Regulatory Guidelines Stock Profiles

Introduction

Zenith Investment Partners (“Zenith”) provides the following guidelines on Zenith’s processes and procedures relating to research services, research methodologies and conflict of interest management. This information also addresses Zenith’s obligations relating to regulatory guidance as specified by the Australian Securities & Investments Commission (ASIC). In particular, this document deals with Zenith’s obligations as defined by Regulatory Guide 79 and other regulatory guidelines and the Corporations Act.

Financial Services Guide

Zenith Investment Partners Financial Services Guide can be located here: Financial Services Guide.

Privacy Policy

Zenith Investment Partners Privacy Policy can be located here: Privacy Policy.

Services and Expertise

Zenith was formed as a Research House specialising in managed funds research in 2003 and is the holder of Australian Financial Services License (AFSL) No. 226872. Zenith is 100% owned by Directors and Senior Management and accordingly has no institutional ownership.

Zenith currently has a dedicated team of 11 full time analysts, 2 quantitative analysts, 2 portfolio specialists and additional analytical resources amongst the wider team that can be brought to bear as needed. Organisational structure is as follows:

Zenith organisation chart.

All Zenith analysts and senior personnel at minimum meet the general standards of competency required for AFSL holders as set out in ASIC Regulatory Guide 146 Licensing: Training of financial product advisers. RG 146 is a guide for Australian financial services licensees and representatives who provide financial product advice to retail clients. In addition, all analysts also have academic qualifications to degree level at minimum. Further details on Zenith staff can be found on the People pageFurther details on Zenith staff can be found on the People page at https://www.zenithpartners.com.au/People of Zenith’s website.

Stock Profiles

Stock Profiles are prepared by Zenith Investment Partners (ABN 27 103 132 672) (Zenith) using data sourced externally from Thomson Reuters for exclusive use by Zenith clients.

Zenith is the holder of Australian Financial Services License No. 226872 which was issued by the Australian Securities and Investment Commission on 10 April 2003 for the purposes of providing General Advice as defined under the Corporations Act 2001.

To the extent that any of the content in the Stock Profiles constitute advice, it is limited to General Advice for Wholesale clients only, and has been prepared without taking into account the objectives, financial situation or needs of any specific person. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Stock Profiles should not be read in isolation as they do not purport to contain all the information that prospective investors may require and are not considered to be a comprehensive statement on any matter nor to be relied on as such. Investors should seek their own independent financial advice before making any investment decisions and should consider the appropriateness of the information contained in any Stock Profile in light of their own objectives, financial situation or needs. Investors should obtain a copy of, and consider, the product PDS/ Prospectus or relevant offer document before making any investment or trading decisions. Investors should also consider market developments subsequent to the date of the Stock Profiles, and whether the information contained in the Stock Profiles is appropriate in light of their financial circumstances.

Further information on the services Zenith is licensed to provide can be found on our website.

Process and Coverage

Coverage

Zenith's Stock Profile investment universe is comprised of stocks listed in the ASX200 as determined by the S&P ASX 200 Index at the start of each month. The constituent list of the S&P ASX 200 is extracted from Thomson Reuters Datastream in the first week of each month and updated.

Thomson Reuters Scope & Expertise

Zenith Stock Profiles extract and use consensus recommendations, estimates and actual data from Thomson Reuters Datastream, utilizing the Institutional Brokers' Estimate System (I/B/E/S), Datastream and Worldscope databases daily at approximately 6am [EST] to get the previous business day’s last price and available estimates, actuals and recommendations.

Thomson Reuters' Institutional Brokers' Estimate System (I/B/E/S) has collected earnings estimates and recommendations from contributing analysts for over 40 years and applies a strict set of guidelines and policies before approving analyst firms for the provision of estimates and ratings.

Thomson Reuters’ approval process involves the provision of sample of research reports, three references from institutional clients, three references from company investor relations, details on the number of companies covered per analyst in the firm, and background information on the director of research from all potential contributing analyst firms. Once the approval process is finalized data from the contributing analysts are included in consensus recommendations and estimates.

The consensus recommendations used in Stock Profiles is obtained by Thomson Reuters by calculating the mean (average) of applicable analyst data for each stock from contributing analysts. The number of contributing analysts providing recommendations and estimates will vary between stocks as not all analysts will cover the same stocks.

Thomson Reuters strives to provide and maintain current estimates through continual analysis of the research, ratings and forecasts by applying a series of checks and measures to prevent stale data.

A contributing analyst’s estimates will be ‘Stopped’ and no longer displayed on products if:

  • The contributing analyst has dropped coverage.
  • The contributing analyst is "restricted" on the stock
  • Estimate has not been updated (confirmed or revised) for 210 days or more.
  • Recommendation has not been updated (confirmed or revised) for 180 days or more.
  • Target Price under review

A Contributing analyst's estimates will be filtered and excluded from the mean calculation if:

  • Estimate is on a different accounting basis than the majority of contributing analysts.
  • Estimate has not been confirmed or revised within 3 days of the issuance of a company’s earnings guidance if they are outside the guidance range.
  • Estimate is not on the majority basis pertaining to a corporate action or the estimate has not been updated to reflect a corporate action after the effective date.
  • Quarterly estimates revised without a corresponding adjustment to the annual estimate (all other period estimates for the same year are filtered).
  • Annual estimate revised without a corresponding adjustment to the quarterly estimates (all quarterly estimates for the same year are filtered).
  • A Thomson Reuters Market Specialist has requested data verification and no response was received for more than 48 hours.
  • Estimate is under review by the contributing analyst.
  • Estimate has not been updated (confirmed or revised) for 180 days or more.

Recommendation calculations

To ensure consistency the Thomson Reuters I/B/E/S recommendations use a 5 point scale which all contributing analysts must use, converting their system if required.

  1. Strong Buy
  2. Buy
  3. Hold
  4. Underperform
  5. Sell

The mean ratings are calculated as follows:

  • Strong Buy Less than or equal to 1.5
  • Buy Less than or equal to 2.5 but more than 1.5
  • Hold Less than or equal to 3.5 but more than 2.5
  • Underperform Less than or equal to 4.5 but more than 3.5
  • Sell More than 4.5
  • No Opinion Mean of 0

Fiscal Year-End

Different companies have different fiscal year end and reporting dates. Data is provided on each stock profile the day after it is available in Thomson Reuters Datastream.

More information on Thomson Reuters Datastream and I/B/E/S can be found:

Currency and Scope of Stock Profiles

Stock Profiles are prepared in good faith and updated in accordance with the Process and Coverage outlined in these guidelines. Stock Profiles are valid until they are updated, replaced or withdrawn and are subject to change at any time without notice. The data contained in Stock Profiles is believed to be reliable and reasonable and is based on the latest data available to Zenith but is not guaranteed to be accurate, complete or timely. Zenith has not independently verified the data and provides no warranty, representation or responsibility to update Stock Profiles or that they are current as at the date of any Stock Profile. Investors should make their own independent investigations regarding the accuracy, reliability and completeness. Except for any liability which cannot be excluded, Zenith, its associates, officers, directors, employees and agents do not accept any liability, whether direct or indirect arising from the use of information contained in Stock Profiles.

Past performance is not an indication of future performance.

Conflicts of interest

Zenith may receive a fee for other non-research related services such as subscription fees for Zenith’s research services and/or for the provision of investment consultancy services. Any conflicts of interests will be disclosed by Zenith as appropriate. Full details regarding Zenith’s management of actual or potential conflicts are outlined in Zenith’s Conflicts of Interest Policy https://www.zenithpartners.com.au/ConflictsOfInterestPolicy

Fee for Service

Zenith provides services to wholesale clients via subscription to its website with regard to general advice and commissioned research. Zenith charges standard fees for these services which are tailored in relation to the depth of services provided. Further details on Zenith’s fee arrangements can be found in Zeniths Financial Services Guide https://www.zenithpartners.com.au/FinancialServicesGuide

Copyright

The material contained in Stock Profiles is subject to copyright and may not be reproduced, stored or transmitted without the consent of the copyright owner. Stock Profiles also contains material that has been supplied by a third party and subject to copyright. Any such material is the intellectual property of that third party and must not be reproduced, stored or transmitted without the consent of that third party. © 2015 Zenith Investment Partners. All rights reserved