Upfront Investor | CCL – Look at the Finer Detail

Coca-Cola Amatil (CCL) has been quite brutal in clearing the financial deck ahead of a change at the helm and this has led some to question whether the write down of the SPC business may have been overstated. Investors have a right to be shocked by the recent financial result, which was announced just after the company went cap in hand to the state government asking for taxpayer support. The problem I have with this recent news is not simply the degree of the write down that CCL chose to take, but the way in which the financial results were initially reported.

This brings me back to one simple thing and that is how we all need to be alert to what drives human emotions, which is Fear and Greed. With that in mind do we really want a media that focusses on sensationalism or a body that keeps us better informed?  Of course this responsibility doesn’t rest solely with the media outlets as I believe that Australians need to demand more from our media and lift the bar on reporting on financial matters.

The news on CCL showed an 82.5 per cent fall in net profit (inclusive of the SPC write down), however, it failed to clearly outline how excluding the write down CCL’s position was a fall in underlying profit of around 10 per cent. Whilst the write down is a concern for investors it was necessary and timed well to set the scene for the new CEO Alison Watkins to drive the business forward.

So what do we expect in the market?

Positive numbers continue to be issued to the market from a number of our largest listed companies and investors appear to be eating up the news, pushing prices higher across the broader market. At the time of writing the All Ordinaries Index was up 62 points or 1.15% from the prior week’s close.

Importantly, continued bullish momentum has pushed the All Ords above the high of 5383 points achieved in early January. Regular readers will know this is the sign I have been waiting for to confirm the market is much more likely to now continue to rise toward my target of between 5600 and 5800 points over the coming months. On this basis, investors would be wise to start looking for stocks that present a solid value proposition.

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To your profitable trading,

Dale Gillham
Chief Analyst
Wealth Within

Dale Gillham, ‘one of the country’s most respected analysts’ (Wealth Creator Magazine, Nov/Dec 2004), sought after key note speaker and author of the best selling book ‘How to Beat the Managed Funds by 20%’. Dale has assisted thousands of traders and investors to learn to trade shares and become confident and profitable in their direct share investments. Tired of an industry saturated by quick fix gimmicks and expensive short-courses, Dale co-founded Wealth Within to provide ‘ real education and ongoing personalised support’, as well as independent investment adviceto traders and investors who have become disillusioned by the market for one reason or another. As testament to this, Wealth Within launched Australia’s first and only nationally accredited Diploma and Advanced Diploma of Share Trading and Investment.