KEY POINTS:
News of F&P Appliances' plans to move more of its manufacturing overseas was sad for the company's workers and anyone who values New Zealand's remaining manufacturing jobs.
The sharemarket, however, loved it.
The company's shares rose 34c on the day to $2.54 but have come back a bit since, closing 4c lower yesterday at $2.48.
Goldman Sachs JBWere and Aspect Huntley analysts say the cost of the plan will impact on the firm's reported 2009 net profit and to lesser extent the 2010 result, but will result in significant long-term cost savings.
Goldman's Adrian Allbon expects a reported a full-year net profit of $29.1 million in 2009, down 60 per cent on his previous estimate while Aspect Huntley's Nachiket Moghe is picking a figure of $42 million, a downward adjustment of 48 per cent.
Adjusted for the cost of the relocation plan, Allbon puts next year's net profit at $69.6 million while Moghe picks $77 million. Both analysts retain their estimates for this year's reported bottom line at $50.7 million and $65.5 million respectively.
At current levels, compared with his $3.05 estimate of fair value for the company given the plan, Moghe rates the stock "accumulate".
Despite his more modest estimates of F&P's reported and adjusted net profit next year, Allbon values the stock on a discounted cash flow basis and allowing for all of the cost savings the company makes to be "competed away", at $3.10 a share and rates it a "buy".
