Share Price Alert: Fletcher Building Ltd 3

Fletcher Building Ltd [FBU.NZX] came out with a profit downgrade yesterday for the coming 2012 first half year, down by around 10% on the 2011 year interim result. The stock was down by over 12% and at one stage down by nearly 14%. It finished down 98c to close at $6.92.

This of course provides more opportunities for investors as the market assesses the constantly changing timeline for the Christchurch rebuild but I don't think FBU it is near its lows because the property cycle isn't at bottom yet - and the Christchurch rebuild has and will contribute to that cycle - before it begins its climb to the next peak. Christchurch staying still is a big influence for the medium term and if doesn't FBU could be alot lower 12 months from now.

If the shakes stop soon the late part of 2012 to 2013-2014 and onwards for 10 years will mean good things for the company as rebuilding takes place.

For the wider building sector, outside the Christchurch earthquake rebuild, in New Zealand and other markets that FBU does business in, the recovery of the building sector looks well off and uncertain and FBU management have confirmed this.

It looks reasonably negative currently, with demand for their services and products outside of the company and its control. The only negative from the company's point of view are the reasonable debt levels they carry which should be paid down in these uncertain times given the market as a whole and its fear of the debt bogeyman.

Given all this uncertainty, the share price will be impacted, so investors wanting a share of this company should bide their time, research and most of all be patient.

Keep the cash handy and buy on further weakness.

Disc I own FBU shares in the Share Investor Portfolio

Share Price Alert Series

Ecoya Ltd
Port of Tauranga Ltd 2
Contact Energy Ltd 5
Contact Energy Ltd 4
The Warehouse Group Ltd 2
Contact Energy Ltd 3
Contact Energy Ltd 2
Xero Ltd 2
Pumpkin Patch Ltd 4
Pumpkin Patch Ltd 3
Hallenstein Glasson Holdings Ltd
Telecom New Zealand Ltd 4
Telecom New Zealand Ltd 3
Port of Tauranga Ltd
Freightways Ltd 3
Goodman Fielder Ltd 2
Freightways Ltd 2
Telecom New Zealand Ltd 2
Ryman Healthcare Ltd
Charlies Group Ltd
Fletcher Building Ltd 2
Contact Energy Ltd
Steel & Tube Ltd
Telecom New Zealand Ltd
New Zealand Stock Exchange Ltd
Mainfreight Ltd 2
The Warehouse Group Ltd
Pumpkin Patch Ltd 2
Hallenstein Glasson Holdings Ltd 2
Fletcher Building Ltd
Restaurant Brands Ltd
Mainfreight Ltd
Tourism Holdings
Goodman Fielder Ltd
Pumpkin Patch Ltd
Hallenstein Glasson Holdings Ltd
NZ Refining Ltd
Freightways Ltd
Xero Ltd


Fletcher Building @ Share Investor

Fletcher Building: Crane Takeover Offer Well Timed
Fletcher Building Ltd: 2010 Full Year Profit Analysis
Fletcher Building: All eggs in one basket make for big risk
Long Term View: Fletcher Building Ltd
Hugh Fletcher: Silver spoon no recipe for success
Long VS Short: Fletcher Building Ltd
Fletcher Building's Commercial arm keeps their head above the tunnel
Sweetheart deal for Fletcher Building's Friends
Fletcher House built on hard times
Fletcher Building down tools in the short term
Why did you buy that stock? [Fletcher Building Ltd]
A solid foundation for the future
Fletcher Building raises profit through canny management
Fletcher's got game

Discuss Fletcher Building @ Share Investor Forum - Register free
Download FBU Company Reports

NEW - From Fishpond.co.nz | Think Bigger, By Michael Hill

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c Share Investor 2011

Share Price Alert: The Entire NZX

At time of writing the NZX 50 stockmarket index is down 95 points or 2.80% after a toweling on the DOW last night and a rogering in Europe.

Most non market watchers find days like these terrifying but I like market jitters like this because I love getting bargains. It is the equivalent of boxing day sales before Christmas.

I am by nature a contrarian and like to buy as others are selling.

Everything on the NZX today is down with the 5 biggest drops from the Share Investor Portfolio in this order.

Goodman Fielder Ltd [GFF.NZX] 6.1%
ASB Preference Shares [ASBPB.NZX] 3.9%
Steel & Tube Ltd [STU.NZX] 3.7%
Ryman Healthcare Ltd [RYM.NZX] 3.7%
Fletcher Building Ltd [FBU.NZX] 3.2%

I would suggest that Monday might be an even better opportunity to have another look as sentiment on Wall Street doesn't look good as well as some important economic data out overnight on jobs looks likely to be negative.

I will be looking to make a move on Fisher & Paykel Healthcare Ltd [FPH.NZX] after a good canning on the DOW, tomorrow NZ time. It is currently trading at $2.47, close to my target of $2.35.

Like we didn't see this all coming.

Share Price Alert Series

Contact Energy Ltd 4
The Warehouse Group Ltd 2
Contact Energy Ltd 3
Contact Energy Ltd 2
Xero Ltd 2
Pumpkin Patch Ltd 4
Pumpkin Patch Ltd 3
Hallenstein Glasson Holdings Ltd
Telecom New Zealand Ltd 4
Telecom New Zealand Ltd 3
Port of Tauranga Ltd
Freightways Ltd 3
Goodman Fielder Ltd 2
Freightways Ltd 2
Telecom New Zealand Ltd 2
Ryman Healthcare Ltd
Charlies Group Ltd
Fletcher Building Ltd 2
Contact Energy Ltd
Steel & Tube Ltd
Telecom New Zealand Ltd
New Zealand Stock Exchange Ltd
Mainfreight Ltd 2
The Warehouse Group Ltd
Pumpkin Patch Ltd 2
Hallenstein Glasson Holdings Ltd 2
Fletcher Building Ltd
Restaurant Brands Ltd
Mainfreight Ltd
Tourism Holdings
Goodman Fielder Ltd
Pumpkin Patch Ltd
Hallenstein Glasson Holdings Ltd
NZ Refining Ltd
Freightways Ltd
Xero Ltd


From Fishpond.co.nz



Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz




c Share Investor 2011

Craigs Investment Partners Picks Top Stocks

In a NZ Herald column this morning Mark Lister from Craigs Investment Partners discusses the virtues or otherwise of new investors buying "penny stocks" and the quality of the businesses that might be behind the stock price and as thinly on the ground as they are on the NZX, that you must look to the fundamentals of the business.

Mark indicates some qualities he would like to see in a business before investing:

1: A business without too much competition.
2: Good balance sheet with room for debt.
3: A track record of good and increasing earnings.
4: Generally defensive in nature.
5: Good management.

I agree with these 5 points but must add that I see good management as the first tick before investing, well above the other point Mark made.

I must also note buying cheap face value stocks is not always an indication that the company is a dog - it maybe just suffering a temporary dip in performance for whatever reason - but it is more often than not a good indicator.

With this in mind Mark has picked 11 stocks that fit his criteria and that he has invested his clients in and I will comment below on these picks:

The following is a list of stocks by the returns they have delivered over the past decade, using figures that we calculate ourselves for the 10 years ended March 31, 2011. These figures take into account dividends and capital growth in share prices and are adjusted for share splits, rights issues and so on. This list is not exhaustive and is obviously limited by space.

This list is not any sort of quality ranking, but it does show how well some of our companies have done over the past decade.

Freight-forwarding company Mainfreight Ltd [MFT.NZX] tops the list. It has returned 29 per cent a year over the decade, or a total return of 1216 per cent. In 2003 Mainfreight published a book on its first 25 years. It was a great read and it talked a lot about the 100-year vision for the company. In the years since, it has made rapid progress, cementing its local market position and expanding its operations around the world. Company leadership is top-flight and it has a strong focus on the long term.

TrustPower Ltd [TPW.NZX] comes next with a 10-year gain of 22.6 per cent a year. The Tauranga-based generator and retailer of electricity has carved out a defensive niche in it sector. Its strong renewables focus has been a point of difference, as has its ability to manage its retail operation better than any rival while maintaining its premium customer service offering.

Ryman Healthcare Ltd [RYM.NZX] is not far behind with 22.2 per cent a year. One of our market's biggest success stories, Ryman is a leading company in the aged care sector. It recently announced it will be expanding into Australia and locally will be increasing its build rate from 450 to 550 units and beds a year to meet rising demand for its services. Ryman has also grown its dividend handsomely. Investors astute enough to buy Ryman shares 10 years ago are enjoying an income from dividends of over 18 per cent a year on their original cost.

There aren't many big development or infrastructure projects in this country that happen without Fletcher Building Ltd [FBU.NZX]. This strong market share in construction and building materials has helped it deliver a return to shareholders of 20.7 per cent since 2001. The company continues to expand overseas.

A company that many people perhaps will not have heard of is Ebos Ltd [EBO.NZX], a healthcare distributor. It has returned 17.1 per cent a year and is another stock that has delivered strong dividend growth. It has a strong market position here and is expanding in Australia.

Port of Tauranga Ltd [POT.NZX] has returned 15.5 per cent a year and continues to go from strength to strength. Strong demand for logs from Asia is boosting export volumes and revenues, but this company is much more than a short-term story. It has built a strategically important position, has valuable land assets, good transport links and room to grow.

Auckland International Airport Ltd [AIA.NZX] comes next with a return of 12.6 per cent a year. The airport is New Zealand's key contact point with the outside world. Management continues its focus on developing the airport's property precinct and improving the overall service offering and efficiency.

Carpet maker Cavalier Corp Ltd [CAV.NZX] comes next with a return of 11.8 per cent a year. Cavalier clearly operates in a tough sector and faces strong competition, and has to cope with demand for its carpets moving up and down with the economic cycle. Despite all of this the company has done well and delivered excellent growth and dividends for shareholders.

Express package company Freightways Ltd [FRE.NZX] has delivered a solid 10.6 per cent a year over the decade. It is a well-managed company with strong brands such as New Zealand Couriers and Post Haste Couriers. It continues to expand its market position and has expanded into Australia in the information management sector.

Property for Industry Ltd [PFI.NZX] is one of the best-performed listed property vehicles with a return of 9.4 per cent a year. It has delivered consistent increases in its dividend over the years and has always impressed with its astute management of its portfolio of industrial properties.

No list of high-quality stocks in this country could exclude Fisher & Paykel Healthcare Ltd [FPH.NZX]. It produces world-class products such as heated humidification products including respiratory humidifiers, breathing circuits, infant resuscitators and infant warmers. It is a leader in products for the treatment of obstructive sleep apnoea. It has returned 7.9 per cent a year over the decade. Given 98 per cent of sales are overseas, the strong NZ dollar has impacted on results.

Mark Lister, NZ Herald, May 7 2011.

Now I haven't checked Mark's figures for accuracy but if you check below this post in the Long Term View series of posts you will find there are other stocks that have gleaned far higher returns than his picks, especially when you hold for greater than the 10 years he has covered.

I agree wholeheartedly with Marks first pick, it is the best managed company on the NZX, but he hasn't been critical of his other picks or pointed out that all of these companies have been impacted by the financial ups and downs of the last 2-3 years. Fletcher Building for example had a disastrous history through the 1990's and up to the point where Mark makes his calculations, the company they were before they became FBU almost went into receivership.

An essential point missing from Mark's stock picking criteria is timing of the investment. You must buy when the stock you are after is at a level where its fundamentals meet what current returns you are after and therefore what future returns you might get. There is no point buying what some might seem as good quality companies unless you include this as a feature in your picking.

Finally, it is great to see people like Mark putting their money where their mouth is and buying and disclosing what they are investing in on behalf of clients. It would be nice to see him disclose what he has in his own personal portfolio though.


Share Investor's Annual Stock Picks

Share Investor's 2011 Stock Picks: Looking Back
Share Investor's 2011 Stock Picks
Share Investor's 2010 Stock Picks
Share Investor's 2009 Stock Picks
Share Investor's 2008 Stock Picks

Brokers 2011 Stock Picks


Long Term View Series


ASB Capital Preference Shares (A)
ASB Capital Preference Shares (B)
Auckland International Airport
Air New Zealand
AMP Ltd
ANZ Banking Group Ltd
Briscoe Group Ltd
Cavalier Corporation Ltd
Comvita Ltd
Contact Energy Ltd
Delegats Group Ltd
EBOS Group Ltd
Fletcher Building Ltd
Fisher & Paykel Appliances
Fisher & Paykel Healthcare
Freightways Ltd
Goodman Fielder Ltd
Hallenstein Glasson Holdings Ltd
Hellaby Holdings Ltd
Infratil Ltd
Kirkcaldie & Stains Ltd
Kiwi Income Property Trust Ltd
Mainfreight Ltd
Michael Hill International Ltd
Metlifecare Ltd
Methven Ltd
Mowbray Collectables Ltd
NZ Oil & Gas Ltd
New Zealand Refining Ltd
New Zealand Stock Exchange Ltd
Nuplex Industries Ltd
PGG Wrightson Ltd
Port Of Tauranga Ltd
Postie Plus Group Ltd
Pumpkin Patch Ltd
Restaurant Brands Ltd
Ryman Healthcare Ltd
Sanford Ltd
Sealegs Corp Ltd
Scott Technology Ltd
Skellerup Ltd
Sky City Entertainment Group Ltd
Sky Network Television Ltd
Smiths City Group Ltd
Steel & Tube Ltd
Telecom NZ Ltd
Telstra Corp Ltd
Tourism Holdings Ltd
Trustpower Ltd
Turners Auctions Ltd
Turners & Growers Ltd
The Warehouse Group Ltd
Vector Ltd
Wakefield Health Ltd
Westpac Banking Group Ltd




c Share Investor 2011

Share Price Alert: Fletcher Building Ltd 2

Give to those affected by the Christchurch Quake here

Fletcher Building Ltd [FBU.NZX] has risen considerably since its previous share price alert on Feb 28. From $8.63c on close of trade on February 26 the FBU share price is currently trading up 4c at $9.07 and up 49c or approx 6% in just over one month.

The stock has rise primarily on expectations that FBU will make bumper profits during 2012 on the back of the reconstruction of Christchurch post the February 22 earthquake.

The stock has risen by around 20% since the beginning of 2011 on news of a good 2011 full year result and the quake impetus.

The only question for investors is that just when the re-construction of Christchurch can begin and of course just when the income for that re-construction appears on company books.

An additional factor probably not taken into account by investors now piling into the stock is that how on earth the company will be able to handle significant amounts of rebuilding - estimated to be revenue of approx $2 billion per annum for 10 years - without first affecting revenue in other parts of the company and indeed whether the company has enough bums on seats, equipment and raw materials (in short their own business infrastructure) to be able to complete their task adequately of being the major constructor in the Christchurch rebuild.

While the current share price is breaking 3 year highs it appears that the market now sees this stock as a relative bargain if the Christchurch factor is entered into the equation.

Proceed with caution if you are interested in this company as initial share price movements could be the market overreacting to the Christchurch quake and subsequent trading could see some selling.

Disc I own FBU shares in the Share Investor Portfolio

Share Price Alert

Telecom New Zealand Ltd
New Zealand Stock Exchange Ltd
Mainfreight Ltd
The Warehouse Group Ltd
Pumpkin Patch Ltd
Hallenstein Glasson Holdings Ltd
Fletcher Building Ltd
Restaurant Brands Ltd
Mainfreight Ltd
Tourism Holdings
Goodman Fielder Ltd
Pumpkin Patch Ltd
Hallenstein Glasson Holdings Ltd
NZ Refining Ltd
Freightways Ltd
Xero Ltd

Fletcher Building @ Share Investor

Fletcher Building: Crane Takeover Offer Well Timed
Fletcher Building Ltd: 2010 Full Year Profit Analysis
Fletcher Building: All eggs in one basket make for big risk
Long Term View: Fletcher Building Ltd
Hugh Fletcher: Silver spoon no recipe for success
Long VS Short: Fletcher Building Ltd
Fletcher Building's Commercial arm keeps their head above the tunnel
Sweetheart deal for Fletcher Building's Friends
Fletcher House built on hard times
Fletcher Building down tools in the short term
Why did you buy that stock? [Fletcher Building Ltd]
A solid foundation for the future
Fletcher Building raises profit through canny management
Fletcher's got game

Discuss Fletcher Building @ Share Investor Forum - Register free
Download FBU Company Reports

NEW - From Fishpond.co.nz | Think Bigger, By Michael Hill

Join the Share Investor Facebook Group

c Share Investor 2011

AUDIO: Two Essential Investor Interviews

I have included two crucial interviews carried out by Kathryn Ryan from Radio New Zealand made over the last two days.

The first is an interview with Mark Binns, infrastructure CEO of Fletcher Building Ltd [FBU.NZX] where he talks about his company's role in rebuilding Christchurch and the obvious benefits that will bring to the company over the next 3-5 years.

The second interview is with Allan Bollard, Reserve Bank Governor, and his rationale for increasing the OCR today by 50 basis points to 2.5%.

The last interview is especially interesting given that Bollard made a preemptive rate cut today rather than the typical reactive moves that he usually makes, so it is clear that he sees the economy getting worse over 2011, partly due to the Christchurch Earthquake and that things will not pick up until 2012 when we will see increasing economic activity surrounding , ironically, around the rebuilding of Christchurch.

Fletcher Building will be one of the largest benefactors of this rebuilding so it makes the interview compelling listening to those investors thinking of buying FBU shares.

Download Interviews

Mark Binns
Allan Bollard


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c Share Investor 2011

Share Price Alert: Fletcher Building Ltd

Give to those affected by the Christchurch Quake here

Fletcher Building Ltd [FBU.NZX] is but one stock listed on the NZX that has benefited from speculation based on probable contracts to reconstruct Christchurch after the massive earthquake there last week that destroyed a great deal of the city and its infrastructure.

Clearly FBU do set to gain from this tragedy and the share price has gained rapidly over the last week since the Tuesday 22 event. The share price pre-quake was $8.28 and at close of trading last Friday finished at $8.63, a gain of around 4% in a market that is otherwise heading south.

The stock has risen by around 13% since the beginning of 2011 on news of a good 2011 full year result.

The only question for investors is that just when the re-construction of Christchurch can begin and of course just when the income for that re-construction appears on company books.

While the current share price is breaking 6 month highs it appears that the market now sees this stock as a relative bargain if the Christchurch factor is entered into the equation.

Proceed with caution if you are interested in this company as initial share price movements could be the market overreacting to the Christchurch quake and subsequent trading could see some selling.


Disc I own FBU shares in the Share Investor Portfolio


Share Price Alert

Mainfreight Ltd
Tourism Holdings
Goodman Fielder Ltd
Pumpkin Patch Ltd
Hallenstein Glasson Holdings Ltd
NZ Refining Ltd
Freightways Ltd
Xero Ltd



Fletcher Building @ Share Investor

Fletcher Building: Crane Takeover Offer Well Timed
Fletcher Building Ltd: 2010 Full Year Profit Analysis
Fletcher Building: All eggs in one basket make for big risk
Long Term View: Fletcher Building Ltd
Hugh Fletcher: Silver spoon no recipe for success
Long VS Short: Fletcher Building Ltd
Fletcher Building's Commercial arm keeps their head above the tunnel
Sweetheart deal for Fletcher Building's Friends
Fletcher House built on hard times
Fletcher Building down tools in the short term
Why did you buy that stock? [Fletcher Building Ltd]
A solid foundation for the future
Fletcher Building raises profit through canny management
Fletcher's got game







c Share Investor 2011

Fletcher Building: Crane Takeover Offer Well Timed

The takeover offer by Fletcher Building Ltd [FBU.NZX] for Crane Group Ltd [CRG.ASX] comes at an opportune time for Fletcher. Crane Group is at or near the bottom of a business cycle over the last 6 years (see 6 year summary from the CRG 2010 Annual Report below) and the share price has been trading at a multi year low so Fletcher has made a bid that would have otherwise been higher near the top of the business cycle.


Click on picture to enlarge view

Crane has had a patchy last 10 years with profit ranging from a AU$15 million loss in 2004 at its lowest and a $AU60 million profit in 2008 at the high end. Revenue has ranged from $1.4 billion in 2000 to $2.3 billion in 2008.

2010 half year profit of $21 million was up 16.8% on 2009 and a research report from Aspect Huntly indicates positive earnings with "upside to come" from the commercial building sector - the major floods in Australia over the last month will be a big benefit to Crane and to Fletcher Building so this upside is likely to be significant.

This is where FBU have a problem because CRG management have indicated that the offer for Crane is far too low and significantly undervalues the company and its long term prospects.

Fletcher do not have a good history with acquisitions providing good value for shareholders, with the purchase of Formica Corp a few years ago, for almost a billion dollars, destroying shareholder value and adding less than nothing to the balance sheet. If the offer for Crane is successful it could provide some benefit to FBU shareholders if they can take over the company at its current price.

The AU$ 740 million bid for 90% of the company is detailed as follows and can be found in more detail here.

• Australasian building materials manufacturing and distribution company Fletcher Building (FB) has bid for CRG offering $3.43 cash and 1 FB share implying a value of $9.35, a 28% premium to CRG’s one month volume weighted average price equating to an FY11 PE multiple of 19 based on consensus forecasts and an EV/EBIT multiple of 11.8.


• FB already owns 14.9% of CRG, 13.1% of which it bought from institutional shareholders for $9.35 cash immediately prior to announcement of the bid.


• The bid includes a 90% minimum acceptance condition.

For FBU shareholders like myself this is a nervous time. If the proposed acquisition doesn't come off there will be millions of dollars of cost associated with the takeover activity.

Analysts have indicated that as Crane has over 80% of institutional investors on its shareholder registry so a takeover is likely to be an easier case to make than with a company with more mum and dad investors as shareholders.

We can only cross our fingers that FBU are able to grab Crane at their current bid price and add value to both companies if successful.


Fletcher Building @ Share Investor

Fletcher Building Ltd: 2010 Full Year Profit Analysis
Fletcher Building: All eggs in one basket make for big risk
Long Term View: Fletcher Building Ltd
Hugh Fletcher: Silver spoon no recipe for success
Long VS Short: Fletcher Building Ltd
Fletcher Building's Commercial arm keeps their head above the tunnel
Sweetheart deal for Fletcher Building's Friends
Fletcher House built on hard times
Fletcher Building down tools in the short term
Why did you buy that stock? [Fletcher Building Ltd]
A solid foundation for the future
Fletcher Building raises profit through canny management
Fletcher's got game

Discuss Fletcher Building @ Share Investor Forum - Register free
Download FBU Company Reports

NEW - From Fishpond.co.nz | Think Bigger, By Michael Hill

Join the Share Investor Facebook Group

c Share Investor 2011

Brokers 2011 Stock Picks

You may have read my sharemarket picks for 2011 but for some light reading over the holidays lets take a look at some of the "professionals" picks from brokers and the like.

Please keep in mind that just like my picks there maybe some financial interest involved in picking them, there usually is, but in my case I disclose whether I have a holding in any of the stocks that I have picked. It is not clear from the NZ Herald article from where these picks originate as to whether the brokers have holdings or not. One would assume they did but they could of course just be theoretical selections.

Brokers Picks for 2011

Craigs Investment Partners
* Auckland Airport
* Contact Energy
* Fletcher Building
* Westpac Banking Corporation
* Henderson TR Pacific
Hamilton Hindin Greene
* Pyne Gould Corporation
* Ryman Healthcare
* Sky City Entertainment
* Tower Corporation
* Westpac Banking Corporation
First NZ Capital
* Contact Energy
* Kathmandu
* Opus International Consultants
* Nuplex
* NZX
Goldman Sachs & Partners
* Infratil
* Kathmandu
* Fisher & Paykel Healthcare
* Mainfreight
* Sky Television Network
McDouall Stuart
* Diligent
* Fletcher Building
* Infratil
* Michael Hill
* Ryman Healthcare
Forsyth Barr
* Delegat's
* Infratil
* Guinness Peat Group
* Sky City Entertainment Group
* Pumpkin Patch
Macquarie
* Sky Television Network
* New Zealand Oil and Gas
* Kathmandu
* Restaurant Brands
* Skellerup
THE PAST YEAR'S PICKS
12 months to December 10, 2010
* Subsequent to cut off point for the competition Pike River Coal has gone into receivership and been suspended
First NZ Capital
* Nuplex NPX 47.4%
* Tower TWR 11.6%
* Restaurant Brands RBD 82.2%
* The Warehouse WHS 1.1%
* Opus International OIC 25.3%
* Total 33.5%
ASB Securities
* Sky TV SKT 9.6%
* F&P Healthcare FPH -0.7%
* Pumpkin Patch PPL -12.0%
* Methven MVN 8.1%
* Auckland Airport AIA 16.1%
* Total 4.2%
Goldman Sachs JBWere
* Mainfreight MFT 40.6%
* Methven MVN 8.1%
* Infratil IFT 21.4%
* F&P Healthcare FPH -0.7%
* Nuplex NPX 47.4%
* Total 23.4%
Craigs Investment Partners
* Ryman Healthcare RYM 11.0%
* F&P Healthcare FPH -0.7%
* Freightways FRE 4.5%
* SkyCity SKC 1.7%
* Templeton Emerging Markets TEM 20.9%
* Total 7.5%
Hamilton Hindin Greene
* Fletcher Building FBU 5.0%
* NZ Oil & Gas NZO -44.1%
* Pyne Gould Corp PGC -12.7%
* Rakon RAK 2.6%
* Tower TWR 11.6%
* Total -7.5%
Forsyth Barr
* Auckland Airport AIA 16.1%
* Contact Energy CEN 12.3%
* PGG Wrightson PGW -20.0%
* GPG GPG -3.5%
* Delegat's DGL -19.8%
* Total -3.0%
McDouall Stuart
* NZ Oil & Gas NZO -44.1%
* Pike River Coal* PRC -77.5%
* Ryman Healthcare RYM 11.0%
* Michael Hill Jeweller MHI 36.5%
* Diligent DIL 93.5%
* Total 3.9%

Disclosure : I own MFT, FPH, RYM, PPL, FBU, WHS, SKC, MHI, AIA, shares in the Share Investor Portfolio.


Share Investor's Annual Stock Picks

Share Investor's 2011 Stock Picks
Share Investor's 2010 Stock Picks
Share Investor's 2009 Stock Picks
Share Investor's 2008 stock picks


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c Share Investor 2010 & 2011

Canterbury Earthquake to Stimulate Fletcher Building's Fortunes

Any worries that Fletcher Building Ltd [FBU.NZX] might have had a few weeks back about gaps in their order book will have collapsed over the weekend as the big earthquake hit Canterbury and the centre of Christchurch.

I expressed a concern of the lack of work on the books back in August.

There is talk that there could be around $2 billion or more worth of damage to city infrastructure and add to that domestic and commercial buildings and we are looking at a major bill to rebuild Christchurch city and surrounds.

With the current under-use of resources at FBU and other building firms, companies will be ready, able and willing to get to work.

For FBU the whole chain of their business will be involved. From raw materials that they supply to the contracts for sewerage, roads, commercial and residential building this should be a boom time for them in the Mainland.



On top of the $1.7 billion recently shelled out by taxpayers for investors in the failed South Canterbury Finance company, the injection of more billions into this economy will be good news for the area and for companies that can ride of the coattails of more than 4 billion being injected into the region.

Fletcher Building will be well placed to take a large slice of that money.

My best to you all down there. Keep well.


FBU 2010 Profit in detail

Listen to audio of profit presentation - 18/08/10
Presentation in PDF - 18/08/10


Fletcher Building @ Share Investor

Fletcher Building Ltd: 2010 Full Year Profit Analysis
Fletcher Building: All eggs in one basket make for big risk
Long Term View: Fletcher Building Ltd
Hugh Fletcher: Silver spoon no recipe for success
Long VS Short: Fletcher Building Ltd
Fletcher Building's Commercial arm keeps their head above the tunnel
Sweetheart deal for Fletcher Building's Friends
Fletcher House built on hard times
Fletcher Building down tools in the short term
Why did you buy that stock? [Fletcher Building Ltd]
A solid foundation for the future
Fletcher Building raises profit through canny management
Fletcher's got game

Discuss Fletcher Building @ Share Investor Forum - Register free

Download FBU Company Reports


Recommended Fishpond Reading



Buy The Intelligent Investor & more @ Fishpond.co.nz




c Share Investor 2010

Fletcher Building Ltd: 2010 Full Year Profit Analysis

The 2010 full year profit for Fletcher Building Ltd [FBU.NZ] is a solid result considering the recession has hit the building sector so hard over the last year.

Small and big building companies are going to the wall faster than you can say "rip that drywall out before the receivers come in" so the fact that FBU is still here and in good health is positive. The worry for FBU shareholders is surely what levels of work lay ahead for the company in the 2011 financial year and will they survive if they don't win future big Government infrastructure projects which they have an 85% reliance on for revenue.

Australia makes a big infrastructure contribution to Fletcher's revenue take as well.

While the 2010 net profit of $272 million (after the one-off government tax changes for 2010) was up strongly on the 2009 $46 million loss, due to asset writedowns in the Formica division, it was on revenue down 4% to NZ$6.8 billion.


Key Points

•Net earnings before unusual items $301 million.

•Unusual items of $29 million due to NZ tax changes.

•Net earnings $272 million

•Operating earnings¹ of $521 million.

•Cashflow from operations $522 million.

•Revenues down 4% to $6.8 billion

•Higher insulation and construction revenues

•Lower sales volumes in most business

•Adverse impact from exchange rate movements

•15 cents per share final dividend, 29 cents for the year

•Dividend reinvestment plan not operative for final dividend


The Formica division, bought for nearly NZ$ 1 billion in 2007 has still failed to fire and continues to drag on overall company performance. It is probably around break even net profit-wise so the money borrowed to finance the purchase continues to drag on the bottom-line with interest payments sucking out cashflow from the balance sheet. I don't see this dog paying back long-term, if at all, for a considerable time.

Like the fortunes of Steel & Tube Ltd [STU.NZ], FBU's steel division sales are well down and needs the commercial sector, which has impacted all areas of their commercial businesses, to turn the slump around.

Management say their residential building sector in New Zealand, Australia and North America shows some promise but it is only small and has so far failed to show any sort of sustainable pattern and could be just a blip on an otherwise downtrend - my emphasis.

Interestingly there is commentary that the emissions trading scheme passed last month will have an impact on the company and its bottomline. Management say a small dent currently but it will be much higher as we descend into the madness of this rort on business and the average Kiwi.

The company is understandably vague about 2011 with no profit indications or expectation, but in New Zealand they see a gradual continuing recovery in residential building activity, with commercial construction expected to remain weak.

Like my good self they see infrastructure spending likely be down in 2011 before growing in 2012.

A similar outlook is expected for Australia with their businesses in Europe, Asia and North America having a level of diminishing expectations from their Australasian business units.

2011 is going to be a difficult year for FBU.


FBU 2010 Profit in detail

Listen to audio of profit presentation - 18/08/10
Presentation in PDF - 18/08/10


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