This research correctly called the bottom of the Australian banks share price cycle in the middle of the Global Financial Crisis. Fear and panic created a once-in-a-generation buying opportunity. For those prepared to think through and analyse the risks, there was significant money to be made.

1. BBY Limited
ABN 80 006 707 777 Participant of Australian Stock Exchange Group and is authorised and regulated by the Financial Services
Authority (FSA) in the UK
Melbourne Sydney London Internet
Tel: 61 3) 9226 0000 Tel: 61 2) 9226 0000 Tel: 44 0) 207 201 2183 http://www.bby.com.au/
Fax: 61 3) 9226 0244 Fax: 61 2) 9226 0066 Fax: 44 0) 207 201 2181
b
This report may contain general advice or recommendations which, while believed to be accurate at the time of publication, are not appropriate for all persons or
accounts. Before making an investment or trading decision, the recipient must consider market developments subsequent to the date of this document, and whether
the advice is appropriate in light of his or her financial circumstances or seek further advice on its appropriateness or should form his/her own independent view
given the person’s investment objectives, financial situation and particular needs regarding any securities or Financial Products mentioned herein. Although every
attempt has been made to verify the accuracy of the information contained in the document, liability for any errors or omissions (except any statutory liability which
cannot be excluded) is specifically excluded by BBY, its associates, officers, directors, employees and agents. A full international disclaimer is contained on the final
page of this report.
BUY Australian Major Banks
Outlook: short term pain (credit crisis), long-term gains (less competition)
We believe Australian major bank stocks are well placed for a 20-30% trading rally. Whilst the
short-term pain of the credit crisis (particularly global systemic risks emerging in Eastern Europe)
remains, we believe major Australian banks will enjoy the long-term gains of diminished competition,
increased market share and enhanced pricing power.
Accordingly, we upgrade National Australia Bank (NAB), Commonwealth Bank of Australia Ltd (CBA)
and Westpac Banking Group (WBC) to BUY. We upgrade Australia and New Zealand Banking Group
(ANZ) to HOLD. In declining order of preferred rankings, our recommendations are:
NAB – BUY (prev. HOLD), price target of A$20.79 (up 22.2% vs prev. A$17.01).
CBA – BUY (prev. HOLD), price target of A$36.02 (up 17.3% vs prev. A$30.70).
WBC – BUY (prev. HOLD), price target of A$18.77 (up 17.2% vs prev. A$16.01).
ANZ – HOLD (prev. Underperform), price target of A$13.36 (up 18.9% vs prev. A$11.23).
We analyse key recent events through the bank stock analytical framework we outlined in
BBY STOCKscan, Feb 09, “ROAD MAP: Navigating Key Risks in the Banking Sector”. Key recent
events that have driven our upgrade include: (i) CBA’s robust 1H09 results (11 Feb 09); (ii) WBC’s
positive market update (18 Feb 09); (iii) the market’s positive reaction to ANZ’s flagged 25% dividend
cut (26 Feb 09); (iv) a recovering domestic credit market, with WBC’s A$700M hybrid issue
progressing well and the first successful non-government guaranteed bond issue (A$250M by CBA);
and (v) the public warning of Australian Prudential Regulatory Authority’s (APRA) Chairman John
Laker that banks should not raise Tier 1 capital too high for fear of inhibiting credit growth.
Other drivers of our upgrade include our view that: (i) the credit crisis has strengthened the domestic
market dominance of the major banks, and so enhanced their long-term earnings outlook; (ii) the risks
of a “second round” of ordinary equity capital raisings has diminished, and even if undertaken, would
likely finance acquisitions or increased loan volumes which we consider strategically positive; and (iii)
attractive dividend yields – both absolutely and relative to historical bank dividend-bond yield
multiples.
Key catalysts include: (i) the imminent end of the cash rate cutting cycle (with markets expecting a
0.50% cut on 3 Mar 09 and another 0.25% on 7 Apr 08); (ii) the NAB trading update on 12 Mar 09; and
(iii) the proposed end to the financial stock short-selling ban on 6 Mar 09.
However, despite the improving domestic outlook, we remain concerned about the deteriorating
global outlook and systemic risks. Australian major bank credit default swaps are currently trading at
levels that exceed their previous Oct-Nov 08 peaks, a manifestation of global systemic risks rather
than concerns on the standing of the Australian banking oligopoly.
George Gabriel, CFA
+612 9226 0091
ggg@bby.com.au
2 March 2009

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BUY AUSTRALIAN MAJOR BANKS: SHORT-TERM PAIN, LONG-TERM GAIN
“ROAD MAP: Navigating Key Risks in the Banking Sector”
Cyclical and structural risks
are either easing or have
been largely price-
discounted.
Systemic risk remains the
key concern.
In BBY STOCKscan, Feb 09, “ROAD MAP: Navigating Key Risks in the Banking Sector”, we
stated that whilst the bullish investment case for bank stocks is improving, “before banks start
their long recovery, the market must be comfortable with the outlook for three types of risks
confronting the bank sector: cyclical, structural and systemic risks”.
Our view is that domestic cyclical and structural risks have either abated or been discounted
by the market.
However, systemic risks remain a key concern.
Cyclical Risks
The bad debt outlook
appears to have been
discounted.
Domestic credit markets are
recovering.
We believe that cyclical risks are easing and/or have been largely discounted in bank share
prices.
Bad debts. Whilst we believe that we are currently only half way through the second
phase of the bad debt cycle (commercial property, SME and mining/resources company
deterioration) and that the third phase of deterioration in the household sector is yet to
come, it appears that bank share prices have discounted the negative bad debt outlook.
Domestic credit markets. Domestic credit markets are recovering, with likely completion of
the first hybrid offering (A$700M by WBC) at the lower end of the indicative price range
and the first successful non-government guaranteed debt raising (A$250M by CBA) since
the credit crisis began.
Structural Risks
Future equity capital raisings
are more likely to finance
acquisitions or loan growth.
We believe that future major bank equity capital raisings are now more likely to finance future
loan growth or opportunistic acquisitions than to recapitalise following bad debt write-offs.
Firstly, the comments of John Laker, Chairman of the APRA, highlight that movements to
higher Tier 1 ratios are not driven by the regulator but rather by (credit and equity) market
participants.
Assuming the market accepts that the outlook for Australian banks is improving, it should
follow that the market becomes more comfortable with 8-8.5% Tier 1 ratios.
Secondly, all banks are now more likely to raise hybrid capital to enhance their Tier 1
capital, following WBC’s apparently successful ~A$700M recent hybrid issue.
We consider ANZ the most likely to announce an acquisition, most likely a material
acquisition of an Asian banking franchise from a distressed European or American parent.
Increased consolidation
represents an upside
earnings risk for the major
banks.
Increased sector consolidation represents a positive structural risk for the major banks. For
the first time in a generation, the Federal Government and anti-trust regulator (ACCC) is
supportive of major bank acquisitions. Indeed, at the height of the credit crisis turmoil in
October 08, the Federal Government said that in the trade-off between bank competition and
financial system stability, it favours stability. This paves the way for the major banks to
execute acquisitions which would not have been possible in previous cycles.
The increased market concentration among the four majors will likely translate to strong loan
growth, rising fee income and increased pricing power. Indeed, there are early signs of all
these trends in CBA’s 1H09 results and the ANZ and WBC trading updates.

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BUY AUSTRALIAN MAJOR BANKS: SHORT-TERM PAIN, LONG-TERM GAIN
Global Systemic Risks
Global systemic risks will
continue to overhang the
sector.
A key risk is the possible
contagion effect of an
emerging market banking
crisis. There is little visibility
on bank exposure to this
risk.
Despite easing domestic cyclical and structural risks, global systemic risks continue to
overhang bank stocks. The two key risks are:
(i) The US financial system. Whilst the Obama administration has outlined its broad policy
response to the US malaise, the detail required for successful execution remains a
challenge. However, we are cautiously optimistic that banking system triage through
“stress tests” followed by mandatory recapitalisation for financially “stressed”
institutions could restore risk-taking confidence.
(ii) The potential “domino” effect of an Eastern European collapse. There is little visibility
on Australia’s secondary and tertiary exposure to the developing emerging market
crisis in Eastern Europe.
US systemic risks
Banking triage “stress tests”
is a step in the right
direction to restore counter-
party confidence.
Confidence has been the
absent element in systemic
risk management.
We believe that US authorities have demonstrated their resolve to “do whatever it takes” to
avert a US-driven systemic collapse and that they are taking tentative steps in the right
direction. Although the policy detail at this stage is wanting, we remain cautiously optimistic
that the US will not return the world to the edge of the financial abyss (like the aftermath of
Lehman’s collapse).
In BBY STOCKscan, Feb 09, we stated that in order to address systemic risk, four issues
must be addressed:
(i) confidence to take counter-party risk;
(ii) credit market liquidity;
(iii) bank solvency; and
(iv) stimulating banks’ lending volumes.
Whilst some public policy has addressed the last three issues, the policy response to date
has not effectively addressed counter-party confidence.
However, we believe that US public policy is moving in the right direction with banking triage
“stress tests”. Successful execution of bank system triage (ie. separating solvent and non-
solvent banks, with mandatory recapitalisation of the latter) is a positive step. If triage fails,
the regulators seem likely to consider more extreme measures such as “nationalisation” of
the banking system. In either scenario, we would expect that counter-party confidence would
be restored.
Eastern European systemic risks
There is limited visibility on
the scope of or Australia’s
exposure to an emerging
market financial crisis. This
risk overhangs the market
and threatens to be the next
downside share-price driver.
There is limited visibility on exposure to an Eastern European systemic risk event. This risk
overhangs the market and threatens to be the next downside share-price driver.
We have two concerns:
(i) The lack of visibility of Western European banks’ exposures to Eastern Europe; and
(ii) The “contagion effect” on Australian banks through higher funding costs, unstable credit
markets and direct counter-party exposures.
Eastern Europe faces the risk of a financial crisis to rival the Asian crisis of 1997-98. The key
features are:
(i) Rising external imbalances – e.g. double digit current account deficit/GDP ratios in
Romania, Bulgaria and the Baltics in 2008 (vs south-east Asian ratios of 3.0-8.5% in
1995-97).

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BUY AUSTRALIAN MAJOR BANKS: SHORT-TERM PAIN, LONG-TERM GAIN
(ii) High foreign currency denominated debt – particularly in Croatia, Hungary and
Romania.
(iii) Weakening currencies.
(iv) Weakening trade flows – driven by Eastern Europe’s export exposure to the weakening
economies of Western Europe.
(v) Limited scope for fiscal and monetary stimulus – given Eastern Europe’s budgetary
imbalances and fragile currencies.
At this stage, we understand that:
(i) Austria is the most exposed secondary economy, with collective exposure of 70% of
Gross Domestic Product (GDP).
(ii) Sweden and Belgium have the next highest exposures, at 20-25% of GDP.
(iii) Australian banks have been reducing their direct counter-party exposures of concern,
given that the credit crisis has been with us for over 16 months.
(iv) Australian banks have completed the majority of their FY09F term funding
requirements, which would diminish their short-term exposure to another increase in
wholesale funding costs.
(v) European Union (EU) bailout initiatives are being discussed, with EUR180 bn
apparently being considered.
Rising bank credit default swap (CDS) margins reflect systemic risks
Australian bank credit
default swap prices reflects
rising global systemic risks.
Rising global systemic risks are being reflected in rising credit default swap margins for
Australian major banks.
Whilst the CDS margin of the four majors had been trending down from Dec 08 onwards,
CDS margins have recently reached levels that exceed all previous peaks, as illustrated in
the four charts below.
CHART 1: ANZ 3 YEAR CREDIT DEFAULT SWAP MARGINS
ANZ 3Y CDS spread
0
20
40
60
80
100
120
140
160
180
200
Oct 07 Dec 07 Feb 08 Apr 08 Jun 08 Aug 08 Oct 08 Dec 08 Feb 09
Spread(bp)
Source: BBY

5. b
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BUY AUSTRALIAN MAJOR BANKS: SHORT-TERM PAIN, LONG-TERM GAIN
CHART 2: CBA 3 YEAR CREDIT DEFAULT SWAP MARGINS
CBA 3Y CDS spread
0
20
40
60
80
100
120
140
160
180
Oct 07 Dec 07 Feb 08 Apr 08 Jun 08 Aug 08 Oct 08 Dec 08 Feb 09
Spread(bp)
Source: BBY
CHART 3: NAB 3 YEAR CREDIT DEFAULT SWAP MARGINS
NAB 3Y CDS spread
0
20
40
60
80
100
120
140
160
180
200
Oct 07 Dec 07 Feb 08 Apr 08 Jun 08 Aug 08 Oct 08 Dec 08 Feb 09
Spread(bp)
Source: BBY

6. b
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BUY AUSTRALIAN MAJOR BANKS: SHORT-TERM PAIN, LONG-TERM GAIN
CHART 4: WBC 3 YEAR CREDIT DEFAULT SWAP MARGINS
WBC 3Y CDS spread
0
20
40
60
80
100
120
140
160
180
Oct 07 Dec 07 Feb 08 Apr 08 Jun 08 Aug 08 Oct 08 Dec 08 Feb 09
Spread(bp)
Source: BBY
Reasons to BUY Australian major bank stocks
We believe Australian major
banks are poised for a
20-30% rally for three
reasons:-
Notwithstanding overhanging systemic risks, we believe that Australian banks stocks are
poised for a 20-30% rally.
We outline our three reasons for this view below.
1. Increased market dominance driving improved earnings outlook
1. Improved earnings
outlook driven by increased
market power and falling
costs.
Increased market dominance is driving an improved earnings outlook for Australian banks.
This is evident across rising net interest margin (NIM), fee income and loan growth.
Net interest margin (NIM).
We first identified the rising NIM trend on 22 Oct 08, following NAB’s FY08 result (cf. BBY
report, “Upgrade to HOLD given upside surprise on rising net interest margin”). CBA’s 1H09
result confirmed this trend – NIM increased from 1.98% to 2.04% from 2H08 to 1H09. Both
ANZ and WBC have confirmed this trend in their latest trading updates.
A key driver of increased NIM is increased asset re-pricing in an environment of reduced
competition. The outlook is for additional NIM increases driven by further loan re-pricing and
a stabilisation of liquid asset balances, partly offset by continued strong competition for
deposits.
Loan growth.
Banks are capturing market share at the expense of their erstwhile competitors. We do not
believe that this is simply a “flight to quality” phenomenon that will be reversed at the first sign
of financial system stability because major banks’ competition is being consolidated away.

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BUY AUSTRALIAN MAJOR BANKS: SHORT-TERM PAIN, LONG-TERM GAIN
APRA data shows that total resident assets (all assets on the banks’ domestic books that are
due from residents) decreased from Oct 08 to Dec 08 by 0.3% (from A$2.402 trillion to
A$2.394 trillion). Meanwhile, CBA reported total lending assets increased through 1H09 by
22% to A$450bn. Both ANZ and WBC have also indicated expectations of strong loan
growth.
Costs.
We believe that CBA’s 1H09 result is indicative of future sector trends. CBA reported its
1H09 cost/income ratio fell from 48.4% to 44.3%, with further reductions targeted. We expect
all banks’ cost structures to benefit from an environment of rising unemployment and low
inflation.
2. Equity capital raisings are likely to be strategically positive
2. Capital raisings are likely
to be for positive strategic
reasons – to finance lending
or acquisitions.
The risk of a second round of equity capital raisings has diminished given that:
(i) the hybrid market is now re-opening;
(ii) the organic capital generating ability of the banks is improving; and
(iii) dividend cuts are increasingly likely across the sector.
If the major banks undertake another capital raising, we believe that it will more likely be to
finance acquisitions or increase lending volumes, as opposed to recapitalisation following
bad debt write-offs. Accordingly, we would view such capital raisings as medium-term
positives.
3. Attractive dividend yields – in absolute and relative terms
3. Attractive dividend yields. Since Dec 08, BBY has been forecasting major bank dividend cuts of c25% (refer Appendix
A). ANZ’s recent guidance supports our view.
Bank dividend yields - even after we have factored in 25% dividend cuts - are attractive on an
absolute and bond-relative basis.
Attractive absolute dividend yields
After factoring in our dividend cuts, major banks offer FY09F dividend yields of 7.4-8.1%.
Attractive pricing relative to historical trends
Since Oct 08, the ratio of bank dividend yield to 10-year bond yields has exceeded all
historical benchmarks. The average bank-bond yield multiple has been 0.9x since 1989,
and reached 1.4x in 1991 at the peak of the previous bad debt loss cycle. Today, this
ratio stands at approx. 2.65x.
We believe that: (i) today’s pricing anomaly was driven by fear of systemic implosion at
the height of the credit crisis; (ii) this pricing anomaly will unwind in the short-medium
term; and (iii) the ratio will revert to the top end of the historical range (we assume
reversion to 1.4x).

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BUY AUSTRALIAN MAJOR BANKS: SHORT-TERM PAIN, LONG-TERM GAIN
Catalysts
We believe that the catalysts to correct this pricing anomaly are:
(i) ANZ’s 25% dividend cut guidance. The market’s positive reaction to ANZ’s guidance
suggests that there were fears of a greater dividend cut being priced into the market.
Also, ANZ has set a de facto ceiling on the maximum dividend cut level which we believe
its peers will be reluctant to exceed.
(ii) The imminent end of monetary easing. The market has factored in a 0.50% cash rate cut
on 3 Mar 09 to 2.75%, followed by one final cut on 4 Apr 09 to 2.50%. We believe that
the RBA’s signals that we are approaching the end of the monetary easing cycle,
accompanied by a less bearish outlook statement, will begin to focus the market on
looking “through the cycle” and highlight the large major bank dividend yields available
relative to the cash rate.
CHART 5: AVERAGE BANK DIVIDEND YIELDS TO 10-YR GOVERNMENT BOND YIELD
Source: BBY

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BUY AUSTRALIAN MAJOR BANKS: SHORT-TERM PAIN, LONG-TERM GAIN
Valuation and Price Targets
Our price targets have been
set using a combination of
PE applied to near-term
earnings and bank dividend
yield/bond earnings yield
multiples.
As the market becomes
comfortable that the outlook
is stabilising, investors will
increasingly revert to
discounted cash flow
valuations to price bank
stocks. This will likely be the
basis for the next round of
equity analysts’ upgrades.
Until now, the market has been pricing bank stocks through application of depressed PE
multiples to depressed forward earnings estimates. We believe that the imminent end of the
monetary easing cycle will be a catalyst for investors to focus on bank dividend yields.
Accordingly, we have set our price targets through a combination of: (i) 25% of near-term PE
based valuation; and (ii) 75% of bond-relative valuation. Our forecast and price targets are
summarised in Appendix A.
As the market becomes comfortable that the outlook has stabilised investors will increasingly
focus on “through the cycle” discounted cash flow valuations, which will provide the basis for
future analyst price target upgrades.
Our price targets assume:
(i) Bank-bond yield multiples return to 1.4x - the peak during the 1991 loan loss
cycle;
(ii) Dividend cuts from 15-25% across the sector in FY09F; and
(iii) ANZ to trade at a 10% discount to reflect the placement discount implied by
ANZ’s Asian acquisition risk.

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BUY AUSTRALIAN MAJOR BANKS: SHORT-TERM PAIN, LONG-TERM GAIN
APPENDIX A – AUSTRALIAN BANK STOCK METRICS
Australian Bank Stock Metrics
ANZ CBA NAB WBC Sector
Average
BBY Recommendation Hold BUY BUY BUY
BBY preferred ranking 4 2 1 3
BBY 12-month target price $13.36 $36.02 $20.79 $18.77
21-Jan-08 Closing Share Price $13.31 $29.80 $17.88 $16.89
12-mth forecast capital return 0.3% 20.9% 16.3% 11.1% 12.1%
12-mth forecast total shareholder return 7.9% 28.9% 24.1% 18.5% 19.8%
08A Cash EPS $1.55 $3.60 $2.37 $1.98
BBY 09F Cash EPS $1.43 $3.17 $1.74 $1.66
% change 08-09 EPS -7.7% -11.9% -26.6% -16.3% -15.6%
BBY 10F Cash EPS $0.94 $2.91 $1.57 $1.15
Earningsper
share(EPS)
% change 09-10 EPS -34% -8% -10% -31% -20.7%
08A Cash DPS $1.36 $2.66 $1.94 $1.42
BBY 09F Cash DPS $1.00 $2.40 $1.40 $1.25
% change 08-09 DPS -26% -10% -28% -12% -19.0%
BBY 10F Cash DPS $1.00 $2.10 $1.40 $1.10
% change 09-10 DPS 0% -13% 0% -12% -6.1%
BBY 09F div yield 7.5% 8.1% 7.8% 7.4% 7.7%
BBY 09F grossed up cash yield 10.7% 11.5% 11.2% 10.6%
Dividendspershare(DPS)
BBY 10F div yield 7.5% 7.0% 7.8% 6.5% 7.2%
FY09F NTA per share $10.62 $13.77 $16.51 $8.20
FY09F book value/share $12.68 $24.09 $20.49 $11.59
Price/09F NTA 1.25x 2.16x 1.08x 2.06x 1.64x
Price/09F book value 1.05x 1.24x 0.87x 1.46x 1.15x
Premium/(discount) to sector average FY09F PE -9.1% 7.2% -24.4% 26.3%
Trailing PE 8.6x 8.3x 7.5x 8.5x 8.2x
Premium/(discount) to sector average FY09F PE -4.9% -4.0% 5.0% 3.9%
09F PE 9.3x 9.4x 10.3x 10.2x 9.8x
Earningsand
Asset-basedValuation
10F PE 12.9x 10.5x 10.8x 13.9x 12.0x
1 Jan 09 share price close $15.29 $28.90 $20.87 $16.97
Year to date performance (%) -12.9% 3.1% -14.3% -0.5% -6.2%
52 week high $27.55 $52.70 $36.32 $27.22
Fall from 52 week high (%) -51.7% -43.5% -50.8% -38.0% -46.0%
All time high $31.74 $62.16 $44.84 $31.32
Shareprice
performance
Fall from all time high (%) -58.1% -52.1% -60.1% -46.1% -54.1%
Source: BBY
10-year government bond 4.41% 4.41% 4.41% 4.41%
Target average bank yield/bond yield 1.4x 1.4x 1.4x 1.4x 1.4x
Implied FY09F share price target $15.75 $37.79 $22.05 $19.68
% upside from current price 18.3% 26.8% 23.3% 16.5% 21.2%
Implied FY10F share price target $15.75 $33.07 $22.05 $17.32
Bondrelative
dividend
yieldvaluation
% upside from current price 18.3% 11.0% 23.3% 2.6% 13.8%

11. b
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This report has been prepared and issued (in Australia) by BBY Limited (ABN 80 006 707 777/AFS Licence No. 238095) (BBY) and is subject to the disclosures and restrictions set
out below.
Analyst Certification:
The research analyst(s) identified on the cover of this report individually certify that in respect of each security or issuer that the research analyst covers that: this report accurately
reflects his or her personal views about any and all of the subject issuer(s) or securities; and no part of the research analyst’s compensation was, is, or will be directly or indirectly
related to the specific recommendation(s) or views expressed by the research analyst(s) in this report.
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of the company(ies) covered in this report and may trade in the securities mentioned either as principal or agent or may be materially interested in such securities.
BBY does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could
affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
Disclaimer & Warning
This report may contain general advice or recommendations which, while believed to be accurate at the time of publication, are not appropriate for all persons or accounts. This
report does not purport to contain all the information that a prospective investor may require. Before making an investment or trading decision, the recipient must consider Market
developments subsequent to the date of this document, and whether the advice is appropriate in light of his or her financial circumstances or seek further advice on its
appropriateness or should form his/her own independent view given the person’s investment objectives, financial situation and particular needs regarding any securities or Financial
Products mentioned herein. Information in this document has been obtained from sources believed to be true but neither BBY nor its associates make any recommendation or
warranty concerning the Financial Products or the accuracy, or reliability or completeness of the information or the performance of the companies referred to in this document. Past
performance is not indicative of future performance. This document is not an offer, invitation, solicitation or recommendation with respect to the subscription for, purchase or sale of
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associate of BBYDL may be a market maker in any investment referred to herein.
Canada: The investments or investment services referred to in this document are available in Canada only to “Designated Institutions”, as defined by the Securities Act (Ontario).
Analysts’ Compensation: the research analysts responsible for the preparation of this report receive compensation based upon various factors, including the quality and accuracy
of the analyst(s) research, client evaluation feedback, independent survey rankings and overall firm revenues, which include revenues from, among other business units and
corporate finance.
Other International Investors: International investors outside the US, UK, UAE or Canada are encouraged to contact their local regulatory authorities to determine whether any
restrictions apply to their ability to purchase this investment.
Recipient Representations/Warranties: By accepting this report, the recipient represents and warrants that he or she is entitled to receive such report in accordance with the
restrictions set out in this document and agrees to be bound by the limitations contained herein. Any failure to comply with these limitations may constitute a violation of law.
Meanings of BBY Limited Ratings
Buy – Describes stocks that we expect to provide a total return (price appreciation plus yield) of 15% or more within a 12-month period.
Hold – Describes stocks that we expect to provide a total return (price appreciation plus yield) of plus or minus 15% within a 12-month period.
Underperform – Describes stocks that we expect to provide a total negative return (price appreciation plus yield) of 15% or more within a 12-month period.
NR – The investment rating and price target have been temporarily suspended. Such suspensions are in compliance with applicable regulations and/or BBY Limited policies.
CS – Coverage Suspended. BBY Limited has suspended coverage of this company.
Speculative Buy – Describes stocks we view with a positive bias, whose company fundamentals and financials are being monitored, but for which there is insufficient information for
BBY Limited to assign a Buy, Hold or Underperform rating.
Speculative Underperform – Describes stocks we view with a negative bias, whose company fundamentals and financials are being monitored, but for which there is insufficient
information for BBY Limited to assign a Buy, Hold or Underperform rating.
Monitor – Describes stocks whose company fundamentals and financials are being monitored, or for which no financial projections or opinions on the investment merits of the
company are provided.
Valuation Methodology
BBY’s methodology for assigning ratings may include the following: market capitalisation, maturity, growth/value, volatility and expected total return over the next 12 months. The
price targets are based on several methodologies, which may include, but are not restricted to, analyses of market risk, growth rate, revenue stream, discounted cash flow (DCF),
EBITDA, EPS, cash flow (CF), free cash flow (FCF), EV/EBITDA, P/E, PE/growth, P/CF, P/FCF, premium (discount)/average group EV/EBITDA, premium (discount)/average group
P/E, sum of parts, net asset value, dividend returns, and return on equity (ROE) over the next 12 months.
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