MTS - Metcash Limited

[Ijustnewit]

Re: MTS - Metcash

MTS Metcash , Metcash net profit up 21pc to $98.9m in first half. Up around $0.20 cents today . Around 6.6 %.
Also reinstating their dividend reinvestment plan due to shareholder demand.

 

[Gringotts Bank]

Re: MTS - Metcash

Trendline cross.

 

[Garpal Gumnut]

Re: MTS - Metcash

MTS Metcash , Metcash net profit up 21pc to $98.9m in first half. Up around $0.20 cents today . Around 6.6 %.
Also reinstating their dividend reinvestment plan due to shareholder demand.

Could be the turnaround, many have awaited.

MTS would need to move up beyond $3.50 with good volume for me to be involved

gg

 

[skc]

Re: MTS - Metcash

Another update... another downgrade.

Profits for FY14 will be 13-15% below last year, while the previous guidance was high single digit fall.

Share price now at ~9 year low.

Is MTS business totally broken? Can it be saved? The presentation today contains, imo, logical but "perdestrian" strategies. The "price match" approach is going to be expensive and unlikely to go anywhere. The local ranging strategy will probably increase costs and complexity. It may increase foot traffic (if there's really something I can only get from IGA and not Woolies down the road) but I am sceptical about it increasing basket size.

They want to invest $600m to refreash their stores and systems, but is that enough to fight the two behemoths in Woolies and Coles? The large capex spending plan which I think will just see them standing still (at best) rather than returning to growth.

Dividend payout is cut to 60% to support the capex spend, which probably means something like 12-14cps for the next year or two. So investors are asked to accept yield ~4.5% whilst bearing the risk of execution and further deterioration in sales. Not an awesome proposition imo.

I'd like to see a strong 3rd force in grocery retailing in Australia... but I am guessing that will be ALDI rather than Metcash. ALDI has some truely differentiated offers and makes it a decent destination shop on occassions. It's market position is clear...while MTS wants to turn IGA into those fancy market-style-Coles-look-alike, without the volume to support the fitout.

 

[VSntchr]

Re: MTS - Metcash

Another update... another downgrade.

Profits for FY14 will be 13-15% below last year, while the previous guidance was high single digit fall.

Share price now at ~9 year low.

Is MTS business totally broken? Can it be saved? The presentation today contains, imo, logical but "perdestrian" strategies. The "price match" approach is going to be expensive and unlikely to go anywhere. The local ranging strategy will probably increase costs and complexity. It may increase foot traffic (if there's really something I can only get from IGA and not Woolies down the road) but I am sceptical about it increasing basket size.

They want to invest $600m to refreash their stores and systems, but is that enough to fight the two behemoths in Woolies and Coles? The large capex spending plan which I think will just see them standing still (at best) rather than returning to growth.

Dividend payout is cut to 60% to support the capex spend, which probably means something like 12-14cps for the next year or two. So investors are asked to accept yield ~4.5% whilst bearing the risk of execution and further deterioration in sales. Not an awesome proposition imo.

I'd like to see a strong 3rd force in grocery retailing in Australia... but I am guessing that will be ALDI rather than Metcash. ALDI has some truely differentiated offers and makes it a decent destination shop on occassions. It's market position is clear...while MTS wants to turn IGA into those fancy market-style-Coles-look-alike, without the volume to support the fitout.

I agree with what you have said.
Reading the presentation gives me the feeling that those in charge feel it is somewhat of their duty (and it is), to fight off the big 2 and provide a competitive offering...and as much as I want them to do it...I can't help but get the feeling its going to be like throwing money on a fire to try and put it out...

The strategies look good but I just don't know if they will be able to pull off the whole "local region" vibe on a national scale...and if they can..as you said, its going to be complicated and complicated = $$.

I was watching for a short but never pulled the trigger, just

 

[ROE]

Re: MTS - Metcash

I am fairly impressed with the presentation, they sure hell put a lot of work into it..

man if they can execute as well as the presentation this stock could be a bargain.

The risk lies in execution and if it works or not...Yield still doesn't look too bad after today price even with a cut

It is a do or die I think .... get this plan working price can go up 50% and beyond else it be market dog for years to come...

 

[Knobby22]

Re: MTS - Metcash

They're up against Aldi too. It's getting tough out there.

 

[Ves]

Re: MTS - Metcash

I am fairly impressed with the presentation, they sure hell put a lot of work into it..

man if they can execute as well as the presentation this stock could be a bargain.

The risk lies in execution and if it works or not...Yield still doesn't look too bad after today price even with a cut

It is a do or die I think .... get this plan working price can go up 50% and beyond else it be market dog for years to come...

Hi ROE

Completely agree with you. The presentation and plan was pretty good, much better than accepting that you are a mature company, and doing nothing. They have realised they are at a critical point and need to act. Their actions will speak louder than words, of course.

If they can fix their cost structure, they have $13B of revenue to capitalise on. Whilst the risks at the moment are fairly well balanced between the upside and the downside, there may be a time for patient investors to pick up this company at an attractive price some time in the future.

The current market price at $400m EBIT (which is roughly the forecast) is not overly expensive, but it does leave room for capital destruction if that base is further eroded.

As Buffett says, you don't always need to swing. But that being said there is no harm in watching from the sides lines until it you see something you can hit.

 

[notting]

Re: MTS - Metcash

MTS reminds me of a one of those little stubborn houses that have refused to sell whilst having two sky scrappers being built on both sides of it.
Having said that, today's price action was compelling may be worth a punt with a stop just below today's low.
Whatch how it handles the gap for a hint of the possible strength in any upswing.

 

[Ijustnewit]

Re: MTS - Metcash

I have held this guys for very long time , and probably will hold out at this stage . But if we ever see around the $3.20 mark again I think I will be gone.
The news hasn't set well with the market , probably has more to do with the 60 % dividend payout ratio reduction than overall "Project Diamond " transformation plans itself. I do think personally it might have been oversold and people do have short memories. Next week the focus will be on some other companies bad news and heat will come off.

 

[Smurf1976]

Re: MTS - Metcash

Whilst I agree that Aldi is a competitor of sorts, that is really only true in the big cities and even there it's only in some areas.

For the rest of the country, the choice is Coles, Woolies or IGA (Metcash). Indeed there are plenty of places where the only nearby competitor to IGA is one of the big two, not both.

So I can see a future for MTS if they manage to pull off the transformation.

 

[piggybank]

Re: MTS - Metcash

It is presently just sitting on the 50% Fib of the up leg from early 2001 to mid 2007.

 

[piggybank]

Re: MTS - Metcash

So I can see a future for MTS if they manage to pull off the transformation.

Well judging by the 1H15 results announced to the market today - and the response from the market - there is still have a long way to go yet. Only last week CBA increased their voting power by 1%, so I would imagine there will be a few members of staff looking over theirs shoulders to see if Ian Narev is their to tell them there is no need to come back in the New Year!!

Btw, the stock was down by 15% on the day - hasn't been this low since 2004. For those who thought well after a drop like that the yield will be even better, sorry but amid today's report the dividend is being reduced from 9c to 6c (30%+)

​

 

[mdkb]

Metcash ASX:MTS heading up

wondered what peoples thoughts are on this stock right now.

 

[piggybank]

Re: Metcash ASX:MTS heading up

wondered what peoples thoughts are on this stock right now.

Hi mdkb,

You might have had a reply by now if you were to say what your thoughts are of the stock presently and where do you think it is going - maybe you already own some of the stock and thinking of pulling out or buying more...

Too many people join up here (and elsewhere) and their first post is what do you think is going to happen to this stock? - gee its gone down so far how long will it take to get back to where it was last week? Then some members have been kind enough to give (generally a long reply) only to never see them again - very rude un-ASF!!

Regards PB

 

[Julia]

Re: MTS - Metcash

+1, piggybank. Exactly.

 

[Garpal Gumnut]

Re: MTS - Metcash

I've been in MTS in it's early days and one or two years ago.

Fundamentally and technically it is stuffed.

If I still held I would get out on the next bounce up.

Just my opinion, I have no inside knowledge on this stock

gg

 

[UMike]

Re: MTS - Metcash

Picked up a small parcel today on the basis that I think they are over sold.

Not too confident of my reasoning. but......

P/E Ratio 6.55
P/B Ratio 0.83
P/E Growth Ratio 10.00
P/S Ratio 0.10
Dividend Yield 10.7 (franking 100%)

 

[Googolplex]

Re: MTS - Metcash

Picked up a small parcel today on the basis that I think they are over sold.

Not too confident of my reasoning. but......

P/E Ratio 6.55
P/B Ratio 0.83
P/E Growth Ratio 10.00
P/S Ratio 0.10
Dividend Yield 10.7 (franking 100%)

I have bought a little bit in recent days. Two things worry me; first, the Company has said very little re providing up to date guidance and secondly, there must be some reason why the market is ignoring the numbers you have quoted above.

 

[skc]

Re: MTS - Metcash

Picked up a small parcel today on the basis that I think they are over sold.

Not too confident of my reasoning. but......

P/E Ratio 6.55
P/B Ratio 0.83
P/E Growth Ratio 10.00
P/S Ratio 0.10
Dividend Yield 10.7 (franking 100%)

You should consider looking at forward ratios rather than historical ratios. Forward ratios aren't always easy to get, but when earnings are in flux, even a rough estimate will be better than taking the historical number on face value.

Take dividend and its yield for instance... management has slashed payout ratio in the presentation to pay for store upgrades and what not. Earnings in decline so the actual dividend amount will continue to reduce. Last half it paid 6.5cps. Even if you were to annualise that you only get 13c which is 9.35% yield. UBS is estimating 10c for FY16, FWIW.

The key theme for MTS at the moment is "operational deleverage"... and that's about as bad as it gets as far as dividend stability is concerned.