Skellerup (SKL) Fundamentals

[Lizard]

Hi Rabcat,

Although what Winner says is all true, it probably depends whether SKL now makes up an uncomfortably large % of your portfolio and/or whether you have a "better" investment prospect in mind. From my point of view, when a stock is close to/above my valuation AND I'm what I'd consider overweight in it, then I would be tempted to take some profit (probably just enough to add another share to the collection )

I'm out of fast-internet for the month (blame the kids!), so running too slow to chart, but would have thought it was well off-trend at present and maybe heading into parabolic territory? In which case, if you want to lighten up, it could be getting close to a good time - if it was me, I'd decide how many I want to sell then watch the depth fairly closely to get a feel for when it might be about to do the stall-reverse.

I agree with Winner that this could well turn into a long term trend that I'll be happy to sit in, but it's not the only stock going up on the NZX and taking some out while it's well above trend to invest elsewhere is something I'd be prepared to risk the occasional Phaedrus lecture for.

[kiora]

Both very good advice imho.Rakon anyone???

[h2so4]

I think SKL is still under value maybe 30%. But I'm not really that confident in my valuation. 100% gain in less than 12 months is very tempting and I would be getting more and more nervous as the price crept up. I would hold on an announcement to announcement basis.

But I'd sell if I found a share offering more value.

[kiora]

http://www.valuecruncher.com/companies/1029 What do others think of this site ?

[h2so4]

http://www.valuecruncher.com/companies/1029 What do others think of this site ?

I like it, they valued CAB at $10.32

[Catalyst]

rabcat - I would take a wait-and-see approach at the moment. Given the company's current guidance and $0.91 share price, SKL is currently trading on a FY11 forward PE of 10.5x, EV/EBITDA of 6.1x and a Gross Dividend Yield of 7.1%. These certainly aren't demanding or expensive multiples, but nor are they super cheap anymore either.

I've also noticed that the company has been quite conservative in its outlook/guidance over the past year given it has over-promised and under-delivered in the prior couple of years. For example, the original FY10 NPAT guidance was for $7.1m (Aug 2009), then $7.1m (reiterated at Oct 2009 AGM), then $8.5m (Feb 2010), then $10-$11m (Jun 2010), and finally it delivered NPAT of $11.9m (incl $2.6m abnormal costs) after the rubber markets improved in the second half of the year.

The company's only guidance for the current FY11 financial year is for NPAT of $16-$17m. I would expect the company to provide further outlook comments at its AGM on 27 October.

kiora - The valuecruncher website could be useful to find simple metrics or company comparisons but the two things I don't like about it is: 1) it only provides historical numbers and no forward looking forecasts or company guidance; and 2) the historical numbers can be misleading without some explanations, for example, the SKL figures for FY10 included $2.6m in one-off abnormal costs and there is no mention of this.

[h2so4]

The abnormals are after tax, that wouldn't affect the valuation.

[Catalyst]

The abnormals are after tax, that wouldn't affect the valuation.

It depends on how you value the company.

If you use a mutiple-based valuation it could affect the valuation ie a PE-multiple based valuation.

If you use a DCF-based valuation it probably wouldn't affect the valuation.

[rabcat]

Why sell now when things are just beginning to come right .... longer term investors would be holding for the next few years I would think

Even if you are only trading SKL short term it is still in a strong uptrend .... and no one knows when that uptrend will stop

Posting questions like that will get you the wrath of Phaedrus .... where is your exit strategy? ..... let the profits run is another of his tips

Anyway congrats on your winnings at the casino anyway

Phew I have been worrying all day about getting a bollocking from Phaedrus! Was worried it might be worse than my wife when i forget to come home in the evening!
Maybe he could provide lessons on exit strategies?

Well thanks to everyone for the feedback. I must say I find selling harder than buying.

I will consider your thoughts for a few days and make a decision.
I feel that SKL have more upside but also feel you have to take some profit some time.

[winner69]

. I must say I find selling harder than buying.

Exactly why you need an EXIT STRATEGY rab

First step in the process - why (what were your intentions) of buying in the first place?

Answer that and the exit strategy might become a bit more obvious