STU - Steel & Tube Holdings

[Perky]

Yes agree BP..more debt. Something to be of aware of for sure.
Headwinds for both VSL and STu in short term but VSL much more efficient at turning $1 into $1.50 than STU.

[winner (n)]

STU always put a chart of building consents in their presos ...an indicator of macro factors affecting their business. So consents must mean something to them.

NOVEMBER consents data out today and the numbers were very sobering

Residential consents (number) for November month down 38% on pcp taking annual fall to 24%

Non-residential ($) for month up 2% on pcp and annual down 8%

For me just confirms STU and most punters are too optimistic about when things might get better. I see tough times for STU through to end of 2025 at earliest

[BlackPeter]

STU always put a chart of building consents in their presos ...an indicator of macro factors affecting their business. So consents must mean something to them.

NOVEMBER consents data out today and the numbers were very sobering

Residential consents (number) for November month down 38% on pcp taking annual fall to 24%

Non-residential ($) for month up 2% on pcp and annual down 8%

For me just confirms STU and most punters are too optimistic about when things might get better. I see tough times for STU through to end of 2025 at earliest

No doubt, a backwards looking market might notice that the number of new residential building permits dropped. Does not mean though that the number of future new buildings will drop as well, but hey, there likely is some short term correlation.

Just wondering, though how the number of building permits in 2023 will impact on the pressure on (not just) Wellington city council to replace their ancient pipe infrastructure? I hear the sale of water storage tanks (not sure, though whether they are made form steel) in Wellington is going already through the roof ...

Just wondering as well, whether the number of past permits gives us an idea of how many of these houses are build with a pina radiata skelton and how many with a steel framework? Plenty of new builds in our district (I hear its the fastest growing in NZ), and I notice more often houses with steel framework.

No doubt the number of building consents tells us that people last year have been pessimistic about the residential building sector. Not sure, a linear extrapolation of these data gives us a useful indication of all of STU's business segments in 2024 and 2025, but hey - we will see.

[winner (n)]

No doubt, a backwards looking market might notice that the number of new residential building permits dropped. Does not mean though that the number of future new buildings will drop as well, but hey, there likely is some short term correlation.

Just wondering, though how the number of building permits in 2023 will impact on the pressure on (not just) Wellington city council to replace their ancient pipe infrastructure? I hear the sale of water storage tanks (not sure, though whether they are made form steel) in Wellington is going already through the roof ...

Just wondering as well, whether the number of past permits gives us an idea of how many of these houses are build with a pina radiata skelton and how many with a steel framework? Plenty of new builds in our district (I hear its the fastest growing in NZ), and I notice more often houses with steel framework.

No doubt the number of building consents tells us that people last year have been pessimistic about the residential building sector. Not sure, a linear extrapolation of these data gives us a useful indication of all of STU's business segments in 2024 and 2025, but hey - we will see.

Just my view of the macro environment (their lingo) STU operate in.

Also strong correlation between readymix production and STU sales. Industry outlook is pretty gloomy there as well.

I stand by my view that things are going to be tough next two years for STU and punters will be disappointed

[Perky]

C,mon winner...stop trying to spook the horses...anyone would think you trying to buy some STU as you always telling us it's going to $1 or below

Stu themselves...say that only 12% of their revenue comes from residential...source last yr financial report.

Still imho...headwinds for both STu and Vsl..but I don't think things be as dire as you predict. As soon as interest rates start dropping these shares will be off to the races.

Let's see how it all pans out. I'm Still holding my modest STU holding and waiting for VSL next poor report and then I might look at jumping ship

[Perky]

Just checked..Stu on the leaders board today...UP nearly 3%... and that's just today...Buy, Buy, Buy

[BlackPeter]

Just my view of the macro environment (their lingo) STU operate in.

Also strong correlation between readymix production and STU sales. Industry outlook is pretty gloomy there as well.

I stand by my view that things are going to be tough next two years for STU and punters will be disappointed

Obviously - nobody can predict the future, this includes me as well as you, so we can only look at the indictors currently available.

What I see is a huge need of replacing ancient and long neglected infrastructure throughout NZ. Councils as well as governments kicked the can for ages down the road, and it sounds we reached in many areas the end of this strategy being sustainable. I heard Wellington is losing nearly half of its water through leaking pipes. Not sure when ratepayers will start to rebel if the water supply stops - what do yo think? Just stop using water (and the toilets) in our capital, how hard can it be? - though I hear, Auckland has its problems as well. Plenty of money around ... assuming Labours predictions of future water bills (predicting they will more than quadruple in the next 10 years) did have any basis. I suppose they foresaw the need to replace some of the infrastructure and consumers having to pay for it ...

What I see is an unbroken demand for living spaces. Plenty of people currently living in cars and carvans ... and even if the government reduces the immigration flow again - we do need more doctors, nurses, carers, builders and teachers - and they need to live somewhere. More and more people living alone, and they want separate homes. Sure - maybe more of these new homes will be flats and units instead of standalone houses, but they all will need steel for the mesh, more and more will need steel for the frame and most of them will need steel for the roof.

What I see is an increasing number of extreme weather events destroying existing infrastructure. Plenty of bridges and roads destroyed last year through extreme weather events, and it will be more this year and in the years to come. They all need steel (and concrete) for fixing.

I don't know more about STU than the public, but I know people working at one of their competitors. They are pretty busy ... and overtime is more the rule for them than the exception.

Ah yes - and for what it is worth ... I see that the analyst EPS consensus for STU is 10 cents in 2024 (same as 2023), rising to 13 cents in 2026. Again - nobody can predict the future, but it shows, that not everybody is that gloomy for the industry.

[winner (n)]

Just checked..Stu on the leaders board today...UP nearly 3%... and that's just today...Buy, Buy, Buy

Even further up ..don't count  SVR so it's top of leader ..up 5% to 115

Punters happy ..big boys back next week ...probably go to 125

Well done you who have had faith

[winner (n)]

Obviously - nobody can predict the future, this includes me as well as you, so we can only look at the indictors currently available.

What I see is a huge need of replacing ancient and long neglected infrastructure throughout NZ. Councils as well as governments kicked the can for ages down the road, and it sounds we reached in many areas the end of this strategy being sustainable. I heard Wellington is losing nearly half of its water through leaking pipes. Not sure when ratepayers will start to rebel if the water supply stops - what do yo think? Just stop using water (and the toilets) in our capital, how hard can it be? - though I hear, Auckland has its problems as well. Plenty of money around ... assuming Labours predictions of future water bills (predicting they will more than quadruple in the next 10 years) did have any basis. I suppose they foresaw the need to replace some of the infrastructure and consumers having to pay for it ...

What I see is an unbroken demand for living spaces. Plenty of people currently living in cars and carvans ... and even if the government reduces the immigration flow again - we do need more doctors, nurses, carers, builders and teachers - and they need to live somewhere. More and more people living alone, and they want separate homes. Sure - maybe more of these new homes will be flats and units instead of standalone houses, but they all will need steel for the mesh, more and more will need steel for the frame and most of them will need steel for the roof.

What I see is an increasing number of extreme weather events destroying existing infrastructure. Plenty of bridges and roads destroyed last year through extreme weather events, and it will be more this year and in the years to come. They all need steel (and concrete) for fixing.

I don't know more about STU than the public, but I know people working at one of their competitors. They are pretty busy ... and overtime is more the rule for them than the exception.

Ah yes - and for what it is worth ... I see that the analyst EPS consensus for STU is 10 cents in 2024 (same as 2023), rising to 13 cents in 2026. Again - nobody can predict the future, but it shows, that not everybody is that gloomy for the industry.

Peter, With an outlook like that FBU would have to be a great BUY as well

[winner (n)]

I need to remember that it's the story that matters when assessing STU's value .....I need to look beyond the numbers.

STU are telling much the same story as Peter et al .....and it's a good story

But STU 'stories'dont always come true

[BlackPeter]

I need to remember that it's the story that matters when assessing STU's value .....I need to look beyond the numbers.

STU are telling much the same story as Peter et al .....and it's a good story

But STU 'stories'dont always come true

Sigh - I guess we all know that stories don't always come true, no matter who told them, unless the narrator can predict the future. I don't know about you, but I haven't yet met anybody who is able to do that.

That's true for your numbers describing the past as well ... the future predicted by them only comes true, if the past trend continues.

Here are some basic facts:

- linear extrapolation is the easiest extrapolation to do (that's the reason so many people are doing it).
- linear extrapolation makes sense as long as you are describing a linear movement
- no naturally occurring movement is long term linear (stretch a spiral and you find out what I mean)
- however ... all movements can be described by an overlay of cyclical movements (Joseph Fourier).

Maybe its time to start thinking about this turning point you've got in any cyclical movement ... 

Peter, With an outlook like that FBU would have to be a great BUY as well

And yes, you are right ... if the industry turns upwards, FBU should benefit as well ... though, not sure, how much horizontal infrastructure they do these days. I think they moved out of this segment after they found out  after their last big clusterf*ck that letting project managers go is not helpful for completing projects in time and under budget).

[winner (n)]

It's not always the story about macro market conditions that don't come true ......quite a few stories about what STU themselves are going to don't come true either

For many years STU have been raving about increasing margins. They put this chart in the F23 review which doesn't really say they've achieved much .....

You cannot view this attachment.

.....but rather cleverly they left F19 off when GM% was 22.3% ...start the line back then and it paints a different story .....one that says increasing gross margins was just a nice story

[LoungeLizard]

Useful debate about STU's prospects going forward.

 There are those here that are much better than me at crunching the numbers and whilst that is essential in making an informed decision - Winners graphs are excellent in that regard - I tend to look at what is going on in the sector, what are the macro-economic factors at play. That's not to say that company management and history isn't important as well - it is - and that's why I haven't invested in FBU even though they operate in the same sector. STU management have raised their game in recent years and have streamlined operations and seem, unlike FBU, free of any legacy issues.

2022 was an extraordinary year when COVID was hitting it's straps and supply issues were at their most critical - STU could almost charge what they wanted and NP was double the previous year. Margins in 2023 were down in comparison to that year but are better than the years previous to that. If they can hold 2023 margins into 2024 and beyond I think they will do alright.

BP is right - no-one but no-one has a crystal ball. We all play the odds to some degree. But sometimes the macroeconomic stars align and PROVIDED the company is run well enough to take advantage of that (hang your head in shame FBU) then the odds start to fall in your favour. The other thing is that STU's yield is still decent enough to warrant attention in itself.

Finally, the market is a fickle beast. You can do all the right things in making a decision and still the market will prove you wrong. I'm not a TA expert either but I have seen high volumes and support levels developing. Those who got in before xmas at around $1.05 level have already seen a 10% uplift in SP and I think - just my opinion, it goes without saying - that there's more to come yet. In the current market there's not a lot of good news stories, but I have a hunch that STU in the next 12-24 months might be one of them.

[winner (n)]

Suppose this is a profit upgrade ...or things were not quite as bad as we thought with Normalised EBIT (whatever that is) only down 48% on last year rather than more than 50%

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/STU/425573/411891.pdf

[winner (n)]

Probably punters are relieved and we'll see a relief rally with share price heading back over $1.20