REH reece limited

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Ann: CEO - AGM Presentation to Shareholders, page-8

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madamswer

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13/11/19

13:42

Post #: 41400580
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Originally posted by Pipes80 ↑

Yes I there, this is what I took from it.

1 - CEO peter very impressive clearly a very good CEO and the company is in good hands - he seems to be mostly focused on innovation through technology.. as a Plumbing contractor, Client of Reece and using it daily it has some advantages and is a bit clunky in other areas - still it's 1000% better then any of there competition.. My beef with it is as a business owner I'm effectively doing there staffs job by data entering all my purchases for no extra discount on my purchase price, it takes me more time to do this but the flip side is the order is guaranteed to be correct... but as a share holder I can see this is huge for profitability and staff reduction/sale...

2- Australian property is in a downturn and Reece will struggle to get more growth until that changes as they has Australia and NZ covered with stores already they can't grow through new stores... maybe into a different market is a possibility -ie electrical.. but this wasn't mentioned.

3- 15 American company's lined up to be sold to Reece after the Morseco deal went through - they bought Todd piping and are now the number 2 in Cali.. expect more acquisitions..

it was also mentioned that Texas has a greater population then Aus and far few stores and California is the 5th largest economy in the world, this is where all the focus is going to go, be it acquisition or new stores this is where it is going to happen. these states are also growing by population so this reduces the downside of a housing in a recession..

4- The US and NZ will never be the same profit margin as Aus.. this is the big one for me and probably the most disappointing thing to learn... it's complicated but the relationship between manufacturers and merchant is different to Aus and the major manufacturers in the US have far greater control, it will improve over time and as they grow but the product exclusivities which produce high margins of Aus ie Thermann, Posh, B Press, Dura....ect can not easily be replicated in the US...

5. they are still learning the US business so don't expect this a huge profit over night is a very long term play and if they can have slight increases in profit each year I will continue to add stock, pleasing to get through the first year with a profit this shows the American plumbers aren't pissed off they have been bought by a foreigner and continuing to shop..

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Thank you kindly for sharing those insights with the forum, @Pipes80,

When a company grows its top line organically by 5% and then invests all of that incremental margin into making itself more efficient and more technologically advanced, then that is a not the kind of company that I'd be overly keen to compete against.

REH Price at posting: $10.48 Sentiment: Hold Disclosure: Held
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