Tegel IPO

[Valuegrowth]

Although it is not a fast growing company, still it can offer interesting investment opportunities. Still I am not impressed with its ROE but it may improve in the future.

[couta1]

the old 53 week trick eh...fooled some into thinking they'd met guidance but the market overall has voted and seems unimpressed, down 5 cents before the result and 2 cents after it. I'm thinking the shares just like their chicken will be on super special for quite some time. A sustained commodity glut is exactly that no matter how you slice and dice it, just ask the Saudi's or the Russians !

Other than the obvious 53 week trick I wonder if the other beagle has time to go sniffing and digging into their accounts looking for any less obvious accounting tricks, (this hound too busy barking up other trees). Come in Snoopy ! Quite happy to chase the price down a bit, might even end up with an XOS sized holding before the divvy, unlike many other shares on the NZX, at least it's not at an overinflated price. It's fits my main criteria for an XOS drumstick, namely fare value and liquid, almost sounds finger lickin good aye.

[trader_jackson]

Slide 6 in preso has some nice charts.

If you take their revenue and divide by production ou get a good feel for pricing of the finished product (say yield per tonne)

f17 yield was $6,152/tonne down from $6,252/tonne in F16

Current (average prices) are 5.8% less than FY15

I'd say talk of increased prices is just wishful thinking - chicken is really just chicken after all - winning consumer preference on price.

Headline in NBR today: "Tegel says the chicken pricing war is over"... should be onward and upward from here right?
(then again, I also thought they said the pricing war was already over a year ago...)

The whole export story thing as well is interesting, I see they managed just 1% increase in exports.

[hardt]

Export volumes grew 6.7%
Market share grew 2% to 52%

They have had a very average year, we all know about the missed PFI, but looking at the report going forward there was little worry about the value of this company being greater than what the market is currently allowing for.

More Tegel products in more mouths, it opens up many more opportunities for earnings growth in the next 5-10 years...

If you want a boring long term dividend paying stock - buy Tegel at 100-110

Least we forget those that were certain another downgrade was coming.

It was well indicated that a poop and scoop was going to occur prior to results, easy 10+% returns for those that traded this one.
Instos would have been doing just that.

[winner69]

Headline in NBR today: "Tegel says the chicken pricing war is over"... should be onward and upward from here right?
(then again, I also thought they said the pricing war was already over a year ago...)

The whole export story thing as well is interesting, I see they managed just 1% increase in exports.

t_j - that 1% increase in export revenues was on the back of 7% volume increase

Sell heaps more for not more .....hmmm

[Beagle]

Quite happy to chase the price down a bit, might even end up with an XOS sized holding before the divvy, unlike many other shares on the NZX, at least it's not at an overinflated price. It's fits my main criteria for an XOS drumstick, namely fare value and liquid, almost sounds finger lickin good aye.

Maybe wait and see if Snoopy dog can sniff around and see if they added any other curry powder to the results first. Speaking of finger licken mate, dirt cheap chicken has been very good for Restaurant brands that's for sure ! A point I feel is well worth noting though, the results this year were generated on the back of cyclical lows in feed and transport costs. What if these two which are some of their biggest costs go up and additionally they get more pay equity demands from staff like a lot of other industries are getting ?

[JBmurc]

Well I'm happy to see the SP close on its highs for a the day .....might well get another trade before the weeks out

[Valuegrowth]

It went up by more than 7% on a volume of 1,926,403 today.The Inghams Group (ASX: ING) also has received some attention.

[JBmurc]

Yes seems many are keen to accumulate at these levels(Solid base formed in the 1.10-1.16 range

[JBmurc]

1.25 high >>> nice another trade gone to plan ....be interesting if it will trade a range from here with another dip to 1.10-1.20 after divi ex date likely IMHO .... then I might have another crack

[hardt]

A few of the naysayers are awfully quiet after their previous predictions aren't they?

As previously stated, as a holder I love seeing quantifiable concerns being raised and discussed.

[janner]

A few of the naysayers are awfully quiet after their previous predictions aren't they?

As previously stated, as a holder I love seeing quantifiable concerns being raised and discussed.

Was a " naysayer " from the beginning of this IPO. Also during the slide.

Still not a buyer ... Uptake from many of the posts. " EXPORT ". Ain't going to happen in big numbers.. IMHO..

Chicken is THE CHEAP meat in NZ.. The main reason why it is selling.. It is also CHEAPER overseas.. Less than half the price...

O.K. The Takeaway companies will still buy ... Forcing the price down...

TGH will be a good dividend payer over the years. IMHO.. If bought at a reasonable price.. Never a super star...

WHAT'S FOR DINNER DARLING ?? CHICKEN.. :-((((

Saddle soreness easing percy.... GREAT TIME... :-)))

[winner69]

A few of the naysayers are awfully quiet after their previous predictions aren't they?

As previously stated, as a holder I love seeing quantifiable concerns being raised and discussed.

But don't you think the world of TGH only because it was cheap, not because of it being a company you really really wanted to invest in because of its great potential.

Well done on getting in when it was cheap - good effort mate

Be interested when you decide to sell - really

[winner69]

Promoters can sell down / out now seeing all shares out of escrow.

Wonder what their intentions are?

Could see a run if good news over the next few months - aren't I cynical

[Valuegrowth]

1.25 high >>> nice another trade gone to plan ....be interesting if it will trade a range from here with another dip to 1.10-1.20 after divi ex date likely IMHO .... then I might have another crack

JBmurc


I have noticed that you have excelled in art of trading stocks? Am I right?


Today also it went up by more than 3% on a volume of 1,102,174.


https://dasherbusinessreview.com/tegel-group-holdings-limited-nzsetgh-is-the-stock-undervalued/


Tegel Group Holdings Limited (NZSE:TGH): Is The Stock Undervalued?

Time to time poultry related stocks also will have some of the strong rallies in global stock markets.In other words there is a chicken play in stock markets. Globally, selected outstanding companies should deliver above average returns for investors in the coming decade. Will Tegel also become one of the outstanding companies in this sector?

Good luck!

[JBmurc]

JBmurc


I have noticed that you have excelled in art of trading stocks? Am I right?


Today also it went up by more than 3% on a volume of 1,102,174.


https://dasherbusinessreview.com/tegel-group-holdings-limited-nzsetgh-is-the-stock-undervalued/


Tegel Group Holdings Limited (NZSE:TGH): Is The Stock Undervalued?

Time to time poultry related stocks also will have some of the strong rallies in global stock markets.In other words there is a chicken play in stock markets. Globally, selected outstanding companies should deliver above average returns for investors in the coming decade. Will Tegel also become one of the outstanding companies in this sector?

Good luck!

Yes certainly is a ART... recently had a good size cash injection into my trading accounts(After brilliant Property trade come off for me)

Has really been very positive for my trading off late... after around 10 months of stale nil trading just holding a few ASX shares ...(one suspended arrghhh) I was in a ongoing rut >>>

Also having shifted my family to a much quieter location close to a stunning lake.... I certainly think has been positive

Amazing after 11.5yrs of being a Tax Paying trader ...I think I might just about be on the right path to reach my goals of financial freedom

[Valuegrowth]

JBMurc,It is happy to hear that you are on the right path and your success in the investment area. There is a saying. Everything is happening for good.

[JBmurc]

JBMurc,It is happy to hear that you are on the right path and your success in the investment area. There is a saying. Everything is happening for good.

Yes maybe we should start a thread on Investment strat..... always learning and happy to pass on my findings to fellow ST memebers

[Valuegrowth]

Good thinking JB. I think already there is a thread for investment strategy.
Yes maybe we should start a thread on Investment strat..... always learning and happy to pass on my findings to fellow ST memebers

[Meextr]

Tegel hits 130 there must be some confidence out there.

[JBmurc]

Tegel hits 130 there must be some confidence out there.

Yeah wishing I re-purchased when I had a chance ....instead funds gone elsewhere ....I'm sure there will be a few happy TGH buyers around with this bullish move of late

[Meextr]

Yeah wishing I re-purchased when I had a chance ....instead funds gone elsewhere ....I'm sure there will be a few happy TGH buyers around with this bullish move of late
If they went into your MCR I am sure you won't be complaining.

[JBmurc]

No different trading accounts but yes my ASX trading has been on fire of late....

[peat]

I'm picking there will be some resistance at the 1:30 level
There was support there ($1.30) which failed after a couple of tests , then it turned into resistance, and now we are back !


8963

[JeremyALD]

I sold out today. I earnt back all the money I lost through the IPO so that was rewarding considering it was my biggest loss of 2016.

Reason I sold out is I don't think TGH is worth much more than $1.30. They hit the very bottom of wide guidance. Haven't had any runs of the board and it's been a bit of a shambles. Shares are now out of Eskrow and there are plenty of risks. As a result I think a 20% discount on IPO results are fair. The short term upside at $1.30 is not enough for me to continue with the risks. Might buy some more if it drops below $1.20 again.

[Valuegrowth]

No different trading accounts but yes my ASX trading has been on fire of late....

Today also it went up. TGH Closed at $1.290 on a volume of 1296,000 (appreciated by 2.38%).So far it is looking bullish.

It closed in Australia 1.250 +0.070 +5.93%

It is not a bad day for chickens and they outperformed the market.

[Meextr]

Today also it went up. TGH Closed at $1.290 on a volume of 1296,000 (appreciated by 2.38%).So far it is looking bullish.

It closed in Australia 1.250 +0.070 +5.93%

It is not a bad day for chickens and they outperformed the market.

Waiting for chickens coming home to roost, but not keeping all my eggs in one basket.

[hardt]

I sold out today. I earnt back all the money I lost through the IPO so that was rewarding considering it was my biggest loss of 2016.

Reason I sold out is I don't think TGH is worth much more than $1.30. They hit the very bottom of wide guidance. Haven't had any runs of the board and it's been a bit of a shambles. Shares are now out of Eskrow and there are plenty of risks. As a result I think a 20% discount on IPO results are fair. The short term upside at $1.30 is not enough for me to continue with the risks. Might buy some more if it drops below $1.20 again.

I am guessing that was your plan all along, good effort turning the loss around.

I think there is enough support out there for a continuing range above 130, what Affinity decides to do could break the bulls back so I am watching closely.

[Valuegrowth]

Waiting for chickens coming home to roost, but not keeping all my eggs in one basket.

I am also the same not keeping all my eggs in one basket but I love food, airlines, hotels and restaurants. They have more legs. Still we find attractive companies globally in above areas.

By the way, Tegel is moving on volume.

$1.310$0.020 / 1.55%



Trades

135



Value

$1,402,608.09



Volume

1,072,335

[hardt]

Quite a steep looking month, surely it is due for a pullback... happy if it hits 140 before then.

[hardt]

Topped up @127, will look at dropping 1/4 on Tuesday next week @133

[JBmurc]

Should have held my lot ....darn it >>>

[Entrep]

Is it usual for a stock to go up once it goes ex-div?

[777]

Is it usual for a stock to go up once it goes ex-div?

The up is from it's theoretical ex price. The market just doing it's thing as it is meant to.

[hardt]

Having a rough first year in the public eye might have done Tegel some good, I hope they place some importance on keeping the SP healthy moving forward.

Unless you play with the cyclical/retail picks, yields like this don't come around much... if Tegel can prove its performance is maintainable the market will treat it well over the coming years.

Happy holder, I know some are not so chipper...

[Valuegrowth]

https://davidsonregister.com/tegel-group-holdings-ltd-tgh-nz-ending-recent-session-above-parabolic-sar/111986/

[winner69]

Share prices seems to be heading back to the unwanted unloved territory again

[peat]

......................

I'm picking there will be some resistance at the 1:30 level
There was support there ($1.30) which failed after a couple of tests , then it turned into resistance, and now we are back !


8963

[JeremyALD]

According to the Herald Phil Hand was in the top 10 paid CEOs with 3.6 million earnt in the last year. For a company that has underperformed and only made 34 million profit that is quite ridiculous

[winner69]

According to the Herald Phil Hand was in the top 10 paid CEOs with 3.6 million earnt in the last year. For a company that has underperformed and only made 34 million profit that is quite ridiculous

Who was one of the lowest paid Jeremy ......in retirement sector

[hardt]

According to the Herald Phil Hand was in the top 10 paid CEOs with 3.6 million earnt in the last year. For a company that has underperformed and only made 34 million profit that is quite ridiculous

780k this year, so he knows what it's like to get a pay cut for underperfomance!

[janner]

780k this year, so he knows what it's like to get a pay cut for underperfomance!

$3000.00 a day to run a few chicken farms ???

Have to rephrase that.. Oversee the running of a few chicken farms..

[Beagle]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11898293

I am truly shocked by this. A relatively simple business to run and an extremely modest performer and only recently listed to boot. The mind absolutely boggles as to what other grotesquely outrageous salaries are paid in this company that's causing such systemic underperformance ? As long as the shareholders get a few old left over scarps of chicken food for dividends she'll be right ? Indicative of a major cultural problem of greed in this company ?
Disc: Don't own and very strongly inclined to never own after this completely outrageous revelation. Suspect the culture of this company is as rotten as a bad case of campylobacter.

Interesting contrast when you look at Julian Cook's salary at just one quarter of the above scandal...a company that makes far more money, has been growing earnings at ~ 50% per annum for years and operates in a complex development and healthcare needs business. I reckon he could legitimately put his hand up for a decent pay rise.
Disc Own Summerset.

[hardt]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11898293

I am truly shocked by this. A relatively simple business to run and an extremely modest performer and only recently listed to boot. The mind absolutely boggles as to what other grotesquely outrageous salaries are paid in this company that's causing such systemic underperformance ? As long as the shareholders get a few old left over scarps of chicken food for dividends she'll be right ? Indicative of a major cultural problem of greed in this company ?
Disc: Don't own and very strongly inclined to never own after this completely outrageous revelation. Suspect the culture of this company is as rotten as a bad case of campylobacter.

Interesting contrast when you look at Julian Cook's salary at just one quarter of the above scandal...a company that makes far more money, has been growing earnings at ~ 50% per annum for years and operates in a complex development and healthcare needs business. I reckon he could legitimately put his hand up for a decent pay rise.
Disc Own Summerset.

Performance bonuses were set forth by Affinity for Phil Hands appointment in Feb 2014... these were hit and therefore a bonus afforded - His salary is actually 780K.
Even with the bonus, he took home 0.05% of his firms revenue... not shocking, nor is it much of a scandal.

Do you honestly believe running Tegel is a simple task? - do you think turning Tegel around from where they were in 2014 to now was a simple task?
If these are simple tasks to you, why are you not running a publicly listed business yourself?...

2014 / 2017

TGH
REV: 517.2M / 613.9M
NPAT: -3.6M / 36.1M

SUM
REV: 78.8M / 175M*F
NPAT: 25M / 65M*F

As someone who has worked adjacent, spoken to and know closely those who worked fairly mid-upper management within Tegel - I have only heard Tegel houses a healthy environment, rewarding merit where it is due.

DISC: hold both TGH and SUM.

[Joshuatree]

Thankyou hardt. Looks like another case of wrong opinion seamlessly blended with fake news exposed.

And i can see TGH suddenly being "discovered " as the bargain buy and loved and cherished and its a do as i do and back up the truck time because I've got in low and want you to share and have have some of mine higher etc. Be careful out there. DYOR

[Beagle]

Performance bonuses were set forth by Affinity for Phil Hands appointment in Feb 2014... these were hit and therefore a bonus afforded - His salary is actually 780K.
Even with the bonus, he took home 0.05% of his firms revenue... not shocking, nor is it much of a scandal.

Do you honestly believe running Tegel is a simple task? - do you think turning Tegel around from where they were in 2014 to now was a simple task?
If these are simple tasks to you, why are you not running a publicly listed business yourself?...

2014 / 2017

TGH
REV: 517.2M / 613.9M
NPAT: -3.6M / 36.1M

SUM
REV: 78.8M / 175M*F
NPAT: 25M / 65M*F

As someone who has worked adjacent, spoken to and know closely those who worked fairly mid-upper management within Tegel - I have only heard Tegel houses a healthy environment, rewarding merit where it is due.

DISC: hold both TGH and SUM.

Regardless of how it was structured, base salary is almost irrelevant if they're going to pay a bonus like that for such mediocre performance his total package at $3.6m was more than 10% of the companies net profit after tax at $34m. Lets stick with the SUM comparison.
Julian Cooks salary at circa $800K is just a little over 1% of their projected underlying profit for FY 17 of $73.5m (mid point of forecast).

A good comparison for Mr Hand might be Chris Luxon's salary inclusive of bonus at circa $4m, (similar level). A company turning over in excess of $5billion eight times the turnover and producing approx. $400m after tax, (more than ten times the profitability based on average brokers forecast for FY17). Chris Luxon salary inclusive of bonus is just 1% of the company's annual profit after tax. On this basis Mr Hand would have received just $340K inclusive of bonus for the year, which frankly given the very poor performance post float is about all I think he really deserves.

"Rewarding merit where it is due" How so ? Did they beat the IPO forecast ?, No. Why was there a bonus at all for such mediocre performance ? By any comparative measure his salary is grotesque and vastly excessive based on very modest results achieved. What are KPI's upon which this bonus was paid ? Did he get a $2m bonus or thereabout just for being at the helm in its first year of listing, i.e. rewarded for nothing more than having to put up with public shareholders at an annual meeting ? I think this is yet another bit of anecdotal evidence supporting the view that one should be very cautious indeed with new IPO's until the truth in all its grittiness is fully revealed.

This is without doubt the most excessive case of naked executive greed I can ever recall in over 30 years of investing ! If that's indicative of how other executives are remunerated in the company then I truly appreciate your candor in revealing their culture based on your experience and my assessment is the structure of this company in terms of its remuneration policy is systemically flawed to the extent that its uninvest able. I will never be an investor when the company is really primarily run for the benefit of the executives and shareholders are a mere afterthought and inconvenience.
Disc Hold SUM and AIR.

[winner69]

TGH pretty pathetic diversity numbers

No female directors and 2 senior managers (prob one the usual HR person) out of 9

Who buys and cooks most of the chickens?

PS - 2 are the people person (seems to be predominately a female job) and the marketing manager (that's good)

[hardt]

Regardless of how it was structured, base salary is almost irrelevant if they're going to pay a bonus like that for such mediocre performance his total package at $3.6m was more than 10% of the companies net profit after tax at $34m. Lets stick with the SUM comparison.
Julian Cooks salary at circa $800K is just a little over 1% of their projected underlying profit for FY 17 of $73.5m (mid point of forecast).

A good comparison for Mr Hand might be Chris Luxon's salary inclusive of bonus at circa $4m, (similar level). A company turning over in excess of $5billion eight times the turnover and producing approx. $400m after tax, (more than ten times the profitability based on average brokers forecast for FY17). Chris Luxon salary inclusive of bonus is just 1% of the company's annual profit after tax. On this basis Mr Hand would have received just $340K inclusive of bonus for the year, which frankly given the very poor performance post float is about all I think he really deserves.

"Rewarding merit where it is due" How so ? Did they beat the IPO forecast ?, No. Why was there a bonus at all for such mediocre performance ? By any comparative measure his salary is grotesque and vastly excessive based on very modest results achieved. What are KPI's upon which this bonus was paid ? Did he get a $2m bonus or thereabout just for being at the helm in its first year of listing, i.e. rewarded for nothing more than having to put up with public shareholders at an annual meeting ? I think this is yet another bit of anecdotal evidence supporting the view that one should be very cautious indeed with new IPO's until the truth in all its grittiness is fully revealed.

This is without doubt the most excessive case of naked executive greed I can ever recall in over 30 years of investing ! If that's indicative of how other executives are remunerated in the company then I truly appreciate your candor in revealing their culture based on your experience and my assessment is the structure of this company in terms of its remuneration policy is systemically flawed to the extent that its uninvest able. I will never be an investor when the company is really primarily run for the benefit of the executives and shareholders are a mere afterthought and inconvenience.
Disc Hold SUM and AIR.


Delivered well over 200% CAGR earnings growth over his 3 years at the head.

For the tax year ending 2017 he received 625,000 shares from the IPO booked at a value of $1m, he has since purchased a few more on market - annual income is inclusive of this.

There are also LTI and STI options, not sure what these options would be valued at, I am sure they are plenty big.

They hit their forecasted volume, however margins contracted severely under huge poultry pricing pressure that arose months after the IPO and persisted long thereafter.

If margins remained as planned, at their volume in FY17, they would have hit IPO forecast... no crystal ball back then to warn anyone of what was to come.

Still boosted market share to 52% - Essentially, I am proud to have a 0.001% stake of New Zealands entire poultry market.



All in all, you must have forgot to read the bit about the past performance and focused solely on the stock price and missed forecasts.

[Snow Leopard]

...All in all, you must have forgot to read the bit about the past performance and focused solely on the stock price and missed forecasts.

With Roger the Beagle it is very much all about emotions first and if he can select a fact that supports that then all the better.

You nearly all work that way to some degree or other.

The TGH chart confirmed my prejudices about this IPO :)

Best Wishes
Paper Tiger

[Beagle]

That salary and bonus is normally associated with a company turning over several billion dollars and profits of several hundred million. I couldn't care less about past performance when the company wasn't listed, that's completely irrelevant to any comparison with other listed companies and corporate listed norms. The remuneration for current performance is grossly out of line with CEO's of companies of a similar size and level of profitability and is therefore grossly excessive. I believe poor beleaguered shareholders have every right to find this level of remuneration to be both morally bankrupt and grossly offensive. Further, this sort of remuneration for a company of this size is something that I believe is without precedent on the NZX and definitely not something that in any way whatsoever I would want to be associated with either as a shareholder or consultant or to be seen to condoning it in any other way.

We live in a strange world where once this sort of ugly corporate greed raises it feral head it has a nasty way of spreading as others somewhat engrossed in their own thinly disguised lust for money and power start to think they might be entitled to the same level of grandiose remuneration based on some misconstrued idea of relativity.
Without doubt the most vulgar remuneration I have ever seen for a company of this size and such incredibly modest profitability.
As I said right from the outset of this thread, this from a company that has a nasty habit of really leaning on their drivers, many of whom suffer such a degree of burnout they really struggle to have any sort of work life balance. I suppose this is one of the KPI's that generate such an outrageous bonus.
Anyway that's my 3 cents on the subject, if you want to be a shareholder and eat scraps left over from the corporate table of largesse, good luck to you after all what do I care, I am neither a shareholder nor do I intend to be one. Shareholders be warned. Its very hard to do well when you're up against rampant executive greed.

[couta1]

There is an article in the Herald this morning regarding those earning top dollars should have to produce top results to justify that money. The attached table in the article shows the packages that all the CEO's of NZ's main listed companies receive, futher highlighting how outrageous Mr Hand's salary is. It stands out like a sore thumb and is an insult to shareholders. Wouldn't be happy holding the stock based on this alone.

[winner69]

780k this year, so he knows what it's like to get a pay cut for underperfomance!

Luxon at Air Nz gets nearly that much extra for staying on at AIR .....on top of all his other payments

[Meextr]

Tegal is hot again.

[Fatboyj]

Ditch the drumsticks. Will be breast tonight.

[hardt]

CHICKEN BREAST RETAIL VWAP
















Dec-15

Jan-16

Feb-16

Mar-16

Apr-16

May-16

Jun-16

Jul-16

Aug-16

Sep-16

Oct-16

Nov-16




14.62

15.45

15.64

14.24

15.01

15.18

14.35

14.44

14.41

13.52

13.42

13.75




Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17







12.81

14.51

13.95

14.49

14.61

14.16

14.35

14.81

14.55







9112

[TheHunter]

Nice data, prices recovering. Where did you source this from?

[hardt]

Nice data, prices recovering. Where did you source this from?

Data extracted by myself from the Food Price Index monthly releases - http://www.stats.govt.nz/browse_for_stats/economic_indicators/prices_indexes/food-price-index-info-releases.aspx

Page three in the excel spread sheet are the retail VWAP for certain food types.

[TheHunter]

Data extracted by myself from the Food Price Index monthly releases - http://www.stats.govt.nz/browse_for_stats/economic_indicators/prices_indexes/food-price-index-info-releases.aspx

Page three in the excel spread sheet are the retail VWAP for certain food types.

Nice, thanks for sharing. Its the glut in the market that saw Tegels margins fall. When prices recover, so will Tegels profit.

[steveb]

was in countdown last night,they had Ingham no16 chucks on special for $7.00.One has to presume they have come from aus.
My question would be how on earth can they process and ship them to supermarkets in NZ at that price.Should TGH be worried?

[winner69]

Nice, thanks for sharing. Its the glut in the market that saw Tegels margins fall. When prices recover, so will Tegels profit.

Stats NZ also say record production of chicken meat in June quarter - some 58,000 tonnes which was 10% up on pcp

Another glut on the way?

Or maybe a reflection of demand and Tegel in for boom times again?

[winner69]

was in countdown last night,they had Ingham no16 chucks on special for $7.00.One has to presume they have come from aus.
My question would be how on earth can they process and ship them to supermarkets in NZ at that price.Should TGH be worried?

Aren't Inghams in NZ as well

[steveb]

yes winner just checked they are NZ chickens.Still a good price though

[hardt]

was in countdown last night,they had Ingham no16 chucks on special for $7.00.One has to presume they have come from aus.
My question would be how on earth can they process and ship them to supermarkets in NZ at that price.Should TGH be worried?

It is a big worry when I see my own mother buying 2 full size whole chickens from Inghams for $20.

Intuition tells me that Tegel might have trouble maintaining 52% market share this time round.

We will find out soon enough if I should have taken heed from the empirical evidence around me, or if sticking to my macro approach is the way to go for this kind of investment.

[silverblizzard888]

was in countdown last night,they had Ingham no16 chucks on special for $7.00.One has to presume they have come from aus.
My question would be how on earth can they process and ship them to supermarkets in NZ at that price.Should TGH be worried?

Ingham have poultry processing and hatcheries in NZ too. Probably 20-30% of their operation is based in NZ with more coming with expansion

[winner69]

Data extracted by myself from the Food Price Index monthly releases - http://www.stats.govt.nz/browse_for_stats/economic_indicators/prices_indexes/food-price-index-info-releases.aspx

Page three in the excel spread sheet are the retail VWAP for certain food types.

Same data going back a bit further

Trend line looks good for the shoppers ...but not that good for likes of Tegel

No matter how they dress it up chicken breasts becoming a commodity

[TheHunter]

Same data going back a bit further

Trend line looks good for the shoppers ...but not that good for likes of Tegel

No matter how they dress it up chicken breasts becoming a commodity

Peak and trough theory says the trend in your picture has been reversed

[winner69]

Peak and trough theory says the trend in your picture has been reversed

We shall see

hard's chart had a August down tick on it ....

[hardt]

Same data going back a bit further

Trend line looks good for the shoppers ...but not that good for likes of Tegel

No matter how they dress it up chicken breasts becoming a commodity

When I get time, I would like to compare the consumer poultry price index - retail price - consumption growth in one chart.

Possibly throwing in Tegel's overall margins these past 4 years to see the correlation...

[winner69]

When I get time, I would like to compare the consumer poultry price index - retail price - consumption growth in one chart.

Possibly throwing in Tegel's overall margins these past 4 years to see the correlation...

Interesting

Production steadily increasing from JUne 14 to June 17 at rate of ~8% pa
Breast Chicken retail price declined resonably steadily at ~5.5% pa
Tegel Gross Margin by half year from H116 has been 25.1%, 25.5%, 23.1% and 24.1% in H217 (March)

Looks good on chart but can't post at the moment

[TheHunter]

Just remember a significant portion of sales is now coming from value added products, where commodity prices typically have a lower impact and where often substandard product can be turned into high margin.

[Speculator]

The quality of some of their freshly branded frozen patties and the like are pretty shoddy. I wouldn't put too much hope into this segment of product growing too much. Me and other students bought them a few times and then gave up because there's only so much frozen rubbery chicken you can put yourself though.

[dreamcatcher]

Small mention of Ingham NZ in their August report. Worth a read

http://investors.inghams.com.au/Investor-Centre/?page=results

[winner69]

Wow -Tegel might grow earnings F18 - couldn't really say they'll make less could they

CEO says -
So looking at FY18, based on the current market conditions, holding domestic market share, with on- going domestic consumption growth of 4-5% and continuing exports, we expect to deliver an increase in underlying EBITDA from the level at FY17.

[Balance]

Wow -Tegel might grow earnings F18 - couldn't really say they'll make less could they

CEO says -
So looking at FY18, based on the current market conditions, holding domestic market share, with on- going domestic consumption growth of 4-5% and continuing exports, we expect to deliver an increase in underlying EBITDA from the level at FY17.

Wonder if they have learnt anything from the debacle of the listing?

Under promise and over deliver!

[hardt]

Wow -Tegel might grow earnings F18 - couldn't really say they'll make less could they

CEO says -
So looking at FY18, based on the current market conditions, holding domestic market share, with on- going domestic consumption growth of 4-5% and continuing exports, we expect to deliver an increase in underlying EBITDA from the level at FY17.

Same thing was said in their FY17 AR.

Minor increase in EBITDA, debt dropping from $250m > $120m this will allow a fair reduction in repayments flowing through to the bottom line.

Solid 5-10% NPAT growth.

[Arbroath]

Same thing was said in their FY17 AR.

Minor increase in EBITDA, debt dropping from $250m > $120m this will allow a fair reduction in repayments flowing through to the bottom line.

Solid 5-10% NPAT growth.

Hardt - theyve already had that debt benefit as the $130m was repaid from IPO funds in May 2016 so won't be much flowing through from lower interest payments in FY18. I do think though that they want to establish an under-promise, over-deliver set-up for H1'18 as mgmt have been burned by the aggressive IPO forecasts.

[hardt]

Hardt - theyve already had that debt benefit as the $130m was repaid from IPO funds in May 2016 so won't be much flowing through from lower interest payments in FY18. I do think though that they want to establish an under-promise, over-deliver set-up for H1'18 as mgmt have been burned by the aggressive IPO forecasts.

It was paid through April - October, so we can expect some of the repayments between then to have affected the bottom line.

Totally agree this is more or less a conservative forecast.

[hardt]

9155

Thought it would look better than it did, correlation is there, not sure if it matters or not.

Here is the data used for the chart, monthly OHLC.



Date

Open

High

Low

Close

Poultry $



30/04/2016

1.69

1.71

1.59

1.68

15.01



31/05/2016

1.68

1.70

1.56

1.65

15.18



30/06/2016

1.64

1.68

1.61

1.65

14.35



31/07/2016

1.65

1.80

1.63

1.76

14.44



31/08/2016

1.76

1.76

1.50

1.51

14.41



30/09/2016

1.52

1.60

1.44

1.51

13.52



31/10/2016

1.51

1.52

1.44

1.47

13.42



30/11/2016

1.48

1.59

1.29

1.45

13.75



31/12/2016

1.45

1.46

1.30

1.34

12.81



31/01/2017

1.35

1.37

1.26

1.28

14.51



28/02/2017

1.28

1.30

1.12

1.13

13.95



31/03/2017

1.13

1.23

1.12

1.19

14.49



30/04/2017

1.19

1.19

1.05

1.06

14.61



31/05/2017

1.06

1.26

1.06

1.26

14.16



30/06/2017

1.26

1.35

1.23

1.25

14.35



31/07/2017

1.25

1.34

1.21

1.24

14.81



31/08/2017

1.24

1.25

1.22

1.23

[Dust]

Thought it would look better than it did, correlation is there, not sure if it matters or not.

That looks good, definitely a correlation there with a few month of price reaction delays. If the uptrend continues, FY18 forecast should be decent

[winner69]

That looks good, definitely a correlation there with a few month of price reaction delays. If the uptrend continues, FY18 forecast should be decent

but the red line has headed down since july

good to see what you want to see eh?

[Dust]

but the red line has headed down since july

good to see what you want to see eh?

haha maybe ;)

But trading volume have been stale for the past few month, with the amount of liquidity passing through the nzx you really just have to interpret short term price deviance with a grain of salt.

Time will tell though, now that mgmt have taken a conservative approach, it'd be interesting to see what sort of guidance are given for FY18

[hardt]

but the red line has headed down since july

good to see what you want to see eh?

Having broken out of the year long downward trend, it looks like it is forming a solid base in the 115-130 channel.

I will like to keep the chart up to date whenever the CPI is released and see if there is a solid correlation argument moving forward - the past years underperformance clearly reflects the downward spiral of chicken prices.

[winner69]

Having broken out of the year long downward trend, it looks like it is forming a solid base in the 115-130 channel.

I will like to keep the chart up to date whenever the CPI is released and see if there is a solid correlation argument moving forward - the past years underperformance clearly reflects the downward spiral of chicken prices.

See price fell from $14.81 in July to $14.21 in August

Hope correlation with TGH share price is weak eh

[winner69]

Having broken out of the year long downward trend, it looks like it is forming a solid base in the 115-130 channel.

I will like to keep the chart up to date whenever the CPI is released and see if there is a solid correlation argument moving forward - the past years underperformance clearly reflects the downward spiral of chicken prices.

See price fell from $14.81 in July to $14.21 in August

Lower than a year ago

Hope correlation with TGH share price is weak eh

[hardt]

See price fell from $14.81 in July to $14.21 in August

Lower than a year ago

Hope correlation with TGH share price is weak eh

Makes perfect sense winner, August last year TGH was trading in the 150-170 range.

The next few months Sept - Dec are the important ones to look out for, as we can see in the below chart.

9170


Great pick for a dividend portfolio in my opinion.




TEGEL GROUP

FY13A

FY14A

FY15A

FY16A

FY17A

FY18F

FY19F

FY20F

FY17A-FY20F CAGR%












































OPERATING REVENUES GENERATED - NZDm

484.5

517.2

562.7

582.4

613.9

646.0

686.0

721.0

5.51%


Domestic market revenues

421.5

430.2

474.7

480.9

511.0

539.5

576.0

606.0

5.85%


Export market revenues

63.0

87.0

88.0

101.5

102.9

106.5

110.0

115.0

3.78%


OPERATING EXPENSES INCURRED - NZDm

424.7

473.3

501.4

507.5

538.7

568.0

605.0

637.0

5.75%


Cost of goods sold

337.2

387.5

411.2

416.6

449.4

472.5

505.3

532.0




Logistics expenses incurred

43.5

48.0

47.9

50.5

53.2

58.0

61.2

65.0




Corporate and other expenses incurred

44.0

37.8

42.3

40.4

36.1

37.5

38.5

40.0




UNDERLYING EBITDA GENERATED - NZDm

59.8

43.9

61.3

74.9

75.6

78.0

81.0

84.0

3.57%


Depreciation and amortisation incurred

20.8

18.2

18.8

18.4

19.5

20.0

21.0

21.0




Corporate tax incurred

-12.6

-5.8

2.1

5.4

13.6

15.7

16.7

17.5




NET DEBT - NZDm

361.2

267.7

268.5

253.0

106.6

100.0

100.0

100.0




Debt interest incurred

40.2

35.2

35.0

28.2

6.2

3.1

2.9

2.9




Operating Free Cashflows

-

-

-

24.1

45.3

49.8

52.5

55

6.68%


ADJUSTED NPAT - NZDm

11.7

-3.6

5.5

23.7

36.1

39.2

40.4

42.6

5.67%


Underlying EPS - Cents per share

3.29

nil

1.55

6.66

10.14

11.01

11.35

11.97




Payout Ratio %

0

0

0

0

0.74

0.75

0.76

0.77




Net dividend payment - Cents per share

nil

nil

nil

nil

7.55

8.26

8.63

9.22

6.42%

[winner69]

TV


EV
















2017


45.3*1.10

=

49.83

(49.83/1.105^1)

=

45.10



2018


50*1.05

=

52.50

(52.5/1.105^2)

=

43.00



2019


52.5*1.05

=

55.13

(55.13/1.105^3)

=

40.86



2020


55.13*1.05

=

57.89

(57.89/1.105^4)

=

38.83



57.89*(1.05)/(0.105-0.05)

=

1,105.17

(1,105/1.105^5)

=

670.73









Net DEBT

=

106.60









Enterprise V

=

731.92








Shares Issued

=

355.91









DCF TGH

=

$2.06



Graham Valuation = (10.15*(8.5+(2*3.5))*4.4/4.5)/100

=

$1.54




Been drinking a bit, I am sure I have skewed it one way or another.

Discount rate at 10.5%

FCF growth rate set at 5%

LT earnings growth rate at 3.5%

No doubt the drink fine tuned your analytical skills to get a good result

I assume your starting point of $45.3m is the Operating Cash Flow in the 2017 accounts. If not ignore the rest of the post

No capex in your calsc? Alllow for some modest capex of $10m pa (last year $20m and forecasts seem higher than $10m) and your equity value drops to $1.50. I also adjusted for your sneaky move of growing the final years cash flow by 5% before doing the TV calculation

And isn't 5% pa growth forever a bit outrageous. Wind that back to 2.5% and equity value is $1.07

No doubt a realistic number is somewhere in between - maybe $1.30 ...now that's spooky eh

Might need to change the discount rate to get what you want eh

[Joshuatree]

Thanks for sharing your research hardt and critiquing it w69.

[winner69]

hardt - a bit bored today so did a TGH DCF valuation using my methodology

For what's it worth using your ebitda growth assumptions (except term growth at 2.5%) and discount 10.5% I get $1.31

Using my assumptions I get $1.42

As amatter of interest Tegal management cash flow forecasts to support ebitda us a 4% ebitda growth and discount rate of 8.8%

[hardt]

hardt - a bit bored today so did a TGH DCF valuation using my methodology

For what's it worth using your ebitda growth assumptions (except term growth at 2.5%) and discount 10.5% I get $1.31

Using my assumptions I get $1.42

As amatter of interest Tegal management cash flow forecasts to support ebitda us a 4% ebitda growth and discount rate of 8.8%

Excel picked up the pattern and placed a sequential power "^" for this - (Terminal Value/1.105^5)

Should have been to the power of 4 and not 5 for working out the 4th year obviously - this inebriated trash heap puts out a lot of garbage that the sober one has to clean up!

I do believe cash flows will be a % or two above where the below DCF models take it.

Thanks for the work Winner.





VALUATION AT 2.5% FCF & 10.5% DR























TV

EV























2017


45.3*1.025

=

46.43

(46.43/1.105^1)

=

42.02








2018


46.43*1.025

=

47.59

(47.59/1.105^2)

=

38.98








2019


47.59*1.025

=

48.78

(48.78/1.105^3)

=

36.15








2020


48.78*1.025

=

50.00

(50/1.105^4)

=

33.54








2021


50.00*1.025

=

51.25

(51.25/1.105^5)

=

31.11








51.25*(1.025)/(0.085-0.025)

=

875.52

(875.52/1.105^5)

=

531.44














DEBT

=

106.60














EV

=

606.63












Shares Outstanding

=

355.91














DCF TGH

=

$1.70


































VALUATION AT 1.5% FCF & 8.8% DR























TV

EV























2017


45.3*1.015

=

45.98

(45.98/1.088^1)

=

42.26








2018


45.98*1.015

=

46.67

(46.67/1.088^2)

=

39.43








2019


46.67*1.015

=

47.37

(47.37/1.088^3)

=

36.78








2020


47.37*1.015

=

48.08

(48.08/1.088^4)

=

34.31








2021


48.08*1.015

=

48.80

(48.80/1.088^5)

=

32.01








48.8*(1.015)/(0.088-0.015)

=

678.52

(678.52/1.088^5)

=

445.06














DEBT

=

106.60














EV

=

523.25












Shares Outstanding

=

355.91














DCF TGH

=

$1.47

[Te Whetu]

Excel picked up the pattern and placed a sequential power "^" for this - (Terminal Value/1.105^5)

Should have been to the power of 4 and not 5 for working out the 4th year obviously - this inebriated trash heap puts out a lot of garbage that the sober one has to clean up!

I do believe cash flows will be a % or two above where the below DCF models take it.

Thanks for the work Winner.





VALUATION AT 2.5% FCF & 10.5% DR























TV

EV























2017


45.3*1.025

=

46.43

(46.43/1.105^1)

=

42.02








2018


46.43*1.025

=

47.59

(47.59/1.105^2)

=

38.98








2019


47.59*1.025

=

48.78

(48.78/1.105^3)

=

36.15








2020


48.78*1.025

=

50.00

(50/1.105^4)

=

33.54








2021


50.00*1.025

=

51.25

(51.25/1.105^5)

=

31.11








51.25*(1.025)/(0.085-0.025)

=

875.52

(875.52/1.105^5)

=

531.44














DEBT

=

106.60














EV

=

606.63












Shares Outstanding

=

355.91














DCF TGH

=

$1.70


































VALUATION AT 1.5% FCF & 8.8% DR























TV

EV























2017


45.3*1.015

=

45.98

(45.98/1.088^1)

=

42.26








2018


45.98*1.015

=

46.67

(46.67/1.088^2)

=

39.43








2019


46.67*1.015

=

47.37

(47.37/1.088^3)

=

36.78








2020


47.37*1.015

=

48.08

(48.08/1.088^4)

=

34.31








2021


48.08*1.015

=

48.80

(48.80/1.088^5)

=

32.01








48.8*(1.015)/(0.088-0.015)

=

678.52

(678.52/1.088^5)

=

445.06














DEBT

=

106.60














EV

=

523.25












Shares Outstanding

=

355.91














DCF TGH

=

$1.47



















For the VALUATION AT 2.5% FCF & 10.5% DR valuation, you are calculating Terminal Value based on a 8.5% discount rate. This is having a material impact on your valuation.

Also, this is probably pedantic, but anyway... I am unsure of your valuation date; however, it looks like a while ago. One option is to:

adjust the first years earnings based on how far through we are;
discount mid-period;
adjust net debt for dividends since April (increase debt); and
adjust net debt for likely earnings since April (reduced debt, lets hope).


EDIT: Also, since you are increasing the cash flows at a constant rate, you should get the same result as if you just applied the Gordon Growth model to your first cash flow. As an example, using your second valuation (1.5% and 8.5%):

Enterprise value = 45.3*(1.015)/(0.088-0.015) = 629.86
Equity value = 629.86 enterprise value – 106.6 debt = 523.26
Share value = 523.26 equity value / 355.9 shares = $1.47 per share.

This is the same result as your DCF.

By undertaking a DCF, you might think you are putting in more 'science' than you actually have. All you have really said is share value is $1.47 at 1.5% perpetual growth and a 8.8% discount rate.


Also, disc. I have ~3-4% of my portfolio in TGH.

[TheHunter]

Guys you're over complicating it still!

Easiest sense check of EV is FCF/discount rate (do the math, equals the same as a DCF calc with a TV but w no growth factored in).

So $45.3m/8.8% = $515m EV or $1.45 per share... before growth :t_up: Interesting eh, a lot quicker and only 2c different from your valuation...

Keep it simple :cool:

[Te Whetu]

Guys you're over complicating it still!

Easiest sense check of EV is FCF/discount rate (do the math, equals the same as a DCF calc with a TV but w no growth factored in).

So $45.3m/8.8% = $515m EV or $1.45 per share... before growth :t_up: Interesting eh, a lot quicker and only 2c different from your valuation...

Keep it simple :cool:

Um, no. I am not sure if you're joking... there are smilies... but going to assume you're not joking.

You could do $45.3m / (8.8% - 1.5%), that would get you close.

But if you want to assume growth into perpetuity (you should, given inflation) then you will need to use the gordon growth model.

You calculated enterprise value, assumed it was equity value, divided it by shares, and were close...

However, the fact that you got close was a coincidence, as you never adjusted net debt.

Sorry if it's just a joke. However, I don't want anyone ever trying to invest based on your logic. :p


Edit: 60 posts in almost 10 years... I'm on fire.

[TheHunter]

Ahh yes, I didn't read your edit there Te Whetu.. believe we are making the same point regarding the gordon growth model & over-complicating a DCF. And good spotting reg. debt, wrote that way too quickly as the pork was burning. My mistake raises a good point tho... valuations can be what you make them. Always ensure you use a discount rate applicable that suits you and double check those calcs!

Back to Tegel as getting off topic, hows those chicken prices doing?

[winner69]

Guys you're over complicating it still!

Easiest sense check of EV is FCF/discount rate (do the math, equals the same as a DCF calc with a TV but w no growth factored in).

So $45.3m/8.8% = $515m EV or $1.45 per share... before growth :t_up: Interesting eh, a lot quicker and only 2c different from your valuation...

Keep it simple :cool:

Tegel FCF (Free Cash Flow) was actually $15.4m. So your sums The Hunter would give a EV of 49 cents (equity value less)

I agree with the comments made by Te Whetu

[winner69]

Tegel doesn't even cover it's cost of capital (ROIC about 6%/7%) so why should it's shares even trade at its book value of $1.31 ...market saying significantly improved future returns are expected

[winner69]

Back on topic -

From what I've seen in the supermarkets chicken prices are on the way down again

[hardt]

For the VALUATION AT 2.5% FCF & 10.5% DR valuation, you are calculating Terminal Value based on a 8.5% discount rate. This is having a material impact on your valuation.

Also, this is probably pedantic, but anyway... I am unsure of your valuation date; however, it looks like a while ago. One option is to:

adjust the first years earnings based on how far through we are;
discount mid-period;
adjust net debt for dividends since April (increase debt); and
adjust net debt for likely earnings since April (reduced debt, lets hope).


EDIT: Also, since you are increasing the cash flows at a constant rate, you should get the same result as if you just applied the Gordon Growth model to your first cash flow. As an example, using your second valuation (1.5% and 8.5%):

Enterprise value = 45.3*(1.015)/(0.088-0.015) = 629.86
Equity value = 629.86 enterprise value – 106.6 debt = 523.26
Share value = 523.26 equity value / 355.9 shares = $1.47 per share.

This is the same result as your DCF.

By undertaking a DCF, you might think you are putting in more 'science' than you actually have. All you have really said is share value is $1.47 at 1.5% perpetual growth and a 8.8% discount rate.


Also, disc. I have ~3-4% of my portfolio in TGH.

This was originally made for 6% in 2018 down to 1% in 2020 FCF growth.

These formulas auto populate using the models I have in excel, still needs some fine-tuning no doubt.

But yes, far simpler ways with linear growth.

[winner69]

See price fell from $14.81 in July to $14.21 in August

Lower than a year ago

Hope correlation with TGH share price is weak eh

Up to $14.67 in September

That's good

[hardt]

Up to $14.67 in September

That's good

This time last year we could see the prices plummet 10-15% lower to hit the bottom in December 12.81 - 13.50 range.

Signs are pointing towards a moderately good result for TGH, will have to wait and see how they capitalised on these better trading conditions.

Chart looks good too, setting up for a possible move over 133 resistance... has failed on 3 attempts though.

9230

[winner69]

This time last year we could see the prices plummet 10-15% lower to hit the bottom in December 12.81 - 13.50 range.

Signs are pointing towards a moderately good result for TGH, will have to wait and see how they capitalised on these better trading conditions.

Chart looks good too, setting up for a possible move over 133 resistance... has failed on 3 attempts though.

9230

well done hardt

that post got the shareprice moving again

must be onwards and upwards from here by the looks of your chart

back to ipo price ...what was that again

[BlackCross]

well done hardt

that post got the shareprice moving again

must be onwards and upwards from here by the looks of your chart

back to ipo price ...what was that again

Which was a bit more accurate than your 75 cent'sh forecast. (smiley face).

[winner69]

Which was a bit more accurate than your 75 cent'sh forecast. (smiley face).

Did I say 75 cents once

must have been a theoretical price look book value or something

[hardt]

well done hardt

that post got the shareprice moving again

must be onwards and upwards from here by the looks of your chart

back to ipo price ...what was that again

Breaking through resistance was good, filling the gap the next day was better - very unbecoming for the ticker ( has to be related to Forbarr upgrade )

Looks good, fundamental value is still there at current levels, providing the very conservative forecast of "increasing EBITDA" is met ( nowhere to hide if they don't )

I joined in the fun yesterday - Still wary of when UBS may want to shed some of their holding.

[Balance]

Looking good but still a disconnect between chicken prices here and rising overseas prices.

Notice drumsticks are still perennially on specials - as low as $2.99 per kg, and boneless breast meat is now selling for $8.99 - $9.99 kg vs around $10.99 - $11.99 kg being the norm a year ago.

Still, always happy with a rising sp!

[JeremyALD]

Looking good but still a disconnect between chicken prices here and rising overseas prices.

Notice drumsticks are still perennially on specials - as low as $2.99 per kg, and boneless breast meat is now selling for $8.99 - $9.99 kg vs around $10.99 - $11.99 kg being the norm a year ago.

Still, always happy with a rising sp!

Are you? I seem to remember you ****ting all over Tegel and to be honest apart from a rising SP Tegel has nothing to increase confidence beside a vague forecast. I'm waiting to see the next results before reinvesting.

[Valuegrowth]

Without any notice it has appreciated slowly. So far TGH has demonstrated its ability to generate sufficient levels of cash flow, while keeping their debt levels an appropriate level. After tech play, it is a time for some chicken play(especially for attractive stocks). 52 range 1.05 to 1.59.

Chicken stocks are not just chicken plays. Poultry uptake is forecast to rise faster than pork and beef worldwide in the coming decade. Different countries have different strength in the same industry. Low feed cost is one of the main drivers. Some countries will have growth in the poultry industry at lest for next 10 years. Global chicken stocks have more legs. There could be few multibgaars globally. After USA and Europe, we find some well manged locally grown poultry companies in the Asia-pacific region. Will TGL also become one of the growing poultry companies in the world? I was closely following some poultry stocks globally during fast few months.

Some fund managers are no longer classifying strong poultry companies as traditional chicken plays.

[peat]

Global chicken stocks have more legs.
scary thoughts from that phrase.

9254

[Joshuatree]

:lol:hahaha then yuck what a horrible genetic meddling possibility thought :eek2:

[777]

Cut the head off and it could be the current governments mascot.

[RTM]

Without any notice it has appreciated slowly. So far TGH has demonstrated its ability to generate sufficient levels of cash flow, while keeping their debt levels an appropriate level. After tech play, it is a time for some chicken play(especially for attractive stocks). 52 range 1.05 to 1.59.

Chicken stocks are not just chicken plays. Poultry uptake is forecast to rise faster than pork and beef worldwide in the coming decade. Different countries have different strength in the same industry. Low feed cost is one of the main drivers. Some countries will have growth in the poultry industry at lest for next 10 years. Global chicken stocks have more legs. There could be few multibgaars globally. After USA and Europe, we find some well manged locally grown poultry companies in the Asia-pacific region. Will TGL also become one of the growing poultry companies in the world? I was closely following some poultry stocks globally during fast few months.

Some fund managers are no longer classifying strong poultry companies as traditional chicken plays.

Pretty sure nearly all the feed that Tegal uses is imported. So their input cost will be strongly linked to the US Dollar. This will be something of a headwind currently. Disc. Hold.

[hardt]

Good afternoon

Tegel currently exports approximately NZD 100 million product to Australia, the UAE, Hong Kong, the Philippines, and the Pacific Region.
We source our feed from farms globally – from the likes of North and South America, Europe and Australia. So we are able to respond to rising prices in the event of a drought in Australia say, to source it from elsewhere at a lower price. We are also able to adjust the feed mix, eg replace corn with sorghum or adjust the amount of wheat etc. We don’t specify what the total feed costs are.

From our latest annual report:
“To secure input costs, the Company hedges its exposure to certain commodities and foreign exchange risks denominated in US dollars. The Company also uses foreign exchange contracts to hedge revenue from export sales denominated in Australian dollars. All foreign exchange forward contracts and commodity contracts are executed in accordance with the Board-approved FX Hedging and Commodity Risk Treasury Policies. As at 30 April 2017, 89% of US dollar raw material purchase requirements and 77% of forecast Australian dollar receipts were hedged for FY18.”

Hope this helps.

- Take away from this is Tegel have very limited exposure to the negatives that could arise out of a weakening NZD.

[Valuegrowth]

Thank you for some information. Still I am studying their business model.

World cereal stocks by the close of seasons in 2018 are now forecast (FAO) at a new all-time high of 720.5 million tonnes. According to the IGC, the forecast for world total grains production in 2017/18 is raised by 19m t m/m (month-on-month), to 2,069m, second only to last season’s record. Therefore, we cannot expect sharp rise in animal feed even in 2018.

https://genevajournal.com/tegel-group-holdings-ltd-tgh-nz-money-flow-index-nearing-key-level/

https://simplywall.st/news/2017/10/03/october-best-stocks-to-buy/

Following is one of the top winners in the poultry world so far in 2017.

SAFM (Sanderson Farms) It broke several of 52 weeks high and established a new all time high as well. It peaked at an all-time high of $166.65 and currently trading around $ 148.

52 week 74-07 – 166.65

Good afternoon

Tegel currently exports approximately NZD 100 million product to Australia, the UAE, Hong Kong, the Philippines, and the Pacific Region.
We source our feed from farms globally – from the likes of North and South America, Europe and Australia. So we are able to respond to rising prices in the event of a drought in Australia say, to source it from elsewhere at a lower price. We are also able to adjust the feed mix, eg replace corn with sorghum or adjust the amount of wheat etc. We don’t specify what the total feed costs are.

From our latest annual report:
“To secure input costs, the Company hedges its exposure to certain commodities and foreign exchange risks denominated in US dollars. The Company also uses foreign exchange contracts to hedge revenue from export sales denominated in Australian dollars. All foreign exchange forward contracts and commodity contracts are executed in accordance with the Board-approved FX Hedging and Commodity Risk Treasury Policies. As at 30 April 2017, 89% of US dollar raw material purchase requirements and 77% of forecast Australian dollar receipts were hedged for FY18.”

Hope this helps.

- Take away from this is Tegel have very limited exposure to the negatives that could arise out of a weakening NZD.

[peat]

- Take away from this is Tegel have very limited exposure to the negatives that could arise out of a weakening NZD.

Umm, they still do have exposure its just delayed - come FY18 when they repeat their hedging the prices will be lower.

[Valuegrowth]

One good thing is they do hedging to minimize risk. Hope they will hedge correctly. Lower NZD is good for their exports.

[dreamcatcher]

Pak n sav drumsticks @ $5.99kg last Friday suggests increased cost or surplus raw chicken been used for higher value items instead of been dumped. Always wondered why sell raw chicken if you can get a better price for value added product which I think Tegel is trying to establish with their new product range. Heard new boning machine recently modified to handle various chicken sizes more efficiently which should increase raw chicken yield .... imo

GS new TP $1.70

Disc hold

[Valuegrowth]

It was due for rally. Now is has risen from its recent 52 week low 1.06 to 1.45. It is closer to its 52 week high. However, currently it has a below average ROE. It has PE 14.89.Will they have an above average ROE in the future?

[Master98]

very quiet here, bellow is news from NZ Herald:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11944809
plan for chicken farm to create jobs in Northland

[winner69]

Up to $14.67 in September

That's good

Plummets back to $13.74 kg in October

That’s not too good

Stats NZ Food price index

[Out to lunch]

Perhaps gain some market share from Mainland?

[dreamcatcher]

Plummets back to $13.74 kg in October

That’s not too good

Stats NZ Food price index


2016M10 $13.42 2017M10 $13.74

Slight 2.4% improvement from last year

[hardt]

Earnings out on Wednesday, May - October prices have been less volatile this time round...

Now all they had to do is more or less hold onto market share.

Remain cautious with this one though, I remain open to the idea a 5% volume lift is on the table.




1H17

$ CHICKEN

TGH SP



31/05/16

$15.18

$1.65



30/06/16

$14.35

$1.65



31/07/16

$14.44

$1.67



31/08/16

$14.41

$1.71



30/09/16

$13.52

$1.64



31/10/16

$13.42

$1.54







1H18

$ CHICKEN

TGH SP



31/05/17

$14.16

$1.10



30/06/17

$14.35

$1.15



31/07/17

$14.81

$1.24



31/08/17

$14.21

$1.25



30/09/17

$14.67

$1.27



31/10/17

$13.74

$1.38




9300

[BlackCross]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TGH/311466/271171.pdf

[hardt]

Not incredible... lackluster exports.

[JeremyALD]

I'm sorry that's a bloody awful result. Last year was shocking and this year is even worse than that half. They are way behind prospectus forecasts. Glad I got out. Back down they go.

[JeremyALD]

So their target for FY17 was 44m NPAT which they missed by a country mile. Now they've produced 14.8m NPAT in the first half indicating they'll be lucky to beat last year's poor results given the second half of FY17 was a bit better. Meanwhile Inghams seems to be doing OK in this 'competitive marketplace' up 10% on their list price.

[hardt]

So their target for FY17 was 44m NPAT which they missed by a country mile. Now they've produced 14.8m NPAT in the first half indicating they'll be lucky to beat last year's poor results given the second half of FY17 was a bit better. Meanwhile Inghams since to be doing OK in this 'competitive marketplace' up 10% on their list price.

This thread has seen the prospectus about 100 times, a flat first half was expected - we got a minor underperformance.

Domestic market performed well, we can see where this result fell short, let us imagine export revenues were flat - we would have seen 2-4% EBITDA growth.

But for the export performance this was actually alright.. they say this was "as expected" not so sure about that though.

"higher costs have been incurred due to additional investment to drive growth, particularly in Australia as we expanded the export sales team, incurred higher distribution costs and established new product lines in new channels" - hmm

[JeremyALD]

This thread has seen the prospectus about 100 times, a flat first half was expected - we got a minor underperformance.

Domestic market performed well, we can see where this result fell short, let us imagine export revenues were flat - we would have seen 2-4% EBITDA growth.

But for the export performance this was actually alright.. they say this was "as expected" not so sure about that.

It was priced at $1.55 based on prospectus guidance which is at least 20% below. So we'll see how the market reacts today, but with little growth, the risk of Affinity selling out and a PE of 14 its hardly looking attractive.

[winner69]

This thread has seen the prospectus about 100 times, a flat first half was expected - we got a minor underperformance.

Domestic market performed well, we can see where this result fell short, let us imagine export revenues were flat - we would have seen 2-4% EBITDA growth.

But for the export performance this was actually alright.. they say this was "as expected" not so sure about that though.

"higher costs have been incurred due to additional investment to drive growth, particularly in Australia as we expanded the export sales team, incurred higher distribution costs and established new product lines in new channels" - hmm

Is this flat first half expectations your expectations ....or the markets

All the company was saying FY18 ebitda more than F17

[hardt]

It was priced at $1.55 based on prospectus guidance which is at least 20% below. So we'll see how the market reacts today, but with little growth, the risk of Affinity selling out and a PE of 14 its hardly looking attractive.

No doubt it is heading south today...

[hardt]

Is this flat first half expectations your expectations ....or the markets

All the company was saying FY18 ebitda more than F17

TGH remains solid and they have continued to show dominance in the NZ market...
I thought exports would remain stable, so in that regard it underperformed.
I am sure plenty of people shared my same thoughts, has me contemplating taking my profits and buying back later.

At the end of the day brokers will likely continue to support and funnel clients into TGH.

OUT AT 135

[JeremyALD]

TGH remains solid and they have continued to show dominance in the NZ market...
I thought exports would remain stable, so in that regard it underperformed.
I am sure plenty of people shared my same thoughts, has me contemplating taking my profits and buying back later.

At the end of the day brokers will likely continue to support and funnel clients into TGH.

OUT AT 135

Down 10% in early trading

[winner69]

TGH remains solid and they have continued to show dominance in the NZ market...
I thought exports would remain stable, so in that regard it underperformed.
I am sure plenty of people shared my same thoughts, has me contemplating taking my profits and buying back later.

At the end of the day brokers will likely continue to support and funnel clients into TGH.

OUT AT 135

Yes a solid company. Will continue to make decent profits.

Punters get carried away about all this talk about investing in their brand, innovation, new products and investing to improve efficiencies etc and assume that all those things will boost profits (markedly?)

In reality those things are the cost of staying in the game (don’t do them and you gradually die) and really only maintain profitability. After all no matter how much they talk about premium products aren’t they still dealing with a commodity product. That’s why they continually ‘have ongoing challenges around pricing’

Current performance plus or minus a bit is about as good as its going to get I reckon.

same comments apply to Metro Glass

[Beagle]

Yes a solid company. Will continue to make decent profits.

Punters get carried away about all this talk about investing in their brand, innovation, new products and investing to improve efficiencies etc and assume that all those things will boost profits (markedly?)

In reality those things are the cost of staying in the game (don’t do them and you gradually die) and really only maintain profitability. After all no matter how much they talk about premium products aren’t they still dealing with a commodity product. That’s why they continually ‘have ongoing challenges around pricing’

Current performance plus or minus a bit is about as good as its going to get I reckon.

same comments apply to Metro Glass

I reckon you're right in both cases and the only real reason to own either share is for the dividends
TGH 5.91% net and MPG 8.17% net. (plus applicable imputation credits)

[winner69]

I reckon you're right in both cases and the only real reason to own either share is for the dividends
TGH 5.91% net and MPG 8.17% net. (plus applicable imputation credits)

Dividends are the only reason you invest in ‘solid’ companies on the understanding what’s touted you are not buying into a ‘growth’ company.

But if short term deposit rates increased to 5%/6% would you pleased with the yields ( and probably not happy with lower share price that would happen)

[RGR367]

I reckon you're right in both cases and the only real reason to own either share is for the dividends
TGH 5.91% net and MPG 8.17% net. (plus applicable imputation credits)

Nice to know that we somehow share the same sentiments when we identified companies for their dividend giving attributes :cool:
So how would we counteract the going down sp due to the result which is still okay but not may please everybody? Gut feel says we should be buying more of it in due time when the price is low enough to our liking :) Sell more of it now guys and thanks.

[Beagle]

Dividends are the only reason you invest in ‘solid’ companies on the understanding what’s touted you are not buying into a ‘growth’ company.

But if short term deposit rates increased to 5%/6% would you pleased with the yields ( and probably not happy with lower share price that would happen)

I don't own either but clearly one has a superior dividend yield to the other. Seat of the pants to me suggests Tegal has plenty of room to fall given they also touted themselves as a growth stock.
Both floats have been epic fails and investors told a lot of disingenuous stories and half truths.
I warned a while ago on this thread that FY17 profits although incredibly disappointing were predicated upon record low fuel prices and am not surprised to see the biggest gaoin in expenses is in the distribution area http://www.sharechat.co.nz/article/7f00a047/update-tegel-shares-drop-10-as-first-half-result-misses-estimates.html?utm_medium=email&utm_campaign=UPDATE%20Tegel%20shares%20drop%2010%2 0as%20first-half%20result%20misses%20estimates&utm_content=UPDATE%20Tegel%20shares%20drop%2010%20 as%20first-half%20result%20misses%20estimates+CID_8185339d08c 5baef4e4de921547fb61c&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle7f00a047update-tegel-shares-drop-10-as-first-half-result-misses-estimateshtml
Worth noting that diesel prices have only recently taken another serious leap upwards.

[winner69]

Beagle your post re Hands remuneration - $768,000 doesn't seem much in these days of greedy CEOs

[winner69]

They say domestic share held in this half (Share based on scan data and management estimates)

their volumes were up 0.8% (assuming this volumes sold). Stats NZ report poultry production for the same period (almost) were up 8.9% on pcp

Don't know what this means - maybe Tegel lots of extra chicken meat in inventories

[Balance]

They say domestic share held in this half (Share based on scan data and management estimates)

their volumes were up 0.8% (assuming this volumes sold). Stats NZ report poultry production for the same period (almost) were up 8.9% on pcp

Don't know what this means - maybe Tegel lots of extra chicken meat in inventories

Have had a chance to review the results.

Too many things to dislike:

1. Yet another profit downgrade - third one. Hope springs eternal this will be the last one?

2. Outlook comment is most uninspiring: "Looking at the remainder of FY18, we will maintain our domestic market share in a challenging pricing environment. Our Australian exports have diversified into more channels and customers. We continue to work towards exceeding FY17 underlying EBITDA."

Protect domestic market share at low(er) margins if necessary seems to be the message, Australian sales have gone backwards so let's try other channels and products and we are not that confident about achieving profit forecast.

3. Sales are static but receivables and inventories have increased hugely (even allowing for seasonal build up if true) - not a good sign.

4. Most disturbing imo, dividends have been paid using debts. Echoes of Feltex.

Out of here.

[Beagle]

As mentioned yesterday distribution costs up by millions compared to the pcp. Worth noting that the current diesel price is quite dramatically higher than what was prevailing on average throughout the pcp last year and higher than the most recent half year too. I think there's plenty of potential for the full year profit to be yet another disappointment and be less than FY17.

Food for thought for holders while eating their chicken club sandwich for lunch. EPS last year was 9.52 cps. I think its clear now you've been sold a pup and all that talk of growth is nothing but that, "talk".

Even if current period distribution expenses don't jump millions more compared to pcp where's the growth ? Legendary investor Benjamin Graham reckoned a fair PE for a no growth company is 8.5. On that basis 8.5 x 9.52 gives fair value for Tegal of just 81 cents.

On that basis the dividend yield would be roughly the same as that other recent float that talked a lot about growth and has also delivered none, MPG.
By my reckoning both companies deserve to trade around 80 cps, maybe 90 cps if we're being kind and attributing a PE of 9.5 due to the current very low interest rates.

[winner69]

As mentioned yesterday distribution costs up by millions compared to the pcp. Worth noting that the current diesel price is quite dramatically higher than what was prevailing on average throughout the pcp last year and higher than the most recent half year too. I think there's plenty of potential for the full year profit to be yet another disappointment and be less than FY17.

Food for thought for holders while eating their chicken club sandwich for lunch. EPS last year was 9.52 cps. I think its clear now you've been sold a pup and all that talk of growth is nothing but that, "talk".

Even if current period distribution expenses don't jump millions more compared to pcp where's the growth ? Legendary investor Benjamin Graham reckoned a fair PE for a no growth company is 8.5. On that basis 8.5 x 9.52 gives fair value for Tegal of just 81 cents.

On that basis the dividend yield would be roughly the same as that other recent float that talked a lot about growth and has also delivered none, MPG.
By my reckoning both companies deserve to trade around 80 cps, maybe 90 cps if we're being kind and attributing a PE of 9.5 due to the current very low interest rates.

C’mon beagle you know Ben’s formula was relevant decades ago but not that relevant today.

And surely a ‘solid’ profit making company investing to stay in the game (investing to survive is how some describe it) will achieve some modest growth into the future. That growth probably coming from punters eating more chicken if nothing else.

A DDM calc using say 2% and 3% growth gives a value of 94 cents and $1.07 respectively

That’s how I see it

[Beagle]

Yes, No, Maybe. 2% growth in top line sales in line with inflation..so no real inflation adjusted growth. Yes the prevailing risk free interest rate in Ben Grahame's day was 4%, a bit lower now so maybe we stretch to a no real growth PE of 10 which on 9.5 cps means fair value is 95 cps, see we're not that far apart :)
Is it really that 'solid'...just keeps disappointing the market time after time...
P.S. Even though Tegal rhymes with Beagle this hound is not having a bar of investing in it...happy for Mrs Beagle to invest in it at the supermarket though !

[moka]

So paltry growth really although the dividend isn’t chicken feed or paltry.

Poultry volume growth
48.7k tonnes
UP 1% YEAR ON YEAR

[winner69]

Earnings out on Wednesday, May - October prices have been less volatile this time round...

Now all they had to do is more or less hold onto market share.

Remain cautious with this one though, I remain open to the idea a 5% volume lift is on the table.




1H17

$ CHICKEN

TGH SP



31/05/16

$15.18

$1.65



30/06/16

$14.35

$1.65



31/07/16

$14.44

$1.67



31/08/16

$14.41

$1.71



30/09/16

$13.52

$1.64



31/10/16

$13.42

$1.54







1H18

$ CHICKEN

TGH SP



31/05/17

$14.16

$1.10



30/06/17

$14.35

$1.15



31/07/17

$14.81

$1.24



31/08/17

$14.21

$1.25



30/09/17

$14.67

$1.27



31/10/17

$13.74

$1.38




9300

Latest Food Price Index has chicken down to $13.00

Lowest price for a long time

No wonder you bailed from Tegel

[Balance]

Latest Food Price Index has chicken down to $13.00

Lowest price for a long time

No wonder you bailed from Tegel

No signs at the supermarket or Mad Butcher or the various individual meat shops that chicken prices are stabilizing - in fact, the discounting has gotten more aggressive with mad Butcher offering drumsticks at $2.99 kg and boneless breast meat at $7.99 Kg!

[hardt]

Latest Food Price Index has chicken down to $13.00

Lowest price for a long time

No wonder you bailed from Tegel

The theme which kept me long Tegel was the recovery in prices - not looking all that likely anymore.

Was not expecting exports to let them down this badly, really would have been a solid half if on par with domestic.
+20% back to where the market valued the forecast being hit - all they have to do now is progress in Aussie as they said they would do :confused:

Not cheap enough to get me back in... plenty of other opportunities

[janner]

Not cheap enough to get me back in... plenty of other opportunities

Exactly.. NZ chicken has nothing going for it in the export field ... Nothing...

A company that was oversold from the beginning.. Cleverly enough to suck so many " Experienced " investors in ..

Good only for possible dividends.. Which are not guaranteed ..

Disc. Never a holder.. Probably never will be .. Quote " Plenty of other opportunities ""

[flyer]

A small rise in the last 2-3 trading days, is chicken on the comeback?

[JoeGrogan]

perhaps some people wanting a nice holiday dividend to recoup those xmas expenses

[flyer]

Shortage of chicken in the USA, KFC has had to close stores because they cant get any. Maybe a flow on effect may follow, pity Tegel cant supply to them.

[peat]

Shortage of chicken in the UK, KFC has had to close stores because they cant get any. Maybe a flow on effect may follow, pity Tegel cant supply to them.
I believe its the United Kingdom
https://www.ft.com/content/2f98f57e-1583-11e8-9376-4a6390addb44

Company blames ‘teething problems’

but I thought chickens didnt have teeth

[Joshuatree]

No shortage of chicken but a stuff up by the new logistics contractor DHL.

[winner69]

Bit of misfortune for Tegel

Suppose ammonia and dead chickens don’t mix

[Joshuatree]

That link has expired W69
Download Document 361.93KB (https://hotcopper.com.au/documentembed?id=uOMxKKzFkiWRTLKhOROKAxjvSDYL4wi6z BHzv%2BN%2B97FiGug%3D)

The company is working to quantify the one-off costs relating to the disruptions. At this stage theeffect on Net Profit After Tax (NPAT) is estimated to be between NZD$1.5 million and NZD$2.0 million.

[winner69]

Hope Ingram’s not winning in NZ at Tegel’s expense

In spite of market dynamics remaining challenging in NZ they say — The company said New Zealand performance improved in the first half, supported by growing poultry volumes and dairy feed demand, with revenue for New Zealand $191.1m for the half, up from $185.5m for the first half of the 2016 fiscal year.

[Balance]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TGH/314741/275186.pdf

Big supporter selling out? Had enough?

[winner69]

Proposed factory near Dargaville sounds gross

John Hart (@farmgeek)
28/02/18, 4:29 PM
Tegel is considering burning 56,000 tonnes of chicken manure each year, plus floor litter, plus about 40 tonnes of carcasses (at 3% mortality).

[Balance]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/TGH/314741/275186.pdf

Big supporter selling out? Had enough?

https://www.nzx.com/announcements/315217

Another profit downgrade but wait, there's more - $8m to $10m of one-off costs.

Otherwise, all's fine and the company is growing volumes!

[JeremyALD]

Just gets worse doesn't it.

The only thing going for it is probably a consistent dividend yield.

[Beagle]

This really is no "clucking" good.
As noted in the FY18 Interim Results, an internal restructure of the business was completed in February 2018 resulting in roles being consolidated. Although there will be a short term cost impact in the FY18 year, there will be ongoing benefit from the improved organisational structure.

They really don't get it do they ! What they need to tell the market is what the annual savings will be from the organisational review. No investor cares about whether their management processes are better or not !

For instance, If they said we're going to save $2m per annum from our extremly bloated head office costs the market might say thank goodness for that !

Tegal and Beagle rhyme but I wouldn't have a bar of this flea ridden mutt !

[steveb]

Actually looking around my local supermarket,free range products seem to be a massive growth market,at least Tegel are aware of this and going forward should reap the rewards.So yes not a good year but perhaps a glimmer of hope for next year

[Balance]

Actually looking around my local supermarket,free range products seem to be a massive growth market,at least Tegel are aware of this and going forward should reap the rewards.So yes not a good year but perhaps a glimmer of hope for next year

Bought some Turks free range drumsticks the other day at $4.99 kg - used to be $7.99 a year ago.

Wouldn't be buying them again - small and not much meat vs usual chickens.

[JoeGrogan]

The disguised the downgrade amongst the one offs... classic.

[Beagle]

The disguised the downgrade amongst the one offs... classic.

There's another cyclone on its way to N.Z....give them some more excuses if they fail to meet the lower guidance LOL
I'm sure they'll find some more one-off's next year.
Good companies make profits not excuses.

[Joshuatree]

They are stuffed until the price cycle lifts whenever that will be.

[biker]

“In a separate incident, there was an ammonia leak at the New Plymouth plant which resulted in inventory losses.”

I assume inventory losses means lots of dead chickens overcome by ammonia gas. Not a nice way to go I would have thought.

[RTM]

“In a separate incident, there was an ammonia leak at the New Plymouth plant which resulted in inventory losses.”

I assume inventory losses means lots of dead chickens overcome by ammonia gas. Not a nice way to go I would have thought.

More likely a freezer/chiller problem. Loss of frozen or chilled inventory ?

[Balance]

The disguised the downgrade amongst the one offs... classic.

This is the fourth (yes, 4th) downgrade according to the NBR - I have lost count myself.

As for disguising, this company thinks it is very smart in trying to hoodwink the market with all kinds of trickery:

1. Referring F17 last year's results as being for "53 weeks" vs 52 weeks in F18 consistently as one excuse for profit drop,

2. Adjusting the F17 results down to 52 weeks so that NPAT is $31.7m vs $34.2m and EBITDA $72m vs $75.6m.
A simple calculation shows the adjusted $31.7m should be $33.6m and EBITDA $74.2m vs $72m.

The NPAT expected in F18 of $25m to $27m = 20% to 26% Downgrade!

This is what the company said at its AGM in June last year :

"So looking at FY18, based on the current market conditions, holding domestic market share, with continued domestic consumption growth of 4-5% and continuing exports,
overall, we expect to deliver an increase in underlying EBITDA from the level at FY17."

"Tegel is a growing business, the company is in great shape and we are excited about our future prospects."

[Xerof]

To quote the Colonel of chicken: FCK

[Balance]

To quote the Colonel of chicken: FCK

Market cap of $338m so still trading on a forward PER of 12.5X to 13.5X.

Realistically should be on PER now of 10 times (max).

75 cents is where it is heading, me thinks.

[Beagle]

Market cap of $338m so still trading on a forward PER of 12.5X to 13.5X.

Realistically should be on PER now of 10 times (max).

75 cents is where it is heading, me thinks.

I couldn't agree more. 10 times absolute max. Management scare the wits out of investors with huge so called one-off's and don't even have the decency to say whether the dividend is safe or not or even mention the quantum of the head office cost savings. Beggars belief and really highlights the inexperience of this company in dealing with the investing public in my opinion. It occurs to me they really don't care. The impression I gather is as long as their snouts are in the trough gobbling up as much as they can, shareholders are just a nuisance inconvenience.
Trust us we know what we're doing. Yeah right ! is it too early for a Tui ?

[winner69]

I couldn't agree more. 10 times absolute max. Management scare the wits out of investors with huge so called one-off's and don't even have the decency to say whether the dividend is safe or not or even mention the quantum of the head office cost savings. Beggars belief and really highlights the inexperience of this company in dealing with the investing public in my opinion. It occurs to me they really don't care. The impression I gather is as long as their snouts are in the trough gobbling up as much as they can, shareholders are just a nuisance inconvenience.
Trust us we know what we're doing. Yeah right ! is it too early for a Tui ?

Same issues as Metro Glass have post IPO ...they are ill prepared for life under public scrutiny

But then many would say that both were on hiding to nothing anyway after all the outrageous statements in the glossy IPO documents

What were IPO prices again?

[RGR367]

Same issues as Metro Glass have post IPO ...they are ill prepared for life under public scrutiny

But then many would say that both were on hiding to nothing anyway after all the outrageous statements in the glossy IPO documents

What were IPO prices again?

$1.55/share on May 2016 as per NBR story.

[trader_jackson]

$1.55/share on May 2016 as per NBR story.

$1.55 you say? hmm reminds me of some other company also experiencing troubling times right now...

[JayRiggs]

I just sold all my TGH. Fed up with this stupid chicken.
Wasn't impressed with Phil Hand at the AGM last year. Someone asked for more clarification on guidance and Phil refused to give any more detail.
Will be re-allocating funds to more OCA.

I think OCA has more chance of getting to 1.55 than TGH does.

[traineeinvestor]

Disappointing for holders – makes the comparison with Inghams even more striking.

Disclosure: hold ING

[Beagle]

Same issues as Metro Glass have post IPO ...they are ill prepared for life under public scrutiny

But then many would say that both were on hiding to nothing anyway after all the outrageous statements in the glossy IPO documents

What were IPO prices again?

$1.70 for MPG and $1.55 for TGH.
Article behind the paywall today on NBR. Basically calls the downgrade a shocker and goes on to say that THG has disappointed investors EVERY time it has reported.
As I warned at the outset of this tread, this company was floated when feed costs and distribution costs, (fuel) were at record cyclical lows.
I think the size of the second half downgrade is a clear warning as to this companies future sustainable profitability.
Its clear to be this is headed lower and the level of dividend is at risk. Management asleep at the wheel and trying to claim that profit growth will resume next year lol.
I suppose it will if they have less annual so called "one off" costs next year.

[winner69]

Disappointing for holders – makes the comparison with Inghams even more striking.

Disclosure: hold ING

yes ..this is what Inghams said a week or so ago re NZ

In spite of market dynamics remaining challenging in NZ they say — The company said New Zealand performance improved in the first half, supported by growing poultry volumes and dairy feed demand, with revenue for New Zealand $191.1m for the half, up from $185.5m for the first half of the 2016 fiscal year.

[Balance]

yes ..this is what Inghams said a week or so ago re NZ

In spite of market dynamics remaining challenging in NZ they say — The company said New Zealand performance improved in the first half, supported by growing poultry volumes and dairy feed demand, with revenue for New Zealand $191.1m for the half, up from $185.5m for the first half of the 2016 fiscal year.



An Ingham contract farmer told friend of mine that he is very happy with his contract - Ingham takes care of everything related to the breeding, processing and sale of the chickens and he has to just make sure the farm properties and machinery/equipment are in top condition (especially the air-con!).

Tegel's contract is more generous but he has less confidence as they have been very aggressive in adding quantity in recent years.

Guess the chooks are coming home to roost for Tegel - all the increased volume from contracted farmers that they are obliged to take but in a market that's not growing as fast?

Sign of the times - boneless breast meat on sale at $6.99 at Mad Butcher and $7.99 at the local Pak n Save. You would struggle to buy that at under $10 a year ago.

[winner69]

Stats NZ Food Price Index has chicken breasts at multi year lows

Downward trend in price continues

Cant be good for Tegel

[sb9]

Sign of the times - boneless breast meat on sale at $6.99 at Mad Butcher and $7.99 at the local Pak n Save. You would struggle to buy that at under $10 a year ago.

Noticed at Pak n save in my last two visits chicken drum sticks going cheap at $3.99/kg.

[Balance]

Noticed at Pak n save in my last two visits chicken drum sticks going cheap at $3.99/kg.

Try the Asian grocery stores - they have them on specials at $2.99 kg from time to time!

I buy them just to boil for a great chicken soup base!

[Filthy]

I buy them just to boil for a great chicken soup base!

chicken soup? - times must be tough mate! ;)

[Joshuatree]

Stats NZ Food Price Index has chicken breasts at multi year lows

Downward trend in price continues

Cant be good for Tegel

Tegel did get a bit of a hospital pass on listing. A price war with Inghams combined with i think both increasing production while feed prices at a low and still at a low i think. Their time will come when the cycle changes but who wants to be holding in the meantime.:mellow:

[winner69]

Tegel did get a bit of a hospital pass on listing. A price war with Inghams combined with i think both increasing production while feed prices at a low and still at a low i think. Their time will come when the cycle changes but who wants to be holding in the meantime.:mellow:

Hospital pass — well timed IPO then

But then Claris still owns 45% of Tegel

[JeremyALD]

I actually think Tegel represents pretty good value at the moment. A market cap of 320m for a company that has and will be around for a very long time. Sure its underperformed significantly but I think that has now been factored in.

It pays a good dividend which should be sustainable and given the current SP any growth at all would be a bonus as its only an underlying PE of less than 10.

However probably safer to wait until they at least deliver one result that isn't behind market expectation.

[Balance]

chicken soup? - times must be tough mate! ;)

Haha - nothing quite like authentic high quality chicken soup with all the lovely ingredients (scallops, crayfish, prawns and mushrooms) to make one feel at peace with the world!

[Balance]

Stats NZ Food Price Index has chicken breasts at multi year lows

Downward trend in price continues

Cant be good for Tegel

Now $6.99 - with thighs now on sale too now at Mad Butcher at $3.79 kg!

[janner]

chicken soup? - times must be tough mate! ;)

A good medicine, relied on by many Mothers in winter ... Oy vez !!..

[Balance]

Chickens on specials again at local Pak n Save - chicken legs at $4.99 per kg and drumsticks at $3.99 kg.

No end in sight to low prices (yahhhhh!) and global prices are dropping now as well.

[iceman]

A scathing article by Shoeshine- Jenny Ruth in the NBR today

[Beagle]

A scathing article by Shoeshine- Jenny Ruth in the NBR today

Yes really scathing noting that the numbers don't appear to add up.

[Balance]

A scathing article by Shoeshine- Jenny Ruth in the NBR today

Any kind of excuses by Tegel directors and management to try and bluff their way out - to cover their inability to grow profits and grow the company - what they promised to get IPO $$$$ out of punters in NZ (courtesy as well of Forsyth Barr of Feltex, Wynyard and Credit Sails fame).

75 cents is where it will go - all the supermarkets have drumsticks on specials this week it seems, as well as the local shops and the ever reliable Mad Butcher. Ain't no sign of the discounting chicken war abating.

[Beagle]

I and others correctly observed that at the time of the IPO chicken feed costs and diesel costs, (distribution costs are a huge factor) were at cyclical lows.
Its clear the promoters timed the IPO well. What's also clear in terms of their talk of growth is they applied very liberal amounts of lipstick to a pretty ordinary looking pig...something seasoned investors have come to expect from private equity floats. Talk of overseas growth was just that...talk, and that's all it will probably ever be in my opinion. Who's going to 60 cents first, this or MPG ?

[janner]

I and others correctly observed that at the time of the IPO chicken feed costs and diesel costs, (distribution costs are a huge factor) were at cyclical lows.
Its clear the promoters timed the IPO well. What's also clear in terms of their talk of growth is they applied very liberal amounts of lipstick to a pretty ordinary looking pig...something seasoned investors have come to expect from private equity floats. Talk of overseas growth was just that...talk, and that's all it will probably ever be in my opinion. Who's going to 60 cents first, this or MPG ?

Still in agreement with Beagle.. Ref. My posts 58 60 63..

Two companies in competition to be the cheapest.. Not much profit in that..

[Joshuatree]

I and others correctly observed that at the time of the IPO chicken feed costs and diesel costs, (distribution costs are a huge factor) were at cyclical lows.
Its clear the promoters timed the IPO well. What's also clear in terms of their talk of growth is they applied very liberal amounts of lipstick to a pretty ordinary looking pig...something seasoned investors have come to expect from private equity floats. Talk of overseas growth was just that...talk, and that's all it will probably ever be in my opinion. Who's going to 60 cents first, this or MPG ?

But no mention of competitor Inghams also ramping up their ops, thats whats done the damage imo.

[GTM 3442]

Tegel sell a commodity product into a price-sensitive market.

Buy at the right price, and it's like buying an electricity company.

I don't think we've seen the right price yet.

[traineeinvestor]

But no mention of competitor Inghams also ramping up their ops, thats whats done the damage imo.

Ingham actually delivered a very good result (beating consensus forecasts on earnings, dividend, cash flow and debt reduction), were candid about the impact of rising costs when their hedge contracts expire and had a credible plan to address at least some of the impact. ING's management strike me as being very different from TGH's .... so far.

[Balance]

Tegel sell a commodity product into a price-sensitive market.

Buy at the right price, and it's like buying an electricity company.

I don't think we've seen the right price yet.

So what is the right price?

Everything has a right price and as CBL shareholders have found out, it could be zero!

[couta1]

So what is the right price?

Everything has a right price and as CBL shareholders have found out, it could be zero! I wouldn't buy the stock at any price on principal, whilst the CEO receives one of the most outrageous salary's in NZ for the non performing dog Tegal is(Roughly 4 times what the SUM CEO receives by comparison)

[Balance]

I wouldn't buy the stock at any price on principal, whilst the CEO receives one of the most outrageous salary's in NZ for the non performing dog Tegal is(Roughly 4 times what the SUM CEO receives by comparison)

One gets the feeling that he is not there for ALL shareholders?

He just needs to get the job done for the PE shareholder(s) who put him in there - to get the best price for their shares?

The amount of BS generated by the company's CEO and its directors to explain why the company is not performing to IPO forecasts and expectations beg an explanation.

[winner69]

I wouldn't buy the stock at any price on principal, whilst the CEO receives one of the most outrageous salary's in NZ for the non performing dog Tegal is(Roughly 4 times what the SUM CEO receives by comparison)

Last Accounts Summerset CEO total remuneration $1,004,000 and Tegel CEO got $786,000

And Phil’s likely to be less this year (lower STI etc)

Summerset quite open about pay gaps ...like CEO remuneration is 21.7 times the median of all employees being $46,640

[couta1]

Last Accounts Summerset CEO total remuneration $1,004,000 and Tegel CEO got $786,000

And Phil’s likely to be less this year (lower STI etc)

Summerset quite open about pay gaps ...like CEO remuneration is 21.7 times the median of all employees being $46,640 Must have changed then,because in 2016, Phil Hand got 3.6 mill and Julian Cook got just over 800k.

[winner69]

Must have changed then,because in 2016, Phil Hand got 3.6 mill and Julian Cook got just over 800k.

Most of that $3.6m was a bonus for driving the successful IPO ....as Balance says getting the best price for the promoters shares eh

Sorry ..it was really a $2.4m bonus in ‘recognition of past service’

Phil did get 20% less in FY17 than FY16 (excluding that bonus)

Probably earning less this year

[winner69]

Maybe Phil’s paycuts make him less motivated than he was previously

[Balance]

Most of that $3.6m was a bonus for driving the successful IPO ....as Balance says getting the best price for the promoters shares eh

Sorry ..it was really a $2.4m bonus in ‘recognition of past service’

Phil did get 20% less in FY17 than FY16 (excluding that bonus)

Probably earning less this year

Was the $2.4M bonus for enabling the IPO to go ahead at what has now turned out to be fictitious forecasts etc disclosed at the time of the IPO disclosed?

[winner69]

Was the $2.4M bonus for enabling the IPO to go ahead at what has now turned out to be fictitious forecasts etc disclosed at the time of the IPO disclosed?

No no Balance ..... in 'recognition of past service'

[whatsup]

At some point TGH will bounce , what is that "point " ? .80 ?

[Balance]

At some point TGH will bounce , what is that "point " ? .80 ?

Charts - if enough punters believe them, there will be a bounce point.

I learned enough over the decades NEVER to buy into a downtrend.

[Stranger_Danger]

For me, the right price - assuming no change in fundamentals - is about 45 cents.

This is not an exciting fast growth company, but neither is it CBL or Dick Smiths. At the right price, I'd be a buyer.

[Balance]

For me, the right price - assuming no change in fundamentals - is about 45 cents.

This is not an exciting fast growth company, but neither is it CBL or Dick Smiths. At the right price, I'd be a buyer.

No change in fundamentals - fair price is 75c.

It will get to 45c ONLY if there's further downgrades - I would assess as most likely.

Boneless chicken thighs on special at our local Mad Butcher for $6.99 per kg - used to be $11.99 a year ago.

[whatsup]

Charts - if enough punters believe them, there will be a bounce point.

I learned enough over the decades NEVER to buy into a downtrend.

Hmmmmmm ! I said the same (to myself ) with RBD when they were unloved at .50 in 2009 and look where they are today $7 + !!

[Stranger_Danger]

No change in fundamentals - fair price is 75c.

It will get to 45c ONLY if there's further downgrades - I would assess as most likely.

Boneless chicken thighs on special at our local Mad Butcher for $6.99 per kg - used to be $11.99 a year ago.

You're likely right about 75c being a fair price, but I would only buy a company like Tegel at an unfair price. There is nothing here to get excited about and entry price really matters - I don't want to pay a cent for pipe dreams or growth stories, because that isn't what I see for Tegel's future.

If I get an unfair price, sweet. If not, no problem. I strongly suspect the next three years will throw up a few other opportunities that meet my price criteria.

[Beagle]

No change in fundamentals - fair price is 75c.

It will get to 45c ONLY if there's further downgrades - I would assess as most likely.

Boneless chicken thighs on special at our local Mad Butcher for $6.99 per kg - used to be $11.99 a year ago.

No let up in ther chicken war is there !


You're likely right about 75c being a fair price, but I would only buy a company like Tegel at an unfair price. There is nothing here to get excited about and entry price really matters - I don't want to pay a cent for pipe dreams or growth stories, because that isn't what I see for Tegel's future.

If I get an unfair price, sweet. If not, no problem. I strongly suspect the next three years will throw up a few other opportunities that meet my price criteria.

Agree 100%. I'd get interested when boneless skinless chicken breasts are $4.99 a kilo so too speak. Plenty more pain to come yet for poor beleaguered shareholders who were sold a mange and flea ridden mutt at a pedigree show dog price.

[steveb]

I bought a free range chicken at my local Countdown recently,found the brand on it was Macro.So a quick google search later informed me that Macro was an exclusive brand to progressive enterprises,and the chickens were sourced from local New Zealand certified farms.
Now Tegel had this to say in their last update:-
Tegel is pleased to advise that it contracted a further three Free Range farms in January to allow for the continued growth of this market segment. The operational cost of these farms and associated services were not included in the FY18 forecast. These farms will start supplying free range birds for processing in mid-March. These farms will increase Tegel’s free range capacity by 34% in FY19.

Where do they think they are going to sell this increased capacity,clerly not to Progressive!

[Balance]

Agree 100%. I'd get interested when boneless skinless chicken breasts are $4.99 a kilo so too speak. Plenty more pain to come yet for poor beleaguered shareholders who were sold a mange and flea ridden mutt at a pedigree show dog price.

Best analogy so far!

Promised a rooster but delivered a plucked chicken - that's another take!

[Balance]

Hmmmmmm ! I said the same (to myself ) with RBD when they were unloved at .50 in 2009 and look where they are today $7 + !!

I bought RBD too - at 63c no less but sadly, sold out after doubling my money.

Reason for buying RBD was that there was a total management shakeup - Ted van Arkel replaced Bill 'Sleepwalking' Foster, following which Vicki Salmon 'left' after doing a disastrous job (I was at an investment presentation and she turned up half-incoherent after a big night before). The rest as they say is history.

TGH desperately needs a complete shakeup like RBD in 2007 but will it happen? Not when you have the principal shareholder with a different agenda from the other shareholders.

[Arbroath]

I bought RBD too - at 63c no less but sadly, sold out after doubling my money.

Reason for buying RBD was that there was a total management shakeup - Ted van Arkel replaced Bill 'Sleepwalking' Foster, following which Vicki Salmon 'left' after doing a disastrous job (I was at an investment presentation and she turned up half-incoherent after a big night before). The rest as they say is history.

TGH desperately needs a complete shakeup like RBD in 2007 but will it happen? Not when you have the principal shareholder with a different agenda from the other shareholders.

I don't think the principal shareholders agenda is to have the shares languish around 85c so you might see some action this year if the price-war carries on. Surely it is in the principal shareholders interests to change "management direction" if there is no real progress this year.

Failing to meet IPO forecasts etc is in the rear view mirror - they need to sort there strategy out for making $35m+ so they can engineer an exit at $1.20+

[Beagle]

I don't think the principal shareholders agenda is to have the shares languish around 85c so you might see some action this year if the price-war carries on. Surely it is in the principal shareholders interests to change "management direction" if there is no real progress this year.

Failing to meet IPO forecasts etc is in the rear view mirror - they need to sort there strategy out for making $35m+ so they can engineer an exit at $1.20+

You can't make a silk purse out of a sow's ear.

[Arbroath]

You can't make a silk purse out of a sow's ear.

Beagle - THL used to be spoken about like that too when they were below $1. Not saying in any way that TGH is anything like THL but some decent management should be able to restore profitability here from c. $25-27m to $35m and imho that would see the share price back well over $1.00. Lets check back in 12 months and see whats happened...

[winner69]

Beagle - THL used to be spoken about like that too when they were below $1. Not saying in any way that TGH is anything like THL but some decent management should be able to restore profitability here from c. $25-27m to $35m and imho that would see the share price back well over $1.00. Lets check back in 12 months and see whats happened...

Yep not that long ago thl was a flea ridden loss making useless company and so hopeless making a profit seemed impossible.

Unloved and unwanted and a market pariah if there ever was one

But they came right eh

[Beagle]

That might be true if they had some decent management. As noted in the behind the paywall article on NBR management won't even engage with or answer searching questions from arguably N.Z.'s leading business journalists. There are some extremely serious questions around the veracity and integrity of some of the directors assertions in the IPO documentation and since and claims as recently as December 2017 that things were on the improve have proven to be baseless.

I put it to you that this company is a perennial disappointer and on the balance of probabilities is highly likely to continue to disappoint shareholders.

One of the foundations of successful investing is transparency and honesty, things that are in extremely short supply with this company. Rob Campbell wouldn't lower himself to be a director of a company that has played fast and loose with half truth's ever since listing.

I've been beaten around the head with the downtrend stick enough in my life to know not to ever bother fighting an outgoing tide again. The time to buy, (for those that have any confidence left in current management) is when it breaks back up through the 100 day MA trend line, IF that ever happens.

No If's and no but's, hold no mutts, (unless they're the furry variety)

[whatsup]

.83 !! **!

[Arbroath]

I don't disagree Beagle but imagine if the CEO was replaced and one or two quality directors joined the board...just floating it. IF that happened it would likely be the buy signal

[Beagle]

I don't disagree Beagle but imagine if the CEO was replaced and one or two quality directors joined the board...just floating it. IF that happened it would likely be the buy signal

Agree with you on that point. Bottom line is people need protein and it doesn't get any cheaper than chicken. A thorough cleansing of the board and management is required in my opinion.

[Balance]

That might be true if they had some decent management. As noted in the behind the paywall article on NBR management won't even engage with or answer searching questions from arguably N.Z.'s leading business journalists. There are some extremely serious questions around the veracity and integrity of some of the directors assertions in the IPO documentation and since and claims as recently as December 2017 that things were on the improve have proven to be baseless.



Either they have no idea or they are liars - both are equally destructive to any company, but especially with a company which produces a lot of shxt along with its products.

[winner69]

I note that Chairman Jackson still shows Pumpkin Patch on his profile

And as shareholders are not that important they havent even got a photo of Director Bridget on their investor website.

[Beagle]

Either they have no idea or they are liars - both are equally destructive to any company, but especially with a company which produces a lot of shxt along with its products.

At the very least I think they have proven beyond any doubt that they have very limited forward visibility in their own business. Directors could do themselves a huge favour by ceasing to give any further forward guidance at any stage in the future as they've proven its basically meaningless. They've probably done just enough to avoid any litigation in terms of assertions made in the IPO documentation...which was probably their goal all along. Tough getting satisfaction through the courts as Feltex shareholders found out.

Pile the bright red lipstick on the old and tired pig and dress this old mutton up as lamb and the poor IPO investors were like lambs to the slaughter.

[Balance]

No no Balance ..... in 'recognition of past service'

Update :

Tegel IPO : $22.5 million to $25.3 million will cover IPO costs, including an $8 million bonus for senior management.

No wonder the senior managers were talking the prospects of Tegel like chooks could fly.

The IPO was very well-timed indeed and the PE interests got their get out of free jail card with the proceeds used to pay bank debt and their debt.

[winner69]

Update :

Tegel IPO : $22.5 million to $25.3 million will cover IPO costs, including an $8 million bonus for senior management.

No wonder the senior managers were talking the prospects of Tegel like chooks could fly.

The IPO was very well-timed indeed and the PE interests got their get out of free jail card with the proceeds used to pay bank debt and their debt.

So the new shareholders fronted up with the cash for these bonuses ..... generous of them

[JeremyALD]

Kudos to Percy for getting out at $1.30 after the first sign of trouble. Sage advice that was!

[winner69]

Kudos to Percy for getting out at $1.30 after the first sign of trouble. Sage advice that was!

Chartwise the time to bail was mid Sept 2016 when the price fell from 170 odd to 150 odd.

That seems when many on here bought on (because it was cheap and broker analysts were still pushing it)

I got out in the high 170 shortly after that announcement how they were going to take Australia by storm. The big shareholders needed to get the shareprice up to 190 odd so they could quit some .... tried hard but failed eh

[Baa_Baa]

Chartwise the time to bail was mid Sept 2016 when the price fell from 170 odd to 150 odd.

That seems when many on here bought on (because it was cheap and broker analysts were still pushing it)

I got out in the high 170 shortly after that announcement how they were going to take Australia by storm. The big shareholders needed to get the shareprice up to 190 odd so they could quit some .... tried hard but failed eh

Well done. What a sham eh, no wonder so many here slag the PE investors and their tactical games to fleece the sheeple ... despicable but all too often repeated.

[kiora]

UDC anyone? :)

[percy]

UDC anyone? :)

Yes please.

[Balance]

http://investors.inghams.com.au/investor-Centre/?page=asx-announcements

Presentation by Inghams yesterday - big contrast between Inghams and Tegel.

Inghams is growing profits and market has confidence to take another 55m shares from TPG Capital.

Outlook for NZ as far as Inghams is concerned is for competitive conditions to continue.

75 cents is where TGH is headed as a first stop.

[Beagle]

I will be fascinating to get some more colour on exactly what those $8-10m in extraordinary costs are, assuming they fall within that range.
Given the disparity between the performance of Inghams and Tegal anyone thinking that these are the full and final might want to think again. I see further trouble coming in FY19 for this and also big restructuring costs in MPG as a result of their comprehensive external review.

[hardt]

3 reaffirmed guidance announcements since listing that were not exactly accurate... 4 downgrades, a bit opportunism hiding behind a half week delay for the last downgrade.

No mention of the dividend being affected, I am sure that it will be...

The worse a situation becomes the less it takes to turn it around and the bigger the upside should you decide to take the risk on TGH...

Could be worth a little punt if it heads to low 70s

[GTM 3442]

So what is the right price?

Everything has a right price and as CBL shareholders have found out, it could be zero!

Mornin' Balance.

It would have to be in the range 55-65cps until the Augean Stables are once more sparkling and spotless. After that, whatever it has to be to provide a stable 7% dividend yield.

[Valuegrowth]

It seems not all poultry companies perform in a similar manner. Strong competitors and fast growers can dominate in this sector as well. Best companies in this sector are those who can declare dividends, maintain growth, maintain sound financial position, maintain strong market position, maintain productivity and efficiency and application of viable strategy according to the market situation.

Poultry Traders in Europe and the Middle East have been substituting Brazilian poultry with other supplies. In the meantime China’s poultry market performance has improved greatly in recent months. White feathered broiler prices 40% higher than the same period last year.

Can NZ capture some of Brazil’s lost market share in global trade like East Europe and Thailand?

Can NZ find some market share in Asia which includes China as well?

Can Tegel become strong competitor and get at least some stable market share?

How about their brand name?

[Beagle]

Update :

Tegel IPO : $22.5 million to $25.3 million will cover IPO costs, including an $8 million bonus for senior management.

No wonder the senior managers were talking the prospects of Tegel like chooks could fly.

The IPO was very well-timed indeed and the PE interests got their get out of free jail card with the proceeds used to pay bank debt and their debt.

You'd be forgiven for drawing the conclusion that shareholders were betrayed for 30 pieces of silver...(plus inflation for the last ~ 2000 years). Why were senior management granted such massive bonus's because of an IPO float ? Surely not for telling half truth's and application of vast quantities of high gloss red lipstick to a very ordinary looking mature and bloated pig ?

To add insult to injury all shareholders have heard since then is one promise after another all that have turned out to be "inaccurate" putting it extremely kindly.
I'm going to go out on a limb here and suggest that I think this company with its current directors and management team is un-investable regardless of price, what do others think ?

Why, because how can you ever trust the integrity of the management and directors after the IPO betrayal ? At least one director has seen the error of his ways and wants nothing more to do with this ongoing fiasco. Promises that things were on the up and up as recently as December 2017 have come to nothing.
How long before heads need to roll at management and board level ?

Pray tell, what is the point of pumping out ever increasing quantities of chicken if you then have to discount it down to rock bottom to shift it ? Produce 10-20% less and sell if with proper margins and make more money for goodness sake...

[Stranger_Danger]

I wouldn't go as far as saying it is un-investable under the present management team, but, a CEO change is one of the catalysts that may encourage me into the stock.

The truth is, the current CEO had a large financial incentive to get a float away, and in putting him there in the first place, presumably these skills were considered useful.

In future, a different skill set is required, and the potential remuneration is lower, and I could totally understand if the current CEO was less motivated with the "big payday" now in the rear view mirror.

P.S Has there really been a betrayal? From memory, the IPO costs (incl management bonuses) were laid out in advance, and as for the profit forecasts, come on, the thing had two private equity owners in a row, surely nobody truly believed the forecasts. Looks like a pretty standard private equity float to me - the real question is what happens next, because there *is* a real business hiding in amongst this, in my opinion.

[Valuegrowth]

Their competitors are doing a better Job. When they will become competitive?

It seems Inghams have captured market share in New Zealand and Australia through great product development. Their stocks have consistently traded above their issue price. Private equity companyTPG's sale of 55 million Ingham shares this month was easily absorbed by the market.

If I am right, in February their New Plymouth processing plant was affected by ex-cyclone Gita due to water supply issues and private equity company Affinity still retaining a 45 per cent stake in Tegel.It is interesting to see there is a private equity involvement in the poultry sector in Australasia.

[Beagle]

P.S Has there really been a betrayal? From memory, the IPO costs (incl management bonuses) were laid out in advance, and as for the profit forecasts, come on, the thing had two private equity owners in a row, surely nobody truly believed the forecasts. Looks like a pretty standard private equity float to me - the real question is what happens next, because there *is* a real business hiding in amongst this, in my opinion.

You, I and many others on here know full well to take all PE forecasts with a grain of salt but many gullible Joe average investors don't.
I think their entire track record since listing including every single one of their forecasts is shameful so we are not just talking about the IPO forecast.
Directors should simply stop giving forward guidance. They obviously have no forward visibility whatsoever. Frankly you'd be better off watching retail chicken prices and the degree of discounting over time to get an idea on how they're tracking.

[Valuegrowth]

In this sector strong competitors that include strong balance sheet firms could dominate in the coming years. First and foremost Tegel have to consolidate their business and then should become a strong competitor. I also expect some acquisitions to take place globally in this sector as well.

[Balance]

Drumsticks on special at $2.99 kg at Mad Butcher.

Likewise thighs at $3.49 kg.

Going to get worse before things get better for Tegel - plenty of production coming onstream but demand is simply not growing at same pace.

Something has to give and so far it is price of poultry.

[traineeinvestor]

How long before we see some industry consolidation? Australia has just seen a supplier with 2-3% market share being placed in liquidation and Australia's market is not nearly as oversupplied as NZ's.

[Pavan Sharma]

Down at 82 cents, it cant get dragged down any lower its offering a decent dividend while you wiat for a recovery. Hopefully there's some uplift in chicken prices (For Tegel) once they start exporting more.

[Valuegrowth]

Will New Zealand consumers’ per capita consumption of chicken meat continues to increase similar to Asia, Africa and South America?
Will there be further expansion into new export markets?
Will there be improved margins through productivity gains?
How about consumer spending pattern?
Will chicken become alternative proteins as red meat prices are high and less healthy when compare with poultry?
Can they maintain reasonably strong balance sheet while becoming competitive player?

Thanks.

[JeremyALD]

Personally I think Tegel is pretty rubbish, but the SP does seem to be decent value. It's a massive discount off its IPO price and the dividend yield is pretty good. Chicken prices are at all time lows and they are still making 30m NPAT (less 'one off costs') . Chicken is a stable good and Tegel has solid market share in NZ. I see it as an OK play at this price, but they do have a habit of continually disappointing.....