Fleetwood a quiet achiever

Caravans and mobile homes may not rate as the most exciting of products but that hasn’t stopped Fleetwood being arguably the star performer among Western Australia’s listed companies.

It has been a remarkably consistent performer, quietly delivering increased dividends and increased profits year after year for the past decade.

This is reflected in its total shareholder return figures.

Over the five years to June 2004, its TSR of 48.8 per cent makes it the 16th best performer out of all WA-listed companies.

Over three years, its TSR of 91.4 per cent makes it the 11th best performer.

Over the 12 months to June it slipped down the rankings, but a TSR of 92.7 per cent is very impressive by any measure.

The calculation of Fleetwood’s TSR was based on a June 30 share price of $7.65, and since then its shares have risen to above $8.20, so the company is well on the way to producing another year of strong shareholder returns.

Burdett Buckeridge Young analyst Adam Michell is very bullish on Fleetwood’s prospects, tipping a 12-month price target of $10.

Long serving managing director Greg Tate says the secret of Fleetwood’s success lies in the ‘three Rs’ – retirement, resources and recreation – all of which have been growth sectors over the past decade.

Fleetwood makes caravans and recreational vehicles, which are being bought in increasing numbers by retiring baby boomers, and makes park homes for mining and construction camps, particularly in the booming Pilbara region, and for retirees.

And, through a series of acquisitions, it has become a major supplier of parts and accessories to other manufacturers of recreational vehicles.

Its latest results for the six months to December 2003 showed a 44 per cent increase in revenue to $138 million and a 97 per cent increase in net profit to $10.1 million.

Looking ahead, BBY’s Adam Michell has forecast annual net profit of $21.1 million in 2004 rising to $25.6 million in 2005 (excluding a one-off $6.3 million profit from the sale of six caravan parks) and $30.5 million in 2006.

“We continue to see Fleetwood as offering a strong long-term earnings growth profile,” Mr Michell said.

Patersons Securities analyst Nick Allan is also bullish on Fleetwood’s prospects.

He said the key driver of future earnings growth would be the recreational vehicles division, which includes the Coromal and Windsor caravan manufacturing operations and the Camec, Car-Van and Serada component businesses.

Mr Allan said the recreational vehicles division “will continue to drive Fleetwood’s future earnings growth for some years to come, fuelled by favourable demographic changes, increases in production capacity and process improvements”.

Provision of portable accommodation to the resources sector is another positive for Fleetwood.

Its latest contract was for BHP Billiton’s Ravensthorpe nickel project, where it will earn $22 million by providing an accommodation village for up to 1,000 people during the two-year construction phase.

Fleetwood has continued to pursue acquisition opportunities, announcing in April the $1.5 million purchase of Melbourne company Rainbow Transportable Homes.

Its biggest strategic move this year was the sale of its six caravan parks to Aspen Group for $28 million.

Fleetwood said it would continue to develop new parks, providing a market for its manufactured accommodation, but would sell the parks once they mature and provide a steady return akin to a property trust.

As a result of the sale, Fleetwood is debt free.

FLEETWOOD TSR

• 12 months: 92.7%
• 3 years: 91.4%
• 5 years: 48.8% 

STRATEGIES

• Increased caravan production capacity.
• Sold six caravan parks.
• Won BHP Billiton Ravensthorpe contract.
• Purchased Rainbow Transportable Homes.