MPG - Metro Glass

[TheHunter]

Plenty of consistently small transactions on the bid side going through - suspect large SH is still bot selling and a few panicked sellers.

Appreciate NZD may increase input cost but would assume this is passed on to the final consumer, inelastic demand once those consents are issued. Also, increases cost of ready made imported glass so makes it harder for competition.

[Beagle]

Confidence in the construction sector is waning. Business confidence is waning under the uncertainty of a cabinet with very very little business experience.
FBU also be beaten badly with the "inexperienced left wing coalition" fear stick today.
A good sector to avoid in my opinion. Classic value trap this one and FBU...really with a forecast of just 46 cps, (PE of 10 maximum for a cyclical building company at the peak of the cycle and with inept management) suggesting fair value is a long way short of the current price, holders only have their own stupidity to blame for their losses.
At least with this one trading on a PE of circa 10 holders can blame others if they get a beating from here but who can FBU shareholders blame but themselves for holding a stock with that track record in this environment on a PE of 15 ! Asking for a burning in my opinion.

[TheHunter]

MPG trading on a 1 year historical PE of 8.3 while forward looking EPS is expected to increase for FY18 going by guidance issued less than a month a go. By your own rule Mr Beagle of 10x - does this make it undervalued?

Very, very different to FBU - wouldn't touch FBU with an extra large pole at its current price.

[JeremyALD]

Confidence in the construction sector is waning. Business confidence is waning under the uncertainty of a cabinet with very very little business experience.
FBU also be beaten badly with the "inexperienced left wing coalition" fear stick today.
A good sector to avoid in my opinion. Classic value trap this one and FBU...really with a forecast of just 46 cps, (PE of 10 maximum for a cyclical building company at the peak of the cycle and with inept management) suggesting fair value is a long way short of the current price, holders only have their own stupidity to blame for their losses.
At least with this one trading on a PE of circa 10 holders can blame others if they get a beating from here but who can FBU shareholders blame but themselves for holding a stock with that track record in this environment on a PE of 15 ! Asking for a burning in my opinion.

I agree with FBU Beagle but you've got to think with MPG the current share price factors in a very negative view of the company and its future prospects. Afterall at the rate it's going a sub 160m market cap is on the cards, especially after it's pay out 7cps of dividends this financial year.

[t.rexjr]

https://www.nzgeo.com/stories/looking-into-glass/

Says here that NZ does manufacture glass and even export some!

Not since 1991. Now a supermarket/shopping mall

[TheHunter]

Not since 1991. Now a supermarket/shopping mall

This post is completely irrelevant to your comment, it is purely so I have 1 more post than you on share-trader

[Beagle]

MPG trading on a 1 year historical PE of 8.3 while forward looking EPS is expected to increase for FY18 going by guidance issued less than a month a go. By your own rule Mr Beagle of 10x - does this make it undervalued?

Very, very different to FBU - wouldn't touch FBU with an extra large pole at its current price.

I sold recently cum election result at about $1.00 if my memory serves me correctly. The game changer now is the inexperienced left leaning coalition Govt and its impact on business and consumer confidence. Cyclical companies should trade at an average PE of 10 across the economic cycle. At the peak they should be about 7 and at the trough something like 13. With the cost of the wide ranging external review of the company and everything it does being booked into this years profit and loss account I see them struggling to make 10 cps this year. I think the real current PE is more like 9.5 at the current price of 95 cents.
I think there is downside potential possibly as low as 70 cps. (7 x 10 cps) Upside possibility remains too but I think downside risks exceed potential upside rewards at least in the short term.

Who can reliably say what effect this new political environment will have on business and consumer confidence at this stage ? I think the risk is pretty heavily skewed to the downside. That's my fundamental and pit of the gut assessment and of course then there's the technical analysis. This has been in a clear downtrend now and hasn't managed to break above the 30 day MA despite a couple of brushes up against that indicator.

I think prudent risk averse investors will wait for a clear break up through the 30 day MA line before reconsidering a meaningful position in this one. (That's what I am doing) FBU riddled with so many flea's there isn't enough flea powder in the entire country...you'd have to have rocks in your head to be invested in them but this one not so much but still looks like a classic value trap to me. It looks cheap but for a reason and that reason is the new left wing socialist experiment. Too early to say how that play's itself out but good luck to holders and I hope the new left wing don't inflict too much damage.

[TheHunter]

Fair points, but disagree with 10cps - given expected capex benefits from FY19 and directors/ceo buying reflecting confidence in recovering margin. Sales remain strong and growing, consents at record levels & NZ still needs more houses.

CEO better sort out the supply/demand planning issue, if margins are able to recover to historic levels or even close too at these revenue numbers, things will be very honky dory and EPS will exceed 12cps.

[Beagle]

You've misunderstood me mate. I haven't made a prediction on 2019 earnings. To be clear I am saying that I see the potential for the PE to fall as far as 7 on the current year earnings of ~ 10 cps resulting in 70 cps if business and consumer confidence fall off the face of a cliff... Not saying its definitely going to happen but I do see the potential for it too happen.

Too early to try and second guess FY19 earnings at this stage but I would suggest you'd be wise to factor in a multi million dollar restructuring charge into FY19 earnings as a result of the current comprehensive review which itself could potentially run to be a seven figure sum, (knowing a little bit about how professionals like to charge)

[winner69]

And don’t forget these new houses Labour are going build to overcome a housing shortage that doesn’t actually exist is going to need millions of windows

And in metro’s own words windows mean glass