MPG - Metro Glass

[Arbroath]

Its not really a company I follow BP but I note even with the 17% decline in SP today that puts it on a PE of 14 based on last years earnings and investors need to consider if this year's earnings will be lower, (it appears they will be slightly).

On the other hand FBU is on a historic PE of 15 and investors need to weigh up the relative outlook's of each company. Based on a quick and dirty comparison I'd say this mornings fall, (so far), appears fully warranted and quite possibly investors pain isn't finished yet by any means.

They call themselves a growth business in the NZX announcement... Hmmm...growth or cyclical ?, you folks be the judge.

I'll be blunter Roger - I think MPG is a very average business that is still overpriced and if you think avbout its across the cycle earnings is worth maybe $1.10-$1.30 a share. Not something I'd invest in because in great times for them they are not performing well enough - clearly a cyclical even if they are acquisitive and on that basis for me a PE of 10-12 is warranted at best. On 12x last years earnings they are c. $1.33 max.

[BlackPeter]

Well, at least until todays announcement - they certainly could call themselves a growth company ... just have a look at the revenue and EPS growth on 4traders http://www.4-traders.com/METRO-PERFO...72/financials/. CAGR of something like 25%;

So - they now said their growth is in line with forecasts, however the earnings are this year (as well due to one offs) not growing (and might slightly drop).

Does not sound so far like the end of the world to me, but I guess time will tell.

[winner69]

MPG just like FBU - should always be doing better (performance wise) ... especially when market conditions are going for them

And share price starting to reflect this

Pretty impressive factory if you ever get a chance to get a tour around it.

[winner69]

Catching falling knives and all that sort of stuff seems appropriate today ...

Reminds me of the glass business - can tell how long somebody has been a glazier by how many fingers they have

[Beagle]

I'll be blunter Roger - I think MPG is a very average business that is still overpriced and if you think avbout its across the cycle earnings is worth maybe $1.10-$1.30 a share. Not something I'd invest in because in great times for them they are not performing well enough - clearly a cyclical even if they are acquisitive and on that basis for me a PE of 10-12 is warranted at best. On 12x last years earnings they are c. $1.33 max.

I agree 100% (but was trying to be a bit more diplomatic for once lol). Sales are growing for sure but by my reckoning the fact of the matter is astute well managed companies make acquisitions on attractive fundamentals which are EPS accretive immediately whereas average companies can take years to achieve the economies of scale and synergies they're looking for. Comes down to the quality of management and capabilities of the team handling acquisitions. I'd give them a C- at best based on their track record to date.

[winner69]

Looking H2 performance from mid point of their guidance

Australia - $24m revenues and $4.3m normalised ebitda is in line with what they said on acquisition (maybe a bit better)


But NZ - H217 revenues up 9% on H216 (H1 was nearly 20%) but normalised ebitda down 17% - gee whiz that's a lot

Hope H2 trend doesn't carry into H118

Did these things come up in the briefing?

[winner69]

Just a temporary blip by the sounds of it

All hunky dory for the future

Great buying at today's price.

We'll look back in a years time and ask whst was all the fuss about - just like we did after the price collapsed ino the 140s just over a year ago.

They need to manage market expectations better - only beginners at that game but one would have thought Goulter would be doing better than this

http://www.sharechat.co.nz/article/3...d-guidancehtml

[BlackPeter]

Looking H2 performance from mid point of their guidance

Australia - $24m revenues and $4.3m normalised ebitda is in line with what they said on acquisition (maybe a bit better)


But NZ - H217 revenues up 9% on H216 (H1 was nearly 20%) but normalised ebitda down 17% - gee whiz that's a lot

Hope H2 trend doesn't carry into H118

Did these things come up in the briefing?

They did. Lots of analysts from all the big brokers and a number of smaller investors. Just from memory and a few notes:

Nigel Rigby (the CEO) talked a lot about problems with complexity - they introduced a number of new manufacturing machines and methods (and added printing and laminating) - and went through a learning curve seemingly a bit longer than they hoped for. He claims that these problems are now a thing of the past (but obviously impacted on the results of this FY).

They changed manufacturing to a continuous 7 day operation .. and it didn't seem to have helped to do that in the most busy time (prior to Christmas). Lots of organisational problems, but it appears now under control.

Manufacturing seemed to have had as well problems with delays of building projects (and than coming at the wrong time). Not sure, whether I heard that they so far have a solution to that problem.

All of above means higher cost - i.e. reduced margins and earnings.

One analyst question was whether he expects these higher cost to stay and move into FY18 - and the answer was that he does see the additional cost to drop.

I guess Nigel didn't come across as a great speaker - and certainly not one of these wizards who can sell you anything, but he appeared to be open, honest and it came across that he does understand the factory. I think these are the skills they need most at current.

He said as well that he sees this as the bottom: December / January are the worst months in this industry - and the teething problems in the factory seem to be now under control (what should get the margins up again).

Other things I have heard:

Margins are great (if they don't disappear into manufacturing problems) - and new building standards introduced last year gave them initially some trouble in the fab, but should give them now (that they overcame them) as well a moat compared to oversees producers.

[karlos68]

Lets look chart

Attachment 8379
Oh dear........looking like heading down

That's another "Yup"

Metro 3-2-17.png

[Beagle]

Yes from a technical perspective there was a very clear break down through the 100 day MA in mid November 2016 at $2.05 which for TA people said get out. Looking at the whole chart since the IPO in July 2014 @ $1.70 it says the market has been expecting a better performance from management who simply haven't delivered.