FNArena Few Friends Left For PaperlinX FNArena News - April 19 2011 - PaperlinX removed from S&P/ASX200 index - Institutional investors less likely to look at the stock - Morningstar retains Avoid rating, expects tough conditions to continue 1. In the March quarterly re-balancing of the S&P/ASX200 index, PaperlinX (PPX) was removed from the index. Its market capitalisation at present of around $200 million was no longer justifies inclusion. 2. The index removal makes PaperlinX an even more unattractive investment, as not only operates the company in an unattractive industry, but there are now even fewer institutional investors able or willing to invest in the stock. 3. While PaperlinX offers leverage to the European and North American economies, Its earnings are unlikely to recover until both of these economies deliver sustained recoveries. Earnings improvement will also require an improvement in paper volumes. 4. A modest improvement in earnings in the second half of FY11, but with market conditions still difficult a breakeven net profit after tax result is forecast for FY11 as a whole. 5. PaperlinX is to reflect some reductions to long-term estimates and a higher cost of equity. The result is earnings per share estimates (EPS) of 0.0c this year and 1.4c in FY12. FNArena estimated earnings per share is 1.0c and 4.1c respectively. *** There were reduction in valuation for PaperlinX to $0.38 from $0.48 previously. PaperlinX was rated as Avoid by some analysts. The Buy ratings reflect expectations of price and margin improvements as conditions improve in PaperlinX's markets. But some analysts suggest that conditions remain difficult for PPX and any fix in terms of sustainable earnings improvement is likely to take more time. Shares in PaperlinX were trading down 0.5c at $0.205 in a market that is trading deep in the red. Over the past year PaperlinX has traded in a range of $0.32 to $0.84. *** (wdongli) Before 1st July, 2011, after DOW has been in upward for months with the risk to correct in the coming weeks, XAO is coming into its selling season, market sentiment here is extremely nervous, and high inflation expectation and high Australia dollar is in sight, PPX could be down further before being stabilized. Could it drop down lower than $0.10?