STU - Steel & Tube Holdings

[Shareguy]

I must admit I am surprised that the CEO especially has not purchased more when the future looks so positive for Stu. At the end of the day no ones really no’s people’s personal circumstances. For me I would feel a lot better if at the very least that Mark had more shares than I do.

[Rawz]

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.

Hey Percy, how high do you rank insider shareholdings in your criteria for selecting a stock to invest in? Would it be top 3?

[winner69]

I remember the days when STU sold cars and trucks and heavy machinery

[Rawz]

I remember the days when STU sold cars and trucks and heavy machinery

I love it when you come out with these nuggets of gold W69. Like when you said MHJ sold shoes once upon a time.

[winner69]

I love it when you come out with these nuggets of gold W69. Like when you said MHJ sold shoes once upon a time.

Like Michael found out about shoes having a diversified business doesn't often work ......stick to what you know best and do it well

[winner69]

I love it when you come out with these nuggets of gold W69. Like when you said MHJ sold shoes once upon a time.

in the 80's when Brierley Investments was buying almost every company on the NZX the joke around town was that Steel and Tube are safe because they are so useless even Brierley wouldn't buy them

[percy]

Hey Percy, how high do you rank insider shareholdings in your criteria for selecting a stock to invest in? Would it be top 3?

My largest shareholding the ex chairman,directors and ceo hold over 50% of the shares on issue.[PAZ on Unlisted].
My second largest holding the directors do not have significant holdings.[SFF on Unlisted]
Third largest holding is HGH where directors,ceo and other senior staff have very large holdings.

Ranking ? Important,and helps add to making the investment a "high conviction" stock.
I also look at debt,cashflow,sector,and have to decide whether I really under stand the business I am buying.
I love profitable companies that are growing eps and have a high ROE .

PS.I recently bought DGC, well actually DGL in Aussie.Sold yesterday as I realised I had no idea what their eps would be.
I also bought a couple of months ago ALF, as I could see Chris Swasbrook's Elevation Capital taking control of the business,and knew they would drive the business .

[BlackPeter]

Hey Percy, how high do you rank insider shareholdings in your criteria for selecting a stock to invest in? Would it be top 3?

CBL Insurance used to have significant insider shareholdings - and where did that bring them? Similar (different industry and less criminal energy): SML.

Insider holdings are an indicator as good as any other - interesting, but what it really means for a specific company depends on a lot of things you can't put on a checklist.

[percy]

CBL Insurance used to have significant insider shareholdings - and where did that bring them? Similar (different industry and less criminal energy): SML.

Insider holdings are an indicator as good as any other - interesting, but what it really means for a specific company depends on a lot of things you can't put on a checklist.

Think EBO,FRE,HLG,MFT and many others.It really works.

[BlackPeter]

Think EBO,FRE,HLG,MFT and many others.It really works.

Sometimes it does, sometimes it doesn't. As I said - it depends :):

If the insiders are great managers, do have plenty of money, operate in a successful industry and are in addition to all of that good investors, than it is probably a good sign if they hold heaps. Otherwise it does not mean anything.

It is a bit like with our rooster. If he stands on his preferred position on top of the dung heap and starts crowing, the old peasant wisdom is saying that the weather will change - or it will stay as it is.

I do have plenty of examples and am able to verify both options with evidence :p;

[Scrunch]

Think EBO,FRE,HLG,MFT and many others.It really works.

Except where it didn't yet or clearly hasn't. Tower is an example where there has been quite a bit of insider buying but the price hasn't moved much. MPG had insider buying around $1 and that was a terrible predictor of where the share price would go.

As BP notes there are a lot of examples either way.

That said, I'd take insider buying over insider selling any day.

[percy]

Except where it didn't yet or clearly hasn't. Tower is an example where there has been quite a bit of insider buying but the price hasn't moved much. MPG had insider buying around $1 and that was a terrible predictor of where the share price would go.

As BP notes there are a lot of examples either way.

That said, I'd take insider buying over insider selling any day.

I agree.
People sell for any number of reasons,but they only buy for one.
Bit different from directors /management having "the owners' eye".

[Shareguy]

Vulcan upgrades. Looks good for STU. Either way you look at it valuation of $2.00 is cheap when you consider listing multiples of Vulcan.

https://www.nzx.com/announcements/384182 (https://www.nzx.com/announcements/384182)

[Muse]

Vulcan upgrades. Looks good for STU. Either way you look at it valuation of $2.00 is cheap when you consider listing multiples of Vulcan.

https://www.nzx.com/announcements/384182 (https://www.nzx.com/announcements/384182)


Hell of an upgrade. At the opening price about a PE of 11.5. Now up 5% after a few big sellers got taken out at 8.78 - and ~7,300 shares available for sale on the NZX!

[sb9]

Vulcan upgrades. Looks good for STU. Either way you look at it valuation of $2.00 is cheap when you consider listing multiples of Vulcan.

https://www.nzx.com/announcements/384182 (https://www.nzx.com/announcements/384182)

Unfortunately STU will always be at lower multiple than VSL and therefore portrayed as its poor cousin. Mr Market doesn't buy STU story fully yet.

[winner69]

Unfortunately STU will always be at lower multiple than VSL and therefore portrayed as its poor cousin. Mr Market doesn't buy STU story fully yet.

Maybe Mr Market jumps to conclusions and assumes Vulcan taking share off STU

[BlackPeter]

Hmm - interesting ... target price seems to be a lagging indicator (well, for STU this is):

13289

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

The other little gem from our distinguished market experts ... STU was 12 months ago on "Underperform" (2.5 / 10) - and the recommendation still does not look flash (3.3. / 10). Share price however nearly doubled from Nov 20 to Nov 21 - I hope nobody took the analyst recommendation at that stage serious unless they found a still better investment :):

Discl: happy hodler :p ;

[sb9]

Here's hoping that big crossing of 370k odd shares y'day at 1.39 has cleared the seller out....

[winner69]

From the Metro Glass thread I was asked to put up this chart of STU sales over the years v's building activity

I made it look less sad by adding in a 2022 forecast


Bear in mind STU have some non-building activity but in general terms most say their fortunes are tied to the building cycle

[Balance]

From the Metro Glass thread I was asked to put up this chart of STU sales over the years v's building activity

I made it look less sad by adding in a 2022 forecast


Bear in mind STU have some non-building activity but in general terms most say their fortunes are tied to the building cycle

A very interesting & useful chart indeed.

Shows STU generally following the building activity cycle between 2008 to 2016 :

- in fact bucking the downtrend between 2010 and 2012 when activity declined but STU sales increased,

- hiccup in 2013 before resuming sales growth in line with activity until 2017 when STU's problems surfaced.

Every reason indeed for STU's sp to decline from 2017 and in fact, collapsed to below 50c in 2020, given the scale of sales decline relative to building activity levels.

Well, here's to STU regaining its ability to benefit from the increase in building activity levels from 2021 and beyond.

[Rawz]

A very interesting & useful chart indeed.

Shows STU generally following the building activity cycle between 2008 to 2016 :

- in fact bucking the downtrend between 2010 and 2012 when activity declined but STU sales increased,

- hiccup in 2013 before resuming sales growth in line with activity until 2017 when STU's problems surfaced.

Every reason indeed for STU's sp to decline from 2017 and in fact, collapsed to below 50c in 2020, given the scale of sales decline relative to building activity levels.

Well, here's to STU regaining its ability to benefit from the increase in building activity levels from 2021 and beyond.

Well summed up. Thats how i see it too.

Thanks for the graph W69

[sb9]

From the Metro Glass thread I was asked to put up this chart of STU sales over the years v's building activity

I made it look less sad by adding in a 2022 forecast


Bear in mind STU have some non-building activity but in general terms most say their fortunes are tied to the building cycle

Thanks for obliging my request, definitely looks encouraging from hereon...

[Shareguy]

Spoke to a friend last night who works for competitor of STU. Said that every week that goes by that they are selling more and making large margins (Record breaking). Said that customers are struggling with the work load. He thinks this boom is going to last for years. Orders are coming in unquoted. Just supply please..

This bodes well for the future, with further upgrades to come.

[Balance]

3 weeks to go before end of 2021 and this comes to mind :

https://www.nzherald.co.nz/business/retail-investors-select-their-hot-stocks-for-2021/3IJMGFN4IIZLK3BMT5JDJZWVO4/
A special mention

Steel and Tube has had a recovery of sorts since its Covid-19 lows midway through 2020. Since October, the share price has tracked strongly upwards from 60c to around 90c today – no doubt a factor in the company attracting the focus of retail investors.

Mark Malpass, the Steel and Tube CEO, also gets my award for "Most Committed CEO" for selecting Steel and Tube five times for his five picks. Mark, your board should be proud.

[Sideshow Bob]

Another one.....

Steel & Tube Upgrades Earnings Guidance for 1H FY22 - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/384714)

teel & Tube Holdings Limited (NZX:STU) has upgraded its earnings guidance for the six months to 31 December 2021 (1H22), on the back of continued strong trading across the Group.

Earnings Before Interest and Tax (EBIT) is now expected to be between $20m and $22m (Normalised 1H21 $7.6m), with Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of between $30m and $32m (Normalised 1H21 $16.8m) (*1).
EBIT: 1H FY22 Guidance (*1) - $20m-$22m, 1H FY21 Normalised - $7.6m
EBITDA: 1H FY22 Guidance (*1) - $30m-$32m, 1H FY21 Normalised - $16.8m
The upgrade follows a continuation of strong trading across the Group driven by volume growth in target segments and positive market conditions, gross margin disciplines and a continued reduction in percentage operating costs.
For the first five months of the financial year to the end of November, Group revenue increased 22% over the prior comparative period (PCP). Volumes were up 11% on PCP.

Steel & Tube’s Distribution Division has performed well with revenue 35% ahead of PCP. The Infrastructure Division also grew on the same period last year, although was more heavily impacted by the August/September 2021 Covid-19 lockdown as Auckland manufacturing operations were not permitted during Alert Level 4, other than approval for Roofing for a two-week period prior to the move to Alert Level 3.

Distribution (Products sourced from preferred steel mills and distributed through Steel & Tube’s national network) : Sales (5MYTD FY22 vs PCP) - 35%, Volume (5MYTD FY22 vs PCP) - 16%.
Infrastructure (Products processed before sale, typically on a contract or project basis, including onsite installation services): Sales (5MYTD FY22 vs PCP) - 5%, Volume (5MYTD FY22 vs PCP) - 4%.
STU Total: Sales (5MYTD FY22 vs PCP) - 22%, Volume (5MYTD FY22 vs PCP) - 11%.
Steel & Tube CEO, Mark Malpass, commented: “Since our last update, positive trading momentum has continued, and demand growth has been solid. Our key focus has been to maintain availability and high levels of service for our loyal customers while navigating global supply chain constraints, a higher pricing environment and Covid-19 restrictions.

“We have carefully invested in high demand inventory using our strong 30 June 2021 cash position which we expect to rebuild in the second half of the financial year as deferred income during the lockdowns is fully recovered. We have a strong pipeline of secured work in place across the country and market conditions are expected to remain positive for at least the medium term.”
The Company is not providing guidance for the second half of the financial year at this stage, given the ongoing uncertainty surrounding Covid-19 impacts. The Company notes that there are seven (6%) less trading days in the second half of the financial year.
(*1) Guidance is subject to any impact of the recent IFRS Interpretations Committee agenda decision on Software as a Service (SaaS); and excludes the release of a $0.85m provision following the decision on the Metro Performance Glass Limited Holidays Act Court of Appeal case.
ENDS

[BlackPeter]

Another one.....

Steel & Tube Upgrades Earnings Guidance for 1H FY22 - NZX, New Zealand’s Exchange (https://www.nzx.com/announcements/384714)

teel & Tube Holdings Limited (NZX:STU) has upgraded its earnings guidance for the six months to 31 December 2021 (1H22), on the back of continued strong trading across the Group.

Earnings Before Interest and Tax (EBIT) is now expected to be between $20m and $22m (Normalised 1H21 $7.6m), with Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of between $30m and $32m (Normalised 1H21 $16.8m) (*1).
EBIT: 1H FY22 Guidance (*1) - $20m-$22m, 1H FY21 Normalised - $7.6m
EBITDA: 1H FY22 Guidance (*1) - $30m-$32m, 1H FY21 Normalised - $16.8m
The upgrade follows a continuation of strong trading across the Group driven by volume growth in target segments and positive market conditions, gross margin disciplines and a continued reduction in percentage operating costs.
For the first five months of the financial year to the end of November, Group revenue increased 22% over the prior comparative period (PCP). Volumes were up 11% on PCP.

Steel & Tube’s Distribution Division has performed well with revenue 35% ahead of PCP. The Infrastructure Division also grew on the same period last year, although was more heavily impacted by the August/September 2021 Covid-19 lockdown as Auckland manufacturing operations were not permitted during Alert Level 4, other than approval for Roofing for a two-week period prior to the move to Alert Level 3.

Distribution (Products sourced from preferred steel mills and distributed through Steel & Tube’s national network) : Sales (5MYTD FY22 vs PCP) - 35%, Volume (5MYTD FY22 vs PCP) - 16%.
Infrastructure (Products processed before sale, typically on a contract or project basis, including onsite installation services): Sales (5MYTD FY22 vs PCP) - 5%, Volume (5MYTD FY22 vs PCP) - 4%.
STU Total: Sales (5MYTD FY22 vs PCP) - 22%, Volume (5MYTD FY22 vs PCP) - 11%.
Steel & Tube CEO, Mark Malpass, commented: “Since our last update, positive trading momentum has continued, and demand growth has been solid. Our key focus has been to maintain availability and high levels of service for our loyal customers while navigating global supply chain constraints, a higher pricing environment and Covid-19 restrictions.

“We have carefully invested in high demand inventory using our strong 30 June 2021 cash position which we expect to rebuild in the second half of the financial year as deferred income during the lockdowns is fully recovered. We have a strong pipeline of secured work in place across the country and market conditions are expected to remain positive for at least the medium term.”
The Company is not providing guidance for the second half of the financial year at this stage, given the ongoing uncertainty surrounding Covid-19 impacts. The Company notes that there are seven (6%) less trading days in the second half of the financial year.
(*1) Guidance is subject to any impact of the recent IFRS Interpretations Committee agenda decision on Software as a Service (SaaS); and excludes the release of a $0.85m provision following the decision on the Metro Performance Glass Limited Holidays Act Court of Appeal case.
ENDS

Nice one ... and don't they tend to come in threes ;) ?

[Shareguy]

Yes fantastic. And this is only the start. Soon we will be talking about $3.00….

[Muse]

nice one. pleased to have two horses in this race.

[BlackPeter]

Yes fantastic. And this is only the start. Soon we will be talking about $3.00….

One step after another ... lets crack the $2 first. Say Q2 2022?

[sb9]

Nice on STU, handsome upgrade from one just a month ago.

[Balance]

23% profit upgrade at EBIT level - from last upgrade of $17m to mid point $21m.

Upgrades come in a series so plenty more in the year ahead.

STU is like my holding in PGW which I progressively built up over the last 2 years - takes the market a while to wake up that STU (just like PGW) is a different company from the one which blundered badly over the last few years.

Happy to add on a few more if price stays around current levels.

[freebee]

The good news keeps coming from STU, happy holder

[winner69]

Good stuff from STU today

Forbar commenced coverage of Vulcan ……said they were cheap as

Forbar need to look at STU eh …if they want their clients to prosper

[JohnnyTheHorse]

23% profit upgrade at EBIT level - from last upgrade of $17m to mid point $21m.

Upgrades come in a series so plenty more in the year ahead.

STU is like my holding in PGW which I progressively built up over the last 2 years - takes the market a while to wake up that STU (just like PGW) is a different company from the one which blundered badly over the last few years.

Happy to add on a few more if price stays around current levels.

Market still largely unaware of the value in this one. Just like SKT (until a week ago - although still undervalued) and as you say PGW. These turnaround plays have been very profitable. For some reason the market has been taking a VERY long time to start accurately pricing these, which is great as has allowed heaps of time to build large positions.

[Shareguy]

Yep very tempting to get more but I am so overweight. The “big”money still to come on this one. Will have to re do my numbers but already trading on ridiculous low fundamentals. As Forbar has pointed out a steel distribution business a good stock for inflation play. A bit like sky i think, investors are not taking into account the cash they are holding.. And yes based on Vulcan listing $3 is not out of the question.

[Balance]

Market still largely unaware of the value in this one. Just like SKT (until a week ago - although still undervalued) and as you say PGW. These turnaround plays have been very profitable. For some reason the market has been taking a VERY long time to start accurately pricing these, which is great as has allowed heaps of time to build large positions.

SKT, PGW & STU did stumbled along their turnaround journey which would cause most investors to ignore them. But the reward when they fire is simply marvelous!

Happy shareholder in all three! :t_up:

2021 is proving to be a great year!

[Arbroath]

Yep very tempting to get more but I am so overweight. The “big”money still to come on this one. Will have to re do my numbers but already trading on ridiculous low fundamentals. As Forbar has pointed out a steel distribution business a good stock for inflation play. A bit like sky i think, investors are not taking into account the cash they are holding.. And yes based on Vulcan listing $3 is not out of the question.

STU is 13% of my portfolio and Sky TV 14% so it’s a very Merry Christmas this year. Look forward to them both becoming 20-25% of the portfolio in 2022.

[Rawz]

Well I'm glad I topped up last month on the previous announcement. I also bought more FBU. Construction a good place to be right now.

https://www.nzherald.co.nz/business/look-out-carters-warns-of-building-sector-product-price-rises-up-to-275-early-next-year/FCXBLA6WJJNC2YGH2XASXWZ4RU/

Carters putting prices up 27.5% next year.

Who wants to guess what sort of forward P/E we are looking at? I must put my hand up and admit i dont have a clue. I have invested on what industry i think will be successful and also on the back of some great posts here on ST pointing out the value in STU (thanks)

[winner69]

Volume up 11% and value sales up 22% -- overall pretty hefty price increases

Hope input costs noy up by more than 10% else GM% a bit sick -- nut I suppose Mark would have told us if margins were down.

[winner69]

Yep very tempting to get more but I am so overweight. The “big”money still to come on this one. Will have to re do my numbers but already trading on ridiculous low fundamentals. As Forbar has pointed out a steel distribution business a good stock for inflation play. A bit like sky i think, investors are not taking into account the cash they are holding.. And yes based on Vulcan listing $3 is not out of the question.


hey shareguy - didn't you once say H2 was always better than H1

So we looking at $50m EBIT for FY -- in spite of the warnings about less trading days

That's a big increase on the FY21 of $19m eh

[Shareguy]

Yes 2021 has been one of the best years ever, it’s almost embarrassing given the c word. Portfolio with Stu, Rak, Skt being unloved by most turning to be absolute stars. The good news is for those 3 is that there is a lot more to come… in my opinion. Rock on 2022.

[Shareguy]

[QUOTE=winner69;932357]hey shareguy - didn't you once say H2 was always better than H1

So we looking at $50m EBIT for FY --

I am thinking $50m is conservative . If you go and have a look at history over last 20 years, 2nd half is larger in most years. From what I’m hearing and seeing there will be more upgrades to come.

[Balance]

Yes 2021 has been one of the best years ever, it’s almost embarrassing given the c word. Portfolio with Stu, Rak, Skt being unloved by most turning to be absolute stars. The good news is for those 3 is that there is a lot more to come… in my opinion. Rock on 2022.

Especially pleasing when one considers how the rest of the market has not been performing. Looks like NZ50 will have a negative return this year.

I am still in wonderment why anyone would participate in crap like MFB when there are stocks which have been around like STU & PGW which have stood the test of time & economic cycles.

[freebee]

Yes 2021 has been one of the best years ever, it’s almost embarrassing given the c word. Portfolio with Stu, Rak, Skt being unloved by most turning to be absolute stars. The good news is for those 3 is that there is a lot more to come… in my opinion. Rock on 2022.


Also add FBU to that list been a great year for them too with more to come for 2022. Now if only MPG in the same market, could watch and learn...

[Shareguy]

Yes agree Balance. In my opinion they were unloved by analysts who had sell ratings on sky and stu and rak was not even covered. There is still a lot of investors, especially new ones that take great importance of analysts and don’t do there own research. Doing your own research is the key I think. There is still good opportunities on the NZX and I still think STU still one of the most undervalued stocks on NZX

[Entrep]

Love to see it, my biggest holding is about to get even more overweight

[Rawz]

Market screener says last year EBIT was $18.5m
Which generated $0.10 eps

If you guys say this year EBIT is going to be $50m
Applying same ratio to bottom line will give $0.27 eps

At this mornings price of $1.48 it means STU is trading on forward p/e of 5.48... wtf? is this true based on these very crude back of the envelope calcs that i did in 2mins...? Cant be true

[Neophyte]

Based on the mid point EBIT of $21m for H1, even if the growth flattens in H2 (I do not personally see happening) we are looking at c. 14cps dividend at a 70% payout - well over 10% yield if unimputed. The strong balance sheet and growing earnings could see a higher payout ratio, and as mentioned above, H2 is usually stronger.

Can someone with more accounting knowledge please help with their imputation prospects? Do they still have accumulated losses or can we expect to see STU paying taxes / imputing dividends in the upcoming FY?

Plenty of upside in STU, best outlook for 2022 on the NZX in my opinion

[BlackPeter]

Market screener says last year EBIT was $18.5m
Which generated $0.10 eps

If you guys say this year EBIT is going to be $50m
Applying same ratio to bottom line will give $0.27 eps

At this mornings price of $1.48 it means STU is trading on forward p/e of 5.48... wtf? is this true based on these very crude back of the envelope calcs that i did in 2mins...? Cant be true

Order of magnitude might be correct, though - obviously the I in EBIT is currently rising (but this should not be a big issue given their healthy balance sheet), but I recon the T will rise as well.

Anyway - I see potential for a bumper FY ...

[Sideshow Bob]

$1.50..........

[Neophyte]

Order of magnitude might be correct, though - obviously the I in EBIT is currently rising (but this should not be a big issue given their healthy balance sheet), but I recon the T will rise as well.

Anyway - I see potential for a bumper FY ...

Can the "I" rising negatively impact earnings with a positive Net Cash position? I would have thought rising interest costs shouldn't impact a company with no Debt?

[Poet]

Order of magnitude might be correct, though - obviously the I in EBIT is currently rising (but this should not be a big issue given their healthy balance sheet), but I recon the T will rise as well.

Anyway - I see potential for a bumper FY ...

Actually the I in EBIT won't be an issue at all as they currently have no debt, accumulated tax losses will last a little while longer as well. IMO, at this stage in the recovery cycle and the economic cycle it would be appropriate for them to put some debt on the balance sheet and return some capital to long suffering shareholders. I think a capital management plan along those lines is what will next excite the market as we shouldn't see any more profit upgrades (as such) since we are now only two weeks out from the half year close and they should have a very accurate picture of what the actual result should be. And they haven't given FY guidance so there isn't anything to upgrade at this stage. Anyway, running along nicely now and long may it continue

[WAIKEN]

Over many years of investing I have found that multiple earnings upgrades have been a defensive strategy when directors anticipate a potential takeover. Based on that low forward PE this should be at least 3.00

[Balance]

Off to get a few bottles of champagne!

[JohnnyTheHorse]

Today is shaping up to be the largest traded dollar volume in a few years. I'm hoping this ends up like SKT, where there were large sellers constantly selling down, then once that was cleared there were rapid price moves as institutional money had to bid higher and higher to get any volume. We are well set for the next 6 months.

[BlackPeter]

Can the "I" rising negatively impact earnings with a positive Net Cash position? I would have thought rising interest costs shouldn't impact a company with no Debt?

Fair enough ... I just looked at the liabilities to asset ratio when I wrote my post without realizing that the lion's share of these liabilities are lease commitments (which should not be influenced by changes in the I).

Still need to get used to this new accounting standard :):

[Shareguy]

Yes. Good plan I’m going to do the same.’

[Beagle]

Especially pleasing when one considers how the rest of the market has not been performing. Looks like NZ50 will have a negative return this year.

I am still in wonderment why anyone would participate in crap like MFB when there are stocks which have been around like STU & PGW which have stood the test of time & economic cycles.


Today is shaping up to be the largest traded dollar volume in a few years. I'm hoping this ends up like SKT, where there were large sellers constantly selling down, then once that was cleared there were rapid price moves as institutional money had to bid higher and higher to get any volume. We are well set for the next 6 months.

Have to agree that this has been a very impressive turnaround story. Strong balance sheet with no debt, 25m in cash = 15 cps.
Very impressive upgrade, (so impressive I can't resist putting my paw up for a few), and solid outlook. TA also provides considerable encouragement.
PE for FY22 looks super cheap. Been around for many decades.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/STU/380144/356014.pdf
I think they're building real momentum here and they do look very cheap at $1.50. Gets the dog's tick as having good prospects for 2022.

[WAIKEN]

Good analysis Beagle
Currently it is in grave danger of an undervalued takeover.
We may disagree on KPG but we concur with STU

[sb9]

Large trades off market at 1.50 suggests Instos helping each other out, one wants out and other wants in. Hence not much pull back in price unlike earlier times where price would surge on retail buying and back down later.

[winner69]

There is some I in the P&L - in F21 the I was about $5.7m .....mainly related to leases ... prob about the same this year

Question: probably won't be paying much tax F22 but will in F23. question then when assessing a 'fair' PE ratio do you apply a notional tax expense

[Muse]

There is some I in the P&L - in F21 the I was about $5.7m .....mainly related to leases ... prob about the same this year

Question: probably won't be paying much tax F22 but will in F23. question then when assessing a 'fair' PE ratio do you apply a notional tax expense

Personally I apply a notional tax if the tax credits aren't expected to run for years, to get a better feel for a maintainable PE.

Wonder if the analysts will just regurgitate the press release in their reports overnight, update their TP to reflect where prices closed at, and close at a mighty 2-3 page report. nice if they do, leaving buying opportunities for those willing to do the work. those covering STU do zero work....

[winner69]

Vulcan and STU both have updated 5 months sales

Volumes - Vulcan +11% pcp and STU +11% pcp
Revenue - Vulcan +35% pcp and STU +22% pcp

The revenue comparison a bit of a worry - same volume increases but Vulcan much higher revenue increases - sort of says getting better prices .... and getting highr margins than STU

Didn't split Aust and NZ - must be screwing Aussie customers big time lol

[Muse]

Vulcan and STU both have updated 5 months sales

Volumes - Vulcan +11% pcp and STU +11% pcp
Revenue - Vulcan +35% pcp and STU +22% pcp

The revenue comparison a bit of a worry - same volume increases but Vulcan much higher revenue increases - sort of says getting better prices .... and getting highr margins than STU

Didn't split Aust and NZ - must be screwing Aussie customers big time lol

Could be mix - vulcan have a sizeable stainless operation, stu do more reinforcing, roofing and wire (or so i read in the nbr).

Shareguy would this account for the difference or do you reckon something else at play?

[Shareguy]

Stu also have a stainless division from when they purchased NZF fasteners. Stu don’t have a distribution business in Australia. However comparing STU sales to the old One Steel business, Stu made a lot more money (ROI) with better margins. The main reasons were the cost of doing business was a lot higher in Australia with wages being considerably higher than New Zealand in part due to the strong unions. Plus more competition. The S&T roofing division is a licence to print money and has always been very profitable and so was the piping and fasteners operations. Not surprised with Vulcan margins as they have over the years poached the best staff and put a lot of emphasis into customer relationships therefore obtaining a premium. This is changing though under New Ceo so I expect this to change in a positive way for stu. Investors need to consider that in the past few years stu has taken a huge amount of cost out with massive write downs of inventory and all the skeletons have been delt with. They also have 15 cps of cash which is unusual for a distribution business. As you no I have a large holding (more than ceo) and have a high conviction that this stock has only woken up with plenty of up side.

[winner69]

Vulcan said Steel: volumes +12% / revenues +42% and Metals: volume +7% revenues +22%

STU said Distribution; volumes +16% / revenues +35% and Infrastructure; volumes +4% / Revenue +5%

Don't know if sectors are similar but whatever Vulcan seem to be doing better at pricing

Hey shareguy -- work it out for usit

It's just that I like companies maximising profits (v competitors) and not missing out on things otehr are getting - even reminding us sales people are going for margin doesn't explain it

[Balance]

https://blog.steelandtube.co.nz/price-increase-notification-october-2021

Notification of last steel price increases for customers

[SailorRob]

Where were all you keen bullish folk at 52c?

Nobody would even reply to posts on STU!

Off historical performance fair value is $1.50, maybe they really a better company now. Maybe not. Everyone is so keen after the price has run hard.

As for NZ macroeconomic outlook and building industry... Does anyone really know?

[Balance]

Where were all you keen bullish folk at 52c?

Nobody would even reply to posts on STU!

Off historical performance fair value is $1.50, maybe they really a better company now. Maybe not. Everyone is so keen after the price has run hard.

As for NZ macroeconomic outlook and building industry... Does anyone really know?

You could ask that question of any number of stocks, STU being one, FBU being another and SKT too but I prefer to ask where the punters were with SKO in my case when I bought at 29c (now $6.90).

If only we were all that smart, eh?

I cannot speak for others but one golden rule I follow closely is that I DO NOT buy stocks on the way down and definitely, I do not believe in averaging down.

I prefer to buy on the way up and my first purchase of STU was 69c and been averaging up since then.

NZ macroeconomic outlook and building industry outlook - plenty of opinions & forecasts out there so a case of doing one's own asessment and investing accordingly, surely?

[Muse]

Where were all you keen bullish folk at 52c?

Nobody would even reply to posts on STU!

Off historical performance fair value is $1.50, maybe they really a better company now. Maybe not. Everyone is so keen after the price has run hard.

As for NZ macroeconomic outlook and building industry... Does anyone really know?

To be fair I think this is just a situation where a small group of investors saw something the analysts didnt, spoke their minds, and put their money where their mouth was…Im sure shareguy will attest to not suddenly just being interested in this over the last month or two. Company went thru some hard yards and counted as down so if you cant celebrate a small victory like this when can you?

Kinda similar to what happened at Sky TV and Rakon. No these arent forever victories and the factset can change quickly.

But Im happy for everyones respective successes and these threads have kept me much more up to speed on developments that I otherwise might have been - so thanks to those who contribute - its well appreciated.

[SailorRob]

Yep fair points. Well done to everyone.

I've sold half and using proceeds to buy Sberbank at a PE of 5 directly on the Moscow exchange. Incredible bank, trading at book with ROE of 20% and very strong earnings growth.

[Rawz]

Yep fair points. Well done to everyone.

I've sold half and using proceeds to buy Sberbank at a PE of 5 directly on the Moscow exchange. Incredible bank, trading at book with ROE of 20% and very strong earnings growth.

SailorRob you have made some good calls! Nobody can deny that.

Not sure I’ll be following you into a Russian bank thou lol. Old Putin has his sights set on more Ukrainian land and if he goes for it the US will be slapping them with severe sanctions. Likely crushing financial system sanctions. But I’m sure I don’t need to be telling you this. Good luck

[RRR]

All the best SailorRob - your analysis and knowledge shared of STU was excellent.

[bobestm]

Yep fair points. Well done to everyone.

I've sold half and using proceeds to buy Sberbank at a PE of 5 directly on the Moscow exchange. Incredible bank, trading at book with ROE of 20% and very strong earnings growth.

How does one trade on the Moscow exchange, IBKR?

[nztx]

How does one trade on the Moscow exchange, IBKR?


Roubly carefully I would say ;)

Wouldn't want things to be too obvious or noisy or you could get significantly roubled
from any number of different directions .. :)

Having a Rushin Mrs may help things (one in no hurry to scarper back off home)

[Muse]

Wonder if the analysts will just regurgitate the press release in their reports overnight, update their TP to reflect where prices closed at, and close at a mighty 2-3 page report.

okay folks have the first STU report to hand - this one from Jarden. STU closed at 1.46 yesterday, and jarden have updated their TP to, wait for it....to 1.46! Haha. Few bits and bobs:

* estimate gross margin expanded to 22.8% from 20.5%, largely reflecting STUs accounting for COGS (average pricing) which provides margin uplift in rising price environment
* Jard expect moderation in pricing and reversion over time
* STU investing hard into inventory to support revenue growth. They noted management stating it had used its cash position to invest in high demand inventory and a portion of increased inventory also simply reflects higher prices. Thus, Jarden expect cash balances to fall and end the year with less cash
* EBIT: 38.5 > 33.5 > 29.6 > 31.4 > 33.2 > 35 > 37, for FY22-FY28
* NPAT: 24m this year, falling and never recovering by FY28
* Jarden stated if further evidence of sustained earnings growth with respect to GM improvement would see them take a more constructive view

[winner69]

Jarden are much respected by many on here ....maybe the best .....suppose until one disagrees with them

[Rawz]

Big difference to the $50m ebit talked about here yesterday. Huge difference actually

[Muse]

Big difference to the $50m ebit talked about here yesterday. Huge difference actually

truth somewhere in the middle, i reckon. Would be nice to see them doing channel checks, supplier calls, to firm up. The way I am reading analysts is that they are willing to be dragged up after the fact, not before, given the recent history of the company. They make some good points on what will happen to cash and hard to argue the company wont be impact by steel price reversion over time.

The PE's are most different to that being talked about or extrapolated off 1H. IE they forecast 10 >12 >13.7 from FY22 to FY24, but anchored to their forecasts. Their net yields remain healthy 7%, 5.9%, 5.1% same periods.

[Shareguy]

Forbar have increased to tp to $1.75 on a pe of 8. Ebit 22 $46.8 EPS 18.4 Div of 10 percent gross

Have a look at the listing multiples of Vulcan and compare the same to Stu (which were done on previous posts) It’s huge. Which is why I see this as a real value stock.

These analysts in my opinion don’t understand the company or what’s happening with the market with increased costs and inflation and the cost out over the last few years.

[SailorRob]

SailorRob you have made some good calls! Nobody can deny that.

Not sure I’ll be following you into a Russian bank thou lol. Old Putin has his sights set on more Ukrainian land and if he goes for it the US will be slapping them with severe sanctions. Likely crushing financial system sanctions. But I’m sure I don’t need to be telling you this. Good luck

Looks like Jarden have taken the conservative view like I had to, it could of course do much better.

Yes Interactive Brokers for trading directly on the Moscow exchange.

No sanctions will do anything like the damage that occurred last time Russia invaded Ukraine (only a few years ago). This was followed by a deep recession in Russia, inflation rising, interest rates reaching 17%, the Rouble losing half its value, oil price dropping by more than half, and severe sanctions. Sberbank remained profitable every single quarter throughout and the minimum ROE was 11%.

Russia has a very strong financial system compared to the West, check out their debt ratios and I think the most gold backed currency in the world (major). Plus Europe is heavily reliant on them for gas at the moment.

Sberbank has done about 60,000% over 20 years without dividends and even in USD terms it's incredible, if you include reinvested dividends I would say it would have outperformed any US tech company easy. Way more technologically advanced than any of our banks too.

And most importantly it does its incredible high ROE with very low leverage too, much lower than Western banks.

Still have half my STU position.

[Balance]

Jarden are much respected by many on here ....maybe the best .....suppose until one disagrees with them

I used to have great respect for Jarden research but after how seriously flawed and bad their IPO advice (or good for the sellers) and research were with My Food Bag, I would put them in the same league as all the other mainstream brokers.

It comes down always with them as to what research angle they are coming from - fundamental research or corporate banking research.

[winner69]

Forbar have increased to tp to $1.75 on a pe of 8. Ebit 22 $46.8

These analysts in my opinion don’t understand the company or what’s happening with the market with increased costs and inflation and the cost out over the last few years. If anyone is unsure I suggest they don’t invest.

But they always mention ‘discussions with management’ so you’d think they would ‘understand what’s happening’

[winner69]

I do agree with Jarden * Jarden stated if further evidence of sustained earnings growth with respect to GM improvement would see them take a more constructive view”

As far as I’m concerned the jury is still out re gross margins …..no real improvement last few quarters in spite of management narrative.

Needs to improve

[CraftyBeer]

I do agree with Jarden * Jarden stated if further evidence of sustained earnings growth with respect to GM improvement would see them take a more constructive view”

As far as I’m concerned the jury is still out re gross margins …..no real improvement last few quarters in spite of management narrative.

Needs to improve

I'm a long term holder (20+ years). Watched this plod along for many years then go into a spiral, so I had to scoop more up last year, mainly based off the short-lived FBU takeover offer, to come out back on top. I'm still not clear though on what STU does "better" than anyone else, just that market demand is lifting them. Nothing wrong with that but I do like companies to have something to stand out from the crowd too.

[BlackPeter]

Looks like Jarden have taken the conservative view like I had to, it could of course do much better.

Yes Interactive Brokers for trading directly on the Moscow exchange.

No sanctions will do anything like the damage that occurred last time Russia invaded Ukraine (only a few years ago). This was followed by a deep recession in Russia, inflation rising, interest rates reaching 17%, the Rouble losing half its value, oil price dropping by more than half, and severe sanctions. Sberbank remained profitable every single quarter throughout and the minimum ROE was 11%.

Russia has a very strong financial system compared to the West, check out their debt ratios and I think the most gold backed currency in the world (major). Plus Europe is heavily reliant on them for gas at the moment.

Sberbank has done about 60,000% over 20 years without dividends and even in USD terms it's incredible, if you include reinvested dividends I would say it would have outperformed any US tech company easy. Way more technologically advanced than any of our banks too.

And most importantly it does its incredible high ROE with very low leverage too, much lower than Western banks.

Still have half my STU position.

Might be appropriate to create a new thread.

Personally - I would be careful to invest money in countries and systems where the police exists just to protect the governing class from the people and where the courts are just serving at the pleasure of the dictator of the day. Russia is one of the most corrupt countries in the world ... which may or may not be a problem if you want to see your money back some day:) ;

But as I said .. different theme. STU on the other hand operates in one of the least corrupt countries on earth :p;

[SailorRob]

I'm a long term holder (20+ years). Watched this plod along for many years then go into a spiral, so I had to scoop more up last year, mainly based off the short-lived FBU takeover offer, to come out back on top. I'm still not clear though on what STU does "better" than anyone else, just that market demand is lifting them. Nothing wrong with that but I do like companies to have something to stand out from the crowd too.

Yeah this is my point exactly as well as Winners posts. We can try and trade around NZ macro outlook and or improving STU business but the best thing to do is look at their long term track record and ask why would this dramatically change.

You *might* do well but really it's speculation from here, from 50c and 80c it was based on reversion to the mean.

I do not envy anyone who has held this for 20 years that's for sure but holding any company for that long you will plain and simple get the returns that the business has got, whatever their return on capital has been over that time will roughly be your return.

If you think you can trade around that return (like many of us did at 80c) then great but that's all you'll get holding for the long term.

Now if you can find a business that returns 20% on capital and can continue to do so then if you hold that for 20 years, you'll get the same.

You may be right Shareguy and do really well but perhaps with with such a big position in a company like this it may pay to be conservative with the forecast, $3 was mentioned. Well maybe.

[Balance]

Forbar have increased to tp to $1.75 on a pe of 8. Ebit 22 $46.8

These analysts in my opinion don’t understand the company or what’s happening with the market with increased costs and inflation and the cost out over the last few years. If anyone is unsure I suggest they don’t invest.

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

The track record of brokers and analysts covering STU can only be described as abysmal.

As the schedule on recommendation above showed, there was only ever one 'Outperform' recommendation (June to Sept 2020) by one broker out of 3 in the last 18 month!

And that recommendation was wrong because STU actually did not perform over that period so the broker changed the recommendation to hold.

Follow their analysis and recommendations at your peril!

[CraftyBeer]

Yeah this is my point exactly as well as Winners posts. We can try and trade around NZ macro outlook and or improving STU business but the best thing to do is look at their long term track record and ask why would this dramatically change.

You *might* do well but really it's speculation from here, from 50c and 80c it was based on reversion to the mean.

I do not envy anyone who has held this for 20 years that's for sure but holding any company for that long you will plain and simple get the returns that the business has got, whatever their return on capital has been over that time will roughly be your return.

If you think you can trade around that return (like many of us did at 80c) then great but that's all you'll get holding for the long term.

Now if you can find a business that returns 20% on capital and can continue to do so then if you hold that for 20 years, you'll get the same.

You may be right Shareguy and do really well but perhaps with with such a big position in a company like this it may pay to be conservative with the forecast, $3 was mentioned. Well maybe.


$3 in my dreams. We'll see. Driving past their Blenheim Road site in Christchurch recently I did note the car park was chocka with what looked like a fleet of brand new double-cab utes in STU livery. So one thing they do well is spend heaps on company cars! Not sure about the shareholder return on those.

[Muse]

I'm happy to hold STU and enjoy the elevated dividend yield on my purchase price. Not a buyer. Probably some good volume action with construction activity next few years and in infrastructure. But steel prices look maxed out and was reading this AM how China is now forecasting its own steel production will drop 5% next year. Most forecasts show for large drops in steel SKU ASPs, which can taketh away from STU's margins in a falling price environment. More overweight on Vulcan - see that as a better long term bet with the their australian exposure and growing marketshare, even if I can't use their franking credits.

[SailorRob]

I'm happy to hold STU and enjoy the elevated dividend yield on my purchase price. Not a buyer. Probably some good volume action with construction activity next few years and in infrastructure. But steel prices look maxed out and was reading this AM how China is now forecasting its own steel production will drop 5% next year. Most forecasts show for large drops in steel SKU ASPs, which can taketh away from STU's margins in a falling price environment. More overweight on Vulcan - see that as a better long term bet with the their australian exposure and growing marketshare, even if I can't use their franking credits.

Not too sure about Steel supply companies as long term bets.

Try Markel or Unilever or something.

Should dividend yield be considered on purchase price or on what you could get for it now and thus better yield elsewhere?

Big question is what will this company do with retained earnings and I think we all know the answer.

[Muse]

Not too sure about Steel supply companies as long term bets.

Try Markel or Unilever or something.

Should dividend yield be considered on purchase price or on what you could get for it now and thus better yield elsewhere?

Big question is what will this company do with retained earnings and I think we all know the answer.

Yeah I tend to agree with you about steel supply companies. That colours my thinking around STU. However vulcan have built tremendous wealth for their shareholders over 30 years by building a world class business, implementing new systems and ways of operating in tired industries, expanding offshore and consolidating a still fragmented industry. I think they can continue to grow their business through the ups and downs of what happens from a macroeconomic perspective (never linearly of course), for a while to come. I dont think thats the case of STU.

I bought STU a few months ago as I had some proceeds come - bought a few things, but thought STU looked like it offered some growth and strong high single digit yields over the next few years. I'll set and forget and review in a few years. My australasian portfolio is diversified, around 60 entities. Some ETFs for offshore, small handful of direct stocks in the USA. Most of my capital is in private companies.

[RTM]

Should dividend yield be considered on purchase price or on what you could get for it now and thus better yield elsewhere?



Well it just depends SailorRob, if you are tending to want to keep the name...and it has gone up significantly, then the purchase price is a great help. However if you are tempted to sell...and its gone up, then the current price helps, as long as you can see something more attractive to replace it.:)

[SailorRob]

Well it just depends SailorRob, if you are tending to want to keep the name...and it has gone up significantly, then the purchase price is a great help. However if you are tempted to sell...and its gone up, then the current price helps, as long as you can see something more attractive to replace it.:)

Psychologically maybe depending on the investor, but a decision to hold or sell should never be made based on what price you paid for it or you can get into a whole lot of trouble.

The argument can be made that STU is at fair value considering what is known now, or that it is somewhat cheap. But I'm looking for smack in the face cheap like STU @ 52c when it traded for less than the value of steel on the shelf less all liabilities.

With well over half the Russell 3000 now in a bear market there are lots of opportunities out there competing for capital. Not to mention the Hang Sen entire index trading at book, only three times that's ever happened.

[Grimy]

"Well it just depends SailorRob, if you are tending to want to keep the name...and it has gone up significantly, then the purchase price is a great help. However if you are tempted to sell...and its gone up, then the current price helps, as long as you can see something more attractive to replace it." - RTM

"a decision to hold or sell should never be made based on what price you paid for it or you can get into a whole lot of trouble." - SailorRob

Both are valid in my opinion. RTM's reply is how I look at yield (as someone who relies on dividends), and SR is correct about when deciding to hold/sell or not.

As a long time holder in STU (but not for many years - since things went downhill) I wish I had jumped back in when SailorRob was one of the few voices pointing out the (now) obvious!

I didn't know how to add two quotes, sorry.

[Snoopy]

"
I didn't know how to add two quotes, sorry.



1/ Find the first post you want to quote and click the little 'quote box' 'with the plus sign' on the lower right hand corner of that post.
2/ Find the second post you want to quote and tick the 'reply with quote' button. That action will facilitate the quoting of BOTH posts


SNOOPY

[Grimy]

Many thanks Snoopy.

[RupertBear]

1/ Find the first post you want to quote and click the little 'quote box' 'with the plus sign' on the lower right hand corner of that post.
2/ Find the second post you want to quote and tick the 'reply with quote' button. That action will facilitate the quoting of BOTH posts


SNOOPY

Thanks Snoopy I also didn’t know how to do this :)

[Shareguy]

Forbar have increased to tp to $1.75 on a pe of 8. Ebit 22 $46.8 EPS 18.4 Div of 10 percent gross

Have a look at the listing multiples of Vulcan and compare the same to Stu (which were done on previous posts) It’s huge. Which is why I see this as a real value stock.

These analysts in my opinion don’t understand the company or what’s happening with the market with increased costs and inflation and the cost out over the last few years.

I have now gone through the new analysts note and conclude that really they are just playing catch up. Mine and other posters forecast of $50m EBIT against Forbar $46m is at least reasonable.

Vulcan which in my opinion is the first time the market has a true comparison. Fbu have only divulged parts so is hard to get a meaningful comparison. So if Vulcan lists on multiples of 8.8 x EBITDA which Forbar have at $64m fy22 and Vulcan only went up from there. Stu is worth …… so STU is extremely undervalued either way which is why I’m not tempted to sell.

[Rawz]

I have now gone through the new analysts note and conclude that really they are just playing catch up. Mine and other posters forecast of $50m EBIT against Forbar $46m is at least reasonable.

Vulcan which in my opinion is the first time the market has a true comparison. Fbu have only divulged parts so is hard to get a meaningful comparison. So if Vulcan lists on multiples of 8.8 x EBITDA which Forbar have at $64m fy22 and Vulcan only went up from there. Stu is worth …… so STU is extremely undervalued either way which is why I’m not tempted to sell.

Yes super cheap high single digit P/E based on your or Forbar forward EBIT. Even if you take jardens into the mix and get an average it’s cheap.

The TA looking great. Squiggly line goes up!

FBU wanted to pay $2 for this a few years back right?

[Greekwatchdog]

1st offer $1.75 then upped to $1.95.

[winner69]

I have now gone through the new analysts note and conclude that really they are just playing catch up. Mine and other posters forecast of $50m EBIT against Forbar $46m is at least reasonable.

Vulcan which in my opinion is the first time the market has a true comparison. Fbu have only divulged parts so is hard to get a meaningful comparison. So if Vulcan lists on multiples of 8.8 x EBITDA which Forbar have at $64m fy22 and Vulcan only went up from there. Stu is worth …… so STU is extremely undervalued either way which is why I’m not tempted to sell.


Shareguy .... Vulcan guidance ebitda 147m so on 8.5 times forward guidance

STU ebitda say 68m so on 3.6 times

If STU at Vulcan multiple STU share price about $3.50

Discount because Vulcan seen as ASX company (leads to higher multiples) and because Vulcan seen as a better more reliable company and because Vulcan bigger and more diversified maybe $2.70 to $3.00 is a pretty fair price for STU

[Shareguy]

Winner69. Exactly as I see it..The difference is staggering and completely unjustified. Sooner or later the market will realise the difference Or it will get taken over.

[Poet]

Shareguy .... Vulcan guidance ebitda 147m so on 8.5 times forward guidance

STU ebitda say 68m so on 3.6 times

If STU at Vulcan multiple STU share price about $3.50

Discount because Vulcan seen as ASX company (leads to higher multiples) and because Vulcan seen as a better more reliable company and because Vulcan bigger and more diversified maybe $2.70 to $3.00 is a pretty fair price for STU

Quite right Winner69

Imagine if Vulcan bought STU for around $2 a share which is probably feasible - so let's say $350 million. It would probably add $700 million to Vulcan's market cap and that's before accounting for any synergies or reduction in competition- must be very tempting for Vulcan

[Getty]

Simply Wall St updated consensus from 3 analysts; $1.31.

Updated Shareclarity DCF $1.29

Hope that doesn't rain on anyone's parade.

[BlackPeter]

Simply Wall St updated consensus from 3 analysts; $1.31.

Updated Shareclarity DCF $1.29

Hope that doesn't rain on anyone's parade.

Lets face it - some analysts are sometimes right but all analysts are sometimes wrong. Simply Wall Street seems to use exclusively algorithms and clearly belongs into this second group. I don't remember ever having seen from them an analysis which would deserve this name.

Whatever they say is as meaningful as any of us blindfolded throwing a dart at a board with random numbers. But sure - we might hit the right number ... it is just a question of statistics, isn't it?

[Getty]

Lets face it - some analysts are sometimes right but all analysts are sometimes wrong. Simply Wall Street seems to use exclusively algorithms and clearly belongs into this second group. I don't remember ever having seen from them an analysis which would deserve this name.

Whatever they say is as meaningful as any of us blindfolded throwing a dart at a board with random numbers. But sure - we might hit the right number ... it is just a question of statistics, isn't it?

Yep, I simply post info others may not be aware of, and how they interpret or act on it is their business.

[Balance]

Simply Wall St updated consensus from 3 analysts; $1.31.

Updated Shareclarity DCF $1.29

Hope that doesn't rain on anyone's parade.

Why would that rain on anyone's parade?????

The analysts have been so wrong on the stock and their recommendations had been tracking behind the share price by as much as 50%.

Try Market Screener if you want consensus forecasts & recommendations in details.

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

[Sideshow Bob]

I think most people take some pleasure out of being right when analysts are wrong.....

[Arbroath]

Simply Wall St updated consensus from 3 analysts; $1.31.

Updated Shareclarity DCF $1.29

Hope that doesn't rain on anyone's parade.

I back my own research over the crap online or what often passes as “analyst” research.

Where have the analysts been with STU, SKT, NZME not to mention telling their clients to sell Majnfreight for about the last 5 years.

[winner69]

In fairness to them the Shareclarity number is a DCF value ....not a consensus or a target

Yes,based on assumptions but a more thorough analysis than just applying some multiples (the cheats DCF methodology)

STU's cash flows aren't that great......free cash flow averaged 19m over last 3 years .......and even though management said F21 cash flow was strong it was less than F20 .... hmmm .....and didn't forbar sat they expect the cash on hand being less at the end of this year.

So you can see how shareclarity could easily come up with $1.29 as a DCF Value ..... do need some pretty high growth assumptions over a period of time to get a $2.50 value ..... and I'll keep my model outputs to myself until I assess tha H1 cash flows

[Arbroath]

Shareclarity number a DCF value ....not a consensus or a target

Yes,based on assumptions but a more thorough analysis than just applying some multiples (the cheats DCF methodology)

STU's cash flows aren't that great......free cash flow averaged 19m over last 3 years .......and even though management said F21 cash flow was strong it was less than F20 .... hmmm .....and didn't forbar sat they expect the cash on hand being less at the end of this year.

So you can see how shareclarity could easily come up with $1.29 as a DCF Value ..... do need some pretty high growth assumptions over a period of time to get a $2.50 value ..... and I'll keep my model outputs to myself until I assess tha H1 cash flows


H1 FCF might not look that great as they signaled they built up stock levels and then Auckland lockdown impacted the infrastructure division. FY22 FCF likely to be better if there are no more interruptions and they deliver on the de-stocking in the second half. My instincts, subject to the normal caveats, are that H2 might be at least as good, and likely better than H1 and that they could deliver npat of $30m+ for the year which puts them on 7x at $1.50
Whether they are worth $2+ depends on how sustainable the operating environment is and how much fat they've sustainably stripped out of the cost base. Happy to hold and see if time is my friend here...

[RTM]

In fairness to them the Shareclarity number is a DCF value ....not a consensus or a target

Yes,based on assumptions but a more thorough analysis than just applying some multiples (the cheats DCF methodology)

STU's cash flows aren't that great......free cash flow averaged 19m over last 3 years .......and even though management said F21 cash flow was strong it was less than F20 .... hmmm .....and didn't forbar sat they expect the cash on hand being less at the end of this year.

So you can see how shareclarity could easily come up with $1.29 as a DCF Value ..... do need some pretty high growth assumptions over a period of time to get a $2.50 value ..... and I'll keep my model outputs to myself until I assess tha H1 cash flows

""We have carefully invested in high demand inventory using our strong 30 June
2021 cash position which we expect to rebuild in the second half of the
financial year as deferred income during the lockdowns is fully recovered...."

They have signaled that they have used the cash

[Muse]

""We have carefully invested in high demand inventory using our strong 30 June
2021 cash position which we expect to rebuild in the second half of the
financial year as deferred income during the lockdowns is fully recovered...."

They have signaled that they have used the cash

Aye - all that cash cps thats been referred to is now inventory per share! Thats fine - cant sell what you cant stock. But they will have bought less stock for the equivalent amount of cash given steel prices. That says to me the big arbitrage they got in prices might not be there in future results. And if steel prices fall, well, that can likewise take straight away from the bottom line. But at least volumes should be robust enough for a while yet.

[percy]

Aye - all that cash cps thats been referred to is now inventory per share! Thats fine - cant sell what you cant stock. But they will have bought less stock for the equivalent amount of cash given steel prices. That says to me the big arbitrage they got in prices might not be there in future results. And if steel prices fall, well, that can likewise take straight away from the bottom line. But at least volumes should be robust enough for a while yet.

And to think I thought with shipping issues,prices going up,having stock when others are out of stock, they would be making windfall profits,and another upgrade in January..lol.

[Muse]

And to think I thought with shipping issues,prices going up,having stock when others are out of stock, they would be making windfall profits,and another upgrade in January..lol.

There’s no doubt they are making windfall profits and the near term is quite good. It will be good to get some guidance for the YE (I dont have a feel for it). Im thinking the easy gain and pain comes from movement in steel prices as straight to the bottom line, as opposed to uplifts or falls in volumes.

No expert in steel prices. These caught my eye:

https://capital.com/amp/steel-price-to-ease-in-2022-as-rally-is-over

https://www.afr.com/world/asia/china-steel-demand-tipped-to-fall-as-construction-slows-20211214-p59hl5

[percy]

And to think I thought with shipping issues,prices going up,having stock when others are out of stock, they would be making windfall profits,and another upgrade in January..lol.


Looks to me STU are "well positioned," as I feel NZ faces much the same issues as our Australian cousins.
https://sendy.tarawera.co.nz/l/J6oLVth2f3f6IXNYvUBQEg/m1Zw6i892JM1b2onsGJ7srQA/RSs4pU7NHAzz192bf9wy763w

[macduffy]

Looks to me STU are "well positioned," as I feel NZ faces much the same issues as our Australian cousins.
https://sendy.tarawera.co.nz/l/J6oLVth2f3f6IXNYvUBQEg/m1Zw6i892JM1b2onsGJ7srQA/RSs4pU7NHAzz192bf9wy763w

Yes, it's a world-wide problem. I would think, though, that Australia is somewhat better placed with a more mature/diversified steel industry than NZ.

[iceman]

Looks to me STU are "well positioned," as I feel NZ faces much the same issues as our Australian cousins.
https://sendy.tarawera.co.nz/l/J6oLVth2f3f6IXNYvUBQEg/m1Zw6i892JM1b2onsGJ7srQA/RSs4pU7NHAzz192bf9wy763w

Sober reading and this is why I have been out of retailers, bar a very small number of HLG, for a while now. This has been on the horizon for a few months but I feel many people are under estimating what all these shortages and price increases may do to many companies.

[Rawz]

Sober reading and this is why I have been out of retailers, bar a very small number of HLG, for a while now. This has been on the horizon for a few months but I feel many people are under estimating what all these shortages and price increases may do to many companies.

Retail has actually been a nice home for money in 2021 (bar HLG) but yes I am increasingly thinking retail is no good for 2022

[bobestm]

What are people's thoughts on impact on STU due to the anticipated residential construction slowdown as a result of all the lending tightening?
Is STU exposed to residential construction, if so by how much?

[Muse]

What are people's thoughts on impact on STU due to the anticipated residential construction slowdown as a result of all the lending tightening?
Is STU exposed to residential construction, if so by how much?

According to recent pressos:
* Residential construction: 21% sales in FY21 (june 21 financial year), up from 15% in FY20
* Non residential construction: 26% FY21 / 24% FY20
* Infrastructure: 14% FY21 / 13% FY20
* Non food manufacturing: 19% fy21, 24% FY20
* Food manufacturing: 12% FY21 / 14% FY20
* Retail/wholesale: 8% FY21 10% FY20

Or even more summarised:
* 47% residential & commercial construction
* 14% infrastructure
* 31% manufacturing
* 8% merchants / other.

Some FY22 market outlook commentary from the November 2021 investor presentation
* residential expected to flatten due to expected interest rate rises & supply/demand imbalanced slowing reducing w/ borders closed
* commercial seeing positive uplift in consents & significant increase in tenders coming to the market
* infrastructure continuing to build due to significant under investment
* expanding manufacturing sector

[Shareguy]

Here is one of the first posts on sharetrader in 2005 which highlights what this company sp used to be, at one stage.


Up 20c so far today to 520. STU doubtless coat-tailing FBU to some degree.

After a break of five years I bought back into STU in September @ 452. Now showing a 29.2% gain + 15c final div.

[winner69]

Here is one of the first posts on sharetrader in 2005 which highlights what this company sp used to be, at one stage.

Could say we are on the verge of breaking a 15 year sustained down trend

I love being part of history

[Shareguy]

Love that winner69. Yes we are on the verge of something great. We will be rewarded and that graph is going to go up up up. Let’s revisit this post in a year. Closed $1.47

[Muse]

Some interesting stuff STU are releasing on metal price trends - just skimmed it, but good engagement on base drivers, I thought
https://steelandtube.co.nz/sites/default/files/Procurement%20Update_Nov%202021_v2.pdf

[X-men]

Sp should be at least $2 if compared with vulcan steel

[Beagle]

Could say we are on the verge of breaking a 15 year sustained down trend

I love being part of history

Woohoo...better get some more !

[X-men]

I am leading a commercial project and our building materials are on waiting list til next year april....

[X-men]

https://www.nzherald.co.nz/nz/plan-plan-plan-how-the-construction-industry-is-battling-covid-interruptions/MAOTCB5IALFZGVG22RCEIKZFMY/

Roofing materials...3 months waiting list

[Dassets]

I picked STU this year in the stock picking competition and will be repeating that. It is the only one of my picks to make a reappearance.

[Shareguy]

I have entered this year for the first time and also picked STU as my number one choice. I think STU will feature in a lot of sharetrader pics. Not so much with brokerage firms.

[X-men]

Resistance at $1.50..once broke.. would be sweet as

[Beagle]

I've picked up a few more for a turnaround recovery punt and have them as a dark horse pick in the share competition as well. Could potentially see significant market outperformance in 2022.

[X-men]

Nice Beagle! The people would follow your move!

[winner69]

I've picked up a few more for a turnaround recovery punt and have them as a dark horse pick in the share competition as well. Could potentially see significant market outperformance in 2022.

We'll be OK ..... things in the steel market are going so well at the moment it's hard to imagine that even STU management could stuff things up ..... but you never know so keep a close eye of those squiggly and MA lines on the chart.

[Shareguy]

Have caught up over Xmas with a family member that I have not seen all year. He works for a medium engineering business that uses S&T as main supplier. He had been very critical in the past about the lack of common stock items and poor service. It was pleasing to hear he was very positive and said it’s been a big turnaround with no real supply issues for the items they use. And the service has improved dramatically. Also said the prices have gone up but are passed on so no concerns from his point of view. Also commented that for the first time ever they have a year of work on thier books. All very positive.

[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….

One month and a bit, and the end of 2021 so let’s review.

We have Vulcan Steel at $10.29 up a respectable 23 percent from 23/11/21 and Stu at $1.55 up 19 percent also respectable.

A great increase for holders in a short timeframe. I have a high conviction on both stocks but strongly believe that Stu will take the lead soon and won’t stop.

Congrats to holders and let the ride continue.

[glennj]

STU had a very good calendar year 2021.
Looking at my bookkeeping report I see it had an IRR of 69.91% return of capital gain plus net dividends for the twelve month period. ( I don't hold Vulcan Steel)
[A couple of other what were initially "turn around stocks" did better for me over the twelve months. They were Bremworth at 80% IRR and Skellerup with a 77.43% IRR]

[winner69]

STU had a very good calendar year 2021.
Looking at my bookkeeping report I see it had an IRR of 69.91% return of capital gain plus net dividends for the twelve month period. ( I don't hold Vulcan Steel)
[A couple of other what were initially "turn around stocks" did better for me over the twelve months. They were Bremworth at 80% IRR and Skellerup with a 77.43% IRR]

Be good if another 70% gain this year eh

$2.50 plus would be good

[Beagle]

We'll be OK ..... things in the steel market are going so well at the moment it's hard to imagine that even STU management could stuff things up ..... but you never know so keep a close eye of those squiggly and MA lines on the chart.

You're on to it mate. I have learned from bitter experience, (AIR), that with cyclical companies its best to dance very close to the door ;)

[winner69]

You're on to it mate. I have learned from bitter experience, (AIR), that with cyclical companies its best to dance very close to the door ;)

I have hope that STU at current price has a degree of safety (for a while)

If priced on same EBITDA multiple as Vulcan STU would be about $2.70 but STU being STU we need to discount that. Like :

Less 15% because Vulcan is listed on ASx and has insto support over there
Less 20% because of doubt over STU management ever really getting their act together and delivering as they should

That gives a fair 'risk adjusted' price of about $2.00 ....so we have a bit of a margin of safety eh ....but watch the squiggly line on the chart closely

Be good if it ever got to 2 bucks ... almost a double bagger :t_up:

[Shareguy]

$2.50 easily achievable. When the market realises the multiples Vulcan listed at and trades at compared to STU the ride upwards will continue. And if that does not get you salivating have a look at the PE.

It’s all about timing and the time for STU to shine is NOW.

[winner69]

$2.50 easily achievable. When the market realises the multiples Vulcan listed at and trades at compared to STU the ride upwards will continue. And if that does not get you salivating have a look at the PE.

It’s all about timing and the time for STU to shine is NOW.

PE -- on a proforma tax adjusted basis about 7 times F22 earnings

and Vulcan on about 14

Easy to see why you salivating shareguy

But instead of just letting things happen management have to perform ..... hope they do

[winner69]

Share price up 66% in 2021 so do dog eh

Even better than mighty FBU which was only up 23%

Maybe 2022 is the year of the dogs ..... Metro was down 10% in 2021

[Shareguy]

Yes agree winner69 it’s no dog now. How many other shares on the NZX trade on a low pe like that. I’m so overweight STU and have been building up for some time. I’m normally very careful to have some sort of balance. However there is very few opportunities and you have got to back yourself. I just find it very hard not to buy more when the future looks so bright and all the research I do just screams…….a Steel.

[winner69]

Yes agree winner69 it’s no dog now. How many other shares on the NZX trade on a low pe like that. I’m so overweight STU and have been building up for some time. I’m normally very careful to have some sort of balance. However there is very few opportunities and you have got to back yourself. I just find it very hard not to buy more when the future looks so bright and all the research I do just screams…….a Steel.

Best thing going for us is that there is little that can go wrong --- everything is going their way

Even STU's management couldn't stuff this up

[Shareguy]

I don’t think there is much chance of that ….but you never no.

All the people in the industry I have spoken to have said good things. I’m expecting another upgrade and suggest once the half year result is out that will re rate. Mark has done a great job of reducing expenses so when sales increase like this the result is going to be fantastic. It’s not the old Stu with heaps of debt, it’s a company thats cleaned out the closet of skeletons, plenty of cash at year end (.15 cps) and orders flowing through at great margins. Was a $5.00 stock and the longer it stays at these levels the more it is at risk of a takeover. Certainly the large discount STU trades at to Vulcan steel multiples is not warranted in my opinion. $2.00 is not far away.

[Beagle]

Best thing going for us is that there is little that can go wrong --- everything is going their way

Even STU's management couldn't stuff this up

What about if they get another takeover offer from FBU at $1.90 ;)

[winner69]

s. ..................

Was a $5.00 stock and the longer it stays at these levels the more it is at risk of a takeover. Certainly the large discount STU trades at Vulcan steel multiples is not warranted in my opinion. $2.00 is not far away.

The chart from the other day

We've broken that long long downtrend ..... after 26 years ............heading back to 5 bucks

Nice to part of making history

[winner69]

What about if they get another takeover offer from FBU at $1.90 ;)

Susan would put on a brave face and say that under values the company .... and might get an offer of just over 2 bucks

I'd probably take that :)

[Shareguy]

What about if they get another takeover offer from FBU at $1.90 ;)

If Fbu did they would have to pay much more. On original 35 premium to closing price is $2.09 today. However on forecast EBIT that’s a much bigger number.
https://fletcherbuilding.com/news/fletcher-building-confirms-proposal-to-acquire-steel-and-tube/

[winner69]

If Fbu did they would have to pay much more. On original 35 premium to closing price is $2.09 today. However on forecast EBIT that’s a much bigger number.
https://fletcherbuilding.com/news/fletcher-building-confirms-proposal-to-acquire-steel-and-tube/

.... but at that time STU was sort of promising $40m EBIT ...... just doing a little better than now (but the $40m never eventuated as promised and has taken a few years to get there eh)

[Shareguy]

Stu confirmed its forecast 2019 ebit of $25m

https://www.nzherald.co.nz/business/steel-tube-receives-282-million-takeover-offer-from-fletcher-building/FWDKPXHV5N2JPZLGIP3G6CPBJQ/

[glennj]

If Fbu did they would have to pay much more. On original 35 premium to closing price is $2.09 today. However on forecast EBIT that’s a much bigger number.
https://fletcherbuilding.com/news/fletcher-building-confirms-proposal-to-acquire-steel-and-tube/

It is all very hypothetical but I'd be wanting more than $2.09 for my STU shares considering the recent upside momentum and continuing building boom.

[Shareguy]

Here’s some figures. Based on FY22 $50m EBIT which is achievable in my opinion. Based on FBU original multiples of 12.3 x EBIT = $615m cap =$3.70 per share.

So I will take closer to that please which is also more in line with Vulcan multiples..

[winner69]

Stu confirmed its forecast 2019 ebit of $25m

https://www.nzherald.co.nz/business/steel-tube-receives-282-million-takeover-offer-from-fletcher-building/FWDKPXHV5N2JPZLGIP3G6CPBJQ/

And a bit later STU said 'This lowers the original FY19 forecast EBIT from $25m to approximately $21m.' ... and F10 normalised seemed to end up $16m

[Poet]

Here’s some figures. Based on FY22 $50m EBIT which is achievable in my opinion. Based on FBU original multiples of 12.3 x EBIT = $615m cap =$3.70 per share.

So I will take closer to that please which is also more in line with Vulcan multiples..

Good points, but don't forget that STU was also carrying debt when FBU made that offer. No debt now.

[Balance]

Susan would put on a brave face and say that under values the company .... and might get an offer of just over 2 bucks

I'd probably take that :)

That’s what I thought with PGW - that I would have taken a takeover offer of $3.50 when the sp was around $2.70. Thank goodness it never happened as sp is now over $5.00 and yummy dividends every year!

I hope the same with STU.

[clearasmud]

That’s what I thought with PGW - that I would have taken a takeover offer of $3.50 when the sp was around $2.70. Thank goodness it never happened as sp is now over $5.00 and yummy dividends every year!

I hope the same with STU.
I'm quite excited about STU too.
After losing my shirt a couple of years ago I doubled my holding thanks to some good posts here and now am well in the green.
Lets hope Mark Malpass and the team really deliver this year!

[Beagle]

The way you guys are talking this thing is simply a license to print money. If it weren't for the fact that the ol wily hound knows that cyclical companies tend to trade at a very low PE of about 7 at the peak of the cycle I might be tempted to really jump in boots and all. Looks like a pretty good punt, (make hay while the sun shines), until the chart turns is how I would characterize this opportunity.

A very old nag that seems to be performing well on the current firm track conditions but what if the track turns a bit softer ? Could say the same about another company that sells shiny metal things, MHJ. Its all good when there's massive sector tailwinds but down the track when conditions change...

[Shareguy]

Beagle makes some good points. It is easy to get carried away and suggest anyone with doubts don’t invest it’s that’s simple.

I don’t view this as a cyclical short term opportunity. I worked in the industry for a long time including at STU and see this as a turnaround storey. The building industry has been boyant for years. What Mark has done has taken out large costs, simplified the business, changed the focus to margin and most importantly by all accounts placing value on staff.

Like Rak and Skt I have researched this company in detail and see great value. There is no justification for STU to trade at such low multiples compared to Vulcan. At every level I look at Stu is way way undervalued which is why I have backed the truck up and have a substantial holding, more than the CEO.

[winner69]

Beagle makes some good points. It is easy to get carried away and suggest anyone with doubts don’t invest it’s that’s simple.

I don’t view this as a cyclical short term opportunity. I worked in the industry for a long time including at STU and see this as a turnaround storey. The building industry has been boyant for years. What Mark has done has taken out large costs, simplified the business, changed the focus to margin and most importantly by all accounts placing value on staff.

Like Rak and Skt I have researched this company in detail and see great value. There is no justification for STU to trade at such low multiples compared to Vulcan. At every level I look at Stu is way way undervalued which is why I have backed the truck up and have a substantial holding, more than the CEO.

Fair enough

I might say ‘I have researched OCA in great detail and see great value. There is no justification for OCA to trade at such low multiples compared to Summerset’

Fact is that is how the market sees things ….sometimes it’s not fair is it

But one day both OCA and STU will be market darlings

[percy]

At times I think of MFT and EBO.MFT was "just another" trucking business.EBO was a "very simple" medical supply business.
Neither business had a moat.Any one could have set up a business in competition to them.
So why were they successful.?
MFT the answer was Bruce Plested and Neil Graham.
EBO the answer was Mark Waller and major shareholder Peter Krauss.
Are either of the above cyclical.?
I would guess you could say MFT is/was.
Yet my view is a well managed business will adapt to changing conditions.OK some years may be more profitable than others,but over a 5 year period the business will enjoy solid growth.Over 20 to 30 year incredible growth.
STU was a very good business ,that lost its way.It lost focus and grew fat and lazy.
Today it appears to be well directed/managed,with a good balance sheet, in a reliable sector.
Putting capital into fast moving stock items with the world's current logistic problems makes sense to me for two reasons.1] you only make a profit when you sell something,and 2] you gain market share [customers]when others are out of stock.
It looks to me management are on top of market/sector requirements,so I bought STU with the view of never selling.Should results warrant it I will add to my holding.

[winner69]

At this rate STU share price will be well over 2 bucks by Easter

So many things going for it almost a certainty

Think I'll buy more tomorrow ..... in case Mark can't contain himself and puts out another sales update

[winner69]

Best part of recent update was that volume up 11% pcp but sales up 22%. That's massive price increases. Good stuff.

All points to half year sales being in excess of $280m. Jeez, full year F21 was $480m so they are going to smash that out of the ball park.

STU, the stock you can't have too many of .... or whatever the saying is

[winner69]

...........

Putting capital into fast moving stock items with the world's current logistic problems makes sense to me for two reasons.1] you only make a profit when you sell something,and 2] you gain market share [customers]when others are out of stock...........

That's spot on percy

H121 EBIT margin was 3.4% of sales - that improved to 4.5% in H221

Pretty impressive and proof things going the right direction

But H222 (half just finished) the guidance of $22m EBIT is going to be an EBIT margin of about 8%

Things are looking better as time goes on

[winner69]

Big headlines and story in Herald Big Leap in KiwiRail's $100,000-plus earners fuel claim executive pay at the SOE 'out of control...... all rather dramatic

Had a look at STU numbers

in FY21 108 staff >$100k ,,,,,DOWN from 114 in FY20

Love it - doing heaps more with a little less

[Rawz]

At this rate STU share price will be well over 2 bucks by Easter

So many things going for it almost a certainty

Think I'll buy more tomorrow ..... in case Mark can't contain himself and puts out another sales update

Winner, you are into the races. Who wins race to $2?

Stu or MHJ?

[winner69]

Winner, you are into the races. Who wins race to $2?

Stu or MHJ?

STU ..... by a nose

But HMY will beat them both to 2 bucks

[Rawz]

STU ..... by a nose

But HMY will beat them both to 2 bucks

Lol.. well done

Go all three I say. Don’t mind who wins, as long as all of them place

[Beagle]

Fair enough

I might say ‘I have researched OCA in great detail and see great value. There is no justification for OCA to trade at such low multiples compared to Summerset’

Fact is that is how the market sees things ….sometimes it’s not fair is it

But one day both OCA and STU will be market darlings

Every dog has its day ;)

[Muse]

STU ..... by a nose

But HMY will beat them both to 2 bucks

HMY fecking better its at $1.97! Rawz and I will be seriously pissed if STU & MH got there first as something would have to go seriously wrong at hmy for that to happen

[Rawz]

HMY fecking better its at $1.97! Rawz and I will be seriously pissed if STU & MH got there first as something would have to go seriously wrong at hmy for that to happen

Don’t worry Moose. We both know HMY are only 2-3 weeks away from announcing record half year result and very likely an upgrade from their est full year $600m loan book and $90m revenue.

Let’s just say by 31 March:

HMY $2.80
MHJ $2.00
STU $1.99

[Beagle]

Don’t worry Moose. We both know HMY are only 2-3 weeks away from announcing record half year result and very likely an upgrade from their est full year $600m loan book and $90m revenue.

Let’s just say by 31 March:

HMY $2.80
MHJ $2.00
STU $1.99

How much is the trifecta paying ;)

[sb9]

Looks like all the banter here on ST has resulted in strong buying into STU…go you beauty..

[Beagle]

Put my paw up for a few more at the opening at $1.55 and we're off to the races :)

[RTM]

Looks like all the banter here on ST has resulted in strong buying into STU…go you beauty..

Yeah..its great the old FOMO eh !
Got my fill at 75 & 114. Not sure I'd be chasing them up further now. But I do hope the current punters are correct !

[winner69]

You know 2022 is going to be a great year for punters when MHJ WDT STU RAK IKE are top of the NZX leaderboard

[Rawz]

Put my paw up for a few more at the opening at $1.55 and we're off to the races :)

Good stuff Beagle. Drive this bad boy up- the trifecta will pay big!

[fastbike]

Yeah..its great the old FOMO eh !
Got my fill at 75 & 114. Not sure I'd be chasing them up further now. But I do hope the current punters are correct !

Yes, topped up at $1.06. Happy to put these in the bottom drawer for now,

[CraftyBeer]

Don’t worry Moose. We both know HMY are only 2-3 weeks away from announcing record half year result and very likely an upgrade from their est full year $600m loan book and $90m revenue.

Let’s just say by 31 March:

HMY $2.80
MHJ $2.00
STU $1.99

$2.05 would be a nice number - that's what I paid for them 20 years ago lol

[Shareguy]

If you look at all the available information including the last upgrade you will see that STU is way undervalued. World steel prices are increasing with massive increases due to supply issues. In NZ customers are getting in some cases 25 to 40 percent increases for the products they use. With increased demand the discounting is not needed. In a lot of cases it’s a case of “have you got the stock”

So we have a company that has cut expenses dramatically, has increased demand, less discounting. Higher prices per tonne/unit so margin and the “profit “ per tonne/item is increased.

I do agree however when a stock has gone up so much that it’s tempting to sell. My personal opinion is that there is plenty of juice in the tank and the share price is only part way through a huge uplift. I’m expecting further up grades and big increases in margin.

Will the brokers wake up and look at the demand side and compare STU to Vulcans recent listing. I’m betting there will be some big changes after 1/2 year announcement. Then again they might continue to play catch up as the share prices increases.

On saying all this taking a profit is a good thing and each to there own. However when you look at the figures why would you unless you need the money, as theres plenty of upside in my opinion. It was a $5.00 stock many years ago. It’s not worth that currently but when you analyse the information and the future prospects I see $3 as being a reasonable and fair price.

[Balance]

If you look at all the available information including the last upgrade you will see that STU is way undervalued.

Vulcan listing is one of the best things to have happened to STU share price - as you wrote, it puts the spotlight on the industry and on just how undervalued a turnaround STU is relative to VSL.

Powering on this morning towards $1.70 - mostly retail buying but then, STU has been a retail stock for quite a while now so the institutions will just keep playing catch up.

[Rawz]

$2.05 would be a nice number - that's what I paid for them 20 years ago lol

At this rate $2.05 by the end of the month!!

Everyone is buying, fomo?!!

Shareguy has made the case for $3 per share

STU is a special share right now.

Construction and finance great sectors for 2022. Retail was great for 2021. Rotate retail to the other two imo

[X-men]

https://www.nzherald.co.nz/business/power-list-nzs-seven-busiest-house-builders-ranked-by-number-of-places-completed-annually/XEX7SMHDJMOPKOJXYL7ZRKP4BM/

Steel materials increase 65%

[winner69]

https://www.nzherald.co.nz/business/power-list-nzs-seven-busiest-house-builders-ranked-by-number-of-places-completed-annually/XEX7SMHDJMOPKOJXYL7ZRKP4BM/


Steel materials increase 65%

Amazing little graphic that one …+65% wow

But STU don’t seem to be anywhere near that …volume up 11% and revenues up 22%.

Maths say on average prices up 10%

Suppose a lot more to it than this eh

T

[winner69]

Which would make the better headline when half year announced.... which one would excite the market more

Steel and Tube reports a 200% increase in half year earnings

or

Steel and Tube half year profit triples

[Shareguy]

Love it winner69. Triples already in the bag as per last upgrade, and I like that.

What about full year headline or will we not even get that far before we read

“Steel and Tube after a huge turn around receives takeover offer at $2.45 per share.

[SailorRob]

Hopefully can all see attached images.

STU vs MHJ from pre Covid 2020 and from late 2016. Unreal correlations.

What does this tell us?


13387

13388

[Rawz]

Hopefully can all see attached images.

STU vs MHJ from pre Covid 2020 and from late 2016. Unreal correlations.

What does this tell us?


13387

13388

Ah yes, the great share trader race to $2. STU and MHJ. Once unloved. Now market darlings. Who will win???

[winner69]

Seems gold/silver and steel go together (mhj and stu 5hat is)

[Shareguy]

Funny. I no who I’m betting on . But then again gold, silver and diamonds are sexier than steel…..

[sb9]

Hopefully can all see attached images.

STU vs MHJ from pre Covid 2020 and from late 2016. Unreal correlations.

What does this tell us?


13387

13388

Nice charts, thanks for laying them over.
Currently struggling hard to break through resistance at 1.70 mark.

[Balance]

Nice charts, thanks for laying them over.
Currently struggling hard to break through resistance at 1.70 mark.

As it did at $1.50 but when it did, it sailed through $1.60.

[Balance]

https://www.nzherald.co.nz/business/new-housing-consent-data-out-48522-houses-approved-smashes-all-records/DRIU43ISSUTAADNC3MCDLHZULA/

Stronger for longer.

Record housing consents issued to November 2021 year.

[BlackPeter]

https://www.nzherald.co.nz/business/new-housing-consent-data-out-48522-houses-approved-smashes-all-records/DRIU43ISSUTAADNC3MCDLHZULA/

Stronger for longer.

Record housing consents issued to November 2021 year.

Now we just need the materials and workforce to turn the approvals into houses, do we?

But anyway - all good for STU ...

[Shareguy]

Stu roofing division is struggling to keep up with demand. A real inflation play as the increases get passed on. Next update is going to be good, very good in fact.

[Shareguy]

Forbar have Steel and Tube as the highest dividend percentage this year at 10.5 percent gross yield.

[percy]

Forbar have Steel and Tube as the highest dividend percentage this year at 10.5 percent gross yield.

Funny,I have changed my mind,I now like Forbar....lol

[Muse]

Funny,I have changed my mind,I now like Forbar....lol

they do stick their necks out a bit with more proactive research on small & midcaps, recently, which i appreciate.

[Balance]

they do stick their necks out a bit with more proactive research on small & midcaps, recently, which i appreciate.

I do not have time for Forbar research but coverage of a stock with a ‘BUY’ recommendation from them is nevertheless positive - mainly because the stock can then be recommended by their advisors and can be included in their clients’ managed portfolios (whether discretionary, monitored and/or managed funds).

Can result in massive buying as Forbar manages tens of billions of dollars of their clients’ funds.

So next week will be very interesting when the broking & funds industry returns to work and portfolios are adjusted to reflect their 2022 investment strategy.

[Shareguy]

Yes next week will be interesting. Expecting Craig’s to release thier research note after the massive upgrade in December.

[Shareguy]

Spoke to Craigs. The Stu analyst has left so will be re allocated. Hard to resist at current price.

[Beagle]

Interesting price action today on no news ?

[Muse]

Interesting price action today on no news ?

Ive got 2 theories - both probably wrong.

After years and years of uncorrelated poor returns STU and other turnarounds (Rakon, MHJ, etc) have developed exceptionally high asset betas. After their huge runs they are left highly sensitive to market movements.

Fears over house prices. Dropping house prices a strong indicator of future residential construction. The later also a good future indicator on broader economic activity and non resi construction. I think the market waking up to the fact property prices have peaked.

Or some fat fingered trader named chuck cocked up his order and I am just a bit of a black hat.

[winner69]

Interesting price action today on no news ?

That'snot interesting mate --- bordering on disastrous

And to think it was 170 a week or so .... that's a 15% drop ....more than a theoretical 'correction'

Hope it's not shareguy selling

[percy]

That'snot interesting mate --- bordering on disastrous

And to think it was 170 a week or so .... that's a 15% drop ....more than a theoretical 'correction'

Hope it's not shareguy selling

I think it more of a case that Beagle has not been buying enough...lol..
Next announcement due on the 23rd of February.I am expecting it will be very positive.

[Balance]

https://www.nzherald.co.nz/nz/politics/auckland-transport-progress-on-light-rail-route-second-harbour-crossing-decision-in-2023/P2IB2IEQYX77JGY6LXVF4ZUBCE/

There is definitely concern out there that residential property prices have peaked and a lag effect on construction activity will emerge.

Residential construction activity will slow down from the current frantic activity from 2023 but infrastructure & commercial/industrial construction activities will be ramping up then.

The $14.6 billion light rail to link up Auckland per above is a good example.

[Shareguy]

Wow. Have just seen the price. No I am not the seller. I have confidence that Stu is going to be a great share and the result next month is going to be outstanding. $2.00 not far away. My valuation is over $3.00 so I’m all in and have already rung my broker.

[cymonger]

Seemed like algos trading very low prices back and forth between themselves to me. Hard to believe someone bought 3 dollars with of shares with $30 in brokerage. Some of these orders were two shares, 10 shares, 12 shares, etc.



$1.4843528-Jan-2022 13:41


$1.453228-Jan-2022 13:37


$1.447,05928-Jan-2022 13:32


$1.444,33228-Jan-2022 13:30


$1.454,94128-Jan-2022 13:30


$1.455928-Jan-2022 13:21


$1.44525,00028-Jan-2022 13:08


$1.43228-Jan-2022 13:05

[bobestm]

Those kind of trades have always puzzled me and suspect.
Do we know where to get details of such?
If these are algo trades they are very annoying and disruptive to ones investing process .. at least for me.

[BlackPeter]

Seemed like algos trading very low prices back and forth between themselves to me. Hard to believe someone bought 3 dollars with of shares with $30 in brokerage. Some of these orders were two shares, 10 shares, 12 shares, etc.



$1.4843528-Jan-2022 13:41


$1.453228-Jan-2022 13:37


$1.447,05928-Jan-2022 13:32


$1.444,33228-Jan-2022 13:30


$1.454,94128-Jan-2022 13:30


$1.455928-Jan-2022 13:21


$1.44525,00028-Jan-2022 13:08


$1.43228-Jan-2022 13:05


Sharesies? They pay (for small trades) 0.5% of the cost for brokerage, less for larger trades. No minimum fees.

https://www.sharesies.nz/pricing

[cymonger]

Sharesies? They pay (for small trades) 0.5% of the cost for brokerage, less for larger trades. No minimum fees.

https://www.sharesies.nz/pricing


That's definitely part of it. But it was happening long before Sharesies came on the scene. I know people often recommend the book "Flash Boys" around here. Completely changed the way I look at trading. You will NEVER beat the computer. It always gets to go first and then you get to pay a penny or two (or sometimes much) more.

[Shareguy]

My post from a while ago . If anything I’m even more bullish. Not long to wait till result… we will see.


If you look at all the available information including the last upgrade you will see that STU is way undervalued. World steel prices are increasing with massive increases due to supply issues. In NZ customers are getting in some cases 25 to 40 percent increases for the products they use. With increased demand the discounting is not needed. In a lot of cases it’s a case of “have you got the stock”

So we have a company that has cut expenses dramatically, has increased demand, less discounting. Higher prices per tonne/unit so margin and the “profit “ per tonne/item is increased.

I do agree however when a stock has gone up so much that it’s tempting to sell. My personal opinion is that there is plenty of juice in the tank and the share price is only part way through a huge uplift. I’m expecting further up grades and big increases in margin.

Will the brokers wake up and look at the demand side and compare STU to Vulcans recent listing. I’m betting there will be some big changes after 1/2 year announcement. Then again they might continue to play catch up as the share prices increases.

On saying all this taking a profit is a good thing and each to there own. However when you look at the figures why would you unless you need the money, as theres plenty of upside in my opinion. It was a $5.00 stock many years ago. It’s not worth that currently but when you analyse the information and the future prospects I see $3 as being a reasonable and fair price.

[winner69]

Mind you FBU share price been smashed the last week …..STU just following

[Shareguy]

Mind you FBU share price been smashed the last week …..STU just following

Agree the market in general has taken a hammering. Futures looks encouraging and Apple have had another stunning quarter so Monday might be a better day. Some good buying opportunity’s starting to show.

[nztx]

Sharesies? They pay (for small trades) 0.5% of the cost for brokerage, less for larger trades. No minimum fees.

https://www.sharesies.nz/pricing




Not guilty on those trades :)

but did have a bit of nibble later ..

[see weed]

Sharesies? They pay (for small trades) 0.5% of the cost for brokerage, less for larger trades. No minimum fees.

https://www.sharesies.nz/pricing
Correct me if I'm wrong. If I buy $15,000 worth of shares with ASB securities they charge me $30 brokerage at 0.2% fee. If I buy $15,000 of shares with Sharesies they will charge me $27 fee, is this correct?

[BlackPeter]

Correct me if I'm wrong. If I buy $15,000 worth of shares with ASB securities they charge me $30 brokerage at 0.2% fee. If I buy $15,000 of shares with Sharesies they will charge me $27 fee, is this correct?

Not a specialist for Sharesies, but yes, this is how I would interpret their conditions (as per link above).

No idea what ASB would charge you.

Obviously - its not quite comparable. If you buy shares with ASB you own the shares afterwards. Not quite sure whether it is so straight forward with sharesies (e.g. in terms of attending and voting on AGM's and similar). I would think they own the shares on your behalf, but didn't really drill into this hole ...).

Where Sharesies are clearly leading hands down is if you want to invest small amounts into the sharemarket (i.e. significantly less than $15k per parcel).

[BDL]

Sharesies 0.5% + 0.1% for trades above 3k = 0.6% compared to ASB 0.3% for trades 10k and over.

So Sharesies are good for small trades, not larger trades.

[BlackPeter]

Sharesies 0.5% + 0.1% for trades above 3k = 0.6% compared to ASB 0.3% for trades 10k and over.

So Sharesies are good for small trades, not larger trades.

Nice story ... never mind the facts.

0.5% for amounts up to $3k and 0.1% for amounts above $3k obviously do not add up to 0.6%;

But hey - why am I not surprised?

[Scrunch]

Sharesies 0.5% + 0.1% for trades above 3k = 0.6% compared to ASB 0.3% for trades 10k and over.

So Sharesies are good for small trades, not larger trades.

Unless you have belew ratecard, sharesies is also good for large trades.

Direct broking is $29.90 for the first $15k an 0.2% thereafter. A $100k trade would be $199.90 (the remaining $85k is $170 + $29.90)

Sharesies is $15 for the first $3k and 0.1% thereafter. A $100k trade would be $15 + $97 for a $112 total. If you wanted shares in your own name there is a $5 trx out fee.

[X-men]

Went down fast...goes up fast too

[X-men]

https://www.rnz.co.nz/news/business/460620/construction-material-shortages-price-hikes-plague-building-industry?fbclid=IwAR184cQfuZIrme7zy1atz5x8SACntEhE aC4L1CcatwKbcMVsItOBZDZ_T04

[nztx]

Went down fast...goes up fast too


sideways today :)

[sb9]

sideways today :)

Definitely looks like its up today (5c gain)

[nztx]

Definitely looks like its up today (5c gain)


looking at the longer range chart a few cents dont register as much :)

[Shareguy]

Looking forward to Thursday when Vulcan report. I’m picking a great result. Analysts and fund managers will be comparing the two companies when STU report in a few weeks. $2.00 not far away I’m thinking. A steel at current price ……we will see.

[Beagle]

Looking forward to Thursday when Vulcan report. I’m picking a great result. Analysts and fund managers will be comparing the two companies when STU report in a few weeks. $2.00 not far away I’m thinking. A steel at current price ……we will see.

I see what you did there :)

[dreamcatcher]

Last few months STU up........ Bluescope 26% down

[Muse]

Looking forward to Thursday when Vulcan report. I’m picking a great result. Analysts and fund managers will be comparing the two companies when STU report in a few weeks. $2.00 not far away I’m thinking. A steel at current price ……we will see.

Ah good man thanks for the reminder.
I love reporting season!

[winner69]

Looking forward to Thursday when Vulcan report. I’m picking a great result. Analysts and fund managers will be comparing the two companies when STU report in a few weeks. $2.00 not far away I’m thinking. A steel at current price ……we will see.

Wouldn't it be weird / funny if AIR got to $2.00 first

[nztx]

Wouldn't it be weird / funny if AIR got to $2.00 first


News flash today - that they've even brought back one of their retired birds from the desert
for the occasion :)

All that is needed now is for Robertson to be shown how to fly it .. what could possibly go wrong ? ;)

[Rawz]

Wouldn't it be weird / funny if AIR got to $2.00 first

The real race between MHJ and STU to 2 bucks is back on. MHJ making a big comeback

Amazing

[winner69]

Great half year report from Vulcan

STU will report good numbers as well but I can’t see them reporting the same sort of growth and margin improvement that Vulcan has just done.

Vulcan winning and STU just an also ran ……and when the buoyant market ‘normalises’ plain to see whose in the stronger market position

[Shareguy]

Stu is going to report a great half-year result. Given Vulcans upgrade for full year, will be interesting to see what Stu says. The question that is in my mind is “does Stu deserve the discount the market is saying currently it’s worth. I don’t think so and have a large position accordingly.

We will soon find out.

[winner69]

Vulcan Steel selling prices on average up 29% and Metals selling prices up 14% with Total Group up 23%. Gross margin improved 6.1% points YOY to 41.3% in 1H FY22

Be interesting what STU report but if previous update is an indication selling prices up no where near this and Vulcan Gross Margin at 41% something that STU can only look at with envy. (Think there is a bit of a difference how the two report Cost of Sales so GM % maybe not that comparable)

STU share price will rise on the back of Vulcan's rise but the market will be rating Vulcan much higher because of its better performance and a resut of it being an 'Aussie' company

[Shareguy]

Fletchers reporting tomorrow. I’m picking will be a good result above expectations. After the great result and further upgrade from Vulcan will be interesting to see how the Fbu steel division has gone.

[winner69]

Fletchers reporting tomorrow. I’m picking will be a good result above expectations. After the great result and further upgrade from Vulcan will be interesting to see how the Fbu steel division has gone.

How did the Fletcher steel business go shareguy

I haven't got past the Important Information page yet

[Balance]

How did the Fletcher steel business go shareguy

I haven't got past the Important Information page yet

Snippets from FBU's Distribution Business :

Revenue up 9% for HY, up 25% 2Q21 vs 2Q22: strong civil sectors driving Steel and Pipes sales; solid finishing trades benefiting from high product demand and targeted market share gains.

➔ EBIT 6% lower for HY due to 1Q lockdown: 2Q very strong bounce- back. Strong HY contribution from Steel; focus on price governance, operating efficiencies and sales mix to offset higher raw material and freight costs

[Shareguy]

Snippets from FBU's Distribution Business :

Revenue up 9% for HY, up 25% 2Q21 vs 2Q22: strong civil sectors driving Steel and Pipes sales; solid finishing trades benefiting from high product demand and targeted market share gains.

➔ EBIT 6% lower for HY due to 1Q lockdown: 2Q very strong bounce- back. Strong HY contribution from Steel; focus on price governance, operating efficiencies and sales mix to offset higher raw material and freight costs

Balance has summed it up. They used to split the divisions with a lot more detail. I see Forbar saying Stu at 8.4 forward pe on latest FBU note against FBU at 12. Vulcan at 11.6. Stu has cash in the bank at last report of $35m. Some of that has been used in inventory purchase but then again sales are strong so will be interesting to see cash generation and how much cash they have.

Either way the market is currently “Incorrectly” in my opinion pricing STU at a huge discount to both these companies. And not giving credit for the $.15 cents per share of cash they had at year end. I think next week when they report the market will take note. We will soon see.

[Shareguy]

Craigs have finally put out a research note and surprise some big changes.

Now saying net profit from $18.7 to $29.6m increase of 58 percent. 12.5 cps divi which is 8.1 gross yield on a low pe of 8.6.

From latest note


“Steeling the show”
Reuters Bloomberg
STU.NZ STU.NZ
Ticker Exchange
STU.NZ NZC
1.54 1.58
1H22 earnings expected to be at top end of guidance
Ahead of delivering its 1H22 result on Wed 23-Feb-22 we update our HY forecasts, drawing on both management commentary and what has been observed in the construction sector over recent months. In Dec-21 STU upgraded its earnings guidance for 1H22 on the back of strong trading conditions, from an EBIT above $17m in 1H22 vs. $8.9m (normalised $7.6m) in the pcp, to an EBIT between $20m and $22m. STU's 1H22 EBITDA has been guided to between $30m and $32m vs a normalised 1H21 EBITDA of $16.8m. We update our forecasts to account for the expected strong growth in sales volume and price, accompanied by operating margin uplift and a favourable market outlook. We raise our target price to $1.58 (prev. $1.35), and with shares trading at $1.54, we retain our Neutral recommendation.
2H22 outlook robust, balance sheet to remain strong
Whilst the company has not provided guidance for 2H22 due to COVID uncertainty, we expect STU to deliver a strong second half result, given 1) a strong rebound in sales post the Aug/Sep-21 COVID lockdowns (revenue up c.47% in Oct-21 on pcp and up 16% on pre-lockdown level); 2) a secure pipeline of work and margin upside through inventory investment; 3) favourable market conditions with significant consent/capacity surplus and building backlog; and 4) supply tightness unlikely to ease in the next 12 months due to ongoing supply chain issues. We upgrade our 2H22 EBIT estimates to $25m and EBITDA to $35m, based on our estimated lockdown impact of c.$20-30m on revenue or $1-2m on EBIT in Aug/Sep-21, and 2H22 EBIT margin estimate of 8.5% (1H22e 7.7%). 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 increased capital management activities.
Full year forecast changes reflect positive outlook
We revise our FY22/23E EBIT forecasts up to $47m (prev. $32m) and to $36m (prev. $31m). STU has seen a lift in its earnings base having benefitted from the following tailwinds: 1) NZ construction "super-cycle"; 2) supply demand balance tightness has reduced competition; 3) conclusion of a successful cost management change program and operating efficiencies expected to stick; and 4) inflationary environment. Whilst the macro outlook is uncertain, regarding ongoing COVID disruption, rising interest rates and inflation to potentially impact activity levels, we see STU as well-placed to achieve a higher than normal level of earnings over the next 6-1

Reporting this Wednesday. $2.00 here we come….

[winner69]

Hey shareguy, those guys at Craigs tell good stories eh

Not as good as the Forbar guys and gals though

Hope Wed is a good day though

[Shareguy]

Hey shareguy, those guys at Craigs tell good stories eh

Not as good as the Forbar guys and gals though

Hope Wed is a good day though

Your so right Winner. Just playing catch up. At least Craig’s are finally positive I guess.

[Arbroath]

Craigs have finally put out a research note and surprise some big changes.

Now saying net profit from $18.7 to $29.6m increase of 58 percent. 12.5 cps divi which is 8.1 gross yield on a low pe of 8.6.

From latest note


“Steeling the show”
Reuters Bloomberg
STU.NZ STU.NZ
Ticker Exchange
STU.NZ NZC
1.54 1.58
1H22 earnings expected to be at top end of guidance
Ahead of delivering its 1H22 result on Wed 23-Feb-22 we update our HY forecasts, drawing on both management commentary and what has been observed in the construction sector over recent months. In Dec-21 STU upgraded its earnings guidance for 1H22 on the back of strong trading conditions, from an EBIT above $17m in 1H22 vs. $8.9m (normalised $7.6m) in the pcp, to an EBIT between $20m and $22m. STU's 1H22 EBITDA has been guided to between $30m and $32m vs a normalised 1H21 EBITDA of $16.8m. We update our forecasts to account for the expected strong growth in sales volume and price, accompanied by operating margin uplift and a favourable market outlook. We raise our target price to $1.58 (prev. $1.35), and with shares trading at $1.54, we retain our Neutral recommendation.
2H22 outlook robust, balance sheet to remain strong
Whilst the company has not provided guidance for 2H22 due to COVID uncertainty, we expect STU to deliver a strong second half result, given 1) a strong rebound in sales post the Aug/Sep-21 COVID lockdowns (revenue up c.47% in Oct-21 on pcp and up 16% on pre-lockdown level); 2) a secure pipeline of work and margin upside through inventory investment; 3) favourable market conditions with significant consent/capacity surplus and building backlog; and 4) supply tightness unlikely to ease in the next 12 months due to ongoing supply chain issues. We upgrade our 2H22 EBIT estimates to $25m and EBITDA to $35m, based on our estimated lockdown impact of c.$20-30m on revenue or $1-2m on EBIT in Aug/Sep-21, and 2H22 EBIT margin estimate of 8.5% (1H22e 7.7%). 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 increased capital management activities.
Full year forecast changes reflect positive outlook
We revise our FY22/23E EBIT forecasts up to $47m (prev. $32m) and to $36m (prev. $31m). STU has seen a lift in its earnings base having benefitted from the following tailwinds: 1) NZ construction "super-cycle"; 2) supply demand balance tightness has reduced competition; 3) conclusion of a successful cost management change program and operating efficiencies expected to stick; and 4) inflationary environment. Whilst the macro outlook is uncertain, regarding ongoing COVID disruption, rising interest rates and inflation to potentially impact activity levels, we see STU as well-placed to achieve a higher than normal level of earnings over the next 6-1

Reporting this Wednesday. $2.00 here we come….

Useless research really as not timely. The company told the market in December all it needed to know and now Craig’s move their price up to the market price and maintain neutral.

This is still a cyclical so if it sees $2.00 then the smart money will at least be reducing. Easy money has been made on the move from 70c-$1.60.

[Shareguy]

Yes Arbroath it’s a bit late alright and very typical of a lot of reports these days. Analysts don’t stick there head out much. Craigs kind of had to report something as there last note was a joke. Good for those who did not do there research and I’m sure comforting to some.

Cyclical yes. This level of demand is going to keep going for some time in my opinion …. Years. There’s been a lot of money made already so nothing wrong with taking a profit and anyone who thinks it’s peaked should sell.

I’m thinking there is a lot more to come yet. And while I await, will enjoy the handsome divi of over 8 percent gross based on current price. Will be one of the best on the NZX, no doubts.

[winner69]

Vulcan share price was over $10 leadng up to that amazing profit announcement and upgraded full year guidance

Share price $9.90 now - could say includes the 27 cent divie - so really $9.63

Hope STU share price does better than this post a stupendous profit announcement and huge full year profit upgrade -- follow Vulcan and we will never see 2 bucks for STU

[Shareguy]

Vulcan share price was over $10 leadng up to that amazing profit announcement and upgraded full year guidance

Share price $9.90 now - could say includes the 27 cent divie - so really $9.63

Hope STU share price does better than this post a stupendous profit announcement and huge full year profit upgrade -- follow Vulcan and we will never see 2 bucks for STU

Given what’s happening with COVID and in Russia with futures looking negative would not be surprised to see a muted response Tom. The whole market is down though.
Very confident that $2 not far away and have backed myself accordingly. Not long to wait…

[Shareguy]

Caught up this week with a small competitor of STU. They are having record month after record month and see this as lasting for years. He did say that the freight rates and the problems with shipping are not getting any better and for a small company they don’t have the cash like steel and tube does to take advantage and bulk purchase.

It’s an inflation hedge as the costs are passed on. He said that they are increasing there prices with virtually every shipment and customers are accepting as they don’t have much choice. These high prices are here to stay. His biggest issue was having enough staff to keep up and service the demand.