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

The Round Up
3 September 2009
Issue No. 168
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
STO (STOVZJ) Trading Buy – A play on LNG
WDC (WDCKZG) MINI Investment Buy– Bottom of cycle?
TLS (TLSKZD) MINI Trading Buy – Buy the dips
Round Up Corner RBS Monthly Market Review – August 2009

Equities

Move Last % Move Range Volume

ASX 200 -76.4 4438.2 -1.7% -103 to + $6.6 bn(H)
SPI - yesterday -85.0 4436.0 -1.9% -116 to -69.u.c 45,640(H)
Dow Jones -29.9 9280.7 -0.3% -48 to +20 High
S&P 500 -3.3 994.8 -0.3% -6 to +2 High
Nasdaq -1.8 1967.1 -0.1% -10 to +7 High
FTSE -2.2 4817.6 -0.0% -43 to +2 High

Commodities

Move Last % Today % Past Month

Oil-WTI spot -0.01 68.04 -0.0% -2.0%
Gold Spot +22.55 978.90 +2.4% +2.6%
Nickel (LME) -8.03 821.01 -1.0% +1.1%
Aluminium (LME) +0.03 82.15 +0.0% -3.0%
Copper (LME) -1.29 279.33 -0.5% +7.7%
Zinc (LME) -1.15 81.77 -1.4% +4.4%
Silver +0.40 15.42 +2.7% +10.8%
Sugar -0.56 23.68 -2.3% +27.2%
Dual Listed Companies (DLC’s)

Move %Move Last AUD Terms Diff to Aus

NWS (US) +0.06 +0.5% 12.34 14.79 -12.7 c
RIO (UK) -19.00 -0.8% 23.12 45.09 -1100.6 c
BLT (BHP UK) -2.82 -0.2% 15.58 30.38 -626.2 c
BXB (UK) -4.00 -1.0% 3.83 7.46 -11.0 c

American Depository Receipts (ADR’s)

Move %Move Last AUD Terms Diff to Aus

BHP (US) +0.26 +0.4% 60.87 36.49 -15.4 c
AWC (US) -0.02 -0.4% 5.39 1.62 -1.5 c
TLS (US) +0.22 +1.6% 13.71 3.29 +1.7 c
ANZ (US) -0.22 -1.2% 17.69 21.21 +2.7 c
WBC (US) -0.10 -0.1% 100.61 24.12 -14.7 c
NAB (US) -0.18 -0.8% 23.43 28.09 -21.2 c
LGL (US) +1.82 +8.1% 24.41 2.93 +14.6 c
RMD (US) -0.08 -0.2% 45.33 5.43 -5.6 c
JHX (US) -0.46 -1.6% 28.26 6.78 -3.4 c
PDN (CAN) -0.02 -0.5% 4.15 4.50 -4.5 c

Overnight Commentary
United States Commentary
US markets fluctuated between positive and negative territory, spending most of the session in a narrow 25 pt range. However with
little stock specific to sink their teeth into investors failed to find a reason to support the index and the Dow closed down 29.9 pts. S&P
500 similarly off 0.3%.

Eco - Monthly employment losses continue to shrink, Aug Employment -298k, worse than the -250k forecast, but better than July's -
360k. 2Q Nom-Farm Productivity rose 6.6% vs 6.4% exp'd and up from 6.4%, Factory Orders +1.3% vs 2.2% exp'd, from 0.9%, 2Q
Unit Labour Costs -5.9% vs -5.8% exp'd vs -5.8% prev.

Industrials - Merck fell 3.1%, Intel down 1.3%, Disney off 1.1% and Home Depot lost 1% as investors remained unsure which way to
step after the previous days weakness, and with very few signals on direction available. Pulte fell 3.1% and Lennar down 2.9%.

Homebuilders - DR Horton fell 4.3% after being downgraded to 'sell' by one broker which said vauluation of the shares was "well
ahead of fundamentals". Hovnanian fell 7.3% after it reported its 12th straight quarterly loss as volumes remained low as customers
awaited further price declines.

Financials - JP Morgan slipped 1.9%, Bank of America down 1.2% and General Electric off 1.1% as the Fed minutes indicated
differences of opinions as to when to begin withdrawing the financial stimulus.

United Kingdom & Europe Commentary

The FTSE was flat as weakness in banks and miners were offset by a 'giant' find by BP in the Gulf of Mexico. The FTSE Eurofirst 300
was off 0.4%, the DAX fell 0.1% and the CAC was 0.3% lower.

UK Banks - Lloyds was the hardest hit bank, down 6.2%, after Britain's Guardian newspaper reported that they have won backing from
its investors to raise £10bn to reduce its dependence on the taxpayer. RBS, Barclays, HSBC and Standard Chartered shed 0.6% - 4%.

Eco - UK PMI Construction was worse than expected coming in at 47.7 vs 48 expected but up from 47 previously. Euro GDP was in
line both quarter on quarter and year on year.

Retail - Reinstated coverage of the retail sector by a broker saw upgrades. Wm. Morrison, which was among the broker's top UK
sector picks, put on 3.6%, while Tesco gained 1%, Sainsbury rose 0.3%, M&S added 0.5% and Kingfisher rose 0.8%..
Resources Commentary
Miners - Softer metal prices saw the sector take the most points off the index. BHP fell 1.8%, Rio was off 0.8%, Anglo dropped 1.6%,
Xstrata was 1.8% lower and Antofagasta ended down 3.3%.

Energy - The sector gained after news of BP's find filtered through the market and crude held around the $69 mark. BP was up 4.3%,
Shell rose 1.1%, BG Group added 1.8% but Tullow dropped 1.1%.

SPI Commentary
The SPI traded down 85pts or 1.88% to 4436. Open at 4449 with a high of 4452 and a low of 4405. Volume 38,200. Overnight the SPI
trading down 17pts to 4419.

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, real business sales, company profits,
real business inventories, small business profits
US Chicago PMI
Tuesday AUS AIG/PWC manufacturing PMI, building approvals, real net exports, current account balance, real public demand, RBA
cash rate decsiion
US
Wednesday AUS Real GDP
US ISM, pending home sales, construction spending, ADP employment report
Thursday AUS AIG/CBA services PSI, trade balance
US US FOMC minutes
Friday AUS
US Non farm payrolls, unemployment rate, average hourly earnings, consumer credit
*Dates are indicative only and may change

Upcoming Dividends

ExDivDate Security Description Div (c) Yield Frk(%) PayDate

3-Sep-09 NWS News Corp 6 0.9% 0 14-Oct-09
4-Sep-09 AGK AGL Energy 28 3.87% 100 30-Sep-09
7-Sep-09 AMP AMP Limited 14 4.72% 50 16-Oct-09
Trading Buy:

Santos Limited (STOVZJ) – A play on LNG

STO made a move to $16 where it found some resistance and closed at $15.80. Look for the stock to consolidate its
recent move up before moving to $16.50 which was resistance in March. RBS Research have a buy recommendation on
STO with a $16.50 target price. STO reported NPAT of $102mln which beat consensus. The stock went ex dividend 22c
and will not fully underwrite the DRP which suggests that the company has a strong funding position. Oil and gas stocks
have been strong following results, with STO underperforming WPL and OSH. STO remains RBS Research favourite
pick. Buy STOVZJ for a bounce to $16.50

Source: IRESS

STO has been moving higher since July and recently broke resistance at $15. The stock now looks headed to its march
high of $16.50 which is also RBS Research target price.

STO has transformed into an LNG stock with two recent deals being added to the portfolio of potential LNG
developments, bringing the total number of possible LNG assets, at differnent stages of development, up to five. Given
this new strategic direction, STO appears to predominantly position itself increasingly as an LNG player. RBS Research
believe that this makes the company attractive as a target to international oil companies seeking to participate in the LNG
race from an early stage.

RBS MINIs over STO

Security ExPrc Stop Loss CP ConvFac Delta Description

STOVZJ 24-Sep-09 $ 16.00 Call 4 0.10 Trading Call Warrant
STOVZK 29-Oct-09 $ 14.00 Call 4 0.20 Trading Call Warrant
STOVZY 24-Sep-09 $ 14.00 Put 4 -0.03 Trading Put Warrant
STOVZZ 29-Oct-09 $ 13.00 Put 4 -0.02 Trading Put Warrant

RBS Warrants over STO

Security ExDate ExPrice CP ConvFac Delta Description

STOKZD $ 8.8526 $ 9.93 Long 1 1 MINI Long
STOKZE $ 7.8670 $ 8.85 Long 1 1 MINI Long
STOKZT $22.5094 $ 20.47 Short 1 1 MINI Short
STOKZU $20.5563 $ 18.73 Short 1 1 MINI Short
MINI Investment Buy:

Westfield Group (WDCKZG) – Bottom of devaluation cycle?

Post result, WDC has maintained FY09 operating EPS guidance of 94-97cps, despite a cut in the FY10+ payout policy to
70-75%. With WDC arguably at the bottom of a challenging earnings and property devaluation cycle, RBS Research are
more confident of a sector re-rating and upgrade to Buy. RBS target price $14.16. WDC is trading in an uptrending
channel. Buy WDCKZG below $12.

Source: IRESS

RBS Research expect the level of cap rate expansion for WDC to ease materially and the NOI decline across the UK and
US portfolios to cease in the 2H09. RBS see ongoing rerating from here as evidence mounts of a stabilisation and slow
improvement in property markets and move to a Buy with a longterm positive disposition on quality property companies
such as WDC.

WDC reported negative revaluations of A$2.9bn across the portfolio which were not unexpected. The cut in the dividend
payout from 100% of operational earnings to 70-75% would no doubt have caught those expecting an equity raising by
surprise but we see this and the deferred development schedule positioning WDC well to respond to any upturn in the
broader property market.

RBS MINIs over WDC

Security ExPrc Stop Loss CP ConvFac Delta Description

WDCKZG 650.83 716 Long 1 1 MINI Long
WDCKZR 1847.47 1662 Short 1 1 MINI Short
MINI Trading Buy:

Telstra Corporation (TLSKZD) – Buy the dip

TLS traded back down to its medium term uptrend line having gone ex dividend 14c last week and post the Future Fund
offering 498mln TLS shares at $3.47 (cum dividend). RBS Research consider the Future Fund selldown a good thing for
shareholders despite the ongoing overhang. Use the pullback as a buying opportunity. RBS has a BUY on TLS with $4.50
target price. Buy TLSKZD

Source: IRESS

Telstra Result points and fundamentals

• Broadband ARPU up 6.5% to A$57.70. MBB SIOs doubled to 1.05m, helping lift mobile ARPU 4.8% to A$51.84
• Sales of IP-based products increased at double-digit rates. With the rate of PSTN erosion reducing in 2H09 (cf
1H09) the speed-driven revenue lines helped keep total revenue growth at 2.7%.
• Maintaining comparable revenue growth in FY10 may be harder as unemployment rises, the A$ strengthens and
Sensis sales face a tougher business environment.
• The company says achieving its FY10 targets ‘would give us significant excess free cashflow, and all the
flexibility that brings’. We think there is enough flexibility to contribute to NBN Co, on the right terms, and still pay
an extra 2cps in dividends fully franked.
• Key downside risks include further margin contraction, tougher regulation and lower access prices.
• Upside risks include faster sales recovery, better cost control and higher access prices. Regulatory issues may
be clearer when proposed legislation is tabled, we think by September.

RBS MINIs over TLS

Security ExPrc Stop Loss CP ConvFac Delta Description

TLSKZC 260.58 274 Long 1 1 MINI Long
TLSKZD 289.16 306 Long 1 1 MINI Long
TLSKZP 449.9 405 Short 1 1 MINI Short

RBS Warrants over TLS

Security ExDate ExPrice CP ConvFac Delta Description

TLSJZB 29-Oct-09 250 Call 1 0.88 HOT Instalment
TLSIZA 28-Jan-10 250 Call 1 0.95 HOT Instalment
TLSIZQ 14-Jun-10 250 Call 1 1 Rolling Instalment
TLSIZR 14-Jun-10 225 Call 1 1 Rolling Instalment
TLSSZX 4-Feb-19 193.88 Call 1 1 Self Funding Instalment
TLSSZZ 30-Jun-17 255.18 Call 1 1 Self Funding Instalment
RBS Round Up Corner:

RBS Monthly Market Review – August 2009

Sector performance – August 2009

Price Price Absolute performance (%) Relative performance

Sector
(%)
curr -12m 1m 3m 6m 12m 1m 3m 6m 12m
S&P/ASX 200 4479.1 5135.6 5.5 17.3 33.9 -12.8
200 Cons Discret 1490.1 1710.6 4.0 20.0 48.5 -12.9 -1.5 2.7 14.6 -0.1
200 Energy 16281.5 18704.3 6.1 10.9 33.8 -13.0 0.6 -6.4 -0.1 -0.2
200 Healthcare 8433.6 9733.6 7.1 11.9 -2.1 -13.4 1.5 -5.4 -36.0 -0.6
200 Info Technol 594.3 518.6 4.1 15.5 46.0 14.6 -1.4 -1.8 12.1 27.4
200 Materials 10955.2 14036.1 -1.3 7.9 31.8 -21.9 -6.8 -9.4 -2.2 -9.2
200 Industrials 3669.8 4858.2 11.3 25.9 56.7 -24.5 5.8 8.6 22.8 -11.7
200 Property 875.3 1459.2 14.1 20.0 31.3 -40.0 8.6 2.7 -2.7 -27.2
200 Cons Staples 7179.0 7338.7 1.0 12.7 18.0 -2.2 -4.5 -4.7 -15.9 10.6
200 Telecoms 1133.4 1486.4 -7.1 5.1 -5.8 -23.7 -12.7 -12.3 -39.7 -11.0
200 Utilities 4056.2 5327.6 -3.8 -1.6 6.3 -23.9 -9.3 -18.9 -27.6 -11.1
200 Fin Ex Property 5210.1 4967.1 11.8 29.2 50.6 4.9 6.2 11.9 16.7 17.7
Priced at close of business 31 August 2009.
Source: IRESS

A positive reporting season and improved macro backdrop: but where to from here?
The June 2009 reporting season in Australia was generally seen as successful. The high level of company earnings
surprise overshadowed a huge (19%) earnings fall on a pcp basis. The macroeconomic outlook also improved during the
month. However, market valuations remain fair to full, and the key question is what will drive the market further upwards
from here? We continue to position our model portfolio for economic recovery, but believe the strong market rally we have
seen over the past six months may slow somewhat from here.

Australia's performance vs the world

In local currency, the All Ordinaries (+5.5%) outperformed the US S&P 500 (3.4%), the regional MSCI ex Japan Index (-
0.7%) and the World MSCI ex Australia Index (+3.8%).

The best and worst performing sectors

The best performers were Property (+14.1%), Financials ex Property (+11.8%), and Industrials (+11.3). The worst
performers included Telecommunication Services (-7.1%), Utilities (-3.8%) and Materials (-1.3%).

The top five and bottom five performing S&P/ASX 200 stocks
The top five performers from the S&P/ASX 200 (price) Index for the month included ING Industrial Fund (+87.0%), PMP
Ltd (+81.0%), Flight Centre (+47.8%), Lynas Corporation (+44.9%) and Transfield Services (+44.6%). The bottom five
performers were Carnarvon Petroleum (-22.2%), Energy World Corporation (-21.1%), Atlas Iron (-18.6%), Independence
Group (-17.5%) and Sunland Group (-16.9%).

MINIs approaching stop loss

Approx. MINI Share:

Underlying MINI Code MINI Type Strike Stop Loss Share Price
Value Stop Loss

BXB BXBKZR Short $8.73 $7.85 $ 7.56 $ 1.17 3.8%

COH COHKZQ Short $68.41 $61.57 $ 59.07 $ 9.34 4.2%
WES WESKZT Short $29.61 $26.65 $ 25.53 $ 4.08 4.4%
CBA CBAKZT Short $50.33 $47.53 $ 45.49 $ 4.84 4.5%
XJO XJOKZX Short $4,889.94 $4,646.00 $ 4,432.70 $ 4.57 4.8%
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 [email protected]
Robbie Taylor 02 8259 2018 [email protected]
Ryan Corrigan 02 8259 2425 [email protected]
Investment Products Team
Elizabeth Tian 02 8259 2017 [email protected]
Tania Smyth 02 8259 2023 [email protected]
Robert Deutsch 02 8259 2065 [email protected]
Mark Tisdell 02 8259 6951 [email protected]

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
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in preparing this report, has not taken into account an individual client’s investment objectives, financial situation or particular needs. Before a client
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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