It looks like the private equity sharks may still be circling some juicy NZX-listed assets. The latest companies to attract takeover speculation are drinks company Charlie's and Tourism Holdings.
In both cases, talk has been driven by private equity funds increasing their stakes.
Tourism Holdings shares have risen solidly in the past few weeks despite a grim short-term outlook for the sector. They closed at $1.80 yesterday and saw a particularly big spike in turnover on August 21.
Talk has centred on plans for two or more key stakeholders to partner up and take the company private.
There is some logic for the move. The company owns a diverse range of tourism sector assets throughout Australasia. High-profile attractions such as Kelly Tarlton's aquarium and the Waitomo Caves don't necessarily sit easily with its vehicle rental and coach business.
There is a widely held market view that the group failed to deliver during the tourism boom of the past five years and now faces a difficult period as tourist numbers flatten out. To that end, the value of THL's parts may be greater than its value on market.
A group of US investment funds led by Drake Associates has upped its stake several times this year, most recently on July 21 to go to 10.64 per cent.
France's AXA (and AXA Asia Pacific) has also increased its stake this year and holds 12.43 per cent.
Savvy investors Selwyn and David Cushing also hold a sizeable stake.
Putting the squeeze on
Auckland-based Collins Asset management lifted its holding in Charlie's to 19.9 per cent this week, an inherently suspicious number for market watchers.
Twenty per cent is the threshold at which a company intent on making a takeover bid may no longer accumulate shares on market. So it is typically the springboard from which bids are launched.
But Collins denies the takeover speculation, saying it is taking a long-term holding.
Coincidently, international orange juice futures hit a record high this week as a hurricane threatened to flatten crops in Florida.
Charlie's founder, Stefan Lepionka, knows that part of the business well, having worked briefly as a juice trader during his OE in London. Perhaps that is why Charlie's has plenty of local orange suppliers and doesn't rely on imported concentrates.
Something else Lepionka is familiar with is selling juice companies for a premium, having sold his first successful brand, Stefan's, to Frucor in 1994.
Age of resin
This column has devoted plenty of space to Nuplex this year. The resin manufacturer has also attracted its fair share of attention from analysts after generating market returns of 45 per cent for the year so far.
But the dramatic scale of its expansion still came as a surprise when it reported revenue of $1.3 billion for the year to June 30.
That's starting to get into the big league for a New Zealand company - more than the total sales revenue for the kiwifruit industry and more than double that of the wine industry.
Nuplex has, in fact, doubled its revenue since 2004 with some sizeable European acquisitions. Those are now being restructured to be more efficient and more environmentally friendly.
Nuplex's total market cap is a more modest $500 million but if it can bed down those acquisitions successfully and more of that revenue turns into profit it may not remain mid-sized for long.
Nuplex shares closed at $6.38 yesterday.
Long-term prospect
Auckland International Airport remains a good long-term investment, says Peter Sigley at Goldman Sachs JBWere.
Despite the airport facing a short-term drop in tourist numbers and an acrimonious battle over landing fees with airlines (which is raising a fresh spectre of regulatory risk), Sigley gives the stock a target valuation of $2.37 in his post-result analysis.
AIA shares closed at $1.93 yesterday. The company's profit was down slightly this year at $103 million but came in above Goldman Sachs' forecast of $101 million.
Its capital expenditure guidance for 2007/2008 was about $25 million higher than expected, at $157 million.
But capital expenditure is forecast to fall to between $50 million and $70 million (not counting property development) from the 2009 year.
Depending on demand, the airport is expected to enjoy something of a capital expenditure holiday for three to five years after 2009, Sigley writes.
"In the short term, it is difficult to identify catalysts to drive share-price performance," he concludes. "However, long-term we remain positive on AIA's market position, exposure to secular growth in tourism arrivals and pricing power, albeit with an associated heightening of regulatory risk."
The review of landing charges - attracting plenty of media coverage in the past few weeks - is a double-edged sword for the airport.
Under regulatory rules, the airport has the final say on the level of fees it charges airlines, even though it must go through a series of hoops before making any changes. So aeronautical revenue should be about to rise.
But Air New Zealand and the various airline associations are vociferously lobbying the Government (and the media) for a change to the regulatory regime.
So once again, the Government is the wild card. After the Vector and Telecom debacles though, there may be less appetite in Wellington for creating another high-profile meltdown on the beleaguered NZX.
Finger-licking bad
The Restaurant Brands share price was well and truly fried yesterday after the company announced that half-year profits could be down by nearly 60 per cent on the same period last year.
There is no good way to break that kind of news to the market, but the lame press release that popped up after the close of trading on Wednesday was a classic example of a bad way.
Coming out late on a day already chocker with market announcements, it tried to "wow" readers with news in the first paragraph of a 1.2 per cent sales rise. Then it moved on to rising costs, closing margins and last, but far from least, the big profit drop.
Half-hearted attempts to bury bad news just make it look that much worse. That kind of PR spin went out with skinny jeans and big hair in the 80s. Oh yeah, those things are back in vogue too.
Restaurant Brands shares closed down 24c at 95c yesterday.
Port tidy-up cuts profit forecast
The need to upgrade ageing infrastructure give the Lyttelton Port company a less than spectacular short-term outlook, says First NZ Capital's Rob Bode after the company issued its annual result this week.
Bode downgraded the stock to "underperform" largely because increased maintenance costs will depress earnings and dividends for the next couple of years.
With its results announcement - a net profit of $10.1 million - the company said it would spend $5.5 million a year on maintenance for the next two years.
The effect of that was a profit forecast for next year of $8 million. A new dividend policy was also announced, taking the increased expenditure into account.
Consequently, Bode has downgraded his dividend forecasts for next year and 2008 by about 50 per cent.
Another factor weighing on the stock is the rationalisation by shipping giant Maersk, which is expected to announce its plans for South Island services in October.
This creates the risk of further downside, Bode says, although he notes that the company is confident it can keep the Maersk business.
Maersk doesn't have a huge presence at Lyttelton and may not want to quit it completely for fear of handing business, particularly on the import side, to competitors, he says.
The lack of immediate upside for the stock was highlighted earlier this year when the directors recommended accepting the Christchurch City's bid at $2.20, Bode said.
He gives the share an immediate valuation of $2.01 - down by 8c - and a 12-month target of $2.12.
The shares closed down 2c at $2.05 last night.
<i>Stock takes:</i> Takeover talk
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