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Stock of the week

Provided by Aspect Huntley

Caltex Australia Limited (CTX)

Recommendations

Accumulate

Investment ratings

CTX provides investors with the only Australian listed exposure to the petroleum refining and distribution sector. Gradual industry rationalisation is driving a fundamental shift in the demand- supply equation for transport fuels. Market leader CTX is well placed to benefit as it owns the largest refining capacity. Management dramatically overhauled the balance sheet while improving operating efficiency, refinery utilisation and margins. The business is now on a more stable foundation. Refining capacity is expanding in the Asian region and could impact refiner margins. Business risk is high given exposure to volatility in the oil price and currencies. CTX is only suitable for investors with above average risk tolerance as many factors influencing performance are out of management control.

Recent Analysis

1H09 earnings guidance on a replacement cost of sales (RCOP) basis is $270-295m - some 38-50% above 1H08 of $186m. Correctly the Board intends to take a conservative position on 1H09 dividend.

Previous close	52 week high	52 week low
$12.40	$14.00	$6.18
Sector
Energy
Market cap
$3,348 Million

Total shareholder return (avg annual rate)
1yr	3yr	5yr	10yr
7.2%	-17.3%	9.8%	18.6%

Earnings and dividends forecast (cents per share)
	2009	2010	2011
EPS (c)	68.9	141.0	139.8
PE Ratio (x)	18.0	8.8	8.9
DPS (c)	36.0	67.9	69.9
Div Yield (%)	2.9	5.5	5.6

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