Up more than 5% on ASX y'day to close at 3.55 AU which is about 3.83 NZ, see if it gaps up on open here today...
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Whats caused the bump today?
There was a report on Livewire a few days ago comparing James Hardie's performance against the other ASX listed building related stocks like FBU, Boral, CSR and a couple of others. IIRC, the report pointed out that relative stock price movements meant that you could then buy the non-JHX basket of earnings about 60% cheaper than JHX. BLD and CSR have also rallied sharply at the same time as FBU whereas JHX has only moved a little bit since then.
Don't think the Covid level would be relevant for Fletchers (well, as long as it is L2 or below). What will make a difference is if there are sufficient jobs around and whether they are not just able to win them, but as well able to make money with them. Didn't work out that well for them throughout the last construction boom (and this was without Covid).
Not quite sure I share your optimism, though - if I compare FBU's share price to AIR, than FBU is clearly undervalued :p; On the other hand: AIR can fly while FBU can only crash and burn ... this might explain the difference for the punters.
All views are welcome. [/QUOTE
Lol
Is today's announcement kind of an indication of upcoming FY divvy at this stage is a 50/50 chance?
This from y'day..
https://www.nzx.com/announcements/354406
Putting my post ('all views are welcome") in context:
https://www.sharetrader.co.nz/showth...-Serko/page102
Serko put on 40% after the postings above.
In life, you have to stick with your own views after considering other views, be them negative or positive.
Absolutely - and sometimes you will be right and sometimes you will find you are wrong.
Glad for you it worked out for you this time. Markets currently in some unreal lala-land and absolutely separated from reality. Good for the people who took the gamble.
Does not change the fundamentals, though, doesn't it?
Just bought the dip at $3.55... What a bargain! Thanks to the US correction today!
Still waiting patiently for the US equities to come back down so i can put some money to work over there though...
Wondering when there is going to be an update on the banking covenants...?
ie: whether they comply or not...
Certainly a positive announcement - repaying US$300m of US debt early with NZ$350m from cash resources. Some great hedging there by FBU treasury team!
https://www.nzx.com/announcements/355440
Fletcher Building today announced its intention to make an early repayment of US$300 million of USPP notes.
CEO Ross Taylor said that the USPP notes, which were issued in 2012 and due to mature in 2022 and 2024, were the Company’s most expensive source of debt, with an average cost of funding of 5.4%. Repayment of the notes would reduce the Company’s funding costs by cNZ$17 million per year, whilst still leaving the Company with significant liquidity of cNZ$1.1 billion.
The USPP 2012 notes have a notional value of US$300 million. After taking account of foreign exchange and interest rate derivatives held by the Company in respect of these notes, the repayment amount to be made by the Company is expected to be cNZ$350 million.
The reduction in annual interest expense of $17m is definitely a positive in the light of the updated banking arrangements announced recently :
https://www.nzx.com/announcements/354406
"Under the agreements, the Company may elect to rely on more favourable levels for its Total Interest Cover and Senior Interest Cover covenants for the period from June 2020 to December 2021 (inclusive) if required. These levels are a Total Interest Cover ratio of 1.5 times (normally 2.0 times) and a Senior Interest Cover ratio of 2.25 times (normally 3.0 times), with EBIT in 4Q20 for the purposes of testing these interest cover ratios set at $231 million."
Maybe, just maybe there could be a dividend paid later in the year!
The US investors will be loving this. Cash back plus penalty for early repayment and no longer having to be exposed to the New Zealand building sector. The covid environment has made this an easy sell by the FBU Treasury boys.
http://nzx-prod-s7fsd7f98s.s3-websit...611/325647.pdf
$168m extra payments ($83m + $85m) to FBU for delays to the highway construction.
Guess FBU is learning NOT to do fixed price contracts!
Any thoughts on earnings? Also if Fletcher announces that they will pay a final dividend would it boost the SP? I’m getting sick of watching everything else in the market rise while Fletcher gets hammered.
Earnings - What do you mean? Just listen to the market ...
Seriously - given that they said end of May that things did run to plan until end of March (which was admittedly not a very exciting plan, but still with a black number at the bottom) and then came 2 months or so basically without revenue in NZ (and reduced revenue in Australia - I would not be too hopeful.
Not sure which FY will need to carry the redundancy costs for the announced staff reductions (probably FY2021) but anyway - they will cost money ...
On the bright side - I think that this FY will be better for FBU than next. Enjoy it while it lasts.
Still more positive ... while I don't think that FBU is a good company (because it isn't) - I could see potential opportunities to consider them in a year or so from now for the dogs of the NZX portfolio ...
Election year, let's wait for billions dollar projects announcements...
Seems like there are a lot pessimistic people here, that’s good news for FBU buyers IMO there is value here, the market is very experienced in undervaluing solid companies. All I see is a low price/book and a long history of solid income and dividends, a couple of bad years just means time to buy cheapies. Eventually the funds will start adding Fletcher Building (probably when it isoverpriced).
FBU share price was under 3 bucks at the turn of the century and market sentiment was just like it was today ....big company all unloved and unwanted
In the next 6 years or so the share price went to about 12 bucks ...one of the best long term trades I’ve ever had.
Charts said sell and then the GFC hit. The company didn’t fare too well Post GFC ....maybe the coming big recession won’t go them any favours
Been watching ever since but haven’t really seen enough to be tempted to have another go at 4 bagger
Strong cash flows and strong balance sheet ....profit announcement
That’s good
http://nzx-prod-s7fsd7f98s.s3-websit...730/328084.pdf
It seems all the 'dogs of the NZX' have been doing well recently (and by well I mean not badly)... PEB a few weeks back, STU yesterday and FBU today...
The trouble is the new accounting standard on leases changes the make-up of operating cash flows a lot since, I think, all the payments for leases etc, go thru as a financing cashflow item rather than an operating cashflow item. so the operating cash flows are not easily compared YoY when the most recent period will reflect an accounting change which benefits the most recent period.
(please correct me if I am wrong)
Seems like a loss announcement according to this article......but then what do journalists know!?
I bet they are using the COVID issues to do more housekeeping.
Yes Business Desk are reporting it the same way and Jenny Ruth the journalist is having a good dig
After years of insisting it had fully provided for its legacy construction losses, Fletcher Building is adding another $150 million to the near $1 billion pot.
That and covid-19-related impacts are the major reasons behind the $196million net loss the company expects to report next week for the year ended J une.
Strong cash flows but a “loss” will be reported... after significant items, is that Impairments or something like that?
I’m Pretty hopeful for a dividend to be honest. They have the Cashflows for it. That would be a major catalyst for the share price to get moving.
I guess some people just hope that at one stage the "dog of the NZX" strategy will work out
.... and - to be honest, I think that FBU well might be one of these dogs which gets at some stage a (hopefully not just dead-) dog bounce.
I doubt however that the right time for buying in is now.
I must have missed this memo. Auckland Convention Centre was a debacle with hundred million dollar losses (even before the fire), and so were many other big loss making projects. Christchurch Convention Centre and Christchurch Airport Hotel spring to mind ....
Share buy backs sometimes increase shareholder value - and often they don't. I remember many situations where they just had been the last resort of clueless boards trying to stem a well deserved share price drop. I think FBU falls into this category.
It’s important to remember Fletcher was holding $570 million cash at as at 31 December. They are in a strong financial position... just operations have been hindered lately.
Up 2% this morning, why? Some people know something the retailers don’t?
sorry just checked and it is low volume..
FLLYR: FBU: Fletcher Building confirms FY20 annual results 08:31a.m. FBU 19/08/2020 08:31 FLLYR PRICE SENSITIVE REL: 0831 HRS Fletcher Building Limited FLLYR: FBU: Fletcher Building confirms FY20 annual results Fletcher Building confirms FY20 annual results Auckland, 19 August 2020: Fletcher Building today announced its audited annual results, confirming a net earnings loss for the year ended 30 June 2020 (FY20) of $196 million compared to a profit of $164 million in the year ended 30 June 2019 (FY19). The Group also confirmed strong operating cash flows of $410 million and ended the year with a strong balance sheet with liquidity of $1.6 billion. Summary: - Final results in line with market announcement of 11 August 2020 - Revenue of $7,309 million - EBIT before significant items $160 million - Net Loss After Tax of $196 million, compared to a profit of $164 million in FY19 - Strong cash flows of $410 million - Balance sheet strong with liquidity of $1.6 billion and net debt of $0.5 billion - Nil dividend Fletcher Building CEO Ross Taylor said: "Fletcher Building's FY20 performance was characterised by the impacts of COVID-19 and the actions we took to ensure we were well positioned to successfully navigate the market uncertainty in FY21 and beyond. Prior to March 2020, the business was trading in line with expectations and making good progress with operating efficiencies. The subsequent lockdown in New Zealand and restrictions in Australia had a significant impact on our FY20 revenues and profitability. "Our focus through this period has been on three key areas: the health and safety of our people; enhancing the resilience of our business by managing our costs, cash flows and balance sheet; and ensuring we stay focused on strong customer performance and delivering our strategy. "We have been unwavering in our commitment to health and safety. We are driving positive change in our safety culture through our company values and a genuine belief that all workplace injuries are preventable. In FY20 serious injuries reduced from 15 to 8 and we had no fatalities. While our Total Recordable Injury Frequency Rate (TRIFR) 5-year trend continues downward, our FY20 rate was slightly up from last year. This only strengthens our commitment and focus on preventing all injuries. "Anticipating lower market activity ahead, we have taken some difficult but decisive actions to reset the cost base of the business. We expect these actions to deliver a permanent reduction in our cost base in FY21 of approximately $300 million per annum. Significant items in respect of this restructuring, along with one-off charges in our Rocla business and from the early repayment of our USPP debt, have totalled $276 million in FY20. We have sized our business for a market downturn of around 25 percent in New Zealand and around 20 percent in Australia, although there is a high degree of uncertainty over the outlook. We will be looking hard at the trends in activity over the next few months and will be ready to adapt and respond if needed. "As already announced, we decided to raise a further $150 million provisions against our historical construction projects. While this was disappointing, Fletcher Construction, through a reset of bid margins and disciplines now has a $2.4 billion forward-order book of new work with a materially better margin outlook and lower-risk profile. "Pleasingly, our operating cash flows in FY20 have remained robust at $410 million, supported by effective working capital management in a disrupted period. We have also preserved strong liquidity and funding lines. Our leverage ratio remains below the bottom end of our target range, we have total available funding of $2.1 billion as at 30 June 2020, and liquidity for the Group was $1.6 billion. In addition, we pre-emptively renegotiated covenants with our lenders to enable us to rely on more favourable terms for covenant testing through to the end of 2021, should we need to. "As a result of the actions we have taken, our business is well-positioned to continue to drive its strategy and performance improvement. We will continue key investments in our digital and innovation strategies, while also taking opportunities to grow our market share either in our existing product lines or in logical adjacencies. With our strong balance sheet, we expect the tougher market will present better opportunities to achieve our aspirations and overall strategies." In line with the Company's Dividend Policy, the Board has not declared a final dividend for FY20. #Ends Authorised by: Andrew Clarke Company Secretary
Another disappointing result. After further write downs on legacy projects and others I have no faith in the $2 billion of future work that the building division has on their books. To me there is too much risk that things will get even worse. For that reason after 15 years sold all my shares yesterday in this company and will not buy back.
My average cost was $2.80 as I sold some years ago at a good profit . I just wish I had sold them all years ago. Just don’t have faith in the management to turn it around.
Agree. Big company with a track record of delivering disastrous results in good times and disappointing results in bad times. Board seems to be a collection of strong underperformers with strong egos. Tend to make disastrous decisions when times are good (like buying Formica or getting rid of their project management) and below average decisions when times are bad. Calling their current balance sheet (with liabilities to assets of 60%) "strong" (as they do in the report) is laughable. Sure - could still be worse and they are likely to stay around for some more time as a going concern ... but strong?
Not quite sure why I still watch them ... I guess everything coming from the old Fletchers empire seems to be cursed and trainwrecks tend to fascinate me. As well - they say every dog has its day, and in these situations FBU seems to be strongly hype driven. They used to have a really high PE still some years ago, people thought this is a growth company. Actually - just noticing that its (2020 - 2023 forecasts) forward PE is still quite high. Around 30. Maybe the FBU hype still works?
Anyway - there might be at some stage another opportunity for riding the hype, but if I look at their predictions (market down in FY21 by 20 to 25%) I recon it is not now. On the other hand - hype does not need excuses ;):
Was feeling the same but there are reasons. It is a kind of stalwart Kiwi old-school business and , in the building industry which comprises a lot of the smaller businesses in NZ as tradies, so it could reflect the overall mood well. As an ex blue-chip it will still be in a lot of legacy portfolios esp index based ones. For me personally though, its because I've worked inside the organisation and know several people who supply them and so it all adds to the feel for the NZ business scene.
Latest disclosure from perpetual limited shows they increased holdings by approx 9million shares. Now own around 82.2million shares. That’s a good sign http://nzx-prod-s7fsd7f98s.s3-websit...755/329430.pdf
Any other ideas why Fletcher has been on a mini growth spurt?
Three guesses include:
1. Marketscreener indicates 11 brokers are covering FBU. Until recently only one of the 11 has had a buy recommendation but around mid-late August a 2nd broker has flipped up one notch from "Outperform" to "Buy". Some of the recent strength could be the this broker spreading their revised thinking to clients.
2. Growth stocks have done very well lately so there may be some switching into value. The price going up not down could be some of this switch money finding its way into FBU.
https://www.bnnbloomberg.ca/video/th...eniger~1832510
3. Estimating that some of the money the government is tossing out left, right and centre will find its way to FBU so the future demand is less bleak than earlier thinking
Bit early to call this the next summer (or even spring shootings), isn't it? FBU is (so far) in an unbroken downtrend:
Attachment 11910
One ripple does not make a trend change ...
But even if it might go higher ... don't read too much into share price jitter. Never understood the motions of Cryptocurrency - or more recently Hertz or e.g. AIR on the NZX. Its often just the psychology of mass hysteria ...
Just a friendly Novemberday (or better in our hemisphere Mayday). Winter still advancing.
Morningstar have upgraded to an accumulate status - might see an upkick for investors today
Looks like Exec's have accumulated lately https://www.nzx.com/announcements/359944 - Ross Taylor accumulated over 400,000 under his long term share scheme alone..correct me if i'm wrong but that looks promising that they have accumulated shares rather than disposed of shares...
$4 beckoning....hmmm who would've thought for this boring and not popular stock on ST.
Yes, it is over $4 today. But don’t know whether it can stay at the 4ish next Monday, as Trumps issue.
Fletchy is one of the top performers on the NZX today! The most hated stock in NZ but possibly the best value.
Not quite sure the TA looks exciting ... it appears it failed again to break throught he $4.16. Double (or if you like triple ) top. Pretty bearish signal.
But never mind the technicals with FBU, what I really fear are their fundamentals :p, and the bear did not even start its mauling ...
Fletcher sexy again? Even beat Contact today...
I was working on a DCF before COVID hit. Shall I finish it? Would anyone be interested in that?
Absolutely. Obviously - a DCF is only as good as the ability of its author to look into the future and accurately predict future income, revenue and margins.
What are your working assumptions? How do you see the post-Covid economic crisis unfold, and how will this impact on FBU?
Well, SP did crawl slightly above the previous peaks (though not yet by much). SP is as well above the MA 200 (though not by much either). If you look at RSI, this seems to come down as we speak, which could indicate SP just arrived its recent peak.
I'd say from a technical perspective it could get both ways ... from a fundamental perspective however there was nothing which changed my mind.
However - fundamentals have typically little impact on the short term movements of the share market.
Anyway - I don't hold and don't intend to buy at these levels ... but the markets well might disagree with me :):
Thanks for your nice post. yes, I totally agree with you. All sold yesterday, even though it really surprised me with the big rise today.
Looking good holding my shares now, since the lows of covid! When the economy recovers a bit I'm expecting FBU to return to around the $5-6 mark. There's a LOT of housing development going on lately.
Wouldn't be increased demand for housing pushing square neterage quotes up? Plenty of work for builders, why not build for a higher margin?
Can always drop prices when the lending slows and low interest rates rise back up to above 4%
Looking good to clinch 5 handle this side of Christmas....