Trading in Burger Fuel shares has been spasmodic at best, since listing on the NZAX on July 17 2007. They hit a low of 29c earlier this year.
The Burger Fuel(BFW) chart tells a horrible story.
Down 18% today to NZ 42 cents and testing its all time low of 29c.
No operating news yet but sales and profit figures will be coming up in the next month or so.
Some news just at the end of last year though that a Wellington Burger Fuel store was extensively damaged. That would take out a fair amount of revenue.
My efforts to get BF shares have again come to a greasy end.
I tried to put a bid in today at 25 c but was refused by ASB Securities because "it was too low"
The "5% rule" applies, where you cant bid below 5% of what the last sell price was.
That is, even though a bid of 29c was on a buy order a few weeks back and the last sell was above 60c the buy order was allowed to be placed.
The ASB broker told me "someone at the NZX put it through".
I still cant figure out how I'm supposed to get my bid in, for what I think the company is worth, in such an illiquid stock if I'm not allowed to put my bid in how I see fit.
Keeping the cash rate at 8.25% while telling us inflation was a risk down the road.
Well helloooo! could one of the reasons to the risk of inflation be your 4 rate hikes this year and multiple ones over the last few years?
The short answer is yes but the less interesting answer is that Bollard is clearly out of his depth.
Barely able to see over the rims of his accountant style glasses, he rarely has the vision to see further than what happens from day to day..
Instead of dropping the cash rate, as he should have, he risks putting the New Zealand economy at the sort of risk the Labour Government has put it under for the last 8 stifling years.
Labour did it with world record breaking high taxes, removing cash and investment from the economy and Bollard did it with the worlds highest interest rates outside the worlds other banana republics, ditto removing cash from street level and strangling productive investment, savings and business.
World economies are cutting rates to stimulate economies and Bollard sits on his hands. It looks like he will only move once the economic cycle we are in is in the middle of a meltdown.
The Warehouse wont be sold for a bargain
Warehouse extra store, one of only three
It looks like it is all on for young and old in the fight for The Warehouse.
After the recent High Court decision granted New Zealand's Foodstuffs and Australia's Woolworths the right to bid for the general merchandise retailer the two prospective buyers have wasted no time in talking to Warehouse management.
Competition between the two to bid for the company is going to be intense and this writer has a $NZ 50000.00 bet that the bidding is going to be explosive.
There is talk of Foodstuffs teaming up with a private equity player to make a bid but the star likely to shine through is Woolworths. It has a very strong balance sheet, excellent cash flows and a history of paying good money for assets it really wants.
The share price has already done the impression of a Nasa rocket by taking off from below 5 bucks last week to close at NZ$6.65 today.
The Canadians Fly in, again.
In the long running saga that is the Auckland International Airport merger/takeover, yesterday news that the Canada Pension Plan Investment Board has changed the terms of its proposed amalgamation with the airport, stimulating more interest in the company's shares. CPPIB would reduce the convertible note component and increase the value of the ordinary share.
Part of the main Auckland international airport at Mangere
It is offering a convertible note, valued at $2.75, an ordinary share valued at 70.5c and 20c cash.
The proposal will be put to airport shareholders only if CPPIB's $3.66 a share all-cash partial takeover bid for 40 per cent of the airport is successful.
The proposed amalgamation, which requires the support of 75 per cent of airport shareholders, is the second part of the CPPIB's two-pronged scenario to negotiate a restructure of the airport's balance sheet to realize tax benefits.
That offer opens on December 14 and closes mid-March.
The possibility that the board will recommend the bid to shareholders could be a little dodgy considering the pedigree of some of its board members.
Lloyd Morrison or John Brabazon have voiced their opposition to such deals over the last 6 months or more of this long opus and the two council shareholders look reluctant to sell.
Who the hell knows really. The sale process of the airport has only been trumped in its complexity and opaqueness by the sorry tale of Sky City Entertainment and its managements' dilly dallying over bids for the casino company.
Hobson's choice
According to NZ Government stats the Kiwisaver super scheme has 300,000 participants that have "chosen" to "enroll" in it.
What is left out of any analysis is that the scheme is an opt out one rather than opt in so the bulk of those 300,000 haven't done anything. They are merely too lazy to opt out.
Micheal Cullen, our out of his depth Minister of Finance, of course trumpets this as a great success but as usual leaves out the details when they don't stand the scrutiny of logical argument and clear thought processes.
Of course this is the chap who has spent the last 8 years telling New Zealanders that tax cuts don't stimulate economies but is going to hand our money back to us in election year 2008.
Good luck balancing your check book Mr Cullen.
I'm no big fan of this harebrained state controlled and controlling scheme because it is expensive and tax inefficient but it will benefit shareholders in New Zealand listed companies.
Burgers going for half price
In Burger Fuel news, you guys out there loveBurger Fuel:
According to Google information released this week, Burger Fuel was the subject of the most internet searches of any New Zealand listed company.
This is no surprise to me because I have known this little tidbit since the company listed back in July. Its the biggest search term on my blog as well, followed by the worlds credit problems and Pumpkin Patch Ltd.
Incidentally the share price still languishes at 60c and is thinly traded, with a massive $150 going through today.
Its still on my watchlist though.
NZX Market Wrap & commentary
6:27PM Friday December 07, 2007 By Melanie Carroll, NZ Herald
New Zealand shares made a late rebound today to recover the ground lost after last week's downgrade by international share index compilers MSCI.
The benchmark NZSX-50 index closed up 49.4 points, or 1.2 per cent, at 4092.9, its highest in over a week. Turnover totalled $109 million, and rises outnumbered falls by 58 to 38.
Lines company Vector was the standout stock, recovering to a two-month high of 251, up 6c or 2.5 per cent, from 218 last week.
"The stock always looked cheap anyway but particularly post-the MSCI selldown the market is starting to focus on fundamentals behind the stock, and the fact that there was effectively a profit upgrade in recent times," Macquarie Equities NZ investment director Arthur Lim said.
Sky City was up 6c at 491, Sky TV rose 3c to 566, and Contact Energy slid 17c to 847. The compilers of the MSCI indexes, which guide international trading and portfolio composition, downgraded New Zealand and are removing five of the top-10 stocks due to lack of liquidity and market capitalisation.
Remaining in the index are Telecom, Fletcher Building, Contact Energy, Auckland Airport and Sky City. The Warehouse was up 10c at 664, having jumped over 12 per cent since the High Court overturned a Commerce Commission ruling blocking supermarket chains Foodstuffs and Woolworths from bidding for the retailer.
"If you add back the special dividend of 35c, it means that the price is now the equivalent of $7. Clearly the market is saying it is unlikely that the Commerce Commission is going to appeal, and it follows news in Australia that discussions have started taking place between the different parties," Mr Lim said.
The announcement yesterday of a possible listing on the NZX by New Zealand's biggest company, Fonterra, is the best news the New Zealand economy has had in generations.
Fonterra, a global milk products producer, manufacturer and exporter is a huge contributor to NZ Inc and the company has become a dominant force in the Global Dairy products boom.
It has now got to the point though, that it needs some serious capital to allow it to grow larger and compete with the likes of Nestle, Danone and Kraft. Fonterra's cooperative structure doesn't allow the company to raise the capital needed to foot it with the other big boys as the dairy industry players grow in size, through acquisitions and mergers.
There has been much bleating by Unions and the NZ First Political Party that the proposal isn't a good idea but frankly as Unionists and pollies what the hell would they know about business.
This is great news for Fonterra and its long term future and excellent news for New Zealand investors as they will be able to participate in an industry that dominates our export revenues and economy and contribute to the investment of a great business.
TheNZXis going to be more indicative of our economy by having Fonterra listed, possibly sometime in 2010, and the index will get the much needed boost that it has lacked all these years simply because of the impact the company has in our economy.
A cash cow indeed.
Sky City twiddling thumbs in the back row
Sky Tower, Auckland, NZ
News this week that Sky City Entertainment(SKC) is not likely to be able to tell the market anything about the 3 companies currently looking over SKC's books and what their intentions will be until "after Christmas" leaves this writer wondering how far management can stall shareholders any longer.
The timetable initially stood at an announcement at the end of October, then mid November and now after xmas. It makes me wonder how serious prospective bidders might be and doesn't inspire confidence in a good price for the company or a sale at all.
In other company news, contenders for SkyCity Cinemas - which could be worth as much as $116 million - are understood to include Australian firm Greater Union, US-based Reading Cinemas and Hoyts, previously a partnership between PBL and West Australian Newspapers, which was purchased by Australia's Pacific Equity Partners.
The vagaries of management speak are truly alive and well at Sky City, this from the company November 14:
SkyCity said yesterday it did not expect to progress with the cinema sale before the end of November.
What the hell does that mean, will they give a bloody deadline?
Sky City Management surely must be nominees for the worst board for 2007.
Morrison speaketh with forked tongue
I'm having trouble taking Lloyd Morrison seriously.
Morrison, the chief executive of Infratil, a director of Wellington Airport and a backer of a second airport for Auckland at Whenuapai has $300 million invested in Auckland Airport(AIA) on behalf of Infratil and the NZ Super Fund.
The trouble with this though is that Morrison's directorship of Wellington Airport and backing of a second port in Auckland put him in direct conflict with his large ownership of AIA shares and his ambition to get a seat on the AIA board.
Morrison says there is no conflict but it doesn't take a genius to figure out that he is staining credibility paper thin if he thinks that.
He was caught out today on National Radio Business today and last week when he said that the Canadian Pension bid was too low at $NZ3.65 and mentioned a price north of 4 bucks per share as being fair value for the company.
Interesting take when you consider than Infratil was involved in a bid, earlier this year, that was rejected by the board as too low, probably below the Canadian bid.
Morrison is a savvy investor and he is using subterfuge, doublespeak and attacking competitors in his bid to get some sort of control in the Auckland Airport deal/s.
While the AIA board hasn't been straightforward with shareholders over the last 8 months of this protracted bid for control of the port, Morrison's intentions are not clear and he cannot be trusted and shouldn't be elected to the AIA board on November 20.
In takeover news, Canadian Pension Plan Investment Board (CPPIB) has made a formal bid for AIA today.
The key terms of the offer are as follows:
Offer Price: The consideration offered for each Outstanding AIAL Shares taken up under the offer is $3.6555 in cash.
Partial Offer: The Offer is for 39.53% of the AIAL Shares not already held or controlled by the Offeror
Closing time: The Offer closes at 5.00pm on 13 March 2008 Partial Offer: The Offer is for 39.53% of the AIAL Shares not already held or controlled by the Offeror
Closing time: The Offer closes at 5.00pm on 13 March 2008
Hollow words, hollow competition
The owner of Share Trader and many other financial based sites in New Zealand threatened to "take legal action" over this revelation published in the Share Investor Blog a month ago and insisted it be removed and an apology made but as yet has failed to serve me with a writ.
This individual also made a threat of "legal action" over my use of "Good Returns Bookstore" banners on my site back in July even though I was legitimately using them as a genuineaffiliate.
Now I don't take kindly to threats and I am justly annoyed by this pest, but I guess threats ring pretty hollow when you use them as your modusoperandi when doing business and don't follow through.
Good Returns Bookstore, owned by Tarawera Publishing, continues to spam me with emails to buy their books, even though I canceled my affiliate membership and Tarawera'sSharetrader continues to host my contributions on their site, even though I didn't sign up to their new draconian membership terms and conditions(see the fee for spamming!!) as part of Tarawera taking over the site.
*Incidently you can buy all types of finance books from my Share Investor Bookstore, the range is many hundreds of times larger and at least 30% cheaper than Good Returns Books.
Sort yourself out Phil!
Learning to love China
World markets have been nervous again over the last few weeks. The Dow has slipped from over the 13600 mark to just above 130000, oil has reached almost 100 bucks, gold is over US$800 and the US dollar is doing an impression of a tiger moth with one wing.
Shakiness over future sub prime losses for banks and financial institutions have been blamed and to be sure there is more to come once sweetheart mortgage deals end but like any market jitters the market tends to overreact.
I think what could be happening now and we wont really know it for sure until we look back, is that we are partially seeing the start of the transition of dominance from the US as the financial and economic powerhouse to China. To be fair it ain't there yet but early signs seem to be showing the genesis of something akin to an economic transition.
The low value of the Yuan and the Chinese economy powering ahead means their economy will only power ahead in the future, while the US, a massive importer of foreign made goods is struggling as their dollar sinks and imports cost more.
Also the US as a safe haven for foreign investment is being eroded as their interest rates plummet and the cost of repaying debt to China gets ever more expensive.
The transition of America from a manufacturer to their home market and huge importer to a bigger exporter must come and will be easier to do as their dollar drops against their main trading partners.
It is then China will be seen as an opportunity to US manufacturers instead of a threat and the whole cycle of economic change will start again.
Let us remember that China was an economic powerhouse once before.
NZX Market Wrap
The NZSX-50 index, closed up 1.1 points at 4114.2, on turnover valued at $138.5 million.
Auckland Airport fell 3c to 301, after Canada Pension Plan Investment Board (CPP) submitted its formal cash bid for 39.53 per cent at $3.6555 per share. The airport company has also asked its advisers to seek other offers.
AIA shares had earlier risen to 308 before profit takers moved in. Turnover was a heavy $46.8m.
Fisher & Paykel Appliances rose 4c to 364, having gained about 30c since its first half result last week. The company is also considering selling its finance company to focus on its whiteware manufacture and retailing businesses.
Market heavyweight Telecom gained 4c to 425, Fletcher Building was up 8c at 1166 after being caned for most of the last week or so, and Contact Energy lost 5c to 885.
F&P Healthcare was up 3c at 328, Sky City gained 5c to 537 after getting knocked about yesterday after a broker downgrade. Sky TV lost 8c to 562, and Vector recovered some of yesterday's 6c loss to close up 3c at 233.
Air NZ, which has had a rough ride recently due to rising fuel prices, rose 1c to 202.
Among other stocks to gain, NZX was up 5c at 961, Freightways rose 2c to 380, Infratilwas up 2c at 293, Nuplex gained 5c to 725, and carpetmakerCavalier was up 3c at 315.
Hellaby Holdings lost 2c to 271, despite news it was trading ahead of last year, when it posted its first loss since re listing in 1994.
Rakon fell 5c to 515, Tower was down 4c at 204, HallensteinGlasson lost 3c to 445, Mainfreight was 5c lower at 710, and The Warehouse was down 2c at 522, marking time while waiting for a decision by the Commerce Commission as to whether Woolworths or Foodstuffs can make a bid to takeover the company.
Ian Morrice , the head of The Warehouse(WHS) has received good news recently. It was reported in mainstream media today that he is to receive a total remuneration of $3.908 million for the 2007 financial year to June 29.
Nothing wrong with that, Morrice has done well to turn around company fortunes by selling the losing Australian arm and reinvigorating the shop floor by selling more consumer friendly brands in his stores.
Speculation by media in the case of The Warehouse is that one of those targets was an increased share price. Like Auckland Airport(AIA) a few months back managers were given incentives if certain performance targets were met and the link to share price performance was cited by that company.
Both AIA and WHS were/are under takeover speculation so the increase in share price is totally unrelated to the performance by management or the CEO and the incentives paid to those at AIA and Morrice at WHS are clearly undeserved.
If share price increases can be pinpointed to management's achievements then and only then incentives should be paid.
In a closely covered case by business media, the appeal by Foodstuffs, Woolworths and The Warehouse has finished today but a decision is not expected for several weeks.
Playing the game of Monopoly
A Waste Management Trash Unit
Proving that the Commerce Commission can make a ruling in favour of a virtual monopoly business in New Zealand they have cleared Transpacific Industries to buy some businesses off Envirowaste Services.
The company have been trying to buy parts of Envirowaste for some years after being turned down by the CC to buy the whole company a few years ago. That decision followed the purchase of Waste Management by the Australian trash giant and the approval of that purchase by the commission.
Transpacific was yesterday cleared to buy EnviroWaste's solid waste collection businesses in four centres and solid waste businesses in two others.
That decision could shed some light on a decision pending before the commission on whether The Warehouse could be purchased by two dominant retail industry players.
Oils Well?
The recent climb in the price of oil from the low of $US70 per Bbl to over $96 today and the worry over the price is a complex tale of inflation and increases in productivity and technology.
While the price is clearly just below the inflation adjusted April 1980 record price of US$101.70 there are reasons why we shouldn't worry too much, yet.
Since those heady days individuals and companies have increased productivity manifold times and the technology that we now use, for industry and personal use, allows the consumption of far less of the black stuff.
Our cars get more millage to the gallon/litre for a start and vehicles are one of the biggest users of oil, especially you Americans!!
As a footnote to this story, no the world isn't running out of oil. The "Peak Oil" theory is as mythical as global warming and the tooth fairy The left are mining P.O. to advantage their nonsense and collect more taxes.
Acres of Shopping
The new 210 million dollar Westfield at Albany, New Zealand
The expansion of retailing in New Zealand looks set to continue for the foreseeable future if the plans of the mall giant Westfield(WDC) are anything to go by.
Westfield has just opened a giant mall, a former apple orchard from where the "Albany Beauty" apple gets its name, in Albany, just a stones throw from where I live.
That new mall has 5.2ha of indoor floor space and although it was opened yesterday, the 1800-seat Sky City(SKC) Cinemas, will not open until next year.
The company have 12 malls in New Zealand and look set to continue expansion of not only Albany, where there are acres of land to do so, but malls in Newmarket, Auckland and Christchurch as well.
Construction of other shopping precincts unrelated to Westfield, in the Albany area, are going ahead stridently as the population in the area expands rapidly.
Westfield look to have a great future in this country as its covered mall shopping areas don't have the same dominance as they do in such regions as its home market, Australia and the home of the mall, the USA.
NZX Market Wrap
New Zealand shares dropped more than 1 per cent today following significant declines on Wall Street, but the local market's fall was smaller than for those around the region.
The benchmark NZSX-50 index closed down 53.8 points at a one-and-a-half month low of 4154.13. Turnover totalled $113.4 million, with 24 rises and 80 falls.
Telecom shed 2.6 per cent, or 11c, to a more than two-month low of 417 after its quarterly result today. The company said net profit for the three months to the end of September were $225 million, unchanged from a year earlier. But profits from continuing operations were up 29 per cent.
The mobile outlook wasn't good, some of the ways they got some profit seemed to be from lower tax and one-off things like the Southern Cross dividend. Obviously the combination of a bad day and a poor result.
Air New Zealand was one of few leaders to post a rise, up 3c at 215 despite ongoing oil price rises.
No not Sergeant Peppers Band but the Great Stock Market Meltdown of 1987.
I didn't follow the Stockmarket 20 years ago. I vaguely recall a news incident at the time but didn't equate it with anything serious.
I was living in Sydney at the time, so the fallout from it wasn't as bad as it was apparently in New Zealand.
My introduction to the Stockmarket came almost exactly 10 years later, when I bought shares in the fast food operator Restaurant Brands (RBD)
Since then I have taken a great deal of interest in equities and my 10 years invested in it has taught me much.
Investing in the NZX has given me an appreciation of business, how fear and greed work in financial markets and most of all made money for me.
The biggest lesson that I have learnt is from losing money in a couple of stocks. That hasn't dulled my obsession with the market though.
Craig Heatley (left), and Allan Hawkins after Rainbow Corporation lists on the Stock Exchange in the mid 1980s
Unlike some who lost their shirts and more back in 1987 my loss wasn't very large and thousands of Kiwi investors haven't forgotten those heady days and wouldn't touch the sharemarket with a barge poll today.
The New Zealand Sharemarket was one of the worst affected back in 1987 and still hasn't recovered from the hit that it took. Most other global markets have multiplied their values many times in the last 20 years. The US market is now worth more than 5 times what it was worth all those years ago.
True, the NZ Stockmarket is a much more stable and regulated market than it was back in those wild west days but there are still some negative elements that linger today, most notably the insider trading that is done by NZX sanctioned broker firms and management of its listed companies.
Lets hope for a more positive next 20 years. NZX's Mark Weldon is doing a good job so if he straightens the rest of the markets kinks out then we might get somewhere.
Burger Fuel Shares get a Fuel Injection
Burger Fuel Outlet
It hasn't been only the global oil prices climbing lately.
Burger Fuel(BFW) the New Zealand based gourmet burger maker, has had its shares climb from a low of NZ$.60c to 70c over the last week.
On very low volume again but the down trend has reversed.
No news about how the new Kings Cross outlet is going and I will be waiting with with great anticipation for the lowdown.
Good news for this outlets sales will push shares a lot higher.
The Dice get Fluffy
First it was then it wasn't and now it is again.
Sky City Entertainment(SKC) the casino, hotel and cinema operator had its shares halt trading for 15 minutes on Monday because the NZX feared that the company was trading without full disclosure to the market.
Sky City Metro, Auckland City
This was because there had been rumours that another company had approached SKC management with interest in the entertainment group mainly because a director of the company mentioned it to a reporter on Sunday.
This was initially denied then days latter it was confirmed by SKC management itself that there would be indeed another "interested party" doing due diligence with a view to buy the company.
The other company is possibly US private equity firm TPG which is examining the books of SKC, sources familiar with the matter said today, with any bid seen worth over $US2 billion ($NZ2.7 billion).
The new contender is unnamed.
The complexity and ups and downs with the possible takeover of SKC has seen much confusion and speculation over the last 3 weeks since the M & A speculation was mooted.
I'm still hoping the buyout is a failure because I see more value in the company long term and substantial capital returns to shareholders as cinemas in New Zealand and the Adelaide Casino go on the block.
Fishing for returns
Fisher Funds, the highly successful New Zealand fund manager is currently offering what could be a good investment in years to come, if their track record is anything to go by.
Their New Zealand and Australian listed investment funds have done very well since their inception, with excellent returns so far.
Their latest offering is Marlin Global Limited. "Marlin will provide investors with access to a handpicked portfolio of outstanding growth companies selected from around the world", according to the company website.
This is an excellent way to get exposure to global markets without the attendant fees and taxes to complicate things.
You can download a prospectus here but keep in mind that it may not perform as well as Fishers other funds.
I may apply for a small parcel myself.
The Dots get the Hots
Dominos Australia wants a slice of the Global Pizza Market.
Doing what our domestic Pizza Franchisee with the Pizza Hut license, Restaurant Brands couldn't do, the Australian arm of US giant Domino's is successfully expanding overseas.
It will open at least 35 stores in Europe each year until it reaches 1000 stores, betting on rising demand for home delivered food.
Domino's has a total of 667 stores, with 404 in Australia, 65 in New Zealand and a combo of 198 in France, Belgium and the Netherlands.
Restaurant Brands delivered appalling results when it bought the ailing Pizza Hut chain in Victoria Australia in 2000, with a total of around 60 stores.
Poor management was unable to turn company fortunes around and RBD has now almost finished selling their OZ arm after losing 10s of millions of shareholder dollars.
The pizza biz is a very competitive industry but if Domino's OZ expansion works then their slice of profits will get bigger.
Today, the NZSX-50 benchmark index closed up 3.2 points at 4316.31, just 26 points below May's record high. Turnover was light, totalling $89.2 million. Air New Zealand(AIR) rose a cent to $2.12, Steel and Tube (STU) fell a cent to $4.38, Michael Hill(MHI) lost 20c to $10.30.
Carpetmaker Cavalier(CAV) was even at $3.25, Tourism Holdings(THL) dropped 16c to $2.32, Nuplex(NPX) fell a cent to $7.69 and NZ Refining(NZR) jumped 18c to $7.70 stimulated by rising world oil prices.
Fletcher Building(FBU)was up 4c at $12.38, F&P Appliances(FPA) was flat at $3.70 and F&P Healthcare (FPH) down 4c at $3.34.
Telecom(TEL) rose 2c to $4.54, while Contact Energy(CEN) was a cent higher at 943.
Sky TV(SKT) was up 9c at $5.95 amid talk over the company's planned on-market buyback. Small shareholders have been advised to vote against the buyback, which would increase the stake of Rupert Murdoch's News Corp to around 45.95 per cent, and possibly over 50 per cent eventually.
Sky City(SKC) was up a cent at $5.48, having added 7c yesterday over takeover activity.
Auckland Airport(AIA) rose 1c to $3.08, Freightways(FRE) was up 7c at $3.98, NZX climbed 10c to $9.50, and Rakon(RAK) was up 13c at $5.19, possibly over speculation of a good profit statement.
The Dominoes keep Falling The week kicked off with yet another finance company meltdown. Geneva Finance, definitely not Geneva based, stopped lending money to clients. A few weeks ago there were warnings about this company and latter on this week its credit rating was dropped by Standard and Poor's from B+ to B- Standard & Poor's defines a B- rated company as one able to meet its financial commitments but vulnerable to adverse business, financial or economic conditions, doesn't look good. Meanwhile, Nelson finance company LDC and its 700 odd investors could get up to 90% of their funds returned, company liquidators have announced. This is one of the better returns from the 10 finance companies that have collapsed over the last 18 months or so. Bridgecorp investors, who between them risk losing up to half a billion kiwi dollars have decided to discuss the merits or otherwise of taking legal action against Bridgecorp and financial advisers who gave clients the thumbs up to plunge their bucks into this rotting corpse. Finally, Hanover Group, one of New Zealand's biggest finance companies, seems in a huge hurry to quit an apartment building that it helped finance and that has got into difficulty. Instead of flicking off the 92 units individually and getting more money back, they are forcing a mortgagee sale and risk getting roughly half the proceeds that they could. The problem with the most recent finance company collapses has been liquidity and cash flow issues. A Slap on the Back The New Zealand franchisee of KFC, Pizza Hut and Starbucks, Restaurant Brands(RBD) this week announced a net profit of NZ $4.5 Million. This is up nearly 100% on last year, as the company barely managed a positive result in 2006. Revenue increased marginally on last year Much has been made by management of the KFC "transformation" through store refurbishments but the head chickens at RBD still have a long way to go to get close to sales figures from its listed heyday. Starbucks continues to plod on without contributing to the bottom line but Pizza Hut has slowed the downwards flow in sales for its round dough making stores. I was expecting better and it doesn't look good for next years announcement in May. The Power to Succeed Another nail in the coffin for New Zealand's economy was rammed home this week when the climate change disciples from the Labour Party and Green Party announced that this country would no longer be able to build fossil fuel power stations for the next 10 years. We are currently short of reliable power sources for a much needed expansion of our economy and today's announcement means that we now risk current industry and put the price of power to consumers and business up simply because worshipers at the climate change altar want to collect more taxes. Business especially needs the surety of a sustained supply of electricity to allow expansion of their business and the confidence to invest. Look for more manufacturers to head across foreign waters because of this decision. Nuclear energy would be the answer to this problem if it actually existed but the n word will not be discussed by the Gore-ites in the Labour party. NZX Market Wrap The NZSX-50 index, down earlier in the day, rose 9 points to 4305.62. Turnover totalled $NZ95.9 million, with falls outnumbering rises 54 to 59. Telecom (TEL) fell 6c to $4.44, while Fletcher Building(FBU) jumped 23c to $12.78, and Contact Energy (CEN) rose 22c to $9.57 in the wake of the Labour Government's new energy strategy released yesterday. Fisher & Paykel Healthcare(FPH) was up a cent at $3.30 and its sister company Fisher & Paykel Appliances(FPA) up 5c at $3.70. Sky TV (SKT) lost 5c to 570. Among companies under M and A speculation, The Warehouse(WHS) was up 5c at $.548, casino company Sky City Entertainment(SKC) was even at $5.28, and Auckland Airport(AIA) climbed 3c to $3.10. On the downside were Michael Hill(MHI),down another 14c to $11.26 following disappointing quarterly sales figures yesterday, and tech company Rakon (RAK) 12c lower at $4.80 in reaction to the higher currency. Freightways (FRE) (POT) rose 5c to $7.10, Pumpkin Patch(PPL)was up 8c at $3.91, Mainfreight(MFT) rose 5c to $7.05, Port of Tauranga(POT) gained 2c to $3.13, and Tourism Holdings(THL) was up 4c at $2.31. The influential Fund Manager, Fisher Funds, from Auckland's North Shore, sold down Freightways and purchased more Pumpkin Patch. Infratil(IFT) fell 4c to $3.05, fish exporter Sanford(SAN) fell 3c to $4.27, Steel & Tube(STU)lost 3c to $4.41, and Hallenstein Glasson(HLG) the clothing retailer was down 2c at $4.53. NZ Dollar Wrap
Reuters currency rates (12.07.07) NZ Time (5pm today 5pm yesterday)
NZ dlr/US dlr US77.02c US76.42c NZ dlr/Aust dlr A85.52c A85.05c NZ dlr/euro 0.5427 0.5398 NZ dlr/yen 90.41 89.62 NZ dlr/stg 37.89p 37.43p NZ TWI 72.31 71.79 Australian dollar US90.07c US89.86c Euro/US dollar 1.4192 1.4158 US dollar/yen 117.36 117.19
c Share Investor 2007
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 SkyCity’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 SkyCity 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.
AucklandAirport 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.
SkyCity (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.
