seekrit squirrel

Finance => Shares => Topic started by: galumay on September 16, 2020, 10:42:20 AM

Title: KOV
Post by: galumay on September 16, 2020, 10:42:20 AM
16/9/20

Bought 2159 KOV at $4.63

KOV is just a solid, boring, cyclical industrial company that has a couple of divisions, it runs a hot dip galvanising business, and the Industrial Products segment includes the manufacture of electrical and cable support systems , steel fabrication and access systems for heavy earth moving equipment, railways and marine. It also includes the sale, hire and repair of high torque tools used in heavy industry and mineral processing. It includes the businesses trading under the EzyStrut, Power Step and Titan Technologies names. The Industrial products division is about 10x the revenue of the galvanising division.

KOV has been a public company for 50 years.

Its not a high growth business and it is cyclical given its reliance on infrastructure and mining projects, but its also a durable business which is unlikely to be disrupted or competed away given the barriers to entry to things like galvanising and the production of specialist niche tools. Its managed to sustain a consistent reasonably high ROIIC and FCF ratio despite the cyclical nature of the business. The biggest risk to the business is a severe economic downturn with a downturn in mining in Australia, this would cause profit to drop sharply and impact share price.The balance sheet is very clean though with no debt so it should be able to weather any storm.

I paid around my calculation of fair value for the business, but this is another case where its not often going to be cheap.

Galvanising plants in Australia -

Kingfield, Vic & NT private

APG - Nth Qld 12.5m Private

Hartway WA private

Valmont Australia's largest, Vic, Qld, NSW, Tas, Public USA listed.

Furphy Vic & NSW, 8.5m Private

Cable suppports -

Ezystrut, Korvest business, All states.

Burndy - NSW, QLD, WA, TAS  private

Kounis - WA, Vic private

Starstrut WA private

Atkore Unistrut - all over Australia, Aktore listed on NYSE.


Why will this business be around in 10 years? -Because its unlikely anyone new is going to come in and start building galvanizing plants or try to compete on the cable supports business or the specialised tools , none of them seem likely to be disrupted by tech or offshoring etc. The business may not see much growth because none of the industries have much organic growth, there might be some consolidation but I am confident people will still need galvanising, cable trays and specialised tools in 10 years time. Been around 50 years too.
Title: Re: KOV
Post by: galumay on February 26, 2021, 09:45:53 AM
H1 2021, a solid result, revenue dropped quite a lot, but they were able to significantly increase profit so the impacts of Covid were well negotiated.

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Title: Re: KOV
Post by: galumay on August 27, 2021, 09:18:21 PM
FY 2021 very solid result for the year.

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Title: Re: KOV
Post by: galumay on February 19, 2022, 02:19:34 PM
HY 1 2022

Very solid result. Beyond my expectations

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Title: Re: KOV
Post by: galumay on July 25, 2022, 03:58:08 PM
Extremely good FY 2022, divvy up to 60c and showing unexpected growth and strength.

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Title: Re: KOV
Post by: galumay on February 28, 2023, 06:42:24 PM
Pretty sad H1 2023, margin compression has really hurt and guidance implies H2 will be similar. Might be a quiet couple of years for KOV, but the growth has been strong and I am happy to hold at this stage.

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Title: Re: KOV
Post by: galumay on June 07, 2023, 04:24:42 PM
Well things turned out better than anyone expected!

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Title: Re: KOV
Post by: galumay on July 24, 2023, 12:49:49 PM
KOV AR out today, a solid result with a strong FCF result. It's a bit hard to work out what caused the massive improvement in FCF to a record level, there is about a $4m move in Working Capital but that is not enough to explain the total of about $12m after adjustments for misleading accounting requirements. Basically FCF running at a historical high of around $1 per share. I will have to ask management what has driven the much improved cash conversion as there is no explanation in the results or presentation.

If this sort of FCF is sustainable then my range of value would increase significantly for KOV.

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Title: Re: KOV
Post by: galumay on January 22, 2024, 02:33:09 PM
Love businesses like $KOV, H1 2024 report out today, 17 pages, less than most #shitcos 4C's!
No bullshit earnings etc, just a brief, clear commentary then the financial reports. Doesnt hurt that NPAT is up over 25% on slightly lower revenue![ Invalid Attachment ]

Interesting that in the investor presso they actually break out growth capex and maint capex, something that is very rare in ASX businesses, but very hard to work out if the company doesnt disclose it.