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| Weekly Commentary Archive | | For archival copies of the Weekly Commentary click here... | | | | 7th November 2009 | Global insurance giant QBE (Au: QBE) reported a 19 percent lift in its net profit to A$1.02 billion for the six months to June 30 on revenue worth A$8.56b, up 22 percent. Earnings per share was 101.4c compared to 96c in the previous corresponding period. The interim dividend was 62c, up 1c. QBE is not expected to have the same growth in the second half, and EPS for the year is expected to fall by around 6 percent on last year to A$1.94. This puts it on a p:e of 11.3, a moderate discount to its average of 14. This assumes it makes no acquisitions, however, which is unlikely given the company's prudent borrowing levels currently and its track record of mopping up smaller competitors. Among the company's biggest strengths is its ability to manage risk, an essential attribute in the insurance game. Its track record over many years has been exceptional and there is no reason to think this cannot be maintained.
Tourism Holdings (THL) reported an 80 percent slump in profit to $2.9 million for 2008-9 as the decline in international visitors and the cost of restructuring the business weighed on the bottom line. The continuing businesses' net trading loss of $1.4 million reflected general trading conditions within the tourism industry, costs of $1.6 million from redundancies, and from restructuring of the business in response to the environment. However, the sale of Kelly Tarlton’s and Milford Sound Red Boats and its holding in InterCity Holdings helped the company avoid a loss. It has been a very hard year for THL, which is sensitive to tourist flows, but it did successfully grow its trading revenue, enhance its brands, reduce its debt and maintain shareholder's equity. In September, the number of visitor arrivals to New Zealand was up nine percent compared with September 2008 and there has been a big upsurge in visitation from Australia. This is a positive sign for THL. All the company needs now is a big fall in the NZ dollar, which would boost earnings.
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