around the traps ... with the ferret

  1. 4,756 Posts.
    Around the Traps ... with THE FERRET
    07:21, Friday, 18 February 2005

    Sydney - Friday - February 18: (RWE Australian Business News) -
    ******************************

    Leaving forecasts unchanged is a wealth hazard on the stock
    exchange.

    Just look at LEIGHTON (LEI).

    It plunged 60c to as low as $10.40 on Wednesday after the
    announcement of a 20 per cent rise in first-half profit and a
    confirmation (actually a "re-confirmation") the full-year result would
    be "at least" $180 million.

    The stock dipped further to $10.38 yesterday before turning
    around and finishing the day up 12c at $10.56.

    COMPUTERSHARE (CPU) joined Leighton in the "forecast unchanged"
    trough yesterday.

    It plunged 68c to as low as $5.85 before closing at $6.06 after
    reporting a first-half net profit rise of 15 per cent.

    It was these words that the market took as a downer ... "In the
    context of these factors, excluding the expected positive contribution
    of EquiServe, we are at this time, remaining with our previous guidance
    that contemplates revenue growth greater than 10 per cent and earnings
    per share growth greater than 20 per cent".

    *****

    That EPS can be a bit of a quandary for us amateurs when
    analysing Computershare.

    The company has no fewer than five different figures for it.

    In the market announcement it says, "Normalised earnings per
    share (pre-goodwill and post preference shares and outside equity
    interests (OEI)) rose from 8.49c to 10.21c (up 20 per cent)".

    However, in the accounts EPS is shown in these forms - "basic"
    7.99c, "normalised basic" 6.28c, "diluted" 8.21c and "normalised
    diluted" 6.5c.

    And, guess what, none of the four is 20 per cent higher than
    the previous corresponding period.

    Whatever figure you care to use there is no doubt Computershare
    is trading at a very high p/e, which was the main point of our piece on
    the stock back in October after it announced the proposed acquisition
    of EquiServe, one of America's biggest share registrars, and the shares
    rose $1.40 to as high as $5.60 before closing at $5.25.

    We thought it was nutso behaviour at the time but what would we
    know ... the shares have been trading as high as $6.60 this month, so
    all those buyers back in October made money.

    But, getting back to the EPS, if you take the highest figure
    mentioned yesterday of 10.21c, and "annualised" it to 20.42c, it will
    put Computershare on forward p/e of a touch under 30.

    Take the lowest, 6.28c, and it's a forward p/e of almost 48.

    *****

    COLES MYER (CML) was so chuffed about its 17 per cent sales
    rise in the first half it forgot to give its boss a title or a first
    name in the press release ... just Mr Fletcher.

    Heck, what's it matter, we all know he's John and that he is
    the CEO.

    Traders were so chuffed with the figures they lifted Coles Myer
    shares 20c to $9.29.

    However, the shares had fallen from $9.63 to as low as $9.03 in
    the eight days preceding the sales announcement.

    *****

    We wish we knew the secret to how to make a motza in the hiring
    and firing business.

    First, you probably need the sort of talent that can come up
    with a company name like TALENT2 (TWO).

    That's with the number hard up agaisnt the letters and ... er
    ... the TWO is the ASX code, not part of the name.

    Second, you probably need to write stuff like this ... "the
    company had met its growth targets for the half-year and was on track
    in its plan to create Australia's first end-to-end human resource
    outsourcing services, complemented by a 'high end' Search and Selection
    business".

    It's working in the sharemarket, though ... end-to-end.

    Listed on June 1 with opening sales of $1.25, Talent2 rose 6c
    to as high as $1.46 yesterday before closing steady.

    *****

    Australia must be just one giant nickel mine.

    In recent weeks we have had ever richer strike announcement
    from stocks such as JUBILEE MINES (JBM) and MINCOR RESOURCES (MCR).

    Yesterday it was WESTERN AREAS' (WSA) turn.

    It said latest assay results from the Flying Fox deposit
    confirmed it is a major discovery.

    The 34m intersection averaged 4.4 per cent nickel and included
    intervals of 10.2m at 6.3 per cent, 6m at 8.5 per cent (including 1.3m
    at 11.3 per cent) and 2.2m at 8.2 per cent ... etc.

    The company says Flying Fox is an exceptional nickel deposit
    and with three drill rigs currently on site and a fourth on the way the
    good news may continue to flow.

    Western Areas rose 16c to a record $1.78 after the
    announcement.

    *****

    Mincor had another big day in the market yesterday, rising 5c
    to 82c on the back of a 143 per cent rise in net profit to $10.1
    million in the December half and a fully franked 1c dividend.

    Managing director David Moore said that given the ongoing
    capital and exploration expenditure spend, the dividend "really is a
    bonus".

    With strong nickel prices and rising production, as well as
    four drill rigs going flat out on nickel and gold targets, "we think
    shareholders have a lot to look forward to", he said.

    The shares have already risen 23c this month.

    *****

    Cyber-speak: Telstra confirms end customer impact is ongoing.

    (Translation: BigPond email is still down.)

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

    ENDS

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