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[sharechat] BPC - still cheap, but for how long...


From: Holden Glova <dsafari@paradise.net.nz>
Date: Sat, 28 Sep 2002 19:11:30 +1200


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Cheap cheap cheap...

The numbers show this stock is cheap and that the market is still undervaluing 
this stock by almost half it's worth. Seeing as this appears to be in a long 
term up trend one might think it is a good stock to invest in. In the last 
year it has risen from approximately 0.43 to 0.60 which equates to a 28% 
increase.

What do they do?
~~~~~~~~~~~~~~
Burns Philip (BPC) is a leading producer of fresh and dry bakers yeast. BPC 
also produces dry yeast for consumer use in homebaking and manufactures and 
distributes bakery ingredients, industrial vinegar and yeast extracts. 
Additionally, the Group blends, markets and distributes herbs and spices in 
North America and provides bulk storage facilities in Australia and NZ.

Some numbers
~~~~~~~~~~~~
P/E ratio = 10.7
P/E ratio for sector = 14.87
P/E Growth ratio = 6.31
P/E Growth ratio for sector = 1.47
EPS = 5.7
No dividend paid.
asset backing ratio of 0.576

Total assets doubled in 2002 over 2001 from 613 700 000 to 1 235 000 000.
Liabilities went down in 2002 over 2001 from 510 600 000 to 396 000 000.

Some historical financial examination
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
It seems the height of this company as reached in '94 whenthere was a EPS of 
26.5, after that it dropped for the next 3 years to reach an all time low EPS 
in 1997 of 0.5 cents. Something major happened here, I'm not sure what though 
yet. Dividends had been paid through from '93 to '97. All these historical 
figures I am looking at indicate something quite drastic happened in '97, 
however since then things have been on the rise. EPS has been steadily 
rising. Net profit has been on the rise.

I am still waiting on for my "Technical Analysis Explained" by Martin Pring to 
arrive so I'm very very weak in this area. In the past 5 years, there was a 
massive drop in the price of this share, I don't know what caused this. About 
1 year after the sharp decline the market regained some confidence in this 
stock and since then it has been in a fairly steady long term up trend. It is 
now in a short term down trend approaching previous support levels of 0.56. 
The current price is 0.60.

Initial comments from the 2002 annual report
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
I've only started looking through it and am 10 pages into the 96 page report. 
- - Seems they are evaluating the costs of their plants. In March they closed 
down an expensive plant in Oakland California, they state this should have a 
positive effect on next years profitability.
- - June 05 they entered agreements with Kraft foods to acquire its 
Fleischmann's yeast and industrial bakery ingredients business in South 
America. The agreement is conditional and appears to not yet be resolved.
- - August 07 they entered agreements for the sale of the Terminal Division in 
.au and .nz. They esimate the proceeds will be $83 million and is estimated 
to be completed at the end of Sept.
- - August 23 they entered conditional agreement for the sale fo the Vinegar 
Division. The anticipated proceeds of the sale are approximately $88 million 
and is estimated to be completed at the end of Sept.
- - There is something about significant tax losses in the USA. Apparently they 
will receive some 47.9 million deferred tax asset in relation to US business.

For 2001/2002 the sales come from the following components:
- - 60% yeast/bakery
- - 32% herbs & spices
- - 6% vinegar
- - 2% Terminals & bulk storage

For 2001/2002 sales by region:
- - 43% North America
- - 20% South Africa
- - 20% Europe
- - 17% Asia

I think I'm going to watch this one a wee bit and see what happens. In the 
meantime I'm on the hunt for a bargain :)

- -- 
Signed,
Holden Glova
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