Skellerup still powering ahead
Full year profit guidance 10% or there abouts more than last year
Snoops, Blackpeter et all will be pleased
http://nzx-prod-s7fsd7f98s.s3-websit...554/294886.pdf
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Skellerup still powering ahead
Full year profit guidance 10% or there abouts more than last year
Snoops, Blackpeter et all will be pleased
http://nzx-prod-s7fsd7f98s.s3-websit...554/294886.pdf
An excellent result.
Another of my long keepers doing well!
:)
I have updated my valuation using the latest five years of 'rolling data'. FY2019 has been the first year that dividends have not been fully imputed. Granted, the dividends have been increased, which means that dividend hungry shareholders are not worse off. And the reason for not fully imputing those dividends, because of the outperformance success of Skellerup's overseas subsidiaries that do not generate earnings in NZ Dollars, is hardly a negative. Although detractors might say Skellerup should be doing more of their manufacturing in New Zealand. Given the escalation in global trade tensions, I think being geographically diversified with your manufacturing plants is probably a good idea. Even if, unlike Scott Technology (as another example of a NZ based, but internationally spread exporter), the overseas manufacturing facilities are not multipurpose. Skellerup can't choose in which overseas plant they manufacture their widgets!
The calculations to work out the equivalent gross figure for FY2019's unimputed dividends, those paid in the FY2019 financial year, are as follows:
7.0c (55% imputed) = 3.85c (FI) + 3.15c (NI) = 3.85c/0.72 +3.15c = 5.35c +3.15c = 8.50c (gross dividend)
5.5c (50% imputed) = 2.75c (FI) + 2.75c (NI) = 2.75c/0.72 +2.75c = 3.82c +2.75c = 6.57c (gross dividend)
Year Dividends as Declared Gross Dividends Gross Dividend Total FY2015 5.0c+3.5c 6.94c + 4.86c 11.80c FY2016 5.5c+3.5c 7.64c + 4.86c 12.50c FY2017 5.5c+3.5c 7.64c + 4.86c 12.50c FY2018 6.0c+4.0c 8.33c + 5.56c 13.89c FY2019 7.0c (55% I) +5.5c (50% I) 8.50c +6.57c 15.07c Total 65.76c
Averaged over 5 years, the dividend works out at 65.76/5 = 13.1c (gross dividend).
So based on a 7.5% gross yield, 'fair value' for SKL is:
13.1 / (0.075) = $1.75
Now using my plus and minus 20% range to get a feel how the SKL share price might behave at the top and bottom of its business cycle.
Top of Busines Cycle Valuation: $1.75 x 1.2 = $2.10
Bottom of Busines Cycle Valuation: $1.75 x 0.8 = $1.40
At this part of the investment cycle, with conditions very favourable towards shares, I would argue that SKL shares trading at $2.10 (the upper end of my expected range) would not be unusual. The fact they are trading at $2.14, just before a 5.5c dividend is paid, puts them within the top bound of my expected trading range on an ex dividend basis. The 'growth premium' from the half year has gone. From an historical perspective I believe this is justified. Skellerup have yet to earn their 'consistent growth stripes'.
Skellerup's underlying performance has caught up with their market valuation. I felt a touch of pride when I read about the 40 Maserati Quattroporte limousines bought for the Port Moresby APEC conference (the ones that Jacinda refused to ride in), knowing that each one had a Skellerup drive coupling faithfully transmitting all that 'torque' below the floor, while our leaders 'talked' above. But is such growth in the PNG market sustainable?
I have done very nicely out of SKL over the last three to four years. My average purchase price is $1.30. But I won't be topping up at $2.14. Good company. But for me the risk/reward equation is not proven to be 'market outperforming' from here. Lots could go right and lots could go wrong. But I have faith in the direction of management and governance. When I saw the photo of Chairman Liz Coutts in the HY2019 inside cover, I thought she had a touch of the wise look of the late great Stephen Hawking about her. And that can't be a bad thing for a science lead company!
SNOOPY
Appreciate the commentary Snoopy, my average buy is a few cents less than yours.
Neither buying or selling at current level, would like a few more tho if the price does drop at some stage.
It is interesting to look back on past predictions, and in particular the one above that I drew up four years ago. Yes I did consider this valuation 'invalid' a year later (because of a deterioration in business metrics) , but did not and still do not consider in invalid at the time I did it.
My prediction back then was earnings per shares of 17.3 for FY2019. Based on my modelled PE at the time of 12.3, this implies a projected share price today of:
17.3 x 12.3 = $2.18
My forecast gross dividend was 10,1c/0.72 = 14cps. The actual gross dividend paid over the year was 15cps.
At the half year result, CEO David Mair is predicting a net profit of $29m to $31m. Based on 192.806m shares on issue that equates to 15-16eps. With the shares currently trading at $2.14, this represents a FY2019 PE ratio of 13-14.
My share price prediction from four years ago was high, but only 2% high. If I was going to make an error it would be in that direction after I subsequently decided in 2016 that business conditions had deteriorated. For some who think it is impossible to forecast a share price four years into the future this is an extraordinary result. I prefer to think of it as vindication of what is a powerful valuation technique.
SNOOPY
Details of transactions and events giving rise to relevant event
http://nzx-prod-s7fsd7f98s.s3-websit...705/297648.pdf
“Details of the transactions or other events requiring disclosure:
From 21 August 2018 to 28 March 2019, ACC had the following aggregated on-market
transactions in Skellerup Holdings Ltd:
• Purchases of 2,739,690 shares for consideration of NZD $5,682,591.69
• Sales of 559,206 shares for consideration of NZD $1,164,231.98 “
Good to see ACC shareholding go up. Can anyone explain this to me tho,
Why are there purchases and sales ?
Given they were already >5%.... why can they make a
declaration in March 19 for Aug 18 to Mar 19 ?
Only need to disclose when they have a movement of 1% or more in their holding
On 21 August they had 5.465% and even though buying and selling since then they never went over 6.465% or under 5.000% (when they would have disclosed ceasing to be a SSH)
Obviously on March 28th they must have purchased enough to to go over that 6.465% so had to tell us
They probably have bough and sold and many days in this period ....would be a bit nonsensical to disclose every trade so the powers to be decided 1% movements would be enough
Clear as mud?
Thanks. Yes, that’s clear and makes sense.
Appreciated.