Brambles finds its level of value

Brambles shares may have regained a portion of last week's huge losses, but don't expect the rally to go on for a lot longer if views like those espoused by Alliance Capital get around.

The fund manager suggests Brambles's third profit warning in 12 months highlights the gaping chasm between investors' perception of the once mighty blue chip and cold, hard reality.

Brambles Alliance opined in a presentation to members of the fourth estate isn't the ``unbreakable global pallet monopoly" it is commonly held to be. Rather, it was a ``structurally unsound franchise held to ransom by powerful retailers, stubborn recyclers, and nimble competitors".

Obviously it's difficult to glean Alliance's true thoughts on Brambles through such a subtle message. But it is safe to bet the fund manager doesn't own any great quantity of Brambles stock.

It matters not for Alliance anyway, because the fund manager follows the growth style of investing and, clearly, Brambles is no longer pitching itself at that corner of the market. Chairman Don Argus said at Monday night's annual meeting there were a few ``wounded bulls" with Brambles shares in their portfolios, and he indicated the company might find a more ready audience among value managers.

``I think you're going to find that there will be now value investors starting to look at this stock," Argus told reporters after the meeting. Cold comfort indeed for those who thought they were buying a growth stock.

All Terrain vehicle

Some investors might think Terrain Australia is a two-bit broking operation with little to show except a 12 per cent share price decline in the past year. Peter Graham disagrees.

The former Mase-Westpac, UBS and D&D Tolhurst trader appears to be running the show these days after the departure of three directors in the past week. Graham says the financial services group plans to be Australia's number one broker in three years' time, as well as operating 100-odd home loan stores and moving into funds management.

Some might think Graham has set his sights a little too high, given the company has a market capitalisation of just $8 million and is rumoured to have suffered badly from the market downturn. But the major reshuffling of management (chairman Michael Tilley has gone, as has Mark Evans and major shareholder Peter O'Mara) is, Graham says, a sign that things are getting very serious and a major expansion strategy is under way.

Terrain now has six home loan stores. That should grow to 24 if a few agreements are formalised. The company is also believed to be buying funds management business G5, run by the winners of the 1990 Nobel prize for maths.

Qantas flies Chicago

Qantas isn't sitting still, even while it gets together its arguments to present to competition regulators on why they should allow the airline's $520 million alliance with Air New Zealand.

The carrier said yesterday it would start services to Chicago from Melbourne, via Los Angeles, three times a week at the end of March. The expansion, which adds about 25 per cent to capacity between LA and Australia, is interesting on a couple of points.

It's perhaps the first strong sign of growth in that market for six to 12 months, and suggests Qantas is confident of a continued recovery.

The other thing worth noting is that the expansion comes as US rival United Airlines, one of the main competitors in the Pacific, is said to be flirting with bankruptcy. It's probably to be expected. Qantas chief executive Geoff Dixon, a scrapper from way back, hasn't a history of being kind to competitors. ``A pre-emptive strike" was how one observer described the Qantas move.

Meanwhile, Qantas and Air New Zealand are to put the case in favour of their alliance to the Australian Competition and Consumer Commission and the New Zealand Commerce Commission on December 9. There was talk though that Qantas might bring forward its own submission to next week.

Capital idea for Amatil

Coca-Cola Amatil shares were cheered again yesterday after the soft-drink bottler on Wednesday unexpectedly upgraded its target for 2002 net profit to ``at least" 15 per cent.

While broad investor interest in the stock was seemingly renewed, the thoughts of a few turned back to one of those issues that's lingered just in the background. We're talking capital management and ``bolt-on" acquisitions.

The two are linked, with Amatil having promised in the past either to buy new businesses or hand back the cash to shareholders if it can't find any worthwhile purchases. Lately Amatil has been buying additional production capacity to give it the room to launch new products in Australia.

ABN Amro reckons Amatil can probably spend $500 million. But the investment bank observed there were few obvious targets in Australia, and recent calamities have probably discouraged Amatil from looking much in Asia.

All that firepower, ABN Amro suggested, would be better employed in the form of a return of funds to shareholders. It is thought that one or two large investors have aired the idea before to Amatil.