Severfield Share Discussion Threads

[jonwig] 15/4/2011 10:48

Two holdings RNSs:

Aviva a small increase,

Ameriprise at 5% for clients. (US wealth management.)

[jadeticl] 29/3/2011 11:04

We are a long way from the recent high of 330p, but we seem to be in a "creeping up" phase just now after the steep fall.

[jadeticl] 29/3/2011 11:03

Thanks jonwig and grigor.

[jonwig] 28/3/2011 11:33

RBS Hoare-Govett is their chief broker - the equivalent, I suppose.

[grigor] 28/3/2011 10:54

SFR is fully listed.

NOMAD'S are for AIM shares

[jadeticl] 28/3/2011 10:48

Who is the SFR NOMAD?

[grupo guitarlumber] 28/3/2011 07:17

Franc Only Haven Means Biggest Gains in Currencies Hildebrand Can't Stop
By Lukanyo Mnyanda and Liz Capo McCormick - Mar 28, 2011 4:18 AM GMT+0200
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Business ExchangeBuzz up!DiggPrint Email . The franc has surged 8.15 percent in the past year, the most among the 10 most-widely traded currencies tracked by the Bloomberg Correlation-Weighted Indexes. Photographer: Christophe Bosset/Bloomberg


Play VideoMarch 24 (Bloomberg) -- Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co., and Gerard Lyons, chief economist at Standard Chartered Bank, discuss the European debt crisis and the outlook for the euro. They speak with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)


Play VideoMarch 18 (Bloomberg) -- Alessio de Longis, a portfolio manager at Oppenheimer Funds, discusses the Group of Seven's decision to intervene in the foreign exchange market to help stabilize the Japanese economy in the wake of the March 11 earthquake. De Longis, speaking with Erik Schatzker on Bloomberg Television's "InsideTrack," also discusses his recommendation of the Swiss franc. (Source: Bloomberg)


Play VideoMarch 10 (Bloomberg) -- Geoffrey Yu, a currency strategist at UBS Ltd., talks with Bloomberg's Oliver Joy in London about the outlook for today's Bank of England rates decision and its possible impact on the pound. Yu also discusses European Central Bank monetary policy. (Source: Bloomberg)
The Swiss franc, the best performing major currency the past year, has become the only haven in the foreign-exchange market as the Group of Seven weakens the yen and the Federal Reserve floods the U.S. financial system with dollars.

The franc has surged 7.68 percent in the past year, the most among the 10 most-widely traded currencies tracked by the Bloomberg Correlation-Weighted Indexes. Not even the cash spent by Switzerland's central bank last year to curb the franc's strength was enough to keep it from appreciating more than 18 percent against the euro.

Bets by futures traders on further gains against the dollar reached the highest level this month since 2004 even as Swiss National Bank President Philipp Hildebrand said its rise poses "considerable risks" to the economy. Swiss growth will likely lag behind Germany and the U.S. this year as exports from watchmaker Swatch Group AG to technology company OC Oerlikon Corp. risk becoming less competitive.

"The franc has become the ultimate safe haven," said Audrey Childe-Freeman, head of European currency strategy in London at the private-bank unit of JPMorgan Chase & Co., the second-biggest U.S. lender by assets. "In a world where there are question marks against both the dollar and the euro and an environment that will be choppy for the yen in the context of intervention, the franc seems to be the best bet."

Currency Trading
Switzerland's currency has benefited from the nation's role as a stable, neutral financial center and as an exporter of precision products from watches to machine tools. Since 1975, only the yen has appreciated more than the franc among the 10 currencies tracked by the Bloomberg Correlation-Weighted Indexes.

Exports account for about 50 percent of Switzerland's economy, compared with 39 percent for Germany. The Alpine nation's current account surplus -- the broadest measure of trade because it includes investment -- may shrink to 10.95 percent of the economy this year, from 15.33 percent in 2010, according to the median of 10 estimates in a Bloomberg survey. Germany's surplus may expand to 5.3 percent this year from 5 percent, a separate survey shows.

While Switzerland's $491 billion economy is the 19th biggest in the world, the country has the sixth-most actively traded currency, according to the Basel Switzerland-based Bank for International Settlements. The bank's data show it accounts for 6.4 percent of the $4 trillion average daily turnover in foreign-exchange markets during the three years ended 2010.

'Victim of Success'
"We are a victim of our own success," Rudolf Minsch, chief economist at Economiesuisse, the biggest Swiss industry group, representing 30,000 companies totaling 1.5 million employees, said in a phone interview from Zurich on March 23.

The franc fell 1.4 percent last week to 1.29593 per euro and was 2.1 percent weaker at 91.99 centimes per dollar, after climbing to a record 88.52 centimes on March 17. It traded at 1.24025 per euro on Dec. 30, the strongest level since the euro's 1999 debut. The franc was at 1.29475 per euro and 92.12 centimes today.

The currency is still over-valued by 39 percent against its U.S. counterpart and is 32 percent too expensive versus the euro, according to an index developed by the Paris-based Organization for Economic Cooperation and Development that uses relative costs of goods and services.

Hedge funds and other speculators held a net 27,640 contracts at the Chicago Mercantile Exchange as of March 15 betting on a gain in the franc versus the dollar, the most since December 2004, before slipping to 21,301 last week. Traders on average have held a net 10,029 contracts expecting declines over that period, according to the Washington-based Commodity Futures Trading Commission.

Abandoning Euros
"The currency we are longest in Europe is the Swiss franc," John Taylor, chairman of New York-based FX Concepts LLC, the world's largest foreign-exchange hedge fund. "I don't see any chance that the flow of money into Switzerland will change. People just want to get the heck out of the euro."

Taylor, whose firm's global currency fund returned 12.53 percent last year, its best performance since before the global financial crisis, said the franc may appreciate to 1.10 per euro, or 17.7 percent, as investors seek refuge from Europe's sovereign debt crisis, which has forced Greece and Ireland to seek bailouts from the European Union and International Monetary Fund.

The franc may be vulnerable as EU leaders negotiate an aid mechanism for the region's most-indebted nations and the European Central Bank raises interest rates faster than the SNB.

Optimism Tempered
"We continue to see the franc as a safe haven but we have to recognize that a lot of that is priced into the currency," said Axel Merk, president of Merk Investments LLC in Palo Alto, California. "Yes, we like the Swiss franc but I wouldn't bet my house on it."

The Merk Hard Currency Fund has gained 2.86 percent this year, beating 83 percent of its peers as measured by Bloomberg data.

The median of at least 30 analyst estimates in Bloomberg surveys is for the currency to weaken to 1.35 per euro by year- end, and to 97 centimes per dollar.

Switzerland's benchmark rate will probably end the year 1 percentage point below that of the ECB, Bloomberg News surveys of economists show. The SNB's main rate is 0.25 percent compared with the ECB's 1 percent.

Yield Differences
The extra yield that investors get for holding German two- year notes instead of similar maturity Swiss securities has more than doubled since Dec. 31, reaching 114 basis points, or 1.14 percentage point, on March 21, the most since June 2009 and up from last year's low of 17 basis points in June.

Investors have little concern that the SNB will seek to buy and sell currencies in an effort to weaken the franc after the central bank failed at such attempts from March 2009 to June 2010. The intervention contributed to a $21 billion loss for the SNB last year, according to the central bank.

While Oxford educated Hildebrand, 47, who has been head of the central bank since January 2010, and the SNB tried to weaken the franc on their own, the G-7 jointly sold yen on March 18 as that currency's strength threatened Japan's recovery from the magnitude 9 earthquake. The yen has fallen 6.1 percent to 81.60 per dollar from the postwar high of 76.25 touched on March 17.

In the U.S., the Fed began buying $600 billion of Treasuries in November in a second round of its quantitative- easing policy that will run through June. The central bank held $2.61 trillion of assets as of last week, up from less than $1 trillion in 2008. The Fed has kept its target rate for overnight loans at a record low of zero to 0.25 percent since December 2008.

Relative Growth
The Swiss economy will expand 1.95 percent this year, lagging behind growth of 2.6 percent in Germany and 3.1 percent in the U.S., according to Bloomberg surveys of economists. While the SNB raised its growth forecast for this year on March 17 to about 2 percent from 1.5 percent, the economy is "still facing considerable risks," Hildebrand said in Geneva on March 22.

Swiss stocks are trailing their counterparts in Western Europe. The benchmark Swiss Market Index has declined 1.3 percent this year, compared with a 0.5 percent gain in Germany's DAX Index and a 4.4 percent increase by France's CAC 40 Index.

Stephen Urquhart, president of Omega, Swatch's largest watch brand, said Swiss companies cope with a strong currency by focusing on the perceived quality of their products.

'We Are Swiss'
"Most people buy our product because we are Swiss, and I think we just have to face the pros and cons of being a Swiss company," he said in an interview March 23. "There are probably more pros than cons by the way."

Oerlikon said the franc will reduce its reported revenue by about 200 million francs ($217 million).

"It would certainly be easier with euros but you can't change your reporting currency overnight," Juerg Fedier, the company's chief financial officer, said in an interview.

Swiss exports increased in February as growth in Germany and Asia fueled demand for watches and machinery parts. The country's trade surplus widened to 2.49 billion Swiss francs from 2.04 billion francs the previous month, the Federal Customs Office in Bern reported on March 22.

"The franc is basically the only safe-haven currency left," said Kasper Kirkegaard, a senior strategist at Danske Bank A/S in Copenhagen, who expects the currency to trade at about 90 centimes per dollar in six months "The fundaments are very strong. That speaks in favor of a strong currency."

To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at [e-mail]; Liz Capo McCormick in New York at [e-mail]

To contact the editors responsible for this story: Daniel Tilles at [e-mail]; Dave Liedtka at [e-mail]
.

[jonwig] 23/3/2011 07:43

Post-results broker estimates:

2011 2012
PBT(£m) eps(p) dps(p) PBT(£m) eps(p) dps(p)
Fairfax IS [R]
22-03-11 SELL 10.50 8.40 5.00
Evolution Securities Ltd
22-03-11 ADD 8.50 6.90 10.00 11.50 9.50 10.00
Altium Securities
22-03-11 BUY 10.00 7.90 7.50 14.00 11.10 10.00

[alter ego] 22/3/2011 16:22

jonwig, I'll accept that as true but it's not likely to get cheaper and clients will still drive a hard bargain as they will know better than you or I what SFR are paying. I'm not anti SFR at all. They have a promising future but I can't think of another company that is being as generously rated when the immediate prospects remain so poor. Good luck to holders. I wish the stocks I hold had the same magic ability to look way beyond the next 12 months.

[fangorn2] 22/3/2011 16:11

Up 8% post the RNS news...looks like market rewarding the divi cut more than anything else.The financials were dire...if it keeps rising for the next day or two I'm definitely selling into strength....and reinvesting elsewhere that has a yield of 7% or so.

[jonwig] 22/3/2011 15:47

The Independent reports:

Severfield-Rowen raised to buy from hold at Altium, target price stays 288p

I haven't seen the report, of course, just the soundbite. On the arguments, we must be poised to reap maximum benefit from any recovery in the UK, India seems to be doing what was planned, and the ME (Saudi) is intriguing. I've taken the hint a month ago from Goldman-Sachs and bought into the MENA frontiers story with AFMF. SFR might have a lucky break there.

EDIT: didn't see your post, alter ego ... I think SFR can buy their steel cheaper than their UK competitors - don't recollect the precise reference.

[alter ego] 22/3/2011 15:39

You said it much better than I could edmundshaw. SFR seems to have invented an anti grav shield for the share price. The not so distantly past ascent to more than £3 had me baffled and seemed to be taking rose tinted glasses to new heights but how todays results can justify a forecast p/e rating of 25 is utterly beyond me.

At some point SFR will be firing on all cylinders again, the UK market will be buzzing and the Indian venture will hopefully be maturing nicely - meanwhile rising raw material costs, more competition for fewer contracts and a host of other uncertainties just do not add up to the rating accorded to this stock.

Disclosure - I have no position in SFR.

[jonwig] 22/3/2011 15:29

edmundshaw ... I suppose I'm a long-term enthusiast on your scenario, though I must admit to some opportunistic trading along the way.

I've been to the last two AGMs and expect to go to the coming one, which will be posh hotel and free lunch unless their caution cancels it. North Yorks early June?
Actually, AGM at Thirsk HQ would be quite good.

[edmundshaw] 22/3/2011 15:09

I am intrigued by the share price action here.

On the face of it, supporters of SFR have a long term approach, are patient, and value business quality over immediate earnings. Quite impressive, always assuming it all works out well.

I, on the other hand, find it hard to see good news for at least another year. So feel safer out for the moment.

Nevertheless, SFR do seem to manage to make themselves look good, even when their margins are slaughtered(Underlying profit before tax margin at 5.7% (2009: 14.5%)), operating profit 69% down, debt up, final dividend now a quarter of what it was, order book reduced, and writedowns in property assets. And no immediate sign of recovery.

Is it the advantageous & predominant position in the UK? The Indian JV hopes? The squeezing to death of much of the competition? I don't know. But investors seem to be pricing in recovery far more readily here than elsewhere.

Ah, well. Sit and wait for the summer now, I guess...

[stevemarkus] 22/3/2011 10:36

I think there are some positives here, although the financials are fairly dire. The indian JV is going very well from what we can see - sales have more than doubled since the last report. The company also says that they see an upturn towards the end of 2011 and into 2012 - previously they have not been especially positive. Also, as Jon says, competitors are suffering more, and by means of survivorship, SFR looks to do well in the future. I know it's jam tomorrow, but it looks like decent jam, and could be responsible for offering some support to the share price Certainly I don't intend to sell currently.

Cheers,
Steve.

[fangorn2] 22/3/2011 10:29

Rather disappointing results. Wasn't expecting them to be so dire.

Very tempted to sell as the divi was the main attraction,and currently, my holding is still in profit...

[jonwig] 22/3/2011 08:22

For an indication of just how much worse it could have been, look at BILN's numbers from last week.

Operating margins of 6% have been squeezed at both ends - steel prices and need to use fixed assets (plant, skills) at almost any cost.

[alter ego] 22/3/2011 08:18

I've been amazed at just how resilient the share price has been for months, even in the teeth of a bleak trading update. Perhaps now we will see the appropriate realignment.

[edmundshaw] 22/3/2011 08:06

I remain on the sidelines for the moment. I am not as certain about recovery in 2012 as the board appears to be, though they should have their fingers on the pulse; and I just feel the stock is more vulnerable to downward lurches than upward ones at the moment.

Hope to get back in sometime ovr the next year...

[envirovision] 22/3/2011 07:59

Worse than I thought. 6% margin, how dire is that and the sad thing about that is that because this outfit are the largest in the market its probably them who have forced the returns in the sector to shrink to a pathetic 6% simply by trying to outbid everyone else regardless of profit.

[jonwig] 22/3/2011 07:47

Looks about in-line (£15.3m, 12.5p on underlyings), and I doubt the dividend cut will impact the share price too much.

The TS was so recent that these results don't add much information. The higher order book (£233m vs £217m) is encouraging, so is the Indian JV (£33m vs £15m).

For me it's a hold, and a buy at 200p.