STU - Steel & Tube Holdings

[winner (n)]

STU said at ASM the other day '....that the recessionary environment would continue into the first half of its 2024 financial period but expected it to ease in the second half."

Seems to be at odds with what Westpac say in commentary on building consents ' The ongoing downturn in consent issuance reinforces our expectations for a stark fall in building activity over the coming year."

Who knows but I suppose Mark knows more than a bank economist / commentator so no worries for a company showing much resilience

[BlackPeter]

STU said at ASM the other day '....that the recessionary environment would continue into the first half of its 2024 financial period but expected it to ease in the second half."

Seems to be at odds with what Westpac say in commentary on building consents ' The ongoing downturn in consent issuance reinforces our expectations for a stark fall in building activity over the coming year."

Who knows but I suppose Mark knows more than a bank economist / commentator so no worries for a company showing much resilience

Had over the weekend a chat with somebody working in one of the steel companies in Christchurch (not STU, but one of their competitors): staff expanding, consistent need for overtime and their branch is cutting at the moment more steel than they ever did ... and their order books are full for another year or so.

If this is crisis - then I really would want to know how good business conditions look like ;

[winner (n)]

Had over the weekend a chat with somebody working in one of the steel companies in Christchurch (not STU, but one of their competitors): staff expanding, consistent need for overtime and their branch is cutting at the moment more steel than they ever did ... and their order books are full for another year or so.

If this is crisis - then I really would want to know how good business conditions look like ;

Good feed back Peter


So hopefully we'll see a much better performance from STU in F24 after their woeful F23

Here's hoping

[Teitei]

Had over the weekend a chat with somebody working in one of the steel companies in Christchurch (not STU, but one of their competitors): staff expanding, consistent need for overtime and their branch is cutting at the moment more steel than they ever did ... and their order books are full for another year or so.

If this is crisis - then I really would want to know how good business conditions look like ;

And interesting enough, a family friend we were having a birthday dinner with last week said that the aluminum joinery & installation company he works for is booked out until June next year.  Never been busier.

Something is happening out there. 

[winner (n)]

Our Mark doing a rave in a Govt funded report on NZ manufacturing

Betcha he loved doing this

https://tin100.com/wp-content/uploads/2023/10/New-Zealand-Advanced-Manufacturing-Report-2023-Distribution-Ready.pdf?2023+New+Zealand+Advanced+Manufacturing+Report

You cannot view this attachment.

[entrep]

And interesting enough, a family friend we were having a birthday dinner with last week said that the aluminum joinery & installation company he works for is booked out until June next year.  Never been busier.

Something is happening out there. 

I'm hearing everyone from developers down are holding off massively. I assume STU's customers are the MASSIVE dev companies though, who probably keep going?

[entrep]

Only one way since August.

[Ferg]

I assume STU's customers are the MASSIVE dev companies though, who probably keep going?

STU are also a supplier for relatively smaller local manufacturers and a supplier of last resort when demand has exceeded supply chain delivery times ex Asia for larger manufacturers.  IMO their requirements to be a customer are overly onerous and belong in the previous millennium, particularly for specialty products.  But hey if it de-risks their business then good for them.

[winner (n)]

Vulcan say ebitda for last 4 months down 29% on last year

Lower volume, lower selling prices and higher costs they say

Hope STU not doing as bad

[Hectorplains]

Vulcan say ebitda for last 4 months down 29% on last year

Lower volume, lower selling prices and higher costs they say

Hope STU not doing as bad

SNAP!  That was immediate thought too on reading Vulcan's announcement.  It was only five weeks ago at STU's AGM they were talking about the year ahead with "significant" work for them in climate resilience, infrastructure and essential water services.  This confidence coming while presenting earnings down 33% and a near halving of net profit...

I sold out awhile back (as announced on here) and I've my eye on a re-entry at some point... but not yet.  I think it's more likely that their 12 month low will be retested.

[winner (n)]

From Stats NZ ....

In the September 2023 quarter, the actual volume of ready-mixed concrete produced was 1.05 million cubic metres, down 10 percent compared with the September 2022 quarter.

STU thinks this measure put is relevant in measuring their business activity

[winner (n)]

Must have been worried about the sinking share price so have come out with a reassuringannouncement

Saying H124 ebit (normalised of course) will be about the same as H223 seems pretty good (and reassuring) but jeez that's about half of what they achieved last year ...yes H124 ebit down about 50%

Never mind ....still have cash in the bank and sticking to the long term plan

So no worries

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/STU/423213/409249.pdf

[LoungeLizard]

Wonder if they can maintain last years 8c dividend - that's a gross return on current price of 7.8%.
The new Government seems to be committed to correcting the chronic underinvestment in NZ's infrastructure, so STU have a long, long pipeline of big projects. If they can maintain margins I see a pretty solid future for them.

[winner (n)]

Wonder if they can maintain last years 8c dividend - that's a gross return on current price of 7.8%.
The new Government seems to be committed to correcting the chronic underinvestment in NZ's infrastructure, so STU have a long, long pipeline of big projects. If they can maintain margins I see a pretty solid future for them.

Full year eps might be about 9 cents so divie of 8 cents in danger so will likely use cash reserve to maintain it

Punters need to keep the faith ...just a cyclical issue eh

EBIT was $48m in FY22 ...H223 plus H124 going to be $21m/$22m highlights now big the cyclical downturn has been

[BlackPeter]

Must have been worried about the sinking share price so have come out with a reassuringannouncement

Saying H124 ebit (normalised of course) will be about the same as H223 seems pretty good (and reassuring) but jeez that's about half of what they achieved last year ...yes H124 ebit down about 50%

Never mind ....still have cash in the bank and sticking to the long term plan

So no worries

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/STU/423213/409249.pdf

Fair enough - however, if considering that H124 was coinciding with the real estate bottom as well as with all the uncertainty about who will form the next government I think that they did not too bad. Cash up, inventories down and sticking to their EBIT guidance is good.

Adding to that that the new government can now use all the money the old government earmarked for cogovernance bureaucracy and invest it into new shiny (and much more useful) steel pipes to update our crumbling water infrastructure - I think the SP bottom for STU might be in as well. All up from here to go for and exceed FBU's ancient (and from STU board declined) $1.80 offer per share ;

$2 per share around Christmas 2025, how would this sound?

Note: not a forecast ... just a question , However - just to put the number in context:

forward PE (based on analyst consensus for the next 3 years and SP $1.04) is 8.7
forward earnings CAGR (dto, as above) is 8.8
this gives us a PEG (Zulu) of 0.99.

For anybody using this methodology - PEG below 1 is great ;

On top of that ... long term guidance sounds pretty upbeat, and there are plenty of good reasons for that.

If I put above values into grahams formula I get $3.13 per share,and if I use beagles modified formula, its still $2.25.
Some DCF values which float around for STU are as well around the $2 mark - e.g. alphaspread came up recently with $1.86;

So - what about with $2 in Dezember 2025? Am I too pessimistic?

Discl: holding, and nibbled a bit more this morning.