around the traps ... with the ferret

  1. 4,756 Posts.
    Around the Traps ... with THE FERRET
    08:01, Wednesday, 2 March 2005

    Sydney - Wednesday - March 2: (RWE Australian Business News) -

    Some pearly gems from the experts ...

    PREMIUM INVESTORS (PRV) says an undoubted build-up of risk,
    particularly interest rate risk, and a highly leveraged consumer make
    for a potentially lethal cocktail across a range of economic activities
    and asset classes.

    Additionally market speculation has been building and the
    unwavering appetite of investors to back the steady stream of "cash
    boxes" is an excellent example of this, as is the furious consolidation
    that has taken place in the listed property trust sector.


    thinks the market is looking somewhat fully priced on a value basis.

    It is watching with interest the strength of corporate earnings
    and the direction of margins over the next 12 months, particularly
    those more reliant on discretionary spending from consumers.

    However, the investor said a noticeable outcome of buoyant
    markets is that listed investment companies in general tend to trade at
    discounts to their net asset backing when equity markets grow strongly
    and investors are willing to take on greater risk in their equity

    AFIC was trading at the time at $3.80, which was a discount of
    around 5 per cent to its pre-capital gains tax net asset backing of

    However, the shares have since fallen to as low as $3.63 (on
    Monday), which must mean that the boom has got even bigger.


    NAB has completed the sale of its Irish banks, as revealed in a
    four-paragraph statement yesterday.

    It may have been only four pars but it came with no fewer than
    four contact names ... in case we had any questions.

    They were the Group Manager - Group Corporate Relations, Group
    Communications Adviser - Group Corporate Relations, Head of Group
    Investor Relations, and Manager - Investor Relations.

    Later in the day, a much longer media release on "National
    expects new lending for Australian businesses to exceed $10 billion"
    came out with one name, someone from NAB Australian Corporate Affairs.

    That's still five names for the day.

    There must be two departments at NAB - Corporate Relations and
    Corporate Affairs.

    It seems the Corporate Affairs has a few sub-departments
    because a while back we came across a contact name that was described
    as Corporate Affairs Manager - Operations.

    By the way, the day this Operations person's name and title
    popped up, it came out together with someone who was described as Head
    of Media Relations - Australia.

    OK, let's do a check, there must be THREE departments -
    Corporate Relations and Corporate Affairs, and Media Relations.

    As well as Investor Relations, of course.


    It must have been someone jumping the gun on the headline
    result from WOOLWORTHS (WOW) after the interim report on Monday that
    forced the shares down 19c to $14.83 at the opening.

    However, in a massive turnaround the shares later closed the
    day at a record $15.56, up 54c, and rose a further 40c to $15.96

    The market is loving the stock to death and pricing the stock
    on a forward p/e of 20.


    Shaw Stockbroking says the interim continues the well-known
    Woolworths success story.

    That is, growth via acquisition and investment in new stores;
    cost reductions; customer loyalty; Project Refresh efficiency gains;
    and strong cash flow.

    "We expect the company to continue to report the benefits of
    the group wide improvements over the next few years, with significant
    revenue upside from its investment initiatives including the ALH
    acquisition, the ongoing strength in consumer electronics, increased
    market share in fresh food categories, higher asset utilisation within
    supermarkets," the broker says.

    "We also expect the logistics strategies to improve gross

    "Woolworths provides defensive benefits which may be attractive
    to investors should the Australian economic growth rate slow through
    calendar 2005."

    Ah, it's the old people-still-gotta-eat line.


    GUD HOLDINGS's (GUD) nightmare may be over.

    The shares plumbed $6.42 yesterday before bouncing to close at
    $6.62, up 4c in the day.

    It's not much, but a straw for shareholders to cling to after a
    long downwards spiral.

    In mid-December we alerted punters that the Sunbeam appliances
    and Victa mower maker was a warning for all investors when things
    become a little difficult in this hot market.

    The shares, which had soared from $6.31 at the start of the
    year to as high as $11.42 on November 25, were unceremoniously dumped
    when the company alerted the market to the fact that its profit
    forecast was below broker consensus.

    The shares fell $1.80 over the next two days, to $8.90, before
    bouncing back to $9.74 two days after that.

    The stock has been basically wasting away since, particularly
    after the January 31 announcement that GUD had suffered a 10 per cent
    decline in first-half trading EBIT, to $30.1 million from $33.4
    million, and a reported net profit of $10.4 million which included a
    restructuring charge of $8.8 million.

    The company could not quite bring itself to say that this $10.4
    million was down 48 per cent.

    As for outlook, well, "trading profit result for the second
    half is expected to be in line with last year" is not all that


    PERPETUAL TRUSTEES (PPT) seems to have been caught out in GUD.

    When we wrote about GUD's woes in mid-December we pointed out
    the trustee had just lifted its shareholding in the company from 6.92
    million to 7.99 million shares (13.1 per cent of capital).

    However, Perpetual came back for more on January 10.

    It lifted its stake to 8.59 million shares (or 14.2 per cent).

    GUD traded in a range of $9.03 to $9.19 that day.

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


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

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