NPX - Good result

[LeBOJ]

HALFYR: NPX: HY to 31/12/2003 $15,487m ($9.438m) +64% Div 11.5 cps

Chairman's Report: The Directors are pleased to announce that the Group
recorded a Net Surplus for the six months ending 31 December 2003 of $15.5
million, which was 64% ahead of the result for the same period last year.
With current market conditions expected to continue for the immediate future
the Group now expects a full year result more than 30% higher than the
2002/03 year.

Sales revenue increased by 4% to $329 million ($316m) despite the loss of $4
million revenue as a result of the company selling its interest in Medihold 3
Pty limited. This sale was settled in accordance with the conditions of a
vendor finance agreement between Medihold and Stericorp Pty Limited. The
agreement provides for Stericorp to repay the loan in full by 31 January
2005.

Sales growth in Australia was particularly strong with higher volumes in both
the Specialty Products and Resins segments. Vietnam benefited from new resin
manufacturing capacity commissioned during the period and further growth is
anticipated. Export markets proved difficult with margins impacted by the
strength of the New Zealand and Australian dollars.

EBITDA increased in line with sales by 5% to $37 million ($35.4m) although
the strengthening New Zealand dollar had a negative affect on the translation
of Vietnam profits. While the segment report shows a decline in
contributions in NZ dollar terms, the actual US dollar result was an increase
of 18%.

Associate earnings were up by $0.2 million while depreciation, interest and
goodwill amortisation were in total $1.4 million less than the prior year.
Tax expense increased by $0.7 million while abnormal items reduced by $3.4
million with a gain of $0.5 million following a loss of $2.9m in the same
period last year. Significant abnormal items included a conservative write
down of goodwill purchased on acquisition of an Australian cladding business,
and write back of both an over provided write down on the sale of Medihold 3,
and an adjustment to APS prior period pre acquisition provisions. The Net
Surplus before abnormal items increased by 22% to $15 million ($12.3m).

Directors have declared an interim dividend of 11.5 cents per share, an
increase of 21% on last year and representing 48% of the net surplus before
abnormal items for the last six months. The dividend is fully imputed for
both New Zealand and Australian tax residents and payable on 2 April 2004 on
shares registered at 5pm on 19 March 2004. A supplementary dividend of 2.029
cents per share is payable to non-resident shareholders.

Directors have taken into consideration the strong cash position of the Group
and have decided to suspend the option for shareholders to receive shares as
provided by the Dividend Reinvestment Plan. The full dividend will be paid
in cash.

[skinny]

Yes and a confident outlook:


quote:Statement made by Fred Holland, Chairman, Nuplex Industries Limited

A strong performance by Nuplex's Australian operations played a key part in
lifting unaudited after tax profit by 64% to $15.5 million for the six months
ending 31 December 2003.

Coupled with gains from abnormal items and lower provisions for depreciation,
interest and goodwill amortization, the company lifted earnings per share by
9.4 cents to 25.1 cents.

On the strength of the result the resin, construction materials, specialty
products and environmental services company has declared an interim fully
imputed dividend of 11.5 cents, up 2 cents

This excellent start to the year will provide a solid foundation for the full
year, and the company is forecasting an end of year result more than 30%
above the $20.6 million in the prior year.

The initiatives taken in Australia and Vietnam are delivering sound revenue
and profit growth. The company continues to build a platform outside New
Zealand that will deliver on the bottom line in future years.


Pity the NZ market is in such a negative mood - it should rally by far more than it has so far [xx(][xx(]

[KJ]

I agree skinny-forward PE under 10.Once the market gets over its current doom outlook price should improve greatly-I hope!

Hold NPX-will buy a few more.

[Lawso]

quote: Pity the NZ market is in such a negative mood - it should rally by far more than it has so far

Like so many others that have reported great results lately. Is it due to overseas instos cashing out of the market because of the strong Kiwi$?

I'm very happy with NPX, having bought in '02 at 320, but p-----d off with myself for getting underweight in this excellent stock.

[The P.O.D.]

Yes a great result. Makes up for the dissapointment in CDL.

This has been my first foray into Margin Lending using my existing holdong as security. Doubled my holding at an entry of$4.10 so the dividend increase is nice and the result even better. Any price increase now is efectively doubled.

[skinny]

Could be kiwis cashing out to buy overseas too - I've certainly been guilty of that over the past month but glad NPX was one I didn't part company from !

[Lawso]

Now up to 433 - +13c today. That's more like it!

[lewinsky]

A question to POD. Who did you use for Margin Lending? Looks from my broom cupboard as a smart play. Well done.

And a great result from NPX. The DRP works well here.

[The P.O.D.]

Lewinsky,

I used ASB. The lending rate is 8.15% so with the dividend on NPX I sort of thought it was pretty low risk. I have half the holding in DRP (my initial holding) and the other half in cash div to cover the lending rate. The lending ratio is up to 60% but it's wise to keep a bit back to be safe. You can use your existing holding as initial security. You can use other holdings as well for security.

I was sort of tossing up between WAM and NPX but NPX released a few good forecasts a few months back which swayed me.Fortunately, they don't lend on CDL, as I probably would of done it on them as well....and would of lost a bit. That's been a good lesson to me that you sort of need once in a while to reign in one's confidence.

I was thinking a few months ago that telecom would of been the perfect stock for margin lending.

[kiwi_on_OE]

I wasn't that impressed with the result after I read the detail. Sales not up much and profit inflated by improvement in abnormals. I would prefer them to leave the abnormal/extraordinary items out of their 'advertising'.

Excluding the 1.4m reduction in Depn and Int, the net surplus before Abs only increased by 1m (10%), that's ok, but not great. Presumably they have managed to increase their margins because of buoyant conditions, but will they be able to mantain it during a downturn. I'd like to see them really grow their sales, especially in Vietnam.

Also note that DRP is suspended, so they don't need to retain cash and presumably haven't got any good investment ideas up their sleave.

I've had some for years, and they have done nicely over the last 10 yrs or so (which immediately makes them better than many) but the aren't ever going to set the world on fire.

[Lawso]

It's interesting that, after a bit of a flurry around the halfyear announcement in Feb, posters generally show little interest in this great company. Share price up 18c today to 485, surely a record high. No new news, as far as I know. But someone has noted the 64%1st half improvement and the full-year forecast of earnings 30% higher than for '02-'03. However, only 14,700 have changed hands on a quiet morning.

[Phaedrus]

Nuplex has been in a steady uptrend for about a year now, with the tentative trendline being confirmed in February.
The chart below shows 3 different moving averages and a 10% trailing stop. Together with the trendline these could be used to monitor the trend and provide exit signals. (Not that current price action is near any of them!)

http://home.ripway.com/2003-11/39768/NPX001.gif

[zyreon]

indeed, i noticed the jump in price today also (with delight! disc:own NPX). Maybe people are just realising the value...

or maybe some people were busy over easter doing analysis and placed market orders after having their anticipation to buy build up over the break...

...maybe...

[skinny]

I hold too so hope the rise will keep on going but think there could well be a pullback - the volumes driving it up have been quite small unfortunately.

For what its worth I did a range of NPV estimates for NPX after the release of the 1/2 year statement and came up with valuations in the range of 6.50 to 8 assuming that strong sales would continue this year (as the CEO stated would be the case in the report.) With NZ&Oz failing to slow-down as much as some predicted this looks likely. Big unknown though is what the CAPEX requirements will be going forward -they have hinted at setting up plant in China in the not to distant future. Also unsure what impact the continuing increase in crude prices will have on margins...

[star]

Phaedrus & Skinny, many thanks for your contribution.

ABN Amro's 12 month target price is $4.80. I was trying to buy this stock at 4.60 recently, but the price rose continuously. It seems this stock has reached the full price.

Expansion to china has a lot unkown. China has strong growth economy, but is still a high risk country to opearate a business. I know a lot of gobal giant buinsesses tried to set up plants in China in 1990s, but many of them failed due to difficult relationship with government, poor infrastructure, culture clash, and low skilled labour.

High interest and slow down residential property market also should have impact on NPX.

[Lawso]

Thanks, posters. This is the kind of intelligent discussion that ST should be all about. More of this and less of the garbage, I say.

NPX will find it difficult to maintain its impressive gains of the past 12 months, IMHO, but the p/e is still only about 11 and the yield is OK.

The China venture will be not without risk, and could be expensive in the short term, but management seems to be making a success of the Vietnam factory and of course is doing well in Oz, so they won't be going into China without their eyes open.

I plan to increase my holding as and when (if ever!) funds permit. Or maybe by selling down WHS, which I can't feel great about.

[skinny]

Star - my valuations are probably much higher the ABN ambros as I did it on a DCF basis using data since 1999 to establish a trend growth rate in "owners earnings" as in the Buffet-style calculations. With the amazing growth rate expected for 2003/4 I concede that this really does blow-up the estimates of "fair-value".

Consider this though:

- if the share price goes to 6.50 (my lower estimate) the p/e is still under 15 on a trailing basis and the eps is expected to be higher with the release of the June (?) full year report

- on the US and Aus markets chemical companies typically trade at p/e multiples in the upper teens. With NPX growing into a larger player with a more diversified and stable income stream it could be a matter of time before it gets a higher re-rating too.

[star]

Skinny

I read ABN AMRO's report (dated 20/02/2004) again, the DCF valuation is $5.30 and 12 month target price is $4.80. The valuation used normalised earning per share rather than actual earning per share. Probably their earning forecast is lower than yours.

The weighted average P/E in this sector is 12.6 (Orica 12.6, Symex 14.4, Wattyl 13.0, Nufarm 12.4). With the share price of $4.80, NPX's current P/E is 11.2

Whether the price can reach $6 or not totally depends on the success of future expansion strategy - there is still a lot to prove.

[skinny]

Cheers star, good info on the OZ markets and agree that it still has to proove it can make it outside of Vietnam in Asia if that is where it needs to go. As I said the DCF is heavily dependant on the current years earnings estimate. I just checked my figures and I can get ABNs share price (5.30) if I assume NPAT for 2004 is 150% of the 1st half reported figure (i.e around 23.25 mil). This is quite conservative which means either that ABN are playing it safe (and why not with the slowdown factors you mention) or that capex for 2004 will be significantly higher than I am assuming.

Well at any rate still think there is upside based on the fundamentals !

[winner69]

NPX holding up and ready to have another go at the 500 mark, once over that hurdle anything could happen

NPX was featured in Shares mag in Australia this month as one of the best yield plays of the ASX-listed NZ companies ... as well as good comment

That might result in some buying interest.

Somebody mentioned that NPX is trading at a lower pe than ORI in OZ. ORI report half year on Monday - great result expected and that might help the sector as well.

[skinny]

Winner69 - the ORI results were good but obvioulsy not good enough with the share price falling 4%. A sell off on the news ? In any case do you regard this as ominous for NPX or is it company specific ?

disc: hold NPX and think its undervalued.

[Lawso]

Wot's ORI?

[skinny]

largest chemicals co in Oz

http://au.biz.yahoo.com/p/o/ori.ax.html

Lets hope the fall was also in part due to NPX taking some market share ;)

[winner69]

Back up to 495 ... that 500 getting closer

Skinny - ORI sold one of their 'non core' resins plant to NPX a few years. I think ORI would be a good NPX customer.

ORI doing well then suggests that NPX should be doing well as as no doubt they are major supplier to ORI's paint divisions.

ORI bounced today as well but still on a relatively low PE. NPX is on a lower PE than ORI so room for a re-rating sometime.

As long as Al don't stuff it all up by hiking rates too fast tomorrow.

[Lawso]

NPX hits $5! :D I bought in @ 320, just two years ago this week. :D

[kittydashwood]

Big profits for a big polluter. hope you guys enjoy breathing the foul air NPX creates for your dollar.
Worth getting some to make the AGM with my TV crew.

[clearasmud]

Don't care what it does as long as it continues to make me more money![:p]
Besides they take their responsibilities very seriously.:)

[kittydashwood]

Rubbish! They flout air pollution laws continually. This company won't change it's practices because it's cheaper to pay the fines.

As a shareholder you are partially responsible Mr Mud.

[clearasmud]

Kitty,
Where and how are they polluting the air and why aren't they in court now?

[skinny]

Sorry, I am partially responsible for the move to 5 yesterday.
NPX was too light in my portfolio so I topped up. As posted earlier in this thread my own FA puts the intrinstic value at around $6.50. Even what I regard as a really conservative valuation by Ambros has it at $5.30

A good buy [:p]

[kittydashwood]

Cancer causing vinyl chloride has been found in groundwater beneath Neales Rd site of United Environmental, a subsidiary of Nuplex Industries.

The chemical is also suspected of causing malformations in foetuses.

http://www.nzherald.co.nz/storydisplay.cfm?thesection=news&thesubsection=&storyID=9213

*
Nuplex is fined $55,000 and told to inform staff and shareholders.


In a legal first, a multimillion-dollar company with a string of air pollution convictions has been ordered to confess its sins to shareholders.

Resin manufacturer Nuplex Industries, valued at $208 million on the New Zealand Stock Exchange, has also been fined $55,000 for a fumes leak - a record for a single pollution charge.

The court also ordered Nuplex publish details of the conviction in its next annual report, there was little mention.

http://www.nzherald.co.nz/storydisplay.cfm?thesection=news&thesubsection=&storyID=3250962&reportID=162576

Nuplex Environmental is a wholly owned subsidiary of Nuplex Industries, a multimillion-dollar company with a string of pollution convictions, including a record single pollution fine of $55,000 this year.

Appearing before Judge Frederick McElrea in the Auckland District Court, Nuplex Environmental was convicted and fined $20,000 for the discharge, $9000 for the contravention of an enforcement order, and ordered to pay the Auckland Regional Council's costs of $1021.

Nuplex Environmental has two previous convictions.
licence to operate the East Tamaki dangerous goods facility was cancelled last month after an independent assessor found there was "inadequate provision for fire protection/safety" at the site, and there was a risk of a major explosion.

Waste accepted by Nuplex Environmental includes used oil, paint thinners, cleaning liquids and other solvents, acids and cyanides.

The waste is stored in drums, processed in open tanks and eventually recycled or sent to landfill.

But the company also takes sludge and cesspit waste and has been embroiled in legal action since it failed in 1999 to gain permission to discharge gases from waste treatment ponds.

Consents were only partly granted and the company was ordered to stop all discharge of contaminants into the air in the meantime.
Covering the cesspits would come in at about 3 mIllion.
http://www.nzherald.co.nz/storydisplay.cfm?thesection=news&thesubsection=&storyID=3513878&reportID=162576

Basically the attitude is keep flouting ARC regulations because the fines are pathetic.
Don't get me wrong technically and fundamentally this company would be a great in any portfolio, but the current managements attitude to pollution needs serious improvement.
How about developing cleaner processes, new recycled products, better disposal systems.

Eventually this company will be embarrassed if it's facilities fail regulations and productivity is poleaxed by court closures. If they can'ty clean up their act someone else will have to do it for them. Or at least that's the buzz from the hive...

[Lawso]

This is all very high-minded of you, Kitty. But I presume you wouldn't have any qualms about nibbling at the goodies that might fall into your bowl from the exploiters and misery-makers like SKC and the booze companies.

PS. NPX up again this morning :D

[kittydashwood]

Hey you dont have to gamble but you do have to breathe.

[Nimble]

Quite like this company, already own a few, keen to buy some more. Fundamentals are attractive, most brokers seem to have valuations considerably higher than current price e.g. GSJBWere $5.61 however from a TA perspective it seems to be at top of current trend channel. Unless it breaks above the channel it seems more likely to trade sideways to downwards in the short term. Anyone else care to share their TA views?

[LeBOJ]

REL: 1350 HRS Nuplex Industries Limited

GENERAL: NPX: Revised Forecast

At the announcement of our Preliminary Half Year Result the Chairman advised
that "the Group now expects a full year result more than 30% higher than the
2002/03 year."

Trading conditions in the period January to April 2004 have been better than
expected. It is therefore estimated that the Net Surplus for the full year
ended 30 June 2004 will be more than 40% up on the previous year.

This forecast is subject to no unexpected abnormal events.

[skinny]

He he - I thought the Ambro's valuations were too low and topped up last week at 4.94.
If I put through the 40% increase in profits figure through my NPX spreadsheet I now get an intrinsic valuation of around $8, near the top of the previous range of estimates posted. FYI a discount rate of 10% is used in this calculation. Thats still way south of where we are currently so very comfortable with this one.

Another reason to be bullish is that I was reading in the economist this week that Vietnam, where NPX has a strong presence, has been the second fastest growing economy in Asia in the past decade (after China) and its not showing the same over capacity strains. There is this tendency to think that if its in Asia it needs to be China but Vietnam is hardly tiddly - it has about the same population of Germany and thanks to its tragic mid-20th C history its also a very young population (median age around 26!)

[KJ]

Skinny-I think you will find that the market will have already priced in much of the profit increase for the coming yr.

NPAT of say $30m for the coming yr will give a PE of around 10.
While I think there is more upside from here I think $8 is a bit of a dream.


Hold NPX

[zyreon]

in a ratio and analysis assignment I did for financial accounting on NPX one formula i used (an fv/pv calculation) that valued it (cetris paribus) at $9 per share 5 years from now.

...[calculations were based on current PE and constant earnings growth of 7.5%] (also discounted it to PV of 5.45)

[KJ]

Let's face it -5yrs is a long time.If its growth in earnings continues as it has been in recent times it could well reach $9 in 5 yrs time.

I for one hope so.

[skinny]

KJ - yes the $8 per share is certainly not something I expect overnight, I use such calculations more as a comfort factor for my long-term holds.

That said do you really think a p/e multiple of only 10 is justified in a company where ROE has averaged over 15% ? Maybe somewhere around 5.50 is a more realistic end of year target....

[KJ]

I agree that NPX justifies a higher PE than 10 given its growth prospects over the next few yrs-maybe $6 by year end.

[winner69]

quote:Originally posted by KJ

Skinny-I think you will find that the market will have already priced in much of the profit increase for the coming yr.

Was jsut below 500 when upgrade announced. So up 5% since then

NPAT of say $30m for the coming yr will give a PE of around 10.
While I think there is more upside from here I think $8 is a bit of a dream.

Agree $8 bit of a dream (maybe a few years away if they perform) but current price doesn't factor in much of the further potential enbedded in NPX

Hold NPX

[skinny]

Winner - if you think $8 is a "dream" but there is still "potential" do you have an idea about what the potential is worth today ? If you read the earlier posts you'll see my dreaming (and Zyerons) is based on NPV calculations which of course are never the truth but do impose some discipline of the dreaming ;) Again I'm not saying we'll get there tommorrow but I don't see why not within the next 1-2 years if they keep it up.

disc: topped up my holdings @5.93 on this basis

[glennj]

Agree with posters who believe NPX justifies a higher PE. Both performance and prospects have been /are encouraging. IMO as a value investor this has been a buy for several years and remains so despite the price rerating.
Like Lawso I've been in a while. Am sitting on a
substantial paper gain but will not be selling as this stock is not overvalued at the moment.
Re NPX environmental performance my understanding is that they are pretty good compared with similar industries in NZ and some of the court cases were "petty politics" They even got an award for environmental excellence a while back.

[winner69]

Price pretty weak last few days but on relatively low volumes

I wonder how much the high oil prices will affect their margins as a lot of their inputs are petro based.

Maybe why price a bit weak at the moment

[wsheridan]

Nuplex is a misunderstood stock. Has been for many years and the few long-term investors on the NZ market have taken constant advantage of it.

It's a it like NGC, CEN and AIA ... it performs solidly overtime but it's almost like peope don't want it to do well. Just keep buying on any dips and you too will drink drink $50 average bottles of wine rather than $15 ones [:I]

[skinny]

Winner 69 - to give a bit of an answer to the question you raised I read a report from **** released last week on the impact of rising prices on NZ listed companies. The analysis was in part based on economics, and part based on talking to company senior management and ranked the ability of a company to pass on cost increases from high to low. NPX fell in the middle here - mgmt was confident of passing through raw material costs increases (which comprise around 60% of their cost base) as long as demand remained strong and expected it to remain so until at least end of 2005. I was also pleased to see that energy costs, which could well ratchet up, are a small part of their cost base at around 8%.

All up agree with wsheridan - buy on the dips :D

[Lawso]

That's interesting, Skinny. But it doesn't explain the weakness in NPX sp his week. Down 7c on Tuesday, 12c yesterday to 508c - about a 3.5% fall.

There's been no company announcement since May 10, when the forecast net surplus for y/e June 30 was lifted from 30% to 40% above the '02-03 result.

One suggestion is that the drop reflects general uneasiness about the construction industry - not a convincing explanation IMO. FBU is holding up reasonably well.

Any thoughts, anyone?

[clearasmud]

Lawso,
We allknow shares don't move in a straight line
The profit upgrade wasn't that spectacular aginst the hf yr results.
Also the current weaker nz$ is spelled out as a (small) negative for NPX

[KJ]

Lawso-have a look at NPX's chart-while moving up strongly,over the last yr the price has moved up and down several times-each time approx a 10% movement.

At the present time it is about 5% off its high-as others have said this provides good buying opportunities.The market is a bit weaker so it may fall a bit more yet.

Hold NPX

[Phaedrus]

Lawso, I think you are standing too close to the action. Back up a bit and look at the big picture - corrections such as this are only to be expected, especially after a steep rise. Price action is still well clear of the trendline and appropriate moving averages. In any event, drops of more than double this magnitude are common with this stock. Trade them if you wish, but don't let them flick you out if you are taking a longer-term position with NPX. Note how the trailing stop value I have used with NPX is 10% - exactly the volatility as estimated by KJ.
View the current weakness as a regression to the norm - which in this case is a steady uptrend.

http://home.ripway.com/2003-11/39768/NPX2001.gif

[skinny]

Thanks for the analysis of the short-term vs. long term movements Phraedus. I must admit I was a bit non-plussed by Lawso's and others comments re the NPX sell-off: a decline of 3.5% is pretty trivial c/f what I am dealing with daily trading in US markets. Perception of risk & volatility is certainly in the eye of the beholder I guess.

[skinny]

Great to see NPX using its huge profits of the past two years to make a strategic foothold in China. I'd be worried if it wasn't. The market obviously didn't like the move given the usual suspicion over expansions, but it could well provide another nice entry point for those who think managment will be able to earn a decent return on the new investment as they have in the past [:p]

Note that the initial cost of $5m is easily absorbed given profits guidance of around 30m this year, +9m up from last. Ignoring tax effects the purchase knocks profits down to $4m, 20% up on 2003 so no worries about maintaining the good dividend income or that any debt or equity will need to be issued to fund the expansion for that matter.



quote:NPX
28/05/2004
GENERAL

REL: 1108 HRS Nuplex Industries Limited

GENERAL: NPX: Nuplex Resins expands its production base to China

Nuplex Resins (Foshan) Co. Ltd, a newly formed wholly foreign owned
enterprise and subsidiary of Nuplex Industries (Aust) Pty Ltd, has signed an agreement to acquire the manufacturing and business assets of privately owned resin manufacturer Foshan Veeya Chemical Company Ltd ("Veeya"). The facility is based in the southern region of the People's Republic of China in Guangdong province and provides a range of solvent based coating resins to paint manufacturers.

Veeya is affiliated to the Guangdong Carpoly Chemical Group of companies, a major independent manufacturer of decorative and industrial paints.

Nuplex has enjoyed substantial growth in coating resins in recent years in Australia, New Zealand and Asia. This acquisition continues the company's growth strategy and confidence in its ability to be a competitive business to business raw material supplier in diverse markets. Nuplex expects the China economy to remain robust for many years.

The company intends to invest around USD5M during stage one. In addition to acquiring the working assets, process improvements and capacity expansions are planned over the first three years to build on a significant existing volume of business. The site has the ability to cater for a full range of coatings, adhesive and composite resins and other chemical processes, and further investment will be made as required.

Costs additional to maintaining a representative office in the region are expected to be in the order of NZ0.5M in the first year of business. Conservative estimates are that the business should be profitable in the third year of operation.

The company is excited by the prospect of having a manufacturing base in China to service the needs of all of Nuplex' business. A highly experienced management team has been put in place in anticipation of a successful outcome to the acquisition process.
End CA:00100734 For:NPX Type:GENERAL Time:2004-05-28:11:08:26

[Lawso]

A lot of nervous Nellies around, skinny, to judge by the sp weakness. I agree with you - they have to go forward and China seems a logical place to go. Management is taking a suitably cautious approach - like MHI and unlike WHS, TEL and PRG, for example - and they haven't made too many mistakes in the past.

Still a comfortable NPX holder.

[star]

NPX already has a sales office in China for more than two years.

The company's investment planning of US$5 Million (NZ$8.3m) is very modest compared with NPX's total net assets of NZ$157.5m as at 31 June 2003. So for short term, this expansion has little impact on balance sheet and debt/equity ratio.

As for the impact on earning ability, in 2003 financial year, NPX had sales of $75.375m (22.93%) from NZ, $243.529m (74.1%) from Australia and $9.676m (2.97%) from Vietnam. Its main income stream should still be from Australiasia in 2-4 year short/med term after China's expansion.

The accouncement says the additional cost for the first year is NZ$0.5m and it is estimated the business should be profitable from the third year. So my understanding is a loss of $0.5m per year for two years is very immaterial compared with NPX's NPAT of $22.65m in 2003

Expansion to China is a right move for NPX?

NPX had spent quite a long time investigating investment in China, it can differentiate its situation from other high profile failed investments in China for the following reasons:
1. China is already an important raw material supplier to NPX;
2. NPX is a business-to-business supplier and niche products manufacture, so it does not reply on the consumer market which is more price-competitive;
3. NPX has an excellent prudent management team. They have proven successfull records in investing Vietnam. This experience should be very valuable for China's expansion.

Given resin/coating industry in China is immature and China requires 16 litres of coating per capita/annum whereas mature markets like NZ and Australia only need 2 litres per capita/annum, China is a very strategic market for NPX's long term future. In short term it brings more uncertainty to the business. NPX need to exercise more dillegence and care to make sure the first expansion to China be successful.

[winner69]

Not so convinced about NPX passing on raw material price increases.

From the ann on the 2001 result .... high raw material costs which were not fully recoverable ... and that was one of the main reasons for a decline in profit that year.

That performance was also refelected in share price movements around that time as well.

One real concern looking forward 12 months or so is that the likes of NPX could see record oil prices continuing (in $US terms) and at the same time a declining NZ dollar .. a double whammy not seen for many years.

NPX have always said that they are a (very?) cyclical business subject to large swings in demand and raw material pricing.

Even though NPX have broadened their geographical and product base they are still very dependent upon these cyclical factors.

[skinny]

winner69 - I'm only reporting what NPX mgmt are saying today. Note that they do say their ability to pass on much of the price increases is conditional on demand remaining robust. So, if you believe this I reckon the investment decision you make on NPX should probably have something to do with how you feel NZ and OZ will go over the next year or so (much like FBU).

Certainly there is downside risk [xx(] and if I didn't have faith in mgmt and its ability to manage a possible downturn in this part of the world while growing the business in Asia I wouldn't be investing in it now.

[star]

Skinny, share price is firm again today. I toped up some more last Friday. The price will up again when NPX announces 2004 year end results.

[skinny]

More good news on the NPX front with production already starting.
(For some reason info from the May 27 press release was placed on stuff, not this latest one.)


quote:NPX
02/07/2004
GENERAL

REL: 1219 HRS Nuplex Industries Limited

GENERAL: NPX: Nuplex Resins commences production in China

On 27 May 2004 we advised that Nuplex had signed an agreement to acquire the manufacturing and business assets of a privately owned resin manufacturer in the Guangdong Province of the Peoples Republic of China. We are now pleased to advise that all the conditions precedent to completion have been satisfied and that Nuplex Resins (Foshan) Co. Ltd commenced business at the manufacturing facilities in Leliu Town as of 1 July 2004.

A Nuplex management team has been in place for some time in preparation for this new venture and has recruited 43 of the technical and production staff formerly employed by the previous owner. Through the market development work conducted by staff at our China Representative Office over the last two and a half years we are confident in attracting business from the coatings market by offering the Nuplex range of resins. Nuplex has also signed an agreement with Guangdong Carpoly Chemical Group, a major independent manufacturer of decorative and industrial paints to supply a range of resin products.

The company intends to invest around US$5 million during stage one. In addition to acquiring the working assets there will be expenditure on improving safety, health and environmental protection to Nuplex's standards. Process improvements and capacity expansions are planned over the first three years to build on a significant existing volume of business. The site has the ability to cater for a full range of coatings, adhesive and composite resins and other chemical processes, and further investment will be made as required.
Costs additional to maintaining a representative office in the region are expected to be in the order of NZ$0.5M in the first year of business.

Conservative estimates are that the business should be profitable in the third year of operation.

[skinny]

This just in on Reuters -

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh9110 4_2004-10-15_07-20-32_aat003957_newsml

Must admit I have been thinking of reducing my NPX holdings given ever increasing oil prices, but then again we're looking at a company that is going global - Australia, Vietnam, China and now what looks to be a fairly large purchase for them in Europe!

Edit: here is a more informative release off Akzo Bobel's website:
http://www.akzonobel.com/news/news_detail.asp?id=uxiz%2F4vmHHg%3D

NPX is paying 110M euro for Akzo nobels' coating businesses which had sales of 256m Euro in 2003. The manufacturing sites its taking over includes: Bergen op Zoom (the Netherlands), London (United Kingdom), Louisville (Kentucky) and East St. Louis (Illinois) in the United States, Sao Paulo (Brazil), Surabaya (Indonesia) and Melaka (Malaysia). A grass roots plant is in operation at Suzhou in China. The business has its main office in Bergen op Zoom, the Netherlands.

Wow!!!

[floyd]

my thoughts exactly.....wow

have to crunch some numbers, rights issue as well to fund it.....may have to pick up a few more...have to see

[skinny]

Floyd - how do you know there will be a rights issue?
The divisional performance of AN is available here - should be useful for your number crunching...

http://www.akzonobel.com/finance/historicaloverviewbusiness.asp

[SCOTTY]

Great work skinny [8D].
Thanks very much for sourcing this.
Cheers

[star]

Skinny

Thanks for you updated news. I knew NPX is a quiet, solid performer and it always gives the market surprise.

With the managment's rich experience in acquisation, NPX will be a true, successful global business. Good news for investors indeed.

[winner69]

At a stretch prob could do deal with new debt even though it would take debt/debt plus equity ratio to 70% odd.

NPX like capital notes as a cheapish source of finance

But extra sales of $450M on top of current sales of $650M this is a significant acquisition


Reaction from ANZ investors? Took them a while to catch on to the benefits from that Specialty Chem acquisition a year or so ago.

Interesting times

[winner69]

Planning a rights issue for 30% of the cost

[KJ]

The 30% is made up of a share issue which would be a private placement for up to 15% of NPX shares on issue plus a rights issue.

[SCOTTY]

To me this new acquision should be easily funded without going to shareholders for funding.
At a purchase price of 110 million euro with EBITDA of 18 million the return would be about 16.3%. With the proven performance of an existing business and the strength of the NPX balance sheet plus the strong NPX management, I would be surprised if a loan for the total purchase in euros is not already in place.
There must be a number of rationalisation opportunities with this purchase as well.
As price setters rather than price takers in these oil shock times, it should prove to be a good time to expand while markets are nervous. Buy in gloom?
Disc. NPX holder.

[skinny]

Article in Stuff suggests ordinary shareholders will NOT be asked to stump up for the A.N purchase, but there will be an institutional placement.

http://www.stuff.co.nz/stuff/0,2106,3066289a13,00.html

Unfortuntaely the divisional performance link I posed before isn't too informative as it lumps together their coasting business with other resins, and the later is a far larger portion of sales in this division. However, the regional information is sort of interesting -if we take it as indicative of the coatings purchase then it looks like NPX has bought into a primarily European business (around 60% of sales), followed by the US (around 20%) then Asia & Latin America.

http://www.akzonobel.com/finance/historicaloverviewregional.asp

As to whether it’s a good purchase or not guess you have to trust mgmt have done their DD well (I do). There are a few macro factors that stack up in its favour too:

1) Its a great time to be buying European assets with the NZD so high against the euro. Three years ago this transaction would have cost them around $250M instead of $203M.

2) The European business cycle is just coming to life at the moment (albeit in spurts and starts). E.g., the Netherlands has been the worst performing economy in Europe over the past three years and is now growing again. In contrast, arguably we’re on the down leg in Australia and NZ. At any rate, increasing their geographical reach should lead to a more stable revenue and profit flow.

3) In the Netherlands, and Germany to a lesser extent, a whole raft of labour reforms have recently been introduced which should lead to increased flexibility and lower unit labour costs. This and NPX’s technological advantages should lead to an improved level of margins going forward than what A.N was able to generate (i.e around 8% for their combined coatings and resins business over the past 5 years).

4) The bogey man - the price of oil. I guess we have to look on this as a mixed blessing. It is bad for margins now, however, if it wasn't so high and if the Netherlands & Europe hadn't of performed so badly over the past few years perhaps NPX wouldn't of had this opportunity. What I'm really curious about now is how much global market power in coatings this transaction will give NPX???

[tinking]

Interesting question - who are the main players in the international market?

[star]

AKZO NOBEL is the No.1 coating manufacturer worldwide.

Attached article listed the top 10 global coating companies.
http://www.ippmagazine.com/CDA/ArticleInformation/features/BNP__Features__Item/0,6897,135698,00.html

NPX is a quiet performer. We may have underestimated the significance of this purchase.

[kiwi_on_OE]

My memory of past purchases by NPX is that they have probably only had a 50% success rate. I'm thinking of some of their moves into waste disposal in particular. Luckily they were relatively small, and could be excused as being outside their field of expertise. But I get a bit nervous when they announce purchases.

I'm guessing it is a pretty mature business, without huge growth opportunities in existing markets apart from Asia/China.

Given lower European int rates I would bet on them having paid a high price, relative to what they would've paid for the equiv business if it had been in NZ.

[skinny]

Cheers Star, interesting article. It seems 2003 was a busy year for coatings manufactures expanding into China and a not to shabby year for them all round.

kiwi on OE, the NPV will be higher with lower euro rates but I still feel they're likely to have got a good deal - the Dutch economy has been under real stress these past few years (especially its housing market) and the divestments of AN businesses no doubt has a bit to do with that. In addition, the kiwi is riding high against the Euro.

As for the growth opportunities I would expect a cyclical pick up in their Western European operations going forward. Longer term there is still good trend growth opportunities in E. Europe and Latin America and huuuge opportunities in Asia. With this purchase NPX will now have 2 factories in China, as well as operations in Thailand, Malaysia, Vietnam and Indonesia. I don't know the scale of all these operations but from the article Star posted at least it seems the geographical footprint is wider now than their main competitors in the Asian region.

At any rate I see the buy depth is growing on NPX - will be really interesting to see how it trades on Wednesday!!

[star]

KIWI on OE, read this annoucement.
It is said from this purchase EPS will increase from the first year.

NPX
18/10/2004
ASSET

REL: 0826 HRS Nuplex Industries Limited

ASSET: NPX: Nuplex to buy Akzo Nobel Coatings Resins business

Nuplex Industries Limited has made an offer to buy the Coatings Resins (CR)
business of Akzo Nobel N.V. for a consideration of approximately EUR110
million (NZ$202m).

CR is a global manufacturer and recognized technology leader in the
development, manufacture and marketing of high performance resins for
coatings, based on a broad range of resin types and technologies. CR is a
well established solution provider to the largest coating manufacturers in
the world and has a presence in Europe, the Americas and Asia.

This acquisition will transform Nuplex from an Australasia/Asia regional
business into a global manufacturing and marketing group with sales well in
excess of NZ$1 billion.

CR sales amounted to EUR256 million in calendar year 2003, while EBITDA
amounted to EUR18.1m before deducting corporate charges of EUR0.6m. The offer
is net of contributions to pension funds and other employee benefit plan
liabilities which Nuplex is to take over.

CR is based in Bergen op Zoom, Netherlands where it has a manufacturing and
research and development facility. Other facilities are in the UK, USA,
Brazil, Malaysia, Indonesia, Thailand and The Peoples Republic of China. The
business employs 774 people of which 355 are located in the Netherlands.

The CR assets acquired will be all shares in the wholly owned coatings resins
subsidiaries of Akzo Nobel N.V., Akzo Nobel's shares in joint venture
companies in Asia and the coatings resins business assets currently operated
within certain Akzo Nobel subsidiaries in the UK, USA and Brazil.

The consideration will be payable in cash and is being funded by a short term
loan facility of up to EUR125million (NZ$230m) to be provided jointly by
Westpac Banking Corporation and Commonwealth Bank of Australia. This loan
will be re-financed by an issue of Nuplex shares for 30% of the purchase
price plus the establishment of in-market longer term debt facilities for the
balance. The share issue will be achieved by a private placement for up to
15% of Nuplex shares on issue plus an underwritten renounceable rights issue
for the balance.

Settlement of this transaction is subject to the receipt of a number of
regulatory approvals and to obtaining shareholder consent to the transfer of
shares in the joint venture companies. It is also subject to Nuplex obtaining
approval from its shareholders for the transaction and its financing. To this
end a special meeting of shareholders will be convened as soon as possible to
inform shareholders of the proposal and give consideration to the
resolutions.

Nuplex has conducted an extensive due diligence process to evaluate the
economic benefits to the group and to ensure that management fully
understands the opportunities, risks and liabilities that come with this
acquisition. The following strategic benefits are anticipated:

- Access to a strong Research and Development function that will
provide technology strength to the Group and improve our offerings in
Nuplex's markets in Australasia and Asia.
- Bringing to the Group a strong management team that has global
marketing experience and an understanding of world class process technology.
- Providing Nuplex with critical mass that will yield benefits
internally in areas such as marketing, purchasing, operations, HR, systems
and procedures.
- Established businesses in South East Asia and a new plant in China,
the world's fastest growing market.
- Growth opportunities in Eastern Europe and South America.
- The opportunity to introduce Nuplex technology to Northern Hemisphere
markets.
Nuplex has evaluated this opportunity in financial terms taking into account
the current run rate as disclosed by Akzo Nobel and projecting into the
future based on information gained during the d

[skinny]

Another article in Stuff

http://www.stuff.co.nz/stuff/0,2106,3068851a13,00.html

Couple of salient points:
- institutional placement expected to be at around 5.08
- analysts think increased size of NPX and institutional placement will drum up more interest in the stock going forward, especially in Australia

disc: I have a bid in at a price greater than 5.08!

[OldRider]

Placement at $4-90

http://stocknessmonster.com/news-item?S=NPX&E=NZSE&N=106799

[Placebo]

Trading halt lifted, the market likes it, leap of 17c (3.3 pct).


quote:NPX
20/10/2004
PLACE

REL: 0949 HRS Nuplex Industries Limited

PLACE: NPX: Nuplex announces a placement to raise NZ$56.6 million

Nuplex Industries Limited is pleased to announce it has raised NZ$56.6
million through a placement of 11.55 million ordinary shares at a price of
NZ$4.90 each to institutional investors, following a bookbuild managed by
UBS.
The trading halt that has been in place for the last two days will be lifted
at 10.00am (NZ time).
The proceeds of the placement will be used to partially fund the acquisition
of the Coatings Resins business of Akzo Nobel N.V., which Nuplex has made an
offer to acquire for approximately EUR110 million (NZ$202 million).
7.7 million ordinary shares have been placed unconditionally raising
approximately NZ$37.7 million. In addition, due to strong demand, UBS has
requested and Nuplex has agreed to make a further placement of 3.85 million
shares ("Additional Shares") to raise a further NZ$18.9 million. The
placement of the Additional Shares is subject to shareholders approving the
adoption of a new constitution for Nuplex at the Annual General Meeting on
Friday, 29 October 2004.
The placement, including the Additional Shares, represents approximately 15%
of Nuplex's issued capital (including capital notes) and was made at a
discount of 3.5% to the closing share price of Nuplex on 15 October 2004.
Mr John Hirst, Managing Director of Nuplex commented, "We are delighted by
the very strong response from new and existing shareholders in Australia and
New Zealand and their support for the company's strategy to expand the
business. The strength of demand enabled the upsizing of the placement to
conditionally raise an additional 5% of issued capital. We will now focus on
completing the outstanding conditions relating to the acquisition, including
Nuplex shareholder approval. A special meeting of shareholders will be
convened as soon as possible to inform them of the proposal and enable them
to vote on the resolutions."
In addition, Nuplex will look to undertake a rights issue, DRP issue or a
share purchase plan enabling all New Zealand and Australian shareholders to
participate in the raising of the balance of the NZ$65 million equity funding
for the acquisition. Further details regarding this raising will be made
available in due course after completion of the acquisition.
Graeme Storey
Company Secretary
End CA:00106799 For:NPX Type:PLACE Time:2004-10-20:09:49:28

[wsheridan]

will be interesting to see how many of the institutional buyers sell out over the next couple of months.

[scamper]

Well, for a measly 9%, they could sell now...

[CAM]

a measly 9% isn't bad for a few hours of holding though

[SCOTTY]

The capital raising breifing is available through the NZX. Well worth reading as has profit projections both before and after the acquision. Request by e-mailing [lcr@nzx.com] subject:NPX Capital Raising Breifing.

[Tyke]

I've liked this company for a long time and maybe the mananagement has the ability to pull out costs and integrate the technologies of of the combined businesses but I feel that the risk has increased significantly more than the reward. From my experience (many years with Fletchers) management always underestimate the problems, particularly the cultural ones of takeovers. I was surprised that the price appreciated today especially given the placement at $4.90. I have taken the opportunity to take a profit (bought two years ago at $3.23 plus received 80 cps div in the meantime) but will follow this one with interest.

[skinny]

Great day for NPX [8D]
Bottom line is that the aquisition is expected to boost next years EPS AND the institutional placement was oversubscribed (i.e. $4.90 was too cheap). So, given the p/e was already below its Ozzie peers its should be no surprise at all to see the price jump, just a bit peeved that the opening price was well above my bid @5.14. Instead I had to pick em up with the rest of the market @5.26 :D

As long as oil prices don't keep on climbing I think NPX will reach at least $6 within the next year no worries :)[:p]

[Lawso]

Skinny: As a smallish holder of NPX (bought in mid-'02 @ 320cps) I've found your posts on this thread very worthwhile. You obviously know a lot more about the industry than I do, though I've always been impressed with NPX management. Anyway, it's good to know you've backed your judgment and bought in today. Well done. I reckon they're still cheap. Roll on $6, eh?

[skinny]

Cheers Lawso. But actually I don't know much about the innards of the chemicals business at all - I think Star is on to it here?

My bullish call on NPX is based on its sound financials (and what I calculate to be a rather juicy discount to the NPV of its DCFs ;)), managements assertion that they are able to pass on a significant share of the costs arising from changes in input prices, and the macro outlook (i.e., a recovery is slowly gaining ground in Europe and IMO the NZD will come off significantly against the Euro at some point). In this light NPX's aquisition looks sweetly timed.

Like Scotty I've also asked for the profit projections - will post when I get em!

edit: Star cheers for the briefing notes! Will have to plug it all into my spreadsheet at some point.

Some key points:

- mgmt expect 10% increase in EPS from aquisition (on current exchange rates...) and affirm pre-aquistion EPS for 2005 of 53-56c. So, EPS to June 2005 should be 58-64c, implying on current share price fwd 2005 p/e is 8.5 to 9.4. Pretty cheap.

- revenue stream changes from 97% NZ/OZ to 50% NZ/OZ, 25% Europe, 13%the Americas, 11% Asia

- mgmt also affirms that increases in raw material costs from increasing oil prices HAVE ALREADY been largely passed on.

Hmmm, this is all better than I thought...

[star]

I see the positive side of this acquisition is four folds:

1. 30% of sales from the newly acquired business is to Akzo Noble coating manufacture(3 years sales agreement is alreay in place). Other large customers are happy with NPX's ownership.
2. Senior employees of Ako Nobel are committed to stay.
3. NPX will use Akzo Nobel's research and development facility to provide better products/solutions to its existing customers.
4. NPX is now a diversified global busines. The combined revenue from NPX and aquired Akzo Nobel will be well above $1b (NZ 12%, OZ 39%, EU 25%, USA 13%, and Aisa 11%). With Akzo Nobel's marketing knowlege, NPX have better chance to excel in Asia market to gain more market share.

[winner69]

Yield watchers or NZ shareholders in for a div with full imputation credits could see this drop a bit

Relativrly less profit being made in NZ against large weighting of NZ shareholders

Great investment for a boring old chemical co

Took market a long time to recognise the profit steam from Specialty Chemicals

[SCOTTY]

quote:Originally posted by star

I see the positive side of this acquisition is four folds:

1. 30% of sales from the newly acquired business is to Akzo Noble coating manufacture(3 years sales agreement is alreay in place). Other large customers are happy with NPX's ownership.
2. Senior employees of Ako Nobel are committed to stay.
3. NPX will use Akzo Nobel's research and development facility to provide better products/solutions to its existing customers.
4. NPX is now a diversified global busines. The combined revenue from NPX and aquired Akzo Nobel will be well above $1b (NZ 12%, OZ 39%, EU 25%, USA 13%, and Aisa 11%). With Akzo Nobel's marketing knowlege, NPX have better chance to excel in Asia market to gain more market share.


Hi Star
Some other positives:
In the earnings outlook contained in the breifing document it appears that eps of 53-56c (before goodwill amortisation) was expected before the purchase. On completion of the purchase at least 10% positive eps (before goodwill amortisation) in the first full year [8D][:p].
eps of 58-62c or more should certainly crank up the share price.
The other real positive is making the purchase while the $NZ is so strong.
Cheers

[skinny]

Oh well, after adding to holdings at $5.25 bit of a bugger to see it drift back to 5.10 but perhaps not surprising given the somewhat fragile state of markets and the $4.90 institutional placement. I'll be back for more if it does go back under $5 [:p]

[Lawso]

I took a cue from the comments by Skinny, Scotty and others and also topped up @ 525. Not too worried about the recent fall and would buy more at this price if I had spare cash.

[star]

Just to share with you the comment from ABN AMRO (Unlimited Sharetrack, 22 Oct 2004)

>COMMENT FROM THE TEAM AT ABN AMRO Craigs

NPX – NUPLEX

Last Friday Nuplex (NPX) announced that it has made an offer to buy the Coatings Resins (CR) business of Akzo Nobel for NZ$202m. CR is a global leader in the manufacture and marketing of high performance resins for coatings. It is based in Bergen op Zoom, Netherlands where it has a manufacturing and R&D facility. Other facilities are in UK, USA, Brazil, Malaysia, Indonesia, Thailand and China. Settlement of this transaction is subject to a number of regulatory approvals including approval from the shareholders of NPX.

Resins is the core business of NPX. If successful, the purchase will nearly double the asset base of Resins and boost its revenue by some 110%. The strategic benefits as indicated by NPX include: 1) access to a strong R&D capability; 2) utilisation of the established infrastructure network of CR to expand NPX product range; 3) provide bargaining power in purchasing; and 4) growth opportunities in areas NPX previously has no presence such as automotive OEM, vehicle refinishes.

Initially, the purchase will be funded by a short-term loan facility. The loan will be refinanced by equity raising (15% by private placement and 15% renounceable rights issue) and long-term debt. A trading halt has been placed on NPX securities pending the completion of the institutional book build process for the placement. Following the equity issue, leverage of the company, based on NPX's estimate, will increase from 32% in FY04 to 46% in FY05.

The board intends to convene a special meeting of NPX's shareholders as soon as possible. If approved by shareholders, it is anticipated that the transaction will be completed by December or early next year. We retain our Add recommendation.

[SCOTTY]

The online NBR has a headline article by Shoshine headed "Sticky Business" re NPX buying the CR business.
This is the headline only with the full story only available in the print edition.
Would be most gratefull if someone could post the gist of the story please.
Thanks in advance.
Cheers

[star]

Hi SCOTTY

I do not have access to NBR. But from the headline it seems the author is trying to say: NPX's overseas acquisition is different from many failed offshore expansion.

Below is an article from yesterday's NZ Herald. From my understanding, it is a very postive message.

Nuplex expects big gains from its $202m buy

30.10.2004

By GEORGINA BOND

Resins company Nuplex believes its European acquisition will be the new "engine" driving the company's growth over the next decade and generating higher dividend payments.

The two-week-old proposal to buy Coatings Resins in the Netherlands from Akzo Nobel for $202 million was a major topic at the company's annual meeting in Auckland yesterday.

Managing director John Hirst told shareholders Coatings Resins had a strong market position, was profitable and was forecast to be more so.

He said this would enhance the company's ability to pay a dividend higher than the present 13cps in the first full year of ownership. Coatings Resins would add 60 per cent to 70 per cent to Nuplex's income and become a company with a turnover exceeding $1 billion.

Hirst said Nuplex was poised to become a global resin company.

The acquisition is still subject to shareholder approval at a special meeting on November 23.

Excluding the acquisition, the company expected a net surplus in the range of $30 million to $32 million, up from $28.4 million last year.

"All of our divisions are at or ahead of last year's performance after the first quarter and we see no material change in demand pattern," said Hirst.

But a "challenging year" loomed, with a 10 per cent average increase in raw material costs, caused by high oil prices, energy costs and petrochemical shortages.

Price rises - which could add as much as 80c to a can of paint - tight control over operating costs and maintaining high sales volumes
were essential to recover these higher costs and maintain margins. More than 70 per cent of Nuplex's earnings are made outside New Zealand, and Hirst said the high kiwi dollar would dock about $3.7 million off profits.

Chairman Fred Holland said that although some would regard it as "audacious" for a New Zealand company to buy a business with turnover of about $475 million, more than 750 employees and nine operating facilities throughout the world, Nuplex saw it as the next logical step.

Hirst said Nuplex was "a victim of its own success" because, having done so well in the New Zealand and Australian markets, it had to look beyond Australasia to expand.

He said Coatings Resins' laboratory in Arnhem, Holland - focused exclusively on innovation technology - was "the dream factory" and he intended to use those superior facilities to maintain Coatings Resins' strong market position and give Nuplex much-needed research and development support.

"We expect to see a flow of technology from Coating Resins to Nuplex and from Nuplex to Coating Resins," he said.

The intention was to use its spreading global network to deliver a broader range of products to a larger market.

Last week, Nuplex raised $37.7 million in a book-build process to partly finance the $202 million conditional purchase.

Strong demand led the company to sell another 3.85 million shares, on top of the original 11.5 million issued at $4.90, to raise a further $18.9 million.

The issues gave the company a greater spread of investors and increased shareholders outside New Zealand to 12 per cent.

Hirst said the remainder of the equity would be raised from existing shareholders by way of a rights issue, a dividend reinvestment plan or a share purchase plan.

Nuplex shares closed down 4c at $5.13 yesterday.

[The P.O.D.]

Big talk from NPX and I think the share price won't be going anywhere untill the lead up to the half year. Maybe late dec would be a good entry point. Just before xmas and before new year expectations on the half year result.

Interesting that I sold at 5.25 late june and topped up in MXI. MXI has since returned close to 40% (inc div) while NPX has gone sideways. Probably the most fortuitous decision I have made this year.

One thing I think is in NPX favour is that it is percieved to be a NZ company and therefore seems to be overlooked on the ASX, and hence undervalued. If the half year in Feb shows proof of good purchase then NPX should gain significant exposure and be rerated appropriately, due to the size of the company now.

Still seems cheap without the new purchase contributing to eps.

[Bwooce]

Hopefully the divvy reinvestment scheme will be restarted now they've got rid of all the nasty cash they were holding :-)

It would surely be a prudent move to pay down the debt in such a painless manner, I wish I'd written down that question for the AGM now.

[SCOTTY]

Thanks for your reply Star.
Had a look at the NBR article today. Nothing new that we didn't already know in it.
Cheers

[Benlamnz]

Hey been wtaching you guys and learnt alot. Still knows **** all compare to most posters here though. However the price and yield is looking attractive with recent pull back and closer to the institution placement price of 4.90. As a newbie, any recommendation on whether and when to buy in?

[SCOTTY]

quote:Originally posted by Benlamnz

Hey been wtaching you guys and learnt alot. Still knows **** all compare to most posters here though. However the price and yield is looking attractive with recent pull back and closer to the institution placement price of 4.90. As a newbie, any recommendation on whether and when to buy in?

Hi Benlamnz
Wait and see if there is to be a rights issue. If there is, this would probably be the best time to buy. However, I think it is a great company on a modest pe, so over time it probably doesn't matter if you don't pick the bottom as you will still do well if you intend to buy and hold which is what I am doing with NPX ;).
Cheers

[winner69]

Remember that there is now another 11.5 million shares - nearly 20% more than before the announcment of the acquisition

The big boss said earnings this year from the old Nuplex would be snout the same as last year -about $30-32M (eps 41/43 cents). This compares to eps of 48 cents last year.

So no surprise that there is a current weakness in the shareprice - even allowing for the future potentisl earnings still trading on the same PE as before the acquisition was announced.

Still a good long term investment but I wouldn't couny on any sudden resurgence or rerating soon

[star]

Winner69

It seems you have not understood the implication of this acquisition.

Please refer to Skinny's post above re EPS prior to and after acquisition. The data is based on NPX's briefing notes provided to NZX and consulted by prestigious investment bank and accounting firm.

You must understand, the new issue of 11.5 million shares @$4.90/share is to fund a postive NPV project. After acquistion the EPS will increase at least 10%.

The current weakness is because conventional investors/institutions still have doubt in NPX's ability to manage this big offshore expansion.

[winner69]

quote:Originally posted by star

... The current weakness is because conventional investors/institutions still have doubt in NPX's ability to manage this big offshore expansion.


Disagree Star - the instos and those conventional investors would not have fronted up with what they have done

NPX has been rerated with the guided earnings increase because of the acquisition priced in

Before the acquisition NPX was priced at 9.3 times preamortisation profit (last year $34M or 55c/s)

This years guidance is for about the same - $34M. With the 20% extra shares on issue this is 46 c/s (dilution to this extent makes a mess of your original investment). Add on the 10% they say the acquisition will bring and full year earnings is now worth about 50-51 cents. NPX is now proced at 10 times these earnings.

The capital raising has essentially left you with 80% of the traditional NPX earnings (the other 20% gone to the new shareholders) plus 100% of the expected benefits of the latest acquisition.

Don't you feel that more debt and a bigger rights issue might have been a better deal for those (smaller?) shareholders who held pre announcment of the acquisition

[skinny]

Winner69, management have guided this years profits from their existing businesses to be $30-$32m, close to the $34m you state. However they have also said that the AN aquisition which they have issued shares to fund and which will obviously appear on the bottom line next year will increase reported fully diluted EPS by at least 10% This information is available in the Nuplex briefing paper about the AN aquisition which you can request from them. My apologies for an earlier post where I was casting doubt as to your motives as I thought this info. was a general press release!

Benlamnz - soon as the NZ/AUD drops I'll be selling some AIX holdings to increase my NPX stake. I'm very positive about it.


Edit again! The investor breifing is avaliable on NPX's website, thought I has seen it somewhere public!!

http://www.nuplex.co.nz/nuplex/investor/pdfreports.asp

[winner69]

Yeah i know all that skinny - seen all their presos and briefings and talked to management

I too thought that will increase reported fully diluted EPS by at least 10% meant that you would expect eps to go to 53/54 cents (even with the increased number of share).

Good stuff as you would think that another $400-$500M of sales would bring in some real dosh

Having some conversation with management makes me believe how I (and you) intepreted the statement may not be right.

Wonder what that statement means?

Suppose we will only know when June 2006 (the first full year includingthe acquisition) comes around to see what happens.

In the meantime no real reason to get worried - there is probably plenty of upside from here and will have to keep a close eye on it.

[Phaedrus]

Winner69, Skinny, Star and others,
It worries me when there is an obvious disparity between the perceptions of thoughtful people such as yourselves and the market. This is all good news here - right? So how come the NPX shareprice isn't moving and hasn't moved since last May? At a time when plenty of other stocks are rocketing up?
Take a look at the recent large increases in daily volume.(circled) This looks awfully like Distribution to me. I don't like the look of the Double Top. I don't like the way NPX keeps testing the lower limit of its trading range, rather than the upper limit.
I sold half my NPX holding 3 weeks ago on the basis of the trendline break. The big volume increase came after I had sold - I felt that it vindicated my sell decision.
I am watching for any break below the support level of the 6 month trading range - certainly any drop below $5 will trigger more selling.
Consolidation zones after an uptrend are most commonly continuation patterns - NPX ought to break to the upside here. Theoretically.

http://img.villagephotos.com/p/2004-10/848030/NPX001.gif

[star]

Pheadrus

Thank you very much for your wonderful chart. Very good question re why NPX share price has not moved very much. My understanding is:

1. Rising Oil price makes people worry about NPX profitability. But recently NPX's management stated they have passed the increased raw material cost to its customers. So the oil price has not affected its profit very much.

2. Resins are used by buidling industry. The residential housing market in OZ and NZ has cooled this year. Even though the commercial and infrastructure spending is picking up, the market still has concern on its earning ability. You can also see this evidence in FBU's case.

3. NPX's recent purchase of China resin manufacture and AKZO Nobel. The big overseas expansion changed the risk profile of NPX business. NZ and OZ investors experienced failures of Telecom, The Warehouse and Lion Nathan's offshare expansion. So the nature reaction for investors is to suspect and reject NPX's move.

4. Historically, no major NPX shares were held by institutional invstors. The transform of NPX's business from Australiasia regional to global will make institutions rerate NPX shares. Due to NPX's size and geographical coverage, more institutions will hold its shares. But in short term, most investors take "wait and see" attitude.

I do not know TA, but fundamentally, NPX's position is very strong, with excellent experienced management, good niche products, tracking record of EPS growth histrory, good div yield, low P/E ratio, and solid financial performance. The NPX share is undervalued fundamentally. For patient investors who can ignore short term market sentiments and wait to receive the rewards in 2 years, this is a good share to have.

[swirlyworld]

Phaedrus; thanks for posting the NPX chart. I have ben trying to decide when (or whether) to buy in, seeing the chart hasn't given me an answer but it helps confirm the question! I think the trendline break and flattening off reflects the uncertainty surrounding the AN acquisition. Insto's getting in at $4.90 tempts me to think that that is what the price needs to be before it is good buying.What do others think[?]

Disc. learning lots from following posts on this site. [8)]

[SCOTTY]

I guess that the placement @ $4.90 will tend to underpin the price for a while. At least the placement will have the effect of increasing the NTA per share.
One thing that I'm not so happy about though is the 05/11/04 NZX Announcement - Waiver from Listing Rule 7.3.4 :(.
NPX is proposing a share purchase plan which will allow shareholders to purchase upto NZ$5,000 worth of new ordinary shares PER SHAREHOLDER and NPX expects to raise approx NZ$15m of new capital.
Personally I don't think that this is a fair idea as it could advantage smaller shareholders and dissadvantage larger shareholders.
I think that any offer should be on a more equable pro-rata basis.

Disc.Usually happy NPX holder.

[OldRider]

SCOTTY: NPX has round 75M shares issued, the SPP will issue about another 3M, with a prorata rights issue the entitlement would therefore be 1 for 25, so only shareholders owning more than 25,000 shares would be disadvantaged.I wonder if many ST posters are in this bracket?

NPX has 8262 shareholders so if all apply for their $5000 we would be scaled back to round 30%
of application.

In practice the very large holders don't usually apply at all, and the offer gets taken up by small holders who get their $5000 worth,and a worthwhile profit, so I like them.

This SPP method is a relatively frequent event for ASX companies, in fact I know of some investors who endeavour to find those companies likely to raise capital this way, then make a small investment in them looking to profit when the SPP arrives. AIX has made a yearly SPP, I have posted about this before,and enjoyed the benefits.

[swirlyworld]

Just had a look at the Nov. 5th NPX NZX waiver application.

I suppose the value for shareholders would depend on how many shares you get for your 5G.

Obviously a share issue will have the usual dilutionary effect; owners would have to get them at a suitably low price otherwise why not just wait until the fuss dies down and buy at the new (most likely lower) market price?

For a non holder such as myself what would tempt me to buy now, instead of waiting until the new shares have been issued and the share price reestablished by the market?

[winner69]

Lets look at it from an another angle

Last year eps 55 cents (pre amortisation $34M). Lets go with the NPX view and this is 61 cents in the future.

With the added number of shares on issue about $45M ... meaning about $11M per amortisation earnings from the acquisition .... probably for the year to June 2006

Makes sense? ... but not the sort of feedback I got from management

If so you would expect the current price to be about 550 to 600

But as Phaedrus points out the market isn't too keen on NPX st the moment ... despite a pretty positive environment and an exciting acquisition

Mind you that was how it behaved with the ASC acquisition which essentially was the driver of the increase in price over the last year or so.

[winner69]

quote:Originally posted by SCOTTY

I guess that the placement @ $4.90 will tend to underpin the price for a while. At least the placement will have the effect of increasing the NTA per share.
One thing that I'm not so happy about though is the 05/11/04 NZX Announcement - Waiver from Listing Rule 7.3.4 :(.
NPX is proposing a share purchase plan which will allow shareholders to purchase upto NZ$5,000 worth of new ordinary shares PER SHAREHOLDER and NPX expects to raise approx NZ$15m of new capital.
Personally I don't think that this is a fair idea as it could advantage smaller shareholders and dissadvantage larger shareholders.
I think that any offer should be on a more equable pro-rata basis.

Disc.Usually happy NPX holder.


But haven'y you already been disadvantaged with 20% more shares already been issued?

[star]

Today I read NPX's financial reports and Briefing notes again just to see how much profit the new acquisition will bring to the shareholders.

The AKZO Nobel's 2003 year sales was EURO 256m (NZ$470m use EURO/NZ 0.5442), EBITA EURO 18.1m (NZ$33). The acquisition price is EURO 117m (NZ$215).

Now NPX issued new shares 3.85m @ $4.9/share, this raised NZ$18.86m equity.

Suppose the share purchase plan will issue another 3.85m shares @4.9.share, this will raise another NZ$18.86m

So the debt needed to finance this project will be 215-18.86-18.86 = NZ$177m

Suppose cost of debt is 10%, this gives interest cost per year of NZ$17.7m

Annual net profit from AN = EBITA-interest-tax (@33%) = 33-17.7-(33-17.7)X0.33= NZ$10.3.

The total new issued shares = 3.85+3.85=7.7m

Net profit from AKZO Noble business = $10.3m

Total no of shares after share purchase plan = 73.625 + 3.85 = 77.475m ( 73.625m shares as at 1 Nov 04)

EPS for new issued shares only = 10.3m/7.7m =$1.33

The increased EPS for all shareholders = $10.3m/77.475m = $0.13

From here it is not difficult to understand the management's statement the AKZO Nobel acquisition will increase EPS for at least 10% (my calculation is 23% based on the assumption of 7.7m shares issued at $4.9 per share, cost of debt 10%). I am very comfortable with NPX's acquisition.

[skinny]

Good post Star, I think Winners point though is that in discussion with mgmt they were a bit more circumspect on the impact on EPS....even so the AN briefing notes must be seen as credible by the market based on the quick institutional take up.

So, why hasn't the SP done better? One factor is likely to be CSFB taking NPX out of their NZ portfolio based on their assessment that the acquisition increases the risk profile of NPX and worry about margins.

As has been pointed out by NPX most of the margin pressure is being passed on. In terms of risk profile I think you need to think of 2 opposing risks. Increasing risk is the greater complexity and global reach of NPX's businesses, and concern about being able to manage them effectively. They have done a really good job in Australia & Vietnam though so it’s not as if they have no track record in managing offshore businesses successfully. The increased global scale also reduces risk, much like increasing the number of shares in your portfolio. My view is that the market is underestimating this factor, especially at a time when the NZ and OZ business cycles are at their peaks, the currencies are at high levels, while Europe is just begiining to recover and the Euro is low against the NZ and AU dollars.

Anyways, its not all beer and skittles for me - I miss out on the 5k placement as I'm not a resident of NZ or Australia [xx(]

[winner69]

quote:Originally posted by Phaedrus

Winner69, Skinny, Star and others,
It worries me when there is an obvious disparity between the perceptions of thoughtful people such as yourselves and the market. This is all good news here - right? So how come the NPX shareprice isn't moving and hasn't moved since last May? At a time when plenty of other stocks are rocketing up?


And this guru Elder says Many people use fundamental information to forecast markets, but I find that markets themselves are more likely to forecast future fundamental events. (lifted from the TWR htread

Bit out of context but the message seems the same - the market does not really like this acquisition.

Maybe the market knows that the next world recession is near and NPX is not the place to park your money ... or tge narket thinks that NPX has paid too much ... or taken on more than it can digest.

At least Star/Skinny and myself now sort of sgree that NPX (based on what we know) are capable of earning $45-50M in the next year or two. If that is the case ten NPX is worth heaps more than it is mow.

I take some solace in how the market 'misread' the benefits of NPX's other major acquisition (not quite as big but significant) in APSC in 2002.


Before, during and post finalaisation of this acquisition (Amy-Oct 2002) the NPX price traded in a tight range around 320, It was only after H103 and FY03 announcements that the market realised that this acquisition was one of the main drivers the NPX earnings growth and the price went to around 420. Since then the market has realised that these APSC earnings were sustainable and along with favourable market conditions the price went over 500 after H104 announcement early part of 2004.

Since then, as Phaedrus points out, the price ain't moved, in spite of a very market positive market over the last six months. NPX has been an underperformer


I like NPX as a company but I also like making money. I have been out of NPX a bit longer than Phaedrus has been, I was a bit pissed when they a big announcement and I wasn't in but the heavy share dilution solved that problem

Fundamnetally there is a good story here ... and I would like to part of it again

But the words of Elder now ring in my ears - is the market forecasting new fundamnetals for NPX? that will only be obvious in the course of time.

So in the meantime I think I'll leave it to the market to tell me when a good time might be to get on what should potentially be a good 50%-100% gain over a few years.

And guys - by the way some customers have resisted the price rises that NPX are trying to push through, and I know of one who now sources their raw materials from a competitor.

Interesting times ahead.

[SCOTTY]

Good points OldRider,Winner,Star & Skinny.
On reflection, the placements could very well have been the best way to raise the capital quickly and easily and still enhance eps and eps growth.
The purchase terms certainly do look attractive.
Bottom Line: The expansion and future earnings potential look excellent. So what if there is a short term SP dip. More buying opportunities to come [8D]!
I guess that I should get my head out of the sand and congratulate the NPX management for their forsight and guts to put together such a deal. I think that the the speed of the whole transaction really took me by surprise [:I].
Cheers

[Phaedrus]

NPX has been a lousy "buy and hold" candidate. It was in an extended trading range for nearly 10 years! (The 1994 price peakis marked with an arrow) Just because a stock is fundamentally sound does not automatically translate into price growth. While the price may not necessarily be falling, it can go nowhere for quite lengthy periods of time with the stock is in a trading range. Unless you are content with dividends alone, it is better to be out of stocks that are in trading ranges, buying back in when/if the breakout occurs.
Breakouts above trading ranges are one of the most reliable TA buying signals. The chart below includes Contact Energy for comparative purposes. I know it is nothing like NPX, but it gives an excellent example of buying into a breakout after a trading range (16 months long, in this instance)
You have all made a strong case for the growing profitability of NPX. When you promise future share price growth, I believe you. The question is when. NPX has already tracked sideways for 6 months - who knows how long this will continue - 10 months? 10 years??
I have little doubt that ultimately you guys will be "right" and the share price will climb. In the meantime though, are there not better places to put your money?
My preference would be to pay $5.50 for a Nuplex that had broken out of its trading range, rather than $5.10 for a Nuplex that hadn't. But then, I would rather make money than be right!

http://img.photobucket.com/albums/v418/789456/NPXcen001.gif

[airedale]

Hi Phaedrus, I have just read your case for buying on a breakout and I will ask the question here,but you may prefer to comment on it on the TWR thread, because that is what it refers to.
TWR has just broken through from a rising range of $1.15 to $2.30 into a patch of blue sky on the chart. The previous action before Nov 02 was at the $3.50 level. As TWR has been reconstructed since Nov 02, I wonder if this will be a genuine break-out.

[Benlamnz]

quote:soon as the NZ/AUD drops I'll be selling some AIX holdings to increase my NPX stake. I'm very positive about it.

are you sure skinny? It looks as if the NZD /AUD correction is just beginning, with the 12 month forward rate at 0.89 and sliding, won be suprise if it oges back to 0.85 in 12 - 18 months. I am currently considering locking in the 0.91-92 range when it is still available, and transfer most of my cash to AUD, with the ugly duckling of AIR and BGR left behind (can't sell now as way out of money). Was interested in NPX in the first place because of the initial media hype over its increased exposure to aussie investors, but didn't seem to materialise so far judging by volume in the ASX. Phaderus' chart seems pretty convincing too, so currently assessing other aussie targets like the Hastings Utilities fund and the rest of the infrastructure plays, as well as Greens Food and SPC with consolidation play in mind. May even top up AIX of it pull back below 2.10.

Don't know if its the bad taste in the mouth from the access saga, but had been living up to my word of not touching NZX shares so far. Though not for long as I will be participating in the AIR rights issue (no choice, already got one foot in).

[skinny]

Blenlamnz, I should have put a time scale - at NZD/AUD 0.85 or below I will sell Aussie assets so the 'soon as the NZD drops' may be later rather than sooner! I'm picking inside 6 months but your 1 year to 18 months is good a guess as any.

Thanks for the comments on the markets mood Winner. Its all a bit tough IMO - NPX is not doing an ION or a BPC and taking on heaps of debt. Nor are the investments green feild; they are already profitable. The irony is with NZ and OZ likely to slow down a bit over the next couple of years if it hadn't of done the AN aqusition I bet the market would be selling down on the basis that its main growth opportunities have dried up!!

At any rate the opportunity cost of a share going nowhere is around 6% risk free in NZDs at the moment so I take Phaedurs's concerns seriously. However, NPX is only about 8% of the portfolio and the next report, which I hope will be good news, is late February 2005. If the sp stays in the current range until then I can live with that; if it breaks to the downside, yeah, well, much as I'd hate to sell I'm not going to watch my capital go down the gurgler.

[skinny]

Encouraging to see a Director buy notice posted yesterday (David Newtwon, 10,000 shares purchased at AUD 4.75 on 29 October, current AUD SP 4.63). No better signal on the future direction of NPX than that :D

[skinny]

Good summary of the AN aquisition in Cornell's Market Analysis this month. NPX is rated a BUY on the basis of a low p/e and price/sales ratio, a high dividend yeild and above average growth potential. I've done really well out of most of the Market Analysis picks in the past year (in particular to keep the faith with RPL and to keep on buying MHI!) and unless oil prices keep on trending up strongly think this one will be no exception. Now if only that goddman chart would turn ;)

[star]

Skinny, good to know some analysts recognise NPX. If NPX is a bad buy, why recently, the institutions paid $4.9 per share for 11.55 million shares. They must have done a lot of homework before biding for NPX's shares.

After reading Phaedrus's chart, I realise the market in general is risk adverse and does not acknowledge NPX's new acquisition. I found it hard to ignore NPX's fundamentals and just follow the market sentitment. I beleive the biggest rewards will be given to people who understand and have faith in this company.

[Runswifscissors]

quote:Originally posted by skinny

Good summary of the AN aquisition in Cornell's Market Analysis this month. NPX is rated a BUY on the basis of a low p/e and price/sales ratio, a high dividend yeild and above average growth potential. I've done really well out of most of the Market Analysis picks in the past year (in particular to keep the faith with RPL and to keep on buying MHI!) and unless oil prices keep on trending up strongly think this one will be no exception. Now if only that goddman chart would turn ;)

I don't know what Cornell did to the price of NUF. But his dicision to get out of it seems to have really put a rocket under the share price.

[Benlamnz]

Okay guys so a share purchase plan is announced. does anyone know what the scaling formula will be, say how many new shares per existing shares? or is it a free for all so that I can buy 1 existing shares and purchase $5000 of new shares at 4.90? Sounds highly unlikely but if thats the case then I will get on the register with 1 share.

[patsy]

quote:Originally posted by Runswifscissors


quote:Originally posted by skinny

Good summary of the AN aquisition in Cornell's Market Analysis this month. I've done really well out of most of the Market Analysis picks in the past year
I don't know what Cornell did to the price of NUF. But his dicision to get out of it seems to have really put a rocket under the share price.


His recommendation of IAS in the ASX saw the price going from $2 (when recommended in Jan 2003) to $0.38 last week.

[skinny]

Hey Patsy and Runwiffscissors some pretty selective calls there - what about also recommending MHI at 46c back in 1991 (now up 1924%), Toll Holdings in 98 at 60c (now up 2012%) and more recently Melbourne IT in Feb 04 at 53c (up 134%). Overall the fact their portfolio taking into account all current and closed out calls is reportedly up 33% p.a. on average since they started is proof enuff for me that they are able to identify more gems than lemons. I just hope NPX joins the former [:p]

[Runswifscissors]

quote:Originally posted by skinny

Hey Patsy and Runwiffscissors some pretty selective calls there - what about also recommending MHI at 46c back in 1991 (now up 1924%), Toll Holdings in 98 at 60c (now up 2012%) and more recently Melbourne IT in Feb 04 at 53c (up 134%). Overall the fact their portfolio taking into account all current and closed out calls is reportedly up 33% p.a. on average since they started is proof enuff for me that they are able to identify more gems than lemons. I just hope NPX joins the former [:p]

Skinny let me point out that I am a subscriber to Market Analysis, and enjoy reading his newsletter. But like anyone I enjoy noting other peoples failings, particularly when they benefit myself.Although I do not buy a share based simply on Mr Cornell's criteria, I do not consider that this makes Mr Conell a worse stockpicker, as no one not even Warren Buffet gets it 100% right. Let me also freely confess that I have made no investing mistakes at all in my investing career, at least none that I admit to.

[swirlyworld]

So NPX is going to print off some new share certificates and kindly allow its owners to pay $4.90 each for them; a discount to current share price of $4.90/$5.07 = 3.5%. Has anybody worked out what the dilutionary effect of the extra shares will be? My guess is after all is completed the shares will trade at $4.90.

Happy for owners if I'm wrong, but if I'm correct that's when I'll be buying some.

DISC. don't own any but watching closely and appreciating the informed postings on this thread.

[patsy]

quote:Originally posted by skinny

Hey Patsy and Runwiffscissors some pretty selective calls there - what about also recommending MHI at 46c back in 1991 (now up 1924%), Toll Holdings in 98 at 60c (now up 2012%) and more recently Melbourne IT in Feb 04 at 53c (up 134%). Overall the fact their portfolio taking into account all current and closed out calls is reportedly up 33% p.a. on average since they started is proof enuff for me that they are able to identify more gems than lemons. I just hope NPX joins the former [:p]


Skinny - I acknoweldge your comment relating to my "selective" pointing out a dog of a recommendation. On the other hand, the way the newsletter reports performance of the picks is IMHO somewhat misleading. The reported performance takes into account the date when the share was first recommended. However, a share keeps on being on the list of recommended picks for months, and the price of the shares keeps on changing.

Take the case of MHI you pointed out. The newsletter was recommending MHI in Dec 2002 when it was $6.40, then plunged and it took almost 20 months to recover to that level. The newsletter performance assumes that the investment is a one-off event at the time of the recommendation and ignores the fluctuations while it is still being recommended. In actual fact, a more accurate performance measure for their recommendations would be assuming a sort of "dollar cost averaging" where a certain amount is invested every time that a share is recommended rather than when it is FIRST recommended. If this approach were taken, then it would certainly show a lower performance than the 33% you are quoting. On the other hand, this would also be to their advantage if the share drops but because they keep their recommendations for (literally) years and years, they also take advantage of the general and natural upward drift of the markets.

[Lawso]

The announcements to NZX yesterday and today give no details about scaling, Benlamnz, only that no shareholder will be entitled to more than $5k worth of the new shares. Guess we'll have to wait for the company's letter, due to be mailed to shareholders on 19/11, for the details.
The announcement does say that up to NZD15m worth will be issued, which by my calculation will mean a dilution of 4.69%. If my figuring is correct 3.5% doesn't seem like much of a discount.

[skinny]

Looks like NPX is firming up again. Phaedrus's chart shows resistance at $5.40, so from a TA angle I guess its too early to tell whether we're still stuck in a trading range or trending up?

[Phaedrus]

Skinny - Is Nuplex in a trading range or an uptrend? Both. It is in a 6 month trading range, within a 20 month uptrend.
One of the decisions that you must make when drawing a chart is whether to use a linear or logarithmic price scale. Often it makes no practical difference, but theoretically a log scale is preferable. NPX is an example of where they do differ, and where a linear scale has proved to be the better choice. The chart on the left uses a linear scale and plots intraday prices. Both the trading range and the trendline are intact - no Sell signals have been given. The other chart uses a log scale and plots closing prices. Both the trading range and the trendline have been broken, giving Sell signals. I have been using this set-up with NPX, so am currently out of this stock. Note that indicators such as the trailing stop are the same regardless of which price scale is chosen.
A breakout above previous resistance at $5.40 would be a Buy signal here.
http://home.ripway.com/2003-11/39768/NPX004.gif

[Lawso]

NPX up strongly again today to 540. Whether or not it is about to break out of the 540 resistance on Phaedrus's chart - who knows? What I do know is that the current price is making the 490 offer price under the company's Share Purchase Plan more and more attractive. When the SPP was first announced I thought the offer a big niggardly. But I applied for my maximum $5k worth anyway. One of the odd things about the offer IMO is that there is no proportionality - someone with 100 shares can apply for the same number as someone with 100k shares. The current price rise and enhanced discount under the SPP means the offer will probably be oversubscribed. It seems that if scaling is necessary it will not be imposed pro rata but will be on a first come first served basis. So I'm pleased I sent them my cheque by return mail. The offer closes on Dec 10 and the new shares will be issued on or about Dec 14.

[Lawso]

It seems that NPX has now poked its ahead over the 540 barrier, didn't feel good on 545 and retreated.

[star]

I am glad to see NPX climb back again. My view from here is as a normal investor, if the company you invested has good fundamentals, you can not respond to short term market movements too closely. In long term, the common sense still applies.

[Runswifscissors]

quote:Originally posted by Lawso

It seems that NPX has now poked its ahead over the 540 barrier, didn't feel good on 545 and retreated.

You make it sound as if NPX has a problem with vertigo

[skinny]

NPX looks like its well and truly broken out of its range now, can you confirm P?

cheers

[Phaedrus]

Skinny, NPX has indeed broken out of its 6+ month trading range in a very decisive manner. Breakouts above established trading ranges are one of the most reliable of all TA buy signals. The chart below includes todays current price of $5.60.

http://home.ripway.com/2003-11/39768/NPX3001.gif

[Lawso]

Good one, Phaedrus. The current price is making the 490 SPP offer price look all the more attractive. Only wish they would let me bid for more than $5k worth at that price.

[Lawso]

They've finally sorted out the allocations under the Share Purchase Plan. This was to have been completed "on or about" Dec. 14 but I don't think the letters have gone out yet. I had to ring the registry today to find out. It seems that all allocations in the $5k and $3k brackets have been scaled back, despite their saying in the first place that preference would be given "to those applications received earliest". I sent in my cheque by return mail but it didn't do me any good. I've been allotted only 624 shares, instead of the 1020 I hoped to get at the very appetising price of $4.90. So I'm due for a refund, which I guess I'll put towards buying a few more at market.
Interested to hear how other NPX holders fared..

[KJ]

I am still waiting-sent in 2 applications as both my wife and I are shareholders.

[k1w1]

Watch out all you techies, fundy aboard!!!I have bought in on market to this - the thinking man's MHI.

[skinny]

Welcome aboard kiwi. This fundy has held NPX for two years now - my trusty DCF spreadsheet suggests its worth over $8 which sounds a lot but, hey, my spreadsheets also told me MHI was worth over $7 when it was in the low $5 range too ;)

disc: still hold MHI, but NPX now largest NZ holding.

[OldRider]

Deposit in bank account today from NPX, I presume it is a refund from SPP, forgotten the amount, around $1800-00. So it appears SPP oversubscribed,
about 30% scaled back for $5000 applicants.
So no bonus extra shares.

If this is so,it would show good take up of offer
and chance of future growth, I guess some of this has already occured though.

[k1w1]

Zo, Baron von Skinny, vee meet again und ze same shareregister. Is goot nein ? At visk of appearing ze dumbkofen vat is ze DCF spreadsheet?

Danker mein komraden

I zee ze MHI SP is going down und pooperscoopen as I zort vud happen vaz too high.

[skinny]

Nice finish on NPX today on good volume [:p]

Kiwi forget the German you need to go back to the Buffetology books -DCF is discounted cash flow :D

[scamper]

My maths is always weird, but...
Sent npx $5000. They returned $1938.77.
So, they kept $3061.23.

Can I really expect to receive 624.74 shares???

[kiwi_on_OE]

Didn't they place quite a few 'extra' shares in the original placement? Shame they didn't decide to allocate a few extra to existing shareholders.

[whatsup]

Received only 62% of what was applied for ,shows how the future of NPX is viewed by shareholders!

[glennj]

Likewise, just under 40% of money was refunded. I thought those first in were supposed to be given preference. I sent $5000 back by return mail but my application was still scaled.

[Tinker]

Yeah same here, 62%.

I think its a bit on the nose for Nuplex to short change existing, loyal shareholders whilst handing a 12.5% return, as of today, to institutions. 12.5% for two months, for filling in a bit of paper and handing over some cash must make some institutional managers bonus look pretty good this year. Worth all those free lunches they have stumped up for yes?

Obviously the existing shareholders were more than willing to take the risk with the over subscription.

Merry Xmas
Tinker

[Arthur]

I guess I'll be scaled back as well. While I am glad that Nuplex offered shareholders the SPP, it is disappointing that the management favoured the Johnny come lately institutions over the loyal small shareholders. The roadshow was a great success. Lets hope that they don't come to regret not taking all the money offered.

[Tinker]

Hi Arthur,

Hey if you get more than 62% let me know. That'd make me really grumpy[}:)]

Fired off as letter to Fred (the Chairman) yesterday asking why institutions were issued an extra 50% of shares "in response to institutional demand" whilst poor old Tinker didn't even get what he asked for.

Cripes I'm turning into a grumpy dude. I blame the pre-Christmas mad house!!!!!!!!!!


Roll on summer and the beach[:p].


Tinker

[Lawso]

From the letter to shareholders dated 22/11:
" . . . If the SPP is oversubscribed and applications are received in excess of [$15m] applications will be scaled back with preference being given to those applications received earliest "

Later that undertaking went by the board. I was one of those who sent in my $5k cheque by return mail but got cut back like everyone else. I think we are entitled to an explanation.

Good on you, Tinker, for writing to the chairman. We should do things like that more often when we have a gripe.

Never mind, I've topped up, and more so, at 550, which with the allocation at 490 means the price is still attractive.

[kiwi_on_OE]

Re Scamper's post. I got a 1938.77 refund too. Has anyone been able to confirm if they got 624, 625 or 624.74 as implied by the price/refund? I haven't had any luck checking my holding through the computershare website.

I know it's only 1 share, but there is no excuse for getting 624 x 4.90 wrong.

Or was there some small print allowing them to charge fees or something?

Good on you Tinker for writing. However I would point out that at the time of the placement the price was closer to 4.9 than it is now, so the instos did take a bit more of a risk than we have. But I also think we (existing shareholders) should've got a better deal.

[COLIN]

quote:Originally posted by kiwi_on_OE

Re Scamper's post. I got a 1938.77 refund too. Has anyone been able to confirm if they got 624, 625 or 624.74 as implied by the price/refund? I haven't had any luck checking my holding through the computershare website.

I know it's only 1 share, but there is no excuse for getting 624 x 4.90 wrong.

Or was there some small print allowing them to charge fees or something?

Good on you Tinker for writing. However I would point out that at the time of the placement the price was closer to 4.9 than it is now, so the instos did take a bit more of a risk than we have. But I also think we (existing shareholders) should've got a better deal.

624 - which works out at a price of 490.058173 per share. Presumably there was something in the small print to cover this rounding, but you make a fair point about the "first come, first served" promise. The company has some explaining to do.

[cycat64]

The Terms and Conditions of the Share Purchase Plan includes: No.21 "Fractional entitlements will be rounded down and Nuplex will pay any application monies relating to such roundings to charities nominated by the Board of Nuplex"
I guess it will be something to look for in the next Annual Report and if it isn't there then it might form the basis of an interesting question at the next AGM.

[halcyon9]

Skinny, since we invest in very similar shares

thought you'ld be proud to know C9 was tipping this one out at $2.90 (proved to be the dead bottom at the time) exactly 2 years ago;)



Advanced Member
Japan
2479 Posts
Posted - 17/12/2002 : 8:24:51 PM
--------------------------------------------------------------------------------
NPX, hitting new recent highs.

I suggested this would be a good buy a few months ago at 2.90.

Its put on nearly 20%

I believe this will continue based on Fundamentals in the property market at present.
As Cigar? points out, first half earnings up 50%.

A good rerating.

C9

--------------------------------------------------------------------------------
Edited by - cloudnine on 17/12/2002 8:25:15 PM


cloudnine
Advanced Member
Japan
2479 Posts
Posted - 24/12/2002 : 02:38:48 AM
--------------------------------------------------------------------------------
Hope a few of you are still holding NPX. solid performance recently.

Now up 24% in 4 and a 1/2 months. .. and hitting new highs at 360 today. and I only posted 4 times to get this baby to move from $2.90 in late July.

Virtually no coverage on this stock, but then the NZSE is only a 2 horse race yawn

C9


good luck, think it's had it's best for now

$2.90-----------> $5.30 (80% plus over 2 years)

[cycat64]

Regarding the contribution (?) to charity:

According to my calculations, if we make an assumption that the shareholders were evenly apportioned between the $5000, $3000, $1000 and $500 uptakes then 10315 shareholders are involved. On average they have been short-changed by $3.26 (For $5000, $3.63; $3000, $4.14; $1000, $4.65; and $5000, $0.60). This amounts to $33629.47 that is supposedly committed to a charity or charities of Nuplex's choice. Now it is beyond my comprehension why this money could not have just been added to the refund that shareholders received. Surely this was in the best interests of the shareholders. However, given that there was provision for the charitable donation in the offer, then it is important that that is where it goes and shareholders are entitled to know how much and what charities.
It is important as shareholders that we do track the dollars and cents. Overlooking small matters like this can often lead to dollars and cents becoming hundreds of thousands and then millions. The Australasian scene is littered with examples of directors and employees who are used to the big bucks playing with the small investors' money and then becoming big crooks.

[KJ]

Personally I was very happy to buy 1248 shares at $4.90 and also very happy to donate a few bucks to charity-I am sure that NPX Board are honest enough to make the payments accordingly.

[cycat64]

Thankyou for your comment KJ and indeed I was in the same situation as you. The point I was making, however, was that it is important to track the money intended for charity. If it doesn't happen, then that is dishonesty, and dishonesty is something that cannot be countenanced with any Board of Directors. It would be interesting to know what your thoughts would be if the charitable donation does not occur. Remember, the $4.90 and paper profit is irrelevant. Between the time you sent in your money and the allocation of shares the price may well have fallen and you might have been looking at a loss.

[KJ]

Cycat64-of course I would be concerned if it did not happen but what makes you think that it will not happen? Is it something that we should concern ourselves about now?

They said that the funds would be donated to charity and I believe them.In due course we will learn more.I have been a shareholder for quite a while now and I have no reason to doubt them.

I would have been perfectly happy to donate a few dollars to charity regardless what the share price did-after all they told us in the notice before we bought that they intended to make the donation.

[cycat64]

Thanks KJ. But as I said, keep an eye out. You are very trusting. I too trusted once. I had many shares in Robert Jones, Ariadne and Equiticorp. It would not surprise me if the directors of Nuplex had a few skeletons locked away as well. Now, here is a question for you. How would you feel if they donated the money to the Destiny Church or the Maxim Institute ?

[Alpine]

Cycat64 - ironic isn't it. In one breath you are saying that you don't trust directors of companies - after bad experiences - fair enough. In the next breath I assume you are against any funds being given to the likes of Destiny Church or the Maxim Institute. Although I agree with you in one sense, if only more people were concerned about the values that they promote (whatever their motivation may be) our society would not be so full of dishonesty, corruption etc. (.....and cynics!!!)

If there is one reason that society is so full of bureaucracy/red tape it is because we have left behind the values that were once a core part of society.

I am not too concerned about my $3.63, however my thinking is that they have done the wrong thing. The only reason they had for donating fractional entitlements to charity was that they were fractional - a portion of a complete share (And the cost of returning say $2.00 to shareholders was uneconomic). As they ended up filling their quota and refunding nearly 40% of our funds there was no fractional entitlement - and also no grounds to keep any funds.

[winner69]

Guys ..... if this how you feel about the company why invest in it

If you are so indignant about all this get out NOW

[KJ]

Cycat64-Prior to investing in any coy it is basic that one is satisfied with the quality of management.If you are not happy do not invest.

[KJ]

Sorry-missed your question-how would I feel if they donated to Destiny Church etc?

It is very simple-Directors are expected to make sound decisions-if they do not then they get replaced.

[Placebo]

KJ: Perhaps you should forward that post to the Directors of TVNZ [B)]

[cycat64]

To KJ and others.
I am not indignant. I am just wary. IMO the decision to keep the money when the shares were rounded and not refund to the shareholders is wrong, no matter that it might go to charity. There was no cost in returning everything to the shareholders and therefore maximising their return. Surely this was in the best interests of the shareholders whom the Board is working for. While you are very trusting KJ remember that the same Board that we hope has given your money to Charity also reneged on their promise to allocate shares on a first come - first served basis. And KJ. Don't be so ignorant. Directors who don't make sound decisions are usually not replaced. They stay and they make further unsound decisions. Especially when they are supported by institutions who have had their nests feathered in the way that Nuplex has given preferential treatment in this particular affair.

[KJ]

Cycat64-thanks for calling me ignorant and this is just your 5th posting.For goodness sake grow up-this forum needs less personal attacks-not more.

I repeat-if you are not happy with NPX don't invest.And lay off the personal attacks if you want to be treated seriously.

[k1w1]

Cycat, as an independant fellow NPX shareholder I think you do yourself a disservice getting into personal attacks, as KJ has warned. Stick to your topic and don't name call anyone who disagrees with your pointt of view.

[skinny]

NPX is at 5.70 now, anyone who was lucky enuff to get an allocation at 4.90 should be chuffed IMO. Not being a resident of downunder I had to top up my holdings on market at the extortionate price of 5.25 odd :D

Anyways, it always ruffles my feathers a little too when instos are given preferential treatment in capital raisings (e.g. happened today with a holding I have on the ASX, AJL), but I console myself by the fact that institutional take up can be a pre-cursor to *significant* share price appreciation as other institutions take it as a cue to get on board too [8D]

[cycat64]

My humble apologies to KL. Yes, that was unnecessary. My original response was merely to answer queries with regard to a discrepancy between the shares allocated and the amount refunded. I hope that some readers at least see the point I made with respect to the shareholders' best interests. One thing I am prepared to say is that Nuplex does stand out as a company which has a very experienced Board of Directors who collectively have an intimate knowledge of their industry. No fly-by-nighters among them.

[kiwi_on_OE]

Did the directors say (through the offer) that it was first come first served? Apparently.
Did this happen? No.
Did the directors say they would take only $4.90/share? No
Did the directors only take $4.90/share from shareholders? No.
Have the insto's got a better deal? Arguable. As existing shareholders we didn't get any price or quantity advantage over the insto's.
Do I trust these directors? Not completely.
Do bad directors get the boot? Not by small shareholders.
What do I think of the belief that directors that make unsound decisions will be replaced for those decisions? I don't share that belief.
What do I think of the use of the word 'ignorant'? Can be interpreted as being too subjective.
Will the funds be donated to charity? I don't know.
Why did the directors arrange for the surplus to be donated? - I don't know.
Would I prefer the money to be refunded to me? Yes.
Do I think the money could have easily been refunded to me? Yes.

[winner69]

6 bucks today?

[scamper]

Maybe, but it has all been a bit sudden for my comfort. The div is still 4.1% at 595, which is pretty respectable, and as I bought below 300, I'm enormously happy, but...

I would expect some of the 490 buyers to loosen up some cash for their january credit card repayments, and I don't quite understand (not at all, really) that the 'news' warrants the increase over the last eight weeks.

Any ideas as to when or what might prompt a prudent profit-taking? Cheers.

[Sky Tower]

With the Nuplex Share Purchase Plan it was stated that applications received first would be given preferential treatment. This did not happen. They treated broker nominee and custodial companies as 1 share holder so they had 1 x $5,000 worth of shares to split amongst hundreds of shareholders. Then the rounded amounts were donated to charity (I accept that this is in the document). Then they scaled the applications back.

[tribeca]

I purchased some NPX a couple of days prior to 19/11, the record date for the SPP. The sharebrokers didnt register trade till the following week so I missed out.

I'm a newbie and wondering what the forums view is on this:

the seller of the shares is still entitled to the SPP even though they may have sold their shares, doesnt seem logical. I rang the NZX in Wellington to enquire and they said unfortunately that's the way it is, if you're not recorded as a shareholder at 5pm on 19/11 then you're not entitled. L-)

I presume it's the sharebroking firms who are responsible for recording transactions around record dates and making sure entitlements go to the proper client? Does the same work in relation to dividends and other entitlements like bonus or rights issues?

Thanks in advance.

Tribeca NPX may have had an ex date prior to the record date as it has an australian listing and that is the requirement there.

[Sky Tower]

Tribeca you will need to find out whether you purchased the NPX shares before or on the ex date. Or whether you puchased after the record date? or the period in between?

[Arthur]

ASX have been "improving things" over the last few years. In Australia now there is always a delay between date of puchase and registration. From memory they call it T + 3. If your shares are not purchased 4? days before "record date" you always miss out. It seems to be that date of registration, not purchase that counts. I think that this is meant to allow for settlement, clearance of funds etc.

I have a feeling that NZX is moving in the same direction if they have not already done so.

I really hope that NZX allow more SPP it's one of the few good things that they can learn from the Aussies.

It's a shame that Nuplex seemed to mangle it for small investors. On the plus side a few years ago the institutions would have got the lot, with the small shareholder loosing out completely.

Nuplex has been trail blazing with this issue, let's cut them some slack and hope they learn for next time.

[Lawso]

Well said, Arthur. I'm amazed at all the moaning. I was one who returned their SPP application immediately and was disappointed not to receive the full allocation. I think the coy was ill advised to make the original, rather vague first-come-first-served undertaking and they backed away from it in subsequent communications.

Anyway, I put the refund cheque towards buying more NPX so the price of the SPP shares and the new purchase was well below the then m p.

As for the kerfuffle over the charitable donation(s), what a lot of rot. Who cares what happened to a few pennies worth? I believe the directors' action was well intentioned. NPX has treated us well in the past year or so and will continue to do so, IMnsHO.

D nichols Have a look at ASX dividend announcements they always have 3 dates ex record & payment. Ex always being the first date to alloy all shares purchased prior to ex date to be on record by record date.

[kiwi_on_OE]

Tribeca - when I have bought shares a few days before a dividend pymt and they haven't been registered in time the broker has paid me the dividend by cheque, presumably they have claimed it off the other broker who has claimed it off the seller. I would expect the contract note to have CD/XD if purchased around the time of a dividend. Perhaps dividends, cash issues, bonus issues are easier to control than the SPP, and the loss (of div/bonus etc.) is quantifiable. Arguably (if the share price had moved to 4.90) you would not have lost out. It would be interesting to know what the sharebroker has to say about it, but don't hold your breath.

[Sky Tower]

Tribeca - can you remember whether you puchaed the NPX before the ex date or after?

I assume you have spoken to the NZX adviser who looks after your account regarding this matter. Which sharebroking firm was it? Maybe I can give you the name of a contact person with whom you can discuss the matter.

Just trying to help

[tribeca]

dnicholls, ASB Securities were the broker, and yes it was an online trade. I spoke to them about it and they said it was an anomoly when it comes to SPP's.

kiwi_on_OE, ASB did say they pay out for dividends, other entitlements. I guess at the end of the day I've learnt a lesson from this and will know better for next time.

I'm still a happy shareholder and hope 2005 will be a good one for Nuplex:)

[SCOTTY]

By capitalization NPX is now my largest (surpassing SCY) holding, having topped up yesterday at upto $5.96ps.
In hindsight I think that the placement to institutions was the only option to raise the necessary capital quickly whilst maintaining a strong share price. A rights issue to existing shareholders would have to have been done at a deep discount with expensive underwriting and cost to boot. It would have taken a long time for the share price to recover.
I think that as an International business NPX will warrent a strong p.e. re-rating once the earnings from the new CR purchase start to flow through the system.

[skinny]

NPX is now my largest holding on the NZX too Scotty (replacing MHI) and 3rd in the portfolio overall [8D]

I reckon that if NPX is able to produce the EPS increase in 2005 as promised (i.e. 10% or more over 2004 EPS) we'll see the price around $7 in 2005 to put the p/e at about 14. Beyond that if NPX is able to keep it's earnings growth momentum into 2006 as over the past 5 years I calculate its worth over $8 on a DCF basis.

Anyways, so much for the predictions! Amongst factors that could upset the earnings apple cart are:
- oil prices backing up again, say over 50 USD.
- unforeseen intergration costs
- Any one of Europe, Australia or China slowing down dramatically.

On the other hand there is the quite real possibility of foreign earnings being substantively higher than predicted given that with the current level of the NZD the NZ current a/c looks to be blowing out over 7% now! (E.g. see the predictions in the November Reserve Bank MPS.) As such, I reckon NPX is one of those companies on the NZX that is a good buy from both a fundamentals and a more speccy currency gain perspective (RPL, TUA, GPG, MHI & SCT are others that I like from this angle too, but not to the extent of NPX.)

[SCOTTY]

Hi Skinny
NPX could be like Nufarm (was Fernz) after it migrated to the ASX [:P]. Now on a p.e. of 20!! Especially if the eps got to 70cps in the 06 full year which I think is quite possible.
There is risk in any business operation, however, with a good geographical and currency spread the risks are lower than most businesses. As price setters rather than price takers I don't think that future oil prices will be much of a worry to them.
Cheers

[Paper Tiger]

The Share Price appears to be coming off the boil.
Is this a good point to add this stock to the portfolio [?]

Disc: hold none - yet.

[Arthur]

An interesting link

http://www.aireview.com/index.php?act=view&catid=2&id=1235

[Lawso]

Thanks for that, Arthur. Confirms my view that NPX will be one of the solid performers this year. I plan to increase the weighting - currently only 5.23% of my NZ & Oz equities.

[scamper]

Thanks, indeed, Arthur. What good news! But my reading of the charts around 25 Jan show that news was surrounded by a price weakening.

I would have thought the broker's target of $6.82, and range of $6-$7.60 would have been a prompt to top up.

Furthermore, the estimated 28% discount to comparable chemical stocks, makes it seem like a bargain.

Why the price weakening -- or has scamper got it wrong (again)?

[SCOTTY]

quote:Originally posted by kittydashwood

Rubbish! They flout air pollution laws continually. This company won't change it's practices because it's cheaper to pay the fines.

As a shareholder you are partially responsible Mr Mud.





Hi Kitty
I see in the HQP link that you hold NPX in Aussie.
What caused the change of heart?
As a happy NPX holder I am not critical, just curious.
Cheers

[Lawso]

NPX the star of the day - +7c to 600 :)

[floyd]

nuplex comes out with its interim result on friday the 25th, what is everyone expecting.

[scamper]

hi floyd,
the agm address (find on direct broking) last 29 Oct was very positive -- shareprice ~515, but it took the market about 3 weeks to react...

on 29 oct, the chairman reckoned that the june 04 year finished with the shareprice improvement plus divi yielding 52% increase in total shareholder return. he also reported that npx was 10th on someones 'well done' list and above the 70th percentile in asx300. his look-forward was that 05 could be 8% ahead of last.

div for the current price is only 4%, so i'd expect an increase on the 24 cps we got last time.

happy holder, scamper.

[whatsup]

Market doesnt like the 1/2 year result down.27c possible another .50 to go ,full year looks shaky/steady nothing too great to expect. Top of the cycle share?

[Liberty]

You would have to expect that on the basis of the HY and the prospects for the 2nd half, that a PE of 10-11 is all that is justified. That would translate to a valuation of around 520-550 by my reckoning. There may be quite some weakness in the price near-term.

Liberty
None held

[John]

Seems to have bottomed for a while now, will be interesting to see when it comes online in Oz.

Disc: bought this morning at 618[B)]

[leonchai]

My stop loss kicked in at 5.84 and my shares were sold out this am at 5.71...I guess I probably should have tried to hold out for a bit more, maybe around 5.80 but the HY report really is quite worrying. EPS actually DOWN 2.4% compared to the prev half year...

Does anyone here feel that holding is a better strategy than selling at this point?

[k1w1]

Phaedrus, do you have a chart on this, I'm about to put my lifebuoy on,(thats not the soap I'm talking about, either)

[KJ]

Will a chart help?Is the sell down an over reaction-that's the question?

I am no chart expert but I can see that LT support is fine-short term uptrend is broken as a result of today's sell down.My guess is that its an over reaction.We will know more as time goes on.

[Lawso]

No way would I sell. I'm enjoying a nice fat paper profit and am confident the sp will recover in due course. Some will exercise their stop-loss and aim to buy back in more cheaply but that's not my style. Besides, I don't like paying tax or brokerage!

[KJ]

Will a chart help?Is the sell down an over reaction-that's the question?

I am no chart expert but I can see that LT support is fine-short term uptrend is broken as a result of today's sell down.My guess is that its an over reaction.We will know more as time goes on.

[Phaedrus]

The chart doesn't help all that much here, except to clearly show that the long-term uptrend is still intact. This gives some measure of comfort and consolation! It's always hard to know what to do in cases like this - Sell the lot, do nothing, buy more..... When I am genuinely in doubt and stricken with indecision, I find it best to split my bets. That's what I have done here - I've sold half. The plan is to sell the rest if the longterm trendline is breached. I don't think it will be, but I know no more than anyone else.
This is an interesting example of a substantial fall coming out of the blue. More commonly there is usually some indication of weakness before the event. Proof, in case anyone should need it, that TA cannot predict the future. What it does do is give us a frame of reference by which we can judge the magnitude of such an event, and provide us with an objective, reasoned plan on which to base our reactions.

http://img.photobucket.com/albums/v418/789456/NPX225001.gif

[SCOTTY]

I think that this is an excellent result considering that the capital has been expanded from 62 million shares to 76.7 million for the purchase of the new CR business. As there are no earning from the new business, the eps are diluted in comparison to last year.
A very happy holder [8D].
Cheers

[scamper]

Yo team
I feel that it is an over-reaction.
All the people who bought some at 490 in December, and only wanted a short-term money spinner, are now getting out having made 25% at best (in 10 weeks or whatever) and even now (sp @ 555) they are still retrieving better than 10%.

not to panic for the long-termers; those who may want some cash could sell a portion as per Phaedrus' suggestion. Cheers.

[Lawso]

Watch the bounce back on Monday.

[COLIN]

quote:Originally posted by Lawso

Watch the bounce back on Monday.

I agree that there has been somewhat of an over-reaction to the Coy signalling that there are indications of softening in the Aust/NZ construction area.
Lets not overlook that NPX has a strong track record, with a 10-year EBITDA growth averaging 20% p.a. and a history of sustained dividend growth. They are still indicating a higher surplus this year than last (growth in the range of 14% to 25%), cash flows are strong, and they are saying that the dividend (on higher capital) will be AT LEAST maintained.
I certainly have no intention of joining the Nervous Nellies who have bailed out at the slightest hint of a possible little hiccup in this excellent company's forward progress. There will possibly be a few more weak holders to be shaken out on Monday morning, and I intend to take the opportunity to top up my holding. The Akzo/Nobel purchase is significant, and will help offset any weakness in the home markets.

[kiwi_on_OE]

I sold half a few weeks ago, a bit early as it turned out, but ahead of where the price is now.

Phaedrus - can you please explain why your short term trend line isn't a bit steeper - touching the share price line at about 550? The subsequent crossing of such a trendline is what got me out.

Scotty - I haven't checked the figures but I was hoping that the eps for the half was calculated based on the weighted average number of shares on issue for the half, rather than just the number on issue at the end - but I wouldn't be surprised either way. If it was done my way then the newly issued shares wouldn't affect the eps much.

[OldRider]

It's just a gut feeling I have,but it is in agreement with those who think NPX to be oversold.

Little comment was made about the probabilities for the acquired european operations, so whilst we may be near a market consolidation, or perhaps reduction in Aust & NZ, the european growth cycle is behind ours by some time.

Presently companies are hard to find near
my view of fair value, so this may be an opportunity if my idea of european growth eventuates.

Is this a reasonable assumption, or will things go the other way and make it doubly bad?

[winner69]

quote:Originally posted by kiwi_on_OE



Scotty - I haven't checked the figures but I was hoping that the eps for the half was calculated based on the weighted average number of shares on issue for the half, rather than just the number on issue at the end - but I wouldn't be surprised either way. If it was done my way then the newly issued shares wouldn't affect the eps much.


Thats how it is done .. rough calc is the weighted average (on time) number of shares is about 66.4 million ... hey presto that gives the 24.2 cents / share

If calculated on current number of shares - 73.6 million - eps would have been 22 cents / share

All that cash they raised did earn interest in the period so made some contribution to the result ... hopefully not as much as the new acquisition will bring

[Phaedrus]

Kiwi-on-OE,
Your quite valid steeper shorter term trendline gave you an excellent exit point. You may perhaps wish you had sold all, not just half, but I would stoutly maintain that you did the right thing in hedging your bets in the way you did.
It is only after the event that we can see whether shorter-term trendlines have outperformed longer-term trendlines. That is why I run multiple systems with some stocks such as this and FBU. Others like WAM are in such a steady long-term uptrend that it is impossible to beat simply buying and holding so long as the trendline is unbroken. Any and all shorter-term trendlines should be ignored in such cases, in my opinion.

[CAM]

Just a question....

Just looking at P's chart above and seeing a finish of $5.50.....does this mean its a sell signal with the trendline broken....or is it a wait for a couple of days to confirm the break before selling??

disc...don't hold NPX...just learning

[skinny]

quote:Originally posted by OldRider

It's just a gut feeling I have,but it is in agreement with those who think NPX to be oversold.

Little comment was made about the probabilities for the acquired european operations, so whilst we may be near a market consolidation, or perhaps reduction in Aust & NZ, the european growth cycle is behind ours by some time.

Presently companies are hard to find near
my view of fair value, so this may be an opportunity if my idea of european growth eventuates.

Is this a reasonable assumption, or will things go the other way and make it doubly bad?


Oldrider, NPX is one of my few remaining NZX holds for much the same reasons as yours. In the last few months things certainly have not gone their way - oil prices back up, euro area growth turned down in Q4 & Q1 indicators remain poor (see chart pack).

http://www.ny.frb.org/research/directors_charts/i-eu1chart.pdf

...could be a bumpy year ahead, esp. if there are also aquisition pains, but think it will be a solid performer for those with longer horizons.

[Steve]

Warning lops 70c from Nuplex shares (http://www.nzherald.co.nz/index.cfm?c_id=3&ObjectID=10112701)
The company was expecting a full-year net profit of between $32 million and $35 million.

That is up on last year's $28.4 million, but less than the $35.8 million forecast in a survey of six analysts

Work the numbers...[^]

[Phaedrus]

CAM,
There are 2 relevant trendlines here.
(1) The short-term green trendline has been broken, giving a Sell signal for active, short-term traders.
(2) The long-term blue trendline has not been broken - less active long-term investors would continue to hold.
Fence-sitters like me would have a dollar each way by selling half their holding. In effect, I have (had) 2 trades running in parallel with this stock.

[OldRider]

SKINNY: Thanks for the link & chart, I will be watching with interest to see which way the last quarter of 04 moves.

[winner69]

quote:Originally posted by Steve

Warning lops 70c from Nuplex shares (http://www.nzherald.co.nz/index.cfm?c_id=3&ObjectID=10112701)
The company was expecting a full-year net profit of between $32 million and $35 million.

That is up on last year's $28.4 million, but less than the $35.8 million forecast in a survey of six analysts

Work the numbers...[^]



... meaning

[airedale]

My interpretation of Steve's comment is that he is trying to say that the market moved irrationally.
I see that the Volume Weighted Average Price on Friday was $5.70. for the day.

[Sharebroker]

Report from one of the brokers - quality of result poor, boosted by lower depreciation and tax rather than higher EBIT. Outlook downgraded so valuation now stretched at current level. Likely to underperform as result is unofficially a profit downgrade.

[winner69]

quote:Originally posted by airedale

My interpretation of Steve's comment is that he is trying to say that the market moved irrationally.
I see that the Volume Weighted Average Price on Friday was $5.70. for the day.


Maybe the 'market moving irrationally' was the preceding month in pushing the price to the dizzy heights of 620

[winner69]

quote:Originally posted by Sharebroker


Report from one of the brokers - quality of result poor, boosted by lower depreciation and tax rather than higher EBIT. Outlook downgraded so valuation now stretched at current level. Likely to underperform as result is unofficially a profit downgrade.


Yes sharebroker .. i'm with you in that it was an unofficial downgrade

Revenues up $16M but EBITDA down a fraction .. not good ... and operating cash flows were down from $18M to $13M (with a large increase in inventories the problem)

Anybody read Fridays presentation?

http://www.nuplex.co.nz/nuplex/pdf_files/2005H1presentation.pdf

Bit of a worry when you read things like resins finding raw material cost increases 'proving difficult to recover' and 'unhelpful market behaviours' with the outcome being 'lower margin than share loss'

[winner69]

So how has the market seen the value of NPX over the past year and on Friday. Some background and logic (some will say fuzzy) for you all to shoot me down in flames with

*** Leading up to FY04 announcemet in August share price averaged 530-540

*** FY04 earnings announced August 28 and were 45.9 cents per share

*** Over next month or so share price drifted back to average 510-515

*** Market deemed NPX to be worth 11 times trailing earnings (with past performance and future guidance taken into account)

*** Price in October just prior to when acquisition anounced 508
market sentiment in October had changed very little from that which prevailed in August

*** Crux of acquisition was a '10% increase in eps' which sort of suggested the shareprice should be 550-560. (I am still unclear if this 10% increase in eps was before or after new shares to be issued but I have assumed it is after in this exercise)

*** Price went to 620 last week, implying a rerating of some sort - probably with the expectation that nothing is going wrong

*** But things are going wrong - was this re-rating a bit early in the piece?

*** Full year guidance is now $32-$35M - ie 44-47 cents per share (allowing for the increased number of shares)

*** So shouldn't the share price now (based on previous market sentiment indicator of 11 times earnings) be about 480 (low end of guidance at 11 times earnings) to 520 (high end of guidance). Note this is also on forecast earnings now as well, not past earnings.


My take is that at anything over 550 still has a lot good things happening built in. In addition the market rerating that was underway is essentially still present (price down because of lower earnings). But then again currently is not the time to post a veiled profit downgrade and give a lot of bad signals about short to medium term performance .. that rerating might disappear over time

Short term I wouldn't be surprised to see NPX share price go back to 500 some time again this year. So i wont be rebuying my NPX shares on Monday

Long term (3 -4 years out) possibility a different story if all the good things eventuate.

[Liberty]

My sentiment exactly, Winner. To value NPX at greater thamn 550 now requires a good deal of optimism built into the next 18 months. For me, it just isn't there, so NPX went off my watchlist on Friday.

[Steve]

quote:Originally posted by winner69


quote:Originally posted by Steve

Warning lops 70c from Nuplex shares (http://www.nzherald.co.nz/index.cfm?c_id=3&ObjectID=10112701)
The company was expecting a full-year net profit of between $32 million and $35 million.

That is up on last year's $28.4 million, but less than the $35.8 million forecast in a survey of six analysts

Work the numbers...[^]



... meaning


Good on you Winner, you found the meaning of 'work the numbers...' and explained the drop in shareprice![^]

[Lawso]

quote:Watch the bounce back on Monday.
+19c so far [^]

[KJ]

Decided to sell today @$5.70 & $5.60-have to agree with W69.

[airedale]

No point in standing in front of the train.I moved out of the way at 10 am today.

[Lawso]

After the big drop that followed NPX's cautious announcement I posted: "Watch the bounce back on Monday."
Well, it didn't hold that initial 19c recovery but the price has been rising steadily, as I was confident it would. 568 at the moment. Methinks some panicked and sold too quickly.

PS. Now 570

[scamper]

Yeah, Lawso, I'm also holding in the full expectation that the price will increase steadily.

Maybe the big dip was overdue given the rapid rise -- it didn't disturb the delightfully steep and steady two-year uptrend, and barely scatched the 100-day moving average, before bouncing above it.

I think this is a hold.

[KJ]

Good luck to those holding-no panic on my part but I sold out as posted and am happy with that-money went into FBU as per my post on that thread.

[winner69]

quote:Originally posted by winner69

Short term I wouldn't be surprised to see NPX share price go back to 500 some time again this year. So i wont be rebuying my NPX shares on Monday

Long term (3 -4 years out) possibility a different story if all the good things eventuate.


I'll stick to that prediction of the 27/2

The current 537 must be pretty close to that 200MA line ... is the long term up trend over?

More concerns about high raw material costs and their ability to pass on them on methinks ... I know one customer who told them to take a running jump

[Shamrock]

"...is the long term up trend over?"

- yes, Winner, IMO. Trendline break occurred with fall to 535 two days ago. Anyone else read it differently? I'd be interested in your thoughts.

I can't see much upside in the near term, NPX looks quite well valued at 540-odd.

[Phaedrus]

Here is an updated NPX chart - Sell signals in order, marked with arrows :-

(1) Medium-term trendline broken (Red)
(2) 9% Trailing Stop broken (Magenta)
(3) Long-term trendline broken (Green)
(4) Downtrend begins (Grey)
(5) Expected support at $5.40 not found (Blue)
(6) Longterm (200 day) Moving Average broken (Black)

http://home.ripway.com/2003-11/39768/NPX3170B01.gif

[winner69]

Phaedrus .... I assume that you are now out of NPX ... but it was a very successful trade though

Unfortunate word 'broken' ... at least it applies to the trendlines ... and hopefully Nuplex itself ain't 'broken'

[winner69]

quote:Originally posted by winner69


quote:Originally posted by winner69

Short term I wouldn't be surprised to see NPX share price go back to 500 some time again this year. So i wont be rebuying my NPX shares on Monday

Long term (3 -4 years out) possibility a different story if all the good things eventuate.


I'll stick to that prediction of the 27/2

The current 537 must be pretty close to that 200MA line ... is the long term up trend over?

More concerns about high raw material costs and their ability to pass on them on methinks ... I know one customer who told them to take a running jump




Sooner than i thought

500 has been support in the past ... but deep down there are ominous signs .... maybe I'll wait a bit longer to buy back my NPX shares i once held

[winner69]

Aren't there 14 million new shares at 490 floating around somewhere .... be a bugger if some of those new shareholders bail out ... having only the dividend to show for their efforts

Surely not!

[whatsup]

See as lots of us posters missed out (scaled back )on the $5000.00 of new shares that were announced to existing s/holders and now that the S/P has fallen back to that range ,how many of the S/H how applied and were scaled back would now take the opporunity of purchasing Nuplex? (there is the small amount of a .12C div ,but lets not put that into the melting pot!)

[Lawso]

I'm one such, whatsup. Got scaled back to only 624 shares @ 490 so I put the refund and a bit more into more shares @ 554. Had I not done so I'd probably be buying now @ around 490. However, I'm now sitting tight and reasonably confident that NPX will climb back to at least the mid-500s. (My avge buy price since 2002 is 402.5c)

[Paper Tiger]

quote:Originally posted by Paper Tiger on 14/01/2005

The Share Price appears to be coming off the boil.
Is this a good point to add this stock to the portfolio [?]

Disc: hold none - yet.

Well the answer was No.

However then was then and now isn't. ;)

[winner69]

I said a month or so ago that market sentiment prior the Akzo Nobel acquisition for NPX was 11 times earnings

Well at 452 NPX is jsut under that figure ... based on the low end of NPX guidance.

NPX shareprice down 27% since the half year announcement in Feb

Two factors why I feel that NPX might go even lower

Firstly expectations of $32M earnings this year could be reviewed in light of what has happen in the building related markets in Aust and here

Secondly if both the NZX and ASX are being rerated - ie going from fully (or over) valued to a more respectable valuation - than that PE of 11 will also go down (maintaining the same sort of relativities at the overall market)

Some quick numbers - say only $30M earnings and PE of 10 is 390 (PE of 9 is 350).

ON 27/2 I said I wouldn't be buying back my NPX shares at 550 ... today I don't think I will be buying them back at 450 either.

All too much for winner at the moment .. I'll wait until the charts tell me to buy ..

[winner69]

Some 5 days ago was 480 and went down to 432 or something yesterday (9% drop in 4 days)

On a day when a lot of the big losers regianed a fair bit of ground NPX could only manage a couple of cents

Possibly some are worried about that $32M this year not being achieved. Only 5% drop been accounted for ... I think more to come yet, on the back of worse than first thought market environment in Australia

[Tinker]

Mmmm

A company with a P/E of 9, ROE above 15% for the last three years and in a business which is understandable is sure getting some bad press.

Hey Winner69, not picking up a few are you;)?

Cheers
Tinker

Discl: Holder

[SCOTTY]

I'm with you on this Tinker, the fundermentals are too cheap. Also, it will eventually be re-rated as an International business as NZ will account for only about 12% of revenue. NZ investors are still collecting full imputation credits.
What an easy way to invest off shore [8D].
Disc. Happy holder.

[clearasmud]

How can you be a happy holder when it is being dumped mercilessly?
a horror story

If it fails $4.2 then next support $3.70.

Skinny, you must be loosing more weight holding this dog.

[SCOTTY]

I am happy to hold this stock because I think it is a great business run by competent people and is being sold short.
Warren Buffett says, he wouldn't be concerned if the market was closed for 2-5 years when he ownes good businesses.
Would you sell your house just because your neighbour panics and sells his house off cheaply?

[Lawso]

quote: I am happy to hold this stock because . . .
Me too. For much the same reasons.

[clearasmud]

the problem is sure they are competent people but their performance has been uninspiring and their raw material prices are beyond their control.
Further they now have to integrate a new business successfully.

In this new bear market a further rerating may be required.

good luck chaps!