Around the Traps ... with THE FERRET 07:25, Tuesday, 17 August 2004
Sydney - Tuesday - August 17: (RWE) ***********************************
When GREAT SOUTHERN PLANTATIONS (GTP) managing director John Young said it was yet another outstanding result and was the culmination of an extremely successful year, he wasn't exaggerating.
He was commenting on yesterday's announcement of a 125 per cent rise in net profit to $93.2 million, for earnings per share of 43.27c.
With EPS like that it's a wonder the company was not more generous with the dividend - a fully franked 10c, up from 7c.
The prosperity has not gone unnoticed and the shares have doubled over the past 12 months, yesterday rising 11c to $3.28 on the back of the profit announcement.
That price seems low on a p/e basis, being well below 8 times earnings.
Investors must be pondering whether it's not too late to hop on for the ride.
You never know but Mr Young also said yesterday: "The outlook for the coming year is excellent."
Now let's see ... outstanding result, extremely successful year and excellent outlook ... that's a pretty good trifecta.
*****
That was an odd reaction by Perth-based engineering services provider RCR TOMLINSON (RCR) after the 21 per cent profit rise.
The shares fell 1.5c to 39c.
Even positive comments by managing director John Linden could not stem the selling.
Mr Linden said the outlook for the engineering services sector remained "extremely strong" with RCR targeting further double-digit sales and profit growth for 2005.
*****
Buyers are rushing in for more IOOF (IFL) after a short breather.
It rose from $4.77 to $5.15 on July 20 after warning that year EBITDA would be 20 to 30 per cent higher than prospectus forecast of $14.6 million, which should lead to a result ranging from $17.5 million to $19 million.
The stock kept on climbing, to touch a record $5.93 a week later.
It fell to $5.53 on profit-taking, but is building up a head of steam again, with the shares up a further 20c to a new record of $6.03 at one stage yesterday.
Investors love a good growth story and they may think IOOF a good punt as it seems to be on a p/e of only 13 despite the sharp price rise.
*****
They had some trouble with Apostrophe Man at the millionaires' factory.
One of the missives yesterday said "MACQUARIE PROLOGIS TRUST's (ASX:MPR) has announced excellent results ... etc".
Unless the apostrophe was meant to indicate ownership of the ASX code it should not have been there.
The units were unchanged at $1.13.
*****
In the past we have had some fun with FUNTASTIC's (FUN) penchant for boasting about its awards.
There have been plenty.
However, Funtastic is having the last laugh after yesterday's announcement of a 154 per cent (or 162 per cent, take your pick from the press release) rise in net profit in the first half.
We wonder if the result comes under the heading of "big surprise".
The most recent comments about trading we could find were at the annual meeting in April when mamaging director David Hendy told shareholders that 2004 year would be a very strong year and "it is our belief that we will achieve somewhere between 10 per cent to 15 per cent increase in sales and profit for the coming year, that is, without any acquisitions".
That may be so but EPS rose 109 per cent to 2.59c in the first half.
However, the greater part, by far, of Funtastic's earnings are made in the second (Christmas) half - last year it was $1.3 million in the first half and $12.6 million in the second.
Funtastic fell 1c to $2.30 after the announcement, which would be an earnings multiple of less than 10 if the EPS were annualised.
*****
TELSTRA (TLS) remained under the pressure for the third day in a row yesterday.
It fell a further 3c to $4.86 to make a total fall of 16c since the company announced a 20 per cent rise in profit, lifted dividend and announced a special dividend and buyback.
However, the brokers have given the stock the thumbs down.
We read in the weekend paper that Citigroup Smith Barney, Macquarie Equities and Goldman Sachs JBWere have downgraded Telstra from a buy/outperform to hold/neutral rating, while UBS retained its neutral rating but shaved its price target.
ABN AMRO's hold recommendation is under review.
It's interesting how the market follows brokers' recommendations some of the time and ignores it other times.
WESFARMERS (WES) was another stock the subject of an indifferent press from the brokers.
As we wrote last week, CSFB left its rating of Wesfarmers at "underperform" after the profit, Goldman Sachs JBWere left it a short-term "marketperform" and a long-term "buy", UBS was unchanged at "reduce" and CSFB said the actual result was a "little disappointing".
Yet Wesfarmers shares, after initially falling 28c to $28.47, took off and hit $30.01 three days later.
The stock fell $1.12 to $28.76 yesterday as it traded ex a 92c dividend.
