MHJ - Michael Hill International.

[duncan macgregor]

quote:Originally posted by duncan macgregor

MVT, The chart told me not to have shares in the company 10 months ago. Only the fundamentalists would be holding this stock at this time so let them worry about profit problems. macdunk

Liz, sorry to diss apoint you try and twist it in a different way next time. macdunk

[rmbbrave]

No Xmas jingle for jewellery retailer
11 January 2006
By GARETH VAUGHAN

Jewellery retailer Michael Hill International is warning profit for the second half of 2005 will fall well below analysts' forecasts because of lower Christmas sales and tighter margins in Australia than it expected.


Same-store sales in Australia were down 5.3 per cent from the 2004 December quarter, the company said yesterday.

Michael Hill earns about 65 per cent of its revenue in Australia.

The company's shares fell 60c, or 7.7 per cent, to $7.20 yesterday though only 62,400 shares were traded.

"Where we really got knocked around in the Australian business was December," chief executive Mike P****ll said. "Most of the retailers here (Australia) went on sale early so it was a double combination of difficult sales and a slight squeeze on margins."

Michael Hill expected between $10.5 million and $11.5 million profit for the six months to December 31 - down from $12.2 million in the same period of 2004.

The 2004 figure will be restated to conform with International Financial Reporting Standards, which Michael Hill adopted last July. Full results will be made public on February 16.

Though the company had not previously given a second-half forecast, yesterday's guidance is well below expectations for profit between $13 million and $13.5 million.

"Basically we just looked at the consensus forecasts of the analysts and we're going to come up short of that so we felt we had to put a statement out," Mr P****ll said.

"When we look back internally in our business there's nothing we really feel we could have done a hell of a lot better."

Forsyth Barr analyst Guy Hallwright had been anticipating more than $13 million profit for the company. He was surprised at how far Michael Hill's Australian same-store sales fell and suggested the jeweller might have got its promotional activity wrong.

More broadly, Australian retail sales fell 0.1 per cent in November versus expectations for a 0.3 per cent rise. Mr Hallwright said there was also talk of a "fairly soft" December.

Rival Australian jewellers are yet to report Christmas sales.

Michael Hill's New Zealand sales rose 1.6 per cent during the six months, and sales at the company's fledgling Canadian operations gained 9.9 per cent. However, Australian sales fell 2.3 per cent. Mr P****ll said the New Zealand business traded satisfactorily through December with margins holding up.

Warren Couillault, chief investment officer at Fisher Funds, which holds 10.79 per cent of Michael Hill, described the profit warning as a "short-term aberration" caused by difficult Christmas trading. He said the solid Canadian growth was important.

"That's where any shareholder would be looking for the company to achieve positives because that's where their whole future is - growing in another market," Mr Couillault said.

Mr P****ll was cautious about trading prospects in 2006. He said it was too early to tell how the business would perform.

"I don't think it's going to be buoyant, put it that way," he said.

[Lizard]

Did I twist it MacDunk? No offence, but I'm not sure how... Snoopy and Phaedrus were giving their views on a theoretical basis and, as you mentioned your timeline method, I thought it would be interesting to see how it stacked up.

You suggest your "timeline" method but then say you wouldn't have been holding due to the chart - yet, by my calculation, your timeline method would still have had you holding. So I am confused as to how you can have it both ways.

I note you were happy enough to assert that fundamentalists would still be holding without providing evidence as to why (and in fact, from this forum, it appears many aren't).

Cheers, Liz

[duncan macgregor]

LIZ, when a share goes sideways i am out. I really havent followed MHI its not in my buy program. I have not worked out what my buy or sell would be so perhaps you might enlighten me.
I buy a share with a a 5pc stoploss. when it proves its self, i buy a second helping and ease the stop loss. I stated that a share in a steep uptrend my trailing stop loss might ease to 15pc. My time line is taken from my stop loss level at a 20pc rise plus dividends pa. The fundamentalists are still holding because it is A good sound company nothing has changed. perhaps you might tell me with my system where i bought and when then i sold and why. My buy program is based on straight fundamental analysis. macdunk
discl nil so far

[Lizard]

MacDunk, I thought I had already done what you ask by giving you a buy price of $4.20 in mid-2003 and calculating your timeline net of dividends to be at $6.62. Maybe $4.20 was a little premature seeing as you would hardly have called it a steep uptrend at that point. So I will let you have my buy price of $4.70 near the beginning of 2004 (rough estimate - I can't remember if this is exact and too lazy to look it up). After two years at 20% (excluding dividends), that would put your timeline at $6.76. I don't think even the sharp spike down in early 2005 would have hit your timeline, given that the timeline would have been at a lower point then.

I disagree with your take on fundamentalists. They consider more than whether it is a good company. They also consider whether the price has become overvalued and whether the economic outlook is favourable. In MHI case, I was selling in April 2005 because the company carried the significant risk associated with a substantially higher P/E than other retailers and was exposed to an increased chance of a retail slowdown in Australia (with potential for a follow-on slow-down in NZ). The spike down in early 2005 demonstrated the risk of this share falling sharply on bad news due to low liquidity, so I decided to take the cautious option and exited when it gave me a second chance...

[duncan macgregor]

LIZ, if you follow the sp price up with a trailing stop loss as i stated you will find that the stop loss or the time line would have you out very close to pheadrus sell signal. With my system it works of a trailing stop loss not a rigid start figure. the time line is taken from the latest stop loss figure which only rises never drops. Do the sums again and tell me what i might have made. macdunk

[Lizard]

Fair enough MacDunk. To be honest, I've never run a stop loss, so it is probably easier for you to work this out than me. If you rode it to the peak at approx $8.30, then (assuming I understand correctly), I make your stop loss at 15% below this price to be about $7.05. Your time line would run up from there and have been fairly quickly intercepted and you might have sold at a price slightly above this in Jan 2005 - or that might have just slipped past the line in which case you wouldn't have had your trigger till the big spike down in March - the fall then was so sharp, you probably would have had trouble selling any significant volume on the way down to $6.60.

Apologies if I've misunderstood your method further - I don't want to drag this argument out. If you would have sold around the $8 mark as you say, then fine. For once, all our various methods were in agreement.

But I didn't think your casual claim to superiority over those using fundamental analysis could go unchallenged...

Cheers, Liz

[rmbbrave]

Brokers cut Michael Hill forecasts
12 January 2006
By GARETH VAUGHAN

Brokers have taken their red pens to profit forecasts for Michael Hill International, helping bring a two-day fall in the jeweller's share price to almost 12 per cent.


Michael Hill shares fell 30 cents, or 4 per cent, to $6.90 yesterday. That follows Tuesday's 7.7 per cent drop after the company warned its interim profit would be up to $3 million below analysts' forecasts.

Forsyth Barr analyst Guy Hallwright said he had cut his 2006 and 2007 profit forecasts by about 16 per cent. Mr Hallwright now expects Michael Hill to post $15.8 million profit this year, down from $16.5 million last year, and a forecast of $18.5 million next year.

ABN Amro cut its 2006 forecast by 20 per cent to $15.3 million. Macquarie Equities analyst Warren Doak is now expecting an $11 million first-half profit, down from $12.5 million, and an annual figure of $15 million.

On Tuesday, Michael Hill said its first-half profit would be $10.5 million to $11.5 million. This was lower than analysts' consensus forecasts of about $13 million because of lower Christmas sales and tighter-than-expected margins in Australia, where it makes about 65 per cent of its revenue. December quarter same-store sales in Australia fell 5.3 per cent.

Mr Doak said Michael Hill was in a sector that was becoming increasingly competitive. It was also sensitive to changes in discretionary consumer spending. Evidence suggested consumers had favoured items such as iPods and video players rather than jewellery this Christmas.

"Certainly the iPod was the wow-factor item for the 2005 Christmas period," Mr Doak said.

Mr Hallwright said the extent to which Michael Hill's lowered profit outlook was related to the company's adoption of International Financial Reporting Standards would not be clear till it reports interim results on February 16.

[Gryffyn]

Up 5 today. Meow

[Dough Boy]

Oh no oh no the sky is falling and jewellery is never to be worn again...blah blah...panic ....sell...sell.

Meanwhile I took a nibble yesterday at 690 to add to my holding and will move on to the next stock that is at discount next week.

Ah don't you just love the short-termism of the market.