MFT - Mainfreight

[BlackPeter]

Might be quite a while before the tide changes again too.  I remember warning on this one when it got very close to $100 and the tide was fully in.  If my memory serves me correctly quite a few holders were not appreciative of my cautious notes.  The problem with market darlings on elevated multiples is that everything has to continue to stay perfect for the stock to continue to outperform, (and it seldom does).

The problem with predictions is that people only tend to warm them up if they happened to be correct ... nobody carries his wrong predictions on their tongue. Sort of like the analysts who predicted 25 of the last 2 downturns.

But sure - we all know that stock prices - like ships in the sea - go up and down with the waves and the tide. Nothing to crow about, unless you are a trader.

What we do know however is that great transport companies like MFT will be the first to appreciate when the current crisis is over. They always do. Last time (after the first Covid shock) I bought a parcel of MFT somewhere in the mid 30íes - and yes, they nearly moved up to $100. I sold at this stage some of them (just rebalancing my portfolio) and actually repurchased some more recently.

Of course - one always needs to look at the fundamentals, but with MFT on a forward PE of 13 and a forward earnings CAGR of 16.6, are the numbers very undemanding. This is a PEG (Zulu Principle) of 0.8 - pretty spectacular for such a large company!

[Basil]

I think one of the key values of the forum is when people have the courage to share diverse opinions that go against the grain of group think.  The fact is very few people do mainly because of all the negative crap that gets thrown their way in response.   Relax mate, nobody thanked me for cautioning on PAZ when it was $1, OCA at $1.40, ATM at $21 or FPH at over $30 to name just a few.  In fact, quite the opposite.  All I got was heaps of s**t thrown at me for my trouble.

Nobody is disputing that MFT is not a great well managed company, I certainly never have but there are good times and bad times in their industry and there seemed little point to me in buying when all the ducks were in alignment and quacking loudly.  MFT's time will come again but I don't think its anytime soon.  We'll find out more about their current year metrics shortly.  I seriously doubt it's as good as you suggest.  Maybe I am wrong, I don't follow all that closely.
Good luck and best wishes.

[Shareguy]

Maersk's result was interesting given we have Mainfreight reporting 1H24 on Thursday.  Said issues are more around excess shipping supply than demand. Freight rates were down 58% on pcp, and Maersk commented it expects a subdued macroeconomic outlook and soft volumes for the coming years.

Maersk commented that supply side risks create a very uncertain trading environment with significant further downside risk potential.

FB are expecting a large drop in profit but as MFT have never cut their divi should maintain at $.85. 

EPS forecast of $1.20 against 1H23 of $2.15.

Not long to wait.  Could be a great buying opportunity

[Left Field]

Result out.....42% drop in profits...

https://www.nzx.com/announcements/421320

Revenue $ 2.36 billion Down 21.6%
Profit before tax $174.8 million Down 42.1%
Net profit $124.55 million Down 42.6%

[Shareguy]

Met consensus on EPS and divi.

At close of $57.59 EPS forecast full year $2.50 is a PE of 23.

In comparison

DSV 16.6 from FB
KN 20.4

[Basil]

Quite a bit of commentary on CNBC lately from the C Suite of shipping companies saying they're expecting soft trading conditions for the foreseeable future, some exec's suggesting 2-3 years.  If things pan out as those exec's are expecting then a forward PE of 23 still looks a bit expensive to me, (notwithstanding they're a very well managed company with a great reputation for customer service).

Market likes it so what would I know.  Based on their outlook statement I see them doing about $250m after tax for FY24 and on 100.7m shares that's $2.48 eps.
On the latest price this morning of $62 a couple of minutes ago that's a forward PE of 24.8 (a long way north of the 13 suggested by another poster above)....so still on "market darling" metrics despite the share price correction in recent times.

[BlackPeter]

Quite a bit of commentary on CNBC lately from the C Suite of shipping companies saying they're expecting soft trading conditions for the foreseeable future, some exec's suggesting 2-3 years.  If things pan out as those exec's are expecting then a forward PE of 23 still looks a bit expensive to me, (notwithstanding they're a very well managed company with a great reputation for customer service).

Market likes it so what would I know.  Based on their outlook statement I see them doing about $250m after tax for FY24 and on 100.7m shares that's $2.48 eps.
On the latest price this morning of $62 a couple of minutes ago that's a forward PE of 24.8 (a long way north of the 13 suggested by another poster above)....so still on "market darling" metrics despite the share price correction in recent times.

In my view is measuring the companies PE performance at the typical low point for the industry about as sensible than measuring the sea level at low tide with a wave just rolling out ... and planning the dikes accordingly.

The good times for freight companies come with the next economic upturn and, while it is everybody's best guess when this might happen (I think 2024 rather than 2025 or later), we know that historically the freight companies are part of the first bunch to rise (due to lower fuel costs and increased freight volumes).

[Basil]

Commentary from Mainfrieght in their presentation was all about this being more "normal trading conditions", (not tide out as you suggest BP), after last year's highly unusual "spring tide"  Felt to me like they were talking about the tide being at a normal level, (half tide if you like).

Let me put it this way, if the forward PE was really the 13 you suggested the other day I'd definitely be a buyer because its a very well managed business with a great future ahead of it.  At ~ 25 times forward earnings and a gross yield of 3.8% I'm happy to leave it to others. 

I'd rather just keep buying a great growth company on forward metrics of 10 times forward earnings and ~ 8.5% gross yield.  You know the one. 😉

[Left Field]

.....  At ~ 25 times forward earnings and a gross yield of 3.8% I'm happy to leave it to others..... 
 

Totally get your conservative PE musings however the market seems to be saying MFT worth a premium..... SP up 9% or $5.22 today. Not bad those that purchased at recent lows.

[Onemootpoint]

"Globally, September air cargo traffic was up +1.6% from the same month ago, and the fastest growing region was the Asia/Pacific region (+4.2). But the overall levels arte still -1.8% lower than in September 2019, and -3.2% lower in the Asia/Pacific."

 https://www.interest.co.nz/economy/125146/us-data-lackluster-drought-effects-bite-beef-markets-china-plays-fire-over

[entrep]

I'd rather just keep buying a great growth company on forward metrics of 10 times forward earnings and ~ 8.5% gross yield.  You know the one. 😉

Please share here sir

[Red Baron]

Please share here sir

He has in great detail!  It eez a company growing steadily and not requiring a 'Turner'-round, eef you get my dreeft.

RB

[entrep]

He has in great detail!  It eez a company growing steadily and not requiring a 'Turner'-round, eef you get my dreeft.

RB

Mainfreight?

[Basil]

https://stocktalk.co.nz/index.php?topic=104.0

[entrep]

I kid, thanks both