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Outlook for Asian-Pacific stocks
At the apex of the Asian crisis, when Asian markets were utterly bombed out, I made my first Asian stock recommendation in two years: PKX. You could have made 4x your money on nearly any Asian ADR in 1999. This reveals the profits available to anyone with a strong enough stomach to buy during panics...
I am very bullish on Asian stock markets. A key driver of the Asian story will be further economic recovery in Japan. The cleansing effect of the Asian crisis on bad debts and overcapacity will linger for years.
Chris "The Hammer" DeHaemer has been following some super-cheap Indonesian stocks that have tremendous upside in 2000. If you want to play Japan, I recommend buying pure plays on the domestic economy (like Uni-Charm). Avoid commodity DRAM plays that have already tripled: the initial counter-Moore's Law rally is over.
New Zealand remains a call option on Asia. As Asian economies pick up, the New Zealand economy will improve. The fundamentals in New Zealand are fantastic (low rates, strong growth). It's only a matter before sentiment towards Kiwi stocks turns around.
 Fisher & Paykel (FAP-NZSE)
Fisher & Paykel (FAP-NZSE) is only up marginally from my recommended buy limit. However, the prospects for FAP have completely turned around. Management has finally committed itself to generating profits, instead of continually burning cash with excessive R&D.
The real value in FAP is in the healthcare division. FAP's healthcare division generates excellent margins and strong growth, while the whiteware division generates low margins and anemic growth. I estimate that FAP's healthcare division could almost support the current stock price as a stand-alone company.
There's still a lot of fat in FAP. Literally: FAP produces its own meat pies(!)--for the sole reason that the Chairman of the Board wants more meat in his meat pies. Sure, I like meat pies as much as the next guy. But it's a waste of shareholder funds.
I believe that FAP should relocate manufacturing to an offshore location. There's too much trouble with unions in New Zealand. An international manufacturing giant like Siemens or GE could unlock tremendous value in FAP by shredding the colonial laziness of FAP's board.
Nevertheless, FAP is cutting costs. Profits are turning around. FAP is on track to generate NZ$100 million in EBITDA, which implies an EV/EBITDA ratio of only 8.5. Continued growth in EBITDA and EPS will support an uptrend in the stock. FAP remains an excellent turnaround play on New Zealand.
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