GTP - Great Southern Plantations

[Duckman#72]

was teh annual result above ro belwo expectatiosn u think?

thx

MS

Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 41.7 48.6 58.1 63.8
DPS 14.0 19.0 24.0 29.0

Pretty close to what was expected in my view. Still handy EPS.

Regards

Duckman

 

[Jackob]

was teh annual result above ro belwo expectatiosn u think?

thx

MS

Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 41.7 48.6 58.1 63.8
DPS 14.0 19.0 24.0 29.0

Revenue 63% up
Finance costs 380% up
Profit 5% up
Basic e/s 5% down

Can't handle why these numbers would swing from one extreme to the other.

More insto down gradings will follow.

 

[michael_selway]

Revenue 63% up
Finance costs 380% up
Profit 5% up
Basic e/s 5% down

Can't handle why these numbers would swing from one extreme to the other.

More insto down gradings will follow.

Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 41.7 46.7 54.7 58.1
DPS 14.0 16.5 19.0 22.0

Basically i think its goign up atm, beacuse it went down too much when i was $4 to $2.2, but it was only 10% below expectaions in EPS it turned out

"The profit result translates into basic earnings per share for the year of 43.78 cents"

thx

MS

 

[Jackob]

Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 41.7 46.7 54.7 58.1
DPS 14.0 16.5 19.0 22.0

... it was only 10% below expectations in EPS it turned out

"The profit result translates into basic earnings per share for the year of 43.78 cents"

Hi Michael,

The e/s forecast figures you quoted above from CommSec are not the "basic e/s", but are all "diluted e/s" calculated with a method which is more strict than that used by GTP itself. For example, the GTP 2005 e/s Comsec used above is 41.7c, 0.55c lower than GTP's own diluted 2005 e/s of 42.25c.

If we apply the same 0.55c deduction to GTP’s own diluted 2006 e/s of 41.56c, this year's diluted e/s result should be 41.01c in ComSec's view. The brokers consensus prediction 46.7c is ~14% higher.

Behind the disappointing e/s figure, more seriously is the increase of bank debt of $465m, or say $1.50/s, in the past 6 months. The new bank debt will pull down GTP's e/s by ~$0.12 per share per year. This will in turn reduce the value of GTP by $1.50/s based on a discounted-cash-flow calcution. This is why we may say more downgradings for this stock are on the way.

 

[Portfolio]

Taking on $1.50/share of bank debt will only reduce the company valuation by $1.50/share if they blow the lot at the track.

I think it is a good move taking on debt as it will stop the equity raisings. Look at TIM's bank debt and PE. The market has been rewarding them and discounting GTP for their capital structure.

 

[Jackob]

Agree, GTP and TIM are a bit different.

This year GTP's bank debt exploded from nil to $465M ($1.50/s), which is even bigger than its whole sales revenue, while TIM only issued $90M unsecured notes equivalent to 33c/s. No wonder the market would react accordingly.

 

[Portfolio]

Good to see Colonial First State is buying the stock. After yesterdays briefing i didnt think they would be a buyer of the stock but the price and earnings must have been too tempting.

This stock can be hard to exit as well so they must have faith in the longer term prospects.

 

[michael_selway]

Agree, GTP and TIM are a bit different.

This year GTP's bank debt exploded from nil to $465M ($1.50/s), which is even bigger than its whole sales revenue, while TIM only issued $90M unsecured notes equivalent to 33c/s. No wonder the market would react accordingly.

Yeah thats true, that Debt is a worry

Would you favor GTP or TIM now at current prices?

thx

MS

 

[Jackob]

Hi Michael,

In a long-term, both are bad, but GTP is worse.

In a short-term, I've no idea.

 

[Out Too Soon]

Re: Great Southern Plantations

Look guys, anybody can say a stock is no good when it's heading south.

Most of you guys are short term orientated and I don't really see the point in continuuing posting if there is no intelligent comments on the stock.

In five years I've gone from zero to a dividend stream of $150,000 to $200,000 a year with a house thrown in so I am not taking lessons from people like you Bunyip.

I wish you all well but I'm off to live in Asia in a couple of months to live off my investments so will not be posting here anymore.

I'm sticking with my philosophy coz it works. Good luck with all your short term buys.

Lets see if you guys can retire at 35 with your philosophy.

Onya Abucs where ever you may be I'm green with envy.(no green w envy smileys avail at present)
As I noted in July I'm waiting for the doomsayers (Good work Bunyip! & co), to do their bit and I'll be back in. GTP is a stock for patient investors. GTP is borrowing for further expansion, meaning eventually higher sp again, I wonder if the knockers will still be making comments on this thread in 8 mths time or feeding me humble pie.

 

[bunyip]

Re: Great Southern Plantations

Onya Abucs where ever you may be I'm green with envy.(no green w envy smileys avail at present)
As I noted in July I'm waiting for the doomsayers (Good work Bunyip! & co), to do their bit and I'll be back in. GTP is a stock for patient investors. GTP is borrowing for further expansion, meaning eventually higher sp again, I wonder if the knockers will still be making comments on this thread in 8 mths time or feeding me humble pie.

Doomsayer my foot! Get your facts straight mate, I made no forecasts about the future of GTP, I simply said that the stock was in a downtrend, and if it ever started uptrending, that was the time to buy it.

Bunyip

 

[pacer]

Watching with interest.....hehe always a bit of conjecture here .....buy low sell high...waiting for a bottom then buy long, short term till a down, if there is one then buy again at the bottom............could do a rinker though.......beware!!!!!!!!

 

[pch]

While I have absolutely no doubt that GTP share price is the reason that they are changing to debt rather than dilution, I had a look at some recent announcements to understand this loan more.

So first up it is structured that in 2012, GTP repays $258odd million from a borrowed amount of $215mil. Of this, $140 million is actually used to fund the business.

There is no impact on cashflow until 2012 because some $70mil is used to purchase an annuity based debt instrument to deal with interest. Then in 2012 they can refinance this debt or pay it out..

Seems they have picked 2012 because if you believe them, this will be the biggest year for land rotation, which supposedly saves them $350mil in capex for that year. So if you believe that, then it seems on the surface they have plenty of room to pay out the debt in 2012.

But those figures assume a "second Tiwi rotation", which I haven't looked into. If their figures are believable, then if they could pay this loan out without a major cashflow impact, then the years thereafter would benefit greatly.

Anyway, I'm certainly not a GTP bull, but I'm not as bearish as Jackob. Unlike many industries, these assets are finite in the sense that a competitor cannot just come in create a faster, new model and will not lose value (like building a car factory of buying new planes).

I haven't yet gone back and reexamined the level of dilution that has happened over the last 5 years, but one would need to do this, to see how outlandish this debt instrument is in relation and how likely it will be that they need to do this all over again in a couple of years..

regards

P

 

[Portfolio]

Buy this stock before the MIS announcement. It will rocket up and then the traders will wade in and push it higher. Look for a $3.50 exit.

 

[michael_selway]

Buy this stock before the MIS announcement. It will rocket up and then the traders will wade in and push it higher. Look for a $3.50 exit.

when is the MIS annoucment? what isit about?

thx

MS

 

[Portfolio]

The reason this stock has been hammered or rather that it consistently trades on such low multiples is its earnings arent seen as sustainable. There is a belief that govt will change the laws that govern their investments which might reduce their tax effectiveness or popularity.

There is no date for a final announcement but the govt is debating the issue at the moment.

The point is the stock will rally no matter what the announcement. If it upholds the laws the stock rallies as its earnings are "sustainable".

If the govt makes a small change to appease the farmers but wont really change the earnings the stock should also rally.

If the govt axes the laws analysts will focus on the NTA of this company and value it as an asset play and the stock should rally.

 

[Duckman#72]

There is a belief that govt will change the laws that govern their investments which might reduce their tax effectiveness or popularity.

There is no date for a final announcement but the govt is debating the issue at the moment.

I agree Portfolio. The interesting point has been the level of support that the MIS's have had through some of the MP's. There seems to be some strong opponents but some equally strong supporters.

Great Southern seem to be one of the leading players lobbying the MP's. If they can just tweak some of the rules relating to the cream that financial planners get maybe thew Govt will walk away with only some minor industry rule changes.

Duckman

 

[Julia]

The reason this stock has been hammered or rather that it consistently trades on such low multiples is its earnings arent seen as sustainable. There is a belief that govt will change the laws that govern their investments which might reduce their tax effectiveness or popularity.

There is no date for a final announcement but the govt is debating the issue at the moment.

The point is the stock will rally no matter what the announcement. If it upholds the laws the stock rallies as its earnings are "sustainable".

If the govt makes a small change to appease the farmers but wont really change the earnings the stock should also rally.

If the govt axes the laws analysts will focus on the NTA of this company and value it as an asset play and the stock should rally.

I'm happily out of GTP these days but my interest rallied when I heard Bill Heffernan talking about the basic unfairness of MIS businesses on the ABC's "PM" programme this evening. Heffernan is a farmer and I think we shouldn't underestimate his influence within the government. He is one of John Howard's closest friends and advisers.

If the tax ruling was changed, rendering GTP less attractive to high earners, I can't believe the outlook for the SP would be anything but negative.

Julia

 

[Sultan of Swing]

Hi Portfolio

You seem to have a bit of insight into GTP and this type of company. I also couldn't help but notice that out of the 10 posts you've made on this forum, 8 have been in this GTP thread.

Do you mind if I ask you if you have any closer or larger interest than perhaps being just a share holder?

Cheers
SOS

NOTE: I'm a small time investor and have held a few GTP for about 12 months which are currently worth less than the price I paid for them. I'm debating whether to hold or take a loss and get on with it.

 

[Portfolio]

I do have some added insight in that I use their products for my clients. Therefore I get to see mgt when they come to town and get to do site inspections annually with large clients.

Part of the research process for their products is understanding the company as this is the biggest risk factor with MIS fund managers.