Anybody else noticed that we had this week volumes well above average and the SP keeps creeping up? Anyway ... due to popular demand I thought we can use the combined wisdom of sharetrader (well, yes - this is YOU) to do some SWOT analysis of the company:
Strengths:
- largest NZ Glass manufacturer with more than 50% market share.
- natural moat with plenty of sites allover the country: glass manufacturing is better close to the demand side - expensive transport
- reliable and consistent revenue growth in the past (CAGR over the last 5 years: 13.3 %)
- with one exception (FY2017) consistent EPS growth every year (and hey - while the FY17 results are not out yet, according to the forecast they are at worst 7.5% below last year, at best they achieved the same EPS as 2016)
Weaknesses:
- they clearly didn't plan sufficient contingencies for the teething problems they suffered in the recent equipment upgrades and schedule changes. Question is - do they learn from these mistakes or does this point to a systematic skill shortage?
Opportunities:
- building market booming
- Ongoing demand for houses and office buildings (ChCh rebuild, Auckland housing shortage, population growth)
- increased use of (high margin) specialised glas (like heavy duty) in modern building architecture
- ACC buying at an historic low - do they know something Fisher Funds and the markets didn't?
- A number of technical indicators this week point to a possible trend change (capitulation, SP increasing with good volume, RSI creeping back over 30)
- fundamentally ways undervalued if we assume they manage to keep current growth and earnings going (just put their EPS and CAGR into the Graham formula) - and be as conservative as you like
- Australian acquisition seems to do so far just fine (but early days) - another big growth opportunity?
Threats:
- building market might turn sour (but then ... we have a housing shortage - where will all the new immigrants sleep?)
- Australian extension might be more difficult (lots of the strengths and opportunities above missing for the Australian market, and MPG would not be the first Kiwi company losing money over there)
- Fisher Funds selling at an historic low ... do they know something we don't?
- Despite a small recovery this week - trend chart looks shocking
- there always might be a black swan just around the corner
On a more subjective front - I had some interaction during and after the recent downgrade with Nigel and and decided that I give them at this stage the benefit of the doubt ... but hey, this is just me.
Anybody who wants to add to the analysis above?
Discl: holding (XXL).
DYOR