Freightways - FRE

[winner69]

Fund manager selling down not a good sign many say

Fisher sold a lot in may and some more last week ......did they pick the May high and take advantage of it. Chart a bit sad since

[percy]

Maybe they are right? Maybe they are wrong!
Hard one to call.
Always been a fantastic business.I would not be selling.

[Jim]

Maybe they are right? Maybe they are wrong!
Hard one to call.
Always been a fantastic business.I would not be selling.

They could be cashed up for the Meridian float.

[Stumpynuts]

Good to see FRE SP up again after falling to dismal SP range during GFC.

I work within FRE and have talked with my bosses. Yes some of the strategies for FRE is a move towards the internet/online market rather than the usual courier/transport model which is getting more and more expensive due to fuel costs. The strategy towards online based investment would have been noted in previous AGMs and sharemarket reports.

There have been a few key acquisitions over the past few years have been contributing well to profitability.

Key purchases of note are:

Dataprint - http://www.dataprint.co.nz
Iron Mountain - Purchased and now run under Online Security - http://www.onlinesecurity.co.nz/

Both are a push towards online services and both are contributing well to profitability for FRE.

[Stumpynuts]

Hi all,
As per above post and below

https://www.nzx.com/companies/FRE/announcements/244882

[benjitara]

I'm finding this business hard to value given the presence of so much goodwill thus making Net assets negative once this is left out. The difficulty is knowing how much of this 'goodwill" is paramount to the future earnings of the company? I never really include goodwill/intangibles in calculations other than in tech stocks/med as this is the only real sector that, in my mind benefits greatly from IP and goodwill.

[whitewatergeo]

I never really include goodwill/intangibles in calculations other than in tech stocks/med as this is the only real sector that, in my mind benefits greatly from IP and goodwill.

What about companies like Coke, Nike, Microsoft and McDonalds? Surely Goodwill makes up large proportions of their balance sheets and represents such things as brand value and premiums paid during take overs of other businesses?


WWG

[winner69]

I'm finding this business hard to value given the presence of so much goodwill thus making Net assets negative once this is left out. The difficulty is knowing how much of this 'goodwill" is paramount to the future earnings of the company? I never really include goodwill/intangibles in calculations other than in tech stocks/med as this is the only real sector that, in my mind benefits greatly from IP and goodwill.

Another sold result Benjitara

All those intangibles are working hard driving increasing profits

Approaching that all time high of 495 in jan 2007

[benjitara]

What about companies like Coke, Nike, Microsoft and McDonalds? Surely Goodwill makes up large proportions of their balance sheets and represents such things as brand value and premiums paid during take overs of other businesses?


WWG

Yes fair comments by winner and yourself. I suppose Freightways scale gives their goodwill evaluations some credibility. a great result. how do you see macro events impacting on this company long-term? more internet purchases must surely look positive. anyway good result, im pleased for them and those that hold the stock.

[Toulouse - Luzern]

Hi all,

Thanks for all of your posts about FRE.

We can all agree that profit increases are good and upwards sloping charts.

I hold FRE and MFT via investment funds and have been happy for the fund manager to do the analysis, switches, trades, balancing etc.

Thanks in particular to winner69, stumpynuts, benjitara whose ST posts on FRE I can recall.

I find myself agreeing with benjitara initial post that FRE goodwill is high.

Many are averse in general to a high valuation % of goodwill to total assets.

Please note these are my quick observations (E&OE) not a professional evaluation. (DYOR)

Goodwill is the excess of purchase price over fair value of the tangible assets.

In FRE case my read is that Intangible Assets (Goodwill) are 63% at $276M of FRE total assets of $433m.

(Source: 2013 Annual Report.)

The major increase was in 2012 as in the 2010 Annual Report the value was $0.

How much % of assets as goodwill is good, what % is bad - I leave that for you all to decide.

I understand the FRE purchases are strategic and future positioning, and include online internet applications with high potential growth possible.

From the annual returns FRE increase in profit is: 2013 Annual Report $40M compared with $23M in 2010

A lift of $17M.

$17M over $276M = 6%. (Yes, agreed a simplistic view)

I had a look at this sort of thing, as a good few years ago I did an in depth analysis of a US Company following a merger, which resulted in a very high level of Goodwill on the Balance Sheet. I had expected a favourable outcome, however on analysis (in more detail than this post) the merger rationale was strategically flawed from a marketing and financial viewpoint the goodwill paid too high, the impact on profit insufficient and it took years to get over this.

I am not saying there is any issue with FRE balance sheet, growth path or strategy, just that these are my comments that came to mind reading your posts.

Good luck to all of us with FRE.