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Subject: World no tobbaco day at 29% angle for moon

Author:
229pm--May 29th 2009---Gold 204===May 31st This Sunday

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Date Posted: 21:30:25 05/28/09 Thu
In reply to: Price at Review: $9.74 Date: 8 Oct 07Issue: 234 's message, "Computershare's price fall a good start" on 23:36:30 05/27/09 Wed

> Dear Sir/Madam,
>
>
>You may be interested in the following article by the
>Intelligent Investor:
>
>
>Computershare's price fall a good start
>
>"Fears about growth and sharemarket wobbles have hit
>Computershare lately.
>We hope those concerns intensify - this is a business
>we'd love to buy
>again...."
>
>To view the article, click the link above and you will
>be taken straight to
>our website.
>
>The Intelligent Investor is an Independent share
>market advice publication
>with clear buy, sell and hold recommendations on
>Australian stocks.
>
>If you are not already a member, you will need to sign
>up to a 1 month free
>trial to the Intelligent Investor.
>
>We hope you enjoy the article.
>
>Thank you,
>
>The Intelligent Investor.
> Fears about growth and sharemarket wobbles have hit
>Computershare lately.
>We hope those concerns intensify - this is a business
>we'd love to buy
>again.
>So far this year we've offended financial planners and
>Jetstar employees. It's
>about time we got around to a really soft target,
>lawyers. Here's an old
>joke: What do you call one hundred lawyers at the
>bottom of the ocean?
>Answer: A good start. (Or: Why don't sharks attack
>lawyers? Professional
>courtesy.) The 7% fall in Computershare's share price
>since our last update
>on 14 Feb 07 (Hold - $10.46) is like this punchline, a
>good start.
>Computershare, from tiny beginnings, has consolidated
>the share registry
>industry and is now a truly global company with market
>leadership in many of
>its 17 countries. So why has the share price weakened?
>There are two main reasons. The first is that some
>fear the company might be
>'ex growth'. Computershare has been one of Australia's
>great growth
>companies over the past 14 years, both in business and
>share price terms.
>Much of that growth has come from acquisitions. In
>many of Computershare's
>markets, though, including Australia, the UK and the
>USA, its market shares
>are such that it won't be allowed to buy other large
>share registry
>businesses. Without large acquisitions such as the
>US-based Equiserve,
>purchased in June 2005, the company won't be able to
>make the
>technology-driven cost savings that come from rolling
>out systems across
>similar businesses.
>An element of truth
>As with many fears, there's an element of truth in
>this but it's overstated.
>Developed markets may be saturated but what about
>emerging markets? The
>company's Indian business is already profitable; it
>has received approval to
>set up a wholly-owned business in China (where it
>already operates); and it
>has recently increased its stake in Russia's largest
>share registrar and
>bought a stake in the third largest.
>Computershare is more than just a share registry
>business, too. In the past,
>it has acquired complementary businesses, such as
>Georgeson, which contacts
>shareholders - or harasses them, depending on your
>point of view - when
>action is required. Rinker shareholders, for example,
>would have received
>phone calls during the takeover earlier this year from
>Computershare's
>Georgeson arm. Then there are other non-sharemarket
>businesses such as
>tenancy administration, direct mail, commercial
>printing and cheque mailing,
>and the provision of unit trust, corporate trust and
>securitisation
>services. These types of outsourced business services
>are, we think, another
>growth avenue.
>So what's the second reason for share price wobbles?
>Well, despite
>Computershare's apparent diversity, it remains a
>cyclical business. The
>company makes more revenue when sharemarkets are
>booming, partly because
>that's when takeover activity, capital raisings and
>initial public offerings
>are most common. 'Corporate actions', as these are
>called, generated revenue
>of US$253m in 2007, up from US$172m in 2006 and only
>US$100m in 2005 (the
>company has recently adopted US dollars for reporting
>purposes). With recent
>credit market problems and most private equity
>activity drying up, investors
>fear that the recent 'golden era' for takeovers and
>capital raisings might
>be drawing to a close.
>Cyclicality will haunt the company
>Whether or not that's the case, this inherent
>cyclicality will, at some
>stage, haunt Computershare. It's impossible to know
>exactly how badly the
>next market downturn will affect the business but,
>back in 2003, revenue
>fell 9% to A$709m, while underlying profit fell 29% to
>A$41m. You can see
>how easily the business recovered from that downturn,
>as well as the
>phenomenal growth since, in the accompanying table
>(all figures in US
>dollars).
>Five years of growth
> 20032004200520062007
>Sales (US$m) 408.6619.1 795.7 1,198.31,404.2
>EBITDA (US$m) 78.0130.3158.5240.1370.5
>EBITDA margin (%) 19.121.019.920.026.4
>
>The most recent result, for the year to 30 June 2007,
>was again outstanding.
>Sales rose 17% to US$1,404m, while underlying profit
>and earnings per share
>jumped 62% to US$219m, and 61% to US36.7 cents
>respectively. This huge
>increase came about because total costs rose just 6%,
>showing how profitable
>this company is during booming markets. Free cash flow
>came in at US$295m,
>helping the net debt to equity ratio fall from 58% to
>42%. An unfranked
>dividend of 9 cents was declared.
>Management expects good growth in 2008, too - it's
>budgeting for 15% growth
>in earnings per share, although it's worth pointing
>out that profit growth
>won't necessarily be this high as the ongoing share
>buyback will help boost
>the per share figure. All this means that
>Computershare is trading on its
>lowest prospective PER for quite some time. Converting
>earnings per share to
>Australian dollars, the stock is trading on an
>expected 2008 PER of 21. And,
>given management's propensity to exceed expectations,
>it may well end up
>being lower than that. So the current price doesn't
>seem outrageous for such
>a high quality company.
>Faith in management
>We've also enough faith in management that, if it
>thought the stock was
>overpriced, it wouldn't be buying back shares.
>Executive chairman Chris
>Morris is still buying shares on weakness (most
>recently slightly below
>$9.00 a share), although several other directors,
>including the second and
>third largest shareholders, have been net sellers over
>the past year.
>There's no doubt we like this business, but the stock
>doesn't have quite
>enough warts for us at the moment. As a cyclical
>company, a time will come
>when the sharemarket isn't as beneficial to the
>company as it is now, or
>perhaps some problems will one day emerge in a
>far-flung part of
>Computershare's empire. Margins are pretty high for
>what is a
>processing-based business. Then there's the risk that
>competition
>intensifies following the consolidation of the global
>share registry
>industry. These are the risks that many investors are
>presently neglecting.
>Since we last recommended this stock on 9 Jul 03 (Long
>Term Buy - $1.95) the
>company's value has soared. It's undoubtedly a better
>business than ever and
>we probably won't see a price that low again. But we'd
>like to see the
>price/value equation improve from here before
>upgrading our recommendation
>(20% below today's price would tempt us, other things
>being equal). Existing
>shareholders should HOLD on tight, while the rest of
>us will just have to
>wait for a good start to get better.
>James Greenhalgh

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