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Thread: Metro Glass IPO

  1. #2281
    One Fearsome Feline winner69's Avatar
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    Quote Originally Posted by Filthy View Post
    What you reckon then filthy?

    Exceptional or just good or disappointing?


    This a bit of a worry .... 'New Zealand operations progressively and safely ramped up through May,
    with revenue and gross profit percentage from June to September remaining broadly in line with last year'

    No catch up
    “What the wise man does in the beginning, the fool does in the end”

  2. #2282
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    Quote Originally Posted by winner69 View Post
    What you reckon then filthy?
    I think they get a pass.... no major surprises; which is good for MPG. a few more boring results like this would be great.
    ozzy business looks like its in much better shape and getting a bit of traction.
    A bit disappointed no forward guidance was given.... but reading the narrative, they seem to be cautiously optimistic don't they...

  3. #2283
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    Quote Originally Posted by Filthy View Post
    I think they get a pass.... no major surprises; which is good for MPG. a few more boring results like this would be great.
    ozzy business looks like its in much better shape and getting a bit of traction.
    A bit disappointed no forward guidance was given.... but reading the narrative, they seem to be cautiously optimistic don't they...
    Might see 90 cents next year then
    “What the wise man does in the beginning, the fool does in the end”

  4. #2284
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    Quote Originally Posted by Filthy View Post
    I think they get a pass.... no major surprises; which is good for MPG. a few more boring results like this would be great.
    ozzy business looks like its in much better shape and getting a bit of traction.
    A bit disappointed no forward guidance was given.... but reading the narrative, they seem to be cautiously optimistic don't they...
    fair summary I reckon....if they can make a FY21 npat of $11-12m then a dividend is a prospect. Debt to ebitda (pre-IFRS16) down to 1.53x today and should be around 1.3x at FY21.

    good to see Aussie is at least breakeven now after a couple of years of bleeding...imagine if it started to contribute $1-2m npat

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    I was interested to read about the sale and leaseback agreement for the vehicles. I had wondered how they had paid back a larger amount of debt than I had expected. Maybe they had announced that earlier but I might've missed it.

    Other than that nothing particularly interesting that I can see. Australia looking maybe better than I expected. NZ probably slightly worse but time will tell.

  6. #2286
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    Quote Originally Posted by mikeybycrikey View Post
    I was interested to read about the sale and leaseback agreement for the vehicles. I had wondered how they had paid back a larger amount of debt than I had expected. Maybe they had announced that earlier but I might've missed it
    yeah they mentioned it in the ann on the 14/10 - leasing a no brainer eh!
    reckon it would be nice to get debt down to about 20M

  7. #2287
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    Quote Originally Posted by mikeybycrikey View Post
    I was interested to read about the sale and leaseback agreement for the vehicles. I had wondered how they had paid back a larger amount of debt than I had expected. Maybe they had announced that earlier but I might've missed it.

    Other than that nothing particularly interesting that I can see. Australia looking maybe better than I expected. NZ probably slightly worse but time will tell.
    Agree. Sort of good they stopped the bleeding in Australia, but not bleeding anymore still does not make it a winner, at best a survivor.

    NZ sort of a worry - given that home improvement industry is currently totally flat out in NZ (even trying to get just a quote these days from many home improvement businesses is hopeless ... and I am speaking from experience), why does MPG not benefit from the money all these non travelling Kiwis are now spending for their homes? Home insulation business is booming, home renovations business is flat out. What exactly is wrong with MPG that they don't see this boom?

    I hope for them that they pull through, but if I just look at the analyst predictions, then MPG looks currently ways overvalued ... and hey, they are neither a FPH nor a MFT ...

    Obviously - analyst EPS predictions are pretty low (avg 2.3 cts over the next 3 years) ... if they just manage to double this number, then their current SP looks fair. Question is just - do they?

    Looking at their long term EPS (negative 9 cents per share over the last 10 years) am I not that optimistic. In the past they tended to generate in good years something like 5 to 11 cents per share - but every 8 to 10 years they seem to have these huge write offs basically extinguishing any profits they made in between.

    Sort of like AIR, just lower highs and more messy crashes.

    On the other hand - this time is different, isn't it?
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  8. #2288
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    Hmmm well I sold a few last week @ $0.44 and ditched the rest this morning. Have held this thing for way too long and pleased to get out with most of my fur intact. Better places for The Bears money to sit making honey. Someone will probably turn up and buy them out now that I have sold GLTH

  9. #2289
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    Quote Originally Posted by RupertBear View Post
    Hmmm well I sold a few last week @ $0.44 and ditched the rest this morning. Have held this thing for way too long and pleased to get out with most of my fur intact. Better places for The Bears money to sit making honey. Someone will probably turn up and buy them out now that I have sold GLTH
    I went to marketscreener this morning looking to see whether MPG,STU,or FBU looked worthy of further research.
    Came to the conclusion all three are serial under performers.
    ROE and ROA are extremely poor, with FBU having the best with a modest ROE of 7.53% and a ROA of just 4.55%.

  10. #2290
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    Quote Originally Posted by BlackPeter View Post
    NZ sort of a worry - given that home improvement industry is currently totally flat out in NZ (even trying to get just a quote these days from many home improvement businesses is hopeless ... and I am speaking from experience), why does MPG not benefit from the money all these non travelling Kiwis are now spending for their homes? Home insulation business is booming, home renovations business is flat out. What exactly is wrong with MPG that they don't see this boom?
    Agree 100%. I too am experiencing delays with trades and they are all talking about how busy they are. We are still seeing a boom in indoor renovations and outdoor spaces, including glass fencing. So what is the issue at MPG? They mentioned retrofit was up slightly, and I get they are withdrawing from the low margin construction work....

    Anyhoo......an analysis of their numbers:

    NZ Commercial sales -21% is part of a strategic withdrawal
    NZ Residential sales -21% is higher than just COVID losses. 4 weeks lockdown in the reporting period would account for maybe -15% YoY, but there was no bounce back, as mentioned above, and seen in other industries.
    NZ Retrofit +2% (the YoY momentum on this would be circa +20% once you take out sales lost due to lockdown, which is more like it but still lagging other industries)
    Aust residential +2.5% which is good

    NZ GP at 48.7% is down on prior half year of 52.9% and down on FY20 of 51.6%. This is not good and is likely a reflection of discounting in light of new competition.
    Aust GP at 26.3% is up on prior half year of 21.5% and up on FY 20 of 21.4%. This is good, but Aust sales are outnumbered by NZ sales by 3:1.

    Expenses fell by a lower % than the fall in sales %, before the inclusion of the COVID subsidy of $6.1m. This is to be expected given fixed costs are by their nature fixed, and shows companies such as MPG were incurring losses during the lockdown. The subsidy resulted in EBIT falling by 12% which is slightly lower than the fall in sales of 14.4% and when combined with the $951k gain on sale of the MV fleet, resulted in a respectable NPBT.

    No real reduction in interest costs in light of falling interest rates, and the $1.5m loss in the cash flow hedge reserve shows the down side of fixed interest rate policies (swings and roundabouts, win some lose some). So MPG is unlikely to see any major benefit of reduced interest rates in the short term, although reduced debt levels will help somewhat.

    Cash looks healthy, debtor days are creeping up (could be a point in time issue), and inventory looks ok but there was talk of increasing safety stock which will see stock levels increase. I have seen similar where we are importing ex Asia - shipping delays and cancellations are resulting in increased holdings of stock locally to cover unforeseen events. Liquidity looks good, net debt vs equity is looking better at 62% (down from 87%). NTA is 12.4c per share, up from 8.5c at last year end. FCF is 9.7c per share, up on prior half year of 6.2C and looking good vs FY20 of 8.5c. Although the current FCF rate cannot be maintained into 2H21 given the impending increase in stock and signalled resumption of capex.

    In summary a lot of the financial ratios and indicators are heading in the right direction. However, the two biggest issues to be resolved have the most financial impact, being the lack of growth in NZ residential sales and the lower margin on NZ sales. If these can be resolved, in conjunction with continued debt repayment, then IMO a resumption of dividends will be on the cards, if not late 2021 then 2022. However, I suspect some investment is needed in their sales team and/or strategy to fix the NZ sales and margin issue - I'm not seeing them cash in on the "support local" trend.
    Last edited by Ferg; 23-11-2020 at 12:25 PM. Reason: typos

  11. #2291
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    Quote Originally Posted by percy View Post
    I went to marketscreener this morning looking to see whether MPG,STU,or FBU looked worthy of further research.
    Came to the conclusion all three are serial under performers.
    ROE and ROA are extremely poor, with FBU having the best with a modest ROE of 7.53% and a ROA of just 4.55%.
    To be fair - analysts are not better than anybody else predicting the future and the consensus in market screener is, while entertaining not more meaningful than a throw of dice. What will provide the make or brake for these companies is how the economy (and particularly the building industry) will come along in 2021 / 2022 - and so far nobody really would know.

    What we do know is - there is likely to be demand (unless Kiwis find a reason to desert the country).

    So far the positive indicators.

    However - there are many more strong negative indicators:

    None of the three companies did well during past building booms. Probably just incompetent management and lazy boards, but hey - it does show.

    Consumer money to spend at some stage likely to run out. House prices can only rise until nobody anymore can afford them, and even the money printing must stop at some stage.

    MPG does have increased competition and is badly prepared for the future. While they optimized their processes to produce the typical custom size windows for the typical one-off Kiwi house with as many different window sizes as possible - the future will likely be in producing a small number of standardized windows sizes in mass production to suit larger apartment houses and / or standardized semi-detached houses like in the UK. Changing their production lines to the latter and competing in a low margin environment would require for MPG lots of additional investments and new know-how (potentially including framing instead of just selling glass).

    Same as STU they are generating little additional value to the raw materials they buy overseas. They are just cutting and distributing. While there always will be a need for a national distributor of building materials, the margins are likely to shrink.

    Same problem in my view for large parts of FBU. They never have been good in making money with their project work, given their stunning incompetence to plan the projects they bid on. The only reason for them to survive so far have been their outrageous margins in the building supply business (like Placemakers). This is going to change with an increase of the number of larger standardized buildings we will need to house all of our homeless people as well as future generations.

    While I don't give anymore much on market screeners forecasts ... I absolutely concur with your conclusion :
    Last edited by BlackPeter; 24-11-2020 at 07:38 AM. Reason: readability ...
    ----
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  12. #2292
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    Quote Originally Posted by Ferg View Post
    Agree 100%. I too am experiencing delays with trades and they are all talking about how busy they are. We are still seeing a boom in indoor renovations and outdoor spaces, including glass fencing. So what is the issue at MPG? They mentioned retrofit was up slightly, and I get they are withdrawing from the low margin construction work....

    Anyhoo......an analysis of their numbers:

    NZ Commercial sales -21% is part of a strategic withdrawal
    NZ Residential sales -21% is higher than just COVID losses. 4 weeks lockdown in the reporting period would account for maybe -15% YoY, but there was no bounce back, as mentioned above, and seen in other industries.
    NZ Retrofit +2% (the YoY momentum on this would be circa +20% once you take out sales lost due to lockdown, which is more like it but still lagging other industries)
    Aust residential +2.5% which is good

    NZ GP at 48.7% is down on prior half year of 52.9% and down on FY20 of 51.6%. This is not good and is likely a reflection of discounting in light of new competition.
    Aust GP at 26.3% is up on prior half year of 21.5% and up on FY 20 of 21.4%. This is good, but Aust sales are outnumbered by NZ sales by 3:1.

    Expenses fell by a lower % than the fall in sales %, before the inclusion of the COVID subsidy of $6.1m. This is to be expected given fixed costs are by their nature fixed, and shows companies such as MPG were incurring losses during the lockdown. The subsidy resulted in EBIT falling by 12% which is slightly lower than the fall in sales of 14.4% and when combined with the $951k gain on sale of the MV fleet, resulted in a respectable NPBT.

    No real reduction in interest costs in light of falling interest rates, and the $1.5m loss in the cash flow hedge reserve shows the down side of fixed interest rate policies (swings and roundabouts, win some lose some). So MPG is unlikely to see any major benefit of reduced interest rates in the short term, although reduced debt levels will help somewhat.

    Cash looks healthy, debtor days are creeping up (could be a point in time issue), and inventory looks ok but there was talk of increasing safety stock which will see stock levels increase. I have seen similar where we are importing ex Asia - shipping delays and cancellations are resulting in increased holdings of stock locally to cover unforeseen events. Liquidity looks good, net debt vs equity is looking better at 62% (down from 87%). NTA is 12.4c per share, up from 8.5c at last year end. FCF is 9.7c per share, up on prior half year of 6.2C and looking good vs FY20 of 8.5c. Although the current FCF rate cannot be maintained into 2H21 given the impending increase in stock and signalled resumption of capex.

    In summary a lot of the financial ratios and indicators are heading in the right direction. However, the two biggest issues to be resolved have the most financial impact, being the lack of growth in NZ residential sales and the lower margin on NZ sales. If these can be resolved, in conjunction with continued debt repayment, then IMO a resumption of dividends will be on the cards, if not late 2021 then 2022. However, I suspect some investment is needed in their sales team and/or strategy to fix the NZ sales and margin issue - I'm not seeing them cash in on the "support local" trend.
    Good report there ferg

    One thing is cash flows are looking more sustainable (and consistent)

    Not unexpected seeing they gradually loosening the shackles imposed on them from PE days and IPO days (high debt and a stuffed balanced dheet) and the significant capex plan has ended.

    Results should continue to look better in next year or two.

    Bit surprised though that the last 3 months of the year sales weren't stronger.
    “What the wise man does in the beginning, the fool does in the end”

  13. #2293
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    I was happy with the report and bought more. Still my largest NZ holding.

    Churned out a decent result despite COVID (I guess $6m due to govt handouts), P/E of about 7 according to my calcs, debt reduction on target. As per other posters just need a few more boring results like this which will lead to a dividend announcement.

    Happy high conviction holder and expect 50c share price in short order

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