STU - Steel & Tube Holdings

[alokdhir]

Cyclicals have low PEs as they head to the top of the cycle .... and high PEs near the bottom of the cycle

So till PE becomes 12 ...its going up ...But PE goes up as earnings decline and thus dividends ....then eventually SP catches up down ...What part of cycle at present in your view ...past middle or first 30% ?

[winner69]

So till PE becomes 12 ...its going up ...But PE goes up as earnings decline and thus dividends ....then eventually SP catches up down ...What part of cycle at present in your view ...past middle or first 30% ?

Lets say about about half way up --- that gives room for a $2.50 share price some time ..... maybe wishful thinkng

[alokdhir]

Lets say about about half way up --- that gives room for a $2.50 share price some time ..... maybe wishful thinkng

I think u can be right if market conditions support ...But IMO most of the gains of cyclicals are in first 50% of the cycle ...

[winner69]

Good to see gross margins getting up there - 22.8% a great improvement on last couple of years but still room for improvement. Before they stuffed up a few years gm was running at 24%/26%

[Shepherd]

Can anyone tell me Vulcan's gross margin by way of comparison? Certainly very pleased with today's report. Having held for a number of years and averaged down at 90c, I am almost back in profit. Should have paid more attention to the cyclical nature of the stock and sold out on the way down. The CEO also deserves credit for righting the ship.

[winner69]

STU increased GM% from 20.6% to 22.8% in H1--up 2.4% points (12%)

Vulcan increased GM% from 35.2% to 41.2% -- up 6% points (17%)

Jeez just imagine if STU really pulled their finger out and managed to improve margins as much as Vulcan -- would have increased EBIT by about $3m

Must try harder Mr Malpass - your competitors are getting better prices in the market place at the moment (or buying better or both)


The 41% v 23% GM difference not as bad as it looks (from STU point of view) as different methodology re reporting margins .... but STU should be doing much much better than they are

[Shareguy]

Some good questions on the investor call including this one.

The margin comparison is a little misleading. Stu includes freight and labour costs in there gm. Vulcan does not. Mark said that as a comparison stu would be in the high 30”s excluding the freight. So still a difference but a lot closer. A lot of the difference is down to Vulcans downstream plate and coil processing which is at high margin. Stu are planning on addressing that with some investment in this area.

CEO also stated that the second half has started well with Jan 33 percent up.

Jarden and others very complimentary on the call to a fantastic result.

I think the share price is doing pretty well considering on how the dow ended up and with what’s going on with Covid and the Russians.

Very confident however that there will be a number of fund managers and investors looking at this result and thinking to themselves there is still a lot of upside.

Historically Steel and Tube has always traded similar to other distribution/building companies at a pe well above the current level. That was when stu had a lot of debt, so the current discount to me is unwarranted.

Steel and Tube seems to be well run these days and Mark certainly is saying all the right things in my opinion. For me it’s a case of waiting and watching for the market to take note. And while I wait will enjoy one of the highest dividends on the NZX.

[sb9]

Thanks SG for your snippets. $2 here we come once the Russian thing settles down.

[Recaster]

Hello everyone. First post. Glad to join the forum!

The operating cash flow is -9.6 mn which is concerning. If the dividend is added which it could be as it is a cost of capital (although discretionary and counter to IFRS) then the cash flow is -15.1 mn. Massive reversal of prior interim period amount. Negative operating cash flow is often a warning sign.

[percy]

Some good questions on the investor call including this one.

The margin comparison is a little misleading. Stu includes freight and labour costs in there gm. Vulcan does not. Mark said that as a comparison stu would be in the high 30”s excluding the freight. So still a difference but a lot closer. A lot of the difference is down to Vulcans downstream plate and coil processing which is at high margin. Stu are planning on addressing that with some investment in this area.

CEO also stated that the second half has started well with Jan 33 percent up.

Jarden and others very complimentary on the call to a fantastic result.

I think the share price is doing pretty well considering on how the dow ended up and with what’s going on with Covid and the Russians.

Very confident however that there will be a number of fund managers and investors looking at this result and thinking to themselves there is still a lot of upside. Historically Steel and Tube has always traded similar to other distribution/building companies at a pe well above the current level. That was when stu had a lot of debt, so the current discount to me is unwarranted.

Steel and Tube seems to be well run these days and Mark certainly is saying all the right things in my opinion. For me it’s a case of waiting and watching for the market to take note. And while I wait will enjoy one of the highest dividends on the NZX.

Thanks for sharing.