the beautiful young puppy is thriving, page-6

GPASAS,
Some squabble and some substance;

a) I have not been systematically or spitefully voting down your posts. This is easy to demonstrate, many of them have only one thumbs up, if I was there would be none.
I actually enjoy your input and the wit of your Evel post was good. In my opinion one of your posts was illogical, but thats life. Please don't be offended.


b) Your statement that PSH had not breached its banking covenants was quiet explicit. As that information was not in the public domain I was forming the opinion that you are an insider posting on this forum with the implicit or explicit backing of the company.This seemed to be reinforced by the timing of your post coinciding with an unexplained marked change in the market.
If you are an insider it would be nice for you to be open about that as the company has lots of opportunities to boost its own story without infringing on the freedom of expression these forums provide.
You have now explained that you formed that view because there has been no announcement from the company that it has breached its covenants. Of course its possible to breach covenants and not announce if the breach is waived,not material or regarded as confidential.

To Substance;

I think you are correct that the Penrice plant was built some years before WW2. This makes it one of Australia's oldest chemical plants.There are certainly much older plants in Europe but I expect these have been overhauled or rejuvinated in the meantime with massive state subsidised reinvestment.

I think you may find that the European Solvay plants have been protected from competition by tariffs and their distance from ports.The Eastern European plants worked under a different economic regime.

ICI owned the Penrice plant until about 1990. I assume it was well maintained until that time as ICI had an excellent name for engineering and safety. At that time it was bought by a couple of guys in a heavily leveraged LBO, then by a string of other owners in succession.
Under this string of short term owners I doubt there has been reinvestment on the scale needed. Consider; if the plant has a replacement value of over $2,000m and a life of say 20 years it needs reinvestment averaging $100m a year. Its not getting a fraction of this.

On the downside; In my view PSH will not be able to afford to keep the plant going for ever. No different than having a trucking business; you can patch it up for a long time but sooner or later it needs a rebuild or a new truck.

On the upside; the plant is at full capacity of about 300,000TPA and thats about the Australian market anyway, so theres no more volume. The price is set by import parity, so theres no more price.



Its Fragile; 300 employees, over $100m of sales and it makes somewhere between zero and a gnat's fart worth of profit.If one of a hundred sensitivities in this complex business goes wrong its very bad.

It has no fat; If something goes wrong where does it turn. It has no head office in London to go begging to, its debt capacity is used, more equity would be a tough ask, its already sold the salt field.

I have a high regard for the staff who keep this plant ticking over, I wish them well. However it would be sad in my view if more people were enticed to put money into something which I believe is heading for the rocks.

I suppose some people see beauty in Pug dogs, perhaps 70 years old is young. Beauty is in the eye of the beholder. Cash is a fact, no dividends being posted out anytime soon.

over to you.

Bacci