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REH - Reece Limited

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i suspect the market is factoring in a construction downturn ( at least in buildings )

RWC fell more than 2% today as well
 
Fascinating insight into REH's business model and success from FBU CEO explaining failure of Tradelink. Video via @MayneReport

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the replacement market, then renovation, new build. 2.03 "and killed it."
 
Last edited:
Dona Ferentes said:
the replacement market, then renovation, new build. 2.03 and killed it.
Click to expand...
and from a fund manager that focuses on ex top50 companies (and recently trimmed their REH holding)


Orange => no index inclusion
Blue => Small Ordinaries
Grey => Midcap 50
 
and down 7 percent. $24.60

Trading Update Q1FY25
• Softness in housing markets continues
• ANZ revenue broadly flat YoY with underlying volumes softening on the same period last year. Sales supported by recent bolt-on M&A activity.
• US revenue -6.5% (USD) YoY reflecting lower volumes, deflation in select categories and adverse weather conditions.
• Lead indicators remain challenging in both regions - not expecting significant change to demand setting in first half.
• Continue to invest in organic growth through the cycle to build a better business.
• Anticipate HY25 Adjusted EBIT in the range of A$300m - $320m.
 
Probably a good entry point for someone wanting to get in, market selling off on short term sentiment. Similar to PWH recently. Often the only time you get a chance with high quality businesses.
 
Market Matters commentary today on Reece - wait and see stance.
Still way too expensive for me on current multiples and stingy yield.

Not Held
Not a target

Reece Ltd (REH) $22.70​

REH fell -2.3% on Monday, slipping down towards its 12-month low, in this case not a high-flyer experiencing profit-taking. The plumbing and hardware merchant has struggled over the last six months due to soft housing activity in the US and at home, not ideal when your stock was being priced for growth. That said, if the RBA cut this month, it should help, and while the Fed is likely to be on pause for a while, Treasury Secretary Bessent has been highlighting the administrations target towards bond yields – they want them lower, and bond yields are what feeds into the pricing of mortgages.
REH now generates ~60% of its revenue in the US, so it’s an important market, while valuation is now coming back to more palatable levels, having been stretched nearer $30. This is a stock we’ll revisit in 2025 when they show further signs of operational improvement.
  • We will await the REH result in 2 weeks and update our views then accordingly.
MM is neutral towards REH

 
I get what you are saying @finicky, but its one of those businesses that you have to pay more for than you would usually be comfortable with if you want a position. I remember agonising over it when I bought in years ago at $9.
 
Yeah , there are those many times when you have to admit defeat and look elsewhere. Another one that just got away . The difference between looking and doing .
Coulda , shouda .....didn't .
 
Half Year Financial Summary
- Sales revenue down 3% to $4,402 million
- EBIT down 17% to $305 million
- EPS down 19% to 28 cents
- Capex to sales 2.9%, up 38 basis points
- ROCE 13.0%, down 224 basis points vs June 2024
- Interim dividend of 6.5 cents per share, fully franked

Executive chairman Alan Wilson would step down next month from the board and would become chairman emeritus in recognition of his contribution to the company. Wilson was first appointed to the board in 1969. (!)

 
Commentary from Market Matters on Reece's H1

Reece Ltd (REH) $19.05

Plumbing products company Reece Limited (REH) retreated 13.2% to a new one-year low of $19.05 after it said sales were down 3% to $4.4 billion in the six months to December 31. The accompanying rhetoric didn’t improve the report’s disappointing look and feel. “Our performance for the first half reflects the challenging trading environment in both ANZ and the US as mortgage rates and affordability continue to create near-term headwinds in our sector,” – Peter Wilson, Chairman and CEO.

1H25 Sales revenue of $4.40bn was down 3% YoY, inline with expectations.
However, profit for the first half of $180.9mn, was down 19%, compared to $223.6mn last year, and ~5% below consensus.
An interim dividend of 6.5c was announced, down from 8c YoY and lower than hoped.
Analyst calls reflect undoubtedly challenging times ahead for REH: 7 Sells, 4 Holds, and 1 lone Buy. Negative sentiment will undoubtedly change, but this result will unlikely excite many in the short term.

We see no reason to chase the stock currently, however, the time will come when headwinds become tailwinds, but it feels too early for now.
MM is neutral towards REH

Not Held
Unlikely to Buy
 
All of that suggests its a solid buy! So once again the so called experts got their expectations wrong, but somehow its the company's fault! Every.Single.Time!
 
not held

i would see that report as a negative reflection of the residential construction sector , and to a lesser extent the commercial ( office and retail ) sector

i went for RWC ( when cheap ) ( August 2023 ) which SHOULD get a tailwind from all those recent US disasters ( fires and floods )

but maybe it is time to crunch numbers and see if you can get REH at a good price while the big money is whining and holding it's nose ( and FBU is still reeling from their issues )
 
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