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Daily ShareChat: Skellerup

By Jenny Ruth

Sunday 18th July 2010 1 Comment

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Skellerup Holdings' profit upgrade shows changes made in its industrial division are gaining traction, says Brooke Bone, an analyst at Macquarie Equities.

"We consider increased focus on new products and sales, when combined with an element of re-stocking, to be driving profit improvements," Bone says.

"With new sales contracts due to kick in during (the year ending June) 2011, the future for the industrial division looks bright and could be the source of further positive profit surprises."

Bone says with the recent rise in dairy prices and the dairy sector looking to stabilise, the agricultural division is also likely to deliver sales growth in the year ending June 2011.

"The chairman noted that Skellerup was still facing tough conditions in its non-consumables markets which is a good reality check, given the size of (the) profit upgrade.

"We are also mindful of current global financial markets which could negatively impact the auto industry and dairy prices."

Bone is still concerned about how much of earnings in the six months ended June were due to re-stocking activity.

Bone is forecasting net profit in the year ending June 2011 will be $15 million, up from $12 million previously, rising to $17.2 million in 2012.

Recommendation: Outperform.

Daily ShareChat articles report how the main experts in the market might view a certain share and we provide this commentary as a useful resource for investors. Content on this site does not in any way constitute a recommendation to buy, hold or sell any particular share. Investors should always seek professional advice before making any investment decisions.

Comments from our readers

On 22 February 2011 at 10:53 am N.Ward said:

I am full of confidence in Skellerup because 1.Selwyn Cushing is in charge.2 Dairy prices rising.3 Manufacturing on the up in USA.What are the chances 0f another 160% return to shareholders this year?I think it's on the cards.Cheers.

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