Friday, November 23, 2007

Share Investor Friday free for all: Edition 12

Fat Prophets

There have been some good company results out this week. Ryman Healthcare had a 20% rise in profit for the last half year and forecast another strong year in 2008, while Fisher and Paykel Health half year profit was down sharply because of repatriated funds in US dollars lower due to the weak US currency but sales and profitability before currency exchange were up strongly.
Part of a Ryman Healthcare Village

Earlier this week, Mainfreight half year profit rose around 9% before abnormals and future guidance gave investors positive encouragement for their investment in the company.

OK, OK, so I'm blowing my own trumpet because I own shares in all these companies? Well, Yes and No.

While individually these 3 companies are doing well, with rising sales, profits and good future profits indicated, as a group they show that New Zealand listed companies are still doing well, despite all the international drama of market turmoil, rising oil, mineral, commodity prices and Al Gore putting his carbon footprint in his mouth again.

Investing long term in good companies always beats the likes of trading carbon fairy dust!

I'll be baackk

The Loan Terminator, Governor Arnold Schwarzenegger, is back in the news again this week, in a sequel to his Terminator movies that would have him eliminate Californian home loan debtors the pain of repaying their sub prime mortgages at normal interest rates by making the sweetheart deals they initially signed up for extend for a period of up to seven years.
The Governator terminates debt while
looking cool at the same time.

The bulk of these "sweetheart" deals at very low interest rates were due to be recalculated in several months time but 3 lending institutions who have exposure to 25% of sub prime loans, Countrywide Financial Corp, GMAC, Litton Loan Servicing and HomEq Servicing, seem to have convinced Arnie that eliminating the inevitable collapse of borrowers next year and putting it off till 2014 is a great idea.

As I have ranted on before, these individuals, as sad as it is, simply need to bite the bullet and face the music now, instead of slowly dragging down the rest of us with them.

Arnie needs to go back to Hollywood and fight the bad guys not Terminate borrowers' and lenders' responsibilities to face their own debt woes.

Terminator 4 anyone?

The carbon fairy has no clothes on

In what is clearly gearing up to be one of history's greatest financial explosions and implosion when it all inevitably collapses, is news today that the carbon trading "market" tripled in size to US$30 Billion last year.

With this market built on failed "science", lies and spruiking by the likes of wealthy green investors Al Gore and Leonardo Di Caprio, like all markets built on such flimsy backgrounds the money made, and there will be billions, will be made by those that get on the greenwagon first:

Since co-founding Climate Change Capital in 2003, James Cameron and his business partner Mark Woodall have turned their company into a powerhouse in the burgeoning global market in greenhouse gases. Driven by the Kyoto Protocol on global warming, an accord Cameron helped write, this corner of the derivatives arena is growing as never before.

Clearly, Cameron and Woodall are smart cookies but these self interested scam artists, who have written their own rules and now profit from them by "investing" other peoples hard earned cash into worthless carbon credits will be the first to withdraw their own funds when the climate change hysteria is revealed for what it is, that the sun simply getting hotter.
A Carbon footprint recently traded on Ebay for
US$1 Million.

I am old enough to remember similar things happening during the dot com era where mum and dad investors piled into worthless "businesses" and the big boys got out first before the truth about the bulk of silicon valley Internet companies hit the investment fan.

The same thing is going to happen with the carbon trading market.

Fletcher Building's got game
Artist impression of the new Eden Park

In a provisional decision, it has been announced today that Fletcher Building has been picked as the preferred builder for the new Eden Park revamp, valued at anywhere between NZ$190 million and north of $300 million, depending on who you speak to.

The stadium is to be rebuilt for the 2011 Rugby World Cup and construction is expected to start in August 2008.

If Fletcher's can negotiate a good deal for them, it is going to be good for the company. I'm mindful though that many stadiums built around the world have caused construction companies much grief, as changes to design, construction problems, and political meddling has put profits at stake and even put company futures at risk.

The new Wembly Stadium almost sunk the Australian builder Multiplex last year and the company building the new Vector Arena in Downtown Auckland lost big dollars on that project.

Grab your seat for the game, Fletchers could be in for a bumpy ride.

NZX Market Wrap

The benchmark NZSX-50 index, which yesterday ended below where it started the year, close up 16.8 points on 4071.0.

Turnover was light at $71 million.

"The over-riding theme was one of extreme caution," said ABN Amro broker Matt Willis. While value was starting to emerge, there was no rush to buy. Investors remained risk averse due to the US subprime mortgage crisis, which he said was a bi-product of weakening economy.

On the local scene, results of export stocks this week revealed the lagged impact of the high dollar was starting to hurt as currency hedges ran out. Companies were concerned about higher costs.

"Operating conditions are less than positive and that has followed through into sentiment."

However, retirement village operator Ryman Healthcare picked up 2c to 207 after reporting a 22 per cent lift in half year net profit after tax to $34.7 million.

No.2 stock Fletcher Building pared its morning loss to 5c, ending on 1175, after it was confirmed as the prime contractor to revamp Eden Park.

No.3 Contact Energy finished 4c up on 889.

NZ Oil & Gas eased back 2c to 110, having traded up to 113 in the morning, after gaining 11c yesterday on news estimated oil reserves for the Tui field had increased 30 per cent to 41.7 million barrels. That was worth an extra $200 million to NZOG, over time.

Sky City ended unchanged on 518 with possible bidders expected to show their hands early next week. However, share action suggests the market does not hold high hope for high offers.

Australian stocks mostly had a good session despite uncertainty surrounding tomorrow's election result.

Lion Nathan, which on Wednesday reported a strong result with good prospects for 2008, closed up 60 at 1100.

Goodman Fielder recovered some of its recent losses with a 9c gain to 230.


NZ Dollar Wrap

Reuters currency rates

5pm today 5pm yesterday

NZ dlr/US dlr US75.62c US75.46c
NZ dlr/Aust dlr A86.25c A86.41c
NZ dlr/euro 0.5060 0.5074
NZ dlr/yen 81.60 82.10
NZ dlr/stg 36.47p 36.53p
NZ TWI 69.31 69.42
Australian dollar US87.64c US87.36c
Euro/US dollar 1.4942 1.4870
US dollar/yen 107.89 108.84

Disclosure: I own Fletcher Building, Ryman Healthcare, Fisher Healthcare and Mainfreight shares

C Share Investor 2007

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