners Limited GROUP 150 July 2010 Edition 4 Darren Martin Gresham Advisory Partners [email protected]+61 8 9486 7077 +61 412 144 719 Gresham Advisory Partners is a leading Australian mergers and acquisitions/corporate advisory business and one of Australia’s largest and highest ranking independent corporate advisors.
Transcript
JULY 2010
1
ASX RESOURCES - GROUP 150We are pleased to present the July edition of ‘Group 150’, a ranking of the top 150 ASX listed resources companies (excluding oil and gas), by market capitalisation.
If a week is a long time in politics, a year is surely an eternity in the stockmarket. In this edition of the Group 150, we consider developments over what has been a tumultuous year in the history of the ASX, including the “winners and losers” for the past 12 months by both market value and share price performance.
The market value of the Group 150 at the end of June was $467 billion, down 0.8% from May. The entry point into the Group 150 for June was $65.6 million versus $69.8 million for May. The ASX/S&P 200 Resources Index fell 1.2% in the month, while the ASX All Ordinaries and ASX/S&P 200 Index both decreased 2.9%. June was another quiet month for M&A, with only two transactions being announced.
With so much happening domestically, it is easy to lose sight of some of the bigger picture issues which have the potential to significantly affect world trade and with it, the fortunes of our commodities focussed economy.
Significant among these is the announcement during the month of June (just before the G20 Summit in Toronto, which can hardly be a coincidence), that China would return to a form of “managed float” of the Yuan, following a period of nearly two years pegged to the (usually weak) US dollar. Although the Bank of China steadfastly refused to alter the official reference rate, no doubt to muddy the waters slightly for the speculators, the markets clearly interpreted the announcement as a signal that the Yuan would appreciate, albeit slowly, over time.
Other things being equal, this could bring benefits for the commodities outlook, by increasing the purchasing power of China’s consumers and industrial sector. The former, in particular, will need to do much of the heavy lifting in terms of global growth, with President Obama unofficially declaring the US consumer to be on a spending strike for the indefinite future, and Europe, after a decade bathing in the cheap money glow of the Euro, now in the grip of new-found austerity.
While the return to a managed float of the Yuan is a necessary and positive signal, at least at present, it is competing with a lot of other noise – most of it negative – on the health of the global economy. After a period treading water, markets appear poised for significant movement, although trying the direction of that movement seems fraught with danger.
The updated “RSPT-impact” chart from last edition supports a further marked and divergent move between the domestic and international focussed companies and hence continued cost of capital pressures for domestic focussed companies. The average market value of domestic focussed companies since the proposed RSPT was announced has declined 13.6% (vs 12.2% at end of May). International focused companies increased 1.1% (vs a decline of 0.9% at end of May). Globally diversified companies (including BHP Billiton down 7.6% and Rio Tinto down 7.5%) have declined on average 15.5% (vs a decline of 10.0% at end of May).
Gresham Advisory Partners is a leading Australian mergers and acquisitions/corporate advisory business and one of Australia’s largest and highest ranking independent corporate advisors.
Top 150 ASX LiSTed reSource compAnieS - JuneBy Market Capitalisation
Group 150
2
Mkt Cap (A$m) % Mkt Cap (A$m) %
Jun May Company 30-Jun-10 31-May-10 Change Jun May Company 30-Jun-10 31-May-10 Change
Source: Capital IQ Announced Australian Resources (excluding oil and gas) Mergers and Acquisitions >A$10m
Group 150 mArkeT cApiTALiSATion
ASX indeX performAnce - June
Mar
ket C
apit
alis
atio
n (A
$b)
JULY 2010
5
Monthly Performance Overseas Domestic Overseas/ Domestic Total
End of May
Spread of "Group 150" by Project/s Location 49 85 15 149
- Simple Average Return (0.9%) (12.2%) (10.0%)
End of June
Spread of "Group 150" by Project/s Location 50 83 15 148
- Simple Average Return 1.1% (13.6%) (15.5%)
Group 150 - “rSpT impAcT” - BASed on proJecT/S LocATion
The “RSPT-Impact” chart in Edition 3, received wide coverage and supported the clear conclusion of the adverse impact of the proposed RSPT on the domestic focused resource companies.The assessment has since been updated for a further month of trading and the conclusions have not changed and if anything, support a more marked and divergent gap between the domestic and international miners. Hence the cost of capital implications remain as companies compete globally for funding – the quantum of the impairment on Australia’s competitiveness is not a settled matter and will depend on not only the final tax regime agreed, but also on how the new regime is communicated and implemented. The average market value of domestic focussed companies since the proposed RSPT was announced has declined 13.6% (vs 12.2% at end of May). International focused companies increased 1.1% (vs a decline of 0.9% at end of May). Globally diversified companies (including BHP Billiton down 7.6% and Rio Tinto down 7.5%) have declined on average 15.5% (vs a decline of 10.0% at end of May).
Mar
ket C
apit
alis
atio
n -
Perf
orm
ance
Sin
ce P
ropo
sed
RSPT
Ann
ounc
ed
Only 149 companies in May data set as Vantage Goldfields was a new IPO during periodOnly 148 companies in June data set as Vantage Goldfields and Mungana were new IPO’s during period
Group 150
6
Group 150 winnerS And LoSerS - fY2010 ShAre price performAnce
Winners Losers
Winners Losers
Group 150 winnerS And LoSerS - fY2010 mArkeT cApiTALiSATion
Source: Capital IQ Winners and Losers based on companies in the Group 150 as at 30 June 2010
JULY 2010
7
Share Price Performance - June 2010
Share Price Performance - Since 1 Jan 2010
Share Price Performance - Since 1 July 2009
BASe meTALS - SecTor performAnce
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
Copper Nickel Zinc
Group 150
8
Share Price Performance - June 2010
Share Price Performance - Since 1 Jan 2010
Share Price Performance - Since 1 July 2009
coAL - SecTor performAnce
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
JULY 2010
9
Share Price Performance - June 2010
Share Price Performance - Since 1 Jan 2010
Share Price Performance - Since 1 July 2009
diverSified - SecTor performAnce
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
induSTriAL minerALS - SecTor performAnce
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
Group 150
10
Share Price Performance - June 2010
Share Price Performance - Since 1 Jan 2010
Share Price Performance - Since 1 July 2009
GoLd - SecTor performAnce
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
JULY 2010
11
Share Price Performance - June 2010
Share Price Performance - Since 1 Jan 2010
Share Price Performance - Since 1 July 2009
iron ore - SecTor performAnce
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
Group 150
12
Share Price Performance - June 2010
Share Price Performance - Since 1 Jan 2010
Share Price Performance - Since 1 July 2009
urAnium - SecTor performAnce
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
Shar
e Pric
e Per
form
ance
JULY 2010
13
conSenSuS commodiTY price forecASTS - June
Source: Bloomberg Consensus Estimates - Median / High / Low
Terms and ConditionsInformation contained in this publicationThe opinions, advice, recommendations and other information contained in this publication, whether express or implied, are published or made by Gresham Advisory Partners Limited (ABN 88 093 611 413), Australian financial services license (247113), and by its officers and employees (collectively “Gresham Advisory Partners”) in good faith in relation to the facts known to it at the time of preparation. Gresham Advisory Partners has prepared this publication without consideration of the investment objectives, financial situation or particular needs of any individual investor, and you should not rely on the publication for the purpose of making a financial decision. To whom this information is providedThis publication is only made available to persons who are wholesale clients within the meaning of section 761G of the Corporations Act 2001. This publication is supplied on the condition that it is not passed on to any person who is a retail client within the meaning of section 761G of the Corporations Act 2001.Disclaimer and limitation of liabilityTo the maximum extent permitted by law, Gresham Advisory Partners will not be liable in any way for any loss or damage suffered by you through use or reliance on this information. Gresham Advisory Partners’ liability for negligence, breach of contract or contravention of any law, which cannot be lawfully excluded, is limited, at Gresham Advisory Partners’ option and to the maximum extent permitted by law, to resupplying this information or any part of it to you, or to paying for the resupply of this information or any part of it to you.No warranties made as to contentGresham Advisory Partners makes no warranty, express or implied, concerning this publication. The publication provided by us on an “AS IS” basis at your sole risk. Gresham Advisory Partners expressly disclaims, to the maximum extent permitted by law, any implied warranty of merchant-ability or fitness for a particular purpose, including any warranty for the use or the results of the use of the publication with respect to its correctness, quality, accuracy, completeness, or reliability.CopyrightCopyright in this publication is owned by Gresham Advisory Partners. You may use the information in this publication for your own personal use, but you must not (without Gresham Advisory Partners’ consent) alter, reproduce or distribute any part of this publication, transmit it to any other person or incorporate the information into any other document.General mattersThese Terms and Conditions are governed by the law in force in the State of Victoria, and the parties irrevocably submit to the non-exclusive jurisdiction of the courts of Victoria and courts of appeal from them for determining any disputes concerning the Terms and Conditions.If the whole or any part of a provision of these Terms and Conditions are void, unenforceable or illegal in a jurisdiction it is severed for that jurisdiction. The remainder of the Terms and Conditions have full force and effect and the validity or enforceability of that provision in any other jurisdiction is not affected. This clause has no effect if the severance alters the basic nature of the Terms and Conditions or is contrary to public policy.If Gresham Advisory Partners do not act in relation to a breach by you of these Terms and Conditions, this does not waive Gresham Advisory Partners’ right to act with respect to subsequent or similar breaches.
Advised BHP Billiton on its
$204m offer for United Minerals
Corporation.
Advised BG Group on its $1bn takeover offer for
Pure Energy Resources Limited.
Advised IAMGOLD Corporation on its $265m acquisition
of Gallery Gold.
Advised Gem Diamonds on its
$300m acquisition of Kimberley Diamonds.
Advised Polaris Metals NL on
$178m takeover offer by Mineral
Resources Limited.
Advised Tethyan on its $220m
competing takeover offer by Crosby and Antogafasta/Barrick.
Advised Iluka on its $114m
institutional placement and
$353m accelerated right issue.
Advised Bannerman
Resources on its financing with
Resource Capital Funds.
Advised Iluka Resources on its
$54m Narama coal divestment to
Xstrata.
Advised Murchison Metals
on its joint venture with Mitsubishi.
2010
2010
Advised BHP Billiton on its
US$116bn iron ore production
joint venture with Rio Tinto.
2010
Introduced Denham Capital to
Trans Tasman Resources resulting
in NZ iron sands investment.
2010
2009
Advised Indophil on $545m
recommended offer from Zijin
2010
Advised BHP Billiton on the disposal of the Yabulu Nickel
refinery.
2009
Advised Allied Gold on its $54m
acquisition of Australian
Solomons Gold.
2009
Advised Brandrill Limited on its
$45m takeover offer by Ausdrill
Limited.
2009
2008
Advised Kalahari Minerals on its
$140m proposed merger with
Extract Resources.
2008
Advised Centaurus
Resources on its $20m merger
with Glengarry Resources.
2010
2009/08
2008
Advised Summit Resources on its
A$1.2bn takeover by Paladin Energy.
2007
2008
2006
2007
2008
Advised Guandong Rising on its $216m
cornerstone investment in Pan
Aust.
GRAM2009
Advised Energy Metals on its $86m
proportional takeover offer by China
Guangdong Nuclear Power Group.
2009
Mergers and Acquisitions
Takeover Defence
Strategic Advisory, Joint Ventures and Capital Markets
recenT reSourceS TrAnSAcTionS
Takeover Defence
Strategic Advisory, Joint Ventures and Capital Markets
