BNB - Babcock & Brown

[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

 

[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 ? 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.

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!!!!!

 

[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!!!!!

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.