csl p/e Real smart basing your estimates on an unreflective EPS...

csl p/e Real smart basing your estimates on an unreflective EPS figure for a selected BAD 6 month period and then simply doubling it!!! Let me guess you have never found ratios at all helpful in estimating a likely equity value? NOT SUPRISING WTH THE SIMPLISTIC WAY YOU CHOOSE TO APPLY THEM!!!

That EPS came about as a result of short lived negative factors that will be shortly overcome in my honest opinion. Hence, taking my beliefs would it not be better (rather than your "hey I'm just coming to grasps with the use of a calculator" the PE is 27.3 method!) To perhaps take a 12 month or even 18 month average on EPS which will effectively serve to iron out fluctuations in the results. Approx 102 EPS on an 18 month basis rendering a PE of 13.38 ($13.65 closing price)

Now that's pretty damn cheap by my reckoning when you take into account that despite the markets reluctancy to recognise the significant outlays on R+D, CSL are infact a GROWTH stock.

A billion dollar investment to move into the plasma industry has been completely missed by the market. It persists in valuing CSL at pre 1999 levels in the belief "it's a blue chip stock at the end of it's cycle". A 50 million dollar outlay on R+D for the 6 month period ($90 mill last) is hardly end of cycle behaviour. If you take into account their revenue figures this is a very aggressive R+D/growth campaign.

The reason CSL are at these bargain prices is as always the All Ordinary market takes a "hey thats a PE of 27 Dinosaur stock!! SELL SELL".

Take into account these factors before you make the same mistake:

1) CSL heavily invested into an industry that grew by 5% instead of 20% forecast because of unforseen factors. The short term results are of course going to disappoint. The long term ones will not. It's kind of like buying a vintage wine and two days later going "hey it's worth the same price, let's multiple the earnings for the short term period and wonder why they look so bad?"


2)CSL WROTE OFF ALL R+D- which has been proved to be incorrect accounting treatment on the back of recent announcements. Perhaps you can pull out your calculator and add back 140 mill to EPS, and then expense it over the likely realisable value of the investment.

3)CSL have made moves to further expand exposure to the Plasma market, showing their continued confidence in a recovery in Plasma prices. To quote my simpliton example above "let's buy more cheap wine and sell it later to the 27 P/E ratio fools"

4)CSL are at all time lows.

The cheapier CSL get the less confidence I have in the ASX as a market altogether. It appears to be an assembly of Uninformed investors led by the likes of Macquarie Bank and regulated by ASIC? Why not just put all your money into a stolen bag and conduct a raffle.

P.S Thanks for selling! I'll sell it back to you at $28-$30 levels end of 2004.