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Re: Re: [sharechat] Investing in Steel - Jan 2003 Update

From: "Pat Fields" <>
Date: Wed, 22 Jan 2003 03:29:10 -0500

>Don't get me wrong about STU Pat.  I think STU is an attractive income 
>share.  But that published dividend yield of 8.6% isn't quite as good as it 
>might superficially appear.  That figure includes 10c of special dividend 
>that won't be repeated this year.  Take that out and the dividend yield 
>drops to around 6%, based on an STU share price of $3.23.
>My big question mark over STU as a growth investment is, where is the 
>growth going to come from?   Of course as an 'income investor' the answer 
>to this question doesn't matter.  So I leave Pat with a question to ponder. 
>  If STU is 'fairly priced' IMO and 'reasonably cheap' in yours (on a yield 
>of 6.6%), what does that say for WRI on a yield of 15%?

Good argument, Snoopy.  But, are you still confident on a yield of 15% for 
WRI given (1) awful spring, (2) current forex rate, and (3) IMHO, questions 
on management's commitment/ability to re-engineer internal processes and 
achieve cost-out?

I like WRI as well but I'm not sure whether I would place a 'buy' now (at 
$1.17 or so).  Even if I felt confident on the sector (despite past spring 
and NZD value), I'd wonder if Allied Farmers or Will & Kettle are better 
options and, in particular, Pyne Gould given the fact that the South Island 
has had a significant increase in the number of new farms vis-a-vis North 

PS: Sorry changing the sector... from steel to agriculture :-)

discl: do not hold WRI, ALF, WLK, PGG

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