Skellerup (SKL) Fundamentals

[h2so4]

Collecting dividends is only one of the factors I look at. I also look to ensure that the earnings support those dividends with some to spare, and that the dividends are not one off, but have been sustained or have grown for some time. Also that the the company is operating on a sound asset base and not overgeared.

Yes I know. I just posted that incase someone thought it was a good idea for their hard earned money.

[Snoopy]

How does your Dividend thingy work out for Skellerup, Snoopy?

Year	Dividends	Dividend Total
2012	4.0c+3.0c	7.0c
2013	5.0c+3.0c	8.0c
2014	5.0c+3.5c	8.5c
2015	5.0c+3.5c	8.5c
2016	5.5c+3.5c	9.0c
Total		41.0c

Averaged over 5 years, the dividend works out at 41.0/5 = 8.2c (fully imputed).

So based on a 7.5% gross yield, fair value for SKL is:

8.2 / (0.075 x 0.72) = $1.52

I bet you can get $1.51 at 7.5% gross out of it.

Best Wishes
Paper Tiger

You'd be right. Isn't that Spooky... :-)

SNOOPY

[Snow Leopard]

A quick glance, a bit of mental arithmetic, and a sanity check.
The current SP looked a likely target.

Best Wishes
Paper Tiger

Note: did not record payment dates until 2015

[winner69]

So H1 NPAT down 7% but H2 gunna be up 20%

That's good

[winner69]

An interesting chart. But generally when a share is on a cyclical low the PE goes up (because the earnings have gone down) and vica versa. In Other Words, when earnings are high, then the share price isn't bid up in accordance with the earnings, because shareholders know a cyclical earnings fall is coming. So is it realistic to assume a PE of 11 all through the business cycle? I prefer to interpret the chart as saying that we are now at a cyclical earnings low for SKL.
.....l.

Snoopy - so why does the SKL PE remain pretty consistent when SKL profits fall or rise (period in 2007/2009 good example). You theory would have suggested a high PE through this period but it remained about the average. SKL share price doesn't behave lie true cyclicals.

Are SKL profits cyclical? Not really methinks (if they were one is at the top if the cycle now)

Why not really -

When things go against them they have little resilience to manage themselves through these times. This results in disappointing profits

When things should be going their way they fail to capitalise on the opportunities - poor execution of those gunna to do this and gunna to do that strategies. This results in profits about the $20m mark. Seems the best they can do.

Have things changed?

[Snoopy]

Around ten years ago (2006) Skellerup did a bit of soul searching. What are our strengths going forwards? They answered their own question in three parts:

a/ A wealth of experience in technical polymer (mostly rubber) development and production.
b/ The ability to make use of low cost manufacturing, both in house and outsourced.
c/ The ability to make best use of global distribution networks.

This re-evaluation meant that parts of the ‘old’ Skellerup were divested as acquisitions that fitted with the three core strengths were made. I think of FY2006 as the start of the ‘new’ Skellerup. FY2006 was perhaps not co-incidentally, the same year the company became Skellerup (from Skellmax), by name once again. So FY2006 is the first year of data that I have considered in my 're-evaluiation' exercise.

Snoopy - so why does the SKL PE remain pretty consistent when SKL profits fall or rise (period in 2007/2009 good example). You theory would have suggested a high PE through this period but it remained about the average. SKL share price doesn't behave like true cyclicals.

As referenced in my own previous post, I saw 2006 as the dawn of the 'new' Skellerup. I think the plan back then was to break out of the gumboot manufacturer image. The plan was 'reinvention as a growth company'.

I bought the growth story when I invested in SKL for the first time. But when growth stalled last year, I re-evaluated SKL as a dividend paying cyclical. No capital was lost though, because I never overpaid for my SKL shares in the first instance. My point is, I am not sure myself that SKL is a true cyclical. The dairy and iron ore downturns that came together really took the wind out of the SKL growth engine. If you look at the earnings numbers, then SKL isn't growing. But with the two king hits they took, is this a surprise? And can you blame SKL management for not seeing the crash in iron ore and milk prices coming together?

2007 to 2009 was when the 'new growth strategy' (sic) was bedding in. So perhaps it was unfair to expect SKL to behave like a cyclical over that time period?

Are SKL profits cyclical? Not really methinks (if they were one is at the top if the cycle now)

Why not really -

When things go against them they have little resilience to manage themselves through these times. This results in disappointing profits

When things should be going their way they fail to capitalise on the opportunities - poor execution of those gunna to do this and gunna to do that strategies. This results in profits about the $20m mark. Seems the best they can do.

Have things changed?

If your main customers are 'commodity producers', is it fair to suggest that their suppliers have 'little resilience' in a downturn? According to Skellerup management, SKL is making essential consumables for both dairy and iron ore mining. So at the first hint of 'free cash' for their customers, we should see an upturn? How could SKL manage things better?

Not sure what you are referring to about failing to capitalize on opportunities when things are good?

SNOOPY

[winner69]

Snoopy - all that 'soul searching' and building a new company based on their strengths has resulted in lower profits (per share basis) than what they were achieving beforehand.

Another example of we gunna do this and ..........but maybe a new era is dawning as 2020 approaches.

[sb9]

10

10:22:05 am

152

1,000,000

$1,520,000

Off Market

May be Sir Cushing or some large overseas fund on accumulation phase again...all good!!!

[Snoopy]

10

10:22:05 am

152

1,000,000

$1,520,000

Off Market

May be Cushner or some large overseas fund on accumulation phase again...all good!!!

Didn't know Trump's son in law was into Skellerup, but all good. Wait for the twitter post for it all to go viral. Buy buy buy!

SNOOPY

[winner69]

10

10:22:05 am

152

1,000,000

$1,520,000

Off Market

May be Cushner or some large overseas fund on accumulation phase again...all good!!!

.....and no worries eh