Skellerup (SKL) Fundamentals

[Snoopy]

You might be right, especially if NPAT comes in at the top of, or above, the forecast band of $24 to $26 million.
The policy was to pay dividends within the range 40% to 60% of NPAT.
In FY 2012 NPAT was $24.7 million and the payouts, 3 and 5 cents, amounted to 62.2% of NPAT.
I don't know what the dividend policy is now, but clearly 60% is no longer a cap.

I don't think there is any indication of a change in dividend policy here. If SKL had reduced their final dividend from 5cps to 4.72cps, then they would have remained under their 60% self imposed 'payout ratio cap'. I wouldn't have expected any shareholder have actually expected such a fractional adjustment to meet the declared 40% to 60% target range though. Sometimes one can take this decimal point business one step too far.

SNOOPY

[Under Surveillance]

I don't think there is any indication of a change in dividend policy here. If SKL had reduced their final dividend from 5cps to 4.72cps, then they would have remained under their 60% self imposed 'payout ratio cap'. I wouldn't have expected any shareholder have actually expected such a fractional adjustment to meet the declared 40% to 60% target range though. Sometimes one can take this decimal point business one step too far.

SNOOPY

I'm not quibbling about the payout for FY 2012.

The payout ratio for FY 2015 was 79% of NPAT according to Sir Selwyn's speech to the ASM.

[Beagle]

Now it all makes sense about all that strong insider buying over past few weeks (months).

Sure does.

Based on the update from ASM, I'm picking 4c interim and 6c final for the FY 16 making a total of 10c divvy for the year. Thoughts?

I'd say that's bang on the money mate.

I think its very good, keep in mind they're always bit conservative in their estimates.

I agree and think they're keeping something up their sleeve. For me the key takeaway is this

Skellerup CEO, David Mair said, “We have put a lot of effort into prioritising the growth opportunities available to us, and made significant investment in the people and structures we need to make the most of those opportunities. That work is now starting to pay off.”

Emphasis added.
Rome wasn't built in a day so if the work they're doing is now starting to pay off that clearly suggests there more gains to come in future years.

Based on the mid point of their forecast = $25m that equates to 13 cps. On a PE of 12, (which I think is conservative for a company that's growing profitability and now has only 10% of their sales linked to dairy), that suggests a fairly conservative fair value is 13 x 12 = $1.56. Happy holder for long term growth and excellent dividend income.

[Pricey]

To those that thought the 2015 Annual report was a good read, do you mind sharing why you thought it was so compelling? 2014 seemed to be a better read. It included more detail around SKL’s growth into the US. I thought 2015 seemed quite nondescript and ‘flat’.

Key factor this year will be whether any growth comes from revenue growth in the US or currency tailwinds. I still believe the downturn in diary and Aus industrial will have a great impact – and wouldn’t be surprised if they come in at the lower end of their guidance. If anything, recent announcements demonstrate it is more diversified than once thought and it is delivering on its expansion into the US.

And, I also wasn’t sure that the company always understates their forecasts:

NPAT 12 forecast/result: $22m - $23m / result $24m
NPAT 13 forecast/result: $20m revised down to $17m / result $19m
NPAT 14 forecast/result: $22m - $24m / $20m
NPAT 15 forecast/result: no forecast? / result $21

[Sideshow Bob]

Farmer Weekly Article

http://viewer.zmags.com/publication/...d#/1e02a9ad/14

[dumbfounded]

Pricey - my puzzlement as well. Hope someone could offer some explanation. Nonetheless the price went up. Sold a quarter of my holding as I am not sure what's up.

[macduffy]

Pricey - my puzzlement as well. Hope someone could offer some explanation. Nonetheless the price went up. Sold a quarter of my holding as I am not sure what's up.

It's a well-run company, supplying NZ's biggest and most important industry - admittedly one with its own problems but not likely to stop using SKL's products; benefitting from the weaker NZD v USD in respect of its exports; paying an attractive yield in a low interest rate environment; management with significant shareholdings.

Enough to justify its shareprice in current market conditions, IMO.

[BlackPeter]

It's a well-run company, supplying NZ's biggest and most important industry - admittedly one with its own problems but not likely to stop using SKL's products; benefitting from the weaker NZD v USD in respect of its exports; paying an attractive yield in a low interest rate environment; management with significant shareholdings.

Enough to justify its shareprice in current market conditions, IMO.

not to forget ... have been over the last couple of years very successful in geographic (US and Europe) as well as industry (added building industry) diversification and will move over the next handful of months into totally new and purpose build premises (which should further improve their output and efficiency).

[Beagle]

Farmer Weekly Article

http://viewer.zmags.com/publication/...d#/1e02a9ad/14

Thanks for sharing. I see Craigs have increased their valuation from $1.55 to $1.75. Obviously they see value there.

[Beagle]

Bought more this morning @ $1.50. Excellent divvy yield and nice tailwind from even lower currency.