2009 Media Releases

May 8, 2009

Deutsche Bank initiates coverage of Ausenco Ltd

Deutsche Bank has initiated coverage of engineering and project management company Ausenco Limited (ASX: AAX) with a Buy recommendation.

Research analyst Raymond Gonzalez initiated coverage with an A$4.00 twelve month price target.

Mr Gonzalez said, “While significant commodity price falls and subsequent investment cut backs have led to challenging conditions and reduced earnings visibility in the near term, Ausenco currently has US$25 billon in front end solutions (FES) and front end engineering and design work (FEED), which underpins our positive investment thesis. We see considerable upside to the current share price over the medium-term should Ausenco convert this record level of FES and FEED work to engineering procurement and construction management.”

The contracted FES and FEED work gives Ausenco a ready made pipeline of opportunity and while there is a risk of project delays, the question according to the Deutsche Bank research is when, rather than if, Ausenco can convert at least some of the work available. “We understand that Ausenco has achieved a conversion rate of well over 50% historically,” noted Mr Gonzalez.

“In addition, since making three acquisitions last year, we believe the company is a better rounded business with good depth in its customer base as well as more diverse geographically and by commodity,” he said. “Relative to other mining services companies that have lower returns and are more capital intensive, we believe short-term earnings risk is in the price.”

Ausenco Limited provides engineering and project management services to the global mining and minerals processing industry. The company specialises in engineering, procurement, construction management, project management, and the operation of mineral processing plants.

For further information, please contact:

Camilla Anderson (02) 8258 2731


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