PDA

View Full Version : Skellerup (SKL) Fundamentals



Pages : [1] 2 3 4 5 6

Lizard
26-09-2006, 01:36 PM
New thread to separate from the chart view.

One thing worth noting re SKL fundamentals is the comment in the Chairman's notes that states "...its (the Industrial division) EBITDA is anticipated to increase to approximately 60% of group EBITDA in the 2007 year".

This statement is significant. Last year, agri provided $16m EBITDA and industrial $17m. Now, unless agri is shrinking, this is a substantial change. Based on agri remaining constant, a 60% contribution from industrial would indicate EBITDA of $40m - a $7m or 21% increase on prior year. A small amount of growth in agri to $16.5m would indicate EBITDA of $41.3m, or a 25% increase.

While interest expense is likely to increase, an estimated increase in interest cost of $2.5m would still see an increase in NPAT of $3 - $4m, taking NPAT to $16.4-$17.4m. Allowing for some dilution from the DRP, this would put them on a forward P/E of 8.8 - 9.3 at current share price of $1.44.

Lizard
27-09-2006, 09:27 AM
It always seems that the number of responses is inversely proportional to the time spent researching a post. Before I go off for an extended sulk, I shall give myself a response.

1. Is the company being unrealistic in their figure of 60% EBITDA from industrial? Possibly. But last year industrial had organic growth of 16% ($11m revenue). The remaining $24m revenue increase came from acquisitions. However, the major acquisition, Gulf Rubber, was included for only 5 months of operations. I estimate that Gulf Rubber should therefore contribute at least a further $20m to revenue for this year. An additional 16% organic increase would bring industrial revenue to $140m. Using the same EBITDA margin as for 2006 would give industrial an EBITDA contribution of $23m - a $6m increase over 2006 (c.f. the $7m calculated from the Chairman's comments).

2. Why aren't analysts calling this? Analysts appear to me to be low-balling either the revenue projections or margins or both. Reports I have seen have given revenue of $186 - $189m, c.f. my calculation giving $195m. This means they can produce a result which shows a conservative NPAT growth in line with past years.

3. How risky is this? Very. Forex and raw material prices can swing things quite markedly. Comments at this afternoons AGM should give some better guidance, so safer to wait .

BRICKS
27-09-2006, 10:29 AM
quote:Originally posted by Lizard

It always seems that the number of responses is inversely proportional to the time spent researching a post. Before I go off for an extended sulk, I shall give myself a response.

1. Is the company being unrealistic in their figure of 60% EBITDA from industrial? Possibly. But last year industrial had organic growth of 16% ($11m revenue). The remaining $24m revenue increase came from acquisitions. However, the major acquisition, Gulf Rubber, was included for only 5 months of operations. I estimate that Gulf Rubber should therefore contribute at least a further $20m to revenue for this year. An additional 16% organic increase would bring industrial revenue to $140m. Using the same EBITDA margin as for 2006 would give industrial an EBITDA contribution of $23m - a $6m increase over 2006 (c.f. the $7m calculated from the Chairman's comments).

2. Why aren't analysts calling this? Analysts appear to me to be low-balling either the revenue projections or margins or both. Reports I have seen have given revenue of $186 - $189m, c.f. my calculation giving $195m. This means they can produce a result which shows a conservative NPAT growth in line with past years.

3. How risky is this? Very. Forex and raw material prices can swing things quite markedly. Comments at this afternoons AGM should give some better guidance, so safer to wait .




OK, LIZ the true story is every one looks at it and NO one BUYS it such a boring stock is a great candidate fore TAKEOVER.. [8D]

I.T.Ancient
27-09-2006, 01:53 PM
I held this for sometime, and got out for frankly psychological reasons. Far from being boring, I felt that management had an appetite for risk which was out of step with the sort of business that this is. They also seem to be hoping that macroeconomic conditions move in their favour. I am watching and if they start to demonstrate that they can actually produce consistently improving results, then I'll be onboard.

Snow Leopard
28-09-2006, 09:20 AM
What are the actual details of this reported $4m hit when currency cover runs out?

Lizard
29-09-2006, 05:46 AM
Hi PT. I'm a bit surprised at the size of that! From memory, I thought the cheap currency cover fell away more gradually and ran out completely in early 2007. An amount of that size off the bottom line certainly puts a dent in my analysis. Seems the company is forecasting to still grow NPAT, despite the forex hit, but only by an amount similar to last year.

Still think SKL will work out as an investment, but less enthused than I was.

Lizard
19-10-2006, 04:46 PM
SKL looking good today with close at $1.60 and a dearth of sellers. Has also paid a 5cps dividend since my post of a few weeks ago.

In true forum style, I should now point out (after the fact) that I bought more at $1.46 the day after my initial post... ;)

...and am about to go spend the dividend on patagonian toothfish with miso sauce for mothership's belated birthday celebrations!

mothership
19-10-2006, 05:10 PM
Bless you my child - I was not really looking forward to the KFC

stephen
19-10-2006, 05:26 PM
Lizard, how do you feel about their debt levels? I was initially interested in SKL, with their high ROE and reasonable dividend, but that ROE is really the result of some substantial leverage. This leaves me wondering how they would do in a bad year.

Lizard
19-10-2006, 05:39 PM
The ROA still looks good though. So debt pays off. But still need to see how that looks without the hedges...so I am non-committal [8)]

(DRP is a good move in that regard though)

Happy Camper
19-10-2006, 08:21 PM
This Happy Camper is very pleased with the recent run up in the share price.

I calculate that around 2% of the company has changed hands in the past month. I would be keen to have someone with access to raw data confirm
a) my crude 2% calculation
b) the normal range of %age churn per month for SKL over the past year or so

Cheers

Base Trader
19-10-2006, 08:28 PM
I have held SKL (SKX) for 2 years now on the basis it has been undervalued. However, I am not sure what has changed to increase the price. Nothing much has changed except that the business model is proving robust with good consistency in earnings.

Maybe there is an undercurrent or whiff of a takeover in this price ramp up. But I would not expect earnings to significantly increase (nor decrease) so not sure what is happening here.

rmbbrave
19-10-2006, 11:07 PM
Supposedly it has quite an open register so it would be quite easy to takeover should someone want to.

Deev8
20-10-2006, 02:08 PM
quote:Originally posted by Base Trader

I have held SKL (SKX) for 2 years now on the basis it has been undervalued. However, I am not sure what has changed to increase the price. Nothing much has changed except that the business model is proving robust with good consistency in earnings.

If you have thought that the company was undervalued for the past couple of years, perhaps other investors have come to the same conclusion - and pushed up the price. That was my reason for buying in August.

Happy Camper
20-10-2006, 08:23 PM
This Happy Camper considers that at $1-60 this share is fully valued. Having said that, private equity players have been confounding me of late with the premiums they have been paying when acquiring quality stocks.

SKL still deliver a respectable div yield at these prices, so this Happy Camper intends to hold until the SSH picture becomes clearer - I anticipate that will be later this year or early next.

Cheers

rmbbrave
28-11-2006, 12:25 PM
http://www.stuff.co.nz/stuff/0,2106,3880555a13,00.html

Skellerup sets $500m target
28 November 2006
By ALAN WOOD

Skellerup Industries has set itself an ambitious $500 million sales target over the next five years with acquisitions of non-mature firms a key way of driving that growth.


Skellerup's twin Christchurch-Auckland management teams have also upped the company's export drive, aiming to increase international sales to 60 per cent of revenue in the next 12 months.

"That could well expand to upward of 80 per cent in the next five years when we'd like to be a $500 million sales company," Christchurch-based chief operating officer Mike McKessar said.

The rubber and polymer product maker was building on revenues of $122 million in 2005 and $159 million in 2006 toward $190 million to $200 million in 2007. "Everybody considers us a gumboot-manufacturing company, but that's just $10 million (annual revenues), less than 5 per cent of our business."

Skellerup, a top-50 listed company, is part of the annual New Zealand Trade and Enterprise Export Awards, to be held in Auckland on Thursday. There are seven sector-based awards.

The company had a target to improve on the June 30, 2006, $13.4 million net profit by at least 7 per cent. This required more work, considering it had benefited from strong currency hedging positions till recently. It wanted to compound that 7 per cent growth each successive year in the next five years.

Mr McKessar said the export strategy was based on organic growth and the acquisition of businesses or products closely aligned to its existing core businesses.

AdvertisementAdvertisementWith bank debt of about $94 million, funding of larger acquisitions would require raising capital.

Of Skellerup's 950 staff, about 260 are in Christchurch, with 150 in China based mainly at a new manufacturing plant about four hours north of Shanghai. There are 40 in the United States, 30 in Britain and 100 in Australia.

Typical of the export growth strategy, research and development staff were close to completing a firefighter's boot to meet specifications from several countries. "This market alone is worth around $100 million annually ... We know we've got a good price position in terms of where we're at with our Chinese manufacturing facility," Mr McKessar said.

Skellerup's Shanghai facility has enabled it to remain competitive in the manufacture of various products, including gumboots and vacuum pumps.

The acquisition of Australian company Deks in 2003 made Skellerup one of the largest producers of the rubber components of roof flashings in the world, he said. In the 2007 year its revenues would hit about $18.5 million.

Technical rubber product maker Gulf Rubber, bought for $32 million in January, had targeted revenues of $35 million.

Mr McKessar said the buoyant mining resources market in Australia had driven up demand for Skellerup's rubber components. It was the third largest manufacturer of dairy industry-related rubberware in the world.

Lizard
29-11-2006, 07:54 AM
While I think SKL is great for the longer term, I am a little concerned about the potential impact of USD weakness on the profit result. Taking into account that they were working on an exchange rate of 0.60 when they gave their half year result (outlook for NPAT growth similar to previous year). Also, they said at the time that the expiry of lower rate hedges was reducing profit by around $4m, so currency effects can be quite large for them. I have reduced at $1.62.

Scrunch
04-12-2006, 09:35 PM
If anything, the short-term will provide better #'s than long-term. The annual report notes that the FX contracts as at 30 June 2006 had a fair value of $6.3M but a carrying value of $0. This gives them the choice of selling more cheaply than non-hedged competitors or having a wider profit margin on these imported sales. Both of these options are favourable short-term.

Longer-term there appears to be less currency risk, so the roll-off of these favourable hedging positions isn't such a big issue.
a) High NZD = Cheaper imports but profits on China-foreign & AUD sales convert less favourably
b) Low NZD = More expensive profits but the 50%+ of sales outside NZ convert at a better rate hence more revenue and NZD profit.

Disc - shareholder

Flying Goat
16-12-2006, 07:07 PM
Does anyone know why the SP has taken a dive over the last few days while the rest of the market is bull running? Just scouring the top 50 for a good long term value share as I am reducing my Ryman holdings quite a bit (reckon RYM SP is getting way ahead of itself). I used to own Skellerup and am thinking of getting back in because at 1.40 this to me looks good in terms of low pe, yet reasonably good growth prospects. Anyway, back to my question... anyone know why all the enthusiam that carried SKL up over 1.60 has faded away, just want to be sure I am not missing some vital piece of info before getting back in...!

FG

Lizard
17-12-2006, 09:03 AM
AMP Capital investors have been selling down.

I'd be inclined to wait and review HY results and comments before getting in. I think the short term positive impact of the currency hedges is stronger than I initially assumed. That may sound good, but longer term it is a constraint on profit growth as growth is offset by loss of hedges. That is probably why SKL's growth rate has appeared low, to date and may continue to appear weak for another 18 months.

Without better fundamental data, I would at least wait for a technical buy signal.

I'm not finding much to invest in here in NZ either. Every time I think I've had a great idea, it seems to unravel a few months later!

Lizard
18-12-2006, 04:59 PM
Seems like Forbar have downgraded their profit forecasts too - largely due to currency impact, but also some indications of tougher markets.

I've heard it said that brokers have trouble getting SKL management to tell them much about what is going on, although I get the impression that Forbar has a slightly better relationship with them. I therfore tend to take more notice of their views on SKL.

Flying Goat
18-12-2006, 05:15 PM
quote:Originally posted by Lizard

Seems like Forbar have downgraded their profit forecasts too - largely due to currency impact, but also some indications of tougher markets.

I've heard it said that brokers have trouble getting SKL management to tell them much about what is going on, although I get the impression that Forbar has a slightly better relationship with them. I therfore tend to take more notice of their views on SKL.


Thanks for the updates Liz, went for MHI instead in the end becuase I think Michael's margin pressures are more of a temporary nature and that things in Canada will look good soon. Apparently his daughter is a chip off the old block and doing an excellent job of planning and store roll-out up there. Sales looking better over the last quarter too, so am happy enough to get into MHI at 6.90 today and 6.85 on Friday but, wrong thread...! As for SKL will keep watching... and trying to learn a bit more about their different markets first...

FG

Flying Goat
20-12-2006, 01:52 PM
quote:Originally posted by Lizard



Without better fundamental data, I would at least wait for a technical buy signal.

I'm not finding much to invest in here in NZ either. Every time I think I've had a great idea, it seems to unravel a few months later!


Good call Lizard, luckily I took your advice and managed to avoid buying before today's news :) also bailing out of the MHI idea now after some further research and reconsideration... reckon that my spare cash will find its way over the ditch to add to existing / new Aussie small cap growth stocks over there, which I reckon there are an abundance of still at good prices. Think stocks look cheaper there relative to here at the mo.

Thanks again:)

FG

winner69
20-12-2006, 06:48 PM
quote:Originally posted by Scrunch

If anything, the short-term will provide better #'s than long-term. The annual report notes that the FX contracts as at 30 June 2006 had a fair value of $6.3M but a carrying value of $0. This gives them the choice of selling more cheaply than non-hedged competitors or having a wider profit margin on these imported sales. Both of these options are favourable short-term.

Longer-term there appears to be less currency risk, so the roll-off of these favourable hedging positions isn't such a big issue.
a) High NZD = Cheaper imports but profits on China-foreign & AUD sales convert less favourably
b) Low NZD = More expensive profits but the 50%+ of sales outside NZ convert at a better rate hence more revenue and NZD profit.

Disc - shareholder


Still think along these lines?

Base Trader
20-12-2006, 10:15 PM
The problem is that although their business maybe more in balance from an FX perspective fundamentally. SKL will still be without the additional P&L from hedging positions. Everyone has assumed that SKL had an effective FX hedge.

The fact that SKL took the position on 4 years ago when the business was vastly different would indicate that the hedge may not be as effective as when put in place.

metro
21-12-2006, 06:44 AM
From NZ Herald website:

Skellerup issues profit warning
New 7:30AM Thursday December 21, 2006

Rural equipment maker Skellerup Holdings has warned that its interim net profit after tax will be around 14 per cent below last year.

Skellerup said it was being hit by the strong dollar, which continued to trade at around US69c.

It said net profit for the half year to December 31 would be lower, but its earnings before interest, tax, depreciation and amortisation was likely to be above last year's by around 13 per cent.

Lizard
21-12-2006, 07:29 AM
For the record (because I don't think it was in the release to the NZX), management said on Morning Report that each 1c movement in the exchange rate impacts revenue by around $400k. Seems that impact must fall pretty much straight through to the bottom line from the size of the downgrade.

Scrunch
21-12-2006, 11:42 AM
Quite a disappointing profit update, and also light on detail. On the importation side of the business a high dollar should be favourable. It must therefore be either exporting elements of the business, foreign subsidaries converting into NZD that cause the downgrade or their FX hedges reducing in value and them now sourcing stock at the same prices as competitors.

Earlier posts indicated that the reduced revenue rolled through to the bottom line, indicating exports not foreign sub's.

If they now have an exporters exposure to the NZD, then the future predicted fall in the NZD could make this a buying opportunity.

But what I don't understand is that I thought they built a factory in China which produced a lot of their stuff, rather than producing in NZ and exporting. Still more work to understand this one, so no wonder some opt to avoid.

Lizard
21-08-2007, 09:43 AM
Thanks to the company for directing me to the detailed result, available here (http://www.irg.co.nz/announcements/pdf/152258.pdf).

For more details, including the analyst presentation, view the attachments to this (http://www.irg.co.nz/corporate/SKL/newsopen_dyn.php?menu=SKL&header=n&a=152258:SKL)

(If there is any problems with direct access to these links, go to the skellerup web-site (http://www.skellerupholdings.co.nz/) and access from there)

Lizard
21-08-2007, 10:23 AM
For continuity, just transferring over my 30 June 07 post from the SKL Chart (http://www.sharetrader.co.nz/showthread.php?t=666&page=6) thread:


Yes, can see where you are coming from there Winner69. And price fall suggests something going on - perhaps they are putting a cap raising in motion and the potential buyers trying to get maximum value for money? Or just anticipation that a bad result would not have got any better in recent weeks with strong NZD and market anticipates dividend likely to be slashed?

I would have thought they were a good candidate for a "recovery" stock. The forecast for FY gives underlying second half down to $4.2m NPAT (from $4.8m in first half), but further NZD strength can probably be blamed. I don't like the look of the balance sheet (especially adding in $19.6m paid for Tumedei, $16m write-downs and cash expenses for restructuring and $2.6m approx net dividend payment (after accounting for DRP). But EBITDA must be up close to $20m for the FY which should cover interest by around 3x?

The balance sheet might be helped (fixed?) by proposed divestment of the agri business ($50-60m?). Failing that, since their underlying businesses appear sound, with rising revenues and supplying strong markets in agri, mining and construction off an increasingly diverse geographical base, I would have thought they would have little difficulty raising capital. It doesn't look to me like a company that is about to collapse.

Suppose they issued 25m shares at 80cps to raise $20m, they'd still be on a FY08 P/E of under 10 if their 2008 forecast of $12.5m NPAT is correct. And given hedging and interest swaps, surely they have a good part of their variables covered in forecasting that?

Above comments still look about right. Their forecast for 2008 is based on no divestments though. But they have $55k of short term debt. Either divestments or capital raising are required. It would seem to me that they have a good chance of success, unless market conditions worsen. Still risky until they actually complete. My current valuation is $1.19.

kura
22-08-2007, 11:19 AM
Looks like someone else tends to agree with your valuation Lizard, has climbed up nicely in the past few days

Lizard
22-08-2007, 12:24 PM
Looks a bit better. Though I think we probably need a close above $1.10 before Phaedrus would consider breaking out the charts. Even then, a TA probably wouldn't be rushing in considering SKL's long term record.

From a FA perspective, I wouldn't want to underplay the risks. A nasty surprise could topple something with this much debt. Personally, I think that is unlikely at this point. I also think that now that the currency/hedging situation is no longer a hidden underlying factor in their NPAT, it should be possible to see steady profit growth emerge. I have been watching SKL for several years and have been a holder of various sized parcels - I am hopeful that they have finally reached the turning point. Though perhaps 6 months of consolidation until they have finished shoring up the balance sheet and proved up their forecast?

Lizard
29-10-2008, 04:16 PM
This is silly - market rallies and SKL holds their agm, confirms guidance for increased NPAT of $13.4m and the price falls?

Not many shares I've seen with P/E of 8.5, gross yield of 10.7% (at 80cps) and yet predicting profit growth in current conditions.

SKL have been doing alot right in the background, belied by the share price, although with 6cps divs, the rights issue has still been profitable for holders this year.

Deev8
29-10-2008, 05:19 PM
Not many shares I've seen with P/E of 8.5, gross yield of 10.7% (at 80cps) and yet predicting profit growth in current conditions.The problem is that hardly anyone puts any faith in earnings guidance from any company at the moment. Too many companies, in too many markets have been saying 'Oops, we got it wrong'.

Having said that, Skellerup does look like one of the better prospects in the NZ market.

winner69
11-03-2009, 04:12 AM
SKL reaches all time low at 50 cents

The half year result was pretty healthy and the outlook was not that gloomy .... even expecting to make about the same profit in H2 as in H1 .... have been pretty good in their guidance lately

Now down to less than 5 times expected earnings but I am sensing that those who make the shareprice move are looking more at multiplies like EV:EBITDA. On this one SKL at 51 cents is on 5-6 times which is what a lot of industrials are trading at the moment .... the sort of valuation that doesn;t scream out and say 'buy the company' either


Other negatives are just having $80m of debt (equity of $74m) on the books .... and as often happens once tarred as the pariah of the stockmarket (as Skellerup once was) nobody really wants to know about you again

winner69
09-04-2009, 08:02 PM
SKL reaches all time low at 50 cents

The half year result was pretty healthy and the outlook was not that gloomy .... even expecting to make about the same profit in H2 as in H1 .... have been pretty good in their guidance lately

Now down to less than 5 times expected earnings but I am sensing that those who make the shareprice move are looking more at multiplies like EV:EBITDA. On this one SKL at 51 cents is on 5-6 times which is what a lot of industrials are trading at the moment .... the sort of valuation that doesn;t scream out and say 'buy the company' either


Other negatives are just having $80m of debt (equity of $74m) on the books .... and as often happens once tarred as the pariah of the stockmarket (as Skellerup once was) nobody really wants to know about you again

Obviously things change pretty quick in the world of rubber makers .... announcing that 2nd half profits will only be 40% to 60% down on what they said a month ago is not a good look

Probably means that pariah label will return

Interesting that just as the shareprice was close to breaking a down trend line this happens

Lizard
29-07-2009, 12:29 PM
Out of interest, I just downloaded the July company newsletter (http://www.skellerup.co.nz/fileadmin/newsletter/Issue_20_June_2009.pdf) from the web-site.

On the negative side, Don Stewart sounds rather dubious about the prospects for 2010, calling it "challenging" and referring to brighter prospects only as "in the medium term". However, the brighter prospects included a few of things of note:

1. Tumedei "well on track" for E20m sales by 2015 - that's currently over $NZ40m revenue and well up on the $NZ15m they were bringing to the table in early 2007 when they were acquired. Suggests about 13-14% pa growth in sales. Targetting E50m by 2022 which would be around 7.5%pa growth in sales from here.

2. Deks - awarded a preferred supplier contract for 300 Mitre 10 stores in Australia. Reported that the contract will grow to be worth about $A500,000 over the next 3 years. Seems to have been awarded very recently and I'm surprised it didn't rate an announcement if that revenue impact is correct.

3. Agri-business - got to be a tough sector at present, but still managed 20% increase in sales over last year at Mystery Creek (fwiw). Some long-overdue improvements to gumboot wearability too :p

4. Gulf Rubber - new "multi million dollar" contract for new Jeep Cherokee rubber couplings.

Overall though, the "feel" of the newsletter is that the current 6 month period might be on the quiet side, so hope they can slip through regards the EBIT covenants on that debt or it will be back to the shareholders again...

Jim
29-07-2009, 07:25 PM
WHATT ??? Not another shareholders bailout............

Lizard
28-08-2009, 02:53 PM
Result in yesterday. Came in better than their forecast, but the second half was still weak, weak, weak. Which means either the banks are getting tetchy or they decided to beat them to the punch and go back to shareholders for another $20m. 2:5 at 40cps.

Necessary move imo and gets debt down to levels I'd consider comfortably manageable. Post-rights issue, I think underlying value is around 80cps, but might need some hint of strengthening sales this side of Christmas to get any wind behind that share price?

Jim
29-08-2009, 05:05 PM
I hold a small parcel of SKL which I inherited reluctantly years ago from the collapse of management buyout. It is just a DOG. Sometime ago it has a rights issue of 0.80c which I took up and now they want another one. NO ****WAY I am not going to throw money away

Lizard
29-09-2009, 09:42 AM
Last day for rights trading today. Applications for rights close Thursday.

Personally have taken up rights and applied for top-up shares, as I think this raising finally provides a firm base for SKL going forward. I also tend to think profit upgrades are more likely than downgrades this year.

The September company newsletter (http://www.skellerup.co.nz/fileadmin/newsletter/Issue_21_September_2009.pdf) sounds a little brighter than the June one - although still cautious.

Currency fluctuations should be less of an issue for SKL than for most NZ-listed manufacturers, as they have attempted to diversify their geographic base to be overall currency neutral.

I currently have a 12 month price target of 70cps.

Jim
05-10-2009, 08:04 PM
Surprise, surprise........ the take up of the rights issue has been over subscribed. I was wondering why so many suckers got sucked in by this dog

kura
13-10-2009, 01:30 PM
I also took up my rights, and also applied for additional top up shares, to my surprise I was allocated all the top up shares I applied for, there can't have been any scaling ? Just wondering how others got on here ? No announcement from company on how they dealt with top up applications ?

zigzag
13-10-2009, 04:48 PM
I also took up my rights, and also applied for additional top up shares, to my surprise I was allocated all the top up shares I applied for, there can't have been any scaling ? Just wondering how others got on here ? No announcement from company on how they dealt with top up applications ?

I only have a small holding in SKL, applied for extra shares and got scaled back by about 10%. Quite happy with the outcome though.

Lizard
13-10-2009, 05:03 PM
I also took up my rights, and also applied for additional top up shares, to my surprise I was allocated all the top up shares I applied for, there can't have been any scaling ?

I think I got scaled back quite a bit, maybe only got 65% - perhaps because the portfolio I applied for extra through is the one which holds the least shares.

Catalyst
18-02-2010, 09:49 AM
1H10 looks a bit more upbeat then previous announcements.
- Net debt reduced to $34m from over $100m a year ago.
- Resumption of dividends.
- Profit upgrade from $7.1m to $8.5m.
- Operating cashflow up.

The company forecasts FY net profit to 30 June 2010 of $8.5m ($9.5 if you exclude the one-off currency expense/loss).

EPS = $8.5/188.4m shares = 4.5c
PE = 52c/4.5c = 11.5x

I notice in the presentation that the company is forecasting net profit for the y/e 30 June 2011 of approx $14m.

EPS = $14m/188.4m shares = 7.4c
PE = 52c/7.4c = 7.0x

Lizard
18-02-2010, 10:28 AM
Yes, I agree that this result is likely to mark the turning point for SKL. I would say it is likely there will be another profit upgrade prior to FY results - perhaps to above last year. Dividend is probably weighted to this half though to use imputation.

rabcat
18-02-2010, 07:17 PM
Yes I agree the half year result was very positive. I think this company is on the up. It has markets all over the world and as these pick up so will their profits.
At the annual meeting last year they spent a good part of the meeting outlining some of the produces they have developed and the projected growth from these produces over the next few years as they win market share.

Looks like they may have there act together. Well i hope so!

Lizard
30-03-2010, 03:54 PM
Always good to keep an eye out for the quarterly newsletter (http://www.skellerup.co.nz/fileadmin/newsletter/Issue_23_March_10.pdf).
Don Stewart is always the key read - sounding positive that trading has been above expectation, January sales kicked off well and reiterating the forecast of a return to "normal profit levels" for 2011.

The profile on Tumedei also forecasts a 30% increase in sales budget for next year.

Though a vote of appreciation from the owner of a pair of gumboots that were purchased in 1968 (and only just began leaking) may suggest that repeat purchases are less common than investors might like :eek2:

Lizard
16-04-2010, 09:59 AM
Trading halt pending material announcement... based on the last few days trading, I'd say a "positive" ann, perhaps a takeover offer? (Personally, I think a takeover offer for SKL at this point would be a short term positive, but long term, a sad negative.)

Lizard
16-04-2010, 10:36 AM
...okay, trading halt to announce resignation of MD. The fact that a trading halt was called to announce this would surely have to raise a few eyebrows? If they are on the cusp of a turnaround, it hardly seems the time to leave - hanging in for another year or so would surely look better on the CV.

Silverlight
16-04-2010, 10:39 AM
.. hanging in for another year or so would surely look better on the CV.

Being employed since 1979 and MD since 1992. A 31 year employment, and 18 years as MD, another 2 years would not make that much difference to his CV would it?

Lizard
16-04-2010, 10:43 AM
Perhaps you are right - where else do you go after that? Was just meaning in terms of proving the strategy - if his efforts since listing in restructuring to a technical polymer coy have achieved anything, the fruit has to show in the next 12-24 months. So it's unusual to leave before getting to enjoy the fruits - unless they're turning sour.

Silverlight
16-04-2010, 10:48 AM
I guess from an MD perspective if the strategy is in place and the right people are still there to execute, and the board is well aware of this, replacing the MD with another is project management orientated will achieve the turnaround as expected.

On the trading halt issue, TEL did one yesterday as well over a forecast? I think listed issuers may have all just baulked at the Nuplex incident on Monday and are playing extra cautious.

Stranger_Danger
16-04-2010, 10:55 AM
Having a trading halt because a dude is leaving just makes the guy look like a total figjam.

Lizard
11-05-2010, 04:13 PM
29-09-2009
I currently have a 12 month price target of 70cps.

Something that actually hit one of my price targets... and with a few months to spare. :t_up: (Closed at 71cps. )

Jonathan
11-05-2010, 06:19 PM
Something that actually hit one of my price targets... and with a few months to spare. :t_up: (Closed at 71cps. )

Any idea why the share price spiked mid afternoon anyone?

Lizard
30-06-2010, 03:05 PM
I would say it is likely there will be another profit upgrade prior to FY results - perhaps to above last year.

Done. Forecast upgraded to $10-$11m NPAT (after abnormals).

percy
30-06-2010, 03:48 PM
Done. Forecast upgraded to $10-$11m NPAT (after abnormals).

Well done Lizard.

zigzag
30-06-2010, 04:58 PM
Done. Forecast upgraded to $10-$11m NPAT (after abnormals).

You truly are a Guru. Give this man an extra star.

Catalyst
30-06-2010, 08:00 PM
Wow, didn't really expect that upgrade. Fundamentals still look attractive, in my view.

FY10 NPAT normalised = $12.9m ($10.5 midpoint + $2.4m abnormal costs)
EPS = $12.9m / 191.4m shares = 6.7c
PE = 68c / 6.7c = 10x

FY11 NPAT should also be a step up to around $15m - $16m.
Plus the company's debt position is likely to be further reduced.

Disc. Holding

Lizard
01-07-2010, 08:00 AM
I agree, Catalyst. I thought $10 - $11m might have been "before abnormals" and had to re-read the announcement a couple of times... Before abnormals was $4.3m in first half, so second half looks to be around $8m which bodes well for your FY2011 forecast.

From what I've seen, analysts are behind the ball on this one, so could well see a small run to around 76cps if the market lets up in a day or two.

Lizard
08-07-2010, 11:50 AM
Bit of a volume clean out in the last few sessions, so now, with the more positive market tone, looks to be making that next move. Running about a year behind RBD in the "coming out of rehab" stakes and may well provide similar returns to those seen with RBD in the past year. Odd that both listed around the same time... maybe it takes a decade for a company to deal with all the legacy issues the smart-ones float them with.

Or perhaps it's just the feature of a bearish market - as Paper Tiger once wisely pointed out (http://www.sharetrader.co.nz/showthread.php?5609-Is-SKC-a-bargin-at-present&p=180377&viewfull=1#post180377), "A falling tide drops all boats, except for the ones where they finally fix the holes up and pump out, and the ones that hit the bottom which obviously don't sink further though they may get stuck in the mud...."

Anyway, would be nice to see a close at 72cps or higher, to confirm the break from this range (and make those active traders sorry they got out on the trend break at about 65cps! :p)

Phaedrus
08-07-2010, 01:15 PM
..... and make those active traders sorry they got out on the trend break at about 65cps! I'm afraid that such lowlife are incapable of finer human emotions, Liz. They are more likely to judge their efforts by such base concepts as pure monetary gain - and having made 35% in 3 months, I doubt that they are feeling anything other than smug. Intellectually, such types are capable of grasping only the simplest concepts. Their basic "philosophy" (if indeed it could be called such) is based on crude ideas such as "Buy low, sell high" and "a bird in the hand is worth two in the bush". Don't you think that we should feel sorry for them, Liz?

Of course not all traders are tarred by the same brush. Less rapacious, more patient investors are often quite happy to hold stocks that are crabbing sideways - at least for a while. They might well be using slower indicators such as the 3 shown here.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/SKL78.gif

The chart shows the latest trade at 70 cents - the Close may be different.

Lizard
08-07-2010, 05:25 PM
Thank you Phaedrus. I much appreciate you allowing me to provoke you into a few charts. :)

Of course I am horrified to hear that there are people out there who do this for money and not just for the purity of the trade and the rapture of attaining the perfect art form! :p

(PS: Am very grateful you didn't confuse this chart by throwing in the dubious-looking OBV step - I have been putting it on the weekly so I can ignore, which I'm sure is a big no-no).

Phaedrus
09-07-2010, 07:31 AM
Am very grateful you didn't confuse this chart by throwing in the dubious-looking OBV step.Huh? Far from confusing the chart, the OBV adds further clarity - and I certainly cannot see any "dubious-looking" OBV step! Reading through the OBV signals :-

(1) Downtrending OBV. Bearish. (Price kept falling)
(2) OBV "step" down. Bearish. (Price continued to fall).
(3) OBV "step" up. Bullish. (Price continued to rise).
(4) SKL in a trading range, but OBV in an uptrend. Bullish. (Upside breakout of trading range expected).
(5) OBV "step" up. Bullish. Confirms expectation of an Upside breakout. (Tick!) Price continues to rise.
(6) SKL in another trading range but OBV in an uptrend. Bullish. Upside breakout of trading range expected.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/SKL79.gif

This is TA working to perfection, Liz (assuming there will be an upside breakout from the current trading range!). You can even see the same "proven" pattern repeating itself.

Which "step" did you feel was "dubious-looking" - and why?

Snow Leopard
09-07-2010, 07:55 AM
Huh? Far from confusing the chart, the OBV adds further clarity - and I certainly cannot see any "dubious-looking" OBV step! Reading through the OBV signals :-


http://i7.photobucket.com/albums/y269/TheTigerWithNoName/NZX/NZX-SKL-20100708.png

For someone who puts great store on these dubious "OBV step thinggies" you ought to check your data source more carefully. (Hint look right)

regards
Paper Tiger

Lizard
09-07-2010, 08:12 AM
Hi Phaedrus.

My dubious step shows on my freebie charts on 2 July when the price fell 1cps on 3.78m shares traded. However, perhaps your data excludes the 3.5m crossed before open at 67cps that day?

Happy to stick with your version. :)

h2so4
09-07-2010, 08:25 AM
Hi Lizard (trading partner)

Please BUY 2m SKL at market today.
Please exit the position the sooner of - 2 years, 100% profit, a deterioration in the business that leads to a fall in the valuation below our previously discussed margin of safety.

Thanks pal.

Lizard
09-07-2010, 08:36 AM
Hi Lizard (trading partner)

Please BUY 2m SKL at market today.
Please exit the position the sooner of - 2 years, 100% profit, a deterioration in the business that leads to a fall in the valuation below our previously discussed margin of safety.

Thanks pal.

Huh?? :confused:

Happy to watch how you buy 2m at market... (when I get that big, I will move onto stocks with bigger caps and more liquidity).

Interested in hearing more about our previously discussed margin of safety - was there a post somewhere?

Phaedrus
09-07-2010, 08:41 AM
Perhaps your data excludes the 3.5m crossed before open at 67cps on 2/7/10? It certainly appears that way. I see now why you called it a "dubious-looking" step and would agree with that assessment. Overall, SKL is still looking Bullish.

h2so4
09-07-2010, 08:45 AM
No not real Lizard

I was just backing your fundamentalist judgement as opposed to say a chartists but it now seems they are both in alignment

Lizard
09-07-2010, 08:52 AM
Ah, well thanks for the vote of confidence, though you may not need to choose whose judgement to follow - since your 2m bid will probably confirm the break of resistance! :p

Actually, the only time you really need to choose between FA and TA is when you're stuck in a trade where the two don't agree... then you get to show your true colours.

Snoopy
09-07-2010, 09:05 AM
From what I've seen, analysts are behind the ball on this one,


You must have woken John Cairns of Forsyth Barr from his nap. SKL is the "Daily Sharechat" feature today. He is forecasting a 10-20% lift in EBIT for FY2011. Not sure if this comparison includes the $2.4m abnormal cost in FY2010. If it does, that means forecast profit is little better than flat.

JC reckons the industrial division is pulling the company up through the 'going global' strategy. If so the company could reverse if the recession double dips.

SNOOPY

Lizard
09-07-2010, 09:15 AM
YNot sure if this comparison includes the $2.4m abnormal cost in FY2010. If it does, that means forecast profit is little better than flat.


He has upgraded forecast from $13.3m to $15.3m NPAT for 2011 following the recent SKL announcement. The company has not updated their own forecast for 2011 which (in Feb) was said to be "in the vicinity of $14m" and "not reliant on a significant market uplift". However, we shall see.

h2so4
09-07-2010, 09:18 AM
Ah, well thanks for the vote of confidence, though you may not need to choose whose judgement to follow - since your 2m bid will probably confirm the break of resistance! :p



My 2m trade may not manifest today.:p

Snoopy
09-07-2010, 01:26 PM
He has upgraded forecast from $13.3m to $15.3m NPAT for 2011 following the recent SKL announcement. The company has not updated their own forecast for 2011 which (in Feb) was said to be "in the vicinity of $14m" and "not reliant on a significant market uplift". However, we shall see.

$14m/190m= 7.4cps (FY2010), $15.3m/190m= 8.0cps (FY2011)
At an SKL share price of 71c that represents a PE of 9.6 (FY2010) and 8.9 (FY2011)

Comparison with RBD:

$19.7m/97.3m= 20.2cps (FY2010), $26.0m/97.3m= 26.7cps (FY2011). At an RBD with a share price of $2.35 that represents a PE of 11.6 (FY2010) and 8.8 (FY2011)

While SKL may be a good investment, RBD looks better (still!)

SNOOPY

h2so4
09-07-2010, 01:40 PM
No comparison. RBD is way,way,way,way better

Snoopy
09-07-2010, 04:37 PM
No comparison. RBD is way,way,way,way better


RBD has a similar forward PE valuation, lower debt, higher forecast yield and is likely more resilient in a downturn. It is not always easy to compare companies in different lines of business though. In my eyes RBD is the slightly better investment prospect at today's prices. But I wouldn't go further than that.

SNOOPY

h2so4
10-07-2010, 12:11 PM
RBD has a similar forward PE valuation, lower debt, higher forecast yield and is likely more resilient in a downturn. It is nor always easy to compare companies in different lines of business though. In my eyes RBD is the slightly better investment prospect at today's prices. But I wouldn't go further than that.

SNOOPY
Hi Snoopy
I only look at cash, (owner earnings), can't remember the last time I looked at a PE.

Believe it or not RBD had owner earnings of 42m last year, (thats a 21.5% cash yield), and a cash return on invested capital of 78%.

I can only estimate SKL, (full year not out), owner earnings 18m, cash return on invested capital 13%, thats a cash yield today of 13.2%

Sure we can't compare business models but we don't have to, just take the one offering the biggest discount.

RBD looks set for a bumper year. What are they going to do with all that cash?

winner69
10-07-2010, 01:59 PM
Hi Snoopy
I only look at cash, (owner earnings), can't remember the last time I looked at a PE.

Believe it or not RBD had owner earnings of 42m last year, (thats a 21.5% cash yield), and a cash return on invested capital of 78%.

I can only estimate SKL, (full year not out), owner earnings 18m, cash return on invested capital 13%, thats a cash yield today of 13.2%

Sure we can't compare business models but we don't have to, just take the one offering the biggest discount.

RBD looks set for a bumper year. What are they going to do with all that cash?

Acid man .... where do you get that $42m owners earnings from .... I reckon it to be $25m-$26m

Isn't it interesting that for many years (up to 2007) 'owners earnings' were pretty pathetic (sometimes negative) and the shareprice languished .... but as soon as 'owners earnings' have got more respectable the shareprice is looking a lot healthier.

There is a link between PE and 'owners earnings' so don't discount off hand PE ratios

h2so4
10-07-2010, 02:04 PM
Earnings is the starting point. + depreciation + changes to working capital - capital expenses = owner earnings. Any ratio with E in it is manipulative.

winner69
10-07-2010, 02:15 PM
Earnings is the starting point. + depreciation + changes to working capital - capital expenses = owner earnings. Any ratio with E in it is manipulative.

Surely there is an E in your formula

My formula is operating cash flow ($38.7m) less capex ($13.1m) gives $25.6m for 2010

winner69
10-07-2010, 03:32 PM
I'll stick to my way of ca;culating owners earnings

So RBD st sbout $35m to Feb this year and likely to be more in 2011 ----- I reckon SKL to be about $22m this year and again more next year

EV of RBD about $250m so trading about 10 times owners earnings

EV of SKL about $180m so trading at about 9 times owners earnings

Not much in it really is their h2so4 on a valuation basis .... all depends on who you has the best prospects on delivering on the promises implied in the share price eh

h2so4
10-07-2010, 04:56 PM
I'll stick to my way of ca;culating owners earnings

So RBD st sbout $35m to Feb this year and likely to be more in 2011 ----- I reckon SKL to be about $22m this year and again more next year

EV of RBD about $250m so trading about 10 times owners earnings

EV of SKL about $180m so trading at about 9 times owners earnings

Not much in it really is their h2so4 on a valuation basis .... all depends on who you has the best prospects on delivering on the promises implied in the share price eh

Yes your right.

h2so4
10-07-2010, 05:20 PM
I'll stick to my way of ca;culating owners earnings

So RBD st sbout $35m to Feb this year and likely to be more in 2011 ----- I reckon SKL to be about $22m this year and again more next year

EV of RBD about $250m so trading about 10 times owners earnings

EV of SKL about $180m so trading at about 9 times owners earnings

Not much in it really is their h2so4 on a valuation basis .... all depends on who you has the best prospects on delivering on the promises implied in the share price eh

What is st?..."so RBD st....."

Snow Leopard
10-07-2010, 05:48 PM
Lot of TALK, but is anybody putting their MONEY on it?

disc: not me

h2so4
10-07-2010, 05:52 PM
I can't get funds to NZ quick enough.

percy
18-07-2010, 09:33 AM
good article by Jenny Ruth headed "Sunnier outlook for gumboots maker" in today's Sunday Star Times.I could never figure out how this company ever got it's act together,but this article makes it pretty clear Sir Selwyn Cushing who owns 6.5% became chairman in Dec 2007,and David Mair,who joined the board in Nov 2006,may be the reasons.Of interest is the comment"Mair has taken a much more hand-on approach to Skellerup than most directors do".Looks as though Mair may become the new managing director.Now we can understand Donald Stewart's "retirement"and better outlook for the company.Also of interest is the fact that director John Thompson was the founder of Gulf Rubber.I am left with the thought ,put in good people you will get good results.

Lizard
25-08-2010, 09:19 AM
Result beat forecast with NPAT $11.9m or $14.5m before abnormals. Despite some caution in comments (as per most global commentaries), forecast is NPAT $16-$17m for 2011, i.e. forward PE of 8.5 at current sell of 74cps.

upside_umop
25-08-2010, 10:10 AM
Final dividend of 2.5cps announced too. 'Well positioned?'

Market seems to like, up 3 currently on above average volume (average according to the iPhone is 161k, not sure over what time period this is however).

percy
25-08-2010, 11:38 AM
Result beat forecast with NPAT $11.9m or $14.5m before abnormals. Despite some caution in comments (as per most global commentaries), forecast is NPAT $16-$17m for 2011, i.e. forward PE of 8.5 at current sell of 74cps.

Well done yet again Lizard.yes you can post "I told you so".

Catalyst
25-08-2010, 12:58 PM
A good turnaround result I thought.

Key metrics from today's FY10 result:
EBITDA = $31.8m (excl $3.2m abnormal costs pre-tax)
NPAT = $14.5m (excl $2.5m abnormal costs after-tax)
Net debt = $26.6m
FY dividend = 4.5c

# shares = 191.1m
Current share price = $0.78
Market cap = $149.1m

Current PE = $0.78 / ($14.5m/191.1m) = 10.3x
Current EV/EBITDA = ($149.1m + $26.6m) / $31.8m = 5.5x
Gross dividend yield = 4.5c / 78c / 70% = 8.2%

My valuation is around the $0.90 mark, based on:
PE of 12.0x = 12.0 x ($14.5m/191.1m) = $0.91
EV/EBITDA of 6.5x = (6.5 x $31.8m - 26.6m) / 191.1m = $0.94

If we use the company's guidance for FY11 of NPAT between $16 - $17m, it doesn't materially change my view on fair value:
Forecast NPAT = $16.5m midpoint
Forecast EBITDA = $33.0m (NPAT + $7.1m tax + $2.1m int + $7.2m dep'n/amort'n)

Using slightly lower multiples given it is a year away, I still get values around the $0.90 - $1.00 mark:
PE of 11.5x = 11.5 x ($16.5m/191.1m) = $1.00
EV/EBITDA of 6.0x = (6.0 x $33.0m - $26.6m) / 191.1m = $0.90

Anyone got any different values?

Lizard
25-08-2010, 03:55 PM
My spreadsheet throwing out 91cps for now, Catalyst.

Am happy with it hitting 80cps today on good volume. Now 100% gain on the rights and over-subscriptions that we got last year (http://www.sharetrader.co.nz/showthread.php?4091-Skellerup-(SKL)-Fundamentals&p=275173&viewfull=1#post275173). Just grumpy that I got scaled by more than Kura and Zigzag did!

zigzag
25-08-2010, 10:15 PM
My spreadsheet throwing out 91cps for now, Catalyst.

Am happy with it hitting 80cps today on good volume. Now 100% gain on the rights and over-subscriptions that we got last year (http://www.sharetrader.co.nz/showthread.php?4091-Skellerup-(SKL)-Fundamentals&p=275173&viewfull=1#post275173). Just grumpy that I got scaled by more than Kura and Zigzag did!

Just for the record Lizard. I started off with 4000 shares. I don,t rember what my actual entitlement was, but I sent in a cheque for one thousand dollars. That is, I applied for 2500 shares, and I was alloted 2411. That mightn't cheer you up, but the result and upcoming dividend should do the trick.

Lizard
04-09-2010, 09:09 AM
Wonder if SKL will be needing to speed up that Woolston Revamp project they were talking about in the June newsletter (http://www.skellerup.co.nz/fileadmin/newsletter/Issue_24_June_2010.pdf)...

winner69
04-09-2010, 09:12 AM
Wonder if SKL will be needing to speed up that Woolston Revamp project they were talking about in the June newsletter (http://www.skellerup.co.nz/fileadmin/newsletter/Issue_24_June_2010.pdf)...

With the liquificqtion problem post earthquake gumboots could do well

kiora
06-09-2010, 08:13 AM
6 September 2010.

Skellerup Holdings Limited escapes serious business disruption

The 7.1 magnitude earthquake that struck Christchurch on Saturday 4 September 2010 has
caused a lot of infrastructural damage within the city and fortunately it appears that
there are no casualties and as few as two serious injuries.

Skellerup has two factory locations and a separate warehouse in Christchurch all located
in Woolston, 3km south east of Christchurch whilst the epicenter of the earthquake is
located in Darfield, 45 km west of Christchurch. Skellerup employs more than 270 people
in New Zealand with over 200 of those employees in Woolston.

Acting Chief Executive Officer David Mair said that even though there was a shift working
on site at the time of the earthquake, no one has been injured.

“It is incredible that not only have there been no injuries to staff, it appears that
there is little or no significant damage to buildings or machinery. Our immediate focus
is to make sure that all our staff are safe and well.

Obviously the next concern has been infrastructure. Electricity, town water supply and
all computer and communication systems are functioning on all three sites. Local
management has been carefully checking the sites and the outlook is very positive.

The warehouse located on Curries Road appears to have been unaffected. Racking and
inventory is all in good order and the expectation is that ex-stock deliveries will be
available as needed.

The other small production unit in Dyers Road also appears to be unaffected and all
systems appear to be ready to begin production.
The main site in Marshall Street contains critical machinery for the production of many
of our key dairy products. All machinery relating to the Dairy industry were safely and
correctly shut down, in line with company procedures. The attitude of the management and
staff on site has been magnificent.

This is great news for ensuring continuing supply to our Customers. With the warehouse
operation seemingly unaffected, we should be able to meet any immediate demand from
existing inventories.

The other factories will open after confirmation by independent engineers that the
structures are indeed safe as we expect. In other words, there should be little impact on
our supplies to Customers.

Our NZ dairy season was just beginning to slow down and the stock build for the overseas
markets happens later in the year.

Skellerup has comprehensive material damage and business interruption insurance cover.

Although this has been a major event for the people, production and distribution units in
Christchurch, we do not see any material financial impact on the business at this time.

For more information please contact:
David Mair
Acting CEO

rabcat
14-09-2010, 07:48 PM
[QUOTE=Lizard;316806]My spreadsheet throwing out 91cps for now, Catalyst.

The share price has hit 91 cents today! Are we at the top?

I have a question.

I brought a heap of these shares over the last year with an average buy price of 48 cents.

I am not sure what I should do and what is the best strategy? i.e. Should I sell them all and make a nice profit? Should I sell half of them and get all the money i invested back and keep the other half as profit? or should I hold and wait for the share price to climb even further?

Does any one have any thoughts how they would play this?

winner69
14-09-2010, 08:19 PM
My spreadsheet throwing out 91cps for now, Catalyst.

The share price has hit 91 cents today! Are we at the top?

I have a question.

I brought a heap of these shares over the last year with an average buy price of 48 cents.

I am not sure what I should do and what is the best strategy? i.e. Should I sell them all and make a nice profit? Should I sell half of them and get all the money i invested back and keep the other half as profit? or should I hold and wait for the share price to climb even further?

Does any one have any thoughts how they would play this?

Why sell now when things are just beginning to come right .... longer term investors would be holding for the next few years I would think

Even if you are only trading SKL short term it is still in a strong uptrend .... and no one knows when that uptrend will stop

Posting questions like that will get you the wrath of Phaedrus .... where is your exit strategy? ..... let the profits run is another of his tips

Anyway congrats on your winnings at the casino anyway

Lizard
14-09-2010, 09:08 PM
Hi Rabcat,

Although what Winner says is all true, it probably depends whether SKL now makes up an uncomfortably large % of your portfolio and/or whether you have a "better" investment prospect in mind. From my point of view, when a stock is close to/above my valuation AND I'm what I'd consider overweight in it, then I would be tempted to take some profit (probably just enough to add another share to the collection :eek2:)

I'm out of fast-internet for the month (blame the kids!), so running too slow to chart, but would have thought it was well off-trend at present and maybe heading into parabolic territory? In which case, if you want to lighten up, it could be getting close to a good time - if it was me, I'd decide how many I want to sell then watch the depth fairly closely to get a feel for when it might be about to do the stall-reverse.

I agree with Winner that this could well turn into a long term trend that I'll be happy to sit in, but it's not the only stock going up on the NZX and taking some out while it's well above trend to invest elsewhere is something I'd be prepared to risk the occasional Phaedrus lecture for. :ohmy:

kiora
15-09-2010, 03:16 AM
Both very good advice imho.Rakon anyone???

h2so4
15-09-2010, 07:50 AM
I think SKL is still under value maybe 30%. But I'm not really that confident in my valuation. 100% gain in less than 12 months is very tempting and I would be getting more and more nervous as the price crept up. I would hold on an announcement to announcement basis.

But I'd sell if I found a share offering more value.

kiora
15-09-2010, 08:50 AM
http://www.valuecruncher.com/companies/1029 What do others think of this site ?

h2so4
15-09-2010, 12:41 PM
http://www.valuecruncher.com/companies/1029 What do others think of this site ?

I like it, they valued CAB at $10.32 :D

Catalyst
15-09-2010, 01:00 PM
rabcat - I would take a wait-and-see approach at the moment. Given the company's current guidance and $0.91 share price, SKL is currently trading on a FY11 forward PE of 10.5x, EV/EBITDA of 6.1x and a Gross Dividend Yield of 7.1%. These certainly aren't demanding or expensive multiples, but nor are they super cheap anymore either.

I've also noticed that the company has been quite conservative in its outlook/guidance over the past year given it has over-promised and under-delivered in the prior couple of years. For example, the original FY10 NPAT guidance was for $7.1m (Aug 2009), then $7.1m (reiterated at Oct 2009 AGM), then $8.5m (Feb 2010), then $10-$11m (Jun 2010), and finally it delivered NPAT of $11.9m (incl $2.6m abnormal costs) after the rubber markets improved in the second half of the year.

The company's only guidance for the current FY11 financial year is for NPAT of $16-$17m. I would expect the company to provide further outlook comments at its AGM on 27 October.

kiora - The valuecruncher website could be useful to find simple metrics or company comparisons but the two things I don't like about it is: 1) it only provides historical numbers and no forward looking forecasts or company guidance; and 2) the historical numbers can be misleading without some explanations, for example, the SKL figures for FY10 included $2.6m in one-off abnormal costs and there is no mention of this.

h2so4
15-09-2010, 01:26 PM
The abnormals are after tax, that wouldn't affect the valuation.

Catalyst
15-09-2010, 02:06 PM
The abnormals are after tax, that wouldn't affect the valuation.


It depends on how you value the company.

If you use a mutiple-based valuation it could affect the valuation ie a PE-multiple based valuation.

If you use a DCF-based valuation it probably wouldn't affect the valuation.

rabcat
15-09-2010, 06:50 PM
Why sell now when things are just beginning to come right .... longer term investors would be holding for the next few years I would think

Even if you are only trading SKL short term it is still in a strong uptrend .... and no one knows when that uptrend will stop

Posting questions like that will get you the wrath of Phaedrus .... where is your exit strategy? ..... let the profits run is another of his tips

Anyway congrats on your winnings at the casino anyway

Phew I have been worrying all day about getting a bollocking from Phaedrus! Was worried it might be worse than my wife when i forget to come home in the evening!
Maybe he could provide lessons on exit strategies?

Well thanks to everyone for the feedback. I must say I find selling harder than buying.

I will consider your thoughts for a few days and make a decision.
I feel that SKL have more upside but also feel you have to take some profit some time.

winner69
15-09-2010, 07:00 PM
. I must say I find selling harder than buying.



Exactly why you need an EXIT STRATEGY rab

First step in the process - why (what were your intentions) of buying in the first place?

Answer that and the exit strategy might become a bit more obvious

Aaron
27-09-2010, 09:52 AM
I bought SKL shares at the height of the boom based on a recommendation and bought more through the rights issue when it crashed. Its now at around fair value according to Lizard et al on this thread and at a level where I can get my money back. I own twice as much of SKL as I would like to due to the rights issue. The moving average and other oscillators indicate the shares are in an overbought position but they are not declining.
I am caught between greed and fear. I guess the share price could plunge back down but how likley is it the TA indicators give me a warning before the share price drops back below .90 cents per share. Asking the question I realise its impossible to answer so I will run with it and hopefully be able to sell when the trend changes or when I finally succumb to fear.

percy
27-09-2010, 10:17 AM
I think the company is now a lot healthier and better focused than when you brought into it.I think you should sit back and enjoy making some money.Well run companies do not throw up too many surprises.The bad surprises are now history.

Lizard
14-12-2010, 07:20 AM
SKL might be a contender for NZX50 today with the exit of PRC?

Lizard
14-12-2010, 08:50 AM
SKL might be a contender for NZX50 today with the exit of PRC?

And yes, in it goes. Maybe this will push it solidly through the $1 mark?

percy
14-12-2010, 11:00 AM
Good call Lizard.I am buying some for the wife today.Not sure whether we will get at $1.03 or $1.05.

Lizard
15-12-2010, 03:15 PM
Looks like the Directors decided it was a good idea to make sure the market was well informed before the index funds get their fill...

Profit upgrade to $18.5-$19.5m NPAT fo FY11 (from $16-$17m). This might get us to $1.15 before Christmas? (The IPO price!)

percy
15-12-2010, 03:22 PM
Looks like the Directors decided it was a good idea to make sure the market was well informed before the index funds get their fill...

Profit upgrade to $18.5-$19.5m NPAT fo FY11 (from $16-$17m). This might get us to $1.15 before Christmas? (The IPO price!)

You have done it again Lizard. Brought wife's at $1.04 yesterday. I hope aaron is still holding?

Aaron
16-12-2010, 07:34 AM
You have done it again Lizard. Brought wife's at $1.04 yesterday. I hope aaron is still holding?

Still holding thanks for the advice.
Wish I could say my investing came down to something other than luck like research and understanding markets.
A profit upgrade in the paper this morning for SKL also makes me happier.
When I can start making investment decisions on a more logical consistent less emotional basis I'll start entering the share picking competition.

Lizard
16-12-2010, 08:40 AM
Enter the comp, Aaron - a chance to test any theories you might hold on stock picking without actually having to risk any real money!

A share investor with the nature of a perfectionist is going to have a very difficult time - no matter how long you hone your investment skills, you will have to accept getting things wrong and wearing the consequences.... the skill is in being able to acknowledge you were wrong quickly!

Catalyst
16-12-2010, 09:04 AM
A good turnaround result I thought.

Key metrics from today's FY10 result:
EBITDA = $31.8m (excl $3.2m abnormal costs pre-tax)
NPAT = $14.5m (excl $2.5m abnormal costs after-tax)
Net debt = $26.6m
FY dividend = 4.5c

# shares = 191.1m
Current share price = $0.78
Market cap = $149.1m

Current PE = $0.78 / ($14.5m/191.1m) = 10.3x
Current EV/EBITDA = ($149.1m + $26.6m) / $31.8m = 5.5x
Gross dividend yield = 4.5c / 78c / 70% = 8.2%

My valuation is around the $0.90 mark, based on:
PE of 12.0x = 12.0 x ($14.5m/191.1m) = $0.91
EV/EBITDA of 6.5x = (6.5 x $31.8m - 26.6m) / 191.1m = $0.94

If we use the company's guidance for FY11 of NPAT between $16 - $17m, it doesn't materially change my view on fair value:
Forecast NPAT = $16.5m midpoint
Forecast EBITDA = $33.0m (NPAT + $7.1m tax + $2.1m int + $7.2m dep'n/amort'n)

Using slightly lower multiples given it is a year away, I still get values around the $0.90 - $1.00 mark:
PE of 11.5x = 11.5 x ($16.5m/191.1m) = $1.00
EV/EBITDA of 6.0x = (6.0 x $33.0m - $26.6m) / 191.1m = $0.90

Anyone got any different values?

My valuation range is between $1.10 - $1.20 if I now use the midpoint of the company's current guidance ($18.5m - $19.5m). I wouldn't be surprised to see the company exceed this range, like last year, though.

Forecast NPAT = $19.0m midpoint
Forecast EBITDA = $36.8m (NPAT + $8.2m tax + $2.3m int + $7.3m dep'n/amort'n)

PE of 12.0x = 12.0 x ($19.0m/191.1m shares) = $1.18
EV/EBITDA of 6.5x = (6.5 x $36.8m - $26.6m net debt) / 191.1m = $1.10

If I assume NPAT will be $20.0m, my valuation range is $1.15 - $1.25, using the same PE (12.0x) and EV/EBITDA (6.5x) multiples above. It could be argued that if the company is in a period of good growth prospects then the multiples could be increased. If I assume $20.0m NPAT and use a PE of 13.0x and an EV/EBITDA multiple of 7.5x, both multiple-based valuations then come to $1.35.

Lizard
16-12-2010, 09:46 AM
Thanks Catalyst.

I have fair value at $1.15 for now, but I'll happily hold above that while it seems likely that profits will continue trending in the right direction. My best guess would be for about $1.50 in a years time, so, on that basis, it's still a "buy the dips" story.

Catalyst
16-12-2010, 12:43 PM
Yip Liz, still a solid Hold in my view.

rabcat
16-12-2010, 02:36 PM
Yip Liz, still a solid Hold in my view.

SKL come back into the NZX 50 index on monday ( at the expense of Pike River Coal).

This mean the fund managers will have to buy? And this will tend to push the price even higher?

Catalyst
16-02-2011, 07:41 PM
My valuation range is between $1.10 - $1.20 if I now use the midpoint of the company's current guidance ($18.5m - $19.5m). I wouldn't be surprised to see the company exceed this range, like last year, though.

Forecast NPAT = $19.0m midpoint
Forecast EBITDA = $36.8m (NPAT + $8.2m tax + $2.3m int + $7.3m dep'n/amort'n)

PE of 12.0x = 12.0 x ($19.0m/191.1m shares) = $1.18
EV/EBITDA of 6.5x = (6.5 x $36.8m - $26.6m net debt) / 191.1m = $1.10

If I assume NPAT will be $20.0m, my valuation range is $1.15 - $1.25, using the same PE (12.0x) and EV/EBITDA (6.5x) multiples above. It could be argued that if the company is in a period of good growth prospects then the multiples could be increased. If I assume $20.0m NPAT and use a PE of 13.0x and an EV/EBITDA multiple of 7.5x, both multiple-based valuations then come to $1.35.

Couldn't find anything to fault in the solid 1H 2011 result announced today. I'm still forecasting FY NPAT of $20m (compared to the company's reiterated guidance of $18.5m - $19.5m).

My valuation range is currently $1.35 - $1.44 based on:
PE of 13.0x = 13.0 x ($20.0m/192.8m shares) = $1.35
EV/EBITDA of 7.0x = (7.0 x $42.6m - $20.0m net debt) / 192.8m = $1.44

percy
16-02-2011, 07:57 PM
Couldn't find anything to fault in the solid 1H 2011 result announced today. I'm still forecasting FY NPAT of $20m (compared to the company's reiterated guidance of $18.5m - $19.5m).

My valuation range is currently $1.35 - $1.44 based on:
PE of 13.0x = 13.0 x ($20.0m/192.8m shares) = $1.35
EV/EBITDA of 7.0x = (7.0 x $42.6m - $20.0m net debt) / 192.8m = $1.44

Thank you for the update.I agree with your forecast.very positive outlook.

waterboy
23-02-2011, 12:28 PM
Anyone know how the plant in chch is? Last quake skl made an announcement soon after.

gonzo56
24-02-2011, 08:31 AM
Dompost:
"...staff at three locations came through without serious injury. It would not be clear when work would resume, but the company said established inventory and supply lines would ensure that it continued to meet customer demand"

JemT
19-04-2011, 12:03 PM
Does anyone know of any competitors to SKL? I am struggling to find some at the moment, with the exception of a few large multinationals (DuPont has a rubber products line, etc.).

forest
19-04-2011, 01:32 PM
Does anyone know of any competitors to SKL? I am struggling to find some at the moment, with the exception of a few large multinationals (DuPont has a rubber products line, etc.).

ASB gives as SKL peers Austal Ltd, John Shearer and ADG Global Supply, I do not know how relevant they are to SKL but it might be worth looking into.

Catalyst
23-05-2011, 11:38 AM
SKL seems to have stalled at around $1.30. I wouldn't be surprised to see it hang around this level for a further few months until it announces its FY11 result in mid-August.

Based on the company's $18.5 - $19.5m NPAT guidance, SKL is currently trading on...

PE = $1.30 / (($18.5 and $19.5m) / 192.8m shares) = 12.9x - 13.6x

EV/EBITDA = (($1.30 x 192.8m shares) + $20.0m net debt) / ($40.2m and $41.7m) = 7.2x - 7.5x

buns
23-05-2011, 01:58 PM
So is this good or bad?

Catalyst
23-05-2011, 02:14 PM
So is this good or bad?

All I'm saying is that, in my view, right now SKL's fundamentals appear to be 'about right'; that the market's value of SKL is close to my fair value range for SKL; that it's neither severely under or over-valued. We'll have to wait for the FY11 result in mid-August for the next bit of scheduled information to determine if there's any potential valuation upside/downside.

I'd be interested to see what any chartist makes of SKL at the moment.

Phaedrus
23-05-2011, 04:34 PM
This chart updates the one posted here nearly a year ago (on page 5). It uses the same indicators and the same parameters, plus a few extra.

All of these indicators utilise reasonably long time periods and are thus suitable for long-term investors.

Recently, SKL broke below its confirmed long-term trendline. Technically, this constitutes a "sell" signal, but should longterm investors have acted on it? No. You can see that there was no confirmation from any of the other indicators. By way of contrast, compare this situation with the trendline-break Buy signal way back in February 2010 - no shortage of confirmation there! The OBV continues to climb steadily and none of the indicators featured here are anywhere near triggering sell signals.

You can see how the 200 day moving average is working well too - though, as usual, it was late getting you in and will obviously be quite late getting you out as well. I have added a Trailing stop (12%) for those of you that use such things, but again, this is likely to be one of the last indicators to get you out of SKL when this uptrend ends.

Some people think that the use of TA invariably leads to overtrading and therefore it is unsuitable for long-term investors, but you can see how well it has worked here, keeping you in SKL for well over a year so far, as the uptrend trundled on. It will get you out too - when the uptrend weakens or ends.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/SKL523.gif

ratkin
23-05-2011, 04:42 PM
My crayon system in full agreement. Lots more blue bars of late , indicating sideways movement , but no red bars

3384

percy
23-05-2011, 05:35 PM
thanks for the updates phaedrus and ratkin.

Catalyst
17-06-2011, 01:54 PM
Recent share price drop to $1.17....is this general market weakness or has the recent Christchurch tremors caused some extra damage or are SKL's markets experiencing softening demand???

Another overhang to think about is if Salvus winds up, as proposed, it will be unloading nearly 2m SKL shares.

percy
17-06-2011, 02:35 PM
Recent share price drop to $1.17....is this general market weakness or has the recent Christchurch tremors caused some extra damage or are SKL's markets experiencing softening demand???

Another overhang to think about is if Salvus winds up, as proposed, it will be unloading nearly 2m SKL shares.

Have just rung Carroll at SKL.All well ,working hard,no damage,she is getting fit getting under her desk,then up again,then under again.Good sense of humour.She did not know the SP had weakened.No reason she knew.Maybe people think there is damage and interruptions.

arcticblue
17-06-2011, 04:41 PM
So is the TA showing a sell given the large price drop in the last two days? Almost 10% 125 down to 115. It appears that the trailing stop loss Phaedrus was using would have been hit unless I've misread the chart. Any updates guys?

Under Surveillance
17-06-2011, 04:47 PM
You've eliminated one possible factor, percy. Others might be the non-appointment of a permanent CEO, the recent fiasco with the shortage of independent directors, and the absence of a once-confidently-expected further positive earnings update. Minor qualms apart, I upped my holding at the death today @ 114.

Phaedrus
17-06-2011, 06:35 PM
Here is an updated and enlarged chart for you, Arcticblue, using the same indicators and periods as before. Red arrows mark sell signals. You can see that the trendline-break "sell" signal was confirmed a few days later when the SKL uptrend became a downtrend. Next to trigger were the OBV with a trendline break and an MSI warning (yellow). These were followed followed by sell signals from the slower oscillators. The trailing stop triggered last and todays Close is right on the longterm 200 day moving average (blue line).

I doubt that many people would have waited for the trailing stop to be hit before selling.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/SKL617.gif

percy
17-06-2011, 07:09 PM
phaedrus.
Thanks for the update.

percy
18-06-2011, 07:07 AM
From SAM Salvus,May 2011 Manager Report."The holding in SKL was also reduced because its portfolio weighting had risen significantly owing to the strong performance of the share."

arcticblue
20-06-2011, 08:17 AM
Thanks Phaedrus. I see almost all my indicator periods are double yours. Guess I still have some more learning to do, probably should have kept the times shorter in hindsight.

Phaedrus
20-06-2011, 10:39 AM
AB, you can do a lot better than simply copying my SKL parameters as charted. Those were just round figure "legacy" values that I had used in a few previous SKL charts. The object here was to monitor that big 2010 uptrend with a view to generating timely sell signals when the uptrend weakened and ended.

By the end of June 2010 we had a nice clear pivot point (circled) on which to base our indicators. At this stage we could draw in an unconfirmed trendline and select indicator values appropriate for that uptrend. Note that for the RMI, default values were just fine. In August, the trendline was confirmed. Last month, the trendline was broken but this was unaccompanied by any other confirmatory Sell signals. These came a few days later when 4 more indicators all triggered on the same day.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/SKL620.gif

In short, you can make an excellent case for using shorter periods than those initially shown, but I am a bit puzzled as to why you were using indicator periods that were double mine, AB. There is such a thing as being too conservative!

You don't need all this fancy TA of course. An exit when the uptrend ended and the downtrend began (when SKL made a lower Low after a lower High) would have got you out at exactly the same price and locked in a very good profit. SKL has dropped quite sharply since then.

arcticblue
21-06-2011, 08:32 AM
Thanks P. Yes I think I should have fitted my time periods more closely to the trend that was in place. And I think I need to look a bit more closely at the trend, well mainly watching for the end of it.

Lizard
20-07-2011, 06:55 AM
Been a couple of days that appear to have a larger buyer lately - volume on the up days and falls on low volume. Will be interesting to see if Under Surveillance caught the low there at $1.14.

From a fundamental perspective, I still see this as a "buy on dips" - except that I already have more than I need.

percy
20-07-2011, 11:43 AM
Been a couple of days that appear to have a larger buyer lately - volume on the up days and falls on low volume. Will be interesting to see if Under Surveillance caught the low there at $1.14.

From a fundamental perspective, I still see this as a "buy on dips" - except that I already have more than I need.

Good volume at $1.25 today.

percy
22-07-2011, 09:35 AM
Good volume at $1.25 today.

Very large $4.1 mil worth of shares crossed at $1.26 this morning.On market sale at $1.28.

Balance
22-07-2011, 09:53 AM
AB, you can do a lot better than simply copying my SKL parameters as charted. Those were just round figure "legacy" values that I had used in a few previous SKL charts. The object here was to monitor that big 2010 uptrend with a view to generating timely sell signals when the uptrend weakened and ended.

By the end of June 2010 we had a nice clear pivot point (circled) on which to base our indicators. At this stage we could draw in an unconfirmed trendline and select indicator values appropriate for that uptrend. Note that for the RMI, default values were just fine. In August, the trendline was confirmed. Last month, the trendline was broken but this was unaccompanied by any other confirmatory Sell signals. These came a few days later when 4 more indicators all triggered on the same day.

http://i602.photobucket.com/albums/tt102/PhaedrusPB/SKL620.gif

In short, you can make an excellent case for using shorter periods than those initially shown, but I am a bit puzzled as to why you were using indicator periods that were double mine, AB. There is such a thing as being too conservative!

You don't need all this fancy TA of course. An exit when the uptrend ended and the downtrend began (when SKL made a lower Low after a lower High) would have got you out at exactly the same price and locked in a very good profit. SKL has dropped quite sharply since then.

Notice how it's all historical?

I have yet to see a pro-active 'buy' or 'sell' signal posted by TA.

Beautiful 20/20 hindsight - everytime.

percy
22-07-2011, 10:02 AM
[

Beautiful 20/20 hindsight - everytime.[/QUOTE]

Look forward to more foresight from you?

Balance
22-07-2011, 10:04 AM
[

Beautiful 20/20 hindsight - everytime.

Look forward to more foresight from you?[/QUOTE]

Big volume plus a uptrending share price?

Buy signal, surely.

percy
22-07-2011, 11:16 AM
Look forward to more foresight from you?

Big volume plus a uptrending share price?

Buy signal, surely.[/QUOTE]

percy
22-07-2011, 11:17 AM
Big volume plus a uptrending share price?

Buy signal, surely.[/QUOTE]

Well I hope so.

Lizard
25-08-2011, 09:05 AM
SKL result out and any fears the market may have had about them look a bit unfounded to me, with NPAT above previous forecast at $20.2m.

The target of $22-$23m for the coming year looks conservative, given there is probably a $1.5m reduction in interest costs and also would not expect a repeat of the $4.1m of Christchurch earthquake costs that appear to be included in this years result.

Dividend up to 4cps, bringing total for year to 6cps plus imputation.

percy
25-08-2011, 10:18 AM
Well Lizard you and catalyst have been right on the money with your SKL projections.Well done.
I thought the result was a cracker.Most impressed with debt being reduced from 26.9mil to 9.1mil with corresponding reduction of finance costs from 4.785mil to 2.667mil.Pleased to see David Mair finally appointed CEO.Nice to see them looking ahead and agree they appear conservative.Love the divie increase.

Catalyst
25-08-2011, 12:55 PM
Yes, a solid FY11 result. Sticking with the same muiltiples that I've used over the past year or so, my fair value range of SKL sits around the $1.30 - $1.40 mark.

PE of 12.5x - 13.0x = 12.5 or 13.0 x ($20.2m NPAT / 192.8m shares) = $1.31 - $1.36

EV/EBITDA of 6.5x - 7.0x = (6.5 or 7.0 x $39.5m EBITDA - $9.1m net debt) / 192.8m shares = $1.28 - $1.39

percy
05-10-2011, 08:04 AM
Good article by Chalkie this mornings' Press;"Gumboot governance for Skellerup directors."
As one would expect chairmain Cushing keeps up the Brierley tradiation of putting directors and executives before shareholders.No surprises there.!!!!

winner69
05-10-2011, 02:41 PM
Good article by Chalkie this mornings' Press;"Gumboot governance for Skellerup directors."
As one would expect chairmain Cushing keeps up the Brierley tradiation of putting directors and executives before shareholders.No surprises there.!!!!

Was quite an indepth article highlighting these sort of deals in SKL

These old guys like Cushing will get their cumeuppance one day as the world revolts against shennagins in the board room.

The companies with old fashioned values who see society as a key stakeholder rather than shareholders will be the ones that thrive. Companies who have directors and managers like SKL will need to need to change if they want to survive

SKL done well as an investment over the last few years after the bailouts (why were they needed in the first place anyway) but the shareprice would be more than 125 today if it demonstrated a higher level of governance rather than being a few guys play thing.

Lizard
05-10-2011, 03:19 PM
I don't accept the Stakeholder approach as being the way to go. Call me old-fashioned. All the evidence I've seen has been that focussing on returns to shareholders is the most successful approach. That often encompasses staff, customer and supplier interests too, since they all are important to the success of the business. Externalities are for regulators and politics.

Shareholders need to start using the power they have more frequently to help maintain realistic expectations around director remuneration and incentives. However, many shareholders are perhaps more afraid of the consequences of voting against director wishes. Maybe we need another route that is less confrontational and doesn't become a debilitating battle between (particularly minority) shareholders and their supposed representatives.

winner69
05-10-2011, 03:53 PM
Liz - I know it is not as simple as all that. You mention staff, customer and supplier interests are important .... in a general sort of way you society eh ... along with communities in general

There is a thing called 'stakeholder capitalism' which is quite interesting to read up on .... a conclusion from that is shareholders benefit most when CEOs and boards maximise value to society .... a founding father of that thinking was Merck who said 'We should never forget that medicine is for the people. It is not for the profits. The profits will follow .."

I see those companies that think that way will be the winners over the next 20 years. Those that see things like sustainability and meeting the needs of 'society'/communities as important and an integral part of their strategy and day to day plans, as opposed to having out to one side a thing called corporate social responsibility.

Back to SKL - is a guy like Cushing like that?

And you are not 'old fashioned' (your words) in saying what you did - that's how most think today anyway so definitiely not old fashioned

Under Surveillance
05-10-2011, 04:45 PM
Shareholders need to start using the power they have more frequently to help maintain realistic expectations around director remuneration and incentives. However, many shareholders are perhaps more afraid of the consequences of voting against director wishes. Maybe we need another route that is less confrontational and doesn't become a debilitating battle between (particularly minority) shareholders and their supposed representatives.
You seem to be indulging in a bit of flannel here, Lizard!
I'm one shareholder who delights in voting against director wishes with which I disagree, whatever the consequences (admittedly in the knowledge that my holdings are inconsequentially small).
I'll be voting against the SKL Directors' remuneration hike through the non-confrontational and non-debilitating means of online voting.
In the absence of information as to the terms of Mair's CEO employment agreement, I'm tempted to do likewise with the CE incentive scheme, which of itself strikes me as acceptable. The Simmons report is arsewipe material for not, at the least, stating Mair's base salary.

Under Surveillance
06-10-2011, 07:49 PM
Anyone interested can see at http://www.skellerupholdings.co.nz/investor-information/analyst-coverage the 3 analyst reports said in the papers recently to have a median target price of 145.

percy
06-10-2011, 08:05 PM
Anyone interested can see at http://www.skellerupholdings.co.nz/investor-information/analyst-coverage the 3 analyst reports said in the papers recently to have a median target price of 145.

Thank you for the link.

macduffy
09-12-2011, 04:58 PM
Substantial shareholder notice from ACC today shows that they bought 6,954,250 shares yesterday, increasing their holding from 5.474% to 9.725%.

Only a few shareholders with that sort of numbers to sell - AMP or S Cushing?

percy
09-12-2011, 05:32 PM
Substantial shareholder notice from ACC today shows that they bought 6,954,250 shares yesterday, increasing their holding from 5.474% to 9.725%.

Only a few shareholders with that sort of numbers to sell - AMP or S Cushing?

Neither,it was balmain Trust and related entities.

Lizard
10-01-2012, 03:51 PM
Have been reducing in SKL at $1.36. Still think there is value here, but taking some profits from good performers for now to spread them around. Plus this lack of liquidity makes it a bit risky to hold too many - especially if a few large floats of SOE's pushes it out of the index again.

Under Surveillance
10-01-2012, 06:51 PM
Have been reducing in SKL at $1.36. Still think there is value here, but taking some profits from good performers for now to spread them around. Plus this lack of liquidity makes it a bit risky to hold too many - especially if a few large floats of SOE's pushes it out of the index again.

Fair enought that you take profits on good performers, but I don't think there is much risk of SKL leaving the NZX 50 any time soon. I don't pretend to be on top of the arcane process for reviewing membership, especially as to what are deemed to be strategic holdings, but the following seem to me to rank ahead of SKL for the drop at recent market capitalisations: MVN, RAK, PPL, CAV, HNZ, STU, HLG, RBD.

percy
10-01-2012, 07:19 PM
I think the debt reduction,Mair as CEO,the company well focused,and being a dairy industry, as very positive,as is ACC adding to their holding.
What does concern me is the resignation of the general manager of Gulf Rubber.From memory the ex owner of Gulf has recently left SKL board.If these two events are related the question is why? Gulf seemed to me the driving force of SKL and I wonder if there are problems at Gulf.?
Do not have many,so at this stage will hold.

Under Surveillance
10-01-2012, 08:22 PM
I think the debt reduction,Mair as CEO,the company well focused,and being a dairy industry, as very positive,as is ACC adding to their holding.
What does concern me is the resignation of the general manager of Gulf Rubber.From memory the ex owner of Gulf has recently left SKL board.If these two events are related the question is why? Gulf seemed to me the driving force of SKL and I wonder if there are problems at Gulf.?
Do not have many,so at this stage will hold.

As far as I can see, the market has not been informed that John Thompson (founder of Gulf Rubber) has resigned as a SKL director, though it has been informed that he/Balmain Trust sold all their 13 million SKL shares to ACC @ 132 in December. I wonder whether the Scott Thompson who is resigning as general manager of Gulf Rubber is a relative, and if so what if anything the closeness of the events signifies as to SKL/Gulf Rubber performance. I doubt Sir Selwyn will see fit to cast before us even a cryptic resassurance before the half year announcement mid February, and maybe not then unless the institutions pester him.

percy
10-01-2012, 08:58 PM
The announcement 27th October,chairman's address annual meeting;re John Thompson;"has decided to retire from the board at this annual meeting for personal reasons.John was the founder of Gulf Rubber."
Under Survelliance thank you for your post as I did not realise Thompson was connected to Balmain Trust.
Resign/retire and then sell all your shares says to me the personal reasons means somebody has really upset you,and if Scott is related,your family.Our otherwise you really have upset Mair,and or Cushing.

mamos
10-01-2012, 09:10 PM
Dairy will do well this 1/2. New facility should be operating for liners.

Pumps will do well with shale gas in US.

Other industrial products may be under some pressure due to weak Australian/US housing/construction market and weak industrial production in Europe region.

David Mair is an operations efficiency guru who will drive margin improvement even if there is little top-line growth.

Expect to see moving into a net cash position and for potential acquisitions to be made. DM also prefers low leverage so no special distributions should be relied upon.

Under Surveillance
11-01-2012, 08:01 AM
The announcement 27th October,chairman's address annual meeting;re John Thompson;"has decided to retire from the board at this annual meeting for personal reasons.John was the founder of Gulf Rubber."


Thanks for putting me straight, percy

percy
01-02-2012, 05:32 PM
Have been reducing in SKL at $1.36. Still think there is value here, but taking some profits from good performers for now to spread them around. Plus this lack of liquidity makes it a bit risky to hold too many - especially if a few large floats of SOE's pushes it out of the index again.

Has taken awhile for the Lizard parcel that has been overhanging the market to be absorbed,but it appears to have happened today.!!
Buyer now at $1.36, so we will await the half year ended 31/12/11 result, due on 24/2/12 with interest.

Lizard
23-02-2012, 02:58 PM
Half year result out and in line with expectations. That's about as exciting as results season gets this year.

Around fair value here at $1.42 by my measure, but I suppose I could always reduce my discount rate and justify another 20%. More likely take the divs and watch the s.p. tread water for another 3-4 months.

Solid as concrete.

percy
23-02-2012, 03:14 PM
NPAT up 17.2% finance costs down 16.1% is a good result.
You missed the "repositioned" Lizard.

Under Surveillance
23-02-2012, 03:17 PM
Half year result out and in line with expectations. That's about as exciting as results season gets this year.

Around fair value here at $1.42 by my measure, but I suppose I could always reduce my discount rate and justify another 20%. More likely take the divs and watch the s.p. tread water for another 3-4 months.

Solid as concrete.
Interim dividend is up from 2 cents to 3 cents; more fluid than concrete.

macduffy
23-02-2012, 04:39 PM
Half year result out and in line with expectations. That's about as exciting as results season gets this year.



Indeed, Liz.

Plenty of downgrades and other disappointments at present so we should be grateful! Market doesn't seem to be impressed though so I guess some expected better. I'm happy to hold.

percy
10-06-2012, 08:22 AM
A good article headed "Rubber giant milks innovation" by Rob O'Neil in today's Sunday Star-Times on SKL.

Balance
21-06-2012, 08:29 AM
https://www.nzx.com/companies/SKL/announcements/224084

Milford Asset Management building shareholding on behalf of NZ Super.

Time to look closely at this one given Milford's track record of buying quietly before telling market.

Balance
07-08-2012, 01:39 PM
https://www.nzx.com/companies/SKL/announcements/224084

Milford Asset Management building shareholding on behalf of NZ Super.

Time to look closely at this one given Milford's track record of buying quietly before telling market.

On the move.

$1.50 next stop?

Balance
31-08-2012, 12:10 PM
https://www.nzx.com/companies/SKL/announcements/224084

Milford Asset Management building shareholding on behalf of NZ Super.

Time to look closely at this one given Milford's track record of buying quietly before telling market.

Through $1.50 and $1.60 effortlessly.

Next stop, $1.70!

Morpheus
02-05-2013, 11:53 AM
And back to $1.33
Ouch.

Soolaimon
02-05-2013, 02:36 PM
Been here before. Those liners and gumboots are still wearing out, and a $3m decline in profit is not that bad.

percy
02-05-2013, 02:36 PM
Very difficult dailing into a head wind.
I hold and will continue holding.Strong balance sheet with little debt,but SKL will take a year or two to start performing again.Then I will be "well positioned for the upturn." lol.

BlackPeter
25-01-2014, 09:02 AM
article in the press ...

http://www.stuff.co.nz/business/industries/9648423/Mixed-view-on-Christchurch-rubber-maker?cid=edm:stuff:dailyheadlines
Forsyth Barr downgraded from accumulate to hold with good long term prospects. I'd think they still might have another good year (or two) ahead, as long as dairying performs as expected, but SP probably not too much growing for some time to come.

discl: still holding

percy
25-01-2014, 09:16 AM
I sold out a few weeks ago as I thought the share price had got ahead of itself,PE 17.93 and dividend yield of 4.52%,and I did not see a lot of earnings growth over the next year or two..
Been surprised at the SP strength since I sold,but it is a very good business.

noodles
25-01-2014, 10:27 AM
I sold out a few weeks ago as I thought the share price had got ahead of itself,PE 17.93 and dividend yield of 4.52%,and I did not see a lot of earnings growth over the next year or two..
Been surprised at the SP strength since I sold,but it is a very good business.

Likewise, I sold out at 1.66. I thought the AGM guidance was weak. Things have probably got worse since then because of currency headwinds.

Happy to be wrong. Best of luck to shareholders.

BlackPeter
20-02-2014, 10:43 AM
Half year results are out and looking good: https://www.nzx.com/files/attachments/189618.pdf
slightly increased revenue (+2%), nicely increased NPAT (and EPS): +14%; anticipating stronger second half :t_up:; dividend upgrade.

discl: holding and quite pleased :) about that

Schrodinger
20-02-2014, 11:15 AM
Yeah looks good. Interesting to see what the result would look like with a weaker dollar...

percy
20-02-2014, 11:17 AM
A very good result with a very positive out-look.
Surprised me.
Well done.

Lizard
20-02-2014, 11:31 AM
Yes, I was quite impressed - not holding any more, but sort of wish I was. Glad to see them on the move (makes NPX look even duller!).

winner69
21-08-2014, 08:47 AM
Sold result again. Keep the faithful followers happy no doubt

Love their enthusiasm with this exceptional bit but in reality trading was a bit more subdued. Is this insurance 'profit' the capex for their we plant?

Reported net profit after tax (NPAT) was an exceptional $41.1 million, up 116% from the $19.0 million reported a year earlier. However the result was positively impacted by a $20.4 gain from settlement of the Canterbury earthquakes insurance claim

percy
21-08-2014, 10:00 AM
Sold result again. Keep the faithful followers happy no doubt

Love their enthusiasm with this exceptional bit but in reality trading was a bit more subdued. Is this insurance 'profit' the capex for their we plant?

Reported net profit after tax (NPAT) was an exceptional $41.1 million, up 116% from the $19.0 million reported a year earlier. However the result was positively impacted by a $20.4 gain from settlement of the Canterbury earthquakes insurance claim

As a Christchurch resident I rather hope the result is an abnormal rather than normal.!!!

winner69
21-08-2014, 10:10 AM
You know the country is doing well when gumboot sales are on the rise

What's a pair of Bandals look like? New product

percy
21-08-2014, 10:26 AM
You know the country is doing well when gumboot sales are on the rise

What's a pair of Bandals look like? New product

Took of a great deal of looking,but entered Bandals on Skellerup's web site, and found a reference to them.Clicked onto Red Bandals and got a wonderful photo of a pair of........Jandals...... made of rubber.!
I think I will leave it to others to comment???!!!!

winner69
21-08-2014, 10:34 AM
You know the country is doing well when gumboot sales are on the rise

What's a pair of Bandals look like? New product

Well farmers have to look cool at the summer BBQ as well.

Some of them even go the the beach so Bandals for them.

I have had a pair of Skellerup gumboots for years. Wear them a lot. Almost indestructible, even the dog has given up trying to eat them.

winner69
21-08-2014, 11:06 AM
This what you saw Percy ..... nice

Red Bandals

Red Bandals. What to wear when you're not wearing Red Bands

It's the next best thing to New Zealand's best known gumboot, and it's arrived just in time for summer.

Made from high quality rubber

percy
21-08-2014, 11:13 AM
This what you saw Percy ..... nice

Red Bandals

Red Bandals. What to wear when you're not wearing Red Bands

It's the next best thing to New Zealand's best known gumboot, and it's arrived just in time for summer.

Made from high quality rubber

Thanks winner69.
Would one pair be enough??

winner69
21-08-2014, 11:29 AM
Thanks winner69.
Would one pair be enough??

If Red Band made they last forever, but what happens when you lose one

percy
21-08-2014, 12:18 PM
If Red Band made they last forever, but what happens when you lose one

Well if they last forever ,lets hope you don't lose one until you already have one foot in the grave............................,so you will only need one!!! lol.

Snoopy
24-02-2015, 08:37 AM
You know the country is doing well when gumboot sales are on the rise


I picked on this post from the late Winner69 because it sterotypes where Skellerup sits in the minds of many investors. An old traditional NZ manufacturer plugging away in the industrial Heartland of Christchurch producing dull commodity type products - albeit those with a long standing reputation among our farming community. Yet this view is very far from the reality of Skellerup today.

Around ten years ago (2006) Skellerup did a bit of soul searching. What are our strengths going forwards? They answered their own question in three parts:

a/ A wealth of experience in technical polymer (mostly rubber) development and production.
b/ The ability to make use of low cost manufacturing, both in house and outsourced.
c/ The ability to make best use of global distribution networks.

This re-evaluation meant that parts of the ‘old’ Skellerup were divested as acquisitions that fitted with the three core strengths were made. I think of FY2006 as the start of the ‘new’ Skellerup. FY2006 was perhaps not co-incidentally, the same year the company became Skellerup (from Skellmax), by name once again. So FY2006 is the first year of data that I have considered in my 're-evaluiation' exercise.

SNOOPY

Snoopy
24-02-2015, 08:41 AM
I think of FY2006 as the start of the ‘new’ Skellerup. FY2006 was perhaps not co-incidentally, the same year the company became Skellerup (from Skellmax), by name once again.


Just what business is Skellerup in? Skellerup is New Zealand’s largest industrial rubber supplier and exports to more than 30 international markets. From the FY2014 annual report:
“The Skellerup group markets develops and manufactures highly technical polymeric products and vacuum pumps. These products are distributed worldwide for a variety of specialized –industrial-AND-agricultural- products.”

Skellerup product development involves materials, product design and sales staff working together as a team.

Skellerup Industrial uses this ‘team approach’ to solve ‘niche industrial’ problems. One product, “Ultralon” foam, is being used for orthotic insoles. But Ultralon is also used in leading makes of ski boots like Atomic, Fischer, Scarpa and Scott.

The Masport pump for liquid waste is mounted on truck and trailer units all across the USA . Skellerup’s ‘Masport’ dominates that market in the shale and Hydrocarbon industry.

The ‘Flexflow’ rubber chute system, after six years of development, is now specified by BHP in their Pilbara region developments. Flexflow allows sticky yet abrasive iron ore extract to be moved with much reduced downtime. Future applications for ‘Flexflow’ could include bauxite, gypsum and coal. These three examples aren’t giant markets, but part of a wide small market niches serviced well. Skellerup’s customer focussed team approach mean they are very strong across a series of what are in global terms minnow (but profitable) markets.

Skellerup’s Agridivision manufactures and distributes products for the global dairy industry, OEMs and dairy sector distributors. Skellerup is the second largest dairy rubber supplier in the world. Delaval of Sweden claims a 50% share of the dairy market equipment globally and turnover of $NZ1.5 billion (all industry products). By contrast, the turnover of the Skellerup Agridivision in FY2014 was $80m. That means Skellerup is likely second by a long way, yet still ticks the ‘major player’ box.

Conclusion: Requirement satisfied

Snoopy
24-02-2015, 08:53 AM
FY2006 is the first year of data that I have considered in my 're-evaluiation' exercise.


2010: ($11.958-+0.67x$1.180m)/ 191.148m = 6.7cps
2011: ($29.560-$0.265-$9.360)m/ 192.806m = 10.3cps
2012: ($34.493-$1.663m-$10.229)m/ 192.806m = 11.7cps
2013: ($26.631-$0.871-$7.595)m/ 192.806m = 9.4cps
2014: ($29.202-$0.093-$8.458+$1.6)m/ 192.806m = 11.5cps

Notes:
a/ Results for all years have had foreign exchange currency gains removed. Foreign currency gains (or losses) are not a measure of operational business performance.
b/ Result for FY2010 removes the effect of the golden handshake on the retirement of previous CEO Donald Stewart.
c/ Result for FY2014 adds back a $1.6m long standing warranty dispute adjustment.

Note that I have made various adjustments to the normalised profit figures to normalise them a bit more. I have removed any currency hedging profits or losses. I don't consider these indicative of ongoing operational profitability. I have also removed gains and losses from property plant and equipment sales. Again these are restructuring costs that are not indicative of future profitability. Finally I have removed declared 'one off' effects. In FY2014 that includes the adding back of a $1.6m long standing warranty provision.

Conclusion: Requirement satisfied (two significant figures)

SNOOPY

Snoopy
24-02-2015, 08:56 AM
FY2006 is the first year of data that I have considered in my 're-evaluiation' exercise.


ROE= (Net Profit)/(EOFY Shareholders Funds)

2010: $12.748m /$100.890m= 12.1%
2011: $19.935m /$110.325m= 18.1%
2012: $22.600m /$121.372m= 18.6%
2013: $18.165m /$124.673m= 14.6%
2014: $22.251m /$144.691m= 15.4%

Conclusion: Requirement satisfied

SNOOPY

Snoopy
24-02-2015, 08:57 AM
FY2006 is the first year of data that I have considered in my 're-evaluiation' exercise.


Margin = Net Profit/Sales

2010: $12.748m /$180.719m= 6.7%
2011: $19.935m /$193.593m= 10.3%
2012: $22.600m /$207.313m= 10.9%
2013: $18.165m /$189.496m= 9.6%
2014: $22.251m /$196.606m= 11.3%

While not increasing every year, the five-year trend is definitely upwards with a solid improvement from FY2010.

Conclusion: Requirement satisfied

Snoopy
24-02-2015, 08:59 AM
So FY2006 is the first year of data that I have considered in my 're-evaluiation' exercise.


Skellerup meets all the criteria of being a Warren Buffett style growth company. This growth is largely overseas. So Skellerup have proved that they can work outside of the ‘New Zeland box’. Skellerup has done this through the development of offshore-based manufacturing sites and distribution channels.

Subsidiary Gulf industries in Australia have access to manufacturing facilities in Vietnam. The famous Red label Skellerup gumboots, and their more upmarket and specialized Quatro brand cousin, are designed in New Zealand. But manufacturing is done in low cost China.

In 2014 Skellerup bought ‘Thermoplastic Foam Industries’ as a distribution platform for the wider group Skellerup products within. Australia. Likewise in 2007, Skellerup bought ‘Turenedi’ in Itaily as their beachhead into Europe. Fully owned US subsidiary “Canewango” does a similar job in the Americas.

Skellerup have shown their ability to reinvest profits at rates of return that far outstrip their cost of capital over many years. This more than makes up for what on paper today is an average dividend payer. IMO Skellerup is one of those below the radar NZX gems that if bought at the right price should prove a very rewarding investment.

SNOOPY

disclosure: New shareholder

Biscuit
24-02-2015, 09:30 AM
Thanks for posting your analysis Snoopy! I agree it is a bit of a quiet achiever that mostly flies under the radar these days

babymonster
24-02-2015, 09:43 AM
Good analysis! I am happy with my holding and trying to add more if my funding is available.

macduffy
24-02-2015, 11:16 AM
Yes, thanks, Snoopy!

I'll take your analysis as justification for my hands-off "strategy" of benign neglect of this company - except for the burst of enthusiasm that saw me adding a few more a year or three ago!

:cool:

Marilyn Munroe
24-02-2015, 01:24 PM
Snoopy, while I do not dispute your analysis I have been cautious about SKL.

Selwyn Cushing the chairman of SKL was also chairman of Air New Zealand during the Ansett calamity.

Boop boop de do
Mariyln

Discl: Small holding of SKL.

Under Surveillance
24-02-2015, 02:21 PM
As to Cushing's role at SKL, I take some comfort from Cushing and related interests having skin in the game to the tune of 6% plus of SKL.

However, trying to put it nicely, Cushing is in appearance of advanced years and uncertain durability. And the board numbers just 4, of whom one hasn't long been a SKL director, and another is the CEO.

I would happily support an increase in directors fees so at least one additional director can be appointed and robustness added to the board with an eye to succession.

Snoopy
24-02-2015, 03:04 PM
Snoopy, while I do not dispute your analysis I have been cautious about SKL.

Selwyn Cushing the chairman of SKL was also chairman of Air New Zealand during the Ansett calamity.

Boop boop de do
Mariyln

Discl: Small holding of SKL.


Yes I do remember the Air NZ Ansett business. I remember going to the Air NZ AGM in the town hall in Christchurch shortly before. I remember Uncle Sel stand up and proclaim that Air NZ was as well capitalised as any airline internationally (or words to that effect). That may have been true. But unfortunately virtually every major world airline (bar Qantas and the Arabian ones) went broke, or close to it, soon afterwards! Got out of Air NZ 'only' losing half my capital :-(.

I took from this the lesson of Warren Buffett. When you think about investing in an airline and convince yourself the PE and yield is attractive, ring up a prerecorded investment advice message to yourself, reminding you not to do it!

I think the Chairmanship of Skellerup is a semi-retirement project for Uncle Sel these days. I don't think you can knock his performance at Skellerup in recent years though. Maybe the board being a bit lightweight is just what is needed for David Mair and his management team to just get on with things? I do agree with US though. An extra board member with an eye to succession would be welcomed.

SNOOPY

percy
24-02-2015, 03:32 PM
Anywhere Cushing has skin in the game,either at SKL or REL [unlisted market], he is very much on the ball.
I note the sp $1.37 is still under both the 50 day EMA $1.39, and the 200 day EMA $1.51,so take care..

Snoopy
24-02-2015, 03:38 PM
Anywhere Cushing has skin in the game,either at SKL or REL [unlisted market], he is very much on the ball.
I note the sp $1.37 is still under both the 50 day EMA $1.39, and the 200 day EMA $1.51,so take care..


I bought my initial stake at $1.33. I guess that means I'm in real trouble ;-P ? Seriously though, there could be some short term volatility ahead. Slipping out of the NZX 50 woudl mean that index funds are forced to sell (I will be buying if that happens). Not sure how stable their European operations will be short term. The dairy downturn could affect sales in FY2016 etc.

None of this is too much of a concern to me though. I will be getting a steady dividend stream while things settle down.

SNOOPY

Snoopy
26-02-2015, 02:17 PM
ROE= (Net Profit)/(EOFY Shareholders Funds)

2010: $12.748m /$100.890m= 12.1%
2011: $19.935m /$110.325m= 18.1%
2012: $22.600m /$121.372m= 18.6%
2013: $18.165m /$124.673m= 14.6%
2014: $22.251m /$144.691m= 15.4%

Conclusion: Requirement satisfied


A note of warning here. It can be extremely dangerous to rely on ROE as a stand alone indicator. A company can be very highly leveraged which artificially raises their ROE above what it would be if it was more prudently capitalised. But is this the case with Skellerup?

From the FY2015 interim report Balance Sheet:

Cash: $10.678m

Interest Bearing Loans and Borrowings: $2.900m

Net cash position: $7.778m

Skellerup has no term debt and a very strong positive cash position. This is very different from even a few years ago when Skellerup ran up quite a lot of debt. Granted the Christchuch earthquakes and resultant payout relating to their Woolston site has boosted the cash position for now. Some debt may creep back into the balance sheet once the new Wigram factory is built. Offsetting that will be efficiency gains from what will be a thoroughly modern factory. Nevertheless no term debt today is a very good reason to like this company.

SNOOPY

Snoopy
28-02-2015, 09:56 AM
Skellerup have shown their ability to reinvest profits at rates of return that far outstrip their cost of capital over many years. This more than makes up for what on paper today is an average dividend payer. IMO Skellerup is one of those below the radar NZX gems that if bought at the right price should prove a very rewarding investment.


Nothing I have done so far has confirmed the case for investment in Skellerup. A excellent company can still be a lousy investment if the price you pay for access is too high. So is the price for Skellerup today on the market too high? To answer that I plug the numbers into the Buffett style ten year growth model.

For this model I am using an ROE of 17.8% (the actual average of the last 9 years) and a dividend payout ratio of 62% (the actual dividend payout of the last 9 years).



SOFY


FYAsset BackingEarningsDividendRetained Earnings


20130.630.0940.0800.014


20140.650.1150.0850.030


20150.750.1340.0830.051


20160.800.1430.0880.054


20170.850.1520.0940.058


20180.910.1620.1010.062


20190.970.1730.1080.066


20201.040.1850.1150.070


20211.110.1980.1230.075


20221.190.2110.1310.080


20231.270.2250.1400.086


20241.350.2410.1490.091


20251.440.257


Total1.13=align:right



With a 2025 year earnings of 25.7cps and using a PE of 12.6 (actual average over the last 9 years) the expected share price for Skellerup in ten years time is:

12.6 x 0.257 = $3.24

The dividend return over that time is $1.13 (as per above table)

Using a market share price today of $1.39, the expected compounding annual return 'i' can be calculated from the following equation.

$1.39(1+i)^10 = (3.24 +1.13) => i=12.1%

This return is a net return, before imputation credits. I haven't seen anywhere else on the NZX I can get a return so strong for so long. So for me investment in SKL at under $1.39 is a no brainer.

Some however, may consider a 12.1% return not good enough. What price (P) would you need to buy at to get a 15% compounding return?

P(1+0.015)^10 = (3.24+1.13) => P= $1.08

SNOOPY

PS The reason I like this method of analysis is that all the data used to generate it comes from Skellerup itself. I haven't assumed a return on equity rate, nor have a assumed the market value multiple of Skellerup will be anything to different to how 'Mr Market' has valued Skellerup in the past.

samdaman
28-02-2015, 10:32 AM
just doing a quick calc snoopy you'd be looking at a return of 12.3% a year :) if that's good enough for an investor then i guess the price isn't too high right? :D

Snoopy
28-02-2015, 10:41 AM
For this model I am using an ROE of 17.8% (the actual average of the last 9 years) and a dividend payout ratio of 62% (the actual dividend payout of the last 9 years).

<snip>

Using a market share price today of $1.39, the expected compounding annual return 'i' can be calculated from the following equation.

$1.39(1+i)^10 = (3.24 +1.23) => i=12.1%


I always like to double check my work by looking at my averaged assumptions, verses actual figures from the last couple of years. ROE for FY2013 was 14.6%, and for FY2014 was 15.4%. These are both lower than the 17.6% I used. However, this is largely due to a blowout in equity (if you can have such a thing!) caused by large cash insurance payments. Once the new factory at Wigram is built, I believe that greater efficiency will result boosting ROE.

One thing I didn't model is any repeat of the two equity raisings over the last nine years. All this cash has been well deplyed earning well over the companuy's cost of capital. So I don't see any doubt about Skellerup's ability to use their capital wisely. A further cash issue (equivalent to more retained earnings) could boost earnings growth even more than I have modelled.

Finally the PE ratios for 2013 and 2014 respectively as at 30th September were 17.4 and 13.7 respectively. Thus using 12.6 in my model is a multiple reduction (conservative).

I am rather unsure what will happen to SKL over the next two years, with upheavals in industrial Europe and drought. I am however much more confident about knowing where SKL will be in ten or so years time given their record. I intend to use any weakness in the market over the next year or so to boost my holding.

SNOOPY

Snoopy
28-02-2015, 10:43 AM
just doing a quick calc snoopy you'd be looking at a return of 12.3% a year :) if that's good enough for an investor then i guess the price isn't too high right? :D

I used $1.39 as a buy price. If you can buy for lower than that, then the modelled return goes up - yes. Whatever return an investor deems satisfactory is up to them.

SNOOPY

percy
28-02-2015, 10:59 AM
I always liek to double check my work by looking at my averaged assumptions, verses actual figures from the last couple of years. ROE for FY2013 was 14.6%, and for FY2014 was 15.4%. These are both lower than the 17.6% I used. However, this is largely due to a blowout in equity (if you can have such a thin!) caused by large cash insurance payments. Once the new factory at Wigram is built, I believe that greater efficiency will result boosting ROE.

One thing I didn't model is any repeat of the two equity raisings over the last nine years. All this cash has been well deplyed earning well over the companuy's cost of capital. So I don't see any doubt about Skellerup's ability to use their capital wisely. A further cash issue (equivalent to more retained earnings) could boost earnings growth even more than I have modelled.

Finally the PE ratios for 2013 and 2014 respectively as at 30th September were 17.4 and 13.7 respectively. Thus using 12.6 in my model is a multiple reduction (conservative).

I am rather unsure what will happen to SKL over the next two years, with upheavals in industrial Europe and drought. I am however much more confident about knowing where SKL will be in ten or so years time given their record. I intend to use any weakness in the market over the next year or so to boost my holding.

SNOOPY
I sold when the PE reach near 17.
With Aussie mining slow down, a little uncertainty in US market,and the new Christchurch not coming into production until the end of this calendar year,I think earnings will be flat,so your 12.6 PE model may be over generous.

Snoopy
28-02-2015, 02:14 PM
I sold when the PE reach near 17.


If the PE was 17 based on FY2014 earnings, that implies a share price of:

17 x 0.115 = $1.96

If I was looking to buy SKL shares at that price, my expected return, as per my model over a ten year timeframe is as follows:

1.96(1+i)^10 = (3.24 +1.23) => i=8.6%

A compounding return of 8.6% is OK, but not nearly as compelling as 12.1%. If it were me I would be looking out for other opportunities. Paying $1.96 for SKL shares does not excite me. You may have been right to sell Percy if you had better opportunities elsewhere.



With Aussie mining slow down, a little uncertainty in US market,and the new Christchurch not coming into production until the end of this calendar year,I think earnings will be flat,


Very likely true Percy. There may be opportunities in the next year or so when the share price dips. I didn't buy all the SKL shares I wanted at $1.33 for exactly that reason. The likes of Buffett sees these downturns as an opportunity to buy when the underlying long term outlook of the company is strong.



so your 12.6 PE model may be over generous.


12.6 is an average PE taken at September 30th (about when the annual result is made public) each year. It isn't meant to be over generous or under generous. It is just a mathematical calculation.

In bad years the PE may be higher (in anticipation of an ultimate recovery). In good years the PE may be lower (in anticpation of the party not lasting forever). I do not expect the actual PE to hug this average of 12.6. But if I look a decade into the future, not knowing whether the share will be in an upcycle or downcycle, this is the average of what it might be based on what Mr Market has valued the share at in the past.

If you think I should use a lower figure than 12.6, what you are saying is you expect the long term rating of the share to be lower in the next ten years than the last nine. The business has a history of performing well, so it would be incongruous to mark it down on a PE basis. 12.6 (average) is still my best guess going forwards based on nine years of SKL history.

SNOOPY

percy
28-02-2015, 02:53 PM
SKL with manufacturing plants in NZ and Australia will face headwinds.
I think the outlook for NZ and Australian manufacturers is "hopeless".
Wages and costs,means they cannot compete with low cost countries.
Therefore, I would expect the long term rating to be "a lot" lower than the previous nine years.
From memory I sold when the projected PE was 17,and I saw little or no earnings growth.Although The sp did go up a little after I sold,my timing was excellent.I locked in good profits and used my capital better elsewhere
SCT faces the same issues.FPA moved a lot of manufacturing to Thailand,while FPH moved a lot to Mexico.
Some years ago Arthur Lim at a Macquarries presentation said "Invest in anything China wants,sell anything China can make."
His advice has saved me a lot of money.So anyone investing in a NZ or Australian manufacturer should be very careful,as future is not secure.The share is still in a downtrend,so extra care is required.

PS.Those of us with long memories, remember Sydenham in Christchurch was the home to a great number of furniture manufacturers, and also a good number of footwear manufacturers.Today I don't think there is one of either.Hard to believe there will be a rubber products manufacturer in Christchurch in 10 years time,or a production line manufactuerer in Dunedin.
And as for a carpet,or electric motor manufacturer in Auckland in 10 years time? No way!

percy
28-02-2015, 05:11 PM
I sold out a few weeks ago as I thought the share price had got ahead of itself,PE 17.93 and dividend yield of 4.52%,and I did not see a lot of earnings growth over the next year or two..
Been surprised at the SP strength since I sold,but it is a very good business.

Above posted 25-1-2014.
Think I sold at $1.73.Most probably invested in HNZ which at the time were 85cents.
So instead of still having a SKL share worth $1.37 today,I have $2.71 worth of HNZ.So am 97.8% better off.

Snow Leopard
28-02-2015, 05:27 PM
...



SOFY





FY
Asset Backing
Earnings
Dividend
Retained Earnings


2013
0.63
0.094
0.080
0.014


2014
0.65
0.115
0.085
0.030


2015
0.75
0.134
0.083
0.051


2016
0.80
0.143
0.088
0.054


2017
0.85
0.152
0.094
0.058


2018
0.91
0.162
0.101
0.062


2019
0.97
0.173
0.108
0.066


2020
1.04
0.185
0.115
0.070


2021
1.11
0.198
0.123
0.075


2022
1.19
0.211
0.131
0.080


2023
1.27
0.225
0.140
0.086


2024
1.35
0.241
0.149
0.091


2025
1.44
0.257




Total


1.13





Plugging those NPAT figures into the appropriate Tiger Model gives a NPV of $1.565

BUT

with the company predicting FY2015 profit in line with $20M7 I disagree with those forward estimates and starting with $0.11 NPAT for FY2015 reckon a truer NPV would be $1.285

Best Wishes
Paper Tiger

Disc: Quick & Dirty modelling, do not hold (obviously), DYOR.

Snoopy
01-03-2015, 09:17 AM
SKL with manufacturing plants in NZ and Australia will face headwinds.
I think the outlook for NZ and Australian manufacturers is "hopeless".


Percy, your concerns are real. This is exactly the background that the grand review of the business in 2006 was coming from. I think it is now incorrect to describe Skellerup as a New Zealand manufacturer. Their lower cost higher volume products are already made in China (gumboots) or Vietnam (where the 'Australian' arm Gulf sources much of their manufacturing). Their European base is in (relatively) low cost Italy.



Wages and costs,means they cannot compete with low cost countries.


It costs more to pay a New Zealand worker than a Chinese worker, that's true. But it doesn't cost more to pay a New Zealand robot than a Chinese robot. The New Zealand manufacturing arm are making relatively low volume hi-tech mulitmaterial product.



Therefore, I would expect the long term rating to be "a lot" lower than the previous nine years.


The issues facing Skellerup today are the same as in 2006. Skellerup have adapted!



The share is still in a downtrend,so extra care is required.


This is largely because of deferred maintenance in mining spending and a less rosy outlook for the dairy sector. Skellerup sells largely consumable products. So they expect most of this spending to come back. If you wait until later to buy, the share price will probably be higher than today. I wish to buy at the lowest price I can.

SNOOPY

Snoopy
01-03-2015, 09:29 AM
Plugging those NPAT figures into the appropriate Tiger Model gives a NPV of $1.565


Fair enough. I am not working with an NPV model as you can see.



BUT

with the company predicting FY2015 profit in line with $20M7 I disagree with those forward estimates


My table of numbers based on any particular year should not be regarded as a 'forward estimate'. All numbers are mechanically generated according to a formula that calculates a return based on retained assets based on every year being 'average'. They are mechanically calculated projections that ignore the market noise of any particular year. Of course if you pick on any particular year the real number is unlikely to be 'the average'. But real numbers, for a company with resilience, will have a tendency to fluctuate around an average trend.

If Skellerup does not earn 13.4cps (underlying) in FY2015, this will cause earnings growth to be less than projected. Likewise further down the track if earnings are higher than projected, the table will start to catch up with itself. A poor year in FY2015 will only affect one data point out of ten when calculating ten year averages.



and starting with $0.11 NPAT for FY2015 reckon a truer NPV would be $1.285


Your NPV model has generated a 28cps fall in value based on one down or flat year. The NPV model gives more weight to the immediate outlook than the long term trend. I choose not to do that, which is why my valuation is somewhat different from yours.

SNOOPY

Snoopy
04-03-2015, 03:32 PM
As to Cushing's role at SKL, I take some comfort from Cushing and related interests having skin in the game to the tune of 6% plus of SKL.

However, trying to put it nicely, Cushing is in appearance of advanced years and uncertain durability. And the board numbers just 4, of whom one hasn't long been a SKL director, and another is the CEO.

I would happily support an increase in directors fees so at least one additional director can be appointed and robustness added to the board with an eye to succession.

Looks like Skellerup directors are reading this forum and have acted!

----

DIRECTOR: SKL: Skellerup adds director to the Board

Skellerup today announced the appointment to its board of John Strowger, a leading commercial lawyer and partner of Chapman Tripp.

Chairman Sir Selwyn Cushing said: "John is a highly regarded and experienced commercial lawyer who has had considerable involvement with international businesses. We are delighted to have secured such a high calibre person with relevant skills as we seek to grow revenue and earnings in international markets. As a Board we consider it the right time to appoint a further director as the company executes its growth strategies."

The appointment will increase Skellerup's board to five directors and raise the number of independent directors to three.

-----

SNOOPY

Microsloth
19-03-2015, 02:37 PM
Good news bounce on new Ultralon Us Distribution deal

https://www.nzx.com/companies/SKL/announcements/262067

percy
19-03-2015, 02:49 PM
Good news bounce on new Ultralon Us Distribution deal

https://www.nzx.com/companies/SKL/announcements/262067



A very positive announcement.

Snoopy
22-03-2015, 09:37 AM
A very positive announcement.

And ACC agrees! On 19th March they bought over one million shares on market. Percentage holding goes from 5.346% to 6.893% in one day!

SNOOPY

percy
22-03-2015, 03:25 PM
And ACC agrees! On 19th March they bought over one million shares on market. Percentage holding goes from 5.346% to 6.893% in one day!

SNOOPY
Surprised me just how quick they were.
Buying on the day of the announce is indeed very quick,infact I would go so far as to say Ultralon quick!!
I have got no idea the volume of sales they will achieve,but Composites One would appear to be an excellent distributor.Will be interesting to see whether Ultralon or Composites One hold stocks,ie will Ultralon have to establish a warehouse in the US to service Composites One? I just can not see Composites One waiting for stock to be sent from NZ,even if it via the supper service Ports of Timaru and Tauranga can provide??!!

Snoopy
30-06-2015, 02:35 PM
There may be opportunities in the next year or so when the share price dips. I didn't buy all the SKL shares I wanted at $1.33 for exactly that reason. The likes of Buffett sees these downturns as an opportunity to buy when the underlying long term outlook of the company is strong.


Thankyou Mr Pigappopolopolis for providing the opportunity. 'Averaged down' by picking up some more shares at $1.30 today! Or did I average down, as I have already banked a 7c dividend from the first tranche of shares I bought?

Since I bought my first tranche of shares the currency has weakened. That is generally good for exporters. Yet Skellerup has a policy of hedging currency cashflow risk 100% in the current year and 50% in the subsequent one. Last year a fall in the currency of 5% would have only boosted profits by 5% as a result (AR2014 p60)!?! Sub note 3 suggests a similar effect for this year:

----------

3. Apart from repayment of foreign currency loans over the reporting period, the Group’s net exposure to foreign currency at balance date is representative of past periods and is expected to remain relatively consistent for the future 12-month period

----------

Of course the currency weakness was relatively late in the year (Accounting year end 30th June). So it will take until FY2016 before the currency depreciation has a significant effect. Just as well share prices always behave with the future outlook in mind.

Still I am expecting a not so good year in FY2015. Sales to the iron ore miners and dairy farmers aren't going to be good. I will be more than satisfied if FY2015 can match the underlying FY2014 given industry circumstances.

SNOOPY

Pricey
30-06-2015, 06:22 PM
Nice detail Snoopy. The CEO, David Mair, is also buying up (in his capacity as fund manager) at current prices, which peaked my interest the other day. Three separate purchases have taken place in June alone.

theace
01-07-2015, 04:03 PM
Dipped my toes in today

cdonald
07-07-2015, 10:17 AM
ACC have gathered up a few more shares to take their holding to a smidge under 10%. Excuse my novice approach, but do things change if one holder gets more that 10% or does the take over code kick in at 19.9%.

percy
07-07-2015, 10:40 AM
ACC have gathered up a few more shares to take their holding to a smidge under 10%. Excuse my novice approach, but do things change if one holder gets more that 10% or does the take over code kick in at 19.9%.

Over 19.9%.
They have not brought enough to turn around the down trend.Possibly they could try harder.!

Marilyn Munroe
07-07-2015, 12:55 PM
ACC have gathered up a few more shares to take their holding to a smidge under 10%. Excuse my novice approach, but do things change if one holder gets more that 10% or does the take over code kick in at 19.9%.

In the other direction the takeover code allows any bidder in a takeover who gets 90% of the shares from voluntary acceptances of their offer to compolsorily aquire the rest.

Thus if ACC have 10% or more of the shares they can block a complete takeover. This puts them in a favourable barganing position with anyone wanting to aquire the company.

Boop boop de do
Marilyn

cdonald
14-07-2015, 02:03 PM
another large cross this arvo. Wonder if it is ACC picking up some more of these. Also of note is Mairs related increase in holding. Might be interesting if large holders choose to combine.

percy
14-07-2015, 02:31 PM
another large cross this arvo. Wonder if it is ACC picking up some more of these. Also of note is Mairs related increase in holding. Might be interesting if large holders choose to combine.

They will need a big joint venture.!
sp is still falling.
May need a third party with deep pockets to join them?

mattwanz
15-07-2015, 02:18 PM
Think USD strengthening against Kiwi must be good for these guys with previous investment in US and with the new factory around the corner too has pushed me over the edge, might have a go at this one

kiora
22-07-2015, 03:08 PM
Director buying
http://www.stocknessmonster.com/news-item?T=J5OvU69e0QfEpKtzryYFwC&E=NZSE&S=SKL&N=267261

winner69
22-07-2015, 03:49 PM
Director buying
http://www.stocknessmonster.com/news-item?T=J5OvU69e0QfEpKtzryYFwC&E=NZSE&S=SKL&N=267261

One day the share price has to turn around and start heading upwards, doesn't it

Any idea when kiora?

noodles
22-07-2015, 04:31 PM
Director buying
http://www.stocknessmonster.com/news-item?T=J5OvU69e0QfEpKtzryYFwC&E=NZSE&S=SKL&N=267261
I don't think he is. Read the notice...
"Non-beneficial interest as shareholder of fund manager"

EDIT: This post is incorrect

winner69
22-07-2015, 04:43 PM
I don't think he is. Read the notice...
"Non-beneficial interest as shareholder of fund manager"

No change in that particular holding

Read further down and 50,000 purchased where he has a beneficial interest and voting rights

kiora
22-07-2015, 05:11 PM
One day the share price has to turn around and start heading upwards, doesn't it

Any idea when kiora?

Its in no hurry W69,6 months?

Snoopy
22-07-2015, 06:00 PM
One day the share price has to turn around and start heading upwards, doesn't it


The currency should be helping this exporting company in FY2016. The problem is two of their biggest selling consumable lines, the rubber attachments used in milking cows and the slurry handling rubber couplings used in iron ore extraction, have customers facing severe headwinds. These headwinds are likely to delay the aforementioned purchases rather than stopping them. But it does mean the first half of financial year coming up could be soft.

There are other good things happening in Europe. Maserati sales exceeded 35,000 in 2014 and are on target to exceed 50,000 in 2015. Skellerup supplies all the driveline couplings for those through their Italian factory. Even better Alfa Romeo are using a modified version of the mid size Maserati platform as the basis for their new rear wheel drive BMW challenging saloon. If that takes off we could see Skellerup driveline coupling sales increase by a factor of 5. What would that do the bottom line in coming years?

SNOOPY

percy
22-07-2015, 07:03 PM
Snoopy.
Raw materials will be costing more.
Imported goods such as gumboots will be costing them more.
Of concern is SKL share price weakness while other exporters' share price has gone up ,including SCT .

Pricey
22-07-2015, 09:27 PM
He is not buying personally. His non-beneficial interest rose from 1,946,444 to 1,996,444 while his "other relative interest" (i.e. his personal and beneficial interest) remained at 2,527,506. Its interesting that SKL's story is not compelling enough to use his own money ...

I also agree with Snoopy, the weakening of the NZD will probably be offset by the downturn in dairy and iron ore production in the short term. In 2014 North America counted for 24% of revenue while NZ/AUS counted for 49%.

winner69
22-07-2015, 10:42 PM
He is not buying personally. His non-beneficial interest rose from 1,946,444 to 1,996,444 while his "other relative interest" (i.e. his personal and beneficial interest) remained at 2,527,506. Its interesting that SKL's story is not compelling enough to use his own money ...

I also agree with Snoopy, the weakening of the NZD will probably be offset by the downturn in dairy and iron ore production in the short term. In 2014 North America counted for 24% of revenue while NZ/AUS counted for 49%.

Have another read of that SSH notice

There was a purchase of 50 ,000 shares on 17 July by DM2 Investment Trust which Mair has a beneficial interest in as trustee. I assume the DM stands for David Mair

I read it as him using his own money

noodles
23-07-2015, 07:55 AM
Have another read of that SSH notice

There was a purchase of 50 ,000 shares on 17 July by DM2 Investment Trust which Mair has a beneficial interest in as trustee. I assume the DM stands for David Mair

I read it as him using his own money
That is a very positive sign.