am i crazy for buying it lol......., page-16

For all concerned:

Source: Citigroup Smith Barney - 17 January 2005

Earnings & Recommendation Downgrade

Trying to find a bottom

† A profit update has caused us to reduce forecasts again and cut the dividend. The fundamentals look particularly tricky. Sales momentum is worse than expected and will cause significant problem in covering costs, particularly rental. The worse than expected apparel profit is another new worry, as sector sales have been reasonable and the currency should still have been supportive to margin.

† The profit guidance implies an improvement in H2FY05. This may be difficult to achieve given that we expect slowing retail spending and little currency benefit. Importantly, we do not believe a structural turnaround can be achieved in that time.

† Forecasts should therefore continue to be treated with caution. Based on our figures, the fixed cover charge is only marginally above 1.2 times and bank support is likely to be highly dependent on a clear turnaround in operating metrics.

† We have reinstated our Sell recommendation with a target price of $0.73 (from $1.05) due to profit downgrade, lower PER and lack of dividend. Our full year net profit has been reduced by 7% and 14% for FY05e and FY06e respectively. Considerable downside risk remains for forward earnings

*****************************************

These forecasts make you run a mile - wouldn't touch this stock in a million years on current fundamentals if you paid me!

Management needs to be totally restructured and a big clean out for this stock to regain any future creditability.

Perhaps they should look to John Fletcher to lead MRL when his contract expires in the coming year or two with CML!

Cheers Freakme