investingfromtheright

I am retired and take educated guesses on all things financial.

April 29, 2007

April 30, 2007: Aero defense highights, a Chinese tip: SWRAY





lnside the Boeing 787 dreamliner. Business class seating area, cockpit and general seating area of the new plane from Boeing.



A few interesting developments in the areo defense sector and commercial aerospace sector the past few days:

> Bush, of course, will veto the "deadline bill". Congress is quietly putting together a new bill which will fully fund Iraq mission, with stips put on the Iraqi government to succeed post haste with forging a successful end to sectairian violence and and end to tacit support of Al-Queda and Iran elements working within Iraq at present. Bush should agree with most of it, and will likely sign it. That will be good news to the new extremely well protected armor vehicle construction industry, such as FRPT and their subcontractors.

> Boeing (BA) announced a number of orders (over $12B at list prices). Aviation capital bought 15 737s and five 787s, Virgin bought 15 787s, Air Canada bought 23 787s, SpiceJet bought 10 737-800s, Oak Hill bought 6 777-Fs, S7 Group bought 101 737-800s, Arik Air bought 3 787-9s and 4 777's. The London Times stated that USAir will probably switch a $3.7B A-350 order to Boeing 787s.

> AirBus announced layoffs of approximately 4500 workers in four countries. Protests were held by many of the thirty-five hour per week-two month vacation- lifetime pensions- can't be fired workers in Toulouse, France and elsewhere this week. Their balloons and Anti-American signs were a nice touch.

My recommendations are the same as they were last week for this industry.

Force Protection (FRPT), mentioned above, received a large contract for its vehicles - too big for them to handle alone. They will be subcontracting work to other builders to meet their production requirements. Trading at approximately 22, I still cannot endorse this pick, although I have been taken to the woodshed by FRPT devotees the past three months. Any slip on Iraq contracts and this company will fall like a heavy stone - make that a boulder, and I am not interested in one concept defense companies.

A CHINESE TIP:

Several months ago, I recommended looking at a conglomerate based in Hong Kong, Swire Pacific. It has its hands in many things and does each of those many things pretty well. The stock price, even with less than robust earnings from their rental property developments in HK and China, trends up. The ADR is being more actively traded and has a viable market now, IMO. You are encouraged to look at SWRAY closely at this time for possible inclusion in your speculative portfolio. Online, go to www.swirepacific.com and see for yourself. I am likely to add some SWRAY to my speculative portfolio shortly.

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