DOW

Sharemarket analyst Macquarie Research Equities have provided a 2007/2008 Australian Budget Impact statement. Investors who had been eagerly awaiting the release of the 2007-2008 Budget were last night greeted with a host of initiatives that included a significant boost to household disposable income.

Last week, global markets stumbled following reports that China was looking to impose controls to curb its rapidly growing economy and concerns that a soft landing for the US economy may be more difficult than first thought. In the background, the Australian reporting season continued its final week, here are analyst Macquarie Research Equities (MRE) observations and thoughts. The HY December 2006 aggregate earnings reported for the market printed 1.5 percentage points below analyst expectations versus those held at the start of this reporting season.

Downer EDI (DOW) shares have rallied 7 percent on Friday following the announcement that the company is the preferred tenderer for the Sydney Rail PPP (Public Private Partnership) contract. The Reliance Rail syndicate is the preferred tenderer to finance, design, manufacture and maintain 626 new rail cars for CityRail in NSW. The Reliance rail syndicate is 49 percent owned by Downer. Based on the proposed timetable and management presentation stock analyst, Macquarie Research Equities (MRE) have upgraded their EPS forecasts by 14% in FY09 when the contract should be fully up and running.

Aspect Huntley has downgraded the Downer EDI (DOW) stock to Hold from Buy and have cut their valuation of their stock to $6.50 down from $8.40. The downgrade in recommendation follows lower than expected profit result.

Macquarie Research Equities (MRE) has noted that about 65% of companies now having reported their profit results to the market. Stocks in the ASX100 have recorded 22 positive surprises and 9 negative surprises for the reporting season to date. The Ex100 was more volatile and reported 29 positive and 28 negative surprises.