Companies
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David Jones: Non retailers distracted by a takeover?
Roger Montgomery
September 21, 2012
This week David Jones announced their 2012 results and reported a 40% decline in profit. The only positive was that 4th quarter sales fell by just 1% on pcp whereas 1st quarter sales had fallen 11% on pcp. Actually there was another positive; the 35% decline in earnings per share was inline with expectations.
Separately the company also provided an update to its property strategy. Investors should understand that anything DJS does with its properties is simply a takeover defence against private equity (or Premier Investments perhaps) pulling off the same stunt that was done on Myer. That is; launch a takeover, succeed, sell off the property portfolio and get the business cheaper. if DJS shows it is proactive in this area it becomes much harder from Private Equity to argue that they are “adding value”.
DJS intrinsic value (see Fig. 1) has now not increased since 2004 and according to Skaffold.com DJS’s intrinsic value is not expected to rise at all over the next two years.
by Roger Montgomery Posted in Companies, Insightful Insights, Intrinsic Value, Takeovers.
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MEDIA
What are David Buckland’s insights into the future of Australian retail?
Roger Montgomery
September 20, 2012
Do Silex Systems (SLX), Condor Blanco Mines (CDB), Codan (CDA), Webjet (WEB), Tasman Resources (TAS), M2 Telecommunications (MTU), Magellan (MPG), Iluka Resources (ILU), Arrium (ARI), TPG (TPM), ASG Group (ASZ), Incitec Pivot (IPL) and Sirius Resources (SIR) and achieve the Montgomery coveted A1 grade? Watch this edition of Sky Business’ Your Money Your Call broadcast 20 September 2012 now to find out, and also learn David’s insights into the issues facing Australian retail. Watch here.
by Roger Montgomery Posted in Companies, TV Appearances.
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If Only They Had Skaffold
Roger Montgomery
September 20, 2012
Notch up another win for investors who use Skaffold. Back in August last year I was asked by a viewer on Sky Business what I thought of MacMahon Holdings (ASX:MAH).You can watch the video here at 5 mins 20 seconds.
When asked the question, I looked at Skaffold.com and noting the very small change in intrinsic value over many years I said “This business is not going to deliver sustainable long-term outperformance”.
Today’s near-40% share price decline, announcement of a cost blowout, a downgrade to previous earnings guidance and the immediate resignation of the CEO Nick Bowen is a blow to those investors who own the shares of MacMahon and do not own Skaffold.
by Roger Montgomery Posted in Companies, Insightful Insights, Investing Education, Skaffold.
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China growth fears (continued)
David Buckland
September 19, 2012
Yesterday’s Australian Financial Review highlighted comments from Mark Williams, Shell’s global downstream director.
“The global economy seems weaker to me than the numbers indicate”, said Mr Williams. “I still expected more suction out of China than we’re getting. I’m just a bit uneasy with what we are seeing in terms of fuel demand and chemical demand”.
by David Buckland Posted in Companies, Insightful Insights.
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MEDIA
What are the ongoing prospects for Queensland Mining?
Roger Montgomery
September 12, 2012
Roger Montgomery discusses the new Qld Government levies on mining, and the likely impact on mining stocks with Ross Greenwood on Radio 2GB. Listen here.
This program was broadcast on 12 September 2012.
by Roger Montgomery Posted in Companies, Insightful Insights, Radio, Value.able.
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WHITEPAPER
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Is it all FUN and Games?
Harley Grosser
September 9, 2012
The following article was contributed by Harley, and gives a very detailed account of Funtastic as a possible turnaround story. If you have the skill to identify them, turnarounds can be very profitable investments, although its not an area of focus for us at Montgomery Investment Management. In 2006, Funtastic fell to a B5 on our quality and performance ratings, and since that time has been outside the range that we would normally consider “investment grade”. However, as Harley points out, Funtastic may enjoy better times ahead if its portfolio of toys appears on enough Christmas shopping lists.
Funtastic is in the business of fun. As a leading toy distributor with domestic and international operations, as well an entertainment arm, Funtastic (ASX:FUN) make money by selling products that make us happy. The question is, would an investment in Funtastic at today’s prices set us up for pleasant future returns or is this one turnaround story that is worth avoiding?
by Harley Grosser Posted in Companies, Insightful Insights, Manufacturing.
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Mining swings from profit to loss quickly and without fear or favour. Its always been this way.
Roger Montgomery
September 6, 2012
You might recall back in December (Dec 8, 2011) with FMG trading at $4.84 (now $2.94), BHP at $37.00 ($31.36 today) and RIO at $66.09 ($50.19 today) we warned
“I now wonder whether we are seeing the bubble slip over the precipice? Falling property prices (10 per cent of the Chinese economy) leads to lower construction activity, leads to declining demand for Australian commodities, leads to falling commodity prices, leads to big drops in margins for a sizeable portion of the [Australian stock] market index…”
Since the start of 2012, commodities have, on average, fallen more than 20%, and in some cases much more. This is a pace of decline matched only by that experienced during the financial crisis of 2008.
At current prices many mining companies will now be making losses. As analysts we question the viability of some companies and Atlas Iron for example, one of the largest Iron Ore producers outside of BHP and RIO, may not be without outside help – should prices remain at or below present levels.
by Roger Montgomery Posted in Companies, Energy / Resources, Insightful Insights.
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GWA – as close to a bond as you can get – pity about the share price
Roger Montgomery
September 3, 2012
Portfolio point: Reporting season is in full swing and there have been some excellent results. We always watch GWA because it’s a company that has the potential to regain its crown but the 2012 results didn’t inspire.
GWA is a leader in the design, manufacture, import and distribution of bathroom & kitchen products, door and access systems, and heating & cooling products. Brand names of these three core building fixtures and fittings divisions include Caroma, Dorf, Fower, Brivis, Dux, Gainsborough and Trilock. Analysis of virtually every financial measure over the past five years has seen GWA demonstrate bond like qualities.
by Roger Montgomery Posted in Companies, Intrinsic Value, Investing Education, Manufacturing.
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MEDIA
Window Shopping
Roger Montgomery
September 1, 2012
In his September 2012 Money Magazine article Roger outlines ongoing declining prospects for JB Hi-Fi (JBH). Read here.
by Roger Montgomery Posted in Companies, Consumer discretionary, On the Internet.
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QAN 2012 RESULTS CONTINUED
Roger Montgomery
September 1, 2012
Last week’s reporting results flop for the flying kangaroo set the social web alight, with a mixture of sentiment from followers of this blog, the general public and the mass media alike. The first shots were fired during my impromptu guest appearance on Bloomberg…
The below follows the tale through social media curation platform Storify.
by Roger Montgomery Posted in Airlines, Companies.
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