Originally Posted by
Roger
We've certainly has a stellar run in January and that after a strong run-up from $1.00 at the time of the ASM on 31 October to circa $1.16 around Christmas.
A 32% SP gain in the last 3 months is a great result in anyone's books. Now all the good news is out there, unless there's some surprise I'm not aware of it won't surprise me if we see a quieter period in the next three months and this won't concern long term holders many of whom I suspect will be quite happy to collect a nice divvy and know the company is doing the business for the long haul.Its interesting to reflect back to the day of the ASM just 3 short months ago. Those there that I spoke too thought $1.10 - $1.20, (depending on how much they'd had to drink) was a fair SP target for the stock by the time of the 2015 ASM in late 2015 and I was in that range too at that time, to be honest.
HNZ is presently trading on 13.2 times forecast 2015 earnings of 10cps and this price seems fair and reasonable to me for now. I remain of the view that's is a great long term hold on the basis that the team can deliver EPS growth over time and as they continue to deliver on their promises and continue to build their already strong credibility some modest further PE expansion is possible.
Since the ASM I've developed my understanding of the company to the point where I can see it being around $2 in due course but in my view this will take quite some time, probably, realistically, 2-3 years. I guess I feel its perhaps appropriate that somebody sounds a little note of caution to any newbie considering getting on board on the basis of very strong recent SP gains. Rome wasn't built in a day and good things take time. I think anyone expecting another 32% SP gain in the next 3 months ($1.32 growing to $1.74), is highly likely to be disappointed.
On the other hand long term investors will I remain sure, be very happy with long term SP gains and will be happy to know they're being paid well to wait for long term growth with handsome fully imputed dividends, I estimate this year at 7 cps which equates to a gross divvy yield of 7.37% for 2015 based on a SP of $1.32 and I am sure those dividends will grow over the years ahead. Everyone has their own way of investing but for what its worth I won't let any stock get to a position of being worth more than 20% of my portfolio no matter how sure I am of their long term prospects.
It concerns me a little that the company appears to be considering accounting for its profit on the Harmoney investment ? While it was more than fair of them to note that their upgraded guidance excluded any increase in the value of their Harmony stake as a result of the Trade Me investment I struggle to see where they are coming from in terms of implying that it might be acceptable to account for theoretical gains in this non-listed associate company on the basis that this is in some way connected with operational profit ? I would have thought the team would have taken professional advice from their auditors rather than leaving this as an open question is a profit upgrade announcement. You been pushing them too hard Winner 69 ? :)