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

The Round Up
12 October 2009
Issue No. 194
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
CSL (CSLKZG) MINI Update – Gatting back to buy zone
RMD (RMDKZD) MINI Trading Buy – Acquisition of Narval
AGK (AGKKZE) MINI Investment Buy – Value in contract wins
Round Up Corner Strategy – Acquisition candidates

Equities

Move Last % Move Range Volume

ASX 200 -15.7 4752.9 -0.3% -19 to +35 $6.3 bn(A)
SPI - yesterday -23.0 4749.0 -0.5% -24 to +38 29,047(A)
Dow Jones +78.1 9864.9 +0.8% -22 to +78 Low
S&P 500 +6.0 1071.5 +0.6% -2 to +6 Low
Nasdaq +15.4 2139.3 +0.7% -6 to +16 Avg
FTSE +7.2 5161.9 +0.1% -24 to +17 Avg

Commodities

Move Last % Today % Past Month

Oil-WTI spot +0.1 71.8 +0.1% +0.6%
Gold Spot -5.9 1049.3 -0.6% +5.7%
Nickel (LME) -33.8 847.2 -3.8% +4.3%
Aluminium (LME) -0.1 85.0 -0.1% +0.9%
Copper (LME) -4.3 282.0 -1.5% -2.9%
Zinc (LME) -2.1 91.3 -2.3% +2.9%
Silver -0.1 17.7 -0.4% +8.6%
Sugar -1.3 20.7 -5.9% -1.5%
Dual Listed Companies (DLC’s)

Move %Move Last AUD Terms Diff to Aus

NWS (US) 0.14 0.01 +14.2 c 15.68 +16.0 c
RIO (UK) 13.50 0.00 +28.5 c 50.03 -1147.2 c
BLT (BHP UK) -7.50 0.00 +17.7 c 31.03 -682.4 c
BXB (UK) 4.00 0.01 +4.0 c 7.00 -9.7 c

American Depository Receipts (ADR’s)

Move %Move Last AUD Terms Diff to Aus

BHP (US) -0.65 -0.01 +68.7 c 38.03 +18.3 c
AWC (US) -0.28 -0.04 +6.8 c 1.88 +0.1 c
TLS (US) -0.23 -0.02 +14.4 c 3.19 +2.7 c
ANZ (US) -0.13 -0.01 +22.4 c 24.81 +18.9 c
WBC (US) -0.90 -0.01 +118.7 c 26.26 +13.9 c
NAB (US) 0.55 0.02 +28.8 c 31.84 +23.6 c
LGL (US) -1.09 -0.04 +28.2 c 3.11 -1.5 c
RMD (US) 1.04 0.02 +45.7 c 5.06 +6.1 c
JHX (US) 0.05 0.00 +34.4 c 7.60 -3.8 c
PDN (CAN) -0.23 -0.05 +4.5 c 4.74 -5.3 c

Overnight Commentary
United States Commentary
Volumes lower but importantly ongoing strength, the Dow closing on its highs up another 78pts. Support for heavyweight techs,
Chevron and a couple of the growth names accounting for most of the days gains. The S&P added 0.6% and the Nasdaq finished
0.7% higher.
Techs - IBM up 3% topping the space and the Dow, accounting for 25% of the day gains after a bullish broker report. Including an 18%
lift to price target, talking up chip demand and hardware sales the broker in question joins a list of 4 other broking houses predicting
20% upside from the stock in the near term.
Techs - The IBM upgrade set the tone for the rest of the space, accounting for c50% of the Dow's move. HP up 2%, Cisco and Intel up
1.5% and together with IBM filled 4 of 5 top spots on the Dow.
Bonds/FX - Ongoing fallout from a disappointing 30yr auction on the Thursday together comments from Bernanke the Fed is ready to
tighten, saw yields up 8, 13.3 and 13,5 across the 3 maturities. The DXY only marginally lower but the AUD up over a cent, trading
90.4c.
Eco - Just the one data point on Friday, the commerce Dept reporting an unexpecting narrowing in August, coming in at -$30.7bln vs -
$33.0bln expected and an improvement on July's -$32.0bln.

United Kingdom & Europe Commentary

The FTSE eked out a gain of 0.1% or 7pts as oil majors helped but miners were down on weaker metal prices. The FTSE Eurofirst 300
fell 0.3%, the DAX was off 0.1% and the CAC ended 0.2% lower.

UK Banks - Pressure on RBS and Lloyds saw those stocks off 1.25% and 0.3% respectively. The FT said the British government is to
start examining their loan pricing mechanisms. Standard Chartered fell 0.8% but HSBC and Barclays managed gains of 0.7% and
0.3% respectively.

Telcos - Vodafone was a big drag on the blue chips, shedding 1.6%, extending recent falls on concerns over a price war among Indian
mobile firms.

Pharma - With banks and miners weaker investors moved some cash into the sector. AstraZeneca and GlaxoSmithKline were up 0.4%
and 0.7% respectively Shire adding 0.5%.

Consumer Goods - Unilever was one of the FTSE's best, up 2.7%, after industry data showed sales of product lines such as ice-
cream and deodorant accelerating since July.
Commodiites Commentary
Miners - A stronger dollar saw weaker metal prices. BHP was off 0.4%, Anglo fell 1.4%, Xstrata dropped 1.3%, Vedanta also fell 1.3%
but Rio managed a gain of 0.5%.

Energy - Crude held above $71 which saw some of the oil majors gain. Shell climbed 1.7% after the Canadian and Alberta
governments promised C$865mn Shell develop carbon capture and storage at its oil sands processing plant. BG rose 0.9%, Cairn was
up 0.1% but BP fell 0.6% and Tullow was 1.7% lower.

SPI Commentary
The SPI traded down 23pts or 0.48% to 4749. Open at 4794 with a high of 4810 and a low of 4748. Volume 27,232. The SPI traded up
34pts to 4783.

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
US Columbus Day holiday
Tuesday AUS NAB Business confidence, NAB Business conditions
US
Wednesday AUS WMI consumer confidence
US Import price, retail sales
Thursday AUS RBA Governor speaks, RBA bulletin
US Business inventories, FOMC minutes, CPI, NY Fed Empire PMI
Friday AUS
US Philadelphia Fed index, industrial production, Michigan consumer sentiment
*Dates are indicative only and may change
MINI Update:

CSL Limited (CSLKZG) – Getting back to buy zone

CSL pulled back last week as the market shifted away from defensive names and those exposed to a rising AUD/USD.
Look to buy CSL below $31. RBS Research have a buy recommendation on the stock with a $36.30 target price. CSL is
likley to continue to benefit from Swine flu vaccine orders and the share buyback continues which will support falls in the
share price. Buy CSLKZG

Source: IRESS

CSL is trading in a pennant formation evidenced by the formation of higher lows and lower highs. The stock pulled back
from the top of its pennant last week. Look to buy below $31.

WHO says it could take years to downgrade swine flu

It could take years for the World Health Organisation to downgrade the H1N1 (swine) flu from a pandemic to seasonal-like
virus, the UN agency said over the weekend. The WHO moved its six-point pandemic alert level to the top level in June
2009. We believe that should the pandemic continue for another 2 or 3 years, governments across the world are likely to
either expand their vaccination process or continue to stockpile the vaccine. This would be a potential boon for global
H1N1 makers, including CSL. RBS Research are currently assuming the vaccine orders are one offs but should the size
of the order continue into FY11, this would increase EPS and valuation.

RBS MINIs over CSL

Security ExPrc Stop Loss CP ConvFac Delta Description

CSLKZG 2362.05 Long 1 1 MINI Long
CSLKZH 2069.14 Long 1 1 MINI Long
CSLKZQ 4406.25 Short 1 1 MINI Short
CSLKZV 4803.67 Short 1 1 MINI Short
CSLKZW 4011.05 Short 1 1 MINI Short
MINI Trading Buy:

ResMed (RMDKZD) – Acquisition of Narval

RMD announced this week the acquisition of Laboratoires Narval (LN) for €8m cash. LN is based in France and
manufactures and distributes a mandibular repositioning device (MRD). RBS Research believe this helps RMD expand its
offering into the mild end of the OSA market. RMD plans to commercialise the device in EU markets. RBS has a buy
recommendation on RMD with a $5.65 target price. RMD has recently pulled back to its medium trem uptrend. Buy
RMDKZD

Source: IRESS

RMD acquires Laboratoires Narval

RBS Research believe the strategic rationale for the acquisition is related to the potential for RMD to expand its offering
from moderate to severe OSA into the mild end of OSA. Hence, with this acquisition RMD is closer to becoming a
company that caters to the entire spectrum of OSA. RMD said it plans to commercialise this device in selected European
markets. LN already sells into France, Canada, Spain and the UK.

RBS target price is unchanged at $5.65. We continue to believe RMD is a quality franchise, with a number of near- and
medium-term growth drivers. Near-term catalysts include next week’s US Medtrade conference, which may see the
release of new products for the US market.

RBS MINIs over

Security ExPrc Stop Loss CP ConvFac Delta Description

RMDKZD 377.97 Long 1 1 MINI Long
MINI Investment Buy:

AGL Energy (AGKKZE) – Value in contract wins

RBS Research have upgraded AGK to buy recommendation with a $15.70 price target after updating the wind model for
1360GWh of desalination contracts, an expanded project pipeline and weaker near-term REC prices. The net changes
have pushed up valuation to $15.70. AGK is at the bottom end of its trading range. Buy AGKKZE

Source: IRESS

AGK has recently won 1360GWh worth of desal contracts in VIC and SA. While pricing hasn’t been released, RBS
Research estimate the group has locked in roughly A$120/MWh with CPI escalation. This ensures that economics will
remain robust on a large portion of AGK’s wind farm projects and also means new projects will be accelerated.

NSW remains a big opportunity

It appears that the NSW Government is inching towards a sell-down of its merchant energy assets in early CY10. We
think ORG’s large balance sheet leave it well placed to land the assets that it wants (likely EA), but we would argue AGK
is the clear runner up and this means it should still be able to land some accretive assets. A successful potential bid may
require an equity raising, but we have faith in AGK’s management that any deal would represent a very compelling
opportunity for investors.

Rating bumped back up to Buy

AGK’s share price has underperformed the market by almost 20% over the last 2 months, reflecting a shift away from
more defensive names. We believe the wind opportunity is not yet priced in by the market and expect this to occur
gradually over the next 12 months. The New South Wales opportunity can only deliver upside for shareholders.

RBS MINIs over AGK

Security ExPrc Stop Loss CP ConvFac Delta Description

AGKKZC 1063.09 Long 1 1 MINI Long
AGKKZE 1074.58 Long 1 1 MINI Long
AGKKZP 1772.7 Short 1 1 MINI Short
AGKKZQ 1915.68 Short 1 1 MINI Short
RBS Round Up Corner:

Acquisition Candidates
As the global financial crisis continues to recede, RBS Research Strategy believe we are about to enter into an
investment/M&A cycle in the market. Balance sheets are lowly geared, asset values are off their peaks and management
will be starting to think of expansion rather than survival. We identify potential acquisition candidates.

Both corporate balance sheets and cash flows are strong

Corporate cash flows remained robust in 2009 and we forecast growth will resume in 2010. Similarly, corporate
Australia’s balance sheet is in good shape following 18 months of capital preservation and record equity issuance.
Corporate Australia is therefore well placed to expand over the next 6-18 months.

MINIs approaching stop loss

Approx. MINI Share:

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

ANZ ANZKZW Short $27.90 $25.12 $ 25.03 $ 2.87 0.4%

OSH OSHKZS Short $7.49 $6.74 $ 6.66 $ 0.83 1.2%
MQG MQGKZZ Short $68.00 $57.80 $ 56.95 $ 11.05 1.5%
XJO XJOKZW Short $5,082.28 $4,833.00 $ 4,752.90 $ 3.29 1.7%
QAN QANKZQ Short $3.40 $3.05 $ 2.98 $ 0.42 2.3%
SFI’s approaching stop loss

Approx. MINI Share:

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

BXB BXBSZW Long $4.50 $5.18 $ 7.09 $ 2.59 26.9%

BSL BSLSZW Long $1.77 $1.95 $ 3.02 $ 1.25 35.4%
LLC LLCSZV Long $6.01 $6.90 $ 10.69 $ 4.69 35.5%
AGK AGKSZX Long $8.02 $8.81 $ 14.12 $ 6.10 37.6%
LEI LEISZV Long $20.62 $22.64 $ 36.41 $ 15.79 37.8%

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 ben.smoker@rbs.com
Robbie Taylor 02 8259 2018 robbie.taylor@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

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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