KEY POINTS:
Fisher & Paykel Appliances' full-year result last week came in largely in line with expectations, dragging the company's share price off the six-year lows plumbed in spite of the announcement of plans to move production abroad.
Goldman Sachs JBWere analyst Adrian Allbon says the company's Australian operations were
the stand-out performer while the finance division, which was on the block for a while at the end of last year and the beginning of this one, performed solidly in a tough operating environment.
Allbon has adjusted his earnings forecasts for the company to take into account the result, Goldman Sachs' latest views on the local currency and raw material prices.
Those factors knock about 3.6 per cent off reported net profit numbers for the next three years.
However, Allbon has reiterated his buy recommendation on the stock, based on the company's outlook for strong future earnings growth driven by new products and relocation cost savings, and "our assessment that FPA is undervalued at current levels".
Yesterday FPA closed at $2.30 while Allbon's 12-month price target is $3.
"We think, in time, buying at these levels will be rewarded," he said, "but investor patience is needed."
STRUTH RUTH
Last week it emerged that Ruth Richardson-chaired finance company IMP Diversified Fund had struck difficulties and was seeking a moratorium on repayments to investors.
IMP is the second finance company chaired by a former National Government Cabinet minister to get into difficulties in recent times, with Lombard, until recently chaired by Sir Doug Graham, the first.
Rest assured it's not just former National Party ministers getting into finance company boardroom bother - one of Graham's board colleagues at Lombard was former Labour Government justice minister Bill Jeffries.
Anyway, IMP, which is owned by Auckland venture capital firm I-Cap, and has about $16.5 million in investor funds, takes mezzanine debt positions "in a range of technology, biotechnology and healthcare businesses that are seeking to become export based".
It said last week that the weakening economy, the investor switch away from debentures, and the likely inability of its borrowers to repay on time would leave it unable to meet repayments to its own investors.
One of IMP's investments is ICP Bio, obviously somewhat constrained in its ability to repay debt, being in receivership.
Another is Brent King's Viking Capital, in which IMP holds an 8.9 per cent equity stake.
At June 30 last year, IMP said, its Viking investment was "impaired" by approximately $90,000. At November 30, 2007, it was impaired by about $700,000.
At that time Viking's shares were trading at 16c each, giving IMP's stake a value of $10.32 million. Yesterday they closed at 10c and IMP's stake was worth $6.45 million. Sounds like a significant further impairment.
IMP investors vote on the proposal on June 18.
VIKING HELL
Meanwhile, one of the reasons Viking's stock has been in retreat is, of course, its own significant investment in ICP Bio, but that's not the only sorry story in its portfolio, there's also Dorchester Pacific, the company that King himself founded.
King's mystifying strategy, if you can call it that, of badmouthing the struggling finance company while selling down Viking's stake in it has been well covered in Stock Takes over the last few months.
Dorchester itself did little to reassure investors last week, sneaking out its result at 5pm on Friday in which it revealed a net loss of $18.1 million, which was even worse than it had indicated in a revised profit warning a couple of weeks earlier.
The market appeared to be bracing itself for bad news from the company, and when the market reopened again on Tuesday, the news saw the company's shares move only as low as 38c which they had touched a couple of days before.
Yesterday, chairman Barry Graham said the timing of the market announcement was not a deliberate attempt at stealth.
"We had so many issues before us that it just took us right up to the wire to finalise matters. Late on Friday afternoon we were still resolving issues with auditors."
Those issues, said Graham, included provisioning and the St Laurence valuation.
Dorchester wrote down the value of its 25 per cent stake in St Laurence by $11.4 million and took after tax provisioning of $6.8 million on its loan book.
Graham said the company was now in "a sound liquidity position" with $183 million in receivables coming in over the next 12 months more than matching the $156 million in debenture maturities over the same period.
With the writeoff and provisioning, Dorchester's net asset backing is $1.12 a share, well north of yesterday's close of 40c.
MARKET ANNOUNCEMENTS
In a postscript to last week's Stock Takes item about New Zealand Exchange's decision to withdraw free-to-air real time access to company announcements or the information contained therein, local online brokerage Direct Broking has pointed out that the rest of the world - the US Nasdaq market at least - is moving in a different direction.
On Monday, Nasdaq launched a new service which gives access to free real time market data via a number of online service providers including Google, CNBC and the Wall St Journal Digital Network.
"With universal access to the internet and the real-time nature of the web, investors need real time data, and now they don't have to pay for it," said Nasdaq's Adena Friedman.
Direct Broking's marketing manager, Julian Grainger, believes that armed with the right information at the right time, retail investors are more likely to trade.
"They are more likely to understand, live with and alleviate the risks. And they are more likely to have a good experience and come back for more.
"It is not a difficult concept to grasp, giving retail investors timely information will spur further share investment."
Or maybe, says Grainger, increasing data revenue is more important to NZX than increasing its retail investorbase.
Given his contribution to Stock Takes this week, we reckon Grainger deserves something in return so we'll allow him to point out that Direct Broking customers, when logged in, can get market announcements as soon as they are released and it costs nothing to become a customer.
"If you join us, problem solved."
JACK-O'-LANTERN
Goldman Sachs JBWere analyst Rodney Deacon has made downward alterations to his earnings forecasts for children's clothing retailer Pumpkin Patch.
Deacon says the adjustments are to do with updated currency forecasts and trading prospects for the markets Pumpkin Patch operates in.
He reckons United States sales are likely to continue softening and the outlook is less than rosy in Britain.
In Australia and New Zealand, things have held up well with the company "outperforming wider apparel trends" but the slowing of both economies would inevitably have a more negative effec than previously thought. Most significant though, says Deacon, is its projected higher inventory and stock levels which are taking longer than expected to unwind.
This has seen Goldman Sachs reduce its full year 2008 and 2009 net profit forecasts by 15 per cent to $20.5 million and $24.5 million respectively and cut its discounted cash flow valuation to $2.06 a share from $2.52.
But Deacon says the changes are not out of step with what is happening with other retailers and says there is "considerable upside" on a 12-month view.
The revised valuation is still higher than the current share price of $1.71 and Goldman keeps its Buy recommendation.
DOLLAR DILEMMA
Picking the kiwi's key turning points is a mug's game, but you've got to have a stab.
Yesterday's easing bias in the Reserve Bank's statement was as good a reason as any, if not one of the best, to reach the conclusion that this is it ... the big one, the beginning of a substantial move lower that will deliver good times to the export sector.
The sharemarket appeared to see things that way with a number of listed exporters enjoying a bounce.
Fisher & Paykel Healthcare rose 14c or almost 6 per cent to $2.48 while Sanford was up 20c or 4 per cent to $5 and Rakon rose 7c to $3.26.
