STU - Steel & Tube Holdings

[SailorRob]

Doing my best to 'fall in love' with STU .... but finding it difficult, at least from an operational point of view

In spite of years of talking about transforming the business and becoming heaps more operationally efficient many key indicators aren't improving and are in most cases are still worse than they were a few years ago

Gross margin improvement for instance comes through as top of mind. They even say staff incentives are based on gross margin growth rather than sales growth (jeez I made that happen in one place 20 plus years ago).

These charts from the results preso are a worry.

The tonnage / sales chart shows that average selling prices aren't improving - infrastructure seems the problem here

The Gross Margin chart shows margins aren't really improving with 2H21 % less than 1H20. Hardly inspiring and doesn't tie in with the glowing commentary. What's also worry that current GM% is still significantly less than 25% achieved a few years ago.

At lest they put in charts that don't look that good - must give them credit for be transparent.

Besides margins they talk about great working capital management - on the 5 year summary table they show a line Working Capital (times) whih is the number of turns per year. A woeful 2.8 times in F21 when ia few years ago it was well over 4 times - hardling inspiring and again at odds with the commentary over the last few years

Never mind - I can't see myself falling in love with STU (from a company operational point of view) but from a share trading point of view there is (as Rob points out) still potential of good returns if that $27m in cash ends up in shareholders hands somehow and the market re-rates accordingly - F22 might be that year (just like 22 is going to be the Warriors year). However I shouldn't forget that shares are often 'cheap' for a reason and being 'cheap' could be because they are slow growing low margin company with pathetic returns on capital

Very much agree with all of that.

The opportunity was at 80c and then was a no brainer at 50c, now not so much but I'm not a seller either.

[Shareguy]

Some good points winner. I am confident that the company is on the right path going forward and I see long coming rationalisation especially if Vulcan lists. At the end of the day I see a world awash with cash, low interest rates to continue for some time and a company that is a take over opportunity if I ever saw one. BlueScope have a vested interest and currently have a blocking stake but in my mind there are lots of possibilities which is why I have a significant holding.

[sb9]

Market still doesn't buy their story, price has basically gone backwards since release of FY results.

[Scrunch]

Market still doesn't buy their story, price has basically gone backwards since release of FY results.

CFO has just disclosed a purchase of 30,000 shares at an average of $1.112 per share. Doubles his holding from 30,000 to 60,000 shares

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/STU/378871/354381.pdf

Insiders buying is normally a good sign

[sb9]

CFO has just disclosed a purchase of 30,000 shares at an average of $1.112 per share. Doubles his holding from 30,000 to 60,000 shares

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/STU/378871/354381.pdf

Insiders buying is normally a good sign

Not a big chunk, nevertheless good endorsement. Need more insiders buying at current levels to change sentiment.

[BlackPeter]

Not a big chunk, nevertheless good endorsement. Need more insiders buying at current levels to change sentiment.

From memory they had a number of directors buying over the last half year or so at similar levels.

Actually - I don't care about the sentiment, as long as they provide the right numbers come next reporting day (which, admittedly is a long way away ..).

Governments recently announced infrastructure package should be good for them. Hard to build Infrastructure without using steel.

[SailorRob]

From memory they had a number of directors buying over the last half year or so at similar levels.

Actually - I don't care about the sentiment, as long as they provide the right numbers come next reporting day (which, admittedly is a long way away ..).

Governments recently announced infrastructure package should be good for them. Hard to build Infrastructure without using steel.

Exactly, everyone seems so focused on what random strangers are offering them for their business day to day.

If STU was your families business 100% owned, you wouldn't constantly discuss and hang off what price your accountants friend had offered unsolicited to you. If one day you got a crazy offer you might think about it depending what you had planned for the capital, otherwise you'd just be looking at the business.

Everyone seems desperate for the share price to go up as it (to them) confirms their investment, when that's the last thing you should need (or indeed want if you're a long term investor)

[winner69]

Staff to get $150 if they get fully vaccinated

Cash or shares in company

Prob $100,000 plus well spent

After all they apparently have plenty of cash lying around

[nztx]

SP starting to drift again following going ex div ;)

[Jaa]

Staff to get $150 if they get fully vaccinated

Cash or shares in company

Prob $100,000 plus well spent

After all they apparently have plenty of cash lying around

Showing some leadership, good for them. Better than the bleating from Mainfreight.

A vaccinated, regularly tested supply chain will be a competitive advantage. Happy shareholder here.

[artemis]

Staff to get $150 if they get fully vaccinated

Cash or shares in company

Prob $100,000 plus well spent

After all they apparently have plenty of cash lying around

I like it. Better than some of the virtue signalling donations or consultants to run team building from some companies. Good to see share option being offered. Not a bad way to encourage looking at 'your' company a bit differently.

[nztx]

Not much love being shown by Mr Market for STU just a week after entitlements to the 3.29 cps unimputed Div closed .. ;)

Will it dive below the buck, or sink even lower ? ;)

[BlackPeter]

Not much love being shown by Mr Market for STU just a week after entitlements to the 3.29 cps unimputed Div closed .. ;)

Will it dive below the buck, or sink even lower ? ;)

Time for FBU to renew their takeover bid? What was it last time - something like $1.80?

Anyway - it appears building supplies and building companies (like e.g. STU, MPG, FBU) are currently all in some sort of "holding pattern". I would expect them to do well after this lock down ending ... and at some stage this should translate as well into a rerating of the share price.

[Greekwatchdog]

$1.95 then they withdrew. Wonder what impact to FY22 lockdown will cause. Suspect FBU better off than the other two. Still lots of tailwinds.

[Shareguy]

I could not resist and topped up some more this morning. It’s a conviction buy and I believe one of the best buys on the market currently.

[Rawz]

I could not resist and topped up some more this morning. It’s a conviction buy and I believe one of the best buys on the market currently.

https://www.nzx.com/announcements/379522

Looks like independent director Stephen Reindler thinks they are a good buy as well. He topped up yesterday with a small parcel.

[sb9]

Nice to see divvy payment from them, but hate unimputed credits. So much tax on them.

They probably should've done done buy back, fat better use of funds imo.

[RTM]

Nice to see divvy payment from them, but hate unimputed credits. So much tax on them.

They probably should've done done buy back, fat better use of funds imo.

Yep, love the dividend. All good !
Different strokes for different folks, I'm more than happy with the divie rather than a buy back.

[sb9]

Yep, love the dividend. All good !
Different strokes for different folks, I'm more than happy with the divie rather than a buy back.

Sure, I like them too. But what's the point of paying unimputed dividends where the yield is far less than what could've been achieved with buy back as the capital appreciation would be far superior. Or they could've done half each way.

[winner69]

Nice to see divvy payment from them, but hate unimputed credits. So much tax on them.

They probably should've done done buy back, fat better use of funds imo.

Retirement sector shouldn't be paying divies with no imputation credits

Should keep on reinvesting in the business

STU needs to go out and do an acquisition .... and grow the business

[Dassets]

Imputations are irrelevant. Tax is paid either by the company or shareholders. If the company pays it then it attached credits to prevent double taxation. Note the government will never prevent tax being paid at least once!!!!

[winner69]

Interesting piece on Vulcan

Doubt whether STU could command a story like this.

Interesting Vulcan gross margin is 37% of sales ….STU struggles at 20%

https://businessdesk.co.nz/article/infrastructure/vulcan-steel-expansion-is-in-our-dna
Might be paywalled

[Balance]

Interesting piece on Vulcan

Doubt whether STU could command a story like this.

Interesting Vulcan gross margin is 37% of sales ….STU struggles at 20%

https://businessdesk.co.nz/article/infrastructure/vulcan-steel-expansion-is-in-our-dna
Might be paywalled

Think of the upside potential of STU as it aims for the 37% margin.

[SailorRob]

Sure, I like them too. But what's the point of paying unimputed dividends where the yield is far less than what could've been achieved with buy back as the capital appreciation would be far superior. Or they could've done half each way.

Mate, look back in the thread a bit, I've banged on about buy backs until blue in the face, been through the math the facts, included passages from Buffetts letters you name it... Directors paying a dividend over buying back stock at these levels is against their fiduciary duty to us, the owners and bloody near criminal.

Buybacks GUARANTEE us way more money. Dividends in this case are an awful capital allocation decision.

[SailorRob]

Imputations are irrelevant. Tax is paid either by the company or shareholders. If the company pays it then it attached credits to prevent double taxation. Note the government will never prevent tax being paid at least once!!!!

Very good point and thinking as a business owner here. We should all be behaving as if we owned STU as a private business in it's entirety in which case whether the company pays the tax or you personally is irrelevant.

[nztx]

Very good point and thinking as a business owner here. We should all be behaving as if we owned STU as a private business in it's entirety in which case whether the company pays the tax or you personally is irrelevant.


In those shoes, I think I would have made the ultimate sale back when FBU were sniffing around ;)

Even taking a few FBU shares out as part consideration wouldn't have turned out too badly :)

[Balance]

In those shoes, I think I would have made the ultimate sale back when FBU were sniffing around ;)

Even taking a few FBU shares out as part consideration wouldn't have turned out too badly :)

I bought FBU shares last year - even better!

And I believe STU will do us alright too. Everything heading in the right direction - needs a few more runs on the board after the bitter disappointments over the last 3 years. Market can have a long memory but can be seen with FBU, a short one too!

[nztx]

I bought FBU shares last year - even better!

And I believe STU will do us alright too. Everything heading in the right direction - needs a few more runs on the board after the bitter disappointments over the last 3 years. Market can have a long memory but can be seen with FBU, a short one too!

very good points there :)

[Scrunch]

Imputations are irrelevant. Tax is paid either by the company or shareholders. If the company pays it then it attached credits to prevent double taxation. Note the government will never prevent tax being paid at least once!!!!

I stongy disagree with this. It would only be correct if the only way of distributing monies back to shareholders was via dividends and there was no choice on dividend timing. Sharebuybacks return money to shareholders and don't lose part of it to the taxman. A factor in the retirement coys dividends may be so some tax is paid reducing the likelihood of negative tax changes for that sector.

If close to paying tax, deferring dividends until imputation credits can be attached will improve the net of tax return shareholders get. I'm not sure if its still possible but in the past you could even pre-pay the tax and have a tax asset. The prepayment allowed imputation credits to be added to the dividend.

And if looking for an example where the gov't doesn't collect tax - a company sells a major asset for a good tax free capital gain and then cancels shares as part of a capital return to shareholders.

[SailorRob]

I stongy disagree with this. It would only be correct if the only way of distributing monies back to shareholders was via dividends and there was no choice on dividend timing. Sharebuybacks return money to shareholders and don't lose part of it to the taxman. A factor in the retirement coys dividends may be so some tax is paid reducing the likelihood of negative tax changes for that sector.

If close to paying tax, deferring dividends until imputation credits can be attached will improve the net of tax return shareholders get. I'm not sure if its still possible but in the past you could even pre-pay the tax and have a tax asset. The prepayment allowed imputation credits to be added to the dividend.

And if looking for an example where the gov't doesn't collect tax - a company sells a major asset for a good tax free capital gain and then cancels shares as part of a capital return to shareholders.


Are buybacks and dividends not paid out of a companies after tax earnings?

Regarding the cancelling of shares, whose shares are getting cancelled?

[Dassets]

A capital return is another matter which has its own set of rules which have thresholds which have different requirements for things you have to do both with IRD and and the High Court. Buybacks in place of dividends can work but I believe they cannot be pro-rata otherwise can be deemed a divvy and taxed. A non-pro-rata buyback is now getting more difficult to execute in terms of avoiding price manipulation allegations and the NZX rules.

STU has a fair way to go to chew up the tax losses but the other thing to note which I do not believe we see are the differences between tax accounting and FRS/IFRS or whatever accounting for reporting purposes. Regardless STI+U has been paying small dividends to show intent and retain the option for cap return with the 2 minimum thresholds being 10% and 15% of a calc based around mkt cap. Even over 15% if the IRD commissioner decides that a pro rata payment is merely a dividend in lieu eg you save up 3 years of earnings and then make a "capital" payment then tax will be levied. There is tonnes of written stuff about this. If you want that I suggest writing to the board.

[Dassets]

Any one feel happy about the AGM? When the chair said they were going to pay imputed dividends I almost died laughing. Thankfully she was corrected.

[BlackPeter]

Just listening into the AGM. Not that many tangible numbers, but they certainly try to convey the message that they turned the corner and things are going upwards. Lots of talk about growth.

One of the slides shows 2022 revenues (so far) above last years (which was not too bad after the 2020 disaster) and it sounds margins are currently even improving.

Sounds like their stores are well filled and good relations with suppliers / supply chain promise to keep things that way :):

Should be positive for this years results - cautiously optimistic;

Discl: holding;

[Shareguy]

I missed the agm but have read what was supplied. My thoughts are CEO stated that sales were 29 percent above last year before level 4. Now open at level 2 and 3 and demand with lockdowns is not lost… it’s just delayed. Stated they have significant back log of orders.

They have $25m cash which for a distribution company is very unusual (most have a debt up to 30 percent). Nav at year end 21 was $1.11.

To me it’s a screaming bargain which is why I have added to my already large holding this week.

[clearasmud]

I missed the agm but have read what was supplied. My thoughts are CEO stated that sales were 29 percent above last year before level 4. Now open at level 2 and 3 and demand with lockdowns is not lost… it’s just delayed. Stated they have significant back log of orders.

They have $25m cash which for a distribution company is very unusual (most have a debt up to 30 percent). Nav at year end 21 was $1.11.

To me it’s a screaming bargain which is why I have added to my already large holding this week.

You got a deal, I paid $1.13 cum div.

[Balance]

I missed the agm but have read what was supplied. My thoughts are CEO stated that sales were 29 percent above last year before level 4. Now open at level 2 and 3 and demand with lockdowns is not lost… it’s just delayed. Stated they have significant back log of orders.

They have $25m cash which for a distribution company is very unusual (most have a debt up to 30 percent). Nav at year end 21 was $1.11.

To me it’s a screaming bargain which is why I have added to my already large holding this week.

Likewise.

There is a big seller out there keeping a lid on the sp at $1.05. They seem content to keep feeding the stock out at $1.05 and not go lower.

[RTM]

You got a deal, I paid $1.13 cum div.

And I was 114 cum dividend which I did enjoy.

[Shareguy]

Ceo recently purchased 44000 at $1.12. Not only is the future bright there is also a possibility that a takeover happens, especially if it stays around these levels.

[SailorRob]

I wonder if there was a way to calculate the earnings yield for remaining owners if they could retire 25 million dollars worth of shares at around $1.05.

Then would it be possible to attribute a appropriate P/E for such an enterprise and thus come up with a likely share price?

Then would it be possible to comapre that to a pathetic 3 cent dividend that is fully taxed?

[Balance]

Likewise.

There is a big seller out there keeping a lid on the sp at $1.05. They seem content to keep feeding the stock out at $1.05 and not go lower.

Big seller still there imo but backing off as they appear to be the only real seller at this level.

I decided to buy a few more after talking to a builder/developer who bought some STU shares this week - he gets much of his steel products from STU and said he would be stuffed if he had not been with them. There's shortages of steel products all over the place and some builders are finding it impossible to get some products this side of Christmas, meaning delays to completing projects.

Prices have been going up but he is happy to pay as delays to completing projects are even more costly.

I sense another profit upgrade before the end of the year.

[winner69]

Suppose BlueScope are still happy holding on to their 15% share?

They having a say about divie v share buyback?

Whatever probably puts a damper on any takeover

[Balance]

Suppose BlueScope are still happy holding on to their 15% share?

They having a say about divie v share buyback?

Whatever probably puts a damper on any takeover

Takeover is dead until such time as a party friendly to BlueScope is interested.

Not necessary a bad thing given that STU is now on an upward trajectory in earnings & dividends.

[artemis]

In the Herald today (paywalled) different views on steel stock on hand and in the pipeline. Some say about to run out.

"But Mark Malpass, chief executive of NZX listed Steel & Tube, said: "There's no question there's been tight supply out of Asia for some time but that's beginning to open up. Steel reinforcing mesh is not about to run short. It's tight but it won't run out.'' "Reinforcing bar supplies were also limited, Malpass said, adding that people needed to order well ahead of time."

https://www.nzherald.co.nz/business/reinforcing-steel-bar-mesh-shortage-to-hit-26b-sector-industry-chief-raises-alarm/PTPQVBRX4FOVPCNGIVQYLF7G7M/

[Balance]

In the Herald today (paywalled) different views on steel stock on hand and in the pipeline. Some say about to run out.

"But Mark Malpass, chief executive of NZX listed Steel & Tube, said: "There's no question there's been tight supply out of Asia for some time but that's beginning to open up. Steel reinforcing mesh is not about to run short. It's tight but it won't run out.'' "Reinforcing bar supplies were also limited, Malpass said, adding that people needed to order well ahead of time."

https://www.nzherald.co.nz/business/reinforcing-steel-bar-mesh-shortage-to-hit-26b-sector-industry-chief-raises-alarm/PTPQVBRX4FOVPCNGIVQYLF7G7M/

Consistent with what I was told last week that customers dealing with STU are very relieved that they are able to source steel products to continue & complete their projects. Not so those who were dealing with the opportunistic fly-by-nighters steel suppliers who now cannot supply.


Big seller still there imo but backing off as they appear to be the only real seller at this level.

I decided to buy a few more after talking to a builder/developer who bought some STU shares this week - he gets much of his steel products from STU and said he would be stuffed if he had not been with them. There's shortages of steel products all over the place and some builders are finding it impossible to get some products this side of Christmas, meaning delays to completing projects.

Prices have been going up but he is happy to pay as delays to completing projects are even more costly.

I sense another profit upgrade before the end of the year.

[Shareguy]

Yes CEO states trading was 29 percent ahead before lockdown and that lockdowns delay spend. I suggest STU are going to have a great year. They have taken a lot of cost out of the business with a very clean balance sheet with no goodwill and cash in the bank. I agree we don’t want a takeover now while the share price is so low, but think it’s just a matter of time. NZ Steel a subsidiary of Bluescope has 15.8 percent of STU. Bluescope own a distribution business in Australia and rely on distributors in NZ. Would also be a good fit with Fletchers with substantial synergies. Vulcan listing in November. With all that aside I’m expecting a ripper half year result.

[Dassets]

What do you guys think about the CEO being on the Z Energy board? Also one of the STU directors is also on the Z board. Must admit only found out today.

[Balance]

Yes CEO states trading was 29 percent ahead before lockdown and that lockdowns delay spend. I suggest STU are going to have a great year. They have taken a lot of cost out of the business with a very clean balance sheet with no goodwill and cash in the bank. I agree we don’t want a takeover now while the share price is so low, but think it’s just a matter of time. NZ Steel a subsidiary of Bluescope has 15.8 percent of STU. Bluescope own a distribution business in Australia and rely on distributors in NZ. Would also be a good fit with Fletchers with substantial synergies. Vulcan listing in November. With all that aside I’m expecting a ripper half year result.

https://www.marketscreener.com/quote/stock/STEEL-TUBE-HOLDINGS-LIM-6491420/revisions/

STU is a stock which fell out of favor and out of most brokers' coverage. As can be seen from the revisions in the last year, the 3 analysts left covering the stock have not had a clue what revenues and earnings STU was likely to make.

And a stock which is not well covered and badly covered stocks usually will end up surprising - which STU has been doing for the last year.

As it regains favour with earnings upgrades & rising sp, more analysts will cover the stock and that's when the real upward price momentum will emerge imo.

Looking forward to an earnings upgrade by Dec 2021.

[sb9]

https://www.marketscreener.com/quote/stock/STEEL-TUBE-HOLDINGS-LIM-6491420/revisions/

STU is a stock which fell out of favor and out of most brokers' coverage. As can be seen from the revisions in the last year, the 3 analysts left covering the stock have not had a clue what revenues and earnings STU was likely to make.

And a stock which is not well covered and badly covered stocks usually will end up surprising - which STU has been doing for the last year.

As it regains favour with earnings upgrades & rising sp, more analysts will cover the stock and that's when the real upward price momentum will emerge imo.

Looking forward to an earnings upgrade by Dec 2021.

Shades of how FBU was ignored last year...

[artemis]

Update in the Herald, also paywalled. Covers some of the same ground as earlier article mentioned above but with more detail about what is in short supply (reinforcing bar, mesh, plates, rebar, galvanised products) and why (imports from China and local covid impacts on manufacturing and raw material suppliers).

Headline 'Supply crunch: Steel delivery times jump to four months'. Up from 6 weeks earlier this year.

www.nzherald.co.nz/business/steel-products-not-about-to-run-out-but-delivery-lead-times-jump-to-four-months/HOHCIHLPGUUBK4YOO5UDN2KCTY/

[Balance]

Shades of how FBU was ignored last year...

STU getting attention now?

Sp moving back up and on decent volume. Means buyers want stock and are happy to pay up for them. Looks like institutional buying to me.

[Shareguy]

Good volume and some good sized trades today. Share price still ridiculously undervalued in my opinion. I ended up buying some more, I just can’t resist. Agree with Balance that the analysts have no idea on this one, just like Rakon.

[RRR]

I topped up yesterday - STU is now my largest holding. Agree, STU is still very cheap..
Utilized the proceeds from Z sale to top up - completely exited Z yesterday.
Also added some more Greencross..

[Scrunch]

Good volume and some good sized trades today. Share price still ridiculously undervalued in my opinion. I ended up buying some more, I just can’t resist. Agree with Balance that the analysts have no idea on this one, just like Rakon.

Last time i checked there wasn't any analyst coverage for RAK but it has been doing exceedingly well this year. Took a few profits recently for an 8 bagger, bit i'd settle for STU doubling in price.

[Balance]

Last time i checked there wasn't any analyst coverage for RAK but it has been doing exceedingly well this year. Took a few profits recently for an 8 bagger, bit i'd settle for STU doubling in price.

Well done on Rakon.

Issue now is which stock is more likely to double in price in the next 2 to 3 years.

[sb9]

Well done on Rakon.

Issue now is which stock is more likely to double in price in the next 2 to 3 years.

Rakon was out of the box performer, only bought at beginning of this year around 60c and more around 80c mark. Sorry to cross promote, but from hereon looks like STU has more legs to go. And looking at trade depth, the big seller may have finished up or eased off and next big resistance at 1.20

[Balance]

Rakon was out of the box performer, only bought at beginning of this year around 60c and more around 80c mark. Sorry to cross promote, but from hereon looks like STU has more legs to go. And looking at trade depth, the big seller may have finished up or eased off and next big resistance at 1.20

There is talk that NZ will be left out of the Vulcan Steel IPO.

Could be a case of the big seller freeing up cash to participate and then, finding no home for the cash?

In any case, you are right about the depth - the sell side suddenly looks rather thin.

[Balance]

Going to get a speeding ticket from NZX if sp continues on current trajectory!

Need to pause & consolidate to form a base for a decisive move to $1.50 by June 2022.

[VDOG]

Going to get a speeding ticket from NZX if sp continues on current trajectory!

Need to pause & consolidate to form a base for a decisive move to $1.50 by June 2022.

Agreed and pleased I decided to hop back into this a couple of weeks ago at $1.03 - good fundamentals in a company that's been hammered by share holder sentiment. This could easily be back at $1.50 by June - with current demand in construction sector and increased steel prices... And I talk as someone who had this as a massive learning opportunity when I piled in a few years ago at about $2.15 thinking it was cheap and undervalued then (so years of sitting and waiting - I'm never very sensible at realising losses - or cutting and running)...

[Balance]

Going to get a speeding ticket from NZX if sp continues on current trajectory!

Need to pause & consolidate to form a base for a decisive move to $1.50 by June 2022.

Glad to see sp pausing and consolidating around current levels.

Pertinent developments in recent days include :

1. FBU had its AGM - positive outlook, especially with infrastructure sector expected to continue to be strong.

2. Vulcan Steel IPO - well sought after IPO now in progress. Putting the sector in focus and based upon publicly available information, STU stacks up well with its investment fundamentals*.

* - based on current projections. Fully expect STU to announce a few more earnings upgrades in the year ahead.

[buy_high_sell_lo]

After a long 15+ years lurking. Finally set up an account. STU has all the tail winds of success if only they would buy back their shares while it's cheap rather than waste it on dividends.

[Shareguy]

Yes they are struggling to keep up with orders and as ceo stated demand was just delayed with lockdown level 4. Vulcan To list next month on asx and nzx.

[Shareguy]

Profitability
The profit margins and profitability of Vulcan Steel and Steel & Tube have been as follows.


Steel & Tube and Vulcan Steel profitability




FY21

FY20

FY19



Revenue ($m)









- Steel & Tube

480.0

417.9

498.1



- Vulcan Steel

731.5

640.5

685.2



Gross margin









- Steel & Tube

20.4%

19.0%

22.3%



- Vulcan Steel

37.0%

34.7%

34.6%



EBIT margin









- Steel & Tube

4.5%

(13.8%)

3.4%



- Vulcan Steel

13.6%

8.8%

8.7%



All figures in NZ dollars & June year-ends.

[Shareguy]

Vulcan revealed that its excellent June 2021 result was due to several factors.


An increase in underlying demand, particularly in New Zealand, with sales volume increasing by 20% in its home country, compared with 6% in Australia.
The company experienced an increase in the number of monthly active trading accounts.
Vulcan entered the New Zealand engineering steel market.
As global demand increased, the company saw a rise in its average selling price (ASP) per tonne, notably in New Zealand. This resulted in an average group price of $2,817 per tonne for the June 2021 year (representing a gross profit of $1,041 per tonne), compared with $2,735 per tonne for the previous year.

[Shareguy]

So Stu CEO said that trading was up 29 percent before lockdown level 4 . All open at level 3 and demand was just delayed which is why I have a strong conviction that the profit this year is going to blow the analyst forecasts out the window.

[Shareguy]

According to STU annual report. Net asset value is $1.11. EPS for YEJ21 was 9.8 cps so PE at current price $1.14 is 11.6. So what’s the EPS going to be going forward I wonder. No debt and $25m cash in bank. It’s a bloody steel in my opinion.

[Balance]

Thanks, shareguy - very useful information.

Shows how a relatively new outfit like Vulcan (1995) can perform so much better - and imo, how much potential there is for STU to lift its performance.

[winner69]

According to STU annual report. Net asset value is $1.11. EPS for YEJ21 was 9.8 cps so PE at current price $1.14 is 11.6. So what’s the EPS going to be going forward I wonder. No debt and $25m cash in bank. It’s a bloody steel in my opinion.

You asked what’s the EPS going to be going forward ....I'll give it a go

I reckon F22 EPS will be 9.7 cents which is 21% increase on normalised F21 EPS (remember they had $2.8m in property sale profits etc in F21)

So current forward PE is about 12

But as Balance says the Vulcan numbers shows there is HUGE OPPORTUNITY to improve performance ... maybe they will overcome their inability to sustain improvement and things will be all hunky dory in the next few years

[Shareguy]

Thanks Winner69. Good point re the property sale . A distribution business with cash in the bank and a PE of 12 is still a steel in my books anyway. I’m finding it hard to stop buying at these prices. It’s my largest position.

[Rawz]

Has STU historically performed at Vulcan metrics? Big (or huge) opportunity yes.. but if they havnt done it before maybe they never will.

Some businesses are just superior with superior management

Disc. Hold STU

[freddagg]

Posts 1311 and 1312 are Brian Gaynors from a Business desk article, shareguy just did the copy/paste.




Thanks, shareguy - very useful information.

Shows how a relatively new outfit like Vulcan (1995) can perform so much better - and imo, how much potential there is for STU to lift its performance.

[winner69]

Has STU historically performed at Vulcan metrics? Big (or huge) opportunity yes.. but if they havnt done it before maybe they never will.

Some businesses are just superior with superior management

Disc. Hold STU

From my database STU GM% (to sales) over recent years

Mostly between 20% to 22%

Interestingly since they have focused on margin improvement it has fallen from that 26% to currently 20%

Achieving Vulcan margins -- a pipe dream

[winner69]

Vulcan primary listing to be the ASX

Gaynor commented in that above mentioned article this little snippet -

Australian investors will lap up this opportunity because they view Vulcan’s two main New Zealand competitors, Steel & Tube and Fletcher Steel, as being inefficient and poorly run.

That Aussie view is one of the main reasons why the likes of FBU have over the years appeared 'cheap' compared to its Aussie peers

Only time will tall

[Shareguy]

A broker tells me that the shares offered in the Vulcan sell down we’re gone in 3 hours. Stu still largest comparing sales in NZ. There is no getting away from the large difference in margins. Will be a lot of pressure on stu to lift there game. CEO stated that focus is now on margin not volume.

[Balance]

Vulcan primary listing to be the ASX

Gaynor commented in that above mentioned article this little snippet -

Australian investors will lap up this opportunity because they view Vulcan’s two main New Zealand competitors, Steel & Tube and Fletcher Steel, as being inefficient and poorly run.

That Aussie view is one of the main reasons why the likes of FBU have over the years appeared 'cheap' compared to its Aussie peers

Only time will tall

Observation by Gaynor is spot on - Fletcher Steel (actually almost the whole of FBU) & STU had grown fat & lazy on the back of the oligopolistic nature of the building material industry in NZ over the years.

Hence, the opportunity imo for new management (& investors) to reset their businesses and benefit from the strong underlying base due to the nature of the industry.

I can recall sitting in on a presentation by Ralph Waters a year after he took over the management of FBU and he was asked 'why FBU?' given how badly run the company was.

He made the observation that FBU attracted him because the group had strong underlying businesses and management issues can be fixed with strong direction and appropriate reward/incentive structures.

And Ralph went ahead and did exactly that - restructured management, sold off non-performing assets and really got the company firing on all cylinders.

remember how the sp went from $2.70 to over $13.50?

Then he stepped down & the CEOs who took over from him got distracted, made overseas acquisitions and allowed the underlying operations to run down & management to become fat & lazy again.

No complaints here as we all got to buy FBU cheap again!

STU is going through exactly the same exercise as FBU - difference being that STU does not have as diversified and as deep an operational base as FBU, so recovery will be slower and take longer.

Unfolding even as we post here on ST!!!!

[Shareguy]

Good post Balance. I agree Fletchers seemed to be to big for the caliber of management they had. I still think they have a lot of issues still to sort out. Whenever I have to go to Placemakers it reminds me of something between Faulty Towers and Arcrites general store. I had FBU shares for 15 years and sold out as I had lost faith and have no intention of ever buying back in. STU is a simple buisness in comparison and I agree now is the time for them to shine. If you go back a bit STU had a long history of good profits over $20m a year and was a great dividend stock. They have trimmed expenses and from what I hear focused on doing the “basics the best” all while we are in the largest building boom I have ever seen.

[Balance]

Good post Balance. I agree Fletchers seemed to be to big for the caliber of management they had. I still think they have a lot of issues still to sort out. Whenever I have to go to Placemakers it reminds me of something between Faulty Towers and Arcrites general store. I had FBU shares for 15 years and sold out as I had lost faith and have no intention of ever buying back in. STU is a simple buisness in comparison and I agree now is the time for them to shine. If you go back a bit STU had a long history of good profits over $20m a year and was a great dividend stock. They have trimmed expenses and from what I hear focused on doing the “basics the best” all while we are in the largest building boom I have ever seen.

And it is extremely poorly analyzed, researched and covered by the broking industry - exactly how I like it at this stage of the sp recovery cycle.

https://www.marketscreener.com/quote/stock/STEEL-TUBE-HOLDINGS-LIM-6491420/financials/

Consensus forecasts from 3 brokers have STU's 2022 revenues and profits falling. Really?

[SailorRob]

Thanks Winner69. Good point re the property sale . A distribution business with cash in the bank and a PE of 12 is still a steel in my books anyway. I’m finding it hard to stop buying at these prices. It’s my largest position.

Agree with what you say Shareguy, and with the long history of decent profitability and return on equity.

Agree cheap BUT only in the context of the NZX. There are hundreds of far higher quality businesses for sale at similar prices if not even cheaper in global markets, the US has many of them.

Even in the SP500 the median PE is much lower than the markets, somewhere around 16.

I own STU and think it is fair value in any context but not screaming value in the context above. With consideration given to long term performance going back pre GFC and nothing attributed to improvement in future (as how do we know) I think full value would be $1.50.

[Shareguy]

Yes I have seen that. I can’t understand why and only assume that they lack experience and don’t understand the steel industry. Nothing beats doing your own research. On the STU website is a copy of a presentation they did for Craigs I think in September. Apparently they were impressed with Mark’s presentation but yet have not updated their report. There was a lot of demand for Vulcan shares so would imagine that Investors and some big players will be having another look at STU over the next few months.

[winner69]

The offers to buy STU three years ago at 170/190 was at a time when the likes of Fletcher were seduced by the ‘forecast / target EBIT of $40m plus

Jeez, F21 EBIT on a comparable basis was just $16m

So when Rob says STU is full value at $1.50 he could be right …but could still be rather optimistic.

But one day all the positive words and the actions they are taking to improve performance might just come true ….but even current management isn’t really demonstrating successful execution of plans so the future is still based on hope….like hope it’s gunna to get better

[Shareguy]

Agree SailorRob that there are plenty of good buys offshore even better than STU. I invest directly in NZ and Australia (a bit) and apart from a long 20 year holding in Apple use PIE funds for my overseas exposure and diversification as I spend enough time just on the NZ market. My fair value for STU is closer to $2 and I believe it will attract a lot more interest once they post their 6 month result. We will see.

[SailorRob]

Holding Apple for 20 years is damn impressive. Only a small handful of people in the world would have done that. Did you get it during the Dotcom run up or aftermath? Either way that's a life changing investment.

Yes easy worth $2 with a good result and in the context of current market multiples, I'm going of historical performance and long term average market multiples. With a good result and multiple expansion to even 2/3 of the NZX I'd imagine well over $2.

[Shareguy]

My Apple shares have been one of the best share investments I have ever made. On saying that I have sold down and taken profits over the years but still have a significant amount that owe me nothing. A great company with products I use and love so no plans on selling.

As far as STU is concerned only time will tell I guess.

[Dassets]

I expect there will be change. If anyone wants to pm me with any thoughts that they don't want to go on open forum feel free. If that is breaking any rule then please do not. It would help if you were a shareholder and help more if you had a few. It would be good to exchange ideas.

[SailorRob]

I think I've posted before that I have workmates that use them for retail supply in Whangarei, their experience is roughly comparable to what you would expect walking into a steel supply shop in a Southern Greek or Italian town, or perhaps in the former USSR.

Another mate is the GM of a very large construction company that uses a lot of structural steel and he says they are fine and pretty similar to the competitors. Two different markets I guess.

[Dassets]

Does anyone know or can find out how many SKU don't turn over every 6 and 12 months?

[winner69]

Does anyone know or can find out how many SKU don't turn over every 6 and 12 months?

Why you asking Dassets?

Good question though

Wasn't that long ago they wrote $24m of aged, obsolete and non-existent stock

Surely not going to do a repeat of that?

[Beagle]

Slow day on the NZX section of this forum when the last comment in this NZX section was 7 hours ago !!

Have they squared away ALL issues they've had with dodgy Chinese steel ? How can you be sure there's no legacy or ongoing issues with that ?

[Dassets]

I want to check whether that exercise in inventory rationalisation was a complete one. With a couple of things I have heard I suspect it wasn't. But I wouldn't be expecting a write-down. I would expect them to fully incorporate all costs attributable to that stock including a risk rating that flowed through to final cost of capital. I am holding a bit of stock through a broker nominee which I have said before, but will repeat that disclosure. I have some other concerns. Also if this is a reasonably completed turnaround with just the icing to put on the cake, I will beg to differ. I would also like to know exactly what commodity pricing risk they carry and maybe inventory levels. I want to know what form of CAPM they are using or in its absence what alternative they use. Cheers all.

[winner69]

I want to check whether that exercise in inventory rationalisation was a complete one. With a couple of things I have heard I suspect it wasn't. But I wouldn't be expecting a write-down. I would expect them to fully incorporate all costs attributable to that stock including a risk rating that flowed through to final cost of capital. I am holding a bit of stock through a broker nominee which I have said before, but will repeat that disclosure. I have some other concerns. Also if this is a reasonably completed turnaround with just the icing to put on the cake, I will beg to differ. I would also like to know exactly what commodity pricing risk they carry and maybe inventory levels. I want to know what form of CAPM they are using or in its absence what alternative they use. Cheers all.

You seem a bit concerned Dassets

I note that in F21 they increased their Provision for slow moving and aged stock by $1.3m to $2.2m (about 2% of total inventory)

Maybe they are top of past issues ....but your comments are quite intriguing

[Balance]

I want to check whether that exercise in inventory rationalisation was a complete one. With a couple of things I have heard I suspect it wasn't. But I wouldn't be expecting a write-down. I would expect them to fully incorporate all costs attributable to that stock including a risk rating that flowed through to final cost of capital. I am holding a bit of stock through a broker nominee which I have said before, but will repeat that disclosure. I have some other concerns. Also if this is a reasonably completed turnaround with just the icing to put on the cake, I will beg to differ. I would also like to know exactly what commodity pricing risk they carry and maybe inventory levels. I want to know what form of CAPM they are using or in its absence what alternative they use. Cheers all.

I have not read any postings here suggesting that STU has completed an operational & structural turnaround.

In fact, the prevailing view is that STU still has some distance to go before it realizes its full potential - reason for the sp being where it is rather than, say $2.00.



No complaints here as we all got to buy FBU cheap again!

STU is going through exactly the same exercise as FBU - difference being that STU does not have as diversified and as deep an operational base as FBU, so recovery will be slower and take longer.

Unfolding even as we post here on ST!!!!

[Filthy]

https://www.nzx.com/announcements/381534 - sounds positive.....

[winner69]

Some would say that STU have been in turnaround mode for the last 20 years

I recall having a session with Dave Taylor many years when he proudly went through that years turnaround plans

Back then their sales were higher than they are now ... that says something

[Balance]

https://www.nzx.com/announcements/381534 - sounds positive.....

Be surprising with that kind of headline (Continued Strong Recovery) that STU does not have an excellent year ahead.

[Balance]

Be surprising with that kind of headline (Continued Strong Recovery) that STU does not have an excellent year ahead.

I think we have good institutional interest now going into the stock, judging by the way the sell side is being taken out.

[sb9]

I think we have good institutional interest now going into the stock, judging by the way the sell side is being taken out.

That's my take too, someone been accumulating over past month or so and surprised has not triggered SSH notice by now. Looking at today's trades, noticed how quickly big volume at 1.17 got taken out.

Edit - Also the lot at 1.18 got cleared out for now.

[winner69]

seems the instos have finally caught on to the turnaround

A sales increase of 10% in F22 and a few % age points of gross margin and not much an increase in costs and hey presto the instos can see a NPAT of $30m ....... nearly double F21 of $16m odd

Headlines next year Steel and Tube profit doubles

No wonder punters are getting in before the shareprice gets away from them

[Balance]

seems the instos have finally caught on to the turnaround

A sales increase of 10% in F22 and a few % age points of gross margin and not much an increase in costs and hey presto the instos can see a NPAT of $30m ....... nearly double F21 of $16m odd

Headlines next year Steel and Tube profit doubles

No wonder punters are getting in before the shareprice gets away from them

We live in inflationary times, W69, especially in the building material industry.

Those who lived through the 70s and 80s of double digit inflation know - as long as a company can keep their costs under reasonable control, the company will reap huge benefits from inflation as long as it has the ability to pass on price increases.

STU currently fits into that picture.

[Balance]

That's my take too, someone been accumulating over past month or so and surprised has not triggered SSH notice by now. Looking at today's trades, noticed how quickly big volume at 1.17 got taken out.

Edit - Also the lot at 1.18 got cleared out for now.

Nice finish at $1.18 on decent volume.

[Shareguy]

I ended up buying more on opening yesterday. I can only speculate that this surprise announcement is very good news indeed. The board and management will be very aware that the low current share price which is just over NAV ($1.11 YEJ21) leaves the company very open to a takeover.

[winner69]

Shame they didn't have a few weeks of October on this chart - the red line would be heading north big time

Maybe didn't want to get too excited ... leave the really good news to the half half year announcement

On track for NPAT 25m/30m in F22 (v F21 16m)

[Balance]

Shame they didn't have a few weeks of October on this chart - the red line would be heading north big time

Maybe didn't want to get too excited ... leave the really good news to the half half year announcement

On track for NPAT 25m/30m in F22 (v F21 16m)

Now now, W69 - be careful with those kind of numbers.

Too good to share with all and sundry out there!

[Shareguy]

Only 224,000 on sell side to $1.65. 405,000 on buy side. Over 800,000 traded yesterday. Looking good…

[Shareguy]

Looking forward to Thursdays announcement. Given no guidance given for this year I’m hoping at the very least that some numbers are given. Will be very disappointed if it’s just waffle. I’m picking that current share price will be seen to be a steel. More importantly does anyone think that the announcement is very unusual given the AGM was only a few weeks ago. I wonder whether there’s been some interest in steel and tube, and this announcement is a strategy to set a more realistic value on the company to either prevent a takeover or at the very least give any suitors a better indication. I am very suspicious and agree I might be well off base here.. But what if I’m right…..

[winner69]

Looking forward to Thursdays announcement. Given no guidance given for this year I’m hoping at the very least that some numbers are given. Will be very disappointed if it’s just waffle. I’m picking that current share price will be seen to be a steel. More importantly does anyone think that the announcement is very unusual given the AGM was only a few weeks ago. I wonder whether there’s been some interest in steel and tube, and this announcement is a strategy to set a more realistic value on the company to either prevent a takeover or at the very least give any suitors a better indication. I am very suspicious and agree I might be well off base here.. But what if I’m right…..


What’s happening on Thursday?

[Shareguy]

https://www.nzx.com/announcements/381534

[Muse]

https://www.nzx.com/announcements/381534

thanks shareguy that wasn't on my radar.
Just looking at consensus forecasts - man are uninspiring - dropping this financial year and staying close to FY21 for the next few years. Perhaps the analysts just a bit lazy and waiting on good news before an upgrade cycle.

One would hope with the Vulcan prospectus out STU management now have a blueprint on how to trip SKUs, rethink the business model and fatten margins. May take some serious capex to invest into their own transport fleet.

[Shareguy]

Yes Fiordland Moose the anyalists forecasts are a joke. You’re right with the Vulcan float coming up there will be a lot of interest in comparing the two. Stu needs to give us some numbers. Have a look at the depreciation and amortisation for the last two years. Why was their such a big increase over $10 million there alone compared to previous three years. A distribution business with over $25 million in cash.

[winner69]

https://www.nzx.com/announcements/381534

Gotcha

Pretty Ho hum affairs those NZX Retail things ….more of an awareness/ education thing run by NZX to get ‘Mum and dad’ investors some insights into companies

Won’t be anything new …..we’ll have to wait maybe closer to half year

I see Summerset sending a man along as well …and CEO of soon to be listed TradeWindow

[Balance]

Yes Fiordland Moose the anyalists forecasts are a joke. You’re right with the Vulcan float coming up there will be a lot of interest in comparing the two. Stu needs to give us some numbers. Have a look at the depreciation and amortisation for the last two years. Why was their such a big increase over $10 million there alone compared to previous three years. A distribution business with over $25 million in cash.

Depreciation increased basically because STU adopted NZ IFRS 16 Leases on 1 July 2019.

STU has stated : "Information for year to date trading to the end of September 2021 was presented at the 30 September 2021 Annual Shareholders Meeting (www.nzx.com/announcements/380144). Updated revenue information, including trading for October 2021, will be provided on 4 November 2021."

I believe the company is doing an excellent job now of providing trading update information in a cautious & considered manner after the false start at the beginning of 2019, which lost the company a lot of credibility.

[winner69]

OK ....Let’s hope we do see some real numbers on Thursday

Progress to sales of $530m and NPAT $25m plus will be watched closely

I'm falling in love with STU

[sb9]

Vulcan lists on both ASX and NZX on the same day, coincidence?

[winner69]

Vulcan lists on both ASX and NZX on the same day, coincidence?

Wouldn’t thought so

Primary listing is ASX …that indicates where most interest will come from.

[winner69]

Vulcan lists on both ASX and NZX on the same day, coincidence?

Hope the Vulcan shares take off big time when they list.

Will prob boost the STU price

Nothing like a bit of sector excitment.

[sb9]

Hope the Vulcan shares take off big time when they list.

Will prob boost the STU price

Nothing like a bit of sector excitment.

Definitely helps, perhaps STU should look to list on ASX as foreign exempt like most other NZ companies and attract some Aus institutional interest and a higher multiple.

[JohnnyTheHorse]

Monthly bull flags have been my favourite swing setup over the past 6-12 months. There have been so many examples of these since the Corona crash and recovery. STU is shaping up as another great flag.


How I look for the Ideal Entry

https://www.tradingview.com/x/ayv0LO4o/


Looking back in July/August, we could see the monthly chart getting toppy, so we knew that monthly consolidation was a likely scenario to play out. The strength of the fundamentals (massive demand exceeding supply, pricing power, business recovery) had me looking for an entry around the monthly 12EMA / $1.00 psychological support area. To trigger an entry I zoom in to the weekly and daily charts.


https://www.tradingview.com/x/aku2bRyk/


On the daily chart I am ideally looking for an entry on RSI oversold. This is a reliable signal for a weekly low being set (the first step of setting a monthly higher low - which is exactly what we're targeting). In this case we had the $1.03 area be tested 5 times, on much lower volume than the drop. These factors provide a basis to begin scaling in an aggressive entry and we now have a stoploss level to work off. A slightly more conservative entry is purchasing on the breakout from that range, which occurred on strong bull volume. A second chance entry was provided with the daily bull flag formation, lining up with the EMA12. A pullback off $1.20 would provide another entry point.


https://www.tradingview.com/x/VmWvBPJO/


The weekly chart is much the same story. Three weekly inside bars, triple bottom, lower volume. All lined up with the inside bars breaking bullish and confirming the weekly low being set. Again, this is an aggressive entry and we are trying to pick the monthly higher low. Its a credible scenario that the weekly downtrend would continue. The most conservative trader is waiting for a weekly trend change to confirm the monthly higher low.


The key with these aggressive entries by trying to pick up near the bottom is that I know a monthly bull flag is a highly likely scenario. Without this long term outlook these entries often wouldn't present favourable risk/reward. With these aggressive entries the risk of failure is much higher, however you dollar risk is low and potential reward is high. It is a good plan to scale out of some of your position coming into resistance to have your position breakeven if your stops get hit (i.e. weekly downtrend continues).


Looking Forward


We have confirmed the monthly higher low in October, now we are looking for the bull flag to confirm by breaking $1.20. Ideally I like to see a weekly trend change to provide a very strong support area and confidence, however in this case the monthly retracement was low (~25%) so this won't always happen.


If we get the bull break then we are looking for resistance areas of $1.30, $1.60 and $1.70 as target areas. Various exit strategies can be used depending on your strategy or timeframe: e.g. weekly EMA12 or downtrend confirmation, monthly EMA12. In my experience, the key thing with monthly bull flag is to be patient and let your profits run given it is a long term pattern.


Disclosure: hold long position.

[winner69]

If STU was priced on similar multiples as Vulcan the share price would be over 2 bucks

Mind you Vulcan has ‘multiplied in size’ over the last seven years ….STU iF21 sales were lower than F15 sales ...... hmmmm .....maybe Vulcan have grown in NZ at the expense of STU (ie taken share off them)

That's past - looking forward to the 2 bucks

[Shareguy]

Yes will be interesting to see how Vulcan go’s . My broker said the Vulcan sell down was all gone in 3 hours. $2.00 not out of the question. We need some good numbers on Thursday.

[Balance]

Yes will be interesting to see how Vulcan go’s . My broker said the Vulcan sell down was all gone in 3 hours. $2.00 not out of the question. We need some good numbers on Thursday.

Numbers will be good - question of just how good and what is the market expecting.

"The team's at work, the warehouse is full and we're raring to go."

https://blog.steelandtube.co.nz/the-games-back-on?utm_campaign=THE%20GAME%27S%20BACK%20ON&utm_source=S%26T%20Website&utm_medium=S%26T%20Home%20Page%20Tile%20

Our Steel & Tube teams are all back in action ensuring supply of much needed steel products to our manufacturing, construction, infrastructure and rural customers.

We have inventory available and are ready to support you and your business wherever you are in the country.

[Balance]

If STU was priced on similar multiples as Vulcan the share price would be over 2 bucks

Mind you Vulcan has ‘multiplied in size’ over the last seven years ….STU iF21 sales were lower than F15 sales ...... hmmmm .....maybe Vulcan have grown in NZ at the expense of STU (ie taken share off them)

That's past - looking forward to the 2 bucks

Vulcan being listed on EBITDA X of 8.8 times.

Using F21 EBITDA of $37.9m and cash of $25m, STU could be valued at $358m = $2.15 per share!

W69, have I got the calculations right?

[Shareguy]

And this years EBITDA is going to be what, certainly based on comments that sales 29 percent up before lockdown, I’m very confident that $2 is very realistic. Stu unfortunately missed the boat in Australia but only because of the ownership with one steel who already had a distribution business in Australia . Nothing to stop them now entering the Australian market. Seems very logical given how well Vulcan has done there. What we need first though is to be once again the market leader in NZ.

[winner69]

Vulcan being listed on EBITDA X of 8.8 times.

Using F21 EBITDA of $37.9m and cash of $25m, STU could be valued at $358m = $2.15 per share!

W69, have I got the calculations right?

Seems good

You can cut and dice different multiples and on trailing and forecast earnings and what ever way you do it STU worth 2 bucks plus

Vulcan forecasting F22 ebitda to be 14% more than F21

I reckon STU sales up 10% and with improved gross margins STU should see about 30% ebitda increase

On that basis STU will still be cheap as at 2 bucks

We'll look back and keep saying 'was always good buying at 110' won't we Balance

[winner69]

And this years EBITDA is going to be what, certainly based on comments that sales 29 percent up before lockdown, I’m very confident that $2 is very realistic. Stu unfortunately missed the boat in Australia but only because of the ownership with one steel who already had a distribution business in Australia . Nothing to stop them now entering the Australian market. Seems very logical given how well Vulcan has done there. What we need first though is to be once again the market leader in NZ.

No no no shareguy …..go to OZ and end up like Metro Glass

Too many opportunities left in NZ ….let them get that sorted first

[Muse]

Vulcan being listed on EBITDA X of 8.8 times.

Using F21 EBITDA of $37.9m and cash of $25m, STU could be valued at $358m = $2.15 per share!

W69, have I got the calculations right?

You might have the math right but I dont think the logic extends. Sure they are in the same industry and obvious comparables.

Vulcan has a vastly superior business model and management team. Their margins are significantly better, own their own transport fleet, have a better optimised SKU portfolio, fit for purpose overhead structure, vastly superior returns on capital and cashflow profile, are better diversified by geography (australia), and are the momentum player in both markets (undisputedly taking share from STU).

From a CAPM/DCF there are two reasons why Vulcan is likely to always command a premium multiple to STU:

1) higher margins/ROIC/cashflow generation/ and long term growth potential

2) lower risk through better diversification and (in my view) better management team.

Am sure STU a fine investment at this point on the cycle - just cant help but rolling my eyes on any suggestion STU can or should trade at the same multiples at vulcan.

[Scrunch]

You might have the math right but I dont think the logic extends. Sure they are in the same industry and obvious comparables.

Vulcan has a vastly superior business model and management team. Their margins are significantly better, own their own transport fleet, have a better optimised SKU portfolio, fit for purpose overhead structure, vastly superior returns on capital and cashflow profile, are better diversified by geography (australia), and are the momentum player in both markets (undisputedly taking share from STU).

From a CAPM/DCF there are two reasons why Vulcan is likely to always command a premium multiple to STU:

1) higher margins/ROIC/cashflow generation/ and long term growth potential

2) lower risk through better diversification and (in my view) better management team.

Am sure STU a fine investment at this point on the cycle - just cant help but rolling my eyes on any suggestion STU can or should trade at the same multiples at vulcan.

Fair points, so if they should be at a discount to Vulcan's multiples, what is the correct discount?
Lets assume 25%? The STU market cap would be $275m or $1.66/share. That's still a useful increase from today's close.

[Balance]

Fair points, so if they should be at a discount to Vulcan's multiples, what is the correct discount?
Lets assume 25%? The STU market cap would be $275m or $1.66/share. That's still a useful increase from today's close.

Agree that Fiordland Moose make some fair points and thanks for making them.

STU should certainly trade at a discount to Vulcan Steel until such time as the company can demonstrate it is closing the gap on the issues raised.

But STU is currently trading at an EBITDA multiple of 4.6 times - too big a discount to Vulcan’s 8.8 times imo.

Here’s to Vulcan listing very well - STU cannot but benefit from it.

[SailorRob]

Yes will be interesting to see how Vulcan go’s . My broker said the Vulcan sell down was all gone in 3 hours. $2.00 not out of the question. We need some good numbers on Thursday.

This isn't directed at you Shareguy, but in general, why does everyone seem to want the share price to run? Is it because people are unsure of the valuation they put on the company and need the market to confirm for them, or because they want to sell their shares? Would like to genuinly understand.

I'd like to see the share price tank. While the business keeps doing well or better. I was far happier at 60c.

[nztx]

This isn't directed at you Shareguy, but in general, why does everyone seem to want the share price to run? Is it because people are unsure of the valuation they put on the company and need the market to confirm for them, or because they want to sell their shares? Would like to genuinly understand.

I'd like to see the share price tank. While the business keeps doing well or better. I was far happier at 60c.


Can I order both please ? preferably with a bit of a break in between ;)

[Shareguy]

SailerRob well for me I am more interested in other points of view to confirm my own valuation or otherwise. I’m not a trader and looking for long term positions in company’s that I think are substantially undervalued. If anyone wants to sell at current prices good luck to them.

[Muse]

SailerRob well for me I am more interested in other points of view to confirm my own valuation or otherwise. I’m not a trader and looking for long term positions in company’s that I think are substantially undervalued. If anyone wants to sell at current prices good luck to them.

My view only, but STU has always been & will probably always be priced on a dividend yield basis of around 3.5% - 4.5% - and not really on a multiple of ebitda. Fact is while vulcan can trade on nearly twice the ebitda multiple of stu while producing a similar yield says something and limits stus ability to close the gap. Stu cant double its ebitda multiple without halving its dividend yield which the market wont accept over the long run

That said 1) yes agree vulcan listing net good for stu 2) see some greenshoots for stu earnings as is where is 3) perhaps stu can copy vulcan and improve its model and cashflow it will naturally be rerated as its economic profile permits.

My opinion not advice!
And my disc is i am thinking about buying some stu shares

[winner69]

Yes Fiordland Moose the anyalists forecasts are a joke. You’re right with the Vulcan float coming up there will be a lot of interest in comparing the two. Stu needs to give us some numbers. Have a look at the depreciation and amortisation for the last two years. Why was their such a big increase over $10 million there alone compared to previous three years. A distribution business with over $25 million in cash.

Balance has answered the depreciation question ...


.......you should be asking why is Gross Margin $'s significantly less than 4 to 5 years ago (when we have been in a building boom) ....and still trending down

[Shareguy]

Yes thanks Balance and winner69. As far as margin goes Stu stated margin was a result of intense competition. I think they just dropped the ball. Stu have a history of not looking after thier top performers and as a result Vulcan and others gained the best staff. I suggest the low margin is more a case of sales people unsure of market pricing and lacking customer relationships. But things look different now ….

[Muse]

I understand STU and Vulcan run very different ERPs. Vulcan apparently built theirs years and years ago and it is said to be excellent and tailored for its business. Dont know much about STUs but I recall they had some terrible inventory problems years ago. STU run with far more skus which decreases turnover and results in more inventory write offs. Vulcans delivered margins far higher because of their own massive transport fleet - which stu dont have and eats away from their profit margins.

[Balance]

Yes thanks Balance and winner69. As far as margin goes Stu stated margin was a result of intense competition. I think they just dropped the ball. Stu have a history of not looking after thier top performers and as a result Vulcan and others gained the best staff. I suggest the low margin is more a case of sales people unsure of market pricing and lacking customer relationships. But things look different now ….

Sounds like PGW 3 years ago, and glad to say that PGW has been an excellent performer since its restructuring.

Meanwhile, STU has been one of the better performers YTD so far (up 28% + dividend) in an overall flat NZ market so looking forward to more recognition of this turnaround story by the market.

[winner69]

You’d think steel people happy with these numbers …home consents up 25% last 12 months and nonresidential up 10%

Maybe STU share price chart will look like this in a years time

[Balance]

You’d think steel people happy with these numbers …home consents up 25% last 12 months and nonresidential up 10%

Maybe STU share price chart will look like this in a years time

Looking forward to 4th Nov!

[Snow Leopard]

Thought for the day:

Instead of assuming that STU should trade at a higher value because Vulcan is way up there, just think of VSL as another overpriced IPO which will come down to reality over the next six months.

Disc: hold STU

[nztx]

Thought for the day:

Instead of assuming that STU should trade at a higher value because Vulcan is way up there, just think of VSL as another overpriced IPO which will come down to reality over the next six months.

Disc: hold STU


Good thinking there .. just look at where NPH, HMY & MFB are at now :)

[SailorRob]

SailerRob well for me I am more interested in other points of view to confirm my own valuation or otherwise. I’m not a trader and looking for long term positions in company’s that I think are substantially undervalued. If anyone wants to sell at current prices good luck to them.

Exactly, which is why I find the constant talk of wishing for the price to rise odd. You and I should want one thing only, low prices. That's how we will make money. Once the undervaluation is gone then we're stuffed.

[nztx]

Exactly, which is why I find the constant talk of wishing for the price to rise odd. You and I should want one thing only, low prices. That's how we will make money. Once the undervaluation is gone then we're stuffed.


It's something more than that - SR .. finding unique value situations where the market is yet to recognise that there may be
further or hidden unrecognised value. Unless the ride looks really good for further enhancement, in some cases when all are
jumping onboard - that's the time to be looking for the next opportunity :)

Some may regard today's price a bargain, to others it may have done it's dash with further likely upswing a smaller fraction
what they have seen :)

[Shareguy]

I think you will find today’s price is indeed a bargain.

[winner69]

I think you will find today’s price is indeed a bargain.

Indeed ....though I'll be saying 'was always good buying at 110 eh'

Hope t rockets up fast - patience is not a virtue

[sb9]

Anticipation building ahead tomorrow's presentation by Mark and also Vulcan listing. Let's hope it doesn't turn out to be fizzer....

[Balance]

Anticipation building ahead tomorrow's presentation by Mark and also Vulcan listing. Let's hope it doesn't turn out to be fizzer....

There has been a big seller who kept loading up the offer at $1.20 & $1.19 over the last week.

Let's see if they appear again towards the close.

[winner69]

So sales up 14% on last year for first 4 months of you

Pity they didn't mention margins seeing they keep on saying the focus is on growing GM $s


Assume GM up 20% then ....well on way to the NPAT $35m to $30m I reckon they will do in F22

Big spike in share price on way

[sb9]

So sales up 14% on last year for first 4 months of you

Pity they didn't mention margins seeing they keep on saying the focus is on growing GM $s


Assume GM up 20% then ....well on way to the NPAT $35m to $30m I reckon they will do in F22

Big spike in share price on way

Seem that way, could see 1.50 close to end of this year and 2 by the time HY results out in Feb'22.

[winner69]

Looking at the chart they put up and admiring the red line I've updated my F22 NPAT forecast to $30m to $35m and as they say in the biz 'a risk to the upside'

That's an EPS of 20 cents (good they pay no ta) ....PE of just 10 gives a share price of $2 .... makes maths easy eh

[Sideshow Bob]

So sales up 14% on last year for first 4 months of you

Pity they didn't mention margins seeing they keep on saying the focus is on growing GM $s


Assume GM up 20% then ....well on way to the NPAT $35m to $30m I reckon they will do in F22

Big spike in share price on way

When doing their comparison, would expect their prices are up by more than 14%?? :confused:

[winner69]

When doing their comparison, would expect their prices are up by more than 14%?? :confused:

...so they actually selling less stuff ....... and Gross Margin $s could be down

Hope they clarify this soon

[Balance]

Positive outlook with number of identified opportunities

• Long pipeline of secured contract work in place

• Well positioned to take advantage of identified opportunities in a range of sectors

• Focus remains on continued gross margin dollar improvement, leveraging digital platform, product and sales growth

• Expect continued earnings momentum and dividend flow

• Investigating potential capital management activities

[Shareguy]

First thoughts are sales up 14 percent including level 4 lockdown when sales plummeted. Expenses substantially reduced. And generally a very positive update. Hopefully at 11am we get some info on Margin and expenses going forward.

[Balance]

STU shaping up to be like PGW as a corporate turnaround/recovery story - many parallels to be drawn and it is clear a rightly skeptical market is slowly being turned around by runs on the board.

An overall 14% increase in sales (with Auckland in total lockdown for just over a month and NZ in total lockdown for 2 weeks) is no mean feat.

[Shareguy]

Market seems to like it. Currently $1.27 with 293000 wanted and only 132000 on sell side

[Balance]

Market seems to like it. Currently $1.27 with 293000 wanted and only 132000 on sell side

Need to consolidate around $1.25 level as sp has run up on back of positive expectations (now confirmed).

Still not a well analysed stock which is good news for value seekers.

[Entrep]

Very comfy hold for me, glad I DCA'ed.

https://media.giphy.com/media/3oKIPm3BynUpUysTHW/giphy-downsized-large.gif

[sb9]

Watched presentation by Mark which was very good and they sure are working on margin expansion plans on the back of huge industry tailwinds.

[winner69]

Dont overlook the huge motivation Mark has got to see an ever rising share price .... the kudos of winning the Sharetrader Picking Competition

I take he is still leading

[Dassets]

A poor announcement IMO. Like throwing wool over your eyes. Everyone knows, even a taxi driver, knows prices are increasing so really a revenue increase is totally meaningless. In fact by taking this approach it brings into question why the company does not want to talk about profitability. Even if it is ok by staying silent it brings into question the communications strategy and willingness by the board to tell shareholders what is happening with the company they own. What is the issue with that simple request?

[Balance]

Watched presentation by Mark which was very good and they sure are working on margin expansion plans on the back of huge industry tailwinds.

Excellent presentation - came across with confidence, especially during the Q & A session.

Have added to my position.

[Dassets]

He is miles off at 17th but will jump a few places today. So am I at 6th. Basically I am the 5th loser given 2nd is the 1st loser. There can only be 1 winner.

[Balance]

A poor announcement IMO. Like throwing wool over your eyes. Everyone knows, even a taxi driver, knows prices are increasing so really a revenue increase is totally meaningless. In fact by taking this approach it brings into question why the company does not want to talk about profitability. Even if it is ok by staying silent it brings into question the communications strategy and willingness by the board to tell shareholders what is happening with the company they own. What is the issue with that simple request?

It is called managing expectations and I believe Mark & the company is doing an excellent job of it.

Why should they spoon feed the market? I for one am happy to let the market be relatively under-analysed by the brokers at this stage. How else would I have been able to pick up stock at under 70c last year?

[sb9]

It is called managing expectations and I believe Mark & the company is doing an excellent job of it.

Why should they spoon feed the market? I for one am happy to let the market be relatively under-analysed by the brokers at this stage

Couldn't agree more, let market do that math and decide which side they want to be on. There is enough material out there by now to work out a meaningful number.

[Shareguy]

Well I have listened to the presentation and make the following observations.

CEO states very positive outlook with conditions very strong. Expects continued dividend growth with capital management opportunity’s.

14 percent increase on revenue is substantial. Taking into account the $ 25m cash at YE21 ($0.15 per share) the forward PE highlights how cheap, cheap, cheap this stock is.

[Poet]

YTD revenue is up 14% including the lockdown period, however if you look at the chart on page 31 of the presentation, the post-lockdown sales seem to be around 50% or 60% ahead of last year. Obviously there could be some pent-up demand caused by lockdown, but quite likely the underlying yoy growth will be considerably more than 14%.

[BlackPeter]

YTD revenue is up 14% including the lockdown period, however if you look at the chart on page 31 of the presentation, the post-lockdown sales seem to be around 50% or 60% ahead of last year. Obviously there could be some pent-up demand caused by lockdown, but quite likely the underlying yoy growth will be considerably more than 14%.

The other thing to consider is that analyst consensus was for FY2022 revenue being the same as FY2021 revenue. If they beat that revenue target already for the first 4 months despite lockdowns by 14%, then it can only bode well for the rest of the year.

[Dassets]

Well, there are 2 issues that sort of approach at a high level.

The first is an understanding of what your communications strategy is. And that only comes about after once you have addressed a range of factors eg what does the company want to achieve with its communications; what 3rd party info sources are there eg brokers, comparable company info etc (in STU's case the answer is not much): what sort of corporate do I want to be, eg open/closed/opaque(closed one day/open the next), balance v imbalanced(eg good news only/all news).

Say for STU do you know what its required internal rate of return is? Answer will be no. So tomorrow it announces it is spending $25m on project x. Absolutely meaningless to an investor.

The second issue is the NZX requirements which are binary outcomes. From the rules it would appear prospects for a material profit increase are zero. Why? Because the rules require disclosure should profitability do certain things. It isn't about spoon feeding and letting everyone work it out for themselves. It is about having an informed market. A company doesn't even have to issue guidance for this rule to affect it. So a company cannot wait to the FY announcement and release a 50% gain in underlying profitability and say well you investors should have worked that out. The company has breached its continuous disclosure obligations.

[sb9]

Well, the announcement today clearly states its a "Trading update" referring to top line numbers being sales/revenue. They may be another one later this year on early next year relating "Earnings update" which may throw more bit colour around margins etc. Until such time, market has to make its own assumptions around that and for sure if there is going to be huge variation from normal margins, they may well provide an update on that, in the meantime its BAU.

[Shareguy]

Vulcan noted in its Product Disclosure Statement that acquisitions will become a key part of its growth strategy, and access to capital markets will be important to fund this.

I wonder…….

[Muse]

Vulcan noted in its Product Disclosure Statement that acquisitions will become a key part of its growth strategy, and access to capital markets will be important to fund this.

I wonder…….

I dont. Comcom. There have been two failed attempts between the big 3 parties over the last 25 years - both rejected by comcom.

Acquisitions would be in australia given how fragmented that market is, IMV.

[Shareguy]

You are mistaken Fiordland Moose. Fletchers actually got approval from com com and STU under Nick Calavrius also got com com approval to buy Fletcher steel. In the end nothing happened till the recent attempt by FBU which was ended and no application to comcom. Today is very different and I have no doubt that Fletchers or Vulcan would get approval. There is plenty of other competition with Asmuss and United group plus other smaller players. I do agree more likely in Australia esp Wa.

[Balance]

Vulcan noted in its Product Disclosure Statement that acquisitions will become a key part of its growth strategy, and access to capital markets will be important to fund this.

I wonder…….

I am happy for STU (one of NZ's oldest listed companies) to remain listed rather than be taken over as I believe current industry settings and management can take profitability and the sp up a long way.

Remember how AIA nearly got taken over at $4.00 by the Canadians and thank goodness, that was blocked as AIA has gone on to be one of the best performers on the NZX.

Meanwhile, a little titbit from my broking contact (after yesterday's listing of Vulcan & STU's trading update) who told me that a couple of analysts have decided STU represents better value and upside.

The lack of volume on the sell side and the willingness of a buyer yesterday to pay up for stock (when there's volume around $1.25) suggest that the titbit infor is happening. So there's a little bit of stock being offloaded in the over-hyped Vulcan and attempt to get stock in STU?

[Shareguy]

I agree balance. I have also been a long-term holder of Auckland airport and can remember that opportunistic offer. We don’t want a take over at the moment, as the current share price does not adequately reflect the value in my opinion. Steel and tube management would be aware of this which may be a reason for the announcement yesterday. I’m expecting next month that they will do another announcement and give us some numbers which is what they did last December. And those numbers will be good, very good in fact. My sharebroker said the same thing and when you look at the number of buyers against sellers that are currently lined up the market also thinks the future looks good.

[Balance]

I agree balance. I have also been a long-term holder of Auckland airport and can remember that opportunistic offer. We don’t want a take over at the moment, as the current share price does not adequately reflect the value in my opinion. Steel and tube management would be aware of this which may be a reason for the announcement yesterday. I’m expecting next month that they will do another announcement and give us some numbers which is what they did last December. And those numbers will be good, very good in fact. My sharebroker said the same thing and when you look at the number of buyers against sellers that are currently lined up the market also thinks the future looks good.

Sp has to do work around $1.25 imo. Allow a few institutions to get set at a good price and then, they will keep buying.

Institutional support has been light on the register since they sold out to NZ Steel. Good time for them to buy back now that STU is turning around.

[winner69]

Close at day and weeks highs of 129

Good sign ….future looks good

[Balance]

Close at day and weeks highs of 129

Good sign ….future looks good

Prefer to see big volumes going through at around $1.25 mark myself - allow the institutions who want in to get set, and non-committed holders and traders to sell out. Then, we can see a good push from that level through to $1.50 as the next step to $2.00.

https://www.stuff.co.nz/national/126828936/unfinished-homes-as-severe-building-supply-shortages-stall-construction

Meanwhile, it’s clear that the building boom will be sustained for longer and the building material shortages are going to benefit the established players like STU & FBU with their established supply lines.

Meanwhile,

[Dassets]

Hi Balance, I was going to post this yesterday but waivered.

It will be very hard for institutions to get "interested" basically firstly due to the efforts of the FMA to level the playing field in terms of information availability to all types of investors and secondly the inability of brokers to advise on non-researched companies. Dealing with the later first unless the institution has and wants to use proper analysts to do full analysis. Frankly a lot don't have the resource and if they do unlikely to be used on a small cap. The funds management industry has moved away from that capability at this end of town. And brokers basically don't cover it to a level the institutions could get comfortable. The brokers cover is very light touch. So it is pretty much impossible for a portfolio manager to go to the investment committee to pitch the idea and get sign-off. Every conversation a broker has with a client especially those that lead to an order need to be detailed in the client's account through whatever the CRM the broker is using or other method. This is reviewed by internal compliance and, I guess, external when the NZX comes for its audit of the firm.

The FMA's efforts has led to an information vacuum because companies are loath to say boo outside of formal briefings such as the one this week or HY and FY reportings/ Annual report. What this has done is resulted in a massive imbalance, precisely what the FMA was trying to avoid. Why? Because sophisticated large private investors can have a field day. What the FMA failed to realise is there are other sources of information outside the company. Most private investors do not have the knowledge or access to these sources or even the time. I was going to try to make a submission when some sort of consultation was open but I have got to the point where I think it would be a waste of effort.

In summary this one will be up to large private investors or corporates. The private investors will have to flex some muscle at some point and you have to be careful with that so you can't be deemed to act in concert.

[SailorRob]

Excellent post thanks Dassets.

[Shareguy]

Share price holding. Only 174k on sell side and 353k on buy side.

[Arbroath]

Hi Balance, I was going to post this yesterday but waivered.

It will be very hard for institutions to get "interested" basically firstly due to the efforts of the FMA to level the playing field in terms of information availability to all types of investors and secondly the inability of brokers to advise on non-researched companies. Dealing with the later first unless the institution has and wants to use proper analysts to do full analysis. Frankly a lot don't have the resource and if they do unlikely to be used on a small cap. The funds management industry has moved away from that capability at this end of town. And brokers basically don't cover it to a level the institutions could get comfortable. The brokers cover is very light touch. So it is pretty much impossible for a portfolio manager to go to the investment committee to pitch the idea and get sign-off. Every conversation a broker has with a client especially those that lead to an order need to be detailed in the client's account through whatever the CRM the broker is using or other method. This is reviewed by internal compliance and, I guess, external when the NZX comes for its audit of the firm.

The FMA's efforts has led to an information vacuum because companies are loath to say boo outside of formal briefings such as the one this week or HY and FY reportings/ Annual report. What this has done is resulted in a massive imbalance, precisely what the FMA was trying to avoid. Why? Because sophisticated large private investors can have a field day. What the FMA failed to realise is there are other sources of information outside the company. Most private investors do not have the knowledge or access to these sources or even the time. I was going to try to make a submission when some sort of consultation was open but I have got to the point where I think it would be a waste of effort.

In summary this one will be up to large private investors or corporates. The private investors will have to flex some muscle at some point and you have to be careful with that so you can't be deemed to act in concert.


Bang on Dassets. I’m long STU but as an adviser can’t get access to research on it to cover my arse so won’t recommend it to clients even though I think it is well worth holding.

[Dassets]

Just reread my post, missed a sentence mid way about fund managers so add the broker research doesn't allow them to buy ... then carry on into the comment around fund manager own research.

Your comment on retail(I assume) advice is spot on. I can only can talk to a broker because I qualify as a certain type of client but still there is recording to meet regs.

[Dassets]

FYI alot of stock not on the screen for any company so what is shown is not the real volume that can be offered or bid

[Shareguy]

WOW what an upgrade.

https://www.nzx.com/announcements/383137

[sb9]

WOW what an upgrade.

https://www.nzx.com/announcements/383137

Yes, boomer of an update.

[winner69]

EBIT in first half $16m ...... jeez they made $19m in the FULL year F21

Remember I did say I had heard that full year was heading to $25m to $30m

Always good buying around 110 .... Balance was probably lower than this

[Shareguy]

I’m picking full year EBIT $32 to $38m. Second half is traditionally much stronger.

[Dassets]

Huge and super happy. But this is the time for STU to really make hay. Well done to Mark and team so far but let's really go for it. PS IMO Why make an acquisition when the lowest hanging fruit are on the trees in the orchard already. What's the point in buying another orchard? Maybe plant some trees for the future but it is all in front of the company already. An acquisition has the risk of being disruptive for management and directors when the existing business can provide organic growth and requires the full attention of directors and executives. That is the easiest path to regain recognition from the institutional market in the medium/long term. Just my thoughts.

[Balance]

EBIT in first half $16m ...... jeez they made $19m in the FULL year F21

Remember I did say I had heard that full year was heading to $25m to $30m

Always good buying around 110 .... Balance was probably lower than this

I have bought as low as 69c but my latest purchase was $1.28 a couple of weeks ago. Could have bought better but such is life.

Always put my money where my mouth is - sometimes timing is not in synch with the market!

[winner69]

I’m picking full year EBIT $32 to $38m. Second half is traditionally much stronger.

Could well be that high

$38m EBIT is about $35m NPAT --- EPS about 22 cents

Jeez PE is under 6

Something must be wrong with our assumptions or calculations shareguy

[Muse]

My view only, but STU has always been & will probably always be priced on a dividend yield basis of around 3.5% - 4.5% - and not really on a multiple of ebitda. Fact is while vulcan can trade on nearly twice the ebitda multiple of stu while producing a similar yield says something and limits stus ability to close the gap. Stu cant double its ebitda multiple without halving its dividend yield which the market wont accept over the long run

That said 1) yes agree vulcan listing net good for stu 2) see some greenshoots for stu earnings as is where is 3) perhaps stu can copy vulcan and improve its model and cashflow it will naturally be rerated as its economic profile permits.

My opinion not advice!
And my disc is i am thinking about buying some stu shares


I'm actually gutted as yesterday I had a little share buying binge with some surplus cash that came in. I had STU on my list, even click the buy button but didn't proceed to authorise it, because I went back and saw had it was drifting a bit and didn't anticipate the announcement today and thought I had a bit more time. Shame on me! It was a portfolio fringe buying day, adding small parcels, like harmony and vulcan, and also topping up on TRA which is a biggish one of mine. shame on me. all the writing was on the wall for this upgrade and I should have been on my toes a bit more. Good on others for their recent purchases though!

[Shareguy]

Will be interesting to see how share price performs. When you read the outdated analysts reports from Craigs and Forbar that have Stu making less this year. Just shows that you need to do your own research as they clearly don’t understand the market and Stu. As I have stated before this is my largest position by far and have been buying for some time. Like others I have the value over $2.00 share.

[Muse]

Will be interesting to see how share price performs. When you read the outdated analysts reports from Craigs and Forbar that have Stu making less this year just shows that you need to do your own research as they clearly don’t understand the market and Stu. As I have stated before this is my largest position by far and have been buying for some time. Like others I have the value over $2.00 share.

yeah those forecasts are re-donc-ulus .... really off-putting and you'd run a mile away if you believed them. just lazy. I admit I checked them yesterday when I was about to buy and they gave me some pause for thought. oh well - as people say, DYOR, as often its better than lazy analysts.

[JohnnyTheHorse]

I have bought as low as 69c but my latest purchase was $1.28 a couple of weeks ago. Could have bought better but such is life.

Always put my money where my mouth is - sometimes timing is not in synch with the market!

I guess timing isn't quite so important if you're confident in undervaluation/fundamentals. That $1.28 will probably look like a good buy today.

[Rawz]

I have bought as low as 69c but my latest purchase was $1.28 a couple of weeks ago. Could have bought better but such is life.

Always put my money where my mouth is - sometimes timing is not in synch with the market!

Wish I had bought some at $1.28 right about now.... SP will zoom past that by 10.01am

[sb9]

I have bought as low as 69c but my latest purchase was $1.28 a couple of weeks ago. Could have bought better but such is life.

Always put my money where my mouth is - sometimes timing is not in synch with the market!

My first lot was around 89c mark at beginning of the year, top up at 1.20 when they provided trading update in July and watched it drift to as low as 1.04 in following months. Almost tempted to bail out but held my nerve as industry tailwinds are huge for them and will continue to be for a while a yet. Like others $2 by FY22 end can easily be achieved, perhaps even more.

[Shareguy]

Another thought to consider. There has been an awful lot of communication from steel and tube in the last couple of months. I’m thinking that they realise that with the share price being so low that they are conscious that they are a target for a takeover, as current price still not much more than net asset backing.

Have a look at the NTA of Vulcan and the premium that the share price is at compared to STU. Steel and Tube also has $25m in cash at ye21. What’s it now…

[Muse]

rectified my error just picked up a well priced parcel

[Balance]

Positive outlook with number of identified opportunities

• Long pipeline of secured contract work in place

• Well positioned to take advantage of identified opportunities in a range of sectors

• Focus remains on continued gross margin dollar improvement, leveraging digital platform, product and sales growth

• Expect continued earnings momentum and dividend flow

• Investigating potential capital management activities

Management are true to form and delivering on the above as stated in their revenue update 2 weeks ago.

Plenty more upside to come for STU in the next 2 years at least imo, based upon the above.

[WAIKEN]

I believe the frequency of positive communications relates to directors concerns that a takeover is in the wings.

[RRR]

Bought some more today - still a bargain I think

[Rawz]

Got some more and bought some FBU as well...

[Balance]

deleted deleted

[BlackPeter]

WOW what an upgrade.

https://www.nzx.com/announcements/383137

Wondering whether this might push the current target price of 99 cents above the $1 mark?

I guess analysts are often wrong, but rarely that clueless like they have been with their STU forecasts for the last 12 months or so predicting EPS to drop by 40% in 2022 instead of rising by 90%.

[Muse]

Got some more and bought some FBU as well...

I bet we were both looking at the market depth trying to game purchases just before open...you sly dawg.

[Rawz]

I bet we were both looking at the market depth trying to game purchases just before open...you sly dawg.

You, me and a fair few others I reckon ;)

I liked W69 post about P/e of 6 and hit buy buy buy button

[RTM]

Thank you SailorRob.
Had been on my watch list for a while, but was dithering as usual.
Decent sized holding at 75c
Yahoo!

[Shareguy]

Your so right Blackpeter. The disgraceful analyst reports that have been so out of date and so wrong for ages though has really been a blessing in disguise for those of us who have been building up positions. Will be interesting to see whether any of the analysts even bother to update their reports. I suggest as others have mentioned that it is a deeper issue with research notes. Lack of able staff being a point. It’s also very rare these days that you get any target prices that aren’t that far off the current share price. There appears to be less risk for sticking your head out even though it might be blindingly obvious.

[percy]

Huge and super happy. But this is the time for STU to really make hay. Well done to Mark and team so far but let's really go for it. PS IMO Why make an acquisition when the lowest hanging fruit are on the trees in the orchard already. What's the point in buying another orchard? Maybe plant some trees for the future but it is all in front of the company already. An acquisition has the risk of being disruptive for management and directors when the existing business can provide organic growth and requires the full attention of directors and executives. That is the easiest path to regain recognition from the institutional market in the medium/long term. Just my thoughts.

Well I have joined you all this morning having paid $1.3063 per sale.

[BlackPeter]

Well I have joined you all this morning having paid $1.3063 per sale.

Glad you didn't put all your money into AFT :): Anyway - better late than never ... welcome on board!

[Balance]

Your so right Blackpeter. The disgraceful analyst reports that have been so out of date and so wrong for ages though has really been a blessing in disguise for those of us who have been building up positions. Will be interesting to see whether any of the analysts even bother to update their reports. I suggest as others have mentioned that it is a deeper issue with research notes. Lack of able staff being a point. It’s also very rare these days that you get any target prices that aren’t that far off the current share price. There appears to be less risk for sticking your head out even though it might be blindingly obvious.

Wait now for the inevitable to happen - which is that one to two of the fund managers (like Milford) with their own analysts review STU.

They will do so because the stock looks simply too cheap and so undervalued - so either the company is wrong or the market is wrong.

Then, they will start investing and to make it worth their while, they will set their own target price and pay up to get several million dollars worth.

My pick is that we will see this happen in the new year (1.5 months away) when they do their strategy update & portfolio repositioning.

Meanwhile, I added on a few more this morning.

[Shepherd]

Looking at today's updated guidance we can see why the price has started to trend up again. Great announcement and a long time coming

[Popeye]

I spent quite some time looking at these guys before purchasing in the first half of last year. The sentiment was quite bad at the time, but the business looked like it would continue to produce solid cashflow even under negative market conditions. With quite good upside if the market picked up. And management that appeared to be somewhat competent. It has been a pleasant surprise to check in 18 months later and see how well the business has been doing. Hoping they keep up the steady, boring progress without attempting anything flashy like ill-advised acquisitions in a frothy market.

[BeeBop]

I picked them up last year at 61 cents based on some market trends: their on-line system, centralisation, stream lining etc. Then the basic metrics stacked up....if they didn't go anywhere, then at least they deserved to have a bit of a recovery. Growth in infrastructure spending and the current residential boom meant I held on to them. Got heaps of ribbing from people for buying them....one of my consultants (construction) gave me very minor grief....there monthly fee is well covered by my gains now!

[winner69]

Obviously I need to be more patient - that HUGE profit guidance hasn't even got the share price back to what it got to when they presented a little chart showing sales were picking up post lock down

Closed the week at 128

Seems a ase of keeping the faith .... and being patient I suppose

[Shareguy]

The stock is so undervalued in my opinion. Here is why I think so comparing the recent listing of Vulcan Steel.

Based on latest Steel and Tube guidance issued 19-11-21 of EBITDA $26.5m for the half year. Normally the second half is better so I think I have been conservative at full year EBITDA 22 of $53m.

Vulcan Steel was sold at full year forecast 22 of EBITDA x 8.8 which was A$7.10 or NZ $7.43 per share.

Steel and Tube and Vulcan Steel are comparable business so using the same multiples I come up with

S &T cap of $466.4m plus $25m cash at 31/5/21 =$491.4m

Which values Steel and Tube at $2.96 per share.

Note: Information was obtained from Vulcan prospectus and STU annual report. Vulcans share price has since increased to NZ$8.15 as at 19/11/21.

Vulcan has net debt including lease liability’s of NZ$314m.

“Ok I hear you” Vulcans business is best in class. My question is the share price difference between the two business justified when Steel and Tube is currently at $1.28 per share.

Disc. My largest position and have had 18 years in the Steel Industry including In Steel and Tubes executive team.

[winner69]

Hey shareguy. ..that Vulcan shares are up nearly 10% since listing …..STU gone nowhere in same time

[Muse]

The stock is so undervalued in my opinion. Here is why I think so comparing the recent listing of Vulcan Steel.

Based on latest Steel and Tube guidance issued 19-11-21 of EBITDA $26.5m for the half year. Normally the second half is better so I think I have been conservative at full year EBITDA 22 of $53m.

Vulcan Steel was sold at full year forecast 22 of EBITDA x 8.8 which was A$7.10 or NZ $7.43 per share.

Steel and Tube and Vulcan Steel are comparable business so using the same multiples I come up with

S &T cap of $466.4m plus $25m cash at 31/5/21 =$491.4m

Which values Steel and Tube at $2.96 per share.

Note: Information was obtained from Vulcan prospectus and STU annual report. Vulcans share price has since increased to NZ$8.15 as at 19/11/21.

Vulcan has net debt including lease liability’s of NZ$314m.

“Ok I hear you” Vulcans business is best in class. My question is the share price difference between the two business justified when Steel and Tube is currently at $1.28 per share.

Disc. My largest position and have had 18 years in the Steel Industry including In Steel and Tubes executive team.

I'd say the main reason comes down to cashflow conversion and dividend yield. If STU can lift its profitability, & improve its return on capital, it should lift its cashflow conversion and ability to pay dividends. I did a bit of work on this years ago. Looked at STU's long term multiples and found it's one year forward dividend yield stayed in a pretty tight band...point being that STU has always been priced on a dividend yield basis, not a multiple of earnings basis. Vulcan be trade at a higher multiple of earnings because it has better earnings to cashflow conversion & thus dividend payout. All things equal STU can't double its EBITDA multiple without halving its dividend yield, and I think for better or worse thats how the market prices it. So, as a shareholder, lets keep our fingers crossed management continue their momentum in improving the business.

[Shareguy]

Agree Winner. We have been there before with Rakon and look at it now. All I can think of is the analyst coverage is so out of date. Both Craigs and Forbar have less sales and profit for this year. I think a lot of investors take these research notes seriously.

With Vulcan listing it is the first time that a true comparison can be made. FBU only gave out some information so was hard to compare.

Im picking in light of the Vulcan float that we will see some decent coverage especially when STU gets back in the NZX50.

[Muse]

The stock is so undervalued in my opinion. Here is why I think so comparing the recent listing of Vulcan Steel.

Based on latest Steel and Tube guidance issued 19-11-21 of EBITDA $26.5m for the half year. Normally the second half is better so I think I have been conservative at full year EBITDA 22 of $53m.

Vulcan Steel was sold at full year forecast 22 of EBITDA x 8.8 which was A$7.10 or NZ $7.43 per share.

Steel and Tube and Vulcan Steel are comparable business so using the same multiples I come up with

S &T cap of $466.4m plus $25m cash at 31/5/21 =$491.4m

Which values Steel and Tube at $2.96 per share.

Note: Information was obtained from Vulcan prospectus and STU annual report. Vulcans share price has since increased to NZ$8.15 as at 19/11/21.

Vulcan has net debt including lease liability’s of NZ$314m.

“Ok I hear you” Vulcans business is best in class. My question is the share price difference between the two business justified when Steel and Tube is currently at $1.28 per share.

Disc. My largest position and have had 18 years in the Steel Industry including In Steel and Tubes executive team.


Few other bits and bobs. Vulcan acquired Sandvik pretty well and the stainless steel exposure is pretty attractive. Vulcan is way more diversified by location and captures more margin by owning its own transport fleet. I think these things just add up. Its less risky because of its diversification (less risk should in theory lower its discount rate) and is higher margin/better returns on capital which are the more corporate finance theory reasons behind the relative imbalance in valuation multiples. but my first point about dividend yields probably the key thing.

playing devils advocate here and against my own financial interests...but if STU is mainly priced on a yield basis, then it (and potentially vulcan) might be quite interest rate sensitive. investors over the medium term might start demanding a higher yield for it, and if yields have to rise then all things equal price has to fall. Obviously all things aren't equal and if management can continue to grow the business share prices can still rise, but a headwind blunting some of those potential gains will be a rise in dividend yield expecations.

[SailorRob]

Obviously I need to be more patient - that HUGE profit guidance hasn't even got the share price back to what it got to when they presented a little chart showing sales were picking up post lock down

Closed the week at 128

Seems a ase of keeping the faith .... and being patient I suppose

Wouldn't it be smarter to wish for lower share prices after having an incredible announcement? What am I missing here.

If I owned a 3 part share of a prospective gold mine, once we struck gold I'd be really happy if my 2 business partners offered to sell me their parts for a lower price than before striking gold.

Everyone else on this thread seems to think the very opposite.

[SailorRob]

And imagine if I could use the businesses money to buy out other partners rather than my own external capital. That would be incredible.

[Muse]

Wouldn't it be smarter to wish for lower share prices after having an incredible announcement? What am I missing here.

If I owned a 3 part share of a prospective gold mine, once we struck gold I'd be really happy if my 2 business partners offered to sell me their parts for a lower price than before striking gold.

Everyone else on this thread seems to think the very opposite.

Thats cuz we all got sharesight and want to see them paper gains go higher.

But your point well taken.

[winner69]

Wouldn't it be smarter to wish for lower share prices after having an incredible announcement? What am I missing here.

If I owned a 3 part share of a prospective gold mine, once we struck gold I'd be really happy if my 2 business partners offered to sell me their parts for a lower price than before striking gold.

Everyone else on this thread seems to think the very opposite.

The goldmine might be like that New Talisman one …….full of hope but not worth much

[winner69]

Talk of builders and small middle men having cash flow problems …maybe many going broke

Wonder what the STU debtors situation is like?

[nztx]

Well they could do a share consolidation to get rid of all the extra " Debt Rescue Shares" issued a few years back

Or even a Buy Back as well - so it feels a bit better with some excess Ca$h returned ..

Bound to have an overnight affect of the SP ;)

Possibly taking it over the 2 bucks in a flash :)

[Balance]

STU is one of the best performing stocks YTD on a flat NZX - sp up 37.6% + dividend of 4.5c or another 4.8% = 42.4%.

I fail to understand some of the aggro expressed about its performance.

Plenty more in store in 2022 imo but understandable why some holders would want out to lock in their gains especially if they bought this year.

[Balance]

Craig's analysis and recommendation at beginning of this year to give an idea of how clueless the analysts out there are :


Cost out driven earnings lift. No signs of rational industry margins: STU provided a trading update showing earnings improvement over the first five months of FY21 and provided 1H21 normalised EBIT guidance of $6.5-7.5m, up 23% at the mid-point relative to the pcp. This was largely driven by cost out (FY21 c$10m guided due to staff redundancies) and sub-leasing property. Revenue for the first five months of FY21 is tracking slightly lower relative to the pcp (albeit November in line with pcp), below expectations given a soft 1H20 and elevated NZ building activity. No guidance has been provided for FY21 as STU remain cautious on the outlook for 2H21. STU had been aggressive on pricing to start FY21 and we are yet to see any signs of the industry becoming more rational on margins. As a result, it is difficult to see value. Due to limited downside to current share price, we retain our neutral recommendation.

Cost containment ahead of expectations. CIP FY21 EBIT +48%: We lift our FY21 EBIT forecast by $5m to $16m. Assuming STU achieves the mid-point of guided $6.5-7.5m 1H EBIT range, our forecast implies a $2m improvement in 2H due to the labour cost reduction being weighted to the 2H. While STU has materially improved its near-term EBIT, revenue fell with cost containment the key driver. The indicated revenue decline was contrary to our expectations given FBU's recent positive trading update.

Zero debt on balance sheet. Potential for earnings payout lift: STU’s net cash position improved over the past five months from $7m as at June 2020 to $24m currently. In the final month of the half some working capital impact is expected to support seasonal inventory holdings and STU is negotiating the sale of its remaining property as part of its property divestment programme. The current dividend policy is to payout 60-80% of normalised net earnings. With zero debt on the balance sheet there is potential for a lift or top end earnings payout. We have a FY21 NPAT expectation of $7m, this translates to a FY21 dividend of 3.5cps (top of range payout), a yield of 4.1%. STU is on a PE of 18X (1BF), not cheap rel. to peers.

Target price increased, Neutral rating retained: Our DCF derived 12-month TP (WACC 7.8% and TGR of 1.5%) is $0.80 (from $0.67). Key risks included domestic competition, volatility in steel prices and change programme execution

Sp then was already 89c - so quite a number of Craig's clients in the stock could have supplied cheap stock at the beginning of the year.

[Shareguy]

Your right Balance . The reports from Craigs and others have been a joke. Good for those of us though that have increased our position in the meantime. What did you think of my Valuation using Vulcan’s listing multiples following on from your post? Would be interested if you have done the same with the new forecast on EPS and PE for the full year?

[SailorRob]

Well they could do a share consolidation to get rid of all the extra " Debt Rescue Shares" issued a few years back

Or even a Buy Back as well - so it feels a bit better with some excess Ca$h returned ..

Bound to have an overnight affect of the SP ;)

Possibly taking it over the 2 bucks in a flash :)


Buy back ain't to jack the stock my man, it's to increase my share of all future earnings.

Really really simple, but obviously not easy. Keep at it and it will click.

[Muse]

Latest reports

Revenue
FY22
FY23
FY24
FY25
FY26
FY27
FY28




Jarden
530
520
520
533.5
547.5
562.1
577.1




Craigs
528
544
553
n/a
n/a
n/a
n/a




Ave
529
532
536.5



















EBIT (post IFRS16)











Jarden
31.8
29.6
28.3
30.1
31.8
33.6
35.5




Craigs
32.0
31.0
31.0








Ave
31.9
30.3
29.65








% of sales
6.0%
5.7%
5.5%



















NPAT











Jarden
19.2
17.6
16.8
18
19.1
20.3
21.7




Craigs
19.0
18.0
18.0








Ave
19.1
17.8
17.4



















DPS











Jarden
8.1
7.5
7.1
7.6
8.1
8.6
9.2




Craigs
8.0
7.8
7.8








Ave
8.05
7.65
7.45



















Yield at $1.28
6.3%
6.0%
5.8%



















Target Price











Jarden
1.32
neutral









Craigs
1.35
neutral









Ave
1.335

[Shareguy]

Thanks Fiordland Moose for posting that. Seems Forsyth Barr have gone out on a limb with

PE 22E =10.4
7 cps divi
$1.54

As expected I guess.

[winner69]

Buy back ain't to jack the stock my man, it's to increase my share of all future earnings.

Really really simple, but obviously not easy. Keep at it and it will click.

The way the STU board tease you along they no doubt do a pro-rata share buyback …..and you share of all future earnings remains the same :eek2: :):t_up:

[Balance]

Thanks Fiordland Moose for posting that. Seems Forsyth Barr have gone out on a limb with

PE 22E =10.4
7 cps divi
$1.54

As expected I guess.

Second the thanks to Fiordland Moose.

Interesting that for the first time, all three brokers have price targets above the current sp.

So they have gone from chasing the sp to being slightly ahead of it - can't keep on being embarrassed but still playing safe.

[percy]

Latest reports

Revenue
FY22
FY23
FY24
FY25
FY26
FY27
FY28




Jarden
530
520
520
533.5
547.5
562.1
577.1




Craigs
528
544
553
n/a
n/a
n/a
n/a




Ave
529
532
536.5



















EBIT (post IFRS16)











Jarden
31.8
29.6
28.3
30.1
31.8
33.6
35.5




Craigs
32.0
31.0
31.0








Ave
31.9
30.3
29.65








% of sales
6.0%
5.7%
5.5%



















NPAT











Jarden
19.2
17.6
16.8
18
19.1
20.3
21.7




Craigs
19.0
18.0
18.0








Ave
19.1
17.8
17.4



















DPS











Jarden
8.1
7.5
7.1
7.6
8.1
8.6
9.2




Craigs
8.0
7.8
7.8








Ave
8.05
7.65
7.45



















Yield at $1.28
6.3%
6.0%
5.8%



















Target Price











Jarden
1.32
neutral









Craigs
1.35
neutral









Ave
1.335










Thank you for posting.

[Muse]

Second the thanks to Fiordland Moose.

Interesting that for the first time, all three brokers have price targets above the current sp.

So they have gone from chasing the sp to being slightly ahead of it - can't keep on being embarrassed but still playing safe.

Job description for a sell side analyst: "track the share price"
Unless there are plenty of investment banking fees to be made, otherwise "exceed the share price"

nah there are a few good analysts who dedicate a lot of time to their coverage. But for small companies that don't pay big fees or coming from a troubled history they tend to shoot for what is right in front of them.

[Shareguy]

From Craigs latest research note.

We note if STU can maintain its healthy margins over the 2H there is upside relative to our current forecast. Added to this, STU has a strong balance sheet, with a net cash position of $25m announced at last result with management flagging potential for capital management.

[Shareguy]

At close today 23/11/21. Vulcan Steel continues to climb at $8.40. Steel and Tube at $1.30

Will revisit this post in a year and compare the best return. I no what I’m betting on….

[winner69]

Good sign a Director is buying

Added confidence in the company he is helping run

[SailorRob]

Good sign a Director is buying

Added confidence in the company he is helping run

Not a bad sign but pathetic purchase.

Same dude would think nothing of borrowing 800k to buy a house but can only cough up lunch money for STU.

[Dassets]

Well said. I totally agree. Goes to show what board members we have.

[Balance]

At close today 23/11/21. Vulcan Steel continues to climb at $8.40. Steel and Tube at $1.30

Will revisit this post in a year and compare the best return. I no what I’m betting on….

Very clearly institutional buying in action - see how the buyer is mopping up each day the stock on offer by multiple sellers?

Institutional buying vs retail selling - stock is going higher until we see a substantial crossing.

[Shareguy]

Yes someone is building a sizeable position. I have also been adding.

[sb9]

Bullish close for the day with strong volume cleared through at 1.35. Blue skies ahead from hereon me thinks.

[JohnnyTheHorse]

Bullish close for the day with strong volume cleared through at 1.35. Blue skies ahead from hereon me thinks.

Looks to certainly be institutional money on the buy now. Also a decent amount on the sell though, as is often the case with a stock that is up 100%+ in a year (impatient profit taking & rebalancing of portfolios).

All technicals are very strong.

[Shareguy]

Gosh just looking at large imbalance between sell and buy side . Looks like another good day to be had.

[Balance]

Looks to certainly be institutional money on the buy now. Also a decent amount on the sell though, as is often the case with a stock that is up 100%+ in a year (impatient profit taking & rebalancing of portfolios).

All technicals are very strong.


Very clearly institutional buying in action - see how the buyer is mopping up each day the stock on offer by multiple sellers?

Institutional buying vs retail selling - stock is going higher until we see a substantial crossing.

We have not seen any big crossings so fully expect the institutional buying to continue until they can get set in volume.

Meanwhile, stock is getting some proper attention now so can expect more interest to flow to the stock :

NZ Herald Stock Takes : Steel & Tube's lift

Jarden has lifted its earnings forecasts for Steel and Tube Holdings after the company's recent update.

Steel and Tube has provided Ebit guidance of at least $17m for the first half of this financial year compared with $8.9m in the previous corresponding period, reflecting a continuation of the positive momentum seen in the second half of 2021.

The company cited positive market conditions driving volume growth, while also highlighting improved pricing discipline and cost control.

Earlier in the month, Steel and Tube reported a 14 per cent increase in revenue for the first four months of the year, a period that included a substantial slowdown in revenue during the level 4 Covid lockdown.

Jarden noted Steel and Tube's strong order book and the company's expectations that market conditions would remain supportive over the medium term.

"We lift our Ebit forecasts for full-year 2022, 2023, and 2024 by 69 per cent, 40 per cent and 16 per cent, respectively."

"We increase our full year 2022 EBIT forecast to $31.8m on a strong trading update and supportive outlook but recognising there are seven fewer trading days in the second half," Jarden said.

[sb9]

Nice clearance into 1.40s range now, could be 1.50 very soon :t_up:

[Shareguy]

Mark Malpass might indeed be the unofficial Sharetrader pics for the year winner with Stu – Stu – Stu.

[SailorRob]

I originally bought STU pre Covid at 80c, it was buried pages deep on sharetrader with nobody talking about it. I topped up agressivly at 55c where I was paying less than the value of the steel on the shelf less all liabilities.

In post #1002 I presented a valuation based on its historical performance where I concluded that $1.50 was fair value. I'm far from convinced that the business is now better than it has been in the past. I'm not saying I don't think it's worth more, I'm saying I have no idea. BUT I had a very good idea that it was worth more than 80c.

The bullishness here now all seems to be based on macroeconomic industry predictions, not on the ability of the business to perform better than in the past.

I have one question for you all, if it is clear that this company is worth more than $1.50 and some think it is considerably so... My one question is;

Where are the insiders?

[Rawz]

Where are the insiders?

Is a good CEO a good investor? Or a good saver? A few years ago I was offered a role with a competitor to the company I was working at. When I tried to resign the CEO of the company I was working at said don’t move just for money. He said yes you will earn more, but you will spend more. Life style creep.

Bigger house with heated swimming pool. Beach house. Sports car. Travel business class. 5 star restaurants. $500 bottles of whiskey. Etc. It’s actually easy to spend your way through a large pay packet if you want the lifestyle.

I doubt sharetraders number one investor would make a good CEO. Or chairperson.

Anyways, I didn’t take the job. Have since changed jobs, earn about 30% more than then- funnily enough I don’t save 30% more.

It’s nice to see management buy into a company but just because they don’t I wouldn’t hang my hat on it

[SailorRob]

Where are the insiders?

Is a good CEO a good investor? Or a good saver? A few years ago I was offered a role with a competitor to the company I was working at. When I tried to resign the CEO of the company I was working at said don’t move just for money. He said yes you will earn more, but you will spend more. Life style creep.

Bigger house with heated swimming pool. Beach house. Sports car. Travel business class. 5 star restaurants. $500 bottles of whiskey. Etc. It’s actually easy to spend your way through a large pay packet if you want the lifestyle.

I doubt sharetraders number one investor would make a good CEO. Or chairperson.

Anyways, I didn’t take the job. Have since changed jobs, earn about 30% more than then- funnily enough I don’t save 30% more.

It’s nice to see management buy into a company but just because they don’t I wouldn’t hang my hat on it

Yep I take your point, however that simply wont apply to all of the directors and senior management. Amongst them there will be some that are smart with personal money and would have acsesss to decent ammounts of capital even if they had to borrow against the house.

They know a sure thing with this company way better than we do and if saw the share price heading towards $2 anytime over the next couple of years it would be a no brainer for them. We should be seeing chunky insider purchases here.

[percy]

Yep I take your point, however that simply wont apply to all of the directors and senior management. Amongst them there will be some that are smart with personal money and would have acsesss to decent ammounts of capital even if they had to borrow against the house.

They know a sure thing with this company way better than we do and if saw the share price heading towards $2 anytime over the next couple of years it would be a no brainer for them. We should be seeing chunky insider purchases here.

Directors and CEO with large holdings= Percy with a large holding.
Directors and CEO with no holdings or very small holdings = Percy with no holding,or a very small holding.

Disc.I have a very small STU holding.