Prediction is very difficult, true, and I guess this weeks lift is all about people like me that think the share buy back may have a positive pressure over time.
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Prediction is very difficult, true, and I guess this weeks lift is all about people like me that think the share buy back may have a positive pressure over time.
Huge respect to an Awesome Cool Cat, The thing about ‘blue chips’ is that once I went to the Auckland casino and all I did was 'Blew chips' I am sure that three years ago FBU was a 'Blue chip share' and they can go up and they can go down. So if it a case of a rising tide, maybe if the tide turns, then this (FBU) is a vessel that will have $300,000,000 poured into it in the next 12 months, I know what it feels like to be "well positioned" in a share when there is a very large shareholder getting out. So conversely a committed buyer should act a bit like a rope to the wharf and if strong enough may hold back the falling tide effect? But as I said in my first post I may get out at + 18% I am now at +8% so why don't we wait and see where this goes? :t_up: :t_down:
Penn ...you love buybacks ....you in on the SKC one as well.
Even though I am a Gambler I have a resistance/ aversion to investing in a pure play casino share, -so that is a strong no from me however I would look at TRA and ethically I have no issue with the developers of retirement villages, I am holding OCA and SUM, I do believe that FBU is now a steady ship, but as we know there could be a world event that would change it all overnight, how long do you stay 'cashed up' and watch opportunities pass you by?:p
"Almost everyone is investing with an eye to the next BIG crash" OK I agree, however can we come up with a strategy to benefit from knowing this. Just shorting stocks and waiting for October is not wise to me, as being 'all in' may not be the best either. I seem to remember around 2007 when the NZX had an 'across the board' correction and one of the only 'safe havens on the NZX was a large Oil and Gas (nz) company that was worth about a dollar a share and by 2008 was still around $1.05 --Trouble was they then went after coking coal and the rest of that story is too sad to mention and may be what (O.G. Oil & Gas) (Singapore) have in mind with their takeover, or perhaps the answer to my own question at 7.38 on Sunday, is the 'Gentailers" ??
Looks like the theory could work, not every day you can see a 2.3% lift, and just the first day of the 'buyback'
Good on you, you might have found the bottom and indicators certainly look happier than at that stage. However - still below MA200 ...
But then - the higher the risks the higher the potential rewards (or loss). Only time will tell.
Personally (looking at the fundamentals) not sure I would want to take the plunge no matter how good the TA looks - but then - FBU is one of these companies the market is typically pricing higher than I would value them ;).
Hard to say.
If we look at FBU's history with basically stagnant revenue (they made 7.1b in 2009 and analysts expect 7.99 in 2020 - this is less growth than the rate of inflation) and dropping earnings in combination with a constant stream of newly discovered (or probably better newly revealed) skeletons - not sure it would be worth the risk to buy them at all.
If we trust the current management and believe that they got now on top of all the issues - then a forward PE of 10 appears given the lack of growth appropriate ... which would calculate into a share price of $3.40 (but don't forget - there always are risks, and FBU has a lot of experience in getting each of them to blow up);
Obviously - If you see them as the next ATM, then all bets are off - but then again - FBU is performing worst during building booms, and didn't they predict that Australia (as well as NZ) is going to take off again?
Not my preferred investment ...
I guess FBU is an outstanding example for senior managers not always being right - otherwise they wouldn't be in the mess in which they currently are.
Have they been right in buying FBU shares over the last 12 months? Who knows, only time will tell. Share price was still around $7 12 months ago, i.e. timing to buy was certainly not impeccable (if they really bought 12 months ago - I didn't check the buy dates).
However - market does crazy things (like e.g.valuing a lemon like FBU less than 3 years ago at above $10). Market clearly overvalued them at that stage, it might do that again.
9,000,000 shares traded today and +2% guess they did not take a break from the 'buyback' wonder what will happen in the morning?
Looks like another attempt to get above the MA200 failed. RSI dropping, momentum going negative - and the US markets overnight won't help either.
Ready for the next wave downwards?
Attachment 10790
Buyback announced 26 June share price $5.29
Confirmation detAils 21 August share price $4.72
Current share price $4.76
Share price when buy back is completed ???
Can buy more cheaper has to be good for share holders?
Nothing the company has done since August 2019 has changed my view that this is a hopelessly mismanaged company deserving of a $3 handle. Buying back its own shares at over $5 was just the latest chapter in an almost endless litany of completely inept management, in my opinion.
I see analysts have now pulled back estimated eps for FY20 to 34 cps. No doubt average anticipated earnings for FY21 and FY22 will get revised as more skeletons come out of the closet.
Salt (investment advisors) reckon that Fletcher may drop out of the MSCI NZ index if the market cap drops any further.
Quote from their Sept report
"We may be seeing another interesting example at present, where Fletcher Building’s diminished share price is seeing it flirt with the removal threshold as one of seven NZ members of the MSCI Global Index. FBU announced a $300m share buyback in late June and they are executing this with quite some vigour. For example, it accounted for 47% of on-market volume on 26 Sept, 40% on 25 Sept etc. We may be too cynical and FBU doubtless views itself as undervalued but our observation is that more normal levels for buybacks tend to sit in the 10-20% region. Personally, I’d save my firepower for the tens of millions of shares that will be offer if it does fall out in November."
Had a quick look at the MSCI index to verify this https://www.msci.com/documents/10199...2-006f3d10bf8a
Indeed looks like this could occur, with fletcher the lowest market cap of the 7 in the index. Not sure exactly how this will work in Nov, but we could have a large forced seller.
Welcome to the forum Leemsip, an excellent first post !
Thanks beagle. Long time lurker
hope fbu are not cutting corners in there building construction.
Too many of our buildings are broken. We have been warned
https://www.stuff.co.nz/business/116...arned#comments
One thing the media has missed is the building guarantees around cladding in that the product only has to last 15 years now , another wave of broken leaky homes in the making.
In the last few days I have read several reports of multi million dollar disputes FBU is involved with. Maybe its a media beat-up but it seems to me there's a huge range of very serious problems this company is grappling with. Does anyone know the final cost of for example, the International Convention centre ? Will this actually go over $1 billion against its first contracted price if my memory serves me correctly of just $420m ? Have SKC got a bargain or a lemon ?
the new new market mall only just completed started leaking already
Shoppers met with buckets and rags at the new $790m Westfield Newmarket mall
https://www.stuff.co.nz/business/116...newmarket-mall
So i would say fbu pronblems far from over
FLETCHER IN $31 MLN DISPUTE WITH MINISTRY OVER GREYMOUTH HOSPITAL
http://www.sharechat.co.nz/article/5...-hospital.html
Unquestionably it will.
As my builder tells it, there is always remedial work which needs to be carried out with large projects.
FBU’s problem was/is incompetence on a grand scale - underquoting on major projects by the hundreds of millions of dollars to win contracts because executives were rewarded and paid huge bonuses on projects gained, not profits made.
^^^^This. Gross incompetence and recklessness. The sign of a fundamentally sick culture. Extremely poor governance has also been a major contributing factor with very little construction experience on the board. I remain of the opinion this company is uninvest-able for the foreseeable future.
https://www.stuff.co.nz/business/pro...+2019#comments
Another Fletcher project doing "really well" $1.6m for a boring box in central Chch with Fletchers "wonderful" reputation for "quality"...what a "surprise" they're not selling lol Read the comments too...some good ones in there.
Ahh, a classic example of 'the Cobra Effect' or unintended consequences.
For anyone who hasn't already heard the story, in British Colonial India the British Govt became alarmed at the number of deadly cobras in Delhi so initiated an incentive system paying a bounty for dead cobras. Initially it had great results in reducing the population of snakes, but human nature being what it is, pretty soon some enterprising people started breeding the cobras to get the rewards. Eventually the British Govt realised what was happening and discontinued the incentives. Since the cobras were now worthless, the breeders just released them, creating a worse problem than originally started with.
Here is an idea. Why not sell the senior managers, directors and builders these apartments at full price as part of their salary package. They would be free to flog them off at the true market price - probably 70% less than what they are asking, but would still owe the balance due.
Another nightmare for FBU and SKC to navigate...oh my goodness. https://www.nzherald.co.nz/nz/news/a...ectid=12278706
So a worker heads off for smoko & inadvertently leaves a blow torch on.
hmm...imagine if they legalise marujuana.
Will be well covered by insurance.
Might be worth buying a few shares in order to attend the next AGM for the entertainment value.
Disclosure: already have a very small holding ... which is getting smaller by the day.
I would like to know what that material is that burnt like that. Surely all the materials used in a multi story building would be fire retardant.
From the recent NZ Herald article https://www.nzherald.co.nz/nz/news/a...ectid=12278779
Bitumen is used to e.g. waterproof roofs. It is not quite easy to set on fire, but if it burns (and yes, a blow torch will do), it burns ...Quote:
Smoke billowing out of the building mixed with melting bitumen layer on the roof was dangerous to people nearby
Ah - and here is a credible theory re the starting of the fire ... the primer used under the bitumen layer seems to be easier to incinerate:
Very difficult as well to extinguish - particularly given that this one seems to be (as well according to the article) sandwiched between concrete layers.Quote:
While the man, who didn't want to be identified, did not know what happened he said it was possible a person laying the membrane could have left the gas torch on near a primed part of the roof and that was what caught fire, not the actual membrane.
Sounds like an expensive repair anyway ...Quote:
“It is a very difficult fire to put out. The fire is wedged between two concrete layers in the roof. It is too dangerous to crew on the roof, but very hard to reach from our aerial appliances.”
Timeline of this fiasco of cataclysmic proportions. https://www.msn.com/en-nz/news/natio...cid=spartandhp
Expected completion date and final cost ?
My speculative guess, late 2021, total all up cost including damages payable to SKC for late delivery, $1.3 billion.
FBU's previously loss provisioning rumoured to have thrown the kitchen sink at it, won't be enough...will need the "complete bath" as well which is exactly what FBU will get from this.
Maybe they have insurance for the cost to rebuild but what about consequential damages SKC will be seeking for the substantial extra delay ? Fire commander saying its extraordinary difficult to put out...I guess a lot depends upon how devastating the extent of the fire is which is something that's not looking looking good at all https://www.stuff.co.nz/auckland/116...centre-on-fire
Yeah surely there is liquidated damages under the contract payable to to SKC from FBU due to delays that aren't force majeure. FBU probably has insurance to some extent to cover something like this but I'm fairly certain the insurer will want to be certain that there was no negligence/incompetence/lack of industry best practice in the fire starting before paying out...
The insurance payout will surely be contingent on FBU and its subbies having followed proper industry practice and taken all reasonable steps to ensure the place doesn't go up in flames like this...so the root cause determination will be critical to the outcome IMO. Disclaimer: I am not an expert in insurance matters.
How does negligence work with construction? A blowtorch “accidently” left on destroying the entire building is covered I assume?
If anything building site management comes into question I.e.what was the foreman doing while his crew was on smoko? Why weren’t there simple safety procedures for this work. Heck everyone knows to turn of the gas...
There must be a hefty premium and delay penalties added. Will head to court. Be wary investors.
Update at 10 am today.
https://www.nzherald.co.nz/business/...ectid=12278870
"SkyCity Entertainment Group and Fletcher Building chiefs will front at 10am today to update the situation on the convention centre fire and more information is expected to go to the NZX today too."
Wonder who the insurance company is?
fire still burning so the damage will be huge
I would have thought this event was sufficiently big with effects totally unknown, to halt trading for both FBU and SKC !
https://www.nzx.com/announcements/343050
"Fletcher Building confirms that Contract Works and Third Party Liability insurances are in place on the project."
Totally agree that insurance coverage is not a foregone conclusion. Notwithstanding FBU's announcement this morning there's plenty of wiggle room in some insurance contracts so I wouldn't take FBU's assurance at face value without reservation and does the insurance cover the potentially substantial claim SKC will be making against FBU for the substantial additional delay in delivery ?
No but its going to really hurt them. They should stop buying back their own shares and save the cash, they may need it !
Completely agree and was thinking exactly the same thing. The right thing is to halt trading until the effect on both companies can be reasonably estimated.
Mayor Phil Goff talking on breakfast this morning that the centre is unlikely to be ready for Apec in November 2021 ! So we're out now to sometime in 2022 or 2023 :eek2:
John Campbell called this building "seriously cursed" this morning.
I find it staggering with all the completely over the top Health & Safety regulations to cover every eventuality, no one thought if a fire starts on one of the higher floors during this construction project, (which is always a possibility ) how are we going to put its out. What contingency plans do we have for the upper storeys until the sprinkler system is installed? Where's the common sense?
Now we see the fire crews at street level, bravely but hopelessly trying to fight a fire 30 meters above them. From street level they can't even see where to aim the fire hoses & half the waters getting blown away anyway in the gusty winds.
These days everything has to be scaffolded, everyone wearing safety vests, harnesses etc, so many rules & regs, but no one thinks here we have workers using blow torches, flammable materials, all sorts of power equipment etc several stories up & no contingency for a fire.
To me it's seems like a case what goes around comes around? What do you guys think?
Karma or Cosmic justice if you will?
I remember all those years ago when the announcement was made that the convention centre would be consented in exchange for more pokies, I thought this is dodgy AF, somebody obviously getting some backhanders...
Personally I simply don't see the growth in eps that analysts are forecasting for FY21 and 22 and the current forward PE of 13.5 looks too high for a cyclical building company beset by problems, especially once with questionable governance and a culture of entitlement. https://www.marketscreener.com/FLETC...49/financials/
I think its a good short even at the current level.
YES I was going to say that earlier this morning. Karma for FBU as well...plenty of talk in the industry of some interesting processes they follow and they tendered on some land one of my clients owned and then mucked them around for many, many months before pulling out for no reason. I don't like the way "they" do business. As far as I am concerned they means FBU and SKC.
Hard to imagine that insurances would offer these days open ended contracts without caps. How big do you think the cap would need to be to cover this disaster (it certainly is not just doing another bitumen job, it will be at least rebuilding the roof and it might be rebuilding the whole thing)?
As well - who would be liable for damage to adjacent buildings and any follow up costs (lost business and similar) - a number of adjacent buildings and companies (including TVNZ) are currently off limits. I hear the city of Auckland needs to replan for the APEC 2021 summit - this won't be cheap, either. Lets hope Fletcher have a really good insurance policy and nobody here owns shares in that insurance company :p;
Regardless of the current disaster, previous government policies on apportioning risk (to suppliers, pretty much) may have saved taxpayer money in the short term but have contributed to some big construction companies falling over. Possibly contributing bigly.
A few unintended consequences as government procurement projects met their budgets, but tax revenue and bidding for large government projects not so much. The current government has however adjusted risk apportionment.
Net? No idea but these are not trivial events in time, cost, workforce availability, reputation, profit impact.
Joke going round Spark Sport is the root cause if fire - contractor on roof was watching replay of ABs and the picture froze and he put his blow torch down to get streaming back.
Sell the CEO is a clown. Doesn’t seem to realise the seriousness to his company and others. Smiling not a good look. Nothing delivered about their on site procedures and their known facts. The roof crew do know something. Damage control media advice woeful. Improve your comms team and advice. He seems to think the insurers will hand over a cheque. He said his fire control was adequate. Laughable. Sky CEO was good. He does know the name of the person who reported the incident.
Body language indicates he doesn’t want to be there and gives condescending answers.
Especially if the cladding is inflammable.
Marine ply is what I heard from a contractor in the construction game who has contacts in there. Covered with very thick butanol layer and a tar like coating on top of that. Burns extremely fiercely he said, which is something that's becoming self evident.
https://www.nzherald.co.nz/nz/news/a...ectid=12278862
Part of the interview.
Rather harsh saying that he was smiling while he spoke - that’s just the way he looks and speaks!
Still waiting for FBU shares at $4.00 - may need the fire to reignite to get there?