Good buying there Roger, no reason for this one to be under 155 at least in my opinion.
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Good buying there Roger, no reason for this one to be under 155 at least in my opinion.
This seems to be treading water at the moment in regards to share price. Fully valued or no longer the hot share that it was a couple of months ago?
I wouldn't expect wild SP jumps with SKL - this is a solid company, doing a good job - and they sell real stuff, not hype.
Forward PE is 11.5 - and I would think that some of the big industries they operate in (like agriculture, mining) are currently closer to the bottom than to the top. This means, I would longterm see still lots of upwards potential. When will it materialise? I don't know ... can be months, but more likely years. In the meantime they pay a good dividend, so I have no problem with being patient.
Meanwhile - for the people who prefer hype, excitement and instant rewards ... find a way to short PEB ... this is more likely to make you rich (or poor) in the short term.
Discl: holding (SKL, not PEB) & DYOR
Well said BP. It seems to have settled at $1.50 and institutions appear willing to let stock go above that price. We're being paid handsomely with high dividends to wait and enjoy further growth in the years ahead.
Old fashioned company requiring old fashioned patience from investors wanting further gains.
with the NZD set in concrete at 0.65USD and cost of raw materials pretty low at that moment I am wondering how the year is going to play out for these guys. Might be a win/win situation coming up I think.
I'm picking there'll be more surprises come half year results time.
Technically its looking pretty weak and there's plenty on offer at $1.45. Pretty clear slow downtrend for the last 3 months since hitting a high of $1.60. A sustained breech of the 100 day MA currently at $1.43 would be a bad sign. Maybe global sales have been impacted a bit by the instability and with no sign of a dairy recovery things aren't quite as rosy as we'd hoped ?
I bought in after the strong full year results a while back with an eye of the price drifting into the realms of low $1.20's. Macro features aren't really in their favour but the company has a good leadership team and good long term prospects with usa expansion/performance a surprise packet in their last report. good divi too so I will not be all that worried if there's a squeeze on the share price for the next 9 months or so.
Their growth strategy was to expand in USA. We are lead to believe USA economy is generally on the up-tick, except for energy. Exchange rate remains favourable. As noted above, no executive sales announcements. PE still relatively low. But some big volume offerings @ $1.45. On balance, seems like it's oversold to me. Interim results announcement in 3 weeks which should clarify the situation
You guys are probably right. Hopefully nothing to worry about...a bit of consolidation after the strong run last year was probably to be expected. I'll go back to :sleep:
If its helpful Roger, then it would be safe to say that a 10% dip from September until today is actually quite benign considering some of the global carnage out there.
Last year, half year results were released 19 Feb, I think the rule is insiders can't buy this far out from results. Previously insiders bought from instos when they sold. If the big volume offerings at $1.45 are instos exiting, expect further weakness down to 200 SMA.
Half year is the date; revenue is the key
I always thought that a company that is likely to miss guidance by more than 5% will announce such a deviation around a month prior to the earnings announcement. If we are expecting half year results around 19 February (as it was last year), which suggests 18 Feb this year (third Thursday of Feb), then Skellerup would have already disclosed this.
Given that the last message around guidance was Sir Selwyn Cushing's speech at the AGM on 28 October, then we can only assume that the strong increase in profit is still all on track.
Looks like one big seller has the sp strangled at $1.45 with a big lot on offer.
I guess these things happen - and I never can understand the motivation of traders putting such large packets into the market instead of selling in smaller parcels ... unless, obviously - unless they want to influence the market in some funny way.
On the other hand - SKL is in my view an investment, not a trading stock ... so - who really cares about the daily jitter?
Yes I agree it is an unusual way for an insto / larger shareholder to sell a holding. Seller has gradually come down from an original ask of $1.50 so they're determined to clear their stake and until that's gone its probably fair to say the price is capped. Hopefully the depth we see on market is all they have to offer.
Hmm...forget banks, look like SKL is getting hammered over the past few days.
Fundamentals are still the same - good US expansion and a weak USD. Div yield should put a floor on the price too. Will look to top up if it drops to the low $1.30s.
IIRC, similar pattern happened in days leading to FY results in Aug last year. The price was hammered down all the way to $1.18 or so and boom they came out with big results followed by trading update at ASM.
Wonder if there's another surprise in store this time or market pricing in a not so great result?
I guess all will be revealed in a weeks time on Thu 18th Feb.
Considering the significantly lower currency and the fact that some 76% of sales are exported...the result seems pretty underwhelming to me.
Phrases like "tough market conditions" and later in the statement under Outlook Chairman Sir Selwyn Cushing said Skellerup’s results represented a solid performance in what remained a difficult market. are a little concerning.
9% increase in sales on much lower currency which should have boosted margins, where's the money going ?
Disc: No longer hold.
Thanks for the link.
Mixed,flat,steady dividend,yet there is progress being made.
Diversified means when one sector is down other sectors are on the rise.
Still a well run business with a strong balance sheet that is "well positioned" to take advantage of any opportunities that come along.Great seeing they are finding more of those opportunities in the USA.
Glass half full Percy...must be the new brand of coffee my wife bought last week...I see the glass half empty...change coffee or get new glasses ?
Solid performance in a difficult market. Increased their revenue by 9%, kept their earnings and their balance sheet looks very healthy indeed. Great example for the benefits of diversification.
Just imagine how their profits will soar as soon as their major markets mining and agriculture (mainly dairy, but the gumboots) will come out of the doldrums and need to catch up with all this delayed maintenance.
Their recent move into automotive can't hurt in my view either (more diversification, and an industry which will do well as long as the oil price is low ...).
Like it ... not a speculative share but in my view one of these value games.
Discl: Happy holder (goes without saying).
Pretty average result, down on HY15 which was also an average result (EBIT 10% lower than HY14). To be expected though given the state of their main markets. Also agree with BP, that I am impressed by their development of new markets/diversification.
I will look to purchase if price drops significantly on this news.
Remember a good business can have a poor year, and a bad business can have a good year.
SKL is a very good business.
The only surprise to me was how poor NZ dairying was.I thought the consumables would have held up better.Can't see how farmers can keep putting off buying the liners.
I read it as a net neutral report.
I don't know SKL's hedging policy, so hard to confirm what actual exchange rate(s) they are converting at.
SKL are in some tough market segments with the current commodities rout - mining, dairy, oil, so almost certainly some downwards pressure on domestic sales (into dairy) and margins (world wide) would be expected
International sales volumes do appear to be increasing, so this bodes well for the future
Love how things are told
Yesterday Trade Me went to 2 decimal places on the EPS calculation so they could say EPS increased
Today Skellerup say earnings are 'similar level to prior corresponding period (pcp)' when they are actually less
Beauty is in the eyes of the beholder Or something like that
SKL, STU and FBU's results show how difficult it is to grow earnings in a low inflation, flat local and world economy. Don't expect too many spectacular results around this reporting season.
On looking through the financial statement I see that revenue is up nicely. The expenses that have increased are marketing and distribution. Administration expenses have been held or reduced slightly. That seems like a good result to me.
The market doesn't seem to like the report
This has been a good example of the technical's working for people. 100 day MA has been about $1.45 as previously noted and I sold half at $1.49 and the other half when it was clear the 100 day MA had been broken at $1.44. The market was telegraphing for some time the result wasn't going to be stellar. I suspect one or two broker analysts had visited the company over the last month or two.
With dairy and mining stuck in the doldrums and no sign of even the faintest relief on the horizon its hard to see the company making much headway this year...risks to me appear to be to the downside to the company's forecast.
Sound company. good long term prospects. accumulate accordingly
Excellent example / debate this morning of perspective and viewpoint.
A psychologist investor / friend once told me the issue of whether a glass is half full or half empty has finally been resolved and is all to do with one's perspective and viewpoint.
Try this at home. Get half a glass of water and put it right on the very edge of the table with some of the glass sticking over the edge. Now get your eyeballs right down to floor level below the glass and look up. Looks full doesn't it !!
Moral of the story, even an average company looks good if you buy it cheap enough.
Overall my rating for results is 5.5/10, some parts are encouraging and other parts not so great.
On that basis, have sold out my small holding this morning, might look at it in 6 months time depending on how is being progress made. Better to stay out for now in these uncertain times imo.
Interesting reading into both SKL AND STU. Both have headwinds but have managed to report decent increases in revenues but margins are squeezed. I'd be slightly more bullish about SKL given that I don't believe STU can replicate their FY15 performance although I'd certainly argue STU is better priced to buy into currently given yield, etc... Both satisfactory reports in my book.
The guys at the London School of Economics would love the responses to todays announcement. I will point them to this.
Skellerup long term company performance is nicely summed up in a long term share price chart (below)
Skellerup is always gunna be a great company - but never delivers
Anything changed -- nah, nothing
Good for the occasional medium/long term trade but then again they only coincide when the whole market is going up anyway. Good for dividends - maybe
A growth company - come on tell me another one
Didn't we have similar discussions two (or was it three?) years ago around NPX? While I agree, that SKL is due to the nature of many industries they sell into more a cyclical than a "growth" company would I think that the new factory plus additional products for construction / automotive managed to shift the baseline for this cycle upwards.
Probably not a company to hold forever, but still think that they can and will do much better than what they did now, if mining and dairy start to "fire" again.
If share price follows earnings the chart says all the previous changes to 'baseline' over the years have come to nought ...and there has been several. What's different this time around?
Forget about telling me how great an investment it has been since 2010 - nearly everything has been (inc Nuplex) and that's more market action than great Skellerup performance.
Glad you see that probably not a hod forever - so let the trader in you loose and trade the inevitable ups and downs between 130 and 180
Like Nuplex best outcome for Skellerup might be for them to be taken over
Funny you mention that Winner as they did bounce a bit more than the rest of the market on the NPX and DIL takeover announcements on Monday...but back to reality now and an institution seems to have plenty to unload at $1.33 so it would appear that's the new normal for the time being.
I find myself agreeing with the 9am Percy. Not the 10am Percy that sold out an hour later.
If you look at the HY2016 Agri division notes in the presentation your dairy conundrum is explained.
From p2
----
Subdued NZ demand for dairy rubberware and footwear due to international milk price and resultant Fonterra pay-out. However liners and tubing remain an essential consumable.
----‒
From p6
Footwear mixed‒
NZ market slower than expected due to dairy market and dry weather
-----
So farmers are walking around with holes in their boots, even as they pipe up their cows with new liners as they are plumbing them them up to the milking shed. All udderly obvious when you read the detail :-)
SNOOPY
Sir Selwyn is buying up again, very large increase in his holding
Wow - another odd 6 million shares. He has certainly more "play money" than I have ... and he clearly must think that the company is at current price undervalued. 8 million dollars must be even for him a meaningful sum ...
Maybe he does know the company better than the sellers?
Edit:
.... maybe I should have read the full announcement before commenting. The newly acquired number of shares is not as huge as I first thought (though the number went up by that much, but this seems to be more an accounting issue). Still:
Sir Selwyn holds a 20% interest in H&G LtdQuote:
(6) On 18 February 2016 H&G Limited purchased 547,065 shares in Skellerup
on-market at an average price of $1.329 per share.
Not sure ... it is easier to delay maintenance of dairy liners and sealing (though it still might not be wise) than to stop feeding your animals. As well - PGW has a significant exposure to non dairy agriculture (wool, red meat, horticulture, pip fruit, wine), and many of these sectors are currently doing quite well.
It doesn't auger well. Now two full years of low dairy prices with many farmers struggling to come anywhere near breakeven. Pretty clear they're trimming...no slashing costs wherever they can.
Not even the faintest sign of a glimmer of any price recovery on the horizon and with the supply demand imbalance on a global basis this suggests dairy will be extremely challenging for the foreseeable future.
PGW do 24% of their business with dairy farmers. You can't get blood out of a stone...
Keep in mind that "accounting break-even production cost" is quite different to "real break-even production cost". At least $1.00/kgMS. Real break-even production cost for a primarily grass based dairy farming system without excessive debt servicing cost is in the $3.50-$4.00/kgMS range
Yes, dairy farmers are having a challenging time atm. But they were "on the pigs back" 2 years ago, and generally for the 4 years before that
Dairy is a cyclical industry with a long lead-in period. Always has been, probably always will be. Allowance must be made for this aspect of business in cash flow and debt management decisions
But any business which does not spend "stay in business" expenses, is simply making their situation worse. Milking plant consumables fall into this category. They are only "discretionary spending" to delusional farmers, because milk yield decreases as liners age. Kind of like a spark plug in an engine. It still works as it gets older, but you use more petrol if you don't change them periodically
Gumboots are a different situation......
good comparison ... and here is the research paper:
http://www.uwex.edu/uwmril/pdf/MilkM...r_Abstract.pdf
Not a dairy farmer, but I do have a lifestyle block, and need gumboots for a few times each year when I get irrigation. I used to get cheap Chinese gumboots from the red shed, and a pair would last a couple of years before leaking. Then, 12 years ago, I bought a pair of Skellerup boots at 5 times the price. They are still going strong. So it is possible that some dairy farmers think they are saving $40 by buying cheap boots, but it will cost them more in the long run.
The economics of how often to change liners comes down to the cost of lost production incurred through not changing the liners compared to the cost of changing the liners. The older the liner, the more production is lost. As the price of milk comes down, the cost of lost production also reduces, so farmers are correct to replace liners less often when the milk payout is lower.
Also, it is wrong to think of "deferred" spending on "stay in business" expenses as meaning that eventually the farmer will spend the money and Skellerup's revenue will go back up again. If the milk pay-out stays down, sensible farmers will replace liners less often and skellerup's revenue will stay down.
Another million shares for Sir Selwyn
https://nzx.com/companies/SKL/announcements/278214
And he is still buying:
https://www.nzx.com/companies/SKL/announcements/278822
If the directors have this much confidence it bodes well for the future.
SKL at 128
One that doesn't seem to have recovered the slide after that not so good announcement.
Mind you PGW not looking flash either
Both on my watch list after getting out ahead before slides. Still like both.
Gunny
I think you have to take a longer term view with SKL. I started buying last year, average buy price $1.30. The share price sank, then raced up just before the latest half year announcement, then sank again. I bought some more just recently at $1.30! There are some on this forum who have bought and sold over that time frame.
But the new factory is only just starting to come on stream. Any efficiencies captured will be trickling their way into the accounts over the next 18 months. Meanwhile the exchange rate is weakening off. Their new Alfa Romeo drive coupling contract in Italy is yet to start, but ready to go. Countering that is tough times for dairy and iron ore producers which keeps a lid on the profit SKL is making from those respective industries. But the rubber milking cups and slurry carrying rubber connectors are ultimately 'must have' consumables, not luxuries. Purchase cannot be postponed forever.
It all adds up to an ideal time to accumulate SKL by my reckoning.
SNOOPY
Not changed just taking a holiday and earning greater capital gains in other shares at the moment before getting back in. THL and SCL doing it for me currently, CAV not (bugger) . May peg SCL back to balance my portfolio and reinvest in the expected upswing in SKL in a while but seeing too much upside in SCL over SKL at the moment.
Gunny
The drive coupling is a potential mine field.
Car manufacturers are mean,and usually demand supply ex warehouse.ie SKL may need to carry stock in Italy.
SKL were sued [successfully] by Marley for supplying not to specification products.Doing the same thing for a car manufacturer,would mean a recall.The manufacturer would then sue SKL for the cost of the recall.It could/would break SKL.
Drive couplings would be a lot more sophisticated than down pipes or irrigation pipes used by Marley.
Relax Percy. The driveshaft couplings will be made by Skellerup's subsidiary in Italy by passionate Italians, not squeezed out of the old barn in Woolston. Carrying stock in Italy won't be a problem because the stock is already there! Skellerup have been supplying Maserati for a few years now with no problems. So supplying a driveshaft coupling for a less powerful vehicle shouldn't be an issue.
SNOOPY
Lots of activity today. Perhaps Sir Selwyn is buying up large again
It was me (well actually, my purchase was one of the small ones)! Sold my NPX shares and put it into SKL. Was planning to go into SCL but (with my wishful thinking) am hoping the price might ease, whenever I try to buy a climbing share it comes down!
I had a tiny parcel of SKL and decided to extend it. I redid my numbers and re-read the reports and decided that this company is a good home for my cash at the moment (with the price under 1.30).
That is quite a big jump for Skellerup standards. Something up?
Up 12% since beginning of month
Amazing
Must be the stock of the month
No.
!st place in the percy's avoid list goes to CAV,up 21.43%
2nd place SCT up 19.57%
3rd place MVN up 13.27%
And it gets worse, even MGL has outperformed my favourites, being unchanged.
My much loved EBO is down 1.37%,while my largest most loved holding, HBL is down 4.10%,[would be a lot lees taking account of HBL's divie]
Yes CAV have leapt out of the blocks this new financial year giving holders a sweet return but maybe running out of steam now...but better still CVT up from $9.80 on 31 March to $12.00 today, $12.40 on 13 April..shows you the power of entry into the NZX50, (26.5% gain for those canny enough to exit on the 13th being square up day for the index entry).
CVT is even sweeter for those of us who have held it for over a year,up 207.30%.
Even beats TIL up 197.27% in the same time.
Both make SCL up 105.66%, seem to be a bit of a laggard.!!! lol.
https://www.nzx.com/companies/SKL/announcements/281481
Not looking good.
Anything with meaningful exposure to dairy will face similar strong headwinds so this shouldn't be a surprise to anyone. Perhaps a warning for other companies exposed to the severe dairy downturn ?, banks and PGW spring readily to mind.
I didn't realise this not first profit down grade this financial year
When announcing FY15 profit $21.9m they said well placed to further grow profits
At ASM before excited shareholders on 29 Oct it was going to be $24m-$26m
H1 results nit looking too good and on Feb 18 still ahead of last and guided $23m
And now jeez $20m-$21m
So from $26m to $20m in a few months
Wonder what next announcement in July will be like
Skellerup - always gunna to do great things
I think you've summed this company up extremely well mate. I think shareholders have every right to expect better forecasting than they've received and the trend is definitely down so maybe as you suggest the actual result will be below even the most recent disappointing guidance, assuming there isn't yet another downgrade before then, which is by no means a safe assumption. The currency hasn't been helpful either in the last month or two tracking back up towards 70 cents U.S. Headwinds remain for the foreseeable future and with the currency above the 20 year average it doesn't have any appeal to me anymore even at $1.20.
I managed to salt away a few more of these at $1.28 today.
If profit for the year is only $20m, followimng recent downgrades, then based on the 192.8m shares on issue, I get eps of 10.4c. So it is probably too early to say that last years fully imputed total dividend of 8.5c is under threat. It will depend on the capital expenditure requirements and outlook. The brand new Wigram factory is almost ready, so hpefully most capex is done. Given a bottoming oulook for milk and iron ore, I am guessing the board will try and hold the dividend steady.
I don't need the current level of dividend to make my investment case stack up though.
My five year average dividend yield, I am forecasting to be 8.1c (down 0.4c from last years actual).
So at $1.28 SKL is on a 5 year modelled yield of:
8.1/ 128 = 6.3% net, or 8.75% gross
A very nice little dividend earner to put away. 'Worth it's salt' some might say :-) Roger unfortunately has recently scared himself off from this bargain!
SNOOPY
Funny thing is Snoopy me ol mate, whenever I would take my old beagle Kelly to the beach she always seemed to make better progress swimming with the tide than against it. This silly old dog took notes and has recently decided to follow suit :)
When you are in for the long haul Roger, it matters not one jot which way the tide is flowing, provided you are not at risk of drowning in the meantime! SKL has low debt, so I have no doubt that it will be around when the tide turns. And it is very likely that those who prefer to swim with the tide will be paying more than I am today. Of course SKL may get cheaper. But if that has happened around results time, I will buy more shares to take advantage of it.
Take advantage of the clouded outlook for dairy and iron ore (you didn't really expect that SKL would be unscathed did you?), take advantage of the profit downgrade that knocked 10c off the share price, take advantage of a less than successful dairy auction overnight and transfer some of by 2% call money to a "7.5% bond" (and counting) in the meantime.
Another 'risk' is SKL falling out of the NZX50, due to newcomers like Tegal. But that just provides an opportunity that has nothing to do with the operations of the company. Nuplex and Coates will shortly be departing the NZX50. So SKL should be safe inside the NZX50 for now.
SNOOPY
One needs to "weigh" up carefully who might get added to the NZX50 instead, (big hint there) and not discount the effect an exit or entry to the NZX50 has on a company's SP, good recent example the bounce in CVT.
Its management's inability to forecast with any degree of accuracy that surprises me the most mate. Surely they should have been the best placed to sniff the breeze earlier in the year ?
I guess like my late and much loved Beagle if I can't smell a feed coming in a reasonable time frame, I "weigh" up my options and go sniffing elsewhere :) Beagle's by their very nature usually have a poor attention span and lousy stamina when swimming, you must be the exception to the rule mate.
I see director Liz Coutts has bought 40,000 more shares from May 6th to May 10th. I am a little surprised, as surely these purchases are well outside the normal purchase window for director. Is not now between reporting periods? Not surprised at her support for the company though!
SNOOPY