The Share Investor Portfolio had a good week last week and was up significantly on last weeks portfolio update. The portfolio was up by 2.24% or $6243.43. The main reason for the big rise was a 19c gain in the biggest part of the portfolio, Sky City. There were good rises in most other shares but the retail stocks in the portfolio were hit hard, especially The Warehouse which was down 19c and is the second largest part of the portfolio.
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 Portfolioas at 17:30:00, Friday 17 December, 2010 (NZDT)
The Warehouse Group Ltd [WHS.NZX] share price has been hammered over the last 6 weeks. From a high of nearly $4.05 back in late November closing down today on low volume at $3.52.
The stock has been a victim of constant media attention on Christmas shopping figures and official retail sales releases over the last few weeks. Pumpkin Patch Group Ltd [PPL.NZX], Hallenstein Glasson Holdings Ltd [HLG.NZX] and other retailers have been similarly affected.
To be sure the WHS Christmas shopping fortunes for the first half of the 2011 financial year are very important to the bottomline but there is only anecdotal news at the moment that they are being hit hard.
For the share price to be hit by around 12% in six weeks seems a little overdone and I will be watching for further weakness for an opportunity to buy more shares for as little as possible.
I have the 2011 Share Investor Stock Picks coming up over the next few days (my 4th one!) and that post is likely to be one of the last for 2010.
I wish all my loyal readers and to your families and loved ones a very Happy Christmas and a prosperous 2011 New Year.
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 2011 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.
To those readers outside New Zealand the photo is of a Pohutakawa Tree, a Native coastal tree, the New Zealand "Christmas Tree".
With low refining rates, massive capital expenditure and plant shutdowns largely behind them and a rising global oil prices, 2011 looks to be a resurgent year for New Zealand Refining Ltd [NZR.NZX].
Back in October NZR was a Stock of the Week because its share price was 30c below what it closed at yesterday and I commented that higher oil prices will see this stock rise (well duh) and it has but the oil price rise has been a significant one. It has been mainly due to a very cold Northern Winter bumping up all sort of petrochemical products so it is unclear just how sustainable the oil price rise will be. Having said that the recent rise is bound to gain some traction even when the Northern ice melts away.
NZR is also subject to the NZ dollar US dollar cross but it looks like the Kiwi has finally started its appropriate ride down (ironically partly due to higher oil prices) to a value that reflects the dire outlook for our economy over the next 3-5 years.
These positive impacts for NZR seem to be conspiring all at the same time and should have a big impact on the fortunes of the company for 2011.
Historically the closing price of $3.91 yesterday is relatively low but you might want to put this on your watchlist if you are thinking of buying NZR and buy on any overall market weakness.
Typical of management, the company is highlighting sales revenue from franchised stores, which has risen sharply due to store openings in the Middle East and downplaying the franchise income - which is what the company will eventually make a profit on - which has increased by a small fraction.
Key Points
Loss of $219,000 down 26% on lasts half's $296,000
Flagship Kings Cross store closed
Middle East stores performing well.
Australasia stores flat
Set to exit remaining Sydney store.
$1,153,153 cash left in bank
Profit possibly set for 2012 - 2013
The $219,022 loss is a 26% improvement on last years comparable figure so at least this is improving but the company is struggling in New Zealand and has largely abandoned its Australian operations which were a big focus of growth when they announced their IPO. Their Flagship store in Kings Cross has been closed to save money.
The focus from 2010 onwards is growing in the Middle East. Well done to change tack so quickly but the homework just hadn't been well done before a couple of million dollars of shareholder money was lost in Australia.
Shareholders will have to question as to whether the Middle East is going to be any different from the Australian experience but thus far it is looking a little more promising than our more competitive and more business savvy cousins across the Tasman.
Management have focused the 2010 calendar year on pruning business costs and have managed to save $68,000 in the last half year .
Significantly management have changed their expansion model so will grow by means of Area Development or Master License Agreements. This is where the licensee is responsible for all capital and operational costs. This will clearly allow the company to grow quicker and cheaper where it sees the opportunity.
Management indicate they see limited scope for expansion in Australasia and see a patchy and uncertain 2011 ahead.
There is no indication as to when the company will make its maiden profit but management indicated that "the company expects to reach profitability in the near future".
It looks to me that 2012 - 2013 could be that near future.
