Australia | Jul 07 2006
By Rudi Filapek-Vandyck
Some investors learned today that not every take over rumour has merits with Australia’s largest gold miner Newcrest Mining (NCM) issuing a profit warning instead of confirming it had received an offer.
Speculation (and the share price) rose yesterday after the market became aware that GSJB Were had suspended coverage on the company triggering rumours the long mooted offer from an offshore suitor was about to be announced. GSJB Were is seen as the "house broker" of the company and the pending offer would have forced it to temporarily suspend coverage of the stock.
However, usually brokers wait until the announcement is made before suspending coverage.
Newcrest’s official clarification, issued today, sheds some light on the matter by stating there was a "misunderstanding" during a recent meeting with GSJB Were analysts, which has prompted the company to clarify it believes current market expectations for its FY07 profits are too high.
According to Thomson One Analytics, current market expectations are for a FY07 profit between $301.63m-$238m – or more or less double this year’s guidance of a net profit of $125-135m.
Newcrest "clarified" today it won’t meet those expectations. Investors wanting firmer guidance will have to wait until the new CEO has gone through all the figures and projections for the year.
So much for the ever recurring Newcrest takeover saga (it has to be pointed out the company is building up a track record of market disappointments).
Investors willing to chase the omnipresent takeover frenzy can now maybe seek solace at Colorado Group (CDO) or OrotonGroup (ORL). Both retailers are believed to be encircled by private equity groups.
At a little over 3pm Newcrest shares were trading $1.27 (5.72%) lower at $20.93.