around the traps ... with the ferret

  1. 4,756 Posts.
    Around the Traps ... with THE FERRET
    07:31, Wednesday, 23 February 2005

    Sydney - Wednesday - Feb 23: (RWE Australian Business News) -
    ****************************

    When MACQUARIE BANK (MBL) said on Monday afternoon, after the
    close of trading, that when it said on Friday morning that the second
    half would be "very substantially" higher than the previous
    corresponding period, it meant "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".

    Yesterday the shares straight away shot up $1.40 to $51.95,
    making a total gain at that point of $4.35 since the very first mention
    of the "very" word.

    However, it then plunged as low as $49.50, a fall of $1.05 for
    the day.

    Profit-taking? ... or a realisation that 40 per cent is hardly
    in the "very substantial" class, at least in MacBank billionaire land?

    After all profit last year rose 48 per cent.

    Forty per cent this year is almost going backwards.

    *****

    MELBOURNE IT (MLB) was one of the tech boom's hottest floats
    when the shares soared to $17.

    Then it spiralled down into cents territory.

    Now it's making a comeback.

    Still only 60c a year ago, Melb IT yesterday rose 14c to $1.33
    on the back of an 82 per cent profit rise and the prediction of another
    strong year.

    However, seeing as how it's in the domain name business and
    all, it's a pity it puts out one of the least user-friendly
    announcements for the Internet.

    Yesterday's announcement was not only "uncopyable" (which is a
    major pain in the neck for us hacks) it was also l-o-o-ng.

    At 4.05 megabytes it took ages to download on cable, while
    dial-up shareholders would have had to wait all day (and then probably
    crash their computers).

    You'd think Melb IT, of all people, would appreciate the
    problems of the net.

    *****

    Traders, as usual, shot from the hip after ARISTOCRAT (ALL)
    announced its more-than-trebled and guidance-exceeding net profit for
    the year yesterday.

    They pushed the price up 25c to a record $11.10.

    They later thought about it and cut the price back to $10.54.

    Given the stellar result, the company's Outlook statement
    saying, "The group remains confident that its underlying businesses
    continue to be robust and their momentum positive" was a bit flat.

    How good is "robust"?

    It better be pretty good because at the peak price the buyer
    was paying more than 30 times earnings.

    Now THAT is robust.

    *****

    ONESTEEL (OST) also played the "robust" card, saying in its
    announcement of a 27 per cent first-half profit rise that "trading
    conditions remained robust for the six months".

    Also, "We expect overall market conditions to remain robust
    ...".

    Onesteel rose 5c to $2.82.

    *****

    Remember all those election excuses?

    It hasn't even happened yet but get ready for the interest rate
    rise excuses.

    DAVID JONES (DJS) CEO Mark McInnes got the ball rolling in
    yesterday's report of 5.5 per cent sales growth and an upgrade in
    guidance from a 5 per cent rise in profit after tax this year to the
    top end of its long-term annual target of 5 to 10 per cent PAT growth.

    But ... "Having said that, it is difficult to forecast how the
    second half of FY05 will evolve, with the expectation of interest rate
    increases and retailers increasingly fighting for revenue."

    David Jones lost an early 7c rise to close down 3c at $2 ...
    probably on interest-rate-rise fears.

    *****

    FOSTER'S (FGL) yesterday argued its case in the SOUTHCORP (SRP)
    takeover tussle, saying its bid price was:

    1. A substantial premium to the average broker valuation, even
    after recent upgrades,

    2. One of the highest multiples ever offered for a major wine
    company, and

    3. A substantial premium to the trading multiples for
    comparable companies.

    Southcorp shareholders might be impressed but Foster's
    shareholders must be horrified.

    Foster's fell 4c to $5.24.

    *****

    It's hard to believe but business can sometimes be too good.

    Just ask KRESTA (KRS).

    It plunged 14c to 40c yesterday following a warning on
    Monday night that half-year net profit (to be announced on Friday) will
    be down from $4.3 million to $2.7 million.

    You can blame booming sales.

    Kresta said, "Record sales were experienced in the latter part
    of the half-year; however, this resulted in extreme pressure on the
    company's resources resulting from a shortage of trained staff due to a
    very tight labour market requiring abnormal levels of remake of
    product."

    We wonder how many other companies are going to find themselves
    in a similar situation.

    (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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