Allied Farmers: What's it Worth?

I didn't mean to write something else before Christmas but couldn't help myself over the plunging fortunes of ex Hanover investors and their allotment of 1.9 billion shares (yes that is billion with a capital "B") issued last week in lieu of a wind-up of Hanover Finance.

Allied Farmers Ltd [ALF.NZ] shares were always going to significantly drop in value as the new investors in the company headed for the hills and dumped their stock but existing investors in Allied sold shares last Friday after a trading halt was lifted dropping shares from 20c to 14.8c. Yesterday a small number of Hanover investors bailing took the share price down to 10c a share.

There will be a further drop today and further drops as Hanover investors get firm allocations confirmed and they are able to employ a broker to do the business -many Hanover investors would not have easy access to a sharebroker.

What is the company worth though?

Well, that is part of the problem, the market doesn't really know its true value because the "assets" folded into Allied from Hanover are of suspect and therefore unknown value and the prospects for the new Allied Farmers is uncertain at best.

Markets hate uncertainty with a passion.

Those former Hanover investors would have been advised to dump stock ASAP if they wanted some sort of immediate return because I don't think this company is going to stick around for any good length of time but if they think that there is hope for the company that it will survive then the best thing investors could do would be to hold what they have and wait for some concrete results to give the market an indication of true value -the share price will recover if the results are good.

At close of market yesterday Allied Farmers share price valued Hanover assets at around 35c in the dollar, so according to those commentators who eschewed a wind-up of Hanover in favour of a takeover by Allied a 35% return of your money is better than returns from a bankruptcy and they are probably right but the share prices aint going stay above 10c for much longer.





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Merry Christmas and Happy New Year from Share Investor

I wish all my loyal readers a very happy Christmas and a prosperous 2010 New Year and to your family and loved ones.

It has been a pleasure writing on some my favourite subjects and I hope you have found some interesting tidbits to help you out in these very crazy financial times.

I hope you can all join me in 2010 where we can all do it again but this time with a smile and a wink!

To check out the holiday operating hours of the NZX and what is coming up please go here.

Darren, Share Investor.


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c Share Investor 2009

Share Investor's top 12 Stockmarket/Business Awards for 2009

A list seems appropriate for the end of the year, everyone else is doing one so I might as well.

Here goes nothing.

CEO of 2009 - Russel Creedy from Restaurant Brands Ltd [RBD.NZ] For turning around the usually beleaguered fast food company by implementing better menus and service with a capital "S'.

Share price recovery - Restaurant Brands again for almost tripling their share price from a low of 62c to over NZ$1.60 in 12 months.

Management of the year - Mainfreight Ltd [MFT.NZ] As a whole the quality of management shone through as the logistics sector was particularly hard hit. Don Braid, Bruce Plested and the team they manage have negotiated their way through a bleak 2009.

Fraudsters of the year - Mark Hotchin and Eric Watson share this distinction. For going above and beyond the call of duty to fleece elderly investors of their life savings and walking away scot free. They should both be in prison.

Head in the sand award - Rod Oram and his ilk banging on about the fraud of Global Warming simply because they stand to make money by peddling this myth.

Stockmarket crusader award - Bruce Sheppard from the New Zealand Shareholders Association. When there is noise that needs to be made Brucie is there with his horned helmet ready to expose those that need to be seen in all their ingloriousness.

Worst performing major NZX stock/s - This would have to go to Nuplex [NPX.NZ] first and Fisher & Paykel Appliances [FPA.NZ] Nuplex destroyed millions of dollars of shareholder wealth by over extending themselves during the boom times and paying for it in 2009. Fisher & Paykel did the same but only stayed in the game because a capital rescue by the Chinese and their shareholders.

Sneaky IPO Prospectus award - Kathmandu Holdings [KMD.NZ] for hiding detail of their financial position in pro -forma accounts.

Wankers Award - ING and ANZ for duping clients out of hard earned cash after advised by bank tellers that investing in specific product being offered by ING that they were as safe as term deposits -turns out they were not!

Award for having no bark and no bite - The Securities Commission for failing to act in good time on fraudulent activity over finance company collapses and ongoing disclosure issues and insider trading of shares listed on the NZX.

Brand destruction Award - Cadbury for changing the recipe of their chocolate then vowing that customers wanted the change and would "get used to it" and after much pressure reversing the decision - lost sales to other chocolate producers.

Fire Sale of 2009 - Kirin bought the remaining part of Lion Nathan they didn't already own for a song - the "independent" report advised shareholders to sell but they could have gotten more.

From Fishpond.co.nz




c Share Investor 2009

Burger Fuel Worldwide: 2009 Half Year profit analysis

The Burger Fuel Worldwide [BFW.NZ] 2009 half year profit to 30 September is more of the same from this company, continued and mounting losses.

Revenue is up strongly but so are expenses, and the loss, while down by more than 50% to $NZ 296,000, is still a loss and is difficult to compare with last year's half year loss because that figure could be stacked with IPO expenses and other establishment costs -this is not clear from the accounts - and does include a more fulsome period of new store construction by new franchisees.

Cash reserves have dwindled down to below $1.5 million, from over $2 million in the previous corresponding period. While still conservatively geared at a debt to equity ratio of around 32% that cash balance is going to dwindle if the company is to get back on track and deliver the growth they promised in their July 2008 IPO.

As franchisors the only significant income BFW are currently receiving is their cut of franchisee sales and advertising income. The promised windfall of franchise and management fees are paltry at best.

More money was earned from cash in the bank than franchising and construction fees combined.



Key Points from BFW 2009 Half Year

1. $296,000 loss - down 54%

2. $4.2 million revenue - up 19%

3. Cash reserves down 25%

4. Earnings per share -52c VS -$1.26 last year

5. No new stores added

6. 2 stores in Australia incurring significant losses.

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