The results were not as good as many shareholders (including me) would have expected or hoped for but even a C-pus is a good result when market sentiment was primed for an D or an E. The initial positive market reaction gives me hope that the the price will recover from here.
For me, the positives were not so much the financial results but the change in attitude of senior management. Finally, finally, they have admitted that the overseas acquisitions were a mistake that they need to rectify. The concentration on the Australian assets is what is needed and the reduction on capital expenditure is also a good thing. If they concentrate on capital expenditure that will improve efficiencies then that is a good thing. By the sounds of the CEO's presentation and the Q&A, there are some operational practices that are just silly and should be quickly fixed.
"As for them flagging a sale of the European assets.."
What gives me greater confidence is that they have finally conceded that the French assets need to go. The competency of the Board and Senior management is certainly questionable but surely even they were not so incompetent that they haven't already analysed all options to death. So the appointment of Goldman Sachs to me can only mean that they have an "indicative" offer either on or close to being on the table and that is what Goldman Sachs will be looking at. The statement that there is no certainty that a transaction will eventuate is typical takeover talk. Yes the Sante results would not encourage a great sale price but no one is going to price a takeover on the results of one half so i don't know that that would have been the reason for the rapid change in sentiment.
So, to the disappointing price action. Have no clue as to why the dramatic price fall except that the entire market has been on a real wobble. However, the cynic in me thinks that a takeover offer at say $60 a share looks a lot more attractive if the shares are trading at $34 rather than $40.
Should be an interesting week coming up!
RHC Price at posting:
$34.40 Sentiment: Hold Disclosure: Held
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