FBU - Fletcher Building

[Valuegrowth]

Allan Gray specialises in buying shares of distressed companies / undervalued companies with the intention of holding them for several years before selling at a handsome profit. Very successful at it too.

Dear Moka
Last year I read few books on contrarian value investors. They have outperformed others buying stocks when they have temporary issues and in out of favour. I don't see any turnaround for businesses untill 2026.Cost of doing business is going to stay high in the short run. As growth stocks have extended their value I see great opportunities in value stocks. I have kept this on my radar.

[bull....]

That be turn of the century price wouldnt it?

$2 would surely be a takeover target

[Bobdn]

So many "blue chip" NZ companies doing a sort of time warp with their share price back 20 plus years.

Reminds me of the late 1980s. Makes me nostalgic. Looking at the wipe outs on the Teletext, and my net worth going up in flames, and wondering if there's a glitch with the technology somehow. Sadly, no.

[Toddy]

So many "blue chip" NZ companies doing a sort of time warp and taking their share price back 20 plus years.

Reminds me of the late 1980s. Makes me nostalgic. Looking at the wipe outs on the Teletext, and my net worth going up in flames, and wondering if there's a glitch with the technology somehow. Sadly, no.

Almost. I'm pretty sure that back then the execs salary was tied to performance.

[SailorRob]

So many "blue chip" NZ companies doing a sort of time warp with their share price back 20 plus years.

Reminds me of the late 1980s. Makes me nostalgic. Looking at the wipe outs on the Teletext, and my net worth going up in flames, and wondering if there's a glitch with the technology somehow. Sadly, no.

Good post, I am scouring the wastelands but can't see anything interesting.

FBU seems far from cheap to me and god only knows how it ever traded higher than current prices, just 100 seconds looking over the figures tells me that right away.

Revenue flat over a decade and average earnings of around 200 million, expanded their balance sheet and plenty of debt in order to produce those earnings, and people are paying 2.7 billion for it?

I would not even look seriously unless it was trading for 1.6 billion.

So at $2 a share, this business is not super cheap, just mildly interesting.

[winner69]

FBU H124 EBIT down 27% on previous year

H224 EBIT likely to be down 46% on last year

Getting worse as time goes by …and no sign of any impending great recovery in building and construction so F25 goingbto be pretty miserable as well

[Filthy]

I reckon best action would be to flick off a couple of the low performing businesses, pay down some debt, create spin-off listings for maybe civil & concrete; & create a bit of shareholder value (I remember an article a year or two ago citing that the sum of the parts worth way more than the whole) - then manage the smaller leftover business which would be easier for them to control.

[Toddy]

Good post, I am scouring the wastelands but can't see anything interesting.

FBU seems far from cheap to me and god only knows how it ever traded higher than current prices, just 100 seconds looking over the figures tells me that right away.

Revenue flat over a decade and average earnings of around 200 million, expanded their balance sheet and plenty of debt in order to produce those earnings, and people are paying 2.7 billion for it?

I would not even look seriously unless it was trading for 1.6 billion.

So at $2 a share, this business is not super cheap, just mildly interesting.

What takes the cake is buying offshore businesses, taking on long term offshore debt to do so, then failing to build on that business.
Then when FBU needed cash at the request of their banking syndicate they went cap in hand to the shareholders.
Once this was completed, FBU sold their American business, repaid the debt early with penalties, and then used any proceeds left over to pay out to shareholders.

For all of the hard work to make this happen and saving the company, FBU Treasury won an award and Management collected their bonuses.

[Toddy]

Now that we have seen an example of the new depreciation rules in play from the release of the Wellington Airport accounts (IFT), it leaves me pondering what can we expect from FBU on this front.

FBU is a complex business with property assets littered throughout their balance sheet.

Has the accounting and tax effects of the law change been incorporated into the recent FBU disclosures and forecasts.

Will we be in for another unwanted surprise?

[SailorRob]

$2 would surely be a takeover target

No serious investor would pay $2 a share.

But then again the typical take over turkeys probably would.

$2 would be ok but nothing special.