KEY POINTS:
Woolworths chief Michael Luscombe and chief financial officer Tom Pockett struggled valiantly to stay on message as they met the New Zealand press this week.
The Australian retailing giant has not made up its mind whether to bid for The Warehouse. Woolworths' application to the Commerce Commission was a preliminary step along the road to making a full bid.
The market has already got ahead of itself by pushing the share price to more than $7.20.
"There is a lot of hype in the price," Luscombe said. "Fundamental value of around $4, most brokers are around $4.50, and anything above this is pure speculation."
But in the middle of a conversation about potential cost savings, Tom Pockett perhaps revealed the retail giant's true resolve when he said: "We have never put out numbers on synergies and won't - even after we make the acquisition."
The embarrassed CFO quickly corrected himself, but with a less than convincing. "If we make the acquisition." The Warehouse shares closed last night at $7.26.
Fletcher Target
Fletcher Building is emerging as something of a conundrum for investors. Half-year earnings due out in the middle of next month seem straightforward. Despite perennial fears that the company is set to suffer with a cyclical slowdown, the consensus remains that it is in a good state. Sure, the residential property market is easing, as building consents figures for November this week showed. But non-residential demand remains robust.
There are big questions about chief executive Jonathan Ling: What will he buy, when will he buy it, will he buy well?
These were highlighted this week when talk emerged that Aussie rival CSR was on the radar of private equity. The story - unconvincingly dismissed by CSR - was that private equity would buy the firm, sell the building products and aluminium business and leave CSR focused on its sugar and ethanol business. The most promising buyer for most of these unwanted assets was Fletcher Building.
Despite less-than-optimal trading conditions, Fletcher Building is throwing off bundles of cash. As time passes the risks of making a poor buy grow, especially for a new chief executive looking to make his mark.
If assets such as CSR - with a market value of A$3.35 billion ($3.77 billion) - are on the radar then its earnings one year out are far removed from the vagaries of the building cycle. Estimates of value suffer a similar fate. Fletcher's yesterday closed at $10.55, down from their December 29 high of $11.20.
Excited Kids
There's been some more excitement at listed early childhood education provider KidiCorp in the past few weeks.
The share price has risen from just below 18c near the start of last week to close at 20c yesterday.
On a couple of days, more than 200,000 shares have changed hands.
The buying interest had one analyst scratching her head for reasons.
But Frank Jasper, a senior portfolio manager at Fisher Funds Management, which has nearly 19 per cent of KidiCorp, had one theory.
He said ABC Learning - Australasia's biggest provider of early childhood education - had bought some New Zealand centres in mid-December.
That may have led some people to take a speculative interest in Kidicorp, thinking it might become the subject of ABC Learning interest.
Last August, an appraisal by Ferrier Hodgson - issued after a 19c a share offer for KidiCorp by the Mitchell Investment Trust - put a value of 21c to 28c on the stock.
In November, KidiCorp reported a half-year unaudited trading profit of $360,000, just under a projection contained in the Ferrier Hodgson report to shareholders.
The company said then that developments planned or in progress would ensure it exceeded its 15 per cent growth target for expanding existing facilities or developing new centres this financial year.
It also expected implementation of the Government's 20 free hours of early childhood education scheme for 3 to 4-year-olds would increase demand for quality services.
As the Herald reported yesterday, there's concern that many centres have little or no capacity to meet additional demand.