Newcrest Mining. Strong production result A$21.37 AUSTRALIA. Event. Impact. Earnings and target price revision. Price catalyst

Transcription

1 AUSTRALIA NCM AU Price (at 5:37, 27 Oct 216 GMT) Neutral A$21.37 Valuation A$ - DCF (WACC 5.%, beta.8, ERP 5.%, RFR 3.3%) month target A$ month TSR % Volatility Index Medium GICS sector Materials Market cap A$m 16,384 3-day avg turnover A$m 72.4 Number shares on issue m Investment fundamentals Year end 3 Jun 216A 217E 218E 219E Revenue m 3,295. 3, , ,384.7 EBIT m , Reported profit m Adjusted profit m Gross cashflow m 1,59. 1, , ,21.4 CFPS CFPS growth % PGCFPS x PGCFPS rel x EPS adj EPS adj growth % PER adj x PER rel x Total DPS Total div yield % Franking % 1 1 ROA % ROE % EV/EBITDA x Net debt/equity % P/BV x NCM AU vs ASX 1, & rec history Note: Recommendation timeline - if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period. Source: FactSet, Macquarie Research, October 216 (all figures in USD unless noted, TP in AUD) 27 October 216 Macquarie Securities (Australia) Limited Strong production result Event NCM s 1QFY17 production result was better than we had expected. Gold production of 615koz was 9% higher than our expectation while copper output was 12% higher. The stronger production result enabled NCM to report AISC of US$79/oz, 5% lower than our estimate. Impact Strong production result: NCM produced 615koz in 1QFY17, 9% higher than we had forecast. All six mines reported production either in line or ahead of our estimates. The most material beat was at Gosowong which produced 58koz, well ahead of our 32koz forecast. Cadia Valley also reported another strong quarter with gold and copper production 6% and 15% higher than we had forecast, respectively. Cash cost slightly better than expected: Group AISC of US$79/oz was 5% lower than we had expected. The higher copper by-product credits resulted in AISC at Cadia Valley of US$267/oz beating our forecasts by 24% while Bonikro also reported costs 21% below our forecasts. Despite the strong result, Gosowong AISC were in line with our forecasts while Lihir costs were 6% higher than we had expected due to impact of the planned shutdown. Changes in exploration portfolio: During the quarter NCM acquired 1% of SolGold (SOLG LN, Not Rated) for $22.8m, which owns the Cascabel Copper-Gold project in Northern Ecuador. In addition NCM reached an agreement to sell the Marsden Copper-Gold project tin NSW to Evolution Mining (EVN AU, A$2.19, Outperform, TP: A$2.9, Ben Crowley). Earnings and target price revision We have made some modest upward adjustments to our earnings forecasts for NCM after incorporating the 1QFY17 production result. Our FY17 earnings estimate rises 4% while our FY18 and FY19 estimates rise 1% and 2%, respectively. We note that our price target remains unchanged at A$24. despite the modest improvement in earnings. Price catalyst 12-month price target: A$24. based on a 5/5 Blend of 1.3x NPV and 12x OCF methodology. Catalyst: NCM is set to host its bi-annual investor day and analyst tour to its Cadia Valley and Lihir Island operations commencing 21 November. Action and recommendation Maintain Neutral: The 1QFY17 production beat was impressive given both Telfer and Lihir had mill shutdowns during the quarter although production guidance is at this stage unchanged although Cadia is expected to have a weaker 2QFY17. NCM is set to host an Investor day on 21 November and site tours of Cadia Valley and Lihir, and presents a potential major catalyst for the stock, with the main areas of focus expected to be the capex outlook at Cadia Valley and production and cost performance at Lihir. Please refer to page 7 for important disclosures and analyst certification, or on our website

2 1QFY16 production result was solid NCM produced 615koz of gold and 23.7kt of copper in concentrate in 1QFY17. Gold production was 9% higher than we had expected while copper production was 12% better. The higher copper by-product credits and stronger production result enabled NCM to report AISC of US$79/oz, 5% lower than we had anticipated. Fig 1 Headline production better than expected 4QFY16 production Macq Actual Variance Gold production (koz) % Copper production (kt) % Silver production (koz) % AISC (US$/oz) (5%) Source: NCM, Macquarie Research, October 216 The stronger production performance was across the board with all six of NCM s operating mines reporting production above our estimates. Gosowong was the major positive, reporting production 82% higher than we had expected and accounted for 5% of the group production beat. Copper output at Cadia Valley was also much better than we had expected and we note that 1QFY17 was the first time ore was sourced solely from Cadia East with production at Ridgeway now ceased. Fig 2 All mines reported higher production 4QFY16 production Macq Actual Variance Gold production by mine (koz) Cadia Valley % Telfer % Lihir % Gosowong % Bonikro % Hidden Valley % Total % Copper production by mine (kt) Cadia Valley % Telfer % Total % Source: NCM, Macquarie Research, October 216 Cash costs were lower at most mines Unsurprisingly, most mines reported lower cash costs on the back of the production beat, with Cadia Valley and Telfer benefiting from higher copper by-product revenue. However, at Lihir the slight beat in production did not translate to costs with AISC rising 6% with the weaker result reflecting additional costs relating to a planned mill shutdown. Fig 3 Costs lower at all mines expect Lihir AISC by mine (US$/oz) Macq Actual Variance Cadia Valley (24%) Telfer 1,18 1,66 (1%) Lihir % Gosowong (%) Bonikro 1, (21%) Hidden Valley 1,297 1,252 (3%) Group (5%) Source: NCM, Macquarie Research, October October 216 2

3 Changes to production and cost estimates We have made only modest changes to our production estimates for NCM after incorporating the 1QFY17 production result. We lift our FY17 gold production forecast by 2% and copper by 3%. AISC at the group level fall by 2%, due largely to the increased by-product revenue with our cost assumptions across all mines largely unchanged. We note NCM has kept its production guidance unchanged at Moz and 8-9kt of copper for FY17 and our forecasts remain in line with guidance, with gold towards the top end of the range and copper now moving towards the upper end of guidance. Fig 4 Production forecasts remain in line with guidance Production FY17e FY18e FY19e FY2e Gold production (koz) - old 2,57 2,467 2,138 1,822 Gold production (koz) - new 2,546 2,458 2,18 1,825 Change 2% (%) (1%) % Production FY17e FY18e FY19e FY2e Copper production (koz) - old Copper production (koz) - new Change 3% % % % Production FY17e FY18e FY19e FY2e AISC (US$/oz) - old AISC (US$/oz) - new Change (2%) (1%) (2%) (2%) Source: NCM, Macquarie Research, October 216 Earnings rise but price target unchanged We have made some modest upward adjustments to our earnings forecasts for NCM after incorporating the 1QFY17 production result. Our FY17 earnings estimate rises 4% while our FY18 and FY19 estimates rise 1% and 2%, respectively. We note that our price target remains unchanged at A$24. despite the modest improvement in earnings as much of the upgrade reflected adjustments to our deprecation assumptions beyond FY17. Fig 5 Modest upgrade to earnings Earnings changes FY17e FY18e FY19e FY2e FY21e Price Target Net profit (US$m) - old Net profit (US$m) - new Change 4% 1% 2% 4% 6% % Source: NCM, Macquarie Research, October October 216 3

4 Jun 16 Apr 17 Feb 18 Dec 18 Oct 19 Aug 2 Jun 21 Apr 22 Feb 23 Dec 23 Oct 24 Aug 25 Jun 26 Apr 27 Feb 28 Dec 28 Oct 29 Aug 3 Jun 31 Apr 32 Feb 33 Dec 33 Oct 34 Macquarie Wealth Management Fig 6 Cadia Valley production and costs Fig 7 Lihir production and costs Gold production (koz) AISC (US$/oz) , Gold production (koz) AISC (US$/oz) ,4 1,2 1, Source: NCM, Macquarie Research, October 216 Source: NCM, Macquarie Research, October 216 Fig 8 NCM net debt profile Fig 9 NCM Ebitda by mine 5, 4, 3, 2, 1, Net cash / (debt) (US$m) Gearing (%) 4% 2% % -2% 3, Cadia Valley Telfer Lihir Gosowong Bonikro Hidden Valley 2,5 2, 1,5 (1,) (2,) -4% 1, (3,) (4,) -6% 5 (5,) -8% Source: NCM, Macquarie Research, October 216 Source: NCM, Macquarie Research, October 216 Fig 1 NCM net cash vs market capitalisation 18, Net cash (US$M) Market cap (US$m) 16, 14, 12, 1, 8, 6, 4, 2, (2,) (4,) Fig 11 NCM NPV by asset Other 4% Gosowong 1% Lihir 29% Telfer 6% Wafi Golpu 6% Cadia Valley 54% Source: NCM, Macquarie Research, October 216 Source: NCM, Macquarie Research, October October 216 4

5 Fig 12 NCM summary financials Source: NCM, Macquarie Research, October 216 ASX: NCM Price: (A$ps) Year end: Jun Rating: Neutral Up/dn TSR Mkt cap: (A$m) 16,38 Diluted shares (m) Target: % 14% Mkt cap: (US$m) 12,449 Spot A$/US$.76 ASSUMPTIONS FY14a FY15a FY16a FY17e FY18e FY19e FY2e ATTRIBUTABLE MINE OUTPUT FY14a FY15a FY16a FY17e FY18e FY19e FY2e Exchange Rate A$/US$ Gold production Gold (US$/oz) 1,296 1,223 1,167 1,327 1,394 1,381 1,438 Cadia Valley (koz) Copper (US$/lb) Telfer (koz) RATIO ANALYSIS FY14a FY15a FY16a FY17e FY18e FY19e FY2e Lihir (koz) Diluted share capital m Gosowong (koz) EPS (diluted and pre sig. items) US Bonikro (koz) P/E x -5.9x 33.3x 37.7x 2.7x 18.x 28.3x 26.8x Hidden Valley (koz) CFPS US Wafi Golpu (koz) 6 P/CF x 13.x 9.8x 1.1x 8.5x 8.9x 1.7x 11.3x Total (koz) 2,396 2,423 2,439 2,546 2,458 2,18 1,825 DPS US Copper production Dividend yield %.%.%.5% 1.5% 1.7% 1.% 1.1% Cadia Valley (kt) Franking Level % % % % % 1% 1% 1% Telfer (kt) Book value per share US$ps Wafi Golpu (kt) 4 P/Book value x 1.7x 1.8x 1.8x 1.6x 1.5x 1.5x 1.4x Total (kt) R.O.E. (pre sig items) % 15% 4% 5% 8% 9% 5% 5% AISC (US$/oz) R.O.A. (pre sig items) % 6% 7% 5% 8% 9% 6% 6% Cadia Valley (US$/oz) Interest Cover x 4.7x 5.1x 4.x 9.2x 13.7x 11.3x 14.9x Telfer (US$/oz) , ,12 1,68 EBITDA per share US$ps Lihir (US$/oz) 1,132 1, EV/EBITDA x 11.7x 11.1x 11.3x 8.3x 7.3x 9.2x 9.1x Gosowong (US$/oz) FCF Yield 1% 7% 7% 7% 7% 5% 5% Bonikro (US$/oz) ,12 1,152 1,14 1,14 Hidden Valley (US$/oz) 1,3 1,382 1,187 1,245 EARNINGS FY14a FY15a FY16a FY17e FY18e FY19e FY2e Wafi Golpu (US$/oz) (214) Sales Revenue (US$m) 3,77 3,64 3,295 3,759 3,818 3,385 3,11 AISC (US$/oz) (US$/oz) Other Revenue (US$m) OPERATIONAL OUTLOOK Total Revenue (US$m) 3,77 3,64 3,295 3,759 3,818 3,385 3,11 Operating Costs (US$m) (2,164) (2,93) (1,892) (1,955) (1,879) (1,855) (1,613) Operational EBITDA (US$m) 1,543 1,511 1,43 1,84 1,939 1,529 1,497 Exploration Expense/Write-offs (US$m) (34) (3) (32) (61) (72) (74) (76) Corporate & Other Costs (US$m) (123) (96) (79) (79) (74) (76) (82) EBITDA (US$m) 1,386 1,385 1,292 1,665 1,793 1,379 1,339 D&A (US$m) (638) (574) (698) (687) (7) (683) (626) EBIT (US$m) , RESERVES AND RESOURCES (ATTRIBUTABLE) Net Interest (US$m) (16) (158) (147) (16) (8) (62) (48) Reserves Copper Gold Profit Before Tax (US$m) , Project Mt % Mt Mt g/t Moz Tax Expense (US$m) 486 (335) (118) (262) (34) (19) (2) Cadia Valley 1,672.27% 4.6 1, Minorities (US$m) (5) (11) (3) (7) (12) (3) Telfer % Adjusted NPAT (US$m) 1, Lihir Significant Items (post tax) (US$m) (3,174) 69 6 Gosowong Reported NPAT (US$m) (2,15) Bonikro Hidden Valley Wafi Golpu % CASHFLOW FY14a FY15a FY16a FY17e FY18e FY19e FY2e Namosi 94.37% Net Profit (US$m) (2,15) Reserves 3,.36% 1.7 3, Interest/Tax/D&A (US$m) Resources Copper Gold Working Capital/other (US$m) 3, (37) Project Mt % Mt Mt g/t Moz Net Operating Cashflow (US$m) 965 1,28 1,241 1,463 1,411 1,166 1,18 Cadia Valley 3,312.25% 8.4 3, Capex (US$m) (823) (513) (491) (582) (492) (54) (467) Telfer % Investments (US$m) (13) (1) (25) Lihir Sale of PPE and Other (US$m) Gosowong Free cash flow (US$m) Bonikro Dividends Paid (US$m) (15) (22) (32) (142) (27) (169) (13) Hidden Valley Debt (US$m) (46) (76) (921) (1) (25) Wafi Golpu % Equity Issuance (US$m) (6) (7) (6) Namosi 1,52.35% 5.3 1, Other (US$m) Marsden % Net Financing Cashflow (US$m) (67) (789) (959) (142) (37) (169) (155) Total 5,936.33% , Net change in cash (US$m) (145) EQUITY DCF VALUATION Macquarie forecasts Spot prices Projects A$m A$ps A$m A$ps Cadia Valley 9, , BALANCE SHEET FY14a FY15a FY16a FY17e FY18e FY19e FY2e Telfer Cash (US$m) ,44 1,861 2,347 Lihir 5, , PP&E & Mine Development (US$m) 4,411 4,67 3,871 3,766 3,558 3,415 3,256 Gosowong Exploration (US$m) 5,538 5,16 5,2 5,2 5,2 5,2 5,2 Bonikro Total Assets (US$m) 12,799 11,83 11,191 12,78 12,426 12,378 12,58 Hidden Valley (11) (.1) (11) (.1) Debt (US$m) 3,839 3,87 2,16 2,16 2,6 2,6 2,35 Wafi Golpu Total Liabilities (US$m) 5,539 4,846 4,71 4,49 4,335 4,12 3,879 Undeveloped Resources Total Net Assets / Equity (US$m) 7,26 6,957 7,12 7,589 8,91 8,366 8,71 Corporate, forwards & other (2,56) (3.32) (2,482) (3.22) Net Debt / (Cash) (US$m) 3,76 2,889 2,17 1, (312) Cash Gearing (net debt/(nd + equity)) % 34% 29% 23% 15% 7% 2% (4%) Debt (2,88) (3.74) (2,88) (3.74) Gearing (net debt/equity) % 51% 42% 3% 18% 8% 2% (4%) Net Equity Value (@ 5.% WACC) 12, , Price Target (5% 1.3x NAV, 5% 12x OCF) 24. 3, 2, 1, Cadia Valley Telfer Lihir Gosowong Bonikro Hidden Valley Wafi Golpu AISC (US$/oz) FY11a FY12a FY13a FY14a FY15a FY16a FY17e FY18e FY19e FY2e FY21e FY22e FY23e 1,5 1, 5 27 October 216 5

6 Macquarie Quant View The quant model currently holds a marginally positive view on Newcrest Mining. The strongest style exposure is Earnings Momentum, indicating this stock has received earnings upgrades and is well liked by sell side analysts. The weakest style exposure is Quality, indicating this stock is likely to have a weaker and less stable underlying earnings stream. 589/1521 Global rank in Materials % of BUY recommendations 27% (4/15) Number of Price Target downgrades 5 Number of Price Target upgrades 1 Fundamentals Attractive Quant Local market rank Global sector rank Displays where the company s ranked based on the fundamental consensus Price Target and Macquarie s Quantitative Alpha model. Two rankings: Local market (Australia & NZ) and Global sector (Materials) Macquarie Alpha Model ranking A list of comparable companies and their Macquarie Alpha model score (higher is better). Factors driving the Alpha Model For the comparable firms this chart shows the key underlying styles and their contribution to the current overall Alpha score. Fortescue Metals Group 2.3 Fortescue Metals Group Rio Tinto 1.2 Rio Tinto Amcor BHP Billiton James Hardie Industries Orica Amcor BHP Billiton James Hardie Industries Orica % -8% -6% -4% -2% % 2% 4% 6% 8% 1% Valuations Growth Profitability Earnings Momentum Price Momentum Quality Macquarie Earnings Sentiment Indicator The Macquarie Sentiment Indicator is an enhanced earnings revisions signal that favours analysts who have more timely and higher conviction revisions. Current score shown below. Drivers of Stock Return Breakdown of 1 year total return (local currency) into returns from dividends, changes in forward earnings estimates and the resulting change in earnings multiple. Fortescue Metals Group Rio Tinto Amcor BHP Billiton James Hardie Industries Orica Fortescue Metals Group Rio Tinto Amcor BHP Billiton James Hardie Industries Orica % -5% % 5% 1% Dividend Return Multiple Return Earnings Outlook 1Yr Total Return What drove this Company in the last 5 years Which factor score has had the greatest correlation with the company s returns over the last 5 years. Price to Sales LTM Price to Cash LTM Price to Cash FY1 EV/EBITDA FY1 DPS Growth 5yr Historic Capex to Sales FY Incremental Capex Earnings Stability -3% -34% -34% -34% Negatives Positives 37% 36% 35% 33% -4% -2% % 2% 4% How it looks on the Alpha model A more granular view of the underlying style scores that drive the alpha (higher is better) and the percentile rank relative to the sector and market. Alpha Model Score Valuation Growth Profitability Earnings Momentum Price Momentum Quality Capital & Funding Liquidity Risk Technicals & Trading Normalized Score Percentile relative to sector(/1521) Percentile relative to market(/423) Source (all charts): FactSet, Thomson Reuters, and Macquarie Research. For more details on the Macquarie Alpha model or for more customised analysis and screens, please contact the Macquarie Global Quantitative/Custom Products Group (cpg@macquarie.com) 27 October 216 6

7 Important disclosures: Recommendation definitions Macquarie - Australia/New Zealand Outperform return >3% in excess of benchmark return Neutral return within 3% of benchmark return Underperform return >3% below benchmark return Benchmark return is determined by long term nominal GDP growth plus 12 month forward market dividend yield Macquarie Asia/Europe Outperform expected return >+1% Neutral expected return from -1% to +1% Underperform expected return <-1% Macquarie South Africa Outperform expected return >+1% Neutral expected return from -1% to +1% Underperform expected return <-1% Macquarie - Canada Outperform return >5% in excess of benchmark return Neutral return within 5% of benchmark return Underperform return >5% below benchmark return Macquarie - USA Outperform (Buy) return >5% in excess of Russell 3 index return Neutral (Hold) return within 5% of Russell 3 index return Underperform (Sell) return >5% below Russell 3 index return Volatility index definition* This is calculated from the volatility of historical price movements. Very high highest risk Stock should be expected to move up or down 6 1% in a year investors should be aware this stock is highly speculative. High stock should be expected to move up or down at least 4 6% in a year investors should be aware this stock could be speculative. Medium stock should be expected to move up or down at least 3 4% in a year. Low medium stock should be expected to move up or down at least 25 3% in a year. Low stock should be expected to move up or down at least 15 25% in a year. * Applicable to Asia/Australian/NZ/Canada stocks only Recommendations 12 months Note: Quant recommendations may differ from Fundamental Analyst recommendations Financial definitions All "Adjusted" data items have had the following adjustments made: Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests EPS = adjusted net profit / efpowa* ROA = adjusted ebit / average total assets ROA Banks/Insurance = adjusted net profit /average total assets ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation *equivalent fully paid ordinary weighted average number of shares All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards). Recommendation proportions For quarter ending 3 September 216 AU/NZ Asia RSA USA CA EUR Outperform 47.26% 55.5% 38.46% 45.47% 59.9% 48.21% (for US coverage by MCUSA, 8.2% of stocks followed are investment banking clients) Neutral 38.1% 29.31% 42.86% 48.77% 37.88% 36.79% (for US coverage by MCUSA, 8.25% of stocks followed are investment banking clients) Underperform 14.73% 15.19% 18.68% 5.76% 3.3% 15.% (for US coverage by MCUSA, 8.% of stocks followed are investment banking clients) NCM AU vs ASX 1, & rec history EVN AU vs Small Ordinaries, & rec history (all figures in AUD currency unless noted) (all figures in AUD currency unless noted) Note: Recommendation timeline if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period. Source: FactSet, Macquarie Research, October month target price methodology NCM AU: A$24. based on a 5/5 Blend of 1.3x NPV and 12x OCF methodology EVN AU: A$2.9 based on a Blend of 5% 1.4x NAV and 5% 6x CFPS methodology Company-specific disclosures: EVN AU: Macquarie and its affiliates collectively and beneficially own or control 1% or more of any class of Evolution Mining Ltd's equity securities. Important disclosure information regarding the subject companies covered in this report is available at Date Stock Code (BBG code) Recommendation Target Price 25-Jul-216 NCM AU Neutral A$ Jul-216 NCM AU Neutral A$23. 6-Jul-216 NCM AU Neutral A$24. 1-Jul-216 NCM AU Neutral A$ Mar-216 NCM AU Neutral A$ Feb-216 NCM AU Neutral A$ Jan-216 NCM AU Neutral A$ Dec-215 NCM AU Neutral A$ Oct-215 NCM AU Outperform A$ Oct-215 NCM AU Outperform A$ Sep-215 NCM AU Outperform A$ Aug-215 NCM AU Neutral A$ Jul-215 NCM AU Neutral A$ Jul-215 NCM AU Neutral A$ May-215 NCM AU Neutral A$ Apr-215 NCM AU Neutral A$ Mar-215 NCM AU Neutral A$ Feb-215 NCM AU Neutral A$ Jan-215 NCM AU Neutral A$ October 216 7

8 This publication was disseminated on 27 October 216 at 6:45 UTC. Macquarie Wealth Management 7-Oct-214 NCM AU Neutral A$ Aug-214 NCM AU Neutral A$ Jul-214 NCM AU Neutral A$ Feb-214 NCM AU Neutral A$ Jan-214 NCM AU Neutral A$9.5 5-Dec-213 NCM AU Underperform A$7. Target price risk disclosures: NCM AU: Any inability to compete successfully in their markets may harm the business. This could be a result of many factors which may include geographic mix and introduction of improved products or service offerings by competitors. The results of operations may be materially affected by global economic conditions generally, including conditions in financial markets. The company is exposed to market risks, such as changes in interest rates, foreign exchange rates and input prices. From time to time, the company will enter into transactions, including transactions in derivative instruments, to manage certain of these exposures. EVN AU: Any inability to compete successfully in their markets may harm the business. This could be a result of many factors which may include geographic mix and introduction of improved products or service offerings by competitors. The results of operations may be materially affected by global economic conditions generally, including conditions in financial markets. The company is exposed to market risks, such as changes in interest rates, foreign exchange rates and input prices. From time to time, the company will enter into transactions, including transactions in derivative instruments, to manage certain of these exposures. Analyst certification: We hereby certify that all of the views expressed in this report accurately reflect our personal views about the subject company or companies and its or their securities. We also certify that no part of our compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. The Analysts responsible for preparing this report receive compensation from Macquarie that is based upon various factors including Macquarie Group Limited (MGL) total revenues, a portion of which are generated by Macquarie Group s Investment Banking activities. General disclosure: This research has been issued by Macquarie Securities (Australia) Limited ABN , AFSL , a Participant of the ASX and Chi-X Australia Pty Limited. This research is distributed in Australia by Macquarie Wealth Management, a division of Macquarie Equities Limited ABN AFSL ("MEL"), a Participant of the ASX, and in New Zealand by Macquarie Equities New Zealand Limited ( MENZ ) an NZX Firm. Macquarie Private Wealth s services in New Zealand are provided by MENZ. Macquarie Bank Limited (ABN , AFSL No ) ( MBL ) is a company incorporated in Australia and authorised under the Banking Act 1959 (Australia) to conduct banking business in Australia. None of MBL, MGL or MENZ is registered as a bank in New Zealand by the Reserve Bank of New Zealand under the Reserve Bank of New Zealand Act Apart from Macquarie Bank Limited ABN (MBL), any MGL subsidiary noted in this research,, is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Australia) and that subsidiary s obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of that subsidiary, unless noted otherwise. This research contains general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice, you should consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. This research has been prepared for the use of the clients of the Macquarie Group and must not be copied, either in whole or in part, or distributed to any other person. If you are not the intended recipient, you must not use or disclose this research in any way. If you received it in error, please tell us immediately by return and delete the document. We do not guarantee the integrity of any s or attached files and are not responsible for any changes made to them by any other person. Nothing in this research shall be construed as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction. This research is based on information obtained from sources believed to be reliable, but the Macquarie Group does not make any representation or warranty that it is accurate, complete or up to date. We accept no obligation to correct or update the information or opinions in it. Opinions expressed are subject to change without notice. The Macquarie Group accepts no liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this research and/or further communication in relation to this research. The Macquarie Group produces a variety of research products, recommendations contained in one type of research product may differ from recommendations contained in other types of research. The Macquarie Group has established and implemented a conflicts policy at group level, which may be revised and updated from time to time, pursuant to regulatory requirements; which sets out how we must seek to identify and manage all material conflicts of interest. The Macquarie Group, its officers and employees may have conflicting roles in the financial products referred to in this research and, as such, may effect transactions which are not consistent with the recommendations (if any) in this research. The Macquarie Group may receive fees, brokerage or commissions for acting in those capacities and the reader should assume that this is the case. The Macquarie Group s employees or officers may provide oral or written opinions to its clients which are contrary to the opinions expressed in this research. Important disclosure information regarding the subject companies covered in this report is available at Macquarie Group 27 October 216 8