FBU - Fletcher Building

[Greekwatchdog]

Previous High was Sept 2016 - $10.21, May 2007 - $12.54. Time will tell if it hits those dizzy heights..

[Greekwatchdog]

For Bars latest update this morning.

NEUTRAL
Fletcher Building's (FBU) investor day was informative but does little to change our investment view. Unsurprisingly, (1) the
trading environment remains favourable, (2) guidance was lifted (+4% at the midpoint although boosted by higher land
sales), and (3) cost pressures have arisen. The announcement of an NZ$300m on-market share buyback, which we expect
will be +3% accretive to EPS, was a welcome surprise for shareholders. However, the key upside driver of FBU's share price
in the near-term hinges on its ability to achieve its 10% EBIT margin target by FY23 (vs. consensus expectations of 8.5%).
FBU expects to meet this goal through an enhanced focus on residential and land development, market share gains, and by
entering product adjacencies. Trading on 15.2x forward earnings, we view current levels as broadly fair, particularly given
elevated construction activity. NEUTRAL.
What's changed?
Trading environment remains buoyant
With demand for housing resilient, government stimulus targeting infrastructure, and local manufacturers enjoying share gains at the
expense of imports, FBU are operating in a favourable environment. Capacity constraints are beginning to emerge across the industry,
and FBU believe this will result in activity being sustained at current strong levels rather than the spike which consents data may
suggest. Cost pressures have also emerged, with FBU noting a c.NZ$10–15m impact in 2H21 from supply chain constraints and rising
input costs (e.g. energy and steel), however, the brunt of inflationary pressures appear to be being worn by customers. With these
dynamics in play, FBU raised FY21 EBIT guidance to NZ$650m–$665m (vs. previous guidance of NZ$610m–NZ$660m).
How likely are 10% EBIT margins in FY23?
FBU outlined ambitions to achieve a 10% EBIT margin target by FY23, underpinned by four key pillars; (1) AU operating disciplines
and growth initiatives, (2) Construction forward order book replacing nil margin legacy work, (3) leverage in NZ Core and adjacencies,
and (4) strong top-line growth at >15% margin in Residential and Development. The principal new message was the importance of the
residential and development division to reaching this target with ambition to build 300 apartments a year (in addition to the 1,000
homes already targeted) as well as 100 retirement units and development of industrial land. We view investment in this strong
performing business unit as sensible, although it comes with additional risk given entry into new markets. We do not forecast FBU
achieving its FY23 margin goal, with low margin Australia and Construction divisions limiting further expansion.

[Louisphan]

I am just wondering why people already known that someone (The FBU) will buy the stocks any price but they still keep selling it for current price? Do I miss anything? Or that is the FBU's related Party who just make the buy back's plan to buy their shares at high price? Or it is just simple there are big funds who want to exit the stocks but afraid that no one will buy so they selling now when there are a buyer???

[Habits]

Finally freed up some money in the long term portfolio for a position in this. Been meaning to for quite awhile. With the support of the buyback I think the previous $9 highs could be on the cards later this year.

Nup... better buys for yield etc elsewhere imo medium term

[peat]

I am just wondering why people already known that someone (The FBU) will buy the stocks any price but they still keep selling it for current price? Do I miss anything? Or that is the FBU's related Party who just make the buy back's plan to buy their shares at high price? Or it is just simple there are big funds who want to exit the stocks but afraid that no one will buy so they selling now when there are a buyer???

In my understanding buy-backs are usually designed so they dont move or affect the market - there is enough liquidity in a Top 10 stock to do this and still achieve the goals of the buy back i.e accumulate shares. I think your assumptions that they will buy them at any price or at any time should be questioned. They may or they may not. And the price may still go up or down as driven by market and security sentiment.

[JohnnyTheHorse]

In my understanding buy-backs are usually designed so they dont move or affect the market - there is enough liquidity in a Top 10 stock to do this and still achieve the goals of the buy back i.e accumulate shares. I think your assumptions that they will buy them at any price or at any time should be questioned. They may or they may not. And the price may still go up or down as driven by market and security sentiment.

In theory, but practically speaking they are designed to minimise any impact on price. But as you say fundamentals and sentiment are still king.

[Greekwatchdog]

Still no slowdown in Consents. - Below from For Barr.
NZ Consents — What Slowdown?




Residential consents remained very strong in April, being the second largest number on record at 48.2k (annualised and
seasonally adjusted). Over the past twelve months 42.8k dwellings have been consented including 18.2k in Auckland. This is
the total highest total for any 12 month period, with strong demand underpinned by low interest rates and tight
supply. There are signs that demand and house price growth may be softening with auction clearance rates and housing
turnover moderating post the removal of investor interest tax deductions on existing dwellings. While this has yet to impact
consents, we note changes in housing demand have historically taken c.5 months to flow through. Non-residential
continued recent momentum with the 12-month rolling value now slightly above 2019 levels but area consented remains
soft.
Residential strength continues, Auckland cracks 18k
Residential consents continued their strong run in April with reported approvals of 48.2k (seasonally adjusted and annualised), the
second highest on record, up +4.7% mom and +68.0% yoy (cycling a lockdown impacted comp). Positive growth on the prior month
was evenly split between detached (+4.9% mom, +50.8% yoy) and higher density dwellings (+4.6% mom, 98.5% yoy). High density
dwellings have been the larger driver of growth in consents over the last 12 months and remain at historically high levels, comprising
of 45% total consents, with 66% in Auckland. 12 month-rolling floor area consented, which provides the best measure of future
residential activity, was up +12.9% yoy. Regionally, growth continues to be led by Auckland (+23.3% yoy and now >18k), Regional
North Island (+23.9%), Canterbury (+15.2%) and Waikato-Bay of Plenty (+9.9%), while Wellington was broadly flat (+1.4%)
and Regional South Island (-6.7%) declined.
Non-residential continues to pick up
Non-residential has continued recent momentum in April with value/sqm up +49.1%/+13.7% yoy albeit against a lockdown
impacted comparable. On a rolling 12-month basis non-residential consents value is up a solid +17.0% yoy and slightly above 2019
levels but area approved (sqm) remains subdued and was down -8.5%. Non-residential consents are often variable due to the size and
nature of projects. We have seen announcements of some projects that were paused due to the pandemic restarting, particularly in
Auckland Industrial and Office, and industry participants have suggested that government led activity is lifting in the regions. It was a
strong month for Accommodation and Health, Education and Industrial, but Retail remains weak.

[tim23]

Can it hold a break above $7.60?

[RTM]

https://www.nzx.com/announcements/373420

Here we go. Hope they have it right and the FBU shares are not over valued, they are not the highest they've been for a while...is it years ...right ?
These guys have never made mistakes...right ?
Hope it turns out well.
By the way LEK, I am not selling any.

[winner69]

https://www.nzx.com/announcements/373420

Here we go. Hope they have it right and the FBU shares are not over valued, they are not the highest they've been for a while...is it years ...right ?
These guys have never made mistakes...right ?
Hope it turns out well.
By the way LEK, I am not selling any.

They bought heaps at just over $5 not that long ago