2009 - July/August

Charles Leyland

Founder and
managing director

Leyland Private Asset Management

WEBJET (WEB)

Webjet is a recognised brand providing internet technology to display different airfare prices online, enabling customers to compare and book fares from their homes.

In addition to being the monopoly aggregator within the Australian domestic market, Webjet also offers international airline bookings, alongside ancillary offerings such as accommodation and car rental. While its current business model is proving to be a success, we believe that Webjet will leverage off its brand name by launching its own branded airfares in which the customer books the flight which suits their budget and schedule, and Webjet only declares the airline after the booking is made.

This has numerous benefits; market share gains through direct Webjet bookings; increased penetration of last minute flights due to economic slowdown; suppliers can anonymously discount flights with available seats; and Webjet reduces leakage of clients booking direct through the native airline page after comparing prices at Webjet.

RESOURCE GENERATION (RES)

Formally known as Comdek Limited, Resource Generation is a coal mining/exploration company with mines in South Africa and Tasmania; they also have uranium assets in Cameroon. Resource Generation have appointed the highly respected Paul Jury as CEO and the company has been reinvigorated and recapitalised by the new management; we believe that the risk/ reward scenario should appeal to more aggressive investors. The potential, particularly from the South African mines is very exciting.

While not for every investor we believe Resource Generation has significant potential for investors looking for a potentially high return play with runs on the board and experienced management.

Gavin Wendt

Head of mining and resources research

Fat Prophets

COEUR D’ALENE MINES (CXCDA)

The company is one of the world’s biggest producers of silver metal and one of the precious metals sector’s best growth stories, but unfortunately its operational performance over the past couple of years has been quite frankly appalling. It’s fair to say that for operational reasons the market has until recently remained lukewarm to the stock, but we believe this will change during 2009 as it is set to be a very big year for the company. The recent commissioning of two major new silver mines (San Bartolome in Bolivia and Palmarejo in Mexico), which will generate almost three-quarters of the company’s planned 20 million ounces of silver and 85,000 ounces of gold production during 2009, represents a major turning point in the company’s fortunes.

It is therefore essential that the company maximises the performance and ramp-up of these new operations.

SANTOS (STO)

We have been watching Santos for some time and we now believe that a superb buying opportunity now presents itself. The company has thrown off its ‘boring’ tag and offers investors lots of upside potential, particularly with respect to its major stakes in two potentially huge LNG developments in PNG and Queensland. Of course these projects will require substantial capital funding, which is why Santos has entered into a potential $3 billion capital raising, with ordinary shareholders having the opportunity to participate.

The company offers investors lots of upside potential based on several key factors: its exposure to export LNG both in Queensland and PNG; and the potential for corporate activity now that the South Australian Government has removed the 15% shareholder limit.

Keith Nielsen

Founder and
chief executive

The Inside Trader

MACMAHON HOLDINGS (MAH)

Here’s a company that’s heavily involved in the mining and construction industry. They have just completed a $60 million capital raising to shore up their balance sheet to take advantage of any new government infrastructure projects and the potential rebound in the mining industry. The mining business provides a total service for open cut and underground operations, managing mines for major customers in Australia, New Zealand and Malaysia.

It’s currently trading at less than its stated net tangible asset value of 41c and eight analysts have a BUY recommendation on it.

AUSTRALIAN WORLDWIDE EXPLORATION (AWE)

Yes, I am still long term bullish on oil. AWE has extensive assets worldwide and brokers seem to have been taking notice.  AWE Ltd is an Australian oil and gas exploration and production company and was formed to appraise oil and gas discoveries in its initial asset portfolio and to build a significant international petroleum exploration and development entity through further international asset acquisitions. It currently has a 21% earnings yield and an asset backing of $1.83 per share. Definitely worth a look for long-term exposure to the energy sector.

SONIC HEALTH CARE (SHL)

Sonic Healthcare is an international medical diagnostics company, offering extensive laboratory medicine/pathology and radiology services to the medical community.

The company is structured as a decentralised federation of medically-led diagnostic practices. Being a large medical diagnostics business, they are well positioned to take advantage of increased business due to the aging population. This one is worth a look for a long-term investment. It’s currently paying 4.8% dividend yield.