Share Investor Q & A: Questions to The Warehouse' CEO Ian Morrice

I have got a Share Investor Q & A coming out, probably next week sometime, from the CFO of Ryman Healthcare Ltd [RYM.NZ] but have managed to jack up a good one today with The Warehouse Group Ltd [WHS.NZ] CEO Ian Morrice.

The Warehouse is a company with a long established history in New Zealand as the bargain retailer and it has been a great investment for long term shareholders over the past.

Over the last 5 years though the company has stalled in growth and now faces more serious competition from its rivals.

It has been headed by canny Scot, Ian Morrice for the last few years and he has done well. What do we know of his plans for the Red Sheds and how he intends to take the company into the future will be of interest as well as how the man works.

With that in mind I thought I would like my readers to put some questions to Ian and The Warehouse.

Please leave your questions here at the bottom of this post or email me here.


Disclosure: I own WHS shares in the Share Investor Portfolio


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The Warehouse Group @ Share Investor

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The fight for control begins soon

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Download WHS company reports

Shop online at The Warehouse


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c Share Investor 2010

2010 NBR Rich List

The 24th annual 2010 NBR Rich List (see full list at NBR - Requires Sub)was out this morning and revealed the usual bunch of multimillionaires with a few additions to last year and some notable omissions from the 2009 list.

Graham Hart topped the list with a $5 billion plus fortune and there was an inclusion for the first time by Rod Drury, CEO of Xero Ltd [XRO,NZ] and the exclusion of folk like Terry Seripisos and beleaguered businessman Allan Hubbard.

The usual entry of old money from the likes of the Myers, Todds, Fay, Richwhites and Spencers also continue to eek out places in the top ten.

The top 10:
1 Graeme Hart $5.5 billion
2 Todd Family $2.7 billion
3 Eamon Cleary $2 billion
4 Lynette Erceg $1.5 billion
5= Christopher Chandler $1.4 billion
5= Richard Chandler $1.4 billion
6 Goodman Family $850 million
7= Stephen Jennings $800 million
7= Sir Douglas Myers $800 million
8= Sir Michael Fay $750 million
8= David Richwhite $750 million
9= Michael Friedlander $700 million
9= Spencer family $700 million
10 Peter Cooper $650 million

NBR @ Share Investor

2009 NBR Rich List
2008 NBR Rich List
NBR Headlines


Recent Share Investor Reading

Ryman Healthcare Ltd: Australian Expansion Needs Care
Share Investor Q & A: Questions to The Warehouse' CEO Ian Morrice
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From Fishpond.co.nz



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




c Share Investor 2010

Ryman Healthcare Ltd: Australian Expansion Needs Care

Ryman Healthcare Ltd [RYM.NZ],the retirement village and aged care provider, is one of the NZXs best performing companies and historically it has increased earnings by at least 10% for each of the last 10 years.

Its full year result to March 31 2010 was up 16% on last years 2009 full year and indications are that these sorts of results are likely to continue for the foreseeable future considering the increasing age demographics for the New Zealand population and the seemingly unparalleled popularity of their offering to their prospective customers.

New Zealand has and will remain an important area of growth in revenue and profit for the long term and this has been stated by Ryman management on many occasions.

The decision announced today at the Ryman Healthcare Ltd [RYM.NZ] annual meeting to start looking at property in Australia to build one of their villages is a two edged sword for the company and its shareholders.

In an interview with Ryman Chief Financial Officer, Gordon Macleod coming up next week at Share Investor I put the question of expansion into Australia before today's announcement and the answer, now somewhat academic, will be adding to today's news.

On the one hand the company has a good business model, is brilliantly managed and Australia is a vast untapped market for them but on the other hand Australia is littered with the corpses of listed companies that have tried to expand there and have headed back with their tails between their legs and millions of dollars less in their pockets.

Ask management at The Warehouse Group Ltd [WHS.NZ], Telecom NZ [TEL.NZ], Restaurant Brands Ltd [RBD.NZ] Burger Fuel Worldwide [BFW.NZ] and a whole host of other companies that thought they could foot it in a much more competitive market. Australia has been the bogeyman of failure for New Zealand businesses looking for more opportunities for growth.

There have also been successes. Michael Hill International [MHI.NZ], Mainfreight Ltd [MFT.NZ] Pumpkin Patch Ltd [PPL.NZ], Sky City Entertainment Group Ltd [SKC.NZ] (after new management and a number of years) and others set out to achieve their goals and promises to shareholders for more growth across the ditch and have done well for shareholders in terms of returns.

One of the major stumbling blocks for Kiwi companies expanding across the Tasman has been their lack of research and the tendency to go full steam ahead without testing the market in a small way first. Significantly the aforementioned failures all bought standalone businesses (apart form BFW) and thought they could run them in a similar fashion to their New Zealand business model. The successful ones all tried their new businesses in Australia in a small way and grew a base from their initial success.

Management at Ryman have indicated that they have done their research for years and they are going to develop one village and see how it goes before committing any further shareholder cash to growth there:

“We have been carefully studying the Australian market for several years,” and we see it as the next logical step in the growth of the company. The Ryman model will be relatively unique in the Australian market.”

“We are in a strong financial position and the management team is ready to take this next step.”

“Shareholders can be reassured that we will be taking one step at a time, and that we will be very focussed on getting the first village successfully established.” Ryman Chairman Dr David Kerr at 2010 Annual Meeting.

Ryman shareholders should indeed be pleased that the company is taking the softly, softly approach to Australian expansion but cautious nonetheless that the outcome of expansion in OZ could be disappointing.

This company has been well managed in the past and I am mostly pleased about the announcement today, apart from the reservations I pointed out.

If the Australian move is executed with as much care and consideration - subject to proper research by RYM management and taking into account the vast differences in business, investment, employment practices and other country specific variables - as has been in New Zealand the company and shareholders are going to be richly rewarded in the long term.

I look forward to positive results from our Aussie branch over the next few years .

Disclosure: I own MHI, MFT, PPL RYM, WHS shares in the Share Investor Portfolio


Ryman Healthcare @ Share Investor

Share Investor Q & A: Ryman Healthcare's CFO Gordon MacLeod
Ryman Healthcare: Interview sneak peak
Ryman Healthcare Ltd: Australian Expansion Needs Care
Share Investor Q & A: Reader Questions to Ryman CFO Gordon Macleod
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Discuss RYM @ Share Investor Forum



c Share Investor 2010

Official Cash Rate: Bollard Gets it Wrong, Again

Allan Bollard's decision today to raise the official cash rate by .25% to 3.00% is further evidence that Mr Bollard is out of his depth.

His raising of rates to record levels a few years back did nothing to damage the housing boom - the 2008 financial crisis took care of that.

Most of Mr Bollard's movements have been based by looking in a fogged up rear view economic mirror with little understanding of the current and future outcomes. His movements lack foresight, basic economic understanding and the ability to see the bigger picture.

What is clear is that the world is having economic problems, especially struggling with debt, and what New Zealand relies on to keep afloat, exporting, is going to be hurt again by this latest rise.

Likewise the mortgage holder is going to have problems, at a time when there is no spare cash to spend in a faltering economy.

One only has to look towards the United States near zero cash rate to see what problems this latest rise will cause - our OCR is too high.

The wise thing to do today would have been for Mr B to lower the cash rate to 2.5% and keep doing it to stimulate business lending and therefore the economy.

Any 3rd form economics student would have done the same.


Related Share Investor Reading

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Discuss this topic @ Share Investor Forum


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c Share Investor 2010

Long Term View: Wakefield Health Ltd

In this series of posts I am going to be looking at stocks listed on the NZX in relation to their returns to shareholders over the life of their listing -what shareholders would now see in their back pockets if they had invested in the company IPO. The calculation of returns includes dividends and tax credits.

Wakefield Health Ltd [WFD.NZ] has been a good investment for shareholders since its September 2001 listing at $2.50c per share. With $1.24c in net dividends and 30% more in tax credits (see chart above)gives WFD an 230% return (see chart below for the share price percentage gain against the average of all NZX indexes - does not include dividends, tax credits and the share split in its calculation) and over the nearly 10 year listing of WFD an annual net return of 23 %.

This is approximately a 400% better return when compared to the average of all NZX indexes.



Long Term View Series

Auckland International Airport
Air New Zealand
AMP Ltd
Briscoe Group Ltd
Cavalier Corporation Ltd
Contact Energy Ltd
Delegats Group Ltd
EBOS Group Ltd
Fletcher Building Ltd
Fisher & Paykel Appliances
Fisher & Paykel Healthcare
Freightways Ltd
Goodman Fielder Ltd
Hallenstein Glasson Holdings Ltd
Hellaby Holdings Ltd
Kirkcaldie & Stains Ltd
Kiwi Income Property Trust Ltd
Mainfreight Ltd
Michael Hill International Ltd
Metlifecare Ltd
Methven Ltd
New Zealand Refining Ltd
New Zealand Stock Exchange Ltd
Nuplex Industries Ltd
PGG Wrightson Ltd
Port Of Tauranga Ltd
Postie Plus Group Ltd
Pumpkin Patch Ltd
Restaurant Brands Ltd
Ryman Healthcare Ltd
Sanford Ltd
Skellerup Ltd
Sky City Entertainment Group Ltd
Sky Network Television Ltd
Steel & Tube Ltd
Telecom NZ Ltd
Telstra Corp Ltd
Tourism Holdings Ltd
Turners Auctions Ltd
Turners & Growers Ltd
The Warehouse Group Ltd

Wakefield Health @ Share Investor

Discuss WFD @ Share Investor Forum
Download WFD Company Reports


Recommended Amazon Reading


The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
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c Share Investor 2010

Chart of the Day: Rakon Ltd

Rakon Ltd [RAK.NZ] used to be the darling of the market but has had a tough last couple of years.

After reaching a high of over $5.50 in 2007 and a low of not much over 60c in early 2009 the share price has marked ground since then.

Only after recent signs of expansion in the sector that the company operates has the stock taken off. In the last 2 weeks alone the stock has put on around 15%.

The economy and the business that Rakon operates in still hasn't recovered to a sustainable level and the share price could be moving prematurely.

Their Full Year profit to 31 March 2010 was an improvement on the previous year but still a far cry from its profit in earlier years.

Lock in profits if you are a short term investor and look for dips in share price if you are a Rakon follower and want some shares for your long term portfolio.


Chart of the Day @ Share Investor

Kathmandu Holdings Ltd


Rakon Ltd @ Share Investor

Discuss RAK @ Share Investor Forum
Download RAK Company Reports


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c Share Investor 2010

Long Term View: Mowbray Collectables Ltd

In this series of posts I am going to be looking at stocks listed on the NZX in relation to their returns to shareholders over the life of their listing -what shareholders would now see in their back pockets if they had invested in the company IPO. The calculation of returns includes dividends and tax credits.

Mowbray Collectables Ltd [MOW.NZ] has been on a roller-coaster in terms of stock prices and results since its April 2000 listing at 50c per share. With 18c in net dividends and 30% more in tax credits, plus a 11:10 share split in 2006 (see chart above)gives MOW an 83% return (see chart below for the share price percentage gain against the average of all NZX indexes - does not include dividends, tax credits and the share split in its calculation) and over the nearly 10 year listing of MOW an annual net return of 8.3 %.

This is approximately a 10% better return when compared to the average of all NZX indexes.





Long Term View Series

Auckland International Airport
Air New Zealand
AMP Ltd
Briscoe Group Ltd
Cavalier Corporation Ltd
Contact Energy Ltd
Delegats Group Ltd
EBOS Group Ltd
Fletcher Building Ltd
Fisher & Paykel Appliances
Fisher & Paykel Healthcare
Freightways Ltd
Goodman Fielder Ltd
Hallenstein Glasson Holdings Ltd
Hellaby Holdings Ltd
Kirkcaldie & Stains Ltd
Kiwi Income Property Trust Ltd
Mainfreight Ltd
Michael Hill International Ltd
Metlifecare Ltd
Methven Ltd
New Zealand Refining Ltd
New Zealand Stock Exchange Ltd
Nuplex Industries Ltd
PGG Wrightson Ltd
Port Of Tauranga Ltd
Postie Plus Group Ltd
Pumpkin Patch Ltd
Restaurant Brands Ltd
Ryman Healthcare Ltd
Sanford Ltd
Skellerup Ltd
Sky City Entertainment Group Ltd
Sky Network Television Ltd
Steel & Tube Ltd
Telecom NZ Ltd
Telstra Corp Ltd
Tourism Holdings Ltd
Turners Auctions Ltd
Turners & Growers Ltd
The Warehouse Group Ltd


Discuss MOW @ Share Investor Forum
Download MOW Company Reports


Recommended Amazon Reading


The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
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c Share Investor 2010

Stock of the Week - Reprise 3: Contact Energy Ltd

As you can see from the one year Contact Energy Ltd [CEN.NZ] chart the stock price is hitting support levels seen three subsequent times before over the year and at an open market price today of $5.66 is close to its 52 week low of $5.61. I last pointed this out in February 2010, then November 2009 and previous to that in June of the same year and 2 other times 1, 2 during 2009.

This support around this price has been vindicated for buyers at these levels as the stock price has gained significantly the previous 3 times, in one case by almost $1 per share.

If you are after a good long-term investment now could be the time to buy and of course short term investors will be having a ball with this stock.

With June operational data showing poor prices received by CEN for power generation further share price pressure could be on the cards with the prospect of impacts on the coming profit result. This is somewhat offset by a small increase in customer numbers, significant for the company as they have been losing customers over the last year or so.

Buy on further weakness.


Contact Energy @ Share Investor

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Follow the Monopoly Board

Discuss this stock at Share Investor Forum - Register free

Download CEN Company Reports

Stock of the Week Series

Delegats Group Ltd
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From Fishpond.co.nz



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c Share Investor 2010

Queenstown Airport: Loud Voices & Loyalty

Yep, just like some folk down in Queenstown and management of Air New Zealand Ltd [AIR.NZ] at their plush new head office in the most expensive real estate in the country, in Auckland, I am fired up about Air New Zealand's attack on Auckland International Airports [AIA.NZ] buyout of nearly 25% of Queenstown Airport.

Management met with some Queenstown council drones yesterday to assuage their fears that the airport was stolen from the Queenstown ratepayers but it looks like there are a few loud voices down there filling newspaper and webspace in the hope they are noticed before local elections latter on this year. The majority of ratepayers must be pleased that the nearly $30 million that AIA paid for their share of the port might just be put to paying off council debt, if councillors do their jobs properly. This would mean less of a rates rise in 2011 and wouldn't that be a good platform to stand on for election.

There is an agreement by AIA and those on the council side of the airport deal for Auckland Airport to raise their 27.7% stake up to 35% but unless there is a firm deal to do that it looks like this deal could be compromised by the chatter.

As I said in my second post of this deal Air New Zealand's poke at AIA for being "anti - competitive, greedy and monopolistic" is kind of laughable considering the way the company has been ripping off New Zealanders for decades with sky high fares and their own monopolistic business practices and this story out today about an Air New Zealand's Starfish Card a "loyalty programme" that will cost users $800 per annum in order to get a regional flight discount is surely evidence that the airline will do anything as long as there is no competition to keep them honest.

Why not just charge customers lower fares ?

Answer? Because they don't have to as they have no competition in this area of their business.

This is the very reason Air NZ has taken a shot across the bow of Auckland Airport and clearly makes little sense given they continue to rort their "loyal" customers.

Meanwhile the NBR reports that AIA management are "bemused" by AIR NZ's public outbursts and I would have to agree and I must add confused by the AIR move.

Sour grapes.


Disc I own AIA shares in the Share Investor Portfolio


Queenstown Airport Buyout @ Share Investor

Queenstown Airport: Air New Zealand's Crocodile Tears
Queenstown Airport: AIA purchase good Long-Term but will cost shareholders Short-Term


AIA @ Share Investor

Long Term View: Auckland International Airport
VIDEO - Simon Moutter on Australian Airport Purchase
Auckland Airport Capital Raising a fair call
Auckland International Airport lands Australian Ports
What Infratil sale of Auckland Airport stake means...
Is another Auckland Airport bid likely under a business friendly Government?
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Government market manipulation over AIA/DAE deal
DAE move on AIA: Will it fly?

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

AIR @ Share Investor

Long Term View: Air New Zealand Ltd
John Palmer Tipples on the Shareholder
Mike Pero and Air New Zealand: Capitalism vs Socialism
Rob Fyfe's "Environmental Extremism"
Reality Needs to Bite
Air New Zealand wants another taxpayer bailout

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

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c Share Investor 2010

Long Term View: Skellerup Ltd

In this series of posts I am going to be looking at stocks listed on the NZX in relation to their returns to shareholders over the life of their listing -what shareholders would now see in their back pockets if they had invested in the company IPO. The calculation of returns includes dividends and tax credits.

Skellerup Ltd [SKL.NZ] has been on a roller-coaster in terms of stock prices and results since its June 2002 listing at $1.15 (see SKL prospectus for details) and has been a poor performer. With 44c in net dividends and 30% more in tax credits, plus a fully subscribed 2:5 rights issue in 2009 (see chart above)gives SKL a negative 50% return (see chart below for the share price percentage gain against the average of all NZX indexes - does not include dividends, tax credits and the share split in its calculation) and over the nearly 8 year listing of SKL an annual net return of minus 6.25 %.

This is approximately a 200% worse return when compared to the average of all NZX indexes.




Long Term View Series

Auckland International Airport
Air New Zealand
AMP Ltd
Briscoe Group Ltd
Cavalier Corporation Ltd
Contact Energy Ltd
Delegats Group Ltd
EBOS Group Ltd
Fletcher Building Ltd
Fisher & Paykel Appliances
Fisher & Paykel Healthcare
Freightways Ltd
Goodman Fielder Ltd
Hallenstein Glasson Holdings Ltd
Hellaby Holdings Ltd
Kirkcaldie & Stains Ltd
Kiwi Income Property Trust Ltd
Mainfreight Ltd
Michael Hill International Ltd
Metlifecare Ltd
Methven Ltd
New Zealand Refining Ltd
New Zealand Stock Exchange Ltd
Nuplex Industries Ltd
PGG Wrightson Ltd
Port Of Tauranga Ltd
Postie Plus Group Ltd
Pumpkin Patch Ltd
Restaurant Brands Ltd
Ryman Healthcare Ltd
Sanford Ltd
Sky City Entertainment Group Ltd
Sky Network Television Ltd
Steel & Tube Ltd
Telecom NZ Ltd
Telstra Corp Ltd
Tourism Holdings Ltd
Turners Auctions Ltd
Turners & Growers Ltd
The Warehouse Group Ltd


Discuss SKL @ Share Investor Forum
Download SKL Company Reports


Recommended Amazon Reading


The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
Buy new: $14.95 / Used from: $7.50
Usually ships in 24 hours

Buy The Intelligent Investor & more @ Fishpond.co.nz




c Share Investor 2010