FBU Chart.

[Rep]

But of course.

This forum tends to have a deadly obsession and myopic focus on a lot of chicken **** stock like Snakk, VMob etc.

Snakk - 651,000 views vs FBU - 312,000 views.

What does that tell us?

For a company that once was the most valuable stock on the NZX (now fifth in terms of value), which had vertical integration with the supply chain, participated over the last five years in a major construction boom, has tendered and been involved with some of the largest and high profile construction projects during that boom, been heavily involved in the earthquake repair works in Canterbury - it has significantly underperformed the NZX50 index over the last 5 years and has been a serial underperformer over the past 10 years.

10 years ago the stock was sitting at about $12.00 a share and now sits at $7.48. That's a fall in value of 36.3% compared to a rise in the value of the S&P/NZ50 of 86.2% over the same period.
On the 5 year horizon, the stock was sitting at about $6.00 so the improvement to $7.48 of 25.5% is an improvement but not against the rise in the value of the S&P/NZ50 over the same term of 119%.

There's a lot of ma and pa investors out there who should be really grumpy about that result - especially when a good number of folk don't realise that have significant indirect investments with many of them unaware that their kiwisaver funds have probably got a component of their retirement savings locked in FBU stock.

It's not a RAK in terms of terms of the destruction of shareholder value but its a big lumbering, clumsy giant with inertia and not really making a very good return with all of the resources availed to management - especially when there seems to be a lot of folk apparently working there with LTIs and involved with the ESOP, you'd wonder if all of that is actually worth the cost and effort.

One wonders if the governance needs a distinct shakeup given those fairly basic return KPIs.

Disc - not a FBU shareholder

[winner69]

Just imagine what teh NZX50 would have done without a large weighting of this lumbering, clumsy giant in the index.

[Beagle]

Agree Beagle that it seems to be those stuck in their standard portfolio construction that hold.
After looking at the chart for a long time last night my view is that it must find support now or its goodnight nurse
My chart based view is that if it breaks the channel the sky will cave in.

Attachment 9006

I am curious why the company hasn't be accorded a far more realistic PE multiple for a cyclical company with serious systemic issues.

Not everyone's down on FBU. Credit Suisse reckons the current problems are temporary and will "wash through". FWIF, they have an Outperform on the company with a 12 month target of $9.40.

I find it strange that the brokers generally have consistently given them the benefit of the doubt and accepted what they're told by management at face value.

Just imagine what teh NZX50 would have done without a large weighting of this lumbering, clumsy giant in the index.

Brian Gaynor weigh's in...looks like there's deep systemic issues in the company with lot's of "the establishment" paid in excess of $500,000 !
Such grandiose salaries for such mediocre performance !
http://www.nzherald.co.nz/business/n...ectid=11893764
Disc Have never owned and not likely too in the foreseeable future. With their systemic issues and the fact that we're currently in a building boom I see no reason why this should trade on a PE of more that 8 based on actual earnings for 2017, (forecasts don't count as in regard to FBU they have NO credibility).

I think its clear from Bryan Gaynor's report and actions in regard to former CEO that they are pretty weak. Not sure how anyone could have complete confidence in them going forward. Heads should roll at board level too in my opinion. Shareholders need a strong board and a strong CEO who can take this dinosaur of a company forward.

Excellent post Rep.

[Rep]

Just imagine what teh NZX50 would have done without a large weighting of this lumbering, clumsy giant in the index.

I've opined before that the NZ50 is an index but not an investing strategy that I would use myself - there's too many large and mediocre stocks in there and some stocks that aren't in the index because of the free-float criteria that I might want to consider.

Passive investing using the index means that you invest in companies that I don't think are well managed enough that as an investor that I want to be giving them my money for them to invest on my behalf (You could paraphrase Kerry Packer's quote about tax "... I can tell you you're not spending it that well that we should be donating extra.")

There's nearly 2.8 million kiwisaver members out there and $40 billion tied up in the funds - there's a good component of those funds sitting in shares in the NZ50 as well as others with passive funds and who have actively invested in FBU. They should all be pretty grumpy about what's happening here.

[winner69]

Anybody else in for the quick 20% plus profit opportunity here .......20% gain doesn't even get it back to $9

Wouldn't worry about the perceived high PE Beagle. For 'cyclicals' multiples are generally high in bad years and low in good years. AIR generally exhibits this trend (except at the moment it's above average multiples belie its 2nd best profit ever)

[RTM]

Anybody else in for the quick 20% plus profit opportunity here .......20% gain doesn't even get it back to $9

Wouldn't worry about the perceived high PE Beagle. For 'cyclicals' multiples are generally high in bad years and low in good years. AIR generally exhibits this trend (except at the moment it's above average multiples belie its 2nd best profit ever)

I bought for 6.74 in Jan 2106. Need to get a lot closer to that before I would consider buying again.

[hardt]

Anybody else in for the quick 20% plus profit opportunity here .......20% gain doesn't even get it back to $9

Wouldn't worry about the perceived high PE Beagle. For 'cyclicals' multiples are generally high in bad years and low in good years. AIR generally exhibits this trend (except at the moment it's above average multiples belie its 2nd best profit ever)

Worth a good look, never know if the market is going to pick it up straight away or if it could be months before anything positive happens.

Odd how a contracts profits are realised throughout the lifespan of said contract, when a loss is likely to occur it is to be recognized immediately as an expenditure.

We will call this an extraordinary occurrence and carry on with a bullish future outlook... I was hoping for it to bleed a little more before picking some up.

[Beagle]

Anybody else in for the quick 20% plus profit opportunity here .......20% gain doesn't even get it back to $9

Wouldn't worry about the perceived high PE Beagle. For 'cyclicals' multiples are generally high in bad years and low in good years. AIR generally exhibits this trend (except at the moment it's above average multiples belie its 2nd best profit ever)

Did you read that opinion piece by Bryan Gaynor mate ? I think there are deep systemic issues within the company. A lot of old dead wood in management being paid $500K plus for very poor performance which will act as a handbrake on all future profitability until its cleaned out properly. Whether a thorough management and board cleansing will ever happen properly is an open question as far as I am concerned. Quite apart from that and as a separate issue I am certain not all the wood rot has been removed with this most recent write-down and profit revision and expect the SKC conference center to be a real drag on earnings going forward. Mark my words, that international conference center will be later than and cost a lot more than they are even currently forecasting. I have no confidence in management's ability to forecast accurately, either in terms of their profitability or in regard to major construction job costings. Relative to the NZX50 this company has been a sick old dinosaur for over a decade. Better prospects by FAR in another construction company I reckon, namely Metroglass. Frankly I think management and the board deserve the derision of investors.

[Balance]

Did you read that opinion piece by Bryan Gaynor mate ? I think there are deep systemic issues within the company. A lot of old dead wood in management being paid $500K plus for very poor performance which will act as a handbrake on all future profitability until its cleaned out properly. Relative to the NZX50 this company has been a sick dog for over a decade. Better prospects in another construction company I reckon, namely metroglass.

Same Brian Gaynor who thought that it was all over for Diligent when Milford sold out?

Anyway, FBU does look to be infected with the dreadful downgrade disease - 2 down and 1 more to go when the new CEO takes over, and clears the deck?

[winner69]

Did you read that opinion piece by Bryan Gaynor mate ? I think there are deep systemic issues within the company. A lot of old dead wood in management being paid $500K plus for very poor performance which will act as a handbrake on all future profitability until its cleaned out properly. Relative to the NZX50 this company has been a sick dog for over a decade. Better prospects in another construction company I reckon, namely metroglass.

Agree with everything you say .....ever been to Fletcher HQ?

But this is about playing the market game - eg sentiment rather than company performance.

Sentiment at low ebb now - will get better (in short term) and price will follow eh


(Wonder if Fletchers regret missing out on acquiring Metro a few years ago .....far too expensive and couldn't match private equity)