Forum Archive Index - October 2003

["Shayne King" <shayne_king1@hotmail.com>]

I am currently interested in investing in Downer EDI. I have obtained their 
financials and have yet to do any analysis on them yet. How would you 
approach determining whether this company is worth investing in taking into 
consideration their financials and charts? I have heard that they may show 
quite alot of future promise, and one analyst recommends this company as a 
speculative buy. I am interested in short term gains however based on my 
conclusions in their financials, will be willing to be a long term investor 
(growth buyer).

regards
shayne


>From: "Cristine Kerr" <criskerr@optusnet.com.au>
>Reply-To: sharechat@sharechat.co.nz
>To: <sharechat@sharechat.co.nz>
>Subject: Re: [sharechat] Financial Statement Analysis?
>Date: Wed, 1 Oct 2003 14:46:27 +1000
>
>Shayne,
>
>Thank you for your comments. Great (and fast) response from David.
>
>I started to prepare a response but the more I wrote, the more I realised 
>what was left out.
>
>There are so many variables I started to go down the path of 'if this', 
>'then that'.
>
>The bottom line is, its all a bit of a formula of sorts (in some ways 
>similar to creating formulas for an excel spreadsheet).
>
>The formula will be different dependent upon the investment objective/s and 
>risk profile.
>
>Identifying your investment objective and risk profile will help determine 
>the type/s of shares you will be comfortable investing in.
>
>With this in mind..
>
>What is your investment objective?
>
>What is your risk profile?
>
>This information will help sharechat contributors with your question.
>
>Regards,
>Cris
>
>   ----- Original Message -----
>   From: david.gibson
>   To: sharechat@sharechat.co.nz
>   Sent: Wednesday, October 01, 2003 10:03 AM
>   Subject: RE: [sharechat] Financial Statement Analysis?
>
>
>   >My question to everybody is: When you see a company that you are 
>interested
>   >in investing in, what is the most important analysis that you do?
>
>   1) Cashflow
>
>   For me - cashflow is the key.  It is possible for a company to be losing
>   money and still have good cashflow.  It is also possible for a company 
>to be
>   making money and have terrible cashflow.  The cashflow analysis is the 
>first
>   place I look in an annual report.
>
>   If a company is generating cash - it becomes a candidate.
>
>   2)  NTA
>
>   The next factor is asset backing.  This is more than NTA - some 
>industries,
>   in long term structural decline, I would expect the price to reflect a
>   significant discount to the NTA.  On the other hand - other industries 
>with
>   long term growth prospects, I would expect to pay a premium.  The 
>assessment
>   of NTA is mixed with a number of intangible factors.
>
>   I will buy into declining industries if the NTA discount is good enough. 
>  I
>   will only buy growth prospects if the NTA premium is acceptable.
>
>   3)  Market Timing
>
>   Interest rates are the single biggest factor, for me, influencing market
>   timing.  (I know this does not directly relate to your question).  Some
>   sectors are sensitive to interest rates (retail), some are not 
>(utilities).
>
>   Generally, if interest rates are trending down - with a lag in timing - 
>I'm
>   buying.  If interest rates are trending up - with a lag in timing - I'm
>   selling.
>
>
>   
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