Share Investor

Tuesday, January 25, 2011

Queenstown Aiport Case: Air New Zealand VS Auckland Airport

On news that Auckland Airport Ltd [AIA.NZX] have secured a deal for China Southern Airlines to begin flights between Guangzhou and Auckland starting in March because of Auckland Airport's deal with Queenstown Airport at the end of 2010, we must revisit Air New Zealand Ltd [AIR.NZX] opposition to the marriage between Queenstown and Auckland Airports, especially in the light of the recent purchase by AIR of nearly 15% of Virgin Blue Holdings Ltd [VBA.ASX] last week.

Air New Zealand's Rob Fyfe and Bruce Parton last year indicated his airlines opposition to the AIA/Queenstown merger was because of their monopoly status and the "anti-competitive" nature of the company the port already had and the purchase of 27.7% of Queenstown Airport would cement that monopoly.

There are also several businessmen in Queenstown in opposition to the merger and factions within the Queenstown Council, who own the majority of the Queenstown port.

Apart from the clear benefits that the Chinese Airline will have on the New Zealand economy, benefits that I initially was dubious about last year when the deal was announced, the added revenue for AIA is going to be good for shareholders, especially as this route looks like it will develop further over the long term.

For Air New Zealand to continue their case in the Christchurch High Court is to be guilty of hypocrisy of the highest order.

While you may agree that Auckland Airport has a monopoly - it indeed does and that is why I am a shareholder, AIA's purchase of Virgin Blue is pretty much the same deal as engineered by AIA/Queenstown and also cements, for AIR, a history of anti competitive behavior in the Airline business in this part of the world and specifically the stranglehold they have on flights into the booming Queenstown tourism sector.

For them it is about protectionism of their near monopoly in Queentown and the benefits this has on their routes out of that port and Auckland Airport as well.

In effect they are attempting to do the same as Auckland Airport.

Don't expect AIA to take a court case against AIR though.

You wouldn't expect less from a quasi Govt Department though with taxpayer dollars bankrolling them.

Disclosure I own AIA shares in the Share Investor Portfolio

AIA @ Share Investor

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Queenstown Airport Buyout @ Share Investor

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Queenstown Airport: AIA purchase good Long-Term but will cost shareholders Short-Term

Discuss this Stock @ Share Investor Forum - Register free
Download AIA Company Reports
Download Queenstown Airport Company Reports

AIR @ Share Investor

Queenstown Airport: Loud Voices & Loyalty
Long Term View: Air New Zealand Ltd
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Air New Zealand wants another taxpayer bailout

Discuss this stock at Share Investor Forum - Register free
Download AIR Company Reports

THINK BIGGER: HOW TO RAISE YOUR EXPECTATIONS AND ACHIEVE EVERYTHING
BY MICHAEL HILL

c Share Investor 2011

Monday, January 24, 2011

Share Investor Portfolio: Value @ 24 January 2011

The good start to the year for the Share Investor Portfolio ended last week. The Portfolio is down 0.56% or $1573.47 on the Jan 17 update . For the first 3 weeks of 2011 the portfolio has increased by 1.66% or $4600.29. This weeks fall was due, primarily to a 4c drop in SKC, the biggest part of the portfolio. Other stocks lost marginally, while the WHS regained 7c after a previous week of losses due to a negative trading update.

The total of unspent dividends in the bank from the 2010 earnings year is $16631.93 at close of reporting season for 2010. There are also approx $50000.00 in tax credits earned from the portfolio since it began in late 2002.

Share Investor Portfolio as at 09:37:08, Monday 24 January, 2011 (NZDT)

Stock

Quantity

Cost price

Total cost

Market price

Market value

Change

AIA

2,000

$1.700

$3,400.00

$2.250

$4,500.00

$1,100.00

32.35%

AIA

2,000

$1.510

$3,020.00

$2.250

$4,500.00

$1,480.00

49.01%

AIA

803

$2.150

$1,726.45

$2.250

$1,806.75

$80.30

4.65%

AIA

445

$0.000

$0.00

$2.250

$1,001.25

AIA

$1.650

$105.60

$2.250

$144.00

$38.40

36.36%

ASBPB

2,946

$0.000

$0.00

$0.725

$2,135.85

ASBPB

7,054

$1.000

$7,054.00

$0.725

$5,114.15

$1,939.85

27.50%

BGR

438

$0.000

$0.00

$1.380

$604.44

BGR

2,562

$0.990

$2,536.38

$1.380

$3,535.56

$999.18

39.39%

FBU

266

$0.000

$0.00

$7.770

$2,066.82

FBU

848

$9.750

$8,268.00

$7.770

$6,588.96

$1,679.04

20.31%

FPH

3,000

$2.350

$7,050.00

$3.200

$9,600.00

$2,550.00

36.17%

FPH

541

$0.000

$0.00

$3.200

$1,731.20

FPH

1,459

$3.720

$5,427.48

$3.200

$4,668.80

$758.68

13.98%

FRE

1,882

$0.000

$0.00

$3.230

$6,078.86

FRE

6,749

$3.630

$24,498.87

$3.230

$21,799.27

$2,699.60

11.02%

GFF

541

$0.000

$0.00

$1.710

$925.11

GFF

1,459

$2.330

$3,399.47

$1.710

$2,494.89

$904.58

26.61%

HLG

244

$0.000

$0.00

$4.100

$1,000.40

HLG

756

$2.530

$1,912.68

$4.100

$3,099.60

$1,186.92

62.06%

KIP

190

$0.000

$0.00

$1.000

$190.00

KIP

810

$1.480

$1,198.80

$1.000

$810.00

$388.80

32.43%

MFT

1,000

$7.960

$7,960.00

$8.010

$8,010.00

$50.00

0.63%

MFT

1,838

$8.000

$14,704.00

$8.010

$14,722.38

$18.38

0.13%

MFT

657

$0.000

$0.00

$8.010

$5,262.57

MFT

1,505

$4.200

$6,321.00

$8.010

$12,055.05

$5,734.05

90.71%

MHI

1,646

$0.860

$1,415.56

$0.890

$1,464.94

$49.38

3.49%

MHI

7,000

$0.630

$4,410.00

$0.890

$6,230.00

$1,820.00

41.27%

MHI

718

$0.000

$0.00

$0.890

$639.02

MHI

636

$1.050

$667.80

$0.890

$566.04

$101.76

15.24%

PPG

$0.000

$0.00

$0.290

$8.99

PPG

1,500

$0.440

$660.00

$0.290

$435.00

$225.00

34.09%

PPG

1,004

$0.800

$803.20

$0.290

$291.16

$512.04

63.75%

PPL

1,000

$3.090

$3,090.00

$1.600

$1,600.00

$1,490.00

48.22%

PPL

1,000

$2.870

$2,870.00

$1.600

$1,600.00

$1,270.00

44.25%

PPL

939

$4.200

$3,943.80

$1.600

$1,502.40

$2,441.40

61.90%

PPL

877

$0.000

$0.00

$1.600

$1,403.20

PPL

1,184

$1.530

$1,811.52

$1.600

$1,894.40

$82.88

4.58%

RYM

459

$0.000

$0.00

$2.360

$1,083.24

RYM

4,586

$1.970

$9,034.42

$2.360

$10,822.96

$1,788.54

19.80%

SKC

5,750

$7.430

$42,722.50

$3.240

$18,630.00

$24,092.50

56.39%

SKC

1,000

$7.600

$7,600.00

$3.240

$3,240.00

$4,360.00

57.37%

SKC

2,750

$7.700

$21,175.00

$3.240

$8,910.00

$12,265.00

57.92%

SKC

1,431

$8.750

$12,521.25

$3.240

$4,636.44

$7,884.81

62.97%

SKC

25,085

$0.000

$0.00

$3.240

$81,275.40

SKC

899

$4.720

$4,243.28

$3.240

$2,912.76

$1,330.52

31.36%

STU

$0.000

$0.00

$2.270

$177.06

STU

322

$4.740

$1,526.28

$2.270

$730.94

$795.34

52.11%

WHS

4,500

$3.730

$16,785.00

$3.630

$16,335.00

$450.00

2.68%

WHS

6,979

$6.000

$41,874.00

$3.630

$25,333.77

$16,540.23

39.50%

WHS

2,880

$0.000

$0.00

$3.630

$10,454.40

WHS

641

$3.710

$2,378.11

$3.630

$2,326.83

$51.28

2.16%

18.28%

	Total cost	Market value	Change
	$278,114.45	$328,949.86	$50,835.41

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c Share Investor 2011

Allan Hubbard Saga: Hubbard Defiant in 2011

Many hours of time have been whiled away by mainstream journalists, bloggers and supporters of disgraced businessman Allan Hubbard during 2010 over his dodgy business practices and collapsed empire. As 2010 drew to a close few final conclusions could be drawn from investigations made into South Canterbury Finance, Aorangi Securities and a whole raft of businesses owned by Hubbard and now in receivership, gone bust or in Statutory Management.

What we do know is that Hubbard has been, for the last few years anyway, bending the rules big time when it came to the day to day running of his business interests. Fraud, forgery, endemic related party lending to make the books look good, omissions and padding of paperwork, fake investments and highly risky lending were par for the course.

Interested parties to the Allan Hubbard Saga currently await the outcomes of several investigations into the stubbornly defiant octogenarian. The Serious Fraud Office is waiting for a response from Hubbard's Lawyer Mike Heron on his behalf to a range of possible charges which were outlined prior to Christmas and a 6th Grant Thorton Report on Aorangi Securities Limited, Hubbard Management Funds, Hubbard Churcher Trust Management Limited, Forresters Nominee Company Limited, Mr AJ and Mrs MJ Hubbard and Associated Charitable Trusts is due at the end of February 2011.

The long wait on final decisions on what to charge Hubbard for are primarily due to the complicated nature of Mr Hubbards business empire and the lack of precise, or any, paperwork.

Obfuscation on the part of Hubbard and his lawyer during the investigation has also led to a delay in charging.

As published in the New Zealand Herald today and written by Fran O Sullivan, Hubbard has sent a 2 page memo to Simon Power pleading his case:

The Business Herald understands the SFO has indicated that it had narrowed its investigation to four particular issues - one relates to the failure to issue a prospectus for Aorangi Securities, and, another focuses on statements Hubbard Funds Management made which are alleged to have misled investors.

"I think the charges they are proposing are ridiculous and I cannot see any court of law upholding them," said Hubbard. "I've stolen no money - they're dreaming up charges."

Hubbard maintains Aorangi had never traded recklessly, had always paid its interest seven days before due, was not insolvent and had always paid obligations with default during its 36-year history.

"The action taken signalled the death knell for South Canterbury Finance with incoming deposits immediately falling from $2 million weekly to $200,000 per week..."

I agree with Hubbard that the courts may have trouble upholding any possible charges, you just need to recall the history thus far of failed finance company directors who have never been charged or skipped serious charges in the courts over the last year to concur.

Having said that, we know that Mr Hubbard has been less than truthful in his public statements in his own defence. It is crystal clear that there was a rotten core at the middle of his empire and that he was at least partially responsible for the rot. It is quite likely there are others involved but Mr Hubbard was the head banana and he needs to take responsibility for his actions in the coming year.

Allan Hubbard Saga

Full SFO Statement on SCF Fraud Investigation

Hubbard Letter to Simon Power

Sunday, January 23, 2011

Fletcher Building: Crane Takeover Offer Well Timed

The takeover offer by Fletcher Building Ltd [FBU.NZX] for Crane Group Ltd [CRG.ASX] comes at an opportune time for Fletcher. Crane Group is at or near the bottom of a business cycle over the last 6 years (see 6 year summary from the CRG 2010 Annual Report below) and the share price has been trading at a multi year low so Fletcher has made a bid that would have otherwise been higher near the top of the business cycle.

Click on picture to enlarge view

Crane has had a patchy last 10 years with profit ranging from a AU$15 million loss in 2004 at its lowest and a $AU60 million profit in 2008 at the high end. Revenue has ranged from $1.4 billion in 2000 to $2.3 billion in 2008.

2010 half year profit of $21 million was up 16.8% on 2009 and a research report from Aspect Huntly indicates positive earnings with "upside to come" from the commercial building sector - the major floods in Australia over the last month will be a big benefit to Crane and to Fletcher Building so this upside is likely to be significant.

This is where FBU have a problem because CRG management have indicated that the offer for Crane is far too low and significantly undervalues the company and its long term prospects.

Fletcher do not have a good history with acquisitions providing good value for shareholders, with the purchase of Formica Corp a few years ago, for almost a billion dollars, destroying shareholder value and adding less than nothing to the balance sheet. If the offer for Crane is successful it could provide some benefit to FBU shareholders if they can take over the company at its current price.

The AU$ 740 million bid for 90% of the company is detailed as follows and can be found in more detail here.

Australasian building materials manufacturing and distribution company Fletcher Building (FB) has bid for CRG offering $3.43 cash and 1 FB share implying a value of $9.35, a 28% premium to CRG’s one month volume weighted average price equating to an FY11 PE multiple of 19 based on consensus forecasts and an EV/EBIT multiple of 11.8.

FB already owns 14.9% of CRG, 13.1% of which it bought from institutional shareholders for $9.35 cash immediately prior to announcement of the bid.

The bid includes a 90% minimum acceptance condition.

For FBU shareholders like myself this is a nervous time. If the proposed acquisition doesn't come off there will be millions of dollars of cost associated with the takeover activity.

Analysts have indicated that as Crane has over 80% of institutional investors on its shareholder registry so a takeover is likely to be an easier case to make than with a company with more mum and dad investors as shareholders.

We can only cross our fingers that FBU are able to grab Crane at their current bid price and add value to both companies if successful.

Fletcher Building @ Share Investor

Fletcher Building Ltd: 2010 Full Year Profit Analysis
Fletcher Building: All eggs in one basket make for big risk
Long Term View: Fletcher Building Ltd
Hugh Fletcher: Silver spoon no recipe for success
Long VS Short: Fletcher Building Ltd
Fletcher Building's Commercial arm keeps their head above the tunnel
Sweetheart deal for Fletcher Building's Friends
Fletcher House built on hard times
Fletcher Building down tools in the short term
Why did you buy that stock? [Fletcher Building Ltd]
A solid foundation for the future
Fletcher Bu ilding raises profit through canny management
Fletcher's got game

Discuss Fletcher Building @ Share Investor Forum - Register free
Download FBU Company Reports

c Share Investor 2011

Share Investor

Tuesday, January 25, 2011

Queenstown Aiport Case: Air New Zealand VS Auckland Airport

Monday, January 24, 2011

Share Investor Portfolio: Value @ 24 January 2011

Allan Hubbard Saga: Hubbard Defiant in 2011

Sunday, January 23, 2011

Fletcher Building: Crane Takeover Offer Well Timed

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