STU - Steel & Tube Holdings

[entrep]

Market is certainly pricing in bad news tomorrow. Rekt

[Red Baron]

Duplication

So you admeet you are duplicitous?  I knew eet!  The high flying inter-continental trader, all the time in the pocket of Lloyd George!  Vell, now that your cover eez blown, it eez back to the trenches vor you!  But a beet ov vriendly advice vrom the baron.  It eez cold and damp in there.  Make sure you vear your trenchcoat!

RB

[BlackPeter]

So you admeet you are duplicitous?  I knew eet!  The high flying inter-continental trader, all the time in the pocket of Lloyd George!  Vell, now that your cover eez blown, it eez back to the trenches vor you!  But a beet ov vriendly advice vrom the baron.  It eez cold and damp in there.  Make sure you vear your trenchcoat!

RB

Ihr Deutsch hört sich etwas seltsam an ... Sie sollten entweder ordentliches Deutsch oder ordentliches Englisch (oder beides) lernen!

Not sure what you want to highlight? I am sure Manfred von Richthofen's English was better than that, I guess he went to a proper school. Did you poor sod learn your English in a NZ school? Maybe you should try to write in Te Reo instead?

[winner (n)]

Market is certainly pricing in bad news tomorrow. Rekt

Very light volume though

Somebody will see its back to 105/106 at the close

[Teitei]

Very light volume though

Somebody will see its back to 105/106 at the close

Better get out before the webinar update tomorrow, W69.

Remember that downgrades come in threes and we had the first one in Feb (interim results).

[Left Field]

Latest results out....

https://www.nzx.com/announcements/411164

Quick look,

Steel & Tube's unaudited 10-month performance to end-April is summarised below:

$millions / FY23 10 months / FY22 10 months / FY21 10 months

Revenue / 489.0 / 479.3 / 384.6
EBITDA / 40.8 / 53.6 / 29.5
Normalised EBITDA / 41.7 / 54.0 / 28.6
EBIT / 23.6 / 37.9 / 14.8
Normalised EBIT / 24.5 / 38.3 / 13.8
NPAT / 12.4 / 24.1 / 7.4
Operating Cash flow / 77.9 / (38.1) / 20.5
Dividends paid / 19.1 / 14.6 / 2.0
Inventory / 152.2 / 200.9 / 108.3
Net (Debt)/Cash / (9.2) / (43.5) / 19.7

The company continues to perform well against a backdrop of tightening economic conditions and weather events over the past 10 months. Revenues have continued to grow driven by elevated international pricing. Higher input prices and cost pressures have impacted margins. Steel & Tube has built a resilient platform exhibited by significant reductions in debt and inventory positions, and solid underlying cash generation. The company has a strong balance sheet and substantial bank facilities in place to fund growth and to take advantage of opportunities.

Given the recessionary operating environment, 2H23 volumes are expected to be 10% to 15% less than 1H23. As such, Steel & Tube is forecasting FY23 normalised EBIT of between $28m and $32m and normalised EBITDA of between $48m and $52m (*1).

[winner (n)]

Pretty gloomy eh leftie

Just as will I struggled to like STU

[lorraina]

The Bad.
..NPAT well down from $24.1 mil to $12.4 mil
..2nd half volumes expect to be down 10 to15% on 1st half.
The Good.
..Operating Cash Flow an impressive $77.9 mil.
..Inventory well down from $200.9 mil to $152.2 mil
..Net debt heavily reduced from $43.5 mil to a very modest $9.2 mil.
Conculsion.The company's balance sheet is in a very strong position to weather any storm.
I will continue to hold,however I will not be adding to my position.

[winner (n)]

Back in 2018 the 'reset' and new management was going toachieve great results .....they proclaimed " Steel & Tube expects to achieve normalised EBIT of $35-40m in the next 3 years"

Oh well, come 2023 and they might achieve $30m (barring further downgrades)

Just another chapter in the life of Steel & Tube .......new strategies, acquisitions, resilience blah blah blah .......and never delivering

Seems things haven't changed over the years (decades)

[Teitei]

The Bad.
..NPAT well down from $24.1 mil to $12.4 mil
..2nd half volumes expect to be down 10 to15% on 1st half.
The Good.
..Operating Cash Flow an impressive $77.9 mil.
..Inventory well down from $200.9 mil to $152.2 mil
..Net debt heavily reduced from $43.5 mil to a very modest $9.2 mil.
Conculsion.The company's balance sheet is in a very strong position to weather any storm.
I will continue to hold,however I will not be adding to my position.

Impressive cashflow generation - must admit STU has done a great job managing working capital over the last 2 years. Pity about the volatile steel prices - proving too difficult for Mark to manage.

[Basil]

Analysts have them earning 12 cps in FY24 and FY25 and dividends per share at 9 cps each year, presume full imputation credits apply = 9 / 0.72 = 12.5 cps gross.  On $1.06 that's a forward FY24 PE of 8.8 and gross yield of 11.8%.  On the face of it these looks like pretty compelling metrics.

My nose for trouble is telling me they won't do the above numbers and the headwinds in the constructions sector are too strong. 

Good to see that Beagle nose of mine is still working well when it comes to sniffing out food and trouble.
Extrapolating $12.4m net profit for the 10 month period out to 12 months gives $14.9m, let's be generous and call it $15m which is 8.99 cps. With the recession in full effect in FY24, probably for the whole year, I would think they will struggle even more and be lucky if they can make 7-8 cps, well down on analysts' estimates.

There's no way to sugar coat earnings basically halving compared to the previous ten months.  Add in the gloomy outlook and ouch, it's not a pretty picture.

[winner (n)]

Good to see that Beagle nose of mine is still working well when it comes to sniffing out food and trouble.
Extrapolating $12.4m net profit for the 10 month period out to 12 months gives $14.9m, let's be generous and call it $15m which is 8.99 cps. With the recession in full effect in FY24, probably for the whole year, I would think they will struggle even more and be lucky if they can make 7-8 cps, well down on analysts' estimates.

There's no way to sugar coat earnings basically halving compared to the previous ten months.  Add in the gloomy outlook and ouch, it's not a pretty picture.

Last 4 months NPAT has been $0.6m so your generous $15.0 might be a bit generous

Even if $15.0m only their 'strong' balance sheet and so called 'reilience' would enable a full year divie of 7 cents....already paid 4 cents

Can't see next year geting better either

[Poet]

Last 4 months NPAT has been $0.6m so your generous $15.0 might be a bit generous

Even if $15.0m only their 'strong' balance sheet and so called 'reilience' would enable a full year divie of 7 cents....already paid 4 cents

Can't see next year geting better either

They are forecasting an additional $4m to $8m EBIT for remainder of FY - most of this should translate to NPAT given the low debt level

As such, Steel & Tube is forecasting FY23 normalised EBIT of between $28m and $32m and normalised EBITDA of between $48m and $52m

[Basil]

I still reckon ~ $15m is a good number for FY23.  Maybe $12m for FY24 7.2 cps.  I'm ignoring lower debt costs, all the resiliency and cost out talk and just focusing on the full winter chill effects of 12 months of recessionary trading conditions in the construction industry in FY24.

Put a bottom of the cycle PE of 12 on this, (what I consider to be a no growth cyclical company), and maybe it's worth a punt at 12 x 7.2 = 86 cents.  Say 75 cents so there's some margin of safety.  Watch the TA though because a confirmed few months of share price data is really needed to make the case the bottom may be in.

I think a cost out program of more like $15-20m per annum is what's really required here.  $5m is merely fiddling around the edges.

Might take a small stake again in due course when it eventually breaks up through its 100 day MA.  Doubt that will be anytime soon.

[Clearasmud]

I still reckon ~ $15m is a good number for FY23.  Maybe $12m for FY24 7.2 cps.  I'm ignoring lower debt costs, all the resiliency and cost out talk and just focusing on the full winter chill effects of 12 months of recessionary trading conditions in the construction industry in FY24.

Put a bottom of the cycle PE of 12 on this, (what I consider to be a no growth cyclical company), and maybe it's worth a punt at 12 x 7.2 = 86 cents.  Say 75 cents so there's some margin of safety.  Watch the TA though because a confirmed few months of share price data is really needed to make the case the bottom may be in.

I think a cost out program of more like $15-20m per annum is what's really required here.  $5m is merely fiddling around the edges.

Might take a small stake again in due course when it eventually breaks up through its 100 day MA.  Doubt that will be anytime soon.

It's a great business except for one thing the profits are all over the place, Mark.
I guess you got to expect that with a small cyclical business.