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re: [sharechat] fletcher building

From:	Mike Hudson <MHudson@placemakers.co.nz>
Date:	Tue, 31 Oct 2000 15:08:12 +1300

Danny was asking the other day on whether to  sell or hold FLB? My view FWIW

Positives
*       Some good business units, Winstone Wallboards, Winstone Aggregates,
Golden Bay Cement and PlaceMakers  in particular
*       Despite weakness in Auckland and Christchurch residential markets
outlook for construction reasonable driven by commercial sector and
government work (schools and hospitals)
*       Lower NZ$ benefiting export divisions (Fletcher Wood Panels) and
reducing competition from imported product (plaster board, steel, MDF etc)

*       Strong cash flows
*       High dividend yield which should be sustainable in the medium term
*       Potential take over target.

Negatives
*       Uncertainty over medium term outlook for NZ economy
*       Top heavy management structure; maybe Mr Todte may fix this. I hear
he is making all the top brass reapply for their jobs, perhaps he can weed
out some of the dead wood
*       Potential underwriting exposure to FFS
*       Operations in Peru and India

I would be considering increasing my position if it wasn't for the Peruvian
investment. I sniff a disaster in the air. According to the last accounts
FLB has $153m invested in Peru which is equivalent to 44 cents a share. From
my experience an incoming CEO will move quickly to write down any doubtful
assets while the blame can still be pinned on his predecessor.

If anybody is going to the meeting a question as to how much we are likely
to have to write off in South America would not go amiss. It may not be much
in the scheme of things for FCL but could have a major impact for the
shareholders of FLB next year.

Still on balance I would hold

Cheers
Mike H 
Disclosure: hold far too many shares in FLB

Mike  



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