STU - Steel & Tube Holdings

**RTM** · 31-08-2020, 11:58 AM

Originally Posted by peat

yeh Jenny Ruth wrote a good piece about Stu this morning in BusinessDesk. entitled Green shoots for Steel & Tube despite its $60m annual loss

(Paywalled)

https://businessdesk.co.nz/article/i...0m-annual-loss

Thanks for posting that Peat.

**RRR** · 02-09-2020, 07:28 PM

[QUOTE=SailorRob;840420]

Net working capital minus all debt is 124 million against a market cap of 96 million.

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Agree with you SailorRob - the above sentence summarizes the investment rationale. Ben Graham would have loved this stock..

Headline NPAT is misleading- cashflow and balance sheet is where we need to focus in these covid times. STU is not going broke, that is for sure. Management have delivered on their promise (was it "strive"). But, management don't own many shares which is always a concern

Cashflow - 39 million (increasing), Cash 17 million(increasing), debt 10 million (decreasing)
Receivables days - reducing (good)
Payables days - increasing (good)
Inventories - decreasing (capital heavy business, so they will have to carry significant inventory)
Staff numbers are reducing too and there is nothing much to write off I hope

Market cap and liquidity too low for institutions, but that is favourable for retail investors

Discl - Invested from 0.64, bought more in the last week

**SailorRob** · 04-09-2020, 01:59 AM

[QUOTE=RRR;841229]

Originally Posted by SailorRob

Net working capital minus all debt is 124 million against a market cap of 96 million.

-------------------------------------------------------------
Agree with you SailorRob - the above sentence summarizes the investment rationale. Ben Graham would have loved this stock..

Headline NPAT is misleading- cashflow and balance sheet is where we need to focus in these covid times. STU is not going broke, that is for sure. Management have delivered on their promise (was it "strive"). But, management don't own many shares which is always a concern

Cashflow - 39 million (increasing), Cash 17 million(increasing), debt 10 million (decreasing)
Receivables days - reducing (good)
Payables days - increasing (good)
Inventories - decreasing (capital heavy business, so they will have to carry significant inventory)
Staff numbers are reducing too and there is nothing much to write off I hope

Market cap and liquidity too low for institutions, but that is favourable for retail investors

Discl - Invested from 0.64, bought more in the last week

Yes, Ben Graham, Warren Buffett (in his early days) and Walter Schloss would all have been all over it. Cash flow was around 26 million, the 39 was due to an accounting change so need to subtract the new 'financing cash flow' number in order to compare to prior cash flows. But still incredible.

**winner69** · 22-09-2020, 08:39 AM

Don’t blame Greg for not relocating to Auckland ....worse than going to purgatory

http://nzx-prod-s7fsd7f98s.s3-websit...128/331181.pdf

**Balance** · 23-09-2020, 08:50 AM

Originally Posted by winner69

Don’t blame Greg for not relocating to Auckland ....worse than going to purgatory

http://nzx-prod-s7fsd7f98s.s3-websit...128/331181.pdf

Another Wellington based corporate moving to the big smoke.

Guess Wellington Property prices & job opportunities are more favourable than Auckland for CFO from an out of favour Company?

**RRR** · 02-10-2020, 11:39 AM

Watched the ASM video. Net debt as of 31 August is 0 - so they paid off 10 million debt in 2 months

Dividends will certainly resume from this year - any guess how many cents it will be??

https://vimeo.com/463707485

**artemis** · 02-10-2020, 03:10 PM

Q from the floor at the ASM - does the Board regret not accepting Fletchers offer.

Good answer from the Chair clarifying that the company advised Fletchers the independent valuation was being commissioned. Fletchers withdrew the offer.

**Southern Lad** · 04-10-2020, 10:45 PM

Originally Posted by RRR

Watched the ASM video. Net debt as of 31 August is 0 - so they paid off 10 million debt in 2 months

At 30 June 2020 STU reported cash on hand of $17.4m and borrowings of $10m. At the AGM they reported that they had repaid the debt. They pointed out they had since balance date received $1.4m from the sale of a property in Gisborne. They also commented that cash on hand had continued to increase since balance date, so either they have had at least $8.6m of other net cashflow over the last three months or they haven’t really factored in the debt repayment (i.e. they were referring to net cash increasing rather than gross cash).

Anyway, assuming they continue to generate cash, they need to have a useful manner to invest it or all things being equal maybe shareholders may see a dividend. However, as STU had no imputation credits on hand and had tax losses to carry forward of $31.6m at 30 June 2020, dividend payments will not be tax efficient in shareholders hands for some years.