STU - Steel & Tube Holdings

[Waltzing]

YOUR A PRO WINNER()....

you need elons prime or AI to do all your work...or run amuk...

[winner (n)]

YOUR A PRO WINNER()....

you need elons prime or AI to do all your work...or run amuk...

AI said the chart shows what 'super cycles' can do to sales but reminded me of the consequences when a 'super cycle' ends

[Waltzing]

We suspected all along you have AI from elon at work...

[winner (n)]

Hope whatever Vulcan caught today isn't contagious

Média market roundup said it had one of its biggest single-day falls ever

[Basil]

2 year chart looks like a series of lower high's and lower low's. 

[Shareguy]

My thoughts

Both Stu and Vulcan are very similar businesses in what they sell. In essence they are both in the distribution and processing of steel and associated products. Both Vulcan and Stu have recently entered the aluminium market.

The main difference I think between the two is that Vulcan is a quality business that has placed a very high regard to customer relationships and importantly attracting and retaining high calibre staff. Vulcan have a great culture that has come from Peter wells down. Stu has unfortunately not put a high price on these values and has paid the price over the years.

What interests me currently is what Stu is trading at. If you go back over the years as I have done you will find that the share price has traded far in excess of NTA as it should in my opinion.  Also apart from the last period of change has been consistently one of the higher dividend payers on the NZX.

If we compare both companies today {from NZX) we have

STU                                     VULCAN

SP  $1.24.                             SP. $8.82
NTA  $1.17.                           NTA $1.21
Gross yield 11.75 percent.     8.2 percent
PE. 7.3.                                  9.2

Yes NTA is one metric, but I just can't get over the huge premium to NTA that Vulcan trades at when you can get STU at close to NTA.

Stu finally have a good leader by all account, who is focusing on margin and people. They seem to finally be putting effort into staff and are looking to do the basics the best.

No question Vulcan is a great company that has done well and deserves to trade where it is. Stu is the "ugly duckling" that is having plastic surgery and will  be the pick in the sector in my opinion.

I can't see much more downside to STU and already have a large holding.  I'm sure the current board are concerned that they are at risk as a takeover target with share price heading below NTA.

Only time will tell. In the meantime will continue to enjoy one of the highest yields on the NZX.

[winner (n)]

Shareguy ..your NTA conundrum possibly something to do with the relative returns on equity

VSL shareholder funds slightly less than STUs but VSL make roughly 4 times more profit(NPAT) than STU

Rewarded with higher multiples

[Teitei]

Shareguy ..your NTA conundrum possibly something to do with the relative returns on equity

VSL shareholder funds slightly less than STUs but VSL make roughly 4 times more profit(NPAT) than STU

Rewarded with higher multiples

Means VSL's margins can only go down while STU's have huge potential to go higher?

Hope not as we want STU's sp to drop towards $1.00.

Better if lower obviously.

[lorraina]

New data from Stats NZ showed the value of sales in construction was up by 14 per cent or $1b on the December 2021 quarter.

[Hectorplains]

New data from Stats NZ showed the value of sales in construction was up by 14 per cent or $1b on the December 2021 quarter.

The 2021 Quarter was as Auckland came out of lockdown - so it was always going to be up.   

New home consents have continued to fall from the May 2022 peak.  December was down another 7%.  Annualised the consent figure was 16% lower than at the same last year. 

[Basil]

https://www.nzherald.co.nz/nz/eyesore-half-finished-auckland-apartment-complex-upsets-neighbours-as-developers-battle-rising-costs/W6AO4HYMMND7BBW7MKKTZ3H7CE/
Conditions are ripe for widespread business failures in the construction industry.   

[Crackity]

https://www.nzherald.co.nz/nz/eyesore-half-finished-auckland-apartment-complex-upsets-neighbours-as-developers-battle-rising-costs/W6AO4HYMMND7BBW7MKKTZ3H7CE/
Conditions are ripe for widespread business failures in the construction industry.   

Yep and also failures of the developers with the pseudo wholesale 'investors' - Du Val and Williams et al

Hopefully STU aren't making the same mistakes of years ago and  if FBU and Vulcan stay with 'sensible' pricing (let's not involve the ComCom about here) then the mistakes become  who funded the upcoming failures and are gonna be unsecured creditors.

It's an interesting sector - I left a while ago but I'm definitely monitoring

Hmmmm.....

[winner (n)]

The 2021 Quarter was as Auckland came out of lockdown - so it was always going to be up. 

New home consents have continued to fall from the May 2022 peak.  December was down another 7%.  Annualised the consent figure was 16% lower than at the same last year. 

Total construction consents year to Jan 23 +9.2% on pcp.  Not too bad but weakening

Here's some history as to growth in total consents

Seems we are following path of around GFC times and could expect a decent decline in activity

And if Chch quakes anything to go by it takes some time for acttivity to pick up,... up to 2 years. So all future work re recent cyclone damage could be some time off .... and after Chcistchurch quakes the rest of the country suffered a bit of a downturn in activity

So extra work from cyclones could be some time off ....and in meantine STU (and FBU et all) might see a bit of decline in sales

I wouldn't be surprised if STU sales post the 'super cycle' reverted back to steady state level around the $500m mark

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[BlackPeter]

https://www.marketscreener.com/quote/stock/STEEL-TUBE-HOLDINGS-LIM-6491420/financials/
Ouch, eps dropping from 18 cps in FY22 to 15 cps then 12 cps for FY24 and FY25.
Only 2 analysts are covering it though.  Maybe they're both wrong?

Analysts (as everybody else) can't look into the future. Had recently (but before the latest weather events) a chat with Mark Malpass - he thinks the analysts are pessimistic (well, this is what he said). But hey, not sure Mark knows more about the future than the analysts (probably not), but I recon he knows more about the company he runs ...

I suspect that climate change together with the recent weather events will increase the demand for building steel. I suspect as well that the underlying reason for 3 waters (no, not racism or politics ...) will increase the need for pipes and tubes.

The cake clearly will grow. Harder to say though, how big STU's share of this growing cake will be.

[winner (n)]

BP - chat with Malpass eh .... what other intel you g

those pessimistic analysts might be right - if I use their forecast for year through to June 23 the STU sales growth over the years looks like what is in the chart

All falls into place - Malpass sounding bearish at half year ..... the 'super cycle' over .... market activity cooling etc etc.

No sales growth in F23 and EBIT/NPAT not to flash ..... no 10 cent dividend this year

Disasters tend to slow growth badly in the short term .... it takes years to get reconstruction under way so talking of cyclone recovery boosting sales over the next year is flawed thinking .... and wishful thinking that things won't be too bad over the next year or so.

The cake eventually will get bigger (always does) but whether this ends up as a great STU only term will tell. STU probably good buying again when downtrend ends .... maybe around 80 cents

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