Forum Archive Index - July 2000

["Brett & Leeanne Phillips" <bret-lil@ihug.co.nz>]

Hi everyone

I have been watching our lack lustre sharemarket over the last month or so,
disappointed that we are not witnessing many signs of improvement. As was
pointed out, the NZSE40 has a long way to go to reach the 2300 mark . The
recent improvement in the Dow and Nasdaq  hasn't flowed onto our market as
yet and our internal business confidence isn't leaving us with much to smile
about.

However, with the New Zealand market having avoided  some of the earlier
hype and over valuation of the overseas markets, I suggest this market
offers good value to both the NZ. and overseas investors as they look for
future growth while there is still discount buying opportunities available.
At today's prices many New Zealand companies seem to be undervalued for no
apparent reason.

Companies such as FLC, WHS, PRG, HLG, TEL, RMG and several others seem to
offer great value, good growth propects or dividends to either short or long
term investors. I thought I would comment on three companies which I believe
offer investors good potential returns at their current prices, they are
PRG, FFS and RMG.

PRG is one company where recent indicators such as a much improved bottom
line, share options taken up by executives at $1.68, the CEO. Stefan Preston
purchasing his holding at $1.80 per share, potential growth prospects
especially in the finance and whiteware appliance arenas and the Eric Watson
factor would all suggest a stock on the upwards trend. Yet the trading price
is struggling to get above the $1.50 mark.
What am I missing?

With regards to analysis I congratulate Frank Fernandez on his Pacific
Retail Stock take article. It was so well compiled and researched that,
Stefan Preston commented on a Sharechat Q&A, by saying that Frank Fernandez
did a very good analysis of the future opportunities for PRG, and 'that it
was an insightful summation for someone operating with information from the
public domain'. If you haven't done so already, I suggest you take time out
to read Frank's analysis. PRG is trading well below it's yearly average and
is well worth considering in one's portfolio.
>
>
Fletcher Forest shareholders will be looking forward to an outcome to the
rumours that have been circulating since the sale of Fletcher Paper was
announced. While they may have to be patient a little while longer, I would
suggest, money will be made by the short term trader, who will relish the
selling opportunity if the share price jumps to around the $1.00 mark, and
long term holders will no doubt be hoping for a much higher sale price, with
some market forecasts being between the $1.20-$1.40.mark.

The continuation of rumours and announcements should keep this stock in the
limelight over the next few months and this will work to the advantage of
short term traders, until a conclusive announcement is made by management.

The good news for FFS investors, is that log prices are forecast to increase
along with the added news of a new opportunity in its joint venture with
Argentine forester Forestada Tapebicua. Wall Street analysts' are also
recommending FFS as a firm buy, with a revenue rise of 225% expected in the
2001 year and these aspects can only be positives to any sale propositions.

Of course the big negatives for FFS is their high debt level and the
inability to reach a satisfactory conclusion to the dispute with it's
Chinese, (Citic) partner. It has been commented that Fletcher officials seem
to be 'taking this in their stride' at present. The debt factor could be
addressed to an extent also, by generating larger cash flows from cutting
down and selling their ample supply of un-harvested trees.  With log prices
forecast to keep rising on the back of a strong  Asian and global economies
they will no doubt be waiting for the right moment.

I would suggest Fletcher Forests will be one of the most intriguing shares
to follow over the next few months, whatever the outcome. I hope the many
longer term stakeholders are rewarded for their patience.
>
>
RMG. has been formed from the combination of 15 receivables management
companies from each side of the Tasman. In the last ten days while
recommencing trading, the new enterprise has also acquired a 25% interest in
Atlantis Marketing Limited which specialises in 'collection analysis and
business information' and will provide a credit information data base to
service the whole of Australasia and also Asia.

RMG has publicly announced it has plans to be the biggest company of its
type in Australasia. The RMG board has been changed with two new directors
being appointed and two retiring. Paul Cooney, is CEO of RMG, and David De
Campo, currently an executive director of Advantage Group in Australia have
joined the board. Stuart Cairns will remain as chairman and John Tarrant
formerly CEO of FRO remain on the board.

The receivables management market in Australia is currently valued at around
$250m per annum and is forecast by some analysts to grow by 15% per annum
over the next 5 years to reach $500m per annum by 2005.

The established companies that make up RMG have all had successful trading
backgrounds, so the question will be how well the directors and management
can "knit" the entire group together to 'out shine' their main competitor.
I'm sure RMG shareholders will be looking forward to this new enterprise
emulating the market success of Baycorp.

Given the growth prospects, the share price of RMG seems to be relatively
cheap since trading recommenced on the ASX and the NZSE. While a 20%
increase has still been posted in the ten or so days of trading, I have been
surprised by the lack of hype centred around the re-listing. This leads me
to believe they may let their 'actions speak for themselves' and I would
suspect a further price strengthening as investors begin to see the possible
medium to long term growth prospects of this company.

Well I hope I have offered up something worth consideration. I look forward
to any comments. My  'punt' for the weekend is the All Blacks to win by 13
points!

Happy Trading to all


Cheers Brett



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