MPG - Metro Glass

[Filthy]

After unsuccesfully trying to push the sell button on my holdings 3 times (I was interupted twice and I chickened out the third time) I decided it wasnt meant to be so I bought a few more at $0.38 instead ...time will tell if averaging down was was a big mistake...

whats your avge now just out of curiosity?

[forest]

The full eps needs to be applied to debt reduction though. In that context any valuation multiple needs to take into account the debt. EBIT to enterprise value of 165/28 = 6 may be an appropriate measure. That ratio seems very appealing if there wasn't a new entrant about to stake a claim to half of metros market share.

James I think the new entrance might take a claim to up to 50% of the NZ residential glass not 50% of MPG total revenue of $268m.
Total NZ residential glass $100m, MPG potential loss $50m.
Remember there are more revenue stream, commercial glass, special glass and Australia.
2018 total $268m revenue, a loss of $50m a material amount but less than 20% of total revenue.

[James108]

I think you are quite right.

I can't recall seeing any figures on this but unfortunately I think residential is the most profitable part of their business (except retrofit?). Certainly Australia isn't and I recall they had trouble with their commercial contracts recently.

[Beagle]

James I think the new entrance might take a claim to up to 50% of the NZ residential glass not 50% of MPG total revenue of $268m.
Total NZ residential glass $100m, MPG potential loss $50m.
Remember there are more revenue stream, commercial glass, special glass and Australia.
2018 total $268m revenue, a loss of $50m a material amount but less than 20% of total revenue.

Its important for the young ones to understand that if your assumption is correct this implies more than a 20% reduction in profitability as economies of scale in the manufacturing process and overhead structure are lost.

[Arbroath]

James I think the new entrance might take a claim to up to 50% of the NZ residential glass not 50% of MPG total revenue of $268m.
Total NZ residential glass $100m, MPG potential loss $50m.
Remember there are more revenue stream, commercial glass, special glass and Australia.
2018 total $268m revenue, a loss of $50m a material amount but less than 20% of total revenue.

NZ residential is c. $145m and APL are c. $50m of that revenue I think. The thing is APL supply the aluminium to owner operators with around 70% of the glass going in being Metro supplied.
That will clearly drop quite a bit but given logistics of all these fragmented owner-operators and that they make their own decisions its not clear how much. My gut feeling only is that Metro might lose $25-30m of revenue but the bigger issue will be pricing pressures and who responds best to the changed environment. Don't forget Metro have 55-60% NZ market share so if anyone can cope it "should" be them.

Be interesting to see the valuation multiples implied by the impending sale of Viridian which I believe performs much worse than Metro.

[RupertBear]

whats your avge now just out of curiosity?

$0.70 .... gonna be a long slow haul to get back up to that, if indeed it ever does...

[winner69]

NZ residential is c. $145m and APL are c. $50m of that revenue I think. The thing is APL supply the aluminium to owner operators with around 70% of the glass going in being Metro supplied.
That will clearly drop quite a bit but given logistics of all these fragmented owner-operators and that they make their own decisions its not clear how much. My gut feeling only is that Metro might lose $25-30m of revenue but the bigger issue will be pricing pressures and who responds best to the changed environment. Don't forget Metro have 55-60% NZ market share so if anyone can cope it "should" be them.

Be interesting to see the valuation multiples implied by the impending sale of Viridian which I believe performs much worse than Metro.

Viridian pretty useless on most counts. Year to March 17 made $0.8m on $96m revenues

Not very good eh ..that’s why CSR trying to hock them off....just can’t compete with market leader.

[winner69]

Its important for the young ones to understand that if your assumption is correct this implies more than a 20% reduction in profitability as economies of scale in the manufacturing process and overhead structure are lost.

Probably more than 20% reduction in profitability

Lose $50m sales in NZ means Gross Margin down $25m ....other variable expenses say $5m and unless cuts are made elsewhere that means $20m less profit. Ouch ....that’s all their current profit gone.

On $25m lost sales maybe $10m less profit. Ouch ...that most of current profit gone.

But Metro a pretty resilient and there’s no quarantee that ATL will be successful ....and then Viridian might just disappear or downsize giving heaps of work to Metro (the opportunity they mentioned)

[Beagle]

Viridian pretty useless on most counts. Year to March 17 made $0.8m on $96m revenues

Not very good eh ..that’s why CSR trying to hock them off....just can’t compete with market leader.

If MPG directors hadn't gone on a reckless debt fueled goose chase across the tasman they'd be well positioned to buy this company on the cheap.

[Beagle]

Probably more than 20% reduction in profitability

Lose $50m sales in NZ means Gross Margin down $25m ....other variable expenses say $5m and unless cuts are made elsewhere that means $20m less profit. Ouch ....that’s all their current profit gone.

On $25m lost sales maybe $10m less profit. Ouch ...that most of current profit gone.

But Metro a pretty resilient and there’s no quarantee that ATL will be successful ....and then Viridian might just disappear or downsize giving heaps of work to Metro (the opportunity they mentioned)

That's why I think this is a SELL ! I simply don't believe the new CEO or the board know how to cut their cloth to suit the changing competitive environment. Why ? Simply because of all the lies, half truth's and creative corporate B.S. they have told shareholders since this listed. Does a tiger change its stripes or a leopard change its spots ?...oh hang on a minute...sometimes they do lol