Guess which company is now a stockmarket darling, despite a second half profit warning yesterday?
Why, it’s Queensland railway operator, QR National, the stock many local fund managers spurned in the noisy privatisation late last year.
Now they want it because it’s showing some potential, but more importantly it is about to be included in a number of major market measurement indexes, and fund managers need to own shares in these indexes, otherwise they won’t perform as well and will look silly (or so they think).
Those same fund managers are now chasing stock because the share price has moved higher, reducing their potential profits (so they think).
It’s the herd mentality of Australian fund managers and advisers at its worst.
If Asciano had produced a profit forecast like QRN did yesterday, there would have been all sorts of moaning from analysts and fund managers, with the shares sold off.
Instead they were in strong demand in a market that was soft all day.
QRN shares rose 4.4%, or 13c, to $3.20, a new closing high since the listing last November 22. The shares touched a new all time high of $3.22 in trading yesterday.
That was despite some glum commentary in yesterday’s interim profit statement on the outlook, thanks to the impact of the Queensland floods and big wet on its coal mine customers and the company’s business outlook.
QR National reported a maiden net profit of $278 million for the six months to December 31, compared with a loss of $132 million previously.
QR National did not pay an interim dividend.
QRN forecast that the Queensland floods and cyclone will cut as much as $47 million from its pre-tax earnings for the full year.
The company said it now expects to report underlying earnings before interest and tax of between $380 million and $410 million for the full year.
It had forecast $427 million in EBIT in its offer document, released last November.
That forecast does not include costs arising from a redundancy program.
"Softer volumes than normal are now expected for coal haulage for quarter four, with downside risk of continuing wet weather and uncertainty around final customer tonnages.
"On the upside, QR National can accommodate a step-up in haulage, which may be driven by customers in response to strong price conditions," the company said.
QR National’s revenue for the six months to December 31, 2010, was up 18.2% to $1.69 billion.
Many coal mines were forced to declare force majeure on export contract in December and January and production and exports are now slowly being stepped up.
QR National said the flooding and Cyclone Yasi were likely to reduce total coal haulage for this financial year by 25 million tonnes.
The company said the heavy rain in December ‘‘significantly affected’’ coal volumes on its key central Queensland rail systems. The wet weather and a train derailment on the Goonyella rail system in December reduced coal volumes by about 7 million tonnes in the second quarter.
