A result that's hard to fault - Morgans

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Feb 15, 2017 - EBITDA, which is in line with the recent Register Print Group transaction. In addition,. ORA has ... acqu
Packaging│Australia│Equity research│February 15, 2017

Orora A result that’s hard to fault

ADD (no change) Current price: Target price: Previous target: Up/downside: Reuters: Bloomberg: Market cap:

A$2.97 A$3.22 A$3.10 8.5% ORA.AX ORA AU US$2,757m A$3,584m US$9.57m A$13.10m 1,207m 100.0%

Average daily turnover: Current shares o/s Free float: Key changes in this note FY17F revenue increased by 1%. FY17F EBIT increased by 2%. FY17F NPAT increased by 4%.

Vol m

Price Close

Relative to S&P/ASX 200 (RHS)

3.30

127.0

3.10

121.2

2.90

115.3

2.70

109.5

2.50

103.7

2.30

97.8

2.10 25 20 15 10 5

92.0

Feb-16

May-16

Aug-16

Nov-16

Source: Bloomberg

Price performance Absolute (%) Relative (%)

1M -0.3 -1.8

3M 5.7 -3.4

Alexander LU, CFA T (61) 2 9043 7901 E [email protected] Belinda MOORE T (61) 7 3334 4532 E [email protected]

12M 33.2 13.3



ORA’s 1H17 result was stronger than we expected despite generally subdued conditions in Australasia and North America.



The result was driven by a strong performance from North America (EBIT +25% in USD), with Australasia (EBIT +3%) benefiting from cost improvement initiatives.



We increase FY17F EBIT by 2% to A$302m.



We retain our Add rating on an increased A$3.22 target price (from A$3.10).

1H17 result ahead of expectations ORA’s 1H17 result overall was stronger than we expected, with EBIT (excl. one offs) up 9% to A$149.6m (+3% vs Morgans) and underlying NPAT climbing 12% to A$92.1m (+6% vs Morgans). The result was driven by a strong performance from North America (EBIT +25% in USD), with Australasia (EBIT +3%) benefiting from cost improvement initiatives. The balance sheet remains strong with net debt/EBITDA reducing to 1.6x (vs 1.7x at 1H16 and well below 2.5x management target) and gearing (ND/ND+E) was steady at 29% (1H16: 29%). Pleasingly, return on funds employed (ROFE) improved to 13.2% (from 12.1% in 1H16). Free cash flow (excl. one offs) was up 24.9% to A$157.5m on the back of good working capital management despite slightly higher net capex during the period. Cash conversion was good at 72% and was in line with management’s 70% target. 1H17 DPS of 5.0cps was in line with our forecast (5.1cps).

Acquisitions to further expand point of purchase footprint ORA also announced the acquisition of The Garvey Group and Graphic Tech in the US for a total of US$54m (A$71m). The acquisition multiple represents 5.8x historic EBITDA, which is in line with the recent Register Print Group transaction. In addition, ORA has agreed to reimburse one of the vendors for recent growth capex investments totaling US$5m. Including the reimbursement, the acquisition represents 6.3x historic EBITDA. We think the multiple is reasonable given ORA expects US$2-3m in synergies in the first 2-3 years with the acquisition to also meet its ROFE target of 20% by year 3.

Upgrades to earnings forecasts Updates to earnings forecasts see FY17F EBIT rise by 2% to A$302m. This implies growth of 8% on FY16 driven by cost efficiencies in Australasia (partially offset by higher input costs), and continued organic growth and contributions from acquisitions in North America. FY18F and FY19F EBIT increases by 4% as we factor in full year contributions from The Garvey Group and Graphic Tech acquisitions.

Maintain Add rating – top pick in the Packaging sector We maintain our Add rating on an increased A$3.22 PE-based target price (from A$3.10). With another solid result we are becoming increasingly confident in ORA’s ability to drive organic growth, extract operational efficiencies and execute on acquisitions. While ORA is not cheap, trading on 19.4x FY17F PE and 3.5% yield, we believe it is deserving of a premium multiple given its defensive characteristics, strong market positions (especially in Australasia) and solid growth outlook (2-year EPS CAGR of 11%) with upside from further acquisitions. Financial Summary Revenue (A$m) Operating EBITDA (A$m) Net Profit (A$m) Normalised EPS (A$) Normalised EPS Growth FD Normalised P/E (x) DPS (A$) Dividend Yield EV/EBITDA (x) P/FCFE (x) Net Gearing P/BV (x) ROE % Change In Normalised EPS Estimates Normalised EPS/consensus EPS (x)

Jun-15A 3,408 323.2 131.4 0.11 26.2% 27.27 0.08 2.53% 12.93 29.57 42.1% 2.49 9.3%

Jun-16A 3,850 388.0 168.6 0.14 27.1% 21.26 0.10 3.20% 10.92 29.84 42.0% 2.39 11.5%

Jun-17F 4,112 416.0 185.1 0.15 10.5% 19.36 0.10 3.50% 10.46 17.68 48.8% 2.29 12.1%

Jun-18F 4,430 454.6 206.0 0.17 11.3% 17.39 0.12 3.97% 9.49 26.28 44.5% 2.19 12.9%

Jun-19F 4,607 478.7 221.7 0.18 7.6% 16.17 0.13 4.28% 8.89 24.24 39.1% 2.09 13.2%

1.04

1.03

1.03

SOURCE: MORGANS, COMPANY REPORTS

IMPORTANT DISCLOSURES REGARDING COMPANIES THAT ARE THE SUBJECT OF THIS REPORT AND AN EXPLANATION OF RECOMMENDATIONS CAN BE FOUND AT THE END OF THIS DOCUMENT. MORGANS FINANCIAL LIMITED (ABN 49 010 669 726) AFSL 235410 - A PARTICIPANT OF ASX GROUP

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Packaging│Australia│Equity research│February 15, 2017

Figure 1: Financial summary Income statement (A$m) Revenue

AIFRS FY15A 3,407.8

AIFRS FY16A 3,849.8

AIFRS FY17F 4,112.0

AIFRS FY18F 4,430.2

AIFRS FY19F 4,606.5

EBITDA Depreciation & amortisation EBIT Net interest expense Pre-tax profit Tax expense Minorities NPAT pre-abnormals EPS pre-abnormals (cps) Abnormal items after tax Reported NPAT Reported EPS (cps) DPS (cps) - ordinary DPS (cps) - special DPS (cps) - total Franking (%)

323.2 98.1 225.1 -37.9 187.2 -55.8 0.0 131.4 10.9 0.0 131.4 10.9 7.5 0.0 7.5 30.0%

388.0 107.5 280.5 -41.1 239.4 -70.8 0.0 168.6 13.9 0.0 168.6 13.9 9.5 0.0 9.5 30.0%

416.0 113.7 302.2 -39.5 262.7 -77.6 0.0 185.1 15.3 0.0 185.1 15.3 10.4 0.0 10.4 30.0%

454.6 118.2 336.4 -44.0 292.4 -86.4 0.0 206.0 17.1 0.0 206.0 17.1 11.8 0.0 11.8 30.0%

478.7 122.7 356.0 -41.4 314.6 -92.9 0.0 221.7 18.4 0.0 221.7 18.4 12.7 0.0 12.7 30.0%

Segmental EBIT (A$m) Australasia North America Corporate / Other Total underlying EBIT

FY15A 181.6 71.6 -28.1 225.1

FY16A 200.4 98.9 -18.8 280.5

FY17F 210.3 119.2 -27.3 302.2

FY18F 220.6 143.7 -27.9 336.4

FY19F 231.5 153.1 -28.6 356.0

Cash flow statement (A$m) EBITDA Net interest paid Tax paid Working capital Dividends received Other Operating cash flow (1) SIB capex (2) Growth capex (3) Total capex Other Investing cash flow Cash dividends paid (4) Equity raised / (repurchased) Net borrowings / (repaid) Other Financing cash flow FX impact Net cash flow Free cash flow (1-2) per share Deployable cash flow (1-2-3-4)

FY15A 323.2 -35.3 -33.1 6.1 0.6 -7.5 254.0 -63.0 -47.3 -110.3 13.4 -96.9 -78.4 0.0 -35.9 -11.4 -125.7 5.4 31.4 191.0 15.9 65.3

FY16A 388.0 -29.2 -52.5 -23.9 0.1 22.5 305.0 -63.0 -47.1 -110.1 -89.6 -199.7 -101.7 -21.3 14.8 0.0 -108.2 1.7 -2.9 242.0 19.9 93.2

FY17F 416.0 -39.5 -77.6 -29.3 0.0 -3.7 265.8 -111.2 -16.0 -127.2 -123.7 -250.8 -120.3 -16.2 187.7 0.0 46.7 3.6 66.2 159.2 13.2 22.8

FY18F 454.6 -44.0 -86.4 -34.3 0.0 0.0 290.0 -106.4 -8.0 -114.4 -2.7 -117.1 -136.4 0.0 -36.6 0.0 -172.9 0.0 0.0 183.6 15.2 39.2

FY19F 478.7 -41.4 -92.9 -25.4 0.0 0.0 319.0 -104.3 0.0 -104.3 -8.1 -112.4 -147.8 0.0 -58.8 0.0 -206.6 0.0 0.0 214.7 17.8 66.9

Balance sheet (A$m) Current assets Cash Receivables Inventories Other current assets Total current assets Non-current assets Property, plant and equipment Intangible assets Derivative financial instruments Other non-current assets Total non-current assets Total assets Current liabilities Payables Derivative financial instruments Interest bearing liabilities Other current liabilities Total current liabilities Non-current liabilities Interest bearing liabilities Deferred tax liabilities Derivative financial instruments Other non-current liabilities Total non-current liabilities Total liabilities Net assets Shareholders equity Issued capital Reserves Retained profits Minority interest Total shareholder funds

FY15A

FY16A

FY17F

FY18F

FY19F

67.3 427.7 451.1 52.3 998.4

66.1 515.8 459.4 41.4 1,082.7

135.9 572.5 509.9 62.6 1,280.9

135.9 638.8 569.0 62.6 1,406.3

135.9 688.0 612.7 62.6 1,499.2

1,547.4 287.9 3.5 99.8 1,938.6 2,937.0

1,564.3 378.2 0.1 104.6 2,047.2 3,129.9

1,859.4 392.7 0.1 107.5 2,359.7 3,640.6

1,858.2 392.7 0.1 107.5 2,358.5 3,764.8

1,847.9 392.7 0.1 107.5 2,348.2 3,847.4

636.0 3.9 0.0 113.0 752.9

708.5 13.7 0.0 111.2 833.4

786.4 10.1 1.4 268.8 1,066.7

877.5 10.1 1.4 268.8 1,157.8

945.0 10.1 1.4 268.8 1,225.3

674.2 14.2 8.4 45.3 742.1 1,495.0 1,442.0

695.7 32.2 12.3 58.7 798.9 1,632.3 1,497.6

899.8 45.8 6.9 53.1 1,005.6 2,072.3 1,568.3

863.3 45.8 6.9 53.1 969.1 2,126.8 1,638.0

804.5 45.8 6.9 53.1 910.3 2,135.6 1,711.9

502.7 127.2 812.1 0.0 1,442.0

481.8 136.8 879.0 0.0 1,497.6

473.7 150.8 943.8 0.0 1,568.3

473.7 150.8 1,013.5 0.0 1,638.0

473.7 150.8 1,087.4 0.0 1,711.9

ADD Projected return Current share price

A$2.97

Price target Upside (downside) 12mth dividend yield TSR

A$3.22 8.5% 3.5% 12.0%

Shares on issue (m) ORA Market Cap (A$m)

1,206.7 3,583.9

Trading multiples (x) EV/EBITDA EV/EBIT PE

FY15A 13.0 18.6 27.2

FY16A 10.8 14.9 21.4

FY17F 10.1 13.9 19.4

FY18F 9.2 12.5 17.4

FY19F 8.8 11.8 16.2

Valuation summary DCF Sum-of-the-parts PE-relative

A$3.10 A$3.12 A$3.22

DCF inputs RF rate Debt premium Cost of debt Beta MRP Cost of equity Net debt (A$m) EV (A$m) L/T growth WACC

4.3% 2.0% 6.3% 1.00 6.0% 13.1% 606.9 4,190.8 2.5% 8.7%

Key earnings ratios Revenue growth YoY EPS growth (adjusted) Dividend yield - ordinary Dividend yield - total Payout ratio Free cash flow yield Effective tax rate

FY15A 20.7% n.a. 2.5% 2.5% 68.7% 5.3% 29.8%

FY16A 13.0% 27.1% 3.2% 3.2% 68.4% 6.7% 29.6%

FY17F 6.8% 10.5% 3.5% 3.5% 68.0% 4.4% 29.5%

FY18F 7.7% 11.3% 4.0% 4.0% 69.0% 5.1% 29.5%

FY19F 4.0% 7.6% 4.3% 4.3% 69.0% 6.0% 29.5%

Balance sheet debt metrics Net debt Gearing (ND/Equity) Gearing (ND/ND+Equity) Net debt/EBITDA EBIT interest cover

FY15A 606.9 42.1% 29.6% 1.9x 5.9x

FY16A 629.6 42.0% 29.6% 1.6x 6.8x

FY17F 765.3 48.8% 32.8% 1.8x 7.6x

FY18F 728.8 44.5% 30.8% 1.6x 7.6x

FY19F 670.0 39.1% 28.1% 1.4x 8.6x

Working capital metrics Inventory/Sales Receivables/Sales Payables/Sales

FY15A 13.2% 12.6% 18.7%

FY16A 11.9% 13.4% 18.4%

FY17F 12.4% 13.9% 19.1%

FY18F 12.8% 14.4% 19.8%

FY19F 13.3% 14.9% 20.5%

Return metrics Return on assets Return on equity

FY15A 7.9% 9.3%

FY16A 9.2% 11.5%

FY17F 8.9% 12.1%

FY18F 9.1% 12.9%

FY19F 9.4% 13.2%

Key assumptions Australian GDP growth US GDP growth AUD/USD

FY15A 2.7% 2.7% 0.83

FY16A 3.0% 2.8% 0.73

FY17F 3.0% 2.8% 0.75

FY18F 3.0% 3.0% 0.74

FY19F 3.0% 3.0% 0.74

9.4% 4.9% 7.4%

10.2% 5.2% 7.8%

10.5% 5.6% 8.0%

10.6% 6.1% 8.2%

10.7% 6.3% 8.4%

EBIT margins Australasia North America Total

SOURCE: MORGANS RESEARCH, COMPANY

2

Packaging│Australia│Equity research│February 15, 2017

Five key points from the 1H17 result 1) The result overall was stronger than we expected - 1H17 underlying EBIT (excl. one offs) rose 9% to A$149.6m (+3% vs Morgans), while underlying NPAT grew 12% to A$92.1m (+6% vs Morgans). The result was driven by a strong performance from North America (EBIT +25% in USD), with Australasia (EBIT +3%) benefiting from cost improvement initiatives. The balance sheet remains strong with net debt/EBITDA reducing to 1.6x (vs 1.7x at 1H16 and well below 2.5x management target) and gearing (ND/ND+E) was steady at 29% (1H16: 29%). Pleasingly, return on funds employed (ROFE) improved to 13.2% (from 12.1% in 1H16). Free cash flow (excl. one offs) was up 24.9% to A$157.5m on the back of good working capital management despite slightly higher net capex during the period. Cash conversion was good at 72% and was in line with management’s 70% target. 1H17 DPS of 5.0cps was in line with our forecast (5.1cps). 2) North America was again the standout division, with EBIT up 19.8% to A$55.1m, which was 7% above our forecasts. In USD terms, EBIT increased 24.7% to US$41.4m. The result was driven by strong organic growth in the Orora Packaging Solutions (OPS) business and benefits from the IntegraColor acquisition. Excluding the impact of acquisitions, OPS organic sales grew 6% which was a solid result in our view given flat economic and market conditions. For FY17, we forecast North America EBIT to rise by 23% to US$88.8m which includes 2H earnings contributions from The Register Print Group, The Garvey Group and Graphic Tech acquisitions. Australasia EBIT grew 3.3% to A$109.0m, which was 2% above our forecasts. While revenue was flat, earnings growth was driven by ongoing self-help programs with EBIT margin improving 40bps to 11.0%. For FY17, we forecast FY17 Australasia EBIT to grow by 5% to A$210.3m. 3) Acquisition of The Garvey Group and Graphic Tech to expand pointof-purchase (POP) presence – ORA announced the acquisition of The Garvey Group and Graphic Tech in the US for a total of US$54m (A$71m). The acquisition multiple represents 5.8x historic EBITDA, which is in line with the recent Register Print Group transaction. In addition, ORA has agreed to reimburse one of the vendors for recent growth capex investments totalling US$5m. Including the reimbursement, the acquisition represents 6.3x historic EBITDA. We think the multiple is reasonable given ORA expects US$2-3m in synergies in the first 2-3 years with the acquisition to also meet its ROFE target of 20% by year 3. The multiple is also lower than ORA’s purchase of IntegraColor (6.9x) in March 2016. The Garvey Group is based in Illinois and Graphic Tech is situated in California. The acquisitions expand ORA’s POP footprint into the Midwest and West of the US, complementing its existing presence in Texas and New Jersey. The deal will be fully debt funded and is expected to close at the end of March 2017. 4) Higher AUD/USD negatively impacts North America earnings translation – The average AUD/USD exchange rate over 1H17 was 75.2c versus 72.3c in 1H16. Given the rise in the exchange rate over the period ORA experienced a A$41.7m adverse impact from the translation of North America revenue. On average, the annualised sensitivity to ORA’s net profit from a 1c movement in the AUD/USD is A$0.9m (0.5%). This sensitivity could rise if North America earnings increase over time as ORA looks to build out its presence in the region. 5) FY17 outlook maintained – As expected, management maintained guidance for higher earnings in FY17, subject to global economic conditions. We forecast 8% EBIT growth to A$302.2m.

3

Packaging│Australia│Equity research│February 15, 2017

Increases to earnings forecasts Updates to earnings forecasts see FY17F EBIT rise by 2% to A$302m. This implies growth of 8% on FY16 driven by cost efficiencies in Australasia (partially offset by higher input costs), and continued organic growth and contributions from acquisitions in North America. FY18F and FY19F EBIT increases by 4% as we factor in full year contributions from The Garvey Group and Graphic Tech acquisitions. Figure 2: 1H17 result summary and earnings forecast changes Morgans A$m

FY17F

FY18F

FY19F

1H16A

1H17A

Chg.

1H17F

Diff

Old

New

Chg.

Old

New

Chg.

Old

New

Chg.

Australasia

992.8

993.0

0.0%

1,022.6

-2.9%

2,025.7

1,996.1

-1.5%

2,105.6

2,074.9

-1.5%

2,189.0

2,157.0

-1.5%

North America

905.7

982.4

8.5%

957.4

2.6%

2,058.5

2,115.8

2.8%

2,194.3

2,355.3

7.3%

2,282.1

2,449.5

7.3%

1,898.5

1,975.4

4.1%

1,980.0

-0.2%

4,084.2

4,112.0

0.7%

4,299.9

4,430.2

3.0%

4,471.1

4,606.5

3.0%

197.7

205.3

3.8%

200.3

2.5%

410.6

416.0

1.3%

440.2

454.6

3.3%

461.1

478.7

3.8%

Australasia

105.5

109.0

3.3%

107.3

1.6%

209.8

210.3

0.2%

220.2

220.6

0.2%

231.1

231.5

0.2%

North America

46.0

55.1

19.8%

51.4

7.1%

114.8

119.2

3.8%

131.7

143.7

9.1%

139.3

153.1

9.9%

Operating EBIT

151.5

164.1

8.3%

158.8

3.4%

324.6

329.5

1.5%

351.9

364.3

3.5%

370.4

384.7

3.9%

Corporate / Other

-6.2

-14.5

133.9%

-13.6

-6.4%

-27.3

-27.3

0.0%

-27.9

-27.9

0.0%

-28.6

-28.6

0.0%

Total group EBIT

145.3

149.6

3.0%

145.1

3.1%

297.4

302.2

1.6%

324.0

336.4

3.8%

341.7

356.0

4.2%

Net interest expense

-20.2

-18.9

-6.4%

-22.0

14.3%

-44.8

-39.5

-11.8%

-45.5

-44.0

-3.3%

-41.5

-41.4

-0.3%

Tax expense

-37.2

-38.6

3.8%

-36.4

-6.0%

-74.7

-77.6

3.9%

-82.4

-86.4

4.9%

-88.8

-92.9

4.7%

NPAT Adj.

87.9

92.1

4.8%

86.7

6.3%

177.9

185.1

4.1%

196.1

206.0

5.1%

211.4

221.7

4.9%

0.0

0.0

n.m.

0.0

n.m.

0.0

0.0

n.m.

0.0

0.0

n.m.

0.0

0.0

n.m.

87.9

92.1

4.8%

86.7

6.3%

177.9

185.1

4.1%

196.1

206.0

5.1%

211.4

221.7

4.9%

Adjusted EPS (cps)

7.3

7.6

4.8%

7.2

6.3%

14.7

15.3

4.1%

16.3

17.1

5.1%

17.5

18.4

4.9%

Total dividend (cps)

4.5

5.0

11.1%

5.1

-2.0%

10.2

10.4

2.0%

11.2

11.8

5.4%

12.1

12.7

5.0%

10.4%

10.4%

-2.1%

10.1%

0.3pt

10.1%

10.1%

0.1pt

10.2%

10.3%

0.0pt

10.3%

10.4%

0.1pt

7.7%

7.6%

-8.0%

7.3%

0.2pt

7.3%

7.3%

0.1pt

7.5%

7.6%

0.1pt

7.6%

7.7%

0.1pt

10.6%

11.0%

35.0%

10.5%

0.5pt

10.4%

10.5%

0.2pt

10.5%

10.6%

0.2pt

10.6%

10.7%

0.2pt

5.1%

5.6%

53.0%

5.4%

0.2pt

5.6%

5.6%

0.1pt

6.0%

6.1%

0.1pt

6.1%

6.3%

0.1pt

Revenue

Total sales revenue EBITDA EBIT

Net signficant items Reported NPAT

EBITDA margin EBIT margin Australasia North America

SOURCES: MORGANS FORECASTS, COMPANY RESULTS

Valuation and recommendation Updates to earnings forecasts sees our target price increase to A$3.22 (from A$3.10). Our target price for ORA continues to be based on an FY17F PE multiple of 21x, which represents a premium to the Industrials (ex-Fin) FY17F multiple (19x). We believe ORA deserves to trade at a premium given the relatively defensive nature of its business, strong balance sheet and solid earnings growth profile (2-year EPS CAGR of 11%) with upside from further acquisitions. With a forecast 12-month total shareholder return of 12%, we maintain our Add rating on the stock. Risks to our valuation include weaker-than-expected economic growth in Australasia and North America, higher-than-expected AUD/USD and higherthan-expected raw material and energy prices.

4

Packaging│Australia│Equity research│February 15, 2017

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+61 7 4957 3033

Newcastle

+61 2 4926 4044

Milton

+61 7 3114 8600

Newport

+61 2 9998 4200

Australian Capital Territory

Noosa

+61 7 5449 9511

Orange

+61 2 6361 9166

Canberra

Redcliffe

+61 7 3897 3999

Port Macquarie

+61 2 6583 1735

Rockhampton

+61 7 4922 5855

Scone

+61 2 6544 3144

Northern Territory

Spring Hill

+61 7 3833 9333

Sydney: Level 7 Currency House

+61 2 8216 5111

Darwin

Sunshine Coast

+61 7 5479 2757

Sydney: Grosvenor Place

+61 2 8215 5000

Tasmania

Toowoomba

+61 7 4639 1277

Sydney: Hunter St

+61 2 9125 1788

Townsville

+61 7 4725 5787

Sydney: Reynolds Equities

+61 2 9373 4452

Wollongong

+61 2 4227 3022

South Australia

Hobart

+61 2 6232 4999

+61 8 8981 9555

+61 3 6236 9000

Disclaimer The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual’s relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so. Those acting upon such information without advice do so entirely at their own risk. This report was prepared as private communication to clients of Morgans and is not intended for public circulation, publication or for use by any third party. The contents of this report may not be reproduced in whole or in part without the prior written consent of Morgans. While this report is based on information from sources which Morgans believes are reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect Morgans judgement at this date and are subject to change. Morgans is under no obligation to provide revised assessments in the event of changed circumstances. This report does not constitute an offer or invitation to purchase any securities and should not be relied upon in connection with any contract or commitment whatsoever.

Disclosure of interest Morgans may from time to time hold an interest in any security referred to in this report and may, as principal or agent, sell such interests. Morgans may previously have acted as manager or co-manager of a public offering of any such securities. Morgans affiliates may provide or have provided banking services or corporate finance to the companies referred to in the report. The knowledge of affiliates concerning such services may not be reflected in this report. Morgans advises that it may earn brokerage, commissions, fees or other benefits and advantages, direct or indirect, in connection with the making of a recommendation or a dealing by a client in these securities. Some or all of Morgans Authorised Representatives may be remunerated wholly or partly by way of commission.

Regulatory disclosures Analyst owns shares in the following mentioned company(ies): -

Recommendation structure For a full explanation of the recommendation structure, refer to our website at http://www.morgans.com.au/research_disclaimer

Research team For analyst qualifications and experience, refer to our website at http://www.morgans.com.au/research-and-markets/our-research-team

Stocks under coverage For a full list of stocks under coverage, refer to our website at http://www.morgans.com.au/research-and-markets/company-analysis/ASX100-Companies-under-coverage and http://www.morgans.com.au/research-and-markets/company-analysis/EX-100-Companies-under-coverage

Stock selection process For an overview on the stock selection process, refer to our website at http://www.morgans.com.au/research-and-markets/company-analysis

www.morgans.com.au If you no longer wish to receive Morgans publications please contact your local Morgans branch or write to GPO Box 202 Brisbane QLD 4001 and include your account details. 01.10.16

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