Monday, August 13, 2007

Sky City Casino Lead up to 2007 Full Year Profit Announcement

Sky City Casino (SKC) has been in the news recently.

A week or so ago there was talk of Greater Union, the US Cinema Chain, being interested in the Sky City Cinema assets.

Of course SKC paid far too much for Village Cinemas when they originally bought a portion in the late 90s, then a purchase of the unit in its entirety in 2002. Money was lost through write downs then and more money will be lost when the "asset" is finally sold to some other poor sucker-I hate cinemas as a business because as a whole they don't make money.

As a substantial Sky City Casino Shareholder I am very pleased the Cinemas are going to be sold.

Proceeds should be used to pay off the mortgage.

The other bit of press Sky City has garnered came out this morning in the NZ Herald and basically outlines what management have been up to since Evan Davies departure a few months back.

The focus for a company profit turnaround seems to be an effort to get more moola from the "high rollers" that visit the Auckland Complex , forgetting of course the fact that management recently banned a high roller after he won "millions" off the company last year in the VIP lounge, so naturally this has not endeared any possible whales from plunking down the big bucks. So they are starting on the back foot here because the high roller club is an exclusive one worldwide that obviously talk amongst themselves.

The other tack management are taking is on lowering table bets for games such as Blackjack. From the usual minimum of NZ$5 down to $2.50 on a Friday and Saturday night the focus here is at the lower end, perhaps trying to lure one arm bandit freaks to try a game of skill? I personally don't see this increasing table business. You are either a table player or a fruit machine retard. If they are trying to lure passerby by lowering the bet I'm not sure whether $2.50 is going to make any difference.

I can see managements' thinking though. If you can get them to the table, perhaps they will stay longer and therefore lose more pennies. The jury is still out on this but we may know more when the Full Year 2007 result comes out Monday 21 August (NZ time)

Either way next weeks results may be a turning point in the companies history. We will find out where they have been , what assets will be flogged off and although very hard considering recent upheavals, perhaps a profit forecast depending on the above.

As I write this Monday Morning the share price is down by 6c to $4.56 on low volume and is at lows for a year.

c Share Investor 2007

Saturday, August 11, 2007

Labours Socialist Peril

We are just over a year from probably one of New Zealands most important elections in generations. Important because we currently have a party in power that have us doomed and heading towards a socialist utopia(theirs)that would have Helen Clark and her merry band of brothers and sisters and their Labour Party telling its citizens exactly what they should be doing.

Complete control of New Zealand by an elitist bunch of individuals who have an agenda of turning the "Swedish Model" of socialism that they aspire New Zealand to have into some sort of Stalinist, Maoist, Clarkist, Fascist, South Pacific 1930s Germany.

Some of us have learnt from history how socialism didn't work and we also know from history that socialism will never work in the present or is good for our countries future. Micheal Cullen, the Dr of History, should take on board the lessons that his craft has taught him. If you ignore history you are doomed to repeat the same mistakes.

Doing the same thing over and over again and expecting a different result is the definition of an idea, thought or in Labour's case their socialist agenda, that clearly makes that idea a redundant one. Are you listening Micheal!

Let us canvas briefly Labours last 8 years in office. We must all continue to be reminded as to what this group of angry, vindictive, nasty individuals have foisted on New Zealand and some of the crimes against our freedoms that have been imposed upon us.

Without a doubt the biggest blot on our countries freedom has been the rights of parents and their right to parent as they see fit.

Removal of the right of a parent to smack a child if he puts himself in danger or the parent has no other recourse for punishment would be funny if it wasn't so serious. Like Labour's removal of physical punishment in schools during the 1980s, sensible practical people all know where this has led schools to in the present day. Pupils now run classes and are allowed to swear, be unruly and hit teachers and pupils without consequence. Removal of the threat of physical punishment in schools has led to more violence, not less as the left would have you believe.

The same reason has been given for the removal of the rights of a parent to lightly smack a child, that is, to prevent violence. If you learn from history and common sense we all know that is going to happen. Learn from history Labour.

The nanny state has also been busy telling us what we should eat, drink, smoke ,say and think and at the same time using taxpayers money in a Stalinist way to "educate" the masses, using TV, Newspapers and other media to brainwash Kiwis into thinking that the bizarre is normal. It wont be long before the government is running supermarkets and pumping gas!!

The attack on the Family through legislation to make same sex "marriage" normal for homosexuals and lesbians is part of the sustained attack by Labour's "Rainbow Youth" section and the continued striving by them to make Government mandated same sex relationships a legitimate thing. Us Heteros don't want Government meddling in our relationships why would the queer folk want the same?

The legitimisation of prostitution by Labour legislation its no surprise. Minister Phil Goff's proposal that the age of consent be brought down to 12 gives the public an idea as to what Phil and his comrades have in store for us should they continue to hold the reins of power going forward.

The loose morals and low standards of Labour's leader, Helen Clarke, have not only pervaded its parties policies and law making but have clearly been evident in Clarke's colleagues actions and attitudes.

From the top down we can see a litany of lies, deceit and subterfuge not seen since Richard Nixon took office in the United States.

Helen Clarke has been caught out lying several times; falsely signing paintings, professing not to know what was happening around her as her Ministerial car sped through a 50KM zone at 170KM(yeah right!)so she could get to a Rugby game and a long list of other fibs and spins including the stealing of 850,000 dollars of taxpayer money to buy the 2005 election and then the passing of a law under urgency to legitimise this theft. Something tricky dicky would be proud of and incidentally something he was impeached and sacked for.

We had drop kick lefties like Chris Trotter coming out in their newspaper columns saying that the theft was legitimate and if the means to this end was to deny National its place in Government, theft and lying was acceptable.

Clarke's Minister David Benson Pope has been caught out lying twice, that we know of. He lied to Parliament twice during the great tennis ball incident and the recent case of the sacking by him of Madeline Setchel, then repeated the lies to media.

We also had the case just before the 2005 election of Phillip Field, where there is clear evidence he has been found to be taking bribes from his electorate and using slave Labour in Samoa to get houses he owns renovated. This was apparent before the 2005 election but our largely leftist mainstream media were more interested in the non-story of National and the money coming from a religious group.

Chris Trotter and his media ilk ignored the cover-up of the Phillip Field scandal because if Field had lost his electorate of Mangere then Labour would have been outski in 2005. David Lange would be spinning in his grave!!

We also had one of Clarke's Ministers caught drunk behind the wheel while Minister for ACC and a Minister who was illegitimately claiming expenses for living in taxpayer funded accommodation and a long, long list of other sleaze, spin and lies too long to list in this brief article.

Let us not forget the mishandling of our economy my Micheal Cullen and his social misfits. During a time when all economic factors conspired to give us the best economic conditions we have had in generations the best the economy could do was 3.5% growth.

Cullen has squandered that growth by taxing the life out of its citizens ,while at the same time on such a reckless Government spending spree that bureaucrats have increased by more that 30% in 8 years.

Dr Cullen has milked the middleclases of its hard earned wealth filtered it through Government lackeys and "given" it back through Welfare benefits, through "Working for Families" and other nutcase socialist schemes. Never before in our history have New Zealanders had so many people reliant on the State(other taxpayers)through welfare.

Probably the epitome of ridiculousness was the 2005 election bribe of free student loans. Dr Cullen's theory that if there is no interest on student loans and that students therefore will pay back loans quicker defies even the logic of a sane man. This collective individual (an oxymoron if I ever heard one)is in charge of the taxpayers purse strings. Remember though he is going to have another go at bribing you again with your own money in 2008.

Cullen's high taxes, amongst the highest in the world, is clearly killing the economy. Not only are his high taxes and proliferate spending putting a nail through business and productivity but they have given rise to the highest interest rates in the developed world. Our dairy farmers have little to do with the rising dollar, it has more to do with Dr Cullen's out of control spend and tax regime. Socialism at work!!

Now I could continue to trot out acre after acre of prose about the nasty, vindictive, morally corrupt lot that call themselves our leaders but I want to leave that up to you to comment on. For or against.

What we must not forget though is the attacks by our Government on our freedoms our pockets our minds our consciences and the socialist agenda that is wrapped around it are set to continue unabated if this swine get elected again in 2008.

It is up to you to remember what the ultimate in socialism did to Stalinist Russia.

Millions perished.


c Political Animal 2007

Friday, August 10, 2007

Global Markets Dropping and Your Portfolio

Global share markets continue to fall and the charts are looking like a man who hasn't taken his Viagra after riding a rollercoaster for a few weeks.

Nervous nellies and those with short term investing horizons are bailing out quicker than you would have to bail out the Titanic.

There is talk of a credit squeeze, institutions freezing funds to stem a flow of cash and Federal and State banks increasing liquidity as a result.

The markets have had a good run of late, especially Asian markets and China the beacon of them all. Clearly share markets are currently factoring in some sort of global economic downturn. How bad is unclear, I would agree to a certain extent with Frank Barbera about China:

"That basically leaves the Shanghai Market as the sole hold out among Global Markets. Ironic, in that the historical analogy between the US Market and Great Britain of the 1920’s seems to be holding up perfectly nearly 80 years later. Back in the late 1920’s, the US was the up and coming industrial production giant, while Great Britain was the established economic power. As it turned out, the European Stock Markets peaked in 1928 and began extended declines into early 1929. At the same time, the US Stock Market was able to shrug off the declines in other markets and continued to make new all time highs going into August of 1929. Then came the Crash, where the US Market collapsed and caught up to the European and UK Markets which by then had long since been in bear market territory down more than 30% off there highs.

Flash forward to 2007, and we see roughly the same thing happening all over again, this time with the US in the role of Great Britain as the developed economic power, and China as the rising manufacturing star. At the very last pages of this report, we update what will in all likelihood be the final version of the Global Top Out Parade for this cycle, documenting the high dates for each of the major global indices, and a wide number of important sectors. What is painfully clear is that China now stands alone with its market, the Shanghai Composite, on a “Solo Walk” to new highs. Perhaps for a historical sense this is the most fitting end, as the Shanghai market has been the speculative bubble leader over the last few years. That said, we see no way that this market is able to sustain itself with the inevitable crash in Chinese stocks still the order of the day". (Frank Barbera 7.8.07)

I am not as pessimistic as Barbera but I would agree to the extent that I think China is the Joker in the pack of global markets. How bad could it be is hard to tell but it does need to pull back. The worst part is the uncertainty. Stockmarkets hate that.

What does this all mean to ones portfolio though?

Well, if you are like me, a long term investor, with a view of more than five years then you will be approaching these volatile markets with great interest and a certain amount of glee because these share price drops represent opportunities to buy more of what you own at a cheaper price. Look at these share price drops as one of the biggest sales that you have been to !

If you have bought well in the first place clearly any price below what you paid for your company is going to be an opportunity to buy. Who the hell would want to buy when the share prices are going up?

The only decisions you have to make though is how any global economic slowdown might have material and lasting effects on the prospects of the company or companies that comprise your portfolio and when to buy more of the companies that are going to ride out any possible global economic slowdown.

I have never been good at picking bottoms of share prices so I am going to place my buying decisions on the value of the company at the time I buy and its prospects as we move away from a global slowdown.

Whatever you do though, do not follow the heard and sell. Go against your psychological urges to sell and do the opposite if you have some cash. It is extremely hard to do and something I learnt from the insane decision to sell my portfolio on September 11 2001 and again the next year following Global worries over the US share market and its dodgy accounting fiascos.

Markets returned much to those who bought at these times rather than sold.

Hang on for the next several months, it will be character building.


Related Share Investor Reading

"Mr Market" gets his groove on
A sensible approach to global market volatility
Global Market's dropping and your portfolio

From Fishpond.co.nz - Buy Toughen Up: What I've Learned About Surviving Tough Times

Toughen Up: What I've Learned About Surviving Tough Times

Toughen Up - Fishpond.co.nz



c Share Investor 2007

Thursday, August 9, 2007

Freightway's Delivers

Freightways Ltd [FRE.NZ] , the domestic courier and Australasian document manager, delivered a small increase in profit for the 2007 year at the beginning of this week. Profit was just a tick over $NZ25 million, 3% up on 2006.

http://www.headliner.co.nz/images/sub60.jpg
Freightways should be able to weather the
coming economic downturn.


Management put that down to a "softening" economy and increasing business costs. Something all New Zealand businesses have had to cope with since the Labour Government have been in power.

An interesting paragraph comes at the end of managements announcement to the market and this is where I want to focus this article on:

Freightways' performance will in the near term be influenced by a challenging New Zealand marketplace. Medium to longer term and subject to business factors beyond its control, Freightways is exceptionally well positioned in all aspects of its business to continue to achieve positive performance for its shareholders and all other stakeholders.

Just how Freightways' Management have positioned themselves for the future is an interesting point to follow.

The strategy seems to have them move away from their core courier and postal services and towards information/document management and that has seen Freightways head West towards expansion in Australia.

Now I have nothing against expansion and growth or Australia but and it is a very big but we all know that across the Tasman lie the graves of many aborted attempts at Kiwi companies "spreading the risk" by shooting the ditch. The Warehouse (WHS) Telecom(TEL) Hallenstein Glasson (HLG) and Sky City Entertainment(SKC) have tough there to varying degrees.

What worries me about Freightways push there is that if they have underestimated how tough competition is and the differences in business culture, then the company is going to struggle like the aforementioned ones. Freightway's management have a good track record but as we all know history cant always be the judge of what business leaders do going forward.

Another niggle I have is that Freightways core business has been the courier postal arena and moving away from a companies main area of expertise can be a dangerous thing if it is not done right. History is littered with the corpses of companies who have moved from the area of their expertise just to "diversify" company earnings. There is nothing wrong with sticking to what you know.

Now I'm not saying this is going to lead to Freightways going belly up but I have seen too many companies from New Zealand "diversify" (I hate that word but it is the one that is used to describe multifaceted earnings streams) because our market is small and management want to soften the economic cycles a specialist company faces. It can often work the opposite way if done wrong. Its like Coke making tyres for goodness sake!

Having said that, If management have been on the ball with their diversification then they will reap the rewards of good stewardship. When the next upwards swing happens after the current downwards cycle dissipates, then we will start to see Freightways grow as it has in the past, strengthen its dominant position in its courier and postal divisions and perhaps look again to Australia for growth from its document management acquisitions.

The courier and postal business in New Zealand is ripe for acquisitions from overseas companies and within. NZ Posts' business is looking to grow further and there are global logistics companies that would be interested in acquisitions or a local "partner" here.

Long term Freightways looks to be a solid deliverer.

Disclosure I own FRE shares

Freightways @ Share Investor

Long VS Short: Freightways Ltd
Freightway's keeps delivering
Why did you but that stock: Freightways Ltd
Freightway's delivers
Freightway's packages up a good result

Related links

Freightway's Financial Data


Related Amazon Reading

How to Pick Stocks Like Warren Buffett: Profiting from the Bargain Hunting Strategies of the World's Greatest Value Investor
How to Pick Stocks Like Warren Buffett: Profiting from the Bargain Hunting Strategies of the World's Greatest Value Investor by Timothy Vick
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c Share Investor 2007