STU - Steel & Tube Holdings

[winner (n)]

yes basil - there's an old saying 'Believe the past to foresee the future'

Suppose that'sgood advice

[Perky]

Basil, some of us didn't own STU 5 yrs ago. Some off us bought it 3yrs ago when the big steel barge was on the turn

The trend is our friend until the bend at the end...

TRA is bending the wrong way

TRA Share price down 30% in last 52 weeks
TRA last 3 dives 6c, 7c, 5c ..oh dear that's a 30% drop from last qtr

STU share price down 24% in last 52 weeks
STU last 3 divies 3.3c , 5.5 c, 7.5c + imputation...oh lordy that's a 40% increase from last half

Theres some Strength in that STU dividend.

Discl. This is a bit of Wind up
I actually think both STU and TRA are good long term shares but at the moment I personally prefer STU and you prefer TRA

[BlackPeter]

For what its worth mate I will always stick with my belief that the best guide to the future is the recent past and they have a very poor dividend track record on average over the last 5 years.

Sure its an old company but you can very easily make the case its best days are behind it, for example they paid dividends of 40 cps for years in the late 1990's and eps was as high as 63 cps in 1995, page 30 of the 1997 annual report https://steelandtube.co.nz/sites/default/files/report/1997_AR.pdf

I believe the building industry has always been historically cyclical and it will always be that way going forward so going fishing in this sector for reliable dividend payers is fraught with significant risk around the cyclicality of the industry. As a semi-retired income investor I am far less concerned with what their prospective yield might be in FY23.  My focus is on what it will average across the economic cycles going forward.

In my view the board made a complete hash of the FBU $1.90 offer several years ago and in the intervening time the NZX50 is up more than 50% so shareholders could have had $1.90 + 50% = $2.85 in value now plus more reliable income since then in other high yield stocks.  Adding that difference back in, let's call it $3 just for the sake of simplicity, (it's probably more), in value now shareholders could have had if the board approved the FBU deal but thanks to the "rocket scientists" on the board they now have only $1.30.  Why would anyone trust a board that did that to them?

I also note they did a 1:1 bonus issue in 2017.

I was a shareholder for a while in early 2022 and bought into the hype on the other forum at the time.  It cost me a few thousand to liquidate that position in May 2022.  My losses would have been four times as much if I was still holding now.  I only post to put some background and realism into this thread so that others can reflect on a counter point of view.

I believe over the medium to long term I will get a higher and more reliable source of retirement income from the likes of HLG and TRA.   Both companies have a 10% prospective yield and a clear plan for growth in the long run that will grow those dividends over time.

If holders believe all STU's past problems are behind them and they're headed back to the former days of glory. good for you and good luck with that. 

The recent past is only a good indicator for the future if you have only one (or one major) parameter impacting your trend, and this is moving in a linear fashion.

Sure - these things happen, but reality is not just unbroken trends ... as we all know , but a cyclical or chaotic system with an unlimited number of inputs following anything but a linear trend.

Often good to consider as well things which might change the trend chart ... and I am not just talking about the SP.

[Shareguy]

No question that STU has had some horrendous years and suffered from poor management. These days under Mark Malpass the ship is I believe steering in the right direction.

I still think STU is One of the most undervalued shares on the NZX currently.  Where can you buy a distribution business pretty close to NTA. ($1.22 at FY22). I'm expecting this years result to be close to last years which was EPS of 18 cents and a div of 13 cents. Im thinking FY23 we will be looking at 14 cent DPS possibly even 15 cents with recent acquisitions. Low debt with gearing at 19 percent at FY22.


When I was highlighting the potential on that other site we were looking at around $1.00 a share. Since then the share price has stabilised around current price.

I believe there is a lack of understanding on how this company generates income. These days Steel & Tube is a diversified business with limited exposure to any one sector. According to the annual report residential is about 21% of their market sales.


One of the highest dividend payers on the NZX and should be fully imputed going forward. I also believe at current price it will be attractive as a take over. 


Not long to wait for the results. I back myself with 18 Years in the industry which is why I'm overweight on STU.

[Poet]

Well said shareguy 100% agree.

This is my second largest holding (v overweight) and for those same reasons you outline.

Roll on the next report 15 Feb

I think we should see a steady eps with inventory and debt down and a fully imputed 1/2 yr dividend around 7 (or maybe even 8c)

Definitely an attractive t/o prospect, not that that would be my preference. I think the recovery has some way to run yet.

[Left Field]

For what its worth mate I will always stick with my belief that the best guide to the future is the recent past

Trouble with this belief is that it doesn't allow for CHANGE.....(Lessons learned and all that.)

After a few disappointing company results, a management/Board shake up takes place, changes are made and a turnaround is underway........

In the last 12 months GTK, ATM are classic examples of positive CHANGE........both up over 50% on recent 12 month lows. (Although dividend hounds seem happy to  hunt elsewhere). 

Always a good feeling to ride a turnaround SP wave when you find one. Can't beat tax free capital gains.

STU maybe a work in progress but all will be revealed soon.

[SuperMario]

Hi, does STU have a DRIP? I couldn't find it mentioned. Cheers.

[Perky]

Hi, does STU have a DRIP? I couldn't find it mentioned. Cheers.

No DRP active as far as I'm aware.
Cheers

Discl. Holder

[winner (n)]

Plenty of ready mix concrete being produced

Could say at record levels

Suppose steel and concrete go together - assuming STU do steel for concrete

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[Perky]

Back it the Wild West days of STU...the times Basil refer to.
STU used to hide all the dodgy steel in the concrete

..even back then STU was setting records (biggest ever com com fine at the time)

https://comcom.govt.nz/news-and-media/media-releases/2018/steel-and-tube-fined-$1.885-million-for-misleading-representations-about-steel-mesh

but we have a new captain and the boardroom got a refresh. such dodgy practices just ghosts of the past...STU a well respected member of the community now.

You will know how steel and concrete sales mesh on the 15th Feb.

[BlackPeter]

Plenty of ready mix concrete being produced

Could say at record levels

Suppose steel and concrete go together - assuming STU do steel for concrete

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They do - though from a recent site visit I made in Christchurch it did not appear to me that this might be their most significant sales item ;

Anyway - if people pour reinforced concrete, than they typically need as well plenty of steel on top of the concrete ... and this is where STU has lots of business: any steel carrier and connector you need for buildings e.g. halls, high rise buildings, industrial buildings ... and obviously as well the stuff they put on the roof (corrugated iron) ; 

[Davide]

Thay have a reinforcing division that is very busy. Will be reporting a big profit on Wednesday. I agree that it's one of the best buys on NZ market. Recent acquisitions will add to eps.  I'm all in.

[Hectorplains]

Thay have a reinforcing division that is very busy. Will be reporting a big profit on Wednesday. I agree that it's one of the best buys on NZ market. Recent acquisitions will add to eps.  I'm all in.

FBU guidance this morning was soggy (like everything else at the moment)... EBIT down as a "result of adverse weather impacts in New Zealand in January and February."  Forward on residential is weak; although they note, "Commercial and infrastructure markets are expected to be more robust."  STU are less likely to feel that impact due to greater weighting towards the later areas.

[winner (n)]

Readymix volumes down 9% in December22 quarter v December21 quarter

Hopefully STU won't tell a sad story like Fletchers

[Hectorplains]

Readymix volumes down 9% in December22 quarter v December21 quarter

Hopefully STU won't tell a sad story like Fletchers

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No doubt, it'll all be dandy.