around the traps... with the ferret

  1. 4,756 Posts.
    Around the Traps... with THE FERRET
    07:32, Tuesday, 22 February 2005

    Sydney - Tuesday - February 22: (RWE Australian Business News)

    The market is so hot and prices so high you'd think a punter
    has missed the boat on most stocks.

    But no.

    Take BILLABONG (BBG), for example.

    The market knew it was travelling well and the price was
    already up from $7.50 a year ago to $12.90 in anticipation of a big

    Despite that, the stock took off like a rocket yesterday after
    its 73 per cent profit rise in the first half, and an upgrade in
    full-year expectation from a 30 per cent profit rise to 40 per cent.

    The buying was relentless and day-long.

    The shares soared $1.58 to close at a record $13.70.

    It must have been the upgrade that did it.

    A 40 per cent rise would give the company EPS of 60c so traders
    were yesterday stumping up a forward p/e of more than 22 times for the
    stock, which is probably not that excessive, given the company's
    sharply rising earnings.


    We've written recently about what value we should ascribe to
    the "very" word in company language.

    Billabong CEO Derek O'Neill gave us a clue yesterday.

    In fact, it was a "very strong" clue.

    He said the 73 per cent higher first-half result reflected a
    "very strong" retail environment in several key markets.

    OK, so "very" is something around the 70 per cent plus mark.

    Mr O'Neill also said it had "certainly been an exceptional" six

    So "very strong" is also "exceptional".


    If "very" is 70 per cent-plus then it's no wonder MACQUARIE
    BANK (MBL) is still climbing.

    On Friday CEO Allan Moss told an analysts' briefing he expected
    the second-half result to March 31 to be "very substantially" higher
    and the shares rose $1.28 to $4.30.

    Yesterday the shares rose a further $1.74 to $51.04.

    Not only had punters not missed the boat, but the rise is

    Well, it was until a last-minute dip to $50.55.


    Meanwhile, the size of "very" is coming into focus at Macquarie

    Last night the billionaires factory revealed that when it said
    it expected a very substantial increase in its second-half profit,
    "this increase is currently expected to lead to the bank's net profit
    after tax attributable to ordinary equity holders for the year to 31
    March 2005 being up at least 40 per cent on the previous year,
    excluding the effects of the gain which has been brought to account as
    a result of the formation of the Macquarie Goodman Group".

    Maybe it wasn't only your scribe who has been scratching his
    head over how rich is their very.


    COOL OR COSY (COS), the company with catchy TV jingle, seems to
    be moving away from its well-known "environmentally friendly" slogan.

    These days it prefers the decidedly uncosy branding of "Total
    Comfort Solutions", which sounds more suited to a maker of orthopaedic

    This probably has something to do with the company's newer
    interest in air-conditioning which, as any greenie could tell
    you, is the main drain on the national power grid during summer months.

    Still, Cool or Cosy seems to be onto a good thing because it
    attributed its 24 per cent rise in first-half revenue largely to
    air-conditioning sales.

    Sales of the company's traditional insulation were flat and
    managing director Mario Di Lallo said, "The impact of mandatory
    insulation requirements for new homes has yet to be realised, given
    insulation is supplied at the end of what is becoming an increasingly
    longer construction period."

    Cool or Cosy fell 2c to 66c yesterday, well below the record
    93c set in November.


    Here's a passion killer for the market.

    IINET (IIN) announced after the close last night it was to
    place 28 million shares at $3.05 each to raise $85 million for the
    purchase of OzEmail and for working capital.

    The only trouble is Iinet was a near-record $3.58 when trading
    was suspended.

    The placement is going to the usual institutions and
    sophisticated investors but existing shareholders, particularly buyers
    over the past month, will be fuming.


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