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Re: [sharechat] FLB????


From: Chris <cd@ak.planet.gen.nz>
Date: Wed, 31 May 2000 14:56:58 +1200


Simon, 
The building industry is a big beast and FLB have duopolistic control of 
it in NZ.  While the residential component is contracting at the moment 
large infrastructual projects  continue to be announced.  It is in the 
latter area that FLB have their finger permanantly planted and ongoing 
profits are promised.  It is definitely not a one dimensional building 
company as many would expect.  Yes the profits from concrete and gib 
where FLB dominate and to a lesser extent steel will feel the pinch of 
fewer residential consents being issued.  But this information is already 
factored into the market.  

Keep in mind we have a Labour led government and like others before it 
will invest in projects right up FLB's alley.  Three areas come 
immediately to mind, education health and corrections.  National had so 
little commitment to these areas that the catch up is a huge task.  In 
the Auckland area about 5 new schools, 2 prisons and major hospital 
expansions have been announced(Middlemore & Auckland).  FLB are the lead 
contractor on the $500 million Mangere sewerage upgrade and with that 
expertise will probably get the contract in North Shore City for the $236 
Rosedale sewerage upgrade.  In the SI i'm not sure what they have on or 
planned.  Manapouri extension(plus lawsuit), Arthurs Pass 
overbridge(?)..........Someone from the mainland may be able to fill in 
that gap. 

It is the balance between residential and non-residential construction 
which makes FLB attractive.  Rarely do both sectors run hot together so 
volume continuity is ever present.

A number of brokers value FLB at over $3, ABN AMRO at about $3.20 from 
memory(Mike can you confirm?).  I think it is a very good defensive stock 
in the current climate.  

Chris D
<cd@pl.net>        

Simon Dallimore wrote;
>Mike, I appreciate you sharing the information about FLP and FFS with us but 
>I don't go along with a blanket recommendation to reinvest the money in FLB 
>when the building industry is in the doldrums and because of interest rate 
>hikes (and more to come) which makes selling FLB a more difficult 
>proposition. I would suggest that investors, should they decide to get out 
>of FLP and FFS (which I would do as you can always get back in), look at 
>other stocks which are well-performing at the moment. Kind regards,
>Simon
>________________________________________________________________________

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