Forum Archive Index - October 2003

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

Im not that convinced with DOW. I did a bit of analysis of its financials 
and this is what i found:
- net cash flows for 2003 went through the roof with a 86% increase from 
last year. This was mainly attributable to a large increase in receipts from 
customers (24% increase from 2002) while payments to suppliers increased 
only 18%.
- as cristine mentioned earlier. goodwill is at $345,706,000!!!!This makes 
up an alarming 17% of total assets. Therefore, if at any stage goodwill is 
compromised, this will severly affect any debt covenants it may have and 
further affect any future financing obligations that may arise in the 
future.
- Net assets per share is only 78c. At todays shareprice (87c), DOW is 
trading at a premium. Whats even more alarming, is that if u calculate net 
assets per share less goodwill, it is only 43c.
- P/E remains relatively low at 12 indicating there is no huge expectation 
that this company will deliver any exceptional profits.
- out of the 5 executives, 11 non-executive directors, and 1 executive 
director, a total of $4,248,226 was paid out in remuneration. This isnt even 
including the $9,768,750 they have in ordinary shares.
- what is however the most worrying is its liquidity ratio (current ratio). 
For the 2003 year it was 1.19, its lowest level since 1999. Prior to 2003, 
it has averaged around 1.75, so this year it is extremely low.
- also as cristine mentioned earlier, its dividend yeild is only 3.4% 
indicating it wouldnt make for a very healthy growth stock.

Based on my analysis, im not that convinced. i prefer to invest in a company 
that is trading at a discount to its net asset backing.

Your comments on my analysis is most welcome

regards
shayne

>From: "Morgy 40" <morgy40@hotmail.com>
>Reply-To: sharechat@sharechat.co.nz
>To: sharechat@sharechat.co.nz
>Subject: [sharechat] DOW:ASX
>Date: Thu, 02 Oct 2003 16:18:26 +1200
>

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