Forum Archive Index - June 2001

["mrgoodall" <mrgoodall@xtra.co.nz>]

Gerry  I  now  have  reread  your  post  on Collection  house   dated  23 April

and  can only  agree  .  Thanks  for  yours  and  other  contributors   hard  work

this  certainly  looks  like  a  great  company  and  yes  have  to agree  that  a high pe  in  these  circumstances  (  a company  with  huge  growth  both  in recent times  and  all  signs  pointing  to that continuing)  can only  reflect  just  that .  these  companies   Baycorp  Clh    have  backgrounds    rmg  is  trying  to cash in , could  be a long  time  before  they  eat  into  the  opposition. and  with all due  respect  to  Jim Boult  they  are  playing  catchup  ( a point  to ponder  RMG  have  over  500 million  shares on issue  if  they  were  to  turn  over  the  same  revenue  as Bay corp  , and have  the  same  profit   and  capitilisation  the

share  would  be  $2    that is  going  to take a long  time  (IMHO)

regards   Mike G (  that  would  also include  them having   growth of  %20  +

----- Original Message -----

From: G Stolwyk

To: sharechat.co.nz

Sent: Wednesday, June 06, 2001 7:17 PM

Subject: Re: Re: [sharechat] CLH - Collection House

Thanks for your post " mrgoodall " I wished that you had read my post of April 23, 2001.

 

There is no guarantee that the Herald has the correct P/E's even for the last year. I complained about this sort of thing some years ago, perhaps they may have improved.

 

Anyhow, the new year starts on July 1 and we should be concerned with that, rather than the past.

 

You will probably know that if the market perceives CLH to be an excellent stock, then two things will happen:

 

The P/E will not only be higher but the higher P/E will also be trying to " outrun " the actual achievement.

 

Thus, the public will already accord a higher P/E now, instead of waiting till later! Therefore, there is a premium on the stock!

 

And so, if the results turn up even better than expected, this P/E level may move up again up to a certain point. And that happened to Baycorp or BCH! Such a stock will be tightly held! 

---

If you read the key post of April 23, you will find the " Projected share prices " of CLH, on page 1. 

 

Page 3, item 7, will give you the projected

P/ E ratios          2000      2001       2002

BCH                    60.6      52.7        44.8

CLH                                46.5 #      30.2 #

# Based on the now share price of appr. $ 4.75 instead of the then price of $ 4.40: See my report.

 

Your first question: Is the P/E too high?

Answ.: There is a large fall in the P/E value in 2002. You are the only one who can decide if the P/ E for the new year is too high. I have CLH shares and hope that my projected share prices come true! 

 

If you had read the remarks on page 3, item 7, there, I am suggesting that the P/E of CLH  will try to meet that of BCH.

You have already seen that the price of CLH has risen by 35 cents since that report while BCH is somewhat static.

 

I have already said that the support level is about $ 4.80; the first three weeks in June are subjected to tax-loss selling and all sorts of unexpected events can happen to any stocks!

---

Re your second question: Is the current Receivables Book $ 2.3 Bil. and is this for one year?

 

When they listed, this Book was $ 2 Bill., it is growing faster than they are clearing up and now stands @ $ 2.4 Bill.: Refer to page 2 of my report.

 

Obviously, their rate of clearing will increase over time now they are consolidating; However, I am very encouraged to know that they have plenty of work in front of them!

 

Even if this rate increases, it could merely mean that they are able to take on more work! Therefore, this " work - in - progress " is a dynamic thing and not subjected to a given time period! 

 

Gerry

PS: Thanks Nick! One way of putting it: Yes, 1 kg of Gold cost more than 1 kg of iron!!

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Disclaimer. Readers are not asked to buy, hold or sell CLH. To do so will be entirely at their own risk.