Forum Archive Index - September 2000

["Peter Maiden" <pmaiden@today.com.au>]

Ben - thanks for the great response

I agree that looking at the past clouds the decision making process. Even 
though the past may give some indication of the future the main driver of any 
investment descision should be ones view and assessment of the future.

Back to BCH. As we both agree they have created a tremendous amount of value 
out of their intellectual property. However with a market cap in excess of $1B 
that is what they would expect to sell that property for. For the acquirer that 
incurs a $50M a year goodwill cost (over 20 years). Bearing in mind that BCH 
(with all that intellectual property and know how) current revenues are only 
just in excess of $50M things still don't stack up. 

Tempted again to get into BCH but on this basis still think overvalued. Most 
likely another lost opportunity but that's my personal decision. Good luck 
however to current and future investors.

Basic fundamentals don't always sway my buying decisions. I have an interest in 
both RNS and WHS which also trade at high PE ratios.

Since changing their strategic direction a few years ago I have had a lot of 
time for RNS. They have been a very innovative company. Firstly they have used 
internet technology to capture the efficiencies that that medium offers and 
have become a very efficient distribution company. Secondly they have developed 
those processes to an extent that they can extract real value out of their 
innovation and build a platform for future earnings growth - even in the global 
marketplace. They have my confidence and money - good luck to them.

I am also a strong believer in WHS and have not had anybody agree with me on 
this forum when I have expressed my opinion that 600 is still cheap. i get shot 
down and reminded that WHS should not be trading at a PE of over 20 and that 
525 is a fair value. However as per the argument you put forward why shouldn't 
WHS trade at a high PE?.  What WHS has done has done over the last 10 years has 
been unheard of in NZ business history.  A business has been built up and now 
operates a model (refer some of my previous postings) that appears to adapt to 
whatever is thrown at it. WHS is another business that has not been afraid to 
throw money into technology and the rewards are coming through. Essentially a 
stuffed NZ is good for WHS. We should not forget that their sales increases in 
NZ alone are over $120M - a figure that a lot of listed companies alone would 
be proud of their total turnover.   That is what I see the real value in WHS 
and my I continue to express my view that even at the current 600 price (even 
if the PE is 20 odd) there is a tremendous amount of value yet to be extracted 
- not just in NZ but as they get OZ operations in order.

However at the end of the day sentiment rules and that what drives a lot of the 
prices.

Enough rambling for now - but a good debate, and hopefully making us all the 
wiser

Have a good weekend

Peter  

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