Analysts have downgraded Vulcan Steel this week.
Forsyth Barr has downgraded Vulcan Steel from outperform to neutral on the tough economic environment, although it has kept its target price at $9.60.
Analysts Rohan Koreman-Smit and Paul Koraua said the operating environment for steel distributors had been challenging over the past two years, with large volume declines in New Zealand and price pressure on both sides of the Tasman resulting in earnings downgrades.
“Vulcan Steel was cautiously optimistic at its 1H24 result, with some early signs of an inflection point in NZ demand and self-help opportunities.”
But a downturn in manufacturing in the March PMI data combined with a fall in business confidence had seen the analysts moderate their expectations for a pick-up in volume in the steel division in the second half of Vulcan’s financial year.
“We had forecast average tonnes per day in the steel division to lift +5 per cent in 2H24 compared to the prior half. Given the weaker NZ business survey data we now expect 2H24 steel division tonnes per day to be in-line with 1H24. Our medium-term assumption that the Steel division daily volumes return to FY19 levels by FY26 is unchanged.”
They remain positive for the medium-term outlook given steel prices had stabilised after a steep decline, New Zealand activity would eventually recover from the current trough, there was a large potential for share gains in Australia and upside from Ullrich operational improvements.
The analysts forecast revenue will be $1.106 billion in the FY24 financial year, down from $1.245b in FY23 and forecast net profit to be $53.6 million in FY24, down from $95.2m in FY23.
Vulcan Steel is taking action to offset the downturn, including cost management with a 13 per cent reduction in its full-time equivalent staff from the peak of its operation.
Vulcan is not the only steel company shrinking its staff numbers. Fletcher Building subsidiary Easysteel has begun consultation with staff this week on dozens of potential job losses.
Fonterra has teamed up with share trading platform Sharesies to offer its farmer owners a new way to trade shares in the co-operative among themselves.
The current trading platform technology for Fonterra shares has been in place since 2012 and the existing vendor agreement is due to expire shortly.
The co-op’s shares are distinct from the NZX-traded Fonterra units, which can be owned by non-farm investors.
To date, only the units – which represent 6.7 per cent of Fonterra’s shares on issue - have been available on the Sharesies platform.
The parties said the move presented an opportunity for Fonterra to review and enhance the trading experience for Fonterra farmers.
In partnering with Sharesies, from mid-2024, the system will offer:
Fonterra’s acting chief financial officer Simon Till said the collaboration with Sharesies would make trading shares easier.
Under Fonterra’s Flexible Shareholding capital structure, units in the FSF are held by a mix of farmers, retail investors, private wealth and institutions.
Fonterra shares (FCG) can only be held by current or former supplying farmers, sharemilkers, contract milkers or farm lessors.
TradeWindow chief executive and founder AJ Smith has dipped into his own pocket to get the company’s capital raising over the line.
Smith will contribute between $300,000 and $500,000, subject to shareholder approval, towards the raising which is targeting $2.2 million. His contribution means the company, which does freight logistics technology, will now reach the minimum $1m threshold to get the placement over the line.
But given the closing period for the capital raise is today, it seems unlikely the company will hit its target. Sharesies investors have already had the deadline for them to participate in the capital raise extended.
Initially, they were given until 3pm on April 5 to take part in the placement. But on April 5 Sharesies investors were told they had been given until 3pm on April 19 to buy into the offer.
The capital raising is aimed at getting the company to be ebitda and cashflow positive. The company has been growing its revenue but still made a loss of $4.77m in the six months to September 30, although that was an improvement on the $7.08m loss it made in the corresponding prior period.
Smith said in an announcement to the exchange that it should come as no surprise that he will participate in the capital raise.
“I am committed to making this company a success. More importantly, given our record, I have great confidence in delivering on that goal. Companies born in the crucible of recession are sculpted for resilience; they emerge not just ready to survive but primed to thrive.
“With ongoing shareholder support I believe TradeWindow will exemplify this principle.” TradeWindow shares were trading at 20.5c yesterday.
The share price for Donald Trump’s social media company has slumped in recent weeks hitting a low of US$22.84 ($38.56) on Tuesday - more than 70 per cent below its peak set late last month.
Trump Media & Technology Group has traded as high as US$79.38 a share but closed on US$26.40 yesterday as the euphoria surrounding the stock fades.
According to AP, part of the decline may be due to criticism that the stock price had zoomed way past what sceptics said the money-losing company is worth, particularly one with tough odds for success. But another part is also likely because of action Trump Media took on Monday.
The company filed documents with the US Securities and Exchange Commission that open the door for the future potential sale of millions of shares. The document, called an S-1, relates to warrants held by investors that can be transformed into shares of stock, as well as shares held by company insiders.
The filing also includes all the shares held by the former president. Trump, though, remains under a “lock-up” deal that largely restricts him from selling his shares for roughly another five months. His son, Donald Trump jnr, who is a director on the board, and CEO Devin Nunes, are also bound by the lock-up.
Typically, all shares of stock held by insiders subject to lock-up deals are included in such filings, according to Jay Ritter, an expert on initial public offerings of stock at the University of Florida’s Warrington College of Business.
The filing does not necessarily mean any investors are planning to sell their shares, Sarasota, Florida-based Trump Media & Technology Group said in a statement.
Trump Media got its place on the Nasdaq after merging with a company called Digital World Acquisition Corp, which was essentially a pile of cash looking for a target to merge with. It’s an example of what’s called a special purpose acquisition company, or SPAC, which can give young companies quicker and easier routes to getting their shares trading publicly.
S-1 filings are typically filed quickly after a SPAC deal closes, usually within 15 or 30 days, said Kristi Marvin, founder of SPACInsider.com, which specialises in SPAC deals.
The exercise of warrants referenced in Trump Media’s S-1 filing would increase the number of shares outstanding for the company. That in turn could put downward pressure on the stock price. When something becomes more available, it tends to fall in price unless demand for it picks up accordingly.
The drop in Trump Media’s stock price over the last few weeks hurts its shareholders, who experts say are mostly smaller-pocketed investors rather than big institutions. Several users of Truth Social have said they bought shares to show their support of the former president.
The drop also puts a huge hit on Trump’s finances directly. He could personally own nearly 114.8 million shares, depending on the company’s performance. That would be worth around US$3 billion at its current price. On March 27, that was worth nearly US$7.6b.
On Monday, Trump arrived at a New York court for the start of jury selection in his hush-money trial. It’s the first trial of any former US commander in chief.
- additional reporting AP
Demand for bonds may well stay strong, but there's a catch.