OCTOBER 2011 1 ASX RESOURCES - GROUP 150 We are pleased to present the October edition of ‘Gresham Group 150’, a ranking of the top 150 ASX listed resources companies (excluding oil and gas), by market capitalisation. September felt like another month at “ASX Casino” with only 18 companies recording a positive increment on their market value. The Gresham Group 150 lost $72.5 billion or 14.2% during the month, with the cumulative market value falling from $509.8 billion to $437.3 billion, a level not seen while we have been compiling the Group 150. At the end of the first week of October, approximately $33 billion had been recaptured with the cumulative market value climbing back to $470 billion. The entry threshold for September’s list fell dramatically to $96.6 million, down from $111.2 million last month. The ASX/ S&P 200 Resources Index decreased 13.4%, while the ASX All Ordinaries and ASX/S&P 200 Index decreased 6.9% and 6.7% respectively. Given the turmoil in the market in recent months, we reviewed the thesis from the March 2011 edition, “cash is king and debt is bad”. Utilising the recent 30 June balance sheets, we updated the market gearing levels for the Gresham Group 150 to identify any stretched balance sheets or dramatic changes in gearing levels. The updated study found that consistent with previous findings, approximately 80% of companies still remain in a net cash position and the weighted average gearing level has decreased marginally to circa 1.1% (versus 2.6% at March 2011), when measured on a net cash to enterprise value basis. During the relevant period the market value of the Gresham Group 150 has declined 28% from $605.4 billion at end of February to $437.3 billion at 30 September 2011 and cash reserves have decreased by $9.2 billion from $42.7 billion to $33.5 billion while total debt has increased $4.8 billion from $40.9 billion to $45.7 billion. Returns at “ASX Casino” in October will be interesting. Having witnessed a couple of spins of the wheel from the US Federal Reserve in response to rapidly deteriorating economic and financial conditions, it now appears the leaders of Germany and France are going to have a spin and unveil a comprehensive package to recapitalise the European banks by the end of October. Early indications (given market commentary around a possible offer for Extract) suggest the uranium sector may hit the Jackpot! Gresham Advisory Partners Limited GRESHAM GROUP 150 October 2011 Edition 19 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
OCTOBER 2011
1
ASX RESOURCES - GROUP 150We are pleased to present the October edition of ‘Gresham Group 150’, a ranking of the top 150 ASX listed resources companies (excluding oil and gas), by market capitalisation. September felt like another month at “ASX Casino” with only 18 companies recording a positive increment on their market value. The Gresham Group 150 lost $72.5 billion or 14.2% during the month, with the cumulative market value falling from $509.8 billion to $437.3 billion, a level not seen while we have been compiling the Group 150. At the end of the first week of October, approximately $33 billion had been recaptured with the cumulative market value climbing back to $470 billion.The entry threshold for September’s list fell dramatically to $96.6 million, down from $111.2 million last month. The ASX/S&P 200 Resources Index decreased 13.4%, while the ASX All Ordinaries and ASX/S&P 200 Index decreased 6.9% and 6.7% respectively. Given the turmoil in the market in recent months, we reviewed the thesis from the March 2011 edition, “cash is king and debt is bad”. Utilising the recent 30 June balance sheets, we updated the market gearing levels for the Gresham Group 150 to identify any stretched balance sheets or dramatic changes in gearing levels. The updated study found that consistent with previous findings, approximately 80% of companies still remain in a net cash position and the weighted average gearing level has decreased marginally to circa 1.1% (versus 2.6% at March 2011), when measured on a net cash to enterprise value basis.During the relevant period the market value of the Gresham Group 150 has declined 28% from $605.4 billion at end of February to $437.3 billion at 30 September 2011 and cash reserves have decreased by $9.2 billion from $42.7 billion to $33.5 billion while total debt has increased $4.8 billion from $40.9 billion to $45.7 billion. Returns at “ASX Casino” in October will be interesting. Having witnessed a couple of spins of the wheel from the US Federal Reserve in response to rapidly deteriorating economic and financial conditions, it now appears the leaders of Germany and France are going to have a spin and unveil a comprehensive package to recapitalise the European banks by the end of October. Early indications (given market commentary around a possible offer for Extract) suggest the uranium sector may hit the Jackpot!
Gresham Advisory Partners is a leading Australian mergers and acquisitions/corporate advisory business and one of Australia’s largest and highest ranking independent corporate advisors.
Top 150 asX LisTed resource companies - sepTember By Market Capitalisation
Group 150
2
Mkt Cap (A$m) % Mkt Cap (A$m) %
Sep Aug Company 30-Sep-11 31-Aug-11 Change Sep Aug Company 30-Sep-11 31-Aug-11 Change
1 1 BHP Billiton Ltd. (ASX:BHP) $186,464.7 $211,605.9 (11.9%) 51 60 Gold One International Limited (ASX:GDO) $432.8 $428.8 0.9%
Source: Capital IQ Announced Australian Resources (excluding oil and gas) Mergers and Acquisitions >A$10m
Group 150 markeT capiTaLisaTion
asX indeX performance - sepTember
+21.5%
Group 150 mkT cap - by commodiTy
Mar
ket V
alua
tion
(A$b
) - G
roup
150
-6.4%
OCTOBER 2011
5
NET DEBT
NET CASH
capiTaL sTucTure - GearinG LeveLs
Changing gearing levels in a falling market
In the March 2011 edition, we reviewed the thesis “cash is king and debt is bad” based on the net cash position of the Gresham Group 150 utilising market values at end of February adjusted for 31 December 2010 balance sheets.
Given the uncertainty in the markets in recent months, the analysis has been updated to account for the net cash position at 30 June 2011. During this time the market value of the Gresham Group 150 has declined 28% from $605.4 billion to $437.3 billion at 30 September 2011 and cash reserves have decreased by $9.2 billion from $42.7 billion to $33.5 billion while total debt has increased $4.8 billion from $40.9 billion to $45.7 billion.
The study found that approximately 80% of companies still remain in a net cash position, consistent with previous findings, but the weighted average gearing level has decreased marginally to circa 1.1% (versus 2.6% at March 2011), when measured on a net cash to enterprise value basis.
In a change from March, the companies with overseas focussed operations are in a stronger net cash position than peers with domestic focussed operations – refer next page. Below is a summary of the gearing levels of the Gresham Group 150.
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
