the australian

Nylex (NLX) 13.5c
NYLEX has long been viewed as a turnaround prospect, but the plastics goods maker is fast running out of friends, except perhaps for major investor Kerry Stokes.
Criterion would have to agree that the only key factor in Nylex's favour is that the stock's cheap, but then again so are those clothes pegs which disintegrate after one outing.
Perhaps that's being a tad cruel. Nylex also has a revered suite of consumer brand names, including Esky, and a recovery strategy based on water conservation products.
Balanced against that, Nylex derives about 25 per cent of its earnings from the troubled automotive industry, providing fuel tanks, car trimmings and the like to local manufacturers.
Add to the equation import competition, a high dollar and the soaring prices of oil-related input costs and it's not a pretty picture.
To survive, Nylex plans to move to the importer-distributor model by which its products are made in the Asia-Pacific. This week saw the closure of its Melbourne industrial products facility, at a cost of 50 jobs.
The closure is sad but hardly surprising (it's being repeated across the country) and the $8 million cost (mainly redundancy payments) is included in a previous writedown.
Nylex reports its half-year numbers on February 27 but has already warned of a poor result.
Criterion suspects we won't see an operational recovery at Nylex within a typical investor's time frame (which is about 10 minutes).
The much spouted water strategy is -- in Citigroup's words -- wearing thin. But the stock holds appeal given the potential for a shake-out of the consumer goods/homewares sector.
Thanks to the $115 million sale of the AH Plant hire business, Nylex can't be accused of being overgeared.
Nylex has an acquisition kitty of $60 million for two specific, yet undisclosed, targets but could well be in the sights of someone else.
On Citigroup estimates, Nylex will post a full-year result of around $10 million, rising to $16.8 million by 2006-07. These figures are adjusted for the AH Plant divestment.
Just for fun we'll bet on an industry shake-out and rate Nylex a SPECULATIVE BUY. But don't hang around for a dividend.
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The Australian accepts no responsibility for stock recommendations. Readers should contact a licensed financial adviser. The author does not hold shares in the above companies.

NYLEX
NLX closed 0.5c lower at 13c
Tipped as a SPECULATIVE BUY on Wednesday at 13.5c
NYLEX has a revered suite of brand names and derives about 25 per cent of its earnings from the automotive industry. Add to the equation import competition, a high dollar and the soaring prices of oil-related input costs and it's not a pretty picture. Nylex reports its half-year numbers on February 27 but has already warned of a poor result. Criterion suspects we won't see an operational recovery at Nylex within a typical investor's time frame. Just for fun we'll bet on an industry shake-out and rate Nylex a SPECULATIVE BUY. But don't hang
around for a dividend.