Forum Archive Index - May 2004

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Gordon/Jackie,
 
>
>Hi Snoopy and others,My thoughts on LPC:
>no it is not going ahead like the other ports in terms of share
>price.Is this  solely a union problem?.
>

The reason why LPC will not go ahead in share price is because over 
time all of the earnings are paid out in dividends.    Or put another way 
none of the earnings are retained so that the capital base of the 
business can be increased, and the business expanded.

That means the best you can expect over time is that the share price 
will improve at the rate of inflation.   Because ports are a competitive 
business 'port inflation' isn't high.   

We have the Christchurch City Council to thank for this situation as 
they require annual cash flow from the port to allow them to keep rates 
increases to a minimum.     I don't see this situation ever changing, so 
LPC will always be 'just an income share'.

>
>I've been in ports up and down
>the country and in Oz and I don't think that the Lyttelton watersider
>is too much different from other wharfies. In fact the "bolshiest"
>wharfies used to be in Auckland. Macdunk uses the easy label 
"pommy
>union", but the proportion of poms at Lyttelton is negligible.  It
>looks as if management would get credit if all was well, but the staff
>take the flak when the going gets tough. It doesn't work like that,
>management get paid to manage and I have confidence that  the new 
>chief executive  Peter Davie  will succeed where his predecessors
>failed. 
>

I don't expect to see Peter Davie elected an honorary member of the 
union any time soon.   But whether he ultimately succeeds or not is 
irrelevant to today's investor.   Some union uncertainty has already 
been built into the LPC share price.

>
>So for the moment its a good dividend share,especially if you
>can get it  around or below $1.60.
>

I would like to know how LPC intend to fund the fuel wharf 
reconstruction and the result of the current union dispute before I 
would say 'around $1.60' is a good price or not.  But LPC is probably at 
better buy now at $1.61, than it would be with the above issues 
resolved and the share price at $1.75.

SNOOPY

discl: hold LPC






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