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Global Stock Writeups |
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Waida Manufacturing. Having not expanded capacity for years, this top ranked manufacturer of speciality grinding machines is now planning to increase it by 40% by end 3Q06. This is in response to hitting full capacity (casing sales growth is likely to slow to 14% in the year to 06/06 from 24%) and launching three new products (of which two are key) in 4Q06. They are already receiving orders for the two key new products and hence have an element of visibility in respect of demand and pricing. Over the next two years this conservative management team estimate that operating margins can be expected to jump to 25% from currently 17%. Despite our assumption that operating reaches only 22.5% we believe that the stock offers considerable upside over the next two years.
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Yahoo Japan has bounced nicely post Microsoft's bid for its parent. Although there were some synergies between Yahoo Japan and Microsoft's Japanese business, the deal would not have provided a major earnings kicker to Yahoo Japan's profitability over the next few years. Without projecting a massive improvement in the advertising sector, it is tough to square the circle on the current punchy valuations. Hence we have exited the position. In Japan, Yahoo provides the functions of not only Yahoo 'Global' but also Google and Ebay - it runs the largest and most used search engine, as well as the most popular auction website. 20 million people have an email account with them and they dominate internet advertising with a 50% market share. As consumption picks up in Japan, advertising spending is set to rebound, especially online. Yahoo Japan is ideally placed to benefit.
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Yara International. Norway's ninth company by market cap. and the world's largest (nitrogen-based) fertiliser company. Second quarter earnings soared 44% on the back of very strong demand, especially from Brazil, and significantly higher grain prices. The growth rate may slow from here, but should still remain high; meanwhile it is also expanding through acquisitions - the most recent being a Finnish fertiliser company. A very simple play on the change in the grain cycle fuelled by Asia's demand for more and better food.
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