Yeah, saw the revised notification. Not a bad endorsement by CFO, isn't it.
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Yeah, saw the revised notification. Not a bad endorsement by CFO, isn't it.
https://nzx.com/companies/SKL/announcements/269357
CFO (Ms Coutts) buying more...always a good sign.
Strong battle going between bid at $1.27 and ask at $1.28, let's see who blinks first no trades yet...
Is there a correlation between GDT results and SKL? Or has the market realised this is an undervalued high divvy stock? Or something else?
Psst ... some people still might want to accumulate while the price is low ...
Looking at your question ... the dairy industry is one quite important customer for SKL, so some people might see a connection, though obviously one somewhat better auction result (or three) does not make a dairy spring.
I suppose its more the market realising that this is an undervalued company. They are even successful if dairy is low - farmers can delay maintenance on their systems only so long, no matter how low the milk price is - and SKL was as well quite successful in diversifying their products. SP is slowly creeping upwards for the last five weeks or so and just passed the MA100. Some people might call this the start of an uptrend, though (I know Percy ;)) there is obviously still the MA200 to crack.
Discl: holding
I overlaid the GDT index and SKL, and the 18 month correlation is strong. Even the temporary price rise in Dec/Jan, and of course the rise over the past month are both mirrored. Probably just coincidence since SKL are much more than just dairy. But I would be interested in any other peoples thoughts.
I jumped aboard SLK 2 weeks ago when I noticed their P/E was comparatively low when they were paying a sizable dividend. So I'm keen to learn more about the drivers for this stock
Drivers
1. 76% of sales are exported so the recent major fall in the $Kiwi will materially boost FY16 returns and beyond
2. Cheap PE about 11 last time I looked
3. Gross dividend yield north of 10% and presently trades cum a fully imputed 5.5 cent final divvy, ex date early October)
4. Several directors recently bought in decent volume
5. Beat market expectations in FY15 a year that was already gloomy for the dairy industry
6. Expectations that the FY15 result is the bottom of the cycle for SKL ?
Disc : I'm a happy holder
All looking very positive, good points on drivers Roger. Just a small correction goes ex-div end of this month 30/09.
BP,I use charts as just another tool to help me,yes a very important tool.
I saw the result and thought it was fantastic.The next day I saw Sir Selwyn buy,so I brought some.Thought about it,and doubled my holding the next day.Paid $1.29 and $1.27.
"Well positioned". lol.
ps.Don't worry the chart will catch up with us shortly.!!
Clear break above the 100 day MA which is back at $1.30. $1.34 now, onward and upward :)
Selwyn Cushing keeps buying, another 750,000 on to his ledger.
2M shares purchased in a month, now holding 7.3% of company shares. A strong vote for his vision of future SKL fortunes
I finally bought some for the first time last week. Have seen many stocks with insider buying fail to perform - can be average managers and mediocre investors; but when the insiders are successful investors and make very substantial purchases... the odds are obviously in our favour :)
To follow, an estimate of SKL's 2016 profit given best-guess exchange rates for the year ending 06/2016.
And allowing for 2016 hedge losses.
If the calculations are right, and assuming 6% inherent growth (same as this year), eps jumps by 65%, to about 19cps.
Over the last 8 years, the median year-low PE and year-high PEs are 9.6 and 16.1 - say 10-16.
Giving a valuation range of $1.90 - $3.04.
Which might help explain point 4) above.
The directors don't give much away about the outlook in the annual report - just describing it as 'promising'.
On top of that - overseas earnings rose from 72% to 76% between 2014 and 2015.
If SKL can continue to grow overseas sales its growth prospects seem 'reasonable.'
Workings and sources follow.
15a 16 npat ul 21.9 35.8 (5) eps ul 0.113 0.186 po % 79% 79% gdps 0.125 0.204 gy% 9.3% 15.3% Deriv. of 16 NPAT 2015 NPAT 21.9 AUD +/- (1) 1.2 USD +/- (2) 8.6 EUR +/- (3) 3.4 Hedge +/- (4) -1.4 Adj. NPAT 33.8 + 6% grwth (5) 35.8 Effect of a change in exchange rate on 03/15 revenue, NPAT and EPS 06/15 figures 06/15 figures with different ex rates (best guess for 06/16 bolded) NZD/USD 0.78 0.75 0.7 0.68 0.66 0.64 0.62 0.6 US/other rev (in NZD) 66 68 73 75 78 80 83 86 US/other rev (in USD) 51 Ch rev 0.0 2.6 7.5 9.7 12.0 14.4 17.0 19.7 Ch NPAT 0.0 1.9 5.4 7.0 8.6 10.4 12.2 14.2 Ch eps 0.000 0.010 0.028 0.036 0.045 0.054 0.063 0.074 NZD/AUD 0.93 0.92 0.9 0.88 0.86 0.84 0.82 0.8 Au rev (in NZD) 51 52 53 54 56 57 58 60 Au rev (in AUD) 48 Ch rev 0.0 0.6 1.7 2.9 4.2 5.5 6.9 8.3 Ch NPAT 0.0 0.4 1.2 2.1 3.0 4.0 5.0 6.0 Ch eps 0.000 0.002 0.006 0.011 0.016 0.021 0.026 0.031 NZD/EU 0.65 0.64 0.62 0.6 0.58 0.56 0.54 0.52 EU rev (in NZD) 39 40 41 42 44 45 47 49 EU rev (in EUR) 25 Ch rev 0.0 0.6 1.9 3.3 4.7 6.3 8.0 9.8 Ch NPAT 0.0 0.4 1.4 2.4 3.4 4.5 5.7 7.1 Ch eps 0.000 0.002 0.007 0.012 0.018 0.023 0.030 0.037 Hedge losses hedged @ Amt local $m Assumed rate Hedge val real val Gain/loss AUD 0.9319 4.72 0.86 5.1 5.5 0.42 USD 0.698 3.61 0.66 5.2 5.5 0.30 EU 0.651 1.38 0.58 2.1 2.4 0.26 GBP 0.4722 1.47 0.42 3.1 3.5 0.39 1.4 Sources Hedge figures and 2015 results - https://www.nzx.com/files/attachments/218922.pdf p34
Yeah I noticed that mate. I think its safe to say he's a forward thinker so realises that buying now he's really only paying $1.285 per share as he'll get 5.5 cps fully imputed dividend back in five minutes so too speak. He'll know the prospects for the company with the lower $Kiwi better than anyone on here.
Banter - You could say we are well positioned :)
Ms Coutts accumulates more (another 20,000)...
Yes its very rare for so many senior exec's and directors to be accumulating at once. Its very tempting to go to the On the water boat show this weekend. On one hand one could buy a new boat and watch it depreciate by 20-30% in the first year and cost another 10% of its up front cost in annual opex or one could buy some more SKL and watch them go up by 20-30% in the first year and earn a 10% gross divvy yield. Hmmm
BOAT - Bring On Another Thousand
P.S. And CFO Ms Coutts is still buying today $1.36.
The more this goes on, the more dodgy it's starting to look
I hope the directors are making relevant disclosures of pertinent price-sensitive information to the market, and not just sharing it amoung themselves
It's all there in print if you care to read the Aug 15, 2015 results.
Highlights for the year ending 30 June 2015
o Strategies to boost presence in and develop products for international
markets, particularly in the United States, have delivered increased sales
and earnings.
o NPAT of $21.9 million is up six percent on guidance and the previous year
excluding the $20.4 million gain realised on settlement of the Canterbury
earthquakes insurance claim in FY14.
o Increased final dividend of 5.5 cents per share (cps) giving a full year
dividend of 9.0 cps (up 6% on pcp).
o Construction of our new Dairy Rubberware Development and Manufacturing
facility (Project Viking) has progressed significantly.
A strong finish to the year has allowed Skellerup Group to post improved
earnings for FY15, the Company announced today.
Chief Executive Officer David Mair said the results demonstrated the value of
Skellerup's focus on allocating capital and resources to those markets with
the greatest potential for sustainable long-term growth in revenue and
profit.
"The economic environment is uncertain, however I am confident that our
progress and plans mean we are well placed to deliver a further improvement
in earnings in FY16."
Exactly Stoploss. And having taken the trouble myself to go to the downtown library and study the annual reports, even back to the ones no longer available on the net.... A tangible improvement has been coming for SKL for years. I've been accumulating for about six months in spite of the incredulity of some who didn't think the company was worth studying becasue it was 'in a downtrend'. The latest result announcement simply clarifies a gradually developing story.
The directors put all the facts on the table, start buying themselves, then someone suspects a conspiracy of concealment? How much spoon feeding do investors need these days?
SNOOPY
Don't get me wrong, I am a shareholder and like to see my investment increase in paper value.
I read the report (20 Aug). It was good, but I didn't think it was excellent. A 6% increase in NP, 3% revenue increase, dairy tough.
The buying activity seems disproportionately concentrated from people closely associated with the company, with multiple buys from the same people - CFO (they seem to have 2, Liz & Graham) & CEO
Meanwhile insto's are doing the opposite and selling - NZ super fund offloads 4.5M, AMP sells 1.9M (and maybe more since they are now below 5% holding so don't have to notify anymore)
Makes me wonder if some people have greater "insight" than the rest of us. And if that is the case (and I'm not saying it definitely is) then there is a problem.
Hopefully it's nothing more than an extremely solid endorsement of the company by senior management taking advantage of an oversold stock situation with SP still well below their view of true market value
^^ Relax, your last sentence sums it up perfectly. That and its trading cum a fully imputed final divvy of 5.5 cps...who doesn't like a juicy big divvy :)
Disc - I bought more today myself. If directors and CFO are buying like crazy so am I ! We are in a clear uptrend now, clear break of the 100 day MA, multiple endorsements from directors and senior management in substantial volume, very strong tailwind from dramatically lower currency compared to last year and 76% of sales are exports. Compelling low PE and high gross divvy yield.
You could say that we are very well positioned ! I don't know much about new production efficiencies from the new manufacturing facility being built but I would suggest its pretty obvious the Directors do !
How do you feel about the fact that while dairying might have reached its lowest point and might debatably be on the way up (artificial volume), the spending from dairy farmers will be cut back this year, meaning the flow on to the results is yet to be noticed.
There's some things they have to do (replace broken items), but some things they will certainly be putting off (eg preventative maintenance).
I am always on the look out for insider buying. Not token stuff but serious insider buying. Selwyn Cushing's recent purchases indicate he has a lot of confidence in the company. this is the best buy signal for any share that I have seen for a while.
I think you are right NBT.
The Skellerup financial year closed on 30th June, and the worst effects ofthe dairy downturn happened after that. However,as others have said, Skellerup's main dairy market is for consumables, like the rubber interface between the cows teat and the milking machine. These items wear out and farmers can't choose not to replace them eventually. So what we have here is a timing issue. I do expect the first half of FY2016 for SKL to be affected. Was hoping to pick up some more cheap shares, if they do get sold down. But I don't think the outlook for the business is affected longer term. Share prices tend to reflect the future looking a year or two out, not what is happening in the customer market on the day.
SNOOPY
Ms Coutts adds more today (being last day before ex-div) another 50,000 @1.36 a piece.
I guess this is the reason for the institutions deciding to sell. They have been selling to the insiders though.
I see a new insider bought shares yesterday, his action is more 'token' compared to the other directors. The guy is John Strowger, a legal guy specialising in mergers and acquisition type stuff. He started early this year. After his buy yesterday he now has 118,000 shares compared to 42,000 in March
TPP applies to all manufactured goods. :t_up:
Quite a few large off-market transactions today.
Went back to check the market depth...boom its $1.40 now...
CEO has bought another 500K @ 1.35 over the past few days
I may be a touch late to the party on this one, but have placed a small order for market opening.
Well, more buying by another director. At this rate, there'll none left for general public I think ;)
I particularly like the fact that directors are continuing to buy as the SP rises. Todays notification at a whisker above $1.38
I cannot recall another example of such sustained and widespread directors and senior management purchases in a VERY long time. What is it about the manufacturing efficiencies of the new plant or some other thing they know which shareholders don't fully comprehend yet ? It'll be $1.50 in no time and brokers will have to upgrade their target price. The way this is going they'll all be reinvesting this weeks dividend into more share purchases as well.
That was good finish for the day, wasn't it?
Yeah, my thoughts are with you Roger, is there something that the insiders know about future prospects that we ordinary shareholders does not. In which case, if its materially sensitive they should issue a formal earnings update/upgrade.
Just realised the ASM is in Auckland (Eden Park) on 28 Oct (wed), are you going for this one Roger?
Not sure at this stage mate.
Info on Elizabeth from SKL site http://www.skellerupholdings.co.nz/Board.php
She has been and remains a busy lady!!
Just received my annual report and voting pack. Just wondering - is the Elizabeth Coutts sitting on the SKL board (and standing for reelection) the same Elizabeth Coutts who happened to sit on the VTL board when they created the framework for Nathan Finance? If yes - the board must have been at best pretty tired (firm asleep?) at that time ...
http://www.nzherald.co.nz/business/n...ectid=10554397
Does anybody know?
Same person,but she and Larsen were gone when they smelt a rat.
As an aside, I received a Nathan's Finance "prospectus".
It read really well.No related party lending.Offcourse it was all lies.
I wonder what all the directors and senior managers are going to do with all that lovely cash they received in their bank account yesterday from that juicy dividend ?
Hmmm... VTL was a costly $5000 lesson for me back in the day... assume Elizabeth moved out early having, as you say Percy, potentially "smelled a rat"... one hopes that a brush with this(those) rodent(s) early on in her directing career has lead to her acquitting herself with aplomb as a director ever since... I am not aware of her scoring any black marks since... anyone else??
Thanks percy, this would put her on my "never again" list. Don't need directors who disappear when they smell dead rats, but instead directors who do something about problems before shareholders hurt. Shall vote against her re-election (not that it matters, but still ...)
VTL was,or had the potential for great things.
A number of very astute investors were caught.
I am fortunate enough to have a holding in Ebos.Last year Coutts came up for re-election,and spoke to the meeting.A very capable director,who would add a great deal of knowledge to any board in Australasia.The board of Ebos hold her in very high regard.The chairman spoke at length of her contributions.
Sir Selwyn was on my "never again list" after his extremely poor chairmanship of AIR NZ and Cabletalk [turned out a complete disaster].
Yet, since then I have invested in both SKL, and Sir Selwyn's REL [unlisted] ,and extremely happy with both.
When you are a director and disagree with the "major"shareholders all you can do is resign.
That is why we watch for directors/CFOs resigning,or in SKL's case buying more shares."Inside knowledge."
Caught up with my reading over the weekend. Annual report made for a very good read. Good solid and sound company with 75 year plus trading history looking to build their business the old fashioned way through careful product expansion and innovation without throwing too much money at capital projects or new products until they're proven to be a profitable exercise. (A report like this should be compulsory reading for some of the tech company executives).
Very strong balance sheet, exchange rate tailwind, project Viking initiative and production efficiencies and the wide array of meaningful director and senior management buying in give people the obvious clue this company and its shareholders are very well positioned.
Based on a conservative estimate of FY16 dividends of 10 cps fully imputed 10 / 0.72 = 13.89 cents gross SKL trades on a gross dividend yield of a fraction under 10% and has a consistent record of strong and reliable dividends so shareholders are being paid handsomely to hold and enjoy future growth.
Yeah agree with you Roger, the annual report was good read over the weekend, very encouraging overall. I reckon $1.50 by ASM next week.
Hmmm.., looks like someone wants to get out at $1.42, once that seller gone, should be up and away.
Time to update the eps figures from a five year perspective
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
2015: ($30.956-$0.558-$9.023)m/ 192.806m = 11.1cps
Conclusion: Fail test
SNOOPY
An update on perspective from the FY2015 financial year
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%
2015: $21.375m /$203.011m = 10.7%
The above is a fairly flat looking margin trend. But with inflation near zero, margins are largely holding up.
Conclusion: Requirement satisfied
SNOOPY
The numbers aren't painting quite such a bullish picture from an FY2015 perspective. The dip in ROE to below 15% will need to be watched. The fall in this figure is more due to an increase in equity than due to falling earnings. The increase in equity is largely being used to finance the brand new Wigram factory. In FY2015 this construction consumed $15m of funds with another $25m of spending earmarked for FY2016 before it opens. Right now, spending on the new factory is 'dead money', an asset on the books producing no return. This will no doubt change when the new factory gets up and running. But even then depreciation charges will be higher. So will the increase in profitability from the new facility outweigh the increase in depreciation charges? This is something we shareholders will need to monitor.
The inability to cement an increasing five year earnings trend (test 2) is disappointing. Granted the eps drop in FY2015 was small. In fact Skellerup management would disagree with me as they reported a normalised profit increase for FY2015. However Skellerup managment have considered the $1.6m warranty payment that depressed FY2014 earnings as part of normal business. I regard that one off payment to be a high enough 'one off' that it should be pulled out of the normal results. Hence the difference of opinion, and of course I am right ;-).
Looking back, what happened to depress results in FY2013? Here is what chairman Sir Selwyn said in the annual report of that year:
"A protracted drought in New Zealand and sluggish international markets impacted customer purchasing decisions; this, in turn, affected Skellerup’s trading performance – breaking a run of record results in recent years"
Could this happen again in FY2016? We shareholders hope not, but yes it could. So I think it is worth looking at Skellerup from the 'five year dividend model', rather than from the 'retained earnings growth model' perspective that I used last year.
SNOOPY
A bit so so eh Snoopy
So you not buying more at the moment
Year Dividends Dividend Total 2011 2.5c+2.0c 4.5c 2012 4.0c+3.0c 7.0c 2013 5.0c+3.0c 8.0c 2014 5.0c+3.5c 8.5c 2015 5.0c+3.5c 8.5c Total 36.5c
Averaged over 5 years, the dividend works out at 36.5/5 = 7.3c (fully imputed).
So based on a 7.5% gross yield, fair value for SKL is:
7.3 / (0.075 x 0.72) = $1.35
SNOOPY
As you can see from my other valuation Winner, I bought in when it was a 'no brainer' at $1.39. Actually I paid less than that overall, my average purchase price being $1.30. But let's say I had paid $1.39 back in February.
Since that time, I have received dividends totalling 8.5c and 7c of capital gain (based on today's trading price of $1.46). So my gain on shares bought at $1.39 is:
(8.5c+7.0c)/ $1.39 = 11.1% (net)
That isn't a bad return over 8 months. In fact it is getting close to the 12.1% return I predicted under the previous model as an 'average' return over 12 months.
The question here is not 'is Skellerup a good company to invest in?' (it is). The question is, what price is too much to pay? I think there is a good chance I might pick up some more shares at less than $1.46 over the next six months. Remember the worst of the 'dairy crisis' forms part of FY2016, not the already declared FY2015. Throw some international uncertainty into the mix and I see no compelling reason to buy right now. But then again, I already own a handy portion of SKL shares. So I can afford to be picky with my buying timing.
SNOOPY
Snoopy
I would contend the increase in equity over the last few years is essentially from retained earnings (including the impact of the insurance payout)
It would appear that so far the new building has been funded largely by debt.
One could say that the declining ROE sort of implies that they not really putting retained earnings to work, a bit lazy in fact?
Instead of ROE I prefer ROIC (all capital in the business). This is about 12%/13% so above its cost of capital and the company is adding economic value in the process.
On that basis market cap deserves to be more than $160m but $260m current suggests a lot of good stuff priced in.
Good work though Snoopy
Thanks snooper but I think the resident beagle is better off thinking about the next dividend feeds. My old beagle always seemed to be thinking about her next feed so if it was good for her, then may I suggest you follow suit :)
Pretty clear to me the tailwind of lower currency and the way the company is headed suggests dividends will grow from here and judging from Director and senior management purchases they agree.
My view is that dividends going forward of 10 cps fully imputed appear sustainable based on best known current information so I have them on a gross forward dividend yield of 10.0 / 0.72 = 13.89 / 146 = 9.51%.
sb9, I am using the calendar year June to June, corresponding to the financial year. You are correct, but that final dividend for FY2015 of 5.5c was actually paid in FY2016. So I stand by my figures as presented.
One thing to note, as you point out, is that with the increased final dividend of 5.5c already paid, my 'figures' are already out of date. On a five year perspective, that 5.5c final divvy replaces the 2.5c from FY2011 in my model. So you might argue my model valutaion should be a bit higher than $1.35. If so I would agree with you. But my calculation is a purely mechanical process calculation based on the financial five calendar years. Add your own fudge factor!
Perhaps I should have said, I see a value SKL at 'at least' $1.35. I find a bit of conservatism in these valuations never hurts.
SNOOPY
Oh the irony Snoopy. Most people think bean counters are obsessed with historical information but I'm the hungry beagle always trying to peer around the corner to see what feed is coming next. Good reversal of roles going on here :)
Let's be clear what I am saying Roger. The $1.35 is a 'no growth' valuation of a company, bumbling along through the business cycle, and subject to normal cyclical forces. Does that sound like the Skellerup that you and I invested in? Hopefully not. Yet if you look at the historical results only, you can make a case for this no long term growth scenario. You can regard the $1.35 valuation as a bottom line valuation if all growth initiatives fizzle out.
For myself , I believe the long term growth scenario is most likely intact. I would presume the directors who have been buying SKL think the same. The only problem is, they have yet to earn their stripes - on paper. Hence my cautionary alternative valuation, if things do not pan out as planned.
SNOOPY
This just in:
"28 October 2015 Skellerup expects strong increase in profit
Speaking ahead of today’s Annual Shareholders Meeting, Skellerup Chairman, Sir Selwyn Cushing said based upon the strong trading performance in the latter part of FY15 and in the first quarter of FY16, the company is forecasting net profit after tax (NPAT) between $24 million and $26 million for FY16, up from $21.9 million in FY15."
Bit disappointing - I was expecting more.
Skellerup expects strong increase in profit
https://nzx.com/companies/SKL/announcements/272427
I'm sure those who are able to make it to ASM this arvo, would be in far better position to give us more snippets.
SP up 10c since announcement
Always a good sign when the CEO & CFO put there personal mobile numbers on an announcement ...not afraid to answer questions .
Low valuation (PE/PCF/yield); No debt; Strong management with large stakes; agri division at cyclical low, industrial division showing good growth and great potential; solid annual growth forecast.
Won't be a multi-bagger but risk-reward in low-interest rate environment looks very attractive to me :)
Cushing told shareholders that the company's share price had risen to $1.57 today which was a “fine way to start” the 14th annual meeting.
He also assured them that recent share purchases by directors and management were in line with stock exchange rules and were not a result of them “knowing anything in advance” of other shareholders.
Earlier this month NBR referred to share purchases by directors and officers and, in particular, noted Mair and Cushing had been especially bullish on the company, investing $2.5 million and $1.4 million respectively. Skellerup’s shares had been on a downward trend until it delivered a better-than-expected result in late August.
Cushing said a lot of the company’s stock had come on the market at one time due to a sell-down by institutional shareholders which could have had a negative impact on the share price but instead it has risen.
One of those institutions is AMP Capital Investors which held 16 percent of Skellerup according to the 2014 annual report, reduced to 8 percent in the 2015 report. In a September notice to the stock exchange AMP further reduced its shareholding to 4.93 percent.
http://www.scoop.co.nz/stories/BU151...-prospects.htm
Based on the update from ASM, I'm picking 4c interim and 6c final for the FY 16 making a total of 10c divvy for the year. Thoughts?
You might be right, especially if NPAT comes in at the top of, or above, the forecast band of $24 to $26 million.
The policy was to pay dividends within the range 40% to 60% of NPAT.
In FY 2012 NPAT was $24.7 million and the payouts, 3 and 5 cents, amounted to 62.2% of NPAT.
I don't know what the dividend policy is now, but clearly 60% is no longer a cap.
I don't think there is any indication of a change in dividend policy here. If SKL had reduced their final dividend from 5cps to 4.72cps, then they would have remained under their 60% self imposed 'payout ratio cap'. I wouldn't have expected any shareholder have actually expected such a fractional adjustment to meet the declared 40% to 60% target range though. Sometimes one can take this decimal point business one step too far.
SNOOPY
Sure does.
I'd say that's bang on the money mate.
I agree and think they're keeping something up their sleeve. For me the key takeaway is thisEmphasis added.Quote:
Skellerup CEO, David Mair said, “We have put a lot of effort into prioritising the growth opportunities available to us, and made significant investment in the people and structures we need to make the most of those opportunities. That work is now starting to pay off.”
Rome wasn't built in a day so if the work they're doing is now starting to pay off that clearly suggests there more gains to come in future years.
Based on the mid point of their forecast = $25m that equates to 13 cps. On a PE of 12, (which I think is conservative for a company that's growing profitability and now has only 10% of their sales linked to dairy), that suggests a fairly conservative fair value is 13 x 12 = $1.56. Happy holder for long term growth and excellent dividend income.
To those that thought the 2015 Annual report was a good read, do you mind sharing why you thought it was so compelling? 2014 seemed to be a better read. It included more detail around SKL’s growth into the US. I thought 2015 seemed quite nondescript and ‘flat’.
Key factor this year will be whether any growth comes from revenue growth in the US or currency tailwinds. I still believe the downturn in diary and Aus industrial will have a great impact – and wouldn’t be surprised if they come in at the lower end of their guidance. If anything, recent announcements demonstrate it is more diversified than once thought and it is delivering on its expansion into the US.
And, I also wasn’t sure that the company always understates their forecasts:
NPAT 12 forecast/result: $22m - $23m / result $24m
NPAT 13 forecast/result: $20m revised down to $17m / result $19m
NPAT 14 forecast/result: $22m - $24m / $20m
NPAT 15 forecast/result: no forecast? / result $21
Farmer Weekly Article
http://viewer.zmags.com/publication/...d#/1e02a9ad/14
Pricey - my puzzlement as well. Hope someone could offer some explanation. Nonetheless the price went up. Sold a quarter of my holding as I am not sure what's up.
It's a well-run company, supplying NZ's biggest and most important industry - admittedly one with its own problems but not likely to stop using SKL's products; benefitting from the weaker NZD v USD in respect of its exports; paying an attractive yield in a low interest rate environment; management with significant shareholdings.
Enough to justify its shareprice in current market conditions, IMO.
not to forget ... have been over the last couple of years very successful in geographic (US and Europe) as well as industry (added building industry) diversification and will move over the next handful of months into totally new and purpose build premises (which should further improve their output and efficiency).
Bought more this morning @ $1.50. Excellent divvy yield and nice tailwind from even lower currency.