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Hi Shayne,
First impressions of Downer
EDI (ASX Code DOW)
1) stayer - been around for a while - didn't review
assets
2) cashflow - good revenue, diversified income
stream, margins appear tight which places higher emphasis on maximising
volume and minimizing cost
3) as a growth stock - forward order book
appears healthy - announcement 'reliable long-term income
streams' seems credible on the surface but without contract details
(contingencies and time frames) cannot assess
4) dividend - selling ex dividend at
present - reasonable return on stock price but there are better out
there, eg; Downer EDI (DOW) dividend 2.9 cents (only partially franked) and
selling around 85 cents whilst Cellnet (CLT) 7cents (fully franked at 30%)
is selling around 86 cents
NB This is just my own opinion, but the end of the
day, I believe a 'growth stock' should provide a good return on
your investment. If a company has a good income stream and are
able to make reasonable profits they should be sharing a good percentage of
those profits with shareholders or justifying holding on to most or
all of it in retained profits, eg; communicating plans for future
growth that will necessitate investment expenditure.
5) healthy exec salaries - execs seem to be doing
well from the business even if shareholders aren't - wouldn't mind having
one of those positions!
NB I'm all for execs being paid well, but it should be
linked to performance criteria (profit and dividends being just a couple of
those) not revenue performance alone
6) Intangibles - would like to know what's been factored
into Goodwill - $345,706,000 and Intellectual Property -
$34,701,000?
7) Current interest bearing liabilities -
$96,204,000?
8) Prefer not to see unexplained entries in the millions,
eg; Current Payables, Other? - $31M
9) Don't know their market or competition
May very well grow but not my cup of tea based on the
quick review I did. (NB Keep my review in perspective - trading
for just over two months.)
Regards,
Cris
----- Original Message -----
Sent: Wednesday, October 01, 2003 3:22
PM
Subject: Re: [sharechat] Financial
Statement Analysis?
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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