Forum Archive Index - April 2001

["G Stolwyk" <stolwyk@wave.co.nz>]

 

Readers, in case you want to follow the discussion, please print my article, dated April 23, 2001.  

 

 

Gary,

 

Arising from your queries, dated April 24, 2001:  

 

1. In the " Summary ", page 1 of my report dated April 23, 2001, amend " Nov. 1993 " to " Nov.  2003 ".                            

 CLH:   < www.collectionhouse.com.au >

 

2. Re your 1st question " Where has the forecast for 2002 come from? Is it their own forecast or yours?

Answ.: The E/S from your item (3), is calculated from items (1) and (2): refer to my report of April 23, 2001.

 

The net surplus to June 30, 2001, @ $ 8.334 mill. as forecasted by CLH would be met, according to their recent statement.

That I upped it to $ 8.4 mill.merely confirms my confidence.

 

I had originally forecasted the June 30, 2002, profit to be $ 13 mill.: See article of March 5. 

Arising from their latest takeovers and the painless raising of more cash, I have increased it to $ 14.3 mill.

( There will be a full year's use of these resources up to June 2002 ). It is my forecast and  I have not approached CLH. 

As always, I do some background checks and was impressed with the quality of the take-overs.

 

3. As to your second question, we have the following data:

                            2001,E/S                 2002, E/S

BCH                      18.6                       21.9 ( + 17.7 % )   

CLH                      10.2                       15.7 ( + 53.9 % )

My Remarks: CLH: It is estimated that it will take less than 1.5 years starting from July 1, 2002 - to obtain the same E/S that BCH has in the year up to June 30, 2002.

 

Your question: On what basis do you make the above remark and how can you be so sure CLH can grow in 2003 and 2004 as fast as from 2001 to 2002 ?                   

 

Answ: BCH has an E/S of 21.9 cents on June, 30, 2002. Therefore, according to the remarks, CLH has to earn this up to say Nov 30, 2003. 

 

Refer to the CLH projected return of 15.7cents on June 30, 2002. The difference is: ( 21.9 - 15.7) = 6.2 cents or 39.5% growth over nearly 18 months up to Nov. 30, 2003. Refer to my suggested " business time table " below. This rate of growth is lower than the 53.9% in the year up to June 30, 2002.  

 

Sure, CLH staff will have to work and they will ! However, the issue is also one of share price: I requested the reader to take note of the Remarks- see item (3) of my April 23 report. 

 

 Presumably, you missed the following statement - after having mentioned that I rate a compound return of 31% every 10 months, etc.- " It is a conservative statement because it ignores any possible increase of the BCH share price between now and June 30, 2002. "

 

I would expect some rise in the share price of BCH up to June 2002 and I would expect CLH to derive some of that during the 18 months after June 30, 2002.

 

I have omitted that possible increase in share price, as a safeguard. In fact, I have used the actual number of the April 23, 2001, BCH share price as the number for CLH share price in Oct / Nov. 2003: Refer to " Summary " - in red.

      

---

I can see the CLH business time table as follows:

 

1992: Incorporation; developing systems, including the highly rated " The Controller ".

            

Oct. 2000 Listing, heavy expenditure incurring in expansion, yet earning $ 8.33 mill. to June 30, 2001- according to their advice.

 

July 1, 2001- June 30, 2002: Costs per dollar revenue are decreasing, additional benefits from the expansion from the year before.

 

July 1,2002 - June 30, 2003: As before, partly because most costs previously incurred have now disappeared and replaced by earnings. CLH is close to running on all cylinders.

 

July 2003 - June 30, 2004: CLH is continuing its organic expansion in a large market with a depth of operations: Refer to the " Summary " of the article, dated April, 23. Share prices move accordingly.

 

CLH has quite a way to go before it approaches the margins, BCH has. That statement should comfort the investor!

 

Finally, one can never guarantee any projections! If one could, then one would pay some $ 6 odd instead of today's $ 4.40 for CLH !

 

As always, we continue to work at the COAL FACE !!  And we don't want to fish " behind " the net !!  

 

 

Regards,

 

Gerry

---

Disclaimer. I hold BCH and CLH stock. The contents of this communication are my opinion. Readers are not asked to buy, hold or sell shares or any other financial instrument. To do so, will be entirely at their own risk.