Forum Archive Index - April 2003

["Michael McGregor" <mikemcgregor@nzoomail.com>]

>Hi Phaedrus,
>
>>
>> 
>> OST has been in a downtrend for most of this year, with a nice
>>  tidy confirmed trendline in place. I have plotted the chart
>> with todays current price of $1.72. This is up 4 cents on
>> yesterday, and if it closes at this, price action will have
>> broken above the trendline. A Close of above $1.72 would mean
>>  the start of a new uptrend, as well as a trendline break.
>>  
>
>Thanks for this.    For those who came in late, here is the fundamentals 
>commentary
to 
>go with Phaedrus's chart.   
>
>OST was an unwanted steel producing/distributing child of BHP.  It was spun
off into the 
>market with significant debt shareholders who wanted 'out' and an unknown 
>future.
 The 
>nadir here was a low point of 90c in September/October 2001.
>
>Then things started to change.  There was a share placement that reduced debt.
  OST, 
>as no.1 in steel distribution was involved in a bid with rival Smorgon Steel
( the no. 2) to 
>take out the number three competitor in the market,  'Email'.   Then all of
a sudden the 
>world price of hot rolled steel, a proxy for the value of recycled scrap steel,
rose 
>significantly.     OST was able to dodge the consequent cost rises due to 
>manufacturing

>most of their raw materials from scratch.
>
>Today residential construction, commercial construction and big infrastructure

>construction projects are all on an upturn.   Furthermore the MD at an 
>analyst's
briefing 
>today seems to have changed his tone from being rather cautious at the time
the latest 
>half year results were announced, to quite being quite bullish.  He is 
>predicting
a 3 year 
>boom cycle in construction.
>
>The OST share, which has just shed a dividend, is trading on an earnings yield
of some 
>8% allowing for franking credits.     I say 'allowing for franking credits'
because the very 
>profitable New Zealand arm of OST, Steel and Tube, means that these franking
credits 
>should soon be available to NZ shareholders thanks to recently thrashed out
trans 
>tasman tax arrangements.
>
>But I am a little concerned that all of this seems a little too sweet.   It
is hard to imagine 
>the current Australian domestic building boom continuing for another three
years, and 
>will Australians want to keep money into infrastructure projects as well as
the war effort?
>Mind you the Australian government probably has the financial means to do both!

>
>I have a gut feeling that OST might be one to buy on weakness, rather than
trying to 
>jump on the end of a long term trend.
>
>OST has certainly been bouncing around a bit in price as shown by on Phaedrus's

>chart.    And who knows, that closing above the trendline today might just
be another 
>'outlier' point.  If you look closely at the right hand side of Phaedrus's
chart you can see 
>other incidents of that!
>
>SNOOPY
>
>
>--
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>on Pegasus Mail version 4.02
>----------------------------------
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>
>
>
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>
>Sounds like a whole lot of speculation to me.

  Mike M.


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