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metro
19-11-2006, 12:58 PM
An excerpt from <s>the</s> my StockWatch newsletter:

FBU Fletcher Building Limited

Head Office: 810 Great South Road, Penrose, Auckland. Tel: 09 525 9248. Fax: 09 525 9029.
Business: Manufactures, distributes, and sells materials for the building industry.
Chairman: Roderick Deane Managing Director: Jonathan Ling, P E Baines, H A Fletcher, G J McGrath, Sir D Spring.
Senior Management: J Ling Managing Director, M J Binns MD-Infrastructure, D C Edwards MD-Distribution, P J F Merry GM-Human Resources, MC Farrell Company Secretary and General Counsel, W J Roest Chief Financial Officer, D Worley MD-Laminates and Panels Group.
Dividend Reinvestment Plan: Yes.
Market Capitalisation: $4.3 billion.
Share Registry: Computershare Investor Services Level 2, 159 Hurstmere Road, Takapuna, Private Bag 92119, Auckland. Tel: 09 488 8777. Fax: 09 488 8787.
Share Price: as at 19th November 2006 $9.85.
Website: http://www.fletcherbuilding.co.nz

Introduction:

Fletcher Building Limited (FBU) manufactures, distributes, and sells materials for the building industry including wood fibre-based products, cement and aggregates, plasterboard and panel products, lumber and aluminium extrusion and residential and commercial construction. The company operates primarily in New Zealand and Australia and is currently riding the wave of increased construction activity in Australasia.

FBU commands a strong competitive position in the building materials sector. This is assisted by industry leading brands and a nation-wide distribution network. The company also has a very strong presence in the infrastructure segment in New Zealand.

The company believes that it has the necessary financial capacity to pursue big-ticket acquisitions with the stated objective of having a debt/capital ratio between 40-50% over the longer term.

Latest Result:

In spite of weakiening demand in the residential property market on both sides of the Tasman, Fletcher's strategy of diversification and strategic purchases ensured earnings reliabilty in a cyclical downturn with the NPAT (net profit after tax) reported at $379m (and increase of 9.0%) for the full year ended 30th June 2006 from sales of $5.52bn (an increase of 6.0%). Revenues from ordinary activities were NZ$5,520m, up 19.1% from the same period last year. Diluted EPS was 79.6 NZc compared to 73.2 NZc last year. Net operating cash flow was NZ$560m compared to NZ$479m last year. Total dividend for the year was 40 NZc compared with 32 NZc last year. The company advised that the full year result reflected a more difficult market environment, offset by the benefits of acquisitions and ongoing productivity improvements.

Brokers Recommendations:

ABN Amro Craigs (ABNAC) in their Spring client newletter stated FBU full year result "demonstrated the inherent strength of the company's diversification strategy. Our view of the stock has not changed; it is a top quality franchise with a solid track record of value creation. FBU's diversification strategy has provided it with a good measure of earnings reliability in a cyclical downturn. While the earnings growth outlook is likely to be less spectacular in the absence of acquisitions, we believe it is still very respectable in a slowing economic environment. ABN Amro Craigs analyse Dennis Lee described the result as a "solid but less sparkle this time". In the context of a slowing environment "we think this is a very credible performance. As expected the drivers have slowed in the second half but not as severely as we had anticipated....the slowing residential markets on both sides of the Tasman and cost pressures were reflected in two of the four divisions displaying margin pressure. The result is a good showcase of FBU's diversified earnings base. Investors should take comfort in the company pushing for modest earnings growth despite an economic slowdown". "The result is a testimony to FBU's improved earnings reliability". ABNAC's Target P

kura
19-11-2006, 03:08 PM
Isn't that a breach of copyright to reproduce articles from a subscription service ?

kittydashwood
19-11-2006, 04:03 PM
Metro what is a hold+?

Should I add to my holding or hold more tightly?


IMHO In 12mths FBU will be more likely to be 19.55.

metro
19-11-2006, 04:32 PM
KittyDashwood: Given the recent takeover and acquisition activity in the building sector of the ASX and with a possible contract for the construction of the Waterfront Stadium it might well be closer to $19.55 than $10.55, in 12 months. But using the Dividend Discount Model which is what many equity analysts use i.e. D1/k-g and ifyou are predicting g, i.e. the growth in earnings to be flat or reasonably flat (which is what I said above) it would be impossible to justify a valuation of $19.55 using the model. Even using a Discounted Cashflow model (DCF) it would not be possible to justify a valuation of $19.55. I perhaps should have said StockWatch predicts a 12 month target price of at least $10.55.

Recommendations used in my newletter are: Sell (E), Reduce (D), Hold (C), Hold+ (B), and Buy (A). A HOLD+ is one step down from a BUY, HOLD+ meaning HOLD or BUY if you don't already have some. I don't think many investors have ever regreted buying FBU, only regreted selling as the stock has gone from strength to strength, even with the departure of Ralph Waters. For a NZ equity portfolio, medium risk profile and with an emphasis on growth I would consider it a core holding along with CEN, AIA, SKT, MFT, FPH etc. Will post up some information on these companies shortly. So a HOLD+ recommendation for FBU means...if an investor doesn't hold any, even at $9.85 they could consider adding it to their portfolio. I have never regreted buying FBU.

Nevl
19-11-2006, 04:38 PM
thanks for the news letter Deane and keep up the good work.

kura
19-11-2006, 05:35 PM
Metro, (as you are touting for subscriptions) you are effectively using this forum as a way of free advertising, which I personally dislike.

Could I suggest you get some official arrangement with Mr Share Trader, so at least they get some sort of cut, out of any subscriptions received to cover cost of providing this forum.

I'm not knocking the contents of article, and could be tempted to subscribe myself, but I just think you are going about it the wrong way !

metro
19-11-2006, 06:23 PM
Kura. I have noted your comments. As I rather like this forum and value everyones opinions and participation I will approach Mr Sharetrader as you suggest.

This forum has for many years kept me in touch with like minded individuals - and if it was not for this forum I would not have as much opportunity to do that - plus I've made some great friends here - so I'm grateful.

Rif-Raf
19-11-2006, 07:03 PM
Forums are for people to share opinions and the better the quality of postings then the better we all are. I don't consider Metro's posts to be in the category of spam, there's no copyright breaches as it's his own material and if he chooses to give away some of his advice that he may otherwise be able to charge for then that's his good/bad luck.

Give Metro a break!!!

Snow Leopard
19-11-2006, 07:26 PM
Financials:

Gross Dividends Per Share: 28.36
Dividend Yield: 4.2
Tax Adjusted Dividend Yield 2.2%

28.36(cps I presume) would be 19c+imp+etc and for a half year not a full years divvies
4.2(% ?) is plain wrong, even for the half year.
2.2% implies a price of $8.64 if we are talking about the 19c

Do you want to try
divvy last year 40cps, gross divvy last year 59.7cps
as a percentage: 4.1% and (gross) 6.1% at a SP of $9.85

regards

Paper Tiger

Snow Leopard
19-11-2006, 07:36 PM
Metro, what does each edition of your newsletter actually consist of ?
How many of these company analysis? What else?

kura
19-11-2006, 08:26 PM
Rif Raf, prior to Metro editing his original post there was no obvious association with Metro to the Stockwatch newsletter, that is why I originally raised the matter of copyright.

I have no idea how long Metro has been in bizz with Stockwatch, but given PT's comment (and my own curiousity) I think it is only fair that we should be able to view a full monthly newsletter to make an objective judgement as to it's merits or otherwise. Sure, to post the current version may offend those people who have paid for the service, but to post a version that was a few months out of date would surely offend no one ?

Rif-Raf
20-11-2006, 07:08 PM
quote:Originally posted by kura

Rif Raf, prior to Metro editing his original post there was no obvious association with Metro to the Stockwatch newsletter, that is why I originally raised the matter of copyright.
Yes, i understand that and it was fair enough to raise it.

quote:
I have no idea how long Metro has been in bizz with Stockwatch, but given PT's comment (and my own curiousity) I think it is only fair that we should be able to view a full monthly newsletter to make an objective judgement as to it's merits or otherwise. Sure, to post the current version may offend those people who have paid for the service, but to post a version that was a few months out of date would surely offend no one ?

I'm not sure why we can expect anything, if he shows only some of his wares then surely that's his prerogative. My thoughts are bring on any contributor that posts worthwhile content. On one of his other threads showing company analysis I note a couple of people accused his posts of being spam! Within the forums there are endless posts of complete drivel and flaming (e.g. read the NZOG thread), so when someone provides some analytical or informed commentary I feel they should be encouraged and it seems that you and others are being a little overly critical of Metro. - but hey, that's just my opinion! :)

kura
21-11-2006, 11:47 PM
Rif Raf, yes you are entitled to your opinion, and also, I have seen some of Metros recent posts, and they are definitely not spam (merely a discrete sort of "signature" at end of each post, just as many posters will put some witty saying )
However to reply to you, I don't expect anything from Metro as such, if anything I thought I was giving constructive advise, as to how he could enhance his subscriber base, as I would be reluctant to buy (subscribe) anything before I knew what I was exactly getting (would you really buy a car, if you were only allowed to see the tyres, and nothing else ? )
I hope you see what I am saying, as in does Metro's newsletter cover 1 stock per week or 10 stocks ? (and whatever else ? ) I simply wouldn't know, and I thought my suggestion of displaying an out of date newsletter was fair and reasonable, as it would give anyone interested, the general idea of the actual product, without disclosing any current research.

Rif-Raf
22-11-2006, 12:03 PM
Kura - fair enough, the problem with written communication is what we type doesn't always translate to the message readers interpretate.

As to FBU, I see it's come back to $9.60 after Stadium uncertainty. Good buying.

kittydashwood
22-11-2006, 12:15 PM
Hey metro how about a riskwatch.
Something that monitored the ten most risky investments of the week would be useful.

metro
27-12-2006, 02:40 PM
When I started this thread the price was $9.85. Last sale today 11.06. A nice 12% gain!

Placebo
08-08-2007, 02:46 PM
Nobody has posted or commented on this, so I might as well :).

Pretty good result all told, and they are fairly positive about the future. Market has reacted oddly, price down today. But still going well.



FLLYR: FBU: FBL 2007 Annual Results

Name of Listed Issuer: Fletcher Building Limited

For Year Ended: 30 June 2007

This report has been prepared in a manner which complies with generally
accepted accounting practice and gives a true and fair view of the matters to
which the report relates and is based on audited accounts.
The amounts as presented have been prepared in a manner which complies with
New Zealand accounting standards which comply with International Financial
Reporting Standards (IFRS).

CONSOLIDATED OPERATING STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

Audited

Current Year NZ$'M; Up/Down %; Previous Corresponding Year NZ$'M

Total operating revenue: $5,926m; up 7%; $5,520m.

OPERATING SURPLUS BEFORE UNUSUAL ITEMS AND TAX: $611m; up 4%; $587m.

Unusual items for separate disclosure: 5; n/a; 0

OPERATING SURPLUS BEFORE TAX: $616m; up 5%; $587m.

Less tax on operating profit: $113m; down 40%; $189m.

OPERATING SURPLUS AFTER TAX BUT BEFORE MINORITY INTERESTS: $503m; up 26%;
$398m.

Less minority interests: $19m; no change: $19m.

OPERATING SURPLUS AFTER TAX ATTRIBUTABLE TO MEMBERS OF LISTED ISSUER: $484m;
up 28%; $379m.

Extraordinary items after tax attributable to Members of the Listed Issuer:
0: n/a: 0.

OPERATING SURPLUS (DEFICIT) AND EXTRAORDINARY ITEMS AFTER TAX ATTRIBUTABLE TO
MEMBERS OF THE LISTED ISSUER: $484m; up 28%; $379m.

Earnings per share: 101.9 cps; up 25%: 81.3 cps

Final Dividend: 23 cps

Record date: 21 September 2007

Date Payable: 11 October 2007

Tax credits on latest dividend: 100% for New Zealand comprising through the
attachment of imputation credits, and fully franked for Australian tax
purposes.
Refer attached press release for further detail.

2007 ANNUAL RESULTS SUMMARY

Auckland, 8 August 2007 - Fletcher Building today announced record results
for the year ended 30 June 2007. Net profit after tax and minority interests
was $484 million, compared to $379 million in the previous year. The
increase of $105 million includes the $70 million one-off taxation benefit
previously advised to the market.

Operating earnings (earnings before interest and tax) were $703 million,
including a net $5 million of unusual items, and an increase on the $675
million of operating earnings in the previous year, which had no unusual
items. The increase of 4 percent on the 2006 year reflected some benefits
from acquisitions, ongoing productivity improvements and the unusual items,
with some offset due to more difficult market conditions.

The lift in earnings has enabled the eleventh consecutive dividend increase,
with a final dividend of 23 cents per share, with full New Zealand and
Australian tax credits. The total dividend for the year increased from 40
cents to 45 cents per share. Total shareholder return for the 12 months
ended 30 June 2007 was 42 percent.

Divisional results (excluding unusuals) reflected the mixed operating
environment, with increases in three divisions more than offsetting the
decreases in the other two. Infrastructure's operating earnings were $271
million (previously $255 million), Distribution's $80 million (previously $75
million) and Laminates & Panels' $131 million (previously $116 million).
Operating earnings from Building Products were $141 million (previously $142
million), and Steel $80 million (previously $93 million).

Chief Executive Officer, Jonathan Ling said the increase in operating
earnings in a softer trading environment provided further validation of the
group's strategy to build earnings reliability. "The balance of exposures
between different geographical regions and market sectors is serving us well.
All our divisions have performed well in the market conditions applying to
them. At the same time we have been successful in further implementing our
strategic objective to internationalise the company and provide a wider range
of growth options, following the recent acquisition of Formica Corporation".

Results highlights
- Operating earnings up 4 percent to $703 million.
- Group net earnings, including unusual items, up 28 percent to $484 million.

- Group net earnings, excluding unusual items, up 5 percent to $399 million.
- Final dividend of 23 cents per share with full New Zealand and Australian
tax credits for a total dividend for the year of 45 cents per share.
- Cashflow from operations was $483 million.
- Interest cover at 9.8 times.
- Basic earnings per share were 101.9 cents and 84.0 cents on a normalised
basis, both up from the 81.3 cents in the previous

Placebo
08-08-2007, 03:44 PM
...I could go on :) :)

Forsyth Barr's take on the FBU result

FIRST IMPRESSIONS: FY07 RESULT REVIEW

Result Checklist
Better or worse than our expectations: BETTER
Better or worse than market expectations: BETTER
Quality of earnings: GOOD
Outlook for next year’s earnings: POSITIVE
Short-term price catalyst: NO
Recommendation change expected: NO
Earnings revision expected: YES (lower but still above consensus)

Key Points

FBU reported a FY07 profit (pre abnormals) of $479m, comfortably ahead of our forecast of $462m and market expectations. A final dividend of 23cps was declared, bringing the full year dividend to 45cps, which was in line with expectations. FBU’s Group EBIT increased by +3% to $698m, which was +$15m higher than our forecast and ahead of market expectations.
The result was more mixed than expected with Infrastructure and the Laminates & Panels operations performing well ahead of expectations. In contrast the Building Products and Steel operations performed well below expectations mainly due to a difficult trading 2H07 period from Steel Making (Pacific Steel and Pacific Wire) and Insulation (in both NZ and Australia).
The trading environment for FBU has been challenging over the past couple of years as building activity, by volume, has been in decline in both NZ and Australia. We believe that FBU’s earnings are poised for a step up change once the interest rate cycle eases and economic growth recovers. Despite FBU signalling a decline in NZ residential consents in FY08, we maintain our positive medium-term outlook for NZ residential building activity. Our fair valuation for FBU is $14.45 and we believe the near-term risks are outweighed by the more positive medium-term outlook for a step up in earnings. We reiterate our BUY recommendation.

Taijon
08-08-2007, 04:05 PM
Placebo I agree it's surprising that the FBU share price should fall after today's result. At the current price of $12.20 and a full year dividend of 45 cents it is giving a dividend yield of just over 7% - pretty good with the possibility of upside in the share price and a further dividend increase next year.

Thanks for your posts.

Wilkins_Micawber
08-08-2007, 04:34 PM
Placebo I agree it's surprising that the FBU share price should fall after today's result. At the current price of $12.20 and a full year dividend of 45 cents it is giving a dividend yield of just over 7% - pretty good with the possibility of upside in the share price and a further dividend increase next year.

Thanks for your posts.

Sorry to spoil the party but according to my calculator $0.45 / $12.20 = 3.688% net which divided by 0.67 = 5.50% gross dividend yield.

Taijon
08-08-2007, 05:30 PM
Thanks for the correction WM - too much red wine already tonight!!!!!!!!!!!!!!!

Placebo
09-08-2007, 08:12 AM
Bah! Foiled by invasion of reality!

7% or 5.5%, I don't think there are many people in FBU for the yield. A nice bonus though.

It wouldn't be a bad idea for them to hold onto some of those earnings for future purchases either.

Deev8
09-08-2007, 10:08 AM
I don't think there are many people in FBU for the yield. A nice bonus though.I'm not exactly holding Fletcher Building for the yield. However I bought the shares back in 2002 mainly because I saw their prospective gross yield of more than 7% at the time as a good indicator of value (they were also trading at a relatively low multiple of earnings).

What's more the increased dividend at each results announcement since then has helped to convince me to continue holding the shares.

Viking
09-08-2007, 10:32 AM
This is one of those share that sits firmly in my bottom drawer~
Starting to accumulate them since around the $3 period~
Its like a saving stock for me, when I have little extra money for saving ~ I just save up and buy FBU.... kind of works well for me~
Not sure if others feel the same, but IMHO this one is for long term saving :)

Placebo
09-08-2007, 11:02 AM
Yeah. Whichever way you cut it, it's a damned good share to have in your portfolio. :)

If there is any nervousness around FBU long-term then it is in its very ambitious takeover of Formica. In terms of branding and global reach this has sent FBU into a whole new arena. This was also Jonathan Ling's first big-ticket purchase as CEO (although they would undoubtedly have had it on their radar prior to his taking the reins).

If there is a risk around Formica, it is somewhat mitigated by the diversification around the company as a whole. Interesting that they have really picked things up around the Distribution division (which includes Placemakers). This was dragging on results in past years and is now making good contributions. The construction business also gong great guns and looking around Wellington, there's still plenty of cranes across the skyline and every morning I walk past what will become Wellington's largest building (by floorspace), currently being surrounded by lovely red-and-white Fletcher Construction hoardings :), with Fletcher-sourced concrete going into the foundations and however many tonnes of Gib board and Batts it will take to fit the bugger out. Go you good thing :D

So the future is looking good too. Again, more reason to long-term hold.

Deev8
09-08-2007, 03:53 PM
Interesting that they have really picked things up around the Distribution division (which includes Placemakers). This was dragging on results in past years and is now making good contributions.Jonathan Ling commented on TV this morning that PlaceMakers had benefited from the strong NZ dollar - much of what they sell is imported.

Marilyn Munroe
15-12-2010, 04:32 PM
Fletcher Building announces take over bid for Crane Holdings.

I am surprised that there has been no comment about the risk of the merged companies having a dominant position in the plumbers merchants area.


Boop boop de do

Marilyn

metro
04-01-2011, 06:50 PM
Its really interesting reading your own posts four years later. Often you would express things differently, maybe had a different opinion. But in this case, I stand behind everything I said below. FBU is a GREAT company. And it should swallow Crane no problem and Crane will be a positive earner from day one.


An excerpt from <s>the</s> my StockWatch newsletter:

FBU Fletcher Building Limited

Head Office: 810 Great South Road, Penrose, Auckland. Tel: 09 525 9248. Fax: 09 525 9029.
Business: Manufactures, distributes, and sells materials for the building industry.
Chairman: Roderick Deane Managing Director: Jonathan Ling, P E Baines, H A Fletcher, G J McGrath, Sir D Spring.
Senior Management: J Ling Managing Director, M J Binns MD-Infrastructure, D C Edwards MD-Distribution, P J F Merry GM-Human Resources, MC Farrell Company Secretary and General Counsel, W J Roest Chief Financial Officer, D Worley MD-Laminates and Panels Group.
Dividend Reinvestment Plan: Yes.
Market Capitalisation: $4.3 billion.
Share Registry: Computershare Investor Services Level 2, 159 Hurstmere Road, Takapuna, Private Bag 92119, Auckland. Tel: 09 488 8777. Fax: 09 488 8787.
Share Price: as at 19th November 2006 $9.85.
Website: http://www.fletcherbuilding.co.nz

Introduction:

Fletcher Building Limited (FBU) manufactures, distributes, and sells materials for the building industry including wood fibre-based products, cement and aggregates, plasterboard and panel products, lumber and aluminium extrusion and residential and commercial construction. The company operates primarily in New Zealand and Australia and is currently riding the wave of increased construction activity in Australasia.

FBU commands a strong competitive position in the building materials sector. This is assisted by industry leading brands and a nation-wide distribution network. The company also has a very strong presence in the infrastructure segment in New Zealand.

The company believes that it has the necessary financial capacity to pursue big-ticket acquisitions with the stated objective of having a debt/capital ratio between 40-50% over the longer term.

Latest Result:

In spite of weakiening demand in the residential property market on both sides of the Tasman, Fletcher's strategy of diversification and strategic purchases ensured earnings reliabilty in a cyclical downturn with the NPAT (net profit after tax) reported at $379m (and increase of 9.0%) for the full year ended 30th June 2006 from sales of $5.52bn (an increase of 6.0%). Revenues from ordinary activities were NZ$5,520m, up 19.1% from the same period last year. Diluted EPS was 79.6 NZc compared to 73.2 NZc last year. Net operating cash flow was NZ$560m compared to NZ$479m last year. Total dividend for the year was 40 NZc compared with 32 NZc last year. The company advised that the full year result reflected a more difficult market environment, offset by the benefits of acquisitions and ongoing productivity improvements.

Brokers Recommendations:

ABN Amro Craigs (ABNAC) in their Spring client newletter stated FBU full year result "demonstrated the inherent strength of the company's diversification strategy. Our view of the stock has not changed; it is a top quality franchise with a solid track record of value creation. FBU's diversification strategy has provided it with a good measure of earnings reliability in a cyclical downturn. While the earnings growth outlook is likely to be less spectacular in the absence of acquisitions, we believe it is still very respectable in a slowing economic environment. ABN Amro Craigs analyse Dennis Lee described the result as a "solid but less sparkle this time". In the context of a slowing environment "we think this is a very credible performance. As expected the drivers have slowed in the second half but not as severely as we had anticipated....the slowing residential markets on both sides of the Tasman and cost pressures were reflected in two of the four divisions displaying margin pressure. The result is a good showcase of FBU's diversified earnings base. Investors should take comfort in the company pushing for modest earnings growth despite an economic slowdown". "The result is a testimony to FBU's improved earnings reliability". ABNAC's Target P