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Diesel Brothers and US growth, page-28

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vic_wattle

3,484 Posts.

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11/10/20

15:30

Post #: 48007304
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Originally posted by madamswer ↑

So a short-term cyclical variation in an exchange rate had no bearing on ARB shareholder value over the past 6 months?

It had no bearing on EBIT margins?

I know the answer but why don't you check for yourself instead of calling on others to provide the answers for you?

To find that information - it's all in the company's audited financial statements - would take less time than it took for you to write that post to me.

(Hint: Be sure to adjust for the adoption of AASB16 in the FY2020 interim and final accounts, as well as the Jobkeeper payment received by the company in the June half.)

"It had no bearing on the ~200% share price rise since the march lows?"

You can ruminate and speculate about why share prices do what they do over short-term time frames until the cows come home if that's what you think will inform the way to create long-term wealth by investing in the share market.

But it's really a fool's errand based on my long-made observations (as I've mentioned to you on umpteen occasions... yet for some reason that doesn't stop you continuing to pose these sorts of inane and irrelevant macro-economic questions to me.)

For example, take different time frames:

1 Jan to today:

The A$:US$ exchange rate is today 4% higher than it was at the beginning of the year.
ARB's share price is 70% higher than on 1 January.

Going back 1 year:
A$:US$ is today is 7% higher than same time last year
ARB share price is 78% higher

Going back 2 years:
A$:US$ is today is 2% higher than 2 years ago
ARB share price is 86% higher

Demonstrably, zero correlation.

PS. I note that you use the concept of "shareholder value" inter-changeably with "share price" over the 6 month period you referenced. That linkage is certainly not one that I'd even dream of making.

Clearly - over short-term time frames, such as 6 months - there is virtually zero chance of changes in market value ever accurately reflecting changes in shareholder value. Because if that was the case, the theoretical essence of "value investing" - which has been proven to create untold wealth for its adherents since equity markets existed - would be de-bunked.

.

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"Demonstrably, zero correlation."

Yet ARB's managers themselves have consistently highlighted the effect the AUDTHB has on profit margins.

4 Feb 2020 market update:

"Based on unaudited management accounts, ARB expects to report a reduction in net profit after tax of around 7.4%. As previously indicated, the result reflects the significant strengthening of the Thai baht which has caused an increase in the Company’s costs on a range of products manufactured in ARB’s Thai factories."

Yes take your point on shareholder value not linked to short term price fluctuations. Was a foolish connection by myself. Thank you for pointing that out.

ARB Price at posting: $32.21 Sentiment: None Disclosure: Held
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Diesel Brothers and US growth, page-28

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