FPH - Fisher Paykel Healthcare.

[Phaedrus]

A significant number of competent ST posters have suggested that FPH might be fully valued - or even overvalued. The shareprice keeps going up though, so are they all wrong? I don't think so.

The market carries a lot of momentum. Rising stocks almost always overshoot their "true value", just as falling stocks almost always fall below their "intrinsic worth". The trouble is everyone has their own view as to exactly where these levels lie. Even if there was some way to precisely calculate the exact worth of a stock, there is no way of knowing just how far the market will overshoot in any particular instance. To sell simply because a stock had reached your theoretical value caps your profits at that point and you miss out on any "overshoot" which can be quite substantial. It seems to me that the answer here is to use FA to determine when a stock is approaching its "value" then switching to TA to time your exit - with a view to selling when the uptrend shows signs of weakness. Many people think that TA and FA can not and should not be mixed and you must choose one or the other, so such an approach will offend purists on both sides.

Looking at the chart we can see that FPH was in a steady long-term uptrend (dark green trendline) but since December the uptrend has accelerated and FPH is now in a steep uptrend. Too steep to be sustained. There are technical indications of potential weakness such as RSI divergences. There is a new confirmed trendline in place (light green) with price action clearly above it. I would suggest that a break of this trendline would provide an appropriate exit signal. Very conservative looooooong-term holders might prefer to wait until the long-term (dark green) trendline is broken but this would mean giving perhaps 50 cents or more of profit back to the market. Any exit system is better than none though!
For those that do not like trendlines, there are other tools such as Trailing Stops that can be used. Long-term, I had been using a 16% trailing stop with FPH but it became evident that this was a bit too conservative so I tightened it to 13% as soon as it became obvious that the uptrend has accelerated. When I found myself in agreement with others here that FPH was looking a bit overvalued, I tightened the stop yet again to 10%. I do not anticipate tightening it any more than that.
http://img.photobucket.com/albums/v418/789456/FPH529001.gif

[Snow Leopard]

Phaedrus, I am genuinely surprised that you are letting fundamental considerations influence your choice of trailing stop margin.
Given that 13% seems to based on back testing recent data, I would have thought you would have kept to that.

regards

Paper Tiger

[Mr_Market]

From the FA point of view, I calculate fair value to be around $4.00. You certainly aren't getting a bargain with this one.

If I already owned this I would not sell unless either:
a) The market was pricing it far beyond its' intrinsic value or
b) The fundamentals looked like they may deteriorate significantly over the next few years.

[Phaedrus]

There. See how quick and easy it is to simultaneously offend both sides!

Mr Market, You say that "If I already owned this I would not sell unless....the market was pricing it far beyond its' intrinsic value..." This sounds as though you have an exit strategy, when in fact you haven't. Without defining just how far "far" is, you are free to sell or hold at whim. Your sell trigger is not pre-determined. What you have is an idea - not a system. You probably put quite a bit of effort into estimating your $4.00 "fair value" for FPH, why not utilise this and resolve to sell when the market exceeds this by a certain percentage? Even if you make it a target range, you will have set minimum and maximum exit points. Without defined exit criteria, you are simply holding and hoping. If you had bought FPH, I would guess it would have been on the basis that it was undervalued (x% lower than your $4.00 estimate). To me, it seems only logical to then sell when it is y% higher than your best estimate.

Paper Tiger, Any decent system will pull you out of a stock long before a trailing stop is hit. To my mind, trailing stops are best used as a secondary backup to the primary system. They can provide an exit strategy for people that do not have a system - as such they are a lot better than nothing. You can see from the chart that the trendline will probably be broken long before any stoploss is hit. I speak a lot about "tightening your stops" and FPH provided a nice practical example of how this can be done. I let fundamental considerations influence my Buy decisions, so it seems only logical to let fundamental considerations influence my Sell decisions as well.
There is another factor here that I have not mentioned at all. As you are aware, I monitor the Index (NZSX50) very closely, using it to guide my overall market strategy. Right now, I am a gnat's eyelash away from moving into "Caution" mode, where all sell signals must be acted on, buying is frowned upon, and all stops are tightened. I'm just being a good boy and keeping to my system. I'm in anticipatory partial caution mode.

PT, I thought you were a TA sceptic. Have you changed or did I read you wrongly?

[Snow Leopard]

I am a sceptic of many things.
TA is something that interests me and I have set out to understand it. But I currently make little use of it for making buy and sell decisions.

[Winston001]

EEERRRKKKK! I just bought some FPH warrants at $2.50. Couldn't you have posted this a few days earlier Phaedrus?? :D

I consider it to be a good stock and bought because I have usually missed out in the past thinking stocks such as RYM were overvalued - only to see them consistantly rise further.

But one thing I've learned from this forum is that stocks over-shoot and thus I'll sell if need be.

Thanks again Phaedrus for your thoughtful analysis.

[Mr_Market]

quote:Originally posted by Phaedrus
Mr Market, You say that "If I already owned this I would not sell unless....the market was pricing it far beyond its' intrinsic value..." This sounds as though you have an exit strategy, when in fact you haven't. Without defining just how far "far" is, you are free to sell or hold at whim. Your sell trigger is not pre-determined. What you have is an idea - not a system. You probably put quite a bit of effort into estimating your $4.00 "fair value" for FPH, why not utilise this and resolve to sell when the market exceeds this by a certain percentage? Even if you make it a target range, you will have set minimum and maximum exit points. Without defined exit criteria, you are simply holding and hoping. If you had bought FPH, I would guess it would have been on the basis that it was undervalued (x% lower than your $4.00 estimate). To me, it seems only logical to then sell when it is y% higher than your best estimate.


Hello Phaedrus, I don't think our paths have crossed much before on this board even though we've both been around a while.

I imagine that you, as a technical analyst and judging from your line of questioning, would have liked me to have provided a more precise response to your assertion that FPH is fully valued. Unfortunately, fundamental analysis is not a precise science.

You have assumed that 'quite a bit of effort' went into determining my estimate of fair value at $4.00. In fact it took me no more than 30 seconds to arrive at that number. All that one requires is the current earnings per share and a suitable discount rate. It is easy to remember the multipliers for various discount rates. Now, as reported earnings per share can deviate from the true value, and the discount rate is estimated, my valuation is necessarily an estimate.

You are correct in assuming that I would only have purchased FPH if it were undervalued. And it is true that I would set the price at some percentage of my estimated value. This is my margin of safety.

Now as far as an exit strategy goes, that is an interesting question, and one that I find TA's have the most difficulty in understanding from the value investors point of view. Simply stated - the value investor seeks to buy at a price at which he will never need to sell. This of course requires choosing the right stock as well as the right price. In fact most of my effort goes into trying to understand the long term prospects various types of business. Now in the real world even the best businesses sometimes dissapoint. If the predicted earnings don't come through then the instrinsic value goes down. This outcome is precisely the reason for purchasing at a discount. So, in the unlikely event that the price falls below my purchase price, I would consider selling.

As for selling on the upside, as I said I would prefer to hold the stock forever. The only time I would consider selling an excellent stock is if I percieved the market to be pricing it at an irrationally high price, since such irrational pricing is often followed by market crashes.

Finally, I do have a system, but is a system based upon the evaluation of probabilities, rather than the calculation of certainties.

[bushbasher]

Mr Market, I have to admit to agreeing 100% with your investment philosophy. I have held FPH (or F&P as it used to be) since 1991 and never sold any and indeed topped up my holding on occasion. I would have to lose confidence in either the management or the healthcare products market in general to be inclined to sell them.

Since my going-in cost is effectively 36c per share after splits I figure I can ride the downswings.

[beacon]

Interesting comments Mr. Market. And how, pray, do you determine the discount rate for any stock?

Thanks Phaedrus, for reaffirming that most successful systems are simple. Value benchmarking should indeed be a more profitable stop loss.

[Mr_Market]

quote:Originally posted by beacon

Interesting comments Mr. Market. And how, pray, do you determine the discount rate for any stock?


Discount Rate = Risk-free rate. i.e long term average rate on a long-term government bond. Of course this will vary over time, so is necessarily an estimate. All the more reason for purchasing at a discount (you build in a margin of safety).

[Phaedrus]

Mr Market, You say you would prefer to hold stocks forever. So would I! We both know that this is not a good idea though. The bluest blue-chip does not keep going up for ever. I have a lot of sympathy and understanding for your approach. In fact, I used a very similar system for over 10 years when I first started out. I was happy enough with the "buy" side, but gradually became increasingly dissatisfied with the fact that I was giving a lot of my profits back to the market by holding stocks too long. The crash of '87 was the last straw. I lost an awful lot of money and it took me over 2 years to recover. The lesson that I had to be a lot more active in order to protect my capital and profits was rammed home. Never, ever again, would I pursue a "buy and hold" type of system.
Look at the charts of RBD, BGR, CAV, HBY, TLS, SCT, TEL etc etc etc. Every single one of these stocks was in a really good uptrend for literally years. Each and every uptrend ended. I have held all of these stocks, selling each one when it became clear that the uptrend was over. Anyone that continued to hold such stocks ended up giving the lion's share of their profits back to the market. I won't mention Snoopy because Duncan thinks I am picking on him.
It's almost as though truly staunch Buffett followers have determined to emulate his mistakes too - take a look at this Coke chart. I haven't bothered to apply any technical indicators such as moving averages or trendlines etc because blind Freddy could see when the uptrend suddenly ran out of steam. Maybe Buffett has such a large holding of KO that he is stuck with it but he has certainly given a lot of his profits back to the market and would have been better off selling years ago. Sound vaguely familiar?
http://h1.ripway.com/Phaedrus/KO003.gif

[duncan macgregor]

Dont be to hard on yourself PHAEDRUS. I feel a bit guilty picking on SNOOPY myself, when in fact he taught me more than anyone. I see where he and his FA BUFFET type followers are blinded to reality. He saved me a lot of money by not making similar mistakes. It put me off reading any BUFFET style books. Buy and hold with your eyes closed to the market is plain stupid.
My investment methods require people like that to make the market work for me. macdunk

[TerryA]

Phaedrus,

What time period do you use in calculating the trailing stops and is the period the same for each percentage.

I have been using periods as short as 5 days for tight stops (95%)and up to 60 days for looser stops (80%) but now wonder if there is any value in doing this.

Thanks,

TerryA

[Snow Leopard]

I was under the impression that a trailing stop was generally based on the highest single [closing] price.

eg a 10% stop.
Previous high is $1.00 the stop is $0.90.
Then next day the SP moves to $1.10 and the trailing stop moves to $0.99.

PS take a look at Phaedrus' chart at the start of this thread.

[beacon]

Thanks Mr. Market. Maybe it is my weak maths, or that I simply haven't twigged yet, but I still can't see $4 FPH valuation from your system. Thanks in anticipation

[Phaedrus]

Terry, The actual construction of a trailing stop is as simple as PT's post suggests. No specific period is involved at all. The thing is to be clear as to which trend you are trading. For example, with FBU you would be using a trailing stop of about 24% if you were a long-term holder, but if you wanted to trade the secondary "medium-term" trends, a figure of around 9% is required. These figures are derived by looking back over the previous 5 years or so.
The secondary trends of FPH are insufficiently well defined for this to be a good trading stock. In any case, a 5% trailing stop such as you describe would be way too tight to trade FPH medium term trends and too loose to trade the short term trends.
Wait! The penny has just dropped! Charting programs like MetaStock need to be told how far to look back to find the "highest high" and you are enquiring as to how to select this lookback period. Yes? Answer :- It should be as short as possible. Make it too short though, and your trailing stop will sometimes fall in the middle of an uptrend - something it should not do.

[Halebop]

quote:Originally posted by beacon

Thanks Mr. Market. Maybe it is my weak maths, or that I simply haven't twigged yet, but I still can't see $4 FPH valuation from your system. Thanks in anticipation


A discount cash flow valuation of $4.00 is very easy to hit if you use Buffett's interpretation of the risk free rate of return. In NZ the 10 Year bond rate was 5.79% the last time I looked. DCF allows for many permuations but a simple $4.00 permutation for FPH would be...

EPS 13.76c
Discount Rate 5.79%
Growth Rate 12% for 5 Years
Termination Growth Rate 0%

In my opinion the risk free rate of return is far too low for any company. By its nature, equity investing is not risk free and requires higher long term returns. In times of low rates it relies upon continued low rates for long periods of time. While the boomer savings glut has assisted this thinking, particularly over the last 10 years, inflation in part fueled by those savings risk shifting the equilibrium. A 5.79% discount rate will quickly be blown away by a lift in inflation to say 5%. The margin of error at low discount rates is an illusion quickly swallowed by changes in inflation and interest rates.

Quite obviously though, in FPH's case, a PE of 32 is not justified by a 5 year 12% growth assumption. So either growth rates or the discount rate need to be changed. I think it's a bit more of one and a bit less of the other. A discount rate below 10% is asking for trouble. Who would invest in equities for results below historical equity returns? Because I like the business and the demographic trends it is riding my DCF assumption would be along the lines of...

EPS 13.76c
Discount Rate 10%
Growth Rate 15% for 7 Years
Termination Rate 3%
Value $3.92

Not exactly an obvious long term fundamental buy on those assumptions, particuarly if you are looking for a margin of error as well.

[TerryA]

PT & Phaedrus,

Thanks for your responses.

If as PT suggests the Trailing Stop (TS) changes each time the closing price changes the TS would replicate the closing price line at the percentage set. This is does not do.

The flat portions of Phaedrus's TS indicate, to me at least, that some form of averaging or, as he suggests, a look back for the previous high is being used.

My programme is Metastock and it does require a "days" function to be included in the TS formula.

Looking at Phaedrus's TS's shown above it appears that your the period is at least 35 days. The best example is the period April - May which has that flat TS until a new ( higher) high is achieved. The TS is then adjusted upwards. Earlier flat periods would suggest that the time period is open ended

I now realise that I may be wrong to shorten the time period for a tighter TS, as this would allow for a gradually falling closing price to never hit the trigger point.

I obviously need to do some more testing but any further comments from you both would be welcomed.

Regards and thanks,

Terry

[Snow Leopard]

You have misunderstood me, probably because you are thinking MetaStock and I was not. I have never used the program.

Here is how I implement trailing stops using MFT and a 10% trailing stop as an example

http://i7.photobucket.com/albums/y269/TheTigerWithNoName/MFT-20051130.png

The trailing stop value rises with higher highs but should the closing price be lower than the trailing stop value then it drags the stop down with it. It starts with day one of data

One of the advantages of writing your own application, is that it can be made to do what you want. :)
Mind you the technical support leaves a lot to be desired at times. :D

[TerryA]

PT,

Thanks again. I think we are almost on the same wavelength and I will work on getting metastock to do what I want it too.

I empythise with your comment on self technical support. My equivalent is anyone who works for himself has a b'd for a boss.

Best wishes,

Terry

[stevieb]

quote:Originally posted by Halebop


In my opinion the risk free rate of return is far too low for any company. By its nature, equity investing is not risk free and requires higher long term returns.

Hold on, I'm confused, weren't you the guy that told me there is no relationship between risk and return. While I agree with your statements that people require higher long term return, the basis for them requiring this is surely that there is (or at very least they think there should be) a payback in return for greater risk. Maybe I've misunderstood your position?

[Halebop]

quote:Originally posted by stevieb

Hold on, I'm confused

Yes you are...


quote:Originally posted by stevieb

Maybe I've misunderstood your position?

...Yes you have...


quote:Originally posted by stevieb

...weren't you the guy that told me there is no relationship between risk and return. While I agree with your statements that people require higher long term return, the basis for them requiring this is surely that there is (or at very least they think there should be) a payback in return for greater risk. Maybe I've misunderstood your position?

When valuing a company, if I use a higher discount rate, I achieve a lower valuation. If I achieve a lower valuation and then apply a 50% margin of error on top - I am only buying companies for much less than their intrinsic value. Being valued much less than intrinsic has nothing to do with risk. The qualitative factors verify risk, not the quantitative. A discount rate has nothing to do with risk. It's purely subjective. I don't actually see treasuries / government stock as being "risk free" yet they are offered referred to as such (or at least as the nearest proxy). But I do see excess risk in valuing a risky asset class at a "risk free" rate of return.

[stevieb]

quote:Originally posted by Halebop


quote:Originally posted by stevieb

Hold on, I'm confused

Yes you are...


quote:Originally posted by stevieb

Maybe I've misunderstood your position?

...Yes you have...


quote:Originally posted by stevieb

...weren't you the guy that told me there is no relationship between risk and return. While I agree with your statements that people require higher long term return, the basis for them requiring this is surely that there is (or at very least they think there should be) a payback in return for greater risk. Maybe I've misunderstood your position?

When valuing a company, if I use a higher discount rate, I achieve a lower valuation. If I achieve a lower valuation and then apply a 50% margin of error on top - I am only buying companies for much less than their intrinsic value. Being valued much less than intrinsic has nothing to do with risk. The qualitative factors verify risk, not the quantitative. A discount rate has nothing to do with risk. It's purely subjective. I don't actually see treasuries / government stock as being "risk free" yet they are offered referred to as such (or at least as the nearest proxy). But I do see excess risk in valuing a risky asset class at a "risk free" rate of return.


It wasn't the discussion of valuation I was confused about, my points is why bother assessing risk at all (valuation I can understand) if you don't see any relationship between risk and return. For someone who does not believe there is any relationship you mention the word risk and how you would assess a hell of a lot in your posts.

If you don't believe in the relationship I don't understand why you bother.

[beacon]

Thanks Halebop.

[Halebop]

quote:Originally posted by stevieb

It wasn't the discussion of valuation I was confused about, my points is why bother assessing risk at all (valuation I can understand) if you don't see any relationship between risk and return. For someone who does not believe there is any relationship you mention the word risk and how you would assess a hell of a lot in your posts.

If you don't believe in the relationship I don't understand why you bother.

I was talking about the divorce between valuation and risk and risk and return. The divorce comes through (or at least is exploited by) the process of qualitative risk management, not the other way round.

Risk and return do not correlate. If they correlated then the most speculative investments [u]on average</u> would make the biggest profits. But bar a few extraneous results in the distribution curve which everyone likes to focus on, big risks tend to result in big losses.

If I manage my risk in terms of the quality of the investment and buy only when the shares are trading at a substantial discount to a subjective valuation criteria, then I reduce the risk of loss but maintain the typical upside of share investing. Again, risk and reward do not correlate. The qualitative criteria ensure I give more obvious duds a miss and focus on the good stuff and the valuation criteria ensure I buy cheaply more often. My returns are exaggerated by avoiding too many big losses yet I have taken the "same" equity risk as all share investors. The magic of less losers by avoiding risks is that my winners don't even need to outperform by much to make me look good. The qualitative measures also ensure the winners have a degree of consistency, which becomes more important if you hold through those inevitable down years.

[Halebop]

quote:Originally posted by beacon

Thanks Halebop.


You're Welcome! (Not sure I'm appreciated on all fronts [:p])

[stevieb]

quote:Originally posted by Halebop


Risk and return do not correlate. If they correlated then the most speculative investments [u]on average</u> would make the biggest profits.

Aha, but correlation does not have to be a positive correlation. Negative correlation is still a correlation.


quote:

big risks tend to result in big losses.

That's a correlation.


quote:
From http://economics.about.com/cs/economicsglossary/g/correlation.htm

Definition of Correlation”
Glossary

from Econterms

Definition: Two random variables are positively correlated if high values of one are likely to be associated with high values of the other. They are negatively correlated if high values of one are likely to be associated with low values of the other.

[Mr_Market]

quote:Originally posted by Phaedrus

Mr Market, You say you would prefer to hold stocks forever. So would I! We both know that this is not a good idea though. The bluest blue-chip does not keep going up for ever. I have a lot of sympathy and understanding for your approach. In fact, I used a very similar system for over 10 years when I first started out. I was happy enough with the "buy" side, but gradually became increasingly dissatisfied with the fact that I was giving a lot of my profits back to the market by holding stocks too long. The crash of '87 was the last straw. I lost an awful lot of money and it took me over 2 years to recover. The lesson that I had to be a lot more active in order to protect my capital and profits was rammed home. Never, ever again, would I pursue a "buy and hold" type of system.


I'm sorry you got burned in '87 Phaedrus. Even though it didn't work for you doesn't mean it's not a valid investing strategy. As I said before one should look at selling if one perceives extreme overvaluing by the markets. For whatever reason you did not see the overvaluation in '87. Did you know that Warren Buffet once liquidated his entire portfolio (I think it was in the 60's) because he was uncomfortable with the extrememly high market valuations. The market crashed soon after.

In any case, you have now found a system that works for you, and you are right to take advantage of it.

[Halebop]

quote:Originally posted by stevieb

Aha, but correlation does not have to be a positive correlation. Negative correlation is still a correlation.

Great thought but I referred to correlation, which is neither positive nor negative - just trendable. If you can show me the correlation, positive or negative, you would probably earn a Nobel prize in economics! Get to it, the prize and sharemarket profits are worth more than any argument of semantics with me!

While its a commonly "accepted" concept that risk and reward go hand in hand, there is no data or model that backs that up. Risk and reward are a product of market conditions and nothing else. My apparent genius today can be disproved tomorrow with catastrophic loss. Even something as low yielding and superficially low risk as a bank deposit can end in tears if the banks face systemic loss.

[bushbasher]

quote:Originally posted by Mr_Market


quote:Originally posted by Phaedrus

Mr Market, You say you would prefer to hold stocks forever. So would I! We both know that this is not a good idea though. The bluest blue-chip does not keep going up for ever. I have a lot of sympathy and understanding for your approach. In fact, I used a very similar system for over 10 years when I first started out. I was happy enough with the "buy" side, but gradually became increasingly dissatisfied with the fact that I was giving a lot of my profits back to the market by holding stocks too long. The crash of '87 was the last straw. I lost an awful lot of money and it took me over 2 years to recover. The lesson that I had to be a lot more active in order to protect my capital and profits was rammed home. Never, ever again, would I pursue a "buy and hold" type of system.


I'm sorry you got burned in '87 Phaedrus. Even though it didn't work for you doesn't mean it's not a valid investing strategy. As I said before one should look at selling if one perceives extreme overvaluing by the markets. For whatever reason you did not see the overvaluation in '87. Did you know that Warren Buffet once liquidated his entire portfolio (I think it was in the 60's) because he was uncomfortable with the extrememly high market valuations. The market crashed soon after.

In any case, you have now found a system that works for you, and you are right to take advantage of it.


Phaedrus, I too sympathise with your '87 losses as I also dropped a bundle of cash in that debacle. Remember portfolio gems like Equiticorp, Chase, Ariadne, Judge, Rainbow, Renouf? However, that experience prompted me to be even more rigorous in my value investment criteria. I want to be convinced that a company has a leading (or niche) position in an attractive market, has an able management and is able to sustain some sort of competitive advantage over an extended period.

However, I (or Mr Market I am sure) am not suggesting anyone should buy stocks and then go and stick our heads in the sand and ignore what is happening in the market. Every company has missteps, loses its competitive advantage or of course the market as a whole drives prices to irrational levels. In all these occasions we should be strong enough to make a decision to sell a share (even if we have held it for a long time) to protect our capital.

However, I think Mr Market's point stands...buy low enough to withstand the occasional downswings in a long term upwards trend. You raise the example of HBY, which I actually still hold - it clearly has been affected by a feeling that it has overexposed itself to retail at the same time as retail is perceived to be in a general down-cycle. However, I have not lost faith in management and since I bought this stock at $2.08 in 2001 at the current share price that is effectively still a 17% p.a. compound growth rate in my capital since I bought (excluding divis). I still believe that company can generate superior growth in the future which is why I continue to hold...until I am proven wrong.

Your example of Coca Cola is also a relevant one. However, even in this example if you had bought 10 years ago at $15 you would still have made a compound return approaching 12% p.a. based on a share price of $45 today. Everything depends on the time period during which you hold. Now that he is so big Warren Buffet doesn't have the luxury (as most of us do) of being able to get into and out of stocks in a short time horizon. His approach with Coca Cola will probably be more likely to try and influence the strategic direction of the management through his large holding rather th

[Halebop]

quote:Originally posted by bushbasher

However, even in this example if you had bought 10 years ago at $15 you would still have made a compound return approaching 12% p.a. based on a share price of $45 today. Everything depends on the time period during which you hold.

By using technical measures you could have sold for $70 to $50 [u]8 years ago</u>. Even if you hurried the selling process and got 10% or 15% less than you should have, you've had 8 years to make it back. If you are exceptionally enarmored with the stock, you could buy back in at any time the technicals corroborated (Coke may finally be doing so now - an irony with Buffett announcing his departure from the board).


quote:Originally posted by bushbasher

Now that he is so big Warren Buffet doesn't have the luxury (as most of us do) of being able to get into and out of stocks in a short time horizon.

Berkshire Hathaway owns 200m shares in Coke, about 8.45% of the company, currently worth roughly US$9b. The total value of Coke is in excess of $100b. The value of all securities listed on the NYSE back in March was US$43.6 TRILLION (This isn't even counting the Nasdaq and other North American markets). Coke represents less than 0.25% and Buffett's stake around about 0.02%. It's not a credible argument that he would face difficulties selling this stake. In the New Zealand context selling 100% of TEL would be a big ask. In the USA its less than a blip.

[Phaedrus]

Buffett made a lot of money on Coca Cola but then gave a very significant proportion of his winnings back to the market. In less than 5 years, his 1998 holding worth $17.7 billion fell to $7.4 billion as KO went from a high of $88.94 to a low of $37.01.

Did Buffett not see the overvaluation in '98?

The market certainly did!!!

[bushbasher]

quote:Originally posted by Halebop


quote:Originally posted by bushbasher

However, even in this example if you had bought 10 years ago at $15 you would still have made a compound return approaching 12% p.a. based on a share price of $45 today. Everything depends on the time period during which you hold.

By using technical measures you could have sold for $70 to $50 [u]8 years ago</u>. Even if you hurried the selling process and got 10% or 15% less than you should have, you've had 8 years to make it back. If you are exceptionally enarmored with the stock, you could buy back in at any time the technicals corroborated (Coke may finally be doing so now - an irony with Buffett announcing his departure from the board).

I don't disagree with that at all. I've never held Coke but if I had I doubt I would have lasted 8 years of poor performance. My point is if you can pick all the market turns correctly with technical analysis all credit to you. I don't have sufficient faith in my own ability to act on supposed key technical market signals consistently enough for it to be a viable method for me.

Incidentally, did TA indicate that FPH should have been sold when it got sold aggressively down to $3.30 in December? Anybody who did would have missed out on a 33% gain since then.


quote:

quote:[i]Originally posted by bushbasher

Now that he is so big Warren Buffet doesn't have the luxury (as most of us do) of being able to get into and out of stocks in a short time horizon.

Berkshire Hathaway owns 200m shares in Coke, about 8.45% of the company, currently worth roughly US$9b. The total value of Coke is in excess of $100b. The value of all securities listed on the NYSE back in March was US$43.6 TRILLION (This isn't even counting the Nasdaq and other North American markets). Coke represents less than 0.25% and Buffett's stake around about 0.02%. It's not a credible argument that he would face difficulties selling this stake. In the New Zealand context selling 100% of TEL would be a big ask. In the USA its less than a blip.


True, its not a big number in terms of the US stock market. However, $9 BN is a pretty big chunk of stock to place even here. The largest IPO in US corporate history (AT&T Wireless in 2000) only (!) raised just over $10 BN. It would certainly not be impossible for Buffet to place the stock but I suspect he has held (perhaps misplaced) faith in the management to turn the situation around there, till now.

[Halebop]

quote:Originally posted by bushbasher

...My point is if you can pick all the market turns correctly with technical analysis all credit to you. I don't have sufficient faith in my own ability to act on supposed key technical market signals consistently enough for it to be a viable method for me.

This is the favoured high ground of FA's arguing against TA. There is no system that can pick ALL trends correctly. If you can show me the FA system that is ALWAYS right and ALWAYS outperforms I'll happily dump any use of TA. For me TA is another tool in the tool box. Unfortunately, all my tools have their foibles.


quote:Originally posted by bushbasher

Incidentally, did TA indicate that FPH should have been sold when it got sold aggressively down to $3.30 in December? Anybody who did would have missed out on a 33% gain since then.

Depending on what signals you were watching for and your investing time frames TA might have told you to exit FPH. But those same signals would have then told you to re-enter as well. Selling, even if it were a false positive signal, does not preclude buying again.

No matter your time frame TA told you to exit Coke and has kept confirming it for almost 8 years, despite numerous shorter term uptrends. We currently have a weakish and tentative indicator of another short term uptrend. Maybe in 5 years time FAs will be able to blinker logic and exclaim "see, he was right to hold through 10 years of negative returns!"?


quote:Originally posted by bushbasher

It would certainly not be impossible for Buffet to place the stock

That's all I was sying as well. The size of his holding did not preclude him from selling.

[Phaedrus]

Bushbasher, you ask "did TA indicate that FPH should have been sold when it got sold aggressively down to $3.30 in December?"

No, it didn't. Take a look at this 5 year FPH chart. You can see that the longterm trendline was unbroken by the December low you mention. In addition, a longterm moving average was also unbroken. (SMA, Dark blue, period chosen to intersect low of March 2004 - nicely confirmed April 2005) A stop loss set to intersect the low of Decenber 2002 (Red) remains unbroken, but over the years it has gradually diverged from the price action and is now a bit on the loose side. I have plotted a series of successively tighter trailing stops to compensate for the acceleration of the uptrend. You can see that all remain unbroken.
Similarly, the longterm trendline has fallen a bit behind price action over the last 6 months and could be replaced by new, steeper trendlines if you wanted to. All are unbroken. Really conservative longterm holders of FPH wouldn't bother with all this updating nonsense - they would still be using the original longterm trendline, moving average and trailing stop. Since price action is so far above all of these indicators, they would only need to check the chart every few weeks or so.
Personally, I run a more active system than that shown here and have in fact been flicked out of FPH 3 times over the 4 year period covered by the chart. You select a system and indicators that are appropriate to your chosen level of market activity.

http://img.photobucket.com/albums/v418/789456/FPH62001.gif

[bushbasher]

Phaedrus, thanks for the graph. Back to your original question on this thread I would not be selling FPH using FA or TA. Seems very clear with FPH that its been in a fairly long term uninterrupted uptrend. Long may it continue :)

At the end of the day its seems to me your chosen investment strategy really depends on how hands-on you want to be with your portfolio.

[duncan macgregor]

quote:Originally posted by bushbasher

Phaedrus, thanks for the graph. Back to your original question on this thread I would not be selling FPH using FA or TA. Seems very clear with FPH that its been in a fairly long term uninterrupted uptrend. Long may it continue :)

At the end of the day its seems to me your chosen investment strategy really depends on how hands-on you want to be with your portfolio.

You are quite wrong the FPH sp has had a few interuptions, if you look at the chart. From july to feb 2003 the sp went nowhere. Its one thing to say its on a long uptrend after the event, and another to close your eyes to reality half way there. If in doubt get out is my motto. Once a share is in profit i lower my stop loss and time line but must still admit i would have been out in sept. macdunk

[Zaphod]

quote:Originally posted by Halebop

A discount cash flow valuation of $4.00 is very easy to hit if you use Buffett's interpretation of the risk free rate of return. In NZ the 10 Year bond rate was 5.79% the last time I looked. DCF allows for many permuations but a simple $4.00 permutation for FPH would be...


Are those bond rates quoted pre-tax? That may also have a significant effect on the permutation.

Zaphod

[Halebop]

I guess if you wanted to you could change the bond discount rate to reflect 33% tax (the value of fully franked New Zealand company earnings). If the bond rate wasn't asking for trouble, the implied 3.88% discount rate surely would be?

I'll stick with my double digit discount rates in either case.

[COLIN]

If you are an FPH holder and want a heart-warming experience to help cope with this miserable winter weather, then spend a little time studying their Annual Report - and you'll be wondering why you ever bother chasing some of the other rubbish that's about in the market.
The positives are too many to detail, but I particularly noted:
* Operating margin of 35.9%
* Pre-tax return of 53% on equity (this despite shareholders equity being $203m against $267m of total assets)
* Intangibles such as goodwill, patents and trademarks, carried at a meagre $3m in the books - the true value of the patents, intellectual property rights, etc., in this world-class business must be enormous!
* Independent valuation of land & buildings is $108m - against $42m book value.
* 65% of revenue is earned in US$. I haven't tried to analyse the full hedging position but the recent decline in the NZD will have given considerable relief.
* And the sales and revenue outlook is one of significant growth, not only across the core product groups but also backed up by development of new specialised products in the treatment of patients.

Its the sort of success story that one doesn't see all that often these days, particularly in the manufacturing field. I'm sure that the pessimists among you (and I usually tend to err that way, myself) could find some negatives, and I realise that the TA people will dwell on the recent (slight) price weakness, but for those of you who are casting around for something that won't "do a TEL" on you, this might be one for you to consider.

[quartzpurple]

Hi Colin,

Unfortunately, good company does not always mean good investment. It is always much easier to do a business analysis than finding out whether there is still any upside in share price that can be exploited.

[COLIN]

quote:Originally posted by quartzpurple

Hi Colin,

Unfortunately, good company does not always mean good investment. It is always much easier to do a business analysis than finding out whether there is still any upside in share price that can be exploited.



Agreed. Too true. Perhaps I should now reveal that I sold about half of my holding at 460, after concluding that there had been too much overshoot, and am now pondering a re-entry point. However, I think there is still plenty of grunt left in the longer-term uptrend and am finding it hard to justify not getting back into a buying mood again.
I really am a "buy the business, not the share" type of investor, but I am not silly about holding on at all costs when there is a clear medium-term downtrend.

[Phaedrus]

Colin, you say "I realise that the TA people will dwell on the recent (slight) price weakness......" WRONG!!!!

One of the many good things about charts is that they enable you to easily assess the magnitude and thus the significance of any price movement. It is easy to see from the attached chart that the weakness Colin mentions is quite insignificant. It has less than half the magnitude of previous retracements - ones that have not affected the overall long-term uptrend at all. Dwell on such barely discernable "weakness"? Not likely!

FPH is in a clear long-term uptrend and has been for many years. On page 1 of this thread, I observed that "The secondary trends of FPH are insufficiently well defined for this to be a good trading stock". This, then, is a good "long-term buy and hold" stock. Note that this does NOT mean that you therefore have no need for any exit strategy. The chart below shows 3 fairly conservative indicators that would provide appropriate Sell signals. These would be generated by :-
(1) A break of the long-term trendline.
(2) A break of the long-term moving average.
(3) A break below the trailing stop.
It is easy to see that current price action is well above all of these indicators - so far above, that trend-followers would have no need to monitor this stock very closely at all right now.


(Quartzpurple) "It is always much easier to do a business analysis than finding out whether there is still any upside in share price that can be exploited".
Perhaps, but in the final analysis, it doesn't matter a damn how you or I value this stock. It's the market that decides how high FPH will go. You would be foolish to sell simply because it had reached your own personal valuation if the uptrend was still strong. Similarly, you would be foolish to hold on because it hadn't reached your valuation if it had peaked and was in a clear downtrend.

http://img.villagephotos.com/p/2006-2/1151662/FPH711001.gif

[scamper]

Good afternoon Phaedrus and chums!
I see that when you started this post last May, fph shot up and down around 430.
Given that it has been hovering between 420-430 for the last couple of months, do you now consider it better value.
fph reported trading revenue up 28% for its half year to sept 06.
time for a dabble? [8)]

[Phaedrus]

Hi Scamper, I'll leave it to others to give their personal estimates as to the current "value" of FPH, preferring (as usual) to concentrate on the dynamics of the marketplace.

You can see from the chart that FPH is in a steady longterm uptrend - has been for years. This makes it an excellent stock to "Buy and Hold". The chart shows 3 longterm indicators monitoring this uptrend and any or all of these would provide suitable exit signals when the uptrend ends - as they all do, sooner or later.

Those attempting to trade FPH's secondary trends would currently be out of this stock, having sold at the trendline break. (Red arrows mark Sell signals, green are Buy). Many such traders would be looking to buy back in when/if FPH breaks above the trading range that it has been in for the last couple of months.

Now is not a good time for longterm accumulators of this stock to buy. You can see that the Williams'%R oscillator plotted at the top of the chart is quite high - well above the "Oversold" level that flags the best buying opportunities. Buy signals generated by this oscillator are marked by Blue arrows - you can see that over the years these have without exception identified excellent entry points into FPH. If 6 buy signals in 4 years is too few for you, simply use a shorter time period than the 100 day period plotted here.

http://h1.ripway.com/Phaedrus/FPH28001.gif

[Flying Goat]

Hi,

By this point I assume that the TA team will be jumping ship at FPH? Would welcome any thoughts on that. Actually I have long watched FPH as it has always appeared ridiculously priced, however they are now drifting into a price range where I am strongly considering picking a few up for long term hold. Underlying earnings in same currency is growing at 20%, massive research and development pipeline, number of patents, high margin excellent long term earnings history etc. Yet the dollar is clearly going to kill it over the next year or two, so the short-termism is starting to bite. Surely this stock is a great way to speculate currency, because you are buying one of New Zealand's best companies with a very bright, very long future over the long term? Only thing I don't like is that they seem to be issuing shares every second day! Never the less, the quantities seem almost immaterial.

FG

[FarmerGeorge]

Flying Goat I have been thinking the same thing: great company in a bad situation going cheap. With the dollar potentially going even higher (I'm no economist but I read that interest may rise ergo the currency) I don't think it's a good time to buy just yet. I'll be seriously considering picking some up towards the end of this Reserve Bank tightening cycle.

[Phaedrus]

Flying Goat, you assume that by this point the TA team will be jumping ship at FPH? Nah! How about "By this point I assume that all trend-followers will have been out of FPH for about 2 months".

Take a look at the chart below. The first warning of trouble came when the trading range marked in Blue broke to the downside. [Point (1)] When trading ranges are preceded by an uptrend (as this one was) they should (statistically) break to the upside. This, then was a very clear warning, though on its own probably would not prompt too many people to sell.

Very shortly after the 3 month support level of the trading range was broken, prices broke below the long-term trendline [Point (2)] for the first time in over 4 years. This was no longer a warning, this was a very clear SELL signal. Should anyone have chosen to ignore this too, next to trigger was the moving average. [Point (3)] Again, this had been unbroken for 4 years.

It is hard to see that any user of TA would still be holding FPH at this point, but some people have no system at all other than trailing stops. Such stops were hit at Points (4) and (6). Point(5) marks where the long-term uptrend ended and the current downtrend began. Only staunch fundamentalists would be still holding this stock.

Farmer George, there's nothing wrong with your intent and logic, but why not wait until FPH stops falling before buying? Better yet, why not wait until it starts rising? At the very least, why not wait until the red trendline is broken?

http://h1.ripway.com/Phaedrus/FPH421001.gif

[Lizard]

Oh come on Phaedrus... show some respect. [}:)]

The first warning of trouble came on some other threads from posters using FA - as you noted in starting this thread. Selling on open the day after this thread was started in response to those posts would have given you $4.32 - and another 8 months to invest it elsewhere. In fact, the peak for FPH occurred just 7 trading days later on 7 June at $4.70. I'm very surprised you're not respectfully asking the FA's for some guidance on where they think the next bottom might be...[:p][:X]

[Phaedrus]

Liz, My keen appreciation of the fallibility of fundamental "valuations" is the reason I pay so much attention to the market's opinion.
For example, your estimate of FPH's worth as $2.60 would have kept you out of this excellent stock as it continued to rise well over 60% after reaching "valuation". Similarly, any fundamental calculation as to where the bottom ought to be can be expected to be of little relevance to the market reality.

[Lizard]

Good shot. Though it probably rests more on the high quality of your TA vs the mediocre quality of my FA. :)

Lets just revert to your earlier quote and agree on that since it was perhaps also implied in my post of 28 May that you refer to.

quote:It seems to me that the answer here is to use FA to determine when a stock is approaching its "value" then switching to TA to time your exit - with a view to selling when the uptrend shows signs of weakness.

So on that basis, since you too suggest FA could helpfully precede TA, then I'm sure you will have appreciated the chance to read F.G's thoughts as much as I did. ;)

[Snow Leopard]

All this thread really needs now is for MacDunk to join in with his timeline stuff.

have a good one
Paper Tiger

[duncan macgregor]

quote:Originally posted by Paper Tiger

All this thread really needs now is for MacDunk to join in with his timeline stuff.

have a good one
Paper Tiger
You paid attention after all you tiger you.:D:D:Dmacdunk

[Flying Goat]

Phaedrus,

Aha, you are trying to catch me out on a timing issue. Just for the record: yesterday, two months ago - it is all the same to me when I know zero about reading charts so do not be surprised about me being two months behind the eight-ball on that one.

I have been reading this thread and giving it more rational thought, and it all seems rather amusing. "The trend clearly shows...."

The only trend this stock is following is that of the strengthening dollar. Lets say that one month ago the NZD fell to 59 cents against the USD quite unexpectedly, instead of rallying to 75 cents as it did. If this had been the case would the stock "continue following its downward trend" no, it would have been re-rated overnight, imo.

[Ttops]

Phaedrus. Big selloff today. It did "rise and broke the trendline" temporarily that you mentioned. 21/4/07 I wondered if this drop is due to RB interest rate increases likely to affect the exchange rate putting pressure on profits or something in TA charts that you can see? Would appreciate your comments.

[FarmerGeorge]

Phaedrus - agreed, advice taken - thanks. :)

[Phaedrus]

Here are some suggestions for those looking to time an entry into FPH. (Treetops? FarmerGeorge?) The 6 indicators plotted here all gave exit signals at around the same time and should provide reasonable (albeit conservative) entry signals. Keep a close eye on the OBV - it is likely to give the first indication that the tide is turning. The idea is to wait until there is some degree of consensus before acting. Another approach would be to spread your entry over 6 separate purchases, buying as each individual indicator is triggered.

http://h1.ripway.com/Phaedrus/FPH517002.gif

[Ttops]

The idea is to wait until there is some degree of consensus before acting.

Phaedrus: Thanks for the suggestions. Timely advice not to just watch one indicator like trendlines which triggered me into buying.$3.67 At least it was a conservative amount. Much appreciated advice and will watch with more indicators in future.
TT

[Anna Naum]

On a less technical note, it appears the budget tax changes to R&D are worth about 15cps to FPH in value. Still got the currency to deal with but for the first time in a long time something looks to be going right for this great NZ company.

[tobo]

...Much appreciated advice and will watch with more indicators in future.
TT

I am seeing:
an uptrend (2 rising peaks),
crossing up through 20 and then 50 day EMA,
MACD trigger and divergence going above 0,
(and slow stochastic came up through 20% line for 2nd time a week ago.)

Do people think the confirmed buy signal happened already (a few days ago?) or is it there now, or is the signal still not strong?

[Phaedrus]

Tobo,
FPH triggered a lot of Buy signals last month. The chart hasn't made it across to to the new setup, as yet.
http://www.snitzforum.sharetrader.co.nz/topic.asp?TOPIC_ID=16473&whichpage=7

[Placebo]

Here's a question for you, Phaedrus. On another thread you have posted that the NZX50 looks a bit wobbly vs its long-term uptrend. In that thread, you comment that your approach when this happens is to exercise caution, tighten all stops and impose a strict ban on buying (hope I've paraphrased that right -- I haven't re-read).

But then, in looking at individual stocks, you will see some like FPH that are setting off buy signals. Does this set up a conflict for you? Do you break your general policy when such a good opportunity presents itself? Or do you pass up the good buying opportunity for fear of the overall pattern taking precedence?

Just wondering... :?:

[Phaedrus]

Sure does. My rule is to pass up these opportunities until the overall market shows signs of improvement. Occasionally I do break this and other rules. Generally this is followed sooner or later by regret, and a vow never to do it again.

[Zaphod]

Plenty of bargains out there at the moment, but not all are ripe for the plucking.

I've already picked up quite a large additional holding in FPH after the last set of buy signals. Just waiting for the next set.

[Yossarian]

aspex, what if they have now overhedged at at high usd rate?

[AMR]

Not terribly likely, I don't think anyone wants to hedge right at the top of the cycle.

[Yossarian]

it's easy in hindsight to say it's the top, but you don't know at the time...

[upside_umop]

i have a feeling, fph was consistent with the hedging policy at 50% exposure.
dont quote me, but around the 70 cent mark..so yes, they would be overhedged if im right..
still, every 1 cent drop is $3.5 mill to the bottom line. good times if it keeps rolling..

[AMR]

Did anyone go to the AGM? Opinions?

[AMR]

An attempt at a chart for FPH :

Seems to be resistance at 3.55 or thereabouts. The preliminary uptrend also seems to have broken. I think the volatility of the dollar may be panicking investors. Any constructive criticism appreciated as this is my first chart.

[Phaedrus]

Good on you for having a go, XX. Here are some comments on your chart - these should NOT be construed as criticisms!

About the chart itself :-
(1) The MACD, Volume and Stochastic plots take up a lot of screen real estate, but you do not refer to them at all. IMO it would have been better to have left them out altogether.
(2) The OBV provided very useful information, but was not mentioned.
(3) The addition of a suitable moving average would add value - some people use them a lot and prefer them to trendlines.

Re your comments :-
(1) "Seems to be resistance at 3.55 or thereabouts."
The highs have been getting higher - 344, 350, 352, and 353. No clear resistance level there.
(2) "The preliminary uptrend also seems to have broken."
Not so. FPH is still in an uptrend, still making higher highs and higher lows. To break the uptrend and become a downtrend, it would first have to make a high lower than 353, then, having done that, it would have to close below 345. That's a lower low after a lower high.

What you are talking about here is the break of the trendline. This is not a positive event, but it is not the same as a break in the trend itself.

[AMR]

A new FPH chart here. I'm not terribly sure what to make of the trendless OBV and the second trendline break. Friday's closing price was bang on 345.
http://img505.imageshack.us/img505/6559/fphchart23rdsept2007wituo7.png

[dumbass]

also bearish divergence on the macd , prices printed higher in sept but peak of macd lower then previous peak in aug

[Phaedrus]

The OBV does not confirm the uptrend and is certainly not Bullish, but FPH has nevertheless risen over 7% in 2 months (equivalent to 42% pa) and is still in an uptrend. You have to give stocks a bit of room to breathe at the start of an uptrend and allow them time to settle down - especially when the market as a whole is unsettled.

XC, I notice that you have highlighted an MACD "Sell" signal. Do you think this would be worth acting on? I certainly don't - here's why :-
Over the short period covered by your chart, the MACD indicator has fired off no less than 11 "Sell" signals (and 11 "Buy" signals). Of these 11 trades, 9 resulted in losses! Clearly the MACD is a very poorly performing indicator with FPH and its use is actively counterproductive. If we go back over the last 3 years, we find that the MACD has signalled 30 trades, of which only 8 were profitable. Simply holding FPH over this period would have given a 15% gain, while trading FPH using MACD signals would have resulted in a 30% loss over the same period! With a track record that bad, I see no point at all in using this indicator with FPH. Colby and Meyers "Encyclopedia of Technical Market Indicators" identifies MACD as a relatively poor performer. I don't use it at all.

[dumbass]

i think with indicators it does come down to personal preference

however i like a good divergence , its the only signal i take from macd but its worth a look for confirmation of other signals

there was a triple divergence on the dec 06 top and jul 07 bottom

[ratkin]

If FPH is in an uptrend then i would hate to see what a downtrend looked like.

[Toddy]

If FPH is in an uptrend then i would hate to see what a downtrend looked like.

Ratkin

The up trend was confirmed today by the closing price being lower than the opening price.

Can't you see it?

[Hoop]

The Dow has got excited last night with Buffet buying activity with Bear Stearns Co Inc.

As Buffet is a FA man I had a look at the graph to see it from a TA perspective.
The BSC 5 yr chart looked very familiar and resembles Phaedrus' FPH charts posted recently.
Very Spooky, as the two are dammed nearly identical.

Similarities
Short accelerated uptrend broken,
Followed by... a rally towards a double peak(sort of ;)) then fall back to enter a trading range where the long term uptrend line is breached
Followed by... a break (down) of the trading range into a steep downtrend
Followed by...Downtrend halted and price respects the resistance set over 18 months ago
Followed by a recent slow uptrend

http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=BSC&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=12&freq=1&startdate=&enddate=&hiddenTrue=&comp=Enter+Symbol%28s%29%3A&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=8&type=2&size=1&optstyle=1013


If I was more tech savy I would've got the two charts together to display..but sadly no :(.
Maybe Phaedrus ? or xxamr corpxx

[Phaedrus]

Here you are, Hoop.

http://h1.ripway.com/Phaedrus/BSCfph.gif

I guess when you boil it all down, Warren and I are looking for the same thing. He wants a company that has shown steady earnings growth over the years - I want a stock in a longterm uptrend. He wants a company that offers good relative "value" - I want a stock that has undergone a recent significant (>30%) retracement. We both want a stock that offers turnaround potential.

[Hoop]

Thanks Phaedrus :):)

I can't believe how similar the 2 are, especially over a long term of at least 5 years.

I suppose a part from it being a curiosity piece there probably not much else to get out of it

I think I will save it as a picture file ... might print it and frame it :):):)

[Toddy]

FPH is being smashed by the appreciating NZD. Looking at the warrant volumes going through today some holders are exercising their stop loses.

I bought in the crises and sold out as soon as the Fed reduced rates.

I am a FPH fan for sure. But common sense tells me that the time to buy back in is when the NZD next heads south.

[ratkin]

How is the stunning uptrend progressing ?

[redzone]

then where is the bottom for fph...sure is in a downtrend but cant have to much further to go

[Lizard]

common sense tells me that the time to buy back in is when the NZD next heads south.

Short term view - it could be tomorrow if arco and friends on the forex thread (http://www.sharetrader.co.nz/showthread.php?p=167291#post167291) have called this correctly.

Though being a "value" type, I'm not even looking till it's stubbed a toe on $3.:cool:

[AMR]

What do the FA/Forex people think of the situation thus far? I'm not terrible clued up about how currency markets work - could someone tell me which one of these scenarios is more likely to happen?

1. Dow Jones continues to tetter, the Central Bank cuts rates and the carry trade takes off again as it is even more attractive now..

2. Dow Jones continues to tetter, causing a reduction in risk aversion, which leads to a strengthening dollar.

Thanks for enlightening me.

[Phaedrus]

Since giving a trendline break Buy signal back in July, FPH has more or less tracked sideways - a reminder that the end of a downtrend does not necessarily mean the beginning of an uptrend. I would think that most people buying at that point would have been looking to establish a longterm position with this stock and would still be holding (unlike faithless traders - despicable low-life scum that would have exited at the break of the uptrend trendline, red arrow).

Having made a Low at point 1, a High at point 2 and a Higher Low at point 3, it's now "wait and see" time with FPH. A break above point 2 (a higher High) would be confirmation of the 3 month uptrend, while a break below the $3.20 support (point 1) would be a continuation of the 12 month downtrend.

At times like this it is often possible to make an educated guess as to the likely direction of the breakout by reference to other indicators. In this case, though, there is no clear consensus. The QStick, while rising, is still in negative territory (on average, there are more Down days than Up days). Similarly, the Slow Stochastic oscillator, while rising, is still less than 50% (the average Close is nearer the days low than the days high). The recent trend of these indicators would perhaps be grounds for some degree of optimism if it were not for the fact that the On Balance Volume is lower now than when the Buy signal was triggered. The Up days are on no higher volume than the Down days. FPH will not go anywhere much unless/until buyers with a little more conviction (and money) emerge.

In my opinion, at this point FPH is a Hold.

http://h1.ripway.com/Phaedrus/FPH1024.gif

[redzone]

I have bought my second (of three) lots of FPH today.

Cant see to much more downside from here.......will give it another month before I look to step in again.

[AMR]

I think I am seeing a turning point on this stock.

- 10 day RSI crossing over the halfway line
- OBV crossing over the 15 day EMA. (This is robust - applying a 55 day EMA also produced the same signal)
- 5/10/15 day price EMAs have crossed over and are in the correct order.

I might put down a CFD order on Tuesday with a guaranteed stop loss at 310 in case the support crumbles.

http://img266.imageshack.us/img266/9812/fphnzet2.png
http://img150.imageshack.us/img150/8716/fphpotentialsignal19thnbx3.png

[Hoop]

Thanks XX nice info
This has been a major disappointment stock for me, it looked real good back in early August when it broke its 6month downtrend and I bought in on the buy signals..in hindsight this was shortlived.

With that non event, one has to question whether these buy signals are the real deal or is it another fizzer.

I'm very cautious (and pessimistic) at the moment and won't be buying anything until this recent correction which is still in progress ends.

The overseas markets had another ****ty day (the Dow is very close to it's tipping point between Bull/Bear), so today I assume it will not be a good day on the NZX.

Strangely in the past few months I have observed that FPH holds up well on bad days, as our dollars falls in tandem with the dropping market.

......but in saying all this...... if the FPH share shoots up past the $3.40 mark within the next few days it could be a different ball game..with more buy signals added I then would be tempted to accumulate more.
Best of luck guys,
Hoop

[Hoop]

My todays quote: ...Strangely in the past few months I have observed that FPH holds up well on bad days, as our dollars falls in tandem with the dropping market.
Well the market has dropped NZ$ not much but the FPH share has dropped big time down 9c (2.7%) to its 27 month resistence level of 320c.
Well this is another one of my shares today thats testing my sell trigger. Already sold a couple. What a day!!!...my sell signals going off all over my share portfolio...:(:(

[Toddy]

My todays quote: ...Strangely in the past few months I have observed that FPH holds up well on bad days, as our dollars falls in tandem with the dropping market.
Well the market has dropped NZ$ not much but the FPH share has dropped big time down 9c (2.7%) to its 27 month resistence level of 320c.
Well this is another one of my shares today thats testing my sell trigger. Already sold a couple. What a day!!!...my sell signals going off all over my share portfolio...:(:(

Hoop

Join the club. I've lost so much over the last three months that I've given up even counting. You don't get much better coy's than FPH. I'm looking forward to the day where I'm back in the money.

[scamper]

fph has caught my eye recently so i've read the last few pages of this thread.
what an informative and intelligent discussion -- well done the posters!
i'm wondering how many of you have been triggered out?

one thing i have noticed perusing the charts is that when the W&#37;R hits oversold, a rise in price (albeit a small one) seems to follow.
the mfi also seems to reflect the price movements sufficiently well to be quite a good indicator.

when both the W%R and mfi hit bottom -- they're heading that way -- i'll start having a good look at the possibility of buying.
thanks for all the useful info. cheers.

[AMR]

Well, all the signals just whipsawed. Probably best to wait until the downtrend line is clearly broken.

[duncan macgregor]

Well, all the signals just whipsawed. Probably best to wait until the downtrend line is clearly broken.
All the TA signals are against a buy at this moment in time, so lets look at the fundamentals. They must manufacture overseas with cheap labour, or they wont compete. The NZ dollar is still way to high so fundamentals look almost as bad as the TA. Everything running at a profit has an oversold price this company still has a way to go before that triggers in my opinion. Its a shame to see a good company hit the slippery down hill slope must be at the bottom sooner or later but not right now. Macdunk

[ratkin]

Never seen the attraction of this stock , they had a good product but a difficult area to sustain any competitive advantage.
There are several american companies they competing against and they are flying woith the low greenback.

Im buying into american equities at present through several LICs , the low dollar is going to really help them , see airbus worried they cannot compete withj boeing due to the low US dollar.

Put those overpriced kiwi dollars to work and invest in low greenback stocks. Thats my tip for the day

[duncan macgregor]

Never seen the attraction of this stock , they had a good product but a difficult area to sustain any competitive advantage.
There are several american companies they competing against and they are flying woith the low greenback.

Im buying into american equities at present through several LICs , the low dollar is going to really help them , see airbus worried they cannot compete withj boeing due to the low US dollar.

Put those overpriced kiwi dollars to work and invest in low greenback stocks. Thats my tip for the day RATKIN, I would say you are doing it it wrong, but then you probabely kmow more about this sort of thing than i do. I placed my NZ overpriced dollars in Australia where their money is on an uptrend. The NZoverpriced dollars are going down hill in comparison along with the yankey dollar. The competitive advantage is with the chinese market, with their low production rates, that neither the NZ or American market can compete in a competitive open free market against. We are downtrending in the world market place, along with the Americans. To invest in either requires you to select the very top stocks in what is turning out to be a falling economy. Macdunk

[ratkin]

It all depends if you see the US decline as permanent or temporary.
Im taking the view that the low dollar is going to really kickstart their economy.
Last year bought a basket of aussie stocks so agree with you on that score, am underweight new zealand as usual mainly because living here i like to put my eggs in other baskets.
Im still very wary of investing in china , they flying too high. It still going to be the big global american companies in control.

[redzone]

So where is FPH heading now ??? in for another drop to say $2.85

[Toddy]

In an internet cafe and just noticed the FPH move. The analysists that were prevy to todays presentation by FPH obviously did not like the signs heading into the future. This is the real thing now, falling on facts, so I'm picking $2.50.

Hopefully the Jo Bloggs out there can get hold of the presentation material.

I got out on the last spike around $3.50 to $3.60.

[AMR]

You need to register with their website to view the webcast, but their presentation is available here.

http://www.fphcare.com/news/2007/FY08%20Half%20Year%20Update%20&%20Overview.pdf (http://www.fphcare.com/news/2007/FY08&#37;20Half%20Year%20Update%20&%20Overview.pdf)

My interpretation of financial documents is rather poor, but my first impression s that they are being squeezed by both the kiwi dollar and an increase in operating costs. The figures in USD don't look that great either, suggesting that there is more than just currency pain. I got out at 3.33 a while back.

[Zaphod]

Despite current events, I still like the fundamentals of this company. They have delivered positive year on year result, but are now being hammered (predominately) by the exchange rate.

I'm out at the moment, but when the stars align once again I'll be back.

[upside_umop]

8million on friday.
almost 10million already today.
whats up? kiwisaver funds flowing in?

anybody got an upto date chart showing OBV?

[AMR]

Head over to the VCT thread, apparently this is due to "indexing" where the funds sell and buy back. I have no clue why they do this or what will happen to the share price. My guess : A brief rally and then continuation of the downtrend.

[chippy52]

8million on friday.
almost 10million already today.
whats up? kiwisaver funds flowing in?

anybody got an upto date chart showing OBV?

Tried to upload chart but failed. I can tell you the OBV did rise with the price last week but has since retracted to a level lower than where it started.

[chippy52]

Better late than never...http://www.sharetrader.co.nz/images/icons/icon8.gif http://www.sharetrader.co.nz/images/icons/icon8.gif

http://img.villagephotos.com/p/2007-12/1289483/ScreenHunter_02Dec.0714.59.gif

Heres hoping http://www.sharetrader.co.nz/images/icons/icon10.gif

[beacon]

Good rise today - very odd though, as forex will keep eroding profit. My valuation sub2.50

[Zaphod]

And the rise continues through today. I think this is the continuation of the trend spurred by the indexing activity last week.

The forex outlook for NZ does not look good, especially with the US rate cut.

[Ttops]

Good rise today - very odd though, as forex will keep eroding profit. My valuation sub2.50
Wouldn't it be likely insiders buying before a new app ann ;)

[upside_umop]

app = appliance?
this is healthcare we're talking about..but maybe a new business path has lined up, or product has come through. takeover talk always pops up around these prices anyways.

[COLIN]

Wouldn't it be likely insiders buying before a new app ann ;)

appointment?
application?
apparatus?
appropriate?
apparition...............!!!?

[Ttops]

appointment?
application?
apparatus?
appropriate?
apparition...............!!!?

app = Apnea product= "a new mask" :p my guess anyway

Got to think laterally :D
The company expects to introduce several additional devices incorporating its new technology over
the next two years. http://stocknessmonster.com/news-item?S=FPH&E=NZSE&N=153170

[beacon]

Meaning continuous promotional expense while rising forex cuts into already wafer thin profits and as the industry gets more competitive by the day. Good luck to Caledonia. To my surprise, I have finally turned bearish on the stock.

[Zaphod]

FPH
11/12/2007
SSH

REL: 1129 HRS Fisher & Paykel Healthcare Corporation Limited

SSH: FPH: SSH Notice From Schroder Investment Management Australia

NOTICE 29555 DETAILS

Submitted Date : 11-Dec-2007 11:24
Status : Accepted

Substantial : Y Director : N
Add Holder : Y Change Holder : N
Ceased Holder : N Change Nature : N

Issuer Code : FPH Fisher & Paykel Healthcare Corporation Limited
Holder : Schroder Investment Management Australia Limited

Address : Level 20 Angel Place
: 123 Pitt Street
: Sydney NSW 2000
Country : Australia

Contact Name : Andrew Arthur
Phone : +61 2 9210 9418

Total of Interest : 29,988,254
Total Issued : 508,663,426
Total % : 5.90%

Class : FPH
Votes Attached : 1

Beneficial
Total of Interest : 0
Names
: N/A
Transaction Dates : N/A
Total Votes : N/A
Considerations : N/A

Non Beneficial
Total of Interest : 29,988,254
Current % held : 5.9%
Last % held : 5.9%
Names : See Annexure A
Provisions : 5(1) (b) and (d)
Transaction dates : As per Annexure B
Total Votes : 29,988,254
Considerations : As per Annexure B

Description : As per Annexure B
Documentation
With Notice : Yes
Not Filed : No
Been Filed : No
Number of pages : 5

Date of Last Notice : N/A
Rel. Sec. Holders : N/A

Submitted By : Andrew Arthur Compliance Officer
End CA:00158072 For:FPH Type:SSH Time:2007-12-11:11:29:04

[beacon]

And to Schroder

[living2]

Philips buys Respironics for €3.6bn
By Michael Steen in Amsterdam

Published: December 21 2007 07:57 | Last updated: December 21 2007 11:28

Philips, the Dutch electronics group, said on Friday it would buy Respironics, the US medical equipment maker specialising in sleep therapy, for €3.6bn ($5.2bn) in cash, its biggest acquisition to date.

The Dutch company, under pressure to reduce its cash pile, has in the last three weeks announced a €5bn share buy-back programme, the €1.8bn acquisition of US lighting fixtures maker Genlyte and two smaller takeovers by its healthcare business.

EDITOR’S CHOICE
Philips in €5bn share buy-back - Dec-19European View: Politicians heed the parable of Pechiney - Nov-27Philips launches €1.8bn bid for Genlyte - Nov-26Philips to miss medical sales forecasts - Oct-15Philips cuts stake in LCD maker - Oct-10Philips to invest €1bn on environmental technology - Sep-25Philips will pay $66 a share for Respironics, a 24 per cent premium on the US group’s closing price on Thursday, valuing the target at 22.5 times 2008 earnings.

Pierre-Jean Sivignon, chief financial officer, said Respironics would form ”the centrepiece” of Philips’ home healthcare business, an area in which it is forecasting strong growth. Gerard Kleisterlee, chief executive, said consumer healthcare hit the ”sweet spot” between Philips’ healthcare and consumer electronics businesses.

Respironics specialises in the treatment of obstructive sleep apnea, a condition involving brief stops in breathing during sleep which is often accompanied by loud snoring and poor sleep and can lead to more serious ailments.

Philips said the $5bn global respiratory market was growing at 10 per cent annually while the $2bn market for sleep apnea management products was likely to grow in the mid-teen percentages.

The company has been stockpiling cash as it withdraws from the semiconductor business to focus on lighting, healthcare and consumer electronics. It had €5.2bn in cash at the end of the third quarter and will generate more from further stake sales and asset disposals.

DE Shaw and Jana Partners, two U.S. hedge funds that hold 1.6 per cent of Philips between them, used an open letter this month to put pressure on the Dutch group to speed up decisions on acquisitions and share buy-backs.

Philips has denied the letter forced its hand, noting that the share buy-back was announced after the Dutch parliament passed favourable changes to Dutch tax law and the takeover plans predated its publication.

”Are we moving to what we called in various releases an efficient balance sheet? The answer is definitely yes,” Mr Sivignon said. He added the company had ”some room” for further acquisitions but needed to integrate the new businesses.

Philips shares slipped 17 cents to €30.54 in mid-morning trading in Amsterdam.
Copyright The Financial Times Limited 2007

[ratkin]

The price rise today is an interesting reaction to the takeover of their main rivals.
Being taken over by Phillips will no doubt make them much stronger , they will now take more market share from Fand P .

i suppose the SP is rising due to the vague notion that another big company will come swooping for f and p. Guess the stock has been percieved as being undervalued of late.

[winner69]

Philips buys Respironics for €3.6bn
By Michael Steen in Amsterdam

...... $66 a share for Respironics, a 24 per cent premium on the US group’s closing price on Thursday, valuing the target at 22.5 times 2008 earnings.


Ratkin suggests FPH up today in response to this move by Phillips

Market must have noted the 22.5 times 2008 earnings ........ ASB show FPH 2008 forecast as 8.3 cents ..... times 22.5 is 186 ..... even on 2007 eps shown as 11.0 gives 247.

Whoops ,,,, so 348 for FPH not too bad at all

[AMR]

Someone has been accumulating since late November, I got my first signal (bullish oscillator divergence) back on the 27th of Nov and I have been getting even more lately. Not too keen to act on them at the moment though, I still think the kiwi dollar has more life in it for now.

Back on watchlist again, might make up my mine in February next year.

[a bowden]

What are peoples views on this stock at them momment, seems to have had a strong few days, would you enter now. Has just broken the 30 day MA. I was thinking of dipping in however am a little concerned that it will just be a short burst.

[Phaedrus]

Hi ab,
I wouldn't pay any attention to the SMA30 crossover if I were you. If we backtest FPH, we find that it is a very poorly performing indicator with this stock. A 30 day simple moving average gives lower returns than simply buying and holding and is wrong (giving losing trades) twice as often as it is right. It "falls between 2 stools" in that it is too long to be of much use for short-term trends and it is too short to be of any use for long-term trends. I have plotted it for you, but its use here is counterproductive. I'm surprised and a little concerned at how many people on ST specifically mention this particular moving average.

You can see from the attached chart that FPH gave multiple buy signals 2 days ago. Anyone buying then bought very close to the current (tentative) trendline and quite close to recent support, making for a low-risk entry point. You can see that buying now would have you entering well above the trendline and maybe 40 cents or more above support. In other words, buying now would give a much higher risk entry, particularly after the series of strong up days that this stock has experienced. We don't know how far FPH will run before it retraces, but it might be better to delay buying until it does. Ideally, it would retrace all the way back to the trendline, confirm it and bounce off in a NNE direction!

http://h1.ripway.com/Phaedrus/FPH35.gif

[Hoop]

Company OK...NZ$ strength has knocked the profit forecast....downgraded profit. Only to be expected so no surprise to the FPH followers.



FPH 09/04/2008 FORECAST REL: 0904 HRS Fisher & Paykel Healthcare Corporation Limited FORECAST: FPH: Fisher & Paykel Healthcare Updates Guidance FISHER & PAYKEL HEALTHCARE UPDATES GUIDANCE Auckland, New Zealand, 9 April 2008 - Fisher & Paykel Healthcare Corporation Limited (NZSX:FPH, ASX:FPH) today updated its earnings guidance for the year ended 31 March 2008 to reflect the appreciation of the NZD:USD exchange rate and trading over the past six months. The company expects to report operating revenue growth of approximately 18% in US dollar terms to approximately US$270M, or 2% in NZ dollar terms to NZ$355M for the full year, driven by strong growth from consumable products, which include masks and breathing circuits. At the time of its half year result announcement in November, the company indicated that it expected its full year operating profit to be approximately NZ$68 million if the NZD:USD exchange rate averaged 0.75 for the remainder of the financial year. The company also disclosed a total operating profit sensitivity of approximately NZ$2.5 million, over the twelve months, per one percentage point change in the value of the NZ dollar. Allowing for the effects of the appreciation of the NZ dollar since November, preliminary operating revenue and inventory reduction the company now expects its operating profit for the full year to be approximately NZ$57 million. "We enjoyed robust operating revenue growth in the second half, in US dollar terms, particulary for our respiratory and acute care product group. Demand for respiratory humidifier systems inventory for major hospital Group Purchasing Organisation (GPO) contracts in the USA exceeded our capacity in the fourth quarter. We finished the year with substantial orders in hand, so we expect a strong start to the new financial year and continuing increase in demand for our products", commented the company's CEO, Mr Michael Daniell. The company expects to report its full year results on 21 May 2008. About Fisher & Paykel Healthcare Fisher & Paykel Healthcare is a leading designer, manufacturer and marketer of products and systems for use in respiratory care, acute care and the treatment of obstructive sleep apnea. The company's products are sold in over 110 countries worldwide. For more information about the company visit www.fphcare.com (http://www.fphcare.com) Contact: Michael Daniell MD/CEO on +64 9 574 0161 or Tony Barclay CFO on +64 9 574 0119. Ends// End CA:00162983 For:FPH Type:FORECAST Time:2008-04-09:09:04:24

[duncan macgregor]

This share should be $10 by now. The most oversold share on the world at present.

Wow what a bargain. CUJODOG, Why dont you enter the competition on the NZOG thread?. A person of your ability and following on these threads would make it very interesting for your fans. Macdunk

[golden city]

what made u think that fph worth 10 dollar..,

[golden city]

I think it could continues to go down as much as 50 cents..to $2.50

[Dr_Who]

This share should be $10 by now. The most oversold share on the world at present.

Wow what a bargain.


Did you mean peso? :D

There's more downside to FPA. The T/O rumours been around for a long time.

[COLIN]

what made u think that fph worth 10 dollar..,

Golden City - as a relative newcomer you have yet to discover Cujo's talents. He's our Number One comedian.

[AMR]

Hi, can someone with live NZX data do an updated chart? I'm getting an RSI divergence on my 3-day old data, I would also like to look at the updated OBV.

[Phaedrus]

Here you go AMR. Hot off the press, as at 12.00 mid-day.
One RSI divergence as ordered.

http://h1.ripway.com/Phaedrus/FPH515.gif

[Dr_Who]

This is a very expensive stock trading at high multiples. Abit like PPL if there is another downgrade, it will hurt bad.

[redzone]

you probably wont have to wait to long for that....dont they report soon...cant see that being anything other than bad news with the picture looking a little brighter with the dollar falling.....$2.45 I am picking

[ratkin]

Im picking they will report good revenues etc with a positive outlook , the dollar strength is already priced in and looking forward it likely to drop , this should add to positive tone of announcement

[Dr_Who]

Strong dollar 'bad' for F&P's health


The strong New Zealand dollar is likely to have a stifling effect on Fisher & Paykel Healthcare's full-year result, out on Wednesday.


The medical equipment maker slashed its profit forecast last month, laying the blame on the strong kiwi.



http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10510918

[ratkin]

Nice result , as expected really but good to see nothing nasty thrown in.

Company looks to have a good solid future so once the exchange rate side is taken care of should be some upside

[redzone]

wouldnt surprise me that they dont go down the same track as FPA and move off shore

[Bob Marley]

Hey mon, I see FPH are now expecting Operating Profit to be around NZ$86m mon for the full year, assuming x-rate of 72 USD mon - this is up 48% from last year's NZ$58.1m mon. Taking off say NZ$6m for net interest mon, and 30% tax, gives FY09 NPAT of around NZ$56m (eps 10.9c) vs NZ$35m last year. This equates to a forward PE of 27.4 mon at current $3.00 market price.

I notice that the current range of analyst expectations is eps of 8.0-10.2cps, so they'll be upgrading their pretty research notes tonight mon.

I also notice the series of positive comments at the AGM including "Demand for our products continues to grow at a rate which would see the business more than double in size over the next five years."

With probable downside to the NZD/USD rate from FPH's assumed 72c, plus cost savings from offshore expansion (likely to be announced later in the year by the sounds of things), FPH looks like it is heading in one direction now mon.

"One love, one heart,..."

[a bowden]

An interesting Letter from FPH posted today on ASX, Especially page 2:

"Current analyst consensus valuation for FPH shares is NZ$3.57, with those analysts
who have updated their currency expectations to be more in line with current rates
valuing FPH shares at around NZ$4.00."

http://research.iress.com.au/ids/current/20081022/00892986.pdf?uid=EA34AA090AF0A3CFD0CFE1C6C586A2470 6310000BAF28024F167E340F1AB0000F4120000&ppv=1

[DJDAVE]

It would be interesting to see the FPH share price vs the USD over recent months. Can someone possibly post an updated chart?

[winner69]

Seeing no action on this thread even though share price is up this year .... a rare event ..... I thought I'd post this from smokin cubans from another thread -

If you buy FPH you will double your money in a year - NPAT tripling this FY, 20% constant currency rev growth, resilient industry, corporate activity in the sector (Philips acquisition of Respironics). Its a no brainer - stop fluffing about with this ****.(Nuplex)

Agree with him ....

[upside_umop]

yeah, their hedging arrangements is 50/50 if i beleive right, and they rolled 50 of it over last year at 70 cents nzd/usd?

they are a stable company, but if there was any misguidance on the downside, they will punished, because as belg says ----> PE of 40..ouch....

should hold their own however, i'd be more thinking $4-$4.50 by year end if there is no suprises. still, 50% gain would nothing to frown upon.

[Bob Marley]

Belgy mon,

"DB has their yield at just 3.6% and there PE ratio at 40".

FPH disclosed back in Nov that they will likely post NPAT of around $60m for the y/e 31 March 2009 if the NZD/USD stays at 55c. If they achieve this, it will equate to a pe of about 29x ($3.50/($60m/509.5m shares)). So I'm not sure where Direct Broking get 40x from.

The 3.6% yield is a net yield not gross too, and it is based on the current f/y not the next 12 months. 3.6% = 12.4c divi likely to be paid for y/e 31/03/2009 / $3.50. Grossed up is 5.1%.

The FY10 figures obviously look a lot more attractive given they have been hedging in the low 50c range compared to a likely 70c avg for FY09.

[dumbass]

from the chart of my one and only nz share, the rally may hit a little resistance.
down trend line may come into play and there is a possibilty of a bearish ascending wedge.
i will get out if uptrend line breaks or add more if clears 3.50 area.

[dumbass]

it seems there has been a perception that fph is a currency play but the
chart of fph v nzd shows there has never been a strong correlation between the movements of nzd and movements in the fph share price even allowing for dollar hedging.

[dumbass]

In fact it correlates best to the market , funny that !
Maybe noteworthy that it was ahead of the bear market decline in the NZSX50 and therefore the current rally in the fph price could be a signal of a market rally.

[tobo]

dumbass, the market rallied, but FPH went down.
Looks to me as if it's broken out of that wedge (downwards) , and has remained below your dark red resistance line.
What's your pick?

Tobo

[dumbass]

from the chart of my one and only nz share, the rally may hit a little resistance.
down trend line may come into play and there is a possibilty of a bearish ascending wedge.
i will get out if uptrend line breaks or add more if clears 3.50 area.

Tobo,the writing was very much on the wall for fph. with multiple signals confirming.

price tested and bounced off down tend line.

bearish ascending wedge has broken to downside.

the 50% fib level was sitting at 3.45.

divergence on indicator.

so it was a sell at 17/03 close at $3.30 or earlier.

what now ? will have to wait for signals to reenter or move to pastures greener.

[winner69]

it seems there has been a perception that fph is a currency play

Maybe that expalins tobo concern that when market went up over the last few days FPH wnet down

[Hoop]

Is this FPH share price weakness caused by investors changing from a defensive to an offensive strategy to quickly cash in (and cash out?) on the market re-rating of other high quality stocks that have been unfairly ravaged by the bear this past year?
....or has the share price technically reached its limits for now?
....or some other fundamental cause? (currency play?)

If it is a shift in Investor behaviour, will this recent FPH share price weakness happen to other bear market defensive stocks as well? Maybe we should watch the behaviour of other defensive stocks for confirmation.

If it is confirmed, does it imply that the bear market defensive stocks (FPH) will at some stage be at risk of themselves becoming unfairly ravaged by this recent opportunistic investor behaviour.. thus raising the chance of being market re-rated at some later date? (Laggard shares)

Is this characteristic behaviour of a share market in recovery mode? If so early responsive shares are a lot more attractive to the investor than late unresponsive laggard shares.

Will FPH be classed as a laggard share?

Is this going to be the year for the quick footed investor?

A bull calf is born?...or just a technical upward blimp in another suckers rally?

[ratkin]

If you look at the run up of FPH it correlated with the weakening NZ currency. Now the currency is rebounding the price is falling . Same with other export related healthcare stocks in australia.

Good company , but not cheap

[Bob Marley]

A factory in Mexico is looking most likely for Fisher & Paykel Healthcare as it pushes on with plans to expand its manufacturing operations overseas.

Managing director Michael Daniell says the medical equipment maker is continuing to pull in strong revenues despite the global recession and has no plans to defer a move overseas to complement its East Tamaki headquarters in Auckland.

"We're still in the planning stages, though that's not yet complete," he said. "We've indicated we're looking at locations in both Asia and Mexico, and Mexico is very high on the list." Mexico's close proximity to the United States, which makes up over 45 per cent of the market for Healthcare's products, made sense from a transportation point of view, said Mr Daniell, as well as obvious cost savings.

Exposure to markets in the US has not hindered Healthcare's progress during the global downturn, unlike sister company Fisher & Paykel Appliances and struggling New Zealand stocks like Nuplex, Fletcher Building and Mainfreight.

Healthcare's share price has enjoyed a solid start to the year, closing the week down 14c at $3.06, with the company living up to brokers' expectations that it would perform better than most in 2009 given people's need for medical treatment even in times of hardship.

Mr Daniell said recent additions to the company's product line, such as a new auto pressure-setting flow generator, continued to do well, while cover for home diagnosis of obstructive sleep apnoea (OSA) by US medical insurance programmes was driving demand for higher spec devices.

Healthcare's last public guidance was in November when it indicated to market that it expected to pull in around $450 million of sales and strong growth earnings.

"We haven't changed our position," said Mr Daniell. "Things continue to look good."

[beacon]

Interesting questions Hoop. FPH is not cheap in my book, despite the growth potential. Obama healthcare policy is influencing global healthcare related stocks, and rmd in OZ and Philips in EU have both suffered recently as a direct consequence. Both signalling weaker outlook. Also NZD expected to strengthen gradually, eroding FPH's forex gains unless they do something drastically more timely than NPX...

[Hoop]

FPH dropped 5.5% this morning on the news that it increased profits by 76%

It seems the market has priced in today that FPH was previously too expensive.

Reading back on this thread for this year it had been mentioned by many posters that FPH was an expensive share and the shareprice was showing weakness.

The confirmation of report released today, FPH was market re-rerated.

It seems in times of Bear cycle environment a PE of over 30 requires tremendous perceived growth, the combination of +76% profit growth increase now and a forecasted +25% growth going forward is seen by the market as obviously not enough to hold the PE of over 30 any longer.

My back of the envelope calulation is that PE is now about 24....is this level about right for FPH?
..or is there others factors in play I have not mentioned and/or the high PE is not the only major issue?

[LJB]

Did the market expect better?!!!! One of the few companies willing to forecast growth, an amenable exchange rate, co-domination of their market, good management and a truly outstanding result for 08. IMHO if ever a company can justify a high PE ratio in the present market, FPH can.

[Rif-Raf]

If the historic PE of 32.7 as shown on DB website is correct (at $2.88) based on the latest result this must now be 18.6 and then going forward to 14.9 in a years time.

[upside_umop]

Seeing no action on this thread even though share price is up this year .... a rare event ..... I thought I'd post this from smokin cubans from another thread -

If you buy FPH you will double your money in a year - NPAT tripling this FY, 20% constant currency rev growth, resilient industry, corporate activity in the sector (Philips acquisition of Respironics). Its a no brainer - stop fluffing about with this ****.(Nuplex)

Agree with him ....

This is where things have changed. If constant currency revenue growth had stayed at 20% I think the market would have been pretty happy...but it hasnt. Down to 10% growth in USD terms --> USD is their constant currency.

[Bob Marley]

Rif-Raf, Hoop

Historical FY09 PE = 23.7x ($2.90 share price/($62.2m net profit/509.6m shares))
Forecast FY10 PE = 18.5-19.7x (based on company's forecast FY10 net profit of between $75-80m)

[ratkin]

Good little story on three news about fph . Seems its the guidance the market dosent like. good opportunity to top up imo

[Yossarian]

gosh, what's up with FPH - suddenly at a two year high, out of nowhere in the last few weeks.

was the technical briefing session on the 30th really exciting??

[emearg]

The share price at a high is surprising considering how high the dollar is right now. Based on the past few months I would expect the share price to be about 50 cents lower right now. So either this stock is being looked on more favourably, or the market in general is feeling positive. Both are in play me thinks...

The good news is that if/when the dollar falls the share price should go considerably higher.

With the consistent revenue growth FPH displays in US dollars there is no reason to think this won't be an excellent long term share. Nice defensive stock in my opinion. Sick people need treating even when they are suffering financially. The only significant downside is the exposure to the dollar.

[ratkin]

Everything is going up and its still a dollar off where it was two years ago.

[Zaphod]

A VERY rapid rise. Keeping my eye on this one.

[LJB]

Wasn't there a briefing the other day with analysts and insto's where they showed off some promising new products. Must be positive sentiment over continued growth through roll out of new products despite currency headwind.

Or is it just market wide positive sentiment for large cap companies in general.

[The Great Gold Guru]

I sold 60% of my NZ share portfolio yesterday ... including all my FPH,SKC,EBO and FBU. Markets seems to have gotten way ahead of itself to me. Am now up 32.4% so far in 2009. That's good enough for me, will gradually sell remaining 40% and will be 100% cash by mid-Aug. Will then stand on sidelines looking for reality to set in later in the year !!

[PartTimeTrader]

I converted all of my CFDs to cash a little prematurely about a week ago. I didn't think the rally would last as long as it has although I still booked a very nice leveraged return for the year.

I'm a bit nervous with shorting stocks, but I've shorted a small amount of FBU yesterday at its peak and several others. Nothing that will hurt too badly if the rally continues.

[Hoop]

I sold 60% of my NZ share portfolio yesterday ... including all my FPH,SKC,EBO and FBU. Markets seems to have gotten way ahead of itself to me. Am now up 32.4% so far in 2009. That's good enough for me, will gradually sell remaining 40% and will be 100% cash by mid-Aug. Will then stand on sidelines looking for reality to set in later in the year !!

Time to sell?... for most of us... no its not.

TA of the NZX and ASX iindices does not say sell .. Most stocks look good.
Even FPH..which has been awful this last few months is now TA turned to buy signals 2 weeks ago and is currently flirting is 3 year downtrend line which I think got breached intraday yesterday. Phaedrus may confirm all this.



However GGG I do not know your strategy...to your credit.. I assume your strategy of reaching your goal of +33% has been reached and you are following your discipline and I admire you to keeping to that discipline .. it is in fact a winning discipline.

GGG I assume the above is true and you decided well in advance your goals but I get this feeling you allowed that emotion factor to dominate your actions and decide now to sell. This decide now action action usually destroys investment timing.. opportunities and existing goals... I hope this isn't true.

--------------------------------------------------------------------------------------------------------------------------------------------------
Axiom on Greed
2 Always take your profits too soon.
......Decide in advance what gain you want from a venture, and when you get it, get out.
--------------------------------------------------------------------------------------------------------------------------------------------------

However ...your investment strategy might say sell for you as your personal goals have been satisfied..but this does not mean this rally is over.
In actual fact there are no signs that this historically significant (possible record breaking) rally is over.

I may like your investment discipline GGG but for me my individual personality will not allow me to adopt your type of investment strategy ...

Personally ... exiting the market while in full flight for me would be painful...having to watch the rest of this biggest party for decades from the sidelines would be too much for me to bear.

We don't get these "once in 20years" rallies often ..so when we do get one I personally want to be a part of it.

I will leave this party when the sell signs appear not before.

[Phaedrus]

TA of the NZX and ASX indices does not say sell .. Most stocks look good. We don't get these "once in 20 years" rallies often ... I will leave this party when the sell signs appear not before. Good on you Hoop. I agree 100%.

http://h1.ripway.com/78963/FPHlt85.gif


Even FPH....which has been awful this last few months is now TA turned to buy signals 2 weeks ago and is currently flirting with it's 3 year downtrend line which I think got breached intraday yesterday.Ah, now here we part company, Hoop. FPH is not "flirting" with the longterm downtrend line at all. It has in fact reconfirmed it. The intraday spike that you speak of is actually very Bearish. FPH rose a lot, but heavy selling pressure pushed it right back down again, below the Open and even beyond the Close of the previous day. FPH is a Sell. Looking at the short-term chart :-

http://h1.ripway.com/78963/FPHst85.gif

Here we can clearly see a Dark-Cloud Cover candlestick. These are a Bearish formation. Some factors intensify the importance of Dark-Cloud Covers. They are :-
(1)The greater the penetration of the black body into the prior white body, the greater the chance for a top (reversal).
(2) The formation of this candle on greater than usual volume.
(3) A long upper shadow.
ALL of these factors were present.
This candle fairly screams SELL! and needs absolutely no further confirmation before acting. Those with little faith in such things oriental and demanding confirmatory signals might like to look at the OBV trendline break.... or the Williams'%R SELL signal..... or any of a whole slew of other indicators (including a trendline break).

This is a textbook example of simple trend analysis. Today's weakness should have come as no surprise to anyone.

[Stranger_Danger]

I suspect GGG will look like an egg for a little while, but the bottom line is the cash is in the bank. There is also some chance he will soon look smart - who knows?

You simply don't have to make every last dollar - especially if your risk aversion was present in July 2007 (from memory, GGG was in this boat) and you didn't lose half your wealth (or more by being geared) in the 18 months after that.

For the record, I'm loathe to ignore the trend *too much* (for which I thank Phaedrus sincerely) but will be taking some chips off the table in the next few weeks.

I am starting with a few shares that have not gone up much or at all.

As for the performing stuff (a lot of which is up well over 100% in a fairly short time) my Phaedrus-influenced left eye will keep looking at the chart and try not be toooo soon, but my cynical right eye will be leading the ultimate outcome - ensuring some good profits are taken and that the very real risk that this is a speculative bear market rally is considered.

[Hoop]

Good on you Hoop. I agree 100%.

Ah, now here we part company, Hoop. FPH is not "flirting" with the longterm downtrend line at all. It has in fact reconfirmed it. The intraday spike that you speak of is actually very Bearish. FPH rose a lot, but heavy selling pressure pushed it right back down again, below the Open and even beyond the Close of the previous day. FPH is a Sell. Looking at the short-term chart :-



Here we can clearly see a Dark-Cloud Cover candlestick. These are a Bearish formation. Some factors intensify the importance of Dark-Cloud Covers. They are :-
(1)The greater the penetration of the black body into the prior white body, the greater the chance for a top (reversal).
(2) The formation of this candle on greater than usual volume.
(3) A long upper shadow.
ALL of these factors were present.
This candle fairly screams SELL! and needs absolutely no further confirmation before acting.

This is a textbook example of simple trend analysis. Today's weakness should have come as no surprise to anyone.

Surprise:eek: to me P
..watched the spike above the trendline and -2cents at close yesterday...but my brain failed to compute ..rather peed off with myself at that moment of discovery in reading your post... should have seen it as a mental image. Time to buy a decent TA program like Metastock ..relying on 24 hr delay TA programs and added one's mental image to that missing day and a half obviously has its downsides..

Disc: Using my personal strategy and my discipline....I have left the FPH party ( held for 2 weeks.. sold today +8% profit)

...owe you a beer P :)

[PartTimeTrader]

Hindsight is a wonderful thing indeed.

No matter what trading strategy you followed this year. As long as it did not involve shorting of stock. You probably have a nice realised or unrealised gain for the year.
A monkey picking random stocks to buy on the NZX this year and holding them would have a nice gain.

The 2 biggest "suprises" ( not to some people ) were FPA & NPX.
The people who made the real gains on these stocks weren't TA's. They were people who thought there was real value in those companies and figured on a weighted basis that the risk of
bankruptcy was lower than the potential reward if they solved their liquidity issues.

[Hoop]

Hindsight is a wonderful thing indeed.

No matter what trading strategy you followed this year. As long as it did not involve shorting of stock. You probably have a nice realised or unrealised gain for the year.
A monkey picking random stocks to buy on the NZX this year and holding them would have a nice gain.

The 2 biggest "suprises" ( not to some people ) were FPA & NPX.
The people who made the real gains on these stocks weren't TA's. They were people who thought there was real value in those companies and figured on a weighted basis that the risk of
bankruptcy was lower than the potential reward if they solved their liquidity issues.

OK PTT ..I'll take your bait.

A simple easy to read Example of very simple TA at work (using MA30 only**) with MFT. Note the over 4 times profit I have made when the MFT share had exactly lost over 2/3's of its value during that time. Note how the money compounds with each entry and exit. (see my post #285) (http://www.sharetrader.co.nz/showthread.php?t=760&page=19)

** I am trialing this type investment strategy at present (using many TA indicators not just MA30...as Phaedrus points out using only one indicator is not wise).
I also currently employing this investment strategy type to other shares, FPH included.

Its working extremely well and is beating the market...Any strategy that can beat the market is good... PTT try it before knocking it.


PS: with reference to FPH... " I"ll be back " (The Terminator 1984):cool::cool:

[PartTimeTrader]

I actually do use TA as part of my analysis. I'm not saying it doesn't work, TA certainly has some merit but it only has merit because of the domino effect of other traders who genuinely believe it "works". If I don't believe in TA, but 99% of the market does. Then what I think does not matter. When a sell signal is generated, I'm not going to be holding this stock because theres going to be huge selling by all the TA's which will crush the price. Of course, 99% of traders aren't TA's. It's about finding the right balance between fundamentals & TA to beat the market.

You back tested MFT over the period that proves your point. If you go back further, it no longer holds true.

I bought a ton of MFT on the day it went ex Dividend a few weeks ago for 4.05-4.1 on a CFD trade. Easiest money ever :)

Reason? the volume of shares traded in MFT isn't particularly high. One big seller and the share price plummets, the opposite happens with a large buyer. This feature of MFT also applies to CEN which I took full advantage of. I figured it's a good deal given what I know about the company from a FA point of view, the downside seemed fairly limited.
I had seen discussions about MFT from this forum, decided to look at the graphs and did some basic TA but I went ahead and bought anyway.


"Yankiwi
Billionairehead - lol


Join Date: Dec 2008
Location: Rotorua, NZ
Posts: 387


For any of those whom are willing to buy after one of Phaedrus's red sell arrows, a 10 cent dividend will be paid this month with an ex date of 17 July.

http://www.mainfreight.com/Files/Dow...ent%202009.pdf

An effective 2.5% discount to the current s/p.

02-07-2009, 11:59 AM #292
Phaedrus
Advanced Member


Join Date: Dec 2001
Location: , , New Zealand.
Posts: 2,257


Don't worry about my red "Sell" arrow, JK - it was way back in May and has no bearing on whether you should buy MFT now or not. Let's rephrase your post....

"For any of those whom are foolish enough to buy a downtrending stock on a falling OBV, a 10 cent dividend will be paid this month with an ex date of 17 July."

Question :- How much do you think MFT will drop when it goes ex? Maybe 10 cents? 2.5% ?"

In "theory" stock price ex dividend should be old price - dividend paid. But given the volume traded in MFT, this was unlikely to happen in my opinion.
The next day, it was selling 4.06 and it has gone up from there onwards. Making me a nice tidy sum. Did I "KNOW" this was going to happen? no not at all but I was more confident than not that this was going to happen, so I took what I thought was a level of risk worthy of the return.

[The Great Gold Guru]

I have been away a few days but it appears my "time to sell" thread has provoked a little debate about entry and exit startegies. In the carnage of 2008 I made 24.8% ... . There is certainly lots of risk and little to gain from trying to extract every last dollar from every trade you do. My motto since the Bear Stearns bail-out started the rout in financial markets back almost 2Yrs to the day is to "scalp" the market for a few weeks or months. A long term buy and hold strategy at present is just too risky, too many unknowns. Better to trade short term sentiment rather than trying to be clever and trade the fundamentals ... no one really knows where the fundamentals are. You can smell , taste , feel sentiment in these markets .. its really quite palpable.

Be greedy when others are fearful ... be fearful when others are greedy !

I sold 10,000 FPH on Monday at 336 ... today 315 ( $2100 saved in 48hrs )
I sold 8,000 SKC on Monday at 344 ... today 325 ( $1520 saved in 48hrs )

I thought others were getting greedy a few days ago , I got nervous at the excessive bullishness , maybe in a few days/weeks/months those people will get scared ?? I am cashed up now and will be ready ...

[Hoop]

You back tested MFT over the period that proves your point. If you go back further, it no longer holds true.


So true ...that is why you use more than one TA indicator to confirm. Re-read my post PTT

I'll repeat myself using many TA indicators not just MA30...as Phaedrus points out using only one indicator is not wise

As for MFT... MA30 is signaling well since 2006 ..who knows what will happen in the future maybe its next signal is dud (overdue to happen I guess). That is why we use more than one indicator so as to confirm the other.

I used MFT post example to highlight an investment strategy method using very minimal factors to kept it simple and easy to understand for posters like yourself. If you don't believe it and your mind refuses to think outside any squares that is your right and I don't care...but PTT, please!.. don't act like a politician and complicate something simple in an effort to try and improve your point of view.

[PartTimeTrader]

Yeah, I shorted FBU and SKC a few days ago. Closed that position and re entered FBU and SKC =)

I still intend to have an overall long position in the market as theres still a long way up. But thats no reason not to make some short term trades in the mean time!

I'm not closed minded. I think TA has its uses. But if its correct to use "more than one TA indicator", it is also not wrong to use fundamentals or sentiment as part of the evaluation.
They are all interrelated in some way so forsaking any of them is being closed minded.

Of course if you want to use only one TA indicator or 3 TA indicators in order to come up with a "simplified" trading system. Then go ahead. It could work out, then again it might not just like any other system.

Sometimes people overestimate their own judgements/edge when they are successful. I am a professional online poker player and this is one of the most obvious features of a "random" outcome. Humans have selective memory. When they win, they can only think of how they "outplayed" their opponents and when they lose they are very quick to blame it on "bad luck". I have logged over 500,000 hands this year, with a good profit. Yet over the course of one block of 50,000 hands I was actually negative through no fault of my own. Just negative variance. At skycity for example, you can only play 20 hands an hour with a live dealer. That means you could potentially win for an entire year and still be just "lucky". A live player needs to play for many years to be statistically "sure" he is a winner. It is the same for FX & Stocks. You need a high number of trades before you can truly have a statistically significant proven edge and that number of trades is far far higher than most people realise.

[The Great Gold Guru]

Part time trader ... "there's still a long way up". What's your thinking on that ? Sentiment or fundamentals ?

[PartTimeTrader]

It's mixed bag of things really.

Current price levels are around the same as they were towards the 4th quarter of 08. The "reccession" mindset was already well underway with people predicting doom and gloom everywhere.

If there is no bad news over the next few months (no good news neccessary although it will help) you can bet all the "fundamental" analysis guys will revise all of their discount rates / growth rates etc.. and start buying up "undervalued" stocks again. What was overpriced only a few months ago now becomes a screaming bargain. People have short memories.
That will start a chain reaction with TA's picking up the trend and sentiment will snowball until everyone thinks they are invincible again.

[emearg]

Todays email from LEF (Life Extention Foundation) is titled:

Common Sleeping Disorder Ups Chances of Dying : Study Is the First to Quantify Death Rates for Sleep Apnea, Especially in People Who Snore

Text can be found here:

http://www.lef.org/news/LefDailyNews.htm?NewsID=8655&Section=AGING&source=DHB_090819&key=Body+ContinueReading

[meesham]

Huge volume today, and one of the few stocks with a SP moving in the right direction. Anyone have an idea what's brought it on?

[Jim]

Low Kiwi $ against the green back

[Nevl]

Great result. Got some CFD's as the market opened and am holding for a nice ride. Good to see 31% of sales in Europe. The Kiwi has not really risen there and $600 in hedges at 52US and 44euro cents. Thats all showing a massive profit at the moment.

[peat]

Shows how important FX strategy is for NZ business huh!


is it incorrect for me to say that nearly all the profit was in fact FX dealings..



Fisher & Paykel Healthcare reported a 31 per cent rise in half year net profit to $37 million....

During September and October the company monetised US$62m ($84.5m) of forward exchange contracts with maturity dates in the 2012 and 2013 financial years with a cash benefit of $30m being realised and applied to reduce bank debt.

[Nevl]

Shows how important FX strategy is for NZ business huh!


is it incorrect for me to say that nearly all the profit was in fact FX dealings..

Yes and no. The FX profit is banked and drawn down as money is repatriated back to NZ and not called profit. If the Kiwi drops back to 50us and they cash out at say 60us and they get new hedging at 50us then the difference would be included as an extraordinary item. So they are basically saying they can sell $600mill before they have to use market exchange rates. That will take them through to next late next year hopefully giving them enough time to either increase prices or get some more hedging if the kiwi drops. However will be tight if there is no drop in the Kiwi by next year. But having said that they now have 40% of sales in the states and 30% in Europe and 30% in Asia so should be ok. The currency risk is well spread now. The Euro rate is still below our long run average and so they should be ok there.

[percy]

good to see R&D expanded.6.5% of operating revenue means
approx 16.3 mil.augers well for future new products and future
profits.a good company in the growing health sector.

[ratkin]

FISHER & PAYKEL HEALTHCARE INTRODUCES NEW CPAP RANGE


Rather unfortunate name :)
It had better be good , or we know what the nurses will be calling it

[Lizard]

Yes, I too choked on my coffee when skim-reading the announcements this morning...

Fortunately, the newspapers, more thoughtfully, translated the headline to read "F&P Launches New Sleep Apnea Product"

[Zito]

Will be interesting to see what effect the Obama health care reform bill has ... should be good.

I'm not so sure it will be good for FPH but it's too early to tell. The US Senate, in passing the ObamaCare Health Plan into law, also imposed a 2.3% excise tax on most medical devices.

Reaction from the industry has been mixed, at best. There is the risk that it will impact growth and place a premium on future research and innovation.

FPH will have been monitoring the passage of the legislation carefully. With about 40% of the company's sales in the US, they will be affected, and if they cannot pass on the tax its NPAT in the States could fall by a significant amount. We shall see.

[Catalyst]

This from CEO Mike Daniell:

Fisher & Paykel Healthcare (FPH): Chief executive Mike Daniell said US President Barack Obama’s healthcare reforms are a long-term positive for his company though it may take several years to bear fruit, according to BusinessDay.

It's interesting to compare Resmed (RMD.AU) with FPH. The two stocks operate in the sleep apnea market and normally track quite closely. I've noticed over the past six months RMD has taken off (+30%) and FPH has dropped (-5%), which is unusual.

[elZorro]

There's a slight uptick on the FPH share price these days. There are some interesting comments in the sleep apnea blogosphere about the new ICON range.

http://www.sleepguide.com/forum/topics/icon-auto-from-fisher-paykel?xg_source=activity

http://www.sleepzone.com.au/showitems.asp?heading1=CPAPs

The indication is that there is some demand for this new gear, and of course USA and Europe is where the action is, not Australasia. I would guess that after a bit of customer testing/evaluation in the local field, the overseas markets will be followed up.

I've heard on the grapevine that the ICON product is very classy looking. Would now be a good time to buy FPH?

[percy]

. Would now be a good time to buy FPH?[/QUOTE]
I would look at TA.On fundamentals I think it is a very good company.It is in the health sector,has good products,has a vegry high ROIC of over 20%.Has excellent growth prospects and invests a good deal on research which is coming through with new and better products.We may even see more drugs in future delivered via the lungs which may benefit FPH.I own a few however I class them as a long term hold.

[elZorro]

Thanks for that Percy, I'm not so good at TA (or FA for that matter) but I will have a look.

I was shown just one locally-made piece of the ICON product last week, and the attention to detail was extraordinary. If all of it has been crafted like that, it's a product we'd all be proud to call NZ Made. When FPH first floated after the split, I knew there were good engineers there, but wasn't into buying shares. It would have been a good investment though.

So now here we are with the share price dropped back somewhat, and all indications are that a new product might steal a march on the competitors. I wonder if they have any patents covering the concept internationally.

[Silverlight]

Weekly chart attached.

Solid uptrend with 3.50 a pretty significant technical level, long term a break out above $3.50 could be expected, buy on the breakout, or the re-test of the support/resistance level, if it retests.

[Penfold]

This is one of my long term holds... I don't trade like most of the guys on here.

I have been watching this for years and there seems to be something up that you TA guys might want to look at. FPH is moving up pretty solidly these last few days despite the xrate not going in their favour. This is pretty unusual behavior... Just thought I would mention it because I don't contribute much round here being a FA kind of guy.

[Ayrton]

Yes and no. The FX profit is banked and drawn down as money is repatriated back to NZ and not called profit. If the Kiwi drops back to 50us and they cash out at say 60us and they get new hedging at 50us then the difference would be included as an extraordinary item. So they are basically saying they can sell $600mill before they have to use market exchange rates. That will take them through to next late next year hopefully giving them enough time to either increase prices or get some more hedging if the kiwi drops. However will be tight if there is no drop in the Kiwi by next year. But having said that they now have 40% of sales in the states and 30% in Europe and 30% in Asia so should be ok. The currency risk is well spread now. The Euro rate is still below our long run average and so they should be ok there.

This from Nov last year may help explain it? Not sure though.

[elZorro]

FPH still popular today, surely a good sign.

[winner69]

Sokid at best result

Headlines say profit up 15% to $71m

However operating profit about the same as last year. Profit increase from forex movements

Guidance is for about the same profit next year so not expecting much growth .... which says the headline about this years profit is not indicative of an another good year .... and with a shareprice at 24 times earnings doesn't suggest outperformance of returns over the next few years

[percy]

Sokid at best result

Headlines say profit up 15% to $71m

However operating profit about the same as last year. Profit increase from forex movements

Guidance is for about the same profit next year so not expecting much growth .... which says the headline about this years profit is not indicative of an another good year .... and with a shareprice at 24 times earnings doesn't suggest outperformance of returns over the next few years

Yes you are right.I am pleased to see R&D $35.3 mil or 7% of operating revenue.This will lead to extra sales.$48mil of capital expenditure will also lead to extra sales.Good products in the health care sector is still a good place to invest.

[Catalyst]

FPH will probably update its earnings guidance at the AGM on 27 August, as they have in the past couple of AGMs. Given the recent currency appreciation against the US$, I wouldn't be surprised to see a downward revision to its guidance, all other things being equal.

31 March 2010 profit = $71.6m

31 March 2011 guidance (given in May) = NPAT of $70 - $75m, assuming fx avgs US$0.67.

Now the currency is over US$0.71. I recall the company stating that its profit sensitivity is around $1m for a 1% change in fx over the course of the year given current hedging arrangements. So if the currency stays over US$0.71 during August I wouldn't be surprised if the company revises guidance down to $65 - $70m.

NPAT of $70m puts them on a PE of around 22x at $3.00 share price.

[darksentinel]

Break above the 19-day MA, some good short-term signals. Anyone else think has broken the down-trend?

[Jaa]

Bollard's hawkish comments yesterday about the OCR should halt the $NZ rise for a while and thus halt FPH's slide. Till the next major data point comes out anyway.

[Zito]

Bought in yesterday - a confirmed trendline break reinforced by an OBV buy signal over the last 2/3 trading days has provided a good entry point.

[Catalyst]

FPH's recent profit guidance shows us again that the stock remains very sensitive to the NZD/USD x-rate. I'd love to see a graph of FPH vs NZD/USD (or inverse of NZD/USD) over the past few years to see how close the correlation is.

Net profit for y/e 31 March 2010 = $71.6m
Old net profit guidance for 31 March 2011 = $70 - $75m (May 2010) assuming 67c x-rate remains
New net profit guidance for 31 March 2011 = $65 - $70m (August 2010) assuming 70-71c x-rate remains

At the current share price of $3.00, and assuming NPAT of $70m and EBITDA of $130m for FY11, FPH is currently trading on:
PE = $3.00 / ($70m/517.4m) = 22.2x
EV/EBITDA = ($3.00 x 517.4m + $77m net debt) / $130m = 12.6x
Gross yield = 12.4c / 300c / 70% = 5.9%

Note: current x-rate = approx 72c

[modandm]

anyone got any views on FPH - there results are out soon.

They are in a portfolio I look after as a long term growth play - but TBH i have little feeling for the stock. Be great to get peoples viewpoints both fundys and techies as to whether I should exit and pursue other more lucrative opportunities.

[Phaedrus]

Modandm, FPH has been crabbing sideways in a $2.80 - $3.60 trading range for nearly 3 years, so far. The OBV is flat, so there is no indication of any accumulation OR distribution. Stasis. Who knows how long this will continue for? Theoretically, FPH "ought" to break out to the Upside, but life is too short to hold stocks like this.

I had to smile when I saw that you have this as a "long term growth play" - I think it needs to be reclassified - an income stock, perhaps?

I reckon you have been patient enough - too patient, in fact. Dump FPH and get something else when the time is right.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/FPH56.gif

[percy]

Phaedrus.Thanks for the chart up date and comments.

[Hoop]

Looking at P's chart I noticed that FPH is not strictly in a traditional trading range (Rectangle formation)..so if not a rectangle it has to be something else, perhaps a flat shaped diamond?

Diamonds aren't necessary a traders friend ....If we (NZX) were in a cyclic bear market this Diamond top would be considered a reasonable reliable reversal formation, however we are in a Bull cycle and the bearish formation has to fight the upward forces of that bull market and therefore the diamond top formation is unreliable.

A diamond top is characterised by the price trend leading into the diamond from the bottom of the formation.

Other characteristics include a falling volume trend or a dome or saucer...initially traders come in when there are higher highs and lower lows (megaphone) however volume dries up when the pattern turns to lower highs and higher lows thus creating less reward. At some point in the later stages of the diamond the reward is unattractive and the traders put the Stock into "who cares a sh1t" category. Sometimes the stock may create an interest when investors use a short-term chart and just see the lower high higher low symmetrical triangle and so get an inverted dome (saucer) but still declining volume pattern.

As one can see the diamond is nearly completed..so what to do???

Nothing until you can see which way it is going to breakout...and even then the break could be unreliable in this bull market cycle.

I have charted the possibilities with Target Prices both ways which have only a 50% chance of reaching...notice the target prices are not that attractive due to the flatness and width of the diamond formation and the price has to go through a strong resistance level going up and a support level going down so again added doubt to reach its target price.

Using the risk and reward method at breakout it shows equal risk to equal reward on an unreliable direction of the breakout. A trading investor would at least need a 70% or higher reward in this situation and as this breakout is an equal 50 -50 the smart investor will put FPH into the "who cares..." basket, ignore it and move on to the next opportune stock.

Its pity really as FPH use to be one stock to watch especially during the last bear market when it showed potential to shine when the Healthcare market was seen to be a safe haven from the bear world-wide....now at this point of time, it is only of an academic interest to the formation Chartists.


If you want in depth info in Diamond formations go to Bulkowski's The pattern Site (http://thepatternsite.com/diamondt.html)



http://i458.photobucket.com/albums/qq306/Hoop_1/FPH06052011.png

[modandm]

thanks to phaderus and hoop for their comments.

Yes it has been doing alot of nothing - its in my dads portfolio honestly - which im now helping with, and he far more patient than I.

I guess there needs to be some fundamental catalyst to break this company out of its anemic crabbing and get a trend going. Lets hope the trend is up.

I think I will wait for the results announcement and presentation then make a call from there. Hopefully the high NZ$ is only hurting them as expected and factored in already - no nasty surprises please.

Guess the question is what else to buy nzx...

[Catalyst]

modandm - FPH is extremely sensitive to the NZD/USD exchange rate given 98% of its earnings are derived offshore, predominately in USD and to a lesser extent EUR. Yes, they do actively hedge but my guess is they only have limited cover in FY12 and the current rate of around 79c will be hurting them. So the catalyst you are looking for is a big drop in the NZD/USD rate. ie. to 70c and below.

I'd love to see a graph of FPH vs NZD/USD (or inverse of NZD/USD) over the past few years to see how close the correlation is. Mr P - are you able to oblige please?

Unlike you, I do expect a nasty surprise when they announce their FY11 result later this month. They gave guidance back in Sep 2010 of $65 - $70m NPAT if the x-rate remains at around 71c. I expect the actual figure will come in at the lower end of this range given the higher-than-expected x-rate since then.

But more importantly, where will the company's FY12 profit guidance be pitched at? We know that the sleep apnea markets are growing at around 15% pa. But we also know that the company's NPAT sensitivity is around +/- $1.5m for every 1% movement in it's 'basket of currencies'. If FPH can grow it's top line at 15% and the currency remains at 79c, then a very crude calculation gets FY12 NPAT of around $60m (assuming $65m FY11 NPAT x 1.15 - (79/71 - 1)*100 x $1.5m + $2m for hedging gains and Mexico efficiences). I don't think the market will be happy with FY12 NPAT guidance of anything lower than $65m.

At the current share price of $3.07, and assuming NPAT of $65m and EBITDA of $123m, FPH is currently trading on some reasonably rich multiples:
PE = $3.07 / ($65m/520.5m) = 24.6x
EV/EBITDA = ($3.07 x 520.5m + $77m net debt) / $123m = 13.7x
Gross yield = 12.4c / 307c / 70% = 5.8%

Without a drop a NZD/USD I can't see FPH going up.

[Phaedrus]

Here you are Catalyst - what do you make of it?

http://i602.photobucket.com/albums/tt102/PhaedrusPB/FPH59.gif

[Catalyst]

Thank you for the chart Phaedrus.

What do I make of it?

Pre-2006 : Fairly high positive correlation between NZD/USD and FPH. FPH had some quite attractive hedging in place during this time. From memory, in 2002 and 2003 they locked in rates below 50c for the next few years so the company's performance in FY04, FY05 and FY06 was largely uneffected by the appreciation in the NZD/USD.

Post-2006 : Fairly high negative correlation. The attractive hedging was gone by this stage and the company's earnings were largely exposed to the spot NZD/USD. The company did lock in some quite good currency rates for FY10 and to a limited extent FY11 when the NZD dived during the GFC but I don't think they have too much attractive cover for FY12 and beyond.

Phaedrus, are you able to post the same chart from 2006 onwards please? Cheers

[Phaedrus]

I've reversed the NZ$US scale for this one, Catalyst.

Strange. Again, there is a good correlation, and then ....... there isn't!

http://i602.photobucket.com/albums/tt102/PhaedrusPB/FPH510.gif

[Catalyst]

Thanks again Mr P. Apart from that 1-year period between mid-2008 and mid-2009 when the kiwi dollar momentarily dived to below 50c, I think the chart generally shows a strong inverse correlation between FPH and the NZD/USD, especially during periods when FPH haven't got a lot of attractive hedging in place.

One further charting question for you please, is the NZD/USD trend still up or has it turned? Cheers

[Phaedrus]

Still in an uptrend, and in a nice tidy trend channel.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/NZUS511.gif

[modandm]

catalyst - I think your post on the prior page summed things up perfectly and best represent my views on the stock i.e that it is priced for growth but unlikely to be actually growing (at least in the next few years with the strong kiwi).

My feelings are that FPH holders probably are older income orientated investors - as phaderus mentioned - this stock may be best treated as an income stock.

As to the currency - despite the strange patterns re correlation it is clear FPH would benefit from a stronger USD - whether this will eventuate I have my doubts.

Investing in shares as a currency play is a flawed strategy imho.

All said and done I will still wait for the outlook and should it be as you have suggested unload the position.

The trouble with the NZX is there are so few good opportunities these days...

[Catalyst]

FY11 result about as expected, outlook possibly slightly on the downside.

NPAT of $63.9m was slightly below $65-70m Sep 2010 guidance. (Edit: Nov 2010 guidance was $60-$63m so it bet that.)

Outlook for FY12 NPAT is $62m (if NZD/USD avgs 80c) to $76m (if NZD/USD avgs 70c). Just shows the sensitivity FPH has to the NZD/USD.

Can't see FPH doing much this year if x-rate remains close to 80c. Multiples look on the high side...

PE = $3.11 / ($63.9m / 520.5m shares) = 25.3x
EV/EBITDA = ($3.11 x 520.5m shares + $77m net debt) / $117m EBITDA = 14.6x
Gross yield = 12.4c / 311c / 72% = 5.5%

[percy]

Thanks for your update Catalyst. That x-rate makes for a strong head wind, and certainly makes the multiples high.
I was pleased to see the R&D spend increased.I thought the out look was/is positive.I continue to hold, but wonder if money would be better elsewhere?

[modandm]

sold most at 3.05 a little left to go.

Thanks catalyst.

Im a peter lynch fan and focus on story and PEG ratio. The PEG ratio on this is shocking - im out. Leave it to the oldies chasing the yield to suffer the declining shareprice.

No way Im paying 25x earnings for a company that earnings are going backwards...

[Catalyst]

The underlying growth in FPH is actually very good - it's the high NZD/USD that is masking its performance. If the NZD drops to around 70c then FPH's profits start to grow quite nicely. Unfortunately the NZD/USD doesn't look to be heading down to 70c in the short term.

[percy]

Another ratio other than PEG to look at is PE/growth+yield
PE 25.3 growth 20% yield 5.5 PE 25.3 divided by25.5 [growth+yield] =.99 which is under 1. Which I take to be positive.So will hold.

[modandm]

i rate growth as -3% according to Catalysts outlook based on steady xrate at 80c. Based on that the ratios are terrible. Don't forget FPH has hedged alot of exposure at near 80c already so for an average of 70c the xrate would have to decline to 60c or something - IMPOSSIBLE.

Re NZD USD each entitled to own views. But lets just say i see interest rates in NZ rising faster that rates in the US. The RWC, Chch rebuilding, ongoing boom in demand for NZ Dairy/Meat/Wood from China, all bode well for a sharp NZ economic recovery over the next 2 years. IMHO.

Be this the case - NZD could actually rise vs USD.

[winner69]

The underlying growth in FPH is actually very good - it's the high NZD/USD that is masking its performance. If the NZD drops to around 70c then FPH's profits start to grow quite nicely. Unfortunately the NZD/USD doesn't look to be heading down to 70c in the short term.

There USD stated accounts show revenues up US$19m but EBIT only up US$2m and when you take into account financing costs profit before tax is down over US$4.4m

Is this a better way of looking at FPH performance without having to allow for xrate movements?

Not really what you expect of a 'growth' company though

[winner69]

Another ratio other than PEG to look at is PE/growth+yield
PE 25.3 growth 20% yield 5.5 PE 25.3 divided by25.5 [growth+yield] =.99 which is under 1. Which I take to be positive.So will hold.


Wheres that 20% growth come from percy

in FPH lingo Operating revenue in constant currency terms increased 5% for the year, or 6% for our core products.

[Catalyst]

modandm - FPH haven't hedged at or near 80c. They've got 57% cover around 69c for FY12. So if the NZD/USD spot rate avg's 80c during FY12, FPH will have an effective rate of about 74c (57% x 69c + 43% x 80c), and according to the company's guidance they will achieve NPAT of $62m.

winner69 - I haven't looked at the accounts in too much detail yet, but I know the company discontinued a range of products in FY10 and they had a one-off cost of c$2m this year which may explain some of the difference. I listened in on the conference call this morning and the management said they expect growth of around 15% in constant currency terms during FY12.

[percy]

[QUOTE=winner69;346550]Wheres that 20% growth come from percy

From today's announcement under the outlook FY2012 heading.

[winner69]

[QUOTE=winner69;346550]Wheres that 20% growth come from percy

From today's announcement under the outlook FY2012 heading.

I see now Mr Percy ... yes 20% it is

Bit disappointing on the market today though eh -- down 11 to a nice round 300 but if they are right should be closer to 400 this time next year

[percy]

[QUOTE=percy;346557]

I see now Mr Percy ... yes 20% it is

Bit disappointing on the market today though eh -- down 11 to a nice round 300 but if they are right should be closer to 400 this time next year

400 this time next year?Yeah Right. Who knows? I like the company,I like its products,I like the health sector .
"What we anticipate seldom occurs;what we least expected generally happens". Benjamin Disraeli. [think he must have had shares too.!!!]

[Lizard]

$3 still doesn't look cheap, but at least we may be heading into a 12 month period where FPH could seemingly see improving profits. That should be the basic recipe for a share price heading in the right direction.

[winner69]

Aussie view of FPH in SMH

Fisher & Paykel in need of healthcare
July 21, 2011

Fisher & Paykel Healthcare shares might soon need to use some of the company's breathing-assistance products if their downward spiral continues.

The New Zealand-based group's stock is now at its lowest point in three years, closing at $NZ2.58 in its home market and $2.01 on the local exchange.

The shares have fallen off a cliff since mid-June, which was well after the company's report, in late May, of full-year results that were ahead of expectations. Most analysts then noted that Fisher & Paykel Healthcare's biggest issue was a rising New Zealand dollar which was eating into its offshore revenue stream and, as Deutsche Bank's David Oxley put it, ''masking'' the efficiency gains achieved by management.

Most of the brokers reined in their forecasts for this financial year on the back of the currency effect, plumping for a 12-month price target in ranges of roughly $NZ3.30 a share to $NZ3.50. Those were not big calls at the time because the shares had been running in a range of $NZ3.00 to $NZ3.25 since about this time last year.

A little like a Tour de France rider who falls off the back of the pack, though, the shares are showing little sign of being able to bridge the gap in the near term without a significant shift in fortunes.

They have jagged their way down to yesterday threaten breaking under the $NZ2.50 level, and there is a whisper around that one reason for the decline is that ResMed, which competes in a similar space on sleep relief products, has been nicking market share from Fisher & Paykel Healthcare.

Certainly ResMed's stock has risen from about $2.85 to just short of $3.10 a share in recent weeks - although that raises a ''chicken and egg'' question. Is the rise in ResMed because it is beating Fisher & Paykel Healthcare in a commercial sense, or because investors are switching from one to the other?

ResMed is due to report its results on August 5, which might clarify the situation.


Read more: http://www.smh.com.au/business/fisher--paykel-in-need-of-healthcare-20110720-1hoy6.html#ixzz1SgSaNjFW

[Rusty]

I think the stregnth of the NZ dollar against the US is having an inpact on the share price. Some advice I was given in relation to FPH was to accumulate when our dollar was weakening. Maybe a graph comparing the NZ/US dollar and the FPH share price would confirm or bust this myth.

[percy]

Gee Whiz.Just had a look at the chart after ready SMH article.Well below 200day MA.
Turned the chart upside down to see if it looked better that way.Still terrible.!!!!

[winner69]

I think the stregnth of the NZ dollar against the US is having an inpact on the share price. Some advice I was given in relation to FPH was to accumulate when our dollar was weakening. Maybe a graph comparing the NZ/US dollar and the FPH share price would confirm or bust this myth.

See post 213 -- nice chart and Phaedrus said "Strange. Again, there is a good correlation, and then ....... there isn't!"

What'll happen if NZD goes to parity with USD?

[Catalyst]

A couple of positive comments from the FPH camp recently might put FPH back on people's radars...
...strong start to FY12 with market share gains (see Friday's AGM speeches).
...FY12 NPAT guidance upgrade to $60m - $65m (based on 80c - 85c NZD/USD x-rates).
...Mexico operations doing well and ramping up production.
...Several initiatives to mitigate strong currency rates.
...NZD/USD dropping from 88c to below 82c over the past few weeks.

And FPH's multiples are currently the cheapest (or least expensive) that I can remember for a long time...
...PE = $2.38 / ($62.5m midpoint of guidance / 520.5m shares) = 19.8x
...EV/EBITDA = ($2.38 x 520.5m + $75m net debt) / $119m EBITDA = 11.0x
...Gross dividend yield = 12.4c / 238c / 72% = 7.2%

[Catalyst]

I see FPH got smashed today...obviously the market is more worried about further weakness in the USD...might have to stay on the sidelines for a bit longer...

[Jim]

Hi I see that this Fisher stock is way down south, time to accumulate some ???

[Catalyst]

I think the reason why the FPH share price has dropped Jim is the weak USD and weak outlook for the USD, given that FPH exports 99% of its products. See the other FPH thread (entitled "FPH.....TA and FA meet") for some discussion around this.

Time to buy? If you're certain that the NZD/USD will be closer to 70c than 80c in a years time, then now would be a good time to accumulate. I wouldn't have a clue where the NZD/USD will be in a years time and prefer to wait until the currency tracks down.

[Joshuatree]

Reviewing my portfolio and trying to come up with a reason not to dump this stock. Anyone got some opinions thoughts ? thanks in advance

[percy]

Reviewing my portfolio and trying to come up with a reason not to dump this stock. Anyone got some opinions thoughts ? thanks in advance

Good products in growing health sector.

[Joshuatree]

Hi percy,yes i like the health sector too .Im happy with Ryman and my recent buy of CAJ@ 4c but FPH has been promising for a while and languishing .Exchange rate can't be the only reason for underperforming and i don't see exchange rate changing back any time soon. Profit result 25th may.

[percy]

Hi percy,yes i like the health sector too .Im happy with Ryman and my recent buy of CAJ@ 4c but FPH has been promising for a while and languishing .Exchange rate can't be the only reason for underperforming and i don't see exchange rate changing back any time soon. Profit result 25th may.

CAJ at 4c.!!!!!!! Mine cost me 5c,plus the cost of the options.!!!!!!!
I would wait for the result,however I think they are achieving excellent growth,and the big spend on research should result in new and better products.I also believe a lot of drugs are better delivered via the lungs,so see further opportunities there.
I also believe if you have a good product,the market accepts ,you will find ways to get your production costs in order.May be they end up with research only in NZ and manufacturing done in countries closer to their markets.

[Zaphod]

Good products in growing health sector.

That might be - and I hear that statement often quoted amongst peers - but FPH sstock has been a lacklustre performer, for many years.

[percy]

That might be - and I hear that statement often quoted amongst peers - but FPH sstock has been a lacklustre performer, for many years.

The SP has been a lacklustre performer for awhile now.In the meantime the company has grown sales,introduced new products and performed very well.The NZ$ has worked against them.At the present time the charts say the company's SP is poised.I think up,but could be down?,therfore poised.!!!! My own view is it has bottomed, and with a good result we will see the SP move upwards quickly.SP has moved or about to move above the 200 day moving average.
So I stand by my statement,"good products in growing health sector."

[slimwin]

I'm only using the directbroking chart which has a 180 MA and it's broken that about 5 times in the last 3 years only to go onto drop. On that note how accurate are the DB charts? They're often at variance to ASB charts.

[percy]

I'm only using the directbroking chart which has a 180 MA and it's broken that about 5 times in the last 3 years only to go onto drop. On that note how accurate are the DB charts? They're often at variance to ASB charts.

The Yahoo charts have 200 day MA but appear to be a few days old,while stocknessmonster chart has 180 day MA,so that is why my post had poised.What we need to confirm a change of trend is for the SP to stay above the 200day MA and for that MA to move up.
Hopefully Hoop my post us a good chart and commentary.I would not be buying or selling until the result was out.
I continue to hold in the meantime.

[percy]

What a steller result, a well managed company making good progress in difficult time's

Yes, a cracker result and I was very pleased at the positive outlook,with new products yet to come on stream .

[Lizard]

I thought result looked as expected. Company makes good sales progress, but still looks relatively expensive.

Perhaps if there was a serious prospect of the NZD returning towards 0.60 against the USD in the short-medium term, I would find the report more riveting reading.

[Joshuatree]

NZX showing a 7.07% div yield is that right? Next years profit and ebitda estuary(estimate) similar. Suppose(he says gloomily) it could be a defensive place to twiddle.Mkt expecting more maybe,s/p down a tad.

[Catalyst]

JT - The gross yield of FPH = 12.4c FY dividend / 230c current price / 0.72 = 7.4%

PE = $2.30 / ($64.1m/530.1m shares) = 19.0x
EV/EBITDA = ($2.30 x 530.1m + $109m net debt) / $115.4m EBTIDA = 11.5x

[Lizard]

Dividend yield is a bit deceptive as not currently covered out of cash-flow, so relies on DRP uptake (dilution) and, perhaps to a small degree, on borrowing to maintain. But it is probably supporting the share price.

[Joshuatree]

Thanks catalyst. The smell of freshly ground coffee coming your way. :rolleyes:

[percy]

a ratio I find handy is PEG .Add divie to it makes more sense too.
PE 19,growth 23%, divie 7.4., so 19/30.7[23+7.4] =6.18 which is very modest,so good value at present.

[Joshuatree]

Thanks Percy ,sending you alphabet soup (with additional star signs and trig symbols) :huh: pssst i have analysis allergy.

[Lizard]

Percy - that's a bit cheeky using the growth rate from the "constant currency" calculations and the NPAT from the actuals... best-of-all-worlds analysis :P