NZX stocks that have stepped back from the precipice?

[Rep]

We have had Pumpkin Patch and Wynyard, both former stock market darlings hit the wall and head to administration this week - other stocks like Postie Plus have also succumbed after prolonged illness.

A lot of folk would have said that the warning signs had been there for some time and that there are a couple of other stocks in the NZX pack that look like the old, sick or wounded...

So how many stocks have managed to stare over the precipice into the abyss and then managed to step back from doom?

I'll nominate RBD as one - they had a lot of debt, they had completed a sale and leaseback of the KFC stores which they had used to fund a misfortunate venture with Pizza Hut in Victoria which ended up with a massive cash burn, they hadn't responded well to either Hell Pizza or Dominos and then built a bunch of loss making Starbucks Coffee outlets, huge amounts of intangibles on their balance sheet AND a reputation for not meeting guidance with the share price falling from over $2 at IPO to just 55 cents... And falling out of the NZX50... And less than 10 years later, they are regarded as a well managed stable outfit with conservative guidance - although I'm watching the current developments closely...

Any others anyone can think of?

[winner69]

We have had Pumpkin Patch and Wynyard, both former stock market darlings hit the wall and head to administration this week - other stocks like Postie Plus have also succumbed after prolonged illness.

A lot of folk would have said that the warning signs had been there for some time and that there are a couple of other stocks in the NZX pack that look like the old, sick or wounded...

So how many stocks have managed to stare over the precipice into the abyss and then managed to step back from doom?

I'll nominate RBD as one - they had a lot of debt, they had completed a sale and leaseback of the KFC stores which they had used to fund a misfortunate venture with Pizza Hut in Victoria which ended up with a massive cash burn, they hadn't responded well to either Hell Pizza or Dominos and then built a bunch of loss making Starbucks Coffee outlets, huge amounts of intangibles on their balance sheet AND a reputation for not meeting guidance with the share price falling from over $2 at IPO to just 55 cents... And falling out of the NZX50... And less than 10 years later, they are regarded as a well managed stable outfit with conservative guidance - although I'm watching the current developments closely...

Any others anyone can think of?

I wouldn't go as far saying RBD were ".. stare over the precipice into the abyss and then managed to step back from doom?'. They were always generating cash, profitable and paid dividends and weren't heading to the bankruptcy courts. Just that punters got a bit peeved and didn't like them - sentiment turned.

Smiths City is one that has been into receivership/administration and survived. Good story

[Rep]

Ok yes they always generated cash but in 2007 they had to borrow $16m to a total of $48m to keep funding their capex and dividends - that was after cutting the dividends after posting losses

[Balance]

Diligent is the standout.

SDL is another.

[Scrunch]

There's a few that got themselves into trouble (sometimes through external events) and raised money by issuing a lot of shares at low prices. Following this recapitalization they have done well following this.

Examples include Air NZ, Nuplex and Skellerup.

[Marilyn Munroe]

What about Wellington Drive Technologies?

They were wobbling at the edge of the precipice but are now steady. Still haven't taken a step back so are vulnerable to a crumbling cliff face or a gust from the winds of change. To torture the metaphor even further they are no longer compelled to stare continually into the abyss but are able to occasionally glance at the horizon.

Boop boop de do
Marilyn

[Valuegrowth]

What a risky stock market? How do they avoid these types of things in the future? This clearly shows us there are risks and rewards in any type of market.

Pumpkin was a growing company. I can still remember its share price rose from $1.00 to $4.00 in no time. What happened to it? Couldn’t they find out customer taste? Did they over-leverage too much? Did they expand to other markets heavily without consolidation first at home? Couldn’t they face competition successfully while retaining their customer base?

However, in clothing sector we should see more bankruptcies in the future too as there may be more competitors in this sector. Strong companies will beat out weak companies in the future too.

[Lola]

Diligent is the standout.

SDL is another.

Agree. But the one that has been through many chameleon like reincarnations and done a bit of coffin dodging on the way, started life decades ago as Genstock, then Parapine, Britomart, and Savoy. Now Promisia I think which has crept up just 400% this year.