Tegel IPO

[winner69]

Nothing wrong with intangibles, but the Tegal brand is not worth $300m, if anything it's a liability.

Everyone know's Tegal is the "budget" brand. When the average kiwi thinks hormone or caged chicken, they think of Tegal, even if that's not true. If they want to successfully sell premium chicken products at high margins then they need to change the brand.

I had a look at their website, and they have a nice range of premium products, but the sight of the "Tegal" brand turns me off.

They should change the name of the company to "T Chicken" or "NZ Chicken Group" or something similar, and then have two brands underneath that. One for the budget range, which they can keep as "Tegal" and then make up a new name for the premium range, for example "Pure T Chicken". The premium chicken can have a different colour, like orange, or purple.

Similar to the beer industry, in which you have different brands of beer for different markets, think Lion Red vs Steinlager. Another example is "My Food Bag", where they have "Bargain Box" as their low end brand.

Obviously the Tegel branding is actually worth squat all if esteemed people like yourself can't spell it correctly

I wouldn't call Tegel a 'budget' brand but then we are both entitled to our opinios

The Tegel Turkey Breast Roasts are pretty nice - they are cage free and a bit cheaper than the so called free range ...wouldn't call them economy and I don't think the Tegel branding detracts from the product.

[Baa_Baa]

Nothing wrong with intangibles, but the Tegal brand is not worth $300m, if anything it's a liability.

Everyone know's Tegal is the "budget" brand. When the average kiwi thinks hormone or caged chicken, they think of Tegal, even if that's not true. If they want to successfully sell premium chicken products at high margins then they need to change the brand.

I had a look at their website, and they have a nice range of premium products, but the sight of the "Tegal" brand turns me off.

They should change the name of the company to "T Chicken" or "NZ Chicken Group" or something similar, and then have two brands underneath that. One for the budget range, which they can keep as "Tegal" and then make up a new name for the premium range, for example "Pure T Chicken". The premium chicken can have a different colour, like orange, or purple.

Similar to the beer industry, in which you have different brands of beer for different markets, think Lion Red vs Steinlager. Another example is "My Food Bag", where they have "Bargain Box" as their low end brand.

That's a rather complicated assessment. Keep the same product, call it something different, and the outcomes will change?

Anecdote is often fraught, nevertheless I think Tegel are a fine company, they have excellent product at competitive prices and they can produce reliably at volume. The fringe brands are really just chipping away at the edges, for the folks who are prepared to pay significant premium prices for largely intangible benefits.

People get all fidgety about the birds, being caged, penned, allowed out, free ranging etc. Really to be honest, my birds which roam the property would be a real fright for the majority of punters. They have purple/blue flesh, are tough as old boots unless veeeery slooooow cooked (yummy), and the poor buggers don't hit the pot until they are definitely beyond laying.

Country folk vs city folks. Maybe my chooks are 'Old McDonald's Barren Layers'. Tasty though🐔🍴. Yeah, that'd go down well in the city supermarkets LOL!.

[huxley]

Here's Tegel's " premium" brand anyway http://www.rangitikeichicken.co.nz

[huxley]

For what it's worth I'd say Tegel has a powerful brand in the NZ marketplace.

[JeremyALD]

Tegel is definitely not a budget brand, but then again when it comes to chicken I don't think people really care about the brand, as long as it's yummy and cheap.

[Snow Leopard]

Like who cares if it is called Silly beer if it tastes good:

http://silly-beer.com

especially if you can get two for one .

Meanwhile the downtrend is very definitely trending down and one day it may turn and be worth buying ^*.

Best Wishes
Paper Tiger

^*refering to tegel shares, not the beer.

[BlackCross]

So the IPO forecast F17 NPAT of $43m is going to be something like $33m to $41m

At least, as they proudly repeated mant times, revenues are growing strongly and will be ahead of forecast

At $1.15 it looks priced to do $33m - any advance on that ought to be good news I'd have thought?

[Rep]

Nothing wrong with intangibles, but the Tegal brand is not worth $300m, if anything it's a liability.

Intangible assets get a bad rap. As an example Alphabet has relatively few tangible assets but Google is an intangible asset, likewise licences, franchises, patents, copyright and software all create 'value' if used appropriately.

Describing the Tegel brand as a liability is overreaching though - again as I point out, just because you individually as a consumer don't consume 'value' or 'mass consumer brands' doesn't mean that a significant part of population thinks similarly.

Not everyone wants, cares or more importantly allocates sufficient value to buying the heirloom breed, organic, free farmed product you may desire - which is why Tegel and for that matter Inghams branded products still take the majority of the consumer dollar vote in FMCG.

Similarly I am not a 'heavy regular consumer' of Restaurant Brands stable of QSR brands - but I invested in shares there because I think it is has demonstrated it's a reasonably well run company and their client base is large enough that they should continue to make a lot of profit out of the populace that do frequent their stores.

The question around Tegel's intangible value is whether the value that is sitting on their books is sustainable - does the carrying value of the business (fixed and intangible assets) exceed the present value of the expected cashflow stream (at Tegel's weighted average cost of capital)? If it doesn't then those intangibles should be impaired... it doesn't sound like that at the moment, it's on anybody's radar, but this will largely depend on whether management's projections of the expected cashflow stream are deemed realistic by their board and then by their auditors. Given that the prospectus projections haven't been met, then what does management now project and what do their board and auditors do to satisfy themselves that the projections are realistic.

IMHO, there have been a lot of retailers and other listed entities who haven't signalled any impairments before heading belly up - and there are questions being asked about whether there is enough scrutiny of the carrying value and management projections of cashflow streams being done by boards and auditors particularly around some recent IPOS...

[Beagle]

If they can make the lower end of their guidance $33m after tax, (I don't think this is "a given" taking into account the "creative" way this company was floated), on 409.3m shares that gives 8.07 cents per share EPS.
Now what PE to use ?
We need to consider that transport and feed costs have been at or very close to cyclical lows.
We need to keep the PE low because this company has a VERY long way to go to build credibility with the investment community and has next to no runs on the board so its almost anyone's guess how this company will perform over the medium term.

I don't see any compelling reason taking into account what amounts to a forecasting fiasco to date and the above to ascribe a PE of more than 10 so maybe this stock bottoms out somewhere around 80 cents per share ? Time will tell...

[Marilyn Munroe]

The Tegel Turkey Breast Roasts are pretty nice - they are cage free and a bit cheaper than the so called free range ...wouldn't call them economy and I don't think the Tegel branding detracts from the product.

Turkeys are normally raised in the open. Calling them cage free is a wasted adjective.

Boop boop de do
Marilyn