Vertex' profit forecast fails to impress Masthead

Takeover target Vertex has lifted its full-year profit forecast by up to 10 per cent. But control-seeker Masthead Equities has declared itself underwhelmed and is disinclined to raise its offer.

In a letter to shareholders, issued to the New Zealand Stock Exchange yesterday, the plastics packaging company's chairman Tony Frankham said the unaudited net profit after tax for the year to March 31 would be in the range of $5.3 million to $5.4 million after all abnormal and one-off costs.

This was 6 to 8 per cent above last year's profit, and 8 to 10 per cent above the profit forecast provided to independent valuer Grant Samuel.

The higher forecast was due to good summer demand for food packaging and careful attention to operating efficiencies to counter the effects of soaring increases in raw materials and the strong kiwi dollar.

Masthead, the investment arm of Christchurch's Stewart family, has a $1.90 a share offer on the table for the 80 per cent of the company it does not already own.

The offer has been knocked back by Frankham, and independent valuer Grant Samuel says the shares are worth $2.14 to $2.39 each. The shares closed up 2c at $1.89 yesterday.

Masthead's Mark Stewart, one of two Masthead directors on the Vertex board, said the increased profit forecast was "unlikely to influence my position".

"We have been directors of the company, we get monthly updates on where the company has been trading, so it's not a surprise to us. We don't feel inclined at this point to up our price."

But First NZ Capital analyst Dwane Clark said the profit numbers were "definitely" ahead of what the market was expecting.

"The company is performing a lot better than people think and the picture Masthead has painted - of a company in disarray and performing poorly."

Stewart noted that a mystery suitor for Vertex - which the market believes to have been Australia packaging heavyweight Visy - had recently walked away after due diligence.

"Maybe they agreed with us that the Grant Samuel valuation was not correct. If they couldn't stump up with an offer even above our $1.90, let alone Grant Samuel's [valuation] they probably had a similar assessment to ours."

Masthead this week further extended its offer to May 10.