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RPL, RICHINA PACIFIC LIMITED
Lizard
post Posted: Feb 26 2008, 02:06 PM
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Well the reported FY07 profit came in at $US16.7m - up 142%. Not a bad result, though helped along by being reported in US Toilet Paper. tongue.gif

Sadly, RPL is more likely to take years, not months, to regain the confidence of institutions. Otherwise, a P/E of 5 with forecast for further growth, property assets in China and low debt might attract some more interest. For now, it's 54cps (and at least has managed not to fall in line with the market over the past few months).

Will be interested to establish the quality of this result when the full financials are available. Op cashflow of $11m and pay down of debt by $12.5m is a good sign. Shareholders equity now up over $NZ1 per share.

 
mosteph
post Posted: Jan 30 2008, 09:51 AM
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I, too, would not be surprised if the payment of regular dividends would cause a strong rerate of RPL. There is no doubt that management have been taking the right steps since Vector, and so it amazes me that the market hasn't responded in advance. I suspect, however, that this can be safely linked to the remoteness of RPL's Chinese operations to the participants in NZ, not to mention the difficulty invovled in a larger buyer taking a position without alerting the market and alone forcing a rerate. Confidence in the management hangs, IMO, on this year's results, especially in context of the Christmas letter.

 
Lizard
post Posted: Jan 30 2008, 09:20 AM
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On a value basis, RPL would have to be one of the most attractive prospects on the NZX. Even allowing for concerns regards history and management, it must be hard to ignore the intrinsic value in the China property assets and the strongly improved earnings forecast which will see RPL on a low P/E of around 5.4 based on current s.p. of 49cps.

Unfortunately, RPL has sufficient external takeover protection and management job protection built into its share register, so the only eventual floor to the share price in a case such as this becomes dividends - something RPL have yet to produce reliably. However, current forecasts suggest this could change over the next year or two - a situation which is likely to lead to a substantial re-rate.

While Mainzeal may see some flow on effect from sub-prime and potential reductions in property development, the biggest threat to RPL will likely be when China hits the inevitable speed bump at some stage. Then it will become apparent to what extent Richina Financial has resisted the temptation to take financial gambles.

 
 


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