GTP - Great Southern Plantations

[Lachlan6]

Re: Great Southern Plantations (GTP)

I used to own GTP. bought in at 78c and watched them rise up to $5 before i offloaded some at $4.8 and the rest at $3.55. interesting stock to watch. it really has been punished, maybe unduly so if you look at the fundamentals of this company. maybe a little nervouseness around the stock. Amazing to see how well it seems fibonacci supports are working again. 50% retracement level from run up mid 2002 to early 2005 at $2.75, seems to have held albeit in the short term, with a nice bounce off this level. I think the next resistance is around $3.30. personally im glad i sold the stock, however who knows what may happen if it breaks support turned resistance at $3.30?

Maybe double bottom occuring on daily chart, resistance at $3.17.

 

[Rafa]

Re: Great Southern Plantations (GTP)

looks like double bottom around the 2.60 mark... which should mean it could rise to 3.80!

hmmm, ain't an expert on tech analysis unfortunately...

HELP!!!

 

[TheAnalyst]

Re: Great Southern Plantations..

I have been looking at the stock and have been wondering myself....i noted that the net profit for this year is 119.6 million which is down on the forecast and Mcquarie bank has down graded next financial years net profit to 151.0 million but even at these figures and compares to other companies earning and P/E ratios the stock is under valued....so what is the problem...well firstly i looked at how many ordinary shares are on issue and realised that the market which means the big players who make up the majority of share ownership (Banks, Funds and other corporates) rated the P/E for the stock maily between 6 and 8 %.

Then I realised if this is the case then the stock on the 119.6 million net profit would be valued at roughly $2.80 and as i have noticed that slowly and cunningly the stock has been off loaded as the major players get the best price for the stock without causing a fast collapse by the volume of sales.

Then on the Mcquarie banks forecast of a net profit of 151.0 million that means with the P/E ratio of between 6-8% the most it can go to is $3.60.

So i reckon and this is my opinion it will go below $3 and then collapse. Eventually if the market decides it should earn a higher P/E ratio then that will help lift its price.

Warning: do not rely one my opinions go elsewhere

I think it is now time for ME to buy some Equity Installment Warrants. I am not advising others.

 

[TheAnalyst]

Re: Great Southern Plantations (GTP)

Anyone done some specific research on GTP warrants, particularly installments?

Would love to hear of it.

 

[Kauri]

Re: Great Southern Plantations (GTP)

Anyone done some specific research on GTP warrants, particularly installments?

Would love to hear of it.

Having flipped around a few sites found this alternative P/E workout...

Owners earnings =depreciation+amortisation + net income +- one offs - capex.
In 2003 this gave ratio of 8
Currently gives 30

Also the net increase in cash held came from the share issue, so with diluted EPS and costs of ( as yet ) non producing assets purchased this has resulted in ROE going down.

Having said that, on the tech front it may be in early stages of cup/saucer.

 

[TheAnalyst]

Re: Great Southern Plantations (GTP)

Having flipped around a few sites found this alternative P/E workout...

Owners earnings =depreciation+amortisation + net income +- one offs - capex.
In 2003 this gave ratio of 8
Currently gives 30

Also the net increase in cash held came from the share issue, so with diluted EPS and costs of ( as yet ) non producing assets purchased this has resulted in ROE going down.

Having said that, on the tech front it may be in early stages of cup/saucer.

That doesnt seem to work out....that would give it a lower P/E not a higher one of 30 as its current P/E is around 7.5 and if you add back the dep'n & amort expenses that would surly increase its net profit and amortisation doesnt come into the equation as amortisation of non-tangible assets is non-tax deductable.

 

[Kauri]

Re: Great Southern Plantations (GTP)

TheAnalyst...
OK.. fundamentals aren't one of my strong points I might be confusing myself here.
What I am trying to figure out is what were their basic earnings. I note they raised $140 million through a share issue and $40 million through proceeds of TREES, ( this increased their share base by approx 65% ).Against this they bought Sylvetech and Environwest. Med term both good but short term I dont think they contribute much to the bottom line. So instead of 225 million shares they now have 400 million shares, against this assets have increased but ROA/ROE isn't? Is any of the cash left over from the above raisings minus the asset purchases show up in the books and if so does it affect some of the fundamental ratios? Basically, how did the business perform stripped of the raisings and purchases and how will it perform in the immediate future? .......Now I've given myself a headache. :hammer:

 

[TheAnalyst]

Re: Great Southern Plantations (GTP)

TheAnalyst...
OK.. fundamentals aren't one of my strong points I might be confusing myself here.
What I am trying to figure out is what were their basic earnings. I note they raised $140 million through a share issue and $40 million through proceeds of TREES, ( this increased their share base by approx 65% ).Against this they bought Sylvetech and Environwest. Med term both good but short term I dont think they contribute much to the bottom line. So instead of 225 million shares they now have 400 million shares, against this assets have increased but ROA/ROE isn't? Is any of the cash left over from the above raisings minus the asset purchases show up in the books and if so does it affect some of the fundamental ratios? Basically, how did the business perform stripped of the raisings and purchases and how will it perform in the immediate future? .......Now I've given myself a headache. :hammer:

Hi Kauri

The raising of equity would not be taken into account when considering profit as capital raising gets added to equity(share capital) in the companay consolidated balance sheet to the value of the shares raised and the the amount of actual cash raised and the assets that are purchased will become debit enteries in the consolidated balance sheet as a non-current assets.

To work out the P/E just go to the statement of consolidated performance and take the net profit and divide it by the shares on issue and that will be the P/E ratio or you can also take into account the number of directors options that will eventually be converted to shares and include this number as well which will give you the diluted P/E ratio.

In regards to the depreciation as it is not actually cash lost you can add the dep'n expenses back to the net profits but you must also take into account the tax reduction(30%) the company has also recieved off the tax payable.

Capital expenditure really gets taken into account when it has been borrowed or spent from cash reserves, then it can be added back as capital expenditure; equity raisings is a little different and one off losses if it has had any and then they actually have to be material meaning it should be mentioned as it will effect users of financial statements desicion on either to buy, hold or sell in a company to be put into the notes of the company accounts. I dont know of any abnormal losses this year from GTP or write downs just profit didnt meet the full expectations.

 

[Kauri]

Re: Great Southern Plantations (GTP)

Thanks Analyst... i will try to dijest this tonight.....a change from looking at charts.

 

[abucs]

Re: Great Southern Plantations (GTP)

Hi guys,

have enjoyed the discussion on GTP and hope to continue to hear all the views.

I have owned GTP for 4 or 5 years now and have been continually increasing the stake.

I'm still quite bullish but things i think that impact the shareprice negatively are :

1. Low return from GTP's first harvest.
2. Low dividend payout.
3. Capital raisings.
4. Lack of surety on future government legislation (deductions and tax rates)
5. Lack on surety that the business will contine to sell it's schemes.

To address these issues respectively.

1. (Low return from 1994 scheme) GTP says that they have learned a lot from the first scheme and future returns (quality and quantity of wood) should increase. This concern though is fair enough. The only other thing i would say is that the entry price for each woodlot ($3300) has remained fairly stable over the last few years while the price of woodchip continues to increase. So the returns for subsequant investors in the woodlots (subsequant to 1994) should be guaranteed to increase. And this increase on return should continue each year.

2. (Low dividend payout) ha ! growth verse 'money in the pocket'. GTP continue to invest for the future and they expect sales to continue to increase and thus keep buying more land. It's good that the company is so bullish on the future but this continual re-investment hides just how well the company is going and lowers the EPS. If you look at the continued amount of land that GTP is obtaining you see that the profits they are not paying out in dividends, together with large amounts of cashflow are being used to buy land. Of course GTP could stop buying the enormous amount of land and make more profits and pay higher dividends. The question is when will they decide they have enough land ? For example buying 35,000 hectares of land each year costs well over $100 million. (30c per share). The rotation of the land will cut CAPEX dramitically in the future.

3. (Capital raisings). Ditto from above. The buying of Sylvatech and Environest is a good example. The extra shares issued dilute EPS straight away but the advantages are in the medium to long term. The 100,000 hectares from the Tiwi islands will cut CAPEX over the next several years. The cattle project that will be sold through GTP's large network will provide more and more re-curring income in future years as the cattle schemes are progessively expanded. It also provides some diversication and targets the agribusiness investor that wants a return not in ten years but much sooner.

4. (Lack of future Government Support). Well this could cause problems although all of the talk has been positive to date and the government wants to support the industry as it is 'more green' (planting new trees against cutting native bush) and helps with the balance of payments (we currently import more wood products than export) and helps rural communities (more jobs and wealth). With tax cuts (present and future) it will be interesting to see how they impact sales and this could affect the share price quite dramatically (in either direction).

5. (Continuing to sell schemes). This of course can be affected by 1. and 4. above or by competition from other investment alternatives. If you look though at how much plantation land GTP owns now, and what the forecast future earning of that wood will be, GTP could cease selling schemes and still be quite profitable down the track. Of course you'd have to wait 10 years for GTP to make the wood sales in their own right but the amount for sales will be huge so that is the fundamental that underpins anything that could go wrong. As the years progress and GTP continues to own more and more plantation land, vineyards, olive groves and cattle, their position will continue to get stronger and stronger in my opinion.

Sorry for the initial long post on this one.

 

[Julia]

Re: Great Southern Plantations (GTP)

Hi guys,

have enjoyed the discussion on GTP and hope to continue to hear all the views.

I have owned GTP for 4 or 5 years now and have been continually increasing the stake.

I'm still quite bullish but things i think that impact the shareprice negatively are :

1. Low return from GTP's first harvest.
2. Low dividend payout.
3. Capital raisings.
4. Lack of surety on future government legislation (deductions and tax rates)
5. Lack on surety that the business will contine to sell it's schemes.

To address these issues respectively.

1. (Low return from 1994 scheme) GTP says that they have learned a lot from the first scheme and future returns (quality and quantity of wood) should increase. This concern though is fair enough. The only other thing i would say is that the entry price for each woodlot ($3300) has remained fairly stable over the last few years while the price of woodchip continues to increase. So the returns for subsequant investors in the woodlots (subsequant to 1994) should be guaranteed to increase. And this increase on return should continue each year.

2. (Low dividend payout) ha ! growth verse 'money in the pocket'. GTP continue to invest for the future and they expect sales to continue to increase and thus keep buying more land. It's good that the company is so bullish on the future but this continual re-investment hides just how well the company is going and lowers the EPS. If you look at the continued amount of land that GTP is obtaining you see that the profits they are not paying out in dividends, together with large amounts of cashflow are being used to buy land. Of course GTP could stop buying the enormous amount of land and make more profits and pay higher dividends. The question is when will they decide they have enough land ? For example buying 35,000 hectares of land each year costs well over $100 million. (30c per share). The rotation of the land will cut CAPEX dramitically in the future.

3. (Capital raisings). Ditto from above. The buying of Sylvatech and Environest is a good example. The extra shares issued dilute EPS straight away but the advantages are in the medium to long term. The 100,000 hectares from the Tiwi islands will cut CAPEX over the next several years. The cattle project that will be sold through GTP's large network will provide more and more re-curring income in future years as the cattle schemes are progessively expanded. It also provides some diversication and targets the agribusiness investor that wants a return not in ten years but much sooner.

4. (Lack of future Government Support). Well this could cause problems although all of the talk has been positive to date and the government wants to support the industry as it is 'more green' (planting new trees against cutting native bush) and helps with the balance of payments (we currently import more wood products than export) and helps rural communities (more jobs and wealth). With tax cuts (present and future) it will be interesting to see how they impact sales and this could affect the share price quite dramatically (in either direction).

5. (Continuing to sell schemes). This of course can be affected by 1. and 4. above or by competition from other investment alternatives. If you look though at how much plantation land GTP owns now, and what the forecast future earning of that wood will be, GTP could cease selling schemes and still be quite profitable down the track. Of course you'd have to wait 10 years for GTP to make the wood sales in their own right but the amount for sales will be huge so that is the fundamental that underpins anything that could go wrong. As the years progress and GTP continues to own more and more plantation land, vineyards, olive groves and cattle, their position will continue to get stronger and stronger in my opinion.

Sorry for the initial long post on this one.

Hello Abucs

Interesting comments.
Do you own GTP?
If so, what percentage allocation of your portfolio does it have?
If you are continuing to add to your holding, what would you consider to be maximum portfolio percentage?
(I'm interested, because I'm somewhat overweight in GTP but reluctant to sell.)

Julia
(we're not all blokes here!)

 

[abucs]

Re: Great Southern Plantations (GTP)

Hi Julia,

yes, i do own GTP. I have about half my portfolio in GTP at an average entry price of $2. I have added quite a few since it's latest fall buying from $3.78 down to $2.77.

I guess the answer for how much of the portfolio to invest in 1 stock is a personal matter. I am not looking to buy any more but i wouldn't be selling for anywhere near these prices either.

If i could only pick one stock though, this would be it. My own thoughts are to sell a third of the stock somewhere between $5 and $6 and to hold the rest indefinitely.

Happy investing.

 

[TheAnalyst]

Re: Great Southern Plantations (GTP)

Hi Julia,

yes, i do own GTP. I have about half my portfolio in GTP at an average entry price of $2. I have added quite a few since it's latest fall buying from $3.78 down to $2.77.

I guess the answer for how much of the portfolio to invest in 1 stock is a personal matter. I am not looking to buy any more but i wouldn't be selling for anywhere near these prices either.

If i could only pick one stock though, this would be it. My own thoughts are to sell a third of the stock somewhere between $5 and $6 and to hold the rest indefinitely.

Happy investing.

If you are that keen on GTP maybe buying the Installment warrants would have been a better option as you could have used less money for more leverage to the growth in the stock.

 

[Julia]

Re: Great Southern Plantations (GTP)

Hi Julia,

yes, i do own GTP. I have about half my portfolio in GTP at an average entry price of $2. I have added quite a few since it's latest fall buying from $3.78 down to $2.77.

I guess the answer for how much of the portfolio to invest in 1 stock is a personal matter. I am not looking to buy any more but i wouldn't be selling for anywhere near these prices either.

If i could only pick one stock though, this would be it. My own thoughts are to sell a third of the stock somewhere between $5 and $6 and to hold the rest indefinitely.

Happy investing.

Hi abucs

Wow, you must have a lot of confidence in GTP. Half your portfolio in one stock! I've been worried about being overweight with about 15% of my portfolio in GTP, at the current price.

I bought my first lot in 2001 at 54 cents and subsequent purchases at 83c, 84c and 90c.

Is anyone else holding this stock, and if so, what price would you sell at, or do you regard at as a really long term holding, i.e. more than 5 years?

Julia

 

[abucs]

Great Southern Plantations (GTP)

Hi TheAnalyst.

You could be right. I don't tend to go in much for derivative trading.

Regards,
Abucs.

 

[abucs]

Re: Great Southern Plantations (GTP)

Intersting words today from the Great Southern AGM.

Sales so far are well ahead of last years record and the non timber schemes haven't even started yet.

They also mentioned that the non timber schemes this year had the potential to be 30% of sales this year (from 8% last year).

Put these two comments together and it looks like another great year despite the very low PE ratio.

I'm out of the country at the moment. Did anyone go to the AGM and have extra stuff to report ? I'd be interested in comments made about future dividend policies, and the structure of the upcoming cattle investment product.

Regards.

 

[abucs]

Re: Great Southern Plantations (GTP)

Seems like some successful financial institutions are getting into GTP or extending existing holdings in the last month. Colonial / CBA, UBS and Orion Investments . Including Macquarie Bank who are underwriting any DRP's or capital raisings, there are some very successful investment companies putting significant amounts of money into GTP right now.

 

[TheAnalyst]

Re: Great Southern Plantations (GTP)

Hi TheAnalyst.

You could be right. I don't tend to go in much for derivative trading.

Regards,
Abucs.

I have been looking at the installment warrants but you do have to watch the institutions buying in as at the same time they are then offering the installment warrants as the can get up to 10% guaranteed return by using this method and transferring all the downside risk to the holder of the warrants..at present i am looking at macquarie hot installment warrants as they have a 90 - 80% leverage which i like.

 

[abucs]

Great Southern Plantations (GTP)

Hi TheAnalyst.

Do you think that trading in GTP derivatives / shares is causing an effect on the share price ?

The number of shares being bought by the institutions is quite large. Is the derivative market large enough to cover this ?

Regards,
Sean.

 

[TheAnalyst]

Re: Great Southern Plantations (GTP)

THe best way to go about this and its a bit time consuming is to sum up the amount of ordinary shares that GTP has on issue and then go the ASX website and get the list of GTP warrants on issue and get the Product Disclosure Statement and in each one for each warrant issued the institution offering the warrants will state how many warrants it plans to issue add them up and that will tell you how many shares that the institutions are using for the warrants and also take into accout any ratios of more than one warrant for each share.
Also look at the institution that bought shares such as commonwealth bank and see if they ghave been issuing any new warrant issues.

When certian warrants expire that can have a downside effect on the share price as if you do not choose to take upp the warrant then the underlying shares maybe sold which will effect volume to check this scenario out just check the dates when warrants are expiring and check the volume and price of shares on a chart around about those dates.