Share Investor's Friday Free for all: Edition 3

Fast Food Company keeps its Head

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

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

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

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

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

Retail Therapy

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

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

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

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

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

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

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

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

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

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

Fonterra headed to a new Frontier?

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

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

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

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

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

Good news and bad news for Fonterra this week.

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

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

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


Stupid is as Stupid does

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

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

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

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

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

Cant have it both ways Forrest.


The Song Remains the Same

Finance companies are in the news again this week.

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

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

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

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

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

Geneva insist things are hunky dory.

Jumping Ship at Telecom a good Call

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

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

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

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

The departures are well timed.

NZX Market wrap

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

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

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

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

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

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

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

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

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

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

c Share Investor 2007

Look closer at the Risk Ladies and Gents

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

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

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

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

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

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

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

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

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

You have been warned :)


c Share Investor 2007

Lest we forget 9/11

Not much has been written, in New Zealand, about those Americans that fell on September 11, 6 years ago. Our Labour politicians no longer consider Americans our friends and actively encourage those that are our enemies to make New Zealand their home.

The world changed on that day. The West is in constant fear of those that would force their way of life on us and we are reminded everyday when we watch what is unfolding in the Middle East, about what would happen if our freedoms were taken at the point of a gun or homicide bomber.

Those that are fighting the good fight in Iraq must be given the hero status that they deserve, for that is what they are. Heroes.

I give my thoughts to those that lost their lives on September 11 2001 and for those lost in Iraq and elsewhere who fought and are still fighting to keep our way of life the way it is.

Lest we forget.

c Darren Rickard 2007

Labour's State Control out of control

In the latest grasp by Helen Clark and the sisterhood for full state control of every New Zealander we see the Government apparatus, the Children’s Commission and its head Cindy Caro make another play for the control of the nations children.

Caro has put forward a lunatic idea that every child from new-born to 15 years old will be "tracked" by the state. What that means is visits from state appointed workers who will check on the child’s "wellbeing" and make sure that you as a parent are doing what you "should be."

If the parents of a child refuse Government employee’s access to the child, the child can be removed and placed in State care!

The absurdity of the idea is a smack in the face for the majority of families who look after their children well. Targeted action on those who are actually at risk, Maori and Pacific peoples, and proper punishment for those who perpetrate crimes against children are good steps in trying to combat child violence.

State propaganda advertising other socialist nut bag legislation recently passed, the anti -smacking law has recently started. Various Z grade celebrities like Alison Mau and the lefty sniveling "I know better than you," Russell Brown, listed by himself as some kind of journalist, spank themselves silly in print on TV and radio, giving the great unwashed public the benefit of their superior knowledge on child rearing and telling you therefore that your way is wrong, wrong, wrong- insert image of a wagging finger here.

This latest attack on the family is merely the continuation of the state control that has been engineered from the inception of this socialist Labour Government when it took control of the countries finances in 1999.

The overriding focus for Labour in its 8 long years has been law passed to seize control, piece by piece of every individual’s ability to run their lives in an independent way, self sufficient and self reliant.

Labour wants us to rely on the state as much as possible.

The list of Government interference in our lives is a long one.

Labour has passed the anti-smacking bill, the thrust of this law is that parents no longer have the right to challenge or punish children for doing wrong in anyway. If they do their children will be taken away and the parents punished by child welfare agencies. Screwy huh?

Labour removed the choice of individuals to smoke in pubs and restaurants and at the same time private property rights and profits of business owners.

Labour has interfered with food in schools by making such treats as pies and chips, who all sensible people know should only be eaten sparingly.

Labour have interfered in child minding and pregnancy by introducing paid maternity leave, to be paid by taxpayers and employees thereby forcing those families who would pay for their own children’s upbringing to work longer hours to pay the increasing taxes for the scheme.

Labour’s “Working for Families” Welfare package have effectively put another 500,000 individuals on welfare and therefore at the mercy and control of those who hold the purse strings

Labour have brought Railways and Air New Zealand under the state flag and TVNZ has moved towards more state control and failed miserably.

Labour have started a State bank, “invested” millions of taxpayer dollars and have yet to get a return and never will.

I hate to “Labour” the point but the thirst for control by these individuals is monotonous in its regularity.

Along with the looney laws, we have had a mountain of Government propaganda and spin in all the media about what should: eat,smoke, read, drink and how to raise our children and what our families should look like. We are constantly bombarded with these messages to the point that the more gullible and moronic amongst us start to believe what they see, read and hear.

Stalin and Hitler used these same forms of Government spin to get their message across. We are not at this point yet but follow the story of the last 8 years to its logical end.

While all the energy by this government being put into making New Zealand a nanny state is wasted, this countries economy, education, health slides further and further towards oblivion.

The trouble with all this finger wagging and State control is that its logical conclusion would be a state employee following every individual around constantly telling them what to and what not to do. Think that this can’t happen?

The undercurrent and aim of this Socialist Labour Government is to have effective control of everything that an individual does. Private enterprise and self reliance is an anathema to them and not to be encouraged at all, we only have to look at their attack on John Key and his success in life to see where this filthy lot are coming from.

The ultimate in socialist control and for the reigns of power to be held in their hands in perpetuity, is the Electoral Finance Bill, which would, if passed, allow the incumbent to spend taxpayers money promoting government legislation to buy an election while opposing groups to government will be restricted to $60000.00 and not be allowed to criticize government in an election year.

These pigs in the taxpayer trough must be stopped before they end up in bed next to us.

That is a scary thought.

c Darren Rickard 2007