Probably good - makes live harder for any foreign competition;
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They can build them for that but it causes other problems. Was actually discussing this point with some friends this evening and there are VAST amounts of land south of the Bombay hills that the Government could simply legislate must be rezoned residential and they could build a sea of prefabricated cheap housing. The problem then becomes that the Southern motorway becomes so congested people can't get to work unless they are prepared to commute for 1.5 - 2 hours each way. Good for MPG though :)
And Winnie The Fraudster wants to move the bottom half (port) of Auckland to Whangarei without any consideration of how to get the goods back to Auckland and further south !! Scary
Back on topic
MPG share price up 6 cents the last 2 days
Expect more today to close off the week with positive momentum
Fundamentals ain't changed since IPO = bright future
Chert wise - heading back to 128 being Hoop's support / resistance line ......and then to fill the gap back to 140 ......and then anything could happen because it'll be about half year announcement time
C'mon possums - still cheap.
Fatboy - hope you haven't missed out, never be sub $1
Yo W I did miss out on this buddy but it would have been a purchase from sales of other assets, which have appreciated more :)
And yep this is cheap, and seeing ST heavyweights investing at this level you got to think the timing is good to have skin in the game.
I bought in at 1.25 earlier, bummer, a 2 day wait would have done wonders. I'll get my affairs in order over the weekend then get some more on Monday.
Lets sell down people the naysayers are right :)
Nice to see more insider buying.
I had a chat with my inner possum this morning it went like this
Beagle - Winner thinks these are great value and what they said the other day wasn't that bad, still confident of profit growth this year
Possum - Yeah Yeah we've heard that sort of bold public relations talk before from many companies, it was basically a profit warning and Winner just talking his own book the mischevious hound he is
Beagle - Don't be barking mad, they just said things are flat
Possum - Downgrades come in three's, they're just softening shareholders up for an official downgrade in November, and there might be another one after that
Beagle - But look at all the insiders buying
Possum - You sure its with their own money and not some non recourse interest free loan from the company ?
Beagle - Can't say for sure but unlikely as they have to disclose financial assistance
Possum - Its a building company in the peak of it cycle and realistically the best you can hope for is to match last year's normalized profit of $21.3m that's a pretty ordinary company
Beagle - Yeah you're probably right and by the way I hate the term normalized profit but on 185m shares that's just 11.5 cps and there could be downside risk to that
Possum - You know you've always used a PE of 10 for cyclical companies so its only worth $1.15
Beagle - But they say they can grow over the years and they even say they're a "growth company"
Possum - Let them prove it then.
Beagle - Okay you win, its only worth $1.15 until they can prove they can grow EPS. I have mixed feelings about you Possum but you're definitely saving me a lot of brokerage.
Possum - All good, lets have another hug then. :)
A beagle and a possum, now that's good multiple personality disorder. Thinking hard of dipping my flabby toe in again.
In NBR today..."Market sees Metro's Glass as half empty."
4 Traders Ave target price has dropped again. Now at $1.34.
Bought a few on opening this morning. Not my normal way of trading, but thought it might be worth a small gamble.
Volumes are underwhelming for a suposed undervalued stock. Hope that cat didn't die from lead poisoning...
The share market is in the short run a voting machine and in the long run a weighing machine ...
We know now that MPG won't win a popularity contest, but we knew that before, didn't we?
Long term I still think it will weigh in :).
For a company with such a dominant share of the local market and a long track record of being in business they do a lot of talking about "learning" and talk in the behind the paywall article on NBR today was of some commercial projects with negative profit...Hmmm never heard losses described in such a creative way. Suppose old dogs can learn fancy new ways to describe ugly words like losses. Its okay for Fletchers to mess this up and the inference its not so bad if we mess up then either is it !
Thrust of the argument at the annual meeting seems to be...give us a break folks, we're trying and learning and trust us to spend more capex and we'll find more efficiencies...oh and by the way the Glass industry is a very tough industry to make money, don't you shareholders understand that ?
Chairman even asked for sympathy for his legs that weren't in good shape, (has had operations on them) but is happy to collect $170,000 in directors fees and actually wanted to raise the fees too.
I think if I was grading this company at present they'd get a C- and the teachers report would say in block capitals MUST TRY HARDER !
In a recent presentation they had this bullet point under commercial -
Current and forward book of work has been reviewed
Industry speak for whoops some of our contract pricing is a bit awry - affecting profitability
Solution seems to be (under F18 areas of focus) a national pricing strategy (ie someone in HQ checks all conmmercial quotes / tenders)
H217 Gross Margin 44% when normally 53% --- hmmmm
I did mention the Alexandra Park Apartments the other day - observers say hasn't started yet.
Like Fletcher's ! Board approval required now for them for fixed price tenders. I think the nub of the issue is there's too many sales managers on commission or incentive packages for volume / value of sales and they're quite happy to give margin away as long as they get their commission / bonus !
Had to close up shop on this one today...not the bounce i was looking for!...getting vibes that remind me of my time in the UK in 2007 towards the end of a construction boom...or maybe i'm coming down with a bad case of Jacinda Jitters!
Disc: my vibes do not qualify as financial advice
Your vibes are tuned in perfectly..
This bounce is/was very poor (~5%)..The momentum died within a day..the next 2 days incl today saw no momentum just very small wavers between +ve and -ve...Yep T rex jnr this cat's full of lead..
I bought in for the bounce thinking there was a bit of love for this stock...obviously not....
Kay you beat me to the door, I may give it a couple more days..
Guy on radio this morning was talking about NZ having peak construction and 'peak tourism' at the moment
Metro say 'We continue to anticipate that the strong residential and commercial construction markets in New Zealand will benefit Metro for a number of years to come.'
Possibility it might remain strong ....but growth might not be a given
I don't really care what happens in the short term. There's no way this dosent have long term value at this price point UNLESS the Australian business is a disaster which so far isn't the case.
We are in the midst of strong construction demand something both national and labour are keen to drive .
Well Hoop I still have my foot in the door. I didn't quite complete my order due to the selfish market running out out of offers! A few pennies left to make this a side show (or barely profitable if it jumps!).
It does worry me hearing that a politician wants to significantly lower house prices in Auckland. I don't see how that can be achieved without a recession!...and a good one at that!
I'm also not convinced that the construction industry is making a reasonable profit out of the boom (large companies that is). Maybe some of the non publicly traded companies are fairing well.
It seems to me that the price of construction is only going to increase. And will reduce demand.
Happy to walk away from glass...for now...might have another look through the window in November!
Picking the bottom,or guaranteed correct entry time.....!
Easy......
Ring your sharebroker and say you are thinking of buying a few MPG shares.
If the broker tells you not to, as he has just sold his wife's MPG shares,................BUY.!
It really works....
To cheer you up a little, MPG has NOT dropped out of the NZ50.
Ohhh $1 is back on the cards, truck positioned ready and waiting.
Against your sound advice, I will be loading .
My sound advice is not that soundly based.! I do not like the sector, and did not like MPG's result,or their record of underperforming.
I therefore have not done "full" research on MPG,and do not know whether the share price reflects the company is over priced or under priced.
Please take my comments as just a warning.There are a great number of companies I follow,and I think a lot would be safer investments.
I always think ,if in doubt stay away.
If I were to give advice it would be, that I often buy a small parcel of shares in a company,and when that company achieves what they say they will do, I buy more,and keep buying as they continue to do, as they say they will do.
If they don't I sell straight away.
What a good philosophy. It works . I bought these at 1.05 and am sitting
The article behind the paywall on NBR was titled "Glass half empty". Is the glass half full or is it half empty or it is simply half a glass of water ?
It all depends on your perspective. Stick half a glass or water right on the edge of the table and get down to floor level and look up and it looks half full. On the other hand looking directly down from above it looks half empty. Okay enough of the metaphors this is what I am getting at.
EBITDA margin fell to 18% in 2017...they can and have done better in the past, 20 and 22% in recent years and they have acknowledged they have made mistakes and are learning.
Their Annual meeting statements have been treated extremely cautiously by the market and most people expecting a flat result although the company itself officially at this stage is still cautiously optimistic of some profit growth. If one takes a glass half full approach then one could hope they can slowly grow earnings and the stock on a PE of 10 on 11.5 cps this year is currently worth $1.15 with potential for a recovery as they can prove earnings growth.
I guess those with only a small sized glass of this could simply leave the thing out in the rain and hope favorable economic conditions fill the glass a bit more and that management having received a rocket are working hard to restore higher EDITDA margins...(the possum approach).
All things considered including the pending election uncertainty I think the shares are currently about fair value.
Metro have heaps of goodwill on their books
It is supported by assuming volume growth of 7.9% pa over the next 5 years and then 2.8% pa growth forever. Management budgets that auditors are happy with.
We should believe them - thus $1.10 current share price is so cheap it's not funny (esp if factor in margin expansion as well)
All honky dory on the Metro front.
It seems to me that certain fund managers got their knickers in a twist about under-performance in a boom. If you can't make money in a boom, when can you make it? Just a few thoughts about booms...
In a boom, companies are tempted to ramp up, expand, recruit, borrow. It's a boom, there's a shortage of skilled staff, so unskilled staff come on the books, quality suffers, product is returned, deadlines missed, penalties ensue, profits disappear, then the bust happens and that company swiftly exits stage left (history of being unreliable, poor quality). Add into the mix that many construction companies are run by can do managers who hate to turn away work, not strategists, planners, and you have a sector that will always stuggle to make a profit regardless of boom or bust. Simplistic way of looking at, but I like simple.
MPG, I hope, are looking at the long term, not compromising quality, delivering on time, not expanding simply to meet demand, and therefore, not making big profits in a boom, but making sure they will still be around in the bust.
You want a tortoise in this sector, not a hare.
Good summary
Metro have essentially been around for decades and been through a few boom and bust cycles so know what they're all about .....and one of their strategic intents is to have a sustainable business.
They do tout themselves as a hare don't they?
Mind you mainly because private equity loaded them up with debt they did end up in liquidation in 2012 post the bust of 2009/2010. Take out the huge interest expense they were still quite profitable
Not always....but yeah often but in ways one does think of...Often a layman's paradox occurs..
Investors put their rosy glasses on and act on "logic" when they see a sector booming and dive into companies related to that sector...as the boom keeps rolling on shareprices should keep going up --right?....No, wrong!!....
If Mr Market is "irrational" and a booming sector company's shareprice loses it's up trend "logic" says the market will come its senses and eventually the "cheap" share price will rise to reflect the sector's/company's fundamentals (Benjamin Graham's short term voting machine long term weighing machine argument)--right?...No wrong!!!!!!!
The "logic" paradox commences when... company's shareprices after a while begin to slow down/maybe reverse thus underperforming their NZX indexes while their sector market keeps on booming...Disbelieve me.. then look at AIA ARG AVR FBU KPG MET(only just qualifies) MVN RYM STU SUM...
It's never a perfect world and some could argue with me using OCA PCT, maybe MET, PFI (maybe peaked recently?)...but the number of companies mentioned above is enough NZ examples to reinforce the worldwide correlation argument that there is no significant correlation between Equity shares and economy.
This argument seems illogical and a paradox to ones thinking but its a laymans paradox, fueled on by media hype and "media logic", which clouds the thinking of the best of us....
So why is this happening??...Thinking back to Market Cycle Theories provides an answer to a few questions..such as near the top of an economic cycle negative forces come into play..increased competition, lower profit margins, scarcity of supply slowing down production and raises risk of mis-quoting jobs due to time lags, new competition brings new systems of doing things upsetting the bemoths companies which are slow to adapt, the perceived overbundance of wealth within a booming sector upsets the public which forces the Government to act and install more regulations and controls thereby creating more costs...
The market top endgame is always oversupply...many cyclic sectors e.g property are very large ships at sea..satisfying sudden market demand shifts takes years to gear up and when by that time the market is eventually satisfied there are still many projects in long term production and when the satisfied market demand tapers off the market the industry motion carries on and oversupply results...Government is always slow to react too so expensive regulations stay in place....Think Titanic..
Equities are known as a leading indicator..the equity market is forward looking..yes a reborn market can happen but Benjamin Graham's famous quote is not always a given..
Using Charts with the companies above..most (RYM excluded) peaked around Sept to November 2016...What happened at this period?..How far forward is the NZ market looking?..Is the property market/economic cycle reaching it's end -game and the Equity market is a forecast warning?...or is it all Bullsh1t and the sector carries for much longer forcing the companies shareprices to correct upwards again?
Disc: recently bought..holding
So what are you saying? NZ will not increase but reduce the number of houses we are building? New houses will be built with less windows? Or are you saying that the builders who require at the moment a one to two week turnaround for getting new windows will be happy in future to order their new windows in China and wait for 8 weeks until they arrive?
I think it is easy to look at the SP trend and fall into a depression ... and everything looks bleak. And sure - everything can go wrong. Maybe the dear leader tests his first live missile close to NZ (lucky that Christchurch is out of range ;)) ... though this might even boost the windows market - who knows?
MPG are an established company with a huge market share - and there is no sign for demand dropping soon - and so far they kept their market share. There are many indicators for increasing demand, though. Their EPS over the recent couple of years was between 10 and 11 cents - and there is no indication that this will drop. Their share price at the moment is 110 (i.e. PE around 10).
They invested heavy into new equipment and have end of this year another manufacturing upgrade. Typically new equipment helps you to produce (after a learning curve) more efficiently.
Why would anybody buy 4.5% bonds if you can buy instead shares offering (without growth) a 7% dividend (plus imputation credits)? Even if the dividend yield would half (what nobody expects) they would still look good compared to bonds (due to the imputation credits).
Sure - if NZ Inc is closing down with the last person at the departure gate switching off the lights, they would have problems, but so would any other investment in NZ. Do we expect this?
Let the speculators do their job ... at some stage they run out of shares to sell - and then MPG will find again an appropriate price level reflecting its earnings and (if we so believe) growth potential). Some people though might buy very cheap shares ... and others will be sorry they sold them.
I think you paint a pretty realistic scenario of what may have happened. Hopefully they are learning from mistakes made quicker than Fletchers management are. Then hound suspects Fletchers have themselves locked into fixed price contracts that will affect the company for several years hence and reckons anyone holding that stock is barking up the wrong tree. Jury is out on this one and will be deliberating for quite some time.
No ..It's the lag effect.. Cyclical Industry response to extra demand very slow..industry response to a satisfied market is too slow...So like the past, in the future there will be shortfalls followed by glut....By the time the industry reaches the speed that is needed, surpluses will start appearing...Typical Cyclical stuff.. ..As mentioned on this thread investors attitude towards these companies that supply a cyclical industry depends on how well they perform during the industry's good times as a point of reference of how well they could survive during the not so good times...MPG is in that group that investors are taking a grim view of at the moment, as reflected by their discounted shareprices...
Serial underperformers manage to underperform in good and bad times.
They are consistent.
Nooooooo, its whats needed.
I think we all agree that there is a perception that MPG has underperformed, but against what benchmark are we judging this underperformance against? Is it a sector benchmark, or a market benchmark? If it's above average in its sector, but below average in the market, then it ticks a box for inclusion in a diversified portfolio I guess.
I actually find their presentations are adquately presented and the forward statements are positive but don't really overstate success and they often have "market dependant" on some of their projections.
THL is an example of VERY positive forward statements in their reports and of course they have been delivering. I get a lot more confidence from reading a THL report and I would do even if I knew nothing about the companies.
I think MPG is trying to say things will get better but I haven't seen them telling lots of porkies recently. Tbh they took responsibility at the share holders meeting (and they had to)...but I think you'll see they will be working very hard to turn things around. I doubt they'd want a similar shareholders meeting next year and if there was I'd expect some resignations.
Codecracker not a challenge this morning - only 58 seconds to complete
So did a DCF on Metro to give the brain cells a bit of a workout
Using Metro's own assumptions 5 year growth 7.9% pa for next 5 years (then 2.9% oa forever) and some margin expansion a DCF valuation is $1.92
Working backwards to current share price of $1.10 the market is only pricing in five year growth at 2.0% pa with no margin expansion
Seeing how Metro seemed to have pissed off many fund managers maybe current price is about right. Even so that in theory that should still give a 10% pa return plus dividends
Metro need to get the confidence of fund managers back before the share price will get to $1.50 plus. It is the big punters that really control the share price.
ACC included in the big punters group? I'd have thought with them jumping in others would have followed.
Brian Gaynor's view on the state of the building industry (not just) in NZ. Not MPG specific, but I think very relevant to explain as well their pain:
http://breakingviewsnz.blogspot.co.n...-that-got.html
Worthwhile reading - and MPG certainly would need to be part of the proposed solution (just in case the building industry wants to improve their lot)
BP - If you really want to know more about residential construction productivity read this (was mentioned in Gaynors article)
http://www.productivity.govt.nz/site...Report_0_0.pdf
double glazing one of the main contributors to costs building a house - factor in housing affordability
Interesting. Tens of thousands of highly paid consultant hours must have gone into this report. I am sure we are looking here at millions, probably tens of millions of taxpayer dollars.
On a first flick through it it appears they recommend lots of additional consultation and reviews ....
Are you aware of anything material which came out of this work? I guess at least it appears that our government realised already in 2011 that there is a problem. This must be a highlight ;)
But probably not a discussion for the MPG thread ...
Best summed up;
After all said and done, there was more said, than done.
Superb response perc.... Aesop ??
How many these days have even heard of him ?????
Only the old ones ... and they are apparently not capable to grasp new technologies (but this is a different thread).
Ah well - sound like we two know about him, so maybe windows manufacturing is the right thread for us ... even the old Romans (fenestra) and the Germanic tribes (window - Windauge - "eye of the wind") knew already about them :).
[QUOTE=janner;681976]Windows... In at $1.35 Out at $1.38. Wisdom comes from age ... :-))))))
Usually accompanied with less verbiage..
About the same time Metro mentioned 'flat' Comvita said with a bit luck earnings next year might be about the same as 2 years prior
Metro share price down 20% since - Comvita share price up 25% since
Punters obviously have more faith in Comvita's forecast than Metro's forecast
Just shows you how Metro is regarded by the market - almost become a market pariah and that's nota good place to be.
Very good point. According to 4traders FBU who are forecasted, (if you believe them) to recover their profitability very well in FY18, (I personally think the systemic management issues they are still working their way through will take a long time to resolve and then there's the effect of existing fixed price contracts still to be completed) FBU is trading on 13 times next years robust recovery number and 12.7 times FY19's continuing recovery number. Surely there are substantial risks to these forecasts ?
On the other hand, again according to average broker forecast MPG are trading on a FY18 PE of just 9.6 (forecast 21.2m), and FY19 PE of just 9.1, (forecast $22.6m) and FY20 average forecast is $23.5m so more growth to come then.
Honestly I see FAR more risks from known and unforeseen factors to FBU's forecast and then there's the PE difference which looks overdone to me even assuming they can make their optimistic numbers.
Fund managers just spitting the dummy mate..all getting on the back of Bryan Gaynor's article. Patient possums will get reasonably well fed with this one I reckon.
Don't want to get splattered all over the road so I'll just keep a small piece of one paw in this one.
This slide from full year announcement is pretty awful - H217 profits down 18%
Wonder how bad the slide will look for for this half year - especially in context of AGG contribuzting $4m plus ebitda v last year
Sure - but pretty old news, isn't it? Their story is that they had problems to get these new toys they installed before Christmas to run ... and had to introduce three shifts during the busiest time of the year to keep up with demand. They still made the revenue growth but had to pay lots of overtime to make it ...
So, yes - we do know why their NPAT dropped - and (unless you have better information) I don't see why we should not believe them. Sounds like a one-off problem to me.
The Calgary Stampede did not happen,or has not happened yet.
Appears there were an equal number of pick up trucks, and dump trucks, at the loading dock this morning.
"Today is the day, that yesterday you worried about,and all is well." [so far].
Forward PE on Steel & Tube holdings is just on 9. MPG being tarred with the same brush seems a bit harsh considering STU's well known problems.
Yes old news - share price was 140 when they showed that and market obviously took it in its stride and the share price hung around that mark for a while (did go over 150 for a day or 2)
Later news flat was mentioned and the market reacted
Wonder how flat half one is going to be?
The main reason i haven't backed up the truck on this one is because STU is on a current PE of 9.7. Also it has a lower market cap then MPG while also making more profit and paying a larger dividend. NTA is also more then STU's current SP. If MPG is no longer a growth stock (single digit growth is likely a best case scenario this year), it seems like MPG should be priced where it is currently on a PE of roughly 10 until it can show the market that growth is actually going to be attainable. Currently it just looks like MPG is going to follow the footsteps of STU performance wise, until management can show the contrary (if that actually happens).
Of course STU is also contingent on steel prices, but i'm not sure what the current outlook of steel is, and whether this is priced into STU's current sp.
Analyst presentation from late August https://www.nzx.com/files/attachments/263746.pdf
Lot of talk in there about looking for efficiencies, recent acquisitions and the tough and uncertain construction market too. A lot of similarities at first glance.
As I said last week, its hard to make a good case that MPG deserves to be on a forward PE of more than 10, (fair price $1.15 ). Really its up to management to prove it deserves a higher rating and until they do its quite possible we'll be staring at the cricket wickets like a possum stuck in the headlights for quite a while yet... 111 or thereabouts. I think FBU are dramatically over-priced rather than STU or MPG being seriously under valued.
Quite happy to stare at the cricket wickets summers on the way.more than happy to collect a div yield of just under 10%.
Also quite happy to top up @ $1.10-$1.15.I believe the hound is right its a fair price
Also add MVN to the over-priced list being on or about 13pe.
Disc: Broke my rule of staying clear of the construction sector and bought a small parcel today. On the face of it, the current price seems fair, and i think that the negative sentiment towards the sector may subside somewhat after the election. Worth a cheeky punt.
Stats NZ Building Activity Survey for June 17 quarter (first three months of Metro new financial year)
Total building activity in volume terms DOWN 1.2% on same quarter last year.
No building boom ......flat comes to mind
So we'll be languishing at this level for the foreseeable, possibly head lower to $1 during September?
At least this under performer is now off my radar and will put funds towards NTL SPP, possibly more into crypto bargains with this massive selloff.
article in NBR:
https://www.nbr.co.nz/article/value-...arter-b-207330
Apparently the value of building works increased over the last 12 months by 4.6%. This must be good for MPG as well ...
With all this good news coming out, why is mpg still languishing at these low levels and still heading lower? This is the one pooping most in my lap.
Couta you bought in recently cant remember? I bought in at 1.25. Strong urge to sever this tumour and cut my losses. This turd might need more polishing to find favour again, if ever. You still staying in or jumping ship?
One of my little philosophies I have developed is "there is always another time". That tends to apply to both buying and selling. My feeling is you have already taken the beating, so may as well see how it goes from here.
Some would say cut your losses. I think that makes sense when the company is clearly turning into a dog, but the jury is hung on this one I think.
Disc: Sold, almost by accident, my wee parcel prior to it going ex div for 1.39 (I got the jitters). So I'm not feeling the pain on this one, but have been there on others.
What you paid is more or less an irrelevancy. It's only ever worth what some else is prepared to pay you. So your save or sever logic should be based on the future from today. You only have 4 limbs to sever. My left arm is a bit uncoordinated but still serves a purpose...
Currently watching this one from the sidelines
Strongish afternoon saved what could have been a dismal day
Readymix concrete production could be a lead indicator for Metro NZ performance - like concrete needs to be poured before windows go in for a lot (if not most) of buildings
Stats NZ report Readymix production down 2% in the June quarter v same quarter last year and on an annual basis growth has fallen to 3% (growth steadily declining from the 13% reported in June 15 year.
Seems to mirror the Building Activity stats out the other day
Wonder how flat flat really is - we'll know come November (if not before)
That sounds about right, I do see the softening as a temporary lag though and that record activities are yet to come
That said, any growth arent likely to translate into revenue growth on paper until FY2019 so we might see the price hang around this level in the short term.
Thanks karlos for the heads up, if we do see any aggressive cost reduction come to fruition this year, it should hopefully offset the slowdown making the price attractive at current levels
Disc. Jumped in @ current prices
so here we are again at close to the all time low,is it worth a top up again? what do you think guys?