FBU - Fletcher Building

[bull....]

be no dividend if they have to raise money , if they have to sell an asset to cover losses mean the companies worth less as well , imagine they have to pay consultants to do a strategic review now as well.

maybe they could float the divisions on the nzx and remain majority owners as a way to raise cash.

[Valuegrowth]

If I am correct, their losses were largely ascribed to following two projects.

· Sky City Convention Centre
· The Justice Precinct in Christchurch

How did they lose money on those projects?

https://simplywall.st/stocks/nz/mate...-its-industry/

In my view currently it is overvalued. Although it has a long term business model it will take some time to recover. It may have some short term support in the current bull market but when bear set it also may have a hit unless they perform well in the long run.

[Ggcc]

If I am correct, their losses were largely ascribed to following two projects.

· Sky City Convention Centre
· The Justice Precinct in Christchurch

How did they lose money on those projects?

https://simplywall.st/stocks/nz/mate...-its-industry/

In my view currently it is overvalued. Although it has a long term business model it will take some time to recover. It may have some short term support in the current bull market but when bear set it also may have a hit unless they perform well in the long run.

I built a business from empty space and I definitely underestimated the cost of tradies and equipment. My budget was blown by 25% and I had to scale back spending on certain products to meet that. I can imagine with the big jobs there will be budget blowouts

[trader_jackson]

be no dividend if they have to raise money , if they have to sell an asset to cover losses mean the companies worth less as well , imagine they have to pay consultants to do a strategic review now as well.

maybe they could float the divisions on the nzx and remain majority owners as a way to raise cash.

Their will be no dividend if they have breached covenants full stop I would have thought...

Marketwinner, I think this is further losses on other projects as well, such as that flash new downtown Auckland building.

http://www.afr.com/street-talk/fletc...0170417-gvm3uv
Seems a division sell off could be 'more possible'
That building products division is probably going along way in keeping Fletcher afloat... so at least it won't be a Carillion v2

Interesting to watch

[bull....]

Their will be no dividend if they have breached covenants full stop I would have thought...

Marketwinner, I think this is further losses on other projects as well, such as that flash new downtown Auckland building.

http://www.afr.com/street-talk/fletc...0170417-gvm3uv
Seems a division sell off could be 'more possible'
That building products division is probably going along way in keeping Fletcher afloat... so at least it won't be a Carillion v2

Interesting to watch

read it sounds like typical investment bankers trying there luck for a deal but at the end of article afr say really who would want it at the top of the cycle?

[Valuegrowth]

Thanks. Hope It won’t be like Mainzeal. I am pretty sure It won't go into receivership and liquidation but better to be cautious. It is not too big to fall. I would like to do some research on this company.

[Kay]

I'd like to see the job descriptions of those 54, I bet many of them do no more and have no more responsibility than the village manager of a large 400 resident retirement facility, who are on around 100k.

Well I am not saying they are all worth it (wouldn't have a clue). But good to put the number 54 into context as there must be 30ish companies/units under the Fletcher umbrella. All each handling maybe 7, 8, 9 figures of revenue etc and for all I know performing well and very far separated from the murky world of Fletcher building and interiors....unless the problem runs deeper of course!

[value_investor]

What I don't understand is how after the last earnings downgrade, the stock fell from close to $8, down to below $7 and then back to $8. It literally went up in value after a profit downgrade. This would be understandable if the company was a good one. Like the company had strong fundamentals, or good management, or they were in a stable environment but FBU aren't!

This movement is ridiculous. How can a stock with 3 profit downgrades in a year be trading at such a strong multiple. Is there too much emotion about FBU out there? Perhaps a lot of older folks putting money into it. Or is this just the bull market?

[Beagle]

Watched TV1 tonight and the glee with which Milford talked down FBU - the stock is an absolute BUY on MOnday should it drop $2.00 to say, $5.75.

Means Milford is out and like with Diligent, is getting ready to buy back in imo.

If someone offered me 10,000 shares in SUM or 20,000 shares in FBU and they were to be held in trust for me for 10 years and I couldn't touch them I'd choose SUM in a nanosecond despite the present value being well under half of the FBU choice. FBU has been a perennial underperformer for the last decade and is red hot favorite to continue in the same way in my opinion. The point of my illustration is to raise the question of, over time, why bother at any price when there are so many proven performers out there that will grow your capital ? I'd even take 20,000 AIR shares even though they're also cyclical and less than half the price instead of 20,000 FBU shares in that scenario as over time good quality management work for shareholders interests whereas poor quality managers work against shareholder interests.

[macduffy]

be no dividend if they have to raise money , if they have to sell an asset to cover losses mean the companies worth less as well , imagine they have to pay consultants to do a strategic review now as well.

maybe they could float the divisions on the nzx and remain majority owners as a way to raise cash.

Yes, a breakup of the company and listing of the divisions separately is looking more and more likely now. Rather like the split of Fletcher Challenge into FBU, Fletcher Energy, Fletcher Paper, Wrightson many years ago.