What The Broker Thinks ... A Tale Of Two Stocks

The Age

Saturday April 27, 2002

Source: Deutsche Bank

CASE ONE

KAZ COMPUTER SERVICES

• Price: $0.64#

• Market capitalisation: $484 million

EARNINGS

• Net profit (Jun 2001): $11.7 million*

• Price-earnings multiple: 29.4 times

• Net profit (Jun 2002): $20.1 million^

• Price-earnings multiple: 21.2 times

PAYOUT:

• Dividend (Jun 2001): 0.6 cents*

• Dividend yield: 0.9 per cent

• Dividend (Jun 2002): 1.8 cents^

• Dividend yield: 2.8 per cent

CASE TWO

INFOMEDIA

• Price: $1.11#

• Market capitalisation: $356 million

EARNINGS:

• Net profit (Jun 2001): $12.8 million*

• Price-earnings multiple: 29.3 times

• Net profit (Jun 2002): $15.6 million^

• Price-earnings multiple: 25.2 times

PAYOUT:

• Dividend (Jun 2001): 2.5 cents*

• Dividend yield: 2.2 per cent

• Dividend (Jun 2002): 3 cents^

• Dividend yield: 2.7 per cent

7# Closing price at April 24 *Actual ^Forecast Source: Deutsche Bank

The acquisition of Aspect Computing elevates KAZ Computer Services into the top five IT services companies. KAZ founder Peter Kazacos was a former employee of Aspect and we believe the consolidation of the two cultures represents an excellent strategic fit with a common corporate culture. We also believe the combined capabilities provide improved capacity to win larger, more lucrative contracts that should deliver sustained growth in earnings.

Valuation/risks: Our valuation for the combined businesses is $1.10 a share. The key risk, as with any significant acquisition, remains execution in achieving the benefits without compromising existing customers and profitability. -- Deutsche Bank

The deal with Toyota - a five-year licence agreement to distribute its Microcat electronic parts catalogue (EPC) product into the United States (nonexclusive) and into Mexico (exclusive) - signals that Infomedia is now a global partner with the Japanese car giant.

This reflects the quality advantage that the Infomedia EPC has over its competitors. We are confident that this advantage will enable IFM to retain its data license contract with Ford Europe when the tender is decided in June.

Valuation/risks: We expect Infomedia will trade at a discount to our $1.63 share valuation until the Ford issue is resolved.

The key risk to Infomedia is the loss of the Ford contract. The value of the shares falls from $1.63 to $1.05 if that contract is lost. -- Deutsche Bank

© 2002 The Age

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