ANALYST OUTLOOK FOR FY21 - Our analysts share their outlook and top stock picks for FY21 - OncoSil Medical
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ANALYST OUTLOOK FOR FY21. Our analysts share their outlook and top stock picks for FY21.
To learn more about the stocks mentioned in this CONTENTS
report, speak to your adviser or refer to the Client BANKS & GENERAL INSURERS 3
Access Research Library. DIVERSIFIED FINANCIALS & FINTECH 4
LISTED INVESTMENT COMPANIES 5
Please note that Speculative securities may not be AGRICULTURE & FMCG 6
suitable for retail clients (refer to final page of this TECHNOLOGY 7
report). DISCRETIONARY RETAIL 8
INDUSTRIALS 9
www.bellpotter.com.au RESOURCES & ENERGY 11
1300 0 BELLS (1300 023 557) HEALTHCARE & BIOTECH 15
info@bellpotter.com.au EMERGING COMPANIES 17
DISCLAIMER & DISCLOSURES 18BANKS & GENERAL INSURERS. TS Lim
Our FY2021 top three picks Macquarie Group (MQG) Commonwealth Bank (CBA) MyState (MYS)
possess strong risk management
MQG remains our top stock pick. FY20 profit will be dragged down by Our positive view is based on few
capabilities and defensive qualities
Underlying earnings numbers were COVID-19 but underlying income should distractions facing the bank, an
including healthy balance sheets
strong despite having none of the huge be stable and costs are expected to organic growth strategy that is
and surplus capital that could be prior year asset sales – and if COVID-19 be well-managed. The balance sheet profitable, future-focused and built
returned to shareholders. These related charges are excluded, profit remains in good shape with sufficient around a scalable, digital platform.
companies have undergone massive would have been 4% higher in FY20. capital, funding and provisions, and MYS is an approved lender in both
transformation over the years to MQG’s annuity-style and markets- sound overall asset quality. The the government’s Coronavirus SME
improve the quality and consistency facing activities continue to work well, announced sales of interests in Colonial Loan Guarantee and First Home Loan
of their earnings. being capital efficient in ensuring First State and the Indonesian life Deposit schemes, which should provide
capital can be shifted to activities business should lift CET1 to 11.4-11.5% a lending backstop to underpin organic
Our selection comprises one diversified with higher incremental returns. and place CBA ahead of its domestic revenues. Cost discipline remains a
financial (MQG), one major bank Capital management flexibility is also peers and near the top end of the global key value lever (restructuring benefits
(CBA) and one regional bank (MYS). characterised by a final dividend in FY20 “unquestionably strong” club. Excluding should start to flow in 2H20) and the
The operating environment remains that was entirely funded by non-bank COVID-19 and other provisions, long term aspiration of ~60% CIR is
positive for MQG (e.g. capitalising activities. In essence, MQG remains a underlying organic capital generation in unchanged. We also take comfort in the
on rising global demand for asset longer term “Cash and Growth” story 3Q20 was strong at +12bp and we still quality of its lending book, with arrears
and risk management services and with $25bn equity yet to be deployed in think there is scope for CBA to declare a well below industry levels by at least
infrastructure/green investments) infrastructure and other assets. small 2H20 dividend of 100¢ in August. 90bp.
while CBA and MYS appear well-placed
given sound underlying fundamentals Buy, Price Target $135.00 Buy, Price Target $72.00 Buy, Price Target $4.50
to capitalise on postpandemic
opportunities.
ANALYST OUTLOOK FOR FY21. 3DIVERSIFIED FINANCIALS & FINTECH. Lafitani Sotiriou
AMP (AMP) Trio of Fund Managers (JHG, PDL, PPT) Afterpay (APT) Life 360 (360)
We believe the worst is over. AMP’s We recommend Buying a trio of Fund APT remains a key pick despite its Life360 (360) is our other high
Life sale provides a meaningful capital Managers for exposure to a sector strong run. We believe the stock conviction pick which has languished
injection, for the company to complete that is relatively cheap, still paying remains in an upgrade cycle, with the in its share price performance of late.
its transformation project which healthy dividends, and set to experience next catalyst being the June quarter We see 360 as one of the few microcaps
includes $140m in post-tax synergies meaningful positive mark-to-markets update due out around mid-July. We on the ASX with a true global footprint,
and to potentially embark on a share in the June quarter given equity market believe a key to Afterpay’s continued with approximately 28m monthly active
buyback, organic and inorganic growth gains are around 17% during the period success will be its ability to further its users. We see a catalyst being its new
opportunities. The company has largely in both Australia and MSCI index. More integrations with other key e-commerce product launch which is set for around
repriced its front and back book, specifically, JHG is the cheapest, with and payment infrastructure players July this year with new pricing and
and is on track to be 80% through its a meaningful buyback and high cash in the market with its one-to-many features to be announced.
remediation program this year, with generation, PDL’s performance fees are strategy (i.e. integrate with a key piece
the Royal Commission impact largely set to return and PPT has the Trillium of infrastructure and the growth can
factored in. acquisition and Corporate Trust growth accelerate). Key examples include its
to look forward to. integrations being worked on with Visa,
Mastercard, eBay (possible outside of
Australia), and Wix (a competitor to
Shopify). Further, it has geographic
expansion it is chasing, with Canada
flagged to launch before the end of this
calendar year.
ANALYST OUTLOOK FOR FY21. 4LISTED INVESTMENT COMPANIES (LICs) & Will Gormly
TRUSTS (LITs).
2020 has reminded investors to MFF Capital Investments Limited (MFF) Magellan Global Trust (MGG) WCM Global Growth Limited (WQG)
expect the unexpected whilst
MFF’s primary focus is to invest in large MGG is a Listed Investment Trust that WQG aims to provide access to an
remaining vigilant and flexible listed international companies that have seeks to invest in a focused portfolio of actively managed portfolio of quality
with their investment portfolios. attractive business characteristics at outstanding global companies and seeks global companies found primarily in
a discount to their assessed intrinsic to purchase investments when they are the high growth consumer, technology,
Stalling economic growth from the values. The Company has provided trading at a discount to their assessed and healthcare sectors. The portfolio
global pandemic has resulted in a wide shareholders with a net total return of intrinsic value. Magellan undertakes is managed by WCM Investment
variety of administrative actions from over 18% p.a. over the past 10 years, as extensive fundamental analysis on the Management (WCM), a California-based
each country and state. Geographical at 31 May 2020. Over the same period individual companies and the industries specialist global equity firm with an
diversification is as important now as it the MSCI World Index (in AUD) returned in which they operate. MGG aims to outstanding long-term investment track
has ever been, and our top picks focus on 11.9% p.a. The portfolio is highly invest in 15 to 35 of the world’s best record. WCM’s investment process is
how to easily gain access to diversified concentrated, with the top holdings global stocks whilst targeting a 4% p.a. based on the belief that corporate culture
equity portfolios via high quality global at the end of May being Visa (18.6%) cash distribution yield. As at May 2020, is the biggest influence on a company’s
LIC/LITs. and MasterCard (17.2%). Net cash as the Fund had returned 12.5% p.a. since ability to grow its competitive advantage
a percentage of investment assets and inception. This is an outperformance of or ‘moat’. As at May 2020, WQG recorded
The FY21 top picks are MFF Capital
cash had grown to 46.7%, at 12 June 1.5% p.a. over the MSCI World Net Total a 12-month net shareholder return of
Investments Limited (MFF) which
2020. At this time MFF traded at a Return Index (AUD) over that period. 19.0% (not adjusted for option dilution),
has delivered superior long-term
1.9% discount to the pre-tax NTA. As a MGG traded at a 2.7% discount to the outperforming the MSCI ACWI ex-AUS
performance and now holds a large cash
result of large profitable realisations NAV at this time and was trading on an Index (AUD) by ~8.0%. On 12 June
balance, Magellan Global Trust (MGG)
of investments, MFF continues to annualised 12-month net yield of 3.64%. 2020, WQG traded at a 14.2% discount
which provides access to a high quality
pay large tax instalments which This provides investors with income to the NTA before tax and provided
manager of leading global companies,
ultimately decreases the NTA. However, diversification whilst still maintaining shareholders with an annualised
and WCM Global Growth Limited (WQG)
shareholders will benefit from the pass a current exposure that is weighted unfranked dividend yield of 3.4%. With
which invests in global quality companies
through of franking credits attached towards some of the largest internet & large weightings in the portfolio towards
with a rising competitive advantage and
to future dividends, and the franking eCommerce, technology, and payments Information Technology (~24.1%) and
a corporate culture that supports the
credit balance has grown significantly companies. Health Care (~23.6%), WQG is well
expansion of this moat.
in 2020 to an estimated ~$100m. We positioned for the post-COVID-19
calculate MFF’s indirect cost ratio at recovery that seems set to change
~0.41% and the Company does not incur consumer behaviour. The top position
a performance fee. at the end of May was Shopfiy Inc., a
Canadian e-Commerce platform for
online stores.
ANALYST OUTLOOK FOR FY21. 5AGRICULTURAL & FMCG. Jonathan Snape
Investments in the Agricultural Inghams Group (ING) Elders (ELD) Rural Funds Group (RFF)
& FMCG sector should be
ING is a leading vertically integrated ELD is a leading supplier of fertiliser, Rural Funds Group (RFF) is a listed
considered high risk and come poultry producer (from stock feed to end agricultural chemicals and animal health agricultural REIT with a portfolio
with volatility. For this reason we products) with a market leading position products to rural and regional Australia, covering 50 properties, focused on,
tend to focus on stocks where we in Australia and the number 2 participant with strong agency positions in livestock, almond orchards, vineyards, cattle,
see either: a structural uplift in in New Zealand. wool and real estate. cotton and macadamias. Assets in the
portfolio are some of the most productive
ROIC through the cycle, cyclical We see ING as a second derivative The recent share price of ELD has in the industry and leased to high quality
growth stories, or counter- beneficiary of improved seasonal benefited from rainfall and strong cattle tenants including Treasury Wine Estates,
seasonal crop exposures. conditions, lifting Australian grain prices . However, we continue to see Olam, Select Harvests, AACo and Stone
production. We expect a normalisation consensus FY21-22e earnings as yet to Axe Pastoral, with a WALE of 11.3 years.
Our key commodity call for 2020 has in cropping volumes to drive a rapid reflect the annualised benefit of the AIRR RFF is externally managed by Rural
been the unwinding of the drought contraction in Australian wheat prices, acquisition (and synergy realisation), a Funds Management (RFM), who have
induced dislocation between domestic which should result in a material normalisation in the summer crop (sales been managing agricultural investments
cattle prices and export meat prices contraction in feed costs from 2H21e. flow in 1H21e) or incorporating the scale since 1997.
on a normalisation in weather patterns Between FY16-19 Australian benchmark of upside from integrating three generic
and more recently the normalisation of wheat prices rose ~85% resulting in portfolios across the combined ELD + The RFF portfolio continues to transition
domestic grain prices to international Australian grain trading at a premium to AIRR business. We also see upside from to natural resources (from 46% to 59% of
benchmarks. The three stocks listed US wheat three times historical levels. A migrating independents onto the AIRR FY20e revenues), which are appreciating
below carry varying degrees of exposure normalisation in this historical premium platform (~600 independents in the rather than depreciating assets, and
to these dynamics. is likely to prove a tailwind to earnings market). towards assets with market linked rental
in an environment where competing reviews (from 37% to 43% of FY20e
protein prices face upward pressure. We revenues). Over time as capex is deployed
are already seeing a rapid contraction in we expect favourable asset revaluations
new season crop prices and expect ING and growth in rental incomes from
to benefit from this dynamic in Fy21e, at newly acquired assets. In addition as the
a time when COVID-19 related demand investment in the cattle sector has lifted
headwinds are likely to be weakening. so too has the exposure the business
has to cattle prices, through EYCI rent
linkages on some leases.
ANALYST OUTLOOK FOR FY21. 6TECHNOLOGY. Chris Savage
We continue to be positive on the Uniti Group (UWL) Infomedia (IFM) PWR Holdings (PWH)
technology sector in Australia
Uniti is a diversified provider of Infomedia is a leading provider of software PWR is a leading provider of customised
as, in an environment of low telecommunications services, specialising solutions to the parts and service sectors cooling solutions to the global motorsports
interest rates and low growth, in fixed-wireless, fibre and specialty of the global automotive industry. The market as well as the wider automotive
we believe there are a number of telecommunication services. The company company has a solid growth outlook due industry. While it is technically a
good quality stocks in the sector has grown rapidly through a number of to good momentum in its Service business manufacturer we also see it as a tech
with reasonable to strong growth acquisitions over the past 12 months and and expected rapid growth in its relatively company due to the high level of IP in its
outlooks. is now a strongly profitable and highly new Data business. The shares have products. The company has been negatively
cash generative business. Uniti looks underperformed the sector, however, due impacted by COVID-19 – due to the
We acknowledge many stocks in the sector set for further strong growth over the to an equity raising in April which was not cessation of elite motorsport globally – and
have had a strong re-rating over the past next 12 months through both organic done in conjunction with an acquisition. we have had to downgrade our FY20 NPAT
few years but believe there is still some growth and the proposed acquisition of We do, however, expect acquisitions to forecast by around 25%. We do, however,
value in the sector with a number of good Opticomm which is scheduled to go ahead commence in 1HFY21 and for this to expect a strong recovery in FY21 – due to
quality stocks on reasonable forward PE in September or October. The stock looks provide a catalyst for the share price. The the recommencement of elite motorsport
ratios. Our goal is to find good quality tech reasonable value on an FY21 PE ratio of stock looks reasonable value on an FY21 PE – and an unusually strong 1HFY21 result
stocks with strong growth outlooks that around 25x. ratio of around 25x. which should provide a catalyst for the
are currently trading on forward PE ratios share price. The stock looks reasonable
of around 25x or less and that, over time, Buy, Price Target $2.25 Buy, Price Target $2.00 value on an FY21 PE ratio of around 25x.
can re-rate up to over 30x as has happened
with stocks like WiseTech Global (WTC) and Buy, Price Target $5.00
Altium (ALU).
ANALYST OUTLOOK FOR FY21. 7DISCRETIONARY RETAIL & Sam Haddad
PROFESSIONAL SERVICES.
Retail Temple & Webster (TPW) City Chic Collective (CCX) Professional services
The COVID-19 pandemic has had some TPW is Australia’s largest online only CCX is a global multichannel retailer, IPH Limited (IPH)
significant impacts on the retail sector, furniture and homewares retailer with almost two-thirds of sales online,
although the key overarching trend with >180,000 products on sale from specialising in plus-size (size 14+) IPH wholly owns Spruson & Ferguson,
that has emerged is the acceleration hundreds of suppliers. TPW is the most women’s apparel, accessories and Pizzeys, AJ Park, Griffith Hack,
to online shopping. While the easing leveraged retailer to the online shift in footwear. It is a collective of customer- Shelston IP and Practice Insight. IPH
of social distancing restrictions will our research coverage. The company led brands including City Chic, Avenue is the leading Intellectual Property
see some unwind of this, we believe has a strong balance sheet with ~$29m and Hips & Curves. City Chic appeals (IP) services group in the Asia-Pacific
there will be some enduring impacts on in net cash at hand, a flexible cost to fashion-forward women and its region, with specialist services spanning
consumer shopping behaviour. structure and a low risk inventory model multichannel model comprises: a the protection, commercialisation,
with drop-ship accounting for ~80% of network of >90 stores across Australia/ enforcement and management of IP.
We believe the outlook for consumer revenue. Drop-ship is a capital light New Zealand; multiple websites The group comprises a team of ~1000
discretionary spending remains highly and negative working capital fulfilment operating in Australasia and USA; and staff that services a diverse client
uncertain. Key risks to consumer model where products are sent directly marketplace and wholesale partnerships base of Fortune Global 500 companies
demand include: 1) increased to customers by suppliers, enabling a in the USA and Europe. Avenue targets and other multinationals, public
unemployment and the outlook for larger product range, faster delivery value-conscious women and Hips & sector research organisations, foreign
this once JobKeeper unwinds coupled times and reducing the need to hold Curves is an intimates brand; both are associates and local clients. The key
with weak business confidence; 2) the inventory. The drop-ship range is online only with a significant customer positive factors we see for IPH include:
unwind of other government support complemented by a private label range following throughout the USA. We 1) market leader in a sector that has
initiatives such as rent relief and loan which is sourced directly by TPW from believe CCX is well positioned in this proven relatively resilient through
deferrals; and 3) a ‘second wave’ overseas suppliers. There are several environment given the company’s: strong previous economic downturns; 2)
scenario of COVID-19 cases, impacting initiatives underway or in the pipeline online presence; minimal debt position; strong cash flow generating business
the recovery of foot traffic in malls. to drive sales growth including: adding flexible supply chain (able to align intake (gross conversion >90%); 3) strong
depth and breadth to the company’s to consumer demand/preferences); and expanding exposure to the high
Our favoured retailers also have a core offer; continuing to invest in the and low fixed costs structure (including growth Asian IP market; 4) synergy
strong balance sheet, flexible cost trade and commercial segment; adding recent successful rent reductions with opportunities from recent acquisitions
structure, and low risk inventory model. new adjacent categories; raising brand landlords). Avenue.com has (as at CCX’s (including XIP and AJ Park); and 5)
awareness (TV advertising recently 25 May update) traded resiliently during expansion prospects in new secondary
commenced); and the launch of a the pandemic. We attribute this to IP markets.
mobile app. Avenue’s strong offering in casual wear
which we believe is resonating strongly
in the current difficult environment.
ANALYST OUTLOOK FOR FY21. 8INDUSTRIALS. Alex McLean, James Filius & Hamish Murray
Carbon Revolution (CBR) (Speculative) Corporate Travel (CTD) Emeco Holdings (EHL) Johns Lyng Group (JLG)
Carbon Revolution (CBR) is an advanced CTD is a corporate travel service Emeco Holdings (EHL) is a leading Johns Lyng Group (JLG) is an integrated
manufacturing company that has provider with operations in Australia & provider of earthmoving equipment building services group that primarily
developed the only single piece carbon New Zealand, North America, the UK rental and maintenance services to the delivers insurance building and
fibre automotive wheels to Original and Asia. CTD’s business model revolves Australian mining industry. restoration services (IB&RS), and
Equipment Manufacturer (OEM) quality around its customer value proposition commercial building services across
EHL is exposed to the Australian mining
standards with commercial adoption which combines superior client service Australia. With JLG anticipated to deliver
production cycle that has remained
across several major OEM models. and technology solutions to deliver a strong FY20 result benefiting from
relatively resilient to date. The resilience
return on investment and cost savings insurance panel wins, increased job
COVID-19 left CBR exposed to the of mining production was reflected in the
to corporate clients. In our view, we volumes and acquisitions which will
closure of key customer factories in the company’s strong FY20e guidance, which
see CTD continuing to leverage this see JLG enter the Strata Management
US, Italy, Canada and Spain, delaying had only minor impacts from increased
value proposition, further increasing market, we believe that the company is
the production of end-vehicles and operating costs relating to COVID-19,
its market share both domestically and well positioned as we enter FY21e, for
disrupting the delivery of finished plus some headwinds relating to east
internationally. Despite the uncertainty the following reasons:
wheels. coast coal markets. We expect further
facing the outlook for global travel, we coal related headwinds to impact the 1. JLGs core IB&RS remains relatively
With all customer factories now remain attracted to CTD as a pure play company in FY21e, although this looks insulated from COVID-19 trading
reopened and some manufacturers, on the corporate travel market, exposure priced in, while increased exposure restrictions owing to its “essential
like Ferrari, planning to catch up lost to domestic travel (c.60% of total to underground gold mining and the service” status.
production in the second half of CY20, turnover) and ability to operate profitably strength of iron ore should partially
CBR is positioned to return to more off a low base due to its lean operating 2. The company enters FY21e with a full
offset any coal weakness.
normalised volumes in 1QFY21. model driven by automation. job order book resulting from record
EHL’s high funding costs present some insurance job registration volumes
In our view, CBR should continue to
Buy, Price Target $13.75 additional risk, although we expect arising from 6 recent catastrophic
rerate if the company can achieve
the company to close FY20e with weather events including East
the pre-COVID volumes implied by
close to $100m in cash which could be coast bushfires, and QLD & NSW
prospectus forecasts in FY21e. Longer-
used to amortise debt, while a partial hailstorms. During the calendar
term, we continue to like CBRs first
refinancing of the senior notes remains year to May 2020, JLG has registered
mover advantage, Intellectual Property,
an option if credit markets continue to ~55,000 jobs, which compares to
and ability to generate material revenues
improve. At just 8.5x FY21e underlying ~61,000 jobs in CY19, which we believe
off relatively low implied vehicle
P/E, EHL looks oversold on a normalised positions the company strongly for
volumes.
basis. work completions in FY21e; and
Buy (Speculive.), Val. $2.42ps
Buy, Price Target $1.52
ANALYST OUTLOOK FOR FY21. 9INDUSTRIALS. Alex McLean, James Filius & Hamish Murray
3. We anticipate that the benefits of JLGs Mader Group (MAD) Rhipe (RHP)
integration and cross sell of services
Mader Group (MAD) is a leading provider RHP provides cloud-based subscription
into the Strata management market
of specialised contract labour for software and service licenses to a
will begin to emerge over the course
maintenance of heavy mobile equipment growing channel of IT service providers
of FY21e, which will deliver additional
in the resources industry. across Asia Pacific (APAC). Software
revenue gains and improved operating
subscriptions are distributed at a
leverage across the business. MAD has experienced some disruption wholesale level from world leading
Overall we see JLG as a well-funded and from COVID-19, having had to temporarily software vendors such as Microsoft,
strongly positioned business to deliver suspend its international division (~5% Citrix and Symantec. We believe RHP
solid organic growth during FY21e. We of FY20e revenues), although it’s FY20e remains well positioned to deliver a
see the potential for the business to guidance range suggests continued solid full year result for FY20 despite
grow into its multiple as it expands its growth in Australia and the US has offset the uncertainty facing markets due to
footprint within the strata management the majority of the lost International its lean operating model and exposure
market, with opportunities for strategic revenue. to the digital economy. Ultimately, we
acquisitions in this space likely to be We continue to forecast below trend believe the cloud computing megatrend
highly EPS accretive. growth in FY21e given possible – RHP’s key structural growth driver -
headwinds in east coast coal markets remains intact in a post COVID-19 world
Buy, Price Target $2.90
(17% of 3Q20 revenue). However, strong and supports RHP’s long-term growth
growth in its home market of Western outlook. We see two positive catalysts
Australia (64% of 3Q20 revenue) and for the stock over the medium term: (1)
North America (6% of 3Q20 revenue) RHPs entry into the Japanese market
means MAD’s growth prospects look starting to become a reality; and (2)
cheap at 8.7x FY21e P/E. $60m net cash position will be used on
complementary acquisitions to improve
Buy, Price Target $1.18 FY21 EPS by up to +50%.
Buy, Price Target $2.30
ANALYST OUTLOOK FOR FY21. 10RESOURCES & ENERGY. Peter Arden, David Coates & Stuart Howe
The FY21 outlook has been to benefit as a portfolio diversifier, but Oil prices have rebounded strongly capacity expansions in Europe and Asia to
materially altered by the this kicked up a gear with the risks of following a destructive price war meet projected demand in 2022 and 2023.
the COVID-19 pandemic boosting the between the world’s second largest oil While deferral and possible cancelation of
emergence of the COVID-19 safe haven trade and what has been a producer (Saudi Arabia) and Russia. a number of lithium development projects
pandemic and the implementation steady stream of fiscal and monetary Recently improved sentiment in the from the combined impacts of falling
of social and economic policy announcements that have added oil sector has been boosted by OPEC+ prices and reduced funding ability will
restrictions to contain it. to gold’s appeal as a store of wealth. members complying with production cut tighten the projected market balance.
“Whatever it takes” stimulus packages arrangements. The market for high-purity alumina is also
For base metals this has certainly had from Central Banks to support market Whilst the risk of a second wave of expected to be chronically undersupplied
an impact on the demand outlook. Major liquidity have raised currency debasement COVID-19 infections that could further as its use is recognised in advancing
global economies have been pushed into as a thematic and a further attraction slow the global economy remains, that lithium ion battery efficiency and safety.
negative growth and technical recessions. for investors to increase exposure to risk is being outweighed by the effects
Key indicators of consumption such as gold. Low interest rates and negative of a compliant OPEC+ and forecasts
manufacturing PMI’s have shown rates real interest rates, together with the US for gradually recovering global growth.
of contraction not seen for a decade or dollar falling back from its highs, round Under this scenario, we see oil prices
more. However, the flip side of this has out an extremely supportive gold price remaining relatively steady around current
been supply disruption in both the scrap environment. levels over the next two years, as global
market and dominant metal producing
Energy policy and energy technology are oil inventories are gradually reduced in an
jurisdictions – particularly in South
recurring themes for a post COVID-19 improving economic climate.
America. This has resulted in forecasts for
economic recovery.
the supply-demand balance in the market Battery raw material markets are
remaining relatively tight. A further We have a positive medium term outlook expected to strengthen as governments
mitigating factor has been stimulus for domestic gas markets. The ACCC Gas and industry promote electric vehicle
packages announced by Governments inquiry 2017-25 continues to highlight (EV) take-up and other carbon abatement
which have included significant the risk of a supply shortfall in east technologies.
infrastructure programs. Notably, while coast markets over the medium term, Markets for lithium are expected to return
China as an end user consumes ‘just’ particularly in southern states. This to deficit over a 3-year outlook. Global
~50% of global copper production, the shortfall is driven by declining Bass Strait auto majors have firm plans for major
single largest copper metal user globally, supply, increased reliance on Queensland new investments in EV capacity and new
China Grid (State power utility) has had its coal seam gas and restrictions with models; in cases like Toyota, EVs could
development budget increased by 10%. respect to developing new supply. Strong become their dominant product by the
term prices for gas sales out 24+ months
The gold price in early 2020 continued middle of the decade. Battery cathode
also reflect this expected supply deficit. manufacturers are planning further
ANALYST OUTLOOK FOR FY21. 11RESOURCES & ENERGY. Peter Arden, David Coates & Stuart Howe
Alpha HPA (A4N) Byron Energy (BYE) Comet Ridge (COI) Mincor Resources (MCR)
A4N’s HPA First Project is aiming to BYE continues to advance the growth of COI is positioned to develop two coal MCR’s Kambalda Nickel Project has
supply 99.99% high-purity alumina (4N oil and gas output with the installation seam gas projects over the next two significant attraction but it has not
HPA) to the lithium ion battery and LED of the SM58 G Platform underway and years. The Mahalo JV (COI 40%) in been getting anything like the market
manufacturing sectors. 4N HPA is a expected to lead to new production in partnership with Santos and APLNG, is attention of some recent nickel
preferred ceramic for coating polyolefin September 2020. The new platform expected to be development-ready by discoveries despite delivering further
separators in lithium batteries. The will also facilitate drilling of multiple the end of 2020 and will net COI around high grade Cassini extensions and being
market for 4N HPA is expected to grow exploration wells in the next two years 1.5mmboe pa in gas sales. Mahalo a low capex development underpinned by
from around 30ktpa now to 100ktpa by for which the company is now well North (COI 100%) could be fast-tracked its attractive and strategic concentrate
2028. The HPA first definitive feasibility funded, having recently raised nearly to produce 0.6-1.3mmboe pa in the offtake arrangement with BHP. MCR
study supported 10,000tpa production $30m that included a much larger SPP near term, mostly through existing remains well funded (net cash was
and annual pre-tax cash flow of $133- component after strong shareholder infrastructure. COI also has longer dated $51.9m at 31 March 2020) and is making
280m from capex of $308m. Chemical support. Our oil price forecasts reflect gas projects, including in the Gunnedah solid progress towards a nickel restart,
major Orica is partnering with A4N for the improved pricing since May 2020, Basin, which could eventually be tied-in advancing its debt funding process and
input supply and by-product offtake. with our average forecast WTI prices to STO’s Narrabri Gas Project. readying the very high grade Cassini
A4N could be in production in 2022 and being US$46.45/bbl, US$32.78/bbl deposit for development. Provided
benefit from supply deficits and strong and US$38.48/bbl for FY20 to FY22 Speculative Buy, Valuation $0.19/sh nickel prices improve and global nickel
pricing. respectively. Our long term WTI price inventories decline as expected and
forecast is US$45/bbl and we see the assuming further easing of COVID-19
Speculative Buy, Valuation $0.36/sh Louisiana Light Sweet (LLS) crude price restrictions, FID is likely in 3Q20 so
(which BYE receives) gradually returning nickel processing can potentially restart
to a modest premium to that over time. around late 2021. Our valuation, which
While we are forecasting small losses incorporates a higher discount rate
in FY20 and FY22 and a moderate loss (12%) to reflect the greater global
for FY21, we see the company’s low economic uncertainty of COVID-19, is
operating costs enabling it to continue $0.87/share and our rating is Speculative
to generate very useful and growing Buy.
operating cash flows, aided by useful oil
price hedging. Our target price is $0.40/
share and our recommendation is Buy.
ANALYST OUTLOOK FOR FY21. 12RESOURCES & ENERGY. Peter Arden, David Coates & Stuart Howe
Nickel Mines (NIC) Pantoro (PNR) Regis Resources (RRL) Senex Energy (SXY)
In late 2019 NIC achieved the key After a disappointing 2019, PNR is We continue to view RRL as an attractive, SXY has a strong earnings growth profile
milestone of the completion of the ramp- coming off a low share price base with reliable gold producer. Consistent as the company builds production from
up phase at the Hengjaya and Ranger room to deliver on a more conservative operating margins have been maintained its two Queensland coal seam gas
Nickel Projects at the Indonesia Morowali mine plan, exploration success at its 50% across the business. RRL’s 1HFY20 projects. Roma North (1mmboe pa) is
Industrial Park (IMIP) in Sulawesi. All owned Norseman Gold Project (NGP) EBITDA margin of 50% is competitive now running at design capacity and
four NPI production lines reached full and the first outline of its development with, or ahead of, key industry peers. delivering to the GLNG joint venture
production and are now operating at strategy for that asset. Over the medium RRL’s ongoing CAPEX is in-line with our under gas sales agreements. Atlas
~42-44ktpa Ni in NPI and at all-in costs term, PNR also stands to benefit from expectations and, in our view, represents (2mmboe pa) is ramping up production
of ~US$7,800/t, comfortably below a re-rating upon becoming a multi- investment into attractive, capital and delivering gas to east coast industrial
our original steady state forecast of mine producer as the NGP comes into efficient growth options that leverage and utility customers. Both of these
US$8,300/t. production. off RRL’s existing infrastructure – an projects have expansion potential. SXY
Most recently, NIC has exercised its aspect of its operations that set it apart has a strong balance sheet with net debt
PNR’s balance sheet is debt free and
option to acquire an additional 20% from many peers. RRL also remains one expected to peak in the September 2020
offers full gold price exposure and
interest in the Hengjaya and Ranger of the sector leaders for shareholder quarter before operating cash flows
cash flows that are highly leveraged to
RKEF Nickel Projects, lifting its returns. Its most recent dividend equates support rapid deleveraging.
the gold price. This is due to its gold
ownership levels of both from 60% to to a payout of $40.7m and a payout ratio
production being entirely unhedged Buy, Target Price $0.33/sh
80%. Due to the US$120m acquisition of 43% of NPAT. While RRL does carry
(since end April 2020), making it one of
being funded entirely by equity, NIC a large hedge book which is out of the
just a handful of ASX gold producers with
retains a very strong balance sheet with money, it is almost entirely spot deferred
no hedge book.
just US$65m debt remaining. Attributable offering greater flexibility than flat
production lifts from ~24ktpa Ni in NPI This puts PNR in a strong positon to forward sales. We have estimated that
to ~32ktpa Ni in NPI on our current fund exploration and development at over 2HFY20 and FY21 it would result in a
forecasts. On NIC’s current production Norseman in a market that is giving good realised gold price at a 5.1% discount to a
run-rate this is higher, at ~35ktpa Ni in recognition for exploration success. spot price of A$2,700/oz.
NPI, making NIC the largest pure-play Buy, Target Price $0.17/sh Buy, Target Price $5.72/sh
nickel exposure on the ASX. We retain
NIC as one of our top picks on the basis
of it remaining cheap relative to peers
and its pure nickel commodity exposure –
one of our preferred base metals.
Buy, Target Price $1.08/sh
ANALYST OUTLOOK FOR FY21. 13RESOURCES & ENERGY. Peter Arden, David Coates & Stuart Howe
Westgold Resources (WGX)
Although WGX’s latest quarterly
production was below expectations,
gold output and costs are expected to
improve in 4Q20 and in the next few
years, generating growing free cash flow,
particularly as sub-level cave mining
at Big Bell moves up to the targeted
rate. Big Bell is now expected to build
to targeted production by the end of
2020, providing long term, low cost
feed that is expected to make it WGX’s
flagship mine and potentially one of
the lowest cost gold mines in Australia
if it can achieve its targeted operating
parameters. The company has continued
to have significant near mine exploration
success across its three operations in
the Murchison of WA, with recent high
grade extensions being made at Great
Fingal, Starlight and Trev’s Lode. Our
target price is $2.65/share and our
recommendation is Buy.
ANALYST OUTLOOK FOR FY21. 14HEALTHCARE & BIOTECH. Tanushree Jain
For the healthcare and biotech sector, Mesoblast (MSB) (Speculative) Genetic Signatures (GSS) (Speculative) Opthea (OPT) (Speculative)
COVID-19 has necessitated a shift in focus
this year with companies either trying to Mesoblast is the leading allogeneic Genetic Signatures (GSS) is a specialist Opthea is a Melbourne-based
keep their base businesses on track or regenerative medicine player with one of molecular diagnostics (MDx) company biopharmaceutical company focused on the
trying to make the most of the opportunity in the most diversified pipelines and several which is focused on developing multiplexed development of therapies for the treatment
developing treatments, vaccines or diagnostic products in late stage. It has strategic molecular diagnostic tests for infectious of eye diseases. Its drug OPT-302 is targeting
tests for COVID-19. Companies with licensing agreements with Tasly for China diseases (branded EasyScreen) using its wet age-related macular degeneration (wet
COVID-19 tailwinds or neutral impact from (heart) and Grunenthal for EU and LATAM proprietary platform technology, 3Base. AMD) and Diabetic Macular Edema (DME),
COVID-19 are likely to outperform: (back pain). The company is heading These tests help hospitals and pathology an attractive market with two standard of
towards a transformational 2020, with laboratories screen for a wide variety of care (SOC) anti-VEGF-A drugs generating
1. COVID-19 tailwinds: The pandemic 3QCY20 expected to be the most important infectious disease pathogens (such as US$10bn+ revenue. Last year results
presents an opportunity for companies quarter in its history with multiple catalysts. coronavirus) rapidly, accurately and in high from OPT-302’s Phase 2b wet AMD trial
focused on developing treatments, vaccines COVID-19 has provided tailwinds with the volumes. COVID-19 has provided tailwinds, demonstrated strong vision gain with OPT-
or diagnostics. company developing its Remestemcel-L accelerating the company’s path to market 302 combination over SOC Lucentis alone
2. Key COVID-19 challenges: Declines in cell therapy to treat ARDS, a lung disease in penetration and customer acquisition in (results were statistically significant) and
elective or non-urgent medical procedures ventilator dependent COVID-19 ICU patients international markets. The company reported led to a strong re-rating of the stock. The
and patients seeking non-COVID-19 care; linked to high mortality. Initial data from record revenues for 3QFY20 driven by initial meaningful additional efficacy offered by
Delay of new trials and enrolment in ongoing compassionate use was encouraging and sales of its COVID-19 test kit in Australia OPT-302 and its potential to be combined with
trials has been paused; A slowdown in now the company is running a pivotal trial in and Europe. Formal regulatory approvals for any anti-VEGF-A agent makes the company a
licensing and M&A activity for anything US, expected to read out in 3QCY20. If positive the Kit in both these markets was received strong candidate for takeover or partnering.
non-COVID-19 related; Review timelines for we expect a partnering deal and launch in in April. All indications are that 4Q20 will An earlier stage Phase 2A trial in DME which
some non-urgent applications have been FY21. Remestemcel-L is also awaiting FDA be another record quarter (BPe $5m). US reported recently has extended the safety
delayed by the FDA; Business travel and approval for SR-aGvHD in children, with approval for the kit is expected shortly data of the drug now with the second SOC
medical conferences have been impacted; approval expected by 30th Sep’20 and launch and will a key catalyst. In the short-term drug Eylea and provided signals that the drug
Less face to face meetings with healthcare soon after. Revenues from Remestemcel-L COVID-19 revenues will lead the company to has biological activity in a second indication.
professionals impacting new product for both these indications could see MSB profitability in FY21 and in the long term the We continue to expect a strategic transaction
launches and new customer acquisitions. We becoming profitable in FY21. The company foothold from equipment placed in EU and US in FY21 (we model a US$1.4bn deal). While
expect with easing of restrictions all of these is also on track to report top-line results for COVID-19 will fast track the adoption of its the company believes the results from the
activities will resume in FY21, however the from two key Phase 3 trials (advanced heart other test kits from FY22 onwards. Currently DME trial warrant exploring its drug in larger
pace is likely to be slower than what we saw failure and low back pain) in 3QCY20. The 95% of the company’s revenues are from trials in DME, its primary focus remains on
pre-COVID-19. recent capital raising has strengthened Australia and expansion into Europe and US wet AMD, where it has solid, unequivocal
We continue to believe that companies that its balance sheet, allowing it to proceed markets represent significant growth drivers data. Phase 3 trials for wet AMD are on track
deliver solid, unequivocal data and commercial with manufacturing scale up for the ARDS for the company. to initiate recruitment in Dec’20.
outcomes in FY21 are likely to be rewarded for opportunity and also have a stronger position
their efforts in terms of stock price appreciation in partnering negotiations.
and will attract investors and partners/suitors.
ANALYST OUTLOOK FOR FY21. 15HEALTHCARE. John Hester
The quality of Australian Oncosil Medical (OSL) (Speculative) Avita Medical (AVH) (Speculative) Volpara Health Technologies (VHT)
Biotechnology continues Oncosil Medical is a commercial stage Avita Medical is commercialising Recell Volpara Health Technologies is a medical
to improve with numerous drug developer and is expected to for the treatment of severe burns. This technology company focussed on the
companies now at the commence generating revenues in 2H Australian technology was developed early detection of breast cancer by
commercialisation phase or in CY2020 at the rate of $25,000 per sale. by Dr. Fiona Wood and was approved by improving the quality of screening using
The first indication is for the treatment the FDA for use in the United States in artificial intelligence. The company
late stage clinical development.
of locally advanced pancreatic cancer 2018. The company has moved quickly utilises technology originating from the
where Oncosil (in combination with to expand adoption with more than 70 University of Oxford designed to provide
Oncosil Medical, Avita Medical and systemic chemotherapy) extended overall specialist burns centres in the US now objective data on breast tissue density
Volpara Health Technology are three of survival from 8.5 months to 16 months familiar with its use. The average selling – a key risk marker for breast cancer.
our best. The common thread to each and also increased the rate of surgical price is US$6,500 and the product is sold The vast majority of the revenues are
is outstanding management. In each resection from 7% to 24%. The safety via a direct sales force of approximately earned in the United States although
case the CEO and direct reports have profile of the drug is outstanding with no 20 FTE’s. Avita intends to expand the core Volpara density product is
built careers in large pharmaceutical serious adverse events being recorded the indication for Recell into trauma approved in more than 50 countries
companies or technology and hence during a recent clinical trial. Product wounds, vitiligo, chronic wounds and around the globe. The product suite is
their market knowledge is deep. Each launch is expected to occur in the UK facial rejuvenation in the years ahead. delivered via a Software as a Service
company’s earnings are protected by and Germany later this calendar year The combined addressable market is (SaaS) business model to various
significant patents, trade secrets and with 16 hospitals targeted for training in expected to be ~US$2bn. Several of independent or corporate mammography
other forms of intellectual property the initial roll out. The company recently these projects are under way and in the providers. Since the SaaS model began
protection. raised capital to fund the launch. The clinic. The company will be redomiciled in 2016 the company has increased the
European business unit will be run by Mr to the United States from 1 July 2020 and product suite from the single breast
Nigel Lange, formerly the head of Sirtex maintain a secondary listing on the ASX density assessment tool to a complete
in the same region. where its CDI’s will be listed. suite of products covering all aspects
of risk assessment and accuracy for a
mammography practices.
ANALYST OUTLOOK FOR FY21. 16EMERGING COMPANIES. Damien Williamson
PointsBet (PBH) (Speculative) wagering, resulting from the forced Resimac (RMC) RMC has also benefitted from the three
closure of TAB outlets, pokies and 25bp RBA cuts between June-October
Founded in Melbourne in 2015, PBH casinos. The trading update for the 55 RMC is one of Australia’s leading non- 2019, followed by a further two in March
commenced operations as an Australian days spanning 1 April – 25 May 2020 bank mortgage providers, servicing over 2020. RMC profitability remains highly
corporate bookmaker in February has seen PBH report Group Net Win of 50,000 customers with principally funded sensitive to movements in the net
2017. The May 2018 decision by the $18.5m split $18.2m Australia, $0.3m assets under management of $11.4bn. interest margin, where we estimate a
US Supreme Court to overturn the US, matching the entire 2Q20 Net Win Resimac is the pioneer of securitisation 1bp improvement in the net interest
Professional and Amateur Sports of $18.0m and 3Q20 of $18.8m. On a
Protection Act (PASPA) has provided of Australian residential mortgages with margin increases RMC’s FY20 net profit
daily basis, Group Net Win has surged to
the opportunity for PBH to expand its its first Australian Residential Mortgage- by ~$1.1m.
>$336k for 4Q20, versus ~200k in 2Q20
corporate bookmaking business into the and 3Q20, and $80k in 4Q19. Backed Security (RMBS) issuance dating
back to 1988 under the name Fanmac. While RMC has noted ~6% of customers
US market, as individual states introduce
We see further momentum to PBH from: have requested COVID-19 hardship
legislation to permit both online wagering To date, RMC has issued ~$30bn across
and sports betting. - Resumption of NRL on 28 May and AFL 50 domestic and international RMBS payment moratoriums, the company has
on 11 June issues. RMC does not have the overhead not revised its 2H20 net profit guidance
To apply for a US online sports betting
- NBA, MLB and NHL working towards a of maintaining an extensive nationwide of matching the 1H20 result, given the
licence, PBH is required to partner
with a licensed operator in the form of season resumption in July branch network, rather relationships net interest margin tailwind provided by
a casino or racetrack. PBH currently with over 85% of Australia’s mortgage the current 1 month bank bill of 0.09%
- Minimal near term impact from
partnerships in 12 US states with a brokers, where customer service and a being 0.16% lower than the RBA Cash
reopening of TABs, Pokies and Casinos:
combined population of 94m. PBH given restricted access from social quick approvals process have been key Rate of 0.25%.
accepted its first customer bet in New distancing, while some TAB customers factors for RMC increasing originations.
Jersey in January 2019, Iowa in August may permanently shift betting to online
2019 and Indiana in March 2020. PBH bookies. The 1H20 Normalised Net Profit of
is currently the 4th largest online $26.9m represented an increase of
bookmaker of the 17 operating in New - Customer leakage from Sportsbet
85.5% versus the $14.5m reported
Jersey after reporting 5.6% share of / BetEasy merger: Following the
completion of the merger of Flutter in 1H19, driven by an increase in Net
online sports wagering turnover in the Interest Margin from 1.27% to 1.58%,
March 2020 quarter. PBH is targeting a (Sportsbet) and The Stars Group
(BetEasy) on 5 May, PBH’s domestic 21% growth in its principally funded
launch in Illinois in July 2020, followed by
business is likely to benefit from mortgage book, and cost to income ratio
Colorado in the December 2020 quarter,
and Michigan in the March 2021 quarter. BetEasy being absorbed into Sportsbet. reducing from 57% to 42%.
PBH’s domestic business has been a With a majority of its funding consisting
major beneficiary of the continuation of of domestic floating rate Residential
Australian racing during the lockdown Mortgage Backed Securities (RMBS)
period, as well as the shift to online priced at a margin to 1 month bank bill,
ANALYST OUTLOOK FOR FY21. 17The following may affect your legal rights: Bell Potter Securities acted as Co-Manager to CBA of an exploration company lies in science and is certifies that with respect to each security or issuer
This document is a private communication to clients PERLS XII Capital Notes (CBAPI, October 2019) and generally only accessible to the layman in a limited that the analyst covered in this report: (1) all of the
and is not intended for public circulation or for the use MQG’s Capital Notes 2 (MBLPC, May 2020) received summary form adds further to the riskiness with views expressed accurately reflect his or her personal
of any third party, without the prior approval of Bell fees for that service. which investments in exploration companies ought views about those securities or issuers and were
Potter Securities Limited. T S Lim, authoring analyst, holds long positions in to be regarded. Stocks with ‘Speculative’ designation prepared in an independent manner, including with
CBA, CBAPH, CBAPI, MBLPC, MQG, MQGPC, MQGPD. are prone to high volatility in share price movements. respect to Bell Potter, and (2) no part of his or her
This is general investment advice only and does not Exploration and regulatory risks are inherent in compensation was, is, or will be, directly or indirectly,
constitute personal advice to any person. Lafitani Sotiriou, authoring analyst, holds long
positions in JHG, PDL, APT and 360. exploration stocks. Exploration companies engage related to the specific recommendations or views
Because this document has been prepared without in exploration programs that usually have multiple expressed by that research analyst in the research
Jonathan Snape owns shares in SM1 and SHV.
consideration of any specific client’s financial phases to them where positive results at some report.
Bell Potter Securities acted as Lead Manager of
situation, particular needs and investment objectives stages are not indicative of ultimate exploration
UWL’s capital raisings in August and December 2019
(‘relevant personal circumstances’), a Bell Potter success and even after exploration success, there is
and received fees for those services. Bell Potter
Securities Limited investment adviser (or the financial often insufficient economic justification to warrant
Securities and its associates have a net long position
services licensee, or the representative of such development of an extractive operation and there is
of 0.5% or more of the issued capital of UWL.
licensee, who has provided you with this report by still significant risk that even a development project
arrangement with Bell Potter Securities Limited) Bell Potter Securities acted as lead manager for
with favourable economic parameters and forecast
should be made aware of your relevant personal GSS’ A$35m capital raise in 4QCY19 and received
outcomes may fail to achieve those outcomes.
circumstances and consulted before any investment fees for that service.
Investors are advised to be cognisant of these risks
decision is made on the basis of this document. Bell Potter Securities acted as lead manager for before buying such a stock.
MSB’s A$75m capital raise in Oct’19 and A$138m
While this document is based on information from Biotechnology Risk Warning:
capital raise in May’20 and received fees for that
sources which are considered reliable, Bell Potter The stocks of biotechnology companies without
service.
Securities Limited has not verified independently strong revenue streams from product sales or
the information contained in the document and Bell Bell Potter acted as Lead Manager of A4N’s $3.5m
placement in July 2019 and received fees for that ongoing service revenue should always be regarded
Potter Securities Limited and its directors, employees as speculative in character. Since most biotechnology
and consultants do not represent, warrant or service.
companies fit this description, the speculative
guarantee, expressly or impliedly, that the information Bell Potter Securities acted as Lead Manager to designation also applies to the entire sector. The
contained in this document is complete or accurate. the $55m Placement of June 2019 and Joint Lead fact that the intellectual property base of a typical
Nor does Bell Potter Securities Limited accept Manager to the $231m Entitlements Issue of June biotechnology company lies in science not generally
any responsibility to inform you of any matter that 2020 for NIC and received fees for that service. regarded as accessible to the layman adds further to
subsequently comes to its notice, which may affect the riskiness with which biotechnology investments
any of the information contained in this document and Bell Potter Securities acted as Lead Manager
for the $14m placement and underwriter for the ought to be regarded. Stocks with ‘Speculative’
Bell Potter assumes no responsibility for updating designation are prone to high volatility in share price
any advice, views, opinions, or recommendations $11.4m rights issue in December 2019 and as Lead
manager for the $16m placement in May 2020 for movements. Clinical and regulatory risks are inherent
contained in this document or for correcting any error in biotechnology stocks. Biotechnology developers
or omission which may become apparent after the BYE and received fees for that service.
usually seek US FDA approval for their technology
document has been issued. Past performance is not a John Hester owns 20,000 shares in Avita Medical.
which is a long and arduous three phase process
reliable indicator of future performance. Bell Potter Securities Limited acted as Lead to prove the safety, effectiveness and appropriate
Except insofar as liability under any statute cannot Manager to the PBH IPO in Jun 2019 and Institutional application or use of the developed drug and even
be excluded, Bell Potter Limited and its directors, Placement and Entitlement Offer in Oct 2019 and after approval a drug can be the subject of an FDA
employees and consultants do not accept any liability received fees for these services. investigation of subsequently discovered possible
(whether arising in contract, in tort or negligence or Bell Potter Securities acted as the Lead Manager links between the drug and other diseases not
otherwise) for any error or omission in this document on MAD’s SEP’19 IPO and received fees for that previously diagnosed. Furthermore, the Australian
or for any resulting loss or damage (whether direct, service. exchange listed biotechnology sector is subject
indirect, consequential or otherwise) suffered by the to influence by the global biotechnology sector,
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Disclosures
Raising and received fees for that service. sharp movements, both upwards and downwards,
Bell Potter Securities Limited, its employees,
in both valuations and share prices, as a result of a
consultants and its associates within the meaning Exploration Risk Warning:
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this document (which its representatives may directly ANALYST CERTIFICATION
exploration companies fit this description, the
share) and may from time to time hold interests in the speculative designation applies to all exploration Each research analyst primarily responsible for the
securities referred to in this document. stocks. The fact that the intellectual property base content of this research report, in whole or in part,
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