OTHER PEOPLE’S MONEY

Sun (Auckland), Volume 1, Issue 23, 19 April 1927, Page 2

OTHER PEOPLE’S MONEY

WAIKATO COAL COMPANIES COMING COMPETITION WILL BE KEEN (By Pertinax.) The shares of the Taupiri and Fukemiro colliery companies have risen so sharply since March, 1926, that an examination of the prospects of those and other firms similarly engaged in the Waikato district may claim general attention. Owing to increased use of New Zealand coal by the Railway Department, sales have gone up and larger profits have been disclosed, but it is an open question whether or not the futures of those two mines have been too highly estimated by the market. 9

The “fixed assets” item in the Taupiri balance-sheet, covering freehold and leasehold land, buildings, machinery and plant was, on the last publication, £119,026, while the corresponding item of mining lease, plant, buildings, machinery and branch lines in the Pukemiro balance-sheet was £42,200. The contrast is emphasised by the circumstance that the gross profit of the one concern was £22,546, while that of the other was £69.950.

It is an open secret that the Pukemiro mine was not working to full capacity during 1926, and the Taupiri chairman stated that his mine was

“capable of producing from 1,000 to 1,200 tons of coal per day.” The successful flotation of Hetherington Collieries will shortly bring a new factor into play, for it is known that the potentialities of its field are on a par with those of Pukemiro, and it has been stated that Hetheringtons will be going into production in August or September next. There is a possibility that a privately-owned mine which has been as productive as Pukemiro will increase its output in order to cater for the general demand, while another new flotation is also being mooted.

Having regard to these points, it will be realised that conditions are bound to change considerably during the ensuing 12 months. The position of these shares on the market at present is that Hetheringtons may apparently be bought below par, quotations being 7s 6d-4s 6d; Taupiris are quoted at buyers 225, no sellers, the shares being worth 22s in net assets on the balancesheet figures, while Pukemiros are at sellers £2 19s 6d, buyers £2 17s, the shares being worth approximately £1 13s 4d in net assets. *

The most curious element in the situation was the unheralded publication, in September last, for the first time, of a printed balance-sheet and directors’ report by Pukemiro Collieries. Previously the board had issued an informal typed statement which was not in general circulation, and a comparison of the leading items in the last of those documents with the 1926 balance-sheet does not altogether confirm the subsequent further rise in the price of the company’s shares. 1925. 1926.

Gross trading profit 57,107 64,147 7,040 Rents received .. .. 2,578 4,189 1,611 Upon the issue of the balance-sheet and an announcement that £IO,OOO of the profits would be capitalised, making the whole of the company’s nominal capital of £IOO,OOO issued and fully-paid, the shares which had been quoted at £2 5s six months earlier, changed hands at £3, and holders are now asking practically as much for the new scrip. The company may be able to maintain its dividend rate for some time to come, but the wise investor always treats a portion of such high disbursements as a return of capital.

£ £ £ Dec. Mining lease .. . 2,400 2.200 200 Plant, etc . 40,000 40,000 — Mercer property . 2,406 2,406 Inc. . 29,008 34,915 5,907 . 29,98S 31,245 Sundry debtors .. . . 16,379 18,205 1,826 Zealand . 18,408 32,908 14,500