Skellerup (SKL) Fundamentals

[audiav]

Price of oil? Basis of a bit of skellerup product

[RTM]

Can anyone explain why SKL took such a dive on the day Putin invaded Ukraine? Was that just a coincidence with some other bad news for them? By my calculations they lost over 8% whereas most of my portfolio dipped by far less.

The SP had overshot its near term growth potential.
Happy holder.

[winner69]

SKL one of the days big losers .... down to 541

Report in media says investors may have been spooked by sudden volatility in the NZD which went well above 69 cents at one time

some 17% off recent highs pretty ruthless

[nztx]

SKL one of the days big losers .... down to 541

Report in media says investors may have been spooked by sudden volatility in the NZD which went well above 69 cents at one time

some 17% off recent highs pretty ruthless

wait & see what next few days say IMO

[Southern Lad]

David Mair has sold 700,000 shares over the last three days at an average price of $5.45.

https://www.nzx.com/announcements/388737

Still holds 4,802,248 shares, but hardly a sign of confidence in SKL's short term prospects. No one can blame him for cashing in his success and diversifying his investment portfolio, but curious point for me is why he didn't sell immediately post the half year announcement when the price was over $6. Has the outlook changed in the last couple of weeks?

As always, would be good to see some explanation on the background when the CEO sells down a significant shareholding.

[Charlie]

One of the very few greens today in a sea of red

[bull....]

sadly my holding is no longer. enjoy those who are still in.

having timed my exit from the stock nicely it just goes to show how macro events can change a company from a position of strenght to in a position of issues making life tough as explained in the articel below

The reality is it's still very difficult out there," says Skellerup chief executive David Mair, on the supply chain challenges facing his company and all Kiwi exporters.

https://www.nzherald.co.nz/business/...JAOSRL3B4OHQE/

[Snoopy]

Having timed my exit from the stock nicely it just goes to show how macro events can change a company from a position of strength to in a position of issues making life tough as explained in the article below

The reality is it's still very difficult out there," says Skellerup chief executive David Mair, on the supply chain challenges facing his company and all Kiwi exporters.

https://www.nzherald.co.nz/business/...JAOSRL3B4OHQE/

The written article sells Mair a bit short in his replies. But I have listened to the complementary podcast

https://www.iheart.com/podcast/1049-...with-98308749/

to find out more.

I have done very well out of SKL too, although unlike you Bull, I remain on the share register. I also hold SCT which is in a similar market sector of exporting 'engineering solutions' globally and operates in the same geographic markets as Skellerup. Five years ago, Scott Technology had an opposing logistics strategy of having flexible manufacturing operations around the world so that transport of the finished goods, and any associated logistical headaches were minimised. But with a new CEO John Kippenberger on board, that strategy changed to 'manufacturing centres of excellence', something more akin to the way that Skellerup does things. Perhaps this indicates that Skellerup was on the right logistical track to start with?

Skellerup CEO David Mair's outlook in that article you have referenced, for transportation, is somewhat more upbeat that your single line quote suggests. The message I got from the article is that the 'green shoots' of improvement of shipping both intra-country and inter-country, are there to see. Mair also states he sees inflation as a bigger issue than shipping. Skellerup has used the practice of putting a freight surcharge on some of their products rather than just raising pricing, to give customers a clear idea of where the price pressures are coming from.

Mair sees inflation as a threat in New Zealand - taking cost levels to a higher plateau- , and he compares our inflation outlook unfavorably with what is going on in the rest of the world.

"The issue I have about that is that some countries are getting through that faster and easier than we are, so we may become less competitive."

Yet the principal reason for NZ manufacturing milking liner equipment in NZ (this is NZ's big role within Skellerup) is that there is a very strong 'home market' for this product, which minimises the transport challenges. The second largest market for this product line, the USA, would not be a cheaper alternative manufacturing site. Furthermore the globally distributed manufacturing that Skellerup already has in other Skellerup product areas surely minimises any unfavourable inflation effect that may come through in NZ, and into the company wide inflation picture.

Mair again:
"But what I'm concerned about - particularly for New Zealand - is there is an underlying inflationary element here of bureaucratic regulation that slows things down when we need to move very quickly."

I am not clear what Mair is talking about here. Perhaps opas threatening the borders faster so that people from overseas can come in more easily to fill highly sas threatkilled jobs? In the podcast, Mair goes on to say that bright young graduates are being seduced overseas to Australia where living costs are much cheaper and wages are higher. Mair is under the impression that many young people who leave on their OE will never come back, because of un-affordable housing in NZ, tied to excessive and inefficient building regulations. He also says that NZ has not invested enough in trades and trade certification. He also states that if you want to be paid really well in NZ, you should plug into an industry with lots of automation and be multi-skilled. Mair thinks that government should be concentrating its spending on fundamental infrastructure, be it broadband or fresh water.

The lock-downs in China, he says, are restricting Chinese goods being able to get to port, as different Chinese provinces have different regulations and controls around who can do what. Mair also complains about the strong stevedoreing unions in the USA, who have a lot (implying too much) power. But he doesn't state that centres of excellence and low cost Asian manufacturing operations must offset these disadvantages.

In the podcast, Mair has a very interesting insight into value added manufacturing. How do you carve out a value proposition in a new market and take your product up market? Mair says it can't be done. You have to understand the value your product brings to the market on day 1, enter at a high price point and defend that position. Mair highlights A2 milk as a successful example of this. Smarter manufacturing can drive the cost down, a way to improve future profits. But inevitability some of that cost saving has to be shared with the customer. Reinvention of profitability requires either new products or new materials to reformulate existing products.

SNOOPY

[Biscuit]

....I have listened to the complimentary podcast

https://www.iheart.com/podcast/1049-...with-98308749/

......

Thanks for the link to the (complementary?) podcast Snoopy, look forward to listening to it when I have a free moment. I also am continuing to hold SKL. Haven't been following the share price but I guess they are tracking down as everyone adjusts to higher inflation/interest rates.

[RTM]

The written article sells Mair a bit short in his replies. But I have listened to the complementary podcast

https://www.iheart.com/podcast/1049-...with-98308749/

to find out more.

I have done very well out of SKL too, although unlike you Bull, I remain on the share register. I also hold SCT which is in a similar

SNOOPY

Thanks Snoopy, appreciate the summary. I holding a few, unfortunately decreasing % of portfolio at the moment.