SWL - Seymour Whyte

[Joe Blow]

Seymour Whyte Limited (SWL) is an infrastructure development company with projects in NSW and Queensland . The company's activities focus on: construction of major roadworks; bridgework construction and associated concrete structures; major traffic management schemes; heavy industrial concrete works; and aquatic facilities and community infrastructure.

http://www.seymourwhyte.com.au

[ubtheboss]

Is nobody watching this little gem of a company?!

If you have a read of their last few annual reports you might get excited.

Award winning company with great rep in Qld and making inroads into NSW.

I valued it a couple of months ago. For 2011 I have an intrinsic value of $2.35 with a conservative required return. I hence bought in at $1.59 and it is now at $2.05.

Even better days are ahead. Have a look for yourselves

[ubtheboss]

This little beauty is going great guns.



I No longer think it is only worth 2.35

It is perfectly placed to expand and pick up flood damage repair construction contracts. Once in a lifetime opp for them.

Blue sky ahead

[robusta]

This little beauty is going great guns.



I No longer think it is only worth 2.35

It is perfectly placed to expand and pick up flood damage repair construction contracts. Once in a lifetime opp for them.

Blue sky ahead

Definately a good looking company. Would have bought some a couple of months ago if I wasnt nearly fully invested

[robusta]

Maybe a bit of pain on the horizon for SWL. The costings for this project probably did not factor in flood damage.

http://www.asx.com.au/asxpdf/2011011...5y0cqyjwc9.pdf

[ubtheboss]

Yeah in this flood situation there had to be some pain before the gain. to be expected.

I consider this a value stock and tend to hold long term. If it pulls back to support I after the quaterly I will dive in and buy more.

in the meantime I'm holding tight.

[drlog]

I agree - this does look like a good stock! I think it is currently under valued with a high ROE, low debt, many projects in the pipeline.

Hmm, could be a buy after the share price has taken a beating.

[ubtheboss]

I agree - this does look like a good stock! I think it is currently under valued with a high ROE, low debt, many projects in the pipeline.

Hmm, could be a buy after the share price has taken a beating.

I struggled with my decision but I decided to sell at 2.48 after that letter to shareholders. I expected the letter but I decided to sell and hope to re-enter at a lower price. Like they said on Sky Business on Tues night SWL will probably get hit in the short term with the floods delaying projects but after that there will be more work to be picked up. If I had more cash on the sidelines I might have held on but in lieu of that I'm hoping to buy a bigger parcel of shares when I re-enter.

Waiting on the half yearly report with fingers crossed

[Tightwad]

Have been looking at this one for a while, I picked up a few with spare cash at $2.20... was looking for more of a drop today, but ended up jumping in at 2.39.. a little high perhaps.

[skc]

A 40% fall in one day deserves a posting imo.

A profit downgrade that basically says they made a small loss in H2. Full year NPAT is ~$8m but it was already >$8m in H1. If you go by the immediate EPS of ~10c, $1 probably isn't that far off the mark.

The construction / mining service sector is getting really patchy of late but I seem to recall more downgrades than upgrades.

Well done to whoever managed to sell on open at $1.58 (and shame on my CFD provider for not having them as a short). Closed at $1.015 which is basically the float price back in May 2010.

[McLovin]

Wow, isn't this another of Roger's A1 businesses? I know back in May he was talking about how it's in his fund.

[RandR]

Wow, isn't this another of Roger's A1 businesses? I know back in May he was talking about how it's in his fund.

its a contracting business in the construction industry. earnings will be lumpy, mistakes will be made. people like roger montgomery and those looking to invest for value should know better then try to value a company like this.

[skc]

Wow, isn't this another of Roger's A1 businesses? I know back in May he was talking about how it's in his fund.

Yup. Top of the list no less.

20120619 RM A1 picks.JPG

From http://blog.rogermontgomery.com/are-...cks-right-now/

That list was from 8 Sept 2011. SWL was @ $2 at the time. AND there was adequate margin of safty. NCK and GNG were the other two shockers. MTU, CCP and BRG have done well, however.

Intrinsic value never lies (subjected to appropriate adjustment after the fact).

Also here: 36minutes in - http://www.youtube.com/watch?v=NDJxG07yVvo

[robusta]

Got that here we go again feeling. Picked up some today at $1.18 for my personal account then a bit more for $1.035 for the super. I think there has been a over reaction and expect to see some decent returns in the future. This is not MCE, these guys have next to no debt and a good pipeline of contracts in place.

[Vesupria]

I remember checking this out when Roger the Dodger was spurting about them last year. He said it was a dividend stock for the future or something to that extent. I remember passing at the time because I don't particularly adore cyclical construction / infrastructure / contracting services stocks. Margins in all services based companies are contracting big time due to heavily rising costs. It's all over the media. I thought RM was crazy calling it a "long-term" hold for these reasons.

Don't these guys build roads? (Especially up in QLD) I believe the government up here is keen on delaying any sort of sizeable infrastructure spending because the debt burden up here is apparently unmanageable (especially if they want to regain their AAA credit rating).

Who else is likely to spend major money on roads if the governments delay projects? Sounds like a no brainer to avoid this stock due to the obvious earnings risks.

I also note that their current order book is lower than what it was before they listed! Combine this with rising costs and you can probably see where this is going in the short to medium term.

edit: for a company with forseeable earnings risk it actually looks fairly expensive still as market cap is still double net assets (more if you make some reasonable adjustments).

[ValueSnatcher]

I remember checking this out when Roger the Dodger was spurting about them last year. He said it was a dividend stock for the future or something to that extent. I remember passing at the time because I don't particularly adore cyclical construction / infrastructure / contracting services stocks. Margins in all services based companies are contracting big time due to heavily rising costs. It's all over the media. I thought RM was crazy calling it a "long-term" hold for these reasons.

Don't these guys build roads? (Especially up in QLD) I believe the government up here is keen on delaying any sort of sizeable infrastructure spending because the debt burden up here is apparently unmanageable (especially if they want to regain their AAA credit rating).

Who else is likely to spend major money on roads if the governments delay projects? Sounds like a no brainer to avoid this stock due to the obvious earnings risks.

I also note that their current order book is lower than what it was before they listed! Combine this with rising costs and you can probably see where this is going in the short to medium term.

edit: for a company with forseeable earnings risk it actually looks fairly expensive still as market cap is still double net assets (more if you make some reasonable adjustments).

I tend to agree with you on this. QLD gov't announcing that up to 20,000 public jobs are at risk because they can't afford to keep them. If they are cutting jobs, you better believe they are cutting projects and infrastructure spending.
SWL does do more than just roads, they are providing work on the 'Rapid Transit' thing on the Gold Coast. Most people here on the Coast think its a crappy solution to traffic problems. Combine this with Peter Costello's recent visit where he stated that the project is a waste and will not generate a profit. The transit line has so far been planned to Broadbeach, but was expected to go much further...however I now highly doubt this will occur.

This is just one example of SWL losing out on potential work, I am sure with Gov'ts reigning in spending in combination with the private sector not doing a whole lot either, that there will be plenty more.

[RandR]

Got that here we go again feeling. Picked up some today at $1.18 for my personal account then a bit more for $1.035 for the super. I think there has been a over reaction and expect to see some decent returns in the future. This is not MCE, these guys have next to no debt and a good pipeline of contracts in place.

mmm.

contracts in the pipeline are great if they are actually worth something. A lot of faith needs to be put in the competency of the people involved to price and word them correctly. People can make rash and ill thought decisions when there chasing contracts. Hope it goes well for you Robusta. I havnt spent any time at all looking through there history of pricing and succesfully delivering projects, but if I was seriously looking at buying a piece of a business in this industry its the only track record thats important imo. forget financial metrics of the stock. Id want to first and foremost see a great track record of not blowing there pricing.

[McLovin]

Got that here we go again feeling. Picked up some today at $1.18 for my personal account then a bit more for $1.035 for the super. I think there has been a over reaction and expect to see some decent returns in the future. This is not MCE, these guys have next to no debt and a good pipeline of contracts in place.

LEI had a pretty good pipeline of contracts (still does) until they realised that they weren't actually making money on them...

Parts of SWL's announcement certainly point to that.

[skc]

LEI had a pretty good pipeline of contracts (still does) until they realised that they weren't actually making money on them...

Parts of SWL's announcement certainly point to that.

On the positive side, SWL has a pretty clean balance sheet (~$35m cash and ~$9m debt), so they should be in a position to weather some downturn. The size of projects they run are in the $50-100m space - so it will take a couple of true shockers for them to be in trouble. Many many years ago I worked in the industry and SWL was already around, doing much of the same things. And frankly most of their projects are run-of-the-mill roads, bridges and earthworks so the technical risks are reasonably managable... I don't know what part of the Gold Coast light rail (which has been on paper for at least 15 years) they are doing but I am guessing only the civil instrastructure.

Commercial risks are a different story and the share price surely reflects that uncertainty.

[McLovin]

On the positive side, SWL has a pretty clean balance sheet (~$35m cash and ~$9m debt), so they should be in a position to weather some downturn. The size of projects they run are in the $50-100m space - so it will take a couple of true shockers for them to be in trouble. Many many years ago I worked in the industry and SWL was already around, doing much of the same things. And frankly most of their projects are run-of-the-mill roads, bridges and earthworks so the technical risks are reasonably managable... I don't know what part of the Gold Coast light rail (which has been on paper for at least 15 years) they are doing but I am guessing only the civil instrastructure.

Commercial risks are a different story and the share price surely reflects that uncertainty.

Well that's good to know. I guess to be fair, LEI was getting into areas it didn't have experience in and then quoting rock bottom prices because it was tendering against itself.