not an altogether unexpected reaction from the investment community but as a somewhere who sees this company as a very long term investment opportunity, I was happy, and was again impressed by the new MD.
I think the market didn’t like the customer power at play.
- Rebates up from 8 to 10%.
- Terms for customers being extended
- home branding impacting some lines (4mil impact)
- customers de-stocking (5mil impact apparently)
- the new deals sound like they are beneficial to customers in the short term (at the expense of GUD) with benefit to gud in the medium to longer term.
- new filter competition (bmc?), preventing price rises for RYco.
- gross margin pressure due to fx
- lower cash conversion due to investments in nwc
but having said all that there were certainly some positives:
- i think clearly their financing terms will be unibail-esque as I’m sure banks will be throwing money at them with rates where they are.
- They feel that home branding has reached a floor
- cash conversion guidance sounds very conservative
- Davey growing with volume, and price increases to come. High demand for some products.
- plenty of acquisition opportunities
- tailwinds from an extra 5 months of AAG this year.
And then the all important valuation...
With ebit growth forecast the company has a prospective ev/ebit of about 11 which seems excellent for a cash generative company that when all manner is going against them they still manage to report earnings growth. Net debt:ebitda is low and we can obviously expect bolt-ons in the near term.
To me the result seemed resilient and I’m a happy shareholder. If the market wants to have a short term hissy fit, then I’ll be waiting.
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Last
$10.10 |
Change
-0.010(0.10%) |
Mkt cap ! $1.423B |
Open | High | Low | Value | Volume |
$10.13 | $10.17 | $10.06 | $1.358M | 134.3K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
3 | 3257 | $10.08 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$10.12 | 2478 | 2 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
2 | 2834 | 10.080 |
2 | 3487 | 10.070 |
2 | 2694 | 10.060 |
5 | 3992 | 10.050 |
1 | 694 | 10.040 |
Price($) | Vol. | No. |
---|---|---|
10.120 | 2000 | 1 |
10.130 | 694 | 1 |
10.140 | 694 | 1 |
10.150 | 694 | 2 |
10.160 | 694 | 1 |
Last trade - 16.10pm 09/07/2024 (20 minute delay) ? |
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