SCT - Scott Tech

[Snoopy]

A good result I thought.

Snoopy have you seen today's Forbar research on Scott Technology?

You can get it free - care of signing up to MST Access (likewise free). It's company commissioned so take w/ a grain of salt (but in reality one way or another all research is sponsored, directly or indirectly).

Frustrated at the lack of analyst coverage, Scott's commission their go to local broker to draw up an analyst outlook report!?! No I haven't seen the Forbar/Scott report or should I say the Scott/Forbar report.

Of all the companies that I own shares in, I have done more reading over the years and have been to more AGMs to ask pertinent questions at Scotts than any other. So I doubt if some skinny, tie-less financial analyst junior who parachutes in to Kaikouri Valley, takes a projected FY2023 result, and then adds 10% to that for each ensuing year to come up with 'what happens in 2025' will produce much extra light for me on where SCT is heading.

Of course if anyone does want to post some of the essential numbers from that Scott/Forbar report on this site, I will do my best to correct those numbers ;-P

SNOOPY

[Muse]

lol - good man.

[Snoopy]

Wow! A day of 'pitiful volume' has been followed by one of the largest trading days in history. Price is steady at $2.75 though. Most of the trading in two 'off market' trades (320,000). There are only a handful of shareholders who have that many shares to sell. Chairman Stuart, who will be completing his 15th year as company chair this year, and who sold down a few shares last year, 'selling down' as he contemplates retirement (and that new deck)? Oakwood securities selling down as that shareholding gets split up on the death of long time Scott stalwart Graeme Marsh? An unsupportive Field and Palmer reducing the holding of the old Ian Urquhart estate? It will be fascinating to see who has blinked, and who has come on board!

Looks like I missed another 300k + volume trading day on May 1st, to go with today's trade of nearly 268,000. These are huge volumes for SCT. If all of these shares (including the January sale) came from the same seller (a grand total of about 890,000), that means all may be revealed soon. Why? Because 1% of all the shares on issue add up to 80,484,287 x 0.01 = 804,843. Any significant shareholders are required to declare their updated holding position once the shares held change 'in total' by more than 1% of the company or 804,863 shares (which they now have).

Again, if they are all from the one source, it won't be Chairman Stuart McLauchlan. At last balance date he 'only' held 413,453 shares. If the shares being sold are from Oakwood, then we will know that soon enough as they must file a notice, If we don't get that filing, the shares sold will be from either Field and Palmer, who may have another million or so to sell. Or from 'Leveraged Equities Limited'. That latter possibility sounds like they are an interesting company: https://www.leveragedequities.co.nz/

"We help investors access these opportunities (i.e. giving investors ready cash) utilising their existing investment portfolio. It is the securities market equivalent of borrowing money on the security of real property."

What I would like to know is, do investors have to transfer their shares to 'leveraged equities', at least temporarily as security, to allow this 'cash borrowing' to happen? Anyone know? What other explanation could there be for 'leveraged equities' to appear on the SCT share register?

SNOOPY

[whatsup]

Looks like I missed another 300k + volume trading day on May 1st, to go with today's trade of nearly 268,000. These are huge volumes for SCT. If all of these shares (including the January sale) came from the same seller (a grand total of about 890,000), that means all may be revealed soon. Why? Because 1% of all the shares on issue add up to 80,484,287 x 0.01 = 804,843. Any significant shareholders are required to declare their updated holding position once the shares held change 'in total' by more than 1% of the company or 804,863 shares (which they now have).

Again, if they are all from the one source, it won't be Chairman Stuart McLauchlan. At last balance date he 'only' held 413,453 shares. If the shares being sold are from Oakwood, then we will know that soon enough as they must file a notice, If we don't get that filing, the shares sold will be from either Field and Palmer, who may have another million or so to sell. Or from 'Leveraged Equities Limited'. That latter possibility sounds like they are an interesting company: https://www.leveragedequities.co.nz/

"We help investors access these opportunities (i.e. giving investors ready cash) utilising their existing investment portfolio. It is the securities market equivalent of borrowing money on the security of real property."

What I would like to know is, do investors have to transfer their shares to 'leveraged equities', at least temporarily as security, to allow this 'cash borrowing' to happen? Anyone know? What other explanation could there be for 'leveraged equities' to appear on the SCT share register?

SNOOPY

wasnt leveraged equities have something to do with Paul Collins the ex BIL man?

[Snoopy]

wasnt leveraged equities have something to do with Paul Collins the ex BIL man?

I think that was 'Active Equities'.
http://www.geocities.ws/nzinvest/aeq.html

Note sure if 'Active Equities' is still active though?

SNOOPY

[Snoopy]

Wow, Scott up 8.3% on that interim result to 3 bucks as I write this: Top of the NZX leaderboard!

Interim net profit up 66% from $4.7m (5.9cps) to $7.8m (9.8cps), a rise of 66%. Interim dividend unchanged though at 4cps, with no imputation credits. Perhaps a bit disappointing there is no dividend rise, as company debt is low.

FY2022 operational profit was $12.7m, implying a 2HY2022 result of $8m. So rolling twelve month result now $15.8m, or 19.8cps. That means at $3, based on 79.852m shares on issue, SCT is trading an an historical PER of 15. Doesn't seem too demanding for a company with such a solid portfolio of high tech products to sell.

"Forward work remains strong particularly around the meat and materials handling (Europe) sectors."

But look at the chart headed 'Regional Business Update', and NZ has one of the lower margins at just 2.9%. Then we are told that Rocklabs based in Auckland, traditionally one the the most profitable Scott operations, maintained their margins in dollars, despite reduced sales. The lamb and beef boning room projects are run from Dunedin. So I am surprised to see the overall NZ margins so low. No imputation credits might imply that once the corporate overhead is added in, NZ overall is loss making?

Also no follow up mention of the highly touted Caterpillar robotic fuelling deal. I hope our little caterpillar hasn't crawled away shrivelled up in heat affected outback Australia and died under a scorched Leaf?

The Scott star was fading a bit. Briefly touched $2.60 after the $3 jump on the interim result hike announced in April. So Scott's come out with a 'third quarter announcement' to save the show. 'Third quarter announcement'? That has to be a new one for Scotts.

The quick round up on new business deals signed is this:

1/ Automated sample processing for Mineral Resources Limited, the commercial launch of Scott's modular mining product: $12m
2/ Palletising and Materials handling: A-ware Food Group $3.2m, Colruyt $1.5m, Incom Leone (dairy) $7m
3/ Appliance Manufacturing Lines: New deal signed with Midea for $6.5m (third deal sealed this year with this company)

Then we hear:
"The upgrades arm of the appliance business remains a reliable source of high value, high margin contracts, reflecting strong customer confidence in Scott solutions and alignment with the Scott 2025 strategic pillar of authentic customer partnerships."

That sounds a lot better than describing this 'appliance' side of the business as 'non-core' as has been the case for the last two years. I had been wondering what the distinction between core and non-core business unit at Scotts really was. But now I see it is obvious. As soon as there is a pathway for good money to be made, that business unit becomes core!

The announcement that a "fit for purpose manufacturing centre is being set up in Christchurch to increase manufacturing capacity to meet demand (for poultry trussing)." is interesting. I wonder if this is being looked at as a way to better utilise that skilled Christchurch workforce, now that the appliance line manufacturing business in China seems well established?

Adding up those headline deals announced, I get a total of: $12m+$3.2m+$1.5m+$7m+$6.5m=$30.2m

Annual revenue for the company over FY2022 was $222m. Revenue was $126.5m for HY2023. So that third quarter run rate is looking a little light, although those deals do not include the standard product stuff. Nevertheless is this a hint that Scott is to 'run out of puff' in FY2024?

Today's announcement reads more like a 'Got up, washed my face, and combed my hair announcement.' Nothing very startling. Something that every shareholder might expect is going on behind the scene. Mind you given CEO John Kippenberger's adopted hair style, that 'combed my hair' bit might be genuinely newsworthy?

SNOOPY

[kiwikeith]

The Scott star was fading a bit. Briefly touched $2.60 after the $3 jump on the interim result hike announced in April. So Scott's come out with a 'third quarter announcement' to save the show. 'Third quarter announcement'? That has to be a new one for Scotts.

The quick round up on new business deals signed is this:

1/ Automated sample processing for Mineral Resources Limited, the commercial launch of Scott's modular mining product: $12m
2/ Palletising and Materials handling: A-ware Food Group $3.2m, Colruyt $1.5m, Incom Leone (dairy) $7m
3/ Appliance Manufacturing Lines: New deal signed with Midea for $6.5m (third deal sealed this year with this company)

Then we hear:
"The upgrades arm of the appliance business remains a reliable source of high value, high margin contracts, reflecting strong customer confidence in Scott solutions and alignment with the Scott 2025 strategic pillar of authentic customer partnerships."

That sounds a lot better than describing this 'appliance' side of the business as 'non-core' as has been the case for the last two years. I had been wondering what the distinction between core and non-core business unit at Scotts really was. But now I see it is obvious. As soon as there is a pathway for good money to be made, that business unit becomes core!

The announcement that a "fit for purpose manufacturing centre is being set up in Christchurch to increase manufacturing capacity to meet demand (for poultry trussing)." is interesting. I wonder if this is being looked at as a way to better utilise that skilled Christchurch workforce, now that the appliance line manufacturing business in China seems well established?

Adding up those headline deals announced, I get a total of: $12m+$3.2m+$1.5m+$7m+$6.5m=$30.2m

Annual revenue for the company over FY2022 was $222m. Revenue was $126.5m for HY2023. So that third quarter run rate is looking a little light, although those deals do not include the standard product stuff. Nevertheless is this a hint that Scott is to 'run out of puff' in FY2024?

Today's announcement reads more like a 'Got up, washed my face, and combed my hair announcement.' Nothing very startling. Something that every shareholder might expect is going on behind the scene. Mind you given CEO John Kippenberger's adopted hair style, that 'combed my hair' bit might be genuinely newsworthy?

SNOOPY

I think you are right Snoopy. Nothing too dramatic to report. Maybe just a reminder that the business is still motoring along and nothing out of the ordinary to justify recent share price falls.

[winner69]

JBS want out?

Nothing like a “strategic review” and mention of Macquarie to start speculation

http://nzx-prod-s7fsd7f98s.s3-websit...070/396514.pdf

[Sideshow Bob]

JBS want out?

Nothing like a “strategic review” and mention of Macquarie to start speculation

http://nzx-prod-s7fsd7f98s.s3-websit...070/396514.pdf

JBS share price down 45% in the last year and lost $500m NZD in the last quarter. Markets a bit tough at the moment....

[Balance]

JBS want out?

Nothing like a “strategic review” and mention of Macquarie to start speculation

http://nzx-prod-s7fsd7f98s.s3-websit...070/396514.pdf

Sounds like it.

If it was a takeover, would have happened by now.

So punters may see a selldown by JBS to the market, underwritten by Macquarie as one option?