I wonder if there is something going on at Lyttelton Port Coy.The place is shut down by a strike and yet today 116,520 shares changed hands and the price rose by two cents. Hmm, very odd.
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I wonder if there is something going on at Lyttelton Port Coy.The place is shut down by a strike and yet today 116,520 shares changed hands and the price rose by two cents. Hmm, very odd.
I've been looking into this coy for a little while,mainly for yield...
some research I found says it has no growth earnings expected,may need to review divvie policy for finance port development,and face's potential strike action...
I saw somewhere else they paid $2.9m to settle to strike?..or is it still going on(not the strike itself but the hassles behind it)
any ideas/thoughts would be helpfull...
Cheers,
Bryan
Bransm: Refer to thread "PORTS".Quote:
quote:Originally posted by bransm
I've been looking into this coy for a little while,mainly for yield...
some research I found says it has no growth earnings expected,may need to review divvie policy for finance port development,and face's potential strike action...
I saw somewhere else they paid $2.9m to settle to strike?..or is it still going on(not the strike itself but the hassles behind it)
any ideas/thoughts would be helpfull...
Cheers,
Bryan
I held LPC for a while, also mainly for yield reasons, but came increasingly to the realisation that the potential for capital growth was limited, largely because of the "Peoples Democratic Republic of Christchurch" control.
cheers,Colin,
I did a search under LPC,thou didnt think about ports...
Bransm
Am a holder for yield. Some suggestions of price movement
recently.[:p]
Forecast yield for 2005 is same at 10% gross - good for paying the bills. For quick growth you'll have to look elsewhere.
cheers
yip,cheers foodee,
with this coy,I'm looking for yield...
Hi Bransm, the LPC balance sheet is strong [as you would expect for a utility], and should be able to withstand expenditure on infrastructure, and wharf maintenance. I would be surprised if they reduced the dividend.
Noticed heavy volume on the 6th July of 500,000 which sent the price up 2 cents.
I don,t take any notice when there is anything negative about the employees, except to buy more shares if the price drops substantially. Knocking wharfies is a national pastime and just background noise which gives buying opportunities.
positive announcement on NZX.
I agree Airedale.
The union issue is something that just needs to be worked out (i.e. flush the communists out on the street) and LPC can be compared to the other other ports -> increased valuation and share price.
I have 20K in them and are still adding.
The share price will ultimately be determined by how much cash is spewed out to its majority shareholder (CCC) -surely.
Not that Im complaining, mind.
Port Marlborough possibly with POT assistance are looking to take some of the coal trade from LPC. (current state of rail can't handle the projected tonnages from West Coast/Buller anyway)
LPC & rail need to get their act together or they will both lose some of their current tonnages & miss out on heaps of potential extra coal trade business.
POT leapfrogged POA Into northland deepwater port. It looks like they are doing the same to LPC. By the time they wake up POT will have effective control of New Zealands only other natural deep water port. LPC Is to shallow a port to accomodate large coal ships.
Port of marlborough will end up controled by POT. LPC If they dont wake up will be an also ran. Dont know about you guys but macdunk likes winners know where my money is.
cheers macdunk
I used to hold LPC as it its cheapest of the larger ports on conventional measures. I sold partly because of the industrial relations side of it, but mainly to buy elsewhere. Even so, it holds a near monopoply on the upper south Island port traffic and its a great yeild so I tend to agree with those who think its still a good buy for a long term income hold.
However, if POT does clear the hurdles to run coal out of Malborough perhaps this could be serious for LPC? A fair chunk of their recent capex has been in anticipation of increased coal handling business - only some of which (if I recall correctly) is secured by long term contracts? A really naive question to end - does anyone know whether it would be economic to dredge Lyttelton so deeper draught boats could get in?
From memory, they have done periodic dredging of both Auckland & Otago in the past.
Skinny
It will be interesting to see how the POT proposal is played out.
LPC April 04 anouncement regard coal is somewhat reassuring in the mean time.
I dont think the problem of getting more coal out is related to how deep the harbour is, it is limited by the number of trains that can bring it from the West Coast. How would they get the coal from the coast to Marlborouh?
By putting more LARGE trucks on the road, of course!:D
Good for MFT & OWN?!
Remember guys POT has already done a deal on rail south Auckland to Tauranga I expect the homework to be well underway on this. Keep In mind what costs more transport or digging the ditch. Regardless of the outcome with ships Increasing In size the end result Is who runs the deep water ports. POT Is bleeding the profits from POA LPC Is next In line. LPC Is shackled by a stupid union and a city council easy beats for a switched on company. Take a look at the fundamentals LPC are easy beats the TA will prove me right shortly.
cheers macdunk
LPC coal business is under threat due to the state of the West Coast -Lyttelton railway line which cannot cope with any more coal traffic and urgently needs a $70million upgrade.Indeed Solid Energy had to barge about 80000 tonne of coal round to Lyttelton to meet targets.With Solid Energy about to expand production and with Pike River Coal about to mine 1 million tons there has to be another solution and that solution is Shakespeare Bay Picton.When that gets developed I would bet that a lot of Solid Energy coal gets barged there instead of going to Lyttelton.
Who knows off the top of their heads how much of the total volume through the port is coal?
Hi Steve
Hope these bits are of use:-
Coal is about 25% of bulk weight of through put.
Present year of coal about 2.3m ton and forecast to be no less for 05.
LPC contract with solid energy has about 13 years to run.
Solid energy hope to increase production to 4.0mt.
Unclear arrangement between solid energy and rails to get coal to LPC
cheers
Thanks for the info Foodee.
Do you know if the increase in production has already been committed to go thru LPC?
Steve
Unsure, will have to look at the 2002 announcement when I have sometime tomorrow - won't do any harm to refresh my memory in any case.
As a guess LPC(? and others) won't spend 30millon to complete an upgrade in April 04, without ensuring capabilities and continuity of throughput.
cheers
Had a look at the 2002 contract announcement.
There is no exclusive bind from solid energy.
There is a 'buffer' for LPC which I take to mean a 'guaranttee minimum'.
Solid energy has an 'out' in 2009 if coal production is not econimical - unlikely, unless the good stuff has/is running out!
In todays news the govt is to spend 25mill on upgrading the 'coal track'. Estimated requirement 75mil.
My understanding is that all the coal (including Pike) in the region will have to come to the Westcoast first.
Now, imagine if all this coal were to............[:p]
cheers
ps LPC sp seems to be inching up, picked some more up at 1.67 the other day
Thanks for looking into that Foodee. Well worth thinking about.
Another boring week for LPC-bored through 1.80 with healthy volume.;)
Hi,
Yep, the quiet achiever! LPC is quite a thinly traded stock, so it doesn't take much to push/drop the price. I have captured the last 7 months of LPC.
This is a perfect example of 2 trends: the first, a sideways trend (captured between the 2 magenta lines) lasting until mid july. The second, LPC starting to trend, after the break out in mid July.
Incidently, the mid july breakout had plenty of warning for those who follow LPC. The adx jumped from below 14 to over 30 well before the 21 July breakout! Also was a fair amount of positive volume action. LPC was just screaming for attention!
LPC has acted quite normally since July's breakout. First a symetrical triangle formed (shown), before LPC gapped up and formed an ascending triangle.
Is the break above the ascending triangle valid.....who knows. However, given all the evidence, it could be a good trade. However, as I mentioned in the very first line....LPC is a reasonably thinly traded stock!
http://img.photobucket.com/albums/v2...ly_3_9_04a.gif
pls do your own research first.
SM
The nice picture tells all - appreciatd.
Incidently my topup in July was not based on TA which I neither have the skill nor the tool.
cheers
Interesting to look back on the weekly charts. This time last year it was $1.85 and on the 10th Oct it nudged over $2.00, Then some nervousness about capital expenditure on new wharves sent it back to the $1.60 buy zone.
Heavier than usual volume recently,wonder if there is something brewing?
There is a report out from ABN that Solid energy & Toll have made an agreement to increase coal from 2.4 to 3.8mt over the next 3 years to LPC. Evidently SE has taken all the capacity provided by Toll thereby shutting out PRCC. This would probably explain LPC sp increase the last few days.
cheers
disc: hold LPC
LPC has risen from 1.77 to 1.90 this morning, on the back of the Herald etc publishing ABN recommendation presumably.
Little port is biggest winner in value report
11.01.05
by Georgina Bond
And the winner is ... the minnow.
Institutional sharebroker ABN Amro has lifted its valuation of Lyttelton Port and upgraded the stock to "buy" after researching Solid Energy's 13-year deal to move coal through the port.
Lyttelton is a minnow among listed port companies, with a market capitalisation of $181 million compared with the $750 million of Ports of Auckland and Port of Tauranga.
ABN Amro has lifted its per share valuation of the company from $1.66 to $1.98. The shares closed yesterday at $1.77.
The broker says Lyttelton is better value for investors than the two bigger listed port companies.
The upgrade from a hold came after analysis of last year's deal between rail company Toll and Solid Energy to transport coal to the port.
Solid Energy will freight 2.4 million tonnes of coal to the port this year, increasing to 3.8 million tonnes from 2007/08.
ABN Amro said the company had the highest gross yield of four listed port companies - 9.4 per cent - and the lowest price-to-earnings ratio.
The two bigger listed ports could be affected this year by a review of the hundreds of millions of dollars New Zealand's biggest exporter, Fonterra, spends on ocean freight.
Construction on a new hub for the dairy company's dry goods exports from the Waikato begins this year.
Ports of Auckland is competing with the Port of Tauranga for the business.
ABN Amro's report says this raises the spectre of a price war.
The broker said it was taking "an increasingly conservative approach" to the ports because of that possibility.
Is Duncan there?
You have been a big supporter of POT over POA. What do you think of ABN Amro's evaluation of LPC as the port with the most value?
No, he is not here as he is onhis way down to LPC to get the inside info from the tea lady...;)Quote:
quote:Originally posted by rmbbrave
Is Duncan there?
You have been a big supporter of POT over POA. What do you think of ABN Amro's evaluation of LPC as the port with the most value?
Sorry guys this share wallows about below my expectation level. Havent given it much thought. Have been with POA and POT in the past both treated me well. I only get interested in a share on a high trend. POT is the best PORT company. LPC to much pomme union troubles for me.
GOOD LUCK MACDUNK
In any event, LPC would have been 'timed-out' if you had been holding it last year?! *Assuming that I am finally understanding your TIME criteria*Quote:
quote:Originally posted by duncan macgregor
Sorry guys this share wallows about below my expectation level. Havent given it much thought. Have been with POA and POT in the past both treated me well. I only get interested in a share on a high trend. POT is the best PORT company. LPC to much pomme union troubles for me.
GOOD LUCK MACDUNK
ABN Amro do some sums nad everybody falls overthemselves to get a piece of the action ... up to 195n odd .... leemings
Macdunk says watch these pommie unions
He must have foresaw what was going to happen ... overtime ban all that union stuff ... again ... no doubt more pickets ... hope nobody gets killed this time around
And the price falls accordingly .. but not quite back to where it was ..yet
WINNER69, Talk to the workers for the truth. Notice how it happens in the middle of summer every time. macdunk
LPC seems range bound between $1.60 and $1.90.[:0] Seems to be retreating again.[^]
Did I read somewhere that some German workers are being housed in a container on the port? And the union is not happy about it?
I find it highly unlikely that German workers, who have some of the highest wages, some of the strongest unions and and one of the best standards of living in the world are going to put up with being housed in a container.
Ah, but it wasn't an ordinary 20 foot container [one teu]. It was one of the larger 40 foot boxes [two teus]. Quite teutonic enough for the Germans.
And it didn't look too bad on the tv3 news tonight either...
I think the union guy may be over-reacting to suggest that it could lower the standards to NZ port workers.
Actually rmbbrave, they weren't actually Germans - they were Lithuanians.Quote:
quote: Originally posted by rmbbrave
I find it highly unlikely that German workers, who have some of the highest wages, some of the strongest unions and and one of the best standards of living in the world are going to put up with being housed in a container.
If not high enough quality digs, then could always chuck on a ship down to Dunners, and use for scarfie accommodation.
Think most Dun-Vegas slumlords were looking at those things enviously, thinking they could fit 4-6 bedrooms in each, and then charge $90 a week. Stack 2 or 3 high, sturdy, hard-wearing, low maintenence etc etc :D[:p]
On the news tonight, the "houses" have been relocated, but the workers may now loose their jobs and face deportation...
Life is tough for some.
There you go. I knew Germans wouldn't put up with this excrement.Quote:
quote:Originally posted by Sideshow Bob
Actually rmbbrave, they weren't actually Germans - they were Lithuanians.Quote:
quote: Originally posted by rmbbrave
I find it highly unlikely that German workers, who have some of the highest wages, some of the strongest unions and and one of the best standards of living in the world are going to put up with being housed in a container.
If not high enough quality digs, then could always chuck on a ship down to Dunners, and use for scarfie accommodation.
Think most Dun-Vegas slumlords were looking at those things enviously, thinking they could fit 4-6 bedrooms in each, and then charge $90 a week. Stack 2 or 3 high, sturdy, hard-wearing, low maintenence etc etc :D[:p]
The problem is these guys were in ChCh on visitors permits, not work ones so unions have scored one here!
Agreement reached with union for the next three years appears to be mundane news. Have topped up more on this 'defensive stock'
Have considered topping up on this one myself, but so far I have resisted. The 'value chart' below might explain why.Quote:
quote:Originally posted by foodee
Agreement reached with union for the next three years appears to be mundane news. Have topped up more on this 'defensive stock'
http://img.villagephotos.com/p/2005-...40405.gif'
For those who haven't seemn this kind of chart before it is very simple. If the share price is below the value line then you buy. If the share price is above you don't buy. It works best on a share that pays out all of its earnings as dividends. That is the history of LPC. If a share pays out all of its earnings as dividends that means you can think of it as a kind of 'perpetual bond' with the dividends being equivalent to the 'bond interest paid'.
A bond is issued with some headline interest rate. For a small utility like LPC I think a return of 9.5% is appropriate for the risk involved. That corresponds to a share price of $1.73, which is what I term 'fair value' for Lyttelton Port Company shares.
Personally I require a better deal than 'fair value' for this kind of share investment. I always like to buy at 'below fair value' and for me an expected annual return of 12% is sufficient to get me interested. This is where the second (12%) value line comes in.
As you can see, the share price is currently floating above the 12% value line. I wouldn't say this is expensive. If I wanted to set up a balanced income portfolio I would certainly buy LPC at these levels.
However, I already have my base portfolio set up, so I want to find the the best bargain of the month. Telecom was just that much cheaper, so that was where my money went.
SNOOPY
discl: hold LPC
Snoopy
Appreciated your post-most helpful. TEL did come into consideration but its weight in our portfolio was a tad too high. All said our holding price in LPC is still below 1.70.
Have a good week one and all
I don't keep that close a tabs on it, but I think the value of my own holding in Telecom is approaching twice that of my shareholding in Lyttelton Port. My long term theory is that I want to keep the valuation of each about equal, so I guess I'm relatively underweight in Lyttelton Port at the moment. Mind you I think there are some fundamental reasons for being a bit light on LPC at the moment.Quote:
quote:Originally posted by foodee
Snoopy
Appreciated your post-most helpful. TEL did come into consideration but its weight in our portfolio was a tad too high. All said our holding price in LPC is still below 1.70.
Lyttelton's great hope of the future is the coal trade. However, right at the moment they can't take advantage of it because the midland rail line has not yet been upgraded. I took a look at the Solid Energy Annual report when I was in the library last week.
Did you know that steel manufacturers and coke producers account for 75% of total coal exports? The steel market is on a high worldwide at the moment, but traditionally it has been quite volatile. I also noted that the two largest coal supply contracts to Nippon Steel and Mitsubishi Chemical only extend to 2006/2007. It is quite possible, if China comes off the boil for example, that these contacts may not be renewed.
The annual capacity of the the Lyttelton coal handling operation is 4 million tonnes and it is currently running at 2.1 million tonnes due to constrained rail capacity. However, here is a note from p9 of the FY2004 Solid Energy report.
"Growth in exports beyond 3.3 million tonnes will depend on where we can secure best value for West Coast Thermal Coals, in local markets for power generation or international markets for specialist coal uses."
That export volume also includes coal being directly barged to Australia. That means Solid Energy themselves are only projecting a 50% increase in business in the forseeable future, not the 100% that LPC has been publicly painting in. And if we get a new coal power station in the North Island even that volume increase might be overoptimistic (I presume they would simply barge the coal to the North Island rather than go through Lyttelton).
Meanwhile log exports through Lyttelton have collapsed. If farming comes off, we might be looking at a reduction in dry bulk goods as well.
On the plus side the increase in container terminal TEUs is encouraging. But Barney Sundstrum announced last week a further $18m in capital spending is required to support the development of the port. Let's say half that is Harbour Structures (depreciated over 50 years) and half container equipment (depreciated over 20 years). That adds up to an extra annual depreciation charge of:
9/50 +9/20 = $630,000.
All of this capital expansion is on borrowed money and the interest on $18m , at say 7.5% means additional interest expenses of $1.35m per year
Sundstrum announced a 10% wage bill increase over three years last week. If the workers are not 10% more productive, than means an annual increase in expenses of:
0.1 x 36,461,000 = $3,646,100
I would estimate over a million of that coming through into next years expenses.
Then if the domestic economy slows and some of those used car imports go down.....
In short, I don't think the medium term outlook for LPC, particularly FY2006, is very good. They are going to need a 25% increase in business in FY2006 just to maintain their profitability at current levels!
Furthermore I took a trip down to South Caterbury over Easter to inspect the Port Of Timaru. Land wise and equipment wise it seems more than the equal of anything that Lyttelton has. I think the threat of further competition from the Port of Timaru is very real.
SNOOPY
discl: A slightly grizzly bearish holder of LPC, who intends to keep it underweig
Ahhhhhhhh! Grey clouds coming over.
Wages/productivity/capital expenditure/etc. - management to balance out.
Timaru - did not appreciate its potential despite knowing of its presence. One has learn in life that to compete one has to be better in most if not every way. LPC/Timaru or any coporate will strife for that edge.
Thanks again Snoopy & keep it coming.
The 'Lyttelton Port of Christchurch' annual result came and went the other week, without comment so far on this forum, but far from being without notice from me. Business was up in certain key areas, but still below target overall.Quote:
quote:Originally posted by Snoopy
Barney Sundstrum announced last week a further $18m in capital spending is required to support the development of the port. Let's say half that is Harbour Structures (depreciated over 50 years) and half container equipment (depreciated over 20 years). That adds up to an extra annual depreciation charge of:
9/50 +9/20 = $630,000.
All of this capital expansion is on borrowed money and the interest on $18m , at say 7.5%, means additional interest expenses of $1.35m per year
Sundstrum announced a 10% wage bill increase over three years last week. If the workers are not 10% more productive, than means an annual increase in expenses of:
0.1 x 36,461,000 = $3,646,100
I would estimate over a million of that coming through into next years expenses.
In short, I don't think the medium term outlook for LPC, particularly FY2006, is very good. They are going to need a 25% increase in business in FY2006 just to maintain their profitability at current levels!
I wrote the quoted text in April. Since then the share price soared to near $2, dropped back savagely with the annual result, but then started to rise again.
The profit trend for the last four years has been deteriorating as follows:
2002: $16.3m
2003: $13.5m (excluding one off cost)
2004: $12.0m
2005: $11.8m
This is still enough to cover the (steady) dividend, but the margin between earnings and declared dividends is getting wafer thin! Given the result I wasn't surprise to see the share price drop back. But I *was* surprised to see it rise again.
LPC told us the principal factors in the deteriorating result were unanticipated problems with the tug 'Blackadder' and the coal processing equipment. An increase in wharf maintenance was expected, but I don't think LPC have even started on the major project of a completely new fuel wharf yet.
There are no retained earnings to speak of, so all new expenditure must be funded from new debt. I stand by my earlier prediction of the interest bill rising by over $1m in FY2006. That will, more than likely, result in a continuation of the unfortunate profit trend I have detailed above.
I wonder what will happen to the LPC shareprice when profits are forecast to fall yet again at the AGM?
SNOOPY
Snoopy
Just managed to see you post before being away for a few days.
I hear what you are saying and thanks. I guess you are no longer holding.
Will be interesting to hear the forecast at the AGM.
cheers
Sorry if I gave the wrong impression Foodee. I still hold my LPC shares. Long term I still see the port (most ports actually) as a strategic asset that cannot be easily duplicated. I am just a little puzzled at the way Mr Market is behaving with this share.Quote:
quote:Originally posted by foodee
Snoopy
Just managed to see you post before being away for a few days.
I hear what you are saying and thanks. I guess you are no longer holding.
Will be interesting to hear the forecast at the AGM.
I can think up some excuses:
1/ Overvaluation of the market in general: LPC may be fully priced, but most alternative investments are *even more fully priced*.
2/ Tightening of Port Sector liquidity: The delisting of the Port of Auckland has seen some of that money flow into other shares in the port sector (including LPC).
However, ultimately share prices have to trend back to reality. One of the biggest 'wins' for LPC in FY2005, apart from containers, was a large jump in dried goods shipments. But here in Canterbury we are now getting reprts of a significant drought on the horizon this summer. I wonder what that will do to farmers fertilizer programs?
I do have an additional theory. I don't do much in the fixed interest market. But I got a note from my broker last week highlighting how many of the fixed interest bonds on offer are trading at a good margin above their coupon rate, and the lack of new fixed interest offers in the pipline. IOW people are prepared to pay more to hold fixed interest bonds in general, due to their scarcity value.
Of all the shares out there, I think LPC is the most 'bond like'. Its profits have been 'flattish', well, forever really. I am sure major shareholder, the Christchurch City Council, sees it as a cash cow and will constrain LPC from growing by continuing to demand high dividends. Personally , I don't see the dividend being cut even if, for a while, LPC have to pay out *more* than their earnings as dividends. Cashflow is still OK even if headline earnings are on the slide!
My new theory is that the baseline share price of LPC has risen because all other bonds are rising in price too. Can that reason be sustained? Is it a sign of our bond rates falling more into line with those available in Australia - a long term 'reversion to the mean' of NZs traditionally high interest rates? I don't know the answer!
SNOOPY
discl: still hold LPC. But not looking to buy more at current prices.
Well Snoopy, I think you are right to treat LPC as a bond rather than a stock - an 18% loss over 8 years is not very good performance for a stock is it! You quite rightly damn this stock with faint praise, yet continue to hold it. You note that "Its profits have been 'flattish', well, forever really" yet seem to ignore the fact that its shareprice has suffered similarly.
I'm not sure whether you are :-
(1) An eternal optimist.
(2) Totally focussed on yield to the exclusion of all else.
(3) The most patient man I know.
or, perhaps most likely, someone who is not at all interested in capital gains and thus happy to invest in bonds - or their equivalents.
The chart below shows that, as you suspected, there is a loose correlation between bond rates and LPC's shareprice.
http://home.ripway.com/2003-11/39768/LPC822001.gif
I'll take your word on the eight year return Phaedrus. I've only been in this share 'short term' ;-P myself, a mere three years.Quote:
quote:Originally posted by Phaedrus
Well Snoopy, I think you are right to treat LPC as a bond rather than a stock - an 18% loss over 8 years is not very good performance for a stock is it!
For these 'bond type' shares I have created my own 'fixed interest index'. In this I compare after tax returns from capitial gains and dividends over a year, against the alternative prospect of selling the shares and putting the money in the bank in a term deposit.
I realise that such a crude 'index rating' is in no way indicative of future returns. Nevertheless, my investment in LPC has been very satisfactory on this basis and consistantly averaged above '3' on my scale. That means I have been *three times better off* holding LPC shares than investing in term deposits!
I am well aware that this return has been achieved in a bull sharemarket and that by investing in other shares, maybe even the index, I haven't checked, I could have done better. But such comparisons ignore the very low risk nature of LPC (in the long term) that I perceive. This low risk is not reflected in net return figures, yet for me it is a replacement for a 'stop loss' policy, hence an important consideration.
Thus even though I may have 'underperformed the share index' over three years, I still regard my investment in LPC as a superior result - if that is not too perverse a concept for you!
Yes I am an eternal optimist, as most fundamental share investors are. How could you plan to buy and hold a share if you weren't 'eternally optimistic' about the prospects? This is one area where I see that disciplined share traders have an advantage.Quote:
quote:
You quite rightly damn this stock with faint praise, yet continue to hold it. You note that "Its profits have been 'flattish', well, forever really" yet seem to ignore the fact that its shareprice has suffered similarly.
I'm not sure whether you are :-
(1) An eternal optimist.
There is something to be said for being nether optimistic nor pessimistic, but simply acting on the picture as it unfolds in front of you.
So I have tried to learn from this 'disinterested trader attitude'. I would now describe myself as an 'an eternally optimistic cynic!'. I think I am a better investor because of this change.
Let's just say I don't focus on share price movement at the exclusion of all else! See my explanation of my 'fixed interest index system' above.Quote:
quote:
(2) Totally focussed on yield to the exclusion of all else.
The stock market is a mechanism for transferring wealth from the impatient to the patient! I think it was Ben Graham who said that first.Quote:
quote:
(3) The most patient man I know.
I don't rule out investing in bonds, which I hasten to add you *can* make good capital gains in if you buy at the right price.Quote:
quote:
or, perhaps most likely, someone who is not at all interested in capital gains and thus happy to invest in bonds - or their equivalents.
Snoopy
I jumped to the wrong conclusion re-your holding. No harm done. I do treat LPC as a yield play. Still around 20% gain on value is a bonus or buffer.
Phaed
Not a chart expert (but still learning). My take is that LPC is trying hard to break out of its resistance at 195.
disc:hold LPC
good hike in sp on significant vol.
Yes, it's a real surprise to me to see LPC at $2 again. Perhaps it is someone chasing the dividend foodee? Perhaps the buyers are anticipating a 'surprise' at the upcoming AGM? That Mr Market can be a baffling fellow sometimes. I won't top up myself for all the reasons I have well documented already.Quote:
quote:Originally posted by foodee
good hike in sp on significant vol.
SNOOPY
discl: hold LPC
Eh snoopy ... whats going on .... LPC up to 206
That is getting expensive for a 11 cent dividend isn't it?
Tempted to take some capital gains here?
The break out has occured - ?reason.
With a PE of 18 and gross yield 8%, the sp is certainly getting full. As Snoopy say Mr Market knows more, most of the time.
Still a happy holder.
Foodee,
I'm not at all sure that LPC does breakouts!
To my jaundiced eye, this is a stock going nowhere, doing nothing. Long-term "investment" in such stocks all but ensures that you will fail to beat the Index.
Dividends at any price? Not for me.
http://home.ripway.com/2003-11/39768/LPC915001.gif
Must be getting close to the registration/cut-off date for the divi. Can anyone remember the date.
Airedale
I think the ex-date is 07/10 which is a little way away and therefore the price movement is somewhat unusual. Any ideas anyone?
Phaedrus
I do not think very many will go down that tract, so no problems. Once again appreciate your telling charts.Quote:
quote:Dividends at any price?
Any long term holder of this stock must have a dulled out brain. Seven years of stagnation plus dividends of course. Pomme union problems what more is there to say. Even in hindesight from a TA perspective buying and selling its a dog. I reckon its a little old ladies stock the ones that get a christmas card every year that props it up. macdunk
I would not be so negatve on a stock going 'nowhere' as I have held a lot of these overtime that turn a significant profit to those who wait and quitely collect their dividend in the meantime. So long as they are profitable pay 10% and are improving their business operation then holding can be a very profitable exercise.
Takeover offer
See other announcements for more details
Looks like it is now heading offshoreQuote:
quote:Originally posted by Dough Boy
I would not be so negatve on a stock going 'nowhere' as I have held a lot of these overtime .....
Looks like it is now heading offshoreQuote:
quote:Originally posted by Dough Boy
I would not be so negatve on a stock going 'nowhere' as I have held a lot of these overtime .....
It has been a good day on the market for little old ladies (and some dogs). My own 'seven years of stagnation' only dates back three years since I purchased. I think time must not fly as fast as you get older!Quote:
quote:Originally posted by duncan macgregor
Any long term holder of this stock must have a dulled out brain. Seven years of stagnation plus dividends of course. Pomme union problems what more is there to say. Even in hindsight from a TA perspective buying and selling its a dog. I reckon its a little old ladies stock the ones that get a christmas card every year that props it up. macdunk
Having carefully picked out LPC as a select member of my portfolio, I am a little annoyed that yet another one of my shares faces takeover and NZX annihilation. I know it happened to POA in Auckland, but perhaps the Cantabs will show a little more spine?
I'll wait for the independent report.
But my first reaction is that at $2.10 less the upcoming dividend, the bone I am being offered looks a little bare! But of course LPC 'doesn't do breakouts' so I guess I am wrong ;-P.
Actually the procedure of this takeover is a little odd. The whole deal rests on LPC being 'fully taken over' by the council first (to get around the pesky takeovers code?). Then if that leg of the exercise works some shares have been offered to some Hong Kong outfit at $2.10 with a remainder being on sold for the whatever price paid in the Council takeover to bring the council holding down to 50%- I think???!!!??.
At any rate I shall have plenty of time to digest the events as they unfold as I intend doing nothing (thanks to my dulled out brain): except to wait and see what develops. Any existing LPC shareholders out there I advise them to do the same. Grab hold of your walking stick Granny. We are in for an interesting couple of months.
SNOOPY
discl: hold LPC
Hi Snoopy, you are right that there is no great hurry to take the bait being offered. You have a good filing system/memory for quotes from Macdunk.
Duncan, I managed to make good money buying LPC every time some half-witted journo wrote about labour problems and the price went down.[:p]
The Chch city council is in a bit of a quandry - the cost of capital projects has gone up - particuarly the sewer outfall into the ocean (steel prices) and ratepayers are sick of being hit with rate increases when income is already increasing from new subdivisions etc.
Council can't push through the necessary increases so needs to sell some of the family silver.
There is worldwide competition for port and cargo handling companies -Singapore and Dubai have just fought it out for P&O Ports, one of the world majors. (Dubai looks to have won)
HW are ex Hong Kong but read China.
Will bring a lot to the table for LPC, so should be interesting.
I find it difficult to see how anyone could make money trading this share over the last eight years. The sp for starters is lower. I also find it difficult to see how a fundamentalist would look on this as a buy, and hold. The sp is the first fundamental, followed by the divi, if one goes down, the other has to compensate. The sp is lower than it was eight years ago, add inflation to that on the one side, then deduct the divi on the other.Quote:
quote:Originally posted by airedale
Duncan, I managed to make good money buying LPC every time some half-witted journo wrote about labour problems and the price went down.[:p]
I think that the investors over that period would be lucky to come out even. In other words guys your system of buying and holding over long periods requires upgrading. Property prices have doubled in that time with a buy time looming up shortly. Why dont you do something simple, and buy a bit of dirt on the outskirts of the city.
ONLY STIRRING THE FUNDLES MACDUNK
Sounds fun. Are there any side-effects, such as blindness? [:I]Quote:
quote:
ONLY STIRRING THE FUNDLES MACDUNK
MacDunc et al I've just checked my records on this stock. Have bought three parcels over the last four years & the returns based on yesterdays closing prices are from 13% - 19% annualised. Not great but certainly acceptable.
If you take a value approach & buy at the right price you are generally rewarded. (often spectacularly) With such a good yield & my good purchase prices I had no problem waiting around for the stock to be rerated.
Price may have to climb a bit for the takeover to be successful?
Seems to have helped POT sp as well, quite a while since that has been $4.50 + ....
Disc: Bgt POT last Thurs at 439
I bought in at $1.58 in Jan 2003. I have had 49c in gross dividends since then and at Friday's close of $1.75 gives a return of just over 13% per annum. That lifts to 21% at today's price which aint bad for a fairly low risk boring type of share.
Quote:
quote:Originally posted by duncan macgregor
I find it difficult to see how anyone could make money trading this share over the last eight years. The sp for starters is lower. I also find it difficult to see how a fundamentalist would look on this as a buy, and hold. The sp is the first fundamental, followed by the divi, if one goes down, the other has to compensate. The sp is lower than it was eight years ago, add inflation to that on the one side, then deduct the divi on the other.Quote:
quote:Originally posted by airedale
Duncan, I managed to make good money buying LPC every time some half-witted journo wrote about labour problems and the price went down.[:p]
I think that the investors over that period would be lucky to come out even. In other words guys your system of buying and holding over long periods requires upgrading. Property prices have doubled in that time with a buy time looming up shortly. Why dont you do something simple, and buy a bit of dirt on the outskirts of the city.
ONLY STIRRING THE FUNDLES MACDUNK
I still find it hard to think that any real money was made guys sorry. You either take the divi with the drop in sp or get out at the top and miss the divi. macdunk.
Explain this to me.
At 12:50, or 1:10 if you need to wait for the 20 minute delay, a stand in the market at $2.35 is announced.
At 1:16 75,000 shares sell at $2.25.
So Port Otago Limited want a blocking stake. I love these takeover battles, even as a mere spectator.
That is interesting PT.Looks like someone has mucked up.Although the announcement was made at 1.10pm the trading for the stand in the market at $2.35 did'nt start untill 1.45pm.Hence the person buying the 75,000 shares for $2.25 will be able to sell them again 30 minutes later for $2.35.Although the buyer may well have been Forsyth Barr in which case they won't be sold as they are buying for Port Otago.
I would say that Christchurch City Holdings plans may well be thwarted by this.Forsyth Barr already have 7.94% and at $2.35 there will probably be enough disgruntled locals who will sell to prevent a large part of the port being sold offshore.I'm also just a spectator but this will be interesting.
The stand in the market has reached it's target we have a block on.
Well played mighty o.
IPO next year ?
I hope so, if only to show that greedy CHCH council a few tricks
Hmmm, I expect to see the LPC shareprice drift for a while now. Many an arbitrage player will be hovering over the eject button right about now.
Somehow I doubt that Christchurch City Holdings Limited are able to table an offer that Port Otago Limited simply can't refuse. What would it take I wonder?
Regards JAMP
NZX: AIA LPL MCH MVN NZO NZOOD PPG RBD SAN SKL SPN
NZAX: CVT NWFOA SAT
Unlisted: BRK
POL can and will refuse this deal at any price IMO.Quote:
quote:Originally posted by JAMP
Hmmm, I expect to see the LPC shareprice drift for a while now. Many an arbitrage player will be hovering over the eject button right about now.
Somehow I doubt that Christchurch City Holdings Limited are able to table an offer that Port Otago Limited simply can't refuse. What would it take I wonder?
I Have just finished reading the Lyttelton Port of Christchurch target statement compiled by Crichton Anderson Corporate Finance. I must say that Crichton Anderson have done an excellent job, at least on par with Grant Samuel who have 'set the standard' with these company valuations up to now.
I had visions of doing a 'hold out at all cost' on this share, with the hope that *if* I was forced to sell it would not be for less than $2.35. $2.35 being the price point where Port Otago Limited made their lightning raid on LPC for a strategic stake.
What I learned from the CA report, that hasn't been spelt out in the media, was that this blocking ploy made sense but only as defence mechanism for the Port of Otago's own business. IOW it made sense from POL's perspective who were looking at facing a voracious Asian Tiger managed re-envigorated LPC to block this deal. But it might not have made sense for any other business to pay so much on a stand alone deal basis. Given Christchurch City Holdings Limited's (CCHL's) stranglehold on the share register, at around 70%, it isn't realistic to expect any other company to try taking over LPC. My view now is that it is now unlikely that a final takeover price of $2.35 will be achieved, even though $2.35 is within the fair value range of the CA valuation.
Personally I'd like to see a three way deal worked out. A combined South Island 'superport' meshing together the Ports of Lyttelton and Otago. Perhaps Port Otago Limited could sell some their own equity to Hutchison? That would allow the independent shareholders who wanted to continue to be part of the company in the future to remain on the register, while Hutchison got their 49% stake.
SNOOPY
hold LPC
Hi Snoopy, I can't see Otago giving up any of their 10.1%, below that figure they havn't got much leverage.
Directors have recommended acceptance of revised offer. Confirms Snoopy's views.
Seems the Asians are not likely to pay much more than 2.20.
disc: holder
I got the confirmation of the revised offer in the mail today foodee, in a CCHL envelope.Quote:
quote:Originally posted by foodee
Directors have recommended acceptance of revised offer. Confirms Snoopy's views.
Seems the Asians are not likely to pay much more than 2.20.
disc: holder
However, what was absolutely extraordinary is that I got a letter from LPC in *exactly the same envelope* signed by LPC Chairman Barney Sundstrum saying that I should accept the offer!
I thought these two organizations were meant to be protagonists. On the one hand we have Christchurch City Holdings Limited (CCHL) putting forward an offer. On the other side we have Lyttelton Port of Christchurch (LPC) independently evaluating the offer.
It goes without saying that CCHL and LPC are close. They could hardly not be with CCHL owning nearly 70% of LPC. But I found it rather startling that there is no longer even a pretence at 'chinese walls' in the takeover process. It appears that CCHL and LPC are sitting around the same table holding hands! Both 'protagonist' letters, both dated the same day, arriving in the same envelope is getting a bit much, don't you think?
From page 2 of the LPC headed response to takeover letter:
"CCHL has indicated to the directors of LPC that it would be prepared to waive all conditions to the offer (i.e. declare the offer unconditional) and increase the offer price to $2.20 if the directors of LPC agree to recommend that shareholders accept the increased offer and agree not to pay or declare any dividend until after the closing date of 12 April 2006."
So, wonder of wonders, the LPC directors have agreed to the new offer, and not pay a dividend.
What the...?
Perhaps I am just being old fashioned here. But I would have thought the LPC directors should be evaluating the CCHL offer *on its own merit*. No bribery from CCHL ("you must unanimously recommend the offer and if you don't we won't go uncomditional") should be allowed to sully the independent LPC directors decision!
I want to be clear what I am saying here. I am not suggesting that the new offer of $2.20 is not fair. It is clearly within the fair value range of $2.15 to $2.45 determined by independent valuers Crighton Anderson. However, something about the way this process has been run stinks. It seems that the acquisition premium of 10cps that Crighton Anderson so carefully explained (section 4.4 of the Target Company Statement) has been dropped simply because CCHL ordered LPC to do so! IMO that is wrong.
Hutchison has retreated to Hong Kong (for the moment). No doubt they will be rolled out again if/when CCHL eventually gets full control of LPC. (It is interesting that CCHL has decided not to consult with the ratepayers - the 70% shareholders remember- on this part of the deal).
Through all of this process the only voice of reason I have heard is from Port of Otago Limited (POL). POL bought their so called 'blocking stake' not because they wanted to stymie any deal, but because they wanted to have a working arrangement with the Port of Lyttelton. To me this makes huge sense. No explanation is given by CCHL as to why they won't have a bar of it. I think it is time we forced CCHL and POL back to the negotiating table. And the best way to do that is to *not* sell your shares to CCHL! Now who is with me?
SNOOPY
discl: hold LPC. Will *not* be accepting the revised CCHL offer.
Hi Snoopy,
I too think directors, who should be maximising shareholder wealth for all, are getting a bit cuddly with Christchurch CC who obviously have their own cunning plan to increase their wealth.
I have put my modest stake on the market for $2.35. This is within the fair value range, inclusive of takeover premium, plus would compensate for missed dividend.
What do you want for yours Snoopy? $2.35 or more?
Cheers
Tinker
Thanks, Snoopy, an excellent summary of the situation. I think that shareholders are being hustled too quickly for comfort. I am not in any hurry to sell. The Chch City Council and the LPC directors should be at arm's length or even further from each other. Certainly not cuddling or colluding in the same envelope.
Snoopy
Thanks for the succinct post. The LPC board appears to be mere pawns to ChCH CC.
I feel the play is only just starting. Now if LPC+POL becomes a reality... The Asians will like that. Will continue to hold my shares.
You would need to be a one-eyed Cantabrian (I am not) to understand all these shenanigans. Canterbury Inc. is at work, and there has been a huge outcry from the public - Letters to the Editor, Petitions on shop counters, etc. - imploring the Council to clutch the port to its bosom and shut out all those foreign nasties (including Highlander supporters). Its a Crusade!
'cuddling or colluding in the same envelope.'Quote:
quote:Originally posted by airedale
Thanks, Snoopy, an excellent summary of the situation. I think that shareholders are being hustled too quickly for comfort. I am not in any hurry to sell. The Chch City Council and the LPC directors should be at arm's length or even further from each other. Certainly not cuddling or colluding in the same envelope.
A nice turn of phrase airedale, that summarises succinctly the situation between CCHL and LPC!
I guess some of you who aren't intimately caught up in the situation will wonder what the motive is for CCHL and LPC to behave in this way?
Here is my take on the reasoning. A nice little deal with Hutchison (Hong Kong) will enable things to carry on pretty much as they are on the senior personnel front, both for CCHL and LPC.
Taking out minority shareholders of LPC means that CCHL will be able to bring their 'rebel business' completely 'in house' where it joins ChCh Airport, The Red Bus Company, City Waste and various other stuff. That is how CCHL like it. Keep the corporate smoking jackets, and bask in the illusion of being a multinational private investment company - comparable to any other corporate.
In reality CCHL are all a bunch of public servants, employees of the ratepayers of greater Christchurch. Being tied up with a Hong Kong corporation would, of course, mean much more international travel for CCHL staff. And since they would become 'international entrepreneurs' salary levels would have to be raised accordingly in line with other comparable international business executives (sic). We have here a classic example of 'the institutional imperative' at work!
The *real* reason CCHL don't want to link up with Ports of Otago Limited is that CCHL would then only be 75% (based on current market share) owners of a combined LPC/POL operation. If Hutchison were then to come in as a 50% partner on the new combined operation, then CCHL would find themselves as a minority shareholder of the new combined Hutchison/LPC/POL. Now, losing management control (which is what being a minority shareholder means) means CCHL have to consult with, horror of horrors, the ratepayers (gasp) as to what they are doing! The illusion of CCHL being senior partners in an international port business would be blown away under this alternative LPC/POL/Hutchison scenario.
Fortunately for us LPC minority shareholders, the Ports of Otago have identified what might be a real competitive threat to their own business and stepped in. Personally I have long held a view that the Ports of Lyttelton and Timaru should join together. But the commerce commission might have had something to say about that. So a link up between Otago and Lyttelton does, to me, sound a more sensible as a way of preserving some geographic competition.
What do you think?
SNOOPY
discl: Foundation holder in the new LPC/POL operation, oops I mean LPC ;)
You are right about this Colin, and this is the risk of 'consulting the ratepayer'. You will always get some who are against any sort of change at any price. Personally I don't count myself in that category. I do recognise that a business can't stand still and that change is necessary. To me, linking up with Ports of Otago is the way to go. The people of Otago will have been shocked by the emergence of an LPC/Hutchison alliance. Hopefully this shock will be enough for them to see the sense in giving up control of their own port and throwing their hat in with Lyttelton. Whether Hutchison would then come on board as a third partner at a later date would be a question I am presently undecided on.Quote:
quote:Originally posted by COLIN
You would need to be a one-eyed Cantabrian (I am not) to understand all these shenanigans. Canterbury Inc. is at work, and there has been a huge outcry from the public - Letters to the Editor, Petitions on shop counters, etc. - imploring the Council to clutch the port to its bosom and shut out all those foreign nasties (including Highlander supporters). Its a Crusade!
I am in little doubt that the best thing for the ratepayers of Christchurch and Dunedin would be for LPC and POL to come together. I have little doubt that this *wouldn't* be the best outcome for senior management of CCHL, which is why they are resisting even the suggestion of such a link without reason.
SNOOPY
You've got it foodee.Quote:
quote:Originally posted by foodee
Snoopy
Thanks for the succinct post. The LPC board appears to be mere pawns to ChCH CC.
I feel the play is only just starting. Now if LPC+POL becomes a reality... The Asians will like that. Will continue to hold my shares.
SNOOPY
I couldn't agree more.Quote:
quote:Originally posted by Snoopy
[brWe have here a classic example of 'the institutional imperative' at work!
A couple of excellent posts on the current state of play.
Disclosure: Not a holder of LPC, but a still-disgruntled ex-holder of POA
Or at least preserve their positions, ahead of the interests of minority LPC sharehoilders and Christchurch ratepayers!Quote:
quote:Originally posted by Tinker
Hi Snoopy,
I too think directors, who should be maximising shareholder wealth for all, are getting a bit cuddly with Christchurch CC who obviously have their own cunning plan to increase their wealth.
Tinker, the mid valuation range for LPC (including takeover premium)Quote:
quote:
I have put my modest stake on the market for $2.35. This is within the fair value range, inclusive of takeover premium, plus would compensate for missed dividend.
What do you want for yours Snoopy? $2.35 or more?
is $2.30. Add on 5c for your share of the 'already in the box earnings' and I think your sell price of $2.35 is entirely fair. By co-incidence(?) it is also the price that POL paid for their blocking stake. In summary I find your position entirely reasonable.
What price would I sell at?
Let be quote you a phrase from the last 'bullet point' on page 2 of the 29th March LPC directors letter.
"There appears little prospect of LPC and POL merging. While the directors remain of the view that there is considerable potential value upside available to CCHL (and other shareholders) from such a transaction, it may be some time before that upside can be realised via a transaction."
I want some of that 'considerable potential value upside' the directors are talking about. It is hard to put a figure on it when LPC (or is that CCHL) and POL seems so far apart. But, for goodness sake if LPC directors recognise this value, and POL directors recognise the value (and they do or they would not have bought into LPC), then let the respective directors get together and thrash out a deal!
Once I have seen the synergies drop out as an accounting valuation, then, and only then, will I be in a position to 'name my price'.
The current deal of $2.20 would be fair if CCHL were going to take the whole business in house in perpetuity. But we all know what will hapeen if that bid succeeds. The very next day the boardroom door will open and Dr Paddy Austin (Chair of CCHL) will say:
"Oh, is that you Mr Hutchison? What a tremendous surprise! How would you like to buy half the Port of Lyttelton from us?"
IOW the claim that there are no synergistic benefits that should be paid to minority LPC shareholders, and that CCHL is just taking the existing business in house and all deals with Hutchison are off is a sham.
SNOOPY
Yes, and of course the takeover of the Ports of Auckland by Auckland Regional Holdings is being held up in the Appendix of the Crighton Anderson valuation report as an example of a 'fair deal' that us LPC shareholders should gratefully follow!Quote:
quote:Originally posted by Deev8
Disclosure: Not a holder of LPC, but a still-disgruntled ex-holder of POA
SNOOPY
POL has increased its holding in LPC to over 11%. [?]soon the M-word might be banded.
Got the big rumble tonight. A call from Hamilton Hindin Greene brokers working on behalf of CCHL.
"Had I received the offer documents?"
"Yes"
"LPC has a big capital expenditure program going forward. Did I realize that the dividend might be cut?"
"Oh yes, but happy to keep holding." (actually I think this is scaremongering because the Christchurch City Council probably needs the dividend more than even I do, but we'll see).
I also told Hamilton Hindin Greene that I wanted CCHL to get together with POL for merger discussions but I was told.
"Those two parties seem a long way apart. Not much of a chance of a deal any time soon." (Well, we'll see)
I made it quite clear I didn't plan on accepting the offer and that was that. If you are an LPC shareholder prepare to be rumbled soon!
Good luck folks, and stay staunch to your beliefs.
SNOOPY
discl: Still holding LPC, just a little more tightly than before.