STU - Steel & Tube Holdings

[winner (n)]

There's a good article in NBR today ...how retiring CEO of Naylor Love sees the construction sector. Worth a read if you have access

https://www.nbr.co.nz/business/builder-by-heart-gives-minister-words-of-construction-wisdom/

[Cod]

Third Fractal in progress will not linger at the bottom.
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[BlackPeter]

Third Fractal in progress will not linger at the bottom.
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Interesting chart. They do say something about falling wedges, don't they? And from memory it is good.

[winner (n)]

Interesting chart. They do say something about falling wedges, don't they? And from memory it is good.

Hey BP ...last time you talked about STU falling wedges it precipitated a collapse from mid 120's to 100

Wouldn't want to see 80 cents this time would we

[winner (n)]

Rhetoric about growth still strong out there

But MOF told business people yesterday "Treasury is now warning me that growth over the next few years is likely to be significantly slower than it had previously thought," she said, recognising productivity in New Zealand has slowed. "

I'm sticking to my forecast that things won't be getting much better for the likes of STU before 2027/2028

[BlackPeter]

Hey BP ...last time you talked about STU falling wedges it precipitated a collapse from mid 120's to 100

Wouldn't want to see 80 cents this time would we

That's the thing with TA patterns - they only describe likelihoods and they don't tell you either when the breakout will happen.

I would not see any reason to rule out 80 cents or any other amount ... and frankly, not sure I'd care too much where the bottom lies. Do you?

I guess the more interesting question would be - will they stay profitable (as they have been - with only one exception in the last 10 years)? ... and will they turn the long term EPS shrinkage around (analysts seem to think so, but analysts are not more often right, than you or me are ;

So far I see at $1.05 (ex-dividend - i.e. minus 4 cents divie) a forward PE of 9.3. At 80 cents it would be 7. Pretty sure the market would fix such an anomaly, unless the NZ construction sector falls into a deep depression, which you seem to expect and I don't.   

[Poet]

That's the thing with TA patterns - they only describe likelihoods and they don't tell you either when the breakout will happen.

I would not see any reason to rule out 80 cents or any other amount ... and frankly, not sure I'd care too much where the bottom lies. Do you?

I guess the more interesting question would be - will they stay profitable (as they have been - with only one exception in the last 10 years)? ... and will they turn the long term EPS shrinkage around (analysts seem to think so, but analysts are not more often right, than you or me are ;

So far I see at $1.05 (ex-dividend - i.e. minus 4 cents divie) a forward PE of 9.3. At 80 cents it would be 7. Pretty sure the market would fix such an anomaly, unless the NZ construction sector falls into a deep depression, which you seem to expect and I don't.   

Yes, can't be too bad a deal if we continue to get 10% plus gross yield while we wait for better times to arrive

[winner (n)]

Yes, can't be too bad a deal if we continue to get 10% plus gross yield while we wait for better times to arrive

Last divie greater than profit ......sustainable?

Got surplus cash but isn't that earmarked to acquire things .....or being resilient tide them over in bad times

That could stuff up your yield expectations eh

[BlackPeter]

Last divie greater than profit ......sustainable?

Got surplus cash but isn't that earmarked to acquire things .....or being resilient tide them over in bad times

That could stuff up your yield expectations eh

Last divie greater than profit ......sustainable?


Sounds bad, but is it?

OK - Dividend 4 cents, EPS 3.2 cents. Obviously not sustainable if this is not a one off, but a consistent trend.

On the other hand - Last year was H2 better than H1 - and it doesn't need to be much better to make this sustainable, doesn't it?

I guess, again - it depends on how bleak you see the future. Given that bull runs are historically happening in 78% of the time, while bears occupy only the remaining 22% - well, that's what Russell Investments are saying anyway (https://russellinvestments.com/us/blog/bulls-vs-bears) I guess the odds are against a prolonged recession in the building sector.

But if it makes you feel better ... it could happen - its just not very likely.

Just remember one thing - optimists tend to live longer than pessimists ... :

[Shareguy]

Caught up with a mate who owns a business competing with STU in Auckland. He said that the level of enquires and sales has noticeably dropped off last few months. What is also a concern is doubtful debts are increasing and some customers mostly related directly to constuction are struggling to pay the bills. He is concerned and is trying to cut costs.

Stu has a history of destroying businesses they have acquired. Mostly through being unable to hold on to key staff. Knowledge and skills are something that STU in the past has not valued enough and as such competitors are full of ex STU employees.

However with that all aside Mark seems to be doing a good job. It's a much leaner business and STU have a pile of cash to hopefully make some sound Acquisitions.

[winner (n)]

Caught up with a mate who owns a business competing with STU in Auckland. He said that the level of enquires and sales has noticeably dropped off last few months. What is also a concern is doubtful debts are increasing and some customers mostly related directly to constuction are struggling to pay the bills. He is concerned and is trying to cut costs.

Stu has a history of destroying businesses they have acquired. Mostly through being unable to hold on to key staff. Knowledge and skills are something that STU in the past has not valued enough and as such competitors are full of ex STU employees.

However with that all aside Mark seems to be doing a good job. It's a much leaner buisiness and STU have a pile of cash to hopefully make some sound Acquisitions.

Jeez mate, for you that's one bearish post.

Have a retaining wall built ......contractor ordered steel the other day and they said do you want it yesterday as things are so slack these days

[Shareguy]

Got to post the good and the bad Winner. I still think at current price is good buying just on the divi and potential for takeover.  We are at bottom of cycle or close to it some experts say.

Disc

Still have a good holding but no longer one of my largest positions.   

[Basil]

Just as an aside...love the word "munted"...hardly ever see it in use these days, especially by economists.
Its so prescriptive, doesn't leave much room for interpretation but for what its worth
munt·ed from an online dictionary

[ˈmʌntɪd]
adjective
munted (adjective)
BRITISH
AUSTRALIAN
NEW ZEALAND
informal
under the influence or alcohol or drugs:
"they have constant issues with drivers turning up munted"
NEW ZEALAND
informal
badly damaged; ruined:
"work to remove the munted footbridge—an icon of the Canterbury earthquakes—is to begin this week" · "no wonder our education system is totally munted"
Origin
1990s: of unknown origin.
Translate munted to

Choose language
Similar and Opposite Words
adjective
under the influence or alcohol or drugs:
intoxicated
inebriated
drunken
befuddled
incapable
tipsy
the worse for drink

Opposite:
sober

Maybe shareholders will get really lucky and FBU will renew their takeover offer at $1.90...but of course the directors would reject it as its below intrinsic value yet again just like ARV directors did with their $1.70 offer.  Really, some of these directors need to be taken out the back of the cow shed and @#%&.
I wouldn't trust STU directors as far as I could throw them.  I'm with Winner and Tony Alexander, the outlook for the next few years for this sector is pretty munted.

[winner (n)]

Susan would never allow STU to be taken over

Munted ..good word. Used a lot to describe christchurch post quakes. I did a preso to the Board of an ASX company about impact of quakes on business ...they took the word munted out of the actual preso slides as it was improper to use such words ..... but I said it anyway ...I think they got the message Chch was munted

[Cod]

From Interest.co.nz Friday report.

HARD MINERAL RETREAT
Global steel and iron ore prices are falling rather quickly now. Steel (rebar) is down -2.7% over the past week, and iron ore is down -9.5% over the same timeframe. Since the start of the year the reductions at -11% and -24% respectively. The steel price is back to 2009 levels. These pullbacks directly relate to soft Chinese demand.