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

The Round Up
1 December 2009
Issue No. 229
The Round Up is a comprehensive daily note produced by the RBS Warrants
team providing an overview of market movements along with quality ideas for
warrant traders and investors.

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

Equities

Move Last % Move Range Volume

ASX 200 +129.2 4701.3 +2.8% +129 to +129

SPI - yesterday +99.0 4695.0 +2.2% +28 to +124
Dow Jones +34.9 10344.8 +0.3% -47 to +54
S&P 500 +4.1 1095.6 +0.4% -5 to +6
Nasdaq +6.2 2144.6 +0.3% -18 to +8
FTSE -55.1 5190.7 -1.0% -55 to +25

Commodities

Move Last % Today % Past Month

Oil-WTI spot +1.10 77.15 +1.4% -0.1%
Gold Spot +0.67 1178.30 +0.1% +12.8%
Nickel (LME) +14.38 740.95 +2.0% -10.3%
Aluminium (LME) +1.95 92.03 +2.2% +8.2%
Copper (LME) +3.53 313.11 +1.1% +6.9%
Zinc (LME) +4.18 103.99 +4.2% +7.4%
Silver +0.13 18.43 +0.7% +13.2%
Sugar -0.13 22.07 -0.6% -0.4%
Dual Listed Companies (DLC’s)

Move %Move Last AUD Terms Diff to Aus

NWS (US) unch unch 13.69 14.95 -16.8 c
RIO (UK) -1.5 p -0.0% £30.88 55.48 -1618.4 c
BLT (BHP UK) -6.5 p -0.3% £18.575 33.37 -793.0 c
BXB (UK) -8.3 p -2.3% £3.510 6.31 -29.4 c

American Depository Receipts (ADR’s)

Move %Move Last AUD Terms Diff to Aus

BHP (US) +0.60 +0.8% 75.29 41.12 -18.5 c
AWC (US) -0.04 -0.7% 5.62 1.53 -0.5 c
TLS (US) +0.13 +0.8% 15.53 3.39 -1.8 c
ANZ (US) +0.84 +4.3% 20.25 22.12 -3.3 c
WBC (US) +4.74 +4.5% 110.58 24.15 +1.5 c
NAB (US) +1.25 +5.0% 26.15 28.56 -6.0 c
LGL (US) +0.43 +1.3% 32.82 3.58 -1.5 c
RMD (US) -0.09 -0.2% 50.31 5.49 -1.5 c
JHX (US) +0.93 +2.6% 36.97 8.08 -0.4 c
PDN (CAN) unch unch 3.94 4.08 -4.5 c

Overnight Commentary
United States Commentary
US investors a little unsure what to make of the UAE's pledge to back Dubai banks. After a reasonable start, the Dow
quickly gave back early gains, spent most of the session in and out of positive territory but heading into the last 20mins
has seen some late buying. A night of better than expected economic data together with a push back into financials has
kept bears at bay, the Dow up 40pts, the S&P 0.4% higher and the Nasdaq up 0.2%.
Financials - A clear standout after the UAE's pledge to stand behind Dubai's banks and as a consequence, default
spreads started to head back in the right direction. US Bancorp currently the S&P100's best up 3.4%, Regions not far
behind trading nearly 3% higher, GS and Morgan Stanley up 2% and on the Dow Amex top off of the list up 1.4%, BofA
+0.9% and JP's trading 0.7% higher.
Eco - Chicago PMI for November 56.1 vs 53.0 expected and up on October's 54. NAPM Milwaukee 57.0 in November up
50.0 in the month prior. Dallas Fed Manufacturing Activity +0.3% vs consensus looking for a flat reading and a big
improvement on last months 3.3% contraction.
Steels - On an otherwise mixed night for cyclicals and resource stocks, steels were the standout, the sector up nearly 2%
post a broker uprade.The report in question arguing steel prices in the US had bottomed , prompting a shift from neutral
to attractive.

United Kingdom & Europe Commentary

European markets drifted off again last night with most indices off around 1% as investors come to terms with the fact the
British banks are likely to feel the most impact by the repercussions of the Dubai's debt payment restructuring. Not
surprisingly the financials led the way lower.
Financials - British Lenders including HSBC and Standard Chartered have about $50bn invested in the region. Dubai
World has announced this morning that $26bn is the amount that is effected by the standstill request, however we have
seen this number change many times over the course of the last 3 days.
Energy - BP , Europe's 2nd largest oil company and Italy's Eni SpA plan to produce the worlds first coal-bed methane for
liquefaction as global demand expands. They have signed a production sharing contract with Indonesia. The suggestions
are that Indonesia may hold as much as 450 trillion cubic feet of gas.
Currency - The pound fell against all 16 of their most traded currencies tracked by bloomberg last night after the
consumer confidence number showed a fall for the first time in 10 months. Expectations are for further reductions in GDP
forecasts.
Commodites Commentary
Oil +1.6%; Gold +0.2%, Nickel +2.0%, Aluminium +2.2%, Copper +1.1%, Zinc +4.2%, Silver +0.9% .

SPI Commentary
The SPI traded up 115pts or 2.5% to 4696. Open at 4581 with a high of 4720 and a low of 44534. Volume 39,097. Overnight the SPI
traded up 10 to 4706.

SPI Intraday SPI Daily

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

Upcoming Economic Events for the Week

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

United Group (UGLKZC) – Top sector pick

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

Source: IRESS

Maintenance of the Moranbah schedule supportive of resources growth

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

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

RBS MINIs over UGL

Security ExDate ExPrc CP ConvFac Delta Description

UGLKZC 780.04 Long 1 1 MINI Long
MINI Trading Buy:

Brambles (BXBKZG) – Recovery Story

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

Source: IRESS

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

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

Buy at the bottom for longer-term upside

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

RBS MINIs over BXB

Security ExPrc Stop Loss CP ConvFac Delta Description

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

Telstra Corporation (TLSSZX) – Regulatory risk falling

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

Source: IRESS

Proposed legislation unlikely to return

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

Possible election in 2010 adds to the pressure

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

Good options for long-term value

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

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

RBS SFIs over TLS

Security ExDate ExPrc CP ConvFac Delta Description

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

Banks Sector Update – ANZ,CBA,NAB,WBC

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

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

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

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

Disclaimer:
The information contained in this report has been prepared by RBS Equities (Australia) Limited (“RBS”) (ABN 84 002 768 701) (AFS Licence No
240530) (“RBS Equities”) and has been taken from sources believed to be reliable. RBS Equities does not make representations that the information is
accurate or complete and it should not be relied on as such. Any opinions, forecasts and estimates contained in this report are the views of RBS
Equities at the date of issue and are subject to change without notice. RBS Equities and its affiliated companies may make markets in the securities
discussed. RBS Equities, its affiliated companies and their employees from time to time may hold shares, options, rights and warrants on any issue
contained in this report and may, as principal or agent, sell such securities. RBS Equities may have acted as manager or co-manager of a public
offering of any such securities in the past three years. RBS Equities’ affiliates may provide, or have provided banking services or corporate finance to
the companies referred to in this report. The knowledge of affiliates concerning such services may not be reflected in this report. This report does not
constitute an offer or invitation to purchase any securities and should not be relied upon in connection with any contract or commitment. RBS Equities,
in preparing this report, has not taken into account an individual client’s investment objectives, financial situation or particular needs. Before a client
makes an investment decision, a client should, with or without RBS Equities’ assistance, consider whether any advice contained in this report is
appropriate in light of their particular investment needs, objectives and financial circumstances. It is unreasonable to rely on any recommendation
without first having consulted with your adviser for a personal securities recommendation. This information contained in this report is general advice
only. RBS Equities, its officers, directors, employees and agents accept no liability for any loss or damage arising out of the use of all or any part of the
information contained in this report. This Information is not intended for distribution to, or use by any person or entity in any jurisdiction or country where
such distribution or use would be contrary to local law or regulation. If you are located outside Australia and use this Information, you are responsible
for compliance with applicable local laws and regulation. This report may not be taken or distributed, directly or indirectly into the United States, or to
any U.S. person (as defined in Regulation S under the U.S. Securities Act of 1993, as amended.
The warrants contained in this report are issued by RBS Group (Australia) Pty Limited (ABN 78 000 862 797, AFS Licence No. 247013). The Product
Disclosure Statements relating to these warrants are available upon request from RBS Equities or on our website www.rbs.com.au/warrants

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

Explanation of Warrant Tables:

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