MPG - Metro Glass

[BlackPeter]

Whatever it is - director Peter Griffiths buying some more shares ($50k worth):

https://www.nzx.com/files/attachments/259381.pdf

[winner69]

Relevant to recent discussions.

House building stalls
http://tonyalexander.co.nz/wp-content/uploads/2017/06/WO-June-1-2017.pdf

[BlackPeter]

Had another look at the building consents issued over time - and there appears to be some annual cycle:

A low in December / January (makes sense - holidays)
A smaller high in February / May (catching up after the holiday period?)
A low in June (I reckon builders are too busy to finish the projects they promised to finish before winter to help with planning tasks)
A high from July to November (bad weather motivates builders to look after new clients instead of finishing building projects)?

This means - I expect May and more so June numbers not looking too flash, but from July the building permits should go up again.

Coincidently - this annual cycle appears to be correlated with MPG's annual SP cycle. Just an accident?

[winner69]

Had another look at the building consents issued over time - and there appears to be some annual cycle:

A low in November / December / January (makes sense - holidays)
A smaller high in February / March (catching up after the holiday period?)
A low in April / May (I reckon builders are too busy to finish the projects they promised to finish before winter to help with planning tasks)
A high from June to October (bad weather motivates builders to look after new clients instead of finishing building projects)?

This means - I expect May numbers not looking too flash, but from June the building permits should go up again.

Coincidently - this annual cycle appears to be correlated with MPG's annual SP cycle. Just an accident?

Monthly numbers are pretty volatile - better to look at the seasonally adjusted series (at least smoothed out a bit) or even the trend series

Still reckon that annual rate of change numbers give a better idea where things are heading.

The chart on Page 4 of the latest preso shows the relationship between consents and Metro sales
https://www.nzx.com/files/attachments/258863.pdf

If consents have 'peaked' around 30,000 then MPG revenues might not grow as fast as expected in 2018 (allowing for the lag)

[BlackPeter]

... they are, but it is still possible to see patterns. However - somewhat contradicting myself ;): I added the data from some more years to my stats and the shape slightly changed (just moving the windows a bit around and flattening the first peak). I modified subsequently my post above (it appears - too late, you responded already to the first one).

But why describing it anyway with many words - here is the graph:
8882

Building Permits (x-axis) are average number of permits in the relevant month over all months in above time window and are dwellings including apartments.

And of course - this seasonal variation is overlain by the annual trend

[winner69]

BP -you said ".Coincidently - this annual cycle appears to be correlated with MPG's annual SP cycle. Just an accident?"

You should overlay the 'cyclical' nature of the MPG share price to see what it looks like

[BlackPeter]

BP -you said ".Coincidently - this annual cycle appears to be correlated with MPG's annual SP cycle. Just an accident?"

You should overlay the 'cyclical' nature of the MPG share price to see what it looks like

Are you sure?

Thanks for responding to my rhetorical question ;). They do correlate .... however, given that MPG is only listed for 3 years or so and influenced as well by other things than the annual building consent cycle, are the data points so far not really statistically relevant. Anyway - DYOR.

[winner69]

Are you sure?

Thanks for responding to my rhetorical question ;). They do correlate .... however, given that MPG is only listed for 3 years or so and influenced as well by other things than the annual building consent cycle, are the data points so far not really statistically relevant. Anyway - DYOR.

Still not sure what you are trying to show - was it if consents go up in May (after a bad April) the MPG share price will go up or something alonmg those lines

That chart on Page 4 of latest presentation is interesting - it shows the relationship between consents lagged 9 months.

If we use the December consents figure 0f 30,066 then we should expect MPG annual NZ enues to be about $220m - an increase of $6.2m since March which implies H1 revenues of $117.9m which is an increase of 5.5% on H1 last year.

Would this keep the market happy? Of course they still have a few extra months of Aussie sales to add to growth could hide a slowing down in revenue growth in NZ

Interestingly the title of that chart has changed since the previous presentation. Six months ago they said -

' NZ revenue remains aligned to 9 month lagged NZ housing consents –but the relationship is continuing to diverge over time as Metro Glass’ mix includes an increasing proportion of commercial and Retrofit revenue'


Wonder they left the bit in red off this time around

[winner69]

H118 looking OK and will bea solid result .....enough to drive share price to 160/170

But I'd be watching the chart closely from November onwards .....probably squiggly line will. Ten start to head downwards

[BlackPeter]

Still not sure what you are trying to show - was it if consents go up in May (after a bad April) the MPG share price will go up or something alonmg those lines


Apologies - appear to be not so easy to communicate the things one have in one's head ...

I did above analysis to get some feeling for seasonal changes in building permits and whether (and how) they correlate to the MPG share price.

At this stage I think (based on limited data) that the SP is more correlated with the announcement of the building consents (i.e. 1 to 2 months after the consent) than with the actual business (9 months after the consent). What this means in practical terms is that based on this observation I expect the MPG share price to be soft for another roughly 2 to 3 months (give or take some weeks) and then, assuming consents increase again in July (i.e. announced early September) I expect it to go up culminating around the November HY report.

What happens after November should be then dependant on whether they manage to get their new gear (and with that margins) under control - and what happens during the next big installation phase of new equipment over Christmas.

Clear as mud?

[winner69]

Consents might be one thing but actual activity is interesting

From Stats NZ this doesn't read too good for building related companies


Total building activity fell in both volume and value terms in the March 2017 quarter, compared with the December 2016 quarter, Stats NZ said today. The volatile non-residential building work series led the volume fall, decreasing a seasonally adjusted 7.2 percent, while residential building work decreased 0.8 percent.

[BlackPeter]

Consents might be one thing but actual activity is interesting

From Stats NZ this doesn't read too good for building related companies


Total building activity fell in both volume and value terms in the March 2017 quarter, compared with the December 2016 quarter, Stats NZ said today. The volatile non-residential building work series led the volume fall, decreasing a seasonally adjusted 7.2 percent, while residential building work decreased 0.8 percent.

Well, I don't know - maybe we are all doomed. While decreased building activity in the first quarter of a year makes a lot of sense (holidays) -
turning this into a trend in my view makes not.

As well - how come retirement villages (e.g. at the SUM AGM) are complaining about stretched resources in the building industry if the same industry trends downwards? Does not compute.

Ah yes - and Auckland house prices are rising again: http://www.sharechat.co.nz/article/81465457/auckland-average-house-price-rises-2-8-in-may-from-april-as-sales-listings-rise.html - this will get building activities up.

They haven't yet found a way to make more land ... and to create more space to live in on this land, they must build (or move more people into cars and tents ...). Given that the NZ population is growing and will keep growing (even if we move immigration to Zero) just due to Kiwis returning, we will need new houses.

Call me an optimist - but if there is really a dip I see it only as very temporary. Just noticed National home building policy - 34,000 over 10 years:

https://www.interest.co.nz/property/87743/national-build-34000-houses-auckland-over-next-decade-land-currently-8300-state-homes;

[JeremyALD]

Well, I don't know - maybe we are all doomed. While decreased building activity in the first quarter of a year makes a lot of sense (holidays) -
turning this into a trend in my view makes not.

As well - how come retirement villages (e.g. at the SUM AGM) are complaining about stretched resources in the building industry if the same industry trends downwards? Does not compute.

Ah yes - and Auckland house prices are rising again: http://www.sharechat.co.nz/article/81465457/auckland-average-house-price-rises-2-8-in-may-from-april-as-sales-listings-rise.html - this will get building activities up.

They haven't yet found a way to make more land ... and to create more space to live in on this land, they must build (or move more people into cars and tents ...). Given that the NZ population is growing and will keep growing (even if we move immigration to Zero) just due to Kiwis returning, we will need new houses.

Call me an optimist - but if there is really a dip I see it only as very temporary. Just noticed National home building policy - 34,000 over 10 years:

https://www.interest.co.nz/property/87743/national-build-34000-houses-auckland-over-next-decade-land-currently-8300-state-homes;

Bar a recession construction activity will be very strong in the next ten years. I don't know really know how this could be debated with the current housing crisis we're in so agree with you BP. Have a look at Hobsonville Point. There are some huge developments going on in NZ that are about 5 years away from completion. There are not enough builders to keep up

[winner69]

Well, I don't know - maybe we are all doomed. While decreased building activity in the first quarter of a year makes a lot of sense (holidays) -
turning this into a trend in my view makes not.

As well - how come retirement villages (e.g. at the SUM AGM) are complaining about stretched resources in the building industry if the same industry trends downwards? Does not compute.

Ah yes - and Auckland house prices are rising again: http://www.sharechat.co.nz/article/81465457/auckland-average-house-price-rises-2-8-in-may-from-april-as-sales-listings-rise.html - this will get building activities up.

They haven't yet found a way to make more land ... and to create more space to live in on this land, they must build (or move more people into cars and tents ...). Given that the NZ population is growing and will keep growing (even if we move immigration to Zero) just due to Kiwis returning, we will need new houses.

Call me an optimist - but if there is really a dip I see it only as very temporary. Just noticed National home building policy - 34,000 over 10 years:

https://www.interest.co.nz/property/87743/national-build-34000-houses-auckland-over-next-decade-land-currently-8300-state-homes;

The building activity report numbers werer seasonally adjusted so allows for the quieter period of the year.

Yep Nztional and theie 34,000 houses - whose kidding who but we better discuss that on another thread methinks. Be good for MPG if it is actually more than pre-election talk

[winner69]

BP - the joys of seasonally adjsuted numbers - activity March qtr down on Dec qtr as reported

I prefer looking at actual numbers compared to same quarter a year ago - residential UP 14% and Nonresidential UP 5% making total activity up 11%

Pretty good eh

[BlackPeter]

Interesting - healthy volume (nearly a million shares changing hand) and finishing on 138. Spring coming early this year?

[winner69]

MPG struggling to get out of the mid 130's

Probably here for some time

[BlackPeter]

MPG struggling to get out of the mid 130's

Probably here for some time

If history is a guide - MPG moved so far every year sometimes between July and October into an uptrend. Just look at the charts, quite cyclical stock. I don't see why this year should be different, but obviously don't know whether this years "spring run" will start next month or a couple of months later.

They say "patience is a virtue" ...

[winner69]

You saying MPG share price is 'cyclical' and has some seasonal attributes intrigued me ....so I had a look

Below is MPG shareprice over the year for 2015 / 2016 and so far 2017

You focus on the July/Oct period.

I hope that it follows the 2016 line rather than the 2015. My conclusion not much seasonality (over two years anyway) for MPG share price

Casual observation is that the share price ends the year about where it was in June

Thanks for piquing my interest

[BlackPeter]

You saying MPG share price is 'cyclical' and has some seasonal attributes intrigued me ....so I had a look

Below is MPG shareprice over the year for 2015 / 2016 and so far 2017

You focus on the July/Oct period.

I hope that it follows the 2016 line rather than the 2015. My conclusion not much seasonality (over two years anyway) for MPG share price

Casual observation is that the share price ends the year about where it was in June

Thanks for piquing my interest

winner, have another look. Your window is too small. I said the uptrend starts somewhere between July and October, NOT that it completes during this timeframe.

The 2015 uptrend only started in October and finished in December. Just to make the lot full - there are as well 2014 numbers (uptrend September to November) ...

MPG spring uptrends:
2014 September (174) to November (200)
2015 October (130) to December (172) - and it continued after a short dip through to February
2016 June (170) to September (225) - and it stayed through to early December on this level

All data taken from the trend chart (i.e. give or take a couple of days / cents)

... and consistent with the seasonal uptake of building permits during this time (you might remember this discussion).

[t.rexjr]

winner, have another look. Your window is too small. I said the uptrend starts somewhere between July and October, NOT that it completes during this timeframe.

The 2015 uptrend only started in October and finished in December. Just to make the lot full - there are as well 2014 numbers (uptrend September to November) ...

MPG spring uptrends:
2014 September (174) to November (200)
2015 October (130) to December (172) - and it continued after a short dip through to February
2016 June (170) to September (225) - and it stayed through to early December on this level

All data taken from the trend chart (i.e. give or take a couple of days / cents)

... and consistent with the seasonal uptake of building permits during this time (you might remember this discussion).

Maybe my glasses are foggy but w69s chart (to me) demonstrates a lack of trend.

The platue and down trend since the 40% deposit scenario for investors was tabled may have jinxed the theory...

[winner69]

winner, have another look. Your window is too small. I said the uptrend starts somewhere between July and October, NOT that it completes during this timeframe.

The 2015 uptrend only started in October and finished in December. Just to make the lot full - there are as well 2014 numbers (uptrend September to November) ...

MPG spring uptrends:
2014 September (174) to November (200)
2015 October (130) to December (172) - and it continued after a short dip through to February
2016 June (170) to September (225) - and it stayed through to early December on this level

All data taken from the trend chart (i.e. give or take a couple of days / cents)

... and consistent with the seasonal uptake of building permits during this time (you might remember this discussion).

Sorry for not reading your post properly - my bad

I think we talk to different purposes anyway, Maybe we can agree that the MPG has some cyclical attributes with a random seasonal overlay.

I think the start of the up trends you mentioned are more of MPG / market doing than perceived seasonal impacts of building consents. The 2015 up trend started after a please explain and about the time of the AGM which may have given punters some comfort while the 2016 up trend started post annual results which weren't too bad.

Anyway interesting to see where the share price goes from here ...one thing though it seems mid 130s is about as it will go but question is how high might it go over time.

[winner69]

Maybe my glasses are foggy but w69s chart (to me) demonstrates a lack of trend.

The platue and down trend since the 40% deposit scenario for investors was tabled may have jinxed the theory...

Yes that 40% deposit for investors and general bank lending has put a brake on consents as well as house sales numbers

Punters looking to non bank options for finance eh but question is can they fill the void.

[winner69]

Maybe my glasses are foggy but w69s chart (to me) demonstrates a lack of trend.

The platue and down trend since the 40% deposit scenario for investors was tabled may have jinxed the theory...

That 40% has stalled the property market

What happened when tax changes re property were introduced in 2010 might happen again - consents and house sales took a dive the following year ....as per chart below

As such consents might be weak for the rest of this year and early 2018 (not so good for MPG in the short term)

[BlackPeter]

Fair point. This is a risk and certainly one of the factors overlaying the annual cycle. Just curious how the government will deal with a dropping build rate (already now ways below where we would need it) in times of a housing crisis.

However - this is a discussion for a different thread.

[Beagle]

Still trades cum a 4 cent dividend until Wednesday 5 July next week. Dividend hounds might be considering their position in the queue :)
Disc: Doubled down at $1.35 last Friday.

[Oliver Mander]

...and it hits $1.40.
Perhaps some dividend seekers trying to get in before the ex div date...?

[hardt]

MPG hasn't been around long enough, personally I would not use the last 2 years of price movements ( great macros behind building sector to gain immense earnings growth ) as a base for predicting how the coming year plays out with the current uncertainty around the industry.

I would buy in the 120s again, would like a damn forecast though.

Not held anymore, got out on results day.

[BlackPeter]

MPG hasn't been around long enough, personally I would not use the last 2 years of price movements ( great macros behind building sector to gain immense earnings growth ) as a base for predicting how the coming year plays out with the current uncertainty around the industry.

I would buy in the 120s again, would like a damn forecast though.

Not held anymore, got out on results day.

Agree - looking just 2 years back would be a bit thin. However if you go 6 years back (basically to the start of their pro forma reports for their listing), than they have today a (6yr) CAGR of 13.5% ... and if you add the forward predictions the (9yr-) CAGR is still above 10.5%. Backward PE (the same 6 years back) is 18 - and forward PE 10.7; Looks like a solidly growing company in an industry with lots of potential to me ... but each to their own.

[janner]

Agree .. Each to their own.. Not performing.. Selling.

At a premium of course..

[janner]

Yes... Each to their own.. .. Out !!! And what does that mean !!!...

At a premium of course.. :-)) Made a few Bucks.. ..

DYOR..

[BlackPeter]

Yes... Each to their own.. .. Out !!! And what does that mean !!!...

At a premium of course.. :-)) Made a few Bucks.. ..

DYOR..

LOL - too much vodka? Who knows what the Ukrainians put into your drinks ...

BTW - latest building stats is out and actually -- it is pointing up earlier in the year than I thought.


In May 2017, building consents were issued for 2,794 new dwellings:

2,039 houses
495 townhouses, flats, and units
137 retirement village units
123 apartments.
The seasonally adjusted number of new dwellings consented rose 7.0 percent.

The trend for the number of new dwellings consented is increasing. It reached a 12-year high in mid-2016, but decreased towards the end of the year.

In the year ended May 2017, 30,645 new dwellings were consented – up 8.0 percent from the May 2016 year.


http://www.stats.govt.nz/browse_for_stats/industry_sectors/Construction/BuildingConsentsIssued_HOTPMay17.aspx

Given that at least in New Zealand all houses get nicely double glazed windows - this must be good for the company with more than 50% market share ... :t_up:

[t.rexjr]

Agree - looking just 2 years back would be a bit thin. However if you go 6 years back (basically to the start of their pro forma reports for their listing), than they have today a (6yr) CAGR of 13.5% ... and if you add the forward predictions the (9yr-) CAGR is still above 10.5%. Backward PE (the same 6 years back) is 18 - and forward PE 10.7; Looks like a solidly growing company in an industry with lots of potential to me ... but each to their own.

I'm yet to be convinced this is a growth company. Sure it has seen growth from 2007 where double glazing became more or less compulsory and the building sector dragged itself out of the doldrums. Consents peaked last year but the industry can't sustain those peaks. There may be a small benefit from the latest safety glass requirements but this isn't growth. It's a cyclical business that should be a good dividend payer in the good times. Without further acquisitions and diversification where is the growth going to come from?

[winner69]

LOL - too much vodka? Who knows what the Ukrainians put into your drinks ...

BTW - latest building stats is out and actually -- it is pointing up earlier in the year than I thought.



http://www.stats.govt.nz/browse_for_stats/industry_sectors/Construction/BuildingConsentsIssued_HOTPMay17.aspx

Given that at least in New Zealand all houses get nicely double glazed windows - this must be good for the company with more than 50% market share ... :t_up:


did it fit with your seasonality model?

Good consnets holding up just over 30,000 pa but growth in numbers slowing and as some say is this number about the max NZ can handle?

Nonetheless no excuse for MPG not to do better this year and early next year

[winner69]

BP - looking forward (considering the 9 month lag MPG talk about) what does the darker line looking bit flat mean

[BlackPeter]

did it fit with your seasonality model?



... as indicated - at this stage it looks like an early spring. Growth started roughly one to two months earlier than what the model would have predicted. so far it was normally June being the low point ... and so far (unless the June numbers turn South again) it looks like April was already the local minimum. We shall see ...

[BlackPeter]

BP - looking forward (considering the 9 month lag MPG talk about) what does the darker line looking bit flat mean

So far it feels that the SP is closer correlated to the orders predicted (based on building consents) than to the number of windows manufactured in any particular month. Makes sense to me - the markets are looking ahead ...

[BlackPeter]

I'm yet to be convinced this is a growth company. Sure it has seen growth from 2007 where double glazing became more or less compulsory and the building sector dragged itself out of the doldrums. Consents peaked last year but the industry can't sustain those peaks. There may be a small benefit from the latest safety glass requirements but this isn't growth. It's a cyclical business that should be a good dividend payer in the good times. Without further acquisitions and diversification where is the growth going to come from?

Where is the growth coming from? Lets see ...


There is still a shocking number of single glazed houses in NZ. Power prices go up. Rentals might be more difficult to rent out when full disclosure is enforced (I never would rent an apartment with single glazing anyway);
The number of building permits is still rising - every year since 2008 and the housing shortage keeps increasing. New homes need new windows;
actually - there is even some hedging if the market dips: in this case buildings with double glazing will sell so much better than the single glazed junk still on offer today. In a buyers market many sellers are likely to double glaze their houses - just to distinguish their listing from the rest ...
glass does not burn ... maybe another good reason to use lots of glass in high rises instead of combustible cladding (like the Brits seem to do).
modern industrial and commercial buildings use lots of speciality glass - have a look e.g. at the new buildings in Christchurch. Still lots of empty building sites waiting to be filled with further examples of "glass architecture"

[t.rexjr]

Where is the growth coming from? Lets see ...


There is still a shocking number of single glazed houses in NZ. Power prices go up. Rentals might be more difficult to rent out when full disclosure is enforced (I never would rent an apartment with single glazing anyway);
The number of building permits is still rising - every year since 2008 and the housing shortage keeps increasing. New homes need new windows;
actually - there is even some hedging if the market dips: in this case buildings with double glazing will sell so much better than the single glazed junk still on offer today. In a buyers market many sellers are likely to double glaze their houses - just to distinguish their listing from the rest ...
glass does not burn ... maybe another good reason to use lots of glass in high rises instead of combustible cladding (like the Brits seem to do).
modern industrial and commercial buildings use lots of speciality glass - have a look e.g. at the new buildings in Christchurch. Still lots of empty building sites waiting to be filled with further examples of "glass architecture"



I don't mean to suggest we're going to see a downturn in the next few years. I'm saying consents are unlikely to increase much past their peak and currently they have backed off a little from last year.
The rush you speak of to convert single glazing will barely ripple the bottom line if it happens at all. Without government intervention I doubt it will happen.
I don't see a boom in commercial 'glass architecture' that will translate to 'continued growth'.
It's a sound company which currently should be making hay while the sun shines. There should be a few more years of sustained production ahead...

[winner69]

So far it feels that the SP is closer correlated to the orders predicted (based on building consents) than to the number of windows manufactured in any particular month. Makes sense to me - the markets are looking ahead ...

I still reckon number of consent will decline by 10% to 27,000 odd over the next year / 18 months ....and if the government gets their act together recover in 2019.

[BlackPeter]

I still reckon number of consent will decline by 10% to 27,000 odd over the next year / 18 months ....and if the government gets their act together recover in 2019.

guts feeling - or what is your reason for this assumption?

[JeremyALD]

Even if consents go down MPG should be able to increase profits if it can get costs under control. The boom in construction hasn't helped their costs too much so a small slow down might enable better opportunity to focus on simplification and cost management.

[winner69]

guts feeling - or what is your reason for this assumption?

Some serious modelling mate

Current negative factors are interest rates, bank tightening up on lending and higher section prices. There is still some fallout in Canterbury numbers before we get back to business as usual post quake activity.

All the talk about Housing Accords and social housing still seems that .....somebody needs to stir up the action but that's for another thread.

Watching existing house sales numbers is generally a good guide where residential consents are heading.

[BlackPeter]

Second day closing above the MA100 ... just another TA signal that the SP is moving upwards. Obviously - there was already plenty of opportunity to buy at 130. Now it is 140 - and for people who want more safety, they still will need to wait for the MA200 (which is currently at 168).

[Beagle]

Must admit when SUM of your dogs aren't barking its good to have one or two pups that are. Reasonably pleased I doubled down at $1.35 very recently.

[JoeGrogan]

Second day closing above the MA100 ... just another TA signal that the SP is moving upwards. Obviously - there was already plenty of opportunity to buy at 130. Now it is 140 - and for people who want more safety, they still will need to wait for the MA200 (which is currently at 168).

Will be interesting to see how it opens tomorrow.

[winner69]

This will give a few the warm fuzzies

Nothing new but might have fired up a few instos/investors

https://www.nzx.com/files/attachments/261201.pdf


Love this bit- Windows are all about glass

Let us not forget that

You'll get your $1.50 plus divie sooner than later Mr Beagle

[BlackPeter]

This will give a few the warm fuzzies

Nothing new but might have fired up a few instos/investors

https://www.nzx.com/files/attachments/261201.pdf


Love this bit- Windows are all about glass

Let us not forget that

You'll get your $1.50 plus divie sooner than later Mr Beagle


Still 1.4 million dwellings in NZ with single glazing. Assume 20k average per house to reglaze, this is a $14 billion market. MPG holds more than 50% of that.

Requirements and Specifications getting more and more complicated and markets require fast turnaround (3 days ...). Great moat to keep overseas competitors at bay.

Commercial market nearly quadrupled over the last 5 years in value and keeps growing

"The power of glass" - and yes, solar is expected to have exponential growth ... and yes, it requires glas (lot's of it).

As well - anybody noticing them stating that "they are well positioned"? I think they are right.

Huge opportunities - hard to believe that you could buy this gem still some months ago for under $1.30 ... and they are still cheap as chips (now ex-dividend) back to $1.36.

Discl: proud holder ... and looking forward to the divvie ...

[Beagle]

https://www.youtube.com/watch?v=BtBEmtj4FaM Looks pretty good to me...definitely registers on the wag-o-meter...but a bit of a sleepy investment for me, happy for BP to do most of the barking :) Not sure many will bother going out and retrofitting double glazing, certainly we're not because I don't believe the ROI stacks up but there's a market there for people who want to be extra energy conscious for sure. Expansion into Australia looks sound to me.

[bull....]

pretty ho - hum really still ticks my boxes of not much going on here type of stock.

follows building consents closely which are tracking down they have a 9 mth lag so this will show up in there figures shortly , commercial already showing a decline.
retro-fit wont happen as people are not going to spend 1000s on new windows as an upgrade. rather have a holiday flying air nz instead esp if theres nothing wrong with my single glass windows.

and they are not the cheapest in the market for residential.

so at this share price reflects boom times hate to think what share price is in bad times?

[BlackPeter]

https://www.youtube.com/watch?v=BtBEmtj4FaM Looks pretty good to me...definitely registers on the wag-o-meter...but a bit of a sleepy investment for me, happy for BP to do most of the barking :) Not sure many will bother going out and retrofitting double glazing, certainly we're not because I don't believe the ROI stacks up but there's a market there for people who want to be extra energy conscious for sure. Expansion into Australia looks sound to me.

Roger, double glazing is not about ROI. Double glazing is about living comfort, it is about living in a warm house and about drastically cutting cold drafts. It is as well about no condensation anymore on the windows and it is about a significant drop in overall humidity issues. It is as well about having a healthier family (less and shorter cold / flu type problems in winter).

We double glazed our home more than 15 years ago with low E windows, and gone are the times with condensation and cold drafts in the living area (lots of full-sized windows top to bottom). As well - our house is now much warmer in winter and much cooler in summer (and it can get hot in Canterbury - saves the money for the A/C). I don't think we saved a lot of money overall, but our home is so much warmer and liveable (*).

We paid at that time roughly $15k for the complete reglazing of the house (close to 40 windows), this is by now less than $1k per year (and the windows are as good as in the beginning. We think that the increased living comfort would be much more worth than the less than $1000 per year we effectively paid for it.

As well - the reglazing significantly increased the resale value of the house (not that we plan to sell) - i.e. at the end are we living in a much more comfortable and healthy home - for free ;);

Discl: Nothing of above is influenced by my MPG share holding; By all means - go to the competition, but get some proper windows for your home. You deserve it!

(*) Admittedly - we did some other changes as well - removed the downlights and closed the holes (operating as chimney removing warm air) some idiot designed into the house and added another layer of (wool) insulation into the roof ... but the windows made in my view the largest contribution ...

[BlackPeter]

pretty ho - hum really still ticks my boxes of not much going on here type of stock.

follows building consents closely which are tracking down they have a 9 mth lag so this will show up in there figures shortly , commercial already showing a decline.
retro-fit wont happen as people are not going to spend 1000s on new windows as an upgrade. rather have a holiday flying air nz instead esp if theres nothing wrong with my single glass windows.

and they are not the cheapest in the market for residential.

so at this share price reflects boom times hate to think what share price is in bad times?

You are absolutely entitled to your view ... everybody is. If you are holding, than you clearly should follow your convictions and sell.

However - while all the bulls we reared over the years on our yard have been handsome, agile and strong, none of them was particularly good or successful in predicting the future (including their own) :p.

Sorry - couldn't resist :blush: ...

[BlackPeter]

You must love this stock ... not a dividend stripper myself, but could hardly have gone better (though admittedly TIL last week was a charm as well).

Maybe I should learn the secrets of the trade ;);

[JeremyALD]

Pretty solid strategy presentation. Targeting 5% - 12% increase in revenue over the year and 20% increase on EBITDA. I might buy some more. My only concern is the link to construction and some risks in AU but at this SP she seems pretty solid.

[winner69]

Good that investor day seems to ignited the rocket under the share price - over $1.50 early next week before tracking to new highs

Market bigger now than back then

What was that high again ......hmmmmm

[Beagle]

Roger, double glazing is not about ROI. Double glazing is about living comfort, it is about living in a warm house and about drastically cutting cold drafts. It is as well about no condensation anymore on the windows and it is about a significant drop in overall humidity issues. It is as well about having a healthier family (less and shorter cold / flu type problems in winter).

We double glazed our home more than 15 years ago with low E windows, and gone are the times with condensation and cold drafts in the living area (lots of full-sized windows top to bottom). As well - our house is now much warmer in winter and much cooler in summer (and it can get hot in Canterbury - saves the money for the A/C). I don't think we saved a lot of money overall, but our home is so much warmer and liveable (*).

We paid at that time roughly $15k for the complete reglazing of the house (close to 40 windows), this is by now less than $1k per year (and the windows are as good as in the beginning. We think that the increased living comfort would be much more worth than the less than $1000 per year we effectively paid for it.

As well - the reglazing significantly increased the resale value of the house (not that we plan to sell) - i.e. at the end are we living in a much more comfortable and healthy home - for free ;);

Discl: Nothing of above is influenced by my MPG share holding; By all means - go to the competition, but get some proper windows for your home. You deserve it!

(*) Admittedly - we did some other changes as well - removed the downlights and closed the holes (operating as chimney removing warm air) some idiot designed into the house and added another layer of (wool) insulation into the roof ... but the windows made in my view the largest contribution ...

Good points BP. Yes a very good divvy strip but I am impressed enough to hold so won't sell and strip it. Appreciate your input into this one.

[winner69]

BP - you been buying the shares Schroeders been disposing

No worries - just a rebalancing exercise for hem I suppose

[BlackPeter]

BP - you been buying the shares Schroeders been disposing

No worries - just a rebalancing exercise for hem I suppose

Nop - I filled my truck already at a lower price ;); While it is tempting and while portfolio allocation policies are there to be broken, with MPG am I now definitely fully loaded and looking forward to the ride.

Good to see the SP tracking firmly above the MA100 :).

[winner69]

REINZ report existing house sales for the last 3 months are down 25% on last year

There is a very strong correlation between house numbers and consents for new residential dwellings (lag about 6 months). Where one goes the other tends to.

Probably see 'weak' (lower than expected?) consent numbers over rest of 2017

Just saying.

[BlackPeter]

REINZ report existing house sales for the last 3 months are down 25% on last year

There is a very strong correlation between house numbers and consents for new residential dwellings (lag about 6 months). Where one goes the other tends to.

Probably see 'weak' (lower than expected?) consent numbers over rest of 2017

Just saying.

Bad times for all these people without a place to live? While the correlation you are talking about might have been relevant in times when prices dropped due to lower demand for houses (e.g. after the GFC when everybody was looking for greener pastures) am I not sure, whether this is true as well at current.

I think the recent government actions reduced the speculative froth from the second hand housing market ... and obviously, sellers need a bit of time to get used to lower prices. This works however only if buyers have another option (like building instead of buying). As long as there are 10 thousands sleeping in cars and garages, as long as we have a net immigration gain of 70k plus pa, as long as our build rates are below the required replacement numbers and as long as our infrastructure is highly overstretched and outdated (heard recently about huge numbers of new school buildings they need to build and these have windows as well) am I not too worried.

Maybe the time to the elections is bit slower than normal in spring (people need to wait to find out whether they can stay in a stable New Zealand under National or whether they better queue up at the departure gates to escape the chaos under Peters, Little, Turei and Shaw), but after the elections I'd expect a big push into new buildings. No matter who wins - either people are building themselves or the social housing sector gets a big push.

Did you hear the one that our building industry is not even capable to build all the required hotels in Auckland to house visitors for the America's cup? Do you realise that our building industry struggles to keep up with the Christchurch demand? Chinese investors are jumping in to build now apartments in Christchurch (due to FBU too dumb to do their job and too busy making losses during a boom) - and they will import some building materials as well as workers, but maybe we can at least provide the windows?

The future looks bright and opportunities are endless ... particularly if you look through the windscreen instead of into the rear mirror :).

[winner69]

BP - that strong correlation goes back 25 years - through hick and thin - through the bad times in 2001 - through the building boom in the early to mid 00's - through the GFC - through Chch activity - through tax/interest changes.

Yes there does appear to be plenty of upcoming activity - most times there always is endless opportunities - in the past - now - and no doubt in the future.

I won't debate the homeless and affordable housing and the election on the thread - punters get too emotional.

MPG will do OK this year - next year who knows.

Just saying

[BlackPeter]

Director (Angela Bull) buying her initial holding: https://www.nzx.com/files/attachments/261746.pdf;
Sure - 20k shares are not the world, but still a sign of confidence that the shares are currently good value.

[JeremyALD]

Definitely looking like things are on the up. Thanks Black Peter for bringing my attention to this one :)

[RupertBear]

Definitely looking like things are on the up. Thanks Black Peter for bringing my attention to this one :)

Yep I agree :)

[Beagle]

Chart looks most encouraging. Nice clean and sustained break above 100 day MA. TA investors should be very keen on this one.

[winner69]

Chart looks most encouraging. Nice clean and sustained break above 100 day MA. TA investors should be very keen on this one.

Yep heading back to $2 early next year

Positive momentum on back of positive news about a coming super boom in housing

No worries

[winner69]

So we might actually see these 'extra' 23,000 homes being built ...sometime

Good for Metro if it is actually above and beyond 'normal' activity of building in Auckland

National government on the ball.

https://www.stuff.co.nz/national/politics/95022183/government-setting-up-new-housing-infrastructure-company-will-invest-600m

[tim23]

So we might actually see these 'extra' 23,000 homes being built ...sometime

Good for Metro if it is actually above and beyond 'normal' activity of building in Auckland

National government on the ball.

https://www.stuff.co.nz/national/politics/95022183/government-setting-up-new-housing-infrastructure-company-will-invest-600m

Not sure if the National government have ever been on the ball with housing but better late than never I guess?

[winner69]

Might see $1.50 this week ....good eh

Some will say $1.51/$1.53 could be a strong resistance level that needs to be broken through to make further solid gains

What the heck glass ceilings are meant to broken aren't they .....Metro in the glass game after all.



bit worried senior managers have all their fingers -,sign they haven't been in the glass industry for that long

[BlackPeter]

Might see $1.50 this week ....good eh

Some will say $1.51/$1.53 could be a strong resistance level that needs to be broken through to make further solid gains

What the heck glass ceilings are meant to broken aren't they .....Metro in the glass game after all.



bit worried senior managers have all their fingers -,sign they haven't been in the glass industry for that long

Yep, nice and steady uptrend.

Not sure about your predicted resistance level slightly above 150 - so far I don't see any material sell offers in this range ...

9029

Why do you think there should be?

[winner69]

That $1.50 odd just from a chart perspective

[Beagle]

Yep heading back to $2 early next year

Positive momentum on back of positive news about a coming super boom in housing

No worries

Agree. No worries whatsoever !

[winner69]

Close at $1.50 today?

Back to where it was last March - that's good

No reason $2 before year end

[Beagle]

Close at $1.50 today?

Back to where it was last March - that's good

No reason $2 before year end

Bang on the money mate...you're a true guru ! Agree about the second part too :)

[winner69]

Bang on the money mate...you're a true guru ! Agree about the second part too :)

Building consents data out Monday

Likely to be good and if headlines are good then watch for that seasonal uptrend in MPG share price (as BP recent notes)

[BlackPeter]

I certainly like the current uptrend - the suggested resistance in the early 150'ies was not that hard to overcome - wasn't it? Maybe some people know already the numbers for the June building permits?

While we wait for the official release from Statistics NZ - here are some relevant government announcements for a total of 70,000 new homes across New Zealand (and I suppose they all will have windows :t_up:):

another 10.500 houses for Auckland:
https://www.beehive.govt.nz/release/another-10500-new-houses-auckland

10,700 houses for the Waikato:
https://www.beehive.govt.nz/release/10700-more-houses-waikato

35,000 new houses for Tauranga:
https://www.beehive.govt.nz/release/35000-more-new-houses-tauranga

and wait - there is more:


Hamilton City Council – $272 million – 8,100 houses
Greenfield development (Peacockes) on southern edge of Hamilton.

Waikato District Council – $37 million – 2,600 houses
Te Kauwhata (new development on the shore of Lake Waikare).

Queenstown Lakes District Council – $50 million – 3,200 houses
Two new greenfield sites (Quail Rise South and Ladies Mile) on the Frankton Flats and an extension of the Kingston township.


Interesting how elections can sharpen the focus ... ;);

[winner69]

I certainly like the current uptrend - the suggested resistance in the early 150'ies was not that hard to overcome - wasn't it? Maybe some people know already the numbers for the June building permits?

While we wait for the official release from Statistics NZ - here are some relevant government announcements for a total of 70,000 new homes across New Zealand (and I suppose they all will have windows :t_up:):

another 10.500 houses for Auckland:
https://www.beehive.govt.nz/release/another-10500-new-houses-auckland

10,700 houses for the Waikato:
https://www.beehive.govt.nz/release/10700-more-houses-waikato

35,000 new houses for Tauranga:
https://www.beehive.govt.nz/release/35000-more-new-houses-tauranga

and wait - there is more:


Hamilton City Council – $272 million – 8,100 houses
Greenfield development (Peacockes) on southern edge of Hamilton.

Waikato District Council – $37 million – 2,600 houses
Te Kauwhata (new development on the shore of Lake Waikare).

Queenstown Lakes District Council – $50 million – 3,200 houses
Two new greenfield sites (Quail Rise South and Ladies Mile) on the Frankton Flats and an extension of the Kingston township.


Interesting how elections can sharpen the focus ... ;);

......and tens of thousands in Wellington and Hutt Valley .....

.......and no doubt heaps more retirement village units

Gee whizz

Only question is over what time period .....and whose going to pay for them.

[Beagle]

Might be able to afford to double glaze my home the way this is going, BP tells me it has huge lifestyle benefits, (who cares about ROI) so it must be good as he's the guru on this stock.:t_up:

[winner69]

Residential consents DOWN 7% in June

They'll pick up in July - no worries

http://www.sharechat.co.nz/article/eb0228b5/nz-residential-building-consents-drop-7-in-june.html?utm_medium=email&utm_campaign=NZ%20residential%20building%20consent s%20drop%207%20in%20June&utm_content=NZ%20residential%20building%20consents %20drop%207%20in%20June+CID_551ba7ecf105254cdce4d7 594b982a64&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticleeb0228b5nz-residential-building-consents-drop-7-in-junehtml

[BlackPeter]

Latest building consent numbers are out 2560 units consented in June; Slightly down compared to May (2794), but June so far (except 2016) was always weaker than the May numbers). This number (while a bit below the June 2016 numbers: 2824) is well in range of what my model expected (based on the last 7 years).

I do see this as quite positive ... and if we keep going this way, than 2017 will be the year with the highest number of building permits issued since I started recording them (2008).

My model predicts roughly 30750 building permits for 2017. 2016 it was 29214.

[t.rexjr]

Latest building consent numbers are out 2560 units consented in June; Slightly down compared to May (2794), but June so far (except 2016) was always weaker than the May numbers). This number (while a bit below the June 2016 numbers: 2824) is well in range of what my model expected (based on the last 7 years).

I do see this as quite positive ... and if we keep going this way, than 2017 will be the year with the highest number of building permits issued since I started recording them (2008).

My model predicts roughly 30750 building permits for 2017. 2016 it was 29214.

2016 was a peak. Consents will remain at healthy levels but I'll be seriously surprised if we're at last years numbers.

[winner69]

Latest building consent numbers are out 2560 units consented in June; Slightly down compared to May (2794), but June so far (except 2016) was always weaker than the May numbers). This number (while a bit below the June 2016 numbers: 2824) is well in range of what my model expected (based on the last 7 years).

I do see this as quite positive ... and if we keep going this way, than 2017 will be the year with the highest number of building permits issued since I started recording them (2008).

My model predicts roughly 30750 building permits for 2017. 2016 it was 29214.

Nothing has changed my outlook (June numbers says model running well) that 2017 calender numbers will be about 29,500 and that caleder 2018 will be in the 28,000's somewhere

MPG shareprice will be OK this year as there is that 9 month or so lag

[winner69]

For what its worth annual changes in residential building consents (floor area) for the last 20 years or so and my forecast for the next 2

Annual growth in consents about to go negative. What's causing this has a bit to play out yet

Probably be back at current levels in 2019/2020 so no worries





What a load of ols codswallop some say ....never mind. I trust my own analysis

[Bjauck]

For what its worth annual changes in residential building consents (floor area) for the last 20 years or so and my forecast for the next 2

Annual growth in consents about to go negative. What's causing this has a bit to play out yet

Probably be back at current levels in 2019/2020 so no worries
What a load of ols codswallop some say ....never mind. I trust my own analysis
If correct, where is the extra population from the current net immigration levels going to live? I wonder what is happening to the figures for number of occupants per dwelling.

[winner69]

If correct, where is the extra population from the current net immigration levels going to live?

Same question that has been asked for years ....and probably the same answer I reckon

[winner69]

If correct, where is the extra population from the current net immigration levels going to live? I wonder what is happening to the figures for number of occupants per dwelling.

Assumes there is a problem. maybe answered your own question

[winner69]

ANZ business Confidence Survey

Construction participants not as chirpy as a few months ago

Jack Frost nipped residential construction intentions, which dropped from
+18 to +11. Commercial construction intentions fell from +29 to +6.

Figure 2 is interesting
https://www.anz.co.nz/resources/8/c/8c6c42bb-a385-4634-b3d5-4ea415464b66/ANZ_Business_Outlook_20170731.pdf?MOD=AJPERES

MPG share price will be OK this year - don't forget the lag

[Bjauck]

Assumes there is a problem. maybe answered your own question Let them eat cake? Increasing population and statistics showing increasing average occupants per dwelling may not be a problem for some (those that have been benefiting asset price inflation?) Even stats showing average occupants/dwelling as static can mask what is happening in a society that has become more divergent in its distribution of wealth.

For others at the poor end of the spectrum, it is a different proposition with overcrowding and poor conditions resulting in poorer health and the return of " third world" condituions.

[winner69]

Was the IPO really at $1.70

Been a dog of an investment for buy and hold investors who got in at the IPO (a bit like EVO eh)

[Beagle]

Almost all dogs bark eventually mate :)

[winner69]

Almost all dogs bark eventually mate :)

OK - must soon be time to buy EVO then ......

[bull....]

nice bounce for this dog lol

[BlackPeter]

20. April:

Chart looks lousy, which matches my fundamental research conclusion

31. May:

share price still consolidating at lows i reckon nothing in report to inspire confidence

today:

nice bounce for this dog lol

Yeah - didn't your impeccable analysis tell us around 130 that MPG is ways overvalued? Look bull, maybe you should rename yourself to "bear" or alternatively take some basic lessons in how to research stock ...

It sort of sounds however you have some personal grievance with them ... why don't you tell us about your real agenda?

[janner]

If correct, where is the extra population from the current net immigration levels going to live? I wonder what is happening to the figures for number of occupants per dwelling.

They will live 6 to a room and be very happy .. They even have a toilet to squat on..

[Bjauck]

They will live 6 to a room and be very happy .. They even have a toilet to squat on.. so introducing meaningful policies to enable more affordable housing coupled with increased wages for the low paid may mean that some could move out of those cramped conditions. So the number of households could increase. That could benefit MPG.

[winner69]

Wonder if those building consent numbers on Monday (down 7% on ocp) isthe reason for the 5% drop in MPG share price this week

Nah, just coincidence

[BlackPeter]

Wonder if those building consent numbers on Monday (down 7% on ocp) isthe reason for the 5% drop in MPG share price this week

Nah, just coincidence

I guess SP just got a bit ahead of itself. Still well above the MA30 (and obviously MA100). Recon it will bounce somewhere around 145 and 142 (MA30), but don't take my word for it ...

Not worried at all ... :)

[nomis]

20. April:


31. May:


today:


Yeah - didn't your impeccable analysis tell us around 130 that MPG is ways overvalued? Look bull, maybe you should rename yourself to "bear" or alternatively take some basic lessons in how to research stock ...

It sort of sounds however you have some personal grievance with them ... why don't you tell us about your real agenda?

I brought in just recently on the low's, Look forward to seeing SP reach IPO price over the next 6 months and head towards 2+ over the next 12-18 months

[Beagle]

I brought in just recently on the low's, Look forward to seeing SP reach IPO price over the next 6 months and head towards 2+ over the next 12-18 months

Welcome to the forum. It seems to me you're looking through nice clean glass and seeing the future very well. Nice timing on your purchase :)

[winner69]

Metro love showing the chart below. They say NZ revenues tied to building consent numbers with a 9 month lag - the chart says it all

So the annual number of consents as at June 17 should be a reasonable indoicator of what NZ revenues might be for F18 (allowing for the lag)

Calculating it (based on data from 2012) suggests NZ revenue growth will be about 1.0% in F18. A quick and simople way would be to assume that as consents might be up 4.7% the revenues will be up 4.7%

Both myself and t_rexjr reckon the consents over the next 12 months will be less than what they are now. If we are right Metro NZ revenues will decline in F19

Can Metro be called a growth stock

Just saying

[BlackPeter]

Metro love showing the chart below. They say NZ revenues tied to building consent numbers with a 9 month lag - the chart says it all

So the annual number of consents as at June 17 should be a reasonable indoicator of what NZ revenues might be for F18 (allowing for the lag)

Calculating it (based on data from 2012) suggests NZ revenue growth will be about 1.0% in F18. A quick and simople way would be to assume that as consents might be up 4.7% the revenues will be up 4.7%

Both myself and t_rexjr reckon the consents over the next 12 months will be less than what they are now. If we are right Metro NZ revenues will decline in F19

Can Metro be called a growth stock

Just saying

Define "growth stock". Backwards CAGR (2012 - 2017) is 13.5%; Forward CAGR (2012-2020 - based on analyst expectations) is 10.5%;

I still would call this a growth stock - but sure, it is not one of these crazy SAAS stocks where the potential appears to be (nearly) infinite (until they crash down). Any company producing hardware will slow down growing with increasing size.

Obviously is growth potential not just in the number of houses build (at some stage both NZ as well as Australia will be "full"), but it is in selling added value (double glazing, low E), in selling specialist glass (e.g. to cover solar cells - hint-hint!) or in selling glass for building components which used to be made out of other materials. For example - building a new high rise with glass cladding instead of using this combustible stuff they use in the UK to kill their citizens ... and then there are obviously glass stairs, glass ceilings (just kidding - or maybe not?), showers and lots of other building components. Maybe the sky is the limit after all ...:t_up:

Not sure yet about your 2019 prediction - too many politicians are keen like mustard to build new houses, and it will not matter who wins the elections, but even if there is a short wee dip ... Just wait for 2020ff !

[Oliver Mander]

I think you need to strip out the company's "natural" growth from this. Yes, there is a correlation to consents - but it isn't a 1:1 mapping (ie, 1% growth in consents does not equal 1% in revenue - its something higher than that).

[Beagle]

Are they not expanding into Australia too Winner ?

[Bjauck]

Obviously is growth potential not just in the number of houses build (at some stage both NZ as well as Australia will be "full"), but it is in selling added value (double glazing, low E), in selling specialist glass (e.g. to cover solar cells - hint-hint!) or in selling glass for building components which used to be made out of other materials. For example - building a new high rise with glass cladding instead of using this combustible stuff they use in the UK to kill their citizens ... and then there are obviously glass stairs, glass ceilings (just kidding - or maybe not?), showers and lots of other building components. Maybe the sky is the limit after all ...:t_up:
There must heeps of potential for technological improvements for various types of glass.

For example I live in a house with a living area with large floor to ceiling single-glazed glass windows/ ranch sliders. Even on a cold Winters day, if there is a sunny spell in the afternoon it can reduce the necessity to use heating in the evening. So perhaps one day we can have window/ solar heating cell combos?

Grenfell Tower is a real eye opener on uk regulations.

[winner69]

OK guys - you have beaten me into submission

Metro is a great company (although I only said a pretty good comapny) with unlimited potential no matter what happens in the building cycle. It is truly a growth company. You were all so clever getting in while it was so cheap (even though I doubt you would be buying if it was still over $2 you astute bargain hunters)

I won't post on this thread again until they make some announcements. Enjoy the peace

Was just doing a Krampus - a grumpy guy who states the inconvenient truth people don't want to hear - but that obviously upset you all today





Wish Nigel hadn't proudly put that chart in his presentations. I'll tell him to take it out ....but he does love it to bits


Lightened up a bit today ... holding the rest just in case....hope is a real strategy eh



I'll leave it at that

[JCM]

Grenfell Tower is a real eye opener on uk regulations and what the future could hold for safety in the UK if Brexit desire to rid the UK of red tape eventuates. That horror killed many citizens from other countries too. The number living in the building also may have been higher than official figures as many occupants may have been undocumented immmigrants.
http://www.independent.co.uk/news/uk/home-news/grenfell-tower-fire-disaster-latest-residents-families-victims-homeless-immigration-status-migrants-a7798051.html


Hi Bjauck, there are handy threads elsewhere for pushing your narrative...

http://www.sharetrader.co.nz/showthread.php?10622-Brexit/page50&highlight=brexit

[bull....]

Metro love showing the chart below. They say NZ revenues tied to building consent numbers with a 9 month lag - the chart says it all

So the annual number of consents as at June 17 should be a reasonable indoicator of what NZ revenues might be for F18 (allowing for the lag)

Calculating it (based on data from 2012) suggests NZ revenue growth will be about 1.0% in F18. A quick and simople way would be to assume that as consents might be up 4.7% the revenues will be up 4.7%

Both myself and t_rexjr reckon the consents over the next 12 months will be less than what they are now. If we are right Metro NZ revenues will decline in F19

Can Metro be called a growth stock

Just saying

totally agree

[bull....]

20. April:


31. May:


today:


Yeah - didn't your impeccable analysis tell us around 130 that MPG is ways overvalued? Look bull, maybe you should rename yourself to "bear" or alternatively take some basic lessons in how to research stock ...

It sort of sounds however you have some personal grievance with them ... why don't you tell us about your real agenda?

funny the price bounces 20c from a oversold condition ( and your all guru,s about this solid company with amazing growth prospects ) yet it is still in a well defined downtrend wonder why?

I stick to my analysis I will admit defeat when proven otherwise.

[percy]

Just had another look at this sector.
MVN.......strong sideways chart.
FBU........strong sideways chart.
MPG........strong sideways chart.
MGL.........strong sideways chart.
STU........Stong downturn chart.
CAV........Strong downturn chart.
SKL.........Strong uptrend chart........surprise surprise considering strong NZ $.
SCT..........Strong uptrend chart........surprise,surprise,considering strong NZ $
Happy to leave this sector to others.

ps.heard the rumour of another Australian acquisition.
Positive or negative.?

[winner69]

funny the price bounces 20c from a oversold condition ( and your all guru,s about this solid company with amazing growth prospects ) yet it is still in a well defined downtrend wonder why?

I stick to my analysis I will admit defeat when proven otherwise.

Totally agree ......likewise will admit defeat when proven otherwise.

[Bjauck]

Hi Bjauck, there are handy threads elsewhere for pushing your narrative...

http://www.sharetrader.co.nz/showthread.php?10622-Brexit/page50&highlight=brexit

I was replying to a previous poster. Glass, cladding, safety and regulations are not totally irrelevant to this thread. However I accept your point in relation to Brexit.

[Scrunch]

I won't post on this thread again until they make some announcements. Enjoy the peace

No No No, we need you W69, please come back. This thread needs you


Totally agree ......likewise will admit defeat when proven otherwise.

Phew all is ok with the world - Winner69 is back

[Beagle]

Metro still technically looking very strong. Well above 100 day MA and still trading above 30 day MA. Annual report makes for a good read and talks about growth from recent acquisitions which they're bedding in as well as their Australian acquisition also working on and is performing ahead of expectations. Rome wasn't built in a day, it takes time to get new acquisitions running sweetly. Only a matter of time before they translate their strong top line growth onto bottom line growth in my opinion.
PE of 14 seems fair and reasonable to me, priced about right at present.
Disc: Holding for growth in EPS fuelled by well proven growth in sales.

[Louloubell]

I would have thought that lower numbers of building would create a longer building cycle and also easier to manage for a company like Metro

[bull....]

new incentive scheme announced - is this normal or desparation to make good on there growth story?

[BlackPeter]

new incentive scheme announced - is this normal or desparation to make good on there growth story?

Just stirring or are you really that green to investing ...?

There are hardly any successful listed companies without an incentive scheme - and if you would have gone towards the effort of reading the 3-line announcement before commenting on it you would have noticed that "This LTIP was originally adopted by Metro Glass' Board in February 2016."

Obviously - any incentive schema needs to regularly update its goals and targets. This is what they have done.

[Bjauck]

new incentive scheme announced - is this normal or desparation to make good on there growth story? I am definitely in favour of LTIPs being available for staff from janitors up (and not just confined to senior managers.) I think it would help the culture of a company.

[bull....]

bearish wedge pattern in the making?

[BlackPeter]

bearish wedge pattern in the making?

You want to share with us how you fit into the current trend chart the "rising wedge" you appear to see? Just draw the confining lines for us - will you?

9074

Just to help you - here would be an example of a (bearish) rising wedge (from investopedia):

9075

http://www.investopedia.com/university/charts/charts7.asp

[winner69]

....could be the thin edge of the wedge

[BlackPeter]

....could be the thin edge of the wedge

true, makes sense - if you allow for time to run backwards ;)

[bull....]

very similar pattern just playing out on the hourly nzd

[percy]

Might pay for shareholders to finish eating their cornflakes/weetbix, before reading Brian Gaynor's column in this mornings Herald.

[winner69]

Might pay for shareholders to finish eating their cornflakes/weetbix, before reading Brian Gaynor's column in this mornings Herald.

Can't be true percy

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11902607

[JeremyALD]

Harsh report, but I guess fair enough comments for those who have been invested in MPG since IPO. Personally I entered in at $1.35 before the dividend payment so am happy with their performance. Think at the current SP it remains once of the better value investments on the NZX.

[winner69]

Just a temporary blip by the sounds of it

All hunky dory for the future

Great buying at today's price.

We'll look back in a years time and ask whst was all the fuss about - just like we did after the price collapsed ino the 140s just over a year ago.

They need to manage market expectations better - only beginners at that game but one would have thought Goulter would be doing better than this

http://www.sharechat.co.nz/article/3fba2240/update-metro-glass-shares-tumble-after-weaker-than-expected-guidance.html?utm_medium=email&utm_campaign=UPDATE%20Metro%20Glass%20shares%20tum ble%20after%20weaker-than-expected%20guidance&utm_content=UPDATE%20Metro%20Glass%20shares%20tumb le%20after%20weaker-than-expected%20guidance+CID_a5fe2d391871bc292126fa1924 6743d6&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle3fba2240update-metro-glass-shares-tumble-after-weaker-than-expected-guidancehtml

From last February .....before the medium term outlook turned negative.....and some of you rubbished me at the time

Goulter has let Rigby (and shareholders) down badly.....and obviously pissed Gaynor off as well

Share prices are generally driven by the largest (institutional) shareholders .... MPG not in that good a shape in this context

[BlackPeter]

Harsh report, but I guess fair enough comments for those who have been invested in MPG since IPO. Personally I entered in at $1.35 before the dividend payment so am happy with their performance. Think at the current SP it remains once of the better value investments on the NZX.

Agree - the report is more reflecting on the failings of our board system, and I agree with that. Makes it hard for owners of a company to pick the best people for the board as long as the existing board is able to pick candidates who don't threaten the mediocrity of the existing board and basically block everybody else. But that's not just MPG but any of our listed companies. Been there, seen that.

Is MPG a good investment? Well, yes - as usual it depends on timing. As Jeremy I am quite happy with the performance of the shares I bought around $1.30 ;), but yes, not so flash for people who bought in at IPO time;

Will they thrive? I do see opportunities - and I am not just referring to the housing shortage. They did put a huge amount of money into new equipment and technologies and are in my view well positioned to harvest over the years to come the rewards of this strategy.

Will they grow ad infinitum? Certainly not, and as for any other company there is a price where I would sell out. Did we reach this price yet? I don't think so.

Could they do better as a company? I am sure, they could - but so far I think it appropriate to give management the benefit of the doubt.

[Beagle]

Harsh report, but I guess fair enough comments for those who have been invested in MPG since IPO. Personally I entered in at $1.35 before the dividend payment so am happy with their performance. Think at the current SP it remains once of the better value investments on the NZX.

I entered at the same time and price. I think Mr Gaynor's report is fair and reasonable. The company is saying they need more capex this year to boost their efficiency and effectiveness and to ward off competition. I think they need to look for efficiency elsewhere starting with the headcount. On a forward PE of 14 at $1.42 I would say given their chequered track record they are fair - reasonable value as noted in my most recent post on 3 August but certainly better value than FBU who have a truly abysmal track record in this sector over the last decade. I have this holding on an extremely short leash to be honest and I sold half my holding this week as it went below the 30 day MA The rest will get the boot at or above $1.35 if the SP doesn't perform. Annual meeting could be interesting this year, if I get time I will attend. Low conviction hold for me. Growth in top line sales is one thing but they need to convince me that they can translate this to growth in EPS. I am not so sure they can after reading Mr Gaynor's report. One thing FBU at this company have in common, they are underperforming in the midst of the greatest building boom we have seen for many many years.

[Speculator]

Apologies for the noobie question. Are non shareholders allowed to attend the annual meeting? There aren't any checks are there?

[BlackPeter]

Apologies for the noobie question. Are non shareholders allowed to attend the annual meeting? There aren't any checks are there?

Technically you have no right to attend unless you are a shareholder or are holding proxies (it is not a public meeting) ... and yes, there are checks at the door. However - they normally would allow you to attend (call of the chair), but you won't have speaking or (obviously) voting rights.

However - why don't you just buy a handful of shares ... I think they are currently anyway on discount ;);

[Fatboyj]

I've never been to an agm or egm or any kind of m. Guess the majority are in Auckland, any big companies have meetings here in Chch?

I did buy some shares in MPG, also hold AIR and OCA. And thinking of a little gamble in NTL.

[BlackPeter]

I've never been to an agm or egm or any kind of m. Guess the majority are in Auckland, any big companies have meetings here in Chch?

I did buy some shares in MPG, also hold AIR and OCA. And thinking of a little gamble in NTL.

A number of the big companies are rotating their AGM's through the centres, they will be once every 3 years or so in Christchurch. But yes, the "heartland" has as well their very own companies who normally convene around Christchurch. SML, Ebos, PGW, KMD, HLG spring to mind (though some of them might as well rotate), and there are lots of smaller companies as well.

[bull....]

Can't be true percy

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11902607

yes great minds think alike

[winner69]

bearish wedge pattern in the making?

Wedges are a vital component in the glazing business.

[bull....]

Wedges are a vital component in the glazing business.

yes lol they tend to contain news before it actually happens

[winner69]

You guys should take heart from many of the comments and pictures in the Fletcher preso
https://www.nzx.com/files/attachments/263516.pdf

Might cheer you up a bit after a bit of a tough time

[BlackPeter]

You guys should take heart from many of the comments and pictures in the Fletcher preso
https://www.nzx.com/files/attachments/263516.pdf

Might cheer you up a bit after a bit of a tough time

Well, yes - slide 15 and 16 give some interesting context, though nothing new ...

[JeremyALD]

BP do we usually get any updated gudiance before the interim report releases in November? I've had a look back through their annoucements and looks like they are usually quite quiet

[BlackPeter]

BP do we usually get any updated gudiance before the interim report releases in November? I've had a look back through their annoucements and looks like they are usually quite quiet

Depends on what you call "usually" for a company listed only 3 years ago ... but no, so far I can't remember any update prior to the HY results (and only one prior to the full year results - which sort of resulted in great buying opportunities ;) to characterise it nicely).

Have a look at their still quite recent investor day presentation to get the mood: https://www.nzx.com/files/attachments/261201.pdf

I'd only expect an early update if something absolutely unexpected happens (be it very good or very bad ...).

BTW - just noticed their (well, Infometrics) prediction of building consents for the next 5 years or so. They seem to agree with winners view that there will be a wee dip in 2018, but they expect full steam ahead from there. Personally I am a bit more optimistic.

9088

[winner69]

BP - assumptions of full steam ahead after the 'dip' dependent upon how many 'affordable' (low value) house the government builds (and pays for) .....and in an environment where there is little incentive / motivation for a constrained building industry to build low value (cheap) houses.

Share price on fire today ......that's good



(discussion for another thread)

[BlackPeter]

BP - assumptions of full steam ahead after the 'dip' dependent upon how many 'affordable' (low value) house the government builds (and pays for) .....and in an environment where there is little incentive / motivation for a constrained building industry to build low value (cheap) houses.

(discussion for another thread)

Not my assumptions - the graph came from Infometrics ... but yes, life is full of working assumptions. Personally I think it is reasonable to assume that a rich (top quartile in GDP per head of population) and resourceful (what happened to Kiwi ingenuity ;)) country like NZ will find a way to house an increasing number of its inhabitants, no matter which political colour will win this election :);

[Fatboyj]

On the subject of double glazing, is it mandatory for all new house to now have double glazing? Or is this only in the South Island?

[Topagent]

Mandatory everywhere

[Arbroath]

Mandatory everywhere

I don't think thats quite correct. Houses/buildings have to have the right amount of thermal resistance (R-value) to meet the building code. Double glazing is a very effective way of achieving that but is not complusory. You can have some single glazing and still meet the code but you'd need a good house design, and if you're into good house design you probably spend the $$ for double glazing.

[winner69]

Not my assumptions - the graph came from Infometrics ... but yes, life is full of working assumptions. Personally I think it is reasonable to assume that a rich (top quartile in GDP per head of population) and resourceful (what happened to Kiwi ingenuity ;)) country like NZ will find a way to house an increasing number of its inhabitants, no matter which political colour will win this election :);

I have a tiny tiny interest in a modular building outfit .......could easily solve a lot of the problems land permitting ......but NZers don't seem that keen on the idea and still dream if their 200sqm mansions on a 1/4 acre section

And building up is a logical solution but it seems not many want multi story apartments anywhere near where they live.

[Bjauck]

I have a tiny tiny interest in a modular building outfit .......could easily solve a lot of the problems land permitting ......but NZers don't seem that keen on the idea and still dream if their 200sqm mansions on a 1/4 acre section

And building up is a logical solution but it seems not many want multi story apartments anywhere near where they live. It is difficult to let go of that kiwi dream of the past to accept cheek-by-jowl European and Asian style reality to which our leaders are taking us.

Do smaller dwellings, on average, have a higher proportion of glass per sq meter?

[winner69]

BP do we usually get any updated gudiance before the interim report releases in November? I've had a look back through their annoucements and looks like they are usually quite quiet

Might be something said at the AGM next week

A few might pressure them into something

[BlackPeter]

Might be something said at the AGM next week

A few might pressure them into something

Good point - watch the space ....

[bullfrog]

Interesting article article looking at the links between the £5bn windows and doors market in the UK and construction
http://www.windowsactive.com/market-increases-3-8-value-5-35bn/

[BlackPeter]

NZSA released their AGM voting intentions to members.

I note that they intend to support three of the proposed director (re-)elections, but take a stand against Sir John Goulters re-election.

They indicate that they have some reservations regarding board decisions made under his leadership (as well on other boards - Marsden Maritime) and feel that he should take responsibility for the recent underperformance of MPG under his leadership.

They intend as well to oppose the proposed increase of the directors fee pool (again citing the recent underperformance, but as well that it is already now quite high compared to other companies of comparable size and complexity).

Good to see them taking a stand for retail shareholders ... they do have my proxy vote.

If you want to support them - you could give them your proxy vote as well (not just for this AGM), you could vote with them ... and obviously - you could join them: https://www.nzshareholders.co.nz/

[winner69]

NZSA released their AGM voting intentions to members.

I note that they intend to support three of the proposed director (re-)elections, but take a stand against Sir John Goulters re-election.

They indicate that they have some reservations regarding board decisions made under his leadership (as well on other boards - Marsden Maritime) and feel that he should take responsibility for the recent underperformance of MPG under his leadership.

They intend as well to oppose the proposed increase of the directors fee pool (again citing the recent underperformance, but as well that it is already now quite high compared to other companies of comparable size and complexity).

Good to see them taking a stand for retail shareholders ... they do have my proxy vote.

If you want to support them - you could give them your proxy vote as well (not just for this AGM), you could vote with them ... and obviously - you could join them: https://www.nzshareholders.co.nz/

That's how my vote is going

Sir John was appointed to give the company additional credibility for the IPO

IMO he's done a poor job as Chairman but worse still he appears as if he has been a useless job in mentoring/ helping Rigby in the ins and outs of being in charge of a listed company. A good operator but needed help in that area.

[Oliver Mander]

Note that they have just withdrawn resolution 6 from the meeting....so no increase in the director fee pool.
I am guessing that's some response to the public chatter in the media and as expressed in this forum...?

https://www.anzsecurities.co.nz/DirectTrade/dynamic/announcement.aspx?id=4502642

[winner69]

Note that they have just withdrawn resolution 6 from the meeting....so no increase in the director fee pool.
I am guessing that's some response to the public chatter in the media and as expressed in this forum...?

https://www.anzsecurities.co.nz/DirectTrade/dynamic/announcement.aspx?id=4502642

A pay cut .....ha ha

Hoped Sir gets the chop ......but he'll survive but with 30% odd voting against him.

Rather have somebody else in charge

[Leftfield]

Note that they have just withdrawn resolution 6 from the meeting....so no increase in the director fee pool.
I am guessing that's some response to the public chatter in the media and as expressed in this forum...?

https://www.anzsecurities.co.nz/DirectTrade/dynamic/announcement.aspx?id=4502642

Another victory for NZSA who played a large part in this. I strongly recommend serious Share Traders consider joining this org as it does excellent work.

[bull....]

bearish wedge pattern in the making?

that bearish wedge pattern .... yes just like we say chart never lies

[bull....]

20. April:


31. May:


today:


Yeah - didn't your impeccable analysis tell us around 130 that MPG is ways overvalued? Look bull, maybe you should rename yourself to "bear" or alternatively take some basic lessons in how to research stock ...

It sort of sounds however you have some personal grievance with them ... why don't you tell us about your real agenda?

my analysis is good

[BlackPeter]

my analysis is good

Is it? In this case, why didn't you tell us about it? You didn't say that you expect a somewhat soft year (with similar results as the last one -i.e. not too bad) and increasing revenue and margins from there ...

Well, at least this is what they said today:




While we remain optimistic on the medium term picture, activity levels in New Zealand have been soft
so far this financial year, with revenue growth in the first four months being relatively flat, including continuing declines in Canterbury
Given the current conditions we are seeing in the market, we expect the Group’s first half results to be similar to those achieved in the first half last year, which was a particularly strong half. Activity levels to date have been below our expectations and as we had resourced the business accordingly there will be a need to adapt and pursue efficiency initiatives through the second half of the year
We said in the 2017 Annual Report that we anticipate improved results in the 2018 year, which we continue to anticipate, but this will be dependent on any adverse changes in market conditions. We will further update investors with our expectations for the full year when we release our half year results in November




Does not sound too bad to me, but maybe you just need a bit more time to analyse - do you ;)?

[Beagle]

I for one do not think the SP reaction this morning is a rational response to the market update they provided.

[bull....]

research suggests risks around productivity and execution and in being able to translate this into meaningful margin increase also she be right attitudes also slow down becoming evident.

posted this in april so i did say my research showed not all good i just didnt detail it,

so myself and winner both say mpg was aligned with building cycle closely and slowdown was apparent

[t.rexjr]

Is it? In this case, whey didn't you tell us about it? You didn't say that you expect a somewhat soft year (with similar results as the last one -i.e. not too bad) and increasing revenue and margins from there ...

Well, at least this is what they said today:


Others have tried to suggest this may be the case...

[Fatboyj]

Nice drop. Might put some coin on this at $1.20

[BlackPeter]

Nice drop. Might put some coin on this at $1.20

Yes ... I am sure the brains behind the quick selling fingers at $1.20 this morning are already regretting their decision.

Just updated my spreadsheet with their latest predictions (extrapolated to 2018 FY) and 4 traders 2019 and 2020 numbers:

At $1.27 (current S/P) they offer a forward PE of 10.7 and a forward CAGR of 10.5; I'd call that a bargain ... but hey, I can't buy all the shares on offer by myself ;) sorry - truck is too small;

Always dangerous to push the sell button before analysing the announcements :ohmy:; Congratulations to everybody who managed to get some more MPG shares at $1.20 - that's what I call bottom picking ....

Price creeping up again on solid demand - wondering whether we still will see a dip in the SP at the end of the day?

[winner69]

This 'soft' talk was expected eh

Good buying at in the 120's ....yippee

But I still reckon 'softness' not over yet ...we'll hear this word again later in the year .....but the market will be happy to trade it back up to 140/150 again so why not make a few bucks (almost risk free at current prices) in the process.

Continue to disappoint the market don't they

[JeremyALD]

Hmmm not a very good meeting was it! Very disappointing and the language they use dosent build much confidence. However I'm with BP that this seems like decent value, so I'll hold on for now.

[winner69]

So softness is code for NZ going backwards

"The problem is that they have the acquisition in there ... so to be flat on last year is disappointing," said David Price, broker at Forsyth Barr.



http://www.sharechat.co.nz/article/36c54001/metro-performance-glass-shares-sink-10-on-muted-outlook.html?utm_medium=email&utm_campaign=Metro%20Performance%20Glass%20shares% 20sink%2010%20on%20muted%20outlook&utm_content=Metro%20Performance%20Glass%20shares%2 0sink%2010%20on%20muted%20outlook+CID_959c4f799164 f18421b736e3e6be7e99&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle36c54001metro-performance-glass-shares-sink-10-on-muted-outlookhtml

[Fatboyj]

$1.23, $1.20 not much diff. I'm in. Another thread to subscribe too.

[winner69]

So softness code word for going backwards

H117 EBIT was $19.2m normalised (must use normalised eh) of which say $0.5m came from one month trading from Australia meaning $18.7m from NZ

H118 trading result to be 'flat' probably means about the same - that is EBIT of $19.2m which say $3.0m is from full 6 months of Australia and $16.2m from NZ

So NZ EBIT possibly down $2.5m or 13%

That's a bit more than 'soft' ....'flaccid' maybe

No wonder the guy from Forbar says there is a problem


BP - I have taken time to analyse the announcement. Share price shouldn't go below 120 - unless the instos get really peeved

[winner69]

Did Sir John keep his job?

[JeremyALD]

Did Sir John keep his job?

Yep 25% voted for his out though so pressure is mounting

[winner69]

Metro seem to have a habit of coming out with disappointing outlooks - today's is the third I can think off

No wonder the market reacts as it does - patience of the instos / fund managers must be wearing a bit thin. Don't forget they are the ones who essentially drive the share price.

[winner69]

Somebody panicked on the ASX as well and sold 200,000 shares

[winner69]

Yep 25% voted for his out though so pressure is mounting

Thanks

Just as well they kept the softness news until the meeting eh

[JeremyALD]

It's a bit disappointing given their investor day wasn't long ago and everything was sounding rather postive at that point. What's changed?

[winner69]

It's a bit disappointing given their investor day wasn't long ago and everything was sounding rather postive at that point. What's changed?

The softness was signaled in building consents data late last year ........and by some here on this thread

But even I am surprised that 'softness' leads to flat earnings (declining in NZ) growth for H1 ..... maybe other things in play?

[bull....]

The softness was signaled in building consents data late last year ........and by some here on this thread

But even I am surprised that 'softness' leads to flat earnings (declining in NZ) growth for H1 ..... maybe other things in play?

yea bad execution of business lol

[winner69]

yea bad execution of business lol

looks like it ....always a worry when the Chairman says '.....there will be a need to adapt and pursue efficiency initiatives through the second half of the year.'

[winner69]

Obviously this keen shareholder given the cold shoulder ....or went to the wrong school

In regard to our preparation for this 2017 Annual Meeting I would like to touch on three items. Firstly, you may be aware that the company received a director nomination from a Metro Glass shareholder. The nomination was discussed at length by the board and was assessed as having potential merit. Accordingly the board advised its preparedness to have the nominee go through the company’s director interview and induction process on an exclusive basis. This process involves a number of interviews including by the Nominations Committee, Chief Executive and ultimately the full board.

As I noted earlier, the board has already seen significant recent change with two new directors appointed within the last 12 months, each of whom were required to complete the same recruitment process I have just outlined, and which we see as protecting both the company and shareholders’ best interests. However having been informed of the board’s proposal, the shareholder elected to withdraw the nomination.

[JeremyALD]

Was anyone at the annual meeting? Investors went in for the kill.


Behind paywall but covers the questions to Sir John - investors want him out. Surely with 28% voting for you to leave, it's time to think seriously about doing so?

https://www.nbr.co.nz/article/sharp-words-metro-glass-meeting-th-p-206906

[BlackPeter]

The softness was signaled in building consents data late last year ........and by some here on this thread

But even I am surprised that 'softness' leads to flat earnings (declining in NZ) growth for H1 ..... maybe other things in play?

Agreed, if you look at it from that perspective - than the overall flatness is a bit of a worry. Sort of wondering whether the FBU sickness might have anything to do with that?

Presumably all the delayed FBU projects require as well windows. And from memory - last year many of their problems have been caused by orders being called much later than originally expected (and planned). Now - we all know that the next lot of big FBU projects is again well above budget but behind deadline ... that's something which can kill subcontractors who need to provide the capacity when planned but are only allowed to deliver (and nine months later paid) when their service is called.

Maybe the NZ building industry is still sicker than we thought.

[percy]

Maybe the NZ building industry is still sicker than we thought.

A building boom on and NZ companies are serial non-performers.
A sector to avoid.
CAV,FBU,MVN,STU,MGL....and MPG.!

[Beagle]

I didn't have time to go today but if I had of I would certainly loved to have joined in the pack attack on the CEO and directors.

[winner69]

Agreed, if you look at it from that perspective - than the overall flatness is a bit of a worry. Sort of wondering whether the FBU sickness might have anything to do with that?

Presumably all the delayed FBU projects require as well windows. And from memory - last year many of their problems have been caused by orders being called much later than originally expected (and planned). Now - we all know that the next lot of big FBU projects is again well above budget but behind deadline ... that's something which can kill subcontractors who need to provide the capacity when planned but are only allowed to deliver (and nine months later paid) when their service is called.

Maybe the NZ building industry is still sicker than we thought.

If Fletchers are tied to fixed price contracts (reportedly so) wonder if the sub-contractor trades are as well?

[Elles]

If Fletchers are tied to fixed price contracts (reportedly so) wonder if the sub-contractor trades are as well?

If they were Fletchers might not be in as much trouble! Probably wouldn't affect MPG much anyway as the amount and type of glass is not going to change if there are delays or issues elsewhere in the build.

[winner69]

It's a bit disappointing given their investor day wasn't long ago and everything was sounding rather postive at that point. What's changed?

Metro have a habit of being positive and saying hints all honky dory ........and then coming out a little later and disappointing the market (not delivering on the hype)

they met IPO forecasts first time around (surprise eh) but profits have fallen short of guidance / expectations they set ever since.

Wearing a bit thin I feel

Maybe $20m profit is their lot in life

[BlackPeter]

A building boom on and NZ companies are serial non-performers.
A sector to avoid.
CAV,FBU,MVN,STU,MGL....and MPG.!

Fair point - lots of soft numbers currently coming out of this sector.

However - if we look at the bigger picture the question might be - when is a good time to buy? When shares are high and the industry is booming - or better when the SP is low and lots of demand on the radar?

Obviously - if we assume that the lacklustre performance of basically all building companies continues despite an increasing housing shortage, than yes - you are right - AVOID. This assumes however that executives in the building sector are all stupid overpaid idiots who are not able to learn from past mistakes. While I agree that this description is probably fair for some of the CEO's I've seen, I don't think it applies to all of them.

And while I see some structural issues with a number of the companies you mentioned would I think that MPG is mid term still quite well positioned. They do serve an industry which demands short lead times for their product, and their product is expensive to transport (i.e. they have a significant advantage to competitors sitting in China or anywhere else in the world), they recently geared their factories up and have now modern efficient equipment and they are learning how to use it.

The other thing is - what are the risks? Even if MPG turns out to be a serial underperformer (what I don't expect), than they pay at current SP (1.24) still an 8 cents dividend with an EPS of 10 to 11 cents. This means - worst case they do a MVN on us .... and while I separated myself some time ago from my beloved MVN holding, I didn't do that at a time the SP was at an absolute low, but when it was in the upper regions. So - why selling MPG now?

On the other hand - lets assume not all new New Zealanders want to live under the bridge and the industry learns at some stage to work with the lumpiness of the business - just add a bit of ongoing EPS growth into the mix and the rewards look quite attractive ...

On the balance of risks to rewards would I still think that MPG has much more chances to shine in some years than to further go down the gurgler.

I thought that around 130 was great buying ... and I think the current share price is still more attractive (not just for long term investors). But hey - this is just my view, DYOR.

[percy]

Years ago I was a toy retailer.
One Christmas a year.
Worked 50 weeks of the year for everyone else.Two weeks for me.
Tended to focuss my attention.
Selling books to schools you have to go like the clappers in the first term when schools have money.
If the companies in this sector can't make profits when they have had months/years of Christmas then why bother with them.
Businesses in sectors such as retirement,health,banking,finance and tourism are worth investing in, as their eps growth,strong cashflows, fund further eps accretive acquisitions,which in turn lets companies pay increasing dividends.
OK maybe,just maybe one of the dead ducks in this sector may increase their profit one year,but steady year upon year growth is beyond them.Avoid the sector.
MPG talks the talk,but that is the best they can do.They do not do what they say they will do.Lack credibility.

[horus1]

great comments and how true.

[Beagle]

I think the current price fully factors in the disappointment yesterday. Management need to prove they can stabilize EPS in FY18 and look to grow it in FY19 for the SP to make meaningful headway.

[Fatboyj]

But realistically for this to happen sir JG needs to go? Being a recent shareholder, and reading Bryon Gaynors herald article(and still buying shares!) I'm surprised only a minority wanted him out.

[BlackPeter]

But realistically for this to happen sir JG needs to go? Being a recent shareholder, and reading Bryon Gaynors herald article(and still buying shares!) I'm surprised only a minority wanted him out.

Actually - the roughly 30% against (subject to the final results) are a huge slap into his face, given that directors typically get in with 98 or 99% approval ratings.

It is an unfortunate feature of our system that many shareholders give their proxy to the chair (and guess, how he will vote) and many other share holders just don't bother to vote at all (including some of the funds).

How do the say: bad directors are elected by good people who don't vote ...

Independent of Sir John's fate - it is not unheard of to see companies with underperforming boards (or chairs) to have good days as well .... it is just a bit harder for them (and less likely to continue in the long run).

[trader_jackson]

Ah yes... leave the NPAT and EPS decreases out of the bullet points, and have revenue as the first... number 1 sign things not being all so great...
Dividend payout creeping up to the 'maximum' while debt levels getting higher (although not yet at the concerning levels) and operating cash flows dramatically weaker (although at least they tried to explain 9.1m of the 10m decrease).
Also not much word on how things are 'really' going to be going forward (ie numbers), just lots of warm lovely words and pictures about glass and houses... number 2 sign things not being all so great

Forsyth were picking NPAT of 20.3 and a dividend of 8.2 cps (yes, after they announced the downgrade), so a miss on 2 key accounts, despite their forecasts already being downgraded

I suppose the PE takes account for this lacklustre, although expected result... still a little expensive in my view given no bottom line EPS growth... but no worries, this will all improve and back to $2 something... maybe it will be in the race with Arvida and Heartland winner69?

Share price was $1.39 when posting this exactly 3 months ago... those in the building sector just can't seem to 'make it work' can they (FBU, STU, MPG...)

Disclose: Never been a holder and skeptical from day 1

[bull....]

falling wedge target near 1 dollar

[Fatboyj]

Eeek getting dumped big time, wish I'd waited a day on this.

Just going into town the other day and seeing all the new buildings going up covered in glass, and buildings going to be built(sudima, library, conv centre) had a bit of an influence on me buying these shares. The company is doing something wrong its boggling.

[Leftfield]

Eeek getting dumped big time, wish I'd waited a day on this.

Just going into town the other day and seeing all the new buildings going up covered in glass, and buildings going to be built(sudima, library, conv centre) had a bit of an influence on me buying these shares. The company is doing something wrong its boggling.

Run for the hills, get out quick....... (Disc not holder but the TA graph say's 'why would you buy into a down-trend.... much better to wait till an uptrend is established (and EPS improves.)"

[winner69]

BlackPeter quote of the day - worst case they do a MVN on us ....

I didn't want to mention MVN but glad you did

Always gunna to be great one day

Don't forget Metro isn't a new boy on the block - essentially been key player in industry in its current form for many decades

[Beagle]

This is on a much lower PE than FBU and surely any reasonable person would say FBU have made a far bigger hash of their business than MPG.
I think those with clear medium term vision will be riding this out at this level rather than panicking and running for the hills at any price.

[winner69]

This is on a much lower PE than FBU and surely any reasonable person would say FBU have made a far bigger hash of their business than MPG.
I think those with clear medium term vision will be riding this out at this level rather than panicking and running for the hills at any price.

I wouldn't say panicking - rather just some really pissed off shareholders washing their hands of the company

If one or two big shareholders feel similarly pissed off life could get interesting

Agree, even if you feel half confident no point selling today - it'll be 130 /140 again one day

What was IPO price again?

[winner69]

falling wedge target near 1 dollar


Hey mate - wedges are cool eh

[bull....]

Hey mate - wedges are cool eh

lol never argue with a wedge

[BlackPeter]

Run for the hills, get out quick....... (Disc not holder but the TA graph say's 'why would you buy into a down-trend.... much better to wait till an uptrend is established (and EPS improves.)"

Be greedy if others are fearful ...

Look - sure, this can go lower (it always can), but volumes are not that large (and it looks like all small holders). As indicted .... this is not WYN or any other hype company, but the largest glass manufacturer in NZ.

It would not feel good to find out in hindsight to have sold out at the bottom, spooked by some down rampers. Just saying.

Discl: In - and in this case intending to follow FA rather than some TA spikes.

[JeremyALD]

Be greedy if others are fearful ...

Look - sure, this can go lower (it always can), but volumes are not that large (and it looks like all small holders). As indicted .... this is not WYN or any other hype company, but the largest glass manufacturer in NZ.

It would not feel good to find out in hindsight to have sold out at the bottom, spooked by some down rampers. Just saying.

Discl: In - and in this case intending to follow FA rather than some TA spikes.

TA said it was a buy a month ago when it was $1.50....

I agree with you BP. Reminds me of when Tegel was sold down to $1.05.

[bull....]

TA said it was a buy a month ago when it was $1.50....

I agree with you BP. Reminds me of when Tegel was sold down to $1.05.

the spike was a suckers spike which happens in these wedgee patterns

[sb9]

Run for the hills, get out quick....... (Disc not holder but the TA graph say's 'why would you buy into a down-trend.... much better to wait till an uptrend is established (and EPS improves.)"

With you on this, the chart looks pretty terrible from TA point of view (with lil knowledge I've on TA). Also read in the media Milford in particular Mr Gaynor has been very critical of the Chairman.

[JeremyALD]

You are all acting like MPG is screwed. They said they are tracking to first half of last year, which was actually a very good half and the SP went passed $2 when that was released. The second half was where they performed poorly. The environment is still positive for them and I can't see this changing anytime soon. They have a bit of time to sort out their issues.

I'd expect fully imputed dividends of 7 cents this year. They are still a profitable business and have opportunity to grow the business through Australia and by getting their costs under control.

[couta1]

I'm in again at $1.17, with a PE of 11, this correction is looking overdone.

[bull....]

i think your find there next results are worse than they say, building is slowing fast might change after the election but next 6 mths result will be bad

[trader_jackson]

I'm in again at $1.17, with a PE of 11, this correction is looking overdone.

Whats the PE of Fletcher building? (using underlying operating earnings I thought it was around 10)

Probably is still overdone... can't keep going down 7 ish percent every day surely

(Disclosure: I don't like to catch falling knifes, or should I say glass ;) )

[couta1]

Whats the PE of Fletcher building? (using underlying operating earnings I thought it was around 10)

Probably is still overdone... can't keep going down 7 ish percent every day surely

(Disclosure: I don't like to catch falling knifes, or should I say glass ;) ) Catching falling knife equals opportunity, call it sniffing out value if you like.:D

[Fatboyj]

I'm in again at $1.17, with a PE of 11, this correction is looking overdone.

I actually feel better a bit seeing this. I have funds earmarked for bitcoins but sub 1.20 looks good buying.
But that's what I thought yesterday.
I'll keep what I have and ride it out. Giddy up pony.

[blackcap]

Catching falling knife equals opportunity, call it sniffing out value if you like.:D

Picking bottoms can be smelly business though :P:)

[winner69]

You are all acting like MPG is screwed. They said they are tracking to first half of last year, which was actually a very good half and the SP went passed $2 when that was released. The second half was where they performed poorly. The environment is still positive for them and I can't see this changing anytime soon. They have a bit of time to sort out their issues.

I'd expect fully imputed dividends of 7 cents this year. They are still a profitable business and have opportunity to grow the business through Australia and by getting their costs under control.

Nobody saying MPG (the company) screwed mate

Just discussing what $20m of earnings is worth - esp with NZ earnings going backwards at the moment

[winner69]

Catching falling knife equals opportunity, call it sniffing out value if you like.:D

Agree .....horrible types aren't they

[hardt]

110 and I will be in.

[Beagle]

You are all acting like MPG is screwed. They said they are tracking to first half of last year, which was actually a very good half and the SP went passed $2 when that was released. The second half was where they performed poorly. The environment is still positive for them and I can't see this changing anytime soon. They have a bit of time to sort out their issues.

I'd expect fully imputed dividends of 7 cents this year. They are still a profitable business and have opportunity to grow the business through Australia and by getting their costs under control.

Good post. The hound is not panicking...in fact I have morphed into a possum stuck in the headlights and really embracing that possum experience...feels good to simply do nothing and take some unrealized losses on the snout and learn to live with it and be comfortable.

[bull....]

major overseas brokerage downgrades today from outperform to neutral

[Beagle]

major overseas brokerage downgrades today from outperform to neutral

Yeah but that's hardly a screaming SELL like some people are panicking is it ! Embrace the inner possum, its wonderful to simply sit back and learn to do....absolutly nothing.

[winner69]

i think your find there next results are worse than they say, building is slowing fast might change after the election but next 6 mths result will be bad

FY18 (through to March next year) will be lets say disappointing. The additional profits from Australia won't be enough to offset declining profits in NZ

'Flat' is a good code word to start with - come November it'll will 'less than' last year.

Wedges are not flat are they?

[couta1]

We might get a dead Possum bounce at some stage, Mr Beagle will be looking forward to that after those headlights get up close and personal.

[Leftfield]

Maybe it's OK for Roger Beagle to say 'sit tight' (and all will be right,) however, let's remember that some posters are today advocating MPG is a BUY (Good luck to you.)

While MPG dividends may be some consolation to recent red arrows, why rush and take on such a risk now? All we need is a dodgy NZ election result, a Trump event, or a long overdue Bull correction and your money will be further eroded and tied up for a long, long time.

Remember Warren Buffet has some $10 Billion sitting on the side lines at the moment..... waiting.

IMHO, it is much better to have your hard earned working for you elsewhere until FA and TA signals this pup is a worthy hound to chase.

That's all from me on MPG. GLH.

[couta1]

Maybe it's OK for Roger Beagle to say 'sit tight' (and all will be right,) however, let's remember that some posters are today advocating MPG is a BUY (Good luck to you.)

While MPG dividends may be some consolation to recent red arrows, why rush and take on such a risk now? All we need is a dodgy NZ election result, a Trump event, or a long overdue Bull correction and your money will be further eroded and tied up for a long, long time.

Remember Warren Buffet has some $10 Billion sitting on the side lines at the moment..... waiting.

IMHO, it is much better to have your hard earned working for you elsewhere until FA and TA signals this pup is a worthy hound to chase.

That's all from me on MPG. GLH. In a worst case scenario, stocks like A2 and Air would be wacked heavily in comparison to MPG, remember tall timber falls hardest.

[Beagle]

9102
Relaxed possum, chillaxing on a Friday afternoon

[crighton100]

I would have to say at todays price [$1.14 at present],you would have to be bonkers not to buy in.As a retired old fart I am always looking for a dividend yield much higher than bank interest [& have bought more today]Risk is a funny old thing,but here you have a company that I think has overstreched itself,but really is a sound business with not a lot of serious competition [windows are windows & will always be wanted & now with all the noise & smaller sections & apartments,everyone wants quiet,so you have to have double glazing].So no matter how bad they are doing at present I cannot see them going to the wall & like they say the coming year will be no worse than the last [hopefully they have learn a few things] & their dividend [even if it had to fall a little] is far more superior to the greedy banks.

[Leftfield]

I would have to say at todays price [$1.14 at present],you would have to be bonkers not to buy in.As a retired old fart I am always looking for a dividend yield much higher than bank interest [& have bought more today]Risk is a funny old thing,but here you have a company that I think has overstreched itself,but really is a sound business with not a lot of serious competition [windows are windows & will always be wanted & now with all the noise & smaller sections & apartments,everyone wants quiet,so you have to have double glazing].So no matter how bad they are doing at present I cannot see them going to the wall & like they say the coming year will be no worse than the last [hopefully they have learn a few things] & their dividend [even if it had to fall a little] is far more superior to the greedy banks.

MPG better than money in 'the greedy banks?"

As Brian Gaynor said on 12 August 2017, "MPG's total return, including dividends has been negative 5.4% since listing 3 yrs ago while the NZX top 50 has appreciated 51% over the same period."

[BlackPeter]

MPG better than money in 'the greedy banks?"

As Brian Gaynor said on 12 August 2017, "MPG's total return, including dividends has been negative 5.4% since listing 3 yrs ago while the NZX top 50 has appreciated 51% over the same period."

I think you are disingenuous here. Nobody investing today would buy based on past returns - there is often even a negative correlation between past and future returns. Forward looking I would agree with crighton that in all likelihood MPG's return if bought at current price levels will be far superior to the return of any bank account ...

[Beagle]

9105
Oh dear oh dear..playing possum has its risks !
Represents just 1.4% of my portfolio at today's closing price and pretty relieved its not any more.

[percy]

I think you are disingenuous here. Nobody investing today would buy based on past returns - there is often even a negative correlation between past and future returns. Forward looking I would agree with crighton that in all likelihood MPG's return if bought at current price levels will be far superior to the return of any bank account ...

This quote sums up my feelings towards MPG.:
"Those who can not learn from history are doomed to repeat it."

[winner69]

Jeez - close at 113 - the low of the day

And then a 2 million shares deal after the close at 110

So the word 'flat' causes a 19% drop in 2 days ...not good

That 2 million sell might signal capitulation - if so it's all upwards from here ...and maybe rather quick as well.

Next week will be exciting (for some)

[Beagle]

Jeez - close at 113 - the low of the day

And then a 2 million shares deal after the close at 110

So the word 'flat' causes a 19% drop in 2 days ...not good

That 2 million sell might signal capitulation - if so it's all upwards from here ...and maybe rather quick as well.

Next week will be exciting (for some)

All seems like a little bit of an overreaction seeing as they said first half profit would be in line with last year which was a good first half and then they're looking for efficiencies in the second half, which they definitely should be doing anyway as its bizarre how such strong sales growth in recent years hasn't translated into bottom line EPS growth.
They also said they working with external advisors or words to that effect regarding an efficiency drive and new plant coming on this year would lead to manufacturing efficieineces from FY19.
That's somehow worth a really good proper beating to the SP...go figure ? Reckon Milford probably the seller of that 2 million at $1.10, Gaynor seems especially disillusioned.

[winner69]

All seems like a little bit of an overreaction seeing as they said first half profit would be in line with last year which was a good first half and then they're looking for efficiencies in the second half, which they definitely should be doing anyway as its bizarre how such strong sales growth in recent years hasn't translated into bottom line EPS growth.
They also said they working with external advisors or words to that effect regarding an efficiency drive and new plant coming on this year would lead to manufacturing efficieineces from FY19.
That's somehow worth a really good proper beating to the SP...go figure ? Reckon Milford probably the seller of that 2 million at $1.10, Gaynor seems especially disillusioned.

Flat is bad though Beagle - means NZ will be (lot) less than last year when you take into account the extra 5 months from Australia

Metro have been driving efficiencies for years - need to stay in the game - so current initiatives are just a continuation of those. Sounds good though in a presentation.

The historical finances most punters are looking at are from 2012 - only a half cycle and the better half of the cycle at that. Revenues were about $165m in 2008 at the top if the previous cycle and $214m (in NZ) in 2017 - one could say that top to top cycle growth has been about 2.5% pa (say in line with economic growth). Further more EBIT was similar (if not more) back then.

Glossy brochures and slick presentations are often just that

Nobody in the industry could believe that Catalyst paid over $350m for Metro back in 2006. One joke in the industry was that it had toi be totally over the top because even Fletchers walked away at that price.

Market cap today about $200m (EV of $300m) which looks pretty reasonable

[Lola]

[QUOTE=Beagle;680365]All seems like a little bit of an overreaction seeing as they said first half profit would be in line with last year which was a good first half and then they're looking for efficiencies in the second half, which they definitely should be doing anyway as its bizarre how such strong sales growth in recent years hasn't translated into bottom line EPS growth.
They also said they working with external advisors or words to that effect regarding an efficiency drive and new plant coming on this year would lead to manufacturing efficieineces from FY19.
That's somehow worth a really good proper beating to the SP...go figure ? Reckon Milford probably the seller of that 2 million at $1.10, Gaynor seems especially disillusioned.[/QUOTE


Too right Mr BG is upset
He hates getting misled (read dorked).

But why would anyone invest in an IPO from a PE seller?

NZ market is such a soft (read dumb) touch .

But mr G should stop whinging and moaning when things don't quite work out. It's called risk. Judgement is intuitive. It's not a given.

[karlos68]

Bit off a loss as to why the drop in Share Price.
I am a Glass Merchant and deal with Metro, have viewed charts and note highs and lows, seems odd as past year has been pumping, .......been talking to other various tradies lately and all have said phone calls have cooled abit but still busy, meaning now that workloads are manageable, thou have not chatted to Metro as to workloads but I assist and my impression is they are still pumping.

[winner69]

Too right Mr BG is upset
He hates getting misled (read dorked).

But why would anyone invest in an IPO from a PE seller?

NZ market is such a soft (read dumb) touch .

But mr G should stop whinging and moaning when things don't quite work out. It's called risk. Judgement is intuitive. It's not a given.

Good word is dorked

Amazing how a glossy prospectus and subsequent cool looking presentations can make things look so good

Many got dorked - time for the vultures to come out and play - might be ok from here seeing its probably reached what some call fair value.

[percy]

Good word is dorked

Amazing how a glossy prospectus and subsequent cool looking presentations can make things look so good

Many got dorked - time for the vultures to come out and play - might be ok from here seeing its probably reached what some call fair value.
$1.10 to $1.13 may be a good price to pay for a fair company,however I prefer to pay a fair price for a good company.!!..lol.
No fancy words or pictures,will disguise the fact MPG is an underperformer, in a sector full of serial underperformers.

[Hoop]

".....in a sector full of serial underperformers."============= Dorkland :D

[sideline]

$1.10 to $1.13 may be a good price to pay for a fair company,however I prefer to pay a fair price for a good company.!!..lol.
No fancy words or pictures,will disguise the fact MPG is an underperformer, in a sector full of serial underperformers.

Downgrades are one reason for the drop yesterday - I see Forbar did one.

The other issue coming up is the S&P index rebalance on 15 Sep. MPG's stay in NZ50 was borderline last time -
does anyone expect them to stay in the index this time around??
Some of the bigger transactions could be index fund managers adjusting their portfolios before the announcement is out?!?

[BlackPeter]

Interesting - just tried to correlate the MPG charts with some other companies from the building industry .... and FBU seems to be by ways the best fit:

9107
blue line - MPG;
orange line - FBU;

I wouldn't have thought that both companies have that much similarities ... so maybe it is more the general feeling (or mood)?

Other questions: is this last spike down really a "MPG special", something very temporary - or is FBU likely to follow?

Looking at the RSI (not in the picture) would I expect MPG to bounce back next week. Question is just - by how much?

[Beagle]

Interesting post and comparitive chart BP - Interesting comparing their relative SP performances. I would opine that the management issues at FBU are FAR worse than at MPG but fund managers seem to love FBU and believe their talk of recovery, (for reasons best known to themselves).

Sales flat at MPG but higher funding costs this year as the Aussie acquisition was debt funded half way through last year, (full years funding costs this year).
What does this suggest for net profit after tax next year ? Normalised this year was $21.3m excluding acquisition costs of Aussie company but FY18 to include a full years funding costs so where do we see FY18 profit accounting for that ? (Note interest expense moved from $3.215m to $4.183m from FY16 to FY17 due to the extra 6 months of funding costs of the Aussie acquisition made in Sept so we would expect a similar sized increase this year to reflect a full year, approx. $1m in extra interest in FY18

Net Profit for FY18 ~ $20m ? 185.3m shares on issue gives EPS of 10.8 cps. What PE to ascribe to this company given their track record to date and the fact that its a cyclical building supplies company ?

[winner69]

Beagle - higher depreciation expense as well as new capex comes on stream. Will increase a lot over the next few years (like $25m capex in F18)

What divie next year - AGM preso slide mentioned low end of policy range (so 55% of npata instead of 67% this year) ....and with that capex they'll possibly havevto borrow more to pay it

Anyway Beagle - shouldn't you be using their aspirational financial targets (slide 16 AGM preso) as a guide for F18

[winner69]

Beagle's forecast - Net Profit for FY18 ~ $20m ? 185.3m shares on issue gives EPS of 10.8 cps. What PE to ascribe to this company given their track record to date and the fact that its a cyclical building supplies company ?

Jeez if Australia making another $3m/$4m this year that forecast NZ business is a disaster to put it politely - flat but sliding downhill.

Very competitive industry.

[Beagle]

Beagle - higher depreciation expense as well as new capex comes on stream. Will increase a lot over the next few years (like $25m capex in F18)

What divie next year - AGM preso slide mentioned low end of policy range (so 55% of npata instead of 67% this year) ....and with that capex they'll possibly havevto borrow more to pay it

Anyway Beagle - shouldn't you be using their aspirational financial targets (slide 16 AGM preso) as a guide for F18

Yes good point on the capex and depreciation Winner. As noted above, this is a very very small part of my portfolio so doesn't warrant the full Beagle work-over and sniff test.
Regarding slide 16 - You tell me on this one mate, full of creative corporate speak or do you believe them ?
Did this weeks ASM effectively amount to an implied profit downgrade ? Is their talk of the need to look for efficiencies in the second half tantamount to admitting their expansionary plans haven't really worked ? Is the Australian acquisition EPS accreative and if not when will it be ?
Do the directors and management truly understand that growth without growth in EPS is useless and unless they're growing the latter they cannot be considered a growth company ?

[JCM]

Downgrades are one reason for the drop yesterday - I see Forbar did one.

The other issue coming up is the S&P index rebalance on 15 Sep. MPG's stay in NZ50 was borderline last time -
does anyone expect them to stay in the index this time around??
Some of the bigger transactions could be index fund managers adjusting their portfolios before the announcement is out?!?


I'd also be interested to know peoples thoughts on this. How likely is it that MPG would be removed from the NZ50 and what would be the ramifications of this?

Just had a quick play around on a Sunday afternoon...

MPG comes in at no. 88 of 167 listed companies on the NZX in terms of market cap ($209,477,237).

In terms of capitalisation for companies in the NZ50, MPG comes in at no 46 of 48 (only 48 companies in the NZ50 according to Wikipedia??)

MPG is 1 of only 3 companies in the NZ50 in the building sector - FBU, MPG, STU (STU is no 47 of 48 in terms of capitalisation).

What alternative companies in the building sector could replace MPG or STU in the NZ50? It doesn't look like there are many options available in this underperforming sector. Could the NZ50 reduce exposure here?

As some have said, this correction looks overdone. Thankfully sold old at above 140 with a minor profit. However, that doesn't mean I could resist trying to catch a falling knife on Thursday and Friday... Average cost price per share at 116. Bring on the recovery / dead 'possum' bounce :t_up:

[Beagle]

Beagle's forecast - Net Profit for FY18 ~ $20m ? 185.3m shares on issue gives EPS of 10.8 cps. What PE to ascribe to this company given their track record to date and the fact that its a cyclical building supplies company ?

Jeez if Australia making another $3m/$4m this year that forecast NZ business is a disaster to put it politely - flat but sliding downhill.

Very competitive industry.

Hound probably just having a bad mood day. Had another look at presentation material, what they said was N.Z. sales were flat, not group sales, (important difference I misinterpreted earlier)
That $20m just a real quick back of the envelope Sunday work-up mate. They did say in their ASM presentation that they are still confident of profit growth in FY18 and believed that first half profit for FY18 was on track to match last years good first half profit (which I note was $12.5m normalised).
External advisors looking for efficiencies probably a good thing...got to look to move that 18.3% EDITDA margin up over 20% as they suggested in their page 16 wish list.
Management looking for production efficiencies for FY19 from new technology plant probably offsetting capex funding costs and depreciation (I would hope).
Maybe they can improve on FY17's normalised profit of $21.3m ? I would hope so but my confidence level is best described as only very moderate.
This will remain as a low conviction, very low portfolio allocation for me. You can make a reasonable case as a dividend yield hold 7.6 cps fully imputed, assuming they can maintain that gives (7.6 / 0.72) / 113 = 9.3% gross yield.
I guess the key question is can they grow EPS ? (I think the jury will be out on that question for quite a considerable period of time).

[winner69]

Yes good point on the capex and depreciation Winner. As noted above, this is a very very small part of my portfolio so doesn't warrant the full Beagle work-over and sniff test.
Regarding slide 16 - You tell me on this one mate, full of creative corporate speak or do you believe them ?
Did this weeks ASM effectively amount to an implied profit downgrade ? Is their talk of the need to look for efficiencies in the second half tantamount to admitting their expansionary plans haven't really worked ? Is the Australian acquisition EPS accreative and if not when will it be ?
Do the directors and management truly understand that growth without growth in EPS is useless and unless they're growing the latter they cannot be considered a growth company ?

Bolded question above

We all need aspirations eh

But I would bear in mind that as I said earlier top of cycle in 2008 to current top of cycle (maybe now) revenues have only grown at 3% pa ......and about the same level of profitability. And that's after years of becoming more efficient and more productive etc etc etc

They were lucky they could paint such a rosy financial picture at IPO time from using a starting point at the bottom of the cycle when things were pretty quiet,

Very competitive industry - even for market leaders.

[Beagle]

Bolded question above

We all need aspirations eh

But I would bear in mind that as I said earlier top of cycle in 2008 to current top of cycle (maybe now) revenues have only grown at 3% pa ......and about the same level of profitability. And that's after years of becoming more efficient and more productive etc etc etc

They were lucky they could paint such a rosy financial picture at IPO time from using a starting point at the bottom of the cycle when things were pretty quiet,

Very competitive industry - even for market leaders.

So real inflation adjusted sales growth of only ~ 1% per annum.
Can anyone tell me a good reason why a cyclical building company with virtually no real long term growth should have a PE of higher than 10 because I cannot think of any sound case for a higher PE than my standard cyclical one of 10 (Ben Grahame used 8.5 for no growth companies but long term Govt stock lower than the 4% prevailing at that time so 10 is fair now for a no growth cyclical company in my opinion).

If they can match last year's normalised 21.3m profit, (to be honest I am skeptical about their claims they can still grow it a bit because the tone of and what they said appeared to give them so many out's and caveat's) then we are looking at 21.3m / 185.3m = 11.5 cps for FY18. Put a PE of 10 on that and you have $1.15.

They need to prove they can grow EPS for a SP recovery, in my opinion. I would caution new and inexperienced investors not to expect a quick bounce in the SP with this one.

[winner69]

AGG eps accretive?

Last year 8 months Ebit $3.2m so full year F18 should bet least $5m.

Even if all the interest on extra debt applied to AGG still be eps accretive (no shares issued)

[Beagle]

AGG eps accretive?

Last year 8 months Ebit $3.2m so full year F18 should bet least $5m.

Even if all the interest on extra debt applied to AGG still be eps accretive (no shares issued)

Thanks, good point. Gearing still okay too as long as you believe their intangible assets value.

[winner69]

Thanks, good point. Gearing still okay.


Does raise question whether they paid too much for AGG - heaps of future growth built in to the price

Booked $31m of goodwill relating to this acquisition

[Beagle]

Does raise question whether they paid too much for AGG - heaps of future growth built in to the price

Booked $31m of goodwill relating to this acquisition

Must admit I have been pondering that question myself today. The other question that flows from that is seeing as management obviously have an absolute truck load of work to do with their N.Z. operations actually trying to deliver real EPS gains from recent years strong sales growth (something that appears to have been unachievable to date) doesn't this Australian acquisition suck up a lot of senior management time, energy and resources, things that are desperately needed to make N.Z. operations more profitable ? What is the point of more and more sales growth unless it results in EPS growth ?

[BlackPeter]

Actually - 4 traders updated their numbers in reaction to the AGM. New target price is now $1.39;

However - even if I take the reduced EPS predictions assuming
10.5 cents for 2018 (my take based on them not improving on 2017 - 4 traders assumes still 11.5 cents), 12.1 cent for 2019 and 12.6 cents for 2020

than forward PE at current SP is 9.9 (well, say 10) and the EPS CAGR since 2012 (where EPS was 4.7 cents) would be 13%.

Putting this into beagles modified Graham's formula, (EPS * 10+g) then I still end up with a value of $2.41 per share ... and if I use the original Graham (8.5+2g), than it would be even $3.62 per share.

Obviously - if all the growth stops immediately (something neither the company nor 4-traders assume, and unlikely in a growing building market), than the share would be currently fair priced (well, PE 10 is actually not too bad on the uptrend of the growth curve).

I can only assume that there is still either something horrible lingering undisclosed in the dark ... or the market grossly overreacted. I assume the latter, but time will tell.

BTW - good news for downgrade counters ... this one was number 3 - i.e. all up from here :t_up:

Ah yes ... and the new expected peak for the NZ building market is now forecasted for not earlier than 2020 (according to some RNZ report I heard today) ...

[Fatboyj]

Wow I'm always impressed with the level of detail you guys post.

What is the likelihood MPG will be taken off the NZ50?