SKL Skellerup Holdings

[seaweed]

LOL, noticed sp went up 50c a couple of days before results day after a very slight 3 months down trend. Lucky buyer at the right time

[Dolcile]

After reading a forbar note and doing my own research I started buying on the 5th Feb and finished early on the morning of the 9th.  All at $5.20.   

I was pleasantly surprised to see the share price move up quickly after and the HY report better than expected. 

[winner (n)]

NPAT guidance for FY26 to be in the range of $57 to $62 million.

Rolling Annual NPAT (H225 + H126) is $60.3m

Surely they not saying 'we're going backwards in H226' or 'we will grow a little bit in H226'

Forbar have F26 est at $62.6m. That seems jsut as conservative as Skellerups guess

I say Full year going to be $65m to $69m ......mid-point $67.0m - EPS 34.1 cents

Modelled SKL for many years and my estimates have been pretty good

[Ferg]

An interesting exercise so thanks for sharing that.....I am curious how you got from $36m to $890m.  Is that NPV based on EVA growing in perpetuity, or something else?  What were your assumptions?

Cheers

PE ratios are the cheats way of doing DCF valuations.

Better way to value a company is to consider how much economic value they add -- EVA for short

Skellerup adds a lot of economic value. Its Return on Invested Capital is 22% (Invested Capital is Equity + Debt).

That 22% is extremely good and deserves to be reflected in the Market Value of SKL. Market Value essentially is Equity + NPV of future EVA

Skellerup currently generating about $36m of economic profit (EVA). I assess the NPV of EVA into the future as $890M.

Add the Equity of $240m you get a Market Value of $1.14 billion or $5.82 per share

So it seems that it is currently 'fairly valued'

If Ferg put together one of his famous charts I reckon it would look pretty healthy

SKL is not a share I currently track.  Maybe I will add it to the list......

[Otago K]

....................
SKL is not a share I currently track.  Maybe I will add it to the list......

I have to say that on one of the international stock picker tracker websites SKL has featured for a few years as a value BUY, suspect it will show up well to your investment criteria Ferg on your deeper analysis. Seems to be one that hasn't really re-rated to my eyes, not a perceived sexy stock to hold perhaps??.

[Basil]

Yeah that comment struck me as a bit strange.   

SKL is one of the very few nzx listed businesses that has some things I really like. 

1. History of eps and dps growth
2. High profit to cash conversion
3. Healthy ROIC
4. Focus on their niche
5. Large addressable market
6. Low debt / pristine balance sheet 
7. Profit growing faster than revenue

Excellent synopsis, thank you.
Very few companies fit comfortably inside my GARP value screening formula like SKL does.
Noting also for dividend hounds the decent yield and 10 year DPS CAGR is 12.4%.

[Waltzing]

i remember percy dumping it and we did also.. not for the same reason.. it had topped out but once again missed it recent low...

at about the same time inflation OCR rate hikes went up... OH dear...

but it could well be a good long term hold.. and still a defensive BUY...

[winner (n)]

An interesting exercise so thanks for sharing that.....I am curious how you got from $36m to $890m.  Is that NPV based on EVA growing in perpetuity, or something else?  What were your assumptions?

Cheers


SKL is not a share I currently track.  Maybe I will add it to the list......

EVA growing at 10% pa for next 2 years then 8% the 7% the 5% with Twerminal Rate of 3%

[Ferg]

Thanks.  Was that an 8% discount rate?

[winner (n)]

Good to see the decline in SKL shareprice from 590 to 520 turn today and back to 544

Hopefully that decline was just bit of a blip and we'll see share price heading over 6 bucks before the next profit upgrade

[Sideshow Bob]

Dollar back into the 0.57 range won't be hurting them at all.....

[Dolcile]

Some nice upward pressure today :-)