Forum Archive Index - June 2002

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

Hi trader 100,
 
>
>
> I would be interested in peoples views on UNL from a technical
> perspective.  Using a weekly chart, the triangle breakout and
> candlestick formation both give bullish signals and the DMI
> (unoptimised) looks close to signalling a buy.
> 
> 

I can't provide you with any technical insights I'm afraid, but 
putting my 'income investor hat' on I can make a few comments.

This is the sort of company that most income investors would be glad 
to have in their portfolio.  They have grown dividends from 30cps to 
33cps to 35cps over the last three years.  They have tried to be 
innovative by getting into telecommunications in the Auckland CBD.  
But given they have just grown significantly what is fundamentally a 
limited sized market, I would have to question whether they can keep 
growing like this.   

Nevertheless, the most important thing to an income investor is 
yield.  Based on a dividend of 35c and using a share price of $8.35, 
this gives a yield of 6.4%.

(35c/0.66)/ 835 = 6.4%

The market is now aware UNL is for sale, which is why the price 
jumped to $8.35 recently.  The rumour that it may be broken up 
suggests to me that when a buyer is found they may not see enough
significant synergies to justify a high takeover price.

Whatever the charts may be telling you, fundamentally I can't see 
much upside here.

SNOOPY

disclosure: No shares held


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