STU - Steel & Tube Holdings

[BlackPeter]

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.

You mean the steel price is "munted"?

Not sure whether the price trend (below) is showing this ... I'd say, there still is hope ;

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But apart from that - even if the Chinese spend these days less money on steel, would this really mean there is a problem for STU selling its stuff in NZ?

[winner (n)]

Graphic below from STU half year results preso showing dividend history

Rolling 12 months EPS to December is 6.3 cents .....yet they have paid out 8 cents a share divie

Interesting they use the term 'Super Cycle' above F22......probably code for divies will never be this high again ...or at least for many years

I reckon dividends over the next couple of years (maybe longer) will be at best 6 cents/7 cents .....gives a reasonable yield at current share price but a bit short of the 10% they are proud of.

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[LoungeLizard]

The wind has definitely gone out of the sails hasn't it? Guess the market is unconvinced that the Nats will make good on their infrastructure spend pledge. Still, if divys can be maintained at current levels - which I think they will - the yield is still around 7-8%, Good enough to keep holding - for now. 

[winner (n)]

Jenny Ruth gave STU a good rave in her Just the Business today ....that's good

It seems no matter how good or bad the second half all guru analysts are saying they'll be keeping full year divie at 8 cents .....a lot more than the consensus profit forecasts.

You have to pay to read it

https://justthebusinessjennyruth.substack.com/p/steel-and-tube-ready-for-continuing?publication_id=1827355&utm_campaign=email-post-title&r=1rwf26&utm_medium=email

Ó

[winner (n)]

Good analysis there Ferg.

I have a small holding of Stu...hold more for dividend yield rather than growth.

At some stage I want to pick up some  VUlcan steel...I think their gross margin 35-40% so similar to your client

Much more efficient business and dual aus/nz market for better growth when market picks up.

I thought the vul price might drop a bit after last report but didn't really so I just wait my time holding Stu but VUl is on my watching list. Was hoping might get down to low $7 or late $6 for a buyzone.
Maybe I'm dreaming but it still seems a little expensive for me

Just over a month ago that was perky

Since then VSL share price UP 13% while STU share price DOWN 8%

Suppose that means STU is a BUY at the moment ....lot of catching up to do eh

But then it just may reflect the relative perception of the future prospects of each

[Perky]

I drove past the big shiny Vulcan factory in te rapa Hamilton today Winner...the siren mermaid was singing to me...buy Vulcan perky, buy Vulcan Perky....come to me my friend.

It's a trap...too expensive for me...meanwhile the Stu divie is in the bank today.

I bought STU at 0.80...sold a few at 1.17 after you scared the horses it's was going under $1

So life is all good ...still green capital gain plus good divies...waiting for that mermaid to piss off before I join the Vulcan ship.

[winner (n)]

Good or bad for STU

I'm told cost of steel and construction steel fixing in NZ is exorbitant compared to Australia ...is this on govt radar?

https://www.nzherald.co.nz/nz/politics/live-prime-minister-christopher-luxon-speaks-from-upper-hutt/KKCXBLEOORBKRE5W7QFFA5LZFE/

[BlackPeter]

Good or bad for STU

I'm told cost of steel and construction steel fixing in NZ is exorbitant compared to Australia ...is this on govt radar?

https://www.nzherald.co.nz/nz/politics/live-prime-minister-christopher-luxon-speaks-from-upper-hutt/KKCXBLEOORBKRE5W7QFFA5LZFE/

Wow, one of the most sensible proposals I heard so far from the new government. Maybe they are after all still able to do better than just supporting the tobacco and the gun industry?

This proposal is clearly a big win for all consumers - prices for building products in NZ are just outrageous! If they get them down (and I think there is a good chance), this would be good for everybody.

Is it good as well for STU? I suppose it will increase volume (more building activity), but might reduce individual margins. But hey, they say competition is good for business, so lets bring it on!

[winner (n)]

Coventry on ASX announce acquisition of Steelmasters Group. Turnover $40m and costing Coventry $40m

Were they on STU's radar and one that got away?

Or Aussie exposure put them off to start with.

[winner (n)]

That Steelmasters has an EBITDA margin ~18%

STU's is ~8%/9%

Probably different type of business but hmmmm

[winner (n)]

BusinesDesk headline - Fletcher subsidiary Easysteel looks to cut jobs ...half unionised members to go plus admin etc staff

Things tough in steel industry ...and outlook a bit uncertain

STU pretty clever ...already cut the jobs

[winner (n)]

TV news says contractors and tradies are leaving NZ in droves as uncertainty and delays due to the government cancelling and putting major infrastructure projects on hold.

Jeez ...maybe the billions of work won't eventuate for many years

I'm sticking to my forecast that building/construction activity won't be picking up until at least 2027 ..at beast same amount of activity as the last 12 months.

[BlackPeter]

TV news says contractors and tradies are leaving NZ in droves as uncertainty and delays due to the government cancelling and putting major infrastructure projects on hold.

Jeez ...maybe the billions of work won't eventuate for many years

I'm sticking to my forecast that building/construction activity won't be picking up until at least 2027 ..at beast same amount of activity as the last 12 months.

Jeez - 2027? So you are saying, we need to wait until the current hepless lot is thrown out of government?

[winner (n)]

Acquired a fleet of trucks and trailers and taken on the drivers

Earnings accretive they say ...that's good

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/STU/430311/417594.pdf

[winner (n)]

Jeez - 2027? So you are saying, we need to wait until the current hepless lot is thrown out of government?

Heavens forbid ......they even more hepless ......would need to extend my forecast for any recovery out to 2032 or beyond if that happened .