STU - Steel & Tube Holdings

[boysy]

Great timing steveb what do the company think STU is worth is the question ? $2 has a nice ring to it ....

[Zeitgeist]

Smells a bit funky doesn't it?

No problem with the participation in the rights offer. The maths suggests it was part of the pro rata offer rather than the placement - so no additional shares (above the normal amount per the pro rata offer) were transacted in.

Does it matter if the offer was an indicative non-binding offer? And if so, why even announce the rejection of such an offer?

Without looking into the disclosure rules more closely, this one feels worthy of a box of wine

[boysy]

From the ann - let the games begin ......

Steel & Tube recently reaffirmed its FY19 guidance of earnings before interest and tax of $25 million on the back of the continuing positive progress being made under the company’s ‘Striving for Excellence’ strategy. The company has a clear focus on growth and improving financial performance as it positions itself as New Zealand’s leading supplier of steel products. While the market remains highly competitive, Steel & Tube continues to win new customers, sign large contracts, increase efficiencies and reduce costs.

Steel & Tube’s solid foundation has recently been strengthened with a successful capital raising. The Board and Management are confident in the improving performance of the company, and remain focused on providing high quality steel solutions and products and delivering value for employees, customers and shareholders.

[King1212]

One of my greatest buying at $1.16. Saw a lot of orders wanted to get in at $1.15...so a bit of punt....for me to get in.

[Balance]

https://www.nzx.com/announcements/323845

Always take note when directors and management buy shares and/or more shares.

Has served me very very well over the years - not a sure fire thing but close! Believe me, the buggers are tight with their money, so used are they these days to free options, discounted price entries etc. So when they put in their own money, especially more than token amounts, take note!

So easy!

Always right to buy when directors buy!

[Scrunch]

someone knew?

https://www.nzx.com/announcements/324803

Not me - I just thought the recently increasing price was consistent with an increased probability of the future $40m+ EBIT occurring as the STU had confirmed they are on-track for the first step of the process, an EBIT of $25m. The capital raise repaid most of the debt so the big deduction to get to NPAT is tax. Allowing for a 28% tax rate and a little bit of interest, this EBIT is just over 10c/share earnings. Useful but not enough to support a share price much (if anything) above market.


Its the delivery of the $40m+ future EBIT's that would take the share price up.

Interestingly $40m - $0.8m interest - $11m tax (@28%) = $28.2m
$28.2m / 166m shares on issue = 17c/share

Indicative takeover is therefore around a future PE of 10 (if the $40m EBIT is hit).

[boysy]

You would imagine a fair few synergies would be able to be extracted should fletchers buy STU .... time to up the offer

[Balance]

You would imagine a fair few synergies would be able to be extracted should fletchers buy STU .... time to up the offer

First offer is never last offer so $2 is on imo.

The way to assess this is that FBU can debt fund itself at less than 5% pa so even if FBU pays $2 per share ($330m), a takeover of STU will be earnings positive : $25m EBIT less $15m interest = $10m additional EBIT for FBU

$330m @ 4.5% pa = $15m interest or at 5% = 16.5m

Plus all the benefits from the lovely synergies and rationalization to come!

[boysy]

Seems a win win i suspect only the directors of STU are worried about a new job under a TO situation .... Time to get an independent report done pronto if they think the offer is not up to scratch ....

[Balance]

Seems a win win i suspect only the directors of STU are worried about a new job under a TO situation .... Time to get an independent report done pronto if they think the offer is not up to scratch ....

As I point out on FBU thread, next move is FBU.

First offer is never last offer so let's see what FBU comes out with.

Can imagine FBU executives huddling with their investment bankers and getting their response into shape.