around the traps ... with the ferret

  1. 4,756 Posts.
    Around the Traps ... with THE FERRET
    07:23, Tuesday, 1 February 2005

    Sydney - Tuesday - February 1: (RWE Australian Business News) -

    Two weeks ago Ferret suggested there was probably a perfectly
    logical explanation for two tollroad operators heading in opposite
    directions on the sharemarket.

    HILLS MOTORWAY (HLY) had reported a 4.9 per cent rise in
    December traffic and a 5.5 per cent rise in revenue - and had risen
    from $8.58 to a record $9 as a result - while TRANSURBAN (TCL) had
    reported a 4.4 per cent rise in traffic in the December quarter and an
    8.5 per cent rise in revenue - and fallen from a record $7.02 to $6.76.

    The disparity may have been explained by yesterday's takeover
    bid by Transurban for Hills worth (at time of announcement, at least)
    $9.98 a Hills security.

    If not that, then it was definitely an explanation for Hills
    coming home like a train - er, expressway - last week.

    It rose 33c on Thursday and a further 25c to a then record
    $9.60 on Friday before closing at $9.51.

    After the announcement Hills soared $2.54 to $12.05 and
    Transurban $1.49 to $8.25.

    The bid for Hills is now worth $12.12 ... and to think they
    used to say infrastructure is boring.


    Given the rally in Hills Motorway ended in a vale of cheers,
    should we read something into the latest rush on SIMS GROUP (SMS)?

    It's risen for the past three days and yesterday shot up 56c to
    a record $18.34 before closing at $18.

    Of course, Sims has been to $18 twice in the past three months,
    and come off the top, so it may be a normal fluctuation for a hot

    How hot should be known within days when Sims issues its
    half-yearly report.

    Its first-quarter profit was up 244 per cent.

    Last September it tipped first-quarter profit would exceed $50
    million ... it turned out to be more than $57 million.

    When it announced the first-quarter result it said it said it
    was confident that first-half earnings would exceed $100 million ...
    and it will turn out to be ... well, we'll have to wait and see.

    On a yearly basis that would give Sims an EPS of around $2.20.

    It would put the stock on a forward p/e of not much more than 8

    That's probably why the shares are rising ... compared with the
    rest it's cheap.


    Ferret always gets suspicious when companies do not provide a
    comparative figure.

    Such as SUPPLY NETWORK (SNL), which said that first-half
    pre-tax profit would be $742,000, a rise of 14.6 per cent, while
    after-tax profit would be $498,000 "or 2.25c per share".

    We looked it up ... net profit in the first half last year was
    $477,000 so the rise will be less than 5 per cent.

    However, the company points out the latest result reflects a
    return to a typical tax rate following an unusually low tax rate last

    The shares fell 4c to 71c after the news.

    We also noticed for the first time that the stock took off like
    a scalded cat in the week to January 19, from 55c to 77c.


    Further to our scholarly research pieces on ANGLO AUSTRALIAN
    RESOURCES (AAR) and its "bonanza" gold grades, MOTO GOLDMINES (MTO) and
    its "exceptional" grades, and HIGHLANDS PACIFIC (HIG) with
    "high-grade", er, grades, we see that a more substantial player has
    joined the fray ... JUBILEE MINES (JBL).

    Yesterday it announced "new high grade" massive nickel sulphide
    intersections from the Prospero and Anomaly 4 prospects.

    Initial results of this work were "very encouraging", it said,
    with "exceptionally high grade" results, including 3.8 metres at 15.1
    per cent nickel.

    Jubilee put in a high-grade day in the market after that and
    rose 19c to a 12-month high of $5.14.


    While we're on the subject, the quarterly report from Highlands
    Pacific last week shows that its Kora find in Papua New Guinea must be
    getting richer with age.

    When it first announced the find in September, and modestly
    described it as "high-grade", it was 1,960 g/t gold.

    In the detailed table on drilling results in the quarterly
    report the 2.3 metre intersection is shown as assaying 2,009 g/t gold
    ... AND 248 g/t silver.

    The shares were up 0.5c to 47c yesterday, but that's 0.5c below
    what it was when the quarterly was released.


    INTELLECT (IHG) has just completed a 14-for-10 share issue
    involving 725 million new shares, of which 576 million were taken up.

    Executive chairman Jos Haag said that from this recapitalised
    base "directors look forward to rebuilding the company and regaining
    shareholder value".

    That's going to be tough because IHG now has 754 million shares
    on issue but it's already on the way with IHG up 0.1c on Friday and a
    further 0.2c yesterday, to 3.2c.

    (Comments and complaints to [email protected] - no requests
    for advice please.)


    Copyright © 2005 RWE Australian Business News. All rights reserved.
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