Auckland, New Zealand: Scott Technology (NZX:SCT) is excited to announce a NZD $12 million deal with McCain Foods, the world’s largest manufacturer of frozen potato products, to deliver its proven, automated materials handling system to the McCain, Alberta, Canada processing facility.
Auckland, New Zealand: Scott Technology (NZX:SCT) is excited to announce a NZD $12 million deal with McCain Foods, the world’s largest manufacturer of frozen potato products, to deliver its proven, automated materials handling system to the McCain, Alberta, Canada processing facility.
And 'meat and potatoes' in more ways than one. Yesterday I walked down the street. I did the same thing today. Oh and I also had lunch. But if I had a stock ticker, would I be reporting this to the stock exchange?
SNOOPY
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
Nice they have once in a while a good year. Hey - speading glitter all over the stage! I am sure they deserve it. I took them however some time ago out of my spreadsheet, which is good - it saves me from updating the data ;
Problem with them is the lumpy character of their business ... one swallow does not make a summer and things like that ;
I used to work for a quite comparable NZ company (similar size, similar technology, similar project structure, similar overseas markets, though different industry) and one thing I learned there was - if management are spreading the glitter on the stage (last page of the presentation), then next year will be the year where you better start practising to tightening the belts.
Anyway - what is their long term PE these days? Used to be (from memory) well above 20, did this improve?
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"Prediction is very difficult, especially about the future" (Niels Bohr)
BT2/ Increasing Earnings per Share (One Setback Allowed) [perspective FY2023]
Originally Posted by Snoopy
FY2017: $8.959m / 74.681m = 12.0cps
Notes NPAT normalisation calculations
FY2017: These adjustments may be found on p30,31 of AR2017. I have:
a/ Subtracted a gain on sale of property plant and equipment ($0.073m)
b/ Added back fair value losses on firm commitments, $0.001m.
c/ Subtracted foreign exchange gains ($0.269m) and unrealised fair value gains on fair value gains on foreign exchange derivatives ($0.143m) and fair value gains held as fair value hedges ($0.001m).
d/ Subtracted a fair value gain on purchase of business "DC Ross" ($0.936m).
FY2018: Most of these adjustments may be found on p33 of AR2018. I have
a/ Added back the $0.021m loss on disposal of property plant and equipment.
b/ Added back in the unrealised loss on foreign exchange derivatives, $0.271m; and losses on derivatives used as fair value hedges, $1.579m; and the unrealised fair value losses on interest rate swap contracts, $0.043m.
c/ Subtracted foreign exchange gains ($1.627m) and fair value gains on firm commitments ($1.579m).
d/ Added back $0.496m being due diligence and acquisition costs (including the $0.271m of due diligence services from the auditors)
FY2019: Most of these adjustments may be found on p39 of AR2019. I have
a/ Subtracted the gain on sale of property plant and equipment of $0.106m and $0.237m (assumed non taxable)
b/ Added back in the unrealised loss on foreign exchange derivatives, $1.334m; and fair value losses on derivatives used as hedges, $1.216m; and the unrealised fair value losses on interest rate swap contracts, $0.346m.
c/ Subtracted foreign exchange gains ($0.008m) and fair value gains on firm commitments ($1.216m) .
FY2020: This is the year in which the Covid-19 crisis struck! Most of these adjustments may be found on p5 and p36 of AR2020.
I have
a/ Subtracted the gain on sale of property plant and equipment of $0.328m (assumed non taxable)
b/ Added back $7.600m from the impairment of assets (ceased development of projects Scott dairy and automated pork processing).
c/ Added back $4.257m of restructuring impairment related to the closure of subsidiaries DC Ross Toolmakers in Dunedin and Scott Automation GmbH, the machine tools workshop arm in Germany. Since these represent complete and final closure of these businesses I am assuming no tax is recoverable
d/ Added back $6.295m of project impairments, closing out several challenging Australasian legacy projects (assumed no tax recoverable).
e/ Added back in the unrealised loss on foreign exchange derivatives, $0.082m and fair value losses on derivatives used as hedges, $0.890m.
f/ Subtracted foreign exchange gains, ($0.450m); fair value gains on firm commitments, ($1.036m); unrealised fair value gains on foreign exchange derivatives, ($0.146m) and unrealised fair value gains on interest rates swaps ($0.146m).
FY2021: Most of these adjustments may be found on p39 and p40 of AR2021.
I have
a/ Subtracted the gain on sale of property plant and equipment of $0.068m (assumed non taxable)
b/ Added back an actual foreign exchange loss of $1.706m and an unrealised fair value losses on derivatives used as hedges of $0.521m.
c/ Subtracted unrealised fair value gains on foreign exchange derivatives, ($0.132m) and unrealised fair value gains on interest rates swaps ($0.155m).
d/ Added back the amortisation of HTS 110 goodwill, now a legacy asset that has been sold, of $0.403m.
FY2022: Most of these adjustments may be found on p45 and p46 of AR2022.
I have
a/ Subtracted the gain on sale of property plant and equipment of $0.049m (assumed non taxable)
b/ Added back an actual foreign exchange loss of $1.529m and an unrealised fair value losses on derivatives used as hedges of $0.639m.
c/ Subtracted unrealised fair value gains on foreign exchange derivatives, ($0.339m) and unrealised fair value gains on interest rates swaps ($0.576m).
d/ Writing off of Robotworx goodwilll, now Robotworx is a discontinued operation, was done as a separate accounting entry, outside of the continuing operations accounts as presented. Thus no adjustment to the accounts as presented is required as a result of discontinuing Robotworx operations.
FY2023: Most of these adjustments may be found on p43 and p44 of AR2023.
I have
a/ Subtracted the gain on sale of property plant and equipment of $0.459m (assumed non taxable)
b/ Added back an actual foreign exchange loss of $1.159m and an unrealised fair value losses on derivatives used as hedges of $0.455m.
c/ Subtracted realised foreign exchange gains of ($0.845m), unrealised fair value gains on foreign exchange derivatives, ($0.362m) and unrealised fair value gains on interest rates swaps ($0.083m).
d/ Added back one off costs of $0.683m in relation to the strategic review of the company ownership structure.
Discussion: You will notice that I calculated six years of results, whereas I am meant to be considering only five. I have done this because for Scotts, I believe the FY2020 result was so unusual (Covid-19 effects related), that it would be misleading to to think of it as any part of a 'normal business cycle'. Thus I am going to 'look through' FY2020 as though it didn't happen. The one sense where I will consider FY2020 is that on normalised profit metrics the business was close to break even. So with the benefit of hindsight government support, and no doubt lots of prudent management behind the scenes, we can see that the SCT business was not put at risk of closing by Covid-19. With FY2020 excluded, and only one blip on the 'eps' growth scoreboard, the result of the second Buffett test is clear.
Conclusion: PASS TEST
SNOOPY
Last edited by Snoopy; 01-11-2023 at 08:56 AM.
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
Anyway - what is their long term PE these days? Used to be (from memory) well above 20, did this improve?
Historical long term PE on my 30th September 2023 reference date was: $3.23/$0.193=16.7
Comparable historical PEs for FY2022, FY2021, FY2019 and FY2018, again on my 30th September reference date, were 16.6, 20.1, 20.5 and 22.8. Including FY2023 gives a five year average historical PE of 19.3. (notice I have omitted FY2020 from this analysis, as I believe this Covid year is not a credible forecasting data point).
Based on yesterday's closing price of $3.67, the historical PE was $3.67/$0.193 = 19.0, or very close to the five year average. This is an indicator to me that Mr Market has got the share price 'about right'.
Six reference year reference date compounding 'eps' growth (note I am including the FY2020 Covid year in this compounding time frame) rate is:
13.4(1+g)^5=19.3 => g = 7.6%
No 'improvement' necessary?
SNOOPY
discl: holding
Last edited by Snoopy; 01-11-2023 at 09:32 AM.
Watch out for the most persistent and dangerous version of Covid-19: B.S.24/7
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Originally Posted by Sideshow Bob
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