Is Mainfreight Worth Ten Bucks a Share?

Mainfreight Ltd [MFT.NZ]has had an absolute stellar ride share price wise over the last year.

Its share price has risen from around $6.25 a year ago to finish trading at $10.05 yesterday. An all-time high. Since March alone the share price has risen around 25% from 8 bucks, 80c of that alone happening over the last 5 trading days.

An investor will have to ask themselves, is this stock overvalued?

The answer for me is yes and no.

Looking at current financial's one would have to say the stock is way overvalued and I agree totally with this. You would have to be a knuckle dragging moron or a dribbling socialist to believe otherwise:

*Price Earnings Ratio (P/E) 38.480
*Earnings per Share (EPS) 0.261
*Net Tangible Assets per share 1.864
*Total Net Div Paid (last full financial year) 0.190
*Div Yield 2.70%
*Market Cap 989,615,360

If one looks at the past history of the company though and its track record of ever increasing revenue and profits - save for the last 2 years during the global economic downturn - one would have to consider that the current share price is one that reflects that past and the market clearly sees potential for more of that historical upside for the future - as do I.

Of course the returns for investors buying at these prices are going to be relatively low - at less than 3% net annually - so buying now at the current share price runs the risk that if and probably when the company doesn't live up to the market's expectations the share price is going to be hammered. This is of course a short term thing, every company has ups and downs and will have disappointing years but with Mainfreight's long positive track record through wise business management and capital use the company is more likely to run the way it always has.

At over $10 per share most investors will see this company as "expensive" but that price is just a reflection of how well management have run the company, especially over the last 2-3 years,which are probably the toughest it has ever encountered.

The caution here is that there is alot of positive market sentiment built into the MFT share price and for good reason, and there probably will be a pullback at some stage but there are good reasons as to why the share price is where it is.

If you are a short term investor stay away from this company, you will get burnt at the current share price. If you are thinking long term, just be patient, the share price will retreat at some stage.


Disc I own MFT shares in the Share Investor Portfolio


Mainfreight @ Share Investor

Read the MFT 2011 FY Presentation

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c Share Investor 2011

Share Price Alert: Mainfreight Ltd 2

News that Mainfreight Ltd [MFT.NZX] has bought European logistics company Wim Bosman Group has, in logistical terms, sent the price of Mainfreight shares into destinations previously uncharted.

The share price almost hit the magical 9 buck mark, topping in intra trading today at $8.95 but finishing up 23c or 2.3% to close at an all-time high of $8.82.

The stock has risen almost 9% in two days since the news and by more than 10% over the last week.

MFT shares have risen by around 14% in 2011 and are off 52 week 2010 lows of $5.85.

The thing is, as good as the acquisition is for Mainfreight, and I believe it is a good move, the share price really has gotten away from the realities of the short term benefit for the company.

Long term the share price clearly should increase based on how well the new addition fits into the company and how much profit it makes but short term the market really has overreacted like Charlie Sheen in a room full of cocaine, hookers and the creator of Two and a Half Men.

If you are looking for the short term the share price must be close to a short term peak and long term best be patient, there are more tough times ahead that could hobble the stock in this good company.

Buy on weakness below 8 bucks.


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c Share Investor 2011

Mainfreight's European Acquisition a Good Move

Lets get this out in the open. I am a proud supporter and investor in Mainfreight Ltd [MFT.NZX] and I have been singing its praises as a company for the 4 years I have been a shareholder and a few years before that when I was "just looking".

It has provided excellent returns to shareholders in the past and with this acquisition looks to add to that track record in a positive way.

It is in my view probably the best run medium sized public/private company in New Zealand with a great client centred and employee focused culture and is fast becoming the best run logistics company in a global sense.

Management have clear goals, indicate when and what they are going to achieve and if they don't achieve those goals blame nobody else but themselves.

They care about their staff and clients and their no bullshit policy of saying what they mean and doing what they say should be followed in boardrooms across the country.

I would like to be able to criticize the company in some way - for that is part of what I do here if it is warranted - but I just cannot find fault.

You might call me just a little biased.

Wim Bosman Group looks to have a similar business culture to MFT and is still being run by its founder Wim Bosman so looks to be the perfect fit for European expansion.

With the above in mind let me give you my view on the announcement yesterday by the company that they are to buy European logistics company Wim Bosman Group for €110 million.

The purchase, yet to be given approval by MFT shareholders, will be the company's first foray into Europe and with ebitda of €19.4 million on revenue of around €240 million in 2010, while not overly attractive in terms of returns, is nevertheless a platform on which to grow the company in that part of the world and another jigsaw piece in their global network of businesses that now see them have a presence in North America, Australasia and Asia.

The increasingly bigger reach will enable them to be more seamless and efficient in terms of global freight forwarding as they will not have to rely as much on other logistics companies to get their customers goods from a to b. Having control of your logistics chain is a big plus in terms of delivering for your customer.

This means happier customers and more revenue for the company and profit off the back of that.

This makes for happy shareholders.

Thus far, Mainfreight and its extensive acquisition history shows that they have been able to add value to the company as a whole when buying companies and that is not something that can be said of many New Zealand listed businesses.

There is a shareholders meeting on March 24 to ask shareholders for their approval of this purchase and judging by the nearly 6% rise in share price yesterday to a record $8.59 the market at least sees the news on the acquisition as a positive.

I clearly do too and recommend to my fellow owners of Mainfreight that they approve this latest purchase.

MFT Shareholder Proposal & Voting Forms

Win Bosman Group

Win Bosman on sale to MFT
About Win Bosman

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From Fishpond.co.nz - Every Bastard Says No: The 42 Below Story





c Share Investor 2011

Share Price Alert: Mainfreight Ltd

Mainfreight Ltd [MFT.NZX] is a stock you should be looking out for if you are a short termer and thinking of bailing.

It has added around $1.40 per share or 20% in a mere 3 months to close at $8.39 yesterday. Just a few cents short of an all-time high set last week. This is appears to be on the strength of a good 2011 1st half year where trading results were significantly higher than the previous comparable half.

Of course this increase was made on a particularly bad 2010 half year so we must take this into account when looking at the spectacular rise in the MFT share price.

My only conclusions for the rise are two-fold.

1: Investors have rediscovered the quality management of the company, especially the way they have managed the business over the last 3 very tough years.

2: The market is expecting a good rise in profit for the 3rd quarter, with the announcement coming out late Feb.

Either way though the momentum in share price built up over the last year where the swing has been from around $5.75 to present levels looks difficult to sustain given the absence of further positive news.

Look for a pull-back in share price if MFT disappoints the market in any way and consider locking in profits now if you are a short to medium term investor.

If you are a long-term investor you should wait for a pull back to enter this stock.


Disc I own MFT shares in the Share Investor Portfolio

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Mainfreight Annual Report Packs a Punch
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Mainfreight 2008 Annual report worth reading
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Share Investor's 2008 stock picks

Discuss MFT @ Share Investor Forum
Download Mainfreight Company Reports

	The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) (Collins Business Essentials) by Benjamin Graham Buy new: $13.25 / Used from: $9.24 Usually ships in 24 hours
	The Essays of Warren Buffett: Lessons for Corporate America, Fourth Edition by Warren E. Buffett Buy new: $30.40 / Used from: $169.48 Usually ships in 24 hours

c Share Investor 2011

Investing in the Stockmarket: Timing your Purchase

My Mainfreight Ltd [MFT.NZX] shareholding really is a tale of two stories.

I bought my initial shareholding at $7.96 and $8 over 4 years ago and my most recent addition in 2009 for $4.20.

Yesterday the stock closed at $8.15, an all time high.

The two stories are as follows:

1. The initial shareholding has returned $1.02c in net dividends and 33c in tax credits with a rise in share price of 2%. This gives a total return of approx 19% or an annual return of approx 4.75%.

2. The second shareholding has returned 42c in net dividends and 33c in tax credits with a rise in share price of 94%. This gives a total return of approx 107% or an annual return of approx 71 %.

Apart from the quality of the company and the research you must do to find the right performance and management, what I am pointing out here is that the timing of your investment purchase is critical to your returns.

I was happy to buy the company at 8 bucks because I knew long term that I would be a winner and the recent share price rise and performance of the company is vindication of that but clearly buying stocks when the prospects for a good company are at a high is not always the best way of buying.

I have learnt this over the last 2 years of the stockmarket volatility, buying beaten down stocks (see below for links) in companies I already own, and it looks like another opportunity will present itself as global stockmarkets like the NYSE start to reach all-time highs (with the exception of NZX, Japan and a few others) in a global economic background that doesn't fit with stockmarket gains.

I am keeping my options open and being patient, so should you if you want better returns.


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Discuss MFT @ Share Investor Forum
Download Mainfreight Company Reports

	The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) (Collins Business Essentials) by Benjamin Graham Buy new: $13.25 / Used from: $9.24 Usually ships in 24 hours
	The Essays of Warren Buffett: Lessons for Corporate America, Fourth Edition by Warren E. Buffett Buy new: $30.40 / Used from: $169.48 Usually ships in 24 hours

c Share Investor 2011

Stock of the Week: Mainfreight Ltd

Mainfreight Ltd [MFT.NZX] has had a simply outstanding run in its share price over 2010 (see YTD chart above) and especially in the last month or so. The stock started 2010 at just over $5.55 and closed trading yesterday at $7.96. The last month has seen the stock rise from $7.25. (see one month chart below)It has come off a low of $3.25 in early 2009.


The stock is now back at levels that it was trading in early 2007 (see five year chart below) and few NZX stocks have managed to do that pre the October 2008 stockmarket crash.

I bought my initial shareholding at $7.96 and $8 4 years ago (clearly picked the wrong time there) and my most recent addition in 2009 for $4.20. To me it looks like the stock price has run away with itself.

The company has largely recovered from the recession but we will have to see a couple of years of sustained growth before the expectations of the market match the share price.

Beware before you buy !

I see good long-term value based on the current share price, otherwise I wouldn't have bought it at its peak 3 - 4 years ago (there was also a very big dividend involved in my buying that stock as well) but you could well get it cheaper at some stage during 2011 as the market realises it might well have overreacted.

Quality companies like this though always rise to the top.




Disc I own MFT shares in the Share Investor Portfolio


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Mainfreight @ Share Investor

Read the MFT 2011 FY Presentation

Is Mainfreight Worth 20 Bucks Plus a Share?
Share Price Alert: Mainfreight Ltd 2
Mainfreight's European Acquisition a Good Move
Share Price Alert: Mainfreight Ltd
Investing in the Stockmarket: Timing your Purchase
Stock of the Week: Mainfreight Ltd
Mainfreight Ltd: 2011 1st quarter Profit Analysis
VIDEO: Don Braid with Paul Homes on the Economy
Mainfreight Ltd: Full Year 2010 Profit Analysis
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Share Investor Interview: Mainfreight's MD Don Braid
Stock of the Week: Mainfreight Ltd
Questions to Mainfreight's MD Don Braid
I'm Buying: Mainfreight Management delivers the goods
Mainfreight Annual Report Packs a Punch
Analysis - Mainfreight Ltd: FY Profit to 31/03/09
Mainfreight VS KiwiRail: The Sequel
Long VS Short: Mainfreight Ltd
Why did you buy that stock? [Mainfreight Ltd]
Mainfreight 2008 Annual report worth reading
KiwiRail will cost Mainfreight
Mainfreight keeps on truckin
A rare breed
Share Investor's 2008 stock picks

Discuss MFT @ Share Investor Forum
Download Mainfreight Company Reports

	The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) (Collins Business Essentials) by Benjamin Graham Buy new: $13.25 / Used from: $9.24 Usually ships in 24 hours
	The Essays of Warren Buffett: Lessons for Corporate America, Fourth Edition by Warren E. Buffett Buy new: $30.40 / Used from: $169.48 Usually ships in 24 hours

c Share Investor 2010

Mainfreight Ltd: 2011 1st quarter profit Analysis

2011 1st quarter results for Mainfreight Ltd [MFT.NZX] out yesterday were significantly higher than the comparable 2009 figures.

Excluding abnormals the result was a net profit of $6.82 million for the first three months of the 2011 financial year; an increase of 148.2% on the previous year’s result of $2.75 million (excluding abnormals the increase was 69.5%).


Key Points

* Net profit of $6.82 million for the first three months of the 2011. An increase of 148.2% on the previous year’s result of $2.75 million (excluding abnormals the increase was 69.5%).

*Revenue increased by 20.5% to $315.25 million, from $261.67 million in the comparative period last year (excluding foreign exchange, this represents an increase of 27.8%).

* With the exception of Australasia Mainfreight has experienced growth momentum for all their business operations.

* Large profit upswing for first quarter of 2011 financial year are compared to 2009 figures which were well down on 2008.


This must be put in perspective though that the comparable 2009 figure was down more than 50% on the 2008 results. Having said that the 2010 first quarter shows a nearly 20% increase in net profit on the more relevant 2008 figures.

All important revenue figures were up by 20.5% to $315.25 million, from $261.67 million in the comparative period last year (excluding foreign exchange, this represents an increase of 27.8%).

The comparable 2009 revenue figures were down 17.2% on 2008 figures (after foreign exchange adjustments) so the company has lifted revenue back to around where it was in 2008.

Much of this quarters profit rise then came from cost savings.

All their divisions; New Zealand, Australia, China and The United States showed an improvement in operating performance.

July and August management say has also continued an upward trend.

Once again the outlook for the company is cautious and management expect to see a continuation of the current upward trend with a continuation of their focus on the costs savings that have made management of their business over the last 2 years of recession one of the best on the New Zealand stock exchange.

As the global economy is in quite a fragile state, this quarter must be put in the context of the next 3 quarters for the company and then we can give a true judgement of the 2011 performance of the company.

10 out of 10.


Disc I own MFT shares in the Share Investor Portfolio 

Mainfreight @ Share Investor


VIDEO: Don Braid with Paul Homes on the Economy
Mainfreight Ltd: Full Year 2010 Profit Analysis
Long Term View: Mainfreight Ltd
Share Investor Interview: Mainfreight's MD Don Braid
Stock of the Week: Mainfreight Ltd
Questions to Mainfreight's MD Don Braid
I'm Buying: Mainfreight Management delivers the goods
Mainfreight Annual Report Packs a Punch
Analysis - Mainfreight Ltd: FY Profit to 31/03/09
Mainfreight VS KiwiRail: The Sequel
Long VS Short: Mainfreight Ltd
Why did you buy that stock? [Mainfreight Ltd]
Mainfreight 2008 Annual report worth reading
KiwiRail will cost Mainfreight
Mainfreight keeps on truckin
A rare breed
Share Investor's 2008 stock picks

Discuss MFT @ Share Investor Forum

Download Mainfreight Company Reports



c Share Investor 2010