STU - Steel & Tube Holdings

[lorraina]

Interesting.
Shares on issue 166,852,665.
Market cap @ Share price $1.22 is $203.5 mil.
NTA.$1.17.or $195.21 mi.
So at 80 cents the market cap would fall to $133.48 mil a drop of $70.02 mil.
I would guess the NTA would increase, how ever if it remained the same;$1.17 or $195.21 of net tangible assets.Acoording to brokers STU's sales will remain around  $600 mil .
Net debt to capital will reduce over the next 3 years to 10%,
Distributable Free Cash flow is expected to increase from $39mil in 2023 to $44.7 mil in 2024.
The distributable $44.7 mil would be rather interesting should STU's market cap fall to$133.48.
 33.48% of their market cap. ?

[winner (n)]

You could be right lorriana - Market cap @ Share price $1.22 is $203.5 mil.
NTA.$1.17.or $195.21 mi. So at 80 cents the market cap would fall to $133.48 mil a drop of $70.02 mil.

But then again nobody ever thought OCA would trade at at nearly 50% of NTA ...the market is a funny animal

[lorraina]

Distributable Free Cash flow is expected to increase from $39mil in 2023 to $44.7 mil in 2024.
The distributable $44.7 mil would be rather interesting should STU's market cap fall to$133.48.
 33.48% of their market cap. ?

And that W69 is the difference between STU and OCA...Low debt and high distributable free cash flow.

[Basil]

You could be right lorriana - Market cap @ Share price $1.22 is $203.5 mil.
NTA.$1.17.or $195.21 mi. So at 80 cents the market cap would fall to $133.48 mil a drop of $70.02 mil.

But then again nobody ever thought OCA would trade at at nearly 50% of NTA ...the market is a funny animal

I'm probably the only one that's called for exactly that for quite some time now and I reckon there's a pretty good chance we will see the full 50% discount to NTA this year but I don't think anyone saw ARV at nearly a 50% discount, so agree the market can be a very tough taskmaster at times.

I suspect the analysts are probably not far off the money with their call for trough year earnings in FY24 and FY25 of 12 cps.   Where the market prices STU as the residential building downturn gathers pace will be interesting to see.  At this point I am happy to watch from sidelines and keep my powder dry.  Ditto for ARV.   Thing is, 80 cents (if they can earn 12 cps in the trough years) would be less than 7 times trough year earnings which on the face of it seems too cheap but shares often undershoot fair value by quite a bit in a downturn so you never really know what might be coming and obviously applies to far more than STU!

[lorraina]

Residental building makes up just 10% of STU's revenue.

[winner (n)]

Residental building makes up just 10% of STU's revenue.

Yep residential 11% of revenue

I note Infrastructure is only 5%

So maybe no bonanza windfall from disaster recovery after all

[winner (n)]

From half year preso good to see STU doing good stuff like -

Expanded investment in Māori Cadetship Programme and All staff at or above the Living Wage from 31 December 2022

[lorraina]

Yep residential 11% of revenue

I note Infrastructure is only 5%

So maybe no bonanza windfall from disaster recovery after all

It was 11% in 2022 half,but 10% 2023 half.Company presentation 15th Feb page 6.
And infrastructure is 6% up from 5% last year.
2023 figures are on the left side,2022 on the right side.
It will be interesting seeing where infrastructure % goes over the next few years.

[BlackPeter]

Yep residential 11% of revenue

I note Infrastructure is only 5%

So maybe no bonanza windfall from disaster recovery after all

So - if some wool storage sheds need to be rebuild (and I am sure WoolWorks was not the only company effected by the floods), would this be part of the 11% residential construction or part of the 42% commercial construction?

Maybe the potential is larger than we might think ...

Don't sweat the small stuff ...

[winner (n)]

Media market close report today ... Steel & Tube gained 2c or 1.94% to $1.05;

That's good news

See our Mark doing a rave at a NZX Virtual Investor event next week.

Last time he did that the shareprice was over $1.50 ........hope he does a real good rave this time .....STU needs all the ramping it can get

[BlackPeter]

Media market close report today ... Steel & Tube gained 2c or 1.94% to $1.05;

That's good news

See our Mark doing a rave at a NZX Virtual Investor event next week.

Last time he did that the shareprice was over $1.50 ........hope he does a real good rave this time .....STU needs all the ramping it can get

Last time I checked it was the responsibility of a CEO to manage and improve the performance of the company, not to ramp up the share price. Lets hope his strategy adding aluminium to the steel business helps to dampen the blow the building industry is currently going though (courtesy to the reserve bank strategy) and his numbers are somewhat better than the numbers of the competition.

Well, this is how I will measure his performance anyway - the raving and ramping up can be done by others. Normally you are pretty good in this role, aren't you? 

Anyway - dividend yield currently 9.6%, around half of this beauty imputed ... but sure - I hear already the shouting "dividend trap". I see it as deep value game, unless somebody manages to shut down NZ Inc in the years to come for good ...

[winner (n)]

Last time I checked it was the responsibility of a CEO to manage and improve the performance of the company, not to ramp up the share price. .............

Then why does our Mark seem to get excited about getting to do a rave at these Investor gigs?

[Shareguy]

I am looking forward to the investor update which will hopefully be next week. 

Analyst coverage has 2024 and 2025 on lower EPS and dividend. I think they are far to conservative and wrong. 
Take FY22 Craig's had forecasts of 13.2 EPS and dividend of 9.2cps.

Actual was 18.3 EPS and 13cps dividend.

Stu these days has Low debt, lean with big reduction in overheads, diversified and a focus on basics. Recent acquisitions to add 0.5 to Eps according to ceo. Interested to hear how entrance into the Aluminum market is going. Trading well under nta for a distribution business does not make sense to me. Historically has traded well above nta and carried high debt.

Forecasts for FY23 from analysts. FY22 dividend was $.13 cps partially imputed.

Craig's forecast for FY23 is $.093 cps
Fbar forecast is $.10 cps

Stu current policy is to pay out 60% - 80% of adjusted NPAT to shareholders. I'm picking that the actual dividend will be very similar to last years $.13 when you account for imputation going forward. They have the ability to pay out at 80 percent of adjusted NPAT to match last years. Would also like to see a dividend re investment plan and share buyback.

Have looked at this going down with the rest of the market and think it's a good buy, a steel in fact.

I have more than enough but can't resist at these prices.

Disc. Have been accumulating. Overweight. Hope I'm right.

[Teitei]

I am looking forward to the investor update which will hopefully be next week. 

Analyst coverage has 2024 and 2025 on lower EPS and dividend. I think they are far to conservative and wrong. 
Take FY22 Craig's had forecasts of 13.2 EPS and dividend of 9.2cps.

Actual was 18.3 EPS and 13cps dividend.

Stu these days has Low debt, lean with big reduction in overheads, diversified and a focus on basics. Recent acquisitions to add 0.5 to Eps according to ceo. Interested to hear how entrance into the Aluminum market is going. Trading well under nta for a distribution business does not make sense to me. Historically has traded well above nta and carried high debt.

Forecasts for FY23 from analysts. FY22 dividend was $.13 cps partially imputed.

Craig's forecast for FY23 is $.093 cps
Fbar forecast is $.10 cps

Stu current policy is to pay out 60% - 80% of adjusted NPAT to shareholders. I'm picking that the actual dividend will be very similar to last years $.13 when you account for imputation going forward. They have the ability to pay out at 80 percent of adjusted NPAT to match last years. Would also like to see a dividend re investment plan and share buyback.

Have looked at this going down with the rest of the market and think it's a good buy, a steel in fact.

I have more than enough but can't resist at these prices.

Disc. Have been accumulating. Overweight. Hope I'm right.
 

So you have been the one holding up the sp which I was hoping would drift down to $1.00 or lower!

Fair enough but can you step aside for a few days? 

[Shareguy]

So you have been the one holding up the sp which I was hoping would drift down to $1.00 or lower!

Fair enough but can you step aside for a few days? 

Yes Teitei got my last lot this afternoon.  Has been hard to get decent volume.