This material has been produced by RBS sales and trading staff and should not be considered independent.

The Round Up
30 November 2009
Issue No. 228
The Round Up is a comprehensive daily note produced by the RBS Warrants
team providing an overview of market movements along with quality ideas for
warrant traders and investors.

In today’s issue
Global Market Action Scoreboard, commentary
Aussie Market Action SPI Comment, Events & Dividends
UGL (UGLKZC) MINI Trading Buy – Top sector pick
BXB (BXBKZG) MINI Trading Buy – Recovery Story
TLS (TLSSZX) SFI Investment Buy – Regulatory risk falling
Round Up Corner Banks Update – ANZ,CBA,NAB,WBC

Equities

Move Last % Move Range Volume

ASX 200 -136.5 4572.1 -2.9% -146 to -32.u.c $6.5 bn(H)
SPI - yesterday -122.0 4596.0 -2.6% -151 to -83.u.c 36,716(H)
Dow Jones -154.5 10309.9 -1.5% -233 to -12 Low
S&P 500 -19.1 1091.5 -1.7% -27 to -5 Low
Nasdaq -37.6 2138.4 -1.7% -62 to -21 Low
FTSE +51.6 5245.7 +1.0% -90 to +77 High

Commodities

Move Last % Today % Past Month

Oil-WTI spot -1.9 76.1 -2.4% -4.4%
Gold Spot -10.8 1177.6 -0.9% +13.2%
Nickel (LME) -22.6 726.6 -3.0% -13.8%
Aluminium (LME) +0.4 90.1 +0.4% +1.9%
Copper (LME) +1.5 309.6 +0.5% +4.1%
Zinc (LME) -1.2 99.8 -1.2% -3.8%
Silver -0.4 18.3 -2.0% +9.5%
Sugar +0.5 22.2 +2.1% +0.4%
Dual Listed Companies (DLC’s)

Move %Move Last AUD Terms Diff to Aus

NWS (US) -0.52 -0.04 +13.7 c 15.11 -6.5 c
RIO (UK) 95.00 0.03 +30.9 c 55.94 -1261.5 c
BLT (BHP UK) 29.50 0.02 +18.6 c 33.75 -664.2 c
BXB (UK) -2.25 -0.01 +3.6 c 6.50 -5.6 c

American Depository Receipts (ADR’s)

Move %Move Last AUD Terms Diff to Aus

BHP (US) -2.82 -0.04 +74.7 c 41.21 +81.6 c
AWC (US) -0.40 -0.07 +5.7 c 1.56 +2.1 c
TLS (US) -0.23 -0.01 +15.4 c 3.40 +0.8 c
ANZ (US) -1.27 -0.06 +19.4 c 21.42 +22.7 c
WBC (US) -7.91 -0.07 +105.8 c 23.36 +22.7 c
NAB (US) -1.41 -0.05 +24.9 c 27.47 +46.4 c
LGL (US) -2.21 -0.06 +32.4 c 3.57 +0.4 c
RMD (US) -1.83 -0.04 +50.4 c 5.56 -5.9 c
JHX (US) -1.64 -0.04 +36.0 c 7.95 +12.3 c
PDN (CAN) 0.02 0.01 +3.9 c 4.07 +8.4 c

Overnight Commentary
United States Commentary
The sell off from the Dubai World news was not as dramatic in the US, as it was either here or across UK/Europe. Lows were set on
the open in a shortened session and although risk aversion was certainly the trade of the day and all Dow constituents finished in the
red, the 154pt deficit was arguably not as bad as most had been bracing for. Elsewhere, the Nasdaq and S&P both gave back 1.7%.
Financials - Not surprisingly financials were among the hardest hit and within the space, investment banks felt most of the pain. BofA
down 3%(Dow's worst), Morgan Stanley dropped 2.9%,Goldmans 2.8% and JP's finished 2% lower as the market attempted to quantify
the US financial sectors exposure to Dubai World.
Cyclicals - Resource stocks were the other big loser behind the banks, Alcoa off nearly 3% on the back of a tough night on the LME
and a general aversion for cyclical exposure. Exxon and Chevron followed the oil price lower, down 2.1% and 1.9% respectively and
two of the larger point takers from the Dow.
Market Barometers - Filling the rest of the gaps in the Dow's bottom 10, the bellwethers viewed as a gauge of US economic health
gave back more ground. Caterpillar down 2.7%, Dupont 2.1%, HP and Microsoft down 2% and 1.9% respectively.
FX/Bonds - A reasonably clear flight to safety on Friday, yields on the 2&10yr down c6pbs and 3.5bps for the 30yr and although it was
hardly a rush to buy USD's, there was a noted absence of any real selling, the DXY index stable and the AUD trading sub 91c.

United Kingdom & Europe Commentary

Markets found their feet on Friday night as the concerns over Dubai's attempt to delay its debt payments abated. Banks led the way
after UK Prime Minister said that he was confident that the debt issues in Dubai would be contained.
Financials - The UAE central bank said it "stands behind" the countries local and foreign banks, which are obviously facing losses
from Dubai Worlds possible default. The banks with exposure to the region did find some support with RBS leading the way rallying
5.2%.
Property - Luxury home sales in central London rose on an annual basis for the first time in 17 months. There is a suggestion that the
rally is being fuelled more by a lack of supply than an overwhelming demand profile. Positive news regardless.
Retail - DSG International fell 1.4% after a broker lowered its recommendation for the UK's largest consumer-electronics retailer to
"sell" from "neutral" citing "weak supply chain positioning and a high fixed cost base"

Commodites Commentary
Copper futures fell the most in four weeks and the oil price was also weaker , giving up 2.5%. The weakness is the result of the
nervousness that is still present from the Dubai situation and whilst the financial sector experienced some recovery in Europe it will
likely take a little longer for the USD to move past the negative sentiment.
SPI Commentary
The SPI traded down 122pts to 4596 on Friday. Overnight the SPI traded up 37pts to 4633.

SPI Intraday SPI Daily

*SPI report taken from the 9:50am open to the 4:30pm close on the previous trading day. Charts taken from IRESS

Upcoming Economic Events for the Week

Monday AUS TDMI inflation gauge, HIA new home sales, RBA private sector credit, Wages bill, small business profits, company
profits, real business sales, real business inventories
US Chicago PMI, Milwaukee NAPM, Dallas Fed Manufacturing
Tuesday AUS AIG/PWC manufacturing PMI, Building approvals, Real public final demand, RBA cash rate decision
US ISM, Construction spending, Pending home sales
Wednesday AUS
US ADP employment report
Thursday AUS Nominal retail trade
US Non farm productivity
Friday AUS
US Non-farm payrolls, unemployment rate, average weekly hours, factory orders
*Dates are indicative only and may change
MINI Trading Buy:

United Group (UGLKZC) – Top sector pick

UGL remains RBS Research’s top sector pick. We forecast that growth in the Resources division will lead to rolling EPS
upgrades in FY10 and beyond. IPL's confirmation of the A$683m Moranabah project delivery timetable is seen as a
positive lead indicator for upgrades. RBS Research target price $16.00, Buy UGLKZC

Source: IRESS

Maintenance of the Moranbah schedule supportive of resources growth

With guidance for a flat underlying FY10 NPAT, we still expect a return to double-digit growth in FY11 led by resource-
related spend that has complimentary benefits for the Rail division. IPL’s confirmation that the Mornabah project schedule
(UGL share A$683m) remains unchanged could act as a catalyst for potential consensus forecasts upgrades in FY11.

Lower risks plus attractive returns and upside from cyclical recovery
We continue to see risk mitigation and risk management in contract pricing as a core UGL competency. With only 8% of
the order book effectively exposed to lump sum fixed-price projects, there is lower sector risk than for major peers. A
portfolio of engineering and asset services offer attractive EPS growth prospects beyond FY10F and FY09 wins should
fuel future earnings growth, supported by the robust order book of A$9.3bn.

RBS MINIs over UGL

Security ExDate ExPrc CP ConvFac Delta Description

UGLKZC 780.04 Long 1 1 MINI Long
MINI Trading Buy:

Brambles (BXBKZG) – Recovery Story

BXB’s AGM trading update last week conmtained few surprises and highlighted that conditions remain soft in BXB's key
markets. While conditions may remain tough in the short term, RBS Research maintain a long-term Buy on the back of
BXB's leverage to economic recovery. Last week’s pullback to the previous key resitance level at $6.50 is a buying
opportunity. Buy BXBKZG

Source: IRESS

BXB’s AGM trading update showed underlying group revenue down 3% on the pcp, with CHEP and Recall both recording
3% declines. Given the weak economic conditions through the period to October we think this was not a bad outcome.
Outlook commentary suggests conditions remain weak with BXB yet to see a pickup in activity in its key US and
European markets.

CHEP
With a 5% decline in revenue, the CHEP Americas business was slightly weaker than expected. A soft US market was
the primary driver, with management now estimating pallet issues in the US will be 3% below FY09. CHEP EMEA
declined 1% (+1% ex-autos), while CHEP Asia Pacific increased 2% (+4% exautos) reflecting the better economic
environment in the region.

Buy at the bottom for longer-term upside

RBS retain long-term Buy rating. We think the BXB business will prove itself over time and see sentiment returning as a
pickup in the economic environment feeds through to earnings growth. Executing on the US will be key. Target price
$7.51.

RBS MINIs over BXB

Security ExPrc Stop Loss CP ConvFac Delta Description

BXBKZG 382.1 Long 1 1 MINI Long
BXBKZP 981.09 Short 1 1 MINI Short
BXBKZR 911.27 Short 1 1 MINI Short
SFI Investment Buy:

Telstra Corporation (TLSSZX) – Regulatory risk falling

RBS Research have a Trading Buy on Telstra with an indicative close range of $3.60-3.65, which is 10x FY10F
EPS of 36c. With the imminent threat of extensive reregulation removed, we see the catalyst as a likely non-
binding deal with the Government over NBN2 being announced before Christmas. Buy TLSSZX

Source: IRESS

Proposed legislation unlikely to return

Last week the Telecommunications Legislation Amendment (Competition and Consumer Safeguards) Bill was removed
from consideration by Parliament this year. This gives Telstra the opportunity to work out a broad agreement in the pre-
Christmas timeframe set by the Government.

Possible election in 2010 adds to the pressure

The growing chance of an early election in 2010 increases the pressure for a broad deal to be agreed this year. In that
case, the legislation would be unlikely to return in its current form but, assuming the Government was returned and all
else being equal, we believe cash flow growth would be relatively secure over the next three years.

Good options for long-term value

We believe Telstra has a likely three-year free cash flow outlook as it completes its transformation, achieves incremental
operating leverage and reduces capital expenditure.

The scenario for an increase in 1H10F DPS to 15c is improving, in our view.

RBS SFIs over TLS

Security ExDate ExPrc CP ConvFac Delta Description

TLSSZX 183.83 Call 1 1 Self Funding Instalment
TLSSZZ 240.58 Call 1 1 Self Funding Instalment
RBS Round Up Corner:

Banks Sector Update – ANZ,CBA,NAB,WBC

Post the bank reporting season, CBA trading update and ANZ, NAB and WBC going ex dividend, the banks have
underperformed. RBS Research believe banks will wait until they understand how businesses are performing post
Christmas before poviding further upbeat commentary. This is likely to weigh on relative share price performance in the
short term, however the BDD cycle seems to be peaking and any pullbacks in the banks into the end of the year should
be used as a buying opportunity.

Sector performance
Banks' PE relative (to All Ords) is back down to 86%, having underperformed the market over the last month. While this is
above the long-run average, given short-term structural advantages, we believe the sector can trade at a premium. The
banks are now trading at an average PE of 13.5x FY10F on IBES consensus.

Investment view – RBS Research prefer ANZ and NAB to WBC and CBA
As a result of a normalising earnings cycle, we believe relative valuation will again play a significant role in the relative
performance of stocks in the sector. RBS believe ANZ and NAB still have the greater share price upside potential over
the next six to 12 months, given their 1-2 PE point discounts.
For further information please do not hesitate to contact us on the details below

Contact
Equities Structured Products & Warrants
Toll free 1800 450 005 www.rbs.com.au/warrants
Trading Products Team
Ben Smoker 02 8259 2085 ben.smoker@rbs.com
Ryan Corrigan 02 8259 2425 ryan.corrigan@rbs.com
Investment Products Team
Elizabeth Tian 02 8259 2017 elizabeth.tian@rbs.com
Tania Smyth 02 8259 2023 tania.smyth@rbs.com
Robert Deutsch 02 8259 2065 robert.deutsch@rbs.com
Mark Tisdell 02 8259 6951 mark.tisdell@rbs.com

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© Copyright 2009. RBS Equities. A Participant of the ASX Group.

Explanation of Warrant Tables:

Security – refers to the code ascribed to the warrant, ExDate – refers to the date on which the warrant expires or is reset, ExPrc – refers to the
exercise price, or second instalment payment, CP – tells you whether the warrant is a call or a put, ConvFac – the conversion factor of the warrant
which tells you how many warrants you need to exercise in order to take possession of 1 share, Delta – tells you how much the warrant will move for a
1c move in the underlying security, Description – Tells you the type of warrant.
All charts taken from IRESS unless indicated otherwise