Investor delight as GPG cashes in on investments

Friday 12th March 2004

Guinness Peat Group may have lost its court battle with Perry Group but the investment company is certainly winning over local investors.

It has been a golden 12 months for GPG shareholders with the shares recently breaking through the $2 mark, up from $1.20 this time last year.

The issue for GPG now is where it goes from here.

Eight years ago Sir Ron Brierley suggested his investment vehicle probably should be wound up by the turn of the century. But with the takeover of British thread maker Coats Holdings and an increased involvement in trouble-prone Tower, GPG looks likely to be around for a while yet.

GPG is sitting on investment profits of about £150 million. These do not include unlisted investments, the largest of which is its 64% stake in Coats.

Analysts say Coats has potential for further efficiencies and could be undervaluing GPG by up to 30c a share.

Closer to home, Tower is a different animal. Views around the market of Tower's net tangible asset backing vary immen-
sely. Some brokers put it at $3 a share, in which case GPG with its 17.1% got itself a bargain.

However, some are not convinced Tower's writedowns are behind it and are calculating the figure as much less.

One thing is clear and that is GPG has truckloads of cash.

As at December 31 it had a cash balance of £272 million, close to what chairman Sir Ron regards as a peak level.

First NZ Capital estimates GPG's net asset value (NAV) at $2.29, which is good news for investors given GPG has a track record of increasing NAV by 18% a year.

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