Share Investor

Tuesday, May 3, 2011

Share Price Alert: Freightways Ltd 3

I have been watching the share price of Freightways Ltd [FRE.NZX] increase significantly over the last month. The share price has risen 40c or 13% to close at $3.45 yesterday on higher than average volume.

There hasn't been anything of a material nature for the rise in share price but the positive result out in mid February may have something to do with it and the market could think that prospects for the company for full year 2011 look better than they did last year.

I am not convinced either way as to what the company is going to bring to the market for 2011 and further on into 2012 so the recent share price rise might be a good opportunity for short term speculators to bail and for long termers interested in buying to be a little patient and wait for a pull back.

Buy on weakness.

Disc I own FRE shares in the Share Investor Portfolio

Share Price Alert Series

Goodman Fielder Ltd 2
Freightways Ltd 2
Telecom New Zealand Ltd 2
Ryman Healthcare Ltd
Charlies Group Ltd
Fletcher Building Ltd 2
Contact Energy Ltd
Steel & Tube Ltd
Telecom New Zealand Ltd
New Zealand Stock Exchange Ltd
Mainfreight Ltd 2
The Warehouse Group Ltd
Pumpkin Patch Ltd
Hallenstein Glasson Holdings Ltd 2
Fletcher Building Ltd
Restaurant Brands Ltd
Mainfreight Ltd
Tourism Holdings
Goodman Fielder Ltd
Pumpkin Patch Ltd
Hallenstein Glasson Holdings Ltd
NZ Refining Ltd
Freightways Ltd
Xero Ltd

Freightways @ Share Investor

Share Price Alert: Freightways Ltd 2
Freightways Ltd: 2011 Half Year Profit Commentary
Share Price Alert: Freightways Ltd
Freightways Ltd: 2010 Full Year Profit Analysis
Long Term View: Freightways Ltd
Freightways Ltd: 2010 Half Year profit commentary
Freightways Ltd: 2009 Full Year profit commentary
Freightway's Capital Raising more of the same crap for small shareholders
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

Discuss FRE @ Share Investor Forum
Download FRE company Reports

c Share Investor 2011

Monday, May 2, 2011

VIDEO: President Obama Addresses Americans on Osama Bin Laden Assassination

President Obama Addresses Americans on Osama Bin Laden Assassination.

They got the little fucker!!

From Fishpond.co.nz

Buy Every Bastard Says No - The 42 Below Story, by Geoff Ross & Justine Troy & more @ Fishpond.co.nz

c Darren Rickard 2011

Morningstar Revalues Sky City Entertainment Group

The latest research report out by MorningStar on Sky City Entertainment Group Ltd [SKC.NZX] has put a valuation of $3.80 on the stock. I am not sure how they came to pick that figure - it seems quite arbitrary - but it has been known to the market in general that 2012 will be a record year for the company in terms of revenue and profit from the 2011 Rugby World Cup that kicks off in October and has its impact on results in the February 2012 reporting.
announcement.

Disc I own SKC shares in the Share Investor Portfolio

The Morningstar report on SKC

Valuation: $3.80

Appropriately priced, neither buy nor sell

Last updated:

02/05/11

Investment rating

SKC offers gaming services at its casinos in NZ and Australia. The entertainment complex in Auckland is the major driver of earnings accounting for 60% of its operating profit. SKC faces little competition due to NZ government's blanket ban on new casino licenses. This has allowed the company to operate at very healthy profit margins and generate abundant cash flows. An unfavorable economic environment in NZ will constrain growth but earnings will pick up next year following the Rugby World Cup in 2011. Judicious investments are being considered to lift growth in the longer term.

Event

SKC is currently spending NZ$40m on improving the gaming floor layout ahead of the Rugby World Cup (RWC).

The motive behind this spending is to capitalize on the likely rise in tourist traffic during and in the wake of the RWC.

In the long term, management sees huge growth opportunities for its International VIP business from Asian visitors coming to Auckland. The total size of the market in Australasia is estimated to be around A$50bn

The company is currently in discussions with the South Australian government to expand the property to create a much larger gaming-based integrated entertainment complex.

Impact

There will be a one-off spike in earnings next year on the back of the RWC. Management expects EBITDA to grow by 20-25% in the first half of next financial year, driven by 30% growth in non-gaming businesses like food & beverages and hotels.

Our FY12 NPAT of NZ$155m represents a growth of 20% compared to FY10.

Capital expenditure is likely to be around NZ$125m this year, consisting of growth capital expenditure of NZ$65m. We estimate next year’s capex to be between NZ$125-145m. We don’t see any refinancing risk.

Recommendation impact (last updated: 02/05/2011)

Our fair value of NZ$3.80 is based on 15x normalized earnings of NZ25cps.

Event analysis

Auckland: Capitalising on the RWC opportunity

SKC is currently spending NZ$40m on improving the gaming floor layout ahead of the Rugby World Cup (RWC). This investment also includes redoing the federal street precinct by adding more restaurants and bars. The motive behind this spending is to capitalize on the likely rise in tourist traffic during and in the wake of the RWC.

The refurbishment involves extending the Pacific Room, renovating the Platinum Room and creating a Diamond Room by relocating the Fortuna Restaurant on level 2. The Platinum Room will have 270 machines and the Diamond facility will house 250 machines. The new and improved facilities are expected to grow revenues for the Platinum as well as Diamond tiers.

In the long term, management sees huge growth opportunities for its International VIP business from Asian visitors coming to Auckland. There is only one VIP salon at the moment. SKC wants to grow this to four salons over the next few months. Management is confident that with the right product, higher gaming capacity and improved service it will be able to gain market share from some of its competitors across the Tasman. The total size of the market in Australasia is estimated to be around A$50bn. In the first half of the current fiscal year, International VIP turnover nearly doubled over the prior period. We expect revenues to reach NZ$2.8bn this year, which compares to NZ$1.8bn in FY10. Management’s goal is to lift turnover to NZ$4bn over the next 12-18 months.

National Convention Centre: Will SKC end up funding it?

The government wants to build a National Convention Centre in Auckland and SKC is keen to participate in the venture. The idea is to have the convention centre next to the hotel and casino, connected by an over bridge. SKC envisages a significant increase in foot traffic to its casino and hotel properties. However, the funding model is still up in the air. The government could fund the project but given its fragile balance sheet, especially after the Christchurch earthquake, it might choose to tap private capital instead. The total cost of the project is estimated to be around NZ$300m. SKC sees a great opportunity but it is unclear whether it can make adequate returns under the current regulatory regime. Time will tell whether SKC and the government can thrash out a deal. We will keep a close eye on developments.

Adelaide: Good potential but constrained by regulatory framework

Adelaide is hamstrung by a very restrictive regulatory regime, high tax rates and a lack of parking and entertainment facilities in and around the casino. Consequently, the casino has largely underperformed its other Australasian peers in terms of visitors, revenues and EBITDA margin. The casino currently generates around A$30bn in EBITDA every year, but has the potential to generate A$80bn in EBITDA with a more friendly regulatory framework that its peers enjoy.

The company is currently in discussions with the South Australian government to expand the property to create a much larger gaming-based integrated entertainment complex. It wants to do this alongside the government’s proposed Riverbank Masterplan development. The plan envisages a significant increase in car parks, a material increase in machines and tables, construction of a hotel, and a range of restaurants and bars. The cost of the project is estimated to be approximately A$250m. SKC says it will commit to the project only if it is able to reach an agreement with the government and is able to earn an adequate return on capital.

Rugby World Cup: a one-off bonanza

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c Share Investor 2011

Share Investor's Letter to BioVittoria

Just a note to the owners of BioVittoria, the New Zealand natural-sweetener company that was forced to abort an attempt at listing on the NZX in 2009 due to a lack of market support.

Although I have heard of your company, your attempt to raise funds passed me by because I wasn't really informed that this was happening. Brokers in the past have emailed and called me about every other dog company under the sun - not that there have been many attempted listings since 2009 or since anytime really - but yours sadly must have gone into the spam box or the broker could see how good your company was and wanted to do his own deal.

BioVittoria folks, appears to be at the cutting edge of the "alternative" sweetener market occupied by Aspartame, otherwise known as Nutrasweet , Sucralose and a few others. These alternative sweeteners are in thousands of food products, most know that the major soda makers have these products in their brands like Coca Cola Zero, Pepsi Max etc and they are also in Wrigley products like Extra chewing gum but most of us probably dont know that alot of our everyday consumer products contain a sugar substitute.

In some of these products though, notably the soda drinks, the consumer can tell that what they are eating or drinking doesn't taste like sugar at all and in fact maybe harmful to ones health if used long-term. This is where BioVittoria comes in, not only is their product Fruit-Sweetness™ it a "Natural Sweetener" the makers claim it doesn't have any health side affects, it is calorie free and tastes great.

That and the Food and Drug Administration (FDA) has certified that its Fruit-Sweetness branded monk fruit concentrate is GRAS (Generally Recognized As Safe). The kicker is that a 12% portion of BioVittoria has just been sold to food ingredients company Tate & Lyle and T &L now has a 5 year agreement to dsitribute Fruit-Sweetness™.

Now this is going to allow BioVittoria to compete in the US$50-billion ($62.5b) a year global sweetener market.

"This agreement opens doors to some of the world's largest food and beverage companies, giving a significant boost to our expansion into international markets.'' BioVittoria CEO David Thorrold

Now I don't know about you but I would want to invest in any company that has such a significant product that appears to have no comparative competition (yet) in a fast growing market worth 50 billion bucks, especially at the very beginning.

So please take note David Thorrold and your fellow directors I am very interested in investing in your company should you want the try the NZX again and I am sure lots of my readers would be as well.

Lord knows we need some good companies to enter the NZX IPO market before it disappears completely - only half joking.

Share Investor

Tuesday, May 3, 2011

Share Price Alert: Freightways Ltd 3

Monday, May 2, 2011

VIDEO: President Obama Addresses Americans on Osama Bin Laden Assassination

Morningstar Revalues Sky City Entertainment Group

Investment rating

Event

Impact

Recommendation impact (last updated: 02/05/2011)

Event analysis

Share Investor's Letter to BioVittoria

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