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SVW offered to purchase the remaining Shares of BLD it does not own
End of the road for BLD
Not overly ecstatic at being forced to trade the direct BLD exposure to infrastructure and construction for the more diverse SVW Group, particularly with the non-performing Seven West Media and Beach Energy, but have a lot of faith in the ability of the Stokes to continue to generate value from hereon.
The investment thesis in May 2021 was predicated on the Stokes ability turn BLD around and extract value post the exit of the US businesses, and a "what is good for the Stokes, should be good for me" approach. These outcomes have been delivered. A 60% return over 3 years, with the promise of more to come under SVW is not a bad outcome-cum-moving forward plan, all said.
Discl: Hold BLD and SVW IRL
Summary of results and notes from the BLD investor call
A very strong result, nothing to not like! Business turnaround has been impressive thus far, but is still in early stages with the promise of a lot more to come.
The dynamics between expected flat market-driven-volume, Jan 2024 price increases, operational leverage and the impact on a seasonally softer 2H, will be interesting to observe in 2HFY24
A very happy shareholder!
Discl: Held IRL
Always nice to wake up on a Monday morning to a decent ~6% price pop!
Discl: Held IRL
Does not appear to be anything new from quick scan of the AGM Presentation and Speaker notes other than a positive pricing update on 1QFY24 Trading performance.
No change to FY24 guidance for underlying EBIT range.
Discl: Held IRL
One of my thesis breakers is a SVW selldown of BLD, so this is something I monitor. Really scratching my head with this move, in terms of the rationale other than possibly to raise cash for SVW dividend payouts, given BLD declared no dividends.
It is a cool $22.2m gain no doubt, but (1) it is small change in SVW's world (2) half of it is gone to CGT as it is a <12 month holding (3) moves absolutely nothing in SVW and BLD, financially.
“We are pleased to see the strong recovery in Boral’s share price. Consistent with our disciplined approach to capital management, SGH has elected to sell 1% of Boral to capture the market valuation, while retaining control of the business. SGH remains committed to Boral and its performance journey and will continue to support its management team as they work to restore appropriate profitability to one of Australia’s great industrial businesses.”
Doesnt change my BLD thesis though.
Disc: Hold SVW and BLD IRL
Have held BLD for over a year now. Revisiting my investment thesis notes from February 2023, written after reviewing the 1HFY2023 results.
Discl: Held IRL
Geographical Spread, Type of Assets and Location
INVESTMENT THESIS
NEAR TERM RISKS
RISKS THAT WILL PROMPT SELLING
My summary of the BLD FY2023 results - a really good result which the market clearly liked.
Discl: Held IRL
THE GOOD
NOT SO GOOD
WHAT TO WATCH OUT FOR
OVERALL SUMMARY
A fun bit of Scuttlebutt regarding Boral. I work for a construction company, and we are building an office block for an existing client. The clients wanted to build the project "environmentally friendly". They proposed using Boral's "Envirocrete" environmentally friendly concrete product. After the first pour, we did our usual concrete testing and the desired (advertised) MPA strength wasn't achieved. Assured this was just a bad batch, the concrete was replaced and it failed again! Cost the client a fortune. Needless to say we arent using this product anymore.
1 February 2022 Boral to return $3 billion to shareholders
Boral Limited (ASX: BLD) today announced a $3 billion return of surplus capital to shareholders.
The cash distribution of $2.72 per share will be in the form of a $2.65 per share equal capital reduction, totaling $2,923 million and an unfranked dividend of 7 cents per share, totaling $77 million.
At the 2021 Annual General Meeting on 28 October 2021 shareholders voted in favour of reducing Boral’s share capital by up to $3 billion by way of an equal capital reduction.
S&P’s rating outlook revised to stable S&P Global Ratings (S&P’s) has affirmed the credit rating of ‘BBB' for Boral Limited (ASX:BLD) and revised Boral’s rating outlook from negative to stable.
Boral’s CEO & Managing Director, Zlatko Todorcevski, said: “Boral welcomes the decision by S&P to affirm its investment grade credit rating and revise the company’s rating outlook to stable following the sale of our 50% interest in USG Boral and subsequent reduction in our net debt position.
“As announced to the market on 1 April, in line with our financial framework the sale creates a surplus capital position of approximately $1 billion which is available for reinvestment, and/or return to shareholders. After considering Boral’s future expected operating and cash flow requirements, we also announced the intention to undertake an on-market share buy-back of up to 10% of the shares on issue.
“We recognise that maintaining a strong balance sheet is in the best interests of investors and remain focused on generating surpluses and being disciplined in the allocation of capital.”
Moody's had already revised its outlook to 'Stable" on 22/2/21 (previously posted)
Moody’s rating outlook revised to stable
Moody’s Investors Service (Moody’s) has affirmed the credit rating of ‘Baa2' for Boral Limited (ASX:BLD) and revised Boral’s rating outlook from negative to stable.
In its report, Moody’s noted “Boral recently introduced a well-articulated framework on financial leverage and return on capital. These prudent measures will have implications for the company’s financial strategy and risk management, a key component in our governance risk assessment framework. Today’s rating action considers the impact of Boral’s governance practices on its credit profile, which Moody’s views as credit positive.”
Boral’s CEO & Managing Director, Zlatko Todorcevski, said: “Boral welcomes the decision by Moody’s to reaffirm its investment grade credit rating and revise the company’s rating outlook to stable, recognising the commitment and work undertaken to strengthen Boral’s balance sheet and reduce leverage”.
“We remain focused on cash generation and disciplined allocation of capital, recognising that maintaining a strong balance sheet is in the best interests of debt and equity investors. It provides flexibility to withstand headwinds and take advantage of opportunities throughout the cycle.”
“We are currently targeting to reduce Boral’s net debt to $1.5 billion. We expect that Boral’s net debt position will fall below target when we receive the proceeds from the sale of Boral’s 50% interest in the USG Boral and Meridian Brick joint ventures, which are expected this financial year. This will create a surplus of approximately $1 billion, which will be available to reinvest or return to shareholders.”