Around the Traps ... with THE FERRET 07:31, Wednesday, 12 January 2005
Sydney - Wednesday - Jan 12: (RWE Australian Business News) ****************************
Day traders were nursing burnt fingers and muttering dark thoughts about RANGE RESOURCES (RRS) after it tanked 1.7c to 3.8c yesterday.
Two weeks ago the company set the shares running when it announced sulphide occurrence at Forrestania was potentially nickeliferous.
Now, however, preliminary assays have shown the nickel to be very low-grade and not of economic significance.
Actually, the dogs were barking even before the positive December 29 announcement and the shares were up from 2.9c to 3.7c in the three preceding days.
After the announcement the shares moved ahead to 5.1c as turnover exploded to 241 million shares for the day.
The price eventually topped out on January 4 at 6.1c.
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The year is less than two weeks old and EC-ASIA (ECI) has already issued two profit warnings.
On January 5 it said chip prices had fallen across the board and it expected first-half net profit to be "less" than the previous year.
This week it must have decided that this was not enough detail and issued a follow-up guidance revealing profit would be down about 80 per cent.
As they say, "less is more".
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Is there another profit guidance in the works for GUD HOLDINGS (GUD), or have investors simply pointed the bone at the stock?
A month ago CEO Ian Campbell told a Corporatefile open briefing that EBIT would be ahead of last year's result, but below broker consensus forecasts of 9 per cent growth.
It wasn't thrilling news, but not that awful either.
Profit is still (as far as is officially known) going to rise.
However, the shares, which soared from $6.25 a year ago to a record $11.39 on November 29, fell from $10.70 to as low as $8.90 in the two days after Mr Campbell's warning ... and then bounced back to $9.74 in the next two days.
That's looking like a dead cat bounce because the price has been ground down inexorably since then.
Despite the generally stronger market GUD fell 15c on Monday and a further 49c to as low as $8.57 yesterday.
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Following our item yesterday on the words companies like to bandy about in their announcements, Bill on the email writes that one important one we missed was the frequently quoted "exciting".
As in new mining strikes.
It's when they start putting "very" or "extremely" ahead of it that things become complicated.
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It's depressing how often good news is preceded by positive share price moves in the market.
We noticed yesterday that had happened in ADMIRALTY RESOURCES (ADY), which more than doubled from 2.9c to 5.9c in four days in early December on hugely increased turnover.
The price later went on to peak at 9.9c (December 21) after the company issued an evaluation of the potential its Salar Del Ricon brine deposit in Argentina as a source of lithium, potash, boron and other minerals.
When those early buyers cashed in, the price fell to 6.4c but it has been edging up again and yesterday closed up 0.1c to 7.9c.
Now we know these company valuations, particularly mining companies, have to be taken with a pinch of salt (or brine, as it is in this case) but Marc on the email has pointed out the big discrepancy in Admiralty's case.
Consultants prepared three valuations, saying the deposit is worth $1.32 (lower), $1.73 (median) or $2.44 (higher) a share.
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Those poor investors in CREATABLE MEDIA (CLB), who have watched their 20c shares struggle to stay around issue price since listing last September, heard some positive news from the tabletop ad company yesterday.
Creatable confirmed December was a record month for the company with sales of $406,000 and a fill factor of its installed tables at 87 per cent (sounds good, whatever it means).
It saw the shares rise 0.5c to 17.5c.
CEO Scott Walters welcomed the result, saying it reinforced the positive response from major advertisers to the new medium.
A new medium it may be but Creatable doesn't have this promising, but still shaky, new market to itself by any means, as the company's announcements on patent litigation since listing will attest.
This factor didn't seem to get much coverage in the company's prospectus, which may go some way towards explaining the market's cautious approach to the stock.
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