STU - Steel & Tube Holdings

[lorraina]

Vulcan's interim was not flash.
I wonder whether I am wrong to expect a great result from STU tomorrow.?

[Teitei]

Vulcan's interim was not flash.
I wonder whether I am wrong to expect a great result from STU tomorrow.?

VSL's results in line with expectations and their previous full year guidance.

So no surprises there.

[Poet]

VSL's results in line with expectations and their previous full year guidance.

So no surprises there.

Yes, will be interesting to see whether STU can do better comparatively.

VSL is trading at around 12 times NPAt

STU is trading around 8 times NPAT

Maybe time for a relative reweighting of these two?

We'll know tomorrow

[Davide]

There has been nothing reported since this DECEMBER TRADING UPDATE

The strong demand for steel we have seen over the last two years has continued into the first half of our FY23 financial year, despite challenging macro trends, including higher interest rates, increased labour costs and elevated steel pricing.

This result is going to be excellent I think. Next Six months will be lower, but hay look at the price it's trading at.

I see Vulcan's NTA at $1.21 with share price at$9.56.

Steel and Tubes at $1.22 with share price of $1.42

[Teitei]

Yes, will be interesting to see whether STU can do better comparatively.

VSL is trading at around 12 times NPAt

STU is trading around 8 times NPAT

Maybe time for a relative reweighting of these two?

We'll know tomorrow

A good result from STU will see investors switching from VSL to STU - that's for sure.

The sp action of the two stocks in recent times also show that the swing is towards STU.

Not too late for VSL's shareholders to switch to STU before the results.

[Left Field]

1H23 Results out...... BAU?

https://www.nzx.com/announcements/406675$m / 1H23 / 1H22 / Change
Revenue / 315.3 / 282.2 / 11.7%
EBITDA / 30.5 / 31.9 / (4.4%)
Normalised EBITDA* / 31.6 / 31.8 / (0.6%)
EBIT / 20.3 / 22.6 / (10.2%)
Normalised EBIT* / 21.5 / 22.5 / (4.4%)
NPAT / 11.8 / 14.3 / (17.5%)
Net operating cashflow / 41.1 / (9.6) / 528.1%
Total dividends (CPS) / 4.0 Imputed / 5.5 Unimputed

Revenue for the six months was a record $315.3m, up 12% on the prior comparative period (pcp). Volumes were slightly below prior year, with sustained customer demand continuing for a comprehensive range of products.

Earnings were down slightly on pcp as margin improvement was offset by inflation and depreciation. A focus on margin management and fast moving inventory has minimised margin squeeze. Gross margin was 21.7% with gross margin dollars per tonne increasing to $850 per tonne. Pleasingly, normalised operational costs as a percentage of sales continued to decline. EBITDA for the period was $30.5m with EBIT of $20.3m.

Inventory increased in FY22 to support customers through a period of supply chain constraints. This position is now being reduced as supply chain headwinds ease. Inventory turns (unit and tonnes) have remained consistent with prior periods.

Steel & Tube's balance sheet remains strong with reduced net debt, down to $32.5m as at 31 December 2022, from $43m in FY22, with strong cashflows supporting strategic initiatives.

[winner (n)]

That's a pretty poor result

[winner (n)]

Teitei will say as expected and good in the prevailing market conditions

But will it support the share price?

Or will share price head back to 110/120

[Shareguy]

A quick glance.

Not good but not as bad as Vulcans.

Record sales. Div similar when you take 100 percent imputation.

Slightly over Craig's estimates. Second half normally better.

Low debt and reducing. Entering Aluminium market

[lorraina]

A mixed result.
Sales Revenue up 11.74% yet cost of sales were up 13.40%.
Borrowings down $11mil.
Pleasing seeing inventory down $17.445mil
EPS down from 8.7cents to 7.1 cents.
Imputed divie of 4cents is positive but is the same as the previous 5.5cents unimputed.
Cash flow from operating activities was outstanding at $41.140 mil.
Also pleasing was seeing the equity ratio improving from 48.42% to 53.48%.
The business is in very good shape.Management are performing well.
The entry into the aluminium market should be another good bolt on serving their existing customers.

[Basil]

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

Suppose that'sgood advice

There is no way anyone can sugar coat this result.  It's bloody awful.
Significant decline in eps and the dividend.  This pup is a recidivist offender when it comes to serious disappointments.

[Shareguy]

There is no way anyone can sugar coat this result.  It's bloody awful.
Significant decline in eps and the dividend.  This pup is a recidivist offender when it comes to serious disappointments.

That's not how I see it Basil.

Reported just a 0.6% drop in normalised operating profit and saying demand remains solid.

This bad weather has caused plenty of issues. One thing is for sure, will be a lot of roofs that need replacing and infrastructure is going to get a huge boost.

The steel products distributor's normalised earnings before interest, tax, depreciation and amortisation (Ebitda) of $31.6m compared with $31.8m in the previous first half.

Sales were up 11.7% to $315.3m, while sales volumes were down just 2.8% in the latest six months.

On Tuesday, Vulcan Steel reported a 15% drop in steel volumes sold in its first half. Which indicated to me that STU are continuing to grab market share.

Steel & Tube will pay a fully imputed first-half dividend of 4 cents per share (cps), making it equivalent in value for New Zealand shareholders to last year's unimputed payout of 5.5 cps.

So same dividend and EPS was 7.1 cents against 8.7.

Met Craig's forecast. With the low debt no reason why they can't continue to be one of the NZX highest dividend payers.

Acquisitions are doing well. And the move into aluminium seems like a great play considering many of their customers use the product.

[Basil]

No disrespect mate but you have previously stated you were looking for 14 cps in annual dividends and I believe most were expecting full imputation credits with that. I think it's clear they're a long way short of that.

I don't have a lot of respect for "normalised" earnings especially in the construction sector.

[Teitei]

Teitei will say as expected and good in the prevailing market conditions

But will it support the share price?

Or will share price head back to 110/120

No, I would not say that even though it is in line with Craigs.

I was expecting a higher profit to in line with the higher revenues but their margins did not hold up.

Such is life.

Happy to continue to bank the sustainable high dividends and wait for the huge infrastructure spending to kick in.

[Shareguy]

Not a lot of turnover today suggests to me that the market is ok with the result.