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  1. #2341
    Speedy Az winner69's Avatar
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    When I was involved in glass industry glass people's standard reply was 'glass doesn't leak, not our fault'



    FAIL: New windows leaking under garden variety tests

    https://businessdesk.co.nz/article/p...-variety-tests
    When investors are euphoric, they are incapable of recognizing euphoria itself.

  2. #2342
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    So , we are only a couple of weeks away from the FY results. The price action has so far been exactly the same as prior to the past few announcements. Its nice to see that there is still some optimists out there !!

    I suspect that in the end , the market will be disappointed again. Its unlikely they will pay a dividend. I think they are trading ok / well , as you would expect in this building boom, but the debt mountain was huge. Add to that, the need to increase working capital due to shipping problems, and the need to resume some capex ( after being very tight for a few years ) , and the pace at which debt will come down is bound to slow. Remember too, MPG is paying income tax, because they have maintained trading profitability all through this period.

    If a dividend is not paid, then they really MUST announce the intention to resume dividends next year. It will only take a 2c div to provide a 5% yeild at the current price. I think a 2c div would allow the price to firm up to about 50c. Look what has happened to STU since they resumed div's .

    Having said that, their Balance Sheet remains so bad, that they still face several more years of debt reductions. Its only recently that market Capitalisation has exceeded debt. That is not a good place to be.

  3. #2343
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    I'm no longer a holder but I am thinking NPAT of $10m will be reported. This will be the 5th year in a row profits have declined. 2017 saw profits of $22m before significant items.

    Revenue I guess will be around the $250m mark which hasnt really changed since 2017. Ranges from $244m-$267m each year.

    MPG can't seem to grow and margins are dropping.

    May seem cheap but maybe in 5 years time profits will only be $5m? On revenue of $250m :/

    GLH's

  4. #2344
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    https://www.nzx.com/announcements/372544

    Bad result. Worse than I thought it would be. Market seems to like it though- up 1 cent.

    Underlying profit down 40%

    MPG say building consents high but yet they are selling glass at lower and lower margins.

    Trading at at 5.23 p/e and company says dividends coming at half year. 60% payout ration would give 7% gross yield.

  5. #2345
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    Rounded up figures.
    Total Assets $238mil
    Net Assets.$84 mil ...Equity Ratio 35.2%
    However deduct intangibles of $58mil leaves Net Assets of $26mil, an equity ratio of just 10.92%.

  6. #2346
    Contrarian Investor Ferg's Avatar
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    Following is a quick look at MPG's recently released annual report. Below are snippets from post #2290 on the interim result back in November 2020:

    Quote Originally Posted by Ferg View Post
    HALF YEAR ended Sept 2020:

    NZ Commercial sales -21%...
    NZ Residential sales -21% is higher than just COVID losses...
    NZ Retrofit +2%, the YoY momentum on this would be circa +20%...
    Aust residential +2.5% ...

    NZ GP at 48.7% is down on prior half year of 52.9% ...
    Aust GP at 26.3% is up on prior half year of 21.5% ... but Aust sales are outnumbered by NZ sales by 3:1.

    Expenses fell by a lower % than the fall in sales %...

    No real reduction in interest costs ...MPG is unlikely to see any major benefit of reduced interest rates in the short term, although reduced debt levels will help somewhat.

    Cash looks healthy, debtor days are creeping up (could be a point in time issue), and inventory looks ok but there was talk of increasing safety stock which will see stock levels increase. Liquidity looks good, net debt vs equity is looking better...NTA is 12.4c per share... FCF is 9.7c per share ...[but]... cannot be maintained into 2H21 given the impending increase in stock and signalled resumption of capex.

    In summary a lot of the financial ratios and indicators are heading in the right direction. However, the two biggest issues to be resolved have the most financial impact, being the lack of growth in NZ residential sales and the lower margin on NZ sales. If these can be resolved, in conjunction with continued debt repayment, then IMO a resumption of dividends will be on the cards, if not late 2021 then 2022. ...
    FULL YEAR RESULT

    Some numbers have been restated for 2020 but I am comparing to what was originally reported last year.

    Revenues
    • NZ Commercial continues to decline as a strategic withdrawal -8% Year on Year (YoY)
      • there is no evidence of margin improvement and/or cost reductions given commercial was supposed to be low margin !?

    • NZ Residential is a bit of a shocker at -17% YoY (better than the -21% for H1, but that included April 2020 lockdown)
      • Where is the "buy local" support we are seeing elsewhere?

    • NZ Retrofit +16% YoY is a positive but this comes with increased costs (e.g. subbies & employees)
    • Total NZ -11% is disappointing in light of the continued investment in property I am observing elsewhere due to travel restrictions
    • Australia +1.2% is again disappointing given it is close to Oz annual inflation rate


    Margins
    • NZ Gross Profit at 48.0% of Revenues is lower than last year's 51.6%, likely impacted by higher inwards freight charges & competitive discounting
    • Australian GP of 23.7% has improved versus last year's 21.4%


    EBIT / NPBT
    • NZ EBIT declined from $27.8m to $19.4m, once again expenses fell at a slower rate of -4.8% YoY versus Revenue declines of -8.9%
      • Note: employee costs were down -0.8% or $0.7m YoY
      • Employee costs likely include the $2m management incentive which is masking the size of employee costs decreases; without the incentive the decline is closer to -2.8% which is still less than the % Revenue decline

    • Aust EBIT loss fell from ($3.6m) to ($0.7m) - heading in the right direction but a) not fast enough and b) it is a loss
    • NPBT is half what it was in 2019 and was a loss for the second half of the fiscal (Half year was $10.7m but full year is $5.4m)
      • NPBT of $5.4m was helped by $0.95m gain on sale of the fleet, the $1.4m release from the doubtful debt provision & the $1.07m reduction in advertising spend.


    Positives
    • Talk of a dividend*
    • Comprehensive profit is not a loss TGFSM
    • Continued debt reduction
    • NTA is into double digits at about 12.5c/share, but this has barely moved from the half year result
    • Various Balance Sheet ratios are on track


    Things for Simon to do from last year
    • Arrest the decline in NZ sales
    • Improve NZ margins
    • Strategic plan for NZ sales


    Things for Simon to do this year
    • Arrest the decline in NZ sales
    • Improve NZ margins
    • Strategic plan for NZ sales
    • Reinstate advertising spend, and for God's sake can someone introduce MPG to Google Adwords?
    • Reduce staff costs in line with top line Revenues
    • Not make a loss


    *My concern continues to be revenues and margins are both heading in the wrong direction, and by the time the bankers have had their debts repaid, there won't be any profits for dividends.
    Last edited by Ferg; 22-05-2021 at 12:27 AM. Reason: typo

  7. #2347
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    A good analysis there Ferg

    Big Ca$h going to Loan reductions in low interest times V trying to further sure up SP with even
    signal of an earlier Div concerns, as does hefty Intangibles on Balance sheet & material
    trading figures heading south ..

    Weren't these guys going to creaming it out of all the building activity ? What went wrong ?
    or is that still mostly well out on the future orders list ..
    ... the fine art of sniffing out debits & credits hidden under the carpet can pay dividends ...

  8. #2348
    Contrarian Investor Ferg's Avatar
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    Quote Originally Posted by nztx View Post
    A good analysis there Ferg

    Big Ca$h going to Loan reductions in low interest times V trying to further sure up SP with even
    signal of an earlier Div concerns, as does hefty Intangibles on Balance sheet & material
    trading figures heading south ..

    Weren't these guys going to creaming it out of all the building activity ? What went wrong ?
    or is that still mostly well out on the future orders list
    ..
    A good question and I agree - what is wrong? Forward orders have gone from $1.3m to $2.1m - heading in the right direction but 'tis a drop in the bucket.

    As I peruse the Annual Report I am struck by the photo on page 18. How do you have an executive team of 10 in an organisation of this size? To me an Exec team is the CEO, COO, CFO, Head of Sales & Marketing and maybe a Legal/Product guru (i.e. the person who has been there 60 years). I think there could be some structural issues. CEO = decision maker, COO = Internal focus, HoS&M = External focus and CFO is the glue holding everything together. Legal/Product guy would be the voice of reason to prevent group think.

    A GM of an island, or half of an island should not be on the exec team and do they need a CIO, HR, Strategy & H&S on the exec team? No offence intended to the individuals concerned if you are reading this. The Exec team is not a committee and you do not want decision by consensus; that's when you get the least worst decision and/or product etc. and you end up with vanilla every time. As evidenced by the lacklustre results perhaps?

    They need to rethink their organisation set-up, number of Board members (is 6 necessary?) and take an axe to staff costs that are not product or sales focussed. Maybe Simon is trying to show a flat organisation structure and good on him, but that's not an exec team. Too many "Directors" on the Board and the exec team. I think this is where the problems start. And why am I not seeing Google Ads for MPG when I search for glass? That is a serious fail.
    Last edited by Ferg; 23-05-2021 at 05:06 PM.

  9. #2349
    Speedy Az winner69's Avatar
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    Quote Originally Posted by Ferg View Post

    As I peruse the Annual Report I am struck by the photo on page 18. How do you have an executive team of 10 in an organisation of this size? To me an Exec team is the CEO, COO, CFO, Head of Sales & Marketing and maybe a Legal/Product guru (i.e. the person who has been there 60 years).
    Assuming these 10 are also the highest paid the wage Exec wage bill comes to about $3.8m and that includes the CEO who doesn't seem to be reasonably paid

    There's 20 employees earning more than $200,000 which seems an awful high number for company with sales of just over $200m

    From the table in the AR you wonder if every man and his dog (except maybe the tea lady) is on at least $100,000

    No worries - no doubt they all do a good job and deserve every cent of their rem
    Attached Images Attached Images
    Last edited by winner69; 24-05-2021 at 06:49 PM.
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  10. #2350
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    This thing is without doubt one of the mangiest things to have been listed on the NZX in recent years...sadly one of several.
    Where is the pay-off from all their recent capex investment in modern processing machinery we were assured was going to boost efficiency and productivity ?
    MFB also headed down to where this mutt is. Mutts are pack animals.
    What the heck are all these highly paid executives doing to fix this ongoing fiasco ? How is it possible to have a fairly dominant market position and a robust sector dynamic and yet they are executing so poorly ?
    Last edited by Beagle; 24-05-2021 at 06:50 PM.
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  11. #2351
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    For the past 3 years revenue and profits have decreased. Profits are falling faster than revenue.

    Private equity should come in and pay current shareholders $0.60 a share which would be a 42% premium to todays sp valuing the company at $111m. Everyone would accept.

    Then as Ferg says remove the hapless board and restructure the bloated leadership team. Cut out half of the 20 employees at the trough earning $200k+ as W69 has pointed out (they have 169 people earning $100k+ out of 220 total employees- WOW big money in glass) and then run off with the $30m operating cashflows that would actually grow under a new focused owner.

    Then the private equity firm can float it back to the NZX for $400m in 5 years time. As per HMY and MFB there is plenty of people that will pay a pretty penny for what their broker says is a good bet.

  12. #2352
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    Despite all the doom and gloom that sometimes follows MPG around, it's good I reckon when ya see the Chairman buying $23,000 worth of shares.

    http://nzx-prod-s7fsd7f98s.s3-websit...058/347243.pdf
    Last edited by dubya; 28-05-2021 at 01:53 PM.

  13. #2353
    Legend Balance's Avatar
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    https://www.nbr.co.nz/node/230404

    paywalled

    Sheet glass ‘race to the bottom’ complicates Metroglass turnaround

    Hints of a sheet glass price war creates opaque outlook for local producers.
    In the year to March 2021, there were a record number of new homes consented in New Zealand – some 41,028 homes, eclipsing for the first time a record set

  14. #2354
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    Quote Originally Posted by Balance View Post
    https://www.nbr.co.nz/node/230404

    paywalled

    Sheet glass ‘race to the bottom’ complicates Metroglass turnaround

    Hints of a sheet glass price war creates opaque outlook for local producers.
    In the year to March 2021, there were a record number of new homes consented in New Zealand – some 41,028 homes, eclipsing for the first time a record set

    Its a very good article but I don't think quite as negative as the headline suggests. Clearly a very competitive sector but MPG seem to be navigating it pretty well under Mander. Once they start paying a dividend at the interim...he used the words "very confident" then as debt also keeps declining the equity should keep being re-rated.

    The one point of concern medium term is you can sense there is a big capex cycle maybe in 2023-2024 as they've only spent c. $8m a year for the last 3 years as they've reduced debt. Might run into maybe a $15-20m capex year so dividends are likely to remain around 2-3cps imho, nothing like the 7.5cps they paid pre-2018.

  15. #2355
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    There is obviously a lot of concern at the high overhead structure and pressure on margins, and that is fair enough. But lets not forget that the reason MPG is where it is ( 80% down from a few years ago , when the market is up ) , because the Board ( and PE guys ) loaded the balance sheet up with debt to a dangerous level, and paid a crazy amount for an Australian business that has lost money ever since. They turned a fundamentally ok business into a cot case !!

    The latest results do show that margins have declined . But they have actually done a pretty good job of sorting the Balance sheet, and I think it is reasonable to assume that they will continue to reduce debt, albeit at a slower pace. I was disappointed by the Australian result, which failed to get over EBIT break-even. But that was very Covid affected, and was in fact an improvement on last year.

    The thing that did please me in the report, was a very clear and reasonable statement on Dividends, going forward. The market quite rightly remains skeptical , but I think that statement has been the main driver of buyer interest in MPG. Given the recent history of this company, I doubt there is a broker in the country who would even suggest having a nibble at the stock. So the reasonable level of bidding for the stock in the last couple of months is encouraging. And frankly they have had more support than I had expected. MPG is on the road back , but will need to maintain momentum and deliver solid results over the next couple of years, before the market will fully accept them back into the fold.

  16. #2356
    Speedy Az winner69's Avatar
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    This opaque glass race to the bottom at a time when building activity apparently at high levels doesn't seem to make sense

    Maybe the new competitor is struggling a bit to keep their factory and staff busy
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  17. #2357
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    Quote Originally Posted by winner69 View Post
    This opaque glass race to the bottom at a time when building activity apparently at high levels doesn't seem to make sense

    Maybe the new competitor is struggling a bit to keep their factory and staff busy
    Not a sector I follow closely, but wasn't MPG's argument that there was a long lag (6-9 months) with glass being one of the last bits of the project completed. if so, maybe their post-lockdown lift is still developing? Wasn't the new competitor in Chch, a much smaller market than Auckland?

  18. #2358
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    I think the "new" competitor is in the mighty Waikato. And yes Winner, there are a few competitors with under utilized capacity.

    Of course this is the problem with businesses that have a shallow moat around there business. There should be opportunities , given MPG's relative size, for it to develop better barriers to entry around its part of the market. It needs to be doing that now. And that is why I am relaxed about them starting to invest again in the business ( capex ) .

    They made a huge mistake buying into the crowded Australian market, when they should have been strengthening their position in NZ . But, too late to worry about that now !

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