"I was a decidedly circumspect when Reece's acquired MORESCO, but Reece's most recent financial result provided the first signs of the value creation potential of Morsco (9% like-for-like top line growth after only been in Reece's hands for 12 months)."
I wonder how much of that 9% growth was purely a result of the US economy powering up towards the summit on the back of their cash rate heading back to zero and wall streets puppet trying to take them to the moon with no return rocket fuel. How much of it was systematic growth at the tail end of the longest boom in US history? Who knows, but it was not all Reece's handy work I suspect.
Your calculations above are really interesting and insightful and help to put this capital raise into perspective for retail holders. However, noting you were "decidedly circumspect" at the time of the Morsco acquisition and the share price hovered around $12.50 for four months or so post the acquisition. How does your scenario look if shareholders sold/reduced the 3,500 at $12.50 and re-purchased recently at $8-9. Miles better off no doubt and way ahead of the index.
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I know I am being a pain in the backside and foolishly gloating, but it does demonstrate the importance of sell discipline for value investors who also consider systematic risk in their risk profile.
I think the next 2 years for Reece will be challenging. There are no guarantees the $7.60 will be bedrock. Shows like the block etc on tellie will reduce in popularity as I recall they did during and post the GFC. People in Australia, NZ and the US will have less ability to spray their bathrooms in expensive cans of clear gloss. That is Reece's cash cow. Yes everyday plumbing works is the bread and butter, but the age of flashy dunnies and playing doll house dreaming will be on pause for 18 months or so. Australia's household debt to income cannot be willed up anymore by all and sundry ( all the vested interests will now start to bleat).
For example what happened to reeces free cash flow from 08 to 14?
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Last
$27.10 |
Change
0.630(2.38%) |
Mkt cap ! $17.50B |
Open | High | Low | Value | Volume |
$27.00 | $27.18 | $26.87 | $11.49M | 424.7K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
2 | 1732 | $26.99 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$27.10 | 1035 | 1 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 19 | 26.750 |
1 | 384 | 26.020 |
1 | 455 | 25.990 |
1 | 9 | 25.200 |
1 | 225 | 25.130 |
Price($) | Vol. | No. |
---|---|---|
27.150 | 500 | 1 |
27.200 | 20 | 1 |
27.250 | 2500 | 1 |
27.500 | 3124 | 3 |
28.000 | 7716 | 3 |
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