STU - Steel & Tube Holdings

[LoungeLizard]

FBU loss was due to more write offs/downs. I wouldn't compare FBU result to STU

They're both in the same industry, and not all FBU's loss is attributable to write-offs. The going is tough out there, and relative to the rest STU seem to have their house more in order.

[BlackPeter]

Crikey.....they say a solid result!

https://www.nzx.com/announcements/436783

FY24 Performance and Results
 
 $m / FY24 / FY23 / Change
 
 Revenue / 479.1/ 589.1/ -18.7%
 
 Volume (Ktonnes) / 115.5 /146.4 / -21.1%
 
 GM$/tonne / 901 / 850 / 6.0%
 
 EBITDA / 31.4 / 51.9 / -39.5%
 
 Normalised EBITDA* / 35.8 / 52.9 / -32.3%
 
 EBIT / 9.6 / 31 / -69.0%
 
 Normalised EBIT* / 14.5 / 32.1 / -54.8%
 
 NPAT / 2.6 / 17 / -84.7%
 
 Net cash / 8.7 / 6.5 / 33.8%
 
 Net operating cashflow / 42.2 / 98.3 / -57.1%
 
 Full Year gross dividend (cents per share) / 8.3 / 11.1 / -25.2%
 
 Full Year gross dividend yield** (%) / 9.7% / 9.9% / -2.0%
 

Weird things happen - I find myself agreeing with the Lizard ...

Lets face it - it is a cyclical company, and not just the usual analysts seem to assume that we reached the bottom of said cycle.

If that's correct, than this is a solid result (hey, they did make money - though admittedly not a lot, NTA is above SP, balance sheet looks quite good, cashflow is under control and the future should look bright.

Obviously - anybody assuming that our current government is running our economy from here still deeper into the mud instead of supporting it should invest instead into one in their view better run economy.

[BlackPeter]

Mark says not to worry ....all hunky dory

It's all about this graphic .....what a masterpiece

You cannot view this attachment.

We better set a reminder for the next high! Always good to buy when the SP is depressed (as it still is  now), but so hard not to forget the selling during the inevitable high in a few years ;

[winner (n)]

They also out this chart in the preso. Not so dramatic but gives some idea of the future market conditions. Dashes are my doing ...like marking present

Suppose things are going to be better but no 'super cycle'

I still say things not going much better to 2027/2028


You cannot view this attachment.

[Gerald]

Strange no insider buying if they really think it's the bottom of the cycle 

Liked the chart which showed EBIT should be up $20m even on the same FY22 volume due to all the work behind the scenes. Hope it ages well.

They seem to be getting quite keen on m&a which is questionable given cost of capital differential vs competition such as Vulcan. Hope they show discipline.

[winner (n)]

They're both in the same industry, and not all FBU's loss is attributable to write-offs. The going is tough out there, and relative to the rest STU seem to have their house more in order.

STU v FBU FY24 V FY23

STU revenue down 19% ...EBIT down 55%

FBU revenues +0% ...EBIT down 36%

Normalized ebit for both

FBU seem to have done better ..or less bad

But agree STU house more in order

[winner (n)]

Updated my spreadsheets with this year's numbers

One thing that stood out was that the 2nd half of of year was pretty dire

Revenues were only $217m (~20% down on pcp and first half of year( and Normalized EBIT was a miserly $3.2m

Can't really see how half year we are in can be any better

Mark's rave and positive media and analyst comments have held the share price up today  ... might even close UP

I think come six months time punters might be feeling a bit different

[winner (n)]

Future Infrastructure spend saviour of STU as Susan said a few months ago "There has been underinvestment in New Zealand's infrastructure for many years and we look forward to the new coalition Government confirming its long term investment plan"

Chart below from Budget numbers

Will Susan be pleased (Esp from a growth perspective)

You cannot view this attachment.

Mark really excited about the future growth....esp with infrastructure soend.

Marks words - "In May 2024, the Government budget allocated $68b to infrastructure work over the next five years and is in the process of approving fast track consent legislation, which will improve Infrastructure "

The chart is from Budget numbers ....hmmmm

[BlackPeter]

Mark really excited about the future growth....esp with infrastructure soend.

Marks words - "In May 2024, the Government budget allocated $68b to infrastructure work over the next five years and is in the process of approving fast track consent legislation, which will improve Infrastructure "

The chart is from Budget numbers ....hmmmm

Clearly - the budget did not plan for increasing climate change damages nor did it plan for fixing our crumbling water infrastructure. Ah yes, and we will need coastal shipping back very soon (which requires in many harbours additional docking terminals) - just get some more inland routes destroyed by landslides ...
what is the current rate? 2 to 3 per year unusable for weeks or months ...

Trust Mark, climate change and our quickly deteriorating water infrastructure ... Infrastructure spending will go up!

[Shareguy]

Terrible result.

Craig's say

Our approach to STU's valuation remains unchanged and incorporates a 50/50 DCF and P/E multiple based Target Price (TP) to reflect the cyclical nature of STU's earnings and current market sentiment toward the construction sector, combined with our long-term view of the company.
STU is currently trading on a 12-month forward PE of 30x (based on CIPe blended forward 12-month EPS of 3.5cps, prev 4.7cps), compared to a historical average of 10.5x. Applying this average PE to our forward EPS forecast of 3.5cps we arrive at a TP of $0.36 (prev. $0.49).
Our DCF derived target price increases 9% to $1.27 (prev. $1.16), driven by earnings revisions and a review of our long-run gross margin forecast. Key DCF inputs include WACC of 10.6%, TGR of 2.0%, and long-run RFR of 4.3%.
With the current share price trading c.23% above our Target Price ($0.82), we retain our Underweight recommendation.

Glad I sold.

[winner (n)]

Craig's say in above from shareguy  - Our DCF derived target price increases 9% to $1.27 (prev. $1.16), driven by earnings revisions and a review of our long-run gross margin forecast. Key DCF inputs include WACC of 10.6%, TGR of 2.0%, and long-run RFR of 4.3%.

With all due respect to the gurus at Craig's I remind myself of the old saying 'price is what you pay, value is what you want the spreadsheet to come up with'

PS .... Their F25 forecast eps 3.5 cents is NPAT of $5.8m ....stuff all eh but probably be less

[Perky]

From the interest.co web site today

INFRASTRUCTURE RUSH, RISING +$1.5 BLN PER WEEK
Projects are being added to the national infrastructure pipeline fast now. The latest report from the Infrastructure Commission shows that the value of infrastructure projects in the pipeline totaled $148 mln as at June, an increase of more than +20% since March. That is $24 bln more added in just 90 days. Almost 60% of them comes from projects that are funded, part-funded or have a funding source

https://media.umbraco.io/te-waihanga-30-year-strategy/fk4k5ivh/pipeline-snapshot-june-2024-final.pdf


Might stiffen up the order Book for STU

[BlackPeter]

Terrible result.

Craig's say

Our approach to STU's valuation remains unchanged and incorporates a 50/50 DCF and P/E multiple based Target Price (TP) to reflect the cyclical nature of STU's earnings and current market sentiment toward the construction sector, combined with our long-term view of the company.
STU is currently trading on a 12-month forward PE of 30x (based on CIPe blended forward 12-month EPS of 3.5cps, prev 4.7cps), compared to a historical average of 10.5x. Applying this average PE to our forward EPS forecast of 3.5cps we arrive at a TP of $0.36 (prev. $0.49).
Our DCF derived target price increases 9% to $1.27 (prev. $1.16), driven by earnings revisions and a review of our long-run gross margin forecast. Key DCF inputs include WACC of 10.6%, TGR of 2.0%, and long-run RFR of 4.3%.
With the current share price trading c.23% above our Target Price ($0.82), we retain our Underweight recommendation.

Glad I sold.

Its a funny thing with analyst recommendations. We all know that they are professionally created white noise, given that analysts don't know more about the future than anybody else.

Actually - I did over some years a comparison of analyst recommendations (one year back) with the share price of various companies in my portfolio and on my watchlists - and there was clearly no statistically relevant correlation between recommendation and what the SP did.

Should be still a thread in the other forum (which for some reason I can't access anymore), where I documented some of my results.

But still - if we like what the analysts say, we take their recommendation as evidence that we are right.

Of course, if we disagree, than we know that they aren't right anyway.

In this particular case you seem to belong to the first group and I to the second ... but even if I agree with them (in some other cases) I know that this doesn't mean that they (or I) are right.

And yes, STU's P/E looks currently somewhat stretched, however - this is what any cyclical does at the bottom of the cycle. Only question is - will our economy go belly up from here? I don't think so, and if it recovers from here, so will STU, unless they do a FBU on us, which I don't believe.

Obviously - if the economy goes bust, than the Craig's will end up being on the laughing end, but on the other hand, I don't think this would be good for them (or anybody else) either.

Discl: holding and not too worried.

[entrep]

Following Craigs reports has cost me money many more times than it made me money.

[winner (n)]

Mark getscall excited about the tens of  billions of infrastructure spend that's going to wonders for STU's profits

Had to laugh when I saw this NBR headline You can't fix infrastructure with accounting

Didn't read properly but reminded me you need more than talk blah blah to get things done. Sadly we don't have resources and the wherewithal to get what's needed to be done actually done and what's worse lack of drive / desire to do it

Hope Mark isn't pinning his hopes on a huge increase in activity over the next few years