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????

[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

[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.

Interesting re-visiting this thread - the situation in terms of numbers of downgrades this year is bad, but not as terrible as it was during the height of the GFC five years ago.

From the AFR today:

More downgrades ahead as economy falters

The earnings confession session starts in April and usually draws to a close about this time of the year. But there is nothing to stop companies from issuing earnings downgrades after they have ruled off their June 30 accounts.

Those companies that go to the market early with full-year profit downgrades usually were found to be in the invidious position of having taken a rosy view of the second-half trading period. Boards of directors and management lived in the vain hope that a turnaround would occur.

After their optimism was found to be misplaced they were forced to go to the market with downgrades. Questions are often asked about the companies that have hit the market towards the end of the confession session.

Did they have financial reporting systems of sufficient quality to give them an accurate picture of operating earnings? Were they trying to avoid a downgrade by massaging down the earnings estimates of analysts?

Any further downgrades after this week would be viewed poorly by the market. The credibility of management would be stretched to the limit if a company were to issue a downgrade in the last week of the financial year.

Also, there is no guarantee that the confession session has flushed out all the poor performers. There is leeway in the continuous disclosure regime for companies to avoid going to the market if earnings are 10 per cent either side of consensus.

That means we could see companies that are going to report earnings 10 per cent below consensus sit on that bad news until August.

[steve fleming]

On the plus side, a couple of upgrades today in the funds management space (WIG & AEF), highlighting the strength of that sector.

WILSON HTM INVESTMENT GROUP LTD (ASX: WIG) – GUIDANCE UPGRADED
This is an update to the release issued to the market with the interim result on 13 February2013.
WIG advises shareholders that stronger performance in its funds management businesses,Wilson HTM Priority Core and Priority Growth Funds and its 79.3% owned PinnacleInvestment Management Limited, is expected to underpin an improved financial result for thesix months to 30 June 2013.

Australian Ethical Investment Limited advises that Net Profit after Tax (NPAT) for the year ending 30 June 2013 is expected to beapproximately $1,177k after taking into account the property impairment described below. This compares to the year ended 30 June2012 of $402k and to the half year to 31 December 2012 of $487k.

[steve fleming]

Today's mid-cap downgrade of the day: EHL


"In April, Emeco Holdings Limited (ASX:EHL) (‘Emeco’ or ‘the Company’) advised that it expected Operating Net Profitafter Tax (NPAT) for FY13 to be in the range of $40m to $44m.

The Company today provided an update on operatingconditions and outlook.


Operating Net Profit after Tax (NPAT) for FY13 is now expected to be in the range of $35m to $36m. A number offactors have contributed to the revised FY13 earnings outlook"

So their April forecasts turned out to be too optimistic by up to 20%.

May and June must have therefore been absolutely shocking months. Not good. Down 20% today.

[Huang Chung]

Wow, that list brings back memories! Although I got out of most of them while the going was still good (ABC Learning, Allco, MFS). It would be interesting to compile a similar list for 2013.

Wow...held all three of them at various stages, but only went to heaven with MFS.

Another one for the 'ultimate' downgrade file (administration / receivership) yesterday....Allmine Group (AZG).

Insolvency practitioners will be a growth area in the months ahead...mainly explorers who simply run out of funds, with no hope of tapping shareholders, financiers and underwriters for more.

[steve fleming]

Downgrade of the day: AMP Limited

"AMP Limited has today provided an unaudited earnings update for 1H 13 following poor claims andlapse experience in its Australian wealth protection business in the second quarter, particularly inMay. "

http://stocknessmonster.com/news-item?S=AMP&E=ASX&N=741283

Down 13% today.

[steve fleming]

Following on from the CLO upgrade last week, another upgrade in the mining services sector today.

"OTOC Limited (ASX: OTC) wishes to provide a trading update and earnings guidance for the year ended30 June 2013.
OTC is pleased to announce that it expects to record improved earnings in FY2013 despite the currentsubdued conditions in the resources sector. Based on unaudited management accounts and currentprojections, OTC expects FY2013 EBIT to exceed FY2012 EBIT (FY2012 EBIT $7.2 million). "

[steve fleming]

Here is the downgrade list for FY13 as of a couple of weeks ago - it has probably increased by 30 - 40 since then. (thanks to Roger Montgomery : http://rogermontgomery.com/downgrading/ )

"here are the 127 downgraders for FY13. And don’t forget to add Cochlear to make it 128.Ariadne, Australian Agricultural Company, APN News and Media (second downgrade), ASG Group, Ausdrill (second downgrade), Ausenco, Australian Power, Bisalloy Steel, Blackmores, Boom logistics (second downgrade) , Bradken, Breville, Cabcharge, Cardno (second downgrade), Calibre, Clarius, Clean Seas Tuna, Chandler Mcleod, Chongherr Investments, Coffey, Coventry Group, CPT Global, CSR, DTQ, DWS, Elders, Ellex, Emeco (third downgrade), Engenco, Enero, Fantastic, Fleetwood (fourth), Greencap Ltd, Global Construction Services, GR Engineering, GUD Holdings (second downgrade), GWA Group, Hansen Technology, Hills Industries, Hudson Investment, Hunter Hall, Integrated Research, Jumbo Interactive, Konekt, Korvest, K&S Corporation, Lycopodium, Macmahon Holdings (third downgrade) , Mastermyne, Matrix Engineering (second downgrade), Melbourne IT, Miclyn (second downgrade), Moko.mobi, Mothercare, Noni-B (second downgrade), Norfolk Group, NRW Holdings, Nuplex, Oakton (third downgrade), Objective Corporation, Peet, Pharmaxis, Platinum, PTB Group, QXQ, Redflex, Reece, Regional Express, Resouce Equipment (second downgrade), Ridley, Rubicor, Ruralco, Saferoads, SAI Global, Sedgman (third downgrade), Servcorp, Service Stream, SMS Technology, Steamships Trading, Stokes, Structural Systems, Tel Pacific, Transpacific Group, Transfield (second downgrade), Virgin (second downgrade), VDM Group (second downgrade), Villa World, Vision Eye Institute, Warnambool Cheese & Butter, Watpac, Webjet, WHK Group (second downgrade), WDS Limited, World Reach, Zicom "

[steve fleming]

BUMP

Downgrade season ahead.......

LYL had a great one yesterday:"Over the past few months the reduction in demand hasbeen more rapid and more pronounced than previously anticipated. As a result Lycopodium is nowforecasting a material reduction in the annual net profit after tax to $4M from our previous forecast of$9.5M, reflecting a second half loss of $2.3M. "

http://stocknessmonster.com/news-item?S=LYL&E=ASX&N=678696

TTN also came out with a sneaky one during the week: "Titan managing director Jim Sturgess said, while the company was on track to comfortably surpassits record FY13 results, overall EBIT was likely to be slightly lower than the range initially targeted($21m-$23m)."

http://stocknessmonster.com/news-item?S=TTN&E=ASX&N=797932

[Joshuatree]

Big dump in ANG shares too following a big downgrade.

[skid]

Dang! sure is alot of action on this thread,compared to the upgrade thread

[mark100]

IFM - Interested to see if it's a one off issue. Like the business model but not the PE
MVF - below forecasts for first 2 months of FY. Worth watching
FLT - first downgrade in years. I like CVO but while FLT is downgrading CVO will also struggle for investor attention
ALU - Sales rose but less than expected

[Joshuatree]

ALU looking weak technically.

[BFG]

Motley Fool says sell OFX:

http://us3.campaign-archive2.com/?u=0d1d0582254b8399936e6130e&id=820b45baeb&e=11e980a674

[dingoNZ]

Motley Fool says sell OFX:

http://us3.campaign-archive2.com/?u=0d1d0582254b8399936e6130e&id=820b45baeb&e=11e980a674

I completely disagree with this statement, they have lost banking facilities but will pick up a new covenant very soon I am sure. Still a great stock with a bright future and strong growth, IMO.

[BFG]

I completely disagree with this statement, they have lost banking facilities but will pick up a new covenant very soon I am sure. Still a great stock with a bright future and strong growth, IMO.

Yes, but Motley Fool has a very large reach/audience. I'm just posting it as a sentiment view from the market. MF rating it a buy definitely drove it up when it was first released after the latest Interim Report. As such, it will most likely also drive it down again!

[cloggs]

NZX-listed telco, TeamTalk, is revising down its profit expectations for the
first half of the financial year.

"Following a review of draft results for the six months to December 2014 the
TeamTalk board is disappointed to report that profits for the period will be
down on both expectations and the prior period.

Best offer at them moment is @1.30 down from 1.69 yesterday.

[skid]

This may be wandering a bit ,but a bunch of big players in the States have just reported lower than expected profit results

http://www.theguardian.com/business/2015/jan/27/us-stock-markets-dow-jones-plunge

[stoploss]

That's pretty much a given. Any company that derives a lot of revenue outside of the US is going to get hurt by the rising US$ and weak growth in Europe/China/Australia. So if you are investing there, stick to domestic only companies. Likewise, any company in Australia where import costs are significant will also suffer as the AU$ falls. Which is why a lot of the retail companies are downgrading. Not sure why HVN is on a tear though - defies logic! Best bet this year is to invest in Australian companies with lots of US$ earnings.
Hi KW , maybe check out MYX.ax , they make generic drugs , and sell in the states amongst other places . I have previously been in around 45 cents , stopped out @ 80 on the way back down . Not currently holding but this could be worth watching and
might fit your criteria ( not sure % of revenue in USA however)

[noodles]

A shocking result by CGO. A loss making half. A company with lumpy revenues.

[noodles]

AKG
CGR - massive one-off loss of a single customer

[mark100]

CGR - massive one-off loss of a single customer

And not the first time. The first one was covered by a 'directors guarantee'. Not investment grade imo

[noodles]

LMW - profit dropped. Flat year ahead. Expecting better based on AGM comments...

At AGM "With the first quarter completed, our results to date reflect a continuation of the growth we sawin 2014. We continue to forecast modest growth for 2015, as we focus on laying theappropriate foundations for longer-term sustainable improvement in market share and profits."

[mark100]

IQE missed prospectus. They sounded like they were upgrading CY15 numbers but by not being clear with their wording it could be a slight downgrade in my view