Forum Archive Index - January 2002

["Michael Huang (DSL AK)" <MichaelHu@datacom.co.nz>]

Hi,

I have some FORRA and need to make a decision on whether to take them up or
let it go.  I have insufficient information about where FORCE is performing
now and how bad are they hurt by the Argentina turmoil.  This is my quick
buy and not buy analysis and I will be interest in other's opinion.

WHY BUY:
1. The recent valuation of FOR share @ 3 - 5 cent will value the note at
$1.5 - $2.5.  Base on the FOR share price the FORRA appear to be grossly
under valued.
2. FOR has the cinema consumer monopoly in N.Z and after divesfing it's real
estate operation, it can sustain good cash flow from the n.z movie biz.
3. Proposed integration with Westfield shopping mall provide some growth
opportunity.
4. SKC will take full control of FOR and most likly to offer a premium on
the current share price.  I am unsure about the timing for this but feel
that SKC has too much interest in FOR to not finish it up, any opinion??
5. SKC management will do a better job now it's a majority owner.

WHY LET IT GO:
1. Argentina exposure means FOR continue to lose money, and it can't sell
the SA asset due to whatever reason I don't know.  They already write off
about $50 mil worth of SA asset.  Does anybody know how much is the
Argentina asset on their balance sheet now and can they cut the SA
operation??
2. At debt equity ration of something like 97:3, the biz can not sustain
even the slightest blow of negative earning impact.
3. Movie is a dying biz, people watch DVD in home entertainment, so why
invest in a dying biz.  This is an arguable point though.

Your feedback will be most appreciated.

DISC: Hold 20k FORRA and SKC

Michael Huang


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