Yet another earnings upgrade and yet another strong rise Friday for Flight Centre, the country's biggest travel agency.
The shares rose the most in 15 months after saying first-half earnings beat forecasts.
Flight Centre shares rose $1.85, or more than 8% to $25.06 before easing in Friday afternoon trading to close $1.46 higher at $24.67. The day's rebound went some way to reversing the sharp fall in the company's shares over the past month since the all time high in mid December of $32.48 on an earnings upgrade revealed on December 13.
Since then the shares have shed more than 20% in the sell off.
But on Friday the company delivered another earnings upgrade, since July, when it scrapped plans to sell a stake to buyout firm Pacific Equity Partners in return for $1.1 billion in cash. The stock is now up around 44% since it abandoned the deal, which came five months after investors blocked a buyout backed by management and Pacific Equity at $17.20 a share.
Both knock backs have proven to be well founded, although the second saw two independent directors who led the opposition replaced in the board.
Management would have around 25% of the company in the first deal and remained in place in the second but benefited from the cash payment, which would have undervalued their holdings considerably.
"The company was currently on track to exceed its previous profit target for the period of $85-$ 90 million before tax and now expected a half year result in the order of $92-$93 million, up approximately 75% on prior year," the company said in a statement to the ASX announcing the settlement of the $US135 million purchase of the Liberty travel agency group.
"The new business has not contributed to FLT's record first half results, which will be released on February 26 2008 following the completion of audit review.
"Mr Turner said the company expected to provide additional commentary on its full year expectations on February 26.First half pre-tax earnings are up by around $8 million, compared to the December statement when it forecast pre-tax earnings between A$85 million and A$90 million."
Now that's in the range of $92 million and $93 million.
"We believe we have built a solid foundation for the full year, based on momentum gained during the first half and with small profit contributions expected from Liberty and our new joint venture with the Employment Office," Mr Turner said in the statement.
During the six months to December 31 2006, FLT recorded a $53 million half year result, excluding the abnormal gain from the company's Adelaide Street building sale.
In 2006-07, FLT recorded a $151.6 million pretax profit, excluding the abnormal building gain.
Lead and zinc miner Zinifex is busily selling the merits of its offer for nickel miner, Allegiance Mining, so it's understandable it would put the best complexion on its earnings prospects.
Friday it said it expects to almost double its half year net profit compared to the previous corresponding period.
The company said its net profit range expectations for the half year ended December 31 was $1.270 billion to $1,320 billion, up from $751.2 billion for the same period in 2006.
The higher figure reflects the profit on the sale of its lead and zinc smelting assets in Nyrstar, which, combined with the zinc alloys operation of Belgium's Umicore, created the world's leading zinc producer.
Zinifex said the subsequent sale of the majority of its stake in Nyrstar would yield a profit of $940 to $980 million.
The year before the results reflected the profits from mining and processing minerals like lead and zinc, plus associated products.
Zinifex said earnings before interest and tax (EBIT) from its mines (its only business now) was forecast to be between $250 and $275 million while its EBIT from the divested smelters is expected to be $75 to $100 million.
So it's clear the downturn in zinc and lead prices in the six months to December has essentially cut earnings in half. With prospects for little change in prices this half (as the US, Europe and China slow), ZFX faces a year of depressed earnings.
That's making it hard to sell the worth of its offer for Allegiance to the target shareholders.
Zinifex's $775 million for Allegiance Mining is hostile: it expires later this week and so far it has had very little support.
On January 31 (last Thursday), Zinifex said its voting power in Allegiance was 0.03%.
In its target's statement released on January 17, Allegiance said shareholders representing a combined interest of 11.1% of the company's shares on issue, and 12.2% on a fully diluted basis, had indicated in writing that they intend to reject the offer.
"Allegiance directors have not accepted the $1.00 a share offer, nor has our major shareholder, Jinchuan Group Ltd," Allegiance chairman Tony Howland-Rose said in a statement last week.
Allegiance reiterated that the bid is "inadequate" and "opportunistic", and offers less value than other recent transactions in the mining sector.
Shares in Zinifex closed up 74c, or 7.2% higher, at $11.02 on Friday while Allegiance's shares edged up one cent to $1.06.
Jinchuan has a blocking stake in Allegiance and its major shareholder, Chinalco has just bought into Rio Tinto.
