BNB - Babcock & Brown

[Dakaz]

I watched BNB double their IPO price over a 2 month period, I then bought a few shares. Now since they have announced they are creating a LIC, the shares have slowly gone down. Can anyone please tell me why the LIC is effecting the Share price and 2) in their opinion is it worth holding on to them??
Thanks

[RichKid]

Financial advice cannot be given without the appropriate licence- so please don't ask for advice here as most people aren't legally able to provide advice, nobody wants to get into trouble or cause any bad publicity for this site (or its administrator).

[Maybe all newbies will have to go through a brief training statement which cautions against asking for advice before being able to post or sign-up??- over to you moderator/Joe/Stefan]

I can only post a guess here and that is that maybe people bought on the news/rumour of the LIC and then sold to take profits?? Don't know, just a guess.

[It's Snake Pliskin]

One for the fundamentalists.
As a value investment who sees this stock as a good long term buy and does anybody know what its intrinsic value might be? How does this stock stack up against Macquarie Bank for example?

[RichKid]

One big fall, might be easing off now but another small decline isn't out of the question as there's a congestion area nearby. I note a recent broker valuation was at about $8.

[Yippyio]

Two weeks ago a broker came out with a valution for BNB, which was sub $8 and then yesterday ABN AMBRO gave it a buy recommendation and a valuation of $ 20 ???, beats me.

[kerosam]

heard about the sub $8 value on bnb from a former broker friend as well. and he used to work for AMBRO.

[Scratch]

........................and there I was with $$$s in the bank, testing the winds of fortune, looking at charts and reading forums...............AMBRO $8 - $20 ........wot chance has this little fishy?? :goodnight

Disclaimer:

Who me?? Aren't you supposed to know something first??!!!

[Yippyio]

........................and there I was with $$$s in the bank, testing the winds of fortune, looking at charts and reading forums...............AMBRO $8 - $20 ........wot chance has this little fishy?? :goodnight

Disclaimer:

Who me?? Aren't you supposed to know something first??!!!

Agreed, down 5% in a day, does not take much to spook this stock. :banghead:

[It's Snake Pliskin]

Agreed, down 5% in a day, does not take much to spook this stock. :banghead:


It's getting closer to it's value, but not there yet!

[Yippyio]

Depends who's recommendation your going with, I think it's over sold and going to bounce but then I am biased.

[It's Snake Pliskin]

Depends who's recommendation your going with, I think it's over sold and going to bounce but then I am biased.

I am going with reality. They are modelled like MBL but their off shoots are not that productive yet. One only made its first investment last month. Risky was the evaluation I remember vividly.

[Yippyio]

It's getting closer to it's value, but not there yet!

Agreed, it's not there yet. Probably $20, $22. Did I hear $50

[It's Snake Pliskin]

Agreed, it's not there yet. Probably $20, $22. Did I hear $50

You're a funny man.

Good luck to you if it does get back there.

[BraceFace]

Agreed, it's not there yet. Probably $20, $22. Did I hear $50

I'm with you Yippy....
This one is a keeper.

[RichKid]

BNB appears to be consolidating after that recent correction, next stop should be the all time highs if it gets on with it. Like the previous ledge in the previous run up I expect this to break upwards strongly as that's the general direction of the trend and prices don't tighten up like this for long. Currently testing the lower boundary of support. Has been strong so far but this week suggests it isn't quite there yet, once the last of the weak hands are shaken out it should do well. Another easy one to place a stop with.

No chart posted yet, maybe someone else can oblige with support levels etc or I may post one later.

[mit]

RichKid,

I bought BNB a few days ago on the Breakout. At the moment it is just hovering above support. Doesn't look Bullish to me atm, although I hope you are right

MIT

[RichKid]

RichKid,

I bought BNB a few days ago on the Breakout. At the moment it is just hovering above support. Doesn't look Bullish to me atm, although I hope you are right

MIT

Hey Mit,
Well I could be wrong, that false breakout is just an upthrust (or so says the swing trading info I've been reading), I've seen them in these patterns before (but my experience is limited so don't place too much importance on my view). The main attraction to me is that it appears to have completed the correction and is providing an easy stop loss position with a well defined range, some people may try to shake me out of this (the instos) but there's nothing I can do now but watch and wait for a further signal- I hold.

[mit]

Just blew past my stop, so I am out.

MIT

[RichKid]

Just blew past my stop, so I am out.

MIT

Ditto with me mit. Just remembered that when you have a false breakout of the range (an upthrust) it's likely to retest the opposite border of the range. Maybe I'll wait for a reversal bar next time. Still, it could easily have bounced off support and broken upwards again. Just traded it as I saw it, will remember what I forgot next time to select an even lower risk entry. This sucker is still on my watchlist.

[mit]

I think it was a valid set-up. Just didn't work this time unfortunately. It ended pretty strongly on Monday and I was tempted to give it a little more room. Luckily I followed my rules and got out.

MIT

[waytogo]

BNB has been lolling around $17 over the holiday break. Last week it had a bit of a spurt up to around $17.50.

BNB's reporting period ended 31 December, with the result probably due around February - anyone have any technical analysis suggesting a break out pattern will form?

[michael_selway]

BNB has been lolling around $17 over the holiday break. Last week it had a bit of a spurt up to around $17.50.

BNB's reporting period ended 31 December, with the result probably due around February - anyone have any technical analysis suggesting a break out pattern will form?

BNB dropped a bit today, maybe the below


Date: 4/8/2006
Author: Robert Clow
Source: The Australian --- Page: 29
Babcock's wind farms in Spain, Germany and Lake Bonney have generated $A10m less revenue than forecast. $A9m were due to delays in its acquisition of three Spanish farms. The rest was caused by winds blowing at just 58% and 92% of the average speed. Babcock also has several US wind farms. The company's share price closed $A0.02 lower at $A1.45 and its EBITDA is expected to fall to $A51.5m, from its previous forecast of $A62.2m

Date: 11/7/2006
Author: Helena Keers
Source: The Australian Financial Review --- Page: 23
Investors have sold down the shares of some renewable energy groups in the last six months. However, a number of analysts remain bullish about the sector. Babcock & Brown Wind Partners (B&B Wind) closed at $A1.56 on 10 July 2006, after peaking at $A1.93 in January, while Viridis Clean Energy Group's shares closed at $A0.88, compared with a high of $A1.12 in September 2005. Deutsche Bank has a target price of $A2 on B&B Wind shares, while ABN Amro has a target price of $A1.17 for Viridis stock

thx

MS

[billhill]

Broke through resistance at $20.50 on heavy volume yesterday after a period of consolidation. Is up more then 2% today on a gap. Look for it to test long term resistance at $22.00. And its about time!

[Sultan of Swing]

Anyone got on any ideas about this one? I've held a few for a little over a year and don't intend selling in the near future as I tend to hold long term.

Having said that, that can obviously be fatal to profits as I've found out a few to many times. :rolleyes:

[Nick Radge]

This was sent yesterday...

http://www.aussiestockforums.com/images/tc/80100.png

BOTTOM LINE
11/10:
EW Trend: Corrective (?)
Price Trend: Up
Trend Strength: Strong
Broker Consensus: Strong BUY
20/9:
EW Trend: Corrective
Price Trend: Down
Trend Strength: Weak
Broker Consensus: Strong BUY

LAYMANS ANALYSIS
11/10:
VIDEO ANALYSIS (1 mins 58 secs)
Today's 4% surge, high close and high volume put my "want" of a continued dip well out of the picture. Whilst it's technically still possible, its now, more or less, improbable. Whilst we have seen high volume days before, the price relationship shown today is nothing short of very bullish. It's extremely probable that the BNB trend will now resume after its 4-month pause and that new high is close by. I would expect the immediate targets are just through $24.00, but the larger targets extend well beyond that should we see continuing signs of bullish behaviour. On the flipside, any failure and subsequent break back below the late September lows of $19.22 would suggest the original weakness is back in favour.
20/9:
VIDEO ANALYSIS (1 mins 40 secs)
Prices continue to meander and I still think they'll travel a touch lower before resuming the upward trend. I note with interest that the Brokers have moved their rating to the highest level of Strong BUY. Whilst this does fit the larger bullish picture I've been preaching for some time, its only appropriate so long as $15.75 is not broken (yes, $15.75 is a long way off). Today's weakness does reinforce my thinking that we'll trade lower over the coming weeks so if you are interested in BNB, I believe better levels will become available shortly. The lower $18.00 area should now offer very strong support and I would expect prices to reverse from those levels and move higher.

TECHNICAL DISCUSSION
11/10:
The June highs had been labelled at wave-(i) or -5. Continuing with the impulsive theme, the pattern since then can only be a nested impulse. The reason is that wave-(ii)'s cannot be resolved in the form of a triangle. Therefore, the August lows are deemed a wave-(ii) and we're now sub-dividing higher in a new structure whereby today takes the shape of a wave-iii. Following this smaller structure, the wave-iii target is $22.00 and the wave-v is a little over $24.00. The June 30 highs were $22.00 so the termination of wave-iii should be anticipated as weaker hands take profits. Bullish.
20/9:
The corrective pattern continues to take shape, slowly but surely. The wave-c/wave-a equilibrium is at $17.35 which is just a touch lower than a support band running back to earlier this year. Even so, this "general" area will offer support and we should expect the wave-(ii) to terminate in that region. If that in fact does occur, then the upside potential for BNB is very large. One thing at a time, so look for that weakness over the coming weeks, then look for evidence of a turn higher into wave-iii. The main reason why I think prices will travel lower at present is because the area between wave-a and -b was choppy in nature and not impulsive. That activity suggests corrective movement and as we know, wave-b is a corrective wave.


This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information.

[sleeper88]

looks like it going up..past $22 and at all time high

[billhill]

Wow. There seems to be no stopping these guys. About to float a power fund, finished raising 300million pounds for an infrastructure fund in europe and are part of a consortium that won the 3.6 billion dollar contract to supply trains in NSW. This all in the last couple of weeks. At the rate their going they'll be calling Macquarie a mini Babcock and Brown.

[sleeper88]

your sure right, been holding this for over a yr now, anyone lucky enough to get into this one during their llisting on ASX for $5 per share, a while back?

[billhill]

yeah i've been holding since they were $11. definitely a long term play. Can't imagine what these will be worth 5 years from now.

[michael_selway]

Wow. There seems to be no stopping these guys. About to float a power fund, finished raising 300million pounds for an infrastructure fund in europe and are part of a consortium that won the 3.6 billion dollar contract to supply trains in NSW. This all in the last couple of weeks. At the rate their going they'll be calling Macquarie a mini Babcock and Brown.

dont forget AFG and MFS!

thx

MS

[billhill]

Another day and the anouncement of another fund. This time in singapore. This company is truly turning into a global force in investment banks.

[billhill]

Anyone got any idea about the big jump in price so far today. up $1.27 last i checked.

[sleeper88]

i think it's following MBL's lead, good market sentiment for investment banks atm. it funny that so far, you and i are the only people commenting on this great stock. ;)

[billhill]

Yeah i know. Everyone is so crazy about mining stocks they seem to ignore every other sector. Oh well when the mining boom finishes we'll make all the gains because of our clever positioning in sound good stocks with real not speculative potential.

[Sultan of Swing]

I don't have much else to say but WOO HOOOOO!!!!! :D

As I said in an earlier post, bought a little over a year ago and up 40%+ after today. Not as spectacular as some mining stocks but I feel comfortable with them. I'm also thinking about doubling my position as I'll hate it if it does do as well as MBL over the next few years and I haven't got a bigger chunk. It must be the greed thing again. :p:

They seem to have good management that have a proven track record, a good return on equity for the little info they have on them at this stage and being global, have good growth prospects.

But then, I don't know much and am just along for the ride. :cool:

[michael_selway]

i think it's following MBL's lead, good market sentiment for investment banks atm. it funny that so far, you and i are the only people commenting on this great stock. ;)

hey i hold BNB at $13!

EPS(c) PE Growth
Year Ending 30-12-06 110.2 20.8 43.1%
Year Ending 30-12-07 132.8 17.3 20.5%

Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2009
EPS 77.0 110.2 132.8 155.0
DPS 23.0 34.3 42.2 50.0

thx

MS

[Nick Radge]

Well done Sultan. Nothng feels better than getting that moves smoothly. Here are my comments from a week or two ago...



BOTTOM LINE
8/11:
EW Trend: Up
Price Trend: Up
Trend Strength: Strong
Broker Consensus: Strong BUY
27/10:
EW Trend: Up
Price Trend: Up
Trend Strength: Strong
Broker Consensus: Strong BUY

LAYMANS ANALYSIS
8/11:
VIDEO ANALYSIS (http://www.projectstreamer.com/users/reefcap/0811_bnb/) (1 mins 30 secs)
We didn't get to see the micro triangle form but the dip was spot on a typical decline at this stage of the trend. We've now surpassed those recent highs as BNB puts on 6% in just a few days. We should continue higher for a brief week or so, possibly as far as $24.50 before we get a reasonable corrective movement. A nimble trader looking for a quick move could buy on a break of today's high but must keep close tabs on any weakness entering. The general market is showing some signs of a dip and with BNB hitting these highs for the 3rd time there is a chance of failure. I also note the small gap left from yesterdays strength which in theory should be filled with a reasonable level of probability. The weekly chart looks great, especially if this week can close firm.
27/10:
VIDEO ANALYSIS (1 mins 56 secs)
I hinted at new highs several weeks ago and we've now got them, but I feel there is certainly more upside yet. I have indicated on the chart that we may see a quick dip next week to complete a micro triangle, but volume/price relationship today was very strong so I'm not sure if we'll get that dip just yet. As discussed in the last review, the next immediate leg higher could see prices push through to $24.50 before a reasonable corrective move, but even then, any declines should be short lived. At this rate we could continue all the way to $27.00, quite possibly more. Yet again we see a classic example of a possible micro triangle forming at an old high. Time and again this occurs as weaker hands can resist but take profits. It gives the market pause before moving higher, but it also offers a low risk entry point. Watch for the completion of the triangle this coming week and expect a quick surge higher.

TECHNICAL DISCUSSION
8/11:
The wave-iv correction has completed in a 3-wave movement and bounced off the 38.2% retracement level. I think it says a lot when the stock shows strength on a negative day and a day when interest rates have risen. BNB is usually susceptible to interest rates because of its exposure to infrastructure. all in all, today was more positive than perhaps what is shown via price action. The 61.8x wave-iii targets $24.50 and showing some confluence is the 61.8x the larger degree wave-1 target at $24.00. Remember that the 61.8x wave-1 is the area I look for as the wave-3 terminal point. I am more conservative than most, but it's a good sign of proportion when different waves show similar targets.
27/10:
The pause here at the old highs suggests a minor degree wave-iv triangle is under construction. Today did show solid buying interest so we'll need a down night tonight in the US to see this pattern complete. A positive lead from the US tonight will simply see prices shoot higher without the triangle completing. Today shows a high close on reasonably good volume. This during general market weakness today is a very good sign for the bullish outlook, so the completion of the triangle will hinge on the US tonight. The minor degree targets of 61.8x wave-i suggest $24.50. The equidistant wave-i/-v relationship occurs at $22.73 assuming the pivot low this week was wave-iv. Bullish.

[It's Snake Pliskin]

Just closed my short position with a profit @$25.04

[joslad]

Seems to be a bit suspect at the moment - ann coming?? Maybe. Jumped over 70c although slipping back.

May end up being a good decision to cover...

[billhill]

I think i found your announcement. BNB team with singapore power to buy alinta.
http://www.theage.com.au/news/Business/Alinta-may-get-9-billion-offer/2007/03/05/1172943344903.html

[joslad]

Yep, thats the one. I was watching bloomberg today when they were referring to that story, and suggesting an announcement would be made next week.

BNB have issued an announcement today, saying the speculation by bloomberg today, was without foundation - or words to that effect.

[It's Snake Pliskin]

Any reason for the higher volume today other than people buying in? It somewhat stands out.

[theasxgorilla]

*********************
Babcock & Brown – Successful Completion of Book Build
International investment and advisory firm Babcock & Brown (ASX: BNB)
announced today the successful completion of an accelerated global book build
of shares sourced from Babcock & Brown employees. Under the book build
approximately 19 million shares were sold at a price of $25.20 per share by
employees.
Phil Green Chief Executive of Babcock & Brown said, “The book build process
has given us the opportunity to expand our institutional shareholder base. The
significant support from offshore institutional investors, following a recent
international road show, is particularly pleasing in light of the recent volatility in
global equity markets.
“Babcock & Brown did not raise any new capital in the book build process. As
outlined in our recent results presentation we have significant financial capacity
from a range of existing sources and have no current intention of issuing new
equity in relation to any specific transaction currently being considered.
However we are continually considering new opportunities and depending on
the structure and timing of any new transactions do not rule out the possibility of
issuing additional capital if appropriate. As stated many times previously,
Babcock & Brown will only raise further capital if we are confident that we can
earn an ROE on the incremental capital within our target range of 25-30%.
***************

[barnz2k]

didnt know anything about this stock but saw it as a 'related thread' and it looks interesting.
if you count the recovery form a drop, its gone up almost 30% in the last 3 months!

thats enormous. any thoughts on the future of this stock?

[sleeper88]

didnt know anything about this stock but saw it as a 'related thread' and it looks interesting.
if you count the recovery form a drop, its gone up almost 30% in the last 3 months!

thats enormous. any thoughts on the future of this stock?

BNB and MBL are Australia's 2 largest investment banks, i missed out on MBL when i was cheap..but i didn't make the same mistake with this one. Been holding BNB for close to 2 yrs now and it's one of my fav long term stocks. current payout ratio is fairly low but with tremendous growth potential/prospects..the capital gains on this stock more than makes up for it

[billhill]

thats enormous. any thoughts on the future of this stock?
I totally agree with sleeper. Top notch management. This is probably my favorite long term stock. holding 2 years.

[barnz2k]

im holding off of buying any more stock just now waiting to sort some shyt out. but hell if it kept up that run. Maybe it will drop back a little again and let me buy in.

Curious, what was it at 2 years ago when you guys got in?

btw thanks for fast repsonse!

[billhill]

I bought in at $11.00. I would wait until the next market correction and then stock up. Should be able to get them at a better value then at the moment.

[sleeper88]

$14.10 for me, i wonder if anyone has been holding since the IPO in Nov 04, back then shares where issued at $5..listed at approx $8. It has come along way in less than 3 years

[Mumbank]

I missed out on the IPO but bought at 8.45 and then 9.75 and still holding. At the time I promised myself I'd buy more before they went over $12 but of course I kept buying other stuff. Anyway I'm more than happy to be holding my little parcel which I will continue to hold long term. Certainly if there is a correction and it gets back below $30 I'll pick up another small parcel (certainly smaller than those I picked up just after the IPO.

[Ang]

If you are looking for a very well plased subsidery or off shoot of BNB try BBI I have had it since it was in the low $1 mark and now $1.95 ready to crack $2. BNB has spinned off all its assets into various stock like BBI and the capital Growth is great and yield is also grat with the spin off stock. Another spin off stoc is BBW an i only wished I bought some of those when they were $1.5, hit $2.07 today, with both BBI and BBW going to goin enourmosly from the new buy out of Alinita @ $16.46 / share. I ham hoping BBI and BBW will be $5-$10++ stock in the next 2 yrs.
kind reg
ang

[sleeper88]

If you are looking for a very well plased subsidery or off shoot of BNB try BBI I have had it since it was in the low $1 mark and now $1.95 ready to crack $2. BNB has spinned off all its assets into various stock like BBI and the capital Growth is great and yield is also grat with the spin off stock. Another spin off stoc is BBW an i only wished I bought some of those when they were $1.5, hit $2.07 today, with both BBI and BBW going to goin enourmosly from the new buy out of Alinita @ $16.46 / share. I ham hoping BBI and BBW will be $5-$10++ stock in the next 2 yrs.
kind reg
ang

i agree with you totally..but u left out BBP..it has also been a performer although i sold it just under $3

[barnz2k]

Great info!
Cheers guys.

Il keep an eye on BNB and its subs, maybe go shopping in the next sale, i mean correction haha

you guys must be stoked - 200% increase in under 3years!! amazing.

[billhill]

Speculation mounts that Babcock and Brown will bid for the eurotunnel against maquarie bank and goldman sachs.

http://www.bloomberg.com/apps/news?pid=20601085&sid=aqaIAP9wyjE4&refer=europe

[sleeper88]

Upgrades 2007 profit forecast to $550m (35% growth on 2006), with EPS approaching 30% if this target can be achieved

[Ang]

Great info!
Cheers guys.

Il keep an eye on BNB and its subs, maybe go shopping in the next sale, i mean correction haha

you guys must be stoked - 200% increase in under 3years!! amazing.

BBI is cheap now while they recieved bad news that they were not accepted in the take over. Those bloody commissioners, what right do they have. Anyway they have not changed their profit projections.
I am hanging in there.
Kind regards
ang

[barnz2k]

Cheers Ang!
I was actually looking at the chart on Friday and thinking about it.
I got a letter about more MBL shares for $87 (its currently 89 and was almost 100 a week ago) so im thinking about it - but Im leaning towards BNB IF i get something - my money situation is still uncertain

If BNB arent successful at this bid maybe MBL is and il win either way hahahah

[michael_selway]

Great info!
Cheers guys.

Il keep an eye on BNB and its subs, maybe go shopping in the next sale, i mean correction haha

you guys must be stoked - 200% increase in under 3years!! amazing.

Please dont forget AFG, MFS & MBL!

thx

MS

BNB - Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 115.4 151.3 178.7 203.0
DPS 36.0 47.0 55.2 62.8

EPS(c) PE Growth
Year Ending 30-12-07 151.3 20.7 31.1%
Year Ending 30-12-08 178.7 17.6 18.1%

[hypnotic]

Hey all just looking at the chart for BNB,

I am still new to charting but looks like it has double bottomed.

MACD have just crossed although volume is low...

Just passed its all time high too.

Looks bullish, i am in just to test this charting theory. :p:

Hypnotic

[billhill]

share price appears to have stalled lately. Found this which isnt very good news.


Eircom in bid to avert strike action

Eircom management will today table new proposals to unions in a bid to avert a strike which could paralyse the Republic's fixed-line telephone network.

http://www.ireland.com/newspaper/breaking/2007/0711/breaking12.htm

Note for those who don't know eircom is owned by BNB

[barnz2k]

down almost 10% over the last week. might be good time to get in.
see what spare change I can find..

(while thinking I should not buy shares before moving to london without a job but also not caring so much lol)

[Kravis]

great thread.
I am also a long term holder of bnb. I got in at the float and havnt looked back or sold since.
Phil and his team are first class and i wouldnt sell this stock when there is so much talent at bnb. Remember MBL back in 2000/01 was trading at 21-22 at the time of the Sydney Airport takeover and Alan Jones saga. The perception of the public kept the stock steady.
I believe the same thing is happening at bnb. They just took over Alinta! Look at the assets they hold, predominately energy. These assets are core and pure.
Let this market hype pass and ignore sentiment. If you have spare change continue to top up sensibly.

[barnz2k]

Noticed yesterday there was always huge volume.
Just people scared by the falling price and similar concerns with mbl?
However BNBs ann suggested they have an insignificant part in it and should not be affected in the same way.

I think I will try and get in today or tonight when I can sort some cash out.

[barnz2k]

Well hopefully this is the bottom cause im in now :)
Was hoping for just a slight increase today but down slightly.
See how things go monday morning!

[Lachlan6]

What started this fall was quite possibly the nastiest of divergences in the OBV. This is such a clear sign that the insto's are heading for the door, for whatever reason to switch elsewhere. It occured on the three seperate highs in May and June, which led to BNB getting severly punished. It has capitulated now to a support level which may hold it up in the interim and dont be surprised to see a small bounce from here. The other interesting thing about this level, is it is exactly the 50% retracement level from the similar capitualtion in 2005.

However surely the long term picture is still rosy at BNB, just look at the projected profits. So although the short term doesnt look amazing (apart from a likely bounce) if there is a reversal around these levels, it may be a good low risk entry point for a long term hold.

[barnz2k]

Another dollar or 4.11% down today. 15% in one week!
Volume picked up again today also to 4mil.
But again, its along with the rest. Be an interesting week!

[DOC]

hi,
i was lucky enough to get in at IPO for $5 and sold at around $15. thnks trcom.
But currently hovering around again with the rest of the vultures for another buy oppertunity. looks like support around $25, but with tonights news from the US:

<Aug. 9 (Bloomberg) -- BNP Paribas SA, France's biggest bank, halted withdrawals from three investment funds because it couldn't ``fairly'' value their holdings after U.S. subprime mortgage losses roiled credit markets.
The funds had about 1.6 billion euros ($2.2 billion) of assets on Aug. 7, after declining 20 percent in less than two weeks, spokesman Jonathan Mullen said today. The bank will stop calculating a net asset value for the funds, which have about a third of their money in subprime securities rated AA or higher. >

looks like i'll fly around a few more times before jumping in.

still a great stock with good core values, management, and future earnings.

cheers,
Doc

DO YOUR OWN RESEARCH, SEEK PROFESSIONAL ADVICE FROM A QUALIFIED PERSON. NOT ME!:o

[DOC]

Come to think of it, i'm better off buying shares in Mcdonalds (MCD). they are the only thing thats up on the US market at $51 and at around 52 week highs.
Man I should have known those burgers would turn out to be good for you somehow!
Seriously, I know we are not looking at US stocks, but this ones got some merit!

Bring back the hamburglar and grimas!

cheers,
Doc

[kerosam]

with the DOW down early, i think BNB might take a hit when they open. tomm... using incredible chart, its touching the low of its long term uptrend (5th May 2005)... support is $24.90.

comments? first time commenting on a chart. be gentle.:o

[BIG BWACULL]

with the DOW down early, i think BNB might take a hit when they open. tomm... using incredible chart, its touching the low of its long term uptrend (5th May 2005)... support is $24.90.

comments? first time commenting on a chart. be gentle.:o
Personally the dow being down will give us all a punch in the face :banghead: AGAIN :mad: But im in the marathon and not a sprinter so,
Oh well Bye Now :hide:

[barnz2k]

Personally the dow being down will give us all a punch in the face :banghead: AGAIN :mad: But im in the marathon and not a sprinter so,
Oh well Bye Now :hide:

Down 6.8% now, But as BBW says, im in it for longer term and I think once all this gets sorted out bnb will continue uptrend. and BNB stated last week they have insignificant exposure relating to sub prime market issue.

[golfmos123]

Good time to go long (ish) on BNB INMO. Have jumped in today for a big lick of stock (for me!) under $24, just can't see it falling much further unless the DOW has another coronary shortly. Don't forget this stock has been in the $34's only a couple of months back and little has changed with fundamentals. Alinta takeover news will of course help.

I'm in it to try to make a relatively easy 10-15% in just a few weeks and gracefully (and gratefully) exit again. I just don't think this can go wrong short term from $24 or long term either for that matter, it is just too good a business.

Am I too bullish here????:sly::sly:

[nomore4s]

Good time to go long (ish) on BNB INMO. Have jumped in today for a big lick of stock (for me!) under $24, just can't see it falling much further unless the DOW has another coronary shortly. Don't forget this stock has been in the $34's only a couple of months back and little has changed with fundamentals. Alinta takeover news will of course help.

I'm in it to try to make a relatively easy 10-15% in just a few weeks and gracefully (and gratefully) exit again. I just don't think this can go wrong short term from $24 or long term either for that matter, it is just too good a business.

Am I too bullish here????:sly::sly:

You're a lot gamer than I am thats for sure, with the financial sector copping a hiding lately (not just here but in overseas markets as well) there could be alot more downside to come yet.
The FTSE is currently down 3% :eek: and the Dow looks like opening another 100 points down, so Monday might not be a good day for us either.

There seems to be a bit of panic in the world markets atm, which means no matter how good the fundamentals are the price could drop. Also maybe $34 was overpriced? (not saying it was or wasn't just asking the question)

Good luck with your trade.

[reece55]

Good time to go long (ish) on BNB INMO. Have jumped in today for a big lick of stock (for me!) under $24, just can't see it falling much further unless the DOW has another coronary shortly. Don't forget this stock has been in the $34's only a couple of months back and little has changed with fundamentals. Alinta takeover news will of course help.

I'm in it to try to make a relatively easy 10-15% in just a few weeks and gracefully (and gratefully) exit again. I just don't think this can go wrong short term from $24 or long term either for that matter, it is just too good a business.

Am I too bullish here????:sly::sly:

Golf,
You could equally say that BNB was a $5 float some 2.5 years ago, so why shouldn't it go back to $15????

Investment Bank + Liquidity crisis = losing money on investment.

Just my 2 cents though.....

Cheers

[Kravis]

Fear is a powerful dictator during times of exeburence.
We must remember Babcock and Brown have been around along time, since 1977. We must remember that they have a superior management team run by the best mind in the financial game (Phil Green). We must remember that they are continuously (and yes during these 'sub prime' times) buying quality assets (Alinta/Portuguese toll roads).

The bigger long term picture is better to envisage rather than the short term squiggly line that the charts produce. This is a business that owns and operates quality assets run by high calibre people who have their net worth in the business. Running with the herd short term is the easy option. Standing away from it and cutting out the noise is hard to do, but essential during these times especially for the long term quality businesses.

[Boggo]

My :2twocents worth, its gotta be near the bottom (didn't someone say that earlier :confused: )

Big sellers and big buyers, obviously two opposing views of what its worth.

Mike

[tcoates]

As indicated in the eureka report today (?) fundamentals don't count for much a the moment - there appears to be a mass exodus. And companies cant put out statements like 'business is fine - same as yesterday' each day.

Tim

[Kravis]

"And companies cant put out statements like 'business is fine - same as yesterday' each day."

Why not?
Irrational selling is exactly what is needed to buy into companies that have sound management are profitable and great continued growth for the long term. The whole point is to be greedy when others are fearful but the hard part is determining when to ignore the herd and buy and hold quality.

[vishalt]

i cant believe it, just months ago i was looking at BNB at $32 and saying "i shouldve just held on to it when it was consolidating at $19, SILLY ME!" - and its almost back lol.

i've been following these guys for ages - and as another poster mentioned - BNB management are very good and experienced, and that was proven when they beat superpower Macquarie Bank for Allinta.

im accumulating these will all come back even if itll take several months.

next stop $18 and then the drops stop (i hope)

[hacheln_mice]

"And companies cant put out statements like 'business is fine - same as yesterday' each day."

Why not?
Irrational selling is exactly what is needed to buy into companies that have sound management are profitable and great continued growth for the long term. The whole point is to be greedy when others are fearful but the hard part is determining when to ignore the herd and buy and hold quality.

--------------
You are right, BUT there is no need to try and be a hero by stepping in front of a freight train. It's better to be a little late than a little early in this sort of environment. The next fib retracement support should be at 18.7.

[sleeper88]

hmmm..my beloved bnb..is sinking fast..approx 70% of my on paper profits have been erased!!!..time for me to reassess my position :sly:

[Mumbank]

Yep it certainly is time to re-assess. BUY MORE !!!! This is an outstanding price for this stock. I know the world is in a state of panic, but its just a hiccup that had to happen IMHO.

As the great KP said, buy when everyone is selling and sell when everyone is buying.

[hacheln_mice]

A picture is worth a thousand words, and so here's a chart of BNB for your viewing pleasure. Personally, I think 18.7 should hold, but nothing is for certain.

Lol, minutes after saying 18.7 should hold, it goes sub 18!!! Talk about panic.

Good luck to those holding this.

[sleeper88]

Yep it certainly is time to re-assess. BUY MORE !!!! This is an outstanding price for this stock. I know the world is in a state of panic, but its just a hiccup that had to happen IMHO.

As the great KP said, buy when everyone is selling and sell when everyone is buying.

Well u gotta be very brave to top up now..im gona sit on the fence for a while..i've lossed enough and im not willing to take the risk in this kinda market..its gona take a hell lot longer for the markets to recover..many investors are scared sh_tless..time to build up my war chess..and look to re-enter after the panic is truely gone. Its better to follow the crowd..rather than be the brave on in situations like this..(but then again..fortune favours the brave)

[barnz2k]

never thought it would get this low, almost half of its recent high of $35.

and yeh its gonna take longer than thought to recover I think.

Just hope it DOES recover and all this clears up soon.

I definately jumped the gun on this one.

But, still, I think their fundamentals are still strong, and once (if?) the market gets back to trading on something other than fear and rumors, it will be strong.

[Kravis]

"BUT there is no need to try and be a hero by stepping in front of a freight train."

Hero?
I guess I might be missing something or maybe not just not smart enough to know when to pick the bottoms, but then again im not a trader. But I just could be speaking of holding BNB since listing and see no reason to be fearful.
The point in making is that if you buy quality it really doesnt matter what price you get if you are a long term investor have no 'exit' strategy. Be it 26 a few days ago or 19 today or 15 tomorrow.
Anyway, I enjoy the posts.

[FlaminInvestor]

hey

just bought at $20.50!

Couldnt be happier! it went up about 3.5% today on my buy!

Cant believe the doom sayers, BNB are a good stock.. just now its at a GREAT PRICE!!!

lol i would piss myself laughing if Macquarie made a bid for them at this lower price..


cheers

[barnz2k]

im still way off on my buy in which was far to early at $26. Still they were Pushing $34 not that long ago. Ill be happy if they get back up to around $30 in the not so distant future. Wait.. thats almost 40% from its current position... maybe ill be waiting a while..
And might see further lows yet..

In it for the lonig run i guess!

LOL@ MBL buying BNB

[golfmos123]

Same story for me too - got in just last week at high 23s and thought it an absolute bargain as have been watching for a while. Then last Thursday came and $$ went!!

I'm only was only in this one for a relatively easy 10-15% but now things have changed that's for sure. Still, it's a high qual stock and it can only go up from here.....

[Boggo]

Bought into BNBIMA instalment at 1.17 and again at 0.72. Went against my policy of buying on the way down but in the case of BNB I make an exception.

Expiry of Dec '07, they may soon announce a dividend for Oct or Nov.

Mike

[Nicks]

Firstly, I cant see MBL making a bid for BNB due to ACCC (that rhymes!).

Also, MBL is a garbage stock, an Enron waiting to happen. Often referred to as a House of Cards - they re value their assets and then leverage against the revalues to boost EPS and pay dividends - totally unsustainable and bordering on negligent.
BNB on the other hand is quality. They simply do their business and do it welll with out any of the hidden black box magic of Macquarie. They invest, make money from management fees and returns on their investments and funds.
In short, BNB good, MBL bad.

DYOR, my opinions only.....

[barnz2k]

Firstly, I cant see MBL making a bid for BNB due to ACCC (that rhymes!).

Also, MBL is a garbage stock, an Enron waiting to happen. Often referred to as a House of Cards - they re value their assets and then leverage against the revalues to boost EPS and pay dividends - totally unsustainable and bordering on negligent.
BNB on the other hand is quality. They simply do their business and do it welll with out any of the hidden black box magic of Macquarie. They invest, make money from management fees and returns on their investments and funds.
In short, BNB good, MBL bad.

DYOR, my opinions only.....

Pretty much why I wanted to get in on BNB and jumped gun. More I saw/read about BNB they just sounded more... professional.. Their anns were more often and made more sense to me as well, something I really liked about th em.

Just wish Id got out of MBL at $100 and used that cash for my BNB buy in.

Recovering strong again, currently $22.8.
Thats 20% in 3 days.

[DOC]

Pretty much why I wanted to get in on BNB and jumped gun. More I saw/read about BNB they just sounded more... professional.. Their anns were more often and made more sense to me as well, something I really liked about th em.

Just wish Id got out of MBL at $100 and used that cash for my BNB buy in.

Recovering strong again, currently $22.8.
Thats 20&#37; in 3 days.

Hi,
I was wondering of what peoples thoughts are on these two investment banks, namely BNB? What price range do you think they may trade between for the rest of the calender year?
And Barnz, you bought MBL at $100, I still think MBL have a great model for success with some definite upside in them at these prices, but at $100 was it just a punt or something else?

I bought BNB at 18.83 on that sea-saw day the other week, IMO the only way is up for these guys. Anyway time will tell. Maybe a long time at that.

Thanks for the interesting posts.:):)

doc

[Ken]

I see BNB and MBL being determined by what happens in the US

This stocks are now the scape goat for any US falls.

So in effect BNB and MBL might just be some extra leverage to the DOW in the short term whilst everyone has Sub-prime on their minds.

Was much the same with BHP and the price of Copper when BHP was $24.00

Copper falls by 5&#37; Bhp falls by 5%.....

Even though BHP was more than just copper.

Thats the way it all works....

Long term, you would think they have enough cash to make it grow thus creating shareholder wealth.

[barnz2k]

Hi,

And Barnz, you bought MBL at $100,

doc

No i bought in at $81, I wish I had SOLD at $100, would have been a nice fast 20%. I didnt sell as I had planned long term and thought it would settle back to around $90.. no idea it would hit low 60s just weeks/months later!

I still pretty much had the general public view of MBL, and that it would stay strong. So like I said more I learned about it bnb sounded better.

Now I agree with Ken though - even though its not really justified for BNB as they have less interest in the area to be affected - they are coping it, right or wrong. So if/when/where this all settles will playa big part in it. Long term though, as long as something major doesnt happen, I see them continuing up in the end.

But there has to be better stocks for short term - out of the financial sector all together!

[reece55]

Firstly, I cant see MBL making a bid for BNB due to ACCC (that rhymes!).

Also, MBL is a garbage stock, an Enron waiting to happen. Often referred to as a House of Cards - they re value their assets and then leverage against the revalues to boost EPS and pay dividends - totally unsustainable and bordering on negligent.
BNB on the other hand is quality. They simply do their business and do it welll with out any of the hidden black box magic of Macquarie. They invest, make money from management fees and returns on their investments and funds.
In short, BNB good, MBL bad.

DYOR, my opinions only.....

Nicks
From an accounting perspective, I couldn't agree more with you here...

To me, BNB is the pick of the investment bank style entities (i.e. MBL, CGF, AFG, etc). There are two things that really stick out for me here with BNB that make them a class above the rest -

1). Their earnings are clearly transparent and their disclosure, even down to a business segment basis, is exemplary. Mark to market revaluation are at a minimum, there satellite funds have a clear distribution policy that pays distributions from OPERATING CASH FLOW (unlike the other mob of crooks). All in all, they are capturing recurring annuity style income that is based on sound fundamentals.

2). They always deliver to the market. When they set market guidance, they deliver.

I'm not sure this is the stage in the investment cycle that you want to invest in it, but clearly in my mind this is a must have in a long term portfolio (Super, etc).

The other reason why MBL could never take out BNB is that it is almost 45% owned by it's staff - I don't think they would ever resolve to be taken over (well, over Phil's dead body anyway)!

Cheers

[DOC]

Nicks
From an accounting perspective, I couldn't agree more with you here...

To me, BNB is the pick of the investment bank style entities (i.e. MBL, CGF, AFG, etc). There are two things that really stick out for me here with BNB that make them a class above the rest -

1). Their earnings are clearly transparent and their disclosure, even down to a business segment basis, is exemplary. Mark to market revaluation are at a minimum, there satellite funds have a clear distribution policy that pays distributions from OPERATING CASH FLOW (unlike the other mob of crooks). All in all, they are capturing recurring annuity style income that is based on sound fundamentals.

2). They always deliver to the market. When they set market guidance, they deliver.

I'm not sure this is the stage in the investment cycle that you want to invest in it, but clearly in my mind this is a must have in a long term portfolio (Super, etc).

The other reason why MBL could never take out BNB is that it is almost 45&#37; owned by it's staff - I don't think they would ever resolve to be taken over (well, over Phil's dead body anyway)!

Yes and another 40% is probably owned by the eastern suburbs mafia, but who knows.

[voigtstr]

Its still good value at the moment isnt it?
Thinking of buying some on Monday (unfortunately not cashed up enough for 2k, will prolly get 1.2k worth)

[dj_420]

Has anyone noticed the rather large buys sitting on BNB this morning?

That top bid at $26 is around an $18 million dollar transaction, hedge funds, institutions, or deep pockets buying in? The top four bids bring in around $20 million of value.


No worries... just found out it is options expiry, i thought something crazy had happened! like the all ords would open up 5&#37;

[roland]

Just sold my BNB @ $29.70 up 20% for me in a month. I have a real issue with taking profits, but have so often seen these things zoom up and then come crashing down.

I am now sitting on a wad of cash looking for a home - is this "sellers remorse"

Would like to get some opinions on knowing when enough profit is enough, or when to take the profits. (of course the obvious answer is never enough).

[dj_420]

A number of brokers have $36 targets on BNB, I personally will be waiting for BNB to break old highs then sell. Still a lot of room to move.

This stock has recovered very well from correction.

[roland]

A number of brokers have $36 targets on BNB, I personally will be waiting for BNB to break old highs then sell. Still a lot of room to move.

This stock has recovered very well from correction.

Yes, I agree that it has further to go - but isn't it better to grab a few profits on a good rise, then buy back on a dip. It just can't keep going up 2% per day forever......

[dj_420]

Yes, I agree that it has further to go - but isn't it better to grab a few profits on a good rise, then buy back on a dip. It just can't keep going up 2% per day forever......

Lol, yes I agree with that. I have great entry on BNB at 20.40 from correction so I am quite willling to hold for now.

[roland]

Yes, I agree that it has further to go - but isn't it better to grab a few profits on a good rise, then buy back on a dip. It just can't keep going up 2% per day forever......

I wonder if this is the dip I was waiting for? Anyone have thoughts on how far BNB will fall? A chart on BNB would be nice with some commnets. Thanks

[barnz2k]

nothing in here for a week.
Wondering how well they will hold up today if there is a big fall following the US. They got hit hard last time unfairly, but the US fall isnt a direct blame on the industry this time so maybe not as harsh?

[nikkothescorpio]

I would be amazed if BNB isn't one of the most heavily sold off stocks on the ASX today.

Right or wrong it will be clobbered today as its very US sensitive - mayabe less so with the sell off of some of its US exposure that i believe was annouced recently. I'd be looking for it to be back at the $24 mark during this week.

[TheAnalyst]

BNB is looking really good....should see some good rise from here.....it is coming into its season now......and its earnings is still growing from the last couple of announcements...its even had its ABC wave hello..

[roland]

BNB is looking really good....should see some good rise from here.....it is coming into its season now......and its earnings is still growing from the last couple of announcements...its even had its ABC wave hello..

Yes, it's a pity the dividend return sucks, otherwise I would hold longer. I am happy playing the swings. With the upside potential there is almost no risk. BNB is one hell of a great stock :cool:

[L plates]

BNB is looking really good....should see some good rise from here.....it is coming into its season now......and its earnings is still growing from the last couple of announcements...its even had its ABC wave hello..

Yeh, I agree. As a new student of EW I actually took this trade believing that the (a) (b) (c) has just completed wave (4) and is now going on to wave (5). I'm thinking that up to about $35 is possible, there may be some resistance at $30. Should be interesting day on Monday as Friday's vol was very high and it closed near its high for the day

748 - 2794 4:10:43 pm 2900 121,237 4 $3,515,873 47
A good strong purchase at $29.00 after the close.

Cheers

[michael_selway]

Yeh, I agree. As a new student of EW I actually took this trade believing that the (a) (b) (c) has just completed wave (4) and is now going on to wave (5). I'm thinking that up to about $35 is possible, there may be some resistance at $30. Should be interesting day on Monday as Friday's vol was very high and it closed near its high for the day

748 - 2794 4:10:43 pm 2900 121,237 4 $3,515,873 47
A good strong purchase at $29.00 after the close.

Cheers

Yeah its not bad, maybe getting a bit expensive if u look at short term

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 115.4 163.8 193.9 216.9
DPS 36.0 50.7 59.6 67.8

thx

MS

[TheAnalyst]

Well, it broke $30 today, and once again the earnings forecasts are to be ignored on this stock, as they are always out doing something new, so the earnings forecast cant be taken as gospel.....same happens to MacQuarie Bank.

[L plates]

Yep, it looks all good to me.
To me the push above $30 confirms a wave (5)
All other indicators that I use are looking strong.
First target (after next resistance of $32.40) around $32.70 Any thoughts?
:)

[TheAnalyst]

To me all evidence points to a preAugust price recovery, and then to break its previous share price high.

[ehwebba]

good buying BNB now i thinks, 27ish seams like a bargain, looks like 35 in the near future , i know that ill be in there. sounds interesting eh

[Mr_T]

What is going on with this share?

It seems to keep dropping.

Most frustrating thing is that we hear very little from this firm, except when they have an announcement to make about an acquisition, etc.

[profithunter]

Speculation a major australian bank is about to announce sub prime losses

"Trinh added that currency markets were unsettled Wednesday, with the Australian dollar rallying against the U.S. dollar in early trading before selling off on market talk that a major Australian bank could be about to announce losses related to investment in U.S. sub-prime mortgage securities."

I dont know about this - BNB said they dont have exposure

[Mr_T]

Speculation a major australian bank is about to announce sub prime losses

"Trinh added that currency markets were unsettled Wednesday, with the Australian dollar rallying against the U.S. dollar in early trading before selling off on market talk that a major Australian bank could be about to announce losses related to investment in U.S. sub-prime mortgage securities."

I dont know about this - BNB said they dont have exposure

What? Are you saying there's a risk BNB has material sub-prime exposure, despite their denials to the contrary?

[roland]

No matter where you look, which broker you reference or which report you read - BNB is an absolute bargain.

Even last night when I received my Comsec report, they are suggesting that BNB is an extremely rare chance not to be missed. The target 12 month target now stands at $35 with an expected 12 month SP earnings forecast exceeding 30%

In my opinion, and fall now is an opportunity to grab some more stock. If necessary, I'll be selling other non performing stocks to follow BNB down. It's a pity that the dividend return is not so good :confused:

BNB is tied to the bad taste of sub prime and is put into the same box as others in the financial tagged stocks and suffers accordingly. Funny thing is, BNB is relatively un-exposed to sub prime lending and probably shouldn't be punished as badly as it has been.

The BEI satellite is being seen as a peripheral failure and got punished. Coinmach seemed like a pretty good investment to me - but got punished again today, I guess share holders don't like seeing money being spent which is pretty odd when you hold shares in a company where this is their core business.

The market responded a little better with the Melbourne Children's Hospital deal.

I didn't check, but was told by a trader friend of mine that Macquarrie is being treated similarly.

IMO BNB is a buy, buy, buy - there is no need to take a loss on this baby. :cool:

[Mr_T]

No matter where you look, which broker you reference or which report you read - BNB is an absolute bargain.

Even last night when I received my Comsec report, they are suggesting that BNB is an extremely rare chance not to be missed. The target 12 month target now stands at $35 with an expected 12 month SP earnings forecast exceeding 30%


Any chance of cutting and pasting an important paragraph or two of this report? Would be much appreciated if you could.

[roland]

Any chance of cutting and pasting an important paragraph or two of this report? Would be much appreciated if you could.

Here you go:

Opportunity to profit from fear

Australian investment banks have underperformed the market since the onset of the subprime turmoil. Sentiment has been dragged down by record losses in US and European banks. This is an extraordinary buying opportunity for some stocks in this sector.

Investment banks around the world have been hit by a crisis of confidence. US banks have so far written off over US$50B worth of mortgage-related losses in 3Q, and the market is expecting further write-downs over the coming quarters, up to a possible tune of US$200B if not more. The
trouble is no one, including the banks themselves, can quantify the full extent of their losses with any certainty, as the market for these investments has all but dried up.

With so much uncertainty hanging over the market, investors appear to have lumped all investment banks into the same boat, and we believe this is an opportunity to profit from fear. Most Australian investment banks, particularly Allco Finance (AFG) and Macquarie Group (MQG), have been
oversold even though they have little or no direct exposure investments that are primarily responsible for the massive write-downs in Europe and the US.

If anything, most in the sector have issued relatively positive outlooks, although these were laced with caution. The reason why AFG, MQG and Babcock & Brown (BNB) are relatively insulated from the sub-prime mess is because they mostly deal with physical assets. For instance, a large part of
BNB and MQG’s business is based on buying and “repackaging” infrastructure assets, while AFG is predominantly into leasing aircrafts and ships.
This is not to say their businesses are without controversies. BNB and MQG have received criticisms over underperforming satellite funds. This has prompted BNB to propose buying over Babcock & Brown Environmental Investments (BEI). The offer is valued at $0.508 per BEI share, but this is
unlikely to please all, since some paid $1.75 or more at its IPO.

The perception of the potential lack of acquisition opportunities has also weighed on the investment banks. However, we would not be surprised to see a pick up in acquisition activity, as there are still plenty of good infrastructure assets globally that are there for the taking.

Since all three investment banks rely heavily on overseas credit markets to fund activities, investors have been worried that the credit turmoil would impact their bottom lines. Although the cost of debt has risen worldwide, the banks do not seem to have much trouble raising funds. Last week, MQG
successfully closed a loan syndication healthily oversubscribed.

Meanwhile, MQG faces other challenges. A large portion of its revenues comes from share marketrelated activities, such as brokerage and M&A advisory and underwriting. In revealing its record $1B 1H08 profit, MQG said that its profit was boosted by unsustainably strong equity markets.

While we have factored this into our model, we note that MQG is well placed to profit from the booming Asian economies and there is likely to be continued strong demand for its M&A advisory services. BHP Billiton’s bid for Rio Tinto could spark more consolidation in the industry, while the Utilities sector is another that could experience a pick up in merger activity in the months ahead.

[Mr_T]

Thanks Roland!

It's much appreciated. What is interesting is that the report acknowledges that in the short term there will be a fall, but says the fundamentals are there for a medium term rise.

[roland]

Thanks Roland!

It's much appreciated. What is interesting is that the report acknowledges that in the short term there will be a fall, but says the fundamentals are there for a medium term rise.

Yes, in my opinion, it is a very exciting chance to grab some more stock if you have the $$$'s. I did this last time it came down to this level and sold as it started climbing again. My method with BNB is to play the dollar movements and buy as it falls. It takes a lot of my capital, but I am confident that any fall is only temporary.

This is just my trading style with this stock and not a recomendation - please do your own research

[Mr_T]

I'd be interested in hearing what people's views are of the announcements of the last few days. Anyone have some knowledge about these projects that they would like to share?

[RichKid]

As a caution, consider the fact that some stocks can wallow far below their perceived 'value' or broker valuation, just as much as they can fall far below apparently strong technical 'support'. Anything can happen.

As someone studying to be a technical trader, I will be observing the nature of the test and response of the market as we travel towards those recent lows- an area, presumably, that is considered to be a 'value' buying zone as evidenced by the strong price rejection at those lows (consider some of motorway's descriptions of Wyckoff style tests in his various posts).

Market participants can and do panic and sell assets at any price when they finally succumb to the weight of their losses, not knowing what else to do they sell in grief and misery. Whether this is rational behaviour or not matters little, but it is common place as many stock charts will show (also see the comments by ASF posters in the major stock threads (with the most participants) here on ASF and compare their sentiments to the price charts- merely anecdotal but useful).

Elliott Wave theorists, especially those at Elliott Wave International, and some of the posters here on ASF use sentiment indices as a guide as well, although I'm unaware of any broadbased surveys or accurate sentiment indicators for the Australian Market. So, IMHO what counts is shown on the stock chart.

It may well be that the powerful buyers who move markets have decided that their buy level is well above the August lows so the nearby price levels are worth watching. OTOH they may believe that although it is below fair value they can get it even cheaper than at the recent lows. This is a highly liquid stock, especially after the release of more shares since listing, and worth studying to learn about how markets trend.

[roland]

As a caution, consider the fact that some stocks can wallow far below their perceived 'value' or broker valuation, just as much as they can fall far below apparently strong technical 'support'. Anything can happen.

As someone studying to be a technical trader, I will be observing the nature of the test and response of the market as we travel towards those recent lows- an area, presumably, that is considered to be a 'value' buying zone as evidenced by the strong price rejection at those lows (consider some of motorway's descriptions of Wyckoff style tests in his various posts).

Market participants can and do panic and sell assets at any price when they finally succumb to the weight of their losses, not knowing what else to do they sell in grief and misery. Whether this is rational behaviour or not matters little, but it is common place as many stock charts will show (also see the comments by ASF posters in the major stock threads (with the most participants) here on ASF and compare their sentiments to the price charts- merely anecdotal but useful).

Elliott Wave theorists, especially those at Elliott Wave International, and some of the posters here on ASF use sentiment indices as a guide as well, although I'm unaware of any broadbased surveys or accurate sentiment indicators for the Australian Market. So, IMHO what counts is shown on the stock chart.

It may well be that the powerful buyers who move markets have decided that their buy level is well above the August lows so the nearby price levels are worth watching. OTOH they may believe that although it is below fair value they can get it even cheaper than at the recent lows. This is a highly liquid stock, especially after the release of more shares since listing, and worth studying to learn about how markets trend.

Wow, what a response Richkid, makes me sound very simplistic. I am an emotional trader - wouldn't know the first thing about charts :eek7:

What I do know is how a stock trades almost every second of the day - since my work allows me to have my eyes glued to the chart - I could almost tell you about every trade that was made with all of my stocks on my watchlist.

This develops into quite an aptitude in picking up what is happening from a trade by trade perspective - totally non technical! Now adding my own research, reading every snippet of news, soaking up all the broker consensus I can find of the stock in question, you start to develop a "feeling". Now if I could combine the technical side with this - wow, I think I would have it all.

In my mind, there is no way known to man, short of war, famine or natural catastrophe that will stop BNB from going above $30 in the not too near distant future. How much I can capitalise on this is determined by how much further it will drop and how much of some other dog stock I am willing to let off it's leash :D

My opinions only - OK

[RichKid]

Wow, what a response Richkid, makes me sound very simplistic. I am an emotional trader - wouldn't know the first thing about charts :eek7:

What I do know is how a stock trades almost every second of the day - since my work allows me to have my eyes glued to the chart - I could almost tell you about every trade that was made with all of my stocks on my watchlist.

This develops into quite an aptitude in picking up what is happening from a trade by trade perspective - totally non technical! Now adding my own research, reading every snippet of news, soaking up all the broker consensus I can find of the stock in question, you start to develop a "feeling". Now if I could combine the technical side with this - wow, I think I would have it all.

In my mind, there is no way known to man, short of war, famine or natural catastrophe that will stop BNB from going above $30 in the not too near distant future. How much I can capitalise on this is determined by how much further it will drop and how much of some other dog stock I am willing to let off it's leash :D

My opinions only - OK

Hi roland,

We are actually using different methods to make money from the market (or lose it as I often do!), as long as we come out ahead in the long run and meet our investment goals then all is well! I'm not disparaging your method but merely describing a bit of mine. It's good to avoid another fundamentals vs TA debate as there are many posts on that on ASF already.

There are technical traders watching BNB too so my post might awaken a bit of interest in them. I do look at fundamentals as a filter when looking at the risk profiles of co's so I have an interest in some broker reports. Most long term investors don't use stop losses so the levels I've described above are less relevant to these investors- but very important to technicians who use stops. On a personal note, I'm in no way suggesting that you are prone to buy or sell in an emotional mess or through ignorance; many people in the markets (including exponents of TA) do panic but I can see from you posts that you are likely to make a decision carefully after due consideration and according to your style.

All the best with BNB guys, whichever way you trade it, always enjoyable to discuss stoxxxxx!!!

[roland]

Hi roland,

I'm not disparaging your method but merely describing a bit of mine. It's good to avoid another fundamentals vs TA debate as there are many posts on that on ASF already.

All the best with BNB guys, whichever way you trade it, always enjoyable to discuss stoxxxxx!!!

RichKid, I didn't consider myself disparaged in any way and hope you could summarise your thoughts in a less technical way. I've now got $90K tied up in BNB, so I am all ears (or eyes in this case) :)

[RichKid]

RichKid, I didn't consider myself disparaged in any way and hope you could summarise your thoughts in a less technical way. I've now got $90K tied up in BNB, so I am all ears (or eyes in this case) :)

glad that's ok....guess it's hard for a technician to be less technical, I do tend to rant a bit. I'm basically looking for this counter-trend on the weeklies and monthlies to end so that I can go long, currently looking for evidence that the ct had ended. All the best with your position!

[michael_selway]

glad that's ok....guess it's hard for a technician to be less technical, I do tend to rant a bit. I'm basically looking for this counter-trend on the weeklies and monthlies to end so that I can go long, currently looking for evidence that the ct had ended. All the best with your position!

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 115.4 165.0 195.8 221.8
DPS 36.0 50.7 59.6 67.8

Not too bad actually


Date: 21/11/2007
Author: Nigel Hopkins
Source: The Australian Financial Review --- Page: 8
Adelaide is a leader in Australia's commercial real estate market. Itsgreen credentials have been noted by the Green Building Council and the PropertyCouncil of South Australia in 2007, such as holding 81,000sq m of office spacewith high Green Star ratings. There is also speculation that the Babcock &Brown and Hines Group's Conservatory mixed-use development will become amarket leader under the Australian Building Greenhouse Rating (ABGR)

[Mr_T]

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 115.4 165.0 195.8 221.8
DPS 36.0 50.7 59.6 67.8

Not too bad actually
It's very good.

Only problem with forececasts are that they are just that: forecasts. In reality the future is never that predictable. Yes, the near future is fairly predictable, but the further away something is in time, the less predictable it becomes.

[Mr_T]

It's incredible. The rest of the market goes down, BNB goes down with it. The market goes up, BNB hardly moves.

I wonder if there's something they are hiding. The official forecast figures are all sugar and spice, yet the downward trend of the share price indicates that some people might know something we don't (I am suggesting this as a possibiliy, not a certainty).

[roland]

Hang in there Mr T, there are knowns that are known, some uknowns that are known and some unknowns that remain unknown or something like that.

[Mr_T]

Hang in there Mr T, there are knowns that are known, some uknowns that are known and some unknowns that remain unknown or something like that.

Roland,

Are you trying to tell us something that you know that we don't? If so, could you give us a hint?

[thierry]

Yeah, disappointing performance today.. It usually follows the market, or at least does what MQG does..

There was some negative news on one of their investment arms, and the bailout of their environmental fund.. that's probably what is holding them back at the moment unfortunately.

[Mr_T]

Another day where the market is up and BNB is down. How depressing.

BNB directors, I sincerely hope you aren't keeping things that should be public knowledge from the public.

[roland]

Another day where the market is up and BNB is down. How depressing.

BNB directors, I sincerely hope you aren't keeping things that should be public knowledge from the public.

Mr T, if you read back a page where I posted the Aegis report, you will notice that there is an expected weakness right now - even down to a low of $24.60. Until the SP consolidates around this level (or even lower) then you would expect some weakness and volatility.

I would agree with the Aegis research that we are sitting in a good opportunity for accumulation for longer term growth. Right now is probably not the time for short term trading.

Just my opinion OK

[Mr_T]

Mr T, if you read back a page where I posted the Aegis report, you will notice that there is an expected weakness right now - even down to a low of $24.60. Until the SP consolidates around this level (or even lower) then you would expect some weakness and volatility.

I would agree with the Aegis research that we are sitting in a good opportunity for accumulation for longer term growth. Right now is probably not the time for short term trading.

Just my opinion OK
Yes, you are right. Just that I still have bitter memories of investing in ION a few years back, where the directors kept coming out with "everything's great" when it clearly wasn't.

Anyway, it's way up now compared to earlier on today, so that is a relief.

BTW, i'm not a short term investor, but short term downward fluctuations still hurt like hell.

[roland]

Yes, you are right. Just that I still have bitter memories of investing in ION a few years back, where the directors kept coming out with "everything's great" when it clearly wasn't.

Anyway, it's way up now compared to earlier on today, so that is a relief.

BTW, i'm not a short term investor, but short term downward fluctuations still hurt like hell.

I'm a short term investor as well and sold some BNB at $26.00. If the stocks I hold go backwards - then I become a long term investor :)

[Mr_T]

According to this article (by the great Alan Kohler) some of the shareholders of BNB's spin offs are unhappy with the amount those spin offs pay BNB in management fees.

This raises a few issues:
a) What portion of BNB's profit is from management fees from companies it has a minority interest in (ie spin offs)?

b) To what extent is that portion of the profit in jeapordy from other shareholders of those spin offs taking actions like these ones are?

These are very important issues.

Here is the article

http://www.businessspectator.com.au/bs.nsf/Article/Kicked-by-a-cash-cow-9EVWV?OpenDocument&alerts&loc=center

Kicked by a cash cow

The attack by London hedge fund Pendvest Capital on Babcock & Brown Capital (BBC) is a wake up call for both Babcock and Macquarie Bank about the fees they pull out of their infrastructure funds.

Not that hedge funds like Pendvest and is parent Capvest don’t usually have some pretty ritzy fees themselves, of course.

Pendvest was founded by County Cavan-born Seamus Fitzpatrick, and has now bought 5.21 per cent of BBC.

Yesterday Pendvest called an extraordinary general meeting of shareholders to vote on a return of capital, the sale of its major assets and/or the winding up of the fund, as well as the renegotiation of its management agreement with Babcock & Brown.

It’s all rather shocking and inconvenient for the happy fee-merchants at Babcock. If vulture hedge funds start spoiling the party by demanding wind-ups, where will it end?

Seamus Fitzpatrick claims that shareholders in BBC have had a minus 10 per cent return from their investment since the fund went public in 2005, while the ASX/S&P 200 index has grown by 69 per cent.

At the same time Babcock & Brown has apparently pulled $122 million in management fees out of the fund, having put in $200 million at the beginning – a return on investment of 61 per cent over two years.

In a scathing letter to Babcock & Brown management, Fitzpatrick points out that BBC shares are trading at less than half analyst valuations of the business based on a break-up. The stock was trading this week at $4.45, while Credit Suisse recently valued the assets at $11.50 per share.

Yesterday’s notice of meeting from BBC contains three key resolutions: a capital reduction of $2.13 a share and capital return of the same amount, or $425 million; the “sale, IPO or spin-off of the company’s investments in Eircom (the Irish telco) and Golden Pages (the main Israeli directories business) and/or the winding up of the company”; the renegotiation of the terms of the “preferred adviser agreement” with Babcock & Brown.

BBC owns 57.1 per cent of Eircom, in the books at $448 million, and other “associates of Babcock & Brown own another 7.9 per cent. The rest of the company is owned by former employees through a share ownership trust.

By the way, yesterday Eircom put a proposal to the Irish Government to split itself into two divisions – retail and wholesale. It’s a bit ironic because Australia’s telco, Telstra, is fiercely resisting the same thing.

Anyway, the appearance of Seamus Fitzpatrick’s fund on the BBC register demanding the sale of Eircom and/or the winding up of the company is a fascinating development for all infrastructure funds.

There would be many of them, especially those owned by both Babcock and Macquarie, where the fees paid to the manager ensure that the net asset value of the fund is less than the market value of the assets inside it.

[roland]

Valid point Mr T, but you name one "service" provider where the customers are happy about the fees charged.

Both Macquarrie and Babcock & Brown, amongst others, are in the business of making money. BNB have been in the investment bussiness for over 30 years and I am sure that this is not the first time that complaints have been raised.

I am sure that the comments are valid and the management of BNB and others are always treading a fine line between maximising profits for themselves and their shareholders alike. On the other hand they have to price their services accordingly to maintain competiveness and to attract the investors for their satellites.

Being a shareholder, I am not unhappy that they charge a premium and of course from a long list of investment fund managers there will be always some who complain.

I am confident the management of BNB have the expertise to handle this kind of criticism.

[Mr_T]

Valid point Mr T, but you name one "service" provider where the customers are happy about the fees charged.

Both Macquarrie and Babcock & Brown, amongst others, are in the business of making money. BNB have been in the investment bussiness for over 30 years and I am sure that this is not the first time that complaints have been raised.

I am sure that the comments are valid and the management of BNB and others are always treading a fine line between maximising profits for themselves and their shareholders alike. On the other hand they have to price their services accordingly to maintain competiveness and to attract the investors for their satellites.

Being a shareholder, I am not unhappy that they charge a premium and of course from a long list of investment fund managers there will be always some who complain.

I am confident the management of BNB have the expertise to handle this kind of criticism.

At the risk of sounding like a selfishl p*i*k, frankly speaking, I am not concerned about this from an ethical point of view. My concern is 100% based on this as a possible threat to BNB's future profitability. If:

a) These fees are a major portion of BNB's profit; and

b) The shareholders of these satellites find a way to reduce the fees;

then it might have a material impact on BNB's share price.

[roland]

At the risk of sounding like a selfishl p*i*k, frankly speaking, I am not concerned about this from an ethical point of view. My concern is 100% based on this as a possible threat to BNB's future profitability. If:

a) These fees are a major portion of BNB's profit; and

b) The shareholders of these satellites find a way to reduce the fees;

then it might have a material impact on BNB's share price.

Hey being selfish and looking after one's self and where you put your hard earned $$$'s is well justified.

BNB Environmental was a good example, the SP suffered a little on this news. and BNB did the ethical thing on offereing to buy it back and fix it up - albeit at a much lower cost than the IPO - but that's business....

Personally I don't think the fees are the major income earner, I would be more inclined to think that assett growth and dividend return is the major focus and revenue earner.

Mr T, any news you find and highlight is good for learning more about our investment - much appreciated. Being a trader you learn to use both good and bad news. I try to be in a position with BNB where news, good or bad, is an opportunity to either buy or sell. I took today's SP rise to sell a lower parcel and make a profit. I have some higher cost parcels, so I'll hold until my next sell target. If it falls on Monday - I am set to buy again.

I feel with BNB over analysis would be more suited to investors, but I would like more volatility - it's a lot more fun :D

[roland]

Yo, Mr T - seems like we have more good news today. Another Infrastructure Fund finalised and good to see it over subcribed once again. Go BNB!

[Mr_T]

Then why did the share price go down when the news is good? Maybe the news wasn't considered that materiel.

[roland]

Why does any stock go down on good news? Look at Oxiana today, more copper, more income, stock's SP goes down - go figure....

[thierry]

Why does this share get affected by the sub-prime issues..

Does anyone know if any important events/agm, announcments etc are scheduled in the next few days?

Someone posted a broker review of bnb few posts earlier.. I'm interested in knowing what the other brokers are saying about bnb?

[vishalt]

Why does this share get affected by the sub-prime issues..

Does anyone know if any important events/agm, announcments etc are scheduled in the next few days?

Someone posted a broker review of bnb few posts earlier.. I'm interested in knowing what the other brokers are saying about bnb?
Because B&B is essentially an investment bank (albeit an infrastructure accumulating one) and you have to remember that the market has a bandwagon mindset and they'll abandon a whole asset class when **** hits the fan (like subprime).

Key Dates - www.babcockbrown.com.au

Final Results 2007 21 February 2008
Annual General Meeting 30 May 2008
Interim Results 2008 21 August 2008

Dates are indicative only and subject to change

[bewick]

Because B&B is essentially an investment bank (albeit an infrastructure accumulating one) and you have to remember that the market has a bandwagon mindset and they'll abandon a whole asset class when **** hits the fan (like subprime).

Key Dates - www.babcockbrown.com.au

Final Results 2007 21 February 2008
Annual General Meeting 30 May 2008
Interim Results 2008 21 August 2008

Dates are indicative only and subject to change

BNB - UBS has a price target of $36

UBS Investment Research
Babcock & Brown Limited
R aises US$800m US Infrastructure Fund
�� First close of the Babcock & Brown North American Infrastructure Fund
BNB has announced a further diversification of its capital sources, with the
successful first close of a wholesale (unlisted) infrastructure fund focusing on
North American assets. This is particularly encouraging given market concerns
over investor demand for infrastructure assets in the current environment. We
expect the US$800m initially raised for BBNAIF to be expanded in coming
months with final close potentially up to US$2 billion.
�� Ongoing wholesale fund raisings
We expect BNB to achieve further wholesale fund raisings in coming months. The
European Infrastructure Fund (BBEIF) is expected to reach a final close of around
€2 billion (currently €1.6b). BNB could also look to launch new funds with a
broader investment mandate (eg infrastructure, real estate and private equity)
similar to its current Babcock & Brown Global Partners vehicle.
�� BNB’s business continues to rapidly develop
In recent weeks it has also listed Babcock & Brown Air on the NYSE, sold down a
US retail property portfolio and continued to expand its development pipeline.
�� Valuation. Maintain Buy Rating and $36 Price Target (SOTP based)
BNB’s share price has been highly volatile over the last few months given market
sentiment. It is now trading on just 13.5x FY08E despite increased confidence in
its medium term prospects. Drivers: (1) Strong EPSg despite market movements
(2) Expanding capital base & AUM (3) Diversified revenue. Risks: (1) Volatile PE,
especially in the current environment (2) interest rate and market risk.
Highlights (A$m) 12/05 12/06 12/07E 12/08E 12/09E
Revenues 833 1,293 1,920 2,453 2,787
EBIT (UBS) 339 544 835 1,164 1,345
Net Income (UBS) 252 407 608 741 851
EPS (UBS, A$) 0.75 1.17 1.65 1.99 2.28
Net DPS (UBS, A$) 0.23 0.36 0.52 0.64 0.73
Profitability & Valuation 5-yr hist av. 12/06 12/07E 12/08E 12/09E
EBIT margin % 33.3 42.1 43.5 47.5 48.3
ROIC (EBIT) % - 25.1 21.9 21.7 20.2
EV/EBITDA (core) x - 12.6 12.8 10.1 9.3
PE (UBS) x - 17.0 16.5 13.7 11.9
Net dividend yield % - 1.8 1.9 2.4 2.7
Source: Company accounts, Thomson Financial, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items.
Valuations: based on an average share price that year, (E): based on a share price of A$27.18 on 23 Oct 2007 23:41 EST
Jonathan Mott
Analyst
jonathan.mott@ubs.com
+61-2-9324 3864
Chris Williams, CFA
Analyst
Chris.Williams@ubs.com
+61-2-9324 3968
Arvid Streimann, CFA
Analyst
Arvid.Streimann@ubs.com
+61-2-9324 2189
Global Equity Research
Australia
Diversified Financial
12-month rating Buy
Unchanged
12m price target A$36.00/US$32.12
Unchanged
Price A$27.18/US$24.25
RIC: BNB.AX BBG: BNB AU
24 October 2007
Trading data (local/US$)
52-wk range A$34.63-18.80/US$29.23-14.57
Market cap. A$8.86bn/US$7.91bn
Shares o/s 326m (ORD)
Free float 34%
Avg. daily volume ('000) 2,898
Avg. daily value (A$m) 71.5
Balance sheet data 12/07E
Shareholders' equity A$2.17bn
P/BV (UBS) 4.4x
Net Cash (debt) (A$2.65bn)
Forecast returns
Forecast price appreciation +32.5%
Forecast dividend yield 3.0%
Forecast stock return +35.5%
Market return assumption 11.5%
Forecast excess return +24.0%
EPS (UBS, A$)
12/07E 12/06
UBS Cons. Actual
H1E 0.68 - 0.47
H2E 1.00 - 0.70
12/07E 1.65 1.63
12/08E 1.99 1.90
Performance (A$)

BNB’s Balance sheet capacity
We estimate that BNB now has around $9.1 billion of capital available to fund
future asset growth both on its own balance sheet and within its Specialist Funds.
If we assume that this capital can be geared around 2:1 (in line with many
infrastructure and property assets) this implies that BNB has the ability to
acquire around $27b of assets.
This capital funding is split with around $2.4 billion from BNB’s balance sheet
and $6.7 billion from uninvested equity and potential debt in Specialist Funds.
These are facilities already negotiated with interest rates locked in over the
medium to long-term. We believe that this funding capacity assists in addressing
markets concerns regarding the lack of capital post US sub-prime mortgage and
credit market volatility.
Today’s wholesale raising further illustrates BNB’s capital strength

[thierry]

Thanks for your posts.. that is reassuring .. I was starting to wonder if there was something about bnb i didn't know .. Today was a better day.. and the ~25 appears to be a bottom.

[HRL]

I read the same from both Aegis Research and Reuters this morning. I thought it might be re-rated last month when it dropped from a buy to a hold so stayed away but was a little confused when the 12mth forecast stuck at $36 and reco now back to buy with the fundamentals confirmed. Infact, according to Aegis nearly all the B&B companies are rated highly at the moment which is encouraging. In particular BNB & EBB. Hard to tell where the bottom is at the moment though.

[thierry]

It's strong today although the market is not.. market sentimemtn for this stock appears to be picking up.

[L plates]

Another very strong day for this stock.

Some big trades very late in the day

2604 4:12:49 pm 2812 270,000 32 $7,592,400 (1 trade)
2407 3:48:46 pm 2823 290,000 1 $8,186,700 (1 trade)

from Stockness Monster.

So anybody have any thoughts on this?

Cheers

[overule]

Are you guys filling up ? or do you think the fall going to continue ? :banghead: :) Any advice will be good.

[Treloarasaurus]

I topped up last thursday. Not the best move in hindsight but will hopefully pay off in the long run.

[overule]

BNB dropped more than 5% today.. I went in. It's scary. :banghead:

I am in for longterm. Hopefully it works out.

[mrgroundwork]

bnb is the perfect stock to buy on down days... gets overly hammered every time the market jitters... and is one of the first stocks to bounce back hard...

anyone remember the sub $20 days several months ago?

[DOC]

bnb is the perfect stock to buy on down days... gets overly hammered every time the market jitters... and is one of the first stocks to bounce back hard...

anyone remember the sub $20 days several months ago?

hi,
yes i do remember that day very well, some idiot turned off the futures market for some routine maintenance, and in that 2 hour period the market went crazy. i was lucky enough to buy a small tranch of BNB at 18.83. by the time everyone realised the mistake at the asx, the stock was back up over $20.

cheers,
doc

[Mr_T]

I'm a bit worried here.

In today's Herald Sun, Terry McRann writes http://www.news.com.au/heraldsun/story/0,21985,22963910-36281,00.html

"SHARES: Wall St is headed for a fall, possibly a biggish one. Because we don't have the same problems and the resources sector is likely to remain reasonably healthy, our market is more likely to drift lower. As we see with Centro, some stocks are far more vulnerable. Those with big borrowings, directly or indirectly exposed to US property."

Doesn't BNB fall into this description? It certainly has big borrowings, and has exposure to US property.

Any thoughts?

[tronic72]

I'm a bit worried here.

In today's Herald Sun, Terry McRann writes http://www.news.com.au/heraldsun/story/0,21985,22963910-36281,00.html

"SHARES: Wall St is headed for a fall, possibly a biggish one. Because we don't have the same problems and the resources sector is likely to remain reasonably healthy, our market is more likely to drift lower. As we see with Centro, some stocks are far more vulnerable. Those with big borrowings, directly or indirectly exposed to US property."

Doesn't BNB fall into this description? It certainly has big borrowings, and has exposure to US property.

Any thoughts?

For every article I see on doom and gloom, I see another for a continued boom. Especially commoditities. See below:

http://au.biz.yahoo.com/071223/30/1jizk.html

I'm more concerned with out reliance of commoditities in proping up the Aussie Market. I've start diversifying more than I have in the past (was heavy on metals).

I think the article you mentioned could have been written by a politition as it says a lot but commits to nothing. I do agree that the future for 2008 is uncertain but..... Derrrr!!!!!

:rolleyes:

[Mr_T]

For every article I see on doom and gloom, I see another for a continued boom. Especially commoditities. See below:

http://au.biz.yahoo.com/071223/30/1jizk.html

I'm more concerned with out reliance of commoditities in proping up the Aussie Market. I've start diversifying more than I have in the past (was heavy on metals).

I think the article you mentioned could have been written by a politition as it says a lot but commits to nothing. I do agree that the future for 2008 is uncertain but..... Derrrr!!!!!

:rolleyes:

The article was written by Terry McCrann, who is a very clever man. Of course his comments that the future is uncertain are obvious to some, but it needs to be said, some readers (especially the type that read the Herald Sun/Sydney Telegraph) might be under the delusion that there are those that really know the future!

I am looking for comments comparing the similarity and differences between BNB and Centro. Of course, it goes without saying that BNB is in a whole range of industries that Centro wasn't, but there are still some similarities.

[prana]

Bringing this back into the spotlight. I have no issues with the fundamentals, big fan of the sector and the business. I'd like to know if any technical chartist opinions on the wedge formation that appears to taper to $26.80 mark. Are there are indications of the direction this breakout will be ?

Not that it really matters, I'm a long term holder but curiosity kills the inquisitive :D ....

[Go Nuke]

I bought in at $27 but then got out at the high $26's.

I bought based on the high buy reccomendations through Commsec, but was put off with its slow advance up.

I'm no tech chartist but I personaly think it could go either way at this stage.
Very tight cosolidation going on with the MA's.
Volume has dropped off though.
MACD is almost into the positive territory.

I wouldn't look at BNB till I knew which way its going to go.
Thats my thoughts anyway

[2BAD4U]

I'm only new to charting so do with my observations what you will, however my indicators are still showing weakness in BNB. The main one being that price and volume have been moving in opposite directions (a bearish sign). At this stage I don't see a reversal and am expecting it to break the lower support line on Monday but will wait to see the candle formation and volume before making a call on if it is a break or a test of supply.

Cheers
Warren

[VViCKiD]

Man !!! this one is really getting hammered !!!
anyone have any comments ????
I am wondering if I should sell out and accept my 10K loss...

[roland]

Man !!! this one is really getting hammered !!!
anyone have any comments ????
I am wondering if I should sell out and accept my 10K loss...

yep - I've got a comment I am extremely unimpressed with BNB - sold the last of them today and put 'em into something that's going to pay some decent dividends. If this wasn't a friendly and repectable forum I probably would add a few cuss words here and there!

[DowJones]

I think BNB is a great company, trading at 27 only a couple weeks ago. The credit crunch and weaker US economy has caused sentiment on leverage companies to fall dramatically - i.e. Allco, Mac Bank, Challenger and Babcock.

Ageis has a BUY recommendation and a 12 mth target $37.44... It has potential but may not be the best value stock or that is going to rebound quickly

Even the baby is being thrown out with the bath water...

[DowJones]

I actually topped up and bought somemore today at 21.xx... now it lower, you can never pick the bottom!!

So many 'cheap' stocks, not even dough placed on the side...

[roland]

I actually topped up and bought somemore today at 21.xx... now it lower, you can never pick the bottom!!

So many 'cheap' stocks, not even dough placed on the side...

If I had some dough on the side, I would have done the same thing. Unfortunately I had to use BNB as my dough on the side for other opportunities - ho hum

[VViCKiD]

Yeh same. I topped up @ $22 just 2 days ago.
I was cheering yesterday and now i am all depressed bout this stock..
:eek:

$37 price target ? man... that seems a bit high.

[DowJones]

I think the target is a bit rich as well. Maybe $30 is attainable, but with the market shape as it is, it will take time.

BNB still has no issue raising capital for its infrastucture projects and they recently sold some infrastructure to a European buyer.

[mrgroundwork]

BNB typically rises as quick as it falls... so will be nice to catch the rebound...

i checked bloomberg terminal yesterday and consensus on all the major analysts recs was a 12mnth target of low 30's...

[roland]

BNB typically rises as quick as it falls... so will be nice to catch the rebound...

i checked bloomberg terminal yesterday and consensus on all the major analysts recs was a 12mnth target of low 30's...

I agree, problem is that at 21 bucks or so a share, it ties up a lot of capital. I tried to hold my BNB, but a thousand BNB = around $21,000 which is a lot of small cap buys - I sold BNB, not because I don't have faith in BNB, but because I needed the dollars. Damn shame really

[VViCKiD]

I agree ... if i had more capital i would like to pump in more @ $21 a share...
I am holding gold and oil stocks... i am thinking of selling some of my other stocks for BNB...

I am hoping to hold on long enough to receive the divies...
wat does everyone think the divies might be ?

[barnz2k]

they are still buying up, and im sure I saw an article yesterday about how they are even less effected by the subprime issue than noted before, but I cant see it now. So that should be a good thing!

I have faith in BNB and still hold, but damn its getting harder and harder to keep the faith!

[VViCKiD]

I agree... would you be able to tell me when those price forecasts were made ??

I mean in light of what's happened, it seems like that is really hard to see happening...

[VViCKiD]

can any body tell me why this stock is getting ridiculously hammered ?
It has dropped 50% in the last few months !!
that is insane !

[tronic72]

Could be worse. Have a look at todays action on AFG. 27% last I looked. Glad I sold all my stock recently, was getting to risky with all the Sub Prime uncertainty.

Risky times.

[ged]

its got an bid for $19.06 atm, sounds like a bargain?

i held this stock about 10 months ago, and got a ride from $26 all through to $31 then sold it taking a small profit, and watched it crash to $18 in july, but it sure did recover quick. seems its back at $18. might see what happens at the end of today and decide tomorrow if i should pick it up again.

[Go Nuke]

Yes I was just wondering that myself...Hands up who's game to think $18ish is the bottom???:bounce:

The "buy" recommendation on Commsec has not changed 1 bit over the last couple of months.
I think perhaps people will wait and see what BNB does with this port business in the U.K first.

[L plates]

Down 14.4% on the open !!!!
This is utter madness
This company has been going from strength to strength
Complete panic
Madness:banghead:

[L plates]

God

Whilst typing it dropped again down to 16.3%
Insane, no other words to describe this tragedy.
People are just getting out at any cost for no good reason.
Stupidity

[Judd]

God

Whilst typing it dropped again down to 16.3%
Insane, no other words to describe this tragedy.
People are just getting out at any cost for no good reason.
Stupidity

What you actually mean is that you have never seen this sort of thing before. Imagine what it must have been like during 1972-74. And yet people think October 1987 was a big one.

[barnz2k]

OMG. Im not even gonna look.
Seriously ppl, HTFU! World's gone crazy man.
When are we going to see an upward movement?!

[nikkothescorpio]

Spewing to just miss it at low $15's....damn need to be faster!

Some stops really musta got hit by that bungee effort!

[sideshowbob]

low 15's .... plenty of time now!

U bargain hunters...... were saying BNB at $20 is a bargain a few days ago.

[nikkothescorpio]

I still think she's got scope to go down further tomorrow - I mean I doubt you'd regret getting in at these levels - so maybe a few parcels would be better as it does tend to shoot back hard - see this morning went from $15.50 to $17 in a minute or so.

[bruham]

G'day all,


I've traded BNB three times in three days, hoping that I'm hitting the bottom each time I've traded.
Instead of buying shares, I should switch to CFDs, go short, this being the opposite to my share buying.This would create something like a option straddle.
I might even be able to pull back some of my loses I had from this trade..

It just takes a cool head at this time. Here's hoping I have one.

bruham.

[ged]

your right, i thought $20 was a bargain, then $18, now $15. jeez.

this....is....MADNESS haha

i think we should definitely keep a watch on this. i still think its a bargain though im just worried how far it will far before it will pick up.

[michael_selway]

your right, i thought $20 was a bargain, then $18, now $15. jeez.

this....is....MADNESS haha

i think we should definitely keep a watch on this. i still think its a bargain though im just worried how far it will far before it will pick up.

I think these BNB & MBL shares are all going to get hit big time, like CNP, MFS, AFG etc

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 115.4 166.6 197.7 224.9
DPS 36.0 52.4 59.8 70.3

thx

MS

[mrgroundwork]

I think these BNB & MBL shares are all going to get hit big time, like CNP, MFS, AFG etc

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 115.4 166.6 197.7 224.9
DPS 36.0 52.4 59.8 70.3

thx

MS

Surely you would have to give a bit more reasoning than that...

There are quite a few fundamental differences between those guys and CNP, MFS, AFG... the market can be irrational, but isn't stupid...

[Ken]

Chart wise there are so many stocks being technically short sold and fast.

If MQG breaks under $55 you would be going short on it all the way down to $47-$48, then the next stop is $32.

It would be very painful, but chartwise they are the next stops on the way down.

Look at ZFX it has fallen to $8 in a month.

Fundamentals mean nothing in a bear market.

Which is what a 20&#37; + fall is... so they keep telling us..

[pch]

Actually, fundamentals equally mean nothing in a bull market too :-)

I have always done better in bear years when there is more of a focus on value, rather than the flavour of the month sector.

[Ken]

What !IF!


This bear market is something that we have never seen before.

Is it possible to have a market that is just so volatile due to all the technology, that the market just finds a level and stays choppy.

Or does human emotion mean uncertainty sends stocks south!

[tronic72]

What !IF!


This bear market is something that we have never seen before.

Is it possible to have a market that is just so volatile due to all the technology, that the market just finds a level and stays choppy.

Or does human emotion mean uncertainty sends stocks south!

Really interesting point Ken. I was just talking to someone today about just that point. How many of the recent sells have been due to pre-set stops and margin calls or margin loan calls? I think it's a look at how the stock market can crash or crash more severely for no good reason.

:2twocents

[ithatheekret]

I think these BNB & MBL shares are all going to get hit big time, like CNP, MFS, AFG etc

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 115.4 166.6 197.7 224.9
DPS 36.0 52.4 59.8 70.3

thx

MS

Thoroughly agree Micheal . B&B must at the very least be worried by the Yen loan book . Not quite sure about the Everest (EBB) fund though , I do remember the market cap being somewhere around $400M last year , been continuing the journey south ever since it paid the last div . Chart screams worry , even though it managed to get the snorkel above the $1 line .

[Bushman]

Surely you would have to give a bit more reasoning than that...

There are quite a few fundamental differences between those guys and CNP, MFS, AFG... the market can be irrational, but isn't stupid...

Ha - all of a sudden a debt based asset acquisition model is akin to the anti-Christ.

6 months ago it was being lauded as MCG delivered a $1b plus profit.

This whole 'gearing is the end' obsession is ridiculous. Debt is the basis of the capital markets. Without it, nothing would be built. Debt markets will recover over time and the bigger players (BNB, MCG) are in the best position to ride it out.

By the way, Merril's have warned off a couple of lpt's with overseas exposure and high gearing - IOF & MDT. A case of buyer beware in the current market.

[kengaikl]

I reckon this stocks AFG no.2 the way the share price is going. No matter how much they up their profit guidence their shares end up falling. CFD traders get hit by this stock on a daily basis with their volitile/crazy swings.

[tronic72]

I reckon this stocks AFG no.2 the way the share price is going. No matter how much they up their profit guidence their shares end up falling. CFD traders get hit by this stock on a daily basis with their volitile/crazy swings.

I've stopped trading CFDs for this exact reason.

The rise & fall of stocks such as AFG, MQG & BNB are simply based on fear. Personally I think it's a really good time to diversify or top up. I recently purchased TOL for $10 & AFG for $1.85 and since then the miners continue to suffer. TOL for example was at 10 prior to the crash. I posted a request for information as to why the stock crashed but never got a reply. Since then it's climbed back to over 20% and AFG is over 100%.

If you are keeping stocks long term, just buy them at a price you think is fair and hold. Watching the current price movement will give long term investors an ulcer.

[TheAbyss]

Interesting reading regarding Tricom and a link to the Allco margin call due to ANZ being reluctant to give them any more chips to play with.

Anyone have any thoughts regarding whether Tricom had a few issues surrounding BNB and having to sell holdings in BNB? My reasoning is that if ANZ said "no, we wont be giving you any cash right now" were Tricom forced to drop a bundle of BNB onto the market which then caused BNB to fall lower than it should have and thus cause it to be undervalued? Will we see a take up in BNB or did we see it when the BNB sp jumped back up from $15?

Am i looking for things that are not there?

http://www.theaustralian.news.com.au/story/0,25197,23129469-5013408,00.html

[Aussie2Aussie]

Interesting reading regarding Tricom and a link to the Allco margin call due to ANZ being reluctant to give them any more chips to play with.

Anyone have any thoughts regarding whether Tricom had a few issues surrounding BNB and having to sell holdings in BNB? My reasoning is that if ANZ said "no, we wont be giving you any cash right now" were Tricom forced to drop a bundle of BNB onto the market which then caused BNB to fall lower than it should have and thus cause it to be undervalued? Will we see a take up in BNB or did we see it when the BNB sp jumped back up from $15?

Am i looking for things that are not there?

http://www.theaustralian.news.com.au/story/0,25197,23129469-5013408,00.html

I would be very surprised if BNB is not being sold down because of leveraged exposure through Tricom, same goes for many of the banks and blue chips that have been sold down over the last few days.

Problem is, when will the enforced selling stop?

$500 million is 10&#37; of the daily turnover of the market.....but of that $500M and total turnover, probably 50-60% is blue chip, which means we are now talking 20% of those shares traded as possibly being infected by Tricom.

Bet Tricom wished the Dow went up last night.:banghead:

[thierry]

BNBs timely responses to marke shows a well managed entity..

Not to sure what are the implications at the end of the press release.. if someone can explain that'll be great.


ASX Release
31 January 2008
International investment and specialised fund and asset management group
Babcock & Brown (ASX: BNB) today clarified its relationship with Tricom
Equities (Tricom) in light of media reports over the last few days.
Phil Green CEO of Babcock & Brown said “I am confident that Tricom will work
through its current issues successfully. However in response to market
concerns, Babcock & Brown advises it is not a material creditor of Tricom and
our business is in no way impacted by the difficulties facing Tricom. Babcock &
Brown’s relationship with Tricom encompasses traditional stockbroking and
capital market services. In this regard we confirm the following:
• Neither Babcock & Brown, nor any of its senior executives, have extended
cash facilities to Tricom.
• Neither Babcock & Brown, nor its senior executives, have equity in the
Tricom business.
• Babcock & Brown has no current dealings with Tricom in relation to any of
its equity investments in its managed funds.
“Babcock & Brown currently holds one stock loan position with Tricom in a non
Babcock & Brown related stock, an approximate gross position of $50m and a
borrowing from Tricom of approximately $10m. In addition Tricom holds
convertible notes that Babcock & Brown owns in a listed entity, with a face
value of circa $10m, which are currently being redeemed by the issuer.

[DowJones]

Does anyone know of why Babcock is being sold off? Is it a case of 'throwing out the baby with the bathwater' in financials?

They have good analyst recommendations. Last trading at $17.55 when it was at about $28 before the Jan rout. All of this is on sentiment and debt fear. But has the company changed materially?

The results come out soon... anyone think they'll do well?

[TheAbyss]

Dow, i am of a similar opinion however they have been trending downwards since the first sniff of sub prime last june. I want to get in on BNB however the chart says not yet. I am thinking that if CBA show margin declines tomorrow BNB will go lower with CBA however, should CBA surprise we just might see BNB go up with it.

MQG is a better guide for BNB than CBA as i am sure we all know. I am looking for a change in the financial sector sentiment on good news from CBA tomorrow or a continuation of the slide.

[VViCKiD]

does anyone know when the results are due out ?
how do u find out on comsec when the results are due out ?

[prana]

does anyone know when the results are due out ?
how do u find out on comsec when the results are due out ?

Here (http://www.babcockbrown.com.au/bnb-investor-information/fy07-results.aspx)
21 February 2008

- this your answer is too short means its difficult to answer questions directly, so I have to add some random jibberish.

[VViCKiD]

:mad:thanks prina ... can anyone tell my why this one is getting hammered ? It really doesn't make any sense to me .... :eek7:

[Kalmsg]

Spoke to a broker and he believes that BNB has a way to fall in this market yet and could test the 13 dollar levels and maybe even the 12 dollar levels in coming months ahead.

He also sees macquarie suffering the same fate for a while and could test the mid 45 dollar levels in coming months ahead if this bear market continues as it is believed it will.

Very interesting times ahead.

[VViCKiD]

damn... .that's some terrible news... :banghead:
in it for the long run but this is really testing my nerves.

[prana]

'never ask a barber if you need a haircut' tuggawar between that an 'get out while you still can'. I'm happy to hold but brokers make money from your transaction, surely they're going to take extremes, so you can buy back again when they see it recover. If $12 is the lowest it will go, then I'd be laughing. I'll put an buy order in tomorrow at $12 and wait for the party to come. In fact, if he's really that accurate, he could make a lot of money, why not stall at buying shares? Write out a call option at that price.

But wait, he's just like you or me, fact of the matter, he too cannot see the future, it makes no sense where he pulls those numbers from (maybe support lines?) but whatever it is, he won't cry from your lost, he'll only laugh from your trade. I'd forget those numbers and worry about the business conditions going forward instead. If your broker told you business conditions will definitely suffer from a lack od M&A or there's going to be a disaster in funds and infrastructure, it's hell of a lot more value than "the stock may reach $12" cause it may not, and he certainly cannot know that for sure.

[3MT]

don't forget about the 1 Billion $ worth of stocks coming out of escrow this week. (late last). That could add some downward pressure in the coming days/weeks, depending on how desperate the holders want to cash out.

If you believe in this thing long term, then stop refreshing the comsec screen :-)

[thierry]

both BnB and MQG are seriously undervalued.. I think problems with companies like AFG are reducing inverstor sentiment in these 2 stocks..

BnB has plenty of capital to pick up companies now at cheap prices.. unfortunately their good buisness is not necesarily reflected in the share price we see..

Sure there might be less M&A activities, but there will be a few companies needing financial backing to stay afloat.. BnB and MQG in prime position to pounce on these..

-------------------my opinon only------

[barnz2k]

If you believe in this thing long term, then stop refreshing the comsec screen :-)

LOL. Easier said than done. especially with too much time haha.
I'm really thinking about avoiding all stock news for a year and see what happens haha

[blinkau]

I purchased a decent parcel of BNB only to find out SGB will no longer lend against it there goes that large buffer I had in place, just a though for anyone who might be purchasing on a SGB margin loan. Even after informing them they still havent updated their online acceptable securities list I wonder how many other people have been caught out.

[mrgroundwork]

wow... that is pretty big to wipe the lending rate of an asx top50 company... understandable there is problems, like a Centro, but Babcock is still in good shape...

st george will lose customers over that...

[overule]

Got put options today. I have a feeling this stock will drop like crazy but will do well in the long term.

[VViCKiD]

crap... i wish i bought some puts as well ....
aahhhh ... can anyone tell me why this one is getting hammered so much ?

[michael_selway]

crap... i wish i bought some puts as well ....
aahhhh ... can anyone tell me why this one is getting hammered so much ?

Do you know what, in a a week's time, today's rpcie could be considered quite high :(

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 115.4 166.6 197.7 224.9
DPS 36.0 52.4 59.8 70.0


Date: 8/2/2008
Author: Paddy Manning
Source: The Australian Financial Review --- Page: 77
Credit Suisse banking analyst, James Ellis, has issued a note discussing theprospects of Allco Finance and Babcock & Brown. Ellis has suggested that thetwo Australian companies could face substantial provisions against the decliningmarket value of their co-investments in real estate funds, should they followthe lead of Macquarie Group. Specifically, Ellis claims Allco's 2007-08 netprofit could be affected to the tune of $A118 million, if it is forced to markto market co-investments in its managed funds

[VViCKiD]

We might need to wait a week. The report comes out tommorow...
I am really dreading this.. I hate this stock...

[vishalt]

I'm going to B&B report to cover this tomorrow.

Anyone have any particular questions? I'll be happy to ask lol, I personally want a comment from them after investor confidence in their business model has been shot down. I think SGB and CMC cut margins to BNB and the stock has been the most smashed after Alllco and MFS.

You know its funny, I called MFS, BNB, AFG and MQG up at work and asked them if they want to participate in naming their weekly hires for a weekly story.

MFS BNB AFG refused to participate and they are pretty horrible with dealing with the media and rather secretive, so I dare say these companies are not transparent.

MQG on the other hand is great with the media and stock has fared better and they participate in our "name who ya hired" section.

[reece55]

Do you know what, in a a week's time, today's rpcie could be considered quite high :(

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 115.4 166.6 197.7 224.9
DPS 36.0 52.4 59.8 70.0

The accounting issue Credit Suisse are referring to is impairment of associates in accordance with AASB 128 'Investments in Associates'. I suspect you will find that BNB have a buffer here - after the August correction, BNB still had about a 15 - 20% buffer of market value > book value. Even if this amount is lower and there is an impairment trigger event, Babcock and Brown has a very good argument to say the assets are not impaired at present. In summary, I would think it would be unlikely this will affect BNB results tomorrow - whilst it's not the right time in the cycle to buy BNB, they are easily my favorite player in the diversified financial sector....

Allco on the other hand is completely rooted...... But hey, nothing I haven't been saying for months.....

Cheers

[roland]

We might need to wait a week. The report comes out tommorow...
I am really dreading this.. I hate this stock...

Know how you feel VViCKiD, I got all excited with BNB when I picked up some at a low and made some good profits on the highs. I gave up a few dollars ago, and decided to get into the peripherals such as BBW and BBP. The dividend yield is a whole lot better if you get stuck and have to hold. BNB really ties up a lot capital with close to no dividend yield.

There is nothing wrong with BNB, they are a great company and you will do well if you are patient. I'm not so patient - so got burnt :(

[reece55]

I'm going to B&B report to cover this tomorrow.

Anyone have any particular questions? I'll be happy to ask lol, I personally want a comment from them after investor confidence in their business model has been shot down. I think SGB and CMC cut margins to BNB and the stock has been the most smashed after Alllco and MFS.

You know its funny, I called MFS, BNB, AFG and MQG up at work and asked them if they want to participate in naming their weekly hires for a weekly story.

MFS BNB AFG refused to participate and they are pretty horrible with dealing with the media and rather secretive, so I dare say these companies are not transparent.

MQG on the other hand is great with the media and stock has fared better and they participate in our "name who ya hired" section.

Vishalt
Just because MQG has a great hand on the media does not mean they are more transparent....

BNB is much better disclosure wise than MQG ever have been (certainly from an accounting view)....... MQG just have a nice bankroll to fund a media campaign to let everyone know everything is ok....

Plus, MQG does have the advantage of having a funds management and broker arm, which arguably are less cyclical than BNB's strictly investment banking business...

Cheers

[L plates]

I'm dreading tomorrow. How far will it tank? God only knows, 10 - 20% ?
What the hell might as well go a good 50%.

I regret the day I ever purchased this damn @#@&*^& %%$#@ #$# 'ing stock
:banghead:

Makes me so mad

[prana]

Results ! NPAT to members +70% to BNB 58% ROE 32.4% div 33cents from 21cents

Outlook for 2008 growth is around 15%

[thierry]

great results.. they've got enough cash to ride out credit woes.. and could actually make the most of everyone else's credit woes.

hope the sp performs as good as the result :confused:

[barnz2k]

Results ! NPAT to members +70% to BNB 58% ROE 32.4% div 33cents from 21cents

Outlook for 2008 growth is around 15%

If this isn't enough of a reason to stop those F****rs from hammering the price down i dont know what is. This stock is solid let it get back up there!!

[Nicks]

Vishalt
Just because MQG has a great hand on the media does not mean they are more transparent....

BNB is much better disclosure wise than MQG ever have been (certainly from an accounting view)....... MQG just have a nice bankroll to fund a media campaign to let everyone know everything is ok....

Plus, MQG does have the advantage of having a funds management and broker arm, which arguably are less cyclical than BNB's strictly investment banking business...

Cheers

Agree Reece. It has been consistently noted that BNB do not 'fund' increases in profit, assets or dividends through asset revaluations, nor do they loan against them. Maquarie do. To me this is dangerous and even more compounded in a volatile market with tight credit.

Stranegly BNB are not the ones holding up. Eventually fundamentals and reality need to kick in and I think you will see some significant positive reratings of this stock, meanwhile Maquarie can't keep its risky business af profiting from revaluations and intangibles going and could get hurt severely.

This makes BNB my stock of choice. No riskiness, no 'revaluations' to increase book figures, no loans against revaluations. Just solid investment business. Investment in 'tangibles'. At this price all the fear mongers are doing us a favour.

Time will show.

[michael_selway]

Results ! NPAT to members +70% to BNB 58% ROE 32.4% div 33cents from 21cents

Outlook for 2008 growth is around 15%

Wow they beat 2007 forecasts by a bit, but 15% forecast appears to be lower than previusly forecasted etc

EPS(c) PE Growth
Year Ending 30-12-07 166.6 9.2 44.4%
Year Ending 30-12-08 197.7 7.8 18.7%

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 115.4 166.6 197.7 224.9
DPS 36.0 52.4 59.8 70.0

thx

MS


Date: 18/2/2008
Author: Matthew Cranston
Source: The Australian Financial Review --- Page: 55
Three cattle stations in Australia that are among the nation's best andbiggest are on the market. "Wollogorang Station" in the NorthernTerritory is expected to be sold for in excess of $A50m, with investment bankBabcock & Brown a possible investor. The property of 705,700ha, with roomfor some 50,000 head of cattle, also has great tourism development potential.The "Scheelite" breeding and fattening facility on King Island in BassStrait is being divested by Oakey Holdings, a subsidiary of Nippon Meat PackersAustralia, for $A18m. Finally, a cluster of beef cattle properties in SouthAustralia known as "Sheraco Group" is likely to fetch $A20m

[Mr_T]

Wow they beat 2007 forecasts by a bit, but 15% forecast appears to be lower than previusly forecasted etc


MS
Yeah, but they have always exceeded their forecast. By memory, wasn't their forecast at the beginning of 2007 for a 20% rise during 2007? This was upgraded over the course of 2007.

[vishalt]

They smashed estimates.

I was in during the conference call and geez you talk about "media grilling the board" - well Phil Green hits back and totally redfaces the journos. He's pretty passionate about the business and its clearly believable in as stated in the report that people are selling the stock indiscriminately.

[reece55]

They smashed estimates.

I was in during the conference call and geez you talk about "media grilling the board" - well Phil Green hits back and totally redfaces the journos. He's pretty passionate about the business and its clearly believable in as stated in the report that people are selling the stock indiscriminately.

Yep, good ole Phil Green is a magnificent leader, but I think the best thing if you actually listen to his teleconferences is the down to earth way he relays the results of the business. No matter what your understanding of corporate finance, he explains it extremely well.

Plus, as you say Vishalt, he loves stirring up the media..... I haven't listened to the results briefing, but in the half year he told them he was surprised that anyone was still interested in the business in light of the way people were selling his stock.....

Cheers

[thierry]

BnB have presented some great results and shown a low level of debt which is what the market wanted.. going at lenght to distance themselves from afg would have also helped the stock get back in favour. Hopefully it does get back into favour over the next few days and the market starts valuing it at what it is really worth. up another 6% today.. still a long way to go imo.

[VViCKiD]

I'm in at $19... so still copping a punishment.... I hope this one goes all the way back up to $30... hehehehehe it was at highs of 30+ just last year...
So praying for the best here...

[Mr_T]

According to this Crikey article (available to Crikey subscribers only) Babcock DO revalue assets and add this to their profit. Also, they seem to do so in dubious circumstances.

Here it is:

Friday, 22 February 2008

Michael Pascoe writes:


Beware the financial press falling over itself to heap praise on financial engineers – which is exactly what happened after yesterday’s Babcock and Brown results.


Phil Green was at obvious pains to distance his millionaire factory from the likes of Allco and MFS with a very rich set of numbers – a net profit of $643 million that meant a bonus pool for the lucky execs of more than half a billion dollars. Nice.

But different strokes for different folks. Rather than lapping up Phil’s damning of hedge funds, I was looking for his commentary on the US residential housing market crash, given that BNB plunged $1.6 billion or so on American flats and condos at the top of the market.

I naively thought there might have been a little write-down in the present circumstances, or at least a careful warning about what might be ahead. After all, there was that little Business Week cover story last month suggesting US residential property could fall by up to 25 per cent – and then it would only be back to its long-term trend.

No such write-down from BNB though – quite the opposite. That profit bottom line looked good, but $100 million came from the simple business of revaluing property upwards.

In the present climate, that’s an amazing achievement, especially as the aforementioned US residential stuff represents most of BNB’s real estate investments. But that thought doesn’t seem to have occurred to the cheer squad.

Babcock and Brown’s accounts show it started 2007 with $266 million worth of real estate held as investment property. It then proceeded to buy another $2.2 billion worth. It "deconsolidated" $739 million, pulled in another $11 million from "assets under development", threw in $10 million in capitalised expenditure and therefore had a portfolio of some $1.56 billion.

And then, with property prices falling hard and fast in the US and Europe, Babcock and Brown topped the portfolio up with a $100.6 million "net gain from fair value adjustments" – which means they decided it was suddenly worth $100 million more within months of being purchased.

Gee, they really must be real estate geniuses to achieve that sort of performance so very quickly in crashing markets. All hail BNB – and don’t think too much about the numbers.

[prana]

Pretty good volumes today, on the upside, it exchanged over 4M, that's not too bad. I dunno, perhaps I'm being naive but I pay no attention to the media. When all is good, you hear nothing, but when prices plunge, suddenly a barrage of -ve news appears after the fact, always playing hindsight and tag. What's the good in that?

You really have a choice in stocks, if you like it, you open a position. If you don't like it, you don't. How hard is this concept? And if you picked it up at $18, and it became a victim of short selling, then just let it be. If you believe the intrinsic value is high and you are comfortable with it, then so be it. If you bought a computer for $2k and suddenly you find some store liquidating it at $1.4k cause they're going out of business, do you suddenly drive yourself into the concrete wall over it? I can understand it if you're a trader, or a very greedy investor. But 20&#37; downside in a market like this, is soft.

I think this thing has now completed a double bottom at the same levels, would be interesting to see if it's able to carry momentum to keep its head above these $14 levels with ongoing volatility.

[vishalt]

Here's the article I did, journalists who weren't there at the conference catch Phil Green's fury which are in some of the quotes below:

He literally froze cold any journalists who dared presume any bad debt/margin links.


Investment firm Babcock and Brown's (BNB) chief executive has defended his company's business model after returning a 58 per cent rise in profit to $643 million for 2007.

BNB chief executive Phil Green attributed the rise in profit to revenue generated from buying infrastructure assets and higher management fees.

When asked about its share price decline from a high of $34.78 set in July last year, to a recent low of $14.99, Green said investors did not understand the firm's business model.

"They [investors] do not believe that we do not trade in financial assets," he said.

"We are basically an industrial company.

"We develop wind farms, we invest in real estate, [and] we invest and manage aircraft."

Green also said he was angry with market speculation that BNB executives could face margin calls on their shares like their counterparts from Allco Finance Group (AFG).

"It is total nonsense and absolute rubbish," Green said.

The firm's senior executives have not geared their BNB shares and that they only received them when the firm listed, he said.

"They have not leveraged them, they have never leveraged them and that is the end of the story," Green said.

AFG's share price fell 26 per cent on 23 January after its employee investment vehicle, Allco Principals Investments, sold stock to cover margin calls from its lenders.

BNB declared a dividend of 54.4 cents and is forecasting 15 per cent rise in profit to $750 million for 2008.

BNB shares rose $1.43 or 9.33 per cent to close at $16.76 yesterday.

[Mr_T]

Regarding Michael Pascoe's article that I reproduced above:

I did some research and went looking through BNB's recent reports. What he says may in fact be correct. What he says about the revaluations IS correct - they did occur. What is in issue is whether the revaluations take account of current true value. If they don't then BNB's Profit has been over stated.

What I have written is after looking at their results. I am happy to be corrected on any errors:

REVALUATION OF ASSETS
On the Appendix 4E of their accounts for 2007, page 68, there is an item of Revenue (which adds to profit) listed as "Fair value movement on investment property" in the amount of $100,631,000.


WHAT HAS BEEN REVALUED?
What exactly does this refer to? Some clues as to what this is referring to appear in the following:

Page 2 of "Full Year Results 2007 Announcement" attributes part of the increase of the revenue in the Real Estate division to the following:

"an uplift arising from the development of an Asian self storage portfolio.......and an uplift in the value of the BNP Residential Property portfolio in North America."

The "Full Year 20007 Results Presentation" also refers to "uplift in value" of Asian self storage and BNP Property in the USA in a few places.

So the $100M in revalued assets (which has increased profit) is due to 2 things:
a) its Asian self storage portfolio; and
b) rise in value of American BNP property

HOW MUCH OF THIS REVALUATION IS DUE TO ASIAN SELF STORAGE AND HOW MUCH IS DUE TO THE AMERICAN BNP PROPERTY?
Nowhere is it explicitly stated how much of the $100m is due to the revaluation of the Asian self storage and how much is due to revaluing the BNP Property in the USA.


LETS EXAMINE THE REVALUED BNP PROPERTY A BIT MORE
Since the BNP Property in the USA is more worrying of the 2, lets focus on that one.

Page 21 of the "Full Year 20007 Results Presentation" refers to
"The revaluation of the BNP multi-family portfolio in the US as disclosed at the interim result."

Frankly, IMHO this comment raises some red flags. It bascially implies that the revaluation was done before mid year, and so does not take account of events of the second half of 2007.

Page 23 of "Full Year 20007 Results Presentation" justifies this higher value given to the BNP properties by stating the following:
"The total investment is currently valued in excess of $1.8bn and includes nearly $1.5bn of non-recourse, debt. We remain very comfortable with the valuation of this portfolio on our balance sheet for a number of reasons including:
• Occupancy rates across the portfolio are well in excess of 90% and they have continued to experience strong NOI growth of approximately 4%.
• We acquired older properties in the high growth Sunbelt states. Our average price per unit for both deals is well below replacement cost for newly constructed comparable units.
• We financed our purchase primarily with 10yr fixed rate debt with a weighted average coupon of 5.65%. This debt is interest only and assumable.
• On December 21, 2007, we closed a sale on two properties from our Alliance portfolio at a cap rate of 5.43% based on in-place trailing 12 months NOI. We believe the assets in the BNP portfolio, which are on the balance sheet at an approximate 5.75% cap rate, are superior to the assets sold. At the end of the period Babcock & Brown’s direct and indirect equity in the portfolio was $136m."


NOT GOOD ENOUGH
Not good enough BNB! If you are going to revalue property in a falling market (as is the case of the American BNP property) you really need to give more detail than you have.

I find this troubling and I want to find out more. Any suggestions how/where I can do so?

[reece55]

Regarding Michael Pascoe's article that I reproduced above:

I did some research and went looking through BNB's recent reports. What he says may in fact be correct. What he says about the revaluations IS correct - they did occur. What is in issue is whether the revaluations take account of current true value. If they don't then BNB's Profit has been over stated.

What I have written is after looking at their results. I am happy to be corrected on any errors:

REVALUATION OF ASSETS
On the Appendix 4E of their accounts for 2007, page 68, there is an item of Revenue (which adds to profit) listed as "Fair value movement on investment property" in the amount of $100,631,000.


WHAT HAS BEEN REVALUED?
What exactly does this refer to? Some clues as to what this is referring to appear in the following:

Page 2 of "Full Year Results 2007 Announcement" attributes part of the increase of the revenue in the Real Estate division to the following:

"an uplift arising from the development of an Asian self storage portfolio.......and an uplift in the value of the BNP Residential Property portfolio in North America."

The "Full Year 20007 Results Presentation" also refers to "uplift in value" of Asian self storage and BNP Property in the USA in a few places.

So the $100M in revalued assets (which has increased profit) is due to 2 things:
a) its Asian self storage portfolio; and
b) rise in value of American BNP property

HOW MUCH OF THIS REVALUATION IS DUE TO ASIAN SELF STORAGE AND HOW MUCH IS DUE TO THE AMERICAN BNP PROPERTY?
Nowhere is it explicitly stated how much of the $100m is due to the revaluation of the Asian self storage and how much is due to revaluing the BNP Property in the USA.


LETS EXAMINE THE REVALUED BNP PROPERTY A BIT MORE
Since the BNP Property in the USA is more worrying of the 2, lets focus on that one.

Page 21 of the "Full Year 20007 Results Presentation" refers to
"The revaluation of the BNP multi-family portfolio in the US as disclosed at the interim result."

Frankly, IMHO this comment raises some red flags. It bascially implies that the revaluation was done before mid year, and so does not take account of events of the second half of 2007.

Page 23 of "Full Year 20007 Results Presentation" justifies this higher value given to the BNP properties by stating the following:
"The total investment is currently valued in excess of $1.8bn and includes nearly $1.5bn of non-recourse, debt. We remain very comfortable with the valuation of this portfolio on our balance sheet for a number of reasons including:
• Occupancy rates across the portfolio are well in excess of 90% and they have continued to experience strong NOI growth of approximately 4%.
• We acquired older properties in the high growth Sunbelt states. Our average price per unit for both deals is well below replacement cost for newly constructed comparable units.
• We financed our purchase primarily with 10yr fixed rate debt with a weighted average coupon of 5.65%. This debt is interest only and assumable.
• On December 21, 2007, we closed a sale on two properties from our Alliance portfolio at a cap rate of 5.43% based on in-place trailing 12 months NOI. We believe the assets in the BNP portfolio, which are on the balance sheet at an approximate 5.75% cap rate, are superior to the assets sold. At the end of the period Babcock & Brown’s direct and indirect equity in the portfolio was $136m."


NOT GOOD ENOUGH
Not good enough BNB! If you are going to revalue property in a falling market (as is the case of the American BNP property) you really need to give more detail than you have.

I find this troubling and I want to find out more. Any suggestions how/where I can do so?

Mr. T
With all due respect, the results announced are Appendix 4E style and as such, do not require the same level of disclosure as a full annual report in accordance with Corporations Act. I suspect the answer will come by either emailing their investor relations department if you are a shareholder or waiting for the full statutory accounts (due at the latest by 31 March 08).

Bare in mind that if you add something like this back (and I certainly do when I am valuing the Company), the effect on the bottom line would be about 70 Mil due to the tax effect. Granted, that's a big move, but even with an add back like that the result in my view is fairly robust. I still think that revaluations of investment properties should be taken to a reserve until realised, but good ole AASB 140 'Investment Properties' says otherwise. Note that this is the only item of PP&E that you can take through the P&L, the investment banks fought hard for that to be inserted into our Australian framework.

I'm glad that people are starting to read the financials of Companies again however, it's about time people started questioning the crap we accountants have been feeding the market in the last 3 years!

Cheers

[reece55]

Looking through the 4E again, I am a little more concerned about that valuation now.......

Have a look on page 79 in the notes section - the large majority of the valuation is at Director's valuation (like 1.3 Bil!!!!)....... ughhhhh god I hate that word in financials.... I will be looking closely at the statutory accounts to see how they determined the "directors valuation"....

Cheers

[Mr_T]

Recee55: Just how concerned how you?

Do you take the view that if BNB have been "economical with the truth" on this issue, it raises a whole lot of other questions?

[reece55]

Recee55: Just how concerned how you?

Do you take the view that if BNB have been "economical with the truth" on this issue, it raises a whole lot of other questions?

Well, I'm not overly concerned (happy with the rest of the financials thus far after a cursory glance), it is however a large increase in property holdings to shelve on your balance sheet when the **** has fallen out of the housing market, particularly in the US

They do note that two of the properties obtained from the original portfolio were sold at a cap rate of 5.43% and their valuation is at 5.75%, so depending on how long they intend on holding them, it could be close to the mark. They have time on their side in the fact that the debt attached to the acquisition is fixed for ten years and interest only......

However, I would have thought that the value would have gone down, not up, in light of the sub prime. Hence why I will be looking closely at the disclosure in the full report.

Cheers

[Mr_T]

Reece55:

As I said earlier, the revaluation seems to have been made in the first half of 2007.

From page 63 of the Appendix 4D of the INTERIM 2007 report it states there has been a profit of 62,698,000 on the BNP property (I assume this was on revaluation).

This on a property bought on 28 February 2007. It seems a bit strange that it went up in value in so few months. Even though the subprime crisis wasn't apparent in the first half of 2007, property prices were on the most part falling.

On the other hand, it is possible that they snapped up a bargain. If this is the case, you'd think they would be more open about it.

By the way, if you want to see the apartments that we are discussing, have a look at http://www.bnproperties.com/ . From there, can see the apartments and what rents they are seeking. Wonder if mortgage problems in the USA have caused an increase in rental demand for this type of apartments?

[reece55]

Reece55:

As I said earlier, the revaluation seems to have been made in the first half of 2007.

From page 63 of the Appendix 4D of the INTERIM 2007 report it states there has been a profit of 62,698,000 on the BNP property (I assume this was on revaluation).

This on a property bought on 28 February 2007. It seems a bit strange that it went up in value in so few months. Even though the subprime crisis wasn't apparent in the first half of 2007, property prices were on the most part falling.

On the other hand, it is possible that they snapped up a bargain. If this is the case, you'd think they would be more open about it.

By the way, if you want to see the apartments that we are discussing, have a look at http://www.bnproperties.com/ . From there, can see the apartments and what rents they are seeking. Wonder if mortgage problems in the USA have caused an increase in rental demand for this type of apartments?

Hi Mr T
Not denying that a large part was done in the first half. What I was pointing our was that they have achieved a revaluation for the year of about say 8% on the whole portfolio, which under normal conditions wouldn't be so far from the mark, but in the current environment does look a little cooked (i.e., I would have expected lower revaluation in second half and therefore less than 63 Mil rev booked through the P&L for revaluations)...

I will take a look at the link and see whether we can't match them to current market conditions...... BNB may have got a bargain, but I highly doubt BNP would have just given it to them for a song!!!!

Cheers

[Mr_T]

Assuming the rentals cited on that website are monthly (not weekly) looks predominantly like low rent apartments.

Some say that demand for renting such apartments is now high due to so many people losing their homes.

Which of course doesn't mean that the capital value of those apartments hasn't fallen.

[reece55]

Assuming the rentals cited on that website are monthly (not weekly) looks predominantly like low rent apartments.

Some say that demand for renting such apartments is now high due to so many people losing their homes.

Which of course doesn't mean that the capital value of those apartments hasn't fallen.

Yes, the rent looks pretty cheap to me, at max 3 bedrooms in good sections of America, they are looking at around $230 per week..... Even for someone living here in Adelaide SA, that seems pretty cheap to me (then again, Aussie rents are stupid at the moment)......

So, in summary, feeling a lot better now after taking a peek at the properties, but it would be nice for them to give us a bit better disclosure on the valuation...

Cheers

[Mr_T]

I'm glad these issues are being discussed here. They are very important.

The interior of the apartments looks pretty average to me. Certainly not slums, but hardly premium housing. Which in the current market is probably a good thing.

I wonder how the capital value of such properties has held up in the USA?

[Mr_T]

This is VERY worrying. Have a look at this.

http://business.theage.com.au/whos-next-for-financial-judgment-day/20080227-1v3x.html

If Babcock's satellites keep sinking (they had a good day yesterday), this could precipitate a downward spiral in confidence which could zap the upstream profit flow to the bank. As Babcock's model is predicated on ripping out unrealistically high fees early, they could be in trouble if the new strategy to shift to a wholesale global infrastructure fund model takes time to evolve.

Both Macquarie and Babcock overpay for assets and load them up with debt. In the early years they often pay interest only and therefore display a higher cashflow, hence more income back to the bank. If asset prices fall, though, which they appear to be doing, this game is over. Shrinking confidence and investor support combined with the demand from wholesale investors for more skin in the game will make things very messy.

The revaluation game in property is over: vid Centro.

Babcock however shelled out $1 billion last year at the top of the market for US real estate then casually booked a $100 million revaluation to profit even though property prices were dropping in the US and Europe.

More interesting is Note 30 on interest bearing liabilities, buried deep in the bowels of the accounts. Current liabilities - usually more visible in the balance sheet - stand at $2.9 billion. That would suggest $2.9 billion in debt needs to be rolled this year.

Among the total liabilities is ``OTHER secured by marketable securities'' of $631 million (up from $328 million).

The note says ``OTHER: Babcock & Brown has short term loans that are secured by marketable securities. Several of the marketable securities are accounted for using the equity method because of the size of Babcock & Brown's ownership interest. The loans are repayable within one year''.

One can only assume that these marketable securities are the various Babcock trusts. Has Babcock borrowed against its satellites? If so, BBI is down 20 per cent since December, BBW down 20 per cent, BBP is off a tad more and BJT is roughly even.

And these are presumably the most marketable securities in terms of liquidity.

On top of that operating cashflow was $507 million in the red (up from just negative $76 million), total liabilities stood at $13.1 billion while the finance bill was a hefty $662 million. On those numbers things are starting to look positively Allconian - although the structures are simpler with less cross-collateralisation.

Still, and this is where accounting is so grand - depending on one's perspective - Babcock managed to book a net profit of $639 million and predicted more of the same.

[reece55]

This is VERY worrying. Have a look at this.

http://business.theage.com.au/whos-next-for-financial-judgment-day/20080227-1v3x.html

If Babcock's satellites keep sinking (they had a good day yesterday), this could precipitate a downward spiral in confidence which could zap the upstream profit flow to the bank. As Babcock's model is predicated on ripping out unrealistically high fees early, they could be in trouble if the new strategy to shift to a wholesale global infrastructure fund model takes time to evolve.

Both Macquarie and Babcock overpay for assets and load them up with debt. In the early years they often pay interest only and therefore display a higher cashflow, hence more income back to the bank. If asset prices fall, though, which they appear to be doing, this game is over. Shrinking confidence and investor support combined with the demand from wholesale investors for more skin in the game will make things very messy.

The revaluation game in property is over: vid Centro.

Babcock however shelled out $1 billion last year at the top of the market for US real estate then casually booked a $100 million revaluation to profit even though property prices were dropping in the US and Europe.

More interesting is Note 30 on interest bearing liabilities, buried deep in the bowels of the accounts. Current liabilities - usually more visible in the balance sheet - stand at $2.9 billion. That would suggest $2.9 billion in debt needs to be rolled this year.

Among the total liabilities is ``OTHER secured by marketable securities'' of $631 million (up from $328 million).

The note says ``OTHER: Babcock & Brown has short term loans that are secured by marketable securities. Several of the marketable securities are accounted for using the equity method because of the size of Babcock & Brown's ownership interest. The loans are repayable within one year''.

One can only assume that these marketable securities are the various Babcock trusts. Has Babcock borrowed against its satellites? If so, BBI is down 20 per cent since December, BBW down 20 per cent, BBP is off a tad more and BJT is roughly even.

And these are presumably the most marketable securities in terms of liquidity.

On top of that operating cashflow was $507 million in the red (up from just negative $76 million), total liabilities stood at $13.1 billion while the finance bill was a hefty $662 million. On those numbers things are starting to look positively Allconian - although the structures are simpler with less cross-collateralisation.

Still, and this is where accounting is so grand - depending on one's perspective - Babcock managed to book a net profit of $639 million and predicted more of the same.

Mr T
I'm not so worried personally.........

In regards to the 2.9 Mil in current loans, it is hard to tell whether this is loans that are required to be rolled over this year, or whether items such as the Corporate Facility which have no fixed term and available at relevant market rates. Often whilst these are termed current because they have no fixed term, in reality BNB may be able to have the loan as long as it likes. I will await the final report to review.

Re the 630 Mil secured by marketable securities, it would seem logical that they would leverage their investments in associates against debt to obtain the yield differential. Net investments in associates was 1.9 Bil, so it's not like they are lacking collateral on the loan..... No problem here IMO.

Re the negative operating cash flow, the answer is pretty obvious - there was a net gain of 766,099 on the sale of assets. They obviously pay their staff bonuses, asset management costs and transaction and promotion expenses relative to this profit. But the cash flow attributable to the net gain is in investing activities. Now, you could argue that they will be hard pressed for this all to occur again at the same level, but the relevant expenses associated with the transactions will also not be there and they are sitting in operating cash flow -'s.

I don't think we are looking at an Allco here - AFG cross collateralised and used their own shares as collateral in their sattelite funds and ripped huge fees for complicated financial instruments. BNB sells infrastructure to its funds that have predictable cash flows and does it in a transparent fashion. This is not to say that BNB won't have a harder time making money, but at the end of it all, they have a stable set of satellite funds that have, so far, stood up t o the credit crunch......

Cheers

[Mr_T]

Reece,

Thanks very much for that.

At the top of Note 30 of the Appendix 4E it says:

"Babcock & Brown has a $2.35 billion revolving line of credit of which
$2,109.8 million (2006: $798.5 million) was drawn at 31 December 2007."

Could this be what you are referring to?

[Mr_T]

12 minutes into the Final Year 2007 webcast, Phil Green says the following:

"As at Dec 31, we had $240m of unused corporate facility and $364m of unrestricted cash. We have a three year Evergreen corporate debt facility whic is due for extension coming up now and we are confident that will be extended. We also already have approvals from some banks to actually increase that facility and one bank to join that facility which will increase our capacity at least in line with thecurrent covenants as obviously our net assets increase with retained earnings."


Not sure what to make of this, though the words "we are confident that will be extended" aren't quite as assuring as if he had said "we have received a new debt facility".

Still very worried.