Share Investor: FPA

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Monday, May 25, 2009

Stock of the Week: Fisher & Paykel Appliances Ltd

This is the beginning of a new a column. A regular outing, I will pick one stock that may have been in the news - good or bad-or one that simply takes my fancy and recommend that investors might like to take another look at it to see if it fits their investment profile.

The inaugural Stock of the Week pick is Fisher & Paykel Appliances [FPA.NZ]. Long given a good stiff verbal beating by my good self over many years the main reason why I am picking this stock for closer scrutiny is the ability for you short term investors out there for you to make a quick buck rather than the slow and sometimes painful ones that I make.

Yes, yes, yes you could have bought at NZ 37c a few weeks back but the company's future survival wasn't clear at that point.

The stock closed at 66c on Friday and is on a trading halt until this Wednesday 27 May .

It seems there is to be some material news out this Wednesday in regard to the success or otherwise of its capital raising process.

It seems likely that the news is going be that some kind of finance has been found to keep the company going, at least for the short to medium term, with a 200 million rights issue mooted by BusinessDay over the weekend, the main reason given by FPA management for putting a trading halt on today.

There is some life left in this beast yet, how much we cannot be too sure, but there is short to medium term money to be made if one gets in early on positive news after trading is lifted on Wednesday. The short-term money to be made will be on buying quickly on Wednesday and flicking shares off to those who want to participate in the rumoured capital raising (it could actually be a cornerstone shareholder instead of or as well as) or buying quickly and holding medium to longer term hoping that the company can trade its way out of its current financial, revenue and profit troubles.

It is worth a look at and I will be taking a cursory glance at it on the big day to see if I can gain any benefit from it, as I am not against a short term punt myself.

Good luck.

Stock of the Week Series

Reprise 2 : Contact Energy Ltd
Reprise: Contact Energy Ltd
Restaurant Brands
NZ Refining
Ryman Healthcare
Mainfreight Ltd
Fisher & Paykel Healthcare
Xero Ltd
Auckland International Airport
Sky City Entertainment Group
Burger Fuel Worldwide
Michael Hill International
Contact Energy Ltd
The Warehouse Group
Fisher & Paykel Appliances

Fisher & Paykel Appliances @ Share Investor

Fisher & Paykel downgrade continues fine tradition
Fisher & Paykel Appliances looking fair value
Fisher & Paykel: A Tale of Two Companies
Fisher & Paykel Appliances: In a spin over nothing

Discuss FPA @ Share Investor Forum

Download FPA 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 2009

Monday, May 4, 2009

Fisher & Paykel Appliances future looking bleak

For those of you who have followed my rantings on this that and the other over the last 2 years or so, you will know I haven't got much time for Fisher and Paykel Appliances [FPA.NZ] the so-called "kiwi business icon" and today is no exception.

Get ready for another rant.

It has been poorly run for many years and was only a success largely because of protectionism in New Zealand and has fought that protectionism and lost the battle.

To me Fisher and Paykel Appliances is looking terminal. It has more than half a billion of debt on its books, with a massive slashing of its sales and profit, and bleak hope for the future.

The company is technically bankrupt.

For management to blame the current credit meltdown is moronic and dishonest at best. There has been clear evidence of a spiraling down of company fortunes over the last 10 years, not the least the massive debt that has been allowed to build up.

It shows the lack of forward planning that management did nothing about that debt until the very last minute and it is only the current dire credit climate and global economic circumstances that have accelerated an inevitable credit crunch.

FPA management have been blessed with less foresight than an Al Gore devotee with a blindfold on that they couldn't see the end coming.

The simple fact that it has taken more than six weeks to find some poor sucker to poor millions of dollars more into this loser shows the less savvy investor that nobody really wants to touch it with a 10 foot dish draw.

Having said that what the company does have to its advantage is one or two products that could be useful to another company looking for an edge in the whiteware market and a brand name with just enough cache left that could be used by a more competitive and well managed whiteware manufacturer.

For that reason alone the best thing for the company is for it to be broken up and sold.

That is sad, but some "business icons" have their best days behind them and Fisher and Paykel Appliances is definitely one of those.

Will the company survive?

Unlikely in its current form.

Fisher & Paykel Appliances @ Share Investor

Long Term View: Fisher & Paykel Appliances
Stock of the Week: Fisher & Paykel Appliances
Fisher & Paykel Appliances future looking bleak
Fisher & Paykel downgrade continues fine tradition
Fisher & Paykel Appliances looking fair value
Fisher & Paykel: A Tale of Two Companies
Fisher & Paykel Appliances: In a spin over nothing

Discuss FPA @ Share Investor Forum

Download FPA 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 2009

Wednesday, January 21, 2009

Fisher & Paykel Appliances looking fair value

I have given Fisher & Paykel Appliances [FPA.NZ] a beating over the last few years.

This is mainly due to its future prospects as a long-term going concern and the value that the stockmarket has previously given it.

The stockmarket plunge of the last year or so has largely changed my opinion.

That and more than a few changes management have made, and global economic circumstances as they are, have worked in the company's favour.

Lets have a look at the circumstances outside company control that are benefiting them first.

Input costs such as steel, plastics and appliance component's will have drastically come down in price over the latter quarter of 2008 and during the beginning of this year.

Couple this with a collapsing NZ dollar and you have a recipe for a profit improvement when the global economy recovers.

The full financial force of management moving key areas of manufacturing to Thailand is also set to be shown in the next reporting season come mid-May.

I must reiterate that my previous history of negative comments on the company focused primarily on Fishers attempts to compete globally by manufacturing in the high cost base of New Zealand with small production runs with niche products.

This has been slowly ameliorated by introducing a lower cost brand that sells alongside Fisher & Paykel branded goods and competes on a more level footing with the LG's, Mitsubishi's and other big appliance brands.

This is where I may have been a bit short-sighted in my previous criticism of the company.

If the company can grow its lower cost brand, making more units and therefore lower production cost, then they will be more able to compete with the aforementioned brands.

Selling their niche appliances alongside will be the icing on the cake.

Of course the only stumbling block to this whole process of transformation is going to be the global recession that I have already mentioned.

It has hit sales of appliance companies like Fishers badly-you can always put off that fridge purchase in the tough times!

All is not lost though it wont last forever.

Id love to see Fisher & Paykel make it to the big time.