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
$11.16 |
Change
-0.010(0.09%) |
Mkt cap ! $1.572B |
Open | High | Low | Value | Volume |
$11.19 | $11.25 | $10.96 | $2.708M | 243.1K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
1 | 629 | $11.10 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$11.16 | 1542 | 3 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 787 | 11.090 |
3 | 1863 | 11.070 |
1 | 813 | 11.060 |
1 | 813 | 11.050 |
1 | 3816 | 10.880 |
Price($) | Vol. | No. |
---|---|---|
11.160 | 1039 | 2 |
11.170 | 813 | 1 |
11.180 | 6312 | 2 |
11.190 | 813 | 1 |
11.200 | 1282 | 2 |
Last trade - 16.10pm 24/06/2024 (20 minute delay) ? |
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GUD (ASX) Chart |