Research Recommendations

Total shareholder return

For all stocks, the recommendation is based upon the implied upside/downside to the target price plus the dividend yield, ie total return. An Add/Reduce recommendation implies upside/downside of 10% or more and a Hold recommendation less than 10%.

A Speculative Buy recommendation applies to stocks exposed to a higher than usual level of risk, which is often accompanied by the potential for higher than usual capital upside. Risk may be influenced by factors including lack of earnings (eg start-ups, explorers), vulnerable balance sheets, small size and lower liquidity/higher volatility. Investors should exercise caution in determining their exposure to higher risk stocks in portfolios and consider whether the additional risk aligns with their overall investment objectives.

The target price is the level the stock should currently trade at if the market accepted the analyst's view of the stock, provided the necessary catalysts are in place to effect the change in perception.

If it is felt that the catalysts are not fully in place to effect a re-rating of the stock to its warranted value the target price will differ from 'fair' value.

Given the volatility of share prices and our pre-disposition not to change recommendations frequently, these performance parameters should be interpreted flexibly.

Performance in this context generally reflects total shareholder return and the horizon is 12 months.

Fixed Interest recommendations

Stock

Add - The current credit spread and yield of the security compare favourably to peer securities and offers an attractive total return for new investors.

Hold - The security's current pricing reflects fair value relative to peer securities.

Reduce - The current credit spread and yield looks expensive relative to peer securities. Holders should consider alternative securities.

Sector

Overweight - On balance, the sector offers good value (for the level of risk) relative to other fixed interest sectors.

Neutral - On balance, the sector does not offer compelling value (for the level of risk) relative to other fixed interest sectors.

Underweight - On balance, the sector does not offer sufficient value (for the level of risk) relative to other fixed interest sectors. 

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