Skellerup (SKL) Fundamentals

[Balance]

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Beautiful 20/20 hindsight - everytime.

Look forward to more foresight from you?[/QUOTE]

Big volume plus a uptrending share price?

Buy signal, surely.

[percy]

Look forward to more foresight from you?

Big volume plus a uptrending share price?

Buy signal, surely.[/QUOTE]

[percy]

Big volume plus a uptrending share price?

Buy signal, surely.

[/QUOTE]

Well I hope so.

[Lizard]

SKL result out and any fears the market may have had about them look a bit unfounded to me, with NPAT above previous forecast at $20.2m.

The target of $22-$23m for the coming year looks conservative, given there is probably a $1.5m reduction in interest costs and also would not expect a repeat of the $4.1m of Christchurch earthquake costs that appear to be included in this years result.

Dividend up to 4cps, bringing total for year to 6cps plus imputation.

[percy]

Well Lizard you and catalyst have been right on the money with your SKL projections.Well done.
I thought the result was a cracker.Most impressed with debt being reduced from 26.9mil to 9.1mil with corresponding reduction of finance costs from 4.785mil to 2.667mil.Pleased to see David Mair finally appointed CEO.Nice to see them looking ahead and agree they appear conservative.Love the divie increase.

[Catalyst]

Yes, a solid FY11 result. Sticking with the same muiltiples that I've used over the past year or so, my fair value range of SKL sits around the $1.30 - $1.40 mark.

PE of 12.5x - 13.0x = 12.5 or 13.0 x ($20.2m NPAT / 192.8m shares) = $1.31 - $1.36

EV/EBITDA of 6.5x - 7.0x = (6.5 or 7.0 x $39.5m EBITDA - $9.1m net debt) / 192.8m shares = $1.28 - $1.39

[percy]

Good article by Chalkie this mornings' Press;"Gumboot governance for Skellerup directors."
As one would expect chairmain Cushing keeps up the Brierley tradiation of putting directors and executives before shareholders.No surprises there.!!!!

[winner69]

Good article by Chalkie this mornings' Press;"Gumboot governance for Skellerup directors."
As one would expect chairmain Cushing keeps up the Brierley tradiation of putting directors and executives before shareholders.No surprises there.!!!!

Was quite an indepth article highlighting these sort of deals in SKL

These old guys like Cushing will get their cumeuppance one day as the world revolts against shennagins in the board room.

The companies with old fashioned values who see society as a key stakeholder rather than shareholders will be the ones that thrive. Companies who have directors and managers like SKL will need to need to change if they want to survive

SKL done well as an investment over the last few years after the bailouts (why were they needed in the first place anyway) but the shareprice would be more than 125 today if it demonstrated a higher level of governance rather than being a few guys play thing.

[Lizard]

I don't accept the Stakeholder approach as being the way to go. Call me old-fashioned. All the evidence I've seen has been that focussing on returns to shareholders is the most successful approach. That often encompasses staff, customer and supplier interests too, since they all are important to the success of the business. Externalities are for regulators and politics.

Shareholders need to start using the power they have more frequently to help maintain realistic expectations around director remuneration and incentives. However, many shareholders are perhaps more afraid of the consequences of voting against director wishes. Maybe we need another route that is less confrontational and doesn't become a debilitating battle between (particularly minority) shareholders and their supposed representatives.

[winner69]

Liz - I know it is not as simple as all that. You mention staff, customer and supplier interests are important .... in a general sort of way you society eh ... along with communities in general

There is a thing called 'stakeholder capitalism' which is quite interesting to read up on .... a conclusion from that is shareholders benefit most when CEOs and boards maximise value to society .... a founding father of that thinking was Merck who said 'We should never forget that medicine is for the people. It is not for the profits. The profits will follow .."

I see those companies that think that way will be the winners over the next 20 years. Those that see things like sustainability and meeting the needs of 'society'/communities as important and an integral part of their strategy and day to day plans, as opposed to having out to one side a thing called corporate social responsibility.

Back to SKL - is a guy like Cushing like that?

And you are not 'old fashioned' (your words) in saying what you did - that's how most think today anyway so definitiely not old fashioned