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17-01-2020, 01:41 PM
#2021
Originally Posted by Balance
Long and wrong on this one.
Everyone holding off (including Bain & FBU) as APL is going to be providing serious competition from March this year when Stage 1 goes into operation.
Then there’s stages 2 & 3.
Try modelling a halving of margins if not more.
Yes that how I see it too, reduced margins and reduced revenue in NZ. And that for a company which has had margins reductions already sinds 2017.
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17-01-2020, 01:44 PM
#2022
Member
Waikaka. You buying in big or just $5-10k kindof stuff?
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17-01-2020, 02:40 PM
#2023
Member
Originally Posted by Leemsip
Waikaka. You buying in big or just $5-10k kindof stuff?
Small scale stuff. Just happy to accumulate MPG at these prices. Cash is by far the most significant holding in the portfolio at the moment.
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17-01-2020, 02:43 PM
#2024
Originally Posted by Leemsip
got a link to anything on APL?
http://www.aplnz.co.nz/
https://www.waterfordpress.co.nz/bus...dow-solutions/ Major expansion..more here https://www.eboss.co.nz/ebossnow/van...-supplier-2020
No question in my mind MPG margins and market share will come under very serious pressure in N.Z. and turnaround in Australia, if possible at all, will prove to be extremely difficult and slow.
Pretty sure, going off memory, some of the old hands on here that know him are not impressed with MPG's CEO's track record.
Last edited by Beagle; 17-01-2020 at 02:49 PM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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17-01-2020, 03:23 PM
#2025
Originally Posted by Beagle
Yes Beagle — APL know their windows - impressively so
Until now most of their customers have had to source their glass from outfits like Metro. Now they can offer their fabricator customers the glass component as well. No doubt many will find dealing with one supplier
Metro have been rather coy in saying public how competition might impact them ...but my contacts tell me they are scared as hell.
They’ve mentioned something like APL fabricator customers in upper NI get about $25m of glass from Metro......but their service and delivery record will lessen chances of customers moving. Metro have never mentioned margin impacts from this competitive landscape.
A case of who has heaps to gain and who has heaps to lose - all I know Metro won’t be gaining.
Last edited by winner69; 17-01-2020 at 03:36 PM.
“ At the top of every bubble, everyone is convinced it's not yet a bubble.”
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18-01-2020, 07:34 AM
#2026
The glass division of APL still needs to be commercially viable. The extra competition will undoubtedly put pressure on Metro’s turnover, but glass is a low margin product. End users are unlikely to benefit from the increased competition as much as APL itself does. Although not insignificant, over time I’m predicting the industry to somewhat absorb the extra output and Metro to pretty much bumble along as they are...
Last edited by t.rexjr; 18-01-2020 at 07:36 AM.
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18-01-2020, 09:20 AM
#2027
Originally Posted by t.rexjr
The glass division of APL still needs to be commercially viable. The extra competition will undoubtedly put pressure on Metro’s turnover, but glass is a low margin product. End users are unlikely to benefit from the increased competition as much as APL itself does. Although not insignificant, over time I’m predicting the industry to somewhat absorb the extra output and Metro to pretty much bumble along as they are...
On the contrary, MPG's gross margins had been in the vicinity of 50% - mark up of 100% in other words.
Reason why competitors have entered the supply market.
APL is building and bringing on stream the most modern and integrated plant in the Southern Hemisphere - so costs will be lower and quality will be higher.
Outlook very grim for MPG - especially with the ill fated acquisition in Australia.
As I wrote before, long and wrong - big enough to admit it but not happy.
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18-01-2020, 10:16 AM
#2028
Been a great stock to avoid over the years, its performance even worse than other stocks in the building and construction sector, STU and FBU...beggars belief that its possible to perform worse than those two
Balance, I am curious for any insights you may have on this. What on earth is going on in the construction sector such that these companies are all performing so consistently badly in the midst of a multi year building boom ?
Even looking forward, (hoping that at least one of them has learned some lessons from multiple past mistakes), dare I suggest that the prognosis for all three companies is still very grim !
Last edited by Beagle; 18-01-2020 at 10:18 AM.
Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”
Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine
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18-01-2020, 10:28 AM
#2029
Originally Posted by Beagle
Been a great stock to avoid over the years, its performance even worse than other stocks in the building and construction sector, STU and FBU...beggars belief that its possible to perform worse than those two
Balance, I am curious for any insights you may have on this. What on earth is going on in the construction sector such that these companies are all performing so consistently badly in the midst of a multi year building boom ?
Even looking forward, (hoping that at least one of them has learned some lessons from multiple past mistakes), dare I suggest that the prognosis for all three companies is still very grim !
Having bought into and exited all three companies also on the premise of this multi year building boom, am very interested in Balances opinion also. Surely it can't all be management incompetence? FBU at least should have improved quality & volume metrics based on it's new automated housing factory when ramped up for starters...
All science is either Physics or stamp collecting - Ernest Rutherford
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18-01-2020, 10:48 AM
#2030
Originally Posted by Beagle
Been a great stock to avoid over the years, its performance even worse than other stocks in the building and construction sector, STU and FBU...beggars belief that its possible to perform worse than those two
Balance, I am curious for any insights you may have on this. What on earth is going on in the construction sector such that these companies are all performing so consistently badly in the midst of a multi year building boom ?
Even looking forward, (hoping that at least one of them has learned some lessons from multiple past mistakes), dare I suggest that the prognosis for all three companies is still very grim !
My contacts in the development industry told me that the singular contributor to their dismal failure was their reward system.
In FBU, STU and a few other construction companies, senior management were rewarded on winning contracts & maintaining market share during the housing & construction boom.
It's all too easy to maintain market share by undercutting competitors by underpricing contracts and tenders.
In both cases, they were able to withstand the initial losses from the under-priced contracts due to the huge oligopolistic profits of their duopoly divisions - but as time went by, the rot surfaced and by then, it was all too late especially when costs went through the roof.
Both are lucky they have shareholders who see the underlying businesses as having value and are still very profitable, and so were prepared to pump in more capital to stabilize their financial positions.
Incidentally, FBU had been in this situation before (1990s and early 2000s) and those who were brave enough to invest then made a lot of money.
Last edited by Balance; 18-01-2020 at 10:57 AM.
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