FBU - Fletcher Building

[ari]

Interesting article ex NZHerald.....http://www.nzherald.co.nz/business/n...ectid=12007538

[minimoke]

luckily im far away and ignorant of the local knowledge. People have been screwed badly there, i listened to some of their stories on campbell on RNZ this eve.

NZ was safe there for a while. All corporate bullies found a new home in Fletchers and EQC for quite a while. If the engineering shortcuts overseen by Fletchers in Christchurch is a reflection of their overall corporate culture I would stay well clear of any Fletcher building - and that includes the Convention Center.

[jimmybuffett]

Dropped to $6.21 today, this seems to be the lowest in about 5 years or so. Any thoughts on where this tumble will stop?

[Beagle]

FNZC had a $9+ target price on this before that. Absolutely ludicrous that this complete unmitigated fiasco of breathtaking proportions would only impact their valuation by 10 cps. I think whatever assumptions they've put into their creatively constructed discounted cash flow analysis are fundamentally flawed, (a DCF valuation is only as good as a whole lot of assumptions made supporting it, garbage assumptions go in - garbage valuation comes out)
I put their valuation in the same category as the scandal when they had AIR valued at $2.10 when the market was pricing it close to $3.
FCNZ love FBU but I think what's really going on here is they want the underwriting and investment banking work that could be forthcoming with a capital raise and or debt issuance. Fact of the matter is, FCNZ have been consistently wrong with FBU and FBU have been recidivist destroyers of shareholder wealth.

Agreed, the degree of incompetence shown from management in that division is absolutely breathtaking. To me this announcement does absolutely nothing to address key management failings within the company. Its almost like, oh my goodness we put $500m on black on the roulette wheel and it came up red, sorry about that folks. Not nearly enough contrition shown and not enough of a thorough cleansing of the dead and rotten wood within the company. Every single staff member within that B&I division should be made to reapply for their job and make their case for being retained and an independent expert construction panel appointed to make decisions on a case by case basis. In my opinion this company is uninvest able until that happens.

The loss on the Sky City Convention center simply beggars belief.

How on earth does a company bid $410m on a project that ends up costing $887m to build ?

That included some "one off" provisioning last year...which looks to be a recurring thing. I tried to value them on the basis of their assertion it was a one off and based on an across the cycle PE of 10 for a cyclical company, 7 at the peak of the construction cycle like we are now I arrived at $5 many months ago. Obviously now its clear that losses within the B & I division will be ongoing for quite some years so I would tend to see fair value at well under $5 now. I have no idea how the professional analysts have arrived at some of their fancy theoretical valuations some as high as over $9 but the fact is they've been proven wrong and my own assessment of value made me stay out which has proved correct. I think it takes 5+ years to clean up this mess and see FBU as a systemic underperformer going forward.

Dropped to $6.21 today, this seems to be the lowest in about 5 years or so. Any thoughts on where this tumble will stop?

A selection of my thoughts expressed last month Jimmy.
This week we've had Nikko Fund management head of equities come out in the behind the paywall article on NBR saying their forward PE even at this low level is 16.5 and he thinks that's expensive and is probably wrong as they won't make their earnings forecast. He went on to say asset sales were required or a capital raise and noted that the U.S. private placement noteholders have yet to give their approval to a debt waiver and there can be no certainty they will.
Another analyst in the same article suggested that FBU in its current form is too big and diversified to be managed properly.

I think you'd be a VERY "brave" investor to continue to hold this stock even at the current price with the company facing so many challenges going ahead.
I think this could go quite significantly lower from here and would rate the chances of a material capital loss in the short term as VERY VERY high.

[peat]

He went on to say asset sales were required or a capital raise and noted that the U.S. private placement noteholders have yet to give their approval to a debt waiver and there can be no certainty they will.

Does this not announce a waiver was achieved with only amendments to be agreed?
https://www.nzx.com/announcements/314981

Auckland, 1 March 2018: Fletcher Building today announced that it has received a waiver of the breach of covenants under its US Private Placement (USPP) funding arrangements,

Or is this not the same thing?

However, clearly we await the confirmation of agreement on the amendments in the next few days or otherwise further waivers will be necessary.

Fletcher Building will continue to target the end of March 2018 to complete the amendment process. If the Company does not agree on the amendments by 31 March, it will need to seek an extension of the waiver from the bank syndicate and the USPP noteholders.

Perhaps this is why the share price is quite soft right now until this uncertainty is resolved.

[iceman]

Chris Lee suggesting there are rumours AIR's Chris Luxon being touted as the next Chairman !!

[jimmybuffett]

A selection of my thoughts expressed last month Jimmy.
This week we've had Nikko Fund management head of equities come out in the behind the paywall article on NBR saying their forward PE even at this low level is 16.5 and he thinks that's expensive and is probably wrong as they won't make their earnings forecast. He went on to say asset sales were required or a capital raise and noted that the U.S. private placement noteholders have yet to give their approval to a debt waiver and there can be no certainty they will.
Another analyst in the same article suggested that FBU in its current form is too big and diversified to be managed properly.

I think you'd be a VERY "brave" investor to continue to hold this stock even at the current price with the company facing so many challenges going ahead.
I think this could go quite significantly lower from here and would rate the chances of a material capital loss in the short term as VERY VERY high.

Thanks Beagle, good insight. I will have to do a bit more digging. Intuitively I had always though they were just such a big company that they would always come back. BTW tried to send you a PM the other day, not sure if it got throu, thanks for kind words re that other matter (re SUM).

[Beagle]

Thanks Beagle, good insight. I will have to do a bit more digging. Intuitively I had always though they were just such a big company that they would always come back. BTW tried to send you a PM the other day, not sure if it got throu, thanks for kind words re that other matter (re SUM).

No worries mate I got it.
All the best.

[Beagle]

Does this not announce a waiver was achieved with only amendments to be agreed?
https://www.nzx.com/announcements/314981

Auckland, 1 March 2018: Fletcher Building today announced that it has received a waiver of the breach of covenants under its US Private Placement (USPP) funding arrangements,

Or is this not the same thing?

However, clearly we await the confirmation of agreement on the amendments in the next few days or otherwise further waivers will be necessary.

Fletcher Building will continue to target the end of March 2018 to complete the amendment process. If the Company does not agree on the amendments by 31 March, it will need to seek an extension of the waiver from the bank syndicate and the USPP noteholders.

Perhaps this is why the share price is quite soft right now until this uncertainty is resolved.


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The devil is always in the detail.

[whatsup]

$6 bucks today , lowest S P in 5 years , what a bunch of muckin fuppets , are we heading for $5 bucks, no wonder the shorts are in place for a big clean up !!