MTS - Metcash Limited

[divs4ever]

Should have added that well credentialled Richard Murray, ex Premier Investments and ex JB Hi-FI exec , being tapped to run Total Tools was another point that tipped me over the line.
Mick

i noticed that ann. but it wasn't enough to persuade me to pull the trigger ( but not bad enough to make me step further back )

good luck

 

[mullokintyre]

MTS gone into a trading halt pending an announcement about negotians with Superior Food Group byout.
Will have to wait and see if its any good.
Mick

 

[finicky]

'Market Matters' (James Gerrish) complimentary email came today. They like the non-discretionary retail sector right now and their preferred stocks are MTS and WOW. They think an opportunity might be coming up for a buy of MTS concurrent with a possible discounted equity raise as part of the funding for the rumoured acquisition.
Coincidentally Metcash is G Canavan's latest recc, but he issued that the day before the MTS trading halt.
MM likes WOW while it is under $36.

MTS Not Held

 

[mullokintyre]

Metcash announcement on purchase of Superior food, Bianco and Alpine truss, plus a cap riase to pay for it all.
The existing shareholders will all get a bite of the pie, not just the instos and sophs, albeit a very small bite at 25 mii compared to the big boys having $300mill
Mick

 

[mullokintyre]

The 300mil placement of MTS shares has been completed oversubscribed at an issue price of 3.35, about 10% below the closing price before the TH.

Now us poor plebs get to scrabble over the remaing 25mill allocation at the lower of 3.35 or the vwap for the 5 days prior to closing date.
Hopefully it will fall lower than 3.35 to give me a chance to top up without playing the give the intermediaries some money to hold for a few weeks and bugger all in return.
Mick

 

[mullokintyre]

Got a measly 777 shares in Sp allocation.
Will buy on market now to top up to my preferred allocation.
Looking for this one to be a long term investment.
Mick

 

[finicky]

Chart currently looks ok to me, has broken out of downtrend resistance. However it is close to the top of its 9 month range at a price that is also a past support level that broke and became resistance; so a big ask for it to break through and will be telling if it does. Bottom of the range mentioned is around 3.45, top is around 3.80.
Obviously too there are a lot sitting on a stag profit here from the placement and SPP @ 3.35

Not Held
Hold sentiment

WEEKLY

 

[finicky]

Nice break, albeit on modest volume so far, but strong move above resistance level and makes a higher peak.
Didn't have to watch it long, good call @mullokintyre

Not Held

DAILY

 

[mullokintyre]

Nice break, albeit on modest volume so far, but strong move above resistance level and makes a higher peak.
Didn't have to watch it long, good call @mullokintyre

Not Held

You know how it is @finicky , if you make enough calls, you have to get one right eventually.
Mick

 

[finicky]

Fwiw, under Broker Notes at livewire, brokers suggesting they're onboard at Metcash.
Not Held

 

[Dona Ferentes]

under Broker Notes at livewire, brokers suggesting they're onboard at Metcash

also from Livewire


A lot has been written about blows to living standards on the heels of the sharp rise in interest rates and inflation over the past few years. The Reserve Bank of Australia has termed what many Australians are enduring as a “painful squeeze.”
Adapting has meant cutting back on things once taken for granted, to stretch pay-packets.
Few, if any, can escape the clutches of inflation and interest rates, including corporate Australia.

Businesses are grappling with higher labour, energy, and transport costs. Like households, they too are being impacted by rising rents and interest payments.
So, how are the country’s listed companies faring?
Recent profit results reveal an intriguing, even encouraging picture, at least from what we would term “quality” companies.
By “quality”, we mean companies with records of strong return-on-equity and profitability, unthreatening debt levels, good interest cover, and management teams that have demonstrated the ability to manage costs effectively and implement productivity boosting plans across operations.
Brambles Limited , Seven Group Holdings Limited and Metcash Limited are examples of what we regard as quality companies that have, up to now, succeeded in doing more with less by bending cost curves and improving margins.
Despite plentiful speculation over when Australian and global interest rates may be cut, we don’t expect to see cuts any time soon, and certainly not rapid-fire cuts when they do eventuate. That being the case, companies will need to keep doing more with less for some time yet.
The days of bullish top-line, or revenue growth, are likely to be some time away... .
.
.

Metcash (ASX: MTS): challenging giants​

Metcash represents a kind of second or third force in Australia’s structurally concentrated retail food, liquor, and hardware industries.
The company is a supplier to independent supermarkets trading under the IGA and Foodland brands. In liquor, its network is home to brands including IGA Liquor, Bottle-O and Cellarbrations, and its hardware brands Mitre 10 and Home Timber and Hardware take up the fight to Bunnings.
Metcash recently announced the acquisition of three businesses — Superior Food Group, Bianco Construction Supplies, and framing and truss operator Alpine Truss.(14)
In our view, this transaction makes strategic sense (Chart 2) as long-term trends point to the foodservice market growing faster than the grocery and supermarket sector, coupled with the hardware-orientated latter two businesses rolling into Metcash’s Independent Hardware Group (IHG), which has effectively built out Total Tools and amplified the core Home Hardware and Mitre 10 brands.

Chart: Metcash’s Super Foods acquisition makes strategic sense

Source: Metcash Investor Presentation. Acquisition of Superior Food, strategic hardware acquisitions and equity raising, 5 February 2024,

When revenue growth across many industries is modest, buying growth through acquisitions is strategically sound, if you don’t overpay. Financial discipline is extremely important when high interest rates are squeezing corporate as well as household borrowers.
With that context, Metcash’s claims that the acquisitions are expected to be margin accretive and to boost earnings per share(15) will likely have reassured shareholders.
Superior Food is Australia’s third-largest food distribution business(16) and supplies aged care homes, cafeterias and canteens within universities and schools, hotels, hospitals, and mining sites, as well as fast food outlets like Domino’s, Hungry Jack’s, and Subway.

Our take on Metcash’s Super Food acquisition is that it will help the company reach new markets and also benefit from growing demand for ready-made and takeaway meals available from supermarkets.

Investors will have their fingers crossed for Brambles, Seven and Metcash over the rest of the financial year and beyond. Their recent performance has merited market participants’ support and continuing in the same vein by getting more from existing operations as well as value-accretive acquisitions will be important to future success.

 

[mullokintyre]

Metcash AGM today, and the chairman was upbeat on what was at best a satisfactory year.
Nothing flashy here folks.
But they do generate a bit of cash , some of which they are flinging out to shareholders.
The start of the new fin year seems to be ok, with all members of the group showing growth.
Happy to hold.
Mick

 

[divs4ever]

yes i am going to regret dumping them a few years back , unless something causes a huge dip ( maybe market-wide )

i get see a suitable re-entry point ( for me )

some of the franchisees up here are nicely-run businesses

 

[mullokintyre]

Metcash subsidiary Total Tools has had a major data leak that may have compromised the logon accounts and passwords as well as personal details like addresses and emails for about 38,00 customers in a cyber break in.
As an habitual spender at total Tools, I got this email from them about potential problems.
Have put put some limits on my cards just in case.
The market reacted in a rather muted fashion.
Sp actually went up today.
Mick

 

[mullokintyre]

MTS seems ton have been collateral damage in the revelations that both coles and woolies have been faking their discounts (shock horror!).
despite not having been mentioned adversely in the reports, Metcash hit by a 55 fall today.
Used it as opportunity to top up some more from the profits of some of my recent gold sales.
Mick

 

[mullokintyre]

It may be more than just collateral damage.
Goldman Sachs has it as sell.
Mick

 

[divs4ever]

MTS seems ton have been collateral damage in the revelations that both coles and woolies have been faking their discounts (shock horror!).
despite not having been mentioned adversely in the reports, Metcash hit by a 55 fall today.
Used it as opportunity to top up some more from the profits of some of my recent gold sales.
Mick
View attachment 186332

got badly scorched with this several years back

but that was then , i have a small order to buy back in , in the market currents ( but sub $3.30 and ready to ease it down lower yet , ideally i would like near $3 )

maybe these investigators haven't heard of INFLATION , 2 years back prices were an easy 25% lower

the ACCC have played this game before ( and came out looking threadbare )

 

[divs4ever]

Year to date Group sales have been strong with growth in the Food, Liquor and Hardware pillars, partly buoyed by recent acquisitions.
Food (ex-tobacco) has continued to perform strongly in a highly value conscious shopping environment demonstrating the business’ resilience and relevance of the independent network’s differentiated offer.
The sales performance represents volume growth and moderating inflation.
Superior Foods has also performed strongly for the period since acquisition (3 June 2024), which has included the cycling of a number of new contracts won in September/October last year.
In Liquor, independents are continuing to outperform and win market share in a more challenging environment, supported by their localised and competitive offer.

As noted in the Company’s prior trading update (period to 8 September 2024), the external market for the Independent Hardware Group (IHG) continued to be very challenging with Trade activity softening even further.
It was also noted that retail store margins in IHG were facing pressure due to the impact of lower volumes on fixed costs.
Since that update, there has been additional margin pressure in retail stores in September and October, particularly in Trade due to further sales weakness.
This weakness in retail store sales has been offset by lower-margin wholesale sales.
Metcash is responding to the weaker trading conditions in Hardware by implementing additional cost management initiatives and accelerating its strategic initiatives to drive market share gains in both Trade and DIY.
Cost initiatives have included a strong focus on all business expenditure, particularly labour,where there has already been a material reduction in hours.
The Hardware business remains ideally positioned to capitalise on any increase in market activity levels.All the Company’s recent acquisitions are performing as expected and remain on track for delivering targeted synergies.
Metcash estimates that Group Underlying Net Profit After Tax for the first half of FY25 will be in the rangeof $132 - $135 million.

detail will be provided with the Company’s FY25 half year results materials, scheduled for releaseon 2 December 2024.A briefing call will be held at 10.00 am today.

Please register to join the live teleconference in advance of the commencement of the call using the following registration link:https://register.vevent.com/register/BI09c0130f3a3643a3802067a653907598

This announcement is authorised for release by the Board of Directors of Metcash Limited.

i hold MTS ( bought back into it this morning on the early dip )

not a fortune invested but WOW ( i hold ) continues to stumble and stumble

 

[finicky]

Market Matters opinion on Metcash
Not Held

Metcash (MTS) $3.33
UPDATED 23/10/2024 09:18

A tough session yesterday for MTS following an aggressive broker downgrade from Goldmans to a sell (from neutral) and a $3.10 price target, 13% below the price before they released the note. This is an “outlier” call from Analyst Lisa Deng and goes hard against consensus, hence the big influence on the stock. The call is predicated on three key factors:

Increasing use of online ordering/e-commerce and both Woolworths & Coles have a better offering which will increasingly erode IGA’s value proposition.
Bunnings is winning in Hardware and that trend is unlikely to change due to size and range.
MTS’s acquisition-led growth strategy will reduce the return on invested capital.
We think these are valid points, however, they’re not new. Metcash trades at a material discount to peers due to its market position, and on 12x consensus earnings for FY25, relative to Coles (21x) and Woolworths (23x), we think these dynamics are priced into the shares. For context on other broker calls, there are 10 buys, 3 holds (and now 1 sell) ranging from JP Morgan’s bullish price target of $4.50 down to Morgan Stanley with a hold and $3.83 PT, with Goldman’s call 19% below the next most “bearish” view.

Metcash has been underperforming since its 2022 high of ~$4.80, though we retain a positive stance on the stock for income, expecting a yield for the coming 12 months of nearly 7% fully franked, trading at a valuation that captures the issues raised in the Goldman’s downgrade.
MTS
MM intends to hold MTS for Income

 

[finicky]

Greg Canavan of fat tail investment advisory has moved MTS back to HOLD, 23 Oct

Metcash [ASX:MTS] fell sharply yesterday on no company specific news. Apparently, Goldman Sachs issued a sell recommendation on the company with a $3.10 price target.

The selling saw the share price fall below support to a 3.5-year low. While the company looks like compelling value here, such falls are usually accompanied by more short-term price weakness.

So for now, I’ll move Metcash back to a hold with a view to buying again should the price stabilise. Half yearly results are about six weeks away so that will also give us some guidance as to how the business is tracking.