Forum Archive Index - September 2003

["Morgy" <ica.sports@xtra.co.nz>]

Harry

Nobody,  but nobody "eagerly"  peruses company reports, Surely not ?.

 :-)

Disclosure: Never read a publicly listed company report, ever

Regards

Morgy


----- Original Message ----- 
From: <tennyson@caverock.net.nz>
To: <sharechat@sharechat.co.nz>
Sent: Thursday, September 11, 2003 5:41 PM
Subject: [sharechat] WRI 2003 report looks VG to me


>
> I have eagerly perused the just released annual report and I must say,
> there are a couple of positive surprises in there.
>
> Profit was down for FY2003 as previously announced.  However, that
> reduced profit includes a $4.2m charge for strategic and restructuring
> initiatives.   If we consider a 'normalised profit' and add $3m after tax
> back into the result because of it, then profit comes out at $17.9m -
> virtually fat with the previous record year.   It has been well flagged
> that farming times were tougher over the last year, so I see maintaining
> a flat underlying profit in that climate as a great result.
>
> Last year is now ancient history and what really drives the share price
> from here on in is the outlook for the following years.   The Fronterra
> announcement of the boosted milk payout of $3.90 is one indicator that
> the coming year will be better than this one (payout $3.65).    Of more
> concern is the indicator estimate for FY2005 of $3.20,    Farmers know
> that they have to keep up the spending on their land in 'lean' years so
> my prediction is that of all the retailers WRI (and other rural service
> companies) will suffer the least in any FY2005 downturn.
>
> Normalised WRI profit is 16.4cps.   If the FY2005 is reduced in
> proportion to the milk fat payout ( $3.20/$3.90 ) then NPAT drops to
> 13.5cps.   In other words the dividend of 11.5cps is still well covered.
>
> Completely left out of all this reckoning is the agreement to market
> financial products in partnership with Rabobank which expires in
> November 2003.   WRI have dipped their toe back into farmer
> financing in 2003.   But reading between the lines in the annual report I
> think we can look forward to an all out assault on the farming financial
> loan market from WRI, while Rabobank has to look elsewhere for a
> sales outlet to maintain their profile in New Zealand.    This is
> wonderful news for WRI shareholders as back in the 'old days'  their
> finance arm was a real cash cow.  The company has no term debt
> which is a very good base to start building up a financial arm again
> from.
>
> ROE in 2003 was $18.475m/$125.118m= 14.7%.  Add back in the after
> tax effect of $3.0m in restructuring initiatives and ROE jumps to 17.1%.
>
> Long term policy is to pay out 60-80% of profit as dividend.    WRI
> currently pays out more than that, so I don't see the prospect of the
> dividend being raised in the foreseeable future.   But now that the
> dividend looks sustainable through 2005, I wouldn't be surprised to see
> the yield drop to around 8%, which means a share price of around $2.
>
> Meanwhile the broad brush trend followers will only see the reducing
> returns on commodity prices, and predict doom and gloom for the WRI
> share price.   As the share price rises they will shake their heads in
> disbelief, claim that the market is behaving irrationally and miss out -
> again.  Oh dear!   When will they ever learn to recognize a bargain.
>
> SNOOPY
>
> hold WRI
>
> --
> Message sent by Snoopy
> on Pegasus Mail version 4.02
> ----------------------------------
> "Stay on the upside of the downside,
> Anticipate the anticipation!"
>
>
>
>
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