MHJ - Michael Hill International.

[KJ]

Kiwi-fair points.For sure new stores in Aussi would become profitable more quickly than new stores in CAN.

However,perhaps part of the premium attributed to MHI's share price may well be because it has expanded into CAN based on their tried and proven formula they used to establish in Aussi.

Interesting that MHI's shareprice in the last 3 yrs is up just over 50% (460 to 720)and its profit has also risen just over 50% in the same period ($10.0m to $15.1m)

[Nevl]

Hi Kiwi. Great points and I appreciate the feedback. I agree with most of what you say about the future short term growth of MHI and I feel that if I was a trader I would be sitting on the sideline having taken over 50% profit so far this year with MHI. However I am hoping that Canada will provide as good a growth as Aussie has.

Also the exchange rate issue is a Chimera. As has being pointed out the rise in the NZ$ is hiding the actual improvements. ie 18% growth in Aussie and 7 % in Canada. This is the real MHI sales growth. The currencies have to be converted back to NZ at an arbitary date at a set rate which has nothing to do with the way the business is run. The actual costs of the canadian stores are in C$ and so are there sales. Perfect. While the company is making a loss there these will be lower in accounting terms for the tax man thanks to the high Kiwi but actually it means nothing. A $1 proit is a profit in Canada or Aussie or NZ. Letting good news be obscuered by irrational accounting conventions is great for those who look further.

I will stand by the my preditiction of 10% profit growth for the year and expect this to continue until MHI reaches its 200 stores in Aussie and about 100 in Canada. Like I said NZ is limited to economic growth and inflation for its growth but this does not mean that NZ will suddenly become unprofitable just that profits will stabilise at their current rate. Sweet 9mill per year for as long as they keep doing things right in NZ and that is almost gauranteed. Aussie and Canada are the cherries on top.

[k1w1]

Nevl, KJ, and James K,

Thanks for the well reasoned replies. I know this is an MHI thread but may I continue to play devils advocate on it just so you guys can double check and confirm your holding of this share. I accept that this business and share has historically out performed almost any other and has stood the test of time.

It is correct that I did not realise that the Canadian stores were not open for the full period. Thus per week sales figures are not a proper measure.

It is also true that more stores will reduce the loss from Canada. This will help the overall firm profits.But it is more accurate to describe this as reducing the losses that Canada makes than saying that Canada is a profitable part of the group in the next year or so.

The rise in the NZ dollar effects MHI in two ways. Any costs in NZ dollar items are more expensive . Any sales or profits in Australian dollars are reduced on transfer to NZ dollars.

My question is will the NZ dollar decrease against the Aussie in the next year given our interest rate policy compared to theirs ? Will MHI continue to have to translate its Australian sales into NZ dollar equivalents for reporting purposes ?

Imagine if MHI not only had more stores in Australia, but was opening more, had all its expenses in Aus dollars and did not have to translate its sales into NZ dollars.

If this was the case I believe its financial performance and the reported profits in its next annual report would be improved . I think MHI boosters would point out these as being of advantage for its shareprice.

In fact that is not MHI's position. But it is someone else's

[Phaedrus]

Over the last 15 months or so, MHI has been in an accelerating uptrend. This necessitated the use of sequential trendlines as prices left the older trendlines behind. Unless these obsolete trendlines were updated, much of your gains would be given back to the market before sell signals were triggered.
Price action has now broken below the most recent trendline and below the 6x ATR trailing stop, triggering sell signals.
Note how the ATR (Average True Range) based trailing stop automatically adjusted itself to the accelerating price of this stock. That is the strength of a dynamic indicator that is moderated by the volatility of the underlying stock price movements.

[skinny]

Allo allo MHI has come off a bit hasn't it.

Given MHI was bid up from around 7.50 mainly by institutional buying I think you are right Phaedrus that we'll see it come down a bit now that their spree seems to be over. The question is how low? My call is somewhere around 7 to 7.50, or 10% below current prices, to bring it into the range of 'fair value'. Personally I will look to pick up more if it undershoots below $7.

Sell people please []
Alban is right, MHI is the loser stock for 2005

[Placebo]

Thanks Phaedrus that's excellent advice. This doesn't seem to be a stock that trades on high volumes, e.g. yesterday it dropped 22c on volume of just over 10,000; down another 5c today on 8,000 shares traded. Volumes were also light as it uptrended strongly. Is this an indicator of volatility?

[Alban]

Well get some better choices made then Skinny. You just need to type six letters to do better than my rotten picks. []

[Sky Tower]

Thanks Uncle Phaedrus for posting that MHI chart - most useful.
Your charts and commentaries are excellent
Heres hoping you post lots more

[craic]

One of the peculiarities of the NZ market is that it is often priced on tiny sales late in the day. I have seen a $150 sale take millions off the reported value of a company on the market and it is easy to believe that this is a deliberate manipulation. Have a look at Contact energy friday sales pattern. From a start of 639 it shoots up to 645 and stays there most of the day then at 5pm it drops to 637 on 50,000 shares and stays there. Who sold 300G worth of shares, probably at market for that low price?

[Morch]

quote:Originally posted by Phaedrus

Over the last 15 months or so, MHI has been in an accelerating uptrend. This necessitated the use of sequential trendlines as prices left the older trendlines behind. Unless these obsolete trendlines were updated, much of your gains would be given back to the market before sell signals were triggered.
Price action has now broken below the most recent trendline and below the 6x ATR trailing stop, triggering sell signals.
Note how the ATR (Average True Range) based trailing stop automatically adjusted itself to the accelerating price of this stock. That is the strength of a dynamic indicator that is moderated by the volatility of the underlying stock price movements.

Phaedrus many thanks for your charts and comments. Could you please pass on you thoughts/coments to the following trendline related questions, using the MHI chart as the subject.

(1)It seems to me that often after the 3rd line is in place it's confirmation that a retracement is more likley?
(2)Is the longer trendline of the three the most likley one to indicate future support?
(3) Do you always draw your lines using the closing price? and if so why? I often use OHLC

Happy investing
Morch