GTP - Great Southern Plantations

[pch]

Maybe its the Jim Beam I've been drinking tonight talking, but I see some parallels to iiNet here (stay with me here

They have gone through extroadinary growth and have acknoweledged increased costs and complexities of running the business. What we don't know yet is whether they make the same mistakes as iiNet and don't improve their 'business processes' along with the investment in tools and technologies required by their growth.. Many, many companies stumble at a certain 'critical mass' because management simply lack the experience in dealing with that critical mass.

I used to work (as of today for a company that went from 3-100 staff in 4 years so I directly know all about immature business processes

I think personally iiNet is a classic case of management not coping with the transition of the business from small player to 2nd or 3rd largest ISP in Oz..

Back to GTP.. So even based on a presumption of overrated management (and most management _is_ overrated), $4 to me is a reasonable figure. Perhaps the market is not convinced on the ability of management to deal with the complexities derived from an increasingly diversified business?

But.. I think if you presume that management do reassure the market that they can manage this transition of focus, and the government doesn't screw with things taxwise, the raw numbers still look great..

 

[savtin]

Hi Julia,
Don't get me wrong Julia, I still value the company highly. It is not everyday a company can boost 180 % growth in sales. What i am pissed off with is that the market ---which collectively prices the company (in the short term)........... just doesn't agree with my own assessment.

I am not about to wait to see the companies share price drop or end up in the doldrems like it did for the last half of last year..........I'll want a shift in price momentum and hope that market sentiment changes.

regards
savtin.....

p.s it seems the company needs to communicate more effectively there business strategy to the market because the market is hearing but not listening.....

p.s.s i guess i am starting to sound like you probably did just before you decided not to let emotions rule your investment/trading strategies.

p.s.s.s well this has been a lesson to me..............NEVER FALL IN LOVE WITH A COMPANY.....well i have certainly learn my lesson hard....believe me it was absolutely heartbreaking to see the stock price move counter to what i was expecting after reading there sales report......i thought anything over 130 would be absolutely fantastic and whoooo $143 million........i couldn't believe it......then to see the selloff............................ah well........

 

[TheAnalyst]

Hi Satvin

It is a disappointment but remember it has a per of 8.....so no real concern but an increase in the divvie would really help.

 

[suhm]

makes you wonder what sort of figure they were expecting cause 180% increase in revenue for a company with a per of 8 is fantastic to me or maybe the comments about the plantations was a bit worrying who knows

 

[abucs]

http://www.abc.net.au/news/newsitems/200606/s1664609.htm
http://www.wabusinessnews.com.au/en-story.php?/1/39766/Today-s-business-headlines
http://www.wabusinessnews.com.au/en...hern-raise-143m-in-agribusiness-project-sales

Say $500 for each cow and 12,000 hectares of timber land at $2,500 is around the sale price of $53.5 million.

The Mitchell river goes through the property and deposits trillions of gallons of fresh water each year into the sea at the Gulf of Carpentaria.
So with the ongoing cattle business, plant and equipment, personell, room for irrigation works and dual use of land for timber it seems like a good deal to me.

Also if 20,000 of these cows can be used in the next couple of years in investment droves, this will raise $25 million in of itself.

I think some reason for the shareprice drop is the flagging of a company imposed ceiling on timber plantation sales of 35,000 hectares and also the talk of increasing debt and creating a land fund raising. As mentioned before, i believe it's all about cashflow and have no arguements with any of this.

 

[savtin]

Hi Suhm and Analyst,

Capping the plantation sales to around the $310 million mark will be a good thing , less capex required required especially until they get their rotation going........their aim is to grow the non-forestry to the same level i.e. $310 M which would be $ 620 million in total within 2 years....after that they intend to expand their income projects .........this will lead to a large ANNUITY revenue which they can then increase their dividend substantially to at least 75% which should then equate to about 35 - 40 cents per share ............ during this transition the company is hoping that the P/E will shift to the norm of 12-14 -----------a share price of $7-$8 with a grossed up yield of 7% not bad..............................the problem is: that is the objective ..................however the market has only to realise it.

 

[TheAnalyst]

Hi Satvin

See...now your talking sense friend......this company is on track to become a permanent member of the top 100 - 50 asx companies in the next 2-3 years and based on great fundamentals and stable earnings and growth.....and in bad times presently being set up to ride different economic cycles and retain divvie payout....this company is not like single commodities stocks and I.T. companies that rely on a single cycle or product such as sen, mgx, bdg and others.....if the share price falls another 10% that a per of 7.2 and how can that be justified when forrest Australia trades at a per of 8 and gunns at 12.......just beware and dont be nervous of the volitility at the moment...its just shaking you and there is no profit downgrade as well......i must admit i trade the stock regulary but i am also aware that this thing can shoot up so fast with great unpredictability and leave me behind so i am very careful and always hold some just in case.

 

[Julia]

The following is from FNArena today:

GTP - GREAT SOUTHERN PLANTATIONS LIMITED
Macquarie rates the stock as Downgrade to Neutral - The analysts have downgraded their recommendation on the stock to Neutral as they are worried about the increase in the cost base and in capital expenditure.
They expect the stock to remain volatile as many cost factors are out of its control and due to the fact that sales are concentrated in the month of June.


Julia

 

[savtin]

Gees I am glad I got out of this at $3.80 - $3.83 on Friday...with a nice profit.

I still believe in the longterm picture and will be back when senitiment turns. To many uncertainties in the SHORT term....very pleased with their sales results. I knew when they were considering capping the timber sales the market might respond negatively....pain now for longer term gain.

Will definatley be back when tide turns..........and it will i am certain.
Great stock fundamentally. Technically it looks worrying...........I hope $3.20 holds I truly do.

Regards
Savtin

I

 

[michael_selway]

Gees I am glad I got out of this at $3.80 - $3.83 on Friday...with a nice profit.

I still believe in the longterm picture and will be back when senitiment turns. To many uncertainties in the SHORT term....very pleased with their sales results. I knew when they were considering capping the timber sales the market might respond negatively....pain now for longer term gain.

Will definatley be back when tide turns..........and it will i am certain.
Great stock fundamentally. Technically it looks worrying...........I hope $3.20 holds I truly do.

Regards
Savtin

I

Hi yeah i was out too at 3.80 a while ago, its 3.11 atm as we speak

if it goes down to 2.5 might be a good ST buy

Btw satvin what do u think of TIM? it seems to be doign well

thx

MS

 

[TheAnalyst]

The following is from FNArena today:

GTP - GREAT SOUTHERN PLANTATIONS LIMITED
Macquarie rates the stock as Downgrade to Neutral - The analysts have downgraded their recommendation on the stock to Neutral as they are worried about the increase in the cost base and in capital expenditure.
They expect the stock to remain volatile as many cost factors are out of its control and due to the fact that sales are concentrated in the month of June.


Julia

Macquarie did the down grade last year and got it wrong...they downgraded it to a sell....so now they are downgrading it from a sell to a neutral...isnt that an upgrade????????.....macquarie seems to have schitzophrenia and can never seem to make up its mind or is it they dont have control or are so big they dont know what each other department is doing??

 

[michael_selway]

Macquarie did the down grade last year and got it wrong...they downgraded it to a sell....so now they are downgrading it from a sell to a neutral...isnt that an upgrade????????.....macquarie seems to have schitzophrenia and can never seem to make up its mind or is it they dont have control or are so big they dont know what each other department is doing??

The thing i dont like about Maquarie sometimes is the bias towards stocks they have underwritten or lent money to etc etc

eg HSP and GTP comes to mind

thx

MS

 

[TheAnalyst]

Have they downgraded gns and fea and a list of others as well??? lolol

 

[TheAnalyst]

Well i will be.....lolol.....guess which installment warrant and all 20 million expire on the 30 June 2006...GTPIMR and guess who was the issuer???non other than our friends MACQUARIE who downgraded gtp to a sell last year then came back and downgraded it to a neutral from a sell(upgrade)...still never published that they all of a sudden had upgraded it from a sell to a buy at any stage inbetween....leave it up to u's to decide.....


GTPIMR
Description: MACQUARIE 275 GTP INSTALMENT WARRANT 29-JUN-06
Type: Call warrant
Issuer: MACQUARIE BANK LTD.
Commenced Trading: 25 Oct 2005
Expiry: 29 Jun 2006
Exercise level: 2.750 (expressed in $ or index points)
Warrants per underlying instrument: 1.0000
Exercise style: American
Warrants issued: 20,000,000

Download the Product Disclosure Statement 539KB*

*PDF documents require Adobe Acrobat Reader.
Supplementary disclosure documents will appear at the front of the main document.


Ex Price amended from $2.50 to $2.75 on 8/12/05.

 

[abucs]

Hi Analyst.

yes i have been thinking about this also.
If you look at my post #135 on 6 Jan, nothing seems to have changed -

"TheAnalyst, how do your hot warrants work ? Is there any incentive for the institution to keep the price down as they expire, or would they prefer a higher price ? I noticed that the share price dipped a couple of weeks ago when the warrants expired just before the latest rise."

I wish i had the power to control stock prices and get all the sheep to put money in my pocket. Look at the buying being done now after the bell. A few extremely large buy orders and lots of smaller sell orders.

As for whether Macquarie is right or wrong with its analysis i refer you back to my posting #223 on 6th March.

 

[abucs]

http://www.abc.net.au/news/newsitems/200606/s1665934.htm

 

[TheAnalyst]

Re: Great Southern Plantations

The Macquarie Bank analysis on GTP's website explains much of the nature of the business and especially cashflows. It is dated 8th December but the only thing that has changed since that date is another 50% plus increase in revenue. It's good to read independent analysis of the company but everyone should have their own idea on what a company is worth.
For example, Macquarie previously said GTP was worth high $3 mark and then $2.80 and then $3.80 and now somewhere between $4.10 and $4.34 or so. The market reacts each time while the underlying business stays much the same. I remember when GTP went down to 35c and there wasn't one broker who recommended it, but quite a few that put out the big STAY AWAY and AVOID signs. Then when it went on the big meteoric rise they were all telling us to get on it and how a stock like this "comes along only once in a generation". I think the latest weakness is to do with the cashflows and the impact of this on paying dividends. GTP in its latest presentation has capital management and cashflows as their main theme which is a comfort to me. I am happy to hold on the underlying strength of the business and have bought more in periods of weakness.

Spot o abucs.....no profit downgrade.....company managed well and on track to grow......warrants at expiry like last time....buying was as strong as the selling at the end of the day.....fundamentals have not changed......same time same bat channel.....

 

[TheAnalyst]

I was thinking that we as shareholders can take a class action against the directors of GTP if they continually donot pay a reasonable dividend especially when the directors are able to do so as it is continually profitable...we can use the Sanford v Sanford courier Service Pty Ltd common law case where the company has consistently been profitable but has not paid an appropriate dividend and the court ruled that this was oppressive to the members.

We can first get 5% of current shareholders who want an increased dividend and let the directors know and the directors will have to call a meeting of shareholders to put forth this special resolution and if the directors refuse then they will finally have to put forth the reasons why the dividend payment is always maintained so low when it does not have to be and from their we can take the class action.

 

[Julia]

Macquarie did the down grade last year and got it wrong...they downgraded it to a sell....so now they are downgrading it from a sell to a neutral...isnt that an upgrade????????.....macquarie seems to have schitzophrenia and can never seem to make up its mind or is it they dont have control or are so big they dont know what each other department is doing??

Analyst:

I didn't say it was Macquarie who issued that forecast. I can't remember who it was now. All I said was that it was part of today's FN Arena's Broker Call. I may have been Citigroup, not sure, but I am sure it wasn't Macquarie.

I sold my remaining shares today. Traditionally this has been the best time of the year for MIS stocks.

Savtin

Congratulations: you seem to have broken off your devoted relationship with GTP! (I mean that genuinely, not sarcastically as it may sound).

Cheers
Julia

 

[Jackob]

Julia, Analyst,

Both of you should be congratuated! GTP is going lower and lower and lower ...