Wednesday, November 03, 2004
Portfolio push-me-pull-you
Apart from a hedgehog in the cellar and white mice in the piano the most memorable image from Hugh Lofting's Dr Dolittle is the push-me-pull-you, a fictional creature with four legs, each pair pointing in a different direction and two heads doing likewise.
The push-me-pull-you was some kind of Siamese sheep and probably looked a little bit like this. The heads probably would have spent their time arguing which way to move, hearing the other's jokes ad nauseum and feeling constipated.
The recent high oil price and it's expected effect on my portfolio reminded me of this queer beast. A high oil price is a boon to Dana Petroleum but is the bane of a company like Mayborn. Basic inputs derived from oil are a key ingredient in the manufacture of Mayborn's plastic baby products. In theory, while Dana basks in this bonanza through higher output prices and Mayborn should suffer as input costs soar.
The Times recently reported the struggle some Chinese manufacturers were experiencing in the face of oil prices exceeding $50 a barrel.
Chinese manufacturers have cut production, shut down factory lines and sliced their margins to the bone in a desperate attempt to cope with $50 oil and severe energy shortages....
The surge in the oil price could have more drastic effects. It has wrecked the profit calculations of Chinese plastics, chemicals and textiles companies.
Mayborn's baby products operations consume a huge amount of plastics. Though the recent burgeoning oil price has buoyed profit expectations at Dana Petroleum, Mayborn has thus far escaped any scything sentiment and management have not reported any slip in margins.
Despite having a portfolio of only four shares I remain interested and enquiring of most listed plcs. Their vacillations and tribulations can yield vital information on industry conditions and any emerging trends. Coral Products, the UK based manufacturer of CD and DVD boxes recently warned at their AGM that costlier raw materials would hit profits this year. I'm left wondering if Mayborn has suffered similarly and what this means for my target price to sell. Mayborn last issued a trading statement in December 2003, explaining that market expectations would be exceeded. A similar announcement this year would see me raise my target for Mayborn but any news of falling profitability may lead me to sell. So, until further news arrives, Mayborn target remains 340p and I'll continue to Dolittle with the make-up of my portfolio.
The Artful Dodger
The push-me-pull-you was some kind of Siamese sheep and probably looked a little bit like this. The heads probably would have spent their time arguing which way to move, hearing the other's jokes ad nauseum and feeling constipated.
The recent high oil price and it's expected effect on my portfolio reminded me of this queer beast. A high oil price is a boon to Dana Petroleum but is the bane of a company like Mayborn. Basic inputs derived from oil are a key ingredient in the manufacture of Mayborn's plastic baby products. In theory, while Dana basks in this bonanza through higher output prices and Mayborn should suffer as input costs soar.
The Times recently reported the struggle some Chinese manufacturers were experiencing in the face of oil prices exceeding $50 a barrel.
Chinese manufacturers have cut production, shut down factory lines and sliced their margins to the bone in a desperate attempt to cope with $50 oil and severe energy shortages....
The surge in the oil price could have more drastic effects. It has wrecked the profit calculations of Chinese plastics, chemicals and textiles companies.
Mayborn's baby products operations consume a huge amount of plastics. Though the recent burgeoning oil price has buoyed profit expectations at Dana Petroleum, Mayborn has thus far escaped any scything sentiment and management have not reported any slip in margins.
Despite having a portfolio of only four shares I remain interested and enquiring of most listed plcs. Their vacillations and tribulations can yield vital information on industry conditions and any emerging trends. Coral Products, the UK based manufacturer of CD and DVD boxes recently warned at their AGM that costlier raw materials would hit profits this year. I'm left wondering if Mayborn has suffered similarly and what this means for my target price to sell. Mayborn last issued a trading statement in December 2003, explaining that market expectations would be exceeded. A similar announcement this year would see me raise my target for Mayborn but any news of falling profitability may lead me to sell. So, until further news arrives, Mayborn target remains 340p and I'll continue to Dolittle with the make-up of my portfolio.
The Artful Dodger
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