any thoughts on SCG?, page-3

ok kytbm, here is a selection of research that is current. Most brokers/IB have a neutral rating on it simply because of the low growth numbers. Goldmans, UBS and CreditS are all neutral (per below).

Another pt to note - from an industry insider - is that most instos are flocking to this stock and advising accordingly. I am an analyst. There are a few key pts to note:
1. Oz capex contracted qoq and pcp yet again - pointing to not much development overall.
2. The implication is that GDP will likely drop
3. Upside risk to Unemployment numbers
4. RBA likely to do another cut (25bps) due to above pts.
5. While AUD is 78c against the $US it is still historically high

What all this means is that domestic rates are likely to favour a cycle of cuts. There will be a race to yield as banks will never be able to compete with annuity style payout from infrastructure, utils, REITS (like SCG). Nice, stable income is the name of the game.

SCG is a core asset in any portfolio given current mkt conditions. Oz growth is going to slow given reduce capex numbers, projects shelved due to end of comm super cycle (incl energy - oil/gas), and industries become more mature (IT, Banking etc). Normally what would happen in a well balanced eco is a rebase to dom output and consumption. The low AUD supports this model however we lost out manf base a long time ago so we cant rely on this. Thus, imports will continue to fill the gap. The strategy over the next 5-years (which is generally how I invest) is to get into stable, high-yielding equities. Banks are a no, no however - earnings will start to taper in year 3 when the rate cycle turns from cut to rise to stem inflation from imports etc. Its at this point that cracks in housing will start to appear and prop prices drop back to more sustainable levels. All-in-all you want to be in stability now to lock in yield.