STU - Steel & Tube Holdings

[Shareguy]

Yes Winner. Good news. I even ordered a pound of king crab for dinner.

Still undervalued in my opinion. Trading under nta for a low/no debt distribution business does not make sense to me.

While I have been away the markets have done well. So thinking I need to go on holiday again soon.

Heading home tomorrow.

[winner (n)]

Last week both STU and VSL issued profit guidances.

STU share price went up but VSL share price collapsed

Both were saying F23 profits (STU's EBIT and VSL's NPAT) were going TO BE DOWN ABOUT 33% on F22

All comes down to managing expectations

Shoeshine in NBR said he's heard that Mark Malpass works like a demon to try and lift the company's performance and the esteem of the company in the eyes of shareholders. That's why I mention Mark's regular Raves .....always good stuff.

This compared to the 'culture at Vulcan being more brash.'

Long may Mark keep on Raving

Shows up in share price .....both seeing profits down 33% but STU share price down 12% from 52 weeks ago while VSL down 18% ...and of course STU's is on the rise at the moment

[winner (n)]

Mind you both STU and VSL share prices are down about 22% from highs just over a year ago

With profits down 33% suppose 22% isn't too bad

[Shareguy]

Mark needs to do more to improve shareholders and analysts opinions. Analysts and the market are picking a small final dividend in my opinion.  Mark could surprise the market with a nice juicy dividend and a share buy back given their debt position. Stu have released that they will have net cash of NZ$6.5m at FY23.

[Teitei]

Remember also how STU's management were criticized by some for investing and building up inventories in F22 to buffer against market supply disruptions and to meet demand?

Well, a very pertinent positive to STU's profit update announcement is this :

"Steel & Tube has ended the financial year with no bank debt and a positive cash balance of $6.5m, representing a ~$50m improvement on FY22 after paying increased dividends and tax. The company has also achieved a significant reduction in its inventory balance."

STU paid an interim dividend of 4cps ($6.67m or 57% of NPAT) and based upon its net debt position of $32.5m as at 31 Dec 2022, the company generated net positive cashflow of $45.67m in H2 2023.


And that's after paying $12.5m of final F22 dividend during the period - so STU generated $68m of positive net cashflow in F23.

Looking forward to a 5c fully imputed final dividend and if the sp stays where it currently, be surprising if a share buyback is not being contemplated.

[winner (n)]

The Kingfish guy did a real rave about Vulcan Steel at the Kingfish ASM yesterday

Said their key competitive advantage was their outstanding DIFOT performance ....said it was 98% and that number is far superior than competitors ....leads to loyal customers and better margins

Wonder what STU's DIFOT is?

[Red Baron]

The Kingfish guy did a real rave about Vulcan Steel at the Kingfish ASM yesterday

Said their key competitive advantage was their outstanding DIFOT performance ....said it was 98% and that number is far superior than competitors ....leads to loyal customers and better margins

Wonder what STU's DIFOT is?

Not all zuppliers know their trade vell.  Ze ones that zurvive are those that avoid zhooting themslves een 'Di FOoT' too often?  Vhich Vulcan does 98% of ze time!

RB

[winner (n)]

FWIW from Stats Nz today

In the June 2023 quarter, the actual volume of ready-mixed concrete produced was 1.07 million cubic metres, down 11 percent compared with the June 2022 quarter.

There is quite a strong correlation between STU sales with ready-mix volumes

[Shareguy]

Great investor feedback was received after presenting at the NZ Shareholders Association's Tauranga Branch Meet. CEO Mark Malpass and CFO Richard Smyth had the pleasure of sharing performance and strategy insights.

In case you missed the update, we are also very pleased to announce the official date for our FY23 Financial Results. The full report will be released on Monday 21 August 2023. Details on the FY23 announcement and the NZSA presentation can be found here: https://hubs.la/Q01-Fn7g0

#SteelandTube #Investor #News #FinancialYear

[Left Field]

Results look solid to me.....  strong balance sheet, increased EPS and divvies should make holders happy.

https://www.nzx.com/announcements/416642



• No bank debt and a positive cash balance, representing a ~$50m year on year improvement

• The company has also achieved a significant reduction in its inventory balance

• Robust pipeline, significant opportunities ahead and well positioned to take advantage of these

$m / FY23 / FY22 / Change
Revenue / 589.1 / 599.1 / (1.7%)
Volumes (Ktonnes) / 146.4 / 167.2 / (12.4%)
EBITDA / 51.9 / 66.6 / (22.1%)
Normalised EBITDA* / 52.9 / 66.9 / (20.9%)
EBIT / 31.0 / 47.6 / (34.9%)
Normalised EBIT* / 32.1 / 47.9 / (33.0%)
NPAT / 17.0 / 30.2 / (43.7%)
Inventory / 139.2 / 192.5 / (27.7%)
Net operating cashflow / 98.3 / (34.1) / +388.3%
Net cash/(debt) / 6.5 / (43.0) / 115.1%
EPS / 10.3cps / 18.3cps / (43.7%)
Gross Dividend (incl. imputation credits) / 11.1cps / 14.5cps / (23.4%)
ROFE / 10% / 15% / (35.7%)

[Shareguy]

Had a quick look with thoughts as follows

Zero debt and cash in bank of $6.5m. Very unusual for distribution business.

Great cashflow at $98m against last year ($34)

Inventory reduced

EPS of 10.3 cps

Divi 11.1 cps gross incl imputation credits

Positive commentary going forward. But no share buy back

Are cautiously optimistic that 2023 represents the bottom of the cycle and although we don't expect a fast recovery, we anticipate there will be some improvement from early 2024 (the second half our FY24 financial year). Steel & Tube has significant operating leverage and we expect any uplift in activity and demand to be reflected in our results. There are plenty of green lights ahead across our multi sector exposures. Commercial construction is expected to improve, there is still a strong pipeline in residential construction from consents granted previously, and large scale infrastructure projects are progressing.

A lot to like...

[Onemootpoint]

"Steel & Tube's volumes are down 12 per cent and unlikely to recover this year. Its CEO explains why it's cleaning up its balance sheet and selling down stock."

Steel supercycle officially over: How distributors are responding | nzherald.co.nz

https://www.youtube.com/watch?v=t2RYnf58Quo

[winner (n)]

Thought that after that pretty solid results announcement and Marks usual good rave the STU share price would have kicked up to 130 and back on its way to 150.

However response has been rather muted and it seems to be heading back to sub 120

[winner (n)]

A few years ago when STU told Fletchers to bugger off with their $1.90 offer STU said they were valued at $2.36

What's STUs share price today

[Cod]

STU will either follow the red curve or down to the bottom trend line, I can't guess which one it will be but if I had money in it, I would say the red curve is favorite.

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