Multiple back down to 36x.

I can't see the selling stop and I don't know who is selling. I guess the key word is "transition". Behaving like PWH transition is priced for failure.

Unfortunately added too soon on the drop. Bit of a lesson here.

In two minds whether to cut and add on something a bit more "safe" or having an uptrend. Maybe one of the "overpriced" stocks? GTK? At least GTK I understand the thesis quite well having been involved in some Agile development. And, ironically the overpriced ones seem "safer" than PWH right now, not needing to invest for growth.

But it is not like PWH are going out of business soon.

Car parts supplier PWR reported record revenue and profit for the 2024 financial year but fell short of market expectations.

The stock was one of the worst on the Australian market on Friday, tumbling 15.7 per cent to $9.90. PWR Holdings (PWH) shares are down more almost 24 per cent since their record high of $12.98 in February.

The group’s net profit after tax jumped 14 per cent to $24.8m for the 12 months ended June 30 and will pay a 9.2c per share final dividend, taking its full year payout to 14c per share – up 12 per cent on FY23. Revenue increased 18 per cent to $139.4m.

But the profit missed consensus expectations by about 7 per cent, analysts at Goldman Sachs said.

The broking firm has a “buy” recommendation on the stock with a $13.40 price target.

“Long-term growth prospects remain unchanged with PWH investing to increase capacity with the transition to a new Aus facility in FY26,” said Goldman Sachs’ equity team, led by analyst Elijah Mayr.

“We note that timing of revenue and programs can often impact PWH’s results.” No formal earnings guidance was provided, but the company considers FY25 to be a ‘‘transition year’’. Consensus for FY25 net profit margins was 20 per cent on Visible Alpha estimates, the note said.

The company is spending $21.9m on expanding to new premises at Staplyton on the Gold Coast, replacing its existing facility at Ormeau, by November next year. The expansion is supported by the Queensland Government’s Invested in Queensland program, with $8.8m in assistance over 10 years.

PWR founder Kees Weel said the full year result reflected a solid performance across all parts of the business.

“FY2025 will be a transition year for PWR which is crucial to successfully position us for future growth, as we move to our new headquarters in Stapylton,” he said. “Margins will be impacted in the near term as we invest ahead of the curve to set us up for the future.” The company is known for its hi-tech cooling systems used by Formula One cars. Its new Australian factory will increase factory space by 84 per cent to 20,800m, and will allow it to increase Australian manufacturing capacity by more than 100 per cent. “PWR’s ongoing capital investment program will allow us to improve production efficiency by streamlining production flows, increasing the use of automation and support future growth,” the company said.

The Australian-20240817