if the earning meet the highest predict 17.5m,will the SP bounce back again?if meet 15.5m,will the SP keep droping?
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if the earning meet the highest predict 17.5m,will the SP bounce back again?if meet 15.5m,will the SP keep droping?
The comment below appeared in the recent shareholder letter.
"We are generating cost savings from more efficient warehousing, freight, logistics and restructuring and expect operating costs to be down compared to the prior year, despite increases in rent following the sale and lease back of two sites and inflation pressures."
I read this as saying (fairly poorly) that the savings achieved were of a sufficient size to more than fully offset the rent increases created from the sale and leaseback and some unquantified inflation pressures.
Shareholder letters, like company newsletters to employees, always make every thing sound wonderful. It pays to think critically and question every clause and try to read between the lines. No figures given of course and it is the cost savings versus revenue increase/decrease that counts.
The summary from the trading update on 20 May is pertinent.
•Positive momentum being seen from focus on customer service and turnaround strategies.
•Steel & Tube has grown market share with year on year volumes and sales continuing to improve, however pricing pressure and product mix are impacting second half margins.
•FY18 Normalised EBIT1 has been restated and reduced by approximately $4m following further analysis of FY18 inventory write-offs. This lowers the original FY19 forecast EBIT from $25m to approximately $21m.
•Taking market conditions, trading performance and the inventory adjustment into account, the company now expects FY19 EBIT to be between $15.5m to $17.5m. This is an increase of approximately 20% to 35% on the restated FY18 Normalised EBIT (excluding Plastics) of $13m.
•Steel & Tube’s Board is confident in the medium to long term outlook for the company and anticipates paying a final FY19 dividend in line with its dividend policy.
Dividend policy these days is for 60-80% of NPAT and so shareholders can at least expect a profit for the final half, although the indications are that the final divvy may be down from the interim as a result of reduced margins.
STU were pretty proud of this chart in their half year announcement
But it says a lot more than what they intended to show ...not so good stuff
Normalised npat up 74% on last year
Pretty good ....even better growth than A2
http://nzx-prod-s7fsd7f98s.s3-websit...641/306007.pdf
EPS 0.068, PE ratio close to 14 based on SP 0.94. The PE is highest since 2013 as per my calculation. Given the fact STU operate in a very competitive market, I'm cautious if they can achieve $35-40m EBIT by FY21 as mentioned at 2018 AGM.
Step one of redemption acheived. Still another 99 steps to go but they could so easily have tripped up at this stage...
Given that 2019 was well below the their earlier estimates, $35 to $40m EBIT in FY21 looks rather unlikely. If this was Mr Markets the best guess, the share price wouldn't be where it is. The interest expenses are now low before the accounting lease adjustments ($1m?). A $37.5m EBIT result is therefore a net surplus of about $26m. If say a 12x PE was applied in two years to an EBIT of $37.5m, the 2021 share price is $1.89. People wouldn't be prepared to sell at under $1 if they believed there's a good chance of the share price doubling in the next two years.
Assuming people are pricing in a 15% capital return and some dividends from the current 92c price, the expected share price in two years is $1.22. That's a market cap of just over $200m. A range of different future PE ratios and EBIT's can create a $200m market cap, but they are typically under an EBIT of $30m.
I can't find an investor conference call recording on their website,
Can anyone help me?
Im not certain, but it looks to me as if there is only an online archive of the presentation (i.e. powerpoint slides) , not a recording of the live actual investor conference call.
If you cant find it after more looking give the company an email or a phone call.
Thanks for your help Peat.