KEY POINTS:
Although it raised the ire of environmentalists (what doesn't these days) the release of 13,000 red balloons was a spectacular way to celebrate the 25th anniversary of The Warehouse.
The launch on Tuesday kicked off a month of celebrations which will end with the beginning of the sale process for the company when the Commerce Commission rules on who is allowed to buy it. Then hopefully we'll see some fireworks.
Meanwhile, The Warehouse shares have floated back to down to Earth in the past few weeks. They dropped 4c yesterday to close at $6.75.
Expectations of a third bidder have been deflated somewhat by news out of Australia that Tesco is backing off a bid for Coles. Logic would suggest that if Tesco is not interested in Coles then it is also likely to ditch plans for a tilt at The Warehouse.
Thai Excursion
In the wake of its decision to shift its laundry production plant to Thailand, Fisher & Paykel Appliances gets a fresh assessment from Goldman Sachs JBWere manufacturing analyst Rodney Deacon.
He estimates the net impact of the move is a 17c a share rise in value. But that is offset by a 2c fall due to latest currency forecasts and an 8c drop due to changing assumptions about key markets and costs. Deacon is picking weaker and more distant rebounds in the US market and that steel prices will be stronger for longer than expected. So his latest valuation is up 7c per share at $4.32.
The initial costs linked to the move, up to $38 million, are likely to be absorbed in the 2008 year so do not have a significant effect on the discounted cash flow valuation (which factors in long-term earnings expectations).
But those costs do contribute to the downward revision of earnings for the 2008 and 2009 year.
Deacon forecasts net profit of $52.4 million next year and $91.6 million for 2009 - down by 18 per cent and 19 per cent respectively.
F&P Appliances will continue to deliver earnings growth, he writes.
There are still macro economic headwinds which could see the share price trade sideways or drift down in the short term but the stock looks attractive on a long-term view. For that reason he retains his market perform/buy recommendation.
Someone has liked the look of the stock in past. It spiked 5 per cent in the three days to May 7. Last Thursday it traded particularly heavily.
As has been mentioned in this column before, F&P Appliances starts looking like an attractive acquisition to the big Chinese and US whiteware manufacturers every time its share price dips. The shares closed down 1c at $3.67 yesterday.
Wheelistic Valuation
The hype since Fisher Funds bought in to fledgling manufacturer Sealegs has helped push that company's market cap close to the $60 million mark.
That's a hefty valuation for a company yet to make a profit and still so small that every sale it makes warrants a market announcement.
Small investors should seriously consider the risk attached to this investment before joining the party.
To put it in perspective, a company like Restaurant Brands has a market cap of just $90 million. OK, the fast food company is desperate and dateless right now - but it still generates $40 million in ebitda. Sealegs' total revenue is only about $5 million.
Sealegs shares have risen about 60 per cent since Fisher announced it was taking a stake on April 13. And the high-profile fund manager was still buying this week, lifting its stake from 6.92 per cent to 8.13 per cent.
That fits with typical Fisher Funds strategy - it likes to hold stakes of 10 per cent in its investments which give it a strategic foothold in the event of a takeover bid and enough clout to hold sway with management.
But the Fisher stake will be just a small part of a New Zealand equities portfolio which includes well-established companies such as Mainfreight and Pumpkin Patch.
Sealegs shares closed up 5c yesterday at 94c.
Show And Tell
Macquarie Bank's Australian Conference in Sydney last week was a chance for more about 100 listed companies to talk themselves up in front of about 900 brokers and analysts from the regions biggest institutional investors. A Big Day Out for brokers.
New Zealand companies making presentations included Infratil, Pumpkin Patch and Auckland International Airport. All three managed to impress the tough Aussie crowd. All three have also experienced strong demand on the market since presenting at the conference, which ran from May 2.
Infratil in particular attracted a lot of attention. It has tended to be below the radar of many institutions across the Tasman. Given that global warming and clean energy were hot topics at the conference it is not surprising its controlling stake in Trustpower captured investor attention. Infratil shares are up 20c since May 2 and closed back 5c at $6.20 yesterday.
Shares in Pumpkin Patch - which impressed with its outlook for expansion in the US and Britain - rose 16c last week. They've since eased back and closed at $4.33 yesterday.
Auckland Airport's share price has been the centre of much speculation on news that Macquarie tried to buy shares off market last week. But the company is also understood to have presented well. Airport shares closed at $2.70 yesterday
Rakon Upgrade
Rakon has been given an earnings and valuation upgrade by Jason Familton at First NZ Capital.
The tech stock delivers its full year result on Tuesday and Familton is picking it will come at the upper end of expectations. His estimate: a net profit of $11.6 million (the current consensus is between $7 million and $11.6 million). That figure would give it a $1.42 increase on the 2006 full year and go some way to justifying its strong share price run in the past 12 months.
Familton also tips that the company is likely provide some update on the potential for a joint venture or greenfield production site in either China or Taiwan.
He lifts his valuation on the stock to $4.81 from $4.02 and his 12-month price target rises to $5.50 from $4.58
Rakon shares are up 30 per cent since January 1. They closed at $4.78 yesterday. Familton has moved his recommendation from neutral to outperform.
Xeroing in on the year's first float
The first NZX float for this year is good to go but it won't be a big one (and it has nothing to do with coal mines).
It is understood that the prospectus for software company Xero will be signed off later today and details of the IPO shouldn't be far off.
Xero will look to raise somewhere between $10 million and $20 million. The lead broker will be First NZ Capital.
Investors will be backing the talents of founder Rod Drury, a man with an excellent track-record in the software sector.
Last year he sold his email storage company AfterMail to US software maker Quest for more than $60 million.
With Xero he aims to build a web-based accounting software service that becomes one of the big players in the international market.
There is already a good buzz about the product, which is yet to get a fully fledged roll-out - a select group of about 100 customers is already using it.
Those behind the float seem focused on ensuring they get the right sort of shareholders on board. While not quite a start-up, Xero is a higher-risk, higher-growth type proposition. The company is in the early phases of development and the float will be almost like a public venture capital round.
It seems a little sad that it has taken until mid-May to get a new listing on the NZX but industry insiders remain optimistic and there is talk of up to eight floats by the end of the year.
