NZE - Pot of gold at Rainbows End

[k1w1]

Because - it is the only amusement park in Auckland of its type.Its too small and too non-liquid for traders and brokers to follow.It pays a fully imputed dividend of 2c.

But if you ask your kids where they want to go for a special trip- all to sadly its to go to Rainbows End and it costs a small fortune. Its a tax on fine days on weekends and school holidays for parents if you ask me.

From what I have seen,when not head down hauling cash out of my wallet to placate the insatiable demands of the trainee juvenile delinquents I am escorting,lots of Asians, tourists and adolescents trying to impress their first girlfriends go there.

Downside is that it is vulnerable to wet weather. People go to the movies when its wet. I used to own Sky Leisure as a good balancer so that if it rained I was covered. Sky City holders wouldnt bother as the cinemas are such a small part of the operation I suppose.

Ooh, yes,... I nearly forgot... on announcing its maiden dividend it went up 30% today, to 34 cents, which leaves me sitting on a 42% capital gain exclusive of the fully imputed dividend announced today.

[8D][8D]:D

Anyone else in on this ?

[etrader]

In on it "man i created the gain", bought the bundle of 6k @ .34c this afternoon that was available leaving no sellers after that a bundle has come back on at .38 late this afternoon, hmm been my parcel i had picked up three minutes earlier raising the buy price up so only a spec buy but even at 5.88% net yield it could be reasonable buying, a very wealthy family owns most of the stock so you wonder why they don't just mop up the minorities and save on the listing costs, would be even bigger profits for them.

probably drop off after the div hype today but watching and waiting on this baby cap stock

[Steve]

IN! :D:D:D

[k1w1]

quote:Originally posted by etrader

In on it "man i created the gain", bought the bundle of 6k @ .34c this afternoon that was available leaving no sellers after that a bundle has come back on at .38 late this afternoon, hmm been my parcel i had picked up three minutes earlier raising the buy price up so only a spec buy but even at 5.88% net yield it could be reasonable buying,

e, explain why you bought it, I take it you are a trader rather than a buy and holder like me. What made you buy the shares ?

[James K]

Current share price is ~34 cps. FY 2004 EPS was 2.24, an historic PE of 15.2. Director's outlook comments suggest "at this stage, a similar financial result" for FY2005 to FY2004. Presumably this means a similar NPAT and EPS, and therefore a FY2005 PE of about 15. Doesn't look cheap, esp. when there isn't much growth. I.e. FY2004 revenues and profits before tax were both marginally down on FY 2003. The new rides will provide a lift in FY2005, but that will have to offset higher full year interest costs. Good luck to all holders, and if I'm missing something key, please let me know!

[Thaum]

Congrats for those who made a quick gain, but I'm with James K on this one. NZE is potentially a great little earner, but looked expensive even before the announcement. Decreased profits, flat growth prospects next year, increased capex...if a result like that makes a share increase 30% then we're really in a bull market! I think NZE has a good long term future, but am happy to wait for a rainy year to buy...

[Steve]

quote:Originally posted by James K

Good luck to all holders, and if I'm missing something key, please let me know!


JK, with the exception of etrader who bought in at 34c, I believe that the rest of us bought in below 30 over the last wee while. Hence while they may not look as cheap on your 15x P/E forecast, when based on purchase price the P/E is around 12x and the gross yield is 11%.

Steve

[etrader]

quote:Originally posted by k1w1


e, explain why you bought it, I take it you are a trader rather than a buy and holder like me. What made you buy the shares ?

[/quote]
Kiwi yes my company trades based on different formulas, this is just spec and I've thrown a few $ at it based on minimum yield 5.88 to me p/a which is higher than bank and bigger fool theory either way I occationally throw a few dollars at a couple of random stocks, certainly not my main trading but just a punt.

Yes p/e at 15 quite high but will hold short term.

[Steve]

Good to see the steam coming off after the announcement and the spec buyers disappearing back into the woodwork.

Now somebody make the price drop further so I can collect some more...

[Barrel Scraper]

The new ride destined for Rainbows end looks ok..
Low installation cost, small footprint, capable of inducing nausea and head rushes - what more could ya want ?

Photos, "Action" vid, and the following blurb available from http://www.zamperla.it/
"Up to twenty-four riders at a time flip, twist, and spin through two motor driven rotations, and a third gravity driven rotation, guaranteed to deliver a different ride experience each and every time. Bursting with color and light, the Power Surge is an ideal addition to any park or carnival. The trailer mounted Power Surge comes racked on one road legal trailer and can be set up and torn down in under two hours with just two men."

Tha whanau and I will be giving it a go for sure :)

[Steve]

Now pretty much all the buyers have disappeared. That was quick...

Still holding on to that spec buy etrader?

[Scooter]

I looked at the ride, and did not think it is a good investment for an amusement park, but it is good for the likes of the Easter shows etc because of the trailor like aspect of it. I would rather see something more perminant to go and see as I would not go for that ride.

They could modernise the roller coaster, or the log ride, or add a roller coaster where you just hang in a seat. Land size is the next problem for them

[etrader]

quote:Originally posted by Steve

Now pretty much all the buyers have disappeared. That was quick...

Still holding on to that spec buy etrader?

Sure have it sitting there put my focus on NOG at .68-.69 last wednesday and friday so sitting right there for now, a few dollars on a roller coaster shares can sit in bottom draw for now

[Barrel Scraper]

Scooter
You are right , space is going to be an issue for Rainbows End.
But clever use of what space they do have should allow for a few more rides yet - and some larger ones too..note the Goldrush type ride (a Tamed down roller coaster)was installed amongst the existing log flume ride utilising little or no extra space at all.

I am sure you will see bigger rides puchased in the future, the power surge is not the last ride to be aquired.. but the smaller ride is probably costing less too. I would think that it would be removed from the Trailer and bolted to the ground in a more permanent fashion.

There will be a limit to NZEs organic growth...upon which a new acquisition would be required for growth (hopefully not gondalas in Christchurch). Alternatively a takeover might be on the cards eventually.

[k1w1]

Thought I would try to start posting about shares as we have flogged the Access topic, agreed that Direct Broking & ASB have sh#te designed websites , and Direct has principals in denial about their lack of principles.

NZE gets my quiet achiever award for its management. They have paid all the debt off, then borrowed to buyback shares increasing the EPS of the shares. Interest costs of borrowing are deductable, depreciation of rides is deductable. As they are making profits and have used up all their old losses they are now paying tax which means they now pay dividends as imputable for shareholders.

In Buffet terms there is a moat around this company due to the difficulty in finding suitable land and sufficient investing returns.They have an effective monopoly position in the leisure park market for NZ's largest city.

Expenses are basically fixed costs. This means lumpy earnings which the market does not like. If it rains you have a bad year.If you get good weather during crucial holiday periods then you will make high marginal profits.

Even average weather is profitable as this year the co had revenues of 7.8 million The gross margin EBDIT was 2.3 mill or 29% of revenue received and NPAT was10% at .8 million.

On my average cost of shares that is an after tax return of about 8% o top of an over 30% capital gain this year.

Today is last day of record for payment of fully imputed dividend of 2c.

[Barrel Scraper]

Is that ur 6000 @ 35c that came up for sale today K1w1? ;)

[k1w1]

No Barrell wasn't me , but I can see why you might have thought so.LOL

[Burgerbun]

Kiwi...you have amazed me thankyou

Here you are going on about the illiquidity of ATR and you have purchased one of the most illiquid stocks the NZX has ever seen.

I guess $2000 was a great day today:D:D:D:D


I personally love illiquid stocks...they can be great performers quietly.

SJL and ATR in the early days did me proud.

[k1w1]

Cloudy, I'm K1w1 not Kiwi, an understandable but important difference. He knows a lot more than me. I like illiquid stocks purely for the pragmatic reason that I have made good returns on them and I am a buy and holder more than a trader

[Burgerbun]

Very sorry there K1w1

Im with you on that one...

illiquidity can be a bonus if you can quietly accumulate

case in point with NZE

others have been SJL, BWY, SCY.


Im glad you dont think like that other kiwi....or yould have missed out on ATR too;)

[James K]

one of these commissioned research reports available on NZE for those who might have missed it. At http://www.merlinconsulting.co.nz/investor%20insight/all%20reports/NZE%20300904.pdf

Good background piece, but nothing new, IMHO.

[k1w1]

Well I have now exited this boring, non-liquid share which I have held for a year,topped up more in June 04, for a return of 82.5%. Are there any other non-liquid, no growth shares that someone can point me too ?

Disc: Did not talk to tea-lady on my site visit.

[Steve]

Well done K1w1! I sold mine a while ago in the mid-low 30's for a reasonable %return. But it was only because I had another trade lined up at that time...

[spike]

Any else following NZE. A small little company I have had for years. They don't make the headlines much like other company's but over the years have slowly improves their returns. With a current dividend of 3cps for a 32cents share look like they are still heading in the right directions. Just a shame the share price has not increased.

NZ experience profit up
5:30AM Saturday August 18, 2007
Rainbow's End operator New Zealand Experience yesterday reported its year to June net profit rose to $1.3 million from $828,000 a year ago.
It said it would pay a fully imputed 3cps dividend on September 28, up from 2cps last year.
Operating revenue rose 9.2 per cent to $9.5 million and pre-tax profit rose to $1.9 million, up 56 per cent.

[Neo-Con]

I purchased a few of these about 7 or 8 months ago for 28c each, now at 35c a pretty tidy return against the flow of the market. P/E is around 10

Dividend yield of 13% gross. Sustainable dividend yield of about 10%. It is basically a monopoly.

Very good value on fundamentals (about as good as there is on the NZX at the mo)

Obviously its the kind of stock that in the event of a downturn or whatever would be the first to be hit but all things considered I think its a very tidy stock. Most people just don't seem to notice it.