Forum Archive Index - October 2003

[<feal.nz@xtra.co.nz>]

My understanding of news releases from the NZE is as follows.

NZE has plans of initiating an "on-market" share buy back of 19 041 909 shares.
The bought back shares are to be cancelled.
This represents 34% of all issued shares. Therefore if the share buyback is 
executed to completion, 37 k² shares will remain.
Emerald Capital have indicated agreement to "accept the buyback offer for its 
proportion of shares sought" and sell more to make up for any deficit in the 
target ammount of shares to be bought back.
NZE have a profit target (by there own admission not on track as yet) of 900K 
after tax and have indicated they would like to return to dividend payments 
representing 80 to 90% of this value in Sept 2004.

So here is a novice attempt to look at the fundamentals of this business:

Pros:

Using the forecast figures, my calculations indicate a potential return to 
holders in the order of (noting the dividend payment is post the potential 
buyback) say (.85*900k)/37 k² = roughly 2cps or 8% return on investment. 

The company is debt free (for now) but has the cash flow to secure finance for 
the buyback and some capital improvements.

NTA/share from 2 sources suggests 15.36c, this figure increases to 
(56 k²*15.36)/37 k² = 23.24cps following a successful buyback.

Showing good recovery over two year period reflected in share price
(70% increase for last 12 months).

Facilities improvements on the radar with increased business opportunities
.
I am picking a hot summer  - good for traffic flows through the door.

Cons:

Historically not a liquid stock.

Potential short-term loss of earnings while Front buildings (video arcade, 
merchandising area and admin building) are being renovated post Easter 2004.

High $NZ affecting international tourist flows.


My conclusion? – This looks like good buying  - I must be missing the obvious 
as  I can't understand why the price has remained at 25c. I note that around 10 
Oct on the release of the above news items the share price jumped to 30c on 
what I am guessing was low volumes but quickly returned to proposed buyback 
price.

Would any of you learned share chatters out there like to comment, correct my 
figures or just shoot me down in flames?

Hoping to hear from you

Barrel Scraper.









----------------------------------------------------------------------------
To remove yourself from this list, please use the form at
http://www.sharechat.co.nz/chat/forum/