New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>We downgrade Steel &amp; Tube (STU) from NEUTRAL to UNDERPERFORM.</li><li>It has been a tough 18 months for STU, delivering a -NZ$21m EBIT loss in FY25, followed by a -NZ$7m EBIT loss through the first four months of FY26.</li><li>We expect losses to continue in the coming months, with breakeven EBIT unlikely until at least February/March 2026 given low trading days in December and January.</li></ul>

We downgrade Steel &amp; Tube (STU) from NEUTRAL to UNDERPERFORM.It has been a tough 18 months for STU, delivering a -NZ$21m EBIT loss in FY25, followed by a -NZ$7m EBIT loss through the first four months of FY26.We expect losses to continue in the coming months, with breakeven EBIT unlikely until at least February/March 2026 given low trading days in December and January.

Steel & Tube Holdings More Losses Ahead—UNDERPERFORM

<ul><li>Steel &amp; Tube’s (STU) four-month trading update highlighted that its volumes are stabilising and prices are improving.</li><li>Further, the Perry Metal Protection (Perry) acquisition is performing ahead of expectations.</li><li>Whilst STU sees itself as a natural consolidator of the fragmented NZ steel industry, any near-term acquisitions would likely require additional equity.</li></ul>

Steel &amp; Tube’s (STU) four-month trading update highlighted that its volumes are stabilising and prices are improving.Further, the Perry Metal Protection (Perry) acquisition is performing ahead of expectations.Whilst STU sees itself as a natural consolidator of the fragmented NZ steel industry, any near-term acquisitions would likely require additional equity.

Steel & Tube Holdings Perry Protecting Profits

<ul><li>Steel and Tube (STU) reported an even softer FY25 result than we had been expecting.</li><li>Whilst volumes were more robust than we had anticipated through 2H25, this was more than offset by a -29% decline in gross profit dollar per tonne (GP$/t).</li><li>While we once again push out our cyclical recovery assumptions and make significant cuts to our forecasts, the 2H25 volume improvement suggests activity is improving.</li></ul>

Steel and Tube (STU) reported an even softer FY25 result than we had been expecting.Whilst volumes were more robust than we had anticipated through 2H25, this was more than offset by a -29% decline in gross profit dollar per tonne (GP$/t).While we once again push out our cyclical recovery assumptions and make significant cuts to our forecasts, the 2H25 volume improvement suggests activity is improving.

Steel & Tube Holdings FY25 Result—Annus Horribilis

<ul><li>Steel and Tube (STU) reported a 1H25 loss of -NZ$10m, with steel demand at levels not seen since the 1990s.</li><li>While STU is controlling its controllables, taking cost out of the business, releasing working capital, and managing bad debts well, it has not been enough to offset the deep cyclical trough.</li><li>STU announced the conditional acquisition of Perry Metals Protection (PMC), a market leader in hot dip galvanising. </li></ul>

Steel and Tube (STU) reported a 1H25 loss of -NZ$10m, with steel demand at levels not seen since the 1990s.While STU is controlling its controllables, taking cost out of the business, releasing working capital, and managing bad debts well, it has not been enough to offset the deep cyclical trough.STU announced the conditional acquisition of Perry Metals Protection (PMC), a market leader in hot dip galvanising. 

Steel & Tube Holdings - 1H25 Result—Taking a Dip

Thematic (Sector/Industry)

<ul><li>September-quarter ready-mix concrete (RMC) production showed a slight pick-up after a soft June quarter, with volumes up +2% on the prior quarter (seasonally adjusted).</li><li>Fletcher Building (FBU), Vulcan Steel (VSL), and Steel &amp; Tube (STU) all provided AGM trading updates in October.</li><li>The infrastructure pipeline is increasing, but it will take time for projects to move from earthworks to needing concrete and steel.</li></ul>

September-quarter ready-mix concrete (RMC) production showed a slight pick-up after a soft June quarter, with volumes up +2% on the prior quarter (seasonally adjusted).Fletcher Building (FBU), Vulcan Steel (VSL), and Steel &amp; Tube (STU) all provided AGM trading updates in October.The infrastructure pipeline is increasing, but it will take time for projects to move from earthworks to needing concrete and steel.

Building Sector Ready-Mix Concrete—In The Mixer

New Zealand

Steel & Tube Holdings Limited produces and distributes steel throughout New Zealand and its products include steel fasteners, nuts, bolts and screws.  The Company's other activities include steel reinforcing.

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Steel & Tube Holdings (STU NZ)

Steel & Tube Holdings More Losses Ahead—UNDERPERFORM

We expect losses to continue in the coming months, with breakeven EBIT unlikely until at least February/March 2026 given low trading days in...

Forsyth Barr

Steel & Tube Holdings Perry Protecting Profits

Whilst STU sees itself as a natural consolidator of the fragmented NZ steel industry, any near-term acquisitions would likely require additional...

Forsyth Barr

Steel & Tube Holdings FY25 Result—Annus Horribilis

Whilst volumes were more robust than we had anticipated through 2H25, this was more than offset by a -29% decline in gross profit dollar per tonne...

Forsyth Barr

Steel & Tube Holdings - 1H25 Result—Taking a Dip

Looking through cyclically low near-term earnings, STU is trading on a two-year forward PE of 10.2x, in line with its long-run average. NEUTRAL.

Forsyth Barr

Building Sector Ready-Mix Concrete—In The Mixer

September-quarter ready-mix concrete (RMC) production showed a slight pick-up after a soft June quarter, with volumes up +2% on the prior quarter...

Forsyth Barr

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