Very much agree with all of that.Quote:
Doing my best to 'fall in love' with STU .... but finding it difficult, at least from an operational point of view
In spite of years of talking about transforming the business and becoming heaps more operationally efficient many key indicators aren't improving and are in most cases are still worse than they were a few years ago
Gross margin improvement for instance comes through as top of mind. They even say staff incentives are based on gross margin growth rather than sales growth (jeez I made that happen in one place 20 plus years ago).
These charts from the results preso are a worry.
The tonnage / sales chart shows that average selling prices aren't improving - infrastructure seems the problem here
The Gross Margin chart shows margins aren't really improving with 2H21 % less than 1H20. Hardly inspiring and doesn't tie in with the glowing commentary. What's also worry that current GM% is still significantly less than 25% achieved a few years ago.
At lest they put in charts that don't look that good - must give them credit for be transparent.
Besides margins they talk about great working capital management - on the 5 year summary table they show a line Working Capital (times) whih is the number of turns per year. A woeful 2.8 times in F21 when ia few years ago it was well over 4 times - hardling inspiring and again at odds with the commentary over the last few years
Never mind - I can't see myself falling in love with STU (from a company operational point of view) but from a share trading point of view there is (as Rob points out) still potential of good returns if that $27m in cash ends up in shareholders hands somehow and the market re-rates accordingly - F22 might be that year (just like 22 is going to be the Warriors year). However I shouldn't forget that shares are often 'cheap' for a reason and being 'cheap' could be because they are slow growing low margin company with pathetic returns on capital
The opportunity was at 80c and then was a no brainer at 50c, now not so much but I'm not a seller either.