Guy Gaeta has given up dealing with fruit merchants.
He now drives the five hours from Orange to Sydney several times a week to run his own stall in the growers shed of the Sydney Markets.
There he sells his apples and cherries direct to consumers and retailers to avoid the middle man.
"It's open slaughter (sic)," he says
The merchants "pay as little as you can to the grower, or as much as you can to keep him," he says.
"But we don't know what the thing is sold for. No government has ever been able to fix it up."
Growers want a receipt early, once their consignment of fruit and vegetables has arrived.
But meet the wholesalers at the Sydney Markets and they'll all tell you, it's just too complex to give a receipt for all the produce as it arrives in the early morning, before they have ascertained its quality, or market demand.
Bill Chalk is long running president of the Chamber of Fruit and Vegetable Industries at the Sydney Markets, where he also has a wholesale business called Southern Cross Produce.
"Now if you were to negotiate a price with all these growers before you started to sell; my staff started at 3am and the buyers are in here trying to buy, what time do we negotiate the price and how do we do it?" he asks somewhat rhetorically.
But it's more than the failure to deliver a price early.
For the growers it's also about the confusion of whether at Sydney Markets, they're dealing with agents or merchants.
Apple grower Guy Gaeta believes the biggest problem is merchants are acting as agents, but not declaring their service fee as a commission, and therefore not paying GST.
"If you're acting as a wholesaler, you should be purchasing the crop, within a certain amount of hours, you should be telling the grower what you're paying," says Mr Gaeta.
So growers should be getting a receipt.
"They're not doing that. They're telling them, a week later, they send em a fax, of what they sold them for, but when the paperwork is done they don't show the 10 per cent as if they're working as an agent," says Guy Gaeta
But if that's the case, why isn't the tax office cracking down?
"They're scared," he says.
Bill Chalk does agree with the fruit growers that the Horticultural Code, that was drawn up during the Howard Government, is a "dog's breakfast.... no one practical person sat down to work this out.
"How would you like to be on the phone at 2am negotiating a price, and you don't agree."
The produce "just sits here."
It's 5am at Sydney Markets and already wholesale merchants, have been there for up to three hours.
It's a dangerous place to walk around, as the 700 forklifts buzz around and despite laws to the contrary, presume right of way.
Bill Chalk explains this market is big and complex.
"30 per cent of the population of Australia gets its fruit and vegetables through Sydney Markets somehow.
With 5,000 workers, "Sydney is the largest market in the Southern Hemisphere, the second-largest in the world, and the largest privately owned market in the world."
Wholesale markets like this in Sydney; in Brisbane, Melbourne, Adelaide and Perth are the key distribution point for almost all Australia's horticulture.
It's where retailers large and small, processors and the food industry come to buy fruit and veg for us, the consumers.
Bill Chalk says boxes arrive from many suppliers, of varying quality and there'd be endless paperwork if receipts were to be written.
"I"ll say this - they don't understand the practicalities. In your mind, you think it's quite simple, don't you.
"Well I'll show you this, I've never thought of this, I'm running off the cuff here, there's one, two, three, four different producers on that pallet. So I've got to write four different receipts?"
But back on the farm, there's mistrust about the markets, and the pricing system.
Peter Darley has 25,000 apple trees - of the most popular varieties, on the rolling hills in the central-west NSW.
He's been lobbying for changes for 11 years.
"It doesn't matter what state you are, I think the key problem in each state is the lack of transparency, in the actual sale price.
"Now if you were to actually go and buy a motorcar, you'd ask the price you're going to get for it, or if you were selling it you wouldn't sell it without first getting a price.
"But as horticultural producers we consign produce to that market and we don't know what we're going to get for it.
"They operate under a merchants' agreement. Now a true merchant must give the grower a price, the grower agrees to that price, that's fine, the wholesaler can then go on, and make a mark up on that produce and make a profit himself.
"He's doing that now without setting a price with the grower."
He says it takes at least five days to get a price out of the wholesale merchant.
Peter Darley is on the Horticulture Taskforce, to try to modify the Horticulture code that was introduced under the last government.
He says the lack of transparency is "decimating the industry. We just can't operate anymore.
"The price we've seen in the last few weeks, the prices retailers are charging and the low price farmers are receiving, somewhere in the middle, is it price gouging by the retailer or is it price taking by the wholesaler? Because there's no transparency in there, no one knows."
Peter Darley says the problems go back eleven years, before there was any code.
"The government brought in voluntary retail grocery code, that was never very successful.
"Next the government brought in mandatory code, but it only covers wholesalers, (and it should cover everybody.) retailers, processors, exporters, wholesalers.
"That's one where we agree with the wholesalers.
"That's where we'd look for transparency."
"We've seen retailers charge high prices, pink lady apples e.g are $7.99 ...to $9.99 a kg, but if the grower is receiving $2. to $2.20/ kg, that's about the top price he's receiving. Clearly there's a huge margin that's disappearing out of the equation," says Peter Darley.
The federal independent member Bob Katter has launched his own changes to the Horticulture Code in Parliament, to try to make every transaction transparent.
"Why wouldn't you give the farmer evidence of sale?
"Every other sale that takes place in the world and in this country gets that," Mr Katter told Parliament.
"But the poor old farmer, all he gets is the rough end of the pineapple, Mr Speaker."
Now dubbed the Katter code, not only does it call for transparency and a receipt, it wants a price setting in 24 hours, a payment within 45 days, and the money to be placed in a trust account.
At the moment, the fruit merchant can go broke and the grower wears the whole risk.
It's fuelled by the likes of Makse Srhoj fruit grower in Katter's productive Far North Queensland electorate.
Makse Srhoj says he's been left unpaid for fruit and pumpkins he's sent and Sydney or Brisbane four times in the past eight years.
The worst case was a Brisbane wholesaler went bankrupt.
"It was probably about four years ago, with trading company Benays which involved half a million dollars to about 10 or 12 farmers.
"And how much were you owed?"
"I was owed around about $44,500 actually. I'd delivered pumpkins."
He says both the consumer watchdog ACCC and to ASIC (the Australian Securities and Investment Commission) concluded the amount was too small to chase.
Sydney Markets believe it has far fewer bankruptcies than the wider economy.
Within the past decade the market has run a Credit Co-op to ensure the traders get their money.
President of Chamber of Fruit and Vegetable Industries Bill Chalk says Sydney traders can limit their liability if the retailer they sell to doesn't pay.
But he doesn't see why the co-op should invite growers in.
"Just like any debtor, if for some reason one of the majors defaults, I'd have no way of getting paid either.
"That's part of a business risk. Growers need to do their research. And for the size of the industry this is, it doesn't take long for growers to work out who pays and who doesn't.
"People still get caught, but percentage wise it's whimsical on turnover of payments to growers."
Where to now?
Merchants you meet at the markets believe their relationships with growers are important, and are based on trust.
But for mango and pumpkin grower Makse Srhoj whose been burnt many times, trust is a poor excuse for a lack of transparency.
And Guy Gaeta has his own suspicions of Sydney Markets, which are not being investigated.
"I don't know of too many farmers going around with $400,000 cars.
"You're telling me they're small businesses? We're the small business supplying them.
"We're giving them the wealth and we're not getting our fair share of what truly the fruit has been sold for."
The growers are continuing to lobby the Government to get rid of the old contracts, arguing merchants have too much power.
Katter's code has taken the next step and will be investigated by the House Agriculture Committee. It's called for public submissions.
Bob Katter's trying to force fruit merchants to be more open in their dealings with growers but it's likely to be met with fierce resistance and it's what numerous Government inquiries have failed to do in the past.
2011年10月31日 星期一
2011年9月28日 星期三
Illegal online pharmacy network busted
An illegal online pharmacy network used for shipping psychotropic drugs from India to customers in the U.S., Europe and Canada for the last six years has been busted by the Narcotics Control Bureau . Two persons were arrested on Wednesday in this connection.
Those arrested were identified as Alexander Vyukhin alias Alex , a Russian residing near Auroville for the last five years, and Shanker alias Sekar. They were remanded to custody and sent to prison.
Explaining their operations, NCB Zonal Director S. Davidson Devasirvatham said overseas customers requiring psychotropic drugs, which are usually banned in many foreign countries, would approach merchantaccount -holders online for delivery of the drugs.
“Theaccount -holders suspected to be operating from abroad have contacts in India to whom lists of required drugs, along with overseas addresses to which the delivery is to be made, are emailed. They pay huge money as the drugs are not available easily overseas.”
Investigation based on specific intelligence found that Vyukhin was such a contact for a merchantaccount -holder named ‘John', whose customers are in the U.S., parts of Europe and Canada. “Vyukhin received emails with drug orders on a regular basis from John; he would pass them on with delivery addresses to Shankar, who has a pharmaceutical background,” Mr. Devasirvatham added.
Shankar had travelled around the country procuring psychotropic drugs such as Alprax, Diazepam, Oxycodone and Hydrocodone and sent them overseas through Express Mail Service and Railway Mail Service . The duo were involved in the drug trade for nearly six years and are suspected to have made an overall profit of over Rs. 1.5 crore, NCB sources said.
The NCB team raided Shankar's house in Villupuram on Monday and seized three boxes of drugs and some parcels meant for delivery overseas.
Further probe is on to identify their overseas contacts and track down those who sold drugs in bulk to Shankar.
Those arrested were identified as Alexander Vyukhin alias Alex , a Russian residing near Auroville for the last five years, and Shanker alias Sekar. They were remanded to custody and sent to prison.
Explaining their operations, NCB Zonal Director S. Davidson Devasirvatham said overseas customers requiring psychotropic drugs, which are usually banned in many foreign countries, would approach merchant
“The
Investigation based on specific intelligence found that Vyukhin was such a contact for a merchant
Shankar had travelled around the country procuring psychotropic drugs such as Alprax, Diazepam, Oxycodone and Hydrocodone and sent them overseas through Express Mail Service and Railway Mail Service . The duo were involved in the drug trade for nearly six years and are suspected to have made an overall profit of over Rs. 1.5 crore, NCB sources said.
The NCB team raided Shankar's house in Villupuram on Monday and seized three boxes of drugs and some parcels meant for delivery overseas.
Further probe is on to identify their overseas contacts and track down those who sold drugs in bulk to Shankar.
2011年9月19日 星期一
Sidney Pinto Authors Debut Novel at 85
Sidney Pinto was born on September 2, 1926 in Mangalore, the seventh child of Albert and Helen Pinto. He studied in St. Aloysius School till 1938 in the Kannada medium of instruction, and could not speak English until he entered high school at the age of 13. He then started learning in English with Hindi as the second language. After passing the intermediate exam, he joined Loyola College, Madras and obtained an M. A. in Economics. He moved to Bombay (now Mumbai) in 1948 and did his L.L.B.
After a stint in the law profession, he shifted to industry in 1956. He joined an industrial company run by British owners, and in 1962, the Indian subsidiary of Imperial Chemical Industries Ltd. (ICI). In 1968, he was the only recruit to the proposed merchant banking unit of Grindlays Bank, and became head of the unit in 1973. He left Grindlays in 1976 and set up a consultancy of his own.
On a visit to a friend, he was introduced to a young businessman Uday Kotak (then 22 years), who had obviously studied his past career. Kotak insisted on his joining him to form a new business, which eventually became Kotak Mahindra Bank in 1985 when Kotak was 25 and Pinto 59. In 2003, Pinto was obliged to resign because of a new rule of the Reserve Bank that no director of a bank should be more than 70 years old. Pinto married Rosemary Albuquerque in 1957. She died in 2002.
Coming back to the novel, its central hero is Louis Puchhekanna (in Tulu, Puchhekanna means cat’s eyes), the youngest son of Pascal and Lethy Cardozu. He is a mulgenidar, farmer-tenant, who can be evicted only if he persistently defaulted on paying the annual rent to his landlord – in this case Walter Christo, a retired public official who lived in a bungalow, Forest Lodge, at Bijey, Mangalore, with his wife Veronica and two daughters, Jane and Rebecca. They had two in-house servants – old Sherpinami, the cook-woman, and Pauline, young, dark, house-help. For outdoor work, they had Kuttappan, a Kerala-origin bachelor, loyal to the family, and the local, Monappa, generally undependable. In this setting is transplanted Louis (hereafter Puchhe) who was viewed suspiciously rebellious by his ever-drinking father and his two elder siblings. He is offered to the landlord for work in Forest Lodge for a monthly salary of Rs. 6 – which was to be deposited in a post office account and beyond the reach of Pascal who would have spent it on his liquor.
The liquor story, partly extracted later, had already ended the life of Lethy, in her 30s, who was offered as dummy hostage in a liquor raid case and, there being no jail for women in Mangalore, was sent to Vellore where she was repeatedly gang-raped, ending with a delayed message that she had passed away. Young, ruddy and handsome Pucche is also viewed suspiciously at Forest Lodge because of the concern for protecting the virginity of the two daughters of the Christos and their dusky maid Pauline, for her virginity also the landlord couple feel responsible (see extract below). For this reason, Puchhe is barred from the run of the house and is made to work and sleep outdoors, on the varandah, and is allowed into the kitchen only for meals to be served by the household servant women.
Meanwhile, like water finds its own level, love blossoms furtively between Puchhe and Pauline, leading to her becoming pregnant – a great disgrace and scandal in the then conservative Mangalorean setting. The deed is done, what to do with the dagger? Puchhe the simpleton is prepared to marry Pauline and save her from disgrace – even if it involves eloping. But, Pauline carries a great secret which she is not willing to share with Puchhe nor does she want to cheat him. As it turns out later, her father was a leper confined to the leprosy asylum of Fr. Muller’s Hospital at Kankanady and she did not want Puchhe to suffer for her temporary relief.
Meanwhile, the landlord’s daughter, Rebecca, is infatuated with Puchhe and when he expressed desire to learn English to the landlady, Rebecca jumps into the ring and it leads to a touchy situation – literally. But, now Pauline’s illegitimate pregnancy gives a new twist to their story. Enters Lucy Sanctis, a neighbouring resident and head post master, who also doubles up as agony aunt and, beyond giving advice, also gets into finding solutions. Lucy, with the help of parish priests, gets Pauline married to a widower in a neighbouring parish, Felix Balthazer, a tailor by trade but also a helper in parish work.
Everything looks okay till Pauline is found ready to deliver before the conventional nine months after marriage. An upset Felix, heavily reinforced by liquor, uses his trade scissors to pierce the stomach of Pauline to get at the unborn child. The heavily bleeding Pauline is rushed to Fr Mullers Hospital where an emergency operation delivers a healthy, fair baby – with light blue eyes. But, Pauline dies of the deep wound and loss of blood. In due course the child is given to St Antony’s asylum at Jeppu.
At Forest Lodge, Pauline’s secret disappearance is known to the landlords; but not to Puchhe who agonises over her sudden absence. Now he is given Pauline’s duties and access to the house. One day, however, Walter finds his valuable Parker pen missing and Puchhe is the first suspect and is taken to the police station and is set for third degree treatment to extract a confession. At another level, Rebecca, sure of Puchhe’s innocence, gets a visiting young relative to admit to the theft and all would have been normal. But, Puchhe, fearing the impending torture by police, after borrowing money from his mentor, Kuttappan, secretly leaves the house, heading for Bombay, via bus up to Kadur and train thereafter.
As serendipity would have it, while waiting for the train to arrive, Puchhe is spied by Wendy D’Souza, setting out to go to England to be a nurse in the Royal Navy. She takes Puchhe under her wing, takes him to her untenanted flat in Mahim and then to stay at Majestic Hotel in downtown Bombay. She puts him touch with the vague contacts which Puchhe had come up with -- mainly a garage owner at Sassoon Docks. He also finds accommodation in a local Mangalorean club, studies in night school and soon opens an automobile parts shop, in partnership and ends up buying a flat in Colaba.
One of his better-placed friends and mentors, Stan, has taken a flat in suburban Vile Parle and Puchhe visits and spends week-ends with him. On one such train journey, he spies a familiar face exiting at Bandra Station. Stalking her, he traces her to a flat in Bandra West and gets low-down on how she has adopted Puchhe’s and Pauline’s son from the asylum and how she now works in Bombay with her school-going son, named Edward. To bring up the adopted son, she had given up the idea of marriage and written off her rights to the family property so that she can buy a flat and live in Bombay with Edward. During the story narration, Edward arrives from his boarding school to spend the weekend at home. His initial reaction to meeting Puchhe is detailed in the extract given later.
One thing leads to another and ends up in the low-key marriage of Puchhe and Rebecca, with the Christo couple and Jane and her husband attending. Puchhe moves out of his Colaba flat and moves into Rebecca’s Bandra flat. “And it was agreed by all concerned that each one would retain the name under which each had lived: Rebecca Christo. Edward Christo and Louis Puchhekanna.”
Aravind Adiga had used Mangalorean background in his novel, "Between The Assassinations" with little attempt to conceal the real names of places. Pinto is more specific and evokes nostalgia for Mangalore. His style is crisp and racy. He does not waste time on elaborate foreplay and repetitive sweet nothings – partly because all the amorous encounters are furtive. It is a page–turner, leading to the speculation” if only Pinto had got into his literary outpourings earlier. Of course, it is a matter of time, inclination and inspiration. We should be thankful for what we have. Amen.
After a stint in the law profession, he shifted to industry in 1956. He joined an industrial company run by British owners, and in 1962, the Indian subsidiary of Imperial Chemical Industries Ltd. (ICI). In 1968, he was the only recruit to the proposed merchant banking unit of Grindlays Bank, and became head of the unit in 1973. He left Grindlays in 1976 and set up a consultancy of his own.
On a visit to a friend, he was introduced to a young businessman Uday Kotak (then 22 years), who had obviously studied his past career. Kotak insisted on his joining him to form a new business, which eventually became Kotak Mahindra Bank in 1985 when Kotak was 25 and Pinto 59. In 2003, Pinto was obliged to resign because of a new rule of the Reserve Bank that no director of a bank should be more than 70 years old. Pinto married Rosemary Albuquerque in 1957. She died in 2002.
Coming back to the novel, its central hero is Louis Puchhekanna (in Tulu, Puchhekanna means cat’s eyes), the youngest son of Pascal and Lethy Cardozu. He is a mulgenidar, farmer-tenant, who can be evicted only if he persistently defaulted on paying the annual rent to his landlord – in this case Walter Christo, a retired public official who lived in a bungalow, Forest Lodge, at Bijey, Mangalore, with his wife Veronica and two daughters, Jane and Rebecca. They had two in-house servants – old Sherpinami, the cook-woman, and Pauline, young, dark, house-help. For outdoor work, they had Kuttappan, a Kerala-origin bachelor, loyal to the family, and the local, Monappa, generally undependable. In this setting is transplanted Louis (hereafter Puchhe) who was viewed suspiciously rebellious by his ever-drinking father and his two elder siblings. He is offered to the landlord for work in Forest Lodge for a monthly salary of Rs. 6 – which was to be deposited in a post office account and beyond the reach of Pascal who would have spent it on his liquor.
The liquor story, partly extracted later, had already ended the life of Lethy, in her 30s, who was offered as dummy hostage in a liquor raid case and, there being no jail for women in Mangalore, was sent to Vellore where she was repeatedly gang-raped, ending with a delayed message that she had passed away. Young, ruddy and handsome Pucche is also viewed suspiciously at Forest Lodge because of the concern for protecting the virginity of the two daughters of the Christos and their dusky maid Pauline, for her virginity also the landlord couple feel responsible (see extract below). For this reason, Puchhe is barred from the run of the house and is made to work and sleep outdoors, on the varandah, and is allowed into the kitchen only for meals to be served by the household servant women.
Meanwhile, like water finds its own level, love blossoms furtively between Puchhe and Pauline, leading to her becoming pregnant – a great disgrace and scandal in the then conservative Mangalorean setting. The deed is done, what to do with the dagger? Puchhe the simpleton is prepared to marry Pauline and save her from disgrace – even if it involves eloping. But, Pauline carries a great secret which she is not willing to share with Puchhe nor does she want to cheat him. As it turns out later, her father was a leper confined to the leprosy asylum of Fr. Muller’s Hospital at Kankanady and she did not want Puchhe to suffer for her temporary relief.
Meanwhile, the landlord’s daughter, Rebecca, is infatuated with Puchhe and when he expressed desire to learn English to the landlady, Rebecca jumps into the ring and it leads to a touchy situation – literally. But, now Pauline’s illegitimate pregnancy gives a new twist to their story. Enters Lucy Sanctis, a neighbouring resident and head post master, who also doubles up as agony aunt and, beyond giving advice, also gets into finding solutions. Lucy, with the help of parish priests, gets Pauline married to a widower in a neighbouring parish, Felix Balthazer, a tailor by trade but also a helper in parish work.
Everything looks okay till Pauline is found ready to deliver before the conventional nine months after marriage. An upset Felix, heavily reinforced by liquor, uses his trade scissors to pierce the stomach of Pauline to get at the unborn child. The heavily bleeding Pauline is rushed to Fr Mullers Hospital where an emergency operation delivers a healthy, fair baby – with light blue eyes. But, Pauline dies of the deep wound and loss of blood. In due course the child is given to St Antony’s asylum at Jeppu.
At Forest Lodge, Pauline’s secret disappearance is known to the landlords; but not to Puchhe who agonises over her sudden absence. Now he is given Pauline’s duties and access to the house. One day, however, Walter finds his valuable Parker pen missing and Puchhe is the first suspect and is taken to the police station and is set for third degree treatment to extract a confession. At another level, Rebecca, sure of Puchhe’s innocence, gets a visiting young relative to admit to the theft and all would have been normal. But, Puchhe, fearing the impending torture by police, after borrowing money from his mentor, Kuttappan, secretly leaves the house, heading for Bombay, via bus up to Kadur and train thereafter.
As serendipity would have it, while waiting for the train to arrive, Puchhe is spied by Wendy D’Souza, setting out to go to England to be a nurse in the Royal Navy. She takes Puchhe under her wing, takes him to her untenanted flat in Mahim and then to stay at Majestic Hotel in downtown Bombay. She puts him touch with the vague contacts which Puchhe had come up with -- mainly a garage owner at Sassoon Docks. He also finds accommodation in a local Mangalorean club, studies in night school and soon opens an automobile parts shop, in partnership and ends up buying a flat in Colaba.
One of his better-placed friends and mentors, Stan, has taken a flat in suburban Vile Parle and Puchhe visits and spends week-ends with him. On one such train journey, he spies a familiar face exiting at Bandra Station. Stalking her, he traces her to a flat in Bandra West and gets low-down on how she has adopted Puchhe’s and Pauline’s son from the asylum and how she now works in Bombay with her school-going son, named Edward. To bring up the adopted son, she had given up the idea of marriage and written off her rights to the family property so that she can buy a flat and live in Bombay with Edward. During the story narration, Edward arrives from his boarding school to spend the weekend at home. His initial reaction to meeting Puchhe is detailed in the extract given later.
One thing leads to another and ends up in the low-key marriage of Puchhe and Rebecca, with the Christo couple and Jane and her husband attending. Puchhe moves out of his Colaba flat and moves into Rebecca’s Bandra flat. “And it was agreed by all concerned that each one would retain the name under which each had lived: Rebecca Christo. Edward Christo and Louis Puchhekanna.”
Aravind Adiga had used Mangalorean background in his novel, "Between The Assassinations" with little attempt to conceal the real names of places. Pinto is more specific and evokes nostalgia for Mangalore. His style is crisp and racy. He does not waste time on elaborate foreplay and repetitive sweet nothings – partly because all the amorous encounters are furtive. It is a page–turner, leading to the speculation” if only Pinto had got into his literary outpourings earlier. Of course, it is a matter of time, inclination and inspiration. We should be thankful for what we have. Amen.
Mixed Approach On Total System
We reiterated our Neutral recommendation on Total System Services Inc. (NYSE:TSS), the global electronic payment processor and merchant acquirer, based on the current sustainability factor. The company reported second-quarter operating earnings of 28 cents per share, which came in a penny higher than the Zacks Consensus Estimate of 27 cents and climbed from 25 cents per share in the year-ago quarter.
Results reflected increased same client transactions, lower taxes and slight increase in overall transaction volume. However, continued weakness in North America services along with a dip in merchant acquiring services revenue, higher-than-expected cost of services and selling, general and administrative (SG&A) expenses led to the decline in operating income.
Total System has come a long way from the negative top-line growth trend. Since the second quarter of 2010, the company’s fundamentals are screening decent growth in the top line. Although the rate is stuck at lower single digits, the company’s growth drivers lay ample optimism on the performance of the stock in the long run.
The market recovery has also enabled the improvement in new client growth, same-client transaction volumes and accounts-on-file. Going ahead, the revenue recovery is believed to follow slow and steady growth in North America as well with the company’s leading technology platform, improved pricing and healthy consumer spending once the economy stabilizes.
Total System’s risk free balance sheet along with a modest cash position and cash flow generation provides viable scope for share repurchases and acquisitions. The complete acquisitions of First National Merchant Solutions LLC (FNMS) and TermNet Merchant Services along with international alliances are expected to drive the company’s merchant acquiring space and contract portfolio. Meanwhile, the recent expansion of share repurchase program continues to inculcate confidence among investors.
On the flip side, Total System is vulnerable to increased competition from dominant players such as Global Payments Inc. (NYSE:GPN) and Alliance Data Systems Corp. (NYSE:ADS). Moreover, despite the economic recuperation since 2008, operating margin has witnessed a decline from 28.6% in 2008 to 27.2% in 2009 to 25.6% in 2010. It further declined to 17.3% in the first half of 2011 from 18.9% in the first half of 2010. The company even has a significantly high backlog of accounts.
Management’s outlook for top-line growth in 2011 also appears stressful. With weak internal fundamentals, the company is liable to lose edge over its competitors going ahead.
Currency and interest rates fluctuations pose additional risks. Total System is also exposed to sufficient risk from the regulatory measures enacted in the U.S. in July 2010. These are expected to take effect in the upcoming months of 2011, which could contract credit offerings from financial institutions. Any unfavorable impact of regulations could hamper the company’s inorganic growth strategy.
Finally, we believe that the overall market stability and healthy impact of the regulations in the card industry will help recover the number of client accounts and long term contracts in the long run.
Given the pros and cons, the Zacks Consensus Estimate for the third quarter is pegged at 29 cents per share, increasing about 16% year-over-year. For 2011, earnings are expected to rise 11% over 2010 to $1.11 per share.
Additionally, the quantitative Zacks Rank for Total System is currently #3, indicating no clear directional pressure on the shares over the near term.
Results reflected increased same client transactions, lower taxes and slight increase in overall transaction volume. However, continued weakness in North America services along with a dip in merchant acquiring services revenue, higher-than-expected cost of services and selling, general and administrative (SG&A) expenses led to the decline in operating income.
Total System has come a long way from the negative top-line growth trend. Since the second quarter of 2010, the company’s fundamentals are screening decent growth in the top line. Although the rate is stuck at lower single digits, the company’s growth drivers lay ample optimism on the performance of the stock in the long run.
The market recovery has also enabled the improvement in new client growth, same-client transaction volumes and accounts-on-file. Going ahead, the revenue recovery is believed to follow slow and steady growth in North America as well with the company’s leading technology platform, improved pricing and healthy consumer spending once the economy stabilizes.
Total System’s risk free balance sheet along with a modest cash position and cash flow generation provides viable scope for share repurchases and acquisitions. The complete acquisitions of First National Merchant Solutions LLC (FNMS) and TermNet Merchant Services along with international alliances are expected to drive the company’s merchant acquiring space and contract portfolio. Meanwhile, the recent expansion of share repurchase program continues to inculcate confidence among investors.
On the flip side, Total System is vulnerable to increased competition from dominant players such as Global Payments Inc. (NYSE:GPN) and Alliance Data Systems Corp. (NYSE:ADS). Moreover, despite the economic recuperation since 2008, operating margin has witnessed a decline from 28.6% in 2008 to 27.2% in 2009 to 25.6% in 2010. It further declined to 17.3% in the first half of 2011 from 18.9% in the first half of 2010. The company even has a significantly high backlog of accounts.
Management’s outlook for top-line growth in 2011 also appears stressful. With weak internal fundamentals, the company is liable to lose edge over its competitors going ahead.
Currency and interest rates fluctuations pose additional risks. Total System is also exposed to sufficient risk from the regulatory measures enacted in the U.S. in July 2010. These are expected to take effect in the upcoming months of 2011, which could contract credit offerings from financial institutions. Any unfavorable impact of regulations could hamper the company’s inorganic growth strategy.
Finally, we believe that the overall market stability and healthy impact of the regulations in the card industry will help recover the number of client accounts and long term contracts in the long run.
Given the pros and cons, the Zacks Consensus Estimate for the third quarter is pegged at 29 cents per share, increasing about 16% year-over-year. For 2011, earnings are expected to rise 11% over 2010 to $1.11 per share.
Additionally, the quantitative Zacks Rank for Total System is currently #3, indicating no clear directional pressure on the shares over the near term.
2011年4月1日 星期五
New Financial Regulations
One way of searching for investment opportunities is to look for businesses that are thriving with products and services that are in demand. But another method for finding investment opportunity is counterintuitive: Look for something that is broken or doesn't make sense. Once you locate that problem or fault, either look for a company that may have a solution or perhaps look at the problem itself to see if it is viable or just noise.
Financial regulation, or FINREG, is one of those "problems" that contains some noise. FINREG creates challenges for banks, brokerages, lenders and the consumer.
If you are not completely familiar with the complex 2,300-page bill, The Wall Street Journal assembled this interactive page that details the different facets.
How Can You Profit From the Confusion?
Sometimes an apparent roadblock (legislation in this case) may have holes that make it less restraining than first thought. Now, I'm not going to say that FINREG isn't a highly restrictive, far-reaching, costly (in several respects) and poorly timed bill.
But some parts are just plain ridiculous and bad for the American consumer, and should be altered or removed. One of those pieces is the "Durbin Rule."
Back on March 10, in a note to my subscribers of WaveStrength Options Weekly I detailed this flawed piece of the FINREG puzzle:
Some of you may have heard of the "Durbin Rule" -- it's imbedded in the Dodd-Frank financial regulation bill.
The rule essentially states that "interchange fees," those fees that retails incur anytime you swipe a credit or debit card, are to be limited (fixed) to 12 cents per transaction (the average is 44 cents). It means retailers will be capped in the amount they have to pay in merchant fees that are charged by banks and by Visa, MasterCard, etc. Good news for retailers and bad for banks and our friends over at Visa and MasterCard. This rule equates to BILLIONS of dollars annually!
Our genius politicians thought this legislation would benefit the consumer because the retailers would lower prices because of their savings. This may be true in some cases, but there are serious flaws.
If this is implemented in its current form, big banks like Bank of America and JPMorgan Chase will lose billions of dollars in revenue, as will Visa and MC. What's worse is that the bill excludes smaller banks (which was meant to help them), but if small banks continue to charge high fees and the large banks are forced to do it cheaper, the small banks will lose business.
All the banks are waging war on Capitol Hill to get this rule overturned or, more realistically, modified, which I believe will happen.
Our angle is that the markets have NOT priced in a good outcome for MasterCard, but I believe a compromise will come about, because the rule as it stands now just doesn't work -- this will be beneficial for MA.
Since then, MasterCard (MA:NYSE) stock went from $241 to a high of $262. WOW subscribers were able to capture some fantastic profits there and have since exited, but I wanted to take this a bit further and share this story with you.
On Tuesday the Federal Reserve declared that it is going to delay its ruling on appropriate levels from April 21 till July 21, which was a big win for MA and Visa (V:NYSE), not to mention my hypothesis from two weeks prior.
What "Durbin" Means for You
FINREG is supposed to "help" the American consumer, but aside from the issues for the banks, there are many ways in which this hurts us. Banks have shareholders to report to, which means they must keep profits up. If you take a couple billion dollars away from their balance sheets, they must replace it.
Guess who gets to replenish their balance sheets? The American Consumer!
Some of these changes are ALREADY happening, here are some of the ways the Durbin rule and FINREG is "helping" (hurting) you:
Financial regulation, or FINREG, is one of those "problems" that contains some noise. FINREG creates challenges for banks, brokerages, lenders and the consumer.
If you are not completely familiar with the complex 2,300-page bill, The Wall Street Journal assembled this interactive page that details the different facets.
How Can You Profit From the Confusion?
Sometimes an apparent roadblock (legislation in this case) may have holes that make it less restraining than first thought. Now, I'm not going to say that FINREG isn't a highly restrictive, far-reaching, costly (in several respects) and poorly timed bill.
But some parts are just plain ridiculous and bad for the American consumer, and should be altered or removed. One of those pieces is the "Durbin Rule."
Back on March 10, in a note to my subscribers of WaveStrength Options Weekly I detailed this flawed piece of the FINREG puzzle:
Some of you may have heard of the "Durbin Rule" -- it's imbedded in the Dodd-Frank financial regulation bill.
The rule essentially states that "interchange fees," those fees that retails incur anytime you swipe a credit or debit card, are to be limited (fixed) to 12 cents per transaction (the average is 44 cents). It means retailers will be capped in the amount they have to pay in merchant fees that are charged by banks and by Visa, MasterCard, etc. Good news for retailers and bad for banks and our friends over at Visa and MasterCard. This rule equates to BILLIONS of dollars annually!
Our genius politicians thought this legislation would benefit the consumer because the retailers would lower prices because of their savings. This may be true in some cases, but there are serious flaws.
If this is implemented in its current form, big banks like Bank of America and JPMorgan Chase will lose billions of dollars in revenue, as will Visa and MC. What's worse is that the bill excludes smaller banks (which was meant to help them), but if small banks continue to charge high fees and the large banks are forced to do it cheaper, the small banks will lose business.
All the banks are waging war on Capitol Hill to get this rule overturned or, more realistically, modified, which I believe will happen.
Our angle is that the markets have NOT priced in a good outcome for MasterCard, but I believe a compromise will come about, because the rule as it stands now just doesn't work -- this will be beneficial for MA.
Since then, MasterCard (MA:NYSE) stock went from $241 to a high of $262. WOW subscribers were able to capture some fantastic profits there and have since exited, but I wanted to take this a bit further and share this story with you.
On Tuesday the Federal Reserve declared that it is going to delay its ruling on appropriate levels from April 21 till July 21, which was a big win for MA and Visa (V:NYSE), not to mention my hypothesis from two weeks prior.
What "Durbin" Means for You
FINREG is supposed to "help" the American consumer, but aside from the issues for the banks, there are many ways in which this hurts us. Banks have shareholders to report to, which means they must keep profits up. If you take a couple billion dollars away from their balance sheets, they must replace it.
Guess who gets to replenish their balance sheets? The American Consumer!
Some of these changes are ALREADY happening, here are some of the ways the Durbin rule and FINREG is "helping" (hurting) you:
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