Forum Archive Index - September 2000

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

Interesting thoughts, Frank, on CAH. Sudden surge in price yesterday morning 
before falling back again. 

No doubt this stock will continue to be subject to short term speculative 
pressures quite often in the future. Good for those who want to trade I suppose.

Mark asked what their returns were on shareholders equity.

>From their last annual report - (read in the context of shareholders equity at 
>March 2000 of $5 billion) 

1996   9.3%
1997   5.1%
1998   3.1%
1999   1.3%
2000   4.1%

Whatever cost of capital figure you want to apply CAH is not economically 
adding value. It is one of the many companies in NZ destroying shareholder 
wealth - in a big way. 

It really is performances like this that has contributed to the poor economy we 
now live in.    

These figures show why the share price always languishes down where it is. Over 
the past 4-5 years it has been unable to match the NZSE40. I haven't done it 
but if earnings and share price where plotted I am pretty sure the lines would 
be pretty close together.

CAH have discounted returning the $2.5B cash they are sitting on  back to 
shareholders. Hopefully being invested outside the business (on their own past 
performance)and if this is the case it will be interesting to see how much 
earnings come from investments compared to core operations.

I know trading at a relatively low PE and a discount to NTA and as such is 
undervalued. In addition if subject to speculation about IP buying the balance 
of the shares (or the return to shareholders of the large cash pile) you would 
think the price also has a big upside.

Word on the street is look forward to a much improved performance in the first 
half of the year to be announced 18/10.

Nearly convinced myself here but will continue to stay out. Negative sentiment 
will remain IMHO. 

However the last word needs to come from their web site (chh.co.nz)

"If you admire performance improvement embedded in a company's culture with the 
results to prove it, if you're inspired by the potential of people and the 
ongoing innovation of a company 100 years strong, maybe it's time you invested 
in Carter Holt Harvey - Australasia's leading forest and wood products company"


Regards

Peter

Disc - no CAH (ever)  

 

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