TRA - Turners Automotive Group [previously TNR - Turners Limited]

The first post in this thread says it all - EPS down 33% - So SP should go down. Buybacks are artificial - the market rules - the market knows that finance companies are having their margins squeezed.
Don't worry about BKburger, ST L, HG etc

They are not going to invest more in an industry whose short term prospects look dreadful.

ie economic slowdown, retail investors facing cash crunch etc

see you at $1

Hoop
"Now the interesting thing with DPC is SP $1.61 NTA/S $1.92 !!!!!

NTA is $1.92 - does that assume all loans are collected. does that assume all deals work 100%. Does that assume property values (including head office at 20%??? of nta are valued fairly etc etc

What was bridgecorps NTA - Answer - it does not matter when you have no cash!!!!

also - no cash - no div - yield goes down - sp goes down - very simple formula

Quote:

---

quote:Originally posted by dsurf

also - no cash - no div - yield goes down - sp goes down - very simple formula

---

Absolutely true-no cash,can't pay bills,call receiver.
But what makes you think DPC are near this?

NTA is $1.92 - does that assume all loans are collected. does that assume all deals work 100%. Does that assume property values (including head office at 20%??? of nta are valued fairly etc etc

A fair question to which I can't answer with certainty. I think nowdays there are in place certain requirements for disclosure not like the bad old days where as an example Brierleys under Paul Collins control made their balance sheet look really good by overstating the value of their underperforming investments.

A piece from DPC annual report 31/03/2007 for what it's worth
...
5. Investments
Investments are recorded at current market value.
Investment Properties
Investment properties have been valued at net current value as determined every year by an independent registered valuer.
The basis of valuation is the market value less the estimated costs of disposal. Revaluation gains or losses have been
included in the net surplus for the year and the Statement of Financial Performance does not include a charge for
depreciation on investment properties.
Property Intended for Sale
Properties intended for sale are recognised at the lower of cost and net realisable value.

dsurf..I disagree about the no cash statement.. they have cash on hand and lots of it, about $23M, although less than the previous year.
They aren't producing cash (profit) but they are not asset burners either as the NTA has continued to rise each year.

I suspect that they will not be a large cash producer for a year or two. The reason may lie with the direction they are heading. They are shying away from high return risky loans (car loans, HP) for safer lower returns such as property. Also the reverse annuity mortgage (RAM) market is a very lucrative area that DPC is heading into, but in this area it takes time for the fruits to ripen. At the beginning money is sucked out to give to the oldies (backed by Kiwibank), the RAM costs and interest payable by the oldies is [u]deferred</u> until they die or 10 years whichever happens first. So in the short term with all the outgoings DPC income statement will look sick, but this is deceptive as it's monies is compounding so at the end of the day DPC will eventually realise a tidy return on their investments, but this will take a few years to materialise and slowly at first.

So you don't have to be a rocket scientist to deduce that the finance companies vultures will probably stay away (re: hostile T/O) until the income flows improve. The shareprice will be depressed and potentially undervalued in short to medium term unless some unusual activity causes a demand for them. ST L, VIK, Hugh Green, NZ economy, Govt, are the wildcards.

[u]Conclusion:</u> With the RAM being created,and a move to safer lower return investments, I would not blame management entirely for the poor rate of earnings and would not assume DPC is in poor health.

Disc Hold DPC.. may accumulate when the tide turns

DPC should look at buying some Bridgecorp basement bargains.

No way! Too many cockroaches in that basement and many haven't been spotted yet.

KJ Posted - 06/07/2007 : 11:40:41 AM
--------------------------------------------------------------------------------

quote:
--------------------------------------------------------------------------------
Originally posted by dsurf

also - no cash - no div - yield goes down - sp goes down - very simple formula

--------------------------------------------------------------------------------


Absolutely true-no cash,can't pay bills,call receiver.
But what makes you think DPC are near this?


KJ I do not think DPC are anywhere near calling in the receiver. I was just pointing out that if EPS falls then dividends will fall the the SP will fall.

Also they can keep the dividend up for a while with retained cash like Hellaby's did - however this has -ve growth implications.

Anyway you look at it - there are currently no reasons for the SP to increase.

Can anyone see any I am missing?

p.s. BKBurger reported that he sold his shares for circa $4 in a blatent attempt to convince the market they worth more. The transaction involved a hotel that was "valued". Values are artificial black box calculations that move with intertest rates, liquidity, "market prices" etc. NTA is valid for a break up proposition. Who is going to sell out? Who is going to undertake a T/O?

dsurf-I have been a critic of the management of this coy in recent times.I think their performance has been pathetic.

However their cash position appears strong with Current Assets of $279m (including cash of $35m) & Current liabilities of $215m.On the surface it looks fine.The dividend paid was only around $3m-hardly a big imposition. So your point about "no cash" does not sound right

Their profit was impacted by one-offs of about $5m-without that their NPAT would have been about the same as last yr.With a new CEO you would expect a thorough check for one-offs.

Sure-in the short term their SP is likely to remain weak following the Bridgecorp collapse-I suggest all investment coys are currently affected by this right now.
Im fact the sp will remain weak until they start to show some positive signs of a turnaround-St L involvement should be helpful with perhaps a merger coming up.

St L are only involved because they lent Bridgecorp money. Now ST L are the saviour? If Bridgecorp had not had a couple of "one offs" in the last year they would have made (big guess) 20m?? like they did the year before.

JK DPC will not run out of cash - that was never my point - my point was that the share price is far more likely to continue to fall than recover.

As the thread says the SP is likely to disappoint.

Also - the new CEO's master strategy - RAM will invigorate the company just like the backwards D logo

Going backwards all right - shareholders getting rammed!!!!!

Quote:

---

quote:Originally posted by dsurf

also - no cash - no div - yield goes down - sp goes down - very simple formula

---

Fair enough but from your quote above you can see how I thought that you considered that cash was a problem for them.From your above comment aren't you saying that the SP will fall as a consequence of "no cash"?

KJ - The "no cash" does not relate to solvency - I am not suggesting that. It means less funds for re-investment, lower EPS, lower div's etc

The herald article today quoting St Lawrence sums it up well below.

'Flight to quality' tipped to hit all but best finance companies
5:00AM Thursday July 19, 2007
By Adam Bennett


St Laurence managing director Kevin Podmore.
Higher interest rates mean the "flight to quality" following the Bridgecorp collapse will hit finance companies harder than the three failures last year, says finance group St Laurence.

[b]Bridgecorp's receivership has sparked fears that other finance companies will suffer a squeeze on funding as investors divert money to safer havens such as top tier finance firms and banks, as was seen following the collapse of Provincial Finance, National Finance 2000 and Western Bay Finance last year.

Now it can be argued that DPC is a top finance company - however the public are not well informed and think wrongly that Rod Petrovich is involved with DPC. It is not all the publics fault - BKBurger did sell 20% to Petrovich in such a badly promoted deal that the media have been all over it. This deal is why DPC SP has halved.

Is DPC entering buying territory - Not yet - too much bad sentiment re: finance companies.

Will VIK step up and bail them out - No too busy bailing out BIO!!!

The smoke is clearing as to why this stock has had selling pressure recently. It's BK exiting the scene
So the power base is now down to two, Hugh Green and StLaurence.

This is good news for DPC and I never thought I would be thanking BIO for anything ever again...just goes to show how quickly times can change in the life of an investor.

Quote from NZ herald 3rd Aug:-
Keen observers of listed finance company Dorchester Pacific have noted cornerstone shareholder Viking Capital has been selling stock on market. Trading at just $1.30 yesterday, Dorchester is well below the levels at which Viking first bought in (above $2). The strategic importance of Viking's 9 per cent stake has diminished since the other big shareholders, Hugh Green and St Laurence Group, bought out Bridgecorp back in April to lock up control. If Viking's Brent King ever had serious designs on recapturing Dorchester (which he originally founded) he must have well and truly given up on them now.

Dorchester is in the middle of a share buyback so most likely everything Viking sells is going back to Dorchester and further strengthening Hugh Green's control.

The selling may have something to do with helping out biotech company ICP BIO, in which Viking also has a 9 per cent stake.

Update of chart on Page 5 of this thread :-
http://h1.ripway.com/Phaedrus/DPC83.gif

Phaedrus,

If you don't mind me asking, why do you choose to draw support there? It doesn't seem like a particularly meaningful level, since it is over 4 years ago and only touched once. I can't find any particularly combination of number crunching that suggests this particular level either. What am I missing?

Why not go back to the long period 6-7 years ago where support was around $1?

I'm trying really hard to offer some vestige of hope to the poor sods that have been holding this stock over the last 3 years as the downtrend has progressed. What with a falling OBV, falling Stochastic and falling QStick oscillators, it's difficult to find any hopeful possibilities at all at this point.
I would agree with you that the $1 support level is probably more meaningful, but these shareholders have been through a lot. One thing at a time - let's see if this one holds or not before worrying about the next.

Direct broking are reporting a yield of 6.2% for DPC

1$ SP looking very good. I for one would rather earn 8% in the bank at minimal risk.

I feel for all the DPC staff who took up the offer to buy shares when the price was over $2.50

WOW down to $1.15 what ahuge drop[ from $2.60, wonder what Hewui Greene thinks of this

I wering if their counting unpaid acrrued interest as revenue??

Wow! First time I've looked at this thread for months. Sold out completely back in March & while I didn't time it right $2.13 is a lot better than the $1.15 mentioned above. Had held since 2002 for an annualised return of around 23&#37;
Curious as to whether there is trouble at DPC or if it is all the other trouble in the sector affecting sentiment?

Any supports below $1? Nathan's Finance hit this one pretty hard this morning. It would be ok as a value stock when the sector finally recovers.

has hit good quality DFH (Dominion Finance) as well... 5.6% down :(

The downtrend continues.

http://h1.ripway.com/Phaedrus/DPC821.gif

Question: Is DPC related to Direct Broking? Who do Direct Broking have a relationship with?

I think I found the answer! It was the Dorchester Call Account.

This doesn't look to reassuring though! Are they safe?

"Units are subject to investment risk, including possible delays in repayment and loss of income and principal invested."

http://www.directbroking.co.nz/direc...tatic/cma.aspx

INVESTMENT AND ADMINISTRATION

Dorchester Funds Management Limited is the issuer and manager of the Direct Broking Call Account. Direct Broking Limited (a wholly owned subsidiary of ANZ National Bank Limited) has been delegated day-to-day management responsibility in respect of the Direct Broking Call Account. Units in the Direct Broking Call Account do not represent deposits or other liabilities of ANZ National Bank Limited or Direct Broking Limited. Units are subject to investment risk, including possible delays in repayment and loss of income and principal invested. No member of the ANZ National Bank Limited group (which includes Direct Broking Limited), New Zealand Permanent Trustees Limited or any other person guarantees (either partially or fully) Dorchester Funds Management Limited or the capital value or performance of any product issued by them.

Wow, looks more like a mineshaft - haven't seen one this steep before!:eek:

$1 here we come - good value? You would need to be an insider to know that. Meanwhile TA suggests $1 coming soon.

DPC could be a solid contrarian play.

Trading at close to half book value, with quite a liquid balance sheet (see notes 7 and 9 to the annual report).

I don't see too much risk of the company going bankrupt even if they can't roll over their debenture stock.

Worst case could see a few years of losses and some restructuring costs if their loan book is constrained by a lack of investors for finance co debentures.

Profitability in the medium term is unlikely to be good with rising interest rates suppressing demand for consumer and property lending, and increasing the costs of servicing the debt required for such lending.

However, purely on a book value basis, the company looks interesting.

I could be a buyer if the sp keeps heading South.

Around half their loan book is in motor vehicles, a segment that has been hit pretty hard over the last 24 months.

They also have $139m of loans due to be repaid before end of Sep.

If there has been little impairment of the due assets they should be OK.

With the current markets view on finance cos it may be prudent to wait till the downslide is over or at least until you get some confidence in quality of the MV assets. If they have bad news in September its likely the SP will tank further.

At last there is a NZX enquiry...should've happened way back when it was at $1.60 something.

DPC commented there is nothing that the market does not already know. They admit having a divestment of funds but it they have not mentioned the extent of any damage caused...no mention = riding out the storm reasonably well (disclosure rules).

Typical !! NZX tardiness!! Ditched half of my shares a few days ago after a paranoid market finally unrattled me in making me think something more sinister was out there that I didn't know about but the NZX did. Cancelled the rest of my sell order this morning.

http://www.nzherald.co.nz/section/12...ectid=10459341

Quote:

---

Originally Posted by hairdresser

Around half their loan book is in motor vehicles, a segment that has been hit pretty hard over the last 24 months.

They also have $139m of loans due to be repaid before end of Sep.

If there has been little impairment of the due assets they should be OK.

With the current markets view on finance cos it may be prudent to wait till the downslide is over or at least until you get some confidence in quality of the MV assets. If they have bad news in September its likely the SP will tank further.

---

They have $139m of debentures to repay, but even with large amounts of impairment there is plenty of room in their receivables to cover that amount.

Obviously the lower the SP goes, the greater the margin of safety.

I like management commentary regarding the motor vehicle loans and moving away from them, and that being reflected in a fall in MV loans as a percentage of total loans between the 06-07 years.

One issue is that a large asset on the balance sheet is the investment in St Laurence. I haven't looked into this in detail, but it is a private company is it not? As such I would assume it wouldn't have much freely available information regarding its financial health? This could be one factor that would make it difficult to really get a feel for the strength (or lack thereof) of DPC's underlying asset base.

I dont think there in any meaningful risk of default.

But they have been generating good returns from the MV segment.

A lot of loans are due for repayment, which will imapct on profitability unless they are replaced with new loans.

Agressively chasing new loans may mean taking on greater risk.

investment the in St Lawrence IMO is not too risky.


As a standalone I'd wait to see how much of their provisioning they are able to write back, and where there new loans are coming from.

Also St Lawrence may want to make some sort of play for these guys at some stage [amalgamation most likely], the result would be a much stronger company, it may be worth taking a position on that alone.

Their holding in St Laurence is my worry with Dorchester. As the lack of imformation make me think it is not as good a company as people seem to think it is.

Hairdresser, if you check the annual report, they have pretty much no provisioning. They have taken a one-off hit, writing off a pile of bad debts.

Revenue may fall due to not taking on as many new motor vehicle loans (they have said they want to move away from their central focus on the MV market), however one would expect margins to improve due to more disciplined lending practices.

If write offs next year are more in line with '06, we could see a return to operating profitability, and possibly a significan increase in the SP given that NTA is 1.86.

St Laurence recognises $26m in interest revenue but only $18m in interest payments were received as cash. ie capitalised interest of $8m for the year. I don't know if 31&#37; capitalised interest is normal for finance companies or not, but it is up from 28% in the 2006 year.

I suppose the risk is that they won't know until the projects are completed and fully repaid.

St Laurence Ltd is on NZX (STL - fixed interest notes) and you can find their annual report to March 2007 there or on the website. Pretty sound and well prepared for a credit crunch - I think STL are better placed than DPC.
I am not sure why they are so close whether STL had to buy into DPC to get their money back from Bridgecorp or whether it is all part of a masterplan. There have been some changes at STL in the last year director left etc so that may be a factor.

These guys appear to be pretty cashed up

Note 23
Loans being repaid in current QTR = $119m
Debentures being repaid in current QTR = $57m
Cash at balance date = $53m
If new lending = new debentures
Then they should have around $120m in cash.

Current market cap of DPC = $40m

Hmmmmmm

Well I'm a DPC shareholder as of yesterday. Jumped on once it hit the $1 mark, kind of an arbitrary price but hey :). Seems to be a bit more support as of today and with news of forecast $6M target for next year the SP should rally. If as you say hairdresser DPC were to 'cashup' to $120M they would also have ontop of this their stake in STL who have a reported equity of ~$160M. So Dorchester is holding a quarter of this (= ~$40M when market capital for Dorchester alone is <$40M??). STL seems to be profitable but the main earning are unrealised of ~$30M. Dorchesters stake in STL is more of a long-term investment rather than a cash cow. For STL it would be the opposite (Dorchester dividens providing cash for the day-to-day cash flow of STL). Aside from low consumer and investor confidence (which will hold the SP low in the short-med term) DPC looks (on paper at least) to be a real nice long-term investment.

Anyone got any info on STL shareholders?

Aha

Selling off the MV loan book valued at $147m. Probably at a significant discount to book maybe 10-30&#37; ... Look forward to seeing their response to the NZX request.

If they're making 7.3% GM [their avearage overall lending margin, MV margins are likely to be higher] on the MV loans it will hit their GM by around $10.7m. Of course this may not be as bad as the write down they take on selling the book.

Selling a few reverse mortgages will not replace this income overnight.

$32m of Equity investments current valuation may be a little lower.

Capital adequacy must be pretty tight.

This would probably explain the recent decline in the SP.

Good luck to holders....

Quote:

---

Originally Posted by hairdresser

Aha

Selling off the MV loan book valued at $147m. Probably at a significant discount to book maybe 10-30% ... Look forward to seeing their response to the NZX request.

If they're making 7.3% GM [their avearage overall lending margin, MV margins are likely to be higher] on the MV loans it will hit their GM by around $10.7m. Of course this may not be as bad as the write down they take on selling the book.

Selling a few reverse mortgages will not replace this income overnight.

$32m of Equity investments current valuation may be a little lower.

Capital adequacy must be pretty tight.

This would probably explain the recent decline in the SP.

Good luck to holders....

---

Where does it say they are selling the MV loan book?

DPC said it is exiting the sector. It may just allow the loans to run-off over their lifetime. The company wouldn't be able to achieve $6m NPAT if it had big write-downs from a sale of the MV loans at less than book value.

See PFG's announcement this morning - this could put more downward pressure on DPC.

p2r I am no lawyer or accountant so if you have the knowledge to unravel the mess of interlinked companies and funds I would appreciate it. Such as which owns what and who do they owe money to. Why all this smoke & mirror approach is needed please explain.

From Stuff

http://www.stuff.co.nz/4175700a13.html

"..The company is also pulling out of financing for the Auckland used car market and is already in discussion with a number of parties on a restructuring or sale of this part of the business."

Quote:

---

Originally Posted by POSSUM THE CAT

p2r I am no lawyer or accountant so if you have the knowledge to unravel the mess of interlinked companies and funds I would appreciate it. Such as which owns what and who do they owe money to. Why all this smoke & mirror approach is needed please explain.

---

Just read the notes to the annual report. It outlines it.

Quote:

---

Originally Posted by hairdresser

From Stuff

http://www.stuff.co.nz/4175700a13.html

"..The company is also pulling out of financing for the Auckland used car market and is already in discussion with a number of parties on a restructuring or sale of this part of the business."

---

Ah, ok.

It will be interesting to see the result of this.

I see that viking is down 25% on thin trade todat any prizes for guessing as to why?

VIK dumped 25&#37; of their holding in DPC on Thursday at 1.12.

You would expect Mr King to have a pretty good handle on the DPC business.

Quote:

---

Originally Posted by hairdresser

VIK dumped 25% of their holding in DPC on Thursday at 1.12.

You would expect Mr King to have a pretty good handle on the DPC business.

---

I havent had a read of the year end report. One thing that does surprise me is the $6m profit. Given the turmoil with finance companies of late this result seems unusually high. this gives the company a great earnings per share but somewhere in the murky waters is the true picture imo.

an accoutant might be able to help me on this one.. im thinking on these lines especially with a lot of default payments especially in the MV finance sector. an account receivable is money owed and on face vaule may look good on the books...is this a true reflection on the company's position? especially if many of these loans have been written off as a bad debt so to speak. im not sure if i have explained it well enough but it does seem like an unexpected higher profit given the months long problem in the mv sector and other underpeforming areas.

it reminds me a couple of the lines commonly used by prostitutes and accountants. a guy ask a prostitite what her name is and her reply is ..what do you want it to be? a md ask his accountant what the profit for the financial year and his/her reply is...how much do you want it to be?

I don't see anyway they can make an operating profit for the next 12 months. They should be able to maintain solvency but there business model relies of writing new loans, not just collecting on the old ones. This applies to all finance companies.

IMO they will be looking to book a profit on sale of assets, its hard to see them returning an operating profit with the loss of $10m in interest margin on the sale of their MV business. If anyone has any ideas of where they can replace this income from without chasing risky loans there are be a lot of directors from many finance companies waiting to hear from you.

IMO this share is highly speculative even at the current SP.

Nita
$6M profit sounds reasonable, (MV business not sold yet and it's 1/2 way thru the 2008 financial year) Last year it was $8m less $5M writedowns.

More interesting is BK and Viking...they don't hold a blocking stake in DPC anymore. Current &#37; held : 8.0152793
Last % held : 10.6313

Methinks it was a reluctant sale...needed cash for BIO ????

hoop. i tend to agree. next year writedowns could be somewhat significant

Quote:

---

Originally Posted by Nita

I havent had a read of the year end report. One thing that does surprise me is the $6m profit. Given the turmoil with finance companies of late this result seems unusually high. this gives the company a great earnings per share but somewhere in the murky waters is the true picture imo.

an accoutant might be able to help me on this one.. im thinking on these lines especially with a lot of default payments especially in the MV finance sector. an account receivable is money owed and on face vaule may look good on the books...is this a true reflection on the company's position? especially if many of these loans have been written off as a bad debt so to speak. im not sure if i have explained it well enough but it does seem like an unexpected higher profit given the months long problem in the mv sector and other underpeforming areas.

it reminds me a couple of the lines commonly used by prostitutes and accountants. a guy ask a prostitite what her name is and her reply is ..what do you want it to be? a md ask his accountant what the profit for the financial year and his/her reply is...how much do you want it to be?

---

They took a big bath with massive bad debt write offs last year. The NPAT result this year will be boosted by that.

DPC might also be factoring in expected gains from the sale of the properties they have mentioned in announcements - this would add to profit, allowing them to report higher earnings.

Quote:

---

Originally Posted by whatsup

I see that viking is down 25% on thin trade todat any prizes for guessing as to why?

---

Try figure - VIK was buying/topping up DPC at over $2.00 right up to March this year and now selling out at $1.12. Desparate stuff - money to keep other investments afloat?

Guess the market is waking up to the fact that VIK has made some dreadful investments. ICP Bio is one and VIK was busy pumping in money via loans to find that it was broke and needed recapitalisation.

Quote:

---

Originally Posted by Hoop

Nita
$6M profit sounds reasonable, (MV business not sold yet and it's 1/2 way thru the 2008 financial year) Last year it was $8m less $5M writedowns.

More interesting is BK and Viking...they don't hold a blocking stake in DPC anymore. Current % held : 8.0152793
Last % held : 10.6313

Methinks it was a reluctant sale...needed cash for BIO ????

---

Sell one dog at a huge lost to hold up another dog? What kind of investment strategy is that?

Quote:

---

Originally Posted by Dr_Who

Sell one dog at a huge lost to hold up another dog? What kind of investment strategy is that?

---

No idea!!...not in my investment theories books :D :D
I don't think I would class DPC as a dog but it seems Mr Market has.
If it is a dog, it has a lot less fleas than BIO. DPC will survive, not sure about BIO survival chances, however.

BK is or was reputed to be an astute business person...not sure what he is up to at the moment, but he seems to have dug himself I bit of a hole. I would not write off BK yet, he has the ability to bounce back. I still regard him as a possible menace with DPC, but less so now.

Have you noticed....all investors in DPC have been stung in the last few years...talk about a poison chalice

"Have you noticed....all investors in DPC have been stung in the last few years...talk about a poison chalice"

Except for the largest insider BKburger who sold the poisoned wine as champagne at circa $2.80 to Rodney who is exceptional at two things: losing other peoples money and drinking champagne they have bought him

on face value DPC looks a good investment to buy shares into. what their real position is a little hard to fathom therefore making it a huge gamble to buy into. another issue is that people investing into fixed deposits or other investments where they are only getting 1 or 2% higher than the banks are now getting cold feet.

imo dpc sp demise started to turn to custard around the time that bk and rp were doing some back room deals.

with regards to vik i think that he has become too desperate to chase the so called easy buck. set up his vik with stuff all. no direction, no forcasting. to me bk lost his soul when he started to deal with rp.

all said and dome dpc still looks the most solid of finance companies but i don't have the fanny to buy.. at least not in the next 12 months.

discl. brought this stock at $2.82 and sold for $2.50

VIK holds BIO & DPC shares as it's only sellable assets. I am assuming that since BIO is facing a huge funding problem, that VIK loans to BIO are probably unrecoverable unless BIO returns becomes profitable. Clearly it won't or it would have by now. This means that VIK can either sell DPC shares or go to the market for more money. Now is a terrible time to go to the market and admit a cash flow crunch for VIK so it would seem their only option is to keep on selling DPC. I am also assuming no-one would want to buy the loss making BIO assets.

IS five star finance connected to dpc?

It's ok, it's a 'strategic' move. Yeah, right!

Dorchester pulls rug from subsidiary
New 1:01PM Friday August 31, 2007

Dorchester Pacific Finance has decided to stop funding its subsidiary Senate Finance Limited, which offers loans on used vehicles

With the recent collapse of seven finance companies, Dorchester is reassuring investors it is not in trouble.

Chief Executive Andrew Walker says the company is in negotiations to dispose of the Senate Finance loan book.

He says with finance companies falling over he is not worried about the timing of the move, which he says is a strategic one.

He says most people understand the decision has not been taken because the business is in trouble.

How much will it cost DPC to write off senate finance?

As at 31 Mar 06 Dorcherster Finance Limited had made $134m in related party loans to Senate Finance and its subsidiaries.

Don't know what the current balance [2007 accounts not available] is but I'm guessing they haven't made much of a dent in the repayments...

At the 2006 AGM the cjhairman said they were "changing their lending mix" and showed a before and after pie chart that showed that their lending to the motor vehicle sector had decreased and the lending mix was "safer". It turned out that as loans expired they were not re-lent. The new chairman said this was a strategic move. What a pity a year later they are still exposed.

The other gem was the unvieling of a new corporate symbol. Drum roll....... A backward D

Fantastic!!!

These guys are terrible at spin. The whole management need removing from their "jobs for boys club"

Quote:

---

Originally Posted by Phaedrus

I would agree with you that the $1 support level is probably more meaningful...

---

Interesting to note that DPC has bounced around that $1 level for about a month now.

http://www.stuff.co.nz/stuff/4203454a1865.html

If you own a substantial chunk of a company which you want to sell off to finance another loss-making company why would you publicly slag off that company and run the risk of scaring away any potential buyers?

Is he that bitter and twisted that he just doesn't care? I think that DPC is potentially a company with good prospects but why would you touch it while all this is going on.

I feel sorry for all those Viking shareholders who bought in on the back of King's reputation. Time to bail while you still can.

Quote:

---

Originally Posted by Snapper

http://www.stuff.co.nz/stuff/4203454a1865.html

If you own a substantial chunk of a company which you want to sell off to finance another loss-making company why would you publicly slag off that company and run the risk of scaring away any potential buyers?

Is he that bitter and twisted that he just doesn't care? I think that DPC is potentially a company with good prospects but why would you touch it while all this is going on.

I feel sorry for all those Viking shareholders who bought in on the back of King's reputation. Time to bail while you still can.

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yes king has lost the plot. this has become personal for him rather that make smart business decisions.

it all happened when he got offered a song for his shares to RiP from Bridgecorp. that deal came unstuck as it has turned to mud since.

king and his mate did well out of 42 below and imo was lured by the "easy money" from the use of other peoples money. one only has to look at his decisions since forming Viking to see that.

fast becoming a desperate man and we will hear more about him sooner rather than later.

Any news of movement in this stock? Checked market depth today and the sell side has all but vanished along with very low volume in the past couple of weeks. Is everyone currently holding now in for the long haul? Or waiting to see how the VIK sale pans out?

Havnt VIK only got about 400,000 odd to go? Dont quote me on this but im sure someone would be keen to take that parcel at this price. Heck they could even announce another buyback and approach King personally. Wouldnt that be a nice touch :)

DPC has been in a downtrend for 3 years. There is now clear technical evidence that the bottom might have been reached. It is interesting to see that support was found at exactly $1.00, a level that held way back in 2000/2001. (Support is often found at round figures).

After a steady descent, DPC levelled out at $1.00 - $1.05 going sideways between these levels for a full month.

The downward trendline was broken on 14/9/07 and a 14 day Simple Moving Average was broken on 17/9/07. DPC continued to crab sideways.

Now, here's the interesting bit. Observe how the Slow Stochastic oscillator was climbing - and on 19/9/07 it broke above the 50% threshold. This indicator looks at the position of the Close in relation to the days Low and High. In other words, while the Close was not altering, selling pressure throughout the day had been lessening and people were not selling into the highs as they had been doing for so long. A subtle but clearly evident change.

Observe the QStick indicator. See how it broke into positive territory on 25/9/07. This indicator looks at the ratio of Up days to Down days. For the first time in quite a while, this indicator was showing that, on average, DPC was now having more Up days than Down days. Obvously this is Bullish. These 2 indicators picked up a change in sentiment so subtle that it had not affected the price at all. DPC continued to track along between $1.00 and $1.05, but nevertheless, market sentiment had changed.

The market has not closed yet, but so far today DPC has jumped from $1.04 to $1.20 (albeit on pathetic volume) This rise breaks above the resistance at $1.05 and the Trailing Short Stop as shown in the chart below.
http://h1.ripway.com/Phaedrus/DPC103.gif

Get back to us once the SP has closed above the breakout level for three trading sessions in a row on a reasonable OBV.

DPC is a dog with flees and the only way the SP is going to appreciate is if another dog like GPG comes along and knocks it up.

I ve been keeping a close on eye on DPC with a view to accumulating more shares. It seems like VIK has either finished selling for now. The only person pushing this stock down to these levels was VIK selling a large line and no large buyers to take it up. If VIK comes out selling again, it can go back down to $1. Very little liquidity and any buying/selling can move the SP. Must be hurting VIK to selling down DPC at a huge lost. Thank God I am not a VIK shareholder.

I dont think DPC is a dog under the right management. There are potential for DPC, but again, we need the right management to grow it.

DPC
27/08/2007
SSH

REL: 1019 HRS Dorchester Pacific Limited

SSH: DPC: SSH Notice From Viking Capital Limited

Beneficial
Total of Interest : 2929892
Current &#37; held : 8.0152793
Last % held : 10.6313
Names : Viking Capital Limited
Transaction Dates : 23/08/07
Total Votes : 400000
Considerations : 448000

Non Beneficial
Total of Interest :

Description :
On-market sale by Viking Capital Limited of 400,000 shares in Dorchester
Pacific Limited, sold at a price of $1.12 per share, being a total cash
consideration of $448,000.

I think DPC is a good contrarian value play. Though a little concerned about the longer term effect of recent events on finance company investor sentiment. Also not sure if investment funds might be transferred into cash management PIES rather than directly into debentures?

While organic growth in NPAT seems unlikely in the medium term, consolidation makes sense at these prices and also offers an opportunity for other finance companies to list via merger/acquisition.

[QUOTE=Toddy;167417]....DPC is a dog with flees.... QUOTE]


I disagree :)

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Originally Posted by Toddy

DPC is a dog with flees and the only way the SP is going to appreciate is if another dog like GPG comes along and knocks it up.

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Who could argue with a well-reasoned point of view like that?

The jump is SP was started by a small parcel of shares this morning offered at $1.2 which seems an arbritrary price but someone DID buy a 2% stake at $1.12 when VIK offloaded part of their holding. Interesting to see a further $30k changed hands at this price in a run of small trades... The 'buy' side has moved little and still sits around the $1.05 - $1.07 mark. From what I can figure VIK still have 80% of their holding to sell... watch for the price to continue sideways/downtrend.

the $1.2 trade(s) looks like an anomaly to me; it's only a couple thousand $ worth. if i was to buy, i'd wait till vic starts selling

DPC should merge with St L and other major finance players in the market to form a large competitive finance firm.

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Originally Posted by rimu

the $1.2 trade(s) looks like an anomaly to me; it's only a couple thousand $ worth. if i was to buy, i'd wait till vic starts selling

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VIC only have about 1.9% left to sell and they will be below that 5% mark. Then there
will be no more need to inform the market.
BB

Someone is doing funny buggers with the share price.
Last trade at 5.00pm was for 89 cents down 9...number of shares sold 25 !!!!!

A good chance the HYR report will be released tomorrow.

Liz........Kinda makes you nostalgic doesn't it... last year with BIO

This is one strange stock - Large holder VIK owns a large chunk & tells the market he is selling - no wonder there are no buyers!! King has lost it - glad I am not into VIK - Not many fund mangers talk down there holdings!

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Originally Posted by dsurf

This is one strange stock - Large holder VIK owns a large chunk & tells the market he is selling - no wonder there are no buyers!! King has lost it - glad I am not into VIK - Not many fund mangers talk down there holdings!

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I am with you on this one. Why would someone with a large holding in a illiquid stock go around talking down the company and depressing the price? It will be hard for VIK to raise any further funds in the future with the way they have handled their current investments. Thank God I am not a VIK shareholder.


disc: DPC shareholder

I see that he has sold another 50K at 92 cents today.

Well im presuming its VIK. Beyond belief really. Read the VIK address at the agm and you will be astounded :)

Far out, you're right - I hadn't read the AGM address. Were they handing round crack at the meeting??

Disc : None.

Just read the VIK agm. ..LOL. They must have had a good smoke before the agm.

I think it was Robert Heinlein saying "never underestimate the power of human stupidity" - but I am still wondering who could gain from VIK talking (and selling) DPC down? For every seller there must be a buyer - and over the last months a continuous flow of DPC shares changed hands.

Just imagine somebody might be interested in a takeover (the NTA does not look to bad - 186 cts for a 90 cts share!, and some of the business parts (reverse mortgage) look like growth) - wouldn't it be clever if somebody else invests a bit of money to first talk and sell the shareprice down?

Any idea where all these shares (sold by VIK and others) are going?

This is going to be a very interesting story. To me, all things arent as they seem. There are many possibilities and one that stands out is a possible takeover. It doesnt make sense for BK to openly crtiticise DPC when he is telling the market they are going to sell. Could this mean that he is trying to scare the SP into submission and then come along as the white knight? The other end of it is he just taking the whole thing way to personal. Generally BK is a very smart man with contacts in the right places. But if he does have sour grapes does that mean that his rational under pressure is being exposed. Personally i dont know but there is plenty more to come.

Looking through the VIK address its clear that BK is talking about all the wonderful things that they are doing. In the end i really do wonder how much time and effort is going in. One thing looks certain, BK is taking the pss out of the investors and only thinking about his own pocket.

Does anyone have any real insight on whats going on? In all honesty i dont expect anyone who does to opening come out with it as the information is too valuable.

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Originally Posted by BlackPeter

I think it was Robert Heinlein saying "never underestimate the power of human stupidity" - but I am still wondering who could gain from VIK talking (and selling) DPC down? For every seller there must be a buyer - and over the last months a continuous flow of DPC shares changed hands.

Just imagine somebody might be interested in a takeover (the NTA does not look to bad - 186 cts for a 90 cts share!, and some of the business parts (reverse mortgage) look like growth) - wouldn't it be clever if somebody else invests a bit of money to first talk and sell the shareprice down?

Any idea where all these shares (sold by VIK and others) are going?

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That is the $64m question. It could all be a setup for an eventual takover. Watch this space.

a takeover would be near impossible with St Laurence holding 19.9% and Hugh Green holding 19.9% so that is out of the question im afraid

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Originally Posted by blackcap

a takeover would be near impossible with St Laurence holding 19.9% and Hugh Green holding 19.9% so that is out of the question im afraid

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Agree there Blackcap, DPC is in the same boat as RBC, both having more than one blocking stake...

A classic mexican standoff, & will depend on who wants it bad enough.

My take is HG will go but only at the right price, & DPC will be swamped by STL.

$2 would do it IMO.

Yes agree hostile T/O impossible.
Shasta yes ...DPC is being slowly merged (or swamped).

A quasi- T/O, in my opinion.

A great defense from a hostile T/O is to emerge with a stronger friend. So exit stage right BK.

I predict more companies merging into this one in some shape or form....then a mix and match....in a couple of years DPC will be a different breed of animal. I don't think the shareholders will have much power to prevent the morphing either.

Happens in nature.........create a herd---safety in numbers.

I guess your right that a takeover is unlikely. But look what happened to BK when he owned a sizable chunk. Maybe HHG and SL are just letting this play out and let the small or desperate holders bail. To me HHG especially are too smart just to see the demise of DPC unless there is a bigger plan.

This is a good time for STL and other sizable quality finance firms to use DPC as a backdoor listing. Merger is the key.

DR Who why do you consider STL a quality finance company. Since the cross share holding between STL & DPC the price has gone backwards dramatically. It seems to me that this tie up was a disaster for DPC

St Laurence’s B2 Credit Rating Reaffirmed
11th October 2007

http://www.stlaurence.co.nz/archive....tID=1&report=1

Property-based finance and funds management company St Laurence Limited (SLL) has had its B2 investment grade rating reconfirmed from New Zealand credit rating agency Axis Ratings Limited.

Axis Ratings performed a full quantitative and qualitative review on St Laurence Limited providing an updated rating on the company, and its secured debenture stock of 12 month maturity from the date of the report (16 September 2007).

Axis Ratings says the B2 rating reflects that St Laurence Limited is of “good quality” and “generally moderate risk”. SLL is currently operating at 70% of its optimum potential and continues to perform well in comparison to its international peer group in the financial services sectors, performing better than 78% of its peers.

SLL managing director Kevin Podmore says the rating demonstrates the benefits of St Laurence's diversified finance and funds management operations (from acquisitions made in 2006) and its sound lending and financial position and performance. The rating also highlights St Laurence’s strong approach to liquidity management including ensuring that its average deposit maturities are longer than its average loan maturities.

In the current market conditions investors can have confidence that St Laurence Limited is well placed to meet its commitments. “This full credit rating is aimed at providing a guide for investors for the next year and takes into account more difficult trading conditions. Having our credit rating reaffirmed at B2 investment grade level given the more challenging market conditions we are facing is pleasing and a credit to our management team,” Mr Podmore says.

Mr Podmore says in the past 18 months the company has worked hard to prepare for tougher times by diversifying and strengthening its asset base, income streams, equity and liquidity. In 2006 the company acquired a number of funds management entities to transform itself into a diversified property-based funds management and lending business.

“We are different to other companies operating in the sector in that we have both funds management and finance operations. As a result the company receives significant income from wider sources of revenue, including long-term funds management contracts,” Mr Podmore says.

St Laurence Limited expects to continue to generate a significant portion of its overall income from non-lending income streams by continuing to diversify the businesses’ revenue streams in the next 12 months.

Other strengths noted in the analysis include sound debt management, positive profit performance, healthy return on capital employed and equity invested, and its solid solvency position.

St Laurence Limited recorded a net surplus after tax of $15.2 million for the year ended 31 March 2007, a significant increase from $5.4 million for the 2006 year. Total consolidated revenue was $49.1 million, an increase of 79.1% on the $27.4 million recorded in the previous corresponding period. Assets rose 44.6% to $327.6 million. The company now has total assets under management in excess of $1.2 billion. Equity for St Laurence Limited has increased by $33.3 million over the period, or 162% on the previous $20.5 million, resulting in a new equity ratio of around 16.4%.

The ratings evaluation also credited SLL for its strong board and executive management team, in particular its three independent directors enhancing the strength of the board and protecting external stakeholder interests.

The report notes the Company’s transparency and open communication with its investors, financial advisers and other stakeholders. St Laurence has recently completed its annual roadshow with presentations to around 2,000 investors and advisers in 11 locations across New Zealand.

St Laurence’s lending business is backed by mortgages over property or property related assets, with the average loan to valuation ratio across the portfolio 64% as at 31 March 2007. “St Laurence has well defined lending processes and an effective internally developed credit scoring system to assist in the loan evaluation and approval process,” according to Axis Ratings. Axis Ratings also commented that St Laurence’s overall growth in lending has been strong in more challenging market conditions.

The company has recently renewed its prospectus and investment statement with its latest financial information. As part of this update St Laurence announced that it has removed the ability for prior charges (such as those securing bank debt) to be registered in priority to its first ranking secured debenture stock.

Axis Ratings’ credit rating remains in effect until September 2008, unless withdrawn or amended by Axis Ratings before that date.

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Originally Posted by POSSUM THE CAT

DR Who why do you consider STL a quality finance company. Since the cross share holding between STL & DPC the price has gone backwards dramatically. It seems to me that this tie up was a disaster for DPC

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Possum, the hidden value in DPC is in the rather complex insurance business.

This has been underperforming for a long time, but BK knows theres value in it, as does HG.

DPC is likely to be carved up whoever gets it...

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Originally Posted by POSSUM THE CAT

why do you consider STL a quality finance company. Since the cross share holding between STL & DPC the price has gone backwards dramatically. It seems to me that this tie up was a disaster for DPC

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It's a bit of a stretch to suggest that St Laurence’s shareholding has been responsible for the decline in Dorchester's share price.

Of course the alternative would have been that Bridgecorp continued to hold those shares. I don't think that Dorchester would have fared any better if that had happened.

STL is the white knight for DPC. The worst thing to happen to DPC was Bridgecorp coming in and then VIK selling down its holding at silly prices. The finance industry is going through restructuring and consolidation. There are great opportunities to accummulate some very cheap assets in this environment.

LOL ...what a joke!

Dorchester Pacific investment helps drag Viking Capital down
5:00AM Monday November 26, 2007

Viking Capital lost $3.5 million in the six months to December - better than previously forecast - because of a writedown on its investment in finance company Dorchester Pacific.

The investment company said on Friday that Dorchester's shares almost halved during the trading period.

The 7 per cent stake was written down by $4.3 million. The shares were on Viking's books at $2.29 each at March 31, but closed on Friday at 90c.

"We continue to actively sell the parcel, as stated previously, the decision making of Dorchester continues to disappoint," Viking chairman Brent King said. "The statements from Dorchester give some hope of them returning to profitability and regaining market confidence.

"When this occurs the price should return to at least net asset value." King said he was pleased with Viking's stake in Investment Research Group, which he said had made substantial progress over the past six months.

Its other big investment, ICP Bio, "had continued to make substantial progress in the six-month period with the balance sheet being significantly restructured".

King said Viking would have had a profitable period but for the Dorchester writedown.

He estimated Viking's net assets at 23c against its share price of 16c.

The company's balance sheet was very strong and the company was in a position to look at new investment opportunities, King said.

"We are positive for the second six months and there are some interesting opportunities being presented to Viking Capital."

http://www.nzherald.co.nz/section/3/...ectid=10478273

We continue to actively sell the parcel, as stated previously, the decision making of Dorchester continues to disappoint," Viking chairman Brent King said. "The statements from Dorchester give some hope of them returning to profitability and regaining market confidence.

"When this occurs the price should return to at least net asset value."


Thats the statement I cant make head or tail of! Then why are you selling Viking?