BXB - Brambles Industries

[TheAbyss]

Brambles (now BXB) Is at an all time high at the moment. Any reasoning why? My interest is selfish in that I have some but would welcome some insight. Cheers



Admin Note: BXB was previously known as BIL. You can find the thread on BIL here: https://www.aussiestockforums.com/forums/showthread.php?t=2467

 

[TheAbyss]

Hi

Brambles (BXB) is looking like closing at a 3 year high today and i was wondering if anyone was able to do some TA on it and offer some thoughts?

 

[marc1]

Hi

Brambles (BXB) is looking like closing at a 3 year high today and i was wondering if anyone was able to do some TA on it and offer some thoughts?

Yep good day for Brambles holders abyss

Chart been tracking sideways for a while and then decided to bounce.

A week or so ago.Most of the price action seems to be centered around persistent take over rumours that have been talked about for months.

Better than expected profit results was also talked about in the weekend.

Papers may be contributing to todays rise.

Hope you're holding, good luck.

I'm a long term holder of this one, just dont know how long it will be in aussie hands.

cheers marc

 

[TheAbyss]

Re: BIL - Brambles Industries

Bought in @ 12.76 so pretty happy at the moment

I was in their Qld offices and was impressed with what they were doing so invested a little on the strength of it.

I have managed a few wins this way with a couple of Qld companies, ABS and QGC 2 of the more notable wins.

Glad i am in so shall continue to watch

 

[Halba]

Re: BIL - Brambles Industries

This takeover nonsense geting silly.

BIL's fundamentals don't stack up.

 

[TheAbyss]

Re: BIL - Brambles Industries

Would you be able to expand on that Halba?

 

[Buffettology]

Definately a company I am interested in and will be looking at closely over the next few weeks.

I am also interested to hear what some of the investors on here think about the share buy-back and its affect on price?

 

[imaginator]

What is happening to brambles? Prices have been sliding like a slide, its now only 10.88. I thought they were a good company with good earnings etc always. Was the price pushed too high before??

 

[Buffettology]

Brambles divested its unprofitable business units. How it stands currently, was expected to make 20% growth per annum over the next few years, with moves further through the Americas and Asia (mainly China).

Latest figures released was a growth of 11% I beleive, lower than expected, and hence the slide of its price.

 

[UMike]

They have been mentioned as a potential takover target for a while now.

Dose anyone still think this is the case?

 

[brendan87]

I doubt it. It's quite expensive for a start. From purely the fact that is has almost no debt - yes. However what would a private-equity LBO be able to squeeze out of BXB? BXB is already investing in efficiency and cost-saving initiatives - which have been pricesd into the SP already. It geographic spread is already extensive. It's a solid business - not a 'turn-around' story. The management are pretty determined to throw its spare cash into buy-backs and another 10% on-market buy-back is on the cards after the full-year announcement. Also has Maple Brown Abbott at almost 7% of the register which could, if history is any indication, stymie any less-than-generous bid. Perhaps a bid from a diversified industrial...? GE has eyed the company for years but I can't see any obvious (material) synergies. BXB is already quite a tight ship. But anything is possible.

 

[Buffettology]

It geographic spread is already extensive. It's a solid business - not a 'turn-around' story. .

Just from memory, dont have my etrade account open ATM, but I beleive the far biggest part of its business is in Europe. Whilst the Americas and Asia provide a MUCH bigger target. So it is geogrphically spread, but the splits could change dramatically and hence, it could be a "turn around story" I beleive, from the Brambles that so much was expected from years ago, but never acheived. Only time will tell, but for the moment, Im not holding any BXB, though at $11, I beleive a short-term position may be ok to take.

 

[Trader Paul]

Hi folks,

BXB ... making a V-bottom ... ???

..... will be alert for significant and positive news,
around 16082007 ... and figure BXB will be firing on
all cyclinders, in November 2007 ... particularly betwwen,
12-16112007.

happy days

paul



=====

 

[Awesomandy]

It has been identified that National Rail Consortium now holds almost 16m shares, and MS Corporate Services hold 1.6m shares. They are both subsidiaries of AIO.

It has also been revealed that TOL owns 5.1m shares in BXB as well.

This appears to have fuel speculations for a takeover (personal opinion) , and BXB sp is up more than 9% so far today to $12.44 on relatively high volumes of almost 21m shares changed hands as of 2:25pm.

I think this might be interesting to keep an eye out for.

disclaimer: I am a BXB shareholder.

 

[Buffettology]

I thought I read on BXB news (company announcements) that Asciano group is trying to takeover BXB. It was a real quick skim, but if its right, your personal opinion is far more than that!

I never buy on speculation of a takeover, only if its possible to gain returns through arbitrage once the takeover is a sure thing.

 

[ozambersand]

This is a post I did in another thread on Market Expectations back in June:
Recently three ASX200 companies (Caltex, Metcash and Brambles) have posted record profits showing growth, usually on par with their predictions but the share price has plummeted because some analysts said the results were below "market expectations"

Roger Collison, an analyst at Tyndall Investment Management, said the market had been expecting European CHEP growth of up to 6 percent. (Associated Press)

I emailed Brambles and asked them about it:

Me: "The analysts were expecting (apparently) a 5% constant currency increase (in Europe's sales). Has the company ever intimated that this was achievable? If not, where did they get this figure from?"

Their Investor Relations spokesperson responded: "We have indicated to the market by June 2008, we should be exiting the year at volume growth of around 4-6%, up from the 1H07 figure of 2%. Unfortunately, we have no control on what analysts use in their forecasts.

So are analysts unrealistic in their expectations?

Have brokers/analysts been talking the shares up with their clients?

Could it be a sign that the economy generally is slowing and these are the first indicators?

On a related but different note...

What is there to stop analysts making statements like this knowing/hoping that the price will go down, hence making it easier for their clients/mates to buy in for a future take-over? This latter comment is not saying that this is what the above analyst is doing, but many analysts work for companies (eg Credit Suisse, Deutsche Bank) that have divisions that either invest in these companies themselves or bankroll people that do?

In this scenario, what is there to stop an investment bank having one of their analysts making a negative statement (whether it is really justified or not), then another division of the same company selling off large amounts of shares, watching the price go down and then buying in lower down?

Particularly given that a sudden drop in price will result in many shares automatically being sold as their stop point is reached.

I would be grateful if I could get some insight into this as I am trying to understand the way the market (share-holders/buyers) react to these announcements (by the companies and the analysts) as they have such a huge impact on the share price.

So I am not surprised there are now new major stakeholders and wonder whether they were just taking advantage of the drop in prices or helped to cause it. To that end, I would be very interested in knowing which brokers the above companies brought their shares through?

 

[vishalt]

toll holdings

wow @ the 10% surge today, knew there was something fishy with the bounce for $10

..................

 

[Ken]

Brambles was pumped up massively in the papers this week. Price targets of $14 were floated around.

There was a couple of days in a row of this.

Be interesting to see the outcome.

 

[ozambersand]

Just a couple of dates to put it into perspective.

June 20 Brambles shares close at $12.63

After the market closes there is a flurry of shares (nearly $100 millions worth) doing cross trades around the $12.60 mark. (They knew what was coming????)

June 21 Brambles announcement:

Brambles expects good progress in profit and solid cash generation for the
year ending 30 June 2007.
KEY HIGHLIGHTS
• CHEP is continuing to perform well with further solid overall growth in
sales and profit:
o CHEP Americas is again delivering a strong performance in both
sales and profits;
o CHEP Europe’s sales growth for the 11 months to May was
slightly less than 2% with a small increase in profits; and
o CHEP Rest of World continues to deliver strong growth.
• Recall’s performance has continued to improve with stronger organic
sales growth and higher profits.
• Cash flow generation for the full year is again expected to be strong.
• Since December 2006, Brambles has bought back 142 million shares
(equivalent to 10% of the current issued share capital).
• Brambles will seek shareholder approval at the Annual General
Meeting in November 2007 to undertake further on-market buy-backs
of up to 10% of its issued capital.

Analysts criticise Brambles and express disappointment.

Opening auction @ $12.36 sees $770million shares sold.

Shares close that night at $12.08 after another $100 million dollars traded in the post market auction and another wack in overnight off-shore cross trades.

The next morning a stack of puts got exercised. Wonder who had them!

From then on the shares decreased while the major stock brokers shed crocodile tears that "the market" had over-reacted to the news and started to slap buy recommendations on to the stock. Contrary to what you would expect from that, the sellers greatly outnumbered the buyers and the stock fell further.

This is where Asciano and Toll started to buy in according to this report:

Brambles Limited conducts regular analyses of the underlying beneficial ownership of its shares.

In the process of undertaking such an analysis, National Rail Consortium
(Insurance) Pty Ltd (NRC) confirmed to Brambles last night that it holds a
relevant interest in 15,967,742 Brambles ordinary shares. ASIC searches have
identified that NRC is a subsidiary of Asciano Limited.

The shares are currently registered in the name of a subsidiary of Macquarie
Bank Limited, which has confirmed to Brambles that these shares were purchased pursuant to instructions issued since 29 June 2007.

Macquarie Bank has also advised Brambles that MS Corporate Services Pty Ltd
(MSC), also identified by ASIC searches as a subsidiary of Asciano Limited, has a relevant interest in a further 1,600,000 Brambles ordinary shares.

So it comes down to the chicken and egg problem. Why did the stock price dive so much. Was it "helped".

If this is true, then look out for the other cashed up companies that suffered similar fates recently after reporting increased profits only to see their share prices take a dive. (Caltex and Metcash etc) Maybe they will report new major shareholders in the coming weeks also.

 

[Nick Radge]

BOTTOM LINE
8/8:
EW Trend: Corrective
Price Trend: Up
Trend Strength: Strong
Broker Consensus: Intermediate BUY
25/7:
EW Trend: Corrective
Price Trend: Down
Trend Strength: Strong
Broker Consensus: Intermediate BUY


LAYMANS ANALYSIS
8/8:
VIDEO ANALYSIS (3 mins 5 secs)
Today's announcement that Asciano had acquired a small stake in the company seemed to create a trigger for Merger Arbitrage hedge funds (M&A). I'm not sure of the logic simply because Asciano does not have the financial wallop to mount any serious, in fact any, takeover of BXB. What this announcement does confirm though is the volume clues alluded to in the last review. The jump in volume back in late June was the initial instruction from Asciano to its broker to start acquiring shares. If Asciano is unable to mount any takeover, and if todays buying was knee-jerk from the hedge funds, then it would also suggest that the strength seen today may not be able to follow through. This is exactly what we anticipated in our late July review; a bounce toward $13.00 but then a failure. Todays high was $12.84 and volume was ultra high. We always need to be wary of ultra high volume and more so in this case if today's buying was indeed hedge funds. Hedge Funds tend to be "hot money", that is money that flows in and out of investments with ease with their only goal being profit. M&A funds attempt to ride the coat tails of takeovers and mergers. Back in the 80's it was called "greenmail" and portrayed by Gordon Gekko's in Wall Street. Hedge Funds of today have made an art of the strategy even to the point of attempting to preempt takeovers. The colourful Rene Rivkin was also a low caliber follower of the strategies.
25/7:
VIDEO ANALYSIS (3 mins 32 secs)
BXB did in fact slide through the target area. Again we see signs of buyers coming in right here and combined with various other technical indications we may start that bounce discussed in the last review. That bounce should take prices back toward $13.00 but is unlikely that we'll be on our way to new highs for quite some time. After this immediate bounce I would expect weakness to set in again. BXB may well be on course for an extended period of sideways activity between these kinds of lows and the major highs near $14.50. Many Brokers have downgraded their valuations back toward that same level from their more confident $15.00 levels seen a month ago. Volume has been very interesting again over the last few sessions. Monday was a low close within a reasonably range day yet volume was very small. This is a sign of supply being exhausted or not keen to chase prices any lower. Yesterday and today saw a distinct turnaround. Both sessions closed on their highs after earlier attempts in the day to move lower, and both did so on increasing volume. These combined with Monday's "lack of supply" points to a good probability turning point right here.


TECHNICAL DISCUSSION
8/8:
Our seasonal patterns did not let us down. True, I was not expecting this kind of a move, but nonetheless we were looking for a wave-B bounce to travel through to $13.00. With today's ultra high volume we can expect some kind of consolidation at these levels but I'd still be looking for another decline or at least further meandering below the major highs. The $13.00 level is reasonable resistance being old support for a considerable time before failing back in May. I believe this to be the wave-B bounce and would be looking for selling opportunities, although doing so would require the use of a GSL facility. Who knows who or what can be lurking behind this volume. It may well be someone bigger and stronger than Asciano and this announcement has been a trigger for them to act. Normally a wave-B will resolve itself in a 3-wave pattern, so we're yet to see it completed. I'd suggest some patience is required here.
25/7:
If you've been interested to know more about my new seasonal analysis then tonights video is a great example of how we align the seasonal patterns with wave counts and volume analysis. Yesterday shows a clear start to an upward bias in the stock on 3 different timeframes, namely 6-year, 12-year and 19-year. These three were used because I have 19-years worth of historic data that I can divide it into segments. We are essentially averaging the last 6-year, 12-year and 19-year data then overlay them together. Any strong alignments across all three offer a reason to think some kind of seasonal tendency is at hand. Then, when these also align with our Elliott Wave patterns and Volume analysis, we can build a stronger story for the stock. In this case we have a strong seasonal period lasting until August 20, which according to our Elliott Wave count will most likely be the wave-B bounce. We've fallen in a clear 5-wave pattern, we're seeing some signs of buyers coming in, so we now have final confluence by way of the seasonal pattern as well. Looking at the weekly chart of BXB, we could have further scope for a much deeper wave-C to come, but we'll assess that in due course. For now I highly anticipate that we're about to embark on the wave-B bounce which an aggressive trader could pursue. Obviously any sustained break of the yesterdays lows would invalidate the count.