the Downgrade File: troubles with the ex-100

[steve fleming]

After coming back from a few weeks holiday, I see that a number of mid/small caps that i hold/follow are struggling big time.

Macquarie Research put togethor an interesting list that lists all the earnings downgrades of those companies outside the ASX100. As of last week there have been a staggering 156 downgrades this financial year (and there are still about 2 months until the reporting season really kicks off!!) (compares to 94 for all of FY07)

The downgrade file remains at 156. The file is now ABB Grain, ABC Learning Centres x 3, Adacel, Agri Energy, Air New Zealand x2, Allco, Altium, Ambition Group, APN Property Group, Arasor x 2, Asciano, Austock Group, Australian Renewable Fuels, Australian Biodiesel, Autodom, Baraka Petroleum, Blue Chip Financial, Blue Freeway x 2, Boom Logistics x 2, Bradken, Brickworks, Brierty x 2, BSA Limited, BT Investment Management, Candle, Capral, Cardno, CEC Group, Cellnet, Centrepoint Alliance, Centro Retail Group, Chandler Macleod, Charter Pacific, Clime Asset Management, Clive Peteers, Coffey, Commander Communications x 2, Compass Hotels Group, Coneco, Count Financial, Coventry Group, CP1 Limited, CPT Global, Crane Group, Credit Corp x 2, Customers Limited, Dark Blue Sea, DKN Financial Group x 2, Dolomatrix, Early Learning Services x 2, Electrometals Group, Ellex Medical Lasers, Emeco x 2, Energy Developments x 3, Envirozol, Every Day Mine Services, Fantastic Furniture, FFI Holdings, Fisher and Paykel Healthcare, Flat Glass Industries, Fletcher Building, Frigite, Funtastic, Futuris, GLG Corp, Gloucester Coal, Gosford Quarry Holdings x 2, Great Southern, Guilford Investments, Gullewa, Gunns, Harvest Living, Hire Intelligence, Hyro, Iluka, Imdex, Intellect Holdings, IOOF x 2, John Shearer, KH Foods, Konekt, Lasseters, Legend, Lifestyle Communities, Living & Leisure, Macarthur Coal, Marbletrend, MFS, National Leisure Gaming x 3, Neptune Marine Services, Nick Scali, Noni B, NuSep, Nylex, Omnitech, Pacifica x 2, Paladio, Perilya, Polartechnics, PPK Group, PTB Group, Queste Communciation, Rams Home Loans, RCR Tomlinson, Reeltime, Ross Human Directions, Rubicor, SAI Global, Salmat, SCV Group x2, Senetas, Skilled Group x 2, Southern Dental x 2, Staging Connections, Stokes, Style, Tamawood, Traffic Technologies, UnderCoverWear, View Resources, Virgin Blue, Vita Group, Wattyl x 2, WHK, Wilson HTM, XTEK x2.

Macquarie say that the spike in downgrades that typically occurs in the lead up to reporting season commenced earlier this year and was more pronounced. Fifty of this year’s downgrades have come in the last month.
It is clear that a slowing economy and inflationary pressure are rapidly impacting the earnings outlook for small caps, and the number of revisions in FY08 is well ahead of the past two years as a result.

[pago]

hi steve,i agree,not too many base metal companies on the list but they will be down trending as well.cheers pago

Macquarie Research put togethor an interesting list that lists all the earnings downgrades of those companies outside the ASX100. As of last week there have been a staggering 156 downgrades this financial year (and there are still about 2 months until the reporting season really kicks off!!) (compares to 94 for all of FY07)[/SIZE][/FONT]

The downgrade file remains at 156. The file is now ABB Grain, ABC Learning Centres x 3, Adacel, Agri Energy, Air New Zealand x2, Allco, Altium, Ambition Group, APN Property Group, Arasor x 2, Asciano, Austock Group, Australian Renewable Fuels, Australian Biodiesel, Autodom, Baraka Petroleum, Blue Chip Financial, Blue Freeway x 2, Boom Logistics x 2, Bradken, Brickworks, Brierty x 2, BSA Limited, BT Investment Management, Candle, Capral, Cardno, CEC Group, Cellnet, Centrepoint Alliance, Centro Retail Group, Chandler Macleod, Charter Pacific, Clime Asset Management, Clive Peteers, Coffey, Commander Communications x 2, Compass Hotels Group, Coneco, Count Financial, Coventry Group, CP1 Limited, CPT Global, Crane Group, Credit Corp x 2, Customers Limited, Dark Blue Sea, DKN Financial Group x 2, Dolomatrix, Early Learning Services x 2, Electrometals Group, Ellex Medical Lasers, Emeco x 2, Energy Developments x 3, Envirozol, Every Day Mine Services, Fantastic Furniture, FFI Holdings, Fisher and Paykel Healthcare, Flat Glass Industries, Fletcher Building, Frigite, Funtastic, Futuris, GLG Corp, Gloucester Coal, Gosford Quarry Holdings x 2, Great Southern, Guilford Investments, Gullewa, Gunns, Harvest Living, Hire Intelligence, Hyro, Iluka, Imdex, Intellect Holdings, IOOF x 2, John Shearer, KH Foods, Konekt, Lasseters, Legend, Lifestyle Communities, Living & Leisure, Macarthur Coal, Marbletrend, MFS, National Leisure Gaming x 3, Neptune Marine Services, Nick Scali, Noni B, NuSep, Nylex, Omnitech, Pacifica x 2, Paladio, Perilya, Polartechnics, PPK Group, PTB Group, Queste Communciation, Rams Home Loans, RCR Tomlinson, Reeltime, Ross Human Directions, Rubicor, SAI Global, Salmat, SCV Group x2, Senetas, Skilled Group x 2, Southern Dental x 2, Staging Connections, Stokes, Style, Tamawood, Traffic Technologies, UnderCoverWear, View Resources, Virgin Blue, Vita Group, Wattyl x 2, WHK, Wilson HTM, XTEK x2.

Macquarie say that the spike in downgrades that typically occurs in the lead up to reporting season commenced earlier this year and was more pronounced. Fifty of this year’s downgrades have come in the last month.
It is clear that a slowing economy and inflationary pressure are rapidly impacting the earnings outlook for small caps, and the number of revisions in FY08 is well ahead of the past two years as a result.[/QUOTE]

[AMR]

I'm surprised to see Gloucester coal and MacArthur coal in there...

[h2so4]

Certainly impacts on SP. DWS down 20% after annoucement today. Great opportunity to buy. :)
cheers

[The Big Ease]

vtg (previously fone zone) is now trading at 2 times earnings, with an expected profit of ~18m.

[tricha]

http://nz.f961.mail.yahoo.com/ya/download/nz/ShowLetter?box=Inbox&MsgId=6975_13861464_20144_1834_301241_0_14472_5081 10_1969731645&bodyPart=4&YY=7965&y5beta=yes&y5beta=yes&order=down&sort=date&pos=0&Idx=4



S&P ASX 200 Energy Index

http://nz.f961.mail.yahoo.com/ya/download/nz/ShowLetter?box=Inbox&MsgId=6975_13861464_20144_1834_301241_0_14472_5081 10_1969731645&bodyPart=5&YY=7965&y5beta=yes&y5beta=yes&order=down&sort=date&pos=0&Idx=4

[steve fleming]

Certainly impacts on SP. DWS down 20% after annoucement today. Great opportunity to buy. :)
cheers

Coming thick & fast now.

Update of the Macquarie list from yesterday:

The downgrade file increases to 163 with the addition of Every Day Mine Services.

The file is now ABB Grain, ABC Learning Centres x 3, Adacel, Agri Energy, Air New Zealand x 2, Allco, Altium, Ambition Group, APN Property Group, Arasor x 2, Asciano, Austock Group, Australian Renewable Fuels, Australian Biodiesel, Autodom, Baraka Petroleum, Blue Chip Financial, Blue Freeway x 3, Boom Logistics x 2, Bradken, Bravura, Brickworks, Brierty x 2, BSA Limited, BT Investment Management, Candle, Capral, Cardno, CEC Group, Cellnet, Centrepoint Alliance, Centro Retail Group, Chandler Macleod, Charter Pacific, Clime Asset Management, Clive Peteers, Coffey, Commander Communications x 2, Compass Hotels Group, Coneco, Count Financial, Coventry Group, CP1 Limited, CPT Global, Crane Group, Credit Corp x 2, Customers Limited, Dark Blue Sea, Destra, DKN Financial Group x 2, Dolomatrix, E&A Limited, Early Learning Services x 2, Electrometals Group, Ellex Medical Lasers, Emeco x 2, Energy Developments x 3, Envirozol, Every Day Mine Services x 2, Fantastic Furniture, FFI Holdings, Fisher and Paykel Healthcare, Flat Glass Industries, Fletcher Building, Frigite, Funtastic, Futuris, GLG Corp, Gloucester Coal, Gosford Quarry Holdings x 2, Great Southern, Guilford Investments, Gullewa, Gunns, Harvest Living, Hire Intelligence, Hyro, Iluka, Imdex, Intellect Holdings, IOOF x 2, John Shearer, KH Foods, Konekt, Lasseters, Legend, Lifestyle Communities, Living & Leisure, Macarthur Coal, Marbletrend, MCM Entertainment, MFS, National Leisure Gaming x 3, Neptune Marine Services, Nick Scali, Noni B, NuSep, Nylex, Omnitech, Pacifica x 2, Paladio, Perilya, Polartechnics, PPK Group, PTB Group, Queste Communciation, Rams Home Loans, RCR Tomlinson, Reeltime, Ross Human Directions, Rubicor, SAI Global, Salmat, SCV Group x2, Senetas, Skilled Group x 2, Southern Dental x 2, Staging Connections x 2, Stokes, Style, Tamawood, Ten Network, Traffic Technologies, UnderCoverWear, View Resources, Virgin Blue, Vita Group, Wattyl x 2, WHK, Wilson HTM, XTEK x2

Plus, today, we saw downgrades from:

Boom (3rd this year)
Noni B (2nd this year)
DWS

[steve fleming]

By the way, there is an excellent article in the July edition of Smart Investor that has some great analysis on which companies meet expectations and which companies downgrade/disappoint.

They sugggest that Zinifex(Oz), Suncorp-Metway and Paperlinx will downgrade/disappoint.

[SEC]

Thanks for this useful information Steve, keep it up and please provide updates!

Disappointing but not really surprising Oz Minerals is on radar for downgrade but market continues to factor in downgrades anyway.

Cheers

SEC on holiday in UK

[tricha]

http://nz.f961.mail.yahoo.com/ya/download/nz/ShowLetter?box=Inbox&MsgId=6975_13861464_20144_1834_301241_0_14472_5081 10_1969731645&bodyPart=4&YY=7965&y5beta=yes&y5beta=yes&order=down&sort=date&pos=0&Idx=4





S&P ASX 200 Energy Index



http://nz.f961.mail.yahoo.com/ya/download/nz/ShowLetter?box=Inbox&MsgId=6975_13861464_20144_1834_301241_0_14472_5081 10_1969731645&bodyPart=5&YY=7965&y5beta=yes&y5beta=yes&order=down&sort=date&pos=0&Idx=4



I'll restate it, theres only one sector to have been in recently, is it a bubble or is it for real ???????????????????????????????????

[h2so4]

I'll restate it, theres only one sector to have been in recently, is it a bubble or is it for real ???????????????????????????????????
Is this a ramp upx2 or what?????????????????
I thought this thread was about companies not sectors?

You would think that any company that exceeds its forcast this year will be well rewarded with a surging share price. Fingers crossed.

cheers

[thereslifeafter87]

None of my holdings in there so far. Fingers crossed it stays that way.

Cheers for the list, it makes for interesting reading.

[tricha]

Is this a ramp upx2 or what?????????????????
I thought this thread was about companies not sectors?

You would think that any company that exceeds its forcast this year will be well rewarded with a surging share price. Fingers crossed.

cheers


Sorry if u think it is a ramp h2so4.

But seriously listen very, very closely to this.

http://www.youtube.com/watch?v=D7fFffo3XE8

.................................................. .................................................

If u still think it is a ramp, go and buy some more down grade stocks, because if what u have listened to comes true, the stock markets of the world are going to be trashed for decades to come.
All u will hear is downgrade, downgrade, downgrade.

As suggested by Bermuda, get a copy of "Twilight in the Desert"

Or I suggest u pick up a copy of "1000 Barrels a Second"

[h2so4]

Sorry if u think it is a ramp h2so4.

But seriously listen very, very closely to this.

http://www.youtube.com/watch?v=D7fFffo3XE8

.................................................. .................................................

If u still think it is a ramp, go and buy some more down grade stocks, because if what u have listened to comes true, the stock markets of the world are going to be trashed for decades to come.
All u will hear is downgrade, downgrade, downgrade.

As suggested by Bermuda, get a copy of "Twilight in the Desert"

Or I suggest u pick up a copy of "1000 Barrels a Second"

Hi Tricha
High oil Prices, trashed stock markets:confused:?????????????
You are posting on the wrong thread.

Buying stocks that are downgraded is beyond my control. Thats an inside management thing. What I can do is keep an eye on their value.

Petrol at $15 thats beyond my control.

Business/economy books Fthat. Boring!!!!!!!!! I dont read those.

If the stock markets of the world are going to be triched.:) I say "let them be triched".

[David Hardman]

Add KLM to the list.. Downgrade out this morning!

Stock down 25%

I'm holding 3 stocks which have downgraded.....

BVA, KLM and DWS

[steve fleming]

Update:

The downgrade file increases to 170, with the addition of Frigrite, KLM Group and Asian Pacific Limited.
The file is ABB Grain, ABC Learning Centres x 3, Adacel, Agri Energy, Air New Zealand x 2, Allco, Altium, Ambition Group, APN Property Group, Arasor x 2, Asciano, Asian Pacific Limited, Austock Group, Australian Renewable Fuels, Australian Biodiesel, Autodom, Babcock and Brown Power, Baraka Petroleum, Blue Chip Financial, Blue Freeway x 3, Boom Logistics x 3, Bradken, Bravura, Brickworks, Brierty x 2, BSA Limited, BT Investment Management, Candle, Capral, Cardno, CEC Group, Cellnet, Centrepoint Alliance, Centro Retail Group, Chandler Macleod, Charter Pacific, Clime Asset Management, Clive Peteers, Coffey, Commander Communications x 2, Compass Hotels Group, Coneco, Count Financial, Coventry Group, CP1 Limited, CPT Global, Crane Group, Credit Corp x 2, Customers Limited, Dark Blue Sea, Destra, DKN Financial Group x 2, Dolomatrix, DWS Advanced Business Solutions, E&A Limited, Early Learning Services x 2, Electrometals Group, Ellex Medical Lasers, Emeco x 2, Energy Developments x 3, Envirozol, Every Day Mine Services x 2, Fantastic Furniture, FFI Holdings, Fisher and Paykel Healthcare, Flat Glass Industries, Fletcher Building, Frigite x 2, Funtastic, Futuris, GLG Corp, Gloucester Coal, Gosford Quarry Holdings x 2, Great Southern, Guilford Investments, Gullewa, Gunns, Harvest Living, Hire Intelligence, Hyro, Iluka, Imdex, Intellect Holdings, IOOF x 2, John Shearer, KH Foods, KLM Group, Konekt, Lasseters, Legend, Lifestyle Communities, Living & Leisure, Macarthur Coal, Marbletrend, MCM Entertainment, MFS, Mirvac Group, National Leisure Gaming x 3, Neptune Marine Services, Nick Scali, Noni B x 2, NuSep, Nylex, Omnitech, Pacifica x 2, Paladio, Perilya, Polartechnics, PPK Group, PTB Group, Queste Communciation, Rams Home Loans, RCR Tomlinson, Reeltime, Ross Human Directions, Rubicor, SAI Global, Salmat, SCV Group x2, Senetas, Skilled Group x 2, Southern Dental x 2, Staging Connections x 2, Stokes, Style, Tamawood, Ten Network, Traffic Technologies, UnderCoverWear, View Resources, Virgin Blue, Vita Group, Wattyl x 2, WHK, Wilson HTM, XTEK x2.

[steve fleming]

Update:

The downgrade increases to 179 with the addition of BSA Limited.
The file is ABB Grain, ABC Learning Centres x 3, Adacel, Agri Energy, Air New Zealand x 2, Allco, Altium, Ambition Group, APN Property Group, Arasor x 2, Asciano, Asian Pacific Limited, Austock Group, Australian Renewable Fuels, Australian Biodiesel, Autodom, Avastra, Babcock and Brown Power, Baraka Petroleum, Blue Chip Financial, Blue Freeway x 3, Boom Logistics x 3, Bradken, Bravura x 2, Brickworks, Brierty x 2, BSA Limited x 2, BT Investment Management, Candle, Capral, Cardno, CEC Group, Cellnet, Centrepoint Alliance, Centro Retail Group, Chandler Macleod, Charter Pacific, Clime Asset Management, Clive Peteers, Coffey, Commander Communications x 2, CommQuest, Compass Hotels Group, Coneco, Count Financial, Coventry Group, CP1 Limited, CPT Global, Crane Group, Credit Corp x 2, Customers Limited, Dark Blue Sea, Destra, DKN Financial Group x 2, Dolomatrix, DWS Advanced Business Solutions, E&A Limited, Early Learning Services x 2, Electrometals Group, Ellex Medical Lasers x2, Emeco x 2, Energy Developments x 3, Envirozol, Every Day Mine Services x 2, Fantastic Furniture, FFI Holdings, Fisher and Paykel Healthcare, Flat Glass Industries, Fletcher Building, Frigite x 2, Funtastic, Futuris x 2, GLG Corp, Gloucester Coal, Gosford Quarry Holdings x 2, Great Southern, Guilford Investments, Gullewa, Gunns, Harvest Living, Hire Intelligence, Hyro, Iluka, Imdex, Intellect Holdings, IOOF x 2, John Shearer, Just Group, KH Foods, KLM Group, Konekt, Lasseters, Legend, Lifestyle Communities, Living & Leisure, Macarthur Coal, Marbletrend, MCM Entertainment, MFS, Mirvac Group, National Leisure Gaming x 3, Neptune Marine Services, Nick Scali, Noni B x 2, NuSep, Nylex, Omnitech, Pacifica x 2, Paladio, Perilya, Polartechnics, PPK Group, PTB Group, Queste Communciation, Rams Home Loans, RCR Tomlinson, Reeltime, Ross Human Directions, Rubicor, SAI Global, Salmat, SCV Group x2, Senetas, Skilled Group x 2, Southern Dental x 2, Staging Connections x 2, Stokes, Strathfield Group, Style, Tamawood, Ten Network, Traffic Technologies, UnderCoverWear, View Resources, Virgin Blue, Vita Group, Warehouse Group, Wattyl x 2, WHK, Wilson HTM, XTEK x2.

[Footsie]

I've been in 4 companies that have downgraded this year.... and as a result they are all off over 50% one down 85% on a 15% downgrade hahaha
and they are all out of my p/f now.

this has been a great learning curve
i've re-adjusted the way i invest and I think that will make me sharper in the future.

I'm now putting more focus on Industry, Sentiment and TEchnicals and introducing a 20% stop loss.

previously i was fundamentals only really

[Dr_Who]

There will come a time to pick up some of these very cheap stocks, assuming they are still around. But I have a feeling this cycle will stay down for many years to come and the Doc is in no hurry to buy anything unless it is in the energy sector.

[steve fleming]

Update:

The downgrade increases to 180 with the addition of GPT Group. The file is ABB Grain, ABC Learning Centres x 3, Adacel, Agri Energy, Air New Zealand x 2, Allco, Altium, Ambition Group, APN Property Group, Arasor x 2, Asciano, Asian Pacific Limited, Austock Group, Australian Renewable Fuels, Australian Biodiesel, Autodom, Avastra, Babcock and Brown Power, Baraka Petroleum, Blue Chip Financial, Blue Freeway x 3, Boom Logistics x 3, Bradken, Bravura x 2, Brickworks, Brierty x 2, BSA Limited x 2, BT Investment Management, Candle, Capral, Cardno, CEC Group, Cellnet, Centrepoint Alliance, Centro Retail Group, Chandler Macleod, Charter Pacific, Clime Asset Management, Clive Peteers, Coffey, Commander Communications x 2, CommQuest, Compass Hotels Group, Coneco, Count Financial, Coventry Group, CP1 Limited, CPT Global, Crane Group, Credit Corp x 2, Customers Limited, Dark Blue Sea, Destra, DKN Financial Group x 2, Dolomatrix, DWS Advanced Business Solutions, E&A Limited, Early Learning Services x 2, Electrometals Group, Ellex Medical Lasers x2, Emeco x 2, Energy Developments x 3, Envirozol, Every Day Mine Services x 2, Fantastic Furniture, FFI Holdings, Fisher and Paykel Healthcare, Flat Glass Industries, Fletcher Building, Frigite x 2, Funtastic, Futuris x 2, GLG Corp, Gloucester Coal, Gosford Quarry Holdings x 2, Great Southern, GPT Gorup, Guilford Investments, Gullewa, Gunns, Harvest Living, Hire Intelligence, Hyro, Iluka, Imdex, Intellect Holdings, IOOF x 2, John Shearer, Just Group, KH Foods, KLM Group, Konekt, Lasseters, Legend, Lifestyle Communities, Living & Leisure, Macarthur Coal, Marbletrend, MCM Entertainment, MFS, Mirvac Group, National Leisure Gaming x 3, Neptune Marine Services, Nick Scali, Noni B x 2, NuSep, Nylex, Omnitech, Pacifica x 2, Paladio, Perilya, Polartechnics, PPK Group, PTB Group, Queste Communciation, Rams Home Loans, RCR Tomlinson, Reeltime, Ross Human Directions, Rubicor, SAI Global, Salmat, SCV Group x2, Senetas, Skilled Group x 2, Southern Dental x 2, Staging Connections x 2, Stokes, Strathfield Group, Style, Tamawood, Ten Network, Traffic Technologies, UnderCoverWear, View Resources, Virgin Blue, Vita Group, Warehouse Group, Wattyl x 2, WHK, Wilson HTM, XTEK x2.

GPT today....following Mirvac's downgrade a week or so ago....worrying signs for the A-REITs.

[Huang Chung]

Good posts Steve.

[steve fleming]

I am just hearing so many stories at the moment, mostly from private equity guys, that June has been an absolute shocker of a month for companies across the board.

June seems to have been the month that everything negative has combined to really hit home – rising costs, deteriorating demand and, probably most importantly, plummeting business and consumer confidence (lowest levels since Sept 11 2001).

So all these ASX companies that released guidance in March/April/May on the expectation of an average June/finish to the year, have found themselves missing their year end budgets/targets, in some cases quite considerably – BSA being a classic example.

[h2so4]

A crucial factor for these troubled companies will be their management. One would be wise to only hold shares in companies that you had complete confidence in their management. Management that can deal with a companies problems so it can return to normal profit margins. It might need to cut costs, reduce staff and sell assets. So be it!!! Management has to be up to the task ahead of them.

Do any of the above companies qualify????

[KW]

Markets look forward not back. So its more important what the companies say is going to happen in 08/09 than what actually happened last year. I have a feeling companies are going to take advantage of the doom and gloom and err on the safe side to put very conservative forecasts out, which drops their share price, but leaves a lot of upside if things turn out to be better than expected. (It also provides a nice window for director buying!!). I think this is why bear markets usually recover so quickly - it only takes the next reporting season for companies to begin upgrading again.

[winner69]

A crucial factor for these troubled companies will be their management. One would be wise to only hold shares in companies that you had complete confidence in their management. Management that can deal with a companies problems so it can return to normal profit margins. It might need to cut costs, reduce staff and sell assets. So be it!!! Management has to be up to the task ahead of them.

Do any of the above companies qualify????


You mention 'returning to normal profit margins' after this downturn ... I feel what is happening is that all the factors in play at the moment are returning margins to normal levels .... possibly will go below ..... as they come off record high margins that probably were not sustainable anyway .... and the current situation is made worse by falling demand.

management can do things but sometimes the impact of reduced sales and shrinking margins cannot be rectified quickly by cutting costs ..... sometimes to get ebit back to where it was requires significant (up to 50%) cut in expenses and that always not possible

Globally and including this part of the world companies have experience record margins .... and as they revert to more normal levels the pain will be incurred

[Sideshow Bob]

I'm surprised to see Gloucester coal and MacArthur coal in there...

Macarthur mines profit guidance lift

http://news.smh.com.au/business/macarthur-mines-profit-guidance-lift-20080710-3cwa.html

[h2so4]

You mention 'returning to normal profit margins' after this downturn ... I feel what is happening is that all the factors in play at the moment are returning margins to normal levels .... possibly will go below ..... as they come off record high margins that probably were not sustainable anyway .... and the current situation is made worse by falling demand.

management can do things but sometimes the impact of reduced sales and shrinking margins cannot be rectified quickly by cutting costs ..... sometimes to get ebit back to where it was requires significant (up to 50%) cut in expenses and that always not possible

Globally and including this part of the world companies have experience record margins .... and as they revert to more normal levels the pain will be incurred

Yes I agree but good management should be able to bring profit margins back even on reduced sales. Even in "global record margin times", some companies have been operating on low margins and it is these companies which will suffer the most pain. With good management I would expect some improvement by next reporting season.

[h2so4]

Markets look forward not back. So its more important what the companies say is going to happen in 08/09 than what actually happened last year. I have a feeling companies are going to take advantage of the doom and gloom and err on the safe side to put very conservative forecasts out, which drops their share price, but leaves a lot of upside if things turn out to be better than expected. (It also provides a nice window for director buying!!). I think this is why bear markets usually recover so quickly - it only takes the next reporting season for companies to begin upgrading again.

I think a track record is so important when it comes to good management. Id be wary of any company that after having had a bad year,reports to its shareholders that "next year will be better".If results are worse instead of better I suppose the directors could always jump out of the window.:D

[h2so4]

Anymore updates or is that it?

[steve fleming]

Anymore updates or is that it?

Been on holidays but heres an update as at today:

The downgrade file increases to 197 with the addition of CEC Group and Commander Communications. The list is now ABB Grain, ABC Learning Centres x 4, Adacel, Agri Energy, Air New Zealand x 2, Allco, Altium, Ambition Group, APN Property Group, Arasor x 2, Asciano, Asian Pacific Limited x 2, Austock Group, Australian Renewable Fuels, Australian Biodiesel, Autodom, Avastra x 2, Babcock and Brown Power, Baraka Petroleum, Bill Express, Blue Chip Financial, Blue Freeway x 3, Boom Logistics x 3, Bradken, Bravura x 2, Brickworks, Brierty x 2, BSA Limited x 2, BT Investment Management, Candle, Capral, Cardno, CEC Group x 2, Cellnet, Centrepoint Alliance, Centro Retail Group, Chandler Macleod, Charter Pacific, Clean Seas Tune, Clime Asset Management, Clive Peteers, Coffey, Commander Communications x 3, CommQuest, Compass Hotels Group, Coneco, Count Financial, Coventry Group, CP1 Limited, CPT Global, Crane Group, Credit Corp x 2, Customers Limited, Dark Blue Sea, Destra, DKN Financial Group x 2, Dolomatrix, DWS Advanced Business Solutions, E&A Limited, Early Learning Services x 3, Electrometals Group, Ellex Medical Lasers x2, Emeco x 2, Energy Developments x 3, Envirozol, Everest Babcock & Brown, Every Day Mine Services x 2, Fantastic Furniture, FFI Holdings, Fisher and Paykel Healthcare, Flat Glass Industries, Fletcher Building, Frigite x 2, Funtastic, Futuris x 2, GLG Corp, Gloucester Coal, Gosford Quarry Holdings x 2, Great Southern, Green Cross Limited, GPT Gorup, Guilford Investments, Gullewa, Gunns, Harvest Living, Hire Intelligence, Hyro, iForge, IGDX Holdings, Iluka, Imdex, Intellect Holdings, IOOF x 2, John Shearer, Just Group, KH Foods, KLM Group, Konekt, Lasseters, Legend, Lifestyle Communities, Living & Leisure, Macarthur Coal, Macquarie Radio Networks, Marbletrend, MCM Entertainment, MFS, Mirvac Group, Monarch Gold, National Leisure Gaming x 4, Neptune Marine Services, Nick Scali, Noni B x 2, NuSep, Nylex, On Q Group, Omnitech, Pacifica x 2, Paladio, Perilya, Polartechnics, PPK Group, PTB Group, Queste Communciation, Rams Home Loans, RCR Tomlinson, Reeltime, Rockstead Financial Services, Ross Human Directions, Rubicor, SAI Global, Salmat, SCV Group x2, Senetas, Skilled Group x 2, Southern Dental x 2, Staging Connections x 2, Stokes, Strathfield Group, Style, Tamawood, Ten Network, Traffic Technologies, UnderCoverWear, View Resources, Virgin Blue, Vita Group, Warehouse Group, Wattyl x 2, Westpac Office Trust, WHK, Wilson HTM, XTEK x2

[steve fleming]

The downgrade file remains at 202. The list is now ABB Grain, ABC Learning Centres x 4, Adacel, Agri Energy, Air New Zealand x 2, Allco, Altium, Ambition Group, APN Property Group, Arasor x 2, Asciano, Asian Pacific Limited x 2, Austock Group, Australian Renewable Fuels, Australian Biodiesel, Autodom, Avastra x 2, Babcock and Brown Power x2, Baraka Petroleum, Bill Express, Blue Chip Financial, Blue Freeway x 3, Boom Logistics x 3, Bradken, Bravura x 2, Brickworks, Brierty x 2, BSA Limited x 2, BT Investment Management, Candle, Capral, Cardno, CEC Group x 2, Cellnet, Centrepoint Alliance, Centro Retail Group, Chandler Macleod, Charter Pacific, Clean Seas Tune, Clime Asset Management, Clive Peteers, Coffey, Commander Communications x 3, CommQuest, Compass Hotels Group, Coneco, Count Financial, Coventry Group, CP1 Limited, CPT Global, Crane Group, Credit Corp x 2, Customers Limited, Dark Blue Sea, Destra, DKN Financial Group x 2, Dolomatrix, DWS Advanced Business Solutions, E&A Limited, Early Learning Services x 3, Electrometals Group, Ellex Medical Lasers x2, Emeco x 2, Energy Developments x 3, Envirozol, Everest Babcock & Brown, Every Day Mine Services x 2, Fantastic Furniture, FFI Holdings, Fisher and Paykel Healthcare, Flat Glass Industries, Fletcher Building, Frigite x 3, Funtastic, Futuris x 2, GLG Corp, Gloucester Coal, Gosford Quarry Holdings x 2, Great Southern, Green Cross Limited, GPT Gorup, Guilford Investments, Gullewa, Gunns x 2, Harvest Living, Hire Intelligence, Hyro, iForge, IGDX Holdings, Iluka, Imdex, Intellect Holdings, IOOF x 2, John Shearer, Just Group, KH Foods, KLM Group, Konekt, Lasseters, Legend, Lifestyle Communities, Living & Leisure, Macarthur Coal, Macquarie Radio Networks, Marbletrend, MCM Entertainment, MFS, Mirvac Group, Monarch Gold, National Leisure Gaming x 4, Neptune Marine Services, Nick Scali, Noni B x 2, NuSep, Nylex, Oakton, On Q Group, Omnitech, Pacifica x 2, Paladio, Perilya, Polartechnics, PPK Group, PTB Group, Queste Communciation, Rams Home Loans, RCR Tomlinson, Reeltime, Rockstead Financial Services, Ross Human Directions, Rubicor x 2, SAI Global, Salmat, SCV Group x2, Senetas, Skilled Group x 2, Southern Dental x 2, Staging Connections x 2, Stokes, Strathfield Group, Style, Tamawood, Ten Network, Traffic Technologies, UnderCoverWear, View Resources, Virgin Blue, Vita Group, Warehouse Group, Wattyl x 2, Westpac Office Trust, WHK, Wilson HTM, XTEK x2.

So sitting at 202 to date for FY08, compared to 94 for FY07.

[winner69]

Interesting looking back on this post -- some no longer listed and most still struggling

Maybe proves the old theory onece you start downgrading you keep on downgrading until you go broke or get yaken over

Like FUN Funtastic still telling the market sad stories even now

http://www.smh.com.au/business/funtastic-presents-sad-toy-story-20110927-1kvfd.html