BLD - Boral Limited

[So_Cynical]

Here we go again...Boral trades below $3.40 i post about it, and the last 2 times ive done that (my only 2 posts in this thread) the price almost immediately bounces...did it in 2009 and last year (see page 1) this stock is screaming buy me again...perhaps this time i will?

All things considered the company has to be in better shape than it was the last time it traded at this level?

Chart below showing my previous posts in red.
~

 

[So_Cynical]

Here we go again...Boral trades below $3.40 i post about it, and the last 2 times ive done that (my only 2 posts in this thread) the price almost immediately bounces...did it in 2009 and last year (see page 1) this stock is screaming buy me again...perhaps this time i will?

I entered BLD last Friday at $3.25 ~ placed the order Thursday night, then left early Friday for a little trip and found out yesterday that my buy order did get filled....the SP has held up well in the mean time.

 

[Ves]

I entered BLD last Friday at $3.25 ~ placed the order Thursday night, then left early Friday for a little trip and found out yesterday that my buy order did get filled....the SP has held up well in the mean time.

More bad news today. Hard to believe they have cut their profit forecast by so much in just four months.

What are you plans with this one out of curiousity? It still looks like a dog to me! What is the catalyst for the share price turn-around in your eyes?

It has $3.3 bil in equity, loads of debt on top of that and they can only make $100-120mil? I think that's a return on equity of just over 3%.

 

[McLovin]

More bad news today. Hard to believe they have cut their profit forecast by so much in just four months.

What are you plans with this one out of curiousity? It still looks like a dog to me! What is the catalyst for the share price turn-around in your eyes?

It has $3.3 bil in equity, loads of debt on top of that and they can only make $100-120mil? I think that's a return on equity of just over 3%.

A pile of debt, declining profitability and ~$400m of CAPEX this year. Wouldn't surprise me if they're coming to the market cap in hand sometime this year.

CSR looks better of the two. Neither is particularly exciting though.

Just as a quick historical tidbit, I had a look through my family investment company's records just then, on the 16/10/1987 (great timing!) it bought BLD at $5.60. Over the period between 1987 and 2000 BLD was purchased at prices between $5.60 and $3.00. 25 years later and it's below its 1987 value, even with the benefit of a 20 year property bullmarket.

 

[skc]

More bad news today. Hard to believe they have cut their profit forecast by so much in just four months.

What are you plans with this one out of curiousity? It still looks like a dog to me! What is the catalyst for the share price turn-around in your eyes?

It has $3.3 bil in equity, loads of debt on top of that and they can only make $100-120mil? I think that's a return on equity of just over 3%.

That NPAT included 2 property sales which brings in $20-$24m. BLD needs a pick up in residential construction... it's just hard to see that with house prices still high. They are a good recovery candidate but it has been a slow fall rather than plunge - so no capitulation yet... Now, what's the usual timeframe for a capital raising after a company announces that there is no need for one?

Actually the share price recovered remarkably today considering the 3rd profit downgrade counting the first at the HY... a easy short at above $3.20 imo.

 

[McLovin]

That NPAT included 2 property sales which brings in $20-$24m. BLD needs a pick up in residential construction... it's just hard to see that with house prices still high. They are a good recovery candidate but it has been a slow fall rather than plunge - so no capitulation yet... Now, what's the usual timeframe for a capital raising after a company announces that there is no need for one?

Actually the share price recovered remarkably today considering the 3rd profit downgrade counting the first at the HY... a easy short at above $3.20 imo.

Not only that, they earnt $67m before significant items in 1H. So they're profitability has halved in 6 months, excluding property sales. They're going to struggle to pay their interest if things don't pick up.

 

[So_Cynical]

Forecast Net Profit After Tax was $128 million to $153 million...and is now $115 million to $139 million with the property sales and $100 million to $110 million without...and the SP fell less than 2%

http://www.boral.com.au/Images/common/pdfs/Media_Releases/ASX-Trading-Update-27062012.pdf

News Flash - times are tough and the building industry is getting hammered, the world is ending for the 5th or 6th time in the last 4 years...but of course it isn't actually going to end, building activity will pick up and the world will go on and Boral will do very nicely thank you.

As per usual i will stay in the trade and look to get a second parcel if the SP trades consistently below $2.90

 

[notting]

One thing that made me a little nervous was the caveat about selling the properties next to expecting that to be completed soon and no capital raising required in the short to medium term. Leaves the door open for them to say, "Oh to our great surprise, the sale fell through and we are going to raise!" Probably just jumping at shadows.

 

[skc]

Not only that, they earnt $67m before significant items in 1H. So they're profitability has halved in 6 months, excluding property sales. They're going to struggle to pay their interest if things don't pick up.

Total debt is $1.76B with the average interest something like 6.3% (just eyeballing the table on p.17 of the HY numbers) brings the interest bill to $110m pa. Over $1b of the debt is in $USD so any weakness in $Aud will increase servicing burden further (and they don't have a natural hedge with only a fraction of their income in US). $260m of the debt is due in 2012.

So.. FY12 NPAT say $105m, less $20m from property sale = $85m. H1 was $67m so H2 is only $18m... Add back 30% tax gives PBT of $26m. H2 interest bill is $55m so EBIT = $81m. Interest / EBIT = 1.47. Hmm... I wonder what the debt convenents say wrt interest cover but you'd think there isn't a lot of headspace at the moment.

Looking at their cash... Cash in hand at H2 was $214m. No idea what cash the property sale will bring in but let's say $100m. $400m cap ex earmarked for FY12 of which only $170m has been spent in H1. H1 operating cash flow is only $1.7m even though EBITDA in H1 was $237m.

So... cash at end of FY12 = $214 + $100 (asset sale) - $230 (cap ex) = ~$84m + whatever H2 operating cashflow is. The debt due is a concern but if they can just refinance they may not need additional capital. But things are certainly looking stretched for the times.

Iif I can work all this out in 10 minutes, I'd say they should raise a bit of money while the share price is still north of $3. Or a hedge fund or two will go on a shorting spreed... They only have an acting CEO so may be they will wait a couple of months after the new CEO is put in place.

 

[skc]

Forecast Net Profit After Tax was $128 million to $153 million...and is now $115 million to $139 million with the property sales and $100 million to $110 million without...and the SP fell less than 2%

http://www.boral.com.au/Images/common/pdfs/Media_Releases/ASX-Trading-Update-27062012.pdf

Read it again, So_C. $100-$110 including the profit from the asset sale. The $115-$139m are analyst forecasts.

News Flash - times are tough and the building industry is getting hammered, the world is ending for the 5th or 6th time in the last 4 years...but of course it isn't actually going to end, building activity will pick up and the world will go on and Boral will do very nicely thank you.

As per usual i will stay in the trade and look to get a second parcel if the SP trades consistently below $2.90

Considering saving that money for the cap raising...

 

[So_Cynical]

Read it again, So_C. $100-$110 including the profit from the asset sale. The $115-$139m are analyst forecasts.

Ah yes i see..so begs the question, why didn't the SP fall harder? it really should of...perhaps it was to be expected as we all know that building is very much in the doldrums, both here and in the US.

Considering saving that money for the cap raising...

I've gone back to my old position sizing policy (risk sizing) so can probably afford both..but i do like to buy in after a cap raising at a discount.

 

[skc]

Actually the share price recovered remarkably today considering the 3rd profit downgrade counting the first at the HY... a easy short at above $3.20 imo.

Got a short in finally at $3.18. Stop @ $3.25.

 

[skc]

Got a short in finally at $3.18. Stop @ $3.25.

Well that didn't work out too well. Closed at $3.21

I always trade badly when I think I can ride this for months all the way down to $2. May be I'd learn one day.

 

[So_Cynical]

(15th-June-2012) I entered BLD last Friday at $3.25 ~ placed the order Thursday night, then left early Friday for a little trip and found out yesterday that my buy order did get filled....the SP has held up well in the mean time.

Trade #101 completed today with the exit of 70% of my original capital, realising a 19.74% trade profit for holding 117 days....i have called bottom in this stock 3 times over the last 5 years and been proven right 3 times and yet only profited once.

Boral is a great company with a great global business and as such is a great stock to hold if your building a portfolio and revenue stream via a low cost entry and averaging strategy like me.
~

 

[skc]

Trade #101 completed today with the exit of 70% of my original capital, realising a 19.74% trade profit for holding 117 days....i have called bottom in this stock 3 times over the last 5 years and been proven right 3 times and yet only profited once.

Boral is a great company with a great global business and as such is a great stock to hold if your building a portfolio and revenue stream via a low cost entry and averaging strategy like me.
~

Goldman has been blowing the trumpets of a US housing recovery for months and has driven up both JHX and BLD. Balance sheet is still stretched imho... they should really raise a few bucks now that the share price is edging $4, just in case the recovery is slow / not forthcoming.

 

[notting]

You'd think there was a housing boom not a mild Fed fed US recovery.
BLD, JHX, CSR all up masively over the 9 months or so.
Looking to short the peaks.

 

[skc]

You'd think there was a housing boom not a mild Fed fed US recovery.
BLD, JHX, CSR all up masively over the 9 months or so.
Looking to short the peaks.

CSR issued profit downgrade yet the sell-off lasted only half a morning... I agree the these building material stocks feel like good short candidates. But they just don't bloody fall!

They do offer good leverage to a housing recovery, and small increase in volume can turn the profit dial quite quickly... it's just hard to buy at these levels.

 

[So_Cynical]

it's just hard to buy at these levels.

Absolutely impossible for me but clearly someone is buying, maybe everyone's using stops now :dunno: maybe its all the wannabe trend followers coming out of the closet. :dunno: i really do need an IB account.

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My remaining BLD shares now in profit to the tune of 58.27% how sweet is that!

 

[Gringotts Bank]

BLD might crack 4.5$ here. Bullish for shot term if it does, imo.

 

[rbgmauq]

looks like it's basing for a move higher. six months target: 5.612