FBU - Fletcher Building

[bull....]

The presentation to the Macquarie Australia conference earlier this week noted that the $300m buy-back was c. 75% through.

oh no that means the price fall more

[RTM]

oh no that means the price fall more

The presentation to the Macquarie Australia conference earlier this week noted that the $300m buy-back was c. 75% through.

Thanks Southern Lad, I missed that.

Bull, 25% to go, still quite @ few so should support the SP for a bit longer.
But yes…price might come down a bit more, given where market seems to be heading.
All the better for the remaining 25%.

[Sideshow Bob]

oh no that means the price fall more

And the more they fall, the more they can buy and cancel!!

[Entrep]

Geez imagine the price without buyback support

[nztx]

What % of the total capital are they buying back to cancel ?

[Waltzing]

Yield starting to look good on this old Tonka Toy outfit.

Tonka Toys and sand pits. The construction industry is still going to be needed even in STAGGA incineration times.

[nztx]

Yield starting to look good on this old Tonka Toy outfit.

Tonka Toys and sand pits. The construction industry is still going to be needed even in STAGGA incineration times.

Can't not love the "Tonka Toys and sand pits." bit - good one

The logistics may need a bit of work to make sure the costs dont blow themselves away though

[freebee]

Headline is "Why is Fletcher Building trading at a single digit PE ?" i dont subscribe to this, but maybe someone here who does can tell us any bits that might be of interest

https://www.nbr.co.nz/node/234445?ut...ce=NBR%20Today

[alokdhir]

https://www.nzx.com/announcements/392238

Buy back finished ...they bought and cancelled 5% equity ...saved just under $ 17 mil from stated amount as SP was down

[Nor]

Meanwhile, Fletcher Building appears to have suffered from this souring of sentiment towards homebuilders. This is probably why the share price has been down in 2022 despite consensus earnings upgrades. For more detail on how the relationship between share price and earnings revisions work you can refer to this previous article. Ultimately this situation will resolve with either the share price recovering or consensus earnings forecast falling.

Chart showing the recent bi-furcation between earnings revisions and share price

While Fletcher Building hasn’t been savaged as badly as US homebuilders, while half of its revenue in New Zealand comes from residential, a chunk of that will be renovations and repairs, and none of its revenue in Australia comes from residential, it is estimated to be trading on a price to earnings ratio of 9x forecast earnings. That’s not 4x cheap but it's still cheap and cheaper still when compared to the broader New Zealand market where the average PE is 20x. There can be little doubt that the fizzy top is coming off house prices here, but there remains a very healthy pipeline of activity due to capacity constraints creating a backlog of work.

It will be fascinating to see how house prices respond to changing affordability and changing underlying demographics. In the US one part of the puzzle is already baked in, the coming wave of Millennials that will be looking to buy a house over the next decade. In New Zealand that part is less clear, our demand for housing is driven by migration. If there turns out to be a pent-up surge of migrants heading to New Zealand from China, Europe and the US, we might just see house prices stabilise around current levels.