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Thread: STU

  1. #31
    percy
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    Quote Originally Posted by Snoopy View Post
    Have just run my dividend metric over STU.

    2012F: 5.5c, 5.5c
    2011: 9.0c, 6.0c
    2010: 3.5c, 5.5c
    2009: 9.0c, 10.0c
    2008: 10.0c, 9.0c

    -----

    Average dps over the last 5 years is 12.5c

    12.5/0.08= a share price of $1.56!

    I am really shocked by this. STU is a very well run company and if they can't make money from construction then no-one can IMO. My formula says sell STU as it is currently significantly overvalued. My head tells me don't invest in any share that make their money from building stuff!

    SNOOPY
    I have to unfortunately agree with you.Appears an extremely well run company ,can't go against the trend,yet a poorly run company in the right sector at the right time can make a good profit.I am thinking of Dominan Finance who's five year record looked great until a down turn and we saw all the figures were false.Nice to see well run SCY report a great profit today.Only wish I still held some,as I sold out of all retail stocks,except one disaster in Aussie.!

  2. #32
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    Quote Originally Posted by Snoopy View Post
    Average dps over the last 5 years is 12.5c

    12.5/0.08= a share price of $1.56!
    Looks like I underwent a momentary mutt metamorphosis from 'Snoopy' to 'Goofy' here. My calculation was the correct calculation for net income, but I need to work with 'gross income' to be consistent with my other examples.

    (12.5/0.7)/0.08= $2.23

    So with the current market value of $2.07, there is still value there for long term buyers after all.

    SNOOPY
    Industry shorthand sees BNZ employees still called 'bankers' but ANZ employees now called 'anchors'. Westpac has opted out of banking industry shorthand...

  3. #33
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    Quote Originally Posted by Snoopy View Post
    I am really shocked by this. STU is a very well run company and if they can't make money from construction then no-one can IMO.
    This comment didn't quite come out how I meant it to either. STU are making money, just not 'good money'. ROE used to be very impressive but this has dropped to well under 15% over the past few years.

    SNOOPY
    Industry shorthand sees BNZ employees still called 'bankers' but ANZ employees now called 'anchors'. Westpac has opted out of banking industry shorthand...

  4. #34
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    Quote Originally Posted by Snoopy View Post
    Have just run my dividend metric over STU.

    2012F: 5.5c, 5.5c
    2011: 9.0c, 6.0c
    2010: 3.5c, 5.5c
    2009: 9.0c, 10.0c
    2008: 10.0c, 9.0c

    -----

    Average dps over the last 5 years is 12.5c

    12.5/0.08= a share price of $1.56!

    I am really shocked by this. STU is a very well run company and if they can't make money from construction then no-one can IMO. My formula says sell STU as it is currently significantly overvalued. My head tells me don't invest in any share that make their money from building stuff!

    SNOOPY
    Well I guess holders aren't going to be too chuffed (nor, perhaps, surprised) at a 3.5cps chop to the final dividend. Takes total div down to 11cps. However, still 1cps higher than Snoopy was forecasting.

    Eventually the market will stabilise - surely the earthquake-strengthening projects in a few buildings will require steel? Not in bad shape at balance-sheet level, but maybe still too early to buy construction cyclicals. Could be one to consider at next half year... OIC result might give a glimpse of the extent to which any construction pipeline is developing.

  5. #35
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    Should add that it was very disappointing that they are still stuck on "well-positioned". I'm sure they're at least two reporting seasons behind the play with that one... I suggest that for the AGM they skip straight past "solid result" to a "positive trajectory"!!!

  6. #36
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    Quote Originally Posted by Lizard View Post
    Well I guess holders aren't going to be too chuffed (nor, perhaps, surprised) at a 3.5cps chop to the final dividend. Takes total div down to 11cps. However, still 1cps higher than Snoopy was forecasting.
    No argument that holders won't be chuffed. However, the NZX figures have the final dividend as reduced by 3.0cps, from 9.0cps to 6.0 cps, and the total dividend as dropping from 15.0cps to 11.5cps (0.5cps lower than Snoopy forecast).

  7. #37
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    Oh dear - I rushed that one.... okay, the correct figures should be a 2.5cps chop to the final dividend (from 9.0cps to 6.5cps), bringing the total div to 12.0cps - (from 15.0cps prior). Still 1cps higher than Snoopy's forecast 2012 year end dividend of 5.5cps (but 0.5cps lower than his total 12.5cps average over 5 years). Using Snoopy's "5 year average dividend at required 8% yield" formula, the valuation would be $1.65.

    Although I would dispute that:

    a) the last 5 years represents an entire business cycle for STU (I think it's only the low half of the cycle - e.g. total divs were 29cps in 2007, 32cps in 2006) and

    b) the use of 8% yield is a measure of fair value (the average dividend yield on NZ shares over 3 or 4 decades is only about 4% as I understand it - even though typical interest rates were much higher during most of that period than they are now.)

  8. #38
    percy
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    Until building permits improve and ChCh rebuild gathers momentum STU faces too strong a head winds.
    Good company to have on your watch list,as their time in the sun will be very rewarding for shareholders.
    Is their controlling shareholder there for the long term.?

    Lizard.Quote for you from the book I have just started reading,Damage by John Lescroart,page 22.
    ""the TRAJECTORY there isn't up."
    I can't even relaxe in a book.!!!!!!!!!!!
    Last edited by percy; 11-08-2012 at 11:07 AM.

  9. #39
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    Quote Originally Posted by Lizard View Post
    Oh dear - I rushed that one.... okay, the correct figures should be a 2.5cps chop to the final dividend (from 9.0cps to 6.5cps), bringing the total div to 12.0cps - (from 15.0cps prior). Still 1cps higher than Snoopy's forecast 2012 year end dividend of 5.5cps (but 0.5cps lower than his total 12.5cps average over 5 years). Using Snoopy's "5 year average dividend at required 8% yield" formula, the valuation would be $1.65.

    Although I would dispute that:
    So would I! You used my 'Goofy' calculation based on net yield rather than my 'Snoopy' calculation based on gross yield.

    $1.65/0.7 = $2.36 (the Snoopy valuation)

    a) the last 5 years represents an entire business cycle for STU (I think it's only the low half of the cycle - e.g. total divs were 29cps in 2007, 32cps in 2006) and
    Yes I agree, probably looking at a ten year picture would give a better 'business cycle' result. With the nervous qualification that this takes in data before the 2008 GFC which may be doubtful data to use going forwards. I am of the opinion that the economy won't return to its pre GFC state for at least a decade, and maybe never.

    b) the use of 8% yield is a measure of fair value (the average dividend yield on NZ shares over 3 or 4 decades is only about 4% as I understand it - even though typical interest rates were much higher during most of that period than they are now.)
    Fair point although my 8% yield was not meant to be representative of all shares. Just representative of high yielding low growth shares in a mature market. I believe STU fits into that category.

    The other reason to use 8% is that the result may carry some margin of safety which as investors we can always do with!

    SNOOPY
    Last edited by Snoopy; 11-08-2012 at 12:41 PM.
    Industry shorthand sees BNZ employees still called 'bankers' but ANZ employees now called 'anchors'. Westpac has opted out of banking industry shorthand...

  10. #40
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    Quote Originally Posted by percy View Post
    Is their controlling shareholder there for the long term.?
    Onesteel tried to take STU out a few years ago. Sine then they have had the GFC, the curse of the Oz government's mineral tax and the high Oz dollar to contend with.

    Onesteel changed their name to Arrium this month to, and the share price is just a fraction of it was during the mineral market peak. I don't see a controlling shareholder buyout of Arrium is on the cards in the foreseeable future.

    SNOOPY
    Industry shorthand sees BNZ employees still called 'bankers' but ANZ employees now called 'anchors'. Westpac has opted out of banking industry shorthand...

  11. #41
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    I don't see a controlling shareholder buyout of Arrium is on the cards in the foreseeable future.
    Hi Snoopy

    I assume you meant "by Arrium" and I'd agree with that. Arrium have plenty on their plate without taking on more of STU - and after all the name change was designed to alter perceptions that OST was a purely steel manufacturer. In the period from 2007 -2012, the company's"steel" assets dropped from 92% to 47% of total value, the balance being largely Mining anf Mining Consumables. I don't see them wanting to reverse that trend.

  12. #42
    percy
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    I brought back in today at $2.877.
    It appears the Fortress Fasteners acquisition is better than I thought.

  13. #43
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    You will likely get some volatility in this cyclic industry which will be different to slow and steady of POT.

    Its been a while since I looked into STU. It is normally very cut throat industry with tight margins and dependent on large construction projects as well as a good eye on inventory levels / cashflow.

    Given recent dairy construction boom which required heaps of stainless steel and that we are half way through Christchurch rebuild, do you think there will be enough non residential construction to provide growth and profitability beyond the next few years?

  14. #44
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    Quote Originally Posted by percy View Post
    I brought back in today at $2.877.
    It appears the Fortress Fasteners acquisition is better than I thought.
    That fortress business has high EBIT margins eh Percy
    “Just consider that maybe the probability of you being wrong is higher than you think.”

  15. #45
    percy
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    Projections.............. 2015............. 2016......................2017
    Craigs eps................0.25.................0.29...... .................0.35
    4-Traders eps...........0.25................0.289........... ...........0.329
    Craigs PE..................11.5..................9.7..... .................8.1
    4-Traders PE..............11.4.................9.9.......... ............8.7
    Craigs dps..................0.20...............0.23...... ...............0.28
    4-Traers.dps...............0.195..............0.217. ................0.24
    Craigs div yield............6.8%...............8%............ ..........9.6%
    Craigs eps growth.......23.2%.............17.8%.............. ..20%.

    The eps growth took me by surprise,as did the yield..
    Yes W69,it must have been a fantastic acquisition.
    Nasi Goreng.Agree with you,that is why I sold some time ago,but looking at the above projections you can see why I brought back in..
    Last edited by percy; 05-08-2015 at 03:37 PM.

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