Morningstar Equity and Credit Research Coverage

Australia & New Zealand
Morningstar
Equity and
Credit Research
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Morningstar Equity and Credit Research Overview | 6 September 2016 Page 2 of 25
Table of Contents
Introduction to Morningstar and Our Equity and Credit Research .......................................................................................................................... 3
Equity and Credit Research Coverage ....................................................................................................................................................................... 5
Equity Research Methodology ................................................................................................................................................................................... 6
Research Publications .............................................................................................................................................................................................. 11
Morningstar's Approach to Credit Research ........................................................................................................................................................... 13
Morningstar Australia/New Zealand Equity and Credit Research Team ............................................................................................................... 17
About Morningstar ................................................................................................................................................................................................... 25
Any Morningstar ratings/recommendations contained in this report are based on the full research report available from Morningstar or your adviser. 2015 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content
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Introduction to Morningstar and Our Equity and

Credit Research
Morningstar is one of the most recognised and trusted names in the global investment industry,
serving 8.9 million individual investors, 260,000 financial advisers, and 5,100 institutional clients
around the world. Our "investors first" approach has led to a strong reputation for independence
and objectivity, as our interests are well aligned with those of our clients.
In Australia and New Zealand, Morningstar helps individual, adviser, and institutional investors
achieve their long-term investment goals by providing insightful, differentiated, independent, and
actionable equity and credit research, and portfolio management services.
Morningstar has more than 120 equity and credit analysts globally, covering approximately 1,700
stocks and 700 debt issuers, making us one of the largest independent research teams in the world.
A team of about 20 analysts and strategists based in Australia and New Zealand cover
approximately 220 Australian and New Zealand stocks, more than 40 credit securities, and manage
five equity portfolios that apply our bottom-up research: Core, Income, Growth, Sustainable, and
Small Cap.
Morningstar's analysts apply a consistent, rigorous, and proven global methodology which focuses
on long-term fundamental valuation, competitive advantages (economic moats), risk, financial
health, and stewardship. Each equity research analyst covers 15 to 20 companies and research is
reviewed on an ongoing basis (and at least quarterly) to ensure our investment ideas are always
relevant. Local analysts exchange insights with global sector teams in the United States, Europe
and Asia resulting in an enriched product and ensuring global consistency. Site visits and frequent
interaction with company management and other industry participants foster deeper analytical
insight.
Morningstar's equity research independence means we do not offer issuer-paid coverage. In other
words, we do not receive commissions for providing research in Australasia and we do not charge
companies to be covered; instead our investor clients pay a subscription fee for ongoing service. We
take an "investors first" approach to choosing coverage companies which is detailed later in this
report.
Exhibit 1 Morningstar Global Equity Research
Equity and Credit Research Coverage

Documentation detailing Morningstar's coverage and coverage changes is reviewed and updated
monthly then published on our corporate and product websites. Morningstar's equity and credit
coverage universe is based on our assessment of a security's investment attractiveness, including a
strong bias to companies with economic moats. This approach aligns with our position of
independence and, we believe, puts investors first.
Australian Equity Coverage Guidelines

All companies in the S&P/ASX 100 Index.
Companies in the S&P/ASX 200 Index which are deemed to have an economic moat and/or cash
flow is at least mildly predictable (not possessing "extreme" uncertainty in our framework). As a
rough guide, Morningstar will cover at least 80% of S&P/ASX 200 Index companies (equating to
approximately 95% of the index by market capitalisation). Companies in this index which are not
covered by Morningstar are usually unattractive for most portfolios, in our opinion.
About 50 ex-S&P/ASX 200 stocks are selected on Morningstar's judgment of the security's
investment merit very strong bias toward high-quality companies (those with moats).
New Zealand Equity Coverage Guidelines

The majority of the NZX15 Index.
10 to 15 ex-NZX15 Index stocks selected on our judgment of the security's investment merit.
Credit Coverage Criteria

Morningstar covers approximately 40 listed credit securities. Morningstar operates an independent
non-issuer-paid model in all areas of its Australasian research, and determines coverage of
securities based on investor demand and investment attractiveness. We use the following
guidelines to determine credit securities coverage:
Whether the underlying corporate entity, or its listed parent, is covered by Morningstar's equity
research team, leveraging the depth of expertise.
Morningstar's judgment on the investment merit of the security, such as non-standard structure.
The strength of existing, and likely, demand from our retail investor, broker, financial adviser, and
institutional clients.
Equity Research Methodology

Fundamental Analysis
We believe buying shares in superior businesses and allowing returns to compound over time is the
most effective way to create wealth by investing in the stock market. The long-term fundamentals
of businesses, such as cash flow, competitive position, economic cycles, risk and stewardship, are
our primary focus because history has shown that market sentiment is fleeting, momentum can
quickly reverse, and the herd is sometimes a dangerous crowd to follow. Occasionally, this
approach causes our recommendations to appear out of step with the market, but willingness to be
contrarian is an important source of outperformance and a benefit of Morningstar's independence.
The brief definitions that follow help illustrate our methodology. Extensive methodology documents
are available on our website.
Exhibit 2 Morningstar Research Process for Company Analysis
Morningstar Economic Moat Rating

The economic moat concept is a cornerstone of Morningstar's investment philosophy and is used to
distinguish high-quality companies. An economic moat is a structural feature that allows a firm to
sustain excess returns over a long period of time. Without a moat, profits are more susceptible to
competition. Companies with a narrow moat are likely to achieve normalised excess returns beyond
10 years, while wide-moat companies are likely to sustain excess returns beyond 20 years. The
longer a firm generates economic profits, the higher its intrinsic value. We believe low-quality, no-
moat companies will see their returns gravitate toward the firm's cost of capital more quickly than
companies with moats. We have identified five sources of economic moats: intangible assets,
switching costs, network effect, cost advantage, and efficient scale.
Exhibit 3 Sources of Economic Moats
Fair Value Estimate

Our fair value estimate is based primarily on Morningstar's proprietary three-stage discounted cash
flow model. We also use a variety of supplementary fundamental methods to triangulate a
company's worth, such as sum-of-the-parts, multiples and yields, among others. We look well
beyond the next quarter to determine the cash-generating ability of a company's assets because
history shows that the market price of a security will migrate towards the firm's intrinsic value over
time. Economic moats are not only an important filtering mechanism for quality in our framework,
but the designation directly contributes to our estimate of a company's intrinsic value through
sustained excess returns on invested capital.
Uncertainty Rating
The Morningstar uncertainty rating demonstrates our assessment of a firm's cash flow predictability,
or valuation uncertainty. From this rating, we determine appropriate margins of safety; the higher
the uncertainty, the wider the margin of safety is around our fair value estimate before our
recommendations are triggered.
Our uncertainty ratings are: low, medium, high, very high, and extreme. With each uncertainty
rating is a corresponding set of price-to-fair-value ratios that drive our recommendations; lower
price-to-fair-value ratios (less than 1.0) lead to positive recommendations, while higher price-to-fair-
value ratios (more than 1.0) lead to negative recommendations. Our price-to-fair-value ratios have
proven highly predictive of future stock returns. In very rare cases, the fair value estimate for a firm
is so difficult to determine with any certainty, that a margin of safety cannot be properly estimated.
For these firms, we use a rating of extreme which indicates that investors should avoid speculating
on that company's shares. Risk- and volatility-averse investors should minimise exposure to high
and very high uncertainty companies.
Exhibit 4 Margin of Safety Bands for Each Level of Uncertainty
Recommendations
Our recommendations are calculated daily and are subject to change based on the current share
price relative to Morningstar's more stable fair value estimate, after adjusting for an appropriate
margin of safety. These recommendations are signposts to a broad audience and must be
considered in the context of an individual's tax situation, investment goals, risk tolerance, time
horizon, income needs, and complete investment portfolio, among other factors.
Depending on the portfolio strategy being employed, the ratings (outlined below) can indicate
different actions for different investors. For example, income investors might be best served holding
a fairly valued investment with a reliable dividend stream instead of rotating into a buy
recommendation with questionable income characteristics. Nonetheless, our recommendations
serve as valuable starting points for equity portfolio strategies.
Recommendations displayed in Morningstars Australia and New Zealand equity research products,
such as our local adviser and broker research platform Morningstar Adviser Research Centre and
our retail investor website, are: buy, accumulate, hold, reduce and sell. They are broadly aligned
with the star ratings used in Morningstars global products, such as our institutional equity research
solution Morningstar Select Equity, global adviser and broker research platform Morningstar
Analyst Research Centre and global investment analysis platform Morningstar Direct. In order
to reduce the volatility in Australia/New Zealand recommendations, a minor adjustment is made to
the Australia/New Zealand recommendations for those stocks trading at a price very close to the
point at which a change in the rating is triggered.
Buy (significantly undervalued, QQQQQ): A buy recommendation indicates investment ideas with
a high probability of significant risk-adjusted appreciation from the current market price during a
multi-year time frame. Scenario analysis developed by our analysts indicates that the current
market price represents an excessively pessimistic outlook, limiting downside risk and maximising
upside potential. This rating encourages investors to consider an overweight position in the security
relative to the appropriate benchmark.
Accumulate (modestly undervalued, QQQQ): An accumulate recommendation indicates that

appreciation beyond a fair risk-adjusted return is likely. This rating encourages investors to own the
firm's shares, possibly overweight relative to the appropriate benchmark after fully considering
more attractively priced alternatives, such as our buy recommendations, and the security's fit with
the investor's targeted portfolio.
Hold (fairly valued, QQQ): A hold recommendation indicates that investors are likely to receive a
fair risk-adjusted return (cost of equity). Concentrated portfolios might consider exiting these
positions completely in favour of more attractively priced alternatives, pending the availability of
less expensive alternatives for a given strategy.
Reduce (modestly overvalued, QQ): A reduce recommendation indicates that investors are likely to
receive a less than fair risk-adjusted return and should consider directing their capital elsewhere.
Securities with a reduce recommendation should generally be underweight and exited completely
in most strategies.
Sell (significantly overvalued, Q): A sell recommendation indicates a high probability of undesirable
risk-adjusted returns from the current market price over a multi-year time frame. Our scenario
analysis indicates the market is pricing in an excessively optimistic outlook, limiting upside potential
and leaving the investor exposed to substantial loss. This rating encourages investors to strongly
consider exiting portfolio positions in the security in nearly all strategies
Distribution of Recommendations
Our spread of recommendations is displayed in Exhibit 5. Our recommendations are based on a
long-term fundamental view and rigorous, consistently-applied methodology, so the proportion of
positive relative to negative recommendations will often ebb and flow in negative correlation to
moves in the market. Exhibit 6 demonstrates how our recommendations have helped clients
generate wealth in the past few years. We had many buy and accumulate recommendations as the
market declined through 2011. Many of these recommendations became hold, reduce, and then sell
as the market rallied from mid-2012.
Exhibit 5 Morningstar Australian/New Zealand Recommendation Dispersion (as at 09 October 2015)
Buy 100%
90%
Accumulate
80%
Hold
70%
Reduce
60%
Sell
50%
40%
30%
20%
10%
0%
Financials
Utilities
Health Care
Materials
Telecoms
Energy
I.T.
Discretionary
Cons. Staples
Industrials
Cons.
Source: Morningstar
Exhibit 6 Morningstar Australian/New Zealand Recommendation Distribution Over Time (as at 09 October 2015)
Sell 100% 6,500

Reduce 90%
6,000
Hold 80%
Accumulate 70% 5,500
Buy
60%
5,000
S&P/ASX200
50%
4,500
40%
30% 4,000
20%
3,500
10%
0% 3,000
Mar 10 Sep 10 Mar 11 Sep 11 Mar 12 Sep 12 Mar 13 Sep 13 Mar 14 Sep 14 Mar 15 Sep 15
Research Publications
Morningstar publishes a range of exceptional research material to support adviser and investor
conversations and decisions, including:
Comprehensive Company Reports

Includes a summary of our in-depth analysis on the company's strategic positioning and competitive
advantages, risks, financial health, proprietary Morningstar datapoints (fair value estimate, fair
value uncertainty, moat, and stewardship) and financial forecasts. These also include analyst notes
containing analysis of key corporate events and changes to key assumptions and/or datapoints.
Timely Corporate Event Analysis

Analysis of, and advice on, events that require shareholder action such as capital raisings, mergers,
takeovers, demergers, off-market buybacks, spin-offs.
Equity Pre-IPO Reports

A detailed report on companies due to list on the ASX for which a prospectus has been released to
the market and which we intend to initiate full coverage on. On occasion we produce an IPO
"preview" report which includes an assessment of the industry and competitors, in anticipation of
release of a prospectus for the upcoming listing.
Australia and New Zealand Equity and Credit Securities Outlook

A comprehensive publication packed with our most salient and actionable views across our equity
and credit research coverage.
Thematic Reports
Special reports containing in-depth analysis on a company, sector, or industry where we have
identified of an actionable investment opportunity.
Best Stock Ideas

A monthly publication containing our most vetted and highest conviction Australia & New Zealand
equity investment opportunities currently trading at attractive prices.
Small Cap Focus

A monthly publication focusing on small capitalisation companies. We usually highlight one
undervalued company under coverage, but may also provide research on the small cap sector in
general, or a high-level discussion of a potentially undervalued gem that we don't yet cover but is
rising to the top of our small cap screens.
Credit Research Publications

We produce a range of credit-focused publications and these are detailed in the following section.
Morningstar's Approach to Credit Research

Purpose
Morningstar's credit research measures an issuer's ability to satisfy its debt and debt-like
obligations in a full and timely manner. The investment appeal of each security is a function of the
quality of the issuer and the unique structural characteristics of the security itself.
Our analysis is forward-looking, based on expectations of future cash flow, and incorporates both
objective and subjective assumptions.
Analysis is carried out by Morningstar's credit research team, which works closely with the equity
research team, leveraging the equity analysts' expert knowledge and analysis of the underlying
businesses.
Exhibit 7 Morningstar's Credit Research Process
Issuer Risk Rating

Our credit assessment of an issuer follows the same core principles as the assessments used in our
equity research, but adjusts for credit-specific metrics. We use qualitative and quantitative
measures which vary slightly to suit unique industry characteristics.
We analyse business risk, financial risk and security investment risk to place the security in one of
the issuer risk categories of low, medium, high and speculative. The issuer risk rating is distinct
from the security investment risk rating.
Business risk captures the fundamental uncertainty around a firm's business operations and the
cash flow generated by those operations. Key components of the business risk rating include the
Morningstar Economic Moat Rating and Morningstar's uncertainty rating.
Companies with an economic moat possess sustainable competitive advantages that

allow it to earn excess returns over a long period of time. Without a moat, profits are
more susceptible to the effects of competition. Companies with a narrow moat are likely
to achieve excess returns for the next 10 years, while wide-moat companies are more
than likely to generate excess returns for the next 20 years. Morningstar's detailed
methodology identifies the underlying source of an economic moat as one, or a
combination, of the following five specific categories: intangible assets; cost advantage;
switching costs; network effect; and efficient scale.
Morningstar's uncertainty rating represents our ability to predict the intrinsic value of a
company's shares. Our framework decomposes the equity fair value uncertainty into
systematic risk and unsystematic risk. Systematic risk can be thought of as a company's
beta to the economy which we measure through sales volatility relative to changes in
gross domestic product, operating leverage, and financial leverage. Unsystematic risks
are idiosyncratic, company-specific factors that can impact valuation such as the
regulatory environment, large contract expirations, concentrated customer base,
unpredictable management and severe changes in the competitive environment. From a
debtholder's perspective, the uncertainty rating measures the stability and reliability of
the "equity cushion" at the bottom of the capital structure.
Financial risk assesses the firm's financial health by testing the company against a series of
leverage and cash flow ratios. We rate the likelihood of financial distress by analysing how many
times a company's internal cash generation, plus total excess liquid cash, will cover its debt-like
contractual commitments during the next five years, based on Morningstar's proprietary discounted
cash flow model. We also consider historical and forecast financial ratios, including ratios that focus
on liquidity, profitability, capital structure and interest coverage.
Security Investment Risk Rating

The security investment risk rating is a rating of risk at the security level which may not align
directly with the issuer risk rating. It is important to consider the terms and conditions of the
prospectus in combination with the fundamental assessment of issuer risk. The security's unique
structural features can affect the probability and timing of principal and interest payments, thereby
significantly altering the investment risk profile. We apply an adjustment to the issuer risk rating for
the security's unique characteristics to reach a security investment risk rating of low, medium, high
or speculative. Factors such as discretionary distributions, capital triggers, non-viability triggers and
credit rating events play a part in changing the risk profile of these securities relative to traditional
fixed-income securities.
Fair Value Estimate

Morningstar uses relative and absolute measures to estimate the fair value of each credit security.
Our relative measure estimates a fair value credit spread by comparing the security's trading margin
(or credit spread) with its designated benchmark. This spread above the benchmark (typically the
bank-bill swap rate) measures the credit risk premium of the security which, together with the
benchmark yield, gives the security yield. As a general rule, the fair value credit spread will be
higher for securities with higher security risk, and will diminish over time as the security approaches
maturity. Investors should therefore be compensated with an additional spread premium for each
unit of additional security risk and term risk. Our absolute measure of fair value estimates fair value
credit spread on a transition model, which aligns our security investment risk rating to the
probability of default over the life of the security. This probability is determined by a regression
analysis of security investment risk and historical default rates.
Timing and Frequency of Credit Security Research Reports

Pre-sale summary reports are generally issued within 24 hours of the launch of a new credit security
meeting our coverage criteria.
New-issue research reports on securities that meet the coverage criteria are generally published
within a week of the launch of the issue.
Ongoing research reports are updated about every six months, or sooner in the case of a major
event.
Monthly credit research reports provide a roundup of current pricing, recommendations and outlook.
Each quarter the Australian Moat-Focused Credit Pick List highlights the issuers we consider to have
stable credit profiles which are not at risk of default in the foreseeable future.

An archive of credit research reports is available on the Morningstar Adviser Research Centre
platform and Morningstar's retail investor website.
Research Report Content

Credit research reports contain detailed issuer analysis and an investment recommendation on the
security. Reports contain the following content:
Recommendations For new issues: Subscribe/Don't Subscribe. Once a security begins trading:
Buy, Accumulate, Hold, Reduce and Sell
Security Investment Risk Our credit assessment of the issuer, adjusted for the unique
characteristics of the security, grouped into the following categories: low, medium, high or
speculative.
Investment Rating Overview of the risk and investment appeal of the security.
Analyst Note Analysis of a key event and implications for the investment appeal of the security.
Thesis Analysis of the business risk and financial risk of the underlying business.
Contract Summary Description of the specific characteristics of the security.
Security Valuation Key inputs to the valuation of the security.
Risks Analysis of potential risks to the underlying business and the security.
Investment Perspective for the Underlying Business Investment Rating, Risk, Growth, Profitability
and Financial Health.
Forecasts and key ratios for the underlying business.
Morningstar's credit analysis builds on the expertise of the equity research team, including:
At least five years of detailed proforma financial statement forecasts.
Extensive analysis of free cash flow and return on invested capital.
Uncertainty and scenario analysis, including upside and downside cases.
Forecasts of leverage, coverage and liquidity ratios.
Estimates of off-balance-sheet liabilities.
Morningstar Australia/New Zealand Equity and

Credit Research Team
Team Qualifications, Tenure, Industry Experience
The average industry experience of the Australian and New Zealand analyst team is more than 15
years and about 6 years' average tenure with Morningstar. Staff turnover is low, reflecting
Morningstar's status as an employer of choice where quality research is awarded above all else.
Profiles of the Australian and New Zealand analyst team and investment committee members are
provided in the Appendix.
Exhibit 8 Morningstar Australian/New Zealand Equity and Credit Research Team Qualifications, Tenure, Industry Experience
Tenure with Industry

Morningstar Experience
Name Title Sector / Role Qualifications (years) (years)
Carolyn Holmes Director of Equity Research Australia & New Zealand Infrastructure, Airlines BCom, MLS (Hons), Grad Dip FINSIA 0 33
Peter Warnes Head of Australasia Equity Research BCom 23 47
Adrian Atkins Senior Analyst Utilities, Transport (excl. Airlines) BEng, MCom (Hons) 10 11
Benjamin Chan Associate Analyst Consumer BAppFin, BCom 5 5
David Ellis Senior Analyst Banks, Insurance, Diversified Financials BCom, Grad Dip FINSIA, CPA 10 27
Brian Han Senior Analyst Telecommunications, Media, Gaming BCom (Fin), LLB, Grad Dip FINSIA 1 18
Mathew Hodge Senior Analyst Metals, Mining CFA 14 14
Gareth James Senior Analyst Technology, Professional Services BPhysics 6 12
Chris Kallos Analyst Health Care BPharm, MBA, CFA 2 16
Violet Li Associate Analyst Infrastructure, Airlines BAcc, MAppFin, MAcc 1 1
John Likos Senior Analyst Credit, Hybrids BEc, LLB, Grad Dip FINSIA, CFA 2 15
Tim Mann Analyst Building Materials, Chemical, Paper & Packaging BCom, LLB, Grad Dip FINSIA 2 16
Daniel Mueller Senior Analyst Retail BCom, CA, CFA, Grad Dip FINSIA 2 11
Michael Murphy Associate Analyst Credit, Hybrids BMecEng, BEco, MPhiEco 1 3
Farina Parsons Analyst Property BMedSc, MAppFin FINSIA 2 9
Daniel Ragonese Associate Analyst Indutrials, Resources, Utilities BFin 1 5
Ravi Reddy Associate Analyst Retail, Health Care, Building Materials BBus 16 27
Tony Sherlock Senior Analyst Property BEc, MBA, CA, CPA, Grad Dip FINSIA 3 5
Mark Taylor Senior Analyst Oil & Gas, Mining Services BSc, Grad Dip Mineral Economics 12 26
Nathan Zaia Analyst Banks, Insurance, Diversified Financials BBus (Acc) 7 7
Average 6 16
Profiles of Australian and New Zealand Equity and Credit Analyst Team
Carolyn Holmes is the regional director of equity research for Australia and New Zealand at
Morningstar. She leads the firm's Sydney-based team of analysts focused on providing in-depth,
fundamental equity research on Australian and New Zealand stocks based on sustainable
competitive advantages and long-term valuation analysis. She also covers the infrastructure and
Carolyn Holmes, CPA airline company sectors across Australia and New Zealand. Before joining Morningstar in 2015,
Director of Equity Research Carolyn was an executive director and senior equity analyst at JP Morgan in Sydney. Prior to that
Australia & New Zealand
Infrastructure, Airlines she worked at ABN AMRO New Zealand as head of equity research, Citigroup Smith Barney New
Zealand, Credit Suisse First Boston New Zealand and AMP Investments in both Australia and
New Zealand as head of equity research/equity portfolio manager in New Zealand. Holmes holds
a Bachelor of Commerce, majoring in accounting, finance and systems from the University of New
South Wales, a Master's of Legal Studies (honours), specialising in commercial law from the
University of Auckland, and a postgraduate Diploma in Applied Finance and Investment from the
Financial Services Institute of Australasia (FINSIA). She is a member of CPA Australia and a
Fellow of FINSIA.
Peter is head of equity research at Morningstar, a leading global provider of independent
investment research. Peter is an experienced leader in our equity research group and regularly
contributes thought-provoking research in several client channels, meets with investors to share
our views, and represents Morningstar equity research in the media. He is also a member of
Peter Warnes Morningstar's Investment Committee in Australasia. Peter joined Aspect Huntley, subsequently
Head of Australia Equity acquired by Morningstar, in 1992. His investment career started in 1968 in the Investment
Research
Research Department of the Bank of New South Wales (now Westpac). He continued in industrial
research and institutional stockbroking, working for Hattersley Maxwell and Bain & Company over
a period of 15 years. Peter has a Bachelor's degree in Commerce (Accounting) from the University
of New South Wales.
Adrian is a senior equity analyst in the equity research team at Morningstar, a leading global
provider of independent investment research. Adrian covers the utilities and transport (excluding
airlines) sectors across Australia and New Zealand. Adrian joined Aspect Huntley, subsequently
acquired by Morningstar, in 2004. He has a Bachelor's degree in Engineering and a Master's
Adrian Atkins degree in Commerce (Hons) majoring in Finance and Economics, both from the University of
Senior Equity Analyst Sydney.
Utilities, Transport (ex Airlines)
Benjamin is an associate equity analyst in the equity research team at Morningstar, a leading
global provider of independent investment research. Benjamin is responsible for assisting in the
research of Australian listed companies, focusing on the telcommunications, media, gaming,
information technology and professional services sectors alongside Brian Han and Gareth James.
Benjamin Chan Benjamin joined Morningstar in 2011. He worked previously as an audit intern with
Associate Equity Analyst Pricewaterhousecoopers and in the client services team at Morningstar. He has a Bachelor's
Telco, Media, Gaming, IT and
Professional Services degree in Applied Finance and Commerce-Accounting from Macquarie University.
David is a senior equity analyst in the equity research team at Morningstar, a leading global
provider of independent investment research. He covers the banks, insurance and diversified
financials sectors across Australia and New Zealand. David joined Aegis, subsequently acquired
by Morningstar, in 2005. Before this, he worked extensively at St. George Bank and its
David Ellis, CPA predecessor Advance Bank in various accounting and management roles including asset and
Senior Equity Analyst liability management and balance sheet risk management. He started his career in commercial
Banks, Insurance and
Diversified Financials accounting roles. He has a Bachelor of Commerce degree from the University of Newcastle, has a
Graduate Diploma in Applied Finance and Investment from FINSIA, and is a member of CPA
Australia.
Mathew is a senior equity analyst in the equity research team at Morningstar, a leading global
provider of independent investment research. He covers the metals and mining resources sector
across Australia and New Zealand. Mathew joined Aspect Huntley, subsequently acquired by
Morningstar, in 2001, and worked previously in the mining industry in both underground coal and
Mathew Hodge metalliferous mining in various mining engineering roles. He has passed Level III of the Chartered
Senior Equity Analyst Financial Analyst (CFA) program.
Metals and Mining
Brian is a senior equity analyst in the equity research team at Morningstar, a leading global
provider of independent investment research. He covers the telecommunications, media and
gaming sectors across Australia and New Zealand. Brian joined Morningstar in 2014 and
previously worked as a senior research analyst at Fat Prophets, a fund manager at Constellation
Brian Han Capital Management and an analyst at Citigroup. He has a Bachelor's degree in Commerce
Senior Equity Analyst (Finance) and a Bachelor's degree in Law, both from the University of New South Wales, and also
Telecommunications, Media
and Gaming has a post graduate Diploma in Applied Finance and Investment from FINSIA.
Gareth is a senior equity analyst at Morningstar, a leading global provider of independent

investment research. He covers the technology and professional services sectors across Australia
and New Zealand. Gareth joined Aegis, subsequently acquired by Morningstar, in 2010. He has 12
years' equity markets experience encompassing research, trading, and equity capital raisings.
Gareth James Before joining Aegis, Gareth worked in Deloitte's Sydney Mergers and Acquisitions team, advising
Senior Equity Analyst ASX-listed companies. In Ord Minnett's Equity Capital Markets team, he specialised in initial
Technology and Professional
Services public offerings. He also spent four years within Rabobank's equity derivatives team. Gareth has a
degree in Physics from the University of London and valuation qualifications from Macquarie
University and FINSIA.
Chris is an equity analyst in the equity research team at Morningstar, a leading global provider of
independent investment research. Chris covers the health care sector across Australia and New
Zealand. Chris has more than 15 years' experience in the investment industry and joined
Morningstar in 2014. His previous roles include equity analyst for Edison Group (London), Zacks
Chris Kallos, CFA Investment Research (Chicago), Aegis (Sydney), BBY (Sydney) and biotechnology industry
Equity Analyst consultant to the Australian Stock Exchange. He has a Bachelor of Pharmacy from Sydney
Health Care
University, an MBA from the AGSM, (University of NSW), and a Master's of Applied Finance from
Macquarie University. He is a CFA charter holder and graduate of the Australian Institute of
Company Directors.
Violet is an equity associate analyst in the equity research team at Morningstar, a leading global
provider of independent research. Violet covers the infrastructure and airline sectors alongside
Carolyn Holmes, and well as other team operational responsibilities. Violet joined Morningstar in
2015 and worked previously as a Research Analyst at Orient Capital. She has a Bachelor's degree
Violet Li in Accounting from China, a Master's degree in Accounting from Macquarie University and a
Associate Equity Analyst Master's degree in Applied Finance from the University of Western Sydney. She is an affiliate
Infrastructure/ Airlines
member of the Association of Chartered Certified Accountants (ACCA).
John is a senior credit analyst at Morningstar, a leading global provider of independent

investment research. John is responsible for research into Australian debt and credit securities.
John has more than 14 years of credit experience in Australia and Europe, across a wide range of
products including institutional debt, credit derivatives and listed debt and hybrid products. He
John Likos, CFA has a Bachelor of Economics from Flinders University of South Australia, a Bachelor of Laws from
Senior Credit Analyst Adelaide University, a post graduate Diploma in Applied Finance & Investment from FINSIA, and
is a Chartered Financial Analyst.
Tim is an equity analyst in the equity research team at Morningstar, a leading global provider of
independent investment research. Tim covers the building materials, chemicals and paper &
packaging sectors across Australia and New Zealand. Tim joined Morningstar in 2014. He worked
previously with Bligh Capital Securities, a boutique securities research house, and was recently
Tim Mann involved in corporate advisory/ECM for small and mid-cap companies. He worked at Southern
Equity Analyst Cross Equities as a research analyst with responsibility for a broad range of small and mid-caps.
Building Materials, Chemicals,
Paper & Packaging He has also worked with a range of research houses, including Nomura. He has a Bachelor's
degree in Law (Hons) and Commerce from Bond University and a post graduate Diploma in
Applied Finance & Investment from FINSIA.
Daniel is a senior equity analyst in the equity research team at Morningstar, a leading global
provider of independent investment research. Daniel covers the retail sector across Australia and
New Zealand. He worked previously as a senior equity analyst/portfolio manager with boutique
fund managers Northward Capital, Investors Mutual and MMC Contrarian. Before that, he was a
Daniel Mueller, CA, CFA research manager with Colonial First State, and worked in accounting roles at Commonwealth
Senior Equity Analyst Bank of Australia, Lend Lease, and KPMG. He has a Bachelor's degree in Commerce from the
Retail
University of New South Wales, a post graduate Diploma in Applied Finance & Investment from
FINSIA, and is both a chartered accountant and a CFA charter holder.
Michael Murphy is an associate credit analyst in the credit research team at Morningstar, a
leading global provider of independent research. Michael is responsible for assisting in the
research of Australian debt and credit securities. Michael joined Morningstar in 2015 and worked
previously as a quantitative credit risk analyst at the Commonwealth Bank of Australia (Sydney)
Michael Murphy and was a senior associate in the economic consulting team at Deloitte (London). He has a
Associate Credit Analyst Master of Philosophy in Economics from the University of Oxford, a Bachelor of Mechatronic
Engineering, and a Bachelor of Economics from the University of Adelaide.
Farina is an equity analyst in the equity research team at Morningstar, a leading global provider
of independent investment research. Farina joined Morningstar in 2014 and covers the listed
property sector across Australia and New Zealand alongside Tony Sherlock She worked previously
as an equity analyst with boutique fund manager Ubique Asset Management, where she covered
Farina Parsons the consumer, health care, media, and gaming sectors. Before that, Farina worked at Nomura
Equity Analyst Australia covering food/beverage, retail, and gaming stocks. Farina has a Bachelor's degree in
Property
Medical Science from the University of New South Wales and a Master of Applied Finance
degree from FINSIA.
Daniel is an associate equity analyst in the equity research team at Morningstar, a leading global
provider of independent investment research. Daniel covers metals and mining, oil & gas, utilities
and transport sectors across Australia and New Zealand alongside Mathew Hodge, Mark Taylor
and Adrian Atkins. Daniel has four years' experience in the investment industry and joined
Daniel Ragonese Morningstar in 2015. He worked previously as an Investment Analyst with the Commonwealth
Associate Equity Analyst Bank. He has a Bachelor's degree in Finance from the University of Technology, Sydney.
Metals & Mining, Oil & Gas,
Utilities and Transport
Ravi is an associate equity analyst in the equity research team at Morningstar, a leading global
provider of independent investment research. Ravi covers retail, health care and building
materials alongside Daniel Mueller, Chris Kallos and Tim Mann. Ravi joined Morningstar in 2010
following the acquisition of Aegis Equities Research. He joined Aegis in 2000 and worked in
Ravi Reddy research covering banks, insurers, wealth managers, listed investment companies, and income
Associate Analyst securities. He worked previously for St. George Bank and its predecessor Advance Bank for 11
Retail and Health Care
years, starting as a graduate trainee and progressing through positions in corporate and treasury
accounting, interest rate risk management, and management information systems. Ravi has a
Bachelor of Business degree from the University of Technology, Sydney, majoring in Finance and
Economics, and has completed a conversion course in accounting.
Tony is a senior equity analyst in the equity research team at Morningstar, a leading global
provider of independent investment research. Tony joined Morningstar in 2012 and covers the
listed property (REITs) sector across Australia and New Zealand. Prior to joining Morningstar he
was an equity research analyst at Royal Bank of Scotland researching the engineering
Tony Sherlock, CA, CPA construction sector and property developers, and before that at Aegis Equities Research as an
Senior Equity Analyst equity research analyst covering property, infrastructure, and industrials companies. Before that,
Property
he worked as Senior Manager Strategic Investments and Commercial at Westpac Banking
Corporation, as a strategy consultant with Mellon Financial Corporation in New York, and as a
Senior Consultant with Price Waterhouse in Melbourne. Tony has a Master of Business
Administration degree from New York University Stern School of Business and a Bachelor of
Economics in accounting and finance from Monash University. He is also a member of the
Australian Institute of Chartered Accountants.
Mark is a senior equity analyst in the equity research team at Morningstar, a leading global
provider of independent investment research. Mark covers the oil & gas and mining services
sector across Australia and New Zealand. Mark joined Aspect Huntley, subsequently acquired by
Morningstar, in 2003, and worked previously for Shaw Stockbroking as a Research Analyst and
Mark Taylor Corporate Finance Executive. He has a Bachelor's degree in Science and a post graduate Diploma
Senior Equity Analyst in Mineral Economics from Macquarie University.
Oil & Gas and Mining Services
Nathan is an equity analyst in the equity research team at Morningstar, a leading global provider
of independent investment research. Nathan covers the banks, insurance and diversified
financials sectors across Australia and New Zealand alongside David Ellis. Nathan joined
Morningstar in 2007 as an associate analyst and progressed to an analyst role, specialising in
Nathan Zaia building materials, mining services and airlines. Nathan joined the financials research team in
Equity Analyst 2013. He has a Bachelor's degree in Business (Accounting) from the University of Western
Banks, Insurance and
Diversified Financials Sydney.
About Morningstar
Morningstar is a leading provider of independent investment research in North America, Europe,
Australasia, and Asia. The company offers an extensive line of products and services for individual
investors, financial advisers, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 500,000 investment offerings, including stocks, mutual
funds, and similar vehicles, along with real-time global market data on more than 14 million equity
securities, indexes, futures, options, commodities, and precious metals, in addition to foreign
exchange and Treasury markets. Morningstar also offers investment management services through
its investment advisory subsidiaries and had approximately USD 170 billion in assets under
advisement and management at 31 December 2014. The company has operations in 27 countries.
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Morningstar Equity and Credit Research Coverage

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Morningstar Equity and Credit Research Coverage

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Australia & New Zealand

Introduction to Morningstar and Our Equity and Credit Research .......................................................................................................................... 3

Equity and Credit Research Coverage ....................................................................................................................................................................... 5

Equity Research Methodology ................................................................................................................................................................................... 6

Research Publications .............................................................................................................................................................................................. 11

Morningstar's Approach to Credit Research ........................................................................................................................................................... 13

Morningstar Australia/New Zealand Equity and Credit Research Team ............................................................................................................... 17

About Morningstar ................................................................................................................................................................................................... 25

Introduction to Morningstar and Our Equity and

Exhibit 1 Morningstar Global Equity Research

Equity and Credit Research Coverage

Australian Equity Coverage Guidelines

New Zealand Equity Coverage Guidelines

Credit Coverage Criteria

Equity Research Methodology

Exhibit 2 Morningstar Research Process for Company Analysis

Morningstar Economic Moat Rating

Exhibit 3 Sources of Economic Moats

Fair Value Estimate

Exhibit 4 Margin of Safety Bands for Each Level of Uncertainty

Accumulate (modestly undervalued, QQQQ): An accumulate recommendation indicates that

Exhibit 5 Morningstar Australian/New Zealand Recommendation Dispersion (as at 09 October 2015)

Sell 100% 6,500

Comprehensive Company Reports

Timely Corporate Event Analysis

Equity Pre-IPO Reports

Australia and New Zealand Equity and Credit Securities Outlook

Best Stock Ideas

Small Cap Focus

Credit Research Publications

Morningstar's Approach to Credit Research

Exhibit 7 Morningstar's Credit Research Process

Issuer Risk Rating

Companies with an economic moat possess sustainable competitive advantages that

Security Investment Risk Rating

Fair Value Estimate

Timing and Frequency of Credit Security Research Reports

Research Report Content

Morningstar Australia/New Zealand Equity and

Tenure with Industry

Gareth is a senior equity analyst at Morningstar, a leading global provider of independent

John is a senior credit analyst at Morningstar, a leading global provider of independent

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