MPG - Metro Glass

[Beagle]

I didn't have time to go today but if I had of I would certainly loved to have joined in the pack attack on the CEO and directors.

[winner69]

Agreed, if you look at it from that perspective - than the overall flatness is a bit of a worry. Sort of wondering whether the FBU sickness might have anything to do with that?

Presumably all the delayed FBU projects require as well windows. And from memory - last year many of their problems have been caused by orders being called much later than originally expected (and planned). Now - we all know that the next lot of big FBU projects is again well above budget but behind deadline ... that's something which can kill subcontractors who need to provide the capacity when planned but are only allowed to deliver (and nine months later paid) when their service is called.

Maybe the NZ building industry is still sicker than we thought.

If Fletchers are tied to fixed price contracts (reportedly so) wonder if the sub-contractor trades are as well?

[Elles]

If Fletchers are tied to fixed price contracts (reportedly so) wonder if the sub-contractor trades are as well?

If they were Fletchers might not be in as much trouble! Probably wouldn't affect MPG much anyway as the amount and type of glass is not going to change if there are delays or issues elsewhere in the build.

[winner69]

It's a bit disappointing given their investor day wasn't long ago and everything was sounding rather postive at that point. What's changed?

Metro have a habit of being positive and saying hints all honky dory ........and then coming out a little later and disappointing the market (not delivering on the hype)

they met IPO forecasts first time around (surprise eh) but profits have fallen short of guidance / expectations they set ever since.

Wearing a bit thin I feel

Maybe $20m profit is their lot in life

[BlackPeter]

A building boom on and NZ companies are serial non-performers.
A sector to avoid.
CAV,FBU,MVN,STU,MGL....and MPG.!

Fair point - lots of soft numbers currently coming out of this sector.

However - if we look at the bigger picture the question might be - when is a good time to buy? When shares are high and the industry is booming - or better when the SP is low and lots of demand on the radar?

Obviously - if we assume that the lacklustre performance of basically all building companies continues despite an increasing housing shortage, than yes - you are right - AVOID. This assumes however that executives in the building sector are all stupid overpaid idiots who are not able to learn from past mistakes. While I agree that this description is probably fair for some of the CEO's I've seen, I don't think it applies to all of them.

And while I see some structural issues with a number of the companies you mentioned would I think that MPG is mid term still quite well positioned. They do serve an industry which demands short lead times for their product, and their product is expensive to transport (i.e. they have a significant advantage to competitors sitting in China or anywhere else in the world), they recently geared their factories up and have now modern efficient equipment and they are learning how to use it.

The other thing is - what are the risks? Even if MPG turns out to be a serial underperformer (what I don't expect), than they pay at current SP (1.24) still an 8 cents dividend with an EPS of 10 to 11 cents. This means - worst case they do a MVN on us .... and while I separated myself some time ago from my beloved MVN holding, I didn't do that at a time the SP was at an absolute low, but when it was in the upper regions. So - why selling MPG now?

On the other hand - lets assume not all new New Zealanders want to live under the bridge and the industry learns at some stage to work with the lumpiness of the business - just add a bit of ongoing EPS growth into the mix and the rewards look quite attractive ...

On the balance of risks to rewards would I still think that MPG has much more chances to shine in some years than to further go down the gurgler.

I thought that around 130 was great buying ... and I think the current share price is still more attractive (not just for long term investors). But hey - this is just my view, DYOR.

[percy]

Years ago I was a toy retailer.
One Christmas a year.
Worked 50 weeks of the year for everyone else.Two weeks for me.
Tended to focuss my attention.
Selling books to schools you have to go like the clappers in the first term when schools have money.
If the companies in this sector can't make profits when they have had months/years of Christmas then why bother with them.
Businesses in sectors such as retirement,health,banking,finance and tourism are worth investing in, as their eps growth,strong cashflows, fund further eps accretive acquisitions,which in turn lets companies pay increasing dividends.
OK maybe,just maybe one of the dead ducks in this sector may increase their profit one year,but steady year upon year growth is beyond them.Avoid the sector.
MPG talks the talk,but that is the best they can do.They do not do what they say they will do.Lack credibility.

[horus1]

great comments and how true.

[Beagle]

I think the current price fully factors in the disappointment yesterday. Management need to prove they can stabilize EPS in FY18 and look to grow it in FY19 for the SP to make meaningful headway.

[Fatboyj]

But realistically for this to happen sir JG needs to go? Being a recent shareholder, and reading Bryon Gaynors herald article(and still buying shares!) I'm surprised only a minority wanted him out.

[BlackPeter]

But realistically for this to happen sir JG needs to go? Being a recent shareholder, and reading Bryon Gaynors herald article(and still buying shares!) I'm surprised only a minority wanted him out.

Actually - the roughly 30% against (subject to the final results) are a huge slap into his face, given that directors typically get in with 98 or 99% approval ratings.

It is an unfortunate feature of our system that many shareholders give their proxy to the chair (and guess, how he will vote) and many other share holders just don't bother to vote at all (including some of the funds).

How do the say: bad directors are elected by good people who don't vote ...

Independent of Sir John's fate - it is not unheard of to see companies with underperforming boards (or chairs) to have good days as well .... it is just a bit harder for them (and less likely to continue in the long run).