Peter Reidy, head of Fletcher construction, leaving to return to KiwiRail as CEO.
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Peter Reidy, head of Fletcher construction, leaving to return to KiwiRail as CEO.
one of Wellington's bigger constrution companies gone belly up
https://www.nzherald.co.nz/business/...GMV4VNXDLKJDM/
Still no slow down with new builds. So much demand in system couple with Supply Constraints prolongs the cycle.
https://www.nzherald.co.nz/business/...AG6KLB3ZV224A/
"On-market share buyback programme of up to NZ$300 million through to Jun-22"
Does anyone have any idea how far they are through this ? Is this visible somewhere ?
Hopefully good buying for them at the moment.
At $6.2 it would be about 6% of their shares...not insignificant.
Does anyone know what they do with the shares they buy back?
Thanks Southern Lad, I missed that.
Bull, 25% to go, still quite @ few so should support the SP for a bit longer.
But yes…price might come down a bit more, given where market seems to be heading.
All the better for the remaining 25%.
Geez imagine the price without buyback support
What % of the total capital are they buying back to cancel ?
Yield starting to look good on this old Tonka Toy outfit.
Tonka Toys and sand pits. The construction industry is still going to be needed even in STAGGA incineration times.
Headline is "Why is Fletcher Building trading at a single digit PE ?" i dont subscribe to this, but maybe someone here who does can tell us any bits that might be of interest
https://www.nbr.co.nz/node/234445?ut...ce=NBR%20Today
https://www.nzx.com/announcements/392238
Buy back finished ...they bought and cancelled 5% equity ...saved just under $ 17 mil from stated amount as SP was down
Meanwhile, Fletcher Building appears to have suffered from this souring of sentiment towards homebuilders. This is probably why the share price has been down in 2022 despite consensus earnings upgrades. For more detail on how the relationship between share price and earnings revisions work you can refer to this previous article. Ultimately this situation will resolve with either the share price recovering or consensus earnings forecast falling.
Chart showing the recent bi-furcation between earnings revisions and share price
While Fletcher Building hasn’t been savaged as badly as US homebuilders, while half of its revenue in New Zealand comes from residential, a chunk of that will be renovations and repairs, and none of its revenue in Australia comes from residential, it is estimated to be trading on a price to earnings ratio of 9x forecast earnings. That’s not 4x cheap but it's still cheap and cheaper still when compared to the broader New Zealand market where the average PE is 20x. There can be little doubt that the fizzy top is coming off house prices here, but there remains a very healthy pipeline of activity due to capacity constraints creating a backlog of work.
It will be fascinating to see how house prices respond to changing affordability and changing underlying demographics. In the US one part of the puzzle is already baked in, the coming wave of Millennials that will be looking to buy a house over the next decade. In New Zealand that part is less clear, our demand for housing is driven by migration. If there turns out to be a pent-up surge of migrants heading to New Zealand from China, Europe and the US, we might just see house prices stabilise around current levels.
https://www.nzx.com/announcements/392238
Fletchers announced the completion of its share buyback program - having now purchased 5% of outstanding shares.
Bravo. THey should immediately start another 5% buyback.
They will need some in reserve for new Tonka Toys with all the fancy new controls. High tech toys are the new rage all over the world...
CAP EX ...
Yet another Aussie major construction company in trouble - possibly one reason why Aussie instos have been bailing out of FBU.
https://www.news.com.au/finance/busi...286074303cb503
think grant gave it away yesterday when talking about the ocr increase and inflation saying housing supplies was a big part of the problem. fbu in comcom hairs
FBU now is more then 10% Gross Yield basis if Marketscreeners future dividends can be trusted ...
NZX has a different number - FBU Fletcher Building Limited Ordinary Shares - NZX, New Zealand’s Exchange
Maybe it could be where the latest interim divvy was imputed, but the previous FY divvy in August last year wasn't? (nor was recent divvies prior to that).
Or maybe also made some sort of allowance for the buyback and 5% less shares on issue.....
https://www.marketscreener.com/quote...49/financials/
Its saying future fully imputed dividends of 37 , 41 and 41 cents ahead ...
On 5.50 SP it comes to 10.1% Gross yield
Jarden on FBU -- reducing target share price on back of housing demand falling away next year
Swanepoel’s expectation is for earnings before interest and tax (Ebit) of $768 million for the year to June 2022, ahead of Fletcher’s own May 3 guidance of $750m Ebit, adjusting the target share price from $7.46 to $6.14 on a discounted cash flow basis. Jarden has upgraded expectations of 2023 Ebit to $875m while dropping 2024’s Ebit outlook to $592m. Swanepoel said house price moves are the biggest driver in the housing demand model, so he expects rolling annual housing consents to fall from the current 50,000 per year to below 30,000 by early 2023
.
So with a target of 614 current share price seems about right but isn't it a long way off the 8 bucks its was heading to not that long ago
https://businessdesk.co.nz/article/p...18-says-jarden
That Jarden F24 forecast of $592m is about the sames as they made in F19
Suppose that's what happens in a cyclical / boom bust industry - profits go up and profits go down
FBU's underlying earnings are solid due to the oligopolistic nature of the industries it operates in.
The cream and windfall have always been from building and selling residential houses - just think of how much its land bank alone has made for FBU in the last 5 years.
https://www.nzherald.co.nz/business/...P6ZBZU7JTOEE4/
Fletcher Building takes legal action over insurance for $750m NZ International Convention Centre project
Quote:
Big insurance groups back the project.
The Herald reported in 2020 that more than 80 per cent of the cover was held by American insurance giant Chubb, with the rest held by Australia's second-largest insurer, QBE, and Warren Buffett's Berkshire Hathaway.
Chubb operates in 54 countries and had more than US$174 billion ($273.3b) in assets and collects around US$38b in gross premiums.
Australia's QBE Insurance Group operates in Australia, North America, Europe and the Asia Pacific region.
Berkshire Hathaway is the world's largest financial services company by revenue and Buffett, its chief executive, is one of the richest people in the world.
Chubb is listed on the New York Stock Exchange and claims to be the world's largest publicly traded property and casualty insurance company and the largest commercial insurer in the United States.
Fletcher is an insured party under both its contract works insurance policy and third party liability insurance policy.
What could possibly go wrong ? :)
https://www.nzherald.co.nz/business/...FGYZV75IRWGM3M
(might be paywalled)
Let hope FBU is this time able to play its hand properly ...
Quote:
It's been reported that 94 per cent of the GIB market controlled by the GIB board, 89 per cent of the glass wool supply controlled by three firms, and just two companies control 85 per cent of the concrete industry.
...
"And one of the Jarden analysts Grant Swanepoel looked at Fletcher's dominance recently and found that it held 94 per cent of the share on GIB boards via Winstone Wallboards, 55 per cent of the cement market and 40 to 50 per cent of glass wool insulation. And Fletcher's Placemakers has about a quarter of the merchant market in terms of small to medium-sized buildings."
Surprised, not surprised.....
'Error' behind violation of Gib policy | Otago Daily Times Online News (odt.co.nz)
At current prices FBU yield is over 10% Gross ...Million dollar question ...how safe is the yield for next two years ?
Great question ... and probably anybody's best guess.
It appears they played their hand again really bad with the Gib bord saga. Instead of looking now like the white knights saving the NZ housing market with their Gib board monopoly by supplying (just) sufficient Gib board (even if its three times the world market price), they couldn't even manage the easy predictable building boom (building consent + 12 months) and look now more like the grinches who spoiled the current building boom.
Blatant incompetence.
Lets hope the market isn't punishing them boo bad. Kiwi building market seems to be easy to please as long as FBU is the supplier. Lets hope customers don't wake up from their slumber.
FBU just needs these customers happy to pay three times the world market price and not moaning for getting product 6 months later than anybody else. As long as they hang around, everything should be fine.
I'm not really qualified to comment, as know very little about FBU, but I will anyway ;-)
We are now back to pre-covid pricing for this stock, a period in which the SP languished for about 18months after some losses if I recall correctly. What really pulled them out of the doldrums? Covid sugar rush money, low interest rates, property boom, large scale gov infrastructure spending...all that sort of stuff? I'm only guessing here, so correct me if I'm off the mark. Can't help but think this kind of industry is something of a ponzi scheme, with the next job helping to pay for completing the current one, which is all well and good when things are on the up... Time will tell, but can't see them maintaining a double figure yield in today's environment, and won't be surprised to see it get halved quick smart, and that may be an optimistic viewpoint...plenty of headwinds...I'll sit on the sidelines for now.
The one good thing about the construction industry is it’s usually the first benefactor of fiscal stimulus once the economy goes into recession. I.e the govt of the day will announce a big multi billion dollar infrastructure spend
Sam and our Oliver going to sort Fletchers out
Fletcher Building meeting: Simplicity seeking answers to GIB board shortage
https://www.rnz.co.nz/news/national/...board-shortage
Well, it looks like he found another way to punish FBU:
from:Quote:
Simplicity will never use Gib again and is instead importing four containers a month from Thailand and plans to do so for about the next decade in its 10,000-home plans.
https://www.nzherald.co.nz/business/...thai-importers
(may or may not be paywalled)
https://www.nbr.co.nz/hunters-corner...+Newsletter%3A
Not a subscriber but the headline says it all
Fletcher Building's financial fumble
ANALYSIS: A $300m share buyback has left loyal shareholders worse off.
I like the idea of buybacks but FFS do it when the company is undervalued not over valued!
Yes they (in hindsight) really buggered it up. Poor capital allocators
Maybe they can do another one now to make it right ...Surely they can spare another $ 300 mil ...which will get them 9% equity now then 6% before ..:D
Not one of Tim Hunters best pieces ..... but its full of emotion and probably what punters want to hear
Seems to have overlooked that shareholders ‘received’ $275m ……funny though is that those shareholders don’t know whether they sold into into the buyback or not …they just sold because they wanted to.
And Fletcher have achieved their EPS accretion …..though some might say that’s good for management bonuses.
Yes, FBU might be worth less (market cap) than when buyback started but that’s not because of the buyback is it.
When the buyback commenced FBU was trading at 1.7 times Book Value
Today its trading at 1.0 times Book Value
Don't think the buyback had anything to do this ..... and many unknown shareholders are $273m have cash in their pockets
Cant go wrong buying FBU at or under book value?
Our Oliver first up on One News tonite about his visit to Fletchers with Sam.
One gets the impression that Ross Taylor wasn’t that interested and possibly has lost the enthusiasm for working for them. Maybe it’s Fletchers culture to wear our senior managers after a couple years.
Taylor been there coming up for 5 years ……becoming disinterested ….share price down from when he started …..time for a new CEO reckon.
PS - share price when he started about $7.00 ..... today $4.76
Another member of the unlucky club ..... might be great CEO but ill fortune follows them
CEOs get disinterested for two reasons mainly meeting someone ...either they dont care or it doesn't matter ....dont care possible as he lost interest in job or already decided to move on ...or he didnt care about the meeting as it doesn't matter for his business which he thinks is doing fine ...
But as he has done good job so far ...he wont leave on low note ...he will leave when FBU over $ 7
It has been hell on Earth for Ross Taylor - came into FBU to clean up the mess.
Found the mess to be even worse than he could ever imagine.
Just when he thought things were improving, the Sky City CC fire happened.
Then, COVID & the lockdowns.
He probably has had enough and has better things to do than listen to gripes about gib shortage - which in a big part is thanks to Ardern’s omicron lockdown. The gib factory had to be closed.
poor simplicity and nz shareholders association must have been told to f... off by fletcher building lol
Call for Fletcher Building chairman to resign, directors to seek re-election
NZ Shareholders Association chief executive Oliver Mander and KiwiSaver provider Simplicity (NZ) managing director Sam Stubbs have released a copy of a strongly-worded letter they have just sent to the company after an unsuccessful meeting on Friday
https://www.nzherald.co.nz/business/...EQM33MGTL542M/
Letter here. http://www.equity.co.nz/files/2022%2...U%20Letter.pdf
Seems Taylor OK in their eyes at the moment
Pretty telling chart from that letter to the Chair …..and basically covers duration as well
I see there’s a couple of Fonterra Directors on the Fletcher Board …..and a couple of BNZ directors …..almost like an old boys club
Possibly says a lot
come on winner(n) the chart looks its still going d d d d own...
cant be all down to jib board .. or concrete blocks and steel bar..
whos building all those new suburbs anyway ...
could go under 400?
Agreed. There is a systemic problem of underperformance and lack of accountability with FBU that goes back a very very long way.
Interesting fact, go back ~ 25 years and the share price closed at $4.88 on 30/09/1997, higher than it closed today. Just as well nobody is pretending its a growth company LOL. At best its a tradeable cyclical.
Good on Oliver for having a go. I doubt anything will change at this old boys club.
NZTX It's Kiwi build going to save the day? there is a plan right .....?
Craig’s go OVERWEIGHT on FBU
Their valuation $7.11
Our modelling results show that, despite the headwinds, the outlook for NZ’s residential building sector looks supportive of Fletcher’s medium-to-long-term growth and suggests the market is currently undervaluing the stock,” Parker said.
https://businessdesk.co.nz/article/i...letcher-shares
Paywalled?
Their recent past is not giving confidence to the market ...they need to show more consistency of dividends to get better valuations and respect ...but bad sentiment did help me get some 4.66 ...though I was very shaky doing so ...thats because they keep goofing ...lol
guidance re-iterated (apart from those pesky extraordinaries)
so 7% or higher yield seems reliable for one year at least and probably more.
Well the Sunday Rag out of Welly seem to be doing a dance around a recessionary fire .. from that
Jib issues will probably solve themselves, Demand for the four walls unless state sponsored will
probably fall on it's sword, like the market is showing signs of withering, while interest rates
& inflation rapidly head in the opposite direction ;)
Any new Convention or large Sports Centres on the future spectrum to get fired up about
(apart from a project to build a large cage around Mahuta to stop her being washed away
by a fast flowing flood from the three great waters) ? ;)
Attachment 13968
historically there is a lot of support around this area five and high fours.
Last months candle had a long wick , we're only half way through this month but looking similar so far. That said there is massive resistance up at 8 so it is going to be difficult to double your money.
And yes we probably in for a recession at some point , but I dont think we are in one yet.
today
Commerce Commission to reveal draft report on building supply market
https://www.stuff.co.nz/business/300...-supply-market
Just in time for the plasterboard crisis - which is now over!
https://www.stuff.co.nz/business/129...ustry-slowdown
Pathetic how slow governments move to control or remove oligopolies and monopolies.
Remember how it took total embarrassment in Korea for Helen Clark to finally strip Telecom of its monopoly?
Draft report 383 pages balance
That's a lot of words eh
What will come of the effort .... like last time zilch
Do the get paid by the page or something?
Often you can say more with less
market likes the announcement
Some handsome FY divvy to look out for when they announce numbers in couple of weeks.
Always interesting to see how ready mix concrete production is going - also a reasonable indicator of construction activity
Last 2 quarters have been negative v pcp -- so the touted boom may not be the case - things slowing down
And production only 6% more than June 2019 (3 years ago)
Long term trend below. (Source Stats NZ)
Need to remind ourselves how things can go during bad times like post 2008
$6 next week by this time?
see fb getting a write up today paper
Forsyth Barr notes that stocks like building supplies and construction company Fletcher Building and retirement village operator Summerset Holdings have seen drops of more than 30% from their peak, even though analysts do not expect a significant change of tone.
In a report this week, analysts at Craigs Investment Partners noted Fletcher Building shares looked cheap given their relative P/E valuation.
https://www.stuff.co.nz/business/opi...are-good-value
FBU results tomorrow ....Already flagged as superb at ASM ...Dividend will be 20 Cents ? Or more .
Next year 65 cents eps is consensus analyst call ...It sure looks cheap but it has past reputation of inconsistency which maybe keeping it down
Maybe gets rerated above $ 6 ...their last buyback price !!!
I think final divvy of 20c plus buyback of some proportion are two very highly likely scenarios from tomorrow's announcement.
Actually - I would prefer them to spend their time and effort into improving their business (i.e. sustainably increasing their earnings) rather than playing around with trying to manage their share price. But I guess this is probably the difference between an investor (who is invested) and a trader (who buys and flogs off whatever makes them money)
BP, financial engineering probably 'boosts' senior management incentives / bonus payments .... looking after themselves and hoping 'investors' don't notice
That''s why the Total Shareholder Returns TSR calculation includes buy backs and not just capital gain and dividends ... sneaky eh
Also doing investor friendly things dont take much time and brain power of top management to distract them from doing their job ...lol
They need to signal to investors that they care and will do everything possible to maximise their returns ...which not only includes working well but some investor friendly measures also . Best way to improve their tarnished image due to past mismanagements
At least the FBU share price is higher than the $4.80 they raised $750m at a few years ago.
Good plan .... raise zillions so they an have regular buy backs in the years after