huntley says sell

below exact extract from huntleys newsletter
might explain it down to 66 today and dropping


Investment Rating
DEX is a provider of industrial and office storage solutions. The company is set to benefit from growing demand for warehousing and the need to replace traditional shelving with smart storage solutions. In Australia, it is the largest player in the industrial and steel office storage markets. Strong brands and ability to offer a full range of products and services are competitive advantages. Organic growth is modest, generally rising and falling in line with economic conditions. DEX is a cyclical stock with potential growth and is suitable for medium risk-taking investors. Performance is mainly subject to timing of major project revenue and synergies from its acquisitions.


Result Description
Ceasing coverage on DEX


Impact
Since initiating coverage on DEX the outlook on the global economy has deteriorated significantly.


We no longer feel it is appropriate to recommend the stock to investors. Confidence in the resiliency of earnings during tough economic conditions is not high enough to support a positive recommendation. We think companies will cut back on capital spending and delay purchases of new storage solutions.


High gearing is also of concern, with net debt to equity at 98%. Historical EBIT interest cover of 4 times might prove thin if sales and margins plunge. Some 44% of group debt requires refinancing by 2010 with just over 50% maturing over 2011 and 2012. There is some breathing space. Refinancing would be tough in the current climate.


We advise investors currently holding the stock to Sell and shift holdings into higher quality businesses better placed to ride out the downturn.


We will monitor DEX’s performance over the near term, looking for performance of recent acquisitions, the sustainability of earnings and a reduction in gearing levels before restating an active recommendation.


Recommendation Impact (Last Updated: 04/11/2008)
Ceased coverage.