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SirTradealot, small point of order, the US withholding tax rules don't just apply to listed US incorporated companies. Have a look at DEC. It's actually incorporated in the UK but its dividend payments are subject to withholding tax because its trading susbsidiaries operate in the US. DEC has made an election to be treated as "transparent" for US tax purposes so that any dividends paid up from its trading subsidiaries are not subject to withholding tax in the company but are, instead, subject to withholding tax when paid to its shareholders - this is more tax efficient because SIPP/ISA shareholders are liable to a lower rate of withholding tax.
https://www.aia.org/press-releases/6471469-nonresidential-construction-spending-proje
https://www.forbes.com/sites/billconerly/2022/10/25/non-residential-construction-forecast-slowing-2023-2024/?sh=90936467e630
It's really a question of labour costs, where labour is cheap i.e. China it can be done more cheaply with people.
You are making the assumption that you need Somero products to lay flat and even flooring. It's something of a myth generated by retail investors over a number of years. There is no requirement for such equipment. If there was, then even in North America sales would be 10 or 20 times greater than is currently the case.
Somero offer a very niche product requiring customers to have a very specific set of circumstances to consider their machines
I was stunned to read on the investor's relation page that the US account only for 3% of cement consumption, Europe for the 5%, China a whooping 55!
And yet China doesn't adopt widely high precision concrete placing machines. I thought that's a must have for laying warehouses' floors etc.
Do we expect any surprise here from the US slowing of the economy?
I have read that non-residential construction still hold strong in the US, but the tide may have changed.
China is a less than a concern as the Chinese market is marginal for Somero
I've just bought £2,400 at 385. I plan to increase
Rule applies to US companies based on incorporation, not listing.
I have received also - and was lower than expected - I got 7.55p from II.
I didnt think withholding tax applies as this is listed on UK market? I have other US shares eg Microsoft which does suffer the 15% but didnt think these should...
Yes. I appear to have received the equivalent of 7.44p per share.
I have paid withholding tax as my shares are in an ISA; those holding in a SIPP should receive more (roughly 10.63p I think).
Is today the dividend payment date, has anyone received their dividends?
Not sure they get any revenue from that: I could be wrong but I think that is part of their USP as OEM, compared with "competitors" who have simply tried to reverse engineer individual pieces of equipment.
They contract with each customer to provide ongoing training and maintenance. I have no idea about the terms of that contract e.g. whether the price could be linked to inflation, but I don't think that's the norm.
I suspect your topup was the right approach, they have a history of glass half empty reports and tend to beat their own expectations with a cracking divi to boot although the sp never seems to recognize the value here (I guess that helps offset the downside). Always a chance of an approach too I guess.
(1) Inflation. All that was stated in the recent results presentation was: "The Company mostly offset higher expenses compared to H1 2021 from a higher headcount and cost inflation with 2022 price increases and improved operational efficiency." I can't speak to ongoing contracts etc. I'm not really sure what kind of long-term contracts SOM would enter?
(2) Robotics. I'm not sure about this, but have a hunch that at least for some time, the cost of better floors will be smaller than the cost of better warehouse robots. I'm not really sure that the business model is dependent on warehouses suitable for robots. Perhaps others can assist.
In my view, a bigger immediate issue is the US cement shortage that is creating a delay in concrete being available for jobs, slowing contractors' progress. SOM say if it persists it could affect 2023 trading somewhat, but it's unclear to what extent and might be offset by delayed orders which were still to be filled as at the end of H1 '22.
I have nevertheless topped up today.
This looks good value. I just have a couple of concerns. Isnt SOM very vulnerable to inflation due to its model of using ongoing contracts? Will advances in robotics make ultra smooth floors unnecessary? Also I know that Leadec is struggling. That's a very different company in many ways but it does have a similar customer base and it's seeing below inflation rises in contract prices, refusals to sign long term contracts and threats of industrial action. Overall I'm liking SOM for its p/e, its margin, the way it handles cash and its exposure to the dollar. I'm probably going to invest about 5k
Jack Cooney, CEO, John Yuncza, President and Vincenzo LiCausi, CFO, present Somero’s Interim Results for the six months ended June 30, 2022. A Record H1 revenue driven by continued strength in the US market.
Video: https://www.piworld.co.uk/company-videos/somero-enterprises-som-interim-results-2022-presentation-september-2022/
Podcast: https://piworld.podbean.com/e/somero-enterprises-som-interim-results-2022-presentation-september-2022/
Look fine to me
9% including the special dividend
9% divi, you kidding right ? In-line results
I was hoping for something better too, the market reacted a bit too harshly
A bit meh. Not as good as I’d hoped, but not terrible either. Yield remains good, with plenty scope for growth. Hold.
Somero should report its half year results on Wed the 7th
https://www.youtube.com/watch?v=wfraFxbWIOg&ab_channel=SomeroEnterprises