Skellerup (SKL) Fundamentals

[percy]

Psst ... some people still might want to accumulate while the price is low ...

Looking at your question ... the dairy industry is one quite important customer for SKL, so some people might see a connection, though obviously one somewhat better auction result (or three) does not make a dairy spring.

I suppose its more the market realising that this is an undervalued company. They are even successful if dairy is low - farmers can delay maintenance on their systems only so long, no matter how low the milk price is - and SKL was as well quite successful in diversifying their products. SP is slowly creeping upwards for the last five weeks or so and just passed the MA100. Some people might call this the start of an uptrend, though (I know Percy ) there is obviously still the MA200 to crack.

Discl: holding

BP,I use charts as just another tool to help me,yes a very important tool.
I saw the result and thought it was fantastic.The next day I saw Sir Selwyn buy,so I brought some.Thought about it,and doubled my holding the next day.Paid $1.29 and $1.27.
"Well positioned". lol.

ps.Don't worry the chart will catch up with us shortly.!!

[Beagle]

Clear break above the 100 day MA which is back at $1.30. $1.34 now, onward and upward

[Beagle]

Selwyn Cushing keeps buying, another 750,000 on to his ledger.

[xafalcon]

2M shares purchased in a month, now holding 7.3% of company shares. A strong vote for his vision of future SKL fortunes

[DarkHorse]

I finally bought some for the first time last week. Have seen many stocks with insider buying fail to perform - can be average managers and mediocre investors; but when the insiders are successful investors and make very substantial purchases... the odds are obviously in our favour

[banter]

Drivers
1. 76% of sales are exported so the recent major fall in the $Kiwi will materially boost FY16 returns and beyond
2. Cheap PE about 11 last time I looked
3. Gross dividend yield north of 10% and presently trades cum a fully imputed 5.5 cent final divvy, ex date early October)
4. Several directors recently bought in decent volume
5. Beat market expectations in FY15 a year that was already gloomy for the dairy industry
6. Expectations that the FY15 result is the bottom of the cycle for SKL ?

Disc : I'm a happy holder

To follow, an estimate of SKL's 2016 profit given best-guess exchange rates for the year ending 06/2016.
And allowing for 2016 hedge losses.
If the calculations are right, and assuming 6% inherent growth (same as this year), eps jumps by 65%, to about 19cps.

Over the last 8 years, the median year-low PE and year-high PEs are 9.6 and 16.1 - say 10-16.
Giving a valuation range of $1.90 - $3.04.

Which might help explain point 4) above.
The directors don't give much away about the outlook in the annual report - just describing it as 'promising'.

On top of that - overseas earnings rose from 72% to 76% between 2014 and 2015.
If SKL can continue to grow overseas sales its growth prospects seem 'reasonable.'


Workings and sources follow.

	15a	16
npat ul	21.9	35.8	(5)
eps ul	0.113	0.186
po %	79%	79%
gdps	0.125	0.204
gy%	9.3%	15.3%
Deriv. of 16 NPAT
2015 NPAT	21.9
AUD +/- (1)	1.2
USD +/- (2)	8.6
EUR +/- (3)	3.4
Hedge +/- (4)	-1.4
Adj. NPAT	33.8
+ 6% grwth (5)	35.8
Effect of a change in exchange rate on 03/15 revenue, NPAT and EPS
	06/15 figures		06/15 figures with different ex rates (best guess for 06/16 bolded)
NZD/USD	0.78	0.75	0.7	0.68	0.66	0.64	0.62	0.6
US/other rev (in NZD)	66	68	73	75	78	80	83	86
US/other rev (in USD)	51
Ch rev	0.0	2.6	7.5	9.7	12.0	14.4	17.0	19.7
Ch NPAT	0.0	1.9	5.4	7.0	8.6	10.4	12.2	14.2
Ch eps	0.000	0.010	0.028	0.036	0.045	0.054	0.063	0.074
NZD/AUD	0.93	0.92	0.9	0.88	0.86	0.84	0.82	0.8
Au rev (in NZD)	51	52	53	54	56	57	58	60
Au rev (in AUD)	48
Ch rev	0.0	0.6	1.7	2.9	4.2	5.5	6.9	8.3
Ch NPAT	0.0	0.4	1.2	2.1	3.0	4.0	5.0	6.0
Ch eps	0.000	0.002	0.006	0.011	0.016	0.021	0.026	0.031
NZD/EU	0.65	0.64	0.62	0.6	0.58	0.56	0.54	0.52
EU rev (in NZD)	39	40	41	42	44	45	47	49
EU rev (in EUR)	25
Ch rev	0.0	0.6	1.9	3.3	4.7	6.3	8.0	9.8
Ch NPAT	0.0	0.4	1.4	2.4	3.4	4.5	5.7	7.1
Ch eps	0.000	0.002	0.007	0.012	0.018	0.023	0.030	0.037
Hedge losses	hedged @	Amt local $m	Assumed rate	Hedge val	real val	Gain/loss
AUD	0.9319	4.72	0.86	5.1	5.5	0.42
USD	0.698	3.61	0.66	5.2	5.5	0.30
EU	0.651	1.38	0.58	2.1	2.4	0.26
GBP	0.4722	1.47	0.42	3.1	3.5	0.39
						1.4
Sources
Hedge figures and 2015 results - https://www.nzx.com/files/attachments/218922.pdf p34

[sb9]

Selwyn Cushing keeps buying, another 750,000 on to his ledger.

And he paid top dollar too for those shares $1.34, not a bad endorsement isn't it.

[Beagle]

And he paid top dollar too for those shares $1.34, not a bad endorsement isn't it.

Yeah I noticed that mate. I think its safe to say he's a forward thinker so realises that buying now he's really only paying $1.285 per share as he'll get 5.5 cps fully imputed dividend back in five minutes so too speak. He'll know the prospects for the company with the lower $Kiwi better than anyone on here.

Banter - You could say we are well positioned

[sb9]

Ms Coutts accumulates more (another 20,000)...

[Beagle]

Yes its very rare for so many senior exec's and directors to be accumulating at once. Its very tempting to go to the On the water boat show this weekend. On one hand one could buy a new boat and watch it depreciate by 20-30% in the first year and cost another 10% of its up front cost in annual opex or one could buy some more SKL and watch them go up by 20-30% in the first year and earn a 10% gross divvy yield. Hmmm