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  1. #1
    Permanently OutToLunch's Avatar
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    Default SCT - Scott Tech

    At a PE of 12.5 and further down the profitability track than WDT, for example - surely SCT is a screaming buy?

    By the way, (although I haven't spent much time studying them in great detail aside from when I held WDT), surely F&P appliances, SCT and WDT have a lot in common when it comes to developing small appliance technology? I wonder what SCT and WDT could do if they worked together, say if WDT provided the small motor technology and SCT worked on the production line side of things. Surely a combo of these two would be appealing to the big manufacturers. Hmmmm... any thoughts, anyone?

    Disc: Hold none of these, wish I had some $ to grab a few SCT though

  2. #2
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    Always interesting looking back at what people say a year ago ... and how sentiment changes

    SCT was at 295 on 30/04/04 ... 1 year on 240



    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  3. #3
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    I'm still watching SCT, didn't buy any last year in the end though I have been keeping an eye on them since, esp lately as they started falling below $3. Seems it's the high NZD that's hurting them more than anything else. However maybe the NZD has peaked? Depends on how our economy goes from here and how much more the USD falls, but surely any fall in the kiwi can only be good for SCT, eventually.

    Disc: Hold none, but watching closely

  4. #4
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    quote:Originally posted by belgarion

    Hmm. Both stop losses fired. Now hold just 33% of original holding. Shame. THis company has been good to me. No matter, I still feel this is a good company and have cash ready and waiting when good news makes an appearance. I just can't see SCT mgnt sitting on the hands given the probs they face. The probs aren't that significant IMHO and SCT will bounce back.
    Seems to me a rather conservative stop loss to have on what was supposedly a long-term portfolio.

  5. #5
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    I have pulled a non charting 'Scott Technology' thread out of the archives. That is really because I don't think Scott Technology is a good trading share because of poor liquidity. Last Friday only 95 (not a misprint) shares were traded! I dare not think how much less than a marketable parcel 95 shares is.

    This thread starts with 'out to lunch' suggesting SCT was a 'screaming buy' at somewhere near $3 on 30/04/2004. Yet now the share price has retreated to a '$1.82 buy and $1.85 sell' spread, this same share barely gets a mention on this forum. For those who like the FA statistics $1.82 today represents an historic PE of 15. That is greater than the 12.5 PE when SCT was regarded as a 'screaming buy' at $3 two and a half years ago. Consequently I don't think SCT is a 'screaming buy' at close to $2. I am buying more for portfolio rebalancing purposes. But if you believe that exporting from NZ has any future then I think SCT is worth accumulating at around this $2 level.

    I notice the engineering director, Kevin Kilpatrick, sold all of his shares late last month. Ordinarily an insider 'selling out' like that is not good news. However, Kilpatrick has already signalled his retirement from the company to go 'grape growing' in Marlborough in August 2008. Given he is still a director of Scotts, Kilpatrick had a limited window of opportunity to 'sell out' while the company annual results are fresh. If he had waited he could have been accused of insider trading. So I don't think Kilpatrick selling out to fund his new grape growing activities in Marlborough should necessarily be seen as a loss in confidence in Scott Technology itself.

    Kilpatrick selling out of 170,000 odd shares during 2007 has worked well for me because I have been buying SCT shares in trickles all year - boosting my own holding in this company by something like 80% in the process. My average purchase price of these 'new' shares was $2.07. That doesn't look very clever if you consider the current buy price is $1.82. But that is assuming that I could have bought the number of shares I did buy at 'todays price' of $1.82. And that would not have been possible. It also ignores the dividends that I have accumulated during the year, which makes my 'theoretical loss' (it was a 'theoretical profit' two weeks ago) much less painful. I know that I couldn't have bought my shares at $1.82 because it has taken over a month for me to buy my 'November tranche', a very modest number of shares on market at a price around $2.

    So when do I expect my profit margin on my latest SCT acquisition to rise into the black again? I have no idea. But I am prepared to wait. And if the market weakens further I am prepared to buy more shares in the interim. I don't know if buying SCT shares at $2ish today will look clever in two and one half years time or not. But I think it is more likely to look clever than buying SCT at $3 looks now, viewed with two and one half years of hindsight.

    SNOOPY

    discl: hold SCT
    Last edited by Snoopy; 16-05-2008 at 06:12 PM.
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  6. #6
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    Quote Originally Posted by SectorSurfa View Post
    interesting to read the old threads and thoughts

    *first sign of avoid would have been the appearance of Belgarion holding/ spruiking SCT

    good post Snoopy, and good luck, are you seeing the NZD getting weaker the major SP driver going forward?
    A weaker NZD/USD relationship would help SectorSurfa, but who knows when or if that will happen? RBNZ Governor Bollards comments re NZ interest rates last week seem to have pushed the NZD/USD relationship the other way. That is possibly why some selling pressure has emerged in SCT over the last few days.

    Of more concern to me is the NZD/EURO relationship as the two competitors globally that SCT have operate out of Italy and Spain respectively. As long as Scott's competitive advantage is maintained relative to those two European based competitors, I think that Scotts will be able to compete whatever happens to the NZD/USD exchange rate.

    New CEO Chris Hopkins is onto the exchange rate problem anyway and has embarked on a strategy of sourcing more of the raw material input costs directly from overseas. Also SCT are looking for a domestically orientated business acquisition to smooth some of the peaks and troughs of workload that come with being so overseas focussed.

    When it comes down to it, I guess I am backing on the existing employee skills base to work their way around whatever problems the market throws at them. I am betting on the robotics division finally making a meaningful contribution to profit. And with the retirement of Chairman Marsh, after 38 years at the helm, I am betting on the new governance broom revving the company up a bit.

    SNOOPY

    discl: hold SCT
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  7. #7
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    There has been some comment on other threads about SCT being a great place to put money to take advantage of the NZD weakening. So I thought an update was overdue.

    ----------

    GENERAL: SCT: Securing an order from a major appliance manufacturer

    2 May 2008

    Dear Sir/Madam

    Scott Technology Limited are pleased to announce it has secured key contracts
    for the supply of equipment into the international market. These contracts
    have been gained despite the difficult trading environment that was indicated
    at both the Annual Meeting in December and in the interim announcement in
    April.

    Scott has secured an order from a major appliance manufacturer in Brazil
    worth several million dollars. It is expected that the manufacturing line
    will be completed and shipped at the end of 2008 and installed in early 2009.

    In addition, Scott has secured an order for its meat processing side of the
    business to supply multiple beef de-boning products to a customer in
    Australia.

    Yours faithfully

    Stuart J McLauchlan (Chairman) Christopher C Hopkins (Managing Director)

    ---------

    The above news is certainly good for SCT in securing the continuity of the workforce which is SCTs best asset. However it is no surprise to me that the share price has not moved. Because these projects would have been secured at the high exchange rates prevailing earlier in the month. If management behave according to historic precedent then they will have hedged these two new contracts already. So any depreciation of the NZD will not help the profitability of these projects or the bottom line of SCT. Indeed these two contracts may have been secured at minimal profit or even a small loss.

    Where the NZD decline will help is in the next project. I think SCT has turned the corner. Until that next project is announced, though, I wouldn't be looking for any big moves in the share price.

    SNOOPY

    discl: hold SCT
    Last edited by Snoopy; 16-05-2008 at 10:49 AM.
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  8. #8
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    SCT are about to move into their new larger premises in Dunedin...
    Last edited by Steve; 16-05-2008 at 06:12 PM.
    Death will be reality, Life is just an illusion.

  9. #9
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    Quote Originally Posted by Snoopy View Post

    GENERAL: SCT: Securing an order from a major appliance manufacturer

    2 May 2008

    Scott Technology Limited are pleased to announce it has secured key contracts for the supply of equipment into the international market. These contracts have been gained despite the difficult trading environment that was indicated at both the Annual Meeting in December and in the interim announcement in
    April.

    Scott has secured an order from a major appliance manufacturer in Brazil worth several million dollars. It is expected that the manufacturing line will be completed and shipped at the end of 2008 and installed in early 2009.

    In addition, Scott has secured an order for its meat processing side of the business to supply multiple beef de-boning products to a customer in Australia.

    ---------

    these two contracts may have been secured at minimal profit or even a small loss.
    Significant news from SCT today. They are to become suppliers to the mining industry!

    26/05/2008
    TAKEOVER

    REL: 1328 HRS Scott Technology Limited

    TAKEOVER: SCT: ACQUISITION OF ROCKLABS

    The Directors of Scott Technology Limited are pleased to announce that they have completed satisfactory due diligence for the acquisition of the business of Auckland based manufacturer, Rocklabs Limited. The remaining outstanding
    conditions of sale are expected to be satisfied during the month of June.

    Rocklabs are manufacturers of mechanised and automated sample preparation equipment and suppliers of gold reference materials to the mining industry. Manufactured products include rock crushers, ring mills, sample dividers and integrated systems. Rocklabs are based in Onehunga, Auckland and employ 35 staff, plus it has a network of nearly 30 sales agents worldwide. Rocklabs exports virtually all of its production and has customers in 98 countries.

    Both Scott Technology and Rocklabs have a strong focus on product quality which is one of the factors that attracted Scott Technology to Rocklabs. While Rocklabs supply the mining industry which has not traditionally been the domain of Scott Technology, both companies share a common core business of engineering and automation.

    Part of Rocklabs' business strategy is to move towards greater automation of their products and systems. This is an area in which Scott Technology can provide enhanced design and technical expertise.

    The current owner of Rocklabs, Dr Ian Devereux, will remain with Rocklabs in a management and technical role while Scott Technology intend operating Rocklabs as a standalone subsidiary with few changes to its current operating structure.

    The consideration for the purchase will be a mixture of cash and shares in Scott Technology and the transaction will be earnings positive for the Scott Group.

    ---------

    I'm disappointed we do not know how much cash or how many shares are going to be issued to acquire Rocklabs. Perhaps adding the rider that:

    "the transaction will be earnings positive for the Scott group."

    means that management have decided that they don't need to tell us. I would turn that around.

    Even given I know nothing about 'Rocklabs' I'm picking that the previous owner Devereux is making good profits now and will not be selling out cheaply. If buying into Rocklabs is 'earnings positive' from day one, that must mean that the current profitability on the rest of the SCT business, production line design build and installing and the meat processing robots, is minimal! Oh dear, it is hard to see the SCT share price reacting positively to this announcement.

    SNOOPY

    discl: hold SCT
    Last edited by Snoopy; 26-05-2008 at 01:25 PM.

  10. #10
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    Quote Originally Posted by Steve View Post
    SCT are about to move into their new larger premises in Dunedin...
    Are you based in Dunedin Steve? If so how much do you reckon the old site is worth?

    SNOOPY
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