Friday, September 28, 2007

Share Investor's Friday Free for all: Edition 5

Spin the Wheel

The start of the week saw a possible buyer named as the purchaser of Sky City Entertainment (SKC) after a “mystery buyer” was announced as a bidder last Friday.

Providence Equity Partners was named but then latter on in the week TPG Newbridge a private equity fund with ownership of multiple casinos around the world and a buyer of the Harrah’s Casino empire was fingered instead.

While TPG looks the most likely bidder, it looks like you could be more accurate if you used one of Sky City’s roulette wheels with just as much accuracy to find a suitor.

The final act this week in the saga came with a release from Sky City today that they were going to allow due diligence from the secret party and also actively seek other bidders. Shares closed up 17c today to NZ$5.22 on big volume of over 15 million shares.

The bonus laugh from last week though comes from brokers selling client’s shares before SKC shot up sharply in price on the Friday the announcement was made. Brokers only read the misleading headline of the announcement in which Sky City management “hid” the possible bid in an otherwise inconsequential company blurb.

Affected brokers and most probably their clients have been fuming all this week.

That will teach you to be lazy next time huh?


Slap on the wrist with a wet five dollar bill

Share brokers ABN AMRO Craigs were this week fined by the NZX for trading in shares in 2006 without gaining authorisation from the firm's compliance manager. In a statement to the NZX exchange, NZX Discipline, which rules on matters of market conduct, described the breach as "a serious matter."

ABN had been warned several times regarding the same breach.

In July the NZX Discipline panel's annual report showed that two broking firms and their advisers paid sums of money to the NZX this year for breaches of stock exchange rules.

The brokers and advisors were not named and were fined to the tune of $161,000 and $80,000.

The largest settlement was for Rakon (RAK) shares bought for advisors rather than allocated clients.

Another case named related to NZ Oil and Gas (NZO) shares that were purchased to “influence closing prices.” And brokers were fined a total of $80,000.

Makes me wonder what one has to do in this town to get an appropriate punishment for breaching “serious matters” when brokers go astray.

The old boys network keeps on keeping on and Mark Weldon and co have to take a harder look at breaches such as this to give the public confidence in a market lacking the bulls.

Perhaps the breaches happened late on Friday after lunchtime drinks. We could understand this couldn’t we?


Telecom Splits

News on Wednesday that Telecom New Zealand(TEL) was given concrete news that the New Zealand Government was going ahead with its original plan to split the company into three separate operational units.

The split will occur in March next year but take at least 4 years to fully realize. Where have we heard that one before, I thought Teresa had gone?

With internet speeds on average about 1GB per sec New Zealand languish near the bottom of developed countries for speed.

Ranked number one for speed consumption this writer speculates.

Countries like North Korea have entry level broadband speed at 24 MB per sec and more advanced nations are well over 100MB per sec.

Approaching Telecom reforms at dial-up speed isn’t going to get real broadband here anytime soon and it is one reason why this writer still uses snail-net.


Oldies not Goodies

ING’s Real Living retirement village float has joined AMP’s Somerset float that was cancelled last month.

Before the market turmoil of the last few months the AMP float looked like a promising investment.

ING had questions to ask about participants organizing the float anyway. Proponents within the deal were involved with dodgy dealings back in the roaring 80s.

A shame the AMP IPO went South, this correspondent was interested in buying a stake but I’m guessing that the other two oldie home retirement companies still listed on the NZX, Metlifecare (MET) and Ryman Healthcare (RYM) are going to do better considering the two oldie IPO’s are now dead.

Hopefully the AMP Somerset will go ahead in the future. Let’s hope for a resurrection.


Auckland Airport VS The Warehouse: Which one will fly?


Having taken a sizable stake in The Warehouse(WHS) last week, New Zealand’s largest listed general merchandise operator and also having a very small piece of Auckland Airport(AIA) I am left wondering when stacked next to each other , which stock is going to do the biz when and if buyers make offers that sellers cant refuse.

Both possible sales are not exactly straight forward ones, with AIA mired with local and central government impediments and the WHS weighed down with regulatory issues.

In October the case to allow Foodstuffs and Woolworths to buy the WHS will be heard by the Commerce Commission but the AIA transaction lacks any certain information with updates to the market few and far between.

In my opinion the Warehouse sale is likely to go ahead with conditions attached.


Buffett dines on Bear?

Finally speculation abounds that Warren Buffett, the world’s wealthiest investor, has been sniffing around Bear Sterns, the Wall Street investment bank.

Speculation of course sent Bear stock up strongly but stock for the company is trading at a considerable discount to its highs for the year.

Buffett of course is the master of the bargain, and companies like BS, who have recently been going through hard times during the market turmoil of failing sub prime loans might be a perfect candidate for some of the big man’s billions.

He has already got big stakes in Bank of America and Dow Jones so Bear Sterns would be a perfect fit in his portfolio.

The scenario described above has been refuted by contacts within Bear Sterns but who are we to believe?


NZX Market Wrap

The benchmark NZSX-50 index fell 6.91 points to 4268.90, on turnover totaling a high turnover of NZ$212.7 million.

Sky City (SKC) shares leaped today after the management announced it had agreed to due diligence by what it called a "credible" party interested in a potential takeover.

The company's shares hit a high of $5.41 before closing up 17c at $5.22, on turnover of 15.3 million shares. Other blue chips were mostly weaker, with Fletcher Building (FBU) down 17c at $12.69, Contact Energy (CEN) off 15c at $9.19, and Auckland Airport (AIA) down 3c at 313 .In the face of a continuing stronger New Zealand dollar, Fisher & Paykel Healthcare (FPH) fell 4c to $3.30 and F&P Appliances (FPA) lost 1 cent to $3.56, while Sky TV (SKT) fell 14c as it buys it product in $US.

Telecom (TEL) was up 3c at $4.47, as investors mulled over the Government recommitment this week to split the company into three units.

Air New Zealand (AIR) raised 5c to $2.47, following positive operating numbers for last month, and with shareholders approving its fleet purchase. The stock is running away from fair value with investors ignoring the market volatility of the airline industry.

Other stocks on the rise were Tourism Holdings (THL) up 10c to $2.40, PGG Wrightson (PGG) up 3c at 193, Nuplex (NPX) up 8c at $7.34, and Sanford (SAN) 5c higher at $4.35.

On the downside were Infratil(IFT) down 7c at $2.97, Steel & Tube(STU) down 19c at $4.30, Port of Tauranga(POT) down 5c at $6.70, and Mainfreight (MFT) continues its recent slide down 10c at $6.70.

Disclosure: I own SKC, WHS, RYM, AIA shares


C Share Investor 2007

Thursday, September 27, 2007

Reality needs to Bite

In 2002 Air New Zealand Ltd [AIR.NZX] was at one of its lowest points in years, although like most airlines it had lost billions in the past, this time its predicament meant the New Zealand taxpayer bailed it out via the present Labour Government, to the tune of more than $NZ 1 Billion.

The alternative would have been the entire collapse of the airline, New Zealand's national carrier.

Since then it has done comparatively well, posting acceptable profits and attracting large shareholders.

Its profits since 2002 though have barely got close to the cool billion that the taxpayer forked out to rescue it and on opportunity cost alone has lost a minimum of $250 million on top of that.

Shareholders, taxpayers and voluntary ones alike, need to remember that the airline biz is an extremely fickle one. One that is littered with bankruptcy, failure and many broken dreams, especially in New Zealand.

Long-term, Air New Zealand, like every other airline that there ever has been, with a few notable exceptions, has never made any money.

Air New Zealand's advantage has always been its highly profitable domestic airline monopoly that has propped up its less competitive international division.

While in the past this domestic near monopoly and at present duopoly has had a handful of half serious challenges by competitor airlines that have all failed, the latest drive to compete against the large bully incumbent by Virgin Blue looks set to be the most serious challenge to the big Koru yet.

Virgin has large amounts cash to fund their push, larger than any other prospective airline has had in the past. Virgin has challenged the dominant incumbent airline in all the markets that it has entered. They are in New Zealand for the long haul and will make it hard for Air New Zealand in the most profitable part of their business.

Air New Zealand will fight back hard though but will risk a backlash by the Kiwi flying public when they lower their fares to match Virgin's low prices. Realizing that they have been gouged for generations could be a bitter pill for Kiwis to swallow.

Air New Zealand's small International division, while making acceptable profits by airline standards, is still struggling with meager returns on capital and would be losing money if the cash they were using to operate was borrowed(see taxpayer funded bailout)like most other airlines.

The current profit isn't likely to continue for much longer as the pressures of international and domestic competition start to bite. Being such a small airline Air New Zealand is already struggling hard to compete with the lower costs associated with being a larger player or a traditional low cost operator like Virgin or Virgin Blue.

Investors in airlines seem to get wrapped up in the perceived "glamour" of the airline biz while at the same time forgetting that rather than eagles soaring their investment is more likely to be a spruce goose or an albatross.


AIR @ Share Investor

Share Price Alert: Air New Zealand Ltd
Queenstown Aiport Case: Air New Zealand VS Auckland
Queenstown Airport: Loud Voices & Loyalty
Long Term View: Air New Zealand Ltd
John Palmer Tipples on the Shareholder
Mike Pero and Air New Zealand: Capitalism vs Socialism
Rob Fyfe's "Environmental Extremism"
Reality Needs to Bite
Air New Zealand wants another taxpayer bailout

Discuss this stock at Share Investor Forum - Register free
Download AIR Company Reports

From Fishpond.co.nz

Every Bastard Says No: The 42 Below Story

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c Share Investor 2007




Wednesday, September 26, 2007

Sky City Entertainment Group Ltd: Premium for Control

Sky City Entertainment Group Ltd [SKC.NZX] the New Zealand based casino and cinema operator has been under speculation of a buyout for about a week now.

A name has finally hit the streets, albeit still unconfirmed, TPG Newbridge, one of the world's biggest private equity funds, with links to Sky City's former operator the casino giant Harrahs.

TPG is in the process of tying up a deal to buy the casino group Harrahs and has also been busy buying up casinos around the world.

Owen Blicksilver, a New York- based TPG spokesman, said that the company would not comment on whether it was considering a buyout of Sky City, which he termed "market speculation".

My only consideration, should this speculation have wings, is the price TPG or any other suitor should pay.

Over the 10 years that I have been invested in the New Zealand Stockmarket, many companies have been bought by foreign buyers and usually at a very cheap price in comparison to similar companies and the sectors that they operate in overseas.

Premiums paid for control of good companies haven't been sufficient but hapless management have fallen over to big incentives and short-sighted business plans. Share holders have simply folded their tent for a quick buck and run to the hills to count their beans.

Recently, the bid by MFS living and Leisure, an Australian Tourist operator, failed when it tried to make a cheap play for Tourism Holdings Ltd [THL.NZX] the New Zealand listed camper van and tourism owner.

Recent bids by Dubai Aerospace International and a Canadian pension fund bid for Auckland International Ltd [AIA.NZX] have come at the lower end of valuations for control of a strategic monopoly.

In 2005 Waste Management, a listed New Zealand trash monopoly, in which yours truly had a sizable stake, was flogged off by management after they had been given incentives by the bidder Transpacific Waste, from Australia.

The company went for a song and profits made by the new owner since would be more than reflected in a higher than sale price share price today had Waste Management still been listed.

In Sky City we have a multitude of assets. Auckland, Hamilton, Queenstown, Adelaide, Darwin casinos owned outright. Part interests in Christchurch and Dunedin Casinos and well over 100 cinema screens.

The company's Casinos in New Zealand are a virtual monopoly with no more likely to be built and the Darwin Casino likewise.

It is true enough that the assets are probably not performing as well as they could and the reasons for that are many and varied but they are exceptional assets when they are well managed.

I don't have much faith in the current board being able to efficiently identify company problems and act with speed and diligence to get the firm back on track. Last weeks debacle over the announcement of buyer interest in the group was another decision that was handled badly and reflects upon the board as such.

Monopolies such as Sky City Entertainment deserve a premium when sold and full control attracts a premium as well.

For this reason management must be urged to get a decent price for the company and not fall for the first attractive bidder with long eyelashes.

Simon Botherway from Brook Asset Management has 8 Million shares in SKC and he and his company has been active in holding out for more in buyouts of holdings that he has had in other company's.

Large institutions like his could press for more should there be a concrete offer made.

I'm hoping any low-ball bid by a potential suitor is going to make him and others very angry.

I will be.


Disc: I own SKC shares in the Share Investor Portfolio


Sky City Convention Centre @ Share Investor

Share Investor discusses Convention Centre proposal with CEO Nigel Morrison
Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
SKC Convention Centre power-point slide illustrations & SKC submission to Auckland City Council

Sky City Entertainment Group @ Share Investor


Sky City Entertainment Group Ltd: Presentation to Macquarie Group
Morningstar Revalues Sky City Entertainment Group
Guest Post - Michele Hewitson Interview: Nigel Morrison
Failed Sky City bid for Christchurch Casino good news for Shareholders
Sky City Entertainment Group Ltd: Christchurch Casino bid falls short of Investment Criteria
Sky City Entertainment Group Ltd: Never mind the width feel the volume
Sky City Annual Meeting & 2011 - 2012 Profit Forecast
Stock of the Week: Sky City Entertainment Group Ltd
Sky City set to lose National Convention Centre bid
Sky City Entertainment Group: Australian Acquisition on the Cards?
Sky City Entertainment Group Ltd: 2010 Full Year Profit Analysis
Sky City Entertainment Group 2010 Full Year Profit Preview
Chart of the Week: Sky City Entertainment Group Ltd
Share Investor discusses Convention Centre proposal with CEO Nigel Morrison
Share Investor Q & A: Sky City CEO, Nigel Morrison
Sky City Entertainment: CEO Nigel Morrison discusses 2010 HY
Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
Sky City Entertainment Group Ltd: Download full Company analysis
Sky City 2010 full year profit looking good
Long Term View: Sky City Entertainment Group Ltd
Sky City Entertainment: CEO Nigel Morrison discusses 2010 Half Year
Sky City Entertainment Group 2010 Interim Profit Review
Sky City to focus on Gaming
Sky City debts levels now more manageable
Insider Trading on Sky City shares
Sky City Profit Upgrade: Always on the Cards
Sky City's Current Cinema "Boom" a Horror Story in Disguise
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Sky City Entertainment 2009 Interim Result Preamble
2008 Sky City profit analysis
Sky City share offer confusing and unfair for smaller shareholders
Sky City Entertainment 2008 Full Year profit results , NZX release, 2008 full year presentation, result briefing webcast, financial statements
Sky City 2008 profit preamble
Sky City outlines a clear future plan
As recession bites Sky City bites back
Sky City Assets: Buy, sell and hold
Why did you buy that stock? [Sky City Entertainment]
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NZX Press release: Sky City profit to HY end Dec 2007
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New Broom set to sweep
Sky City Management: Blind, deaf and numb
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Opposition to takeover
Premium for control
Sky City receives takeover bid
Sky City Casino Full Year Profit to June 30 2007
Setting the record straight
Sky City CEO resigns
Sky City Casino: Under performing
Sky City Casino 2007 HY Profit(analysis)
Sky City Casino 2007 HY Profit


Discuss SKC @ Share Investor Forum
Download SKC Company Reports

Recommended Amazon Reading

The Intelligent Investor: The Definitive Book on Value Investing. A    Book of Practical Counsel (Revised Edition)
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
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c Share Investor 2008

Friday, September 21, 2007

Share Investor's Friday Free for all: Edition 4

Safety in Numbers

The week began with Rabobank defying the depressed debt market raising NZ$900 Million after initially wanting to raise $400 Million. It just goes to show that quality wins out every time and money that has been pulled from shaky finance companies has found a new safe home.

Pumpkin Patchy

Pumpkin Patch (PPL) the trendy New Zealand children's clothing retailer, reported a full year 2007 profit slightly down for the 2007 year to $27 million. Revenue was up strongly but expansion costs, high interest rates, wages and other fixed business costs rose.

The Patch is bullish on expansion, especially in the USA and is expecting a better contribution from New Zealand and Australia next year.

10-4, looks like we got a convoy

Mainfreight (MFT) the ever growing New Zealand trucking company this week plunked down US $53.7 million for the US international freight forwarder and logistics provider, Target Logistics which is publicly listed on the US Stock Exchange.

Mainfreight Boss Don Braid said the transaction would provide Mainfreight with a foundation for further growth in the US and international freight markets.

The purchase will be earnings positive and continues the companies wish to grow the company substantially by clever acquisitions and organic growth.

Sales grow slowly at fast food company

Restaurant Brands (RBD) the operator of KFC, Pizza Hut and Starbucks had a better sales report this week.

The company today reported second quarter sales across its three New Zealand businesses up 5.8 per cent to $93.6 million, with same store sales up 5 per cent.

KFC sales were up 11.7 per cent for the 16 weeks ended September 10, compared to the second quarter a year earlier. Despite recent stellar sales increases KFC sales are still well off historical sales figures when adjusted for inflation.

Starbucks Coffee was up a steady 6.7 per cent for the second quarter from a year earlier, while Pizza Hut began to improve but still produced an overall sales decline of 7.5 per cent.

It looks like the profit announcement in October, which should be allot better than last reporting, will push the share price closer to the $1 mark, the market has valued the stock at less than a buck for most of the year, don't count your chickens yet though.

Can Canadians Fly?

Not content with just flicking through and buying Telecom's Yellow Pages, another Canuck pension outfit is in town to make a bid for New Zealand's largest airport.

The Canada Pension Plan Investment Board says it has come up with three options for acquiring a significant minority stake in Auckland International Airport Ltd(AIA)

They include an all cash option of $3.70 per share.

The other two options, which would provide a value of up to $3.90 per share, would involve a combination of cash and the issue of new securities that provided enhanced returns while preserving the investment grade rating of AIAL.

The market saw the shares increase in price to around $3.30 on the day of the announcement so it has probably factored in a likelihood that this deal isn't necessarily going to fly.

In my opinion, local and central government opposition will sink any possible deal.

Shame really, while Canadians are a little odd at times they certainly get my approval over AIA's last suitor Dubai Aeronautical Enterprise.

Time for a climate change

The nonsense that was the New Zealand Labour Party's Carbon Trading and tax plan to ameliorate the non-existent "global warming" problem hit Kiwis right between their wallets on Thursday.

The thirst by socialists for more of our tax money was outlined by David (eyes closed) Parker the Climate Change Minister.

Consumers will pay more for oil, gas, electricity and just about everything else we buy, unless they are low income earners and then the middle classes will simply subsidise these individuals so they can continue to pollute.

I am reminded of the failure of "fairy dust" schemes like carbon trading that have come crashing down in the past.

From the great tulip bulb craze in Europe in the 1600s to the Carbon Trading scheme invented by Enron in the 1990s. Both of these failed, miserably.

The taxes placed on our economy with the excuse of global warming by the present government are likely to do the same.

Waiting for the Ace Card

Casino and cinema operator SkyCity Entertainment Group(SKC) has received a takeover bid from an as yet unnamed party.

Seems an odd way of informing the market without really saying much at all!

The offer would have to be significantly over the current share price of $5.27 for my good self to accept any offer as it is part of my long-term portfolio and has been for 5 years and I own a very large parcel. In fact I went on a buying spree this week and bought some more SKC, as well as a significant parcel of The Warehouse(WHS) for the large dividend payout and imputation credit feast.

If you are a short-term investor you should probably run for the hills today but if you have bought this company as an investment then I wouldn't sell for less than 8 bucks, not that the offer is going to be this high.

There were rumours of Tattersalls and Tabcorp being the suitors but Tabcorp has scotched their inclusion. Does such a quick denial have any deeper meaning?

Thought Id just put it out there.

NZX market Wrap

A huge rise by takeover target Sky City(SKC) and a solid Fletcher Building(FBU) lifted the benchmark index today, outweighing a 3 per cent slide in top stock Telecom(TEL)

Sky City said it has received an indicative and confidential approach from a party interested in acquiring all its shares.

The news boosted the casino company's stock to a record high of $5.56, before it closed up 22 per cent, or 95c, at $5.28 on turnover totalling $96.8m.

Fletcher Building announced today that it had raised over $300 million in debt to cover bridging loans used to fund the recent Formica Corp purchase. Fletcher Building rose 3 per cent, or 40c, to $12.80

The NZSX-50 index ended the week up 0.6 per cent, or 24.28 points, at 4231.16 on turnover totalling $231.5 million.

Top stock Telecom(TEL) was down 13c, or nearly 3 per cent, at $4.29. Contact Energy(CEN) fell a cent to $9.33, Fisher & Paykel Healthcare (FPH) lost 4c to $3.45, F&P Appliances fell a cent to $3.57 (FPA) and Auckland Airport(AIA) lost a cent to $3.24 after rising strongly this week on a Candian pension bid for the company.

Sky TV (SKT)was up 4c at $5.52, Air New Zealand (AIA)rose 3c to $2.22, The Warehouse(WHS) gained 3c to $6.08, Infratil(IFT) was down 2c at $2.98, and Hellaby(HBY) was up 10c at $2.90.

Freightways(FRE) fell 2c to $3.68, Sanford(SAN) rose 4c to 4$.55, and Nuplex(NPX) was up 7c at $7.02.

Guinness Peat Group(GPG) shares fell 4c to $1.89 after the lifting of its trading suspension.

GPG recently quit its $3.62 per cent stake in NZX at a market discount of $9.50. NZX shares closed down 10c today at $9.50.

Disclosure: I own AIA, PPL, SKC, MFT shares

C Share Investor 2007


Sky City Casino Receives Takeover Bid

Casino and cinema operator Sky City Entertainment Group Ltd [SKC.NZX] has received a takeover bid from an as yet unnamed party.

SkyCity revealed the offer to the stock exchange this morning.

"SkyCity advises that it has received an indicative and confidential approach from a party expressing an interest in acquiring 100 per cent of the shares in the company," management have said. Tattersalls and Tabcorp, two Australian Casino operators are rumoured to be suitors.

"In its approach, the party indicates a potential cash offer price range subject to conditions which would represent a significant premium to SkyCity's current share price, if a transaction were to eventuate." The market today has already swallowed up a huge "premium" of around 25% so it probably anticipates an offer north of NZ$6 per share.

Shares in SkyCity surged NZ$1.19 to $5.52 this afternoon(12.07 PM ,NZ time) on over 13 million shares traded, valuing the company at almost $3 billion.

Management have stressed that the offer is still not a concrete one and they will inform shareholders as to what develops.

The offer would have to be significantly over the current share price of $5.52 for my good self to accept any offer as it is part of my long-term portfolio and has been for 5 years and I own a very large parcel. In fact I went on a buying spree this week and bought some more SKC, as well as a significant parcel of The Warehouse Group Ltd [WHS.NZX]

If you are a short-term investor you should probably run for the hills today but if you have bought this company as an investment then I wouldn't sell for less than 8 bucks.


Disc
: I own SKC shares in the Share Investor Portfolio


Sky City Convention Centre @ Share Investor

Share Investor discusses Convention Centre proposal with CEO Nigel Morrison
Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
SKC Convention Centre power-point slide illustrations & SKC submission to Auckland City Council

Sky City Entertainment Group @ Share Investor


Share Investor's Total Returns: Sky City Entertainment Group Ltd
Sky City Entertainment Group Ltd: Presentation to Macquarie Group
Morningstar Revalues Sky City Entertainment Group
Guest Post - Michele Hewitson Interview: Nigel Morrison
Failed Sky City bid for Christchurch Casino good news for Shareholders
Sky City Entertainment Group Ltd: Christchurch Casino bid falls short of Investment Criteria
Sky City Entertainment Group Ltd: Never mind the width feel the volume
Sky City Annual Meeting & 2011 - 2012 Profit Forecast
Stock of the Week: Sky City Entertainment Group Ltd
Sky City set to lose National Convention Centre bid
Sky City Entertainment Group: Australian Acquisition on the Cards?
Sky City Entertainment Group Ltd: 2010 Full Year Profit Analysis
Sky City Entertainment Group 2010 Full Year Profit Preview
Chart of the Week: Sky City Entertainment Group Ltd
Share Investor discusses Convention Centre proposal with CEO Nigel Morrison
Share Investor Q & A: Sky City CEO, Nigel Morrison
Sky City Entertainment: CEO Nigel Morrison discusses 2010 HY
Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
Sky City Entertainment Group Ltd: Download full Company analysis
Sky City 2010 full year profit looking good
Long Term View: Sky City Entertainment Group Ltd
Sky City Entertainment: CEO Nigel Morrison discusses 2010 Half Year
Sky City Entertainment Group 2010 Interim Profit Review
Sky City to focus on Gaming
Sky City debts levels now more manageable
Insider Trading on Sky City shares
Sky City Profit Upgrade: Always on the Cards
Sky City's Current Cinema "Boom" a Horror Story in Disguise
Stock of the Week: Sky City Entertainment Group
Are Insiders selling Sky City Stock?
Sky City Entertainment 2009 Interim Result Preamble
2008 Sky City profit analysis
Sky City share offer confusing and unfair for smaller shareholders
Sky City Entertainment 2008 Full Year profit results , NZX release, 2008 full year presentation, result briefing webcast, financial statements
Sky City 2008 profit preamble
Sky City outlines a clear future plan
As recession bites Sky City bites back
Sky City Assets: Buy, sell and hold
Why did you buy that stock? [Sky City Entertainment]
Sky City Share Volumes set tongues wagging
Sky City half year exceptional on cost cutting
NZX Press release: Sky City profit to HY end Dec 2007
Sky City Cinemas no Blockbuster
Sky City Entertainment share price drop
New Broom set to sweep
Sky City Management: Blind, deaf and numb
Sky City sale could be off
Opposition to takeover
Premium for control
Sky City receives takeover bid
Sky City Casino Full Year Profit to June 30 2007
Setting the record straight
Sky City CEO resigns
Sky City Casino: Under performing
Sky City Casino 2007 HY Profit(analysis)
Sky City Casino 2007 HY Profit


Discuss SKC @ Share Investor Forum
Download SKC Company Reports

Recommended Amazon Reading

The Intelligent Investor: The Definitive Book on Value Investing. A    Book of Practical Counsel (Revised Edition)
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
Buy new: $14.95 / Used from: $6.99
Usually ships in 24 hours

Fishpond


c Share Investor 2007

Thursday, September 20, 2007

The Warehouse: The fight for control begins soon

The stoush between Foodstuffs and Woolworths Australia [WOW.ASX] over control for The Warehouse Group [WHS.NZ] is not over yet.

The Commerce Commission case to decide whether either suitor can make a bid comes up in October and both will be primed and ready to make their prospective arguments.

The recent failure of The Warehouse "extra" format, where 3 stores have been expanded to include groceries, has given more impetus for any takeover to be explored.

The main roadblock in the way of Commerce Commission approval for a takeover bid was the possibility of The Warehouse becoming a third player in the New Zealand grocery market and now that those plans have been put on hold by Warehouse management this roadblock has been somewhat lessened.

Management are going to see if they can tweak performance and costs in some way as to justify further expansion of their grocery offering but in my opinion it is only going to work once they have economy of scale and they can show customers that what they offer is the same or better than at Woolworths or Foodstuffs grocery outlets.

So it isn't crystal clear yet whether the grocery offering that The Warehouse has or will have will be a stumbling block for the Commerce Commisssion to give the green light to a takeover offer because not even The Warehouse knows exactly what the future will look like for the "extra" format stores.

The dark horse here of course is Stephen Tindall, the majority owner of the company, nobody knows what he is going to do. He made a bid last year at NZ$5.85 in conjunction with a private equity partner, for 100% of the company.

Since then we haven't heard anything from him and one could be forgiven for thinking that he has lost interest in a deal.

In my opinion though you cant discount the fact that The Warehouse is Tindall's baby and the company has been his life for almost 30 years.

A company that Tindall has nurtured and changed progressively over those decades, the move by him last year seemed to be him ready to shift The Warehouse in a new and exciting direction and I don't think he is going to give up control easily.

Retailing is in his blood.

WHS shares closed even today at $6.05 and are due a large dividend of 40.5c fully imputed due to the disposal of real estate and return of funds to shareholders.


Disclosure: I own WHS shares


The Warehouse Group @ Share Investor

Long vs Short: The Warehouse Group
Warehouse bidders ready to lay money down
The Warehouse set to cut lose "extra" impediment
The Warehouse sale could hinge on "Extra" decision
The case for The Warehouse without a buyer
Foodstuffs take their foot off the gas
Woolworths seek leave to appeal to Supreme Court
Warehouse appeal decision imminent
Warehouse decision a loser for all
Warehouse Court of appeal decision in Commerce Commission's favour
MARKETWATCH: The Warehouse
The Warehouse takeover saga continues
Why did you buy that stock? [The Warehouse]
History of Warehouse takeover players suggest a long winding road
Court of Appeal delays Warehouse bid
The Warehouse set for turbulent 2008
The Warehouse Court of Appeal case lay in "Extras" hands
WHS Court of Appeal case could be dismissed next week
Commerce Commission impacts on the Warehouse bottom line
The Warehouse in play
Outcomes of Commerce Commission decision
The fight for control begins soon

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c Share Investor 2007 & 2009

Tuesday, September 18, 2007

Picking up Mercury with Chopsticks

I was reminded last week of just how lax New Zealand's laws are on serious fraud and financial skulduggery.

The Serious Fraud Office charged Peter Marshall with 13 counts of false accounting and making false statements in 2005, after his company Access Brokerage collapsed in 2004 owing more than $3 million.

Through his lawyer Marshall's defence is that due to a stroke he has suffered "memory loss" and that crucial evidence is in his mind murky because of this and therefore has asked for an adjournment to his fraud trial.

Forgive me if I might sound a like a tough bastard but surely all the evidence needed is in written form and any charge prosecuted and then defence of such charges would be a simple procedure and could go ahead in the absence of Marshall's absent memory.

Time certainly isn't going to help his recollection of events become crystal clear enough for him to have any trial commence.

Justice certainly isn't going to be served as it has already been over 3 years since the collapse of his firm and further delay seems to me prolonging the inevitable.

I must say this isn't the first example of such a defence being used to delay a fraud trial and it comes on top of poor efforts by the SFO to seek justice on behalf of victims of financial fraudsters and stacked deck accounting practices and the likelihood of these sewer rats being caught and punished seems akin to trying to pick up mercury with chopsticks.

Marshall's prospective fraud trial is especially relevant considering the climate in the finance industry of late.

The recent finance industry collapses in New Zealand share a common thread.

There are many that called themselves "financial advisers" who advised kiwis, many of them elderly, to get into Bridgecorp, knowing it was about to collapse.

I know of one 75 year old who has probably lost NZ $25000.00 that was advised to "invest" in Bridgecorp not long before its fall from grace.

I call that fraud and that needs to be punished by a jail sentence. Sadly the odds are that isn't going to happen.

Trustees of several financial companies have also been culpable in my opinion. Accepting deposits from customers, while at the same time keeping the knowledge that the company is in trouble to themselves.

There is really no need for laws to be changed or the SFO amalgamated into some big new state apparatus . All that is needed is for existing fraud laws to be used, prosecuted and a big enough deterrent handed down.

Until there are deterrents for this kind of despicable behavior that can alter victims lives forever, sometimes with deadly consequence, then underhanded and fraudulent swine are simply going to continue with their criminal behavior.


C Share Investor 2007

Monday, September 17, 2007

Pumpkin Patch profits Flatten

http://www.pumpkinpatch.biz/images/logo.gif


Pumpkin Patch Ltd [PPL.NZ] the small global trendy kids clothing retailer, has announced its full year profit today and reported an annual net profit after tax down 3.2 per cent to NZ$27.6 million.

Sales revenues were up 17.9 per cent to $365.7 million for the year to the end of July.

The high $NZ exchange rate hit net profit as foreign revenue is brought back to head office, which is in New Zealand.

The network of stores increased by 35 over the last year to 200 but the expansion, especially in the US and UK markets hit the bottom line as logistical frameworks were put in place for further future expansion.

It looks likely that company profits will remain flat in the near term because of the increased costs of expansion in combination with what looks to be a kiwi dollar that will remain high.

Currently the company is suffering from high tariffs being placed on Pumpkin Patch product in the UK and the US but there has been some movement by those particular authorities to change tariff quotas. Management are hopeful.

Clearly increasing revenues from expansion will offset the increasing costs of same but the full benefit will only be seen once economies of scale can be brought to the US and UK divisions and that is going to take some considerable time in my opinion.

Micheal Hill International [MHI.NZ]is facing similar business start up problems as it establishes its jewelry chain in Canada.

It seems that once a brand enters into a new market it takes a year or two before it builds enough momentum and gets recognized and loved as it already is in Australia and New Zealand.

Australia already has 102 stores and NZ has the most per capita of the countries that it operates in, at 50.

The main growth area for Pumpkin Patch is going to be the USA. Pumpkin Patch opened its first US store in Los Angeles in 2005. Stores are predominately located on the West Coast but further sites are being sought in the Southwest.

Two stores have been opened in Texas and management have announced today that they will be moving into East Coast locations soon.

My guess is that the US has room for around 1000 stores so the company is clearly going to be a very different one in the 10 years or more that this is going to take, if the company keeps its head above water in this very tough and uncompromising market.

Short term, sales in New Zealand and Australia markets, where most of the Patch profit is earned, are likely to be dampened by a weak economy, with high interest rates, increased taxes and other living expenses having impacts on individuals non-essential spending habits.

Long-term though, if company expansion is successful, then we are likely to see an excellent returns for shareholders.


A final dividend for 2007 of 4.5c per share will be paid 17th October 2007, with a record date of 5th October 2007.

PPL shares closed up 5c today to $3.30, close to its lows for the year.

*Disclosure: I own PPL shares


Pumpkin Patch @ Share Investor

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c Share Investor 2007

Friday, September 14, 2007

Share Investor's Friday Free for all: Edition 3

Fast Food Company keeps its Head

Restaurant Brands (RBD) the operator of KFC, Pizza Hut and Starbucks in New Zealand has appointed, Russel Creedy, the man who has been acting chief executive since Vicki Salmon's departure to the permanent position as head.

Creedy has been with the company since 2001 and has run company supply chains and Pizza Hut in that time.

Unfortunately Creedy is part of the lack of service culture that pervades RBD's operations and his appointment comes in the wake of his failure at the Pizza Hut division to stem sales drops in the face of competition and the continuation of that as acting head.

His placement as the top Colonel seems to me to be a default kind of appointment and smacks of nobody else outside the company with enthusiasm and fresh ideas being attracted to the sinking ship that is Restaurant Brands.

As an aside but related story Mac Donald's in the US is making inroads into Starbuck's territory with better product and cheaper prices. This author wonders how the local bean crusher is faring against the big Mac.

Retail Therapy

Two of the countries larger retailers reported profits today, with similar results.

Clothing retailer Hallenstein Glasson (HLG) reported a 1.3% fall in net profit to NZ$21.4 million.

Sales were marginally up to just over $200 million with New Zealand operations struggling and Australian sales up a solid 8.1 %.

Expansion of OZ and Kiwi stores were on the cards for the previous 12 months with a Glassons opening in a new Westfield Mall 2 weeks ago in my local area. The store manager tells me it seems to be doing very well and foot traffic while I was there seemed to reflect the managers statement.

The Warehouse (WHS) New Zealand's largest retailer, has announced an annual net profit after tax of $115.5 million. Sales were up 2.4 per cent to $1.76 billion.

The profit included almost $20 million from asset disposal from which a 35c special dividend will be paid. There is to be a normal 5.5c dividend on top of that.

The Warehouse is in a state of flux at the moment. Expansion plans are on hold and ownership is in limbo as Foodstuffs and Progressive look to fight out ownership bids for the company in the courts early next month.

Both retailers will find the going tough for the medium turn, as high government spending has lead the economy into a tail spin raising interest rates and inflation.

Post 2008 election a new frugal, tax cutting regime will help stimulate this sector again.

Pumpkin Patch (PPL) the trendy global kids fashion retailer, will report Monday 17 September(NZ time) and judging by the spectacular fall in share price of the last several weeks insiders seem to know that the result isn't going to be pleasing.

Fonterra headed to a new Frontier?

As canvassed here a few weeks back the speculation about New Zealand's largest company being listed surfaced again this week.

Fonterra's brands business could be worth more than $4 billion if floated on the share market and analysts say it would be an eagerly awaited float.

Fonterra's brands business - including Anchor, Mainland and Tip Top - had an operating revenue of $4 billion.

This puts it above the scale of companies with similar strong brands, such as Goodman Fielder (GFF) which has approximate $2.5 Billion in sales.

With the NZX bereft of such large listings a partial float of Fonterra would give confidence to a sagging undervalued New Zealand stock market.

Good news and bad news for Fonterra this week.

Rachael Hunter, the girl form Glenfield and the Tip Top Trumpet ice cream girl from 22 years ago this week launched the Jellytip Trumpet, a fusion of two classics.

Pictures of Rach' licking the new cone shaped concoction immediately reminded one that perhaps Rod Stewart might have seen the original picture of the pretty 16 year old doing exactly the same thing all those years ago. He of course latter married her.

The bad news, the milk that they base most of their products on has been implicated (again) for causing health problems.


Stupid is as Stupid does

Alan Bollard, the Reserve Bank Governor, has left the official cash rate at 8.25% this week.

Just when he should be lowering the rate because of a downturn in the New Zealand economy, with international markets likely to cut interest interest rates ,Bollard sits on his hands.

Bollard's possum in the headlights, hand on the tiller approach didn't work when he was raising rates and now he appears to be riddled with confusion as to what to do next.

"...This would be offset by the sharp rise in dairy prices and the decline in the New Zealand dollar in the past month..."

So he was critical of the Dairy industry when using it as an excuse to raise interest rates and now he is expecting the same industry to get the economy going when he did the best he could to destroy it with the highest interest rates in the developed world.

Cant have it both ways Forrest.


The Song Remains the Same

Finance companies are in the news again this week.

Geneva Finance, the latest company to strike problems in the financial sector crisis, yesterday gave its trustee assurances about its financial fitness.

On Tuesday, Standard & Poor's put Geneva on negative "CreditWatch" saying it was having liquidity problems.

This writer cannot believe the amount of money being spent by this Finance company and others on saturation advertising trying to soothe prospective customers that their company's stability can be assured.

One could equate the quantity of any advertising of a particular company with the amount of trouble they might be in.

I certainly wouldn't come to that conclusion though-sound of one hand clapping.

Geneva insist things are hunky dory.

Jumping Ship at Telecom a good Call

Another Telecom (TEL) exec is about to head West. Telecom's CEO of its consumer arm, Kevin Kenrick, is resigning in December.

His departure follows the resignation of another senior Telecom exec, CFO, Marko Bogoievski.

Teresa Gattung was the first to get the heave-ho earlier this year when her dismal results as the CEO finally caught up with her.

Considering the pressure Telecom is now under because of Government regulation and the need to spend large capital sums replacing aging infrastructure it seems that head office has morale at the same levels as Telecoms dropping share price and future prospects.

The departures are well timed.

NZX Market wrap

The NZSX-50 index rose 20.25 points, or 0.5 per cent, to 4162.68 on turnover of $83.5 million.

It was a weak trading day which capped a week of the same slim trading.

Giant retailer The Warehouse(WHS) was flat at $5.95 after posting an annual net profit of $97.9m.

Clothing retailer Hallenstein Glasson(HLG) fell a cent to $4.59 after saying annual profit fell 1.3 per cent, to $21.4m.

Top stock Telecom (TEL)was down 2c at $4.35.

No 2 on the NZX board, Fletcher Building(FBU) increased on yesterday's 22c gain with a 14c rise to $11.99. Contact Energy(CEN) fell 2c to $8.97.

Fisher & Paykel Healthcare(FPH) was up a cent at 360, while F&P Appliances(FPA) rose 10c to 365. Auckland Airport (AIA)rose a cent to 311 with no more news of takeover talk, Sky City Entertainment(SKC) lost 2c to $4.38, and Sky TV(SKT) rose 17c to $5.60.

Air New Zealand(AIR) was up 4c at $2.29 ahead of a large dividend payout, Infratil (IFT)was up 8c at $2.80 and investment company Hellaby(HBY) was also up 8c, at $2.74.

NZX increased 15c to $9.75, PGG Wrightson(PGG) was up 2c at $1.78, Vector(VCT) the Auckland Lines company rose 5c to $2.58, and Tower(TWR) was up 5c at $2.25.

Going down were, Pumpkin Patch(PPL) was down 9c at $3.25 ahead of next weeks profit announcement, Nuplex(NPX) fell 13c to $6.97, Port of Tauranga (POT) lost 7c to $6.90, and Cavalier(CAV) was down 3c at $3.30.


c Share Investor 2007











Tuesday, September 11, 2007

Look closer at the Risk Ladies and Gents

Given the last couple of months of turmoil in the Finance Company sector and the recent scrapping of the Yellow Pages Bond issue, one might expect companies looking to issue more debt would be a bit clearer in their advertising than they possibly would have before all this mess kicked off.

A current case in point is the offer by Origin Energy, the Australian majority owner of New Zealand' s Contact Energy(CEN)

In their advertising the preference share offer , Origin make no reference to the BBB- rating for the debt, one step above "junk" status and the 10% gross they are currently offering is too low for the risk that investors will be taking if they accept the offer.

To gauge what might be a fair return for potential investors one would only have to look at the offering by the local office of the Dutch giant Rabobank.

Rabobank are asking for $NZ400 million or more in a bond issue that will carry interest rates at between 9-9.25%. The advantage of the Rabobank offer though is that the bonds issued will be rated AA+ and the parent bank is rated AAA.

By comparison the risk potential investors in Origin's Preference share issue are taking is not reflected in the interest rate offered.

I must repeat what I have said in a previous column about the Origin share offer. Those that are pushing it, ASB Bank and ASB Securities are desperate to palm this issue off to mum and dad investors.

Issues like this one, with big names behind them, make them look safe and less risky, in the face of the last few weeks of collapsing finance companies. They could be just as risky.

I have been hassled 3 times by sweaty bankers and pimply brokers to buy these pref shares and do not recommend them to others.

You have been warned :)


c Share Investor 2007

Monday, September 10, 2007

New Zealand Retailers ring up costs not Tills.

With a few noticeable exceptions, this seasons profit round has been flat to poor. Not a surprise though considering the state of the economy and increased business costs being lumbered onto business by this socialist, business hating Labour Government.

One industry that has fared particularly badly is the retail sector.

The countries largest retailer, The Warehouse(WHS) is likely to book a flat net profit of around NZ$96 million, up from $95.3 million last year.

Hallenstein Glasson(HLG) and Pumpkin Patch(PPL) are soon to report their profit results while Briscoe Group(BGR)reported a just over 12 % drop in half-year net profit to $10.53 million Friday 7 September.

Hallenstein Glasson and The Warehouse release profit figures Friday 14 September, and Pumpkin Patch is releasing its results on Monday 17 September. Pumpkin Patch's profit will be affected mostly by the weaker US dollar and stronger Kiwi as profits from foreign shores come back to New Zealand where the company is based.

Smaller retailers like Postie Plus Group (PPG) and the fast food operator Restaurant Brands (RBD) are likely to be similarly affected. RBD is likely to post an improved profit but coming from a loss last reporting season that wont be hard to achieve.

The worst performer has been Hellaby Holdings, they booked a loss of more than $9 million recently. This has been mainly due to poor results from their BBQ Factory chain which they overpaid for 2 years ago and are about to start litigation against former owners the ASB Bank.

Micheal Hill(MHI) the Jeweller has done well this last year, with increased sales and profit. They have benefited from expansion but they have also been one of the few retailers that have done well out of the lower $US dollar , making their core cost, gold, considerably cheaper.

The retail sector has had pressure in general from a multiple shot at the bottom line from increased operating costs. Labour's raising of the minimum wage, parental leave costs, increased holidays and a myriad of other central and local government compliance's have hit retailers and other business sectors with a whiplash effect and it is not about to end soon.

Kiwisaver compliance and the removal of youth rates will hit this sector again in the coming year/s.

Retailers have also been hit by petrol, power and interest rate rises, directly on their business operating side and again with consumers having less to spend on their goods and services because of the rises in these costs.

This slump isn't going to go away anytime soon but it is not terminal for the strong retailers.

A good opportunity exists now for those long term investors to buy stock in those companies that you have had your eyes on but were maybe too expensive to warrant a buy for now their stocks have been beaten down to a level that looks a lot more attractive.

Disclosure: I own PPL shares


c Share Investor 2007



Friday, September 7, 2007

Share Investor's Friday Free for all: Edition 2

Xmas comes early for Warehouse Shareholders

An announcement today from The Warehouse(WHS) New Zealand's Largest retailer, that they will be paying a large special dividend of $NZ 35c imputed per share along with a 5.5c normal dividend will have shareholders running to the bank.

It seems the proceeds from sale of their Australian unit plus some other property sales sees the company flush with some $109 million in cash and owners are going to benefit. The share price was up 14c on modest volume today possibly reflecting the markets lack of faith in the retailing sector given Bricoes (BGR) 16% fall in profit announced today.

It is a shame more companies don't have good capital management such that The Warehouse is operating. Many would have the 109M burning a hole in their pockets looking for a place to spend it.

Sky City(SKC) Entertainment take note when considering what to do with proceeds from mooted asset sales late in 2007 and early 2008.

Auckland Airport Merger Crashes and Burns

The original Dubai Aerospace, DAE, merger with Auckland International Airport(AIA) took a nosedive this week.

In the face of rampant idealist pressure from leftist councils and Central Government the proposal was dead in the water. It was never a flyer to begin with for manifold reasons, mainly due to the fact that the company was a foreign one.

DAE is rumored to be stitching together another more politically palatable deal and a Canadian pension fund is said to be about to launch a concrete bid soon.

Any deal is going to be almost impossible considering there are politicians with big egos and tiny reproductive parts involved.

My speculation would be if Dick Hubbard from Auckland City Council gets re-elected(god help us!) and Manukau Council continues to lean left after October this year then we could see councils combining to re-purchase the airport. Perhaps not a likely scenario but I think the most likely in the face of other proposals.

Finance Company woes Hound Investors

Two more Finance companies went up in smoke this week, bringing the grand total over the last 16 months to 9 and well over NZ$ 1 Billion at risk of being lost.

Fingers continue to be pointed at everyone but those most to blame. Directors of such companies and those that "invested" in them.

A curious excuse was given by the liquidator of Nelson based LDC Finance for its collapse. It seems said liquidator blamed investors for pulling out funds because of market nervousness over finance company collapses.

He conveniently forgot to mention that the company he was in the process of liquidating took call deposits and used them to invest in long term situations. Well duh., it was bound to come unstuck sooner or latter.

Blue Chip Debt fails the risk test

Following in the rumblings of the sub prime meltdown in the United States, New Zealand companies issuing debt securities to pay for business expansion have been left high and dry by fed up Kiwi investors. The Canadian School Teachers Pension Fund, who bought Telecom NZ's Yellow Pages unit this year for NZ$ 2.2 Billion were initially after $300 Million from Kiwi investors at 11% then scaled back twice before being scrapped earlier this week.

I suspect the fund wanted more than the original amount but market sentiment propelled them to scale it back. When they purchased Yellow Pages, market appetite for such debt was at an all-time high. They would have been counting on that appetite to continue when it came for them to fund their purchase.

A hint of desperation also surrounds the issue by Origin Energy, Contact Energy's(CEN) main shareholder, of preference shares with an initial 10% yield.

I have been called twice and offered to buy into this issue. Once by my Broker, ASB Securities and once by the bank that owns the broker ASB Bank. Never before have I been "hounded" in this way. I said no.

Power to the People

Not to let any opportunity go by to bash Helen Clark and her sisters in power or without power in this case.

The case for New Zealand to have nuclear power has never been stronger.

The ideological bent by the New Zealand Labour Party for the country not to use its coal and hydro assets to produce much needed electricity is only matched in stupidity by the same collective ideology that would have them oppose nuclear energy.

Labour's answer to New Zealand's power crisis is to use windmills and solar power, forgetting of course that wind the doesn't always blow (unless you are a parliamentarian) and the sun doesn't always shine(unless you are a Green Party member after your daily spliff)

Kiwi business needs cheap, reliable and plentiful supplies of power to push the economy ahead and for business to have the confidence that they are able to expand with the knowledge that the extra power is there when it is needed.

Slow food

The listed fast food company Restaurant Brands(RBD) is still looking for a leader after more than six months without one.

With news this week that one will be appointed sometime next month share investor wonders-with tongue firmly planted in cheek- whether the ex-chief of Telecom New Zealand(TEL) might be one of the contenders shortlisted.

On second thoughts, perhaps even RBD do not deserve someone so lacking in business acumen and forward planning.

I'm still available.

Burger Fuel(BFW) the listed gourmet burger wrangler, has failed to have its shares trade at all this week.

Watching the share price of this company could get more exciting next week. Yeah right!

Seriously though,this is going to be a market announcement driven stock price in the absence of any material facts and figures about how the business is doing.

Capital would have dried up though and their initial plans would have had to change.

Meanwhile the owners of Hell Pizza and Burger King, one of RBD's competitors for their Pizza Hut brand , have had a stoush with their ad company.

Cinderella Marketing, the advertising company that pursues guerrilla-style marketing promotions - including a condom letterbox drop depicting Hitler and a brazen magazine called Hell-o - are credited with making the brand stand out from bigger fast food competitors.

It seems the brazen advertising has finally got too much for Hell's owners. Was it the condoms or the Hitler references and why did it take so long for the owner of Hell to reject the brazen ad placements?

Market Wrap up

The benchmark NZSX-50 index closed up 11.88 points, or 0.3 per cent, at 4151.98, on turnover totalling $101.8 million.

The big mover today was The Warehouse(WHS) which jumped 2 per cent to 588 on the news of a special dividend of 35c a share totalling $109 million.

Auckland Airport(AIA) was still in play, as suitors such as the Canada Pension Plan Investment Board have been rumored to be making a bid soon.

Auckland Airport shares closed up 2c at 309.

Telecom (TEL)was up a cent at 438, Fletcher Building(FBU) gained 6c to 1191, Contact Energy(CEN) rose 14c to 915, Fisher & Paykel Healthcare (FPH)was up 5c at 355 after announcing new sleep apnoea products this week, and F&P Appliances(FPA) was flat at 367.

Briscoe Group(BGR) was flat at 151, reflecting consideration by the market that their profit drop announcement today was already priced in after reporting a 12 per cent fall in half-year net profit to $10.5m, as competition hit margins.

Among rising stocks, Cavalier Carpets(CAV) was up 9c at 321, Nuplex(NPX) gained 11c to 700, PGG Wrightson(PGG) was up 9c at 193, and Michael Hill(MHI) rose 15c to 1015.

Air New Zealand(AIR) lost 2c to 215 after earlier this week announcing a large special dividend, Sky City(SKC) fell 2c to 441, Vector(VCT) was down 4c at 241, and NZX (NZX)fell 5c to 975.

Lion Nathan(LNN) 5c lower at 1100, and Goodman Fielder(GFF) down 12c at 308.


Disclosure: I own SKC, GFF, FPH ,AIA shares


c Share Investor 2007