GTP - Great Southern Plantations

[Jackob]

If the ann is potentially bad, then it might be a chance to take profit before it happens? As I recall last time people thought they werent true figures - as they suggested huge profit increase but didnt count for the massive debt increase too. So it wasnt as positive as made out to be..

Hi Barnz2k,

Last year GTP's announcement "2006 Sales Increases 30% to $458 million" (29/6/2006), pushed GTP share price tumbling $1+ from ~$3.40 to ~$2.30.

Hard to think what would happen if this year's sales increase would be anythig less than last year’s number 30%. Financially GTP is more difficult now – its debt reaches $2 per share from near zero less than 2 years ago, which needs 20c+ per share every year to be serviced.

 

[Portfolio]

Hi Jacob,

My sources tell me its not great. Cattle was a big hit (and the market already knows this) but:

Grapes, Almonds, Olives all a flop (although you will get the positive spin from the company). Forestry obviously still open but they will struggle to get to the same level as last year.

However i dont think GTP will get the hammering it did last year as the share price is trading on takeover spec rather than fundamentals.

 

[barnz2k]

Hi Barnz2k,

Hard to think what would happen if this year's sales increase would be anythig less than last year’s number 30%. Financially GTP is more difficult now – its debt reaches $2 per share from near zero less than 2 years ago, which needs 20c+ per share every year to be serviced.

Wow. I didnt even see that one (I was travelling at the time). I would have been crapping it haha. Hope it doesnt do a similar thing this year.
I just re-checked and I bought in at 2.98 so as of this second im still actually slightly down.. Not even a profit to take! I thought id bought in cheaper than that..

Wonder what will happen IF IT DOES get taken over?!

 

[Jackob]

Hi Barnz2k,

Wonder why you would suddenly change your idea from "taking profit" to "buying more" within 24 hours!

"what will happen IF IT DOES get taken over?!"

I reckon not much. GTP sp has risen 50% from ~$2 to ~$3. The "takeover" effect has been factored in already.

The more important question now is “WHAT IF GTP will NOT get taken over?”

Wonder last year's after-June-30 drama won't replay again?

Comparing today’s situation with last year, GTP's real value should have shrunk due to

(1) Impending Govt regulation changes to wind up non-forestry MIS;

(2) Gov't enforced forestry MIS secondary trading targeting practices such as GTP's "topping up”;

(3) GTP's debt more than tripled to $2 per share in one year, and its earnings per share dropped.

So what else you would you be expecting?

 

[barnz2k]

Hey
I meant I thought that when I original bought in the stock I thought I bought around the 2.8 or less mark - not 2.98
So i dont want to buy more just that I have no profit to take. So either sticking with it or selling - definitely not buying more!

Actually I bought this stock with on a friends advice - who helped me enter the market in the first place - I trust him and his dads opinion as they have done well in shares and more.

But after 1.5years Im back to where I started!

Ive thought about cutting another stock for not moving after a few months..

But GTP is always moving at will and if anything interesting to watch haha.

So if the takeover fails (or doesnt exist?!) and ann isnt good - could be problems. could drop back to $2 or less, and sharp.

 

[Jackob]

Hi barnz2k,

I am glad that you didn't buy GTP at $2.98. The present price is $2.44, more than $0.50 down!

I am not too surprised at such a downfall. Just quote a bit of what I said on 28/6/2007.

Last year GTP's announcement "2006 Sales Increases 30% to $458 million" (29/6/2006), pushed GTP share price tumbling $1+ from ~$3.40 to ~$2.30.

Hard to think what would happen if this year's sales increase would be anything less than last year’s number 30%. Financially GTP is more difficult now – its debt reaches $2 per share from near zero less than 2 years ago, which needs 20c+ per share every year to be serviced.

Now GTP has announced that this year's sales was not up, but down by 9%. Still too hard for me to think what would happen to the GTP price in the coming weeks.

 

[barnz2k]

I was close to selling while it was still at 2.90 and only taking a small loss, but I didnt watch it closely enough to sell before it got too low.
Still dropping slowly and now at 2.41, so Selling now means losing about 20%!
hopefully takeover will happen and boos it back up, at which point i may sell.

I know I should already have had stop losses set etc, but I havent sold a single stock since I started in shares, hasnt been that long.

I should set some now on others so i dont lose any more!

 

[Kat82]

Kudos to Jackob for highlighting the annual sales in advance. Trouble is even I took notice, just didn't take action, thinking that there shouldn't be a dramatic drop given the takeover rumour. This forum has quality analysts

 

[ozambersand]

I also am extremely grateful to Jackob and others for alerting me to the market's reaction in the past to "good" sales figures.

I had bought a stack of warrants at $2.30, so was sitting on a nice profit when they went up to $3. In some ways I was loath to sell as I thing long term it is a good concept, particularly if they get into carbon trading.

However, I checked their site on the weekend of 30th June and saw they didn't have "sold out" signs on their plantation and hardwood sales so took the hint and sold for a nice profit.

If it goes back down to $2 and starts and all the indicators are there (eg climbing again, good volumes) I will probably buy back in with the profit so I have free shares!!!!!!!

So, many thanks again guys!

 

[Jackob]

Thanks for all your praises. My pleasure to do anything useful for members of this forum.

As many may already know, I have been holding negative views against GTP for a long time, but I usually withhold my full views to avoid conflicting too much with others.

Return to the topic of the GTP price slump, which has now continued for 8 consecutive trading days with a total drop of $0.63 from $3.00 to $2.37. My view is that more has to go in the coming days/weeks/months.

If say last year GTP’s "2006 Sales Increases 30% to $458 million” announcement trigged a $1.00+ price slump in the next 12 consecutive days, then this year's “sales drop 9%” announcement won’t be any better.

If last year's “sales increases 30%” caused only a small drop in e/s, then this year's “9% sales drop” would, I reckon, at least make e/s be halved (from ~40c to ~20c or under) and dividend be cut or even omitted.

 

[savtin]

Jakob,

You are forgetting one major issue this time around. The corporate activity. i.e. the possibilty of a takeover.

I personally was lucky and sold most of mine at $3.00 as i didn't want to be in when they announced their results as i have seen what the market has done to them before. I did keep 5000 of them for the takeover possility and was suprised at the rate of decline.....sold my last parcel for $2.58 and was happy as I bought when the stock was at the $2.0 level...can't complain.....

however I do have a mate who has heaps of them and when I suggested he sell half prior to the sales announcement he said NO....and it was soley based on the fact that he felt a takeover was immenant and that it was the driving force behind its recent rally from $2.20 up to $3.00...................so when GTP announceed that there were at least another 2 companies interested in them , he felt he had made the right decision.......................he has lost a little confidence since then but understands that it may just be one fund manager getting our big time and hence has been dictating the recent weakness..............................he still hopes that a takeover will happen..........................................they do have great assets...........and I think that you are forgetting that in your valuation of them......


so he continues to hold ..........for his sake I hope a company makes a bid for GTP north of $3.00.

 

[barnz2k]

I Hope the same, that a takeover happens and pushes them upto around $3 again, and if it happens il set a stop loss so I cant go below 2.90 again!!

Is it possible to set up a stop loss that only happens after it goes over a certain price?? EG: once it gets over 2.95, a trigger happens so if it goes under 2.90 again it sells - but I cant set it now beause its already under 2.90.. does that make sense?

i trade with SGB directshares if it matters.

cheers guys.

(I should have acted on Jakobs advice as I had planned to!)

 

[Jackob]

Jakob,

You are forgetting one major issue this time around. The corporate activity. i.e. the possibilty of a takeover.

Hi savtin,

There is a possibility of a corporate activity or takeover, and I do have taken the it into account, but this possibility is quite small. Just as GTP said in its announcement, “There is no certainty that any definitive proposals will be received at any future time. Shareholders should continue to draw no inferences on the likelihood of any definitive proposal eventuating or the possible pricing of any definitive proposal.”

… I do have a mate who has heaps of them and when I suggested he sell half prior to the sales announcement he said NO....and it was soley based on the fact that he felt a takeover was immenant and that it was the driving force behind its recent rally from $2.20 up to $3.00...................so when GTP announceed that there were at least another 2 companies interested in them , he felt he had made the right decision.......................he has lost a little confidence since then but understands that it may just be one fund manager getting our big time and hence has been dictating the recent weakness..............................he still hopes that a takeover will happen..........................................

so he continues to hold ..........for his sake I hope a company makes a bid for GTP north of $3.00.

This is a sad story indeed. The problem of this guy was that he had grossly overestimated the possibility of the “takeover” at a wishful price and didn't think of what if this "takeover" failed. And he didn't set a stop-loss.

 

[CanOz]

Interesting chart. So many stocks lately have suffered a similar fate, but this one however to me, is different. Most stocks have exhibited some buying within the selling, absorbing the sellers. This does not look to be the case though, only today was thier any interest, and only from the selling starting to dry up.

Thier has not been a major selling climax in this stock yet in my opinion. Unlike like others (INL).

For a another company to make a play for this, they would need to own the minimum amount, and that king of volume buying should show up.

Also interesting that it came back to fill that last gap too

Cheers,

 

[Bongo_Boy]

Sold out again at $2.85. This stock looks to be a great one for large quick gains (or losses).

My general (uneducated) view is that overall it is still on the way down but if history is any guide there will be at least one more opportunity to profit from a reversal, at the right time.

Well done Savtin on your trade !

I agree with your comment about the assets. It just depends on what price you (or a potential takeover party) values them.

Not sure if the carbon trading will be significant. From overseas markets there seems to be a general price of $20 per carbon tonne.

I think with the absorption of carbon in a typical (or pehaps 'average' is a better word) eucalypt forest, this would equate to an extra $100 million for a 35,000 hectare planting. Of course, if there is a takeover, a private equity marketing could create the impression that the carbon trading component would be more significant than it actually might be.

But then as Portfolio says, the underlying ability for the woodlots to make a profit has not been established and hence should be front and centre of any thoughts.

However, with the woodlot investment price remaining the same and the price of wood constantly increasing, it would seem that later woodlot investments will do better just from this inflation factor alone, independant of any (claimed or otherwise) increase in growing technology.

I'm looking at a future price of $2 if no takeover announcement is made in the next couple of months.

A positive announcement could bring the price back up to $3 (obviously depending on the terms).

A negative announcement could decimate the stock and create a great buying opportunity due to the assets Savtin has mentioned.

This stock is never boring.

 

[Jackob]

... Thier (there) has not been a major selling climax in this stock yet in my opinion. ...

I agree with you, CanOz, this selling storm hasn't reach its climax yet. Far from over. The sellers' queue is still 2-3 times as long as the buyers ( in the "market depth").

 

[barnz2k]

I agree with you, CanOz, this selling storm hasn't reach its climax yet. Far from over. The sellers' queue is still 2-3 times as long as the buyers ( in the "market depth").

this is probably a really dumb question, but Ive dont actually know.

When you sell a stock, does there need to be a buyer willing to take it? Or does the company simply 'buy' it back from you.
I understand if you want to buy there may need to be a seller as there are only so many stocks available, but the other way??
ie: If a stock is on 100% selling spree by everyone that no sane person would buy, is it difficult to sell the shares?

 

[CanOz]

this is probably a really dumb question, but Ive dont actually know.

When you sell a stock, does there need to be a buyer willing to take it? Or does the company simply 'buy' it back from you.
I understand if you want to buy there may need to be a seller as there are only so many stocks available, but the other way??
ie: If a stock is on 100% selling spree by everyone that no sane person would buy, is it difficult to sell the shares?

Short answer is yes, there must be a buyer if you want to sell.

The question is, are you (or whomever) willing to sell at the price they want to buy? If yes, and their price is lower than the last trade, then prices drop.

Prices can drop quickly when there are no buyers at certain price levels.

Opposite goes for when there are no sellers, you must 'pay up' for the stock.

Your just starting to nick the edges of supply/demand. When the penny drops it opens a up a whole new world.

Cheers,

 

[barnz2k]

Thanks Canuk! Good summary there just what I was after.
Makes me understand a little better about how buyers and sellers affect the price too.

Cheers

 

[Nicks]

GTP had a strong about face today... interesting.

Perhaps there will be an update to the cryptic news last leaked out to us on June 12 about a takeover.

Interestingly in a more recent release the company confirmed that there were now multiple interested takeover parties didnt they? I guess this is what the market likes as it opens up the prospect of not just a takeover offer, but a quality takeover offer as a quality price must be offered to secure it if there are multiple bidding parties competing. Mmmmm just what we all like (if we hold shares).