12 Nov 2007 Bulletin

Monday, 12 November 2007
Topic Page Number
Overnight Summary 2
US Equities 3
US Bonds 3
Commodities 3
International Markets 4
US Economic Action 4
Australian Market Summary 5
Australian Equity Market Movers (Sector) 5
Australian Equity 5 Best / Worst Stocks 5
Australian Companies Ex-Dividend 6
Australian Equity Snapshots 7
Summary of Daily Research Reports 8
ST GEORGE BANK LIMITED
SHARE PRICE AS AT 09 November 2007
Last Sale $37.51
Changes +$0.61
Total Volume 2,966,963
Web Address: www.stgeorge.privatebank.com.au
www.banksa.privatebank.com.au
PRIVATEBANKPORTFOLIOSERVICES
DAILYBULLETIN

Daily Bulletin 12 November 2007
Overnight Markets
US stocks dived for the third day as investor confidence took
another battering from big writedowns by Wachovia and Fannie
Mae, a poor outlook for technology stocks and near record high
oil prices.
Australian Market Summary
The Australian share market rose in early trading following strong
leads from overseas markets. The market traded sideways for the
remainder of the day. The All Ordinaries index ended Friday
trading up 52 points.
Flashnotes
Bank of Qld. (BOQ) - Tier 1 capital rasing
Commonwealth Bank (CBA) - IWL’s Scheme of Arrangement to
be acquired by CBA receives Court approval
Coates Hire (COA) - Approval and release of Scheme Booklet on
NED Group proposal
Hills Industries (HIL) - HIL AGM - summarising another record
profit
Coles Group (CGJ) - Removing research from our web site
Coles Group (CGJ) - CGJ shares suspended from official
quotation
Abacus Property Group (ABP) - Update on U Stow It takeover
bid
Perpetual Limited (PPT) - FUM declines $100M in October
largely from institutional outflows
Flight Centre (FLT) - Trading Halt
Tabcorp (TAH) - Court allows tax deduction claims for Star City
Brambles (BXB) - Asciano statement regarding market
speculation
Asciano Group (AIO) - Statement regarding market speculation
WA Newspapers (WAN) - 1Q08 result: Reported profit declines
19% due to Hoyts sale
LinQ Resources Fund (LRF) - October NTA is $2.13 pre-tax
Wesfarmers Ltd (WES) - Supreme Court approves scheme of
arrangement
WorleyParsons Ltd (WOR) - Contracts awarded by ExxonMobil
and Petrobras
Coles Group (CGJ) - Supreme Court approves scheme of
arrangement
Tap Oil (TAP) - Woollybutt-6H appraisal well disappoints
Rio Tinto (RIO) - RIO explores options to sell Rio Tinto Energy
America
Lend Lease (LLC) - A$800M contract signed
Bendigo Bank (BEN) - The Federal Treasurer approves the
proposed Adelaide Bank and BEN merger
Adelaide Bank (ADB) - The Federal Treasurer approves the
proposed ADB and Bendigo Bank merger
Transpacific Industries (TPI) - TPI announces $250M
convertible note
Fortescue Metals (FMG) - Capital works program requires an
additional $100M
News Corporation (NWS) - NWS prices issue of US$1.25B of
new debt
Fortescue Metals (FMG) - FMG seek shareholder approval for
10:1 share split
Aust. Infrastructure Fund (AIX) - AIX acquires incremental
stakes through BAA assets
National Aust Bank (NAB) - NAB delivers a strong FY07 result
Rio Tinto (RIO) - Rio Tinto rejects approach from BHPBilliton
BHP Billiton Limited (BHP) - Rio Tinto rejects approach from
BHPBilliton
Foreign Equities
Index/Security Close Chg %Chg
Dow Jones (US) 13,043 -223.6 -1.7
S&P 500 1,454 -21.1 -1.4
NASDAQ 2,628 -68.1 -2.5
FTSE 100 (UK) 6,305 -77.0 -1.2
DAX 30 (Germany) 7,812 -7.1 -0.1
CAC 40 (France) 5,524 -107.5 -1.9
Nikkei (Japan) 15,583 -188.2 -1.2
Figures as at 12/11/2007 8:30 AM AEST
Australian Market Summary
Index/Security Close Chg %Chg
All Ordinaries 6,607 +38.9 +0.6
ASX 200 6,546 +24.0 +0.4
ASX Small Ords 4,034 +4.9 +0.1
Industrials 6,957 -63.3 -0.9
Fin.-x-Prop Trusts 7,506 +7.9 +0.1
Materials 15,454 +244.2 +1.6
Cons. Staple 8,501 -93.0 -1.1
Telecom Serv. 1,664 -17.4 -1.0
10y Bond Yield 6.00 -0.19 -3.1
Figures as at 09/11/2007 4:30 PM AEST
Commodities
Index/Security Close Chg %Chg Units
Base Metals
CRB Index 354.5 +0.69 +0.2
Aluminium 2,563 -20.0 -0.8 USD/t
Copper 7,001 -185.0 -2.6 USD/t
Lead 3,574 +70.0 +2.0 USD/t
Nickel 33,510 +1,110.0 +3.4 USD/t
Tin 16,785 +185.0 +1.1 USD/t
Zinc 2,742 -49.0 -1.8 USD/t
Precious Metals
Gold 832 -0.1 0.0 USD/Oz
Silver 15.4 +0.0 +0.2 USD/Oz
Energy
Oil (West Texas) 96.3 +0.9 +0.9 USD/Bar
Figures as at 12/11/2007 8:30 AM AEST
Currencies
Index/Security Close Chg %Chg Units
AUD / USD 0.904 -0.024 -2.5 $US
AUD / Euro 0.621 -0.011 -1.8 $A
AUD / STG 0.440 -0.001 -0.3 GBP
AUD / Yen 105 0.0 +0.0 Yen
USD / Yen 113 0.0 0.0 Yen
Euro / USD 1.47 +0.00 +0.2 $US
Figures as at 09/11/2007 4:30 PM AEST

Private Bank Daily Bulletin
Daily Research Reports
Peptech (PTD) - FY07 Result: Dominated by profit on sale of Domantis, as Peptech becomes Arana
AGL Energy (AGK) - AGM comments - reaffirms FY08 guidance
National Aust Bank (NAB) - FY07: strong result but recommendation downgraded due to share price rise
Transpacific Industries (TPI) - TPI rolls debt with a new $250M convertible note
WA Newspapers (WAN) - 1Q08 result: Profit below expectations
Fortescue Metals (FMG) - News of increased liquidity measures is sobered by the need for an additional $100M
Caltex Aust (CTX) - Review of price target
BHP Billiton Limited (BHP) - BHP makes offer for RIO
Goodman Fielder (GFF) - Pricing pressures remain a concern
Jubilee Mines (JBM) - Premium added to maintain recommendation
Rio Tinto (RIO) - BHP makes offer for RIO
Page 3

US Equities
US stocks dived for the third day as investor confidence took another battering from big writedowns by Wachovia and Fannie
Mae, a poor outlook for technology stocks and near record high oil prices.
Wachovia reported a 3Q pre-tax loss of US$1.3B after the value of its mortgage-linked investments plunged by US$1.1B.
Shares in the nation’s fourth largest bank initially tumbled over 4%, but managed to end up 0.9%. Perhaps investors were
relieved that Wachovia’s total CDO exposure now stands at US$676M after the 3Q writedown, or that the value of its US$2.1B
portfolio of more traditional sub-prime mortgage-backed bonds held steady in October due to its hedging strategies. Wachovia
has also increased its bad debt provisions to between US$500-600M for the 4Q.
Fannie Mae reported profits that fell by more than half in the last nine months due to rising credit losses and mortgage
delinquencies. Shares in the largest buyer and backer of home loans in the US plummeted by almost 10%, but recovered to end
down 1.6%.
Surprisingly, the financial stocks weathered Friday’s sell down well, thanks to bargain hunting in the downtrodden sector.
Citigroup rose 0.6%, while Morgan Stanley gained 1%.
The same could not be said for technology stocks. Losses in the technology sector outpaced the broader market after wireless
technology firm Qualcomm issued a 2008 forecast that was below analysts’ expectations and its shares sank 4.2%. The
forecast comes a day after Cisco warned about waning demand for its products from banking and automotive clients. Until
recently, technology stocks have been leading the market.
On the M&A front, the mortgage insurance sector jumped on news that Old Republic had taken a large stake in two companies
in the sector. One of the mortgage insurers is PMI Group and its shares surged almost 34%.
Other notable movers include Merck and Walt Disney. Merck gained over 2% after it said it would pay US$4.85B to resolve
most of the 27K claims involving its Vioxx medication. Disney went the other way, dropping 2.7%, although it reported earnings
that beat expectations.
Market breadth was negative on above average volumes, with all NYSE sector indices finishing in the red. For the week, the
NASDAQ posted the worse performance, falling 6.9%. The Dow Jones Industrial Average and S&P 500 are down 4.1% and
3.7%, respectively.
US Bonds
US Treasury bond prices jumped on rising fears that US banks faced many more billions in sub-prime related writedowns.
The two- and five-year notes tumbled 0.12 to 3.43% and 3.75%, respectively. Meanwhile the yield on 30-year Treasury note
dropped 0.05 4.60%.
US EQUITIES US BONDS
Page 4

Commodities
Crude oil prices bounced from the previous session’s loss due to the weak US dollar and supply worries ahead of winter.
Traders said that options expiration could push oil to US$100/barrel by Tuesday, but warned that this could set the stage for a
heavy sell-off from profit takers.
Gold prices failed to follow oil higher due to profit taking as gold failed to overcome resistance at US$850/ounce. Gold had
finished higher in the last five consecutive sessions.
Copper also lost ground, held back by persistent worries about slowing economic growth and rising inventories. London Metal
Exchange inventories of the red metal rose again on Friday and are now up 75% since July. Copper stockpiles monitored by the
Shanghai Futures Exchange rose 5% to 59,208 tonnes.
COPPER & NICKEL OIL
GOLD
Page 5

International Markets
European stocks fell to their lowest level in almost two months as European equities continued to be weighted down by their US
counterparts. Banking and technology stocks took the brunt of Friday’s sell off.
The major European exchanges had opened higher as sentiment got a boost from BHP Billiton’s audacious bid for Rio Tinto.
However, that soon changed when US-based Wachovia and Fannie Mae announced massive losses due to the sub-prime
fallout.
The news added to jitters that European banks could be facing more shocking writedowns in the coming quarter. UBS tumbled
4.1%, while the Royal Bank of Scotland lost 3% and BNP Paribas fell 2.7%. For the year, these three banks have lost 31%,
39%, and 17% respectively.
Also adding to worries was the latest EU growth forecast. The EU is expecting growth to slow to 2.4% for the next two years,
down from 2.9% this year, due to the US sub-prime turmoil and high oil prices.
The technology sector was another to be hit hard after Qualcomm issued a 2008 profit and sales guidance in the US that was
below expectations. Nokia plunged 4.2%, Alcatel Lucent gave up 3.9% and Ericsson lost 3.5%.
Meanwhile, Rio Tinto continued to bask in the afterglow of BHP’s bid. Rio shares surged another 6.2% on speculation that BHP
would sweeten the offer to win support from Rio’s board. If that fails, there is talk that BHP would attempt a hostile takeover of
its rival. The Financial Times reported that BHP has secured a US$70B credit line from Citigroup.
Amongst the major European exchanges, France’s CAC has fell the hardest, losing 1.91%. The FTSE 100 was close behind
with a 1.21% loss, while the DAX only inched down 0.09%.
Risk aversion was the dominant theme. The Japanese yen hit an 18-month high against the US dollar as traders exited carry
trades due to the waning risk appetite. The yen also rose on crosses.
In early AEST trade, the British pound slipped to US$2.0849 as UK banks struggled with their own credit issues, while the
Australian and New Zealand dollar lost over 1% each on the unwinding carry trades.
FTSE EURO TOP 100 $US/$A VS EUR/$A
Page 6

Australian Stock Prices Overnight
In New York, News Corp fell by US$0.45 to US$22.13, equivalent to A$24.45, A$0.61 above its last close on the ASX.
ResMed rose by US$0.69 to US$43.54, equivalent to A$4.81, A$0.18 above its last close on the ASX.
In London, Rio Tinto rose 328.0 pence to £56.24, A$7.52 higher in Australian currency terms.
BHP-Billiton fell 28.0 pence to £16.28, A$0.64 lower in Australian currency terms.
Henderson Group Plc fell 8.5 pence to £1.54, A$0.19 lower in Australian currency terms.
US Economic Action
In sign that the housing and mortgage turmoil is hitting consumers, the preliminary Michigan Consumer Sentiment Index fell to
75.0 in November from 80.9 the month before. Economists had expected a more modest dip to 80.0.
The US Trade Balance improved in September to -US$56.5B compared to -US$56.8B in the previous month. The falling US
dollar helped boost exports. The market expected the Trade Balance to blow out further to -US$58.5B.
However, economic news on the day failed to move the markets.
Pending Home Sales (for September, released Wed AEST, F/cast: -2.0%, Prior: -6.5%)
Treasury Budget (for October, released Wed AEST, F/cast: -US$53.0B, Prior: -US$49.3B)
Retail Sales (for October, released Thurs AEST, F/cast: 0.2%, Prior: 0.6%)
Retail Sales excluding auto (for October, released Thurs AEST, F/cast: 0.3%, Prior: 0.4%)
PPI (for October, released Thurs AEST, F/cast: 0.2%, Prior: 1.1%)
Core PPI (for October, released Thurs AEST, F/cast: 0.2%, Prior: 0.1%)
Business Inventories (for September, released Thurs AEST, F/cast: 0.3%, Prior: 0.1%)
Crude Inventories (for week of 09 November, released Thurs AEST, Prior: -821K)
CPI (for October, released Fri AEST, F/cast: 0.3%, Prior: 0.3%)
Core CPI (for October, released Fri AEST, F/cast: 0.2%, Prior: 0.2%)
Initial Claims (for week of 11 November, released Fri AEST, Prior: 317K)
NY Empire State Index (for November, released Fri AEST, F/cast: 21.0, Prior: 28.8)
Philadelphia Fed (for November, released Fri AEST, F/cast: 6.0, Prior: 6.8)
Net Foreign Purchases (for September, released Sat AEST, Prior: -US$69.3B)
Industrial Production (for October, released Sat AEST, F/cast: 0.1%, Prior: 0.1%)
Capacity Utilisation (for October, released Sat AEST, F/cast: 82.1%, Prior: 82.1%)
Page 7

Australian Market Summary: As at 09 November 2007
Overview
AUSTRALIAN EQUITIES MARKET: The Australian share market rose in early trading following strong leads from overseas
markets. The market traded sideways for the remainder of the day. The All Ordinaries index ended Friday trading up 52 points.
The S&P/ASX 200 rallied by 39 points. Energy and Materials powered ahead on buying in Woodside Petroleum (+$1.52), Oil
Search (+$0.26), Paladin Resources (+$0.33), Rio Tinto (+$18.59) and Fortescue Metals (+$5.90). Financials’ gain was led by
National Australia Bank (+$1.62), Macquarie Group (+$2.74) and St George Bank (+$0.48). Key contributors to Healthcare’s
increment were CSL (+$0.86) and Cochlear (+$0.53). Other notable moves of the day belonged to Computershare (+$0.96),
Woolworths (-$0.25), Coles Group (-$0.13) and Wesfarmers (-$0.66).
In market news, National Australia Bank reported FY07 cash NPAT of $4,394M, up 12.6% on FY06. The result reflected strong
lending, deposit and FUM growth, cost containment, which were partly offset by a modest decline in the net interest margin and
an increase in the charge for bad debts. BHP Billiton (-$0.84) has made an offer the RIO Board proposing the acquisition of RIO
by BHP. Under the proposal each RIO share would be exchanged for three BHP shares. The RIO Board has rejected BHP's
offer stating that it significantly undervalues RIO. West Australian Newspapers (+$0.03) reported 1Q08 net profit of $21M, down
19% on the pcp. The fall was mainly due to a $7M loss recorded on the disposal of WAN's 50% stake in Hoyts (which is still
subject to regulatory approval), and Hoyts' contributions being disclosed as discontinued operations.
AUSTRALIAN BOND MARKET: Australian Treasury bond yields fell 4 basis points at the short end, while yield increments of 1-
2 basis points were seen at the medium-long end of the curve.
AUSTRALIAN DOLLAR: There was little change to the Australian dollar with the currency trading slightly higher against the US
dollar. By day’s end, the Australian dollar was trading near the US0.929 mark.
AUSTRALIAN ECONOMIC STATISTICS: NO MAJOR AUSTRALIAN ECONOMIC STATS WERE RELEASED IN FRIDAY
TRADING. The next major economic release of note is the Reserve Bank Quarterly Monetary Policy Statement on Monday 12
November.
Market Movers
SECTOR PERFORMANCE
5 BEST / WORST STOCKS
Page 8

Companies Ex-Dividend
Ex Date Sub Type Security
Div Amt
(cents)
Franking
26-Nov-07 Final Year Result Astron Limited (ATR) 20 0
26-Nov-07 Special Event HFA Accelerator Plus Limited (HAP) 5 100
26-Nov-07 Final Year Result
Insurance Australia Group Reset Preference Shares (RPS1)
(IAGPA)
282.32 100
Insurance Australia Group Reset Preference Shares (RPS2)
(IAGPB)
226.12 100
23-Nov-07 Final Year Result St George Bank Limited (SGB) 86 100
22-Nov-07 Final Year Result Linden & Conway Limited (LDN) 30 100
Linden & Conway Limited 5% Fixed Preference Share
(LDNPA)
10 100
19-Nov-07 Half Yearly Result Fisher & Paykel Appliances Holdings Limited (FPA) 9 0
19-Nov-07 First Quarter Result Telecom Corporation of New Zealand Limited (TEL) 8.2353 0
16-Nov-07 Half Yearly Result Luminus Systems Limited (LSL) 0.016 100
15-Nov-07 Special Event Canada Land Limited (CDL) 0.58 0
15-Nov-07 Final Year Result CP1 Limited (CPK) 6 33.33
15-Nov-07 Special Event Indigo Pacific Capital Limited (IPA) 6 100
15-Nov-07 Final Year Result Village Roadshow Limited (VRL) 9 100
13-Nov-07 First Quarter Result
ANZ Stapled Exchangeable Preferred Security (StEPS)
(ANZPA)
198.62
13-Nov-07 Half Yearly Result CSR Limited (CSR) 6 100
12-Nov-07 Final Year Result Brickworks Limited (BKW) 26 100
Brickworks Preferred Adjustable Variable Exchangeable
Resettable Shares (PAVERS) (BKWPA)
329 100
12-Nov-07 Final Year Result Coles Group Limited (CGJ) 25 100
12-Nov-07 Final Year Result Collection House Limited (CLH) 2 100
12-Nov-07 Special Event Crusade Global Trust No. 1 of 2006 - Class A-3 Notes (CTJ)
12-Nov-07 Final Year Result Desane Group Holdings Limited (DGH) 3 0
12-Nov-07 Final Year Result eservglobal Limited (ESV) 2 0
12-Nov-07 Final Year Result Joyce Corporation Limited (JYC) 3 0
12-Nov-07 Final Year Result Money3 Corporation Limited (MNY) 3 100
12-Nov-07 Final Year Result TFS Corporation Limited (TFC) 2.5 100
12-Nov-07 Final Year Result Waterco Limited (WAT) 2 100
Page 9

Flashnotes
BOQ proposes to raise $150M (with the ability to accept up to $50M in oversubscriptions) in Tier 1 capital via the issue of BOQ
Perpetual Equity Preference Shares (BOQ PEPS). The semi-annual dividends will be priced at 2% above the 180-day Bank Bill
Swap Rate. The dividends are expected to be fully franked. BOQ intends to use the proceeds to fund growth. The offer opens
on 19 November 2007 and closes on 10 December 2007. The preference shares will be listed on the ASX.
The Supreme Court of Victoria has approved IWL’s Scheme of Arrangement to be acquired by CBA. The Scheme is expected
to be implemented on 26 November 2007. While this is a small deal for CBA, we believe that IWL will be a good strategic fit
within CBA’s equities business as it provides more growth options over the longer term.
COA has announced that the Federal Court has approved the Scheme Booklet relating to the proposed acquisition of COA. The
Scheme Meeting is scheduled to commence at 10:00am in Sydney on 17 December 2007. The Scheme Booklet, which
contains the Independent Expert's Report, will be dispatched to COA shareholders on or about 16 November 2007. The
Independent Expert declared the overall proposal to be in the best interests of COA shareholders and ascribed a value range of
$6.27 to $6.93 per share.
HIL held its AGM on 9 Nov 07. The meeting was hosted by the company Chairman Ms Jennifer Hill-Ling who summarised the
FY07 result and the current trading conditions HIL are facing, which were described as favourable. Management highlighted
their focus on improving group profitability going forward. Both Ms Jennifer Hill-Ling and Mr Geoff Hill were re-elected as
directors.
CGJ shares will be suspended from official quotation at the close of trading today, 9 November 2007. As such, we shall remove
our research from our web site on Friday, 16 November 2007.
CGJ shares will be suspended from official quotation at the close of trading today, 9 November 2007. The WES ordinary shares
& WES partially protected shares (PPS), are expected to commence trading on a deferred settlement basis on 12 November
2007. WES' ordinary shares issued to CGJ shareholders will have the ASX code ‘WESNA’ during deferred settlement trading &
will revert to the code ‘WES’ at normal trading. WES' PPS will have the code ‘WESN’ during deferred settlement & normal
trading.
Bank of Qld. (BOQ) - Tier 1 capital rasing 09-Nov-07 18:31
Commonwealth Bank (CBA) - IWL’s Scheme of Arrangement to be acquired by CBA receives Court approval09-Nov-07 17:55
Coates Hire (COA) - Approval and release of Scheme Booklet on NED Group proposal 09-Nov-07 17:34
Hills Industries (HIL) - HIL AGM - summarising another record profit 09-Nov-07 17:13
Coles Group (CGJ) - Removing research from our web site 09-Nov-07 16:47
Coles Group (CGJ) - CGJ shares suspended from official quotation 09-Nov-07 16:30
Page 10

ABP has acquired more than 50% (now 51.54%) of shares in U Stow It Holdings Ltd under its previously announced off-market
takeover bid. The bid, which is now unconditional, has been recommended by U Stow It's directors and values U Stow at
~$40M. U Stow It owns and operates a number of self-storage assets in Canberra and Queanbeyan. These assets are being
acquired and warehoused by ABP ahead of a potential launch of a second storage fund. The takeover offer has been extended
until 22 Nov 2007.
PPT announced that funds under management (FUM) as at 31 October 2007 were $39.4B. This includes outflows of $400M
from institutional clients, three quarters of which was Australian Equities, and one quarter Enhanced Cash. FUM as at 30
September 2007 was $39.5B.
FLT announced that has made a request to the ASX for its shares to be placed in a trading halt. FLT shares will remain in pre-
open until the earlier of the commencement of normal trading on Tuesday, 13 November 2007 or when an announcement is
released to the market.
The Federal Court has allowed in full Star City's tax deduction claims against the Australian Tax Office (ATO). Star City had
claimed deductions for $120M in fees that it prepaid in relation to the occupancy of its Sydney casino site. The ATO had
disallowed the deductions and imposed penalties. TAH inherited this issue, which arose in 1994, when it acquired Star City in
1999. TAH disclosed in its FY07 Financial Report that it had provided for unpaid tax of $32M and penalties and charges of
$27M.
Asciano announced that it has no current intention of making a takeover bid for BXB. It also advised that it presently intends to
retain its 4.09% shareholding in BXB.
AIO announced that it has no current intention of making a takeover bid for Brambles. It also advised that it presently intends to
retain its 4.09% shareholding in Brambles.
Abacus Property Group (ABP) - Update on U Stow It takeover bid 09-Nov-07 16:27
Perpetual Limited (PPT) - FUM declines $100M in October largely from institutional outflows 09-Nov-07 15:13
Flight Centre (FLT) - Trading Halt 09-Nov-07 14:22
Tabcorp (TAH) - Court allows tax deduction claims for Star City 09-Nov-07 13:39
Brambles (BXB) - Asciano statement regarding market speculation 09-Nov-07 13:25
Asciano Group (AIO) - Statement regarding market speculation 09-Nov-07 13:21
Page 11

WAN's 1Q08 reported net profit declined 19% on the pcp to $21M. The fall was mainly due to a $7M loss recorded on the
disposal of WAN's 50% stake in Hoyts (which is still subject to regulatory approval), and Hoyts' contributions being disclosed as
discontinued operations. Normalised net profit for 1Q08 increased 5% on the pcp to $28M on an underlying basis. Sales
revenue was up 4% on the pcp to $117M, while adjusted EBIT rose 5% to $45M. The result was below our expectations.
LRF has released its monthly net tangible asset (NTA) update. LinQ Resources Fund's unaudited NTA backing was $2.13 (pre-
tax) per share as at 31 October 2007, this is an increase of 12% on the 30 September NTA of $1.90. Allowing for a notional tax
adjustment of 30%, the post-tax NTA would be $1.77 on 31 October 2007 (30 Sept 2007: $1.61)
The Supreme Court of Victoria has approved the Scheme of arrangement following the approval of the Scheme at the Coles
Group shareholders meeting on 7 November 2007. The Scheme of arrangement for Coles Group to be acquired by WES is
expected to be implemented on Friday 23 November 2007.
WOR has been awarded a US$110M contract by Petrobras to provide integration and project management services and to
execute front-end engineering design for utilities and offsites for the COMPERJ refinery project. WOR and its 50% joint venture
partner Foster Wheeler (who have been working with ExxonMobil on detailed studies for the construction of a petrochemical
plant in Singapore) have been given the go ahead to conduct EPCM for the facility. The price of the contract has not been
disclosed.
WA Newspapers (WAN) - 1Q08 result: Reported profit declines 19% due to Hoyts sale 09-Nov-07 13:20
LinQ Resources Fund (LRF) - October NTA is $2.13 pre-tax 09-Nov-07 11:56
Wesfarmers Ltd (WES) - Supreme Court approves scheme of arrangement 09-Nov-07 11:55
WorleyParsons Ltd (WOR) - Contracts awarded by ExxonMobil and Petrobras 09-Nov-07 11:50
Page 12

CGJ announced that the Supreme Court of Victoria has approved the Scheme of arrangement following the approval of the
Scheme at its shareholders meeting on 7 November 2007. The Scheme of arrangement for CGJ to be acquired by Wesfarmers
is expected to be implemented on Friday 23 November 2007.
The Woollybutt-6H appraisal well is located between two previous oil discoverys. The Woollybutt-6H appraisal well has
intersected to reservoir section at a depth below the oil/water contact observed in the offset wells. As a result the well will be
plugged and abandoned. This is a disappointing result for TAP. This result does not impact the successful Woollybutt-4H
appraisal well that was recently drilled. Woollybutt-4H is expected to begin production in 2Q08.
As part of the strategic review following the Alcan acquisition RIO has decided to explore options for the sale of some or all of
Rio Tinto Energy America. Rio Tinto Energy America is the second largest coal producer in the US.
LLC has signed a A$800M development and management contract for a 40-acre site in Media City, Manchester, UK. The site,
alongside the Manchester Ship Canal, will eventually cover up to 200 acres and be home to a number of industries associated
with the media industry. The project will include office blocks, residential housing units, leisure and retail facilities as well as
infrastructure and road works. Construction is expected to start immediately, with completion due December 2010.
The Federal Treasurer has given approval for the proposed merger between Adelaide Bank (ADB) and (BEN), under the
Financial Sector (Shareholdings) Act. This is another key condition of the proposed deal, which has been met. The next hurdle
is ADB shareholder approval at the meeting scheduled for 12 November 2007.
The Federal Treasurer has given approval for the proposed merger between ADB and Bendigo Bank (BEN), under the Financial
Sector (Shareholdings) Act. This is another key condition of the proposed deal, which has been met. The next hurdle is ADB
shareholder approval at the meeting scheduled for 12 November 2007.
Coles Group (CGJ) - Supreme Court approves scheme of arrangement 09-Nov-07 11:46
Tap Oil (TAP) - Woollybutt-6H appraisal well disappoints 09-Nov-07 11:43
Rio Tinto (RIO) - RIO explores options to sell Rio Tinto Energy America 09-Nov-07 11:38
Lend Lease (LLC) - A$800M contract signed 09-Nov-07 11:30
Bendigo Bank (BEN) - The Federal Treasurer approves the proposed Adelaide Bank and BEN merger 09-Nov-07 11:06
Adelaide Bank (ADB) - The Federal Treasurer approves the proposed ADB and Bendigo Bank merger 09-Nov-07 11:06
Page 13

TPI intends to place a $250M convertible note, due December 2014. The offering is still subject to receipt of all necessary
regulatory approvals in relevant jurisdictions. The note will carry a 6.75% coupon with a redemption value at maturity equal to
the principal amount. The conversion price has been set at A$14.8648 per share, a 36% premium to the closing price on 8 Nov
2007. TPI intends to list the notes on the Singapore Stock Exchange. Proceeds will be used to repay existing bridge loans.
With FMG still aiming to have its first shipment of ore by May 2008, the company feels that it needs to allocate additional
resources toward rail construction, in particular earthworks and track laying progress. The cost of these initiatives, together with
indications coming from a full review conducted on the rail works program to date, suggest that an additional $100M will need to
be drawn from the FMG’s existing cost over-run and back up reserve accounts.
NWS subsidiary News America Incorporated has announced the pricing of an issuance of US$1.25B of 6.65% Senior Notes
Due 2037. The offering is expected to close on 14 November 2007 and is subject to customary closing conditions. News
America will receive gross proceeds of US$1.25B from the offering and expects to use the net proceeds for general corporate
purposes.
A resolution had been passed by the FMG board to seek shareholder approval for a share split to be set at 10 shares for every
1 share held. It is expected that a meeting of shareholders will be called in the near future to consider this proposal. If approved
by shareholders, we would expect it would significantly increase the liquidity in FMG stock.
Hastings Fund Management has announced the acquisition of BAA International Holdings (BAAIH) from BAA Limited for
A$775M. BAAIH owns 19.8% of APAC (Melbourne and Launceston airports), 10% in Northern Territory airport, 15% of Perth
Airport and 15% of the convertible notes issued at Perth airport. AIX will initially invest $146.3M and intends to acquire at
minimum 2.0% in APAC, 4.4% in Perth, 15% of Perth convertible notes and 2.8% in NT airports. AIX intends to use existing
facilities and cash.
FY07 cash NPAT of $4,394M, was up 12.6% on FY06 and below our $4,422M forecast. In terms of ongoing operations, cash
NPAT was up 17.7%. The result reflected strong lending, deposit and FUM growth, cost containment, which were partly offset
by a modest decline in the net interest margin and an increase in the charge for bad debts. NAB noted that asset quality
measures are up from historical lows, but within expectations. The final dividend increase of 11cps to 95cps (ff) was a pleasant
surprise.
BHP has made an offer the RIO Board proposing the acquisition of RIO by BHP. Under the proposal each RIO share would be
exchanged for three BHP shares. The RIO Board has rejected BHP's offer stating that it significantly undervalues RIO.
Transpacific Industries (TPI) - TPI announces $250M convertible note 09-Nov-07 10:24
Fortescue Metals (FMG) - Capital works program requires an additional $100M 09-Nov-07 10:11
News Corporation (NWS) - NWS prices issue of US$1.25B of new debt 09-Nov-07 10:10
Fortescue Metals (FMG) - FMG seek shareholder approval for 10:1 share split 09-Nov-07 09:52
Aust. Infrastructure Fund (AIX) - AIX acquires incremental stakes through BAA assets 09-Nov-07 09:35
National Aust Bank (NAB) - NAB delivers a strong FY07 result 09-Nov-07 09:31
Rio Tinto (RIO) - Rio Tinto rejects approach from BHPBilliton 09-Nov-07 09:02
BHP Billiton Limited (BHP) - Rio Tinto rejects approach from BHPBilliton 09-Nov-07 08:57
Page 14

Daily Research Reports
PTD reported FY07 revenue of $34.6M, up 46% on pcp, while reported NPAT was $133.4M, largely due to the profit on sale of
its stake in Domantis. Management did not declare a final dividend. Shareholders voted in favour of a name change to Arana
Therapeutics Limited. Management also delivered a new strategic plan for the business focused on expanding and accelerating
its internal and clinical pipeline and increasing its technology platforms to in-license new drug candidates.
At its AGM, AGL advised it has completed the review in relation to the revised earnings guidance, and reconfirm its revised
FY08 NPAT guidance range of $330M-$360M. AGL also announced on 6 November that its 50/50 JV with Arrow Energy will
acquire the gas merchant and pipeline businesses of the Enertrade from the QLD Government. The 50% acquisition of the gas
merchant business will result in at least 1cps earning increment in each of FY08 and FY09.
FY07 cash NPAT of $4,394M, was up 12.6% on FY06 and below our $4,422M forecast. In terms of ongoing operations, cash
NPAT was up 17.7%. The result reflected strong lending, deposit and FUM growth and good cost containment. Partly offsetting
this, there was a modest decline in the net interest margin and an increase in the charge for bad debts. NAB noted that
delinquent assets are up from historical lows, but within expectations. The final dividend increased by 11cps to 95cps (ff).
Peptech (PTD) - FY07 Result: Dominated by profit on sale of Domantis, as Peptech becomes Arana
AGL Energy (AGK) - AGM comments - reaffirms FY08 guidance
National Aust Bank (NAB) - FY07: strong result but recommendation downgraded due to share price rise
Page 15

TPI announced that it intends to place a $250M subordinated convertible note due December 2014. The offering, which has a
$14.8648 strike price is subject to all necessary regulatory approvals in relevant jurisdictions and carries a 6.75% coupon, with a
redemption value equal to the principal amount. The note is expected to be listed on the Singapore Stock Exchange.
WAN's 1Q08 reported NPAT declined 19% on the pcp to $21M. The fall was mainly due to a $7M loss recorded on the disposal
of WAN's 50% stake in Hoyts, and Hoyts' contributions being disclosed as discontinued operations. Adjusted NPAT declined 2%
on the pcp to $30M in 1Q08. However, 1Q07 comprised 14 weeks compared to 13 weeks in 1Q08. When the extra trading week
is taken into account, normalised NPAT increased 5% to $28M on an underlying basis.
FMG has announced the results of its AGM.
We have reviewed our long term refining margin assumptions for the refining business of Caltex. This has resulted in a review of
our price target.
We have reviewed our valuation assumptions due to concerns regarding the increasing pricing pressures being experienced by
the company.
JBM has received a takeover offer of $23 per share cash from Xstrata. The offer values the company at approximately $3.1B.
The Board of Directors at JBM has unanimously recommended Xstrata’s offer in the absence of a superior one.
BHP has made an offer to RIO's board proposing the acquisition of RIO by BHP. Under the proposal, each RIO share would be
exchanged for three BHP shares. RIO's board has rejected BHP's offer stating that it significantly undervalues RIO.
Transpacific Industries (TPI) - TPI rolls debt with a new $250M convertible note
WA Newspapers (WAN) - 1Q08 result: Profit below expectations
Fortescue Metals (FMG) - News of increased liquidity measures is sobered by the need for an additional $100M
Caltex Aust (CTX) - Review of price target
BHP Billiton Limited (BHP) - BHP makes offer for RIO
Goodman Fielder (GFF) - Pricing pressures remain a concern
Jubilee Mines (JBM) - Premium added to maintain recommendation
Rio Tinto (RIO) - BHP makes offer for RIO
Page 16

Health Care
John Hynd
ASX: PTD Bloomberg: PTD AU Reuters: PTD.AX 09 November 2007
Peptech
FY07 Result: Dominated by profit on sale
of Domantis, as Peptech becomes Arana
Event
PTD reported FY07 revenue of $34.6M, up 46% on pcp while profit
from continued operations increased 1,953% to $139.4M, primarily as a
result of the sale of PTD's stake in Domantis. Reported NPAT for FY07
was $133.4M. Management did not declare a final dividend.
Shareholders also voted in favour of an official name change to Arana
Therapeutics Limited. Management has developed and released a new
strategic plan for the business. The new company will be focused on
expanding and accelerating its internal and clinical pipeline, increasing
its technology platforms and in-licensing new drug candidates.
Management believes that this will minimize the development risk in
drug development and attract commercial partnerships in drug
development. Arana expects to have 2-3 Phase II/III assets, 2-3 Phase
I or Investigational New Drugs, 3-4 pre clinical programs and an
expanded IP portfolio as well as revenue generating technology
assets. Management plans to sell the animal health business as it is
not aligned with the company's new strategy.
Implications
The merger with EvoGenix provided Arana with a pipeline of early
stage compounds. Arana's lead compound, ARA621, is due to
commence phase II trials in CY08. Following the recent sale of its
interest in Domantis, Arana now has large cash assets and a very
healthy balance sheet, continued revenue streams from its licensing
agreements and an enhanced product pipeline, which differentiate it
from other Australian biotechnology companies. We view the changes
that the board and management are making to the company
positively. Following this result, we have reduced the value of the
Biosceptre JV, which PTD has exited, to zero. Our sum of the parts
valuation has decreased by 6% to $1.73.
Investment Opinion
Effective 1 September 2007, the research on this company has been
commissioned and as such Aegis has received a fee for its ongoing
research coverage. (Prior to this date, the company was covered as
part of the Aegis 200 universe.)
No part of either the fee received by Aegis or the compensation paid to
its analysts involved in preparing this report was, is or will be directly or
indirectly, related to the valuation, earnings forecast or views
expressed in this report.
Key Information
Price Performance
Market Statistics
Key Assumptions
Share Price $1.19
Valuation $1.73
Market Cap (M) $278
Shares (M) 234.9
% of Market 0.01
% of Sector 0.49
12 Month Range $1.06 - $1.97
Company Risk
Share Price Risk
Ethical rating
Performance against indices (%)
3 Months 6 Months 12 Months
PTD (13.8) (32.7) (6.3)
Sector 6.4 5.2 27.9
Market 6.8 4.2 22.4
Beta: 1.5
Market risk premium (%): 5.5
Risk free rate (%): 6.1
WACC (%): 13.6
Forecast cashflow (years): 10
Residual value % of total valuation: 136.7
Nominal terminal growth rate (%): 3.0
Earnings Summary
1 NPAT and EPS are adjusted by removing non-recurring items. All the above statistics are derived from normalised earnings.
Yr to Sep NPAT
Rep $M
NPAT1
Adj $M
EPS1
c
EPS chg
%
PER
x
PER rel
All Ords x
PER rel
Sector x
DPS
c
Yield
%
Franking
%
ROE
%
2006A 5.1 5.1 3.2 (80.3) 37.6 1.8 1.1 0.0 0.0 0 6.3
2007A 133.4 2.7 1.6 (50.0) 75.3 4.0 2.6 0.0 0.0 0 1.3
2008F 9.7 9.7 4.1 161.6 28.8 1.8 1.2 0.0 0.0 0 3.1
2009F 22.7 22.7 9.7 135.0 12.2 0.9 0.6 0.0 0.0 0 6.9

Peptech
Year end Sep. All figures in A$M
Notes:1. The risk ratings are on a 12 month perspective, where five stars denotes low risk and one star denotes high risk. Company risk takes into account expected
financial, strategic and execution risks associated with the company. Share price risk is a measure of the expected volatility of the price and other trading factors.
2. The Ethical rating rates a company on an ethical investment basis where five stars denote very good and one star a poor rating. The score is based on four key factors:
areas of operating, environmental, corporate governance and social factors. For more information see www.aegis.com.au.
Valuation: $1.73 Company risk 1: Share Price risk 1: Ethical rating 2:
Profit & loss summary 2006A 2007A 2008F 2009F
Operating revenue 22.5 25.9 32.3 48.5
Invest & other income 0.0 0.0 0.0 0.0
EBITDA 4.9 (4.0) 2.9 20.2
Depreciation/Amort (0.9) (2.8) (0.4) (0.4)
EBIT 4.0 (6.8) 2.5 19.8
Net Interest 2.3 9.7 11.4 12.8
Pre-tax profit 6.3 2.9 13.9 32.6
Tax expense (1.2) (0.2) (4.3) (9.9)
Minorities/Assoc./Prefs 0.0 0.0 0.0 0.0
NPAT 5.1 2.7 9.7 22.7
Non recurring items 0.0 130.8 0.0 0.0
Reported profit 5.1 133.4 9.7 22.7
NPAT add Goodwill & Pref 0.0 0.0 0.0 0.0
Adjusted profit 5.1 2.7 9.7 22.7
Cashflow summary 2006A 2007A 2008F 2009F
EBITDA 4.9 (4.0) 2.9 20.2
Working capital changes 2.1 5.4 0.0 0.0
Interest and tax (3.2) 7.0 8.6 5.7
Other operating items (0.9) (5.3) (1.8) 0.0
Operating cashflow 2.9 3.1 9.8 25.9
Required capex (0.3) (0.8) (0.8) (1.0)
Maintainable cashflow 2.6 2.3 9.0 24.9
Dividends 0.0 0.0 0.0 0.0
Acq/Disp (0.4) 145.9 17.6 0.0
Other investing items (2.5) (23.2) 0.0 0.0
Free cashflow (0.2) 125.0 26.6 24.9
Equity 0.5 3.5 0.0 0.0
Debt inc/(red'n) 0.0 0.0 (26.6) (24.9)
Balance sheet 2006A 2007A 2008F 2009F
Cash & deposits 40.7 169.0 195.6 220.5
Inventories 0.6 0.0 0.0 0.0
Trade debtors 5.0 25.5 7.8 7.8
Other curr assets 0.9 0.9 0.9 0.9
Total current assets 47.1 195.4 204.3 229.2
Prop., plant & equip. 3.0 1.2 1.7 2.3
Non-curr intangibles 8.1 129.9 129.9 129.9
Non-curr investments 40.2 0.0 0.0 0.0
Other non-curr assets 1.9 2.9 2.9 2.9
Total assets 100.2 329.5 338.8 364.3
Trade creditors 0.0 0.0 0.0 0.0
Curr borrowings 0.0 3.7 3.7 3.7
Other curr liabilities 13.6 2.4 3.1 5.9
Total current liab. 13.6 6.2 6.8 9.6
Borrowings 0.0 0.0 0.0 0.0
Other non-curr liabilities 0.7 14.1 13.1 13.1
Total liabilities 14.3 20.2 19.9 22.7
Minorities/Convertibles 0.0 0.0 0.0 0.0
Shareholders equity 85.9 309.2 318.9 341.6
Ratio analysis 2006A 2007A 2008F 2009F
Revenue growth (%) (51.2) 15.0 24.8 50.2
EBITDA growth (%) (85.7) n/a n/a 586.8
EPS growth (%) (80.3) (50.0) 161.6 135.0
EBITDA/Sales margin (%) 21.8 (15.4) 9.1 41.6
EBIT/Sales margin (%) 17.6 (26.4) 7.8 40.8
Tax rate (%) 18.9 7.5 30.7 30.3
Net debt/equity (%) (47.3) (53.5) (60.2) (63.5)
Net debt/net debt + equity (%) (89.9) (114.8) (151.0) (173.7)
Net interest cover (x) n/a n/a n/a n/a
Payout ratio (%) 0.0 0.0 0.0 0.0
Capex to deprec'n (%) 55.0 192.7 187.8 234.7
NTA per share ($) 0.47 0.76 0.81 0.90
ROA (%) 4.2 (3.0) 0.8 5.6
ROE (%) 6.3 1.3 3.1 6.9
Multiple analysis 2006A 2007A 2008F 2009F
Market cap (M) 278
Net debt ($M) 0.0
Peripheral assets ($M) (0.0)
Enterprise value ($M) 278.4
EV/EBIT (x) 70.3 (40.8) >99 14.1
EV/EBITDA (x) 56.8 (69.8) 94.7 13.8
EV/EBITDA All Ind (x) 10.2 9.1 8.1 7.5
EV/EBITDA rel All Ind (x) 5.5 (7.7) 11.7 1.8
P/E (x) 37.6 75.3 28.8 12.2
P/E rel All Ind (x) 1.7 3.9 1.7 0.8
P/E rel All Ind ex banks (x) 1.5 3.7 1.7 0.8
P/E sector (x) 34.8 28.6 24.1 20.5
P/E rel sector (x) 1.1 2.6 1.2 0.6
Assumptions 2006A 2007A 2008F 2009F
GDP growth (%) 2.76 2.67 3.18 3.62
Interest Rates (%) 5.85 6.44 6.31 6.30
Inflation (%) 3.42 2.60 2.60 2.50
Copyright © 2000 - 2007 Aegis Equities Holdings Pty Limited. All rights reserved.
This information must be read in conjunction with the Legal Notice which can be located at http://www.aegis.com.au/public/disclaimer.aspx.

Peptech
TABLE 2: PTD FULL YEAR RESULTS
Source: PTD/Aegis Equities
Result Highlights
Revenue – Revenue for FY07 increased by 49% to $34.6M, including sales, and licensing and royalty revenues. Royalty
revenue increased marginally to $16.6M. The minimal growth in royalties was due in part to the appreciating AUD. Sales
and licensing income increased 68% to $8.1M, due to incrementing fees on newly licensed products.
NPAT – NPAT for the period increased 2,520% to $133.4M. This large increase was the result of the $136.1M gain on
the sale of the investment in Domantis, and a one month contribution from EvoGenix.
Balance Sheet – Arana’s balance sheet continues to remain strong. Cash assets now stand at $169M, largely driven by
the cash proceeds from the Domantis investment. Arana also has $25.5M in trade and other receivables.
Investments – Unlisted investments reduced to zero after the sale of the Domantis Investment.
Debt - Arana incurred finance costs of $0.8M, up from zero in pcp. These costs were incurred from the discount non-
current liabilities for the deferred consideration payable on the Promics and Scanwell acquisitions. These costs are
expected to continue as the discounts are rolled out.
Cash Flow – Cash inflows from continuing operations increased $4M on pcp to $5.9M. This was due to increased
spending on research and development being offset by increased receipts and interest income.
Program Updates
Autoimmune and inflammatory disease program
ART621 was developed initially by Domantis as a domain antibody and is the first such compound to be used in human
trials. It is currently in a testing program for rheumatiod arthritis, which is an autoimmune disorder. ATR 621 targets a
protein called tumour necrosis factor, considered to play a key causative role in rheumatiod arthritis.
In Oct-07, ART621 successfully completed a phase I clinical trial. The trial involved giving escalating doses of the drug,
either subcutaneously or intravenously, to 30 healthy volunteers. In the trial, ART621 was shown to be well tolerated.
Preclinical animal trials of ART621 showed that it produced a similar effect to one of the three currently approved
blockbuster anti-TNF drugs. Preclinical work has also demonstrated the compound to have favourable stability and
duration of action properties.
A phase II trial is scheduled for CY08. If ART621 demonstrates expected efficacy in the phase II trial, we believe this
would be a valuable molecule and an attractive licensing target for big pharma.
Domantis (now part of GSK) is obligated to develop two more domain antibodies for Arana to targets yet to be selected
by Arana. These represent future options of considerable value for the company.
pcp Aegis Actual Change
For the 12 months ended**: Sep-06 Sep-07 Sep-07 pcp Aegis
Sales revenue :$M 22.5 26.3 25.9 +15% -2%
EBITDA :$M 4.9 -5.3 -4.0 -181% -25%
Depreciation & amort :$M -0.9 -0.3 -2.8
EBIT :$M 4.0 -5.6 -6.8 -272% +22%
Net Int Expense :$M 2.3 8.8 9.7 +317% +11%
Profit Before Tax :$M 6.3 3.2 2.9 -54% -10%
Tax on Recurring :$M -1.2 -0.9 -0.2 -82% -77%
Profit After Tax :$M 5.1 2.2 2.7 -48% +19%
Minorities/Associates :$M 0.0 0.0 0.0
Preference Dividends :$M 0.0 0.0 0.0
NPAT :$M 5.1 2.2 2.7 -48% +19%
Non Recurring (net of Tax) :$M 0.0 136.1 130.8 -4%
Reported Profit :$m 5.1 138.3 133.4 +2520% -4%
** All numbers are adj. for non-recurring items except Reported Profit
PER SHARE DATA Sep-06 Sep-07 Sep-07
Average weighted Capital, fully diluted :M 163 170 170 +5% +0%
E.P.S. on Adj profit :cents 3.1 1.3 1.6 -50% +17%
D.P.S. :cents 0.0 0.0 0.0
Franking :% 0 0 0
Payout Ratio 0% 0% 0% +0% +0%
RATIOS Sep-06 Sep-07 Sep-07
EBITDA Margin :% 21.8 -20.3 -15.4 -37% +5%
EBIT Margin :% 17.6 -21.3 -26.4 -44% -5%
Effective Tax rate :% 18.9 29.7 7.5 -11% -22%

Peptech
PMX53
PMX53 is a small cyclic peptide in the preclinical phase of development that treats inflammatory diseases. PMX53
targets a different protein to TNF.
PMX53 is still at preclinical development, and the company has been focusing more resources at developing ART621.
Cancer Program
ART010
ART010 is being developed to treat osteoporosis and bone cancer. The drug is a variant of a naturally occurring protein
called osteoprotegerin (OPG) that slows the processes that break bone down. ART010 could be effective at treating
cancer-related bone loss. ART010 is hoped to be more effective than OPG as the latter may also interfere with the
body's natural cancer detecting mechanisms. ART010 has therefore been designed to retain the bone breakdown
slowing properties, while not incorporating other potentially deleterious characteristics.
Arana is finalising the structure of an ART010 candidate which would then be put into clinical development, and
simultaneously placed into a GMP manufacture program.
ART150
ART150 is being developed as a therapy for lung cancer and melanoma. It targets complex molecules
(gangliosides) present in cell membranes that are made of carbohydrate and lipid.
ART150 has been shown to completely inhibit tumour development in a mouse model of human lung cancer. This
compound is targeted to complete preclinical development in CY09.
ART104
ART104 is being developed for solid tumours and may improve the effects of certain chemotherapies. The drug
was initially developed for colorectal cancer, but Arana believes ART104 may also be useful for other solid tumours.
This drug is three to six months ahead of ART150 in its development. Arana hopes to be able to select a specific form of
ART104 to take into the clinic within 18 months. The company is engaged in discussions with a third party interested in
licensing ART104.
Protein engineering platform
The EvoGenix acquisition strengthened Arana's pipeline and strengthened the company's protein engineering
capabilities. EvoGenix's Superhumanisation technology makes the antibody more "human-like", thereby reducing the
likelihood of rejection by the body's immune system. The EvoGene technology is used to enhance the affinity and
specificity of the "superhumanised" antibody for its target.
Utilising the combined technologies available on its protein engineering platform, Arana is able to develop potent, non-
immunogenic antibodies, which should make attractive licensing candidates.
Partnership deals
Arana now is deriving recurring revenues from six companies, including GSK, Centocor, Abbott and
CSL, and management has set up strategic commercial agreements with leading drug distribution companies.
Management has also entered into a commercial agreement with Vegenics, involving upfront and milestone payments
and royalties, in relation to humanising and optimising Vegenics' major product.
Arana and AVEO pharmaceuticals have also established a partnership allowing AVEO to utilise Arana’s
Superhumanisation technology.
Name change
Shareholders voted in favour of an official name change to Arana Therapeutics Limited. The company’s ASX code will
be changed to AAH on 12 Nov 07 as a result of the name change, which follows the recent merger between Peptech
and EvoGenix. This name change underlines the company's desire for investors to recognise the new business model
and point of differentiation in the market.
New Strategy
The board has approved a new business strategy which will be focused on expanding and accelerating the company's
preclinical and clinical pipeline, and increasing its technology platforms to take advantage of the recurring revenues
stream that are made available once commercial agreements are established.

Peptech
Summary
Arana is in a very strong cash position following the recent sale of its interest in Domantis. The company now has an
enhanced product pipeline and a very healthy balance sheet with continued revenue streams from its licensing
agreements, large cash assets and developing commercial agreements.
The company's new strategy has the objective of achieving 2-3 Phase II/III assets, 2-3 Phase I or investigational new
drugs and 3-4 pre clinical candidates within the next one to two years. Arana plans to use its large cash balance to
acquire or in-license suitable candidates to expand its IP portfolio. The animal health business, which has performed
poorly for years, has been earmarked for sale.
We view the changes that the board and management are making to the company positively. The company is focused
on deriving recurring revenue and a robust late stage pipeline, which together with the large cash reserves, will
differentiate it from other Australian biotechnology companies.
In light of Arana's exit from the Biosceptre joint venture, we have removed forecast cashflows from these programs from
our model and reduced the value of this JV to zero. We have also reduced the expected value of royalties from Centocor
due to the stronger A$. The net effect of our changes has been a 6% fall in our sum of the parts valuation to $1.73.

Utilities
Wilbur Tong
ASX: AGK Bloomberg: AGK AU Reuters: AGK.AX 09 November 2007
AGL Energy
AGM comments - reaffirms FY08 guidance
Event
At its AGM, AGL advised it has completed the review in relation to
underlying the revised earnings guidance, and reconfirm its revised
FY08 earnings guidance of range $330M-$360 NPAT. AGK also
announced on the 6 November that its 50/50 JV with Arrow Energy will
acquire the gas merchant and pipeline businesses of the Enertrade
from the QLD Government, for a total consideration of $268M plus
transaction costs of c.$12M. AGK intends to on-sell its share of the
pipeline infrastructure by FY08. AGL will initially fund its share of the
acquisition price from cash reserves and debt facilities. Acquisition of
50% of the gas merchant business will result in an average increment
to AGK’s earnings by more than 1cps in both FY08 and FY09.
However, this transaction does not change on its FY08 earnings
guidance.
Implications
To restore investors' confidence, AGK's board and the new CEO seem
to satisfactorily address the key issues facing the company: (1)
wholesale costs control by levering its leading retail position to acquire
power generation and upstream gas business; and (2) retail margin
improvement by capturing economy of scale to drive down cost to
serve, and to better target its high-value customers. Given the modest
nature of the accretion of the Enertrade acquisition, and AGK’s
reconfirmation of FY08 guidance, our estimates and valuation remain
unchanged. Therefore, we retain our HOLD recommendations on both
12-month and long-term investment horizons.
Investment Opinion
AGK is the leading energy utility in Australia with the greatest retail
market share and customer base. The AGL-Alinta demerger process
and Powerdirect acquisition have further reshaped the group's
operations.
Our investment view on AGK remains cautious, due to: (1) the recent
intensified competition in the Retail market, as reflected in the
increasing churn rate and lower margins; (2) high wholesale gas price;
and (3) risks in successfully implementing its restructuring plan
expected to realise full benefits in the medium term.
Key Information
Price Performance
Market Statistics
Key Assumptions
Share Price $12.89
12 month view HOLD
12 month target return (%) 15.8
12 month target price $14.40
Long Term View HOLD
Long Term Target Return (% pa) 13.0
3 year target price n/a
Market Cap (M) $5,646
Shares (M) 438
% of Market 0.28
% of Sector 15.92
12 Month Range $11.96 - $18.23
Company Risk
Share Price Risk
Ethical rating
AGK (15.8) (16.6) (14.4)
Sector (4.2) (8.9) 8.4
Market 11.9 6.3 23.3
Beta: 1.1
WACC (%): 10.3
Earnings Summary
Yr to Jun NPAT
Rep $M
NPAT1
Adj $M
EPS1
c
EPS chg
%
PER
x
PER rel
All Ords x
PER rel
Sector x
DPS
c
Yield
%
Franking
%
ROE
%
2006A 251 340 74.3 86.8 17.3 0.8 0.6 17.0 1.3 100 9.6
2007A 410 520 132.6 78.4 9.7 0.5 0.4 35.5 2.8 100 19.6
2008F 421 333 76.1 (42.6) 16.9 1.1 0.9 52.0 4.0 100 5.6
2009F 323 323 73.7 (3.2) 17.5 1.3 1.0 53.6 4.2 100 4.9

AGL Energy
Year end Jun. All figures in A$M
Notes: 1. The 12M recommendation rates stocks on a 12 month, absolute basis based on the total return (capital and dividends). BUY denotes an expectation of 15% or
more total return; SELL 5% or less; HOLD within the range of 5-15%. ACCEPT OFFER relates to a situation where there is a public offer for shares and our view is to
accept that offer.
2. The Long Term Recommendation rates stocks on a long term, absolute basis based on the average total return per annum (capital and dividends). BUY denotes a long
term expectation of 1% or more above the cost of equity (also known as the required return, which measures the the return required by investors given the company's risk);
HOLD within the range of 1% above and 3% below the cost of equity; SELL more than 3% below the cost of equity but above a total forecast annual return for the stock of
0%; AVOID denotes a long term expectation of a total annual return below 0%. ACCEPT OFFER relates to a situation where there is a public offer for shares and our view
is to accept that offer.
12M Recommendation1: HOLD 12M Target: $14.40 Long Term Recommendation 2: HOLD Long Term Target Return: 13.0% pa
Operating revenue 4,269 3,760 5,194 4,967
Invest & other income 0 0 0 0
EBITDA 757 923 789 765
Depreciation/Amort (206) (163) (179) (184)
EBIT 551 760 610 581
Net Interest (125) (95) (134) (120)
Pre-tax profit 426 665 476 461
Tax expense (187) (181) (143) (138)
Minorities/Assoc./Prefs 101 36 0 0
NPAT 340 520 333 323
Non recurring items (88) (110) 88 0
Reported profit 251 410 421 323
NPAT add Goodwill & Pref 0 0 0 0
Adjusted profit 340 520 333 323
Cashflow summary 2006A 2007A 2008F 2009F
EBITDA 757 923 789 765
Working capital changes 216 (76) 159 0
Interest and tax (314) (146) (419) (260)
Other operating items (191) (411) 1 0
Operating cashflow 468 290 530 504
Required capex (270) (150) (156) (149)
Maintainable cashflow 198 139 374 355
Dividends (288) (36) (228) (231)
Acq/Disp (2,007) (1,880) 357 (80)
Other investing items (11) (237) 125 0
Free cashflow (2,109) (2,014) 628 44
Equity (21) 912 0 0
Debt inc/(red'n) 1,886 1,342 (628) (44)
Balance sheet 2006A 2007A 2008F 2009F
Cash & deposits 58 280 150 150
Inventories 22 28 29 29
Trade debtors 209 1,702 1,564 1,565
Other curr assets 419 5,148 5,148 5,148
Total current assets 708 7,159 6,891 6,892
Prop., plant & equip. 845 1,102 722 767
Non-curr intangibles 847 3,205 3,205 3,205
Non-curr investments 550 1,106 1,106 1,106
Other non-curr assets 43 1,420 1,420 1,420
Total assets 2,993 13,991 13,343 13,389
Trade creditors 59 1,482 1,504 1,505
Curr borrowings 2,273 406 317 317
Other curr liabilities 166 2,226 2,121 2,119
Total current liab. 2,497 4,114 3,943 3,941
Borrowings 223 2,041 1,372 1,328
Other non-curr liabilities 143 1,434 1,435 1,435
Total liabilities 2,864 7,590 6,750 6,704
Minorities/Convertibles 0 0 0 0
Shareholders equity 130 4,214 6,594 6,685
Revenue growth (%) (11.2) (11.9) 38.2 (4.4)
EBITDA growth (%) 61.5 22.1 (14.6) (3.1)
EPS growth (%) 86.8 78.4 (42.6) (3.2)
EBITDA/Sales margin (%) 17.7 24.6 15.2 15.4
EBIT/Sales margin (%) 12.9 20.2 11.7 11.7
Tax rate (%) 44.0 27.2 30.0 30.0
Net debt/equity (%) >1000 51.4 23.3 22.4
Net debt/net debt + equity (%) 94.9 34.0 18.9 18.3
Net interest cover (x) 4.4 8.0 4.6 4.9
Payout ratio (%) 22.9 26.8 68.3 72.7
Capex to deprec'n (%) 131.3 91.9 87.2 81.1
NTA per share ($) (1.57) 2.30 7.74 7.94
ROA (%) 7.2 10.5 4.5 4.3
ROE (%) 9.6 19.6 5.6 4.9
Market cap (M) 5,646
Net debt ($M) 1,539
Peripheral assets ($M) 571
Enterprise value ($M) 6,615
EV/EBIT (x) 12.0 8.7 10.8 11.4
EV/EBITDA (x) 8.7 7.2 8.4 8.7
EV/EBITDA All Ind (x) 10.1 9.0 8.1 7.5
EV/EBITDA rel All Ind (x) 0.9 0.8 1.0 1.2
P/E (x) 17.3 9.7 16.9 17.5
P/E rel All Ind (x) 0.8 0.5 1.0 1.2
P/E sector (x) 30.6 25.3 19.3 16.8
P/E rel sector (x) 0.6 0.4 0.9 1.0
Assumptions 2006A 2007A 2008F 2009F
GDP growth (%) 2.92 2.50 3.02 3.64
Interest Rates (%) 5.73 6.38 6.34 6.30
Inflation (%) 3.20 3.09 2.47 2.50
Notes To Accounts
In an attempt to capture the essence of the transformed AGK, our
projections for FY07 adopt the use of the pro forma financials, which,
in effect, have been prepared after taking into account the completion
of the scheme proposal. However, we stress that these numbers are,
as a result, quite fluid, and will only firm up as more definitive
financials for the still-evolving AGK come to hand.

AGL Energy
AGM Highlights
AGL has been working hard to restore market confidence in the company. A full review of the integrity of the forecasting
systems, risk management systems, business operations and assumptions is being undertaken by the management and
Ernst & Young, and is expected to be completed by 2007. To-date, no issues were identified with respect to the integrity
of the forecasting systems. Its $40B hedge book is performing in line with expectations.
In relation to the review on the analysis and information underlying the revised earnings guidance, AGL has reconfirmed
its revised FY08 NPAT guidance range of $330M-$360M.
Although there is no change in AGL's strategy, the new CEO seems to place more focus on the execution. AGL is very
actively executing its vertically integrated strategy to capture higher value, by levering its leading retail position to
acquire power generation and upstream gas business. Last week saw the announcement to sell its 33% stake in
AlintaAGL, and this week the company announced its third wind farm project development and the 50% acquisition of
Enertrade via its JV with Arrow.
Enertrade Businesses Acquisition
Gas Pipeline Assets
AGL does not consider the asset as core to its long term strategy and intends to on-sell its share of the pipeline before the end
of FY08. With the gas pipeline component of the transaction representing most of the acquisition cost, the net cost of AGL’s
investment is expected to reduce to less than $40M after the sale of the pipeline. AGL does not expect the 50% acquisition of
the pipeline assets will have a material impact on the company's earnings.
Gas Merchant Business
comprises two key parts:
1. Purchase of gas from the Moranbah Gas Project (MGP) coal seam gas operations to sell to large customers in
Townsville; and
2. Dispatch management of the 230MW Yabulu Power Station (YPS) in Townsville into the National Electricity Market
(NEM).
The Gas Purchase Agreement with the MGP JV is for up to approximately 20 PJ per year for 15 years. The Agreement
commenced in 2005.
With very thin retail margin and market volatility in
wholesale costs (currently $2B electricity and $1B
gas), AGL seeks to maintain more control on the
wholesale costs by securing power generation
assets and upstream gas business.
Project Phoenix, the IT integration initiative to
replace all the legacy systems of its acquired
businesses into one single centralised platform, is on
schedule and on budget. A successfull
implementation could increase retail margin and
create the basis for differentiation by capturing
economy of scale to drive down the cost to serve, and
to better target its high-value customers.
AGL mentioned the retail industry has recently
experienced a decline in churn rate. This could be
attributed to the reduced volatility experienced after
winter, and the industry consolidation of the smaller
players as a result of the QLD market privatisation.
Whether it is short-term in nature remains to be seen.
FIGURE 2: VERTICALLY INTEGRATED STRATEGY
Source: AGL AGM presentation

AGL Energy
The first part of the Gas Merchant Business is the supply of gas to two large industrial customers in Townsville and to Enertrade
Electricity Trading under a:
Gas Supply Agreement with Queensland Nickel Industries for up to 6 PJ per year;
Gas Supply Agreement with Copper Refineries Pty Ltd for up to 0.25 PJ per year; and
Self-supply arrangement for the balance of the Gas Purchase Agreement volumes to service the YPS Power Purchase
Agreement (PPA).
The second part of the Gas Merchant Business is the right to dispatch the electricity generated from the 230MW YPS under a
long term PPA with Transfield Services for about 17 years.
Natural gas coal seams will be processed from MGP, compressed and transported for sale to two major industrial customers in
Townsville and also for supply into the YPS. Under the terms of the agreement reached with Arrow, AGL will manage the gas
merchant business for the JV and manage dispatch and control the output of electricity generated at YPS. Arrow will continue to
operate the reconfigured upstream gas business which will now include the Enertrade processing and compression facilities at
Moranbah.
Strategic Implications
The Enertrade gas merchant business is a natural extension of the existing Moranbah coal seam gas JV, as Enertrade
is the major customer for gas produced at Moranbah.
This acquisition provides an immediate exposure for AGL to a "whole of the energy value chain" from gas production
through to electricity sales. It secures the upstream gas business and wholesale energy costs by immediately gaining
exposure to the wholesale electricity generation market at a time of historically high electricity pool prices.
This deal will not only allow AGL and Arrow to capture more of the upside value from gas produced at Moranbah, but
also provides growth opportunities for AGL's north Queensland project portfolio.
AGL will gain the dispatch rights to the 230MW Yabulu combined cycle power station located in Townsville and
connected to the NEM. This will lift AGL’s generating dispatch capacity in QLD to in excess of 500MW when combined
with the recently acquired Oakey Power Station dispatch rights.
The Central Queensland Gas Pipeline development
to build a 440km high pressure gas transmission
pipeline from Moranbah to Gladstone, will serve as a
missing link for the gas supply between the
interconnection of North Queensland Gas Pipeline
and the North Bowen Basin and Gladstone, which
has access to the NSW and SA markets. This deal
effectively creates a mid-size integrated energy
company in the high growth energy market of the
Gladstone to Townsville corridor and further
enhances the business alignment of AGL and Arrow.
FIGURE 3: CENTRAL QUEENSLAND GAS PIPLINE
Source: AGL AGM presentation

AGL Energy
Investment View
To restore investors' confidence, AGL's board and the new CEO seem to satisfactorily address the key issues facing the
company:
1. vertically integrated strategy to control wholesale costs and capture value, by levering its leading retail position to
acquire power generation and upstream gas business; and
2. create the basis for differentiation to improve retail margin by capturing economy of scale to drive down the cost
to serve, and to better target its high-value customers.
However, the lesson to learn from the recent profit downgrade is that no system control or strategy is failsafe, unless the
senior management places proper care and diligence on its daily operations and the business execution.
Another concern is the company's reporting practice, specifically the lack of transparency behind its hedge book, and
that of the AGL's pro-forma results, as opposed to the statuary reported figures.
AGK indicated the 50% of Enertrade’s gas merchant business acquisition will result in a small accretion to AGL’s
earnings by at least one cps for each of FY08 and FY09. However, there is no change to AGL’s revised FY08 earnings
guidance. The EBITDA from the gas merchant business was approximately $20M in FY07 (for 50% share), which was
largely driven by revenue from electricity sales.
Given the modest nature of the accretion of the Enertrade acquisition, and AGL’s reconfirmation of FY08 NPAT
guidance range of $330M-$360M, our estimates and valuation remain unchanged. Therefore, we retain our HOLD
recommendations on both 12-month and long-term investment horizons.
FIGURE 4: LOCATION OF ENERTRADE'S GAS BUSINESS ASSETS
Source: Company/Aegis Equities

Financials
Peter Rae
ASX: NAB Bloomberg: NAB AU Reuters: NAB.AX 09 November 2007
National Aust Bank
FY07: strong result but recommendation
downgraded due to share price rise
Event
FY07 cash NPAT of $4,394M, was up 12.6% on FY06 and below our
$4,422M forecast. In terms of ongoing operations, cash NPAT was up
17.7%. The result reflected strong lending, deposit and FUM growth
and good cost containment. Partly offsetting this, there was a modest
decline in the net interest margin and an increase in the charge for bad
debts. NAB noted that delinquent assets are up from historical lows,
but within expectations. The final dividend increased by 11cps to 95cps
(ff).
Implications
This was a good result, demonstrating that NAB continues to build
momentum across its business. The strong performances in Australian
Banking and Wealth Management are expected to continue and strong
lending growth in 2H07 establishes a platform for earnings growth in
1H08. The UK continues to improve and NAB appears well placed to
deliver further growth in New Zealand despite a competitive
environment. Based on the outlook and the momentum in the FY07
result, we expect NAB will continue achieve double-digit earnings
growth. We have not made any major changes to our
forecasts. FY08 is down by less than 1% and FY09 is up by less than
1%. We have increased our 12-month share price target from $45.32 to
$46.40. Following the recent strong share price performance we have
downgraded our short-term recommendation to HOLD.
Investment Opinion
NAB has a very strong banking franchise in Australia and New
Zealand, but remains sub-scale in the UK despite owning some strong
regional bank brands and expanding its presence into the south of
England. Margins are also under pressure in the UK. NAB has a strong
wealth management brand in MLC. We have a neutral medium-term
view of the stock.
NAB has demonstrated that it has now clearly turned the corner and
the outlook is for further growth going forward. In our view, there are
further opportunities for NAB to achieve improvements in its business
and this, combined with a favourable banking and wealth management
environment, should see NAB achieve double-digit earnings growth
over the next few years. However, at the current share price we have a
HOLD recommendation on NAB on a 12-month view.
Key Information
Price Performance
Market Statistics
Key Assumptions
Share Price $43.40
12 month view HOLD
Long Term View HOLD
Shares (M) 1,648
% of Market 3.55
% of Sector 10.87
12 Month Range $36.22 - $44.70
Company Risk
Share Price Risk
Ethical rating
NAB 11.3 (2.1) 8.0
Sector 3.0 (2.3) 10.4
Market 6.8 4.2 22.4
Beta: 1.1
WACC (%): 12.2
Earnings Summary
Yr to Sep NPAT
Rep $M
NPAT1
Adj $M
EPS1
c
EPS chg
%
PER
x
PER rel
All Ords x
PER rel
Sector x
DPS
c
Yield
%
Franking
%
ROE
%
2006A 4,138 3,903 241.5 15.0 18.0 0.8 0.8 167.0 3.8 85 17.0
2007A 4,295 4,394 268.7 11.3 16.2 0.9 0.9 182.0 4.2 95 15.3
2008F 4,905 4,905 299.8 11.5 14.5 0.9 1.0 198.0 4.6 90 18.4
2009F 5,531 5,531 334.5 11.6 13.0 0.9 1.0 218.0 5.0 90 18.8

National Aust Bank
Year end Sep. All figures in A$M
Notes: 1. The 12M recommendation rates stocks on a 12 month, absolute basis based on the total return (capital and dividends). BUY denotes an expectation of 15% or
more total return; SELL 5% or less; HOLD within the range of 5-15%. ACCEPT OFFER relates to a situation where there is a public offer for shares and our view is to
accept that offer.
2. The Long Term Recommendation rates stocks on a long term, absolute basis based on the average total return per annum (capital and dividends). BUY denotes a long
term expectation of 1% or more above the cost of equity (also known as the required return, which measures the the return required by investors given the company's risk);
HOLD within the range of 1% above and 3% below the cost of equity; SELL more than 3% below the cost of equity but above a total forecast annual return for the stock of
0%; AVOID denotes a long term expectation of a total annual return below 0%. ACCEPT OFFER relates to a situation where there is a public offer for shares and our view
is to accept that offer.
12M Recommendation1: HOLD 12M Target: $46.40 Long Term Recommendation 2: HOLD Long Term Target Return: 12.6% pa
Net interest income 8,686 9,744 10,595 11,503
Non interest income 6,450 4,959 5,394 5,807
Total revenue 15,136 14,703 15,989 17,310
Operating expenses (7,213) (7,020) (7,163) (7,421)
Depreciation/Amort (434) (474) (509) (530)
Bad debts (606) (790) (946) (1,100)
Pre-tax profit 6,883 6,419 7,371 8,260
Tax expense (1,977) (1,742) (2,175) (2,437)
Minorities (749) 0 0 0
Pref. Distributions (254) (283) (292) (292)
NPAT 3,903 4,394 4,905 5,531
Non recurring items 235 (99) 0 0
Reported profit 4,138 4,295 4,905 5,531
Adjusted profit 3,903 4,394 4,905 5,531
Ending balance sheet 2006A 2007A 2008F 2009F
Loans 304,963 345,329 389,842 431,847
Acceptances 41,726 49,322 49,322 49,322
Goodwill 553 565 565 565
Other Assets 137,543 169,418 197,686 224,362
Total assets 484,785 564,634 637,415 706,097
Total liabilities 456,813 534,749 605,482 671,378
Shareholders equity 27,972 29,885 31,933 34,719
Average balance sheet 2006A 2007A 2008F 2009F
Interest earning assets 387,262 440,897 497,729 551,359
Non interest earning assets 88,381 99,529 112,358 124,465
Total assets 475,643 540,426 610,087 675,824
Interest bearing liabilities 357,400 403,331 455,320 504,381
Non interest bearing liabilities 91,388 104,479 123,757 137,751
Avg Ttl Liabilities 448,788 507,810 579,078 642,132
Avg ord sh'holders equity 26,855 32,616 31,009 33,692
Interest Margin (%) 2.24 2.21 2.13 2.09
Cost / Income (%) 50.5 51.0 48.0 45.9
Tax rate (%) 28.7 27.1 29.5 29.5
Payout ratio (%) 69.1 67.7 66.1 65.2
ROE (%) 17.0 15.3 18.4 18.8
EPS growth (%) 15.0 11.3 11.5 11.6
NTA per share ($) 14.24 15.12 16.29 17.77
Tier 1 Capital (%) 7.4 6.7 6.8 6.8
Total Capital (%) 10.8 10.0 9.7 9.4
BDD/avg loans (%) 0.21 0.24 0.25 0.26
Ttl prov/non accruals (%) 111.0 91.6 126.9 155.8
P/E (x) 18.0 16.2 14.5 13.0
P/E rel All Ind (x) 0.8 0.8 0.9 0.9
P/E sector (x) 21.1 17.5 14.6 13.2
P/E rel sector (x) 0.8 0.9 1.0 1.0

National Aust Bank
TABLE 2: RESULTS SUMMARY
Source: Company
Overview
This was a good result from NAB, with underlying earnings from the ongoing businesses up by 17.7%. All businesses
performed well, Australian Banking and Wealth Management being standout performers. The result benefited from strong
revenue growth and modest cost growth.
The key drivers of growth in the underlying performance are as follows:
Good volume growth. Total lending grew by 13.8% compared to 30 September 2006. The momentum was maintained
through the second half, with lending up 7.7% in 2H07. Non-housing lending performed exceptionally well (+19.2% for
the year) driven by strong business lending. Australian housing lending remained weak (+8.6%) and was well below
system growth. NAB continues to rely heavily on its proprietary distribution channels and does not make major use of
brokers, a key distribution channel for many of its competitors. UK lending was a little disappointing, with housing
lending up 4.7% and non-housing lending up 10.6%. Given the strategy to grow through the integrated Financial
Services model (iFS) we would have expected higher growth from the region. New Zealand performed reasonably well
given the difficult market environment, with housing lending up 10.1% and non-housing up 9.3%.
Good margin management, with the group interest margin falling by five basis points (bp). This was a good outcome
considering the ongoing decline in the UK margin (-48 bp) due to the repositioning of the business, and a further 12 bp
decline in the New Zealand margin. The Australian Banking interest margin was flat, a very good performance in a
competitive environment. Reductions in lending margins and an adverse deposit mix change were offset by the benefits
of deposit margin management and a higher capital allocation.
A strong performance from Wealth Management, with Wealth Management Australia earnings up by 30.5% due to
strong growth in funds under management and inforce premiums.
A strong performance on costs which were up by just 0.9% for the year. This saw the banking cost to income ratio
improve, declining from 54.5% to 50.8%.
The charge for bad and doubtful debts was up significantly (+30.6%), but this was from an unsustainably low base.
Overall asset quality remains good, although there has been a slight deterioration in Australian impaired assets, which
NAB attributed to the weak NSW economy.
Period: 1H07A 2H07A FY06A FY07A 2H07A FY07A
$M v. 1H07A v. FY06A
Net Interest Income 4,799 4,966 8,777 9,765 3.5% 11.3%
Non Interest Income 1,723 1,796 3,554 3,519 4.2% -1.0%
Wealth Mgt Net Operating Income 609 677 1,123 1,286 11.2% 14.5%
Total Income 7,131 7,439 13,454 14,570 4.3% 8.3%
Operating Costs -3,709 -3,719 -7,360 -7,428 0.3% 0.9%
Underlying Earnings 3,422 3,720 6,094 7,142 8.7% 17.2%
Bad Debts Charge -390 -400 -605 -790 2.6% 30.6%
Profit before tax 3,032 3,320 5,489 6,352 9.5% 15.7%
Tax -845 -877 -1,563 -1,722 3.8% 10.2%
Investment Income on Shareholders Funds 21 18 56 39 -14.3% -30.4%
Pref Div -137 -146 -254 -283 6.6% 11.4%
Cash NPAT (post prefs) ongoing operations 2,071 2,315 3,728 4,386 11.8% 17.7%
Cash NPAT (post prefs) disposed operations 24 -16 175 8 n/a n/a
Cash NPAT (post prefs) 2,095 2,299 3,903 4,394 9.7% 12.6%
Non-Cash Items -96 -3 235 -99 n/a n/a
Reported Profit (post prefs) 1,999 2,296 4,138 4,295 14.9% 3.8%
Cash EPS (cps) ongoing operations 126.2 142.1 230.6 268.5 12.6% 16.4%
DPS (cps) 87 95 167 182 9.2% 9.0%
Franking 90% 100% 85% 95%

National Aust Bank
Result Analysis
Note: Our comments are on the basis of on-going operations.
Net interest income increased by a very impressive 11.3% in FY07 and a more modest 3.5% in 2H07 compared
to 1H07. The strong full year performance reflects the good volume growth in both loans and customer deposits, partly
offset by the modest decline in the interest margin. The second half growth was impacted by a larger drop in the interest
margin due to increased competitive pressures in Australia and New Zealand. Given the lending momentum in 2H07 we
expect further strong growth in net interest income in FY08.
Non-interest income fell 1% in FY07 but was up by 4.2% in 2H07 compared to 1H07. Underlying lending and
account fees were up by $80M for the year, but this was offset by a number of factors including: the loss of revenue from
the provision of transitional services provided to Danske Bank; and adverse effects of hedging impacts in group
funding/treasury. NAB has also been impacted by the migration of customers to lower fee products. We expect modest
growth in non-interest income in FY08 with the benefit of volume growth partly offset by further migration to lower fee
products.
Group operating expenses rose by just 0.9% in FY07 and 0.3% in 2H07 compared to 1H07. This was a good
performance and reflected the benefits of NAB’s restructuring program which delivered gains of $654M in FY07.
Personnel expenses rose by 10.6%, due to salary increases and increases in performance based remuneration, but this
was partly offset by a decline in general expenses. NAB continues to invest in the business and has increased the
number of frontline staff, while reducing administrative functions, and also continues to invest in growth in its various
regions. NAB has repeated its guidance of cost growth at less than the inflation rate and has extended this guidance out
to FY10.
Non-cash items of -$99M after-tax comprised:
Treasury shares: -$123M to remove the impact of the change in the value of NAB shares held by the group
statutory life funds and consolidated managed investment vehicles.
Revaluation gains/losses on exchangeable capital units: -$86M to remove the impact of foreign exchange gains
or losses related to NAB’s exchangeable capital units.
Discount rate variation impact of -$44M on Investment Earnings on Shareholders’ Funds.
Fair value and hedge ineffectiveness impact $154M
Asset Quality
Bad debt expense increased by $10M over the half and $185M over the year. NAB stated that this growth was
within expectations and was mainly due to a softening in credit conditions and a lower level of write-backs compared to
FY06. Overall asset quality remains sound. NAB noted that loan delinquencies are up from historical lows, but within
expectations.
Gross non-accrual loans came in at $1,094M as at 30 September 2007 compared to $769M as at 31 March 2007
and $904M as at 30 September 2006. The level of gross impaired assets to gross loans and acceptances increased
0.02% to 0.28% over the year, however these remain well covered by provisions at 2.1 times. 90-days past due loans
amounted to $1,207M compared to $1,132M as at 31 March 2007 and $893M as at 30 September 2006.
Capital Management and Dividends
Capital Adequacy. NAB remains well capitalised. Its Adjusted Common Equity (ACE) ratio, which measures tier one
capital less preference shares and deductions was 4.90%, at the top end of its target range of 4.25%-5.00%. NAB’s Tier
1 capital ratio of 6.67% was also at the top end of its revised target range of 6.00%-6.75%. NAB has lowered its Tier 1
target range from 6.25%-7.00% to run a more efficient capital structure.
Dividends. The increase in the final dividend from 84cps (90% franked) to 95cps (100% franked) was a pleasant
surprise. The full year dividend has increased from 167cps (85% franked) to 182cps (95% franked). NAB stated that it
has a medium-term payout ratio target of 65%, with franking in the 80% to 100% range.

National Aust Bank
Summary and Outlook
This was a good result from NAB, broadly in line with our forecast, and shows that the group continues to build
momentum across most of its businesses. The good performances in Australian Banking and Wealth Management are
expected to continue and the strong lending growth in 2H07 establishes a platform for further good earnings growth in
1H08. However, with NAB losing market share in domestic housing, we believe there is more work that needs to be
done to restore Australian Banking to full potential. The weaker performance in domestic housing lending is largely due
to less focus on broker-originated business, with NAB focusing on its proprietary channels. Overall, we expect lending
growth to remain in double-digits in FY08, with business lending remaining particularly strong.
While NAB has done relatively well to minimise the decline in the interest margin in FY07, we expect this will be difficult
to achieve in FY08 given domestic banking industry competition and the ongoing decline in the UK margin. We are
forecasting a slightly larger decline in the interest margin in FY08.
The UK continues to benefit from NAB’s strategy to rollout its iFS strategy, although the momentum in underlying
earnings was not as strong in FY07 as we would have liked. Margins continue to fall significantly as the business shifts
away from its traditional high margin products to the new lower margin offerings. The bank reached a number of
milestones in its restructuring but, clearly there is more work to be done. We expect the iFS centres and ongoing
restructuring to be the key drivers of growth in the UK in FY08.
Wealth Management should continue to benefit from the strong investment climate and compulsory superannuation
regime and is expected to remain a key earnings growth driver for the group.
New Zealand delivered a credible result in a difficult environment. We expect competitive pressures to remain strong in
New Zealand and lending growth may slow given the high interest rate environment. However, NAB appears well placed
to deliver further good growth in New Zealand in FY08 with a strong focus on margin and cost management.
NAB did well to contain its cost growth to less than 1% for the year and this reflects a strong focus on improving
efficiency within the group and the benefits of its restructuring program. We expect NAB will be able to contain cost
increases to less than the inflation rate over the next few years, in line with its guidance. However, we expect FY08 cost
growth to be above the 0.9% achieved in FY07.
While we do not expect any major deterioration in asset quality over the next year, we expect impaired loans to continue
rising from their current low levels. We also expect that bad debt charges will continue to increase given that the credit
cycle appears to have turned. Our forecasts allow for bad debt expense to increase at a faster rate than asset growth in
FY08 although, given the strong revenue growth, this will not be a major issue.
NAB does not give earnings guidance, but in its earnings outlook noted that it aims to grow revenue at better than
system growth rates, particularly in key customer segments such as integrated Financial Services, Agribusiness and
Wealth Management.
NAB also identified a number of strategic areas to drive value for the group, including:
integrated Financial Services – rolling out the strategy in Australia and New Zealand;
Agri banking – expansion of the business in niche areas and identification of opportunities in North America;
Capturing more opportunities in the wealth management space by making direct investments in boutique fund
managers. We think that this is unlikely to be a major revenue source for NAB in the short- to medium-term.
Forecasts and Valuation
Based on the outlook and the apparent momentum in the FY07 result, we expect NAB will continue achieve double-digit
earnings growth.
Given the FY07 result was broadly in line with our expectations, we have not made any major changes to our forecasts.
Our FY08 forecast is down by less than 1% and FY09 is up by less than 1%.
We have increased our 12-month share price target from $45.32 to $46.40, largely reflecting an increase in the market
PE multiple since we last valued NAB. A component of our valuation is based on a PE multiple relative to the overall
market.
Recommendation
This was a good result from NAB and demonstrates the continued momentum in the business. We expect this
momentum to be maintained in FY08, with a continuation of double-digit earnings growth over the next few years.
However, following the recent strong share price performance, we believe this is now reflected in the current share price.
Accordingly we are downgrading our 12-month recommendation from Buy to HOLD. We retain our HOLD
recommendation on a long-term view.

National Aust Bank
Divisional Analysis
TABLE 3: DIVISIONAL RESULTS
Source: Company
Note: Our divisional comments are on the basis of on-going operations.
Australia
Australian Banking saw cash earnings grow 11.2% HoH and 21.2% YoY. The yearly result reflected balance sheet
growth, in particular business lending and deposits, combined with cost and margin management. It is worth noting that
the division did benefit from the free funds impact of increased capital allocation. However, this was partly offset by an
increase in the charge of bad and doubtful debts which was up 39.5% (or $110M) due to lending growth and higher
delinquencies in consumer loans. NAB said that asset quality remains sound.
Australian Wealth Management cash earnings climbed 19.7% HoH and 30.5% YoY. Within Investments, earnings rose
on the back of growth in funds under management and administration (+21.8% to $110.2B). The insurance profit rose
following a 15% increase in sales, though this was offset by a slightly higher claims experience and the impact of an
unfavourable movement in the valuation of policy liabilities.
United Kingdom
Total United Kingdom cash earnings improved by only 1.4% HoH, but were stronger over the year with YoY growth of
14.3%. Excluding the impact of currency movements, cash earnings were up 5.9% HoH and 13.6% YoY. The yearly
performance was driven by strong lending and deposit growth, the benefit of restructuring initiatives and a lower charge
for bad debts, however the net interest margin fell 48bps due to the change in lending mix and higher wholesale funding
costs. The credit quality of the portfolio has improved due to a lower risk profile reflecting the increased mix of secured
lending.
New Zealand
Total New Zealand cash earnings were up by 7.1% HoH and 18.1% YoY. In local currency terms, cash earnings were
up 6.7% HoH and 18.1% YoY. The main drivers of the yearly increase were strong growth in lending, solid growth in
retail deposits, flat costs and a static charge for bad debts. These were partly offset by a 12bps drop in the net interest
margin due to competition, changed product mix and increased cost of wholesale funding. According to the bank, overall
credit quality remains sound.
Period: 1H07A 2H07A FY06A FY07A 2H07A FY07A
$M v. 1H07A v. FY06A
Australia Region
Australian Banking 1,170 1,301 2,038 2,471 11.2% 21.2%
Wealth Mgt. Australia 183 219 308 402 19.7% 30.5%
Other including Asia 0 1 -5 1 n/a n/a
Total Australia Region 1,353 1,521 2,341 2,874 12.4% 22.8%
UK Region 294 298 518 592 1.4% 14.3%
New Zealand Region 183 196 321 379 7.1% 18.1%
nabCapital 338 377 613 715 11.5% 16.6%
Central Functions 19 51 133 70 168.4% -47.4%
Investment Income on Shareholders Funds 21 18 56 39 -14.3% -30.4%
Cash NPAT (before prefs) - ongoing operations 2,208 2,461 3,982 4,669 11.5% 17.3%
Pref Div -137 -146 -254 -283 6.6% 11.4%
Cash NPAT (after prefs) - ongoing operations 2,071 2,315 3,728 4,386 11.8% 17.7%

National Aust Bank
nabCapital (previously known as Institutional Markets and Services)
Cash earnings climbed 11.5% HoH and 16.6% YoY. Underlying profit was up by 29% reflecting origination activity in
Corporate Finance, increased deal flow in both the higher yielding origination and distribution business and an improved
performance by the Markets business. Cost growth was contained to 3.3%, well below revenue growth of 16.0%. The
charge for bad debts was up from a $24M net write-back to a $69M cost, which has reverted back to more normal levels.
NAB stated that asset quality was strong with 92.9% of exposures assessed as investment grade.
Central Functions
Central functions cash earnings contribution fell by $63M due the increase in capital paid by the Funding Group to other
regions and non-recurring income earned in FY06. However these were partly offset by a lower tax expense due to an
adjustment for the over provision of tax in relation to FY06.

Industrials
John Hynd
ASX: TPI Bloomberg: TPI AU Reuters: TPI.AX 09 November 2007
Transpacific Industries
TPI rolls debt with a new $250M
convertible note
Event
TPI announced Friday that it has placed a $250M subordinated
convertible note due December 2014. The offering, which has a
$14.8648 conversion price, is subject to all necessary regulatory
approvals in relevant jurisdictions and will carry a 6.75% coupon, with a
redemption value equal to the principal amount. The note is expected
to be listed on the Singapore Stock Exchange.
Implications
This new debt instrument will account for approximately 11% of TPI's
current and non-current borrowings. Management has advised that
they will be using the new issue to replace an existing bridge loan of a
similar amount as part of the company's refinancing project, as such it
has had no effect of our EPS forecast. Using management guidance
we have decreased our maintenance Capex by 10% and have also
lowered our depreciation figures marginally. The net result of these
changes was a marginal decrease in EPS for both FY08 and
FY09. Our 12 month price target has decreased 5% and now stands
at $12.01. We retain our Hold recommendation for both the short- and
long-term investment horizons.
Investment Opinion
TPI owns a quality group of businesses operating in industries that are
expected to exhibit steady long-term growth. Senior management is
heavily invested in the business and has a track record in creating
shareholder value, particularly via acquisitions. On the basis of the
current stock price, we have a neutral view on the stock on a longer
term time frame.
We expect strong earnings growth from TPI in the next few years,
coming both organically and from acquisitions. Despite having made
numerous acquisitions in recent times, the company still has a number
of growth options across all divisions. At current earnings multiples, we
view TPI as fairly priced and have a neutral stance on a 12-month time
frame.
Key Information
Price Performance
Market Statistics
Key Assumptions
Share Price $10.80
12 month view HOLD
Long Term View HOLD
Shares (M) 293.2
% of Market 0.16
% of Sector 1.69
12 Month Range $7.95 - $14.56
Company Risk
Share Price Risk
Ethical rating
TPI (11.0) (15.6) 32.2
Sector (0.7) (0.5) 20.3
Market 6.8 4.2 22.4
Beta: 1.2
WACC (%): 10.5
Earnings Summary
Yr to Jun NPAT
Rep $M
NPAT1
Adj $M
EPS1
c
EPS chg
%
PER
x
PER rel
All Ords x
PER rel
Sector x
DPS
c
Yield
%
Franking
%
ROE
%
2006A 47.5 46.2 22.4 86.7 48.1 2.2 1.3 9.3 0.9 100 31.6
2007A 103.1 98.1 40.5 80.4 26.7 1.4 0.9 11.7 1.1 100 13.9
2008F 174.0 174.0 54.7 35.2 19.7 1.3 1.0 16.0 1.5 100 10.2
2009F 233.5 233.5 71.0 29.8 15.2 1.1 0.9 20.5 1.9 100 11.8

12 Nov 2007 Bulletin

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