Forum Archive Index - February 2001

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

> 
>I carefully research all investments I make and this approach means
>I do not often pick losers to the degree that Tourism Holdings is
>turning out to be. 
> 
>I invested in Tourism Holdings fully realizing that there were risks
>associated with doing so, especially when the past few years'
>performance could only be rated as `fair' at best. 
> 
Huh?  So despite your careful research indicating that THL was only a 
fair performer, you still invested?
> 
> The company's reported profit for the 2000 year of $14.8M was a
> better performance than previous years but the 7% Return on Invested
> Capital (on year end figures) could hardly be called a staggering
> success. 
>
What figure of ROIC would you regard as acceptable in this industry 
sector? 
>
>However the improved performance did indicate that Tourism
> Holdings was heading for a bright future. 
>
When results get better, the following period of results could be 
either better or worse.  I respectfully suggest to you Peter, that 
any indicator of a bright future was inside your head only. 
> 
>The prospects in the tourism sector in New Zealand have been
>favourable for some time and this is likely to continue into the
>future. Tourism Holdings have been painting a pretty optimistic
>picture of where they fit into this growth industry. I invite you to
>re-read your last annual report, stock exchange announcements and
>the comments made at your last AGM to see what I mean.
> 
Well what would you expect him to say?  A man who would talk down his 
own company is hardly the sort of man you want as a CEO.
> 
>With all this in mind I invested in Tourism Holdings - even after
>the company stated in November that this years profit would be down
>on original expectations. However it was said that Tourism Holdings
>would still be `producing very substantial, and increasing profits'
>
Ah, so you invested in THL as a recovery share, but are now 
castigating yourself for not getting the timeframe of the recovery 
right?  It is difficult to time the market as precisely as 
nailing down three month periods.
> 
>One thing markets around the world do not put up with is a company
>downgrading earnings to the degree that Tourism Holdings has,
>especially less than 3 months after a previous warning. 
> 
Didn't that 3 months include the Olympics?  In other words all that 
happened was that after the Olympic period they found that camper van 
volume hire in Australia wasn't up to scratch?  Then they reported 
that fact, and now you are criticizing Mr Pickup for that?
> 
> The company is pretty keen to put up excuses such as the America's
> Cup boom did not go outside Auckland, weather, Fiji coup, Olympics
> etc etc but shareholders expect a company to manage their way
> through these adverse advents or at least not factor in what may
> have been into published forecasts. 
>
Forecasting is notoriously difficult, in fact almost impossible when 
you have major unforseen events. 
> 
>Whichever way I do my sums it does not appear that the situation
>could change so dramatically over three months because of such a
>shortfall in revenues. 
>
What sums?
>
>With due respect I need to question whether
>the company really knows what is going on. 
>
A fair assessment.  Maybe they don't know what is happening?
>
>Alternatively the
>situation is really far worse than reported and this is not the last
>bit of bad news we will hear from Tourism Holdings.
>
I can't recall a company that deliberately drip feeds bad news.

Peter, in all fairness you invested in THL for its recovery potential 
and are now annoyed that you didn't get the timing exactly right.   
The hotel market is notoriously fickle, with seemingly endemic poor 
profitability and with high capital requirements needed to upgrade 
rooms every few years.   Why should the 'mobile' hotel market be any 
different?  Does it not have even lower barriers to entry than the 
bricks and mortar accommodation market?   Who are THL's competitors in 
Australia?   I would genuinely like to know, and I assume having 
carefully researched your investment you will be in a position to 
tell me?   

If indeed the overall tourism accommodation market is as I describe, 
isn't a market price some 80% of the asset backing of THL be about 
the best you could ever expect?   The low point in the business 
cycle would of course be considerably below this. SNOOPY




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