Now I remember why I missed him when he took his leave recently :D
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This part is fine, but the forex kills off most of any medium and long term happiness. Chinese supply deals would be done in USD, and 2/3 of KMD sales would be done in AUD. The profit is then worked out in NZD which goes badly on the NZD side for both of these. Higher cost, lower revenue, less margin.
So, saying that it is okay in the medium and long term is to say that the Australian economy (i.e. forex) is going to be okay in the medium and long term. And most people would say that isn't a sure bet. The Chinese aren't expected to go gangbuster on Aussie ore etc in the next 5-10 years. So, the forex isn't expected to revert suddenly and cut KMD a break.
I'm not saying it is all forex, but it certainly isn't helping and any margin squeeze in the short term on top of this won't help. Exec level decisions can't get around the forex unless they start manufacturing in Australia :-)
Yes, good point - I get what you mean. I would say (think you may have already stated this point) that you would hope companies and therefore investors do not invest and put together business structures based on forex arrangement. It would be a fairly speculative act in my view.
Sound point though - can't do a thumbs up on this.
Be very careful with historical earnings yield...can look increasingly attractive all the time as the SP keeps declining. Classic value trap this one. Consensus brokers SP target 12 months out is still $2.20...was a widespread buy by many analysts last year with a target price of $4. If one extrapolates this, brokers will be rating it a buy this time next year with a price target of $1.10 and the SP will be about 70 cents. Analysts trying to cover their butts while Rome burns ?
Yes, there are other things to look at. But if you look at historical data, historical earnings yield is a good predictor (not all the time) of investment returns for a collection of stocks. Research on the NZX and ASX market shows similar outcomes to the research conducted by value investors on US markets.
I stand by my belief that this company will turn things around given time no matter what anyone else says on here, just saying:cool: