2009 Media Releases

September 11, 2009

Deutsche Bank initiates coverage of Elders Limited

Deutsche Bank has initiated coverage of rural services company Elders Limited (ASX: ELD) with a Hold recommendation.

Research analyst Philip Pepe initiated coverage with an AUD 0.25 twelve month price target.

Mr Pepe said, “Elders has experienced volatile conditions over the past two years given the dry conditions in eastern Australia and volatile fertilizer prices. Under the previous management team, Elders invested in many different industries loosely related to Rural Services, accumulating a significant amount of debt over this period. The combination of volatile conditions and the amount of debt has led the new management team to significantly restructure the business, sell non-core asset and raise a large amount of new capital.”

According to Deutsche Bank research, the focus now is on the Transformation Program which is expected to improve earnings and reduce working capital. Deutsche Bank expects the Transformation Program to take three years to complete.

After a difficult FY09, Deutsche Bank forecasts revenue growth for the rural services division in the range of 4-5% per annum.

Whilst the “Elders’ EPS was significantly diluted by the recent deeply discounted capital raising”, it helped resolve the company’s debt issues. Deutsche Bank rates Elders as a hold, as we feel Elders is appropriately priced at these levels with the stock currently trading at a FY10E PE of 18.5x and in line with the AUD 0.25 price target.

Established in 1839, Elders is one of Australia’s largest rural services companies and was first listed on the Australian Stock Exchange in April 1983. The company operates four divisions: Rural Services, Financial Services, Forestry and Timber and Automotive. Elders provides farmers in Australia and New Zealand with an integrated service offering that extends from the supply of financial services and farm inputs to the marketing and sale of farm outputs.

For further information, please contact:

Amy King (02) 8258 2505



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