MVN Methven

[winner69]

The 2 announcements at end of Jan and this week are effectively a 20-30% earnings downgrade on the expectations set in September when they were "optimistic that the first half's improved performance can be sustained" (MVN Presentation). Recall the first half earnings were up 20% (before abnormals) and they proudly stated that the 'turnover gathers momentum'

Wow up 20% in first half and likel;y to be down 35% in second half -lets hope that type of performance doesn't 'gather momentum'

[BIRMANBOY]

So as always the SP is simply a reaction to and a reflection of market sentiment. So we have a less than promising outlook and report and we get a response that reflects that and a big SP drop. Now if I was a CEO/board member the last thing I would be thinking about is how can we accelerate that drop and piss off the remaining shareholders....Oh I know lets drop/cut the dividend as well... Yes its conceptually possible but highly unlikely. The market should be fed bad news in instalments interspersed with some good news as a counterbalance is the normal routine. As you said W69 at a 1.40 not returning 11% however currently at 1.19 its looking much more attractive. This, combined with historical dividend history, will IMHO see it give us a bounce back soon. You don't have to like, admire or agree with them but all in all could be a money earner. All it would take to get a bounce would be some reversal of the exchange rate which is at its current high for a while. My theory is Milford went in because of the dividends....and do believe that MVN will resist dividend cuts as a long as they can. Getting in at current levels LOOKS ATTRACTIVE TO ME ESPECIALLY LOOKING AT 5 YEAR CHART. As always just my thinking and not a recommendation.

The market seemed to take the 30/1 profit warning in its stride and even though the price went down 5 cents or so it soon recovered to be over 140. Not much reaction then (maybe Milford and Salt kept the price up)


Now 2 months later another profit warning. Market not forgiving this time around by the looks of it.

So I don't see the current fall as an over reaction - just 'punishing' them as they say for a pretty big downgrade now, one that wasn't punished in January.

You can only piss off the market so many times .... but if you bet on 9.5 cents dividend you'd be in boots and all at 119

[percy]

[QUOTE=BlackPeter;470514]. Just looking at their 5 year summary:

http://www.methven.com/nz/investors/five-year-summary

BlackPeter thank you for the link.
What one may call a reality check!!!
2009 compared to now, 2013,
Revenue 2009 $137,321,000 Now 2013 , $ 98,420,000 -28%
Nett Profit2009 $10,056,000 Now 2013, $5,150,000 -48.8%
EPS 2009 15.10 Now 2013, 7.70 -49%
Divie per share 11.75 Now 2013, 9.00 -23% Yet higher than earnings????
Summary.Lost cause.! Avoid.

[percy]

Yep ..... Bunnings owned by Wesfarmers a la Coles and the grocer way of buying applies to Bunnings

We buy at this price / you stock the shelves up and put in a lot of merchandising / you come in the shop every so often to show our stuff they work / you give us rebate to stay in the shop

If they don't sell take your stock away

Moosie 900.
This post of Winner69's "hit the jackpot".
Tapeware and shower market would be a "terrible business to be in."
Think Goodman Fielder trying supply bread and staples to supermarkets.This business is even tuffer.Impossible.!!

[BIRMANBOY]

My mind is not as "agile" as yours Moosie. There's several degrees of speculation, such as glass half full speculation ranging across to glass half empty speculation and then there's the 'woodlands creature" speculation which is hyper sensitive to every wind blown nuance floating in across the tundra. I choose to select the most probable outcome based on my understanding of human and corporate behaviour, (as I see it anyway). Regardless, its not really about who is right or wrong its about dealing with the reality that occurs. I'm prepared for anything so all good.

Wow those are some pretty scary figures Percy. Would be worth obtaining a Milford/Salt coverage sheet detailing why they bought.

As for dividend not beingcut at all. Come on Birman, really???

[couta1]

Although I no longer hold Methven shares I like the quality of their products and in the last 20 years have only seen one retirement village with Methven taps throughout which is a shame because imagine Methven NZ sales increases if Rym/Sum/Met all decided they were going to use Methven gear in their facilities and as its stands a lot of the alternative products they use especially in the care centers which get heavy use don't seem to be lasting that long from my observations,perhaps Methven should be making a big effort to capture this market?

[BIRMANBOY]

Its dropped too fast for their to be any "sane" people buying. Buy when its bottomed and turned ..even you should know that moosie. Its been returning me a double digit gross div for years. Expand your horizon...oh wait, I forgot you want to trade. Ok look at charts...could be a decent trade here as you long as you have a bit of patience.

I'm just saying that's quite hard to fathom two downgrades and a fast slumping shareprice without a dividend cut. If it wasn't being cut it would be a screaming buy at 10%+ divvie with everyone buying in, thereby stopping the sp dropping right? hey, if I'm wrong, Salt and Milfie guys (as well as you if you're holding...) are going to be getting a big bonus this year right?!?

[winner69]

Gap between EPS and Dividends - I think percy used the term tooth fairy

Over the past 5 years MVN have actually generated more cash (operating less investment) the they have paid out in dividends. Just that cash flows are choppy and are either very good or very bad while dividends have been pretty steady. In the good years they repay some borrowings and in bad years they borrow a bit more to pay the dividend.

This is how things have panned out. First number is FCF and 2nd is dividend paid $000


2009 13,909 / 8,159
2010 13,974 / 7,327
2011 5,949 / 7,327
2012 12,676 / 5,993
2013 898 / 6,661

So over 5 years they have managed OK (only borrowed 2 out of the last 3 to pay the dividend) but goodness knows what this years cash flow is going to be like - need $6.6m to pay that dividend

Had it covered in the first half so I predict that this years divie is SAFE (bit worried about that statement that they might reduce debt this year but maybe another bit of confirmation)

See Birman - I have no barrow to push, neither do I have any need to be vindicated as you said yesterday.

Just wish they would stop raving on about being a growth company

[winner69]

Although I no longer hold Methven shares I like the quality of their products and in the last 20 years have only seen one retirement village with Methven taps throughout which is a shame because imagine Methven NZ sales increases if Rym/Sum/Met all decided they were going to use Methven gear in their facilities and as its stands a lot of the alternative products they use especially in the care centers which get heavy use don't seem to be lasting that long from my observations,perhaps Methven should be making a big effort to capture this market?

Wouldn't be good for MVN even if their taps and stuff went into Ryman

You should be proud of how Ryman screw suppliers / contractors and get a deal that suits them, not the supplier.

No doubt they have tried for this business but couldn't afford to supply and make a buck, at least for the good stuff.

Whose taps and shower heads and things you see couta

[couta1]

Wouldn't be good for MVN even if their taps and stuff went into Ryman

You should be proud of how Ryman screw suppliers / contractors and get a deal that suits them, not the supplier.

No doubt they have tried for this business but couldn't afford to supply and make a buck, at least for the good stuff.

Whose taps and shower heads and things you see couta

I see a mix of brands so starting next week I'm going to do a little survey recording the names of the brands in each facility and see if there is any other NZ brand used at all,Monday I work at an Oceania facility the only one with the Methven gear in as spoke of above,cheers