Forum Archive Index - May 2001

["Adrienne" <artemis@xtra.co.nz>]

Keith asked whether there were any other interesting stock comments in the Coronet newsletter.

 

They commented on Ausdoc, Burns Philp, Portman and Foundation Health Care (all Aus). Some summaries/extracts ...

 

Ausdoc - recent problems came from its expansion into other businesses, mainly outsourcing, which did not yield benefits. Coronet sold most of its holding as it perceived earnings risk, the share price fell dramatically to about $A1, the directors of the company made some tough decisions (exit poorly performing companies, concentrate on core businesses, new CEO, focus on expanding the mail service). Coronet bought back in, share price recently rose rapidly to around $A1.50. Coronet now value the company above $A2.

 

Burns Philp - its core business has few global competitors and sells essential ingredients for food, providing stable earnings growth  and cash flow. Coronet believe the company has turned the corner both operationally and financially. Its management are substantial shareholders - big incentive.  "The selling that occurred during the quarter related mostly to market conditions and concern about one quarter's earnings. With the conservative value of the business being well in excess of the current market price we will maintain or increase this holding until its share price reflects what we perceive is its real value."

 

Portman - ... "PMM ... owned an iron ore business, which would have been making money except for some very poor currency hedging. Production and sale of iron ore is one of the very few metal businesses that has consistently provided a high return on money employed because of the dominance of a few global players. ... With the very favourable outlook for the industry over the next few years, with no debt, a little under $A100 million of cash in the bank, and earnings which we believe should be close to $A50 million next year and growing in the following years, PMM is a cheap company, even at the current share price of $A1.20."

 

Foundation Health Care - "... potential earnings over the next two years are likely to be very impressive making it the cheapest amongst its competitors by a substantial margin. We believe FNC has upside of close to 100% over the next two to three years ..."

 

Adrienne