Whitefield Industrials Limited · ASX:WHF
Whitefield Industrials — Investor Presentation (March 2005)
23 slides from Whitefield Industrials's investor presentation, Mar 8, 2005
Slide 1: Whitefield & Sylvastate Update
WHITEFIELD & SYLVASTATE UPDATE March 2005 WHITEFIELD 1 SYLVASTATE
Slide 2: WHF & SYL Overview
WHF & SYL OVERVIEW WHITEFIELD (WHF) Valuation and Earnings-based strategy Aim to hold stocks where the present value of realistically achievable future earnings is greater than éarnings currently captured in stock price Long term investor Founded 1923 Australian Shares ~45 stockholdings $190m gross
Slide 3: Investment Strategy
INVESTMENT STRATEGY + Valuation and Earnings-based strategy + Aim to hold stocks where the present value of realistically achievable future earnings is greater than earnings currently captured in stock price | Would we make or lose money over the long term by investing? How much? WHITEFIELD 3 SYLVAS
Slide 4: Outcomes: Whitefield (Y/E Mar 2005)
OUTCOMES: WHITEFIELD (Y/E Mar 2005) Last Quarter 13.24% Year to Date 20.90% 4 Years + YTD 11.73% 9 Years + YTD 13.43% 19 Years + YTD 14.47% 22.28% 9.32% 12.25% 12.74% 1.82% -1.38% 241% 4.18% 1.73% NET PROFIT AFTER TAX PER SHARE 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2606 OSV TD OFul year
Slide 5: Drivers of Return 2004
DRIVERS OF RETURN 2004 Mc 19% 40% 100% 33% 25% 5% 28% 60% 48% 28% ‘MBL PPT CGF CSL PRK BIL WES FGL AMC SEV LEl Major Banks Ae 37% 45% 26% 90% 25% 54% 51% 15% (13%) 48% 25% 15% WHITEFIELD SYLVASTATE VY
Slide 6: Investment Outcomes: Whitefield
INVESTMENT OUTCOMES: WHITEFIELD Whitefield’s Medium/Long Term Investment Strategy: Outperforms ASX200 in 18 out of last 20 rolling five year periods. ROLLING 5 YEAR OUTPERFORM ANCE WHF VS ASX200 ACCUMULATION 14.00% 12.00% + 10.00% | 8.00% | L 6.00% 4 4.00% | 2.00% 0.00% (2.00%) CLE EE ESI EE EEEIEE
Slide 7: Investment Outcomes: Sylvastate
3 Yrs 13.00% 5 Yrs 6.44% 10 Yrs 8.53% NVESTMENT OUTCOMES: SYLVASTATE 0.200 0.150 0.100 0.086 4 SYLVASTATE LTD NET PROFIT AFTER TAX (CENTS PER SHARE) 0.000 lad 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 maz TD O04YTD WHITEFIELD 7 SYLVASTATE VY
Slide 8: Investment Outcomes: Sylvastate
INVESTMENT OUTCOMES: SYLVASTATE +Earnings growth and annualised 5 year investment return synchronised «Investment return over rolling 5 year periods approximately equals income growth + 4-5% (dividend) «Annual investment return has been 10-15% in low inflation environment ANNUALISED ROLLING 5 YR RET
Slide 9: Investment Outcomes
INVESTMENT OUTCOMES LIC RETURNS YEAR TO 31 DEC 2004 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Bel CH WIL GCA TGG WAM SYL DW AFI ALR GLI |WHE fARG MLT MR WIT Pe / Y Y4— Growth / Small Cap SYL: Yield & Cash Flow Strong outright return but less than market in a boom year. WHF: Acquiring Und
Slide 10: Investment Portfolio: Whitefield
INVESTMENT PORTFOLIO: WHITEFI ELD CWLTH BANK 1AA% 5.48% NAB NAT. BANK 751% 5.80% 1.81% WBC WESTPAC 5.67% 4.33% 1.34% MBL MACQ BANK 5.36% 1.36% 4.00% ANZ ANZ BANK 5.64% AM% 0.93% PPT PERPETUAL 4.63% 0.32% 4.34% NWSLV NEWS CORPORATION INCORPO! AM% 2.83% 1.58% TLS TELSTRA 4.36% 3.92% 0.44% cs CSL 3.44%
Slide 11: Sylvastate: Portfolio Analysis
SYLVASTATE: PORTFOLIO ANALYSIS SYL: Stock Diversification + 28 stocks + 10 major industry segments SYLVASTATE: INDUSTRY SPREAD Consumer Dssretionary 8% Consumer Staple Whitefits 1 on y 8% Energy om Telecommunicatia Uilties Yields > 6.0% Yields 5.0%-6.0% Yields 4.0%-5.0% Yields < 4.0% 28.83% 42.42% 2
Slide 12: Recent Actions: Sales
RECENT ACTIONS: SALES Lend Lease (exit) + Achievable future earnings unlikely to provide satisfactory rate of return to investors + Risks to the downside escalating (input costs rising, GPT loss) + Some possibility of takeover, however a premium is already priced into the stock Wesfarmers (Recent re
Slide 13: Recent Actions: Acquisitions
RECENT ACTIONS: ACQUISITIONS Brambles *Expected earnings stream from Chep, Recall, Cleanaway remains undervalued. *Cost out story through restructuring of Chep and European operations Challenger *Achievable future earnings undervalued *Management have de-risked business through asset diversification
Slide 14: Recent Actions: Acquisitions
RECENT ACTIONS: ACQUISITIONS Publishing & Broadcasting + While media earnings are subject to same cyclicality as SBC, the share price has not overrun their fair value + Principal upside however, comes from Casino operations (Burswood already above forecast) Multiplex (Recently) + Current falls creat
Slide 15: Our Positioning: Market Outlook
OUR POSITIONING: MKT OUTLOOK Positioning . Global imbalances increasingly likely to impact on market . At this time, we're seeking to hold companies with relatively solid, stable earnings strearns . We're not prepared to chase growth stocks if eamings overpriced . In particular we're seeking to avoi
Slide 16: Banks
BANKS BANKS Future Earnings Implied by Current Share Pi BANKS + Low levels of earnings growth priced-in, ability to outperform if companies deliver earnings above this (long term bank earnings growth is higher than this in majority of circumstances) + Late-cycle pattern: ~ Banks rally strongly towar
Slide 17: Resources
RESOURCES DIVERSIFIED RESOURCES Future Earnings implied by Current Share Prices Future Earnings if Le normalised margins / prices are used RESOURCES + Current share prices are at a 40% premium to consensus net present value * Current share prices imply that prices and margins would be sustained at r
Slide 18: Emerging Global Imbalances
EMERGING GLOBAL IMBALANCES Commodity prices in $USD have risen by 46% (this is extremely inflationary), yet global bond and cash rates remain near 35 year lows (one or both markets will need to adjust significantly) ee CRB index a 0 Yr Bond a. ue . Falls in $USD & RMB are also significant and extrem
Slide 19: Emerging Global Imbalances
EMERGING GLOBAL IMBALANCES Recent Points of Note . . . PPI rising in Australia and US, CPI will follow Cash rates continue to rise in Aust & US, Central banks highlighting inflationary concerns Chinese auto sales growth has fallen from ~50% in 2003 to 0% in 2004 At least 3 large auto manufacturers i
Slide 20: WHF & SYL Pricing
WHF & SYL PRICING WHITEFIELD . Price $3.35 . NTA Pre Tax $3.91 NTA Post Tax $3.54 SYLVASTATE + Price $4.23 + NTA Pre Tax $4.71 NTA Post Tax $4.37 LIC Premiums & Discounts . LICs periodically trade at premiums or discounts fo asset backing based on supply, demand, market conditions or other factors.
Slide 21: Cost Efficient & Tax Efficient
COST EFFICIENT & TAX EFFICIENT Cost & Tax Efficient . . Low MER (Management Expense Ratio) below 0.35% LIC Discount CGT Status ensures individual investors and super funds get 50%/33% discount on ail our capital gains BENEFIT OF LOW MANAGEMENT EXPENSE RATIO AND LIC DISCOUNT CGF STATUS (Value of an i
Slide 22: Capital Issue Outcomes
CAPITAL ISSUE OUTCOMES WHF: APRIL 03 RIGHTS ISSUE OUTCOMES ths at 31 Dec 64) WHF: FEB 04 PUBLIC ISSUE OUTCOMES. {Asai 31 Dec 64) WHF: NCV 0¢ RIGHTS ISSUE OUTCOMES [As at 3t Dec 04) Gross Gross Dividencs Dividends NTAProTax 28% 34% NTA Pre Tax NTA Pre Tax NTAFostTax NTA Pont Tax NTA Post Tax Issue Pr
Slide 23: Conclusion
CONCLUSION CONCLUSION * WHF and SYLs outcomes for 2004 were strong (~25%-28% return) + Investment earnings and net profit are likely to grow in 2005 (as the result of the flow through of dividends from the strong 2004 corporate year) + We expect some increased market volatility as global imbalances
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