SNL - Supply Network Ltd

[steve fleming]

As much as I would never want to underestimate SNL management, I'm struggling with the BH's level of optimism right now.

Mining seems to be going from bad to worse, and we have seen updates by the likes of Bradken and Austin Engineering about how the miners are deferring expenditure wherever they can. Maxitrans seems to have been caught on the hop, with their biggest parts store in Gladstone suffering badly. The drought hasn't abated either, with talk we are moving into an El Nino weather pattern, which should mean more dry weather. I was also having a look at Automotive Holdings (AHE) the other night, and their refridgerated transport division also seems to struggling. Bottom line seems to be that its tough out there in trucking land right now.

Steve, you might be right about NZ. Higher Kiwi/Aussie exchange should help when SNL repatriate those NZ profits back to Australia, but, NZ is only about a fifth of their business, so are the gains in NZ sufficient to counter the tough conditions in their home market? Probably not.

Maybe Multispares is just creaming the opposition. I've got no real way of knowing though.

I must say though, the SNL shareholder base is very resilient. Never seems to weaken from the low to mid $2s.

Maybe, but i look at SNL's metrics and I think you can't get much better than that (i.e. ROE and EBITDA% trends) and I think why i would I want to sell my SNL shares?

Might be some short term head winds, but i guess i take a longer term view, and am happy to hold and ride out any speed bumps as i continue to back Management of this exceptionally well run company

For the Fiscal Period Ending	12 months Jun-30-2009	12 months Jun-30-2010	12 months Jun-30-2011	12 months Jun-30-2012	12 months Jun-30-2013	LTM 12 months Dec-31-2013
Profitability
Return on Assets %	7.4%	7.2%	9.2%	12.7%	12.7%	13.8%
Return on Capital %	11.3%	10.9%	14.5%	20.7%	20.5%	22.7%
Return on Equity %	14.4%	13.9%	18.9%	26.1%	26.2%	28.7%
Return on Common Equity %	14.4%	13.9%	18.9%	26.1%	26.2%	28.7%
Margin Analysis
Gross Margin %	40.3%	40.7%	42.0%	42.2%	43.4%	43.5%
SG&A Margin %	23.1%	23.4%	23.1%	21.8%	22.9%	22.6%
EBITDA Margin %	7.0%	6.8%	8.4%	10.7%	10.8%	11.5%

[Huang Chung]

Given that SNL trade by appointment, it's perhaps a little surprising BH have initiated coverage on the stock.

It would take a month of Sundays for them to get any sort of return by buying and selling stock on behalf of clients. Only other reason I could think for them taking up coverage would be some sort of mandate / provision of advice. Even that seems a little strange, as SNL have never been acquisitive, and have pretty much stuck to steady incremental organic growth over years.

[Lizard]

Special div announced of 25cps (to use up franking credits). Will cap DRP at $1.70. Given last traded price was around $1.95 prior to announcement, they clearly want holders to opt for the DRP, with exercise aimed at releasing franking.

Given I can't use the franking and have never been in the DRP, I will likely take this opportunity to exit the remainder that I hold at (or above) current price of $2.20. I still like management and would consider holding or owning again, but feel there are better places to be invested from a New Zealand perspective.

[Muse]

What a beautiful 5 year chart.

Not one that gets much discussion on this forum, a bit of a pity.

Been a sensational investment. Off to use the capital for something else, but a very fine business and one worth having a glance at or putting on a watchlist.