Balance said he would get big payout
Printable View
Yet another Uni Academic with too much spare time on their hands in Lock down wading in to make the news ? ;)
Haven't we seen this sort of thing before in an earlier lock-down ? ;)
I really liked the result, looks as though they have shed some of the legacy projects that weren't making any money and moved onto focus on their core business which they should be doing. Going into building houses and apartments at scale is where I think the opportunities can be. They are low margin, but at the volumes they can do, they can scale. Its hard to believe its taken this long to capitalise on the building boom that's taken place in the country from I'd say 2017 onwards.
I like the material repayments in the debt profile and the share buyback that is taking place. There also looks like there is a strong runway of growth going into the future which has just started. I'm still not sold on the management team completely due to the decisions they've made in the past of getting into some construction contracts they've lost money on.
I've been looking closely at the homes on Fletcher Living for a few months now and I'm surprised. Firstly, the going rates of these new builds, and secondly, how quickly they sell. Nothing really stays on there for longer than a month and the new supply gets gobbled up so quickly. Being at Level 4 however makes me wonder, how long it would take before it affects their business as whole. I'd say it would take at least a month at Level 4.
Disc: Not a holder but looking closely if it drops.
Actually, the residential division was by far the highest margin part of the business in the last 12 months, with a 21% EBIT margin, and also they presumably are using product from their own building supplies and concrete divisions etc - adding even more to company economies of scale.
Margin improvement has been key driver of earnings growth
F20 was a weird year so like what Fletcher's did let's compare things to F19
Sales are down 188m on F19 but EBIT is up 71m
less sales impact on EBIT was 14m (adverse) but that margin increase of 100bps improved EBIT by 85m
Still plenty of room for improvement I reckon ..... both sales growth and even higher margins
I note that FBU has used up its NZ tax losses and most of its prepaid tax asset (which stood at NZ$61m at June 2020) and the Investor Presentation states that they expect to impute the FY22 final dividend, so all things being equal the gross dividend yield will improve next year.
As the company has significant Australian businesses, they are unlikely to be able to attach full NZ imputation credits to future dividends paid, but even partial imputation credit cover will be a plus to NZ shareholders and also offshore shareholders due to the supplementary dividend regime.
Note 25 suggests they still have Australian tax losses with a carrying value (i.e. tax effect of the gross tax loss amount) of NZ$92m at June 21, so still some way away from paying tax again in Australia. According to Note 18 FBU does have a positive balance in its Australian franking account of NZ$35m, so they may have the ability to attach some franking credits to FY22 dividends from this existing balance.
In the past, FBU alternated between attaching franking credits and attaching imputation credits to dividends paid, so maybe the comment that they expect to impute the final FY22 dividend infers they will attach franking credits to the interim FY22 dividend? FBU previously explained that the alternating treatment was designed to maximise the benefit of the supplementary dividend regime for Australian shareholders.
Didn't realise this has gone XD so quick, almost in a blink of an eye.