BKW - Brickworks Limited

[finicky]

Market Matters afternoon report Thursday:

Brickworks Ltd (BKW) $28.52

BKW +7.22%: was up today on better than expected full-year results. The primary driver of the rally was higher-than-expected property revaluations (circa. 40%) which pushed industrial rents up. Results for FY24: Net profit on the year was down 88% to $61.2m however importantly was a big beat to expectations of $25.4m Dividend increased 3% to $0.43 – continuing the streak of BKW growing its dividend every year since 1976 The business is temporarily closing plants in North America and Australia this fiscal year to control inventory however, this is a short term decision to also push through some maintenance. As we wrote in our piece this morning on James Hardie (JHX), we see volumes picking up in calendar year 2025, and continue to like the look of BKW to take advantage of improving trends.

NOt Held

 

[divs4ever]

i hold BKW ( and SOL ) and was amazed at the market reaction

i was half-expecting a return to $10 ( where i bought in 2012 )

nice to see they are using the closures to upgrade/repair plant , i guess BKW will have to make the best of their alternative investments ( property development and investments in other companies , watch out for a major construction down-turn in Australia

wild card might be the fate of the brick-making arm of recently taken-over CSR , which might be flogged off , or starting some sort of price war

 

[bigdog]

Bigdog 2025 Tipping Note

BKW as a high delta exposure to interest rate cuts and by extension a stock to own as we edge closer to the cycle pivot point

 

[bigdog]

The first ASX 200 blue chip share that could be a buy is Brickworks. It specialises in property, investments, and the manufacture and distribution of building products for the residential and commercial markets.

The team at Bell Potter is tipping Brickworks as a buy. Its analysts believe the company could benefit from interest rate cuts in 2025. They explain:

We see BKW as a high delta exposure to interest rate cuts and by extension a stock to own as we edge closer to the cycle pivot point (Bell Potter's base case for our first cut is 1H CY25). Specifically, we see a scenario unfolding where BKW could realise double digit mark-to-market NTA growth p.a. quite comfortably in coming years through positive revals (i.e. cap rate reversal), ongoing property development and rent reversion (BKW remains ~28% underrented and 50% short-WALE), as well as continued SOL outperformance. This is a growth story we think few ASX-200 industrials can currently match.

Bell Potter currently has a buy rating and $32.00 price target on its shares.

 

[divs4ever]

Non-cash impairment for Brickworks North America and Trading Update

Non-cash impairment to Brickworks North America
Consistent with normal practice for the end of each financial period, Brickworks Limited (Brickworks) has undertaken a review of the carrying value of its assets, as at 31 January 2025, in accordance with Brickworks’ accounting policies and the applicable accounting standards.
As a result, Brickworks is expected to recognise a post-tax non-cash impairment charge of approximately AUD55 million (pre-tax AUD 74 million) to Brickworks North America1 in its 1H25 results (subject to finalisation of results, audit processes and Board approval of those results).
Key drivers of the non-cash impairment are noted below:
• The Company foreshadowed at the Annual General Meeting on 26 November 2024 that market conditions in North America were declining faster than previously anticipated.
These challenging conditions have continued through the balance of 1H25, driving a 13% reduction in revenue compared to the prior corresponding period.
Strong competition in the retail segment has resulted in a loss of some market share at the company-owned Brickworks Supply store network.
• The reduced demand necessitated plant shutdowns during the period, to control inventory levels. This has caused reduced plant efficiency and higher unit manufacturing costs, resulting in a significant decline in earnings before interest, tax, depreciation and amortisation (EBITDA) margin during the half.
• The subdued building activity and scaled back production will delay the realisation of benefits expected to be delivered from plant rationalisation and upgrades that have been completed in recent years.
• In addition, uncertainty around the timing of the market recovery, factors such as labour shortages, elevated material costs, interest rate uncertainty and geopolitical volatility, has resulted in a moderation of the short to medium term outlook for sales activity.
1H25 Earnings Update
The following update is provided in relation to 1H25 divisional earnings:
• Property EBITDA will be higher than the prior corresponding period, due primarily to the prior period experiencing a significant expansion in industrial property capitalisation rates and a consequent devaluation of Property Trust assets.
In 1H25, capitalisation rates have remained relatively stable, and as such there has been no significant change to the value of the Property Trust. In 1H25, development profit will be minimal as construction at Oakdale East is in its early stages.
Net trust income will be marginally higher compared to the prior period.
• Building Products Australia is expected to deliver EBITDA broadly in line with the prior corresponding period,with the impact of lower sales volume broadly offset by portfolio rationalisation and cost reduction initiatives.
• Building Products North America EBITDA will be significantly lower, driven by the impacts outlined above,together with unusually extreme winter weather conditions in our key regions during the latter part of the half.
Until such time as Investment earnings are finalised, which are driven by the Company’s 25.65% shareholding in Washington H. Soul Pattinson and Company Limited (Soul Patts), no guidance can be provided in relation to Brickworks’ net profit after tax (NPAT).
Brickworks full year results remain subject to finalisation and audit and will be released on 20 March 2025.

The Brickworks Board has authorised the release of this announcement to the market.

i hold BKW and SOL

tell me again how well Biden's America was doing ... LOL

 

[galumay]

As a friend wrote about it this morning,

"i always forget that company exists, the hero worship of the millners is one of the dumbest things about australia, it's like... buffett*... except worse returns... no buybacks... a dodgy cross holding to maintain control as a minority... and the children in operational roles..."

Tend to agree, I think a lot less to do with Biden & more to do with Millners.

 

[qldfrog]

As a friend wrote about it this morning,

"i always forget that company exists, the hero worship of the millners is one of the dumbest things about australia, it's like... buffett*... except worse returns... no buybacks... a dodgy cross holding to maintain control as a minority... and the children in operational roles..."

Tend to agree, I think a lot less to do with Biden & more to do with Millners.

Your view is leaving me less eager to BTD on this one..

 

[divs4ever]

As a friend wrote about it this morning,

"i always forget that company exists, the hero worship of the millners is one of the dumbest things about australia, it's like... buffett*... except worse returns... no buybacks... a dodgy cross holding to maintain control as a minority... and the children in operational roles..."

Tend to agree, I think a lot less to do with Biden & more to do with Millners.

that depends on if you think you need a lifeline , SOL normally has a healthy amount of cash stashed away handy , and they tend to help the business get going when the plant a director on the board , BUT the turnaround is normally very slow and patience-testing

i have ( normally ) done very well once the Milners grab a chunk of the company ( the exception to date is AIS , for me )

BUT you have to pick your time to average down AND your targets ( not all will be winners )

it is also a good idea to recover that investment cash when well in front .. then the mediocre returns are coming back 'on free money '

i hold SOL , BKI , BKW ('free-carried') , LAU ('free-carried' ) NHC ( 'free-carried' ) , CLV ( 'free-carried' ) EQT ( 'free-carried' ) ( although i was in there before SOL ) , XRF ( 'free-carried' ) TUA ('free-carried' )

had a very nice ride on TPG , before David Teoh departed )

i have made worse choices in the market , but with the Milners in there ( in the company board ) you DO need patience

 

[divs4ever]

Your view is leaving me less eager to BTD on this one..

i grabbed some @ $10.00 back in August 2012 ( and reduced in April 2023 @ $22.83 )

 

[Dona Ferentes]

BKW is crumbling

 

[Garpal Gumnut]

BKW is crumbling

View attachment 195240

One wonders whether the new duration of director service concept if accepted will impact BKW.

Robert Millner - Wikipedia

en.m.wikipedia.org

gg

 

[divs4ever]

One wonders whether the new duration of director service concept if accepted will impact BKW.

Robert Millner - Wikipedia

en.m.wikipedia.org

gg

they will probably rotate among the Milner Family ,
SOL

Previous Directors​

Name	Position Name	Years	Date Resign
Mr Graeme Lance Robertson	Non-Executive Director	--	15/07/2005
Mr Michael John Millner	Non-Executive Deputy Chairman	--	03/10/2012
Mr Peter Raymond Robinson	Chief Executive Officer,Executive Director	31	02/04/2015
Mr David John Fairfull	Non-Executive Director	17	07/12/2014
Mr David Edward Wills	Non-Executive Director	11	02/11/2017
Mr Robert Gordon Westphal	Non-Executive Director	15	12/12/2021
Mr Thomas Charles Dobson Millner	Non-Executive Director	13	02/01/2024
Mr Michael John Hawker	Lead Independent Director,Non-Executive Director	12	24/11/2024
Mr Warwick Martin Negus	Non-Executive Director	9	02/01/2023
Ms Melinda Rose Roderick	Chief Financial Officer,Finance Director	4	14/04/2018

BKW

Name	Position Name	Years	Date Resign
Mr A W Burgis	Non-Executive Director	--	05/11/2000
Mr Alan J Bentley	Non-Executive Director	24	27/11/2008
Mr Timothy Vincent Fairfax	Non-Executive Director	11	27/09/2008
Mr Michael John Millner	Non-Executive Director,Non-Executive Deputy Chairman	25	23/11/2023
Mr Lindsay R Partridge	Managing Director	24	02/08/2024
Hon Robert James Webster	Non-Executive Director	21	24/11/2022
Mr David Norman Gilham	Non-Executive Director	15	29/11/2018
Mr Brendan Patrick Crotty	Non-Executive Director	12	26/11/2020

TPG

Previous Directors​

Name	Position Name	Years	Date Resign
Mr David Premraj	Non-Executive Director	--	02/12/2012
Mr David John Fairfull	Non-Executive Director	8	09/04/2008
Mr Michael John Millner	Deputy Chairman, Non-Executive Director	8	09/04/2008
Mr Peter Raymond Robinson	Non-Executive Director	8	09/04/2008
Mr Denis Ledbury	Non-Executive Director	20	15/07/2020
Mr Barry Roberts-Thomson	Non-Executive Director	19	15/07/2020
Mr William Peter Cleaves	Non-Executive Director	4	09/04/2008
Mr Alan John Latimer	Executive Director	6	02/11/2014
Mr David Teoh	Executive Chairman & Chief Executive Officer,Non-Executive Chairman,Non-Executive Director	13	27/03/2021
Mr Joseph Pang	Non-Executive Director	12	15/07/2020
Mr Shane Teoh	Non-Executive Director	9	27/03/2021
Mr Diego Massidda	Non-Executive Director	3	30/03/2023
Ms Arlene May Tansey	Non-Executive Director	4	23/10/2024

 

[bigdog]

Published March 30 Sebastian Bowen

Washington H. Soul Pattinson and Co Ltd SOL and Brickworks Ltd BKW are arguably two of the most interesting and impressive shares on the ASX.

At first glance, it might not seem like these two businesses are all that similar. Washington H. Soul Pattinson, or Soul Patts for short, is a diversified investing house. Whereas Brickworks is a construction materials supplier.

However, there are more similarities than meets the eye if we take a deeper dive.

The most glaring connection between these two companies is that they both own a significant chunk of the other. Yep, as it currently stands, Soul Patts has a rough 43% stake in Brickworks, while Brickworks, in turn, owns an approximate 26% chunk of Soul Patts.

This arrangement has been static for decades and was reportedly first initiated to protect both companies from corporate raiders back in the 1970s and '80s. This cross-ownership allows both companies a slice of the other's profits and dividends.

As Brickworks CEO Mark Ellinor recently stated

Our shareholding in Soul Patts, which has been an important source of earnings and cash flow diversification for the Company for more than five decades, is expected to continue to deliver a stable and growing stream of earnings and dividends over the long term.

But there are other similarities. Both Soul Patts shares and Brickworks stock are famous for their long-term investing approach that prioritises the compounding of wealth for shareholders.

Both also have two of the best dividend streaks on the ASX.

Soul Patts is ASX dividend royalty, with a 25-year streak of increasing shareholder payouts. Brickworks can't quite boast that streak. But it can brag about not missing a dividend payment since 1962 and a still-impressive 11-year streak of growing its dividends.

Brickworks vs. Soul Patts: So which to buy?​

In my view, you can't go wrong with owning either of these top-notch shares. Both have delivered significant, market-beating gains over many decades. Both companies have shown that they are prepared to forgo short-term sugar hits for the long-term wealth of shareholders. And both companies have outstanding management teams that always act with honesty and integrity.

Remember, even if you buy one of these companies, you are getting exposure to the other through that cross-ownership structure.

My personal preference is Soul Patts shares, though. Soul Patts has a far more diversified earnings base than Brickworks does, one that is not subject to the significant cyclicality of the construction industry.

The company also owns a huge and diversified portfolio of blue-chip shares, thanks to its acquisition of Milton Corporation a few years ago. Its portfolio also contains investments in private credit, venture capital and unlisted assets.

Thanks to this incredibly broad earnings base, I think Soul Patts is the more resilient business, and that's why I own its shares as one of the largest positions in my personal portfolio.

Saying that, I would be happy to own Brickworks stock too, in addition to Soul Patts shares. Brickworks handles its volatile business cycle with aplomb and always manages to come out on top. Either way, there is no wrong choice here.

 

[rcw1]

@DrBourse if you can be of assistance by running your ruler across this stock again please.

Ex Date 8/4/2025 Record Date 9/4/2025 Payment Date 1/5/2025

Kind regards
rcw1

Hi rcw,

Most Valuation models put BKW’s IV in the range of $25.00 to $30.00……

However, A Roger Montgomery style Valuation produces a range just above $30.00…..

And a Buffett style Valuation comes up even higher at just above $40.00…..

Remember that there is a Cross Holding between BKL, CLV, LAU, NHC & SOL…..

View attachment 159304
View attachment 159305
As usual remember the DYOR Thing....
Cheers M8.

Kind regards
rcw1

 

[DrBourse]

@DrBourse if you can be of assistance by running your ruler across this stock again please.

Ex Date 8/4/2025 Record Date 9/4/2025 Payment Date 1/5/2025

Kind regards
rcw1




Kind regards
rcw1

OK m8.
Out all morning, will post my Analysis after lunch

 

[qldfrog]

OK m8.
Out all morning, will post my Analysis after lunch

Thanks Dr, much appreciated

 

[DrBourse]

@DrBourse if you can be of assistance by running your ruler across this stock again please.

Ex Date 8/4/2025 Record Date 9/4/2025 Payment Date 1/5/2025

Kind regards
rcw1




Kind regards
rcw1

@rcw1

EOFY figures are due July 2025, so my analysis is done by collecting as much up-to-date financial info that I can locate – therefore this analysis is just a little bit of a grey area, and will need to be recalculated sometime in Sept 2025.
The BKW 39-page announcement of 20/3/25 provides most of the data I used.
Overall, the BKW Financials do not look all that good – Ratio’s rate as Good – MOS are rated as BAD.

BKW’s TA follows.
There are Resistance Lines @ $24.80, $27.57, $29.48 & $31.37.
There are Support Lines @ $22.50, $20.75 & $17.57.
ST, MT & LT Indicators are all suggesting Downtrend.
Recent Candlesticks suggest a lot of confusion between buyers & sellers.
Basically, BKW is lacking in direction, the next few announcements may tip the scales.

My call is “More uncertainty and downside until Sept 2025”, when this analysis will need to be recalculated.

Cheers.
DrB.

 

[divs4ever]

i see BKW as an insight into the general economy ( in Australia and to a lesser extent in the US )

however management may be regretting bending to 'activist pressure ' to sell down the SOL holding 'to free up capital '

left field possibility is somebody will lob in a take-over offer as they did with CSR , Boral and Adbri

would SOL resist or accept ?