FWD - Fleetwood Limited

[notting]

Not a pretty picture.



Market didn't like it and may continue to be weak for a while.

Great company though and worth whatching.

 

[tinhat]

I sold this morning at 9.65. The dividend payout rate may not be sustainable over the medium term.

 

[fanger]

Now that mining services companies are on the nose like FWD where do we think the share price is headed?

 

[DJG]

Now that mining services companies are on the nose like FWD where do we think the share price is headed?

Would you say the aging/nomad's will come through in the next 4 years to give a bit of life back? - I read somewhere on the ABS website that x% of the population are to become retired/pensioners in the next 4-5 years. Not saying every single one of them will buy a caravan but the correlation is there to some extent...thoughts?

Does FWD build the pop up housing for any other services or companies such as aboriginal communities?

 

[Fifty101]

Given it's 25% fall today following it's announcement last night that 2nd half revenue is actually going to be "marginally" lower than 1H, I have been having a serious look at whether to sell or hold FWD. Lost money years ago following City Pacific (CIY) on it's downward spiral while being assured it would turn back around, and have been fearful of making the same mistake again ever since.

The big fear seems to be FWD's level of exposure in the "mining related" field.

Based on 1H13 figures the revenue split between the two main divisions seems to be approx:

Manufactured accom - 2/3
Rec vehicles division - 1/3

Some points I have noted are as follows:

Manufactured Accom division seems to be dominated by 3 big projects:

Searimple Village - Karratha, which has contracts with Rio but has softening demand.

Osprey Project - Sth Headland - project commissioned by WA Govt to address housing of key workers in the area - still under construction - due for completion approx end 2013.

Gladstone Village - Under construction - rev expected from 2014, but being continually reviewed due to fluctuations in industry in area.

They also have a current contract with VIC Education for the classroom transfer project with revenue expected into 2015.

Out of it's 3 big projects only one is earning revenue now, but you could argue that when the others are complete - revenue should increase significantly. (They actually advised of this in their 2012 annual report - stating short term revenue would be effected by development costs of these projects). I live in Gladstone and will be surprised if that village doesn't take off, given the absolutely insane level of industry and construction going on here.

In the Rec vehicles division - they have recently reduced overheads by consolidating production to their WA branch, and I would imagine the benefits of this will take some time before they show up on the books and reports. Given the supposed large increase expected in retiries over the next few years, I also agree, they should be able to capitalise on this and revenues should increase in this area.

If you value the company by its latest reported results you could argue the share price has even further to fall, however as we often see - the market seems to value companies based on where they are going, not where they have been. Given this, while not a certainty, you could suggest there might be brighter times ahead if projects come to fruition as planned.

It frustrates me that FWD advised that there would be short term poor results back in the annual report 2012, and then when they issue a market statement yesterday basically reiterating what they had already said would happen, everyone scrambles for the exit.

I am certainly no expert on this topic and am only providing opinions based on what resarch I have done - am more trying to justify my own position than anything, and am happy to be corrected on anything.

 

[jjbinks]

I should say that i'm new to shares.

Trying to learn about value investing and FWD does look promising.

Based on current earnings a my feeling is that its is not worth mor than $2. But if you factor in previous earnings probably purchasing at $3-4 is still good value.

But would it reasonable to assume a return to previous earnings.

 

[Ann]

I should say that i'm new to shares.

Trying to learn about value investing and FWD does look promising.

Based on current earnings a my feeling is that its is not worth mor than $2. But if you factor in previous earnings probably purchasing at $3-4 is still good value.

But would it reasonable to assume a return to previous earnings.

G'day jjbinks, I think there is better value elsewhere. On the 22nd May 5 brokers put a sell recomendation on it. I doubt they see it as a good value share.

As a chartist I call what is happening to the price of FWD as 'catching a falling knife'! May come away with a bits missing off your anatomy.

 

[fanger]

So ann where on the chart is FWD headed?

 

[Sharkman]

Given it's 25% fall today following it's announcement last night that 2nd half revenue is actually going to be "marginally" lower than 1H, I have been having a serious look at whether to sell or hold FWD.
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It frustrates me that FWD advised that there would be short term poor results back in the annual report 2012, and then when they issue a market statement yesterday basically reiterating what they had already said would happen, everyone scrambles for the exit.

that's what i was thinking too. according to commsec the consensus EPS forecast for the full FY has been sitting at 45c since feb (it dropped to 37c last week). 1H EPS was 25c. i would've thought 20c could be reasonably interpreted as "marginally" below 25c, if anything, a tad bit more than "marginal". so have we been told anything new in this latest announcement that wasn't already factored in? OTOH, IDK how far you can trust the consensus forecasts... but i'm inclined to consider taking a small punt on this (if these 7%, 8% falls would stop and we get a few sessions of little movement on low volume - possibly meaning most of the sellers are flushed out?)

G'day jjbinks, I think there is better value elsewhere. On the 22nd May 5 brokers put a sell recomendation on it. I doubt they see it as a good value share.

can't speak for other ppl, but personally i don't trust broker recommendations. the brokers don't make more money when you make more money, they make money when you transact more. now i'm quite new here so i should first warn everyone i'm pretty cynical by nature... i bet they moved it from neutral (or "we don't really know") to sell, hoping their clients would follow it, and they collect the brokerage. sure they get it right sometimes but they also get it spectacularly wrong just as often (or they have ulterior motives - underwriters for a capital raising, perhaps?)

i remember a few years ago when i used to receive complimentary analyst research notes from the broker i was using, before i made the switch to IB (who shall remain anonymous for now). one day i got a research note where they had slapped a buy recommendation on photon group (used to be PGA, looked it up just then out of curiosity, and i see they have since changed to EGG... which could be somewhat apt - is that what the value of your position in it will look like in a few months time?). the broker put down a price target of about 2.30, and it was about 1.30 at the time (this was before the reverse split). i couldn't understand the call. they were drowning in debt (debt/equity was way over 100% IIRC), the chart was nasty, had a whole bunch of weak businesses. thankfully i deleted the research note, for a year later PGA was about 8 cents...

 

[Country Lad]

If you value the company by its latest reported results you could argue the share price has even further to fall, however as we often see - the market seems to value companies based on where they are going, not where they have been. Given this, while not a certainty, you could suggest there might be brighter times ahead if projects come to fruition as planned.

The problem may be that the market doesn't see brighter times in the foreseeable future. There are certainly risks there which the market will be pricing in.

It frustrates me that FWD advised that there would be short term poor results back in the annual report 2012, and then when they issue a market statement yesterday basically reiterating what they had already said would happen, everyone scrambles for the exit.

I am certainly no expert on this topic and am only providing opinions based on what resarch I have done - am more trying to justify my own position than anything, and am happy to be corrected on anything.

No corrections needed, just some comments about the results.

It may be that the extent of the poor results was a bit of a surprise. The manufactured accommodation division EBIT has fallen 60% and the future is still not rosy except for possibly Gladstone, but that may be only short term eg occupancy at Searipple fell to 40-50% over a short period. Add to that the more intense competition for caravan park cabins, the future may appear to be a bit risky.

Even worse, the recreation vehicle division EBIT fell by 98% to virtually nil, so after interest, it is negative for the company. The future may not be all that bright because even though we have all those baby boomers retiring, according to some in the industry, recreation vehicle manufacturing is slowing because of the decline in consumer sentiment, over supply and increasing less expensive imports. If the A$ continues to fall Fleetwood's Asian built products will lose part of their price advantage.

It is not as if Fleetwood have a major market share in recreational vehicles. With Jayco’s 50% of the market and hundreds of other manufacturers, Fleetwood’s relatively small market share will not be able (has not been able) to withstand a downturn without a hit on profit. Although they are confident that the new manufacturing in WA will offer savings, they are a long way from the market which is mainly the eastern states.

Overall, the EBIT has fallen by 64% which probably explains the exit by shareholders. I did very well out of Fleetwood in the past and confess a fondness for the company but I can’t see me buying again in the near future.

Cheers
Country Lad

 

[Ves]

Re: FWD

Margin is only part of the profitability equation the other half is asset utilisation which tends to be equally important for true cyclical companies.

And now starting to look more and more relevant as an apt assessment of the risks!

 

[westboy]

1H EPS was 25c.


Sharkman where do you getting that from. I have full year at 15-20c depending on how you read the anny.

This looks like a train wreck with at least a 3 handle on it.

Cheers

 

[Ann]

So ann where on the chart is FWD headed?

Around the 3.00 to 3.50 level will give it a double bottom from Jan 2009 Fanger. It may go lower I can see no overhead support/resistance until around $1.00. If in fact it has fallen lower than its true value the market will pick it up again. It may even rebound from this level as being oversold. It is now on a long term rising support line. I just wouldn't fancy being first in line to buy as the dagger/knife is falling.

 

[Ann]

So ann where on the chart is FWD headed?

Now to reply with a picture. I wanted to delay the chart to see how well it reacted to the long term support line coming from 2001 today. It appears to be clinging on quite well so far. 4.36 may be as low as it goes. There may be more testing times for FWD and its LT support line, if it fails then there is a double bottom to aim for at around the 3-3.50 mark. Let's see!

 

[Sharkman]

1H EPS was 25c.


Sharkman where do you getting that from. I have full year at 15-20c depending on how you read the anny.

This looks like a train wreck with at least a 3 handle on it.

Cheers

just going off the commsec figures. The consensus full year analyst forecast EPS was 45c since feb, until last week when it dropped to 37c, today i see it has dropped to 25.4c. the analysis page of the company research tab has 25.7c under the 1st half column of 30/6/2013.

admittedly commsec sometimes makes glaring mistakes in their numbers - i recall that last year after GUD sold their stake in breville, commsec put the proceeds of that as "net profit before abnormals", as a result giving GUD what looked like spectacular numbers at first glance, as all the other metrics like EPS, ROE etc. on their table were based off that sale being considered as normal PNL. they have since corrected it, but it took them a few weeks.

so their interpretation of the 1/2 yearly report may be different to yours - or it's possible that 1H number might be a bit out too, like the GUD numbers last year... mind summarising how you arrived at that figure of 15-20c though?

 

[ROE]

I dont have the stock but this industry seem dire according to AFR article today...

Heaps and heaps of modular builder are in real trouble, some has already gone belly up, other survive see their order of 350m 2 years ago now barely 60m ...all the big miners are pulling the plugs..... you need lot of cash and some savage cut to the business if this trend continue...survival of the fittest ...

 

[galumay]

Intersting, I remember I had this stock on my short list, I went back and checked, i have it crossed out with the comment "Cant see this business model being sustainable" Its nice to see it looks like in my early days of learning and researching I may have read this one correctly!

 

[Country Lad]

NPAT of $12.5m, down 77%. Manufactured accommodation division down 59% which is not surprising but the $10.7 million loss for the Recreational Vehicle division is surprising even taking into account the $6 million restructuring cost because the national RV manufacturing is at an all time high.

Cheers
Country Lad

 

[fanger]

FWD looking like its really struggling now.

 

[notting]

As with IMD

Why so happy?
I see nothing!:dunno:

It's fallen from $14, why stop here?