Originally Posted by
SparkyTheClown
Here's a debate worthy of discussion: does Rakon bear comparison to Fisher and Paykel in terms of potential turnaround?
I see it like this:
Fisher and Paykel have been savaged by a collapse in consumer spending in their sector of the economy - appliances. They have become price takers, not price makers (similar to Rakon's componentry not being nearly as unique as it once might have been, and therefore at the mercy of big buyers).
In addition to this, they have mismanaged their currency hedging and have been slapped around by the high NZ dollar (like Rakon). They have moved to offshore production to offset this risk (F&P in Thailand and Mexico, Rakon in Chengdu)
F&P in 2008 suffered from executive malaise - too many old fellas in an industry that was changing. There are parallels here where Rakon is largely controlled by the Robinson family, who are reluctant to bring in external independent directors.
However, F&P Appliances is more than just appliances - they also have a very healthy finance company which is an excellent lender to the consumer and business market, assisting sales of F&P appliances.
F&P also bit the bullet and entered into a strategic relationship with major Chinese Appliances firm Haier, which will bring income to F&P in terms of licensing royalties as well as access to new markets.
F&P have also entered new markets like India.
There is hope that F&P's overall position will improve with the increasing confidence in the housing and consumer markets in the USA, NZ and Australia.
Rakon do not have an external partner that I am aware of. They don't have a diversification of interests to boost their balance sheets (like a stable finance company). They haven't, to the best of my knowledge, announced any new market entries or new products. And though there has been a tearaway explosion in consumer IT goods that might in theory include components like the one's Rakon makes (think iPhones, iPads, Android phones etc), there is no sign that Rakon is benefitting.
I bought into F&P at 35c because it looked too cheap for the next to no risk being taken on. It's risen a very healthy 60% in 3 months. I don't have the same confidence in Rakon at its current level of 47c.