Around the Traps ... with THE FERRET 07:46, Friday, 3 September 2004
Sydney - Friday - September 3: (RWE) ************************************
CSL announced a great result for the year the other day, with net profit up 212 per cent to $219.6 million.
And things are looking good.
The company says the plasma therapeutics industry is rationalising, with the market moving to correct the oversupply situation.
There is evidence prices in the US are beginning to move towards economically sustainable levels.
The global structural change, coupled with CSL's solid progress with integrating ZLB Behring, has strengthened the company's confidence in its strategic direction.
"However these positive signs must be tempered as our 2003-2004 results include just three months of the combined ZLB Behring operations," the company says.
"At this stage we remain comfortable with the upper end of our previous guidance for 2004-2005 which we provided to the market in December 2003, which was net profit after tax in the region of $250 to $270 million subject to currency fluctuations and material price movements for our core plasma products."
The market has got pretty excited about all this and CSL, which was $24.45 before the profit announcement, has not stopped climbing.
It hit $27.35 yesterday, a rise of $1.32.
In the year under review CSL's fully diuted EPS was 123c.
This means the stock is on a p/e ratio of more than 22.
If you take the higher figure of $270 million profit expected this year, EPS will be about 150c this year, putting the stock of a future p/e of 18, which is higher than market average.
Still, that's not like the bad old days when CSL was nudging $100 and the p/e was nudging three figures.
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BIG KEV'S (BKV) listed on the ASX with a lot of hope and a lot of noise but for investors it's all been a bit of a waste of time and a waste of money.
The latest sad missive from the company came yesterday when the company said that following an article in the Brisbane morning paper it felt beholden to let the whole market know that in the article chairman Kevin McQuay had (after the latest loss of $1.24 million in the past year) conceded the company could not continue in its current state and that options were being examined for the future.
"I cannot say I am happy, it would be silly of me to say that," Mr McQuay said.
"We are certainly looking at some drastic measures and these will be implemented in the near future and I think shareholders will be happy with these decisions."
One possible move would be for Mr McQuay to relinquish control, although no decision had been made for his future with the business.
Mr McQuay also admitted the performance of the company's retail outlet at the Logan Hyperdome was below expectation.
"It will remain open but there are no plans to open any more," he said.
It was only last February that the company was saying that at least four new "Big Kev One Stop Cleaning Shops" would be operational by June.
Although some might think the latest news could spark the final wash-up for the company, the market indicated otherwise with a 0.2c rise in the shares to 4.8c.
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One of the day's biggest falls may have also been registered on the day's lowest turnover yesterday.
MIDWARE (MIW) plunged 22.5 per cent or 0.9c to 3.1c.
Turnover was 163 shares, about $5 worth.
The selloff followed news Midware was to buy New Loan Australia for $974,000 in instalments over 10 months.
New Loan is in the non-bank residential lending products business and has over $300 million in funds under management.
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Every time you think ORICA's (ORI) remarkable run has come to an end it puts on a new spurt.
Even a claim for $95 million by the Tax Office could not dampen market enthusiasm for the stock this week.
Orica yesterday rose a further 31c to a record $16.96 before closing at $16.86.
A month ago the shares were $15.43.
The company balances on September 30.
Broker Shaw Stockbroking this week labelled the stock as a "buy" at $16.20 and said it was an "outperform" for the long term.
The broker says Orica has sold surplus land (194 ha) in Melbourne for $35 million, resulting in an estimated profit after tax of $28 million, before finalisation of provisions for environmental clean-ups.
This will be included as a significant item in the full-year result, which is usually released in early November.
Orica has also received an amended assessment of around $95 million, related to the profit on the sale of its pharmaceutical business to Zeneca in 1998, which the company will vigorously contest.
Shaw says that while this equates to 34c a share it would, if successful, be treated as a significant item, "bearing in mind that these cases can drag on for many years".
Earlier this month Orica settled a dispute with the ATO stemming back to 1990 resulting in cash refund of $45 million, resulting in a net profit impact for 2004 of $36 million, to be treated as a significant item.
"We would regard these as distraction from the ongoing operational improvement and growth programs with Orica, with any subsequent price weakness a 'buy' opportunity," the broker says.
