Great post !
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Hey Percy .....MPG and MVN even stevens at a buck each
Looks like we need to think of this as a going backwards race
Reminder to self - downgrades come in threes!
FBU is latest proof.
They have already confirmed guidance for the first half so if there's a downgrade it will be for the 2nd half. I wouldn't be that surprised if there was a disappointing 2nd half. It's FY19 I'm more interested in and they'll really be no excuses for poor performance then. They're getting one last chance from me :)
Metro go on about this 3 quarter lag between consents and their own activities
Sort of suggests F19 could see activity in NZ being less than F18 (in line with how consents are currently trending)
Maybe F20 might be their big year
nonetheless Metro still making heaps of money
Interestingly from a TA perspective despite all the talk they never broke through their 30 day MA in the last couple of weeks and as such are still in a confirmed downtrend.
Please to be out as I think this sector is riddled with issues including not the least of them being an undersupply of quality staff, (FBU's management included).
Some reasonable transactions the last couple of days - another SPH notice coming?
Wonderful posts Couta1 and Balance.
Maybe punters getting a bit worried about the possibility of metro having a few fixed contracts which wouldnt be a good place to be with the nzd ‘collapsing’
Pure speculation of course ...but one never knows
http://www.nzherald.co.nz/business/n...ectid=11935390
"Intueri Education and Metro Glass are standout duds"
Interesting that no one here bothered to post this article from Brian Gaynor on 21 Oct.
Suspect the article prompted a few shareholders to bail out on 24 Oct when the market reopened after the long weekend? Would have had a few shareholders spend the long Labour weekend wondering if MPG will go the same way as IQE! :D
The other thing I don't understand about Brian Gaynor is the constant digs at MPG is not helping the company or share price confidence, yet Millford owns a good amount of shares in the company. It's almost like he's destroying his own investment
Brian and Milford do not write anything without a 'motive' in mind imo - be it market awareness, news worthiness, sending a message to directors & management etc. They know anything they write or stocks they buy or sell will impact on market behavior - short term anyway.
So read the article carefully, especially the ending and reconcile what is written with what Milford has done with MPG :
" Intueri and Metro Glass were the dud private equity floats of 2014 but the one consolation is that the latter was nowhere near as bad as Kiwi Bear and most of the other 1987 IPOs."
Milford sold down its shareholding by net 1% (up to 27 Sep 2017) at an average price of $1.54, and has not disclosed any further selling since then.
The cynical part of my assessment is that there is nothing to stop Milford from buying back a few of the shares sold at that price at a nice 33% discount to where they were sold?
Some of us remember how Milford behaved with Diligent - bought the stock all the way up, aggressively sold out for a huge profit and then, proceeded to bad mouth the company in every forum possible - the sp dropped by over 60% from its peak at one stage. Rumours and complaints emerged that Milford or its executives were buying back at that point.
History records that Diligent was subsequently taken over at $7.14 - so Milford actually missed out.
In and out for ACC...
Based off eps? or fcf?
Building consents looking all honky dory, with a highly correlated 9 month lag to MPG revenue, cash flow is looking promising for next couple of years.
Well I've certainly been taught a damn good lesson by this stock. It really has screwed me over!!
95 cents now. It's getting punished. Question is do I ride this out or get out?
Depends, what do you value this stock at?
https://www.nzgeo.com/stories/looking-into-glass/
Says here that NZ does manufacture glass and even export some!
Yes, there has to be to some extent as EBITDA is expected to be in line with 1H FY17 with revenue growth. As to exactly what extent, will have to see what revenue comes out at.
Margin erosion has been due to poor planning hence all the mgmt reviews etc. Lost efficiency, suspect too much labour planned. However, this still anticipated to recove in 2H and then even more so in FY19 as a result of PPE investment (significantly increases efficiency & reduces labour) and their strategic review.
Plenty of consents in the pipeline with a year lag to keep them busy for the foreseeable future. End of the day we can still anticipate a conservative 11.5cps for FY18 and a gross divi of 7.6cps, with margin growth, and therefore eps growth, coming on in FY19. Market price still seems a quite harsh given this.
Hope this strategic review changes the focus to margin optimisation, rather than top line growth - they have already achieved that. Record revenues, time to turn it into record profits.
Plenty of consistently small transactions on the bid side going through - suspect large SH is still bot selling and a few panicked sellers.
Appreciate NZD may increase input cost but would assume this is passed on to the final consumer, inelastic demand once those consents are issued. Also, increases cost of ready made imported glass so makes it harder for competition.
Confidence in the construction sector is waning. Business confidence is waning under the uncertainty of a cabinet with very very little business experience.
FBU also be beaten badly with the "inexperienced left wing coalition" fear stick today.
A good sector to avoid in my opinion. Classic value trap this one and FBU...really with a forecast of just 46 cps, (PE of 10 maximum for a cyclical building company at the peak of the cycle and with inept management) suggesting fair value is a long way short of the current price, holders only have their own stupidity to blame for their losses.
At least with this one trading on a PE of circa 10 holders can blame others if they get a beating from here but who can FBU shareholders blame but themselves for holding a stock with that track record in this environment on a PE of 15 ! Asking for a burning in my opinion.
MPG trading on a 1 year historical PE of 8.3 while forward looking EPS is expected to increase for FY18 going by guidance issued less than a month a go. By your own rule Mr Beagle of 10x - does this make it undervalued?
Very, very different to FBU - wouldn't touch FBU with an extra large pole at its current price.
I agree with FBU Beagle but you've got to think with MPG the current share price factors in a very negative view of the company and its future prospects. Afterall at the rate it's going a sub 160m market cap is on the cards, especially after it's pay out 7cps of dividends this financial year.
I sold recently cum election result at about $1.00 if my memory serves me correctly. The game changer now is the inexperienced left leaning coalition Govt and its impact on business and consumer confidence. Cyclical companies should trade at an average PE of 10 across the economic cycle. At the peak they should be about 7 and at the trough something like 13. With the cost of the wide ranging external review of the company and everything it does being booked into this years profit and loss account I see them struggling to make 10 cps this year. I think the real current PE is more like 9.5 at the current price of 95 cents.
I think there is downside potential possibly as low as 70 cps. (7 x 10 cps) Upside possibility remains too but I think downside risks exceed potential upside rewards at least in the short term.
Who can reliably say what effect this new political environment will have on business and consumer confidence at this stage ? I think the risk is pretty heavily skewed to the downside. That's my fundamental and pit of the gut assessment and of course then there's the technical analysis. This has been in a clear downtrend now and hasn't managed to break above the 30 day MA despite a couple of brushes up against that indicator.
I think prudent risk averse investors will wait for a clear break up through the 30 day MA line before reconsidering a meaningful position in this one. (That's what I am doing) FBU riddled with so many flea's there isn't enough flea powder in the entire country...you'd have to have rocks in your head to be invested in them but this one not so much but still looks like a classic value trap to me. It looks cheap but for a reason and that reason is the new left wing socialist experiment. Too early to say how that play's itself out but good luck to holders and I hope the new left wing don't inflict too much damage.
Fair points, but disagree with 10cps - given expected capex benefits from FY19 and directors/ceo buying reflecting confidence in recovering margin. Sales remain strong and growing, consents at record levels & NZ still needs more houses.
CEO better sort out the supply/demand planning issue, if margins are able to recover to historic levels or even close too at these revenue numbers, things will be very honky dory and EPS will exceed 12cps.
You've misunderstood me mate. I haven't made a prediction on 2019 earnings. To be clear I am saying that I see the potential for the PE to fall as far as 7 on the current year earnings of ~ 10 cps resulting in 70 cps if business and consumer confidence fall off the face of a cliff... Not saying its definitely going to happen but I do see the potential for it too happen.
Too early to try and second guess FY19 earnings at this stage but I would suggest you'd be wise to factor in a multi million dollar restructuring charge into FY19 earnings as a result of the current comprehensive review which itself could potentially run to be a seven figure sum, (knowing a little bit about how professionals like to charge) :)
And don’t forget these new houses Labour are going build to overcome a housing shortage that doesn’t actually exist is going to need millions of windows
And in metro’s own words windows mean glass
They'll only build a tiny fraction of their stated goal mate, you mark my words, there simply isn't the manpower capability in the construction industry. They've already said they're looking to partner with the private sector to meet that goal but anyone who has tried to hire a builder in Auckland lately knows there is a really chronic skills shortage so building another 10,000 houses a year is a physical and logistical impossibility and is almost as fanciful as their planting 100,000,000 trees per annum or was that a billion trees per annum...might as well be its Mickey mouse pick a number out of thin air stuff...
One should feel for Nigel(the CEO)...Purchased 275000 shares at $1.09 on the 30th of Aug 2017.He should have waited or what was he thinking??I suppose the same should apply for John Fellet of Sky....He was also buying when the SP was around $3.02 and now??
Some CEO's go "off track" on TA...(just like me:confused:)
It’s only a loss when you sell, so happy to play possum for 12 mths. Shame mpg been tarred with the fbu brush, completely different animals hunting in the same jungle, one’s a dodo, the other an ostrich, burying its head in the sand until a team of consultants digs it out.
What I’m interested in is how much money has been transferred out of fbu and mpg, and where on earth has it gone?
A2M? Well not today.
I'll play possum too. Gut says hold, living in the Chch CBD with glass buildings everywhere has to pay off? Fat red arrow looks very nasty hope it shrinks soon.
Jeez .....still dropping
I still wonder who that shareholder who offered to be a director but got told to bugger off by the Board was
Eek I need to sell something in my portfolio quickly so I don't miss out jumping on board this gravy train!
come to daddy
Top up time :t_up:
Anyone noticed someone buying up reasonable amounts off market?
a lot of off market trans (SP) going through in the depth, always on the ask side.
The shares tried hard to build a base at $1.00 and failed. This could be a buy when / if it eventually breaks up through the 30 day MA. I think risk averse investors will probably wait for that rather than trying to pick the bottom which could be who knows where ? One thing with a comprehensive external review of operations you cannot rule out a really significant restructuring charge against FY19 earnings and I suspect the market is starting to wake up to that prospect. Really its been quite the dismal investment for IPO investors with it currently trading close to half the IPO price more than 3 years on whereas the market on the other hand has done very nicely. Seems to me investors are starting to ask, why throw good money after bad ?..or maybe its just the Jasinda effect clobbering business confidence...who knows but why bother trying to swim against the tide ?
I agree Beagle but I've missed the ship here and it's very hard to jump off it at 90 cents with a 7cps dividend on the way. Ultimately I think I'll just need to hold this one for the long term and see where it goes.
The share market is acting like this stock is doomed and even if there is a large cost next year for restructuring if that's what the company needs to start making progress sobeit.
I personally wouldn't buy shares at this price but if it drops below 80 cents which isn't beyond the realm of possibility I might double down because I just think the market cap for this is quite ridiculous based on what we know.
You can fool all the people some of the time and some of the people all the time, but you cannot fool all the people all the time. Lincoln I think
Even before the ASM they were saying things weren't going to get better in a hurry. You need to read between the lines and understand the code.
Difficult to keep telling the same womderful growth story post IPO while realising that they needed to gradually wean punters off that story ...... big fail
Will still make about $20m this year F18 (normalised of course) ....where to in F19 is anybodys guess ...maybe F20 will be the year unless Labour have driven us all into a bust part of the cycle
Dont agree - the market is just trying to find a 'realistic fair value' for it ...which seems to be about 90/100
Book value is $156m (including all that goodwill) and market cap about $160m ....not outrageously stupid
Enterprise value about $260m - about 8 times EBIT - not outrageously stupid
I sold half my shares at $1.38 that I'd bought at $1.35 and the rest at just on $1 which was painful for me because I hate getting skunked or admitting I made a mistake, (occupational hazard for bean counters / beagles is they like to think they can sniff out trouble coming))...but it is good for the soul to admit it is impossible to get every decision right and you can't win every time and its also always good to take a loss on the chin to give one's ego a reality check.
I hear what you're saying mate but I really do think the tide is going out with this one and this hound is too old to bother trying to swim against the tide, too much hard work and my paws get tired :) Good luck with it.
https://www.nzx.com/announcements/309678
First to go....
Yes exactly, and just like your mother and mine told us all those years ago, when you see one cockroach in the kitchen, there is always more.
Bryan Gaynor clearly knows a mess when he sees it and continues to unload, with plenty more to go yet ! https://www.nzx.com/announcements/309695
BP had a very considered and well thought out thesis for investing in Metro. Did plenty of research and even bothered to do a site visit. Only thing wrong was he believed all the stuff in Metro's presentations, in particular I think he was swayed by the reported huge growth over the last 4 to 5 years not grasping that that only covered a half cycle (ie growth from the depths of despair which forced the company into what was essentially receivership to the peak of the current cycle). In reality growth form peak to peak was single digit % pa.
I lalo recall you Mr Beagle saying you though the Annual Report was a pretty good read and this was probably a company going places.
Sad BP hasn't commented on this thread for a few weeks as I would be interested to see if his views have changed much. But good to see that the cheerleader baton has been passed to Head Hunter. Hope he hasn't fallen into the same trap as BP by repeating almost word for word what the company says to convince us that all is honly dory.
About 90 cents is as low as it will go. Even bull... is now probably trading this 'baby' and from here Head Hunter may have the last laugh.
As investors we quickly learn [often the hard way] which companies achieve what they say they will do,and which companies don't.
If they achieve I buy more.If they don't I sell.
And like BP, I have had the wool pulled over my eyes a few more times than I would like to admit to.
But those companies do not get a second chance with me.
I think you mean FXL - I'd like to think they won't cut it down, would be a true disappointment... still not doing as bad as MPG (and yes, FXL's share price performance has been 'really bad' this past year). Crazy that MPG is still nearly 50% more expensive than FXL (pe ratio wise) - winner69, are you suggesting MPG could fall another 33% or so? Now that would well and truly make me feel much, much worse than how I feel with FXL (which is along the same lines as you I would think).
Maybe by talking about another completely different company, on a completely different forum can boost the share prices of both companies
Main thing wrong with metro leadership team is that they do too much strategising and preparing pretty PowerPoint presentations. With consultants on the team I dread what these presentations will look like in future
They really need some hands on execution ...lead from the top.
Consumer Intimancy and Transformation and all those buzz words are terribly impressive ....but getting out into the factory and onto building sites is what’s needed
Lest we forget how good they are
https://stocknessmonster.com/news-it...=ASX&N=1022859
Being flattered - never realised I am that popular ... ;), but as excuse for my silence - currently travelling on the other side of the globe and a bit time constrained to follow stocks I don't hold.
Apologize to anybody who bought the stock due to my posts ... but I am sure I added frequently "DYOR" ... and I normally try to write balanced posts - i.e. I am sure I highlighted as well the risks.
I sold out some weeks ago (around $1) and duly informed this thread ... I am sure the post at that time explains as well my current views on MPG.
Not sure I can add a lot of new info - I think we are still just at the beginning of the unfolding of the troubles of our building industry (FBU & Co) - and I probably should have seen earlier that MPG can't easily insulate itself against these. I see as well that they optimised their factory to provide customised glass for high value individual buildings - which may or may not be the big market of the future. Maybe we need more standardised state houses (with cheap Chinese windows) to resolve our building crisis?
How much is the stock worth? We well might have reached fair value ... but markets tend to overreact and so I think there will be in the coming year times where the share can be purchased cheaper than now.
Anyway ... give me another month or so and I might be back with some fresher analysis. I didn't gave up yet on MPG, but I think it is more likely to get worse before it gets better (otherwise I would not have sold around $1).
Fair comment and appreciate the update to your thinking which pretty much lines up with mine.
The massive amount of goodwill on the balance sheet is built upon assumptions of significant ongoing growth, forgive me I forget but I think its over 5%.
I don't see where that's coming from now that immigration might be down to just 40-50,000 per annum, (just 1% population growth per annum) and we appear to be moving toward a more standardized building model if Labour are to achieve their 10,000 extra homes per annum dream and that suggests mass standardized glass from China.
I struggle to see where their growth comes from...maybe we've hit the peak for MPG sales already for this cycle and its downhill from here. A little birdie tells me that MPG management don't / won't accept that viewpoint and are continuing to build their model based on good growth...Hmmm, lets see how that play's itself out.
Finally I remain concerned by a potential multi million dollar restructuring charge in FY19 from the current total organizational review, a restructuring exercise that might deliver some benefits to FY20 earnings but then again maybe the market has moved further against them by then too ? Classic case of a cat chasing its tail ?
Their FY17 annual report extols the virtues of taking a longer term view...well I'm afraid long term I see the potential for houses to be 3D printed, (already happening in Russia, 3D print a basic house in a single day) and much more standardised prefabricated flat pack housing built in factories in the future on a far more standardised basis and I think the future is smaller homes needing less glass and probably more and more of it from China. How else do me make housing affordable for young people ? The future is anything but clear and with this one the trend is definitely not your friend :eek2:
Phil has just found out how bad the housing shortage is - its 71,000 and he's inherited 'a disaster'
So probably more than 10,000 extra new homes a year - that's not millions of windows - its getting up to zillions of windows ...wow
Nobody has ever been stopped building a house if they really wanted one .....sois there really a 'disaster'? Change the theoretical average number of people in a housing unit in their modelling just a little and the numbers change quite dramatically
Happy to carry the baton winner, believe you have referred to me with an extra head before.
Beagle, Retrofit and Australia are the two growth sectors for MPG. Consents with a one year lag are also at record highs keeping revenue ticking along for quite some time. Sales growth isn't the issue, they are at record highs. Margin is due to poor S&OP planning. If they fix margin, earnings will grow.
How will they fix margin - reviewing processes and capex investment.
Ol Nigel has a lot to gain if he gets GM humming again.
Jeez, maybe all these fancy presentations have gone to my head!
Cheap Chinese glass will be the issue going forward I think. I really don't buy the retro double glaze story. These days you've got heat pumps with a coefficient of performance as good as 6:1 at very modest cost. I don't think the double glazing thing gets anywhere near the bang for your buck that a good heat pump and good thermal curtains do. Maybe you have a point with Australia but why did they bother trying to expand there when they quite obviously haven't got their own house here in very good order ?
Love S&OP
Metro says activity (demand) not as high as per their ‘expectations’ .....and do they admit they also gave operational issues as well
Makes you wonder how much a mess the production side would have been in if activity had been at expected levels.
Hope they still not assuming market activity will be increasing at 10% pa
I kind of see the retro fit story working to a degree, but do wonder how much volume it will actually put through. In a down turn, renovation work seems to increase and that may help prop up the dip in supplying new builds ever so slightly. I wouldn’t be confident the quantity will ever get to a level of significance without government intervention such as they did with the insulation and heat pump subsidy.
Regulatory standards on safety glass may be on Metros side to help fend off pre-processed imported glass. That said I was involved in the construction of an apartment block a number of years ago where the imported glass balustrade used was 1/6 of the cost of local (Pre Metro). The window joinery and it’s glazing was all supplied locally though...
It’s all about Aussie as far as I can see. I think that arm may well be where the growth lies and might just be the catalyst for regained market confidence should it prove successful. Time will tell...
Talking to a mate who's in the industry last night, double glaze also only lasts twenty years or so apparently so will start ticking over itself soon enough too.
Completely agree earnings are a shambles currentl given current revenues. But the market has definitively discounted the share price to account for this. Hoping management can actually do some management and get this mess cleaned up.
I recently had an office ,a bedroom and dining room double glazed. I didn’t do this to save money as it was very obvious to me there would be no payback as $4.5K buys a lot of electricity. The rooms that I double glazed are quieter and more comfortable. In the winter I can sit next to a double glazed window and not feel cold which is not the case for a normal window. I will be double glazing the remainder of the house this summer in preparation for the winter. My View is that Retofit d g should be a reliable earner for Metro.
Trex posted ‘ In a down turn, renovation work seems to increase and that may help prop up the dip in supplying new builds ever so slightly’
This is common thinking (a hypothesis) in home related industries (glass manufacturers, paint manufacturers, builders supplies, decorating, renovators and even homewares stores etc). I’ve done a quantitative study on several industries testing such a hypothesis and find it difficult to prove.
If anything the ‘ever so slightly’ comment is the optimistic view.
My conclusion is that companies believe this as it gives them hope that a decline in new building activity won’t hurt them (too much)
Metro share price on a real roll today
Obviously was oversold and the bargain / value guys out in force
Be catching up with MVN this week at this rate