Tegel IPO

[NZSilver]

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11540792

[winner69]

You'd be in for this one wouldn't you nzsilver?

[NZSilver]

Chicken industry if fully intergrated Tegel owns/controls supply to the supermarket. Also NZ has the fastest growing chickens in the world, well that's what I was told at university, as there are not many diseases therefore vaccination requirements are minimal therefore growths checks are minimal. Amount of chicken eaten per capita has also been increasing at a steady rate. I would look at this IPO once financials come out - how about you winner?

[kiwidollabill]

Interested, the PE firm should do quite well out of this considering they've sold all of the plants/properties to other parties and now lease them back. Sadly cant find any price details on this. Previous CEO resigned when Affinity Equity took over citing "differences in company direction"

[RGR367]

...................., as there are not many diseases therefore vaccination requirements are minimal therefore growths checks are minimal. Amount of chicken eaten per capita has also been increasing at a steady rate. I would look at this IPO once financials come out - how about you winner?

Not sure about here but based on experience back home, chicken is the most vaccinated grown meat. A simple malice akin to colds would wipe the entire poultry in 2 hours. And contract chicken growers make a killing every 8 weeks (for broilers) when demand is really high. It could even be shortened to 5 weeks growing.
I would be keen to have a look.

disc: handled the computerized system on contract growers for chicken of a really big food company somewhere in southeast asia.

[kiwidollabill]

Not sure about here but based on experience back home, chicken is the most vaccinated grown meat. A simple malice akin to colds would wipe the entire poultry in 2 hours. And contract chicken growers make a killing every 8 weeks (for broilers) when demand is really high. It could even be shortened to 5 weeks growing.
I would be keen to have a look.

disc: handled the computerized system on contract growers for chicken of a really big food company somewhere in southeast asia.

Yep, the Free-Range hens get greater volumes of shots too.

FCR is low for NZ birds

NZ customer demand for poultry growing at 4-5% year

[kiwidollabill]

A bit dated but still good.

http://www.coriolisresearch.com/pdfs/coriolis_iFAB_2013_meat.pdf

[Toasty]

And contract chicken growers make a killing every 8 weeks

I wish I could make a killing every 8 weeks....

[Rep]

Chicken industry if fully intergrated Tegel owns/controls supply to the supermarket. Also NZ has the fastest growing chickens in the world, well that's what I was told at university, as there are not many diseases therefore vaccination requirements are minimal therefore growths checks are minimal. Amount of chicken eaten per capita has also been increasing at a steady rate. I would look at this IPO once financials come out - how about you winner?

Tegel controls supply to supermarkets? I think you have forgotten about Inghams.

Also after the two key accounts, Progressive and Foodstuffs - there is also a very large single customer who primarily sources from Inghams apart from some supply in the South Island...

[kiwidollabill]

Tegel controls supply to supermarkets? I think you have forgotten about Inghams.

Also after the two key accounts, Progressive and Foodstuffs - there is also a very large single customer who primarily sources from Inghams apart from some supply in the South Island...

Oh Oh Oh I know, pick me....

[Beagle]

Will be priced within an inch of fair value...modest growth and low margins :sleep:

[LAC]

Couple of franchised restaurants/fast foods have long supply contracts with Tegal. As well as supplying Halal chicken to certain restaurants

[kiwidollabill]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11542113&ref=nzhbiz_tw

[Rep]

Chicken is bloody expensive in this country. I am in on anything that gets away with such blatant price gouging of consumers :-)

As an example, A KFC Ultimate meal is $9.95 in Australia, and $14.50 in New Zealand - a 50% difference. (Whereas Burger King is pretty much the same price in both places).

Making $11m on half a billion dollars of revenue doesn't seem like blatant price gouging although being lumped with a highly geared balance sheet and $35m of interest isn't helpful.

Literally, shiploads of chicken feed in NZ is imported whereas there is a lot of grain grown in Australia and if they have wet conditions prior to harvest, this can result in a lot of wheat ending up in feed rather than as baking grade. NZ is also up against the Chinese domestic market in terms of their needs for feeding the chickens for their consumption - it's staggering to understand how many chickens they consume daily now that the growing middle class is pursuing protein rather than carbs for their dietary requirements.

[kiwidollabill]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11556861&ref=nzhbiz_tw

[kiwidollabill]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11602741

PE of 17+ ,value left in this...?

[trader_jackson]

Although I don't know alot about (nor plan to research to far into) Tegeal... I will not be touching this one (anyone else smelling Hirepool 2?)

Seems like an extremely low net profit margin, with a 'medium' PE given what I expect will be relatively low growth (if any), and I haven't even begun considering other balance sheet factors, the factors that ultimately brought down DSE (like debt).

Not sure if there is export opportunities that could 'boost' growth, but I would be cautious. For me, a good dividend yield, that the institutions will like in this seemingly ever decreasing interest rate environment, is the only thing that will 'get it away'... and in my view that is a dangerous thing to be 'buying the yield, not the company'

[percy]

Has any one compared this with Pro Ten on [NZ] Unlisted market.
Market cap $118,5mil ,PE 15,6 and dividend yield of 4.6%.
ProTen grow chickens in Australia.
I have stayed away as I think it is a fowl industry to be in.

[bohemian]

You wouldn't want your chickens to come home to roost if the ipo fails.

[Hectorplains]

Over the ditch, TPG sunk $900m into Inghams in 2103 and are apparently looking for an out... rumours are it'll IPO this year too. I guess the irony is that they'll be cheering the competition on for a positive listing.

[kiwidollabill]

Hmmm, this will be interesting (scary?) when the final numbers are out.

Found this http://www.stuff.co.nz/sunday-star-times/3778614/133m-sale-flags-moves-at-Tegel from the previous sale

Revenue 2009/2015 $464m$563m = 3.25% CARG
Net Earnings 2009 $29.5m
EIT 2015 $45.5

Plus I think PEP sold off all the property assets and are now on a lease back.

Looking like a dog.....

[Rep]

Over the ditch, TPG sunk $900m into Inghams in 2103 and are apparently looking for an out... rumours are it'll IPO this year too. I guess the irony is that they'll be cheering the competition on for a positive listing.

Bob was no fool neither were his brother Jack or father Walter - building a personal fortune worth a billion. He sold his bloodstock business in 2008 just before the GFC and Inghams is one of the largest stock feed businesses in Oz so vertically integrated - built partnerships with KFC and McDonalds (McNugget supplier).

Doubt Bob would have left much meat on the bones for the TPG vultures.

[Sideshow Bob]

Has any one compared this with Pro Ten on [NZ] Unlisted market.
Market cap $118,5mil ,PE 15,6 and dividend yield of 4.6%.
ProTen grow chickens in Australia.
I have stayed away as I think it is a fowl industry to be in.

Proten's share price has increased by 50% in te last year......not bad for a fowl industry.

http://www.unlisted.co.nz/uPublic/unlisted.mt_public.securityDetail?p_prtp_id=139

[kiwidollabill]

Hmmm, this will be interesting (scary?) when the final numbers are out.

Found this http://www.stuff.co.nz/sunday-star-times/3778614/133m-sale-flags-moves-at-Tegel from the previous sale

Revenue 2009/2015 $464m$563m = 3.25% CARG
Net Earnings 2009 $29.5m
EIT 2015 $45.5

Plus I think PEP sold off all the property assets and are now on a lease back.

Looking like a dog.....

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11605888&ref=nzhbiz_tw

Now calling 2016/2017 EBITA $84M,

[Joshuatree]

Ive noticed how cheap boneless skinless chicken has been this summer.

[LAC]

This is the next Dick Smith
You heard it here first

[Sideshow Bob]

Every dog (chicken) has its price but would have to be clucking cheap to get any interest from me!

[kiwidollabill]

Just dug this out, I struggle to decipher all of it, but the bits I can understand dont make good reading.

https://www.business.govt.nz/companies/app/service/services/documents/6941E556429254528DE4D132837E0895

[kiwidollabill]

Ive noticed how cheap boneless skinless chicken has been this summer.

Super competitive sector at the moment.

They only do ~30% of the national free-range sector (only area with growth) and are struggling to maintain this.

[winner69]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11605888&ref=nzhbiz_tw

Now calling 2016/2017 EBITA $84M,

April 2015 accounts has EBITDA at $30m

Must have and expecting a few good years

[NZSilver]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11615455

[winner69]

Dividend hunters will flock to this big tine - 'above market' yields

And 20% capital gain by 2017 almost assured as Affinity will want to quit what they keep as soon as decently possible

Cats love chicken - i can see Birman licking his chops (or whiskers) at the prospects ahead

[ratkin]

I wont be investing on ethical grounds. Anything good for profit is likely to be bad for chickens.
Some of the stories i have heard regarding the Christchurch Tegal factory were enough to turn me off cheap chicken for life.

Dont mind investing in Gambling, Uranium or most other "ethically challenged " industries, but draw the line at poultry death camps

[warthog]

I wont be investing on ethical grounds. Anything good for profit is likely to be bad for chickens.
Some of the stories i have heard regarding the Christchurch Tegal factory were enough to turn me off cheap chicken for life.

Dont mind investing in Gambling, Uranium or most other "ethically challenged " industries, but draw the line at poultry death camps

Excellent to see investing on some sort of ethical basis, Ratty.

The hog takes a similar approach. For example, the hog won't invest in HBY unless they cut one of their services subsidiaries loose that works with fracking. Pity, as the rest of HBY isn't too bad.

SKY is verboten as gambling destroys people, families and communities.

RBD off the radar as they are peddling junk food which is in many ways no different to cigarettes, etc.

The above just hog thoughts, and detailed here not to suggest to others that other peoples' ethics should accord with the hogs', but rather that an ethical approach is worthy of consideration.

[Bjauck]

Excellent to see investing on some sort of ethical basis, Ratty.

The hog takes a similar approach. For example, the hog won't invest in HBY unless they cut one of their services subsidiaries loose that works with fracking. Pity, as the rest of HBY isn't too bad.

SKY is verboten as gambling destroys people, families and communities.

RBD off the radar as they are peddling junk food which is in many ways no different to cigarettes, etc.

The above just hog thoughts, and detailed here not to suggest to others that other peoples' ethics should accord with the hogs', but rather that an ethical approach is worthy of consideration.

Where to draw the line with legitimate business is up to investors' personal ethics. Of course there are vegetarians who would not countenance any meat producing industry no matter how well looked after the slaughtered animals were prior to ultimate slaughter. As far as health is concerned then even a tin of baked beans has big dollop of added sugar. Then there is the fat and oil in the diets of sedentary people...so do we need a fat tax, a sugar tax as well as a tobacco tax and carbon tax? I have doubts about swimwear makers as they encourage people to lay about on the beach half undressed, soaking up the bright rays. Should they pay a UV tax when they buy the swimwear - likewise a UV tax on paddling pools and outdoor swimming pools. SKY TV...is a tax is needed on the Kids channels as they facilitate Kiwi kids to blob out in front of the box eating high calorie snacks instead of partaking of physical activity. There are lots of things to consider.

[kizame]

Where to draw the line with legitimate business is up to investors' personal ethics. Of course there are vegetarians who would not countenance any meat producing industry no matter how well looked after the slaughtered animals were prior to ultimate slaughter. As far as health is concerned then even a tin of baked beans has big dollop of added sugar. Then there is the fat and oil in the diets of sedentary people...so do we need a fat tax, a sugar tax as well as a tobacco tax and carbon tax? I have doubts about swimwear makers as they encourage people to lay about on the beach half undressed, soaking up the bright rays. Should they pay a UV tax when they buy the swimwear - likewise a UV tax on paddling pools and outdoor swimming pools. SKY TV...is a tax is needed on the Kids channels as they facilitate Kiwi kids to blob out in front of the box eating high calorie snacks instead of partaking of physical activity. There are lots of things to consider.

Now I'm really discouraged in our market,that leaves ATM out in the cold too cos those farmers are polluting our rivers and oceans.
I think you are going to have ethical issues with every company on our market if you go into their industry too deeply.
However I do understand the tegel issue with the chickens (dumb as they are ).
Down the south island in Jan and did notice a free range chicken farm,and how refreshing it was to see.

[percy]

I regularly eat their chicken, and love their turkey at Xmas.
I also pig out on pork,enjoy lamb ,but don't get enough steak.

[kelfy]

Agree with you Ratkin.

More profit they make, more killing they did.

[trader_jackson]

Ethical issues aside... I hope Tegel does well (as with every New Zealand listed company) but unfortunately I get the feel this is a Feltex/Dick Smith in the making...

Good luck to anyone buying

[airedale]

This is the next Dick Smith

Or the next Feltex.

[janner]

You truly have the heart of a Banker perc..


I regularly eat their chicken, and love their turkey at Xmas.
I also pig out on pork,enjoy lamb ,but don't get enough steak.

[Hectorplains]

Anyone a client of Chris Lee and able to offer a precis of their opinion on this listing?

[percy]

Decide to put my hand up for the Tegel IPO today.
Had to give Craigs a $ amount.

[Hectorplains]

Decide to put my hand up for the Tegel IPO today.
Had to give Craigs a $ amount.

Yeah, me too. I have reservations but the yield and having Affinity tied in swayed me.

[winner69]

Markets in a good mood so demand will be high i reckon

Don’t like this not knowing what price will be, esp as indicative range is pretty wide.

But has Mr Munger said recently the stock market is just a casino for punters to get rich quickly ...so les put a few bucks on Tegel and hope.

Mr Mungers thoughts -


“There’s way, way too much of that in America. And too much of the new wealth has gone to people who either own a casino or are playing in a casino. And I don’t think the exaltation of that group has been good for life generally, and I am to some extent a member of that group.

“I’m always afraid I’ll be a terrible example for the youth who want to make a lot of money with and not do much for anybody else and who just want to be shrewd about buying little pieces of paper. Even if you do that very honestly, I don’t consider it much of a life. Just being shrewd about buying little pieces of paper, shrewder than other people, is not an adequate life. It’s not a good example for other people.”

[babymonster]

yes, agree, seems to me the demand is high.. so the ipo price will be high... or overvalued???

[percy]

Markets in a good mood so demand will be high i reckon

Don’t like this not knowing what price will be, esp as indicative range is pretty wide.

But has Mr Munger said recently the stock market is just a casino for punters to get rich quickly ...so les put a few bucks on Tegel and hope.

Mr Mungers thoughts -


“There’s way, way too much of that in America. And too much of the new wealth has gone to people who either own a casino or are playing in a casino. And I don’t think the exaltation of that group has been good for life generally, and I am to some extent a member of that group.

“I’m always afraid I’ll be a terrible example for the youth who want to make a lot of money with and not do much for anybody else and who just want to be shrewd about buying little pieces of paper. Even if you do that very honestly, I don’t consider it much of a life. Just being shrewd about buying little pieces of paper, shrewder than other people, is not an adequate life. It’s not a good example for other people.”

I think Mr Munger makes a very good point.
Maybe it is one of the reasons I still enjoy my bookselling business.You have to work very hard to make a very modest profit.
Makes me appreciate the more than modest profits I make buying "little bits of paper, " although I very much realise that those "little bits of paper," are part ownership in some very well run businesses.

[babymonster]

just talked to my broker, i have to confirm my investment before know what the ipo price is and i might not get that if the ipo was oversubscribed... Gee.. is it really that much demand? i don't think 2.55 is a fair price for this ipo.. Errr. too hard... a bit too risky ..

[Beagle]

just talked to my broker, i have to confirm my investment before know what the ipo price is and i might not get that if the ipo was oversubscribed... Gee.. is it really that much demand? i don't think 2.55 is a fair price for this ipo.. Errr. too hard... a bit too risky ..

Taking your comment at face value I find this sort of thing all back to front and ethically unacceptable. Why should investors be required to place a firm order without knowing the price ? Even if they place a firm order it might not eventuate. This way of floating a new company really sucks compared to how it used to be done. Its all geared to maximise the price for the promoters.

Interesting anecdotal story. My daughters boyfriend, I'll call him Ken to protect his identity used to drive trucks for Tegal. Very tough crowd to work for and they REALLY thrash their drivers. I was in the hospital the day our daughter gave birth to her daughter and Ken was there. It was a difficult birth and our daughter was absolutely knackered and Ken had been previously told he was entitled to 14 days paternity leave which I thought was very reasonable of them. But then what would you know, his mobile phone goes and the area controller was doing a really big emotional job on him saying that they had so many drivers away sick that they desperately needed him back that day ! It was the second time he'd pestered him that same day ! Ken phoned his father who is a line haul driver for Toll to get his advice. His father apparently told him that Tegal have a real reputation for working their drivers into a state of burnout and he told him to tell Tegal, your driver problem isn't my problem.

Things between Ken and the area controller went from bad to worse when he did come back a few days later, (well before he should have), with the paternity leave entitlement. Anyway that's the story I got. If that's how they treat their drivers I wonder how they treat their chickens ?

In terms of a new float generally, tell me the price and I'll tell you if I want some. If its any other scheme of arrangement the promoters can go fish as far as I'm concerned.

[Leftfield]

Taking your comment at face value I find this sort of thing all back to front and ethically unacceptable. Why should investors be required to place a firm order without knowing the price ? Even if they place a firm order it might not eventuate. This way of floating a new company really sucks compared to how it used to be done. Its all geared to maximise the price for the promoters.... In terms of a new float generally, tell me the price and I'll tell you if I want some.

Totally agree, I'm happy to sit on the side lines with this one. Good luck to those who buy in......

[bull....]

some key risks like banning imported chicken

7979

also supply chain interruption

7981

are things im looking into but I like the fact technology has improved

7982

quicker production equals more profit as long as we don't get problems like in the first picture.

[GTM 3442]

Regelation fits quite nicely into one of my investment themes, but the "book build" pricing is a real turn-off.

So I will be doing something on market later on in the piece.

[RGR367]

Inasmuch as I've very little left on the one that is deep frying their chickens (RBD), I might as well try this one killing their chickens for a change and see how it goes within 2 years. Just emailed ASB for my target allocation and hope the demand is not so great that the indicative high price is reached. GL to us all.

[tim23]

Not for me this one, don't like the huge price range either.

[trader_jackson]

Not for me this one, don't like the huge price range either.

I have heard that there has been a "dramatic increase" in interest in the past fortnight or so, I also hear the price is expected to be between $1.90 and $2.10...

[percy]

I have heard that there has been a "dramatic increase" in interest in the past fortnight or so, I also hear the price is expected to be between $1.90 and $2.10...

Was starting to think I would get the full $ amount I put my hand up for.
Will be interesting to see the level of scaling.
May know Monday or Tuesday.

[janner]

Not for me this one, don't like the huge price range either.

Agree..

Also agree with Roger..

Not my style.
Do not wish to buy a pig in a poke..

There are many more opportunities out there.

[percy]

Agree..

Also agree with Roger..

Not my style.
Do not wish to buy a pig in a poke..

There are many more opportunities out there.

"Pig poke."???????????
More like chicken on the dinner plate.!
Another wonder opportunity for us fowl investors.!

[janner]

"Pig poke."???????????
More like chicken on the dinner plate.!
Another wonder opportunity for us fowl investors.!

So long as it does not turn foul..

I am sure you know where I am coming from perc..

To many unanswered and unanswerable questions..

[janner]

Do not think that it will be any good for the Stags either.. ..

So many trying to get in for just that reason.. IMHO..

[percy]

So long as it does not turn foul..

I am sure you know where I am coming from perc..

To many unanswered and unanswerable questions..

Top NZ "brand" food producer.
Strong balance sheet.
Ratios are modest,and dividend yield is attractive.
Chicken consumption is growing.
Room for export growth.
Stable earner for long term investors.

[janner]

op NZ "brand" food producer.
Strong balance sheet.
Ratios are modest,and dividend yield is attractive.
Chicken consumption is growing.
Room for export growth.
Stable earner for long term investors.

Room for export growth. ???????????

We import food stocks..

The exporting food stock Countries have an immediate advantage.

Internal growth may come from the increasing. Butter Chicken Market..

But. " They " usually want everything for nothing..

Again... Not for me perc !!

[trader_jackson]

I don't mean to get all excited or go on the offensive, but while we're at it, I thought we could take a look at Dick Smith's positives (at IPO):

One of the top retailers in Australasia.
Strong balance sheet.
Ratios are modest,and dividend yield is attractive.
Retail sales are growing.
Room for off shore growth.
Stable earner for long term investors.

I realize some of the things above could be 'hotly' debated, but I think my point is made... as always DYOR.

[janner]

I don't mean to get all excited or go on the offensive, but while we're at it, I thought we could take a look at Dick Smith's positives (at IPO):

One of the top retailers in Australasia.
Strong balance sheet.
Ratios are modest,and dividend yield is attractive.
Retail sales are growing.
Room for off shore growth.
Stable earner for long term investors.

I realize some of the things above could be 'hotly' debated, but I think my point is made... as always DYOR.

Absolutely...

Buyer beware !!!

DYOR...

Of course some one will make MONEY...

Is it going to be you ???

[percy]

I don't mean to get all excited or go on the offensive, but while we're at it, I thought we could take a look at Dick Smith's positives (at IPO):

One of the top retailers in Australasia.
Strong balance sheet.
Ratios are modest,and dividend yield is attractive.
Retail sales are growing.
Room for off shore growth.
Stable earner for long term investors.

I realize some of the things above could be 'hotly' debated, but I think my point is made... as always DYOR.

The record shows;
Dick Smith IPO -DSE thread.
page 1 post #3.17-11-2013.
Percy.........Scares me.!!!!!!!!!!!
Comparing a second rate retailer to a No1 market brand food producer, certainly would be "hotly" debated.
Your point is lost on me.!

[kiwidollabill]

There is a difference in being the largest compared to the best. These guys are getting their arses handed to them in the Free Range market- unable to respond to pricing pressure and have overcapacity in supply. They are price takers in the majority of their product range

[winner69]

The record shows;
Dick Smith IPO -DSE thread.
page 1 post #3.17-11-2013.
Percy.........Scares me.!!!!!!!!!!!
Comparing a second rate retailer to a No1 market brand food producer, certainly would be "hotly" debated.
Your point is lost on me.!

I think t_j was just using words the promoters of both used to say how good they were

[winner69]

A bit of cognitive dissonance being demonstrated by some on this thread?

[winner69]

There is a difference in being the largest compared to the best. These guys are getting their arses handed to them in the Free Range market- unable to respond to pricing pressure and have overcapacity in supply. They are price takers in the majority of their product range

In the documents they discuss price/mix several times .............often tagged with hope/hopefully improve

[winner69]

Good sign - 'iconic' only appears 4 times in the documents

That'll add a few cents to the final share price

Feltex still hold the record for the use of iconic - pumpkin patch pretty close 2nd

[trader_jackson]

Good sign - 'iconic' only appears 4 times in the documents

That'll add a few cents to the final share price

Feltex still hold the record for the use of iconic - pumpkin patch pretty close 2nd

Dick smith would definitely be in the "top 5" for use of 'iconic' I'm sure... ;)

[trader_jackson]

Not sure if it has already been shared, but for those who are following:

"The brokers said more than $NZ200 million of retail bids had been received"

Read more: http://www.afr.com/street-talk/tegel-brokers-message-to-fund-managers-20160415-go7eh5#ixzz463iKTZZ3

[Joshuatree]

Ok, so either all those that were dissing Tegel were actually putting in big orders or they just weren't convincing enough:).

[RGR367]

GOTCHA!! Tegel priced at $1.55 http://www.nbr.co.nz/article/tegal-shares-will-be-priced-bottom-range-ck-p-187832

[King1212]

GOTCHA!! Tegel priced at $1.55 http://www.nbr.co.nz/article/tegal-shares-will-be-priced-bottom-range-ck-p-187832


Paid content....

[Hectorplains]

GOTCHA!! Tegel priced at $1.55 http://www.nbr.co.nz/article/tegal-shares-will-be-priced-bottom-range-ck-p-187832

Full article here: http://www.theaustralian.com.au/business/dataroom/tegal-foods-gets-to-list-on-stockmarket-at-nz155/news-story/e7f3afc7219903eda7696e9c1afaa1fd - if you don't subscribe to NBR.

[King1212]

Full article here: http://www.theaustralian.com.au/business/dataroom/tegal-foods-gets-to-list-on-stockmarket-at-nz155/news-story/e7f3afc7219903eda7696e9c1afaa1fd - if you don't subscribe to NBR.

paid subscription...could u please copy and paste? Thanks

[Hectorplains]

paid subscription...could u please copy and paste? Thanks

One of New Zealand’s most familiar consumer brands, the chicken producer Tegel Foods, will list on the stockmarket next month at a price of $NZ1.55 per share after investors supported the deal at the lowest end of the valuation range.

This newspaper’s BusinessNow blog revealed the price on Tuesday.
As this column also reported, Affinity Equity Partners, an Asia-focused private equity firm and the majority owner of Tegel, was faced with two options after a $NZ299 million ($270m) bookbuild concluded yesterday morning: take the floor price or book a higher profit on its sell-down with the slightly higher valuation of $NZ1.75, or 8.2 times forward earnings. At that level a number of top investors declared they would walk.
After a lengthy period of deliberation with the IPO’s joint lead managers, Deutsche and Goldman Sachs, Affinity plumped for the cheapest price, in an effort to avert a poor performance post-listing, as well as lock in a high-quality *register dominated by long-term investors. As a result, a number of fund managers suffered heavy scale-backs on their allocations, paving the way for a strong debut on the stock exchange.
Yet while Affinity spent hours pondering the final deal price, fund managers’ reluctance to climb far above the floor price was evident weeks ago. As this column has stressed, Tegel’s comparatively weak growth prospects always presented the greatest hurdle to a lofty valuation, with the deal’s appeal centering principally on the company’s high-yield, iconic brand and respected management team.
Tegel’s lengthy ownership by private equity firms — Affinity purchased the poultry business for $463m in 2011 from Pacific Equity Partners, which had held it since 2005 — also helped stifle appetite for an expensive valuation.
In the past few years shares in a string of companies floated by buyout firms have headed south, denting enthusiasm. Dick Smith’s spectacular collapse in February ranks among the worst offenders.
Nonetheless, Tegel’s solid earn*ings, delivered chiefly from its domestic market, where it ranks as the country’s leading poultry producer, garnered support at the low end of the 8-9 times forward earnings valuation range. Retail investors also flocked to the deal, offering over $NZ200m in binding commitments. Tegel will list on the stock exchange with a market capitalisation of $NZ552m.

[percy]

Hectorplains;
Thank you for posting the full article.
Will be interesting to see how much I will be scaled.
Applied for equal amounts for the wife and me via Craigs.

[RGR367]

Hectorplains;
Thank you for posting the full article.
Will be interesting to see how much I will be scaled.
Applied for equal amounts for the wife and me via Craigs.

The news is on the NZ Herald now.
Percy, so you're probably one of those that the company said are “long-term, high quality investors” whom they wanted to keep :)
I'm just happy that the amount I allocated is right to the cents. Giving this a 2 year horizon. GL to us all again.

[winner69]

Cheap as

Another Comvita and Scales in the making i reckon

[percy]

It appears there is going to be massive scaling.

[sb9]

Another Comvita and Scales in the making i reckon

Great line for a TUI ad....

[winner69]

Great line for a TUI ad....

Time will tell mate ...........

[kelfy]

Sound too good mate. Let see how it goes

[whatsup]

What is the code?

[trader_jackson]

$1.55 ... we all know why that was... people did not want to pay a cent premium for this... speaks a million word of what the market thinks of the company... could be good for punters wanting to make a quick buck as I would imagine some will simply buy in for the dividend yield, even if the share price went nowhere.

Good luck to the holders, certainly shaping up to be a bit more interesting than I thought!

[King1212]

$1.55 ... we all know why that was... people did not want to pay a cent premium for this... speaks a million word of what the market thinks of the company... could be good for punters wanting to make a quick buck as I would imagine some will simply buy in for the dividend yield, even if the share price went nowhere.

Good luck to the holders, certainly shaping up to be a bit more interesting than I thought!

TJ, are u in?

[trader_jackson]

TJ, are u in?

Not this time...

[bull....]

One of New Zealand’s most familiar consumer brands, the chicken producer Tegel Foods, will list on the stockmarket next month at a price of $NZ1.55 per share after investors supported the deal at the lowest end of the valuation range.

After a lengthy period of deliberation with the IPO’s joint lead managers, Deutsche and Goldman Sachs, Affinity plumped for the cheapest price, in an effort to avert a poor performance post-listing, as well as lock in a high-quality *register dominated by long-term investors. As a result, a number of fund managers suffered heavy scale-backs on their allocations, paving the way for a strong debut on the stock exchange.


I thought it was sell to short term institutions and then get long term institutions to buy them when they list so the the short term institutions can pocket there money? this creating a demand after listing

[Hectorplains]

I thought it was sell to short term institutions and then get long term institutions to buy them when they list so the the short term institutions can pocket there money? this creating a demand after listing

Anyone had notification of their allotment yet?

[winner69]

Cheap as and a bargain

Rest assured there will be a few good announcements over the next few months and H1 will beat forecasts and the share price will be $1.90 to $2.00 by November/December and Claris will be selling 1/2 their shares.

Full year will be pretty good as well (by hook or by crook) and come mid next year Claris can sell the rest

Then what ---who knows

Punters who have been frightened off by Dick Smiths fiasco are missing out. Don't forget Dick Smiths weren't doing too badly and stil paying good dividends until that horrible PE outfit sold out.

[LAC]

How many shares are on offer? Most articles just give a percentage of the business but not actually mention the number of shares. At $1.55, are the number of shares constant?

[Hectorplains]

How many shares are on offer? Most articles just give a percentage of the business but not actually mention the number of shares. At $1.55, are the number of shares constant?

The number of shares on issue on completion of the offer is listed as "254.1m – 355.1m " The number of shares being offered is 137.5m – 192.4m. At $155 it would be $355.1m (cf: http://www.sharechat.co.nz/pdf/Tegel.pdf)

[peat]

It appears there is going to be massive scaling.
feathering?

[percy]

feathering?

Classic.!!!!!!!!!!!!!!!!!!!!...lol.

[RGR367]

feathering?

That's good but the proper term to it should be "molting" :)

[RGR367]

Just got the confirmation from ASB and molting was so bad I only got less than 50% of what I applied for :mad ;: Looks like it will be a trial scamper on listing date.

[Newman]

Just got the confirmation from ASB and molting was so bad I only got less than 50% of what I applied for :mad ;: Looks like it will be a trial scamper on listing date.

I got one third of what I asked for.

[Joshuatree]

Got just under two thirds of my app from craigs. Happy atp that the shares were priced at the bottom end $1.55 which increases the odds of a robust demand on listing and good early life for this company; and it minimalises the scaling too..

[Hectorplains]

Got just under two thirds of my app from craigs. Happy atp that the shares were priced at the bottom end $1.55 which increases the odds of a robust demand on listing and good early life for this company; and it minimalises the scaling too..

No surprise those with the lead brokers seem to have had a better allocation, mine was scaled back to the minimum. Deja vu of Edsion's Contact sell down. Hope Tegel has a better run than Contact's.

[DJMustard]

My bid got completely scaled out.. First time ipo, how easy would it be to get a bid in at opening near the listing price?

[Hectorplains]

This from Chris Lee's newsletter,for those who don't subscribe, outlines the absurdity of the Tegel IPO -

THE Tegel share float, selling shares in a brand that is well understood, and where matters like sales margins and market share are all reasonably predictable, is at the other end of the scale, diametrically opposed to Diligent.


Whether it continues to succeed, or fails, will have nothing to do with historical scandals, colourful investors, penny dreadful punters and regulatory interventions.


But I have to say the process of pricing the shares and allocating them has been as unnecessarily complex as any process I have seen.


Let me justify that. Consider this.


New Zealand brokers, on behalf of clients, were asked to bid for the shares by noon last Friday, and to bid at price bands of 20 cents, beginning at $1.55, then 1.75, 1.95, 2.15, 2.35 or $2.50.


A broker believing the shares were worth somewhere between $1.75 and $2.00 might bid for a large number of shares at $1.95 and a smaller amount at $2.15.


This demand was then handed to the Australian lead brokers, Goldman Sachs and Deutsche Bank, on Friday.


As an aside, Goldman Sachs and Deutsche Bank have left New Zealand, unable to achieve the market successes they had planned. (I think I know why they failed.)


On Monday and Tuesday of this week, the Australian brokers and institutions did their bidding, and then the lead brokers had the right to set any price they liked.


For example, they could have set a price of $1.56, which could have meant that all New Zealand bids at $1.55 were unsuccessful. They had our bids days before they bid, our pricing perhaps held in sealed envelopes behind Chinese walls, perhaps not.


Of course the Australian lead brokers did not exploit this anomaly. Demand was insufficient at any price higher than $1.55. But they had the right to do so.


What nonsense. The lead brokers, indeed all brokers, and all institutions should have bid simultaneously and no one should have had the right to set any price other than the bracketed figure required of New Zealand bidders.


Book-builds and differentiated bidding processes are the bane of retail investors. Any process that allows lead brokers to ‘’play God’’ is an ugly process.


Perhaps it is unrealistic to expect today’s investment bankers to simplify things – their fees might be affected if things were too simple. Complexity breeds confusion and confusion has to be clarified. For a fee.


How many investors would prefer to dump ‘’book builds’’ and revert to the days of an underwritten issue at a known price?


Let the underwriters set the price and let the price be known before investors are asked to invest.


How many potential investors did not bid because they feared the lead brokers’ intervention?

[Hectorplains]

My bid got completely scaled out.. First time ipo, how easy would it be to get a bid in at opening near the listing price?

That's a wishbone question. I'm picking that it'll come out hard (maybe up 15- 20 %) and then fade back in the later session to $165 - 170. Price is pitched at the bottom of their indication BUT this was because bigger retail investors / instos showed no love for anything higher.

Just my guess...

[Anna Naum]

SP will open above $1.70 and will stay above it

[whatsup]

SP will open above $1.70 and will stay above it

anna, what is its code ?

[Antipodean]

anna, what is its code ?

Code will be TGH

[winner69]

Punters are so happy at the moment and it seems nothing can go wrong

When Tegel finally trades it will be a boomer. Punters have been lucky with the timing of this float.

Will be $2 by Christmas - by hook or by crook they will see that it is.

[Valuegrowth]

How about their financial strength? Do they have strong fundamentals?

[Hectorplains]

Punters are so happy at the moment and it seems nothing can go wrong

When Tegel finally trades it will be a boomer. Punters have been lucky with the timing of this float.

Will be $2 by Christmas - by hook or by crook they will see that it is.

Winner, winner. Chicken dinner, eh?

[Valuegrowth]

http://www.theaustralian.com.au/business/dataroom/affinity-equity-partners-lowers-tegel-foods-ipo-valuation/news-story/8154dabcaac0ee557b50543c2c85008a

Affinity Equity Partners lowers Tegel Foods IPO valuation

[winner69]

How about their financial strength? Do they have strong fundamentals?

They used the word 'robust' in the 83 page book in describing their financials

Now we have paid off a lot of their debt of course they are strong.

[trader_jackson]

;)
They used the word 'robust' in the 83 page book in describing their financials

Now we have paid off a lot of their debt of course they are strong.

"well positioned" comes to mind...

[Valuegrowth]

They used the word 'robust' in the 83 page book in describing their financials

Now we have paid off a lot of their debt of course they are strong.

Thank you Winner for your response.

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11615455

According to the above link,

More than $130 million of the cash raised will be used to repay bank debt, while up to $163 million will repay shareholder debt. The remaining $22.5 million to $25.3 million will cover IPO costs, including an $8 million bonus for senior management.Following the IPO, the company's net debt will reduce to $119.5 million.

Do they use imported maize as well? Can they get entire requirements of maize locally? Why are they making use of IPO funds to pay bonus?

[winner69]

;)

"well positioned" comes to mind...

No no t_j

They used position words about 20 times in the 83 pages anf not one 'well positioned'

Best was 'uniquely positioned'

Thats very powerful eh

[winner69]

Thank you Winner for your response.

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11615455

According to the above link,

More than $130 million of the cash raised will be used to repay bank debt, while up to $163 million will repay shareholder debt. The remaining $22.5 million to $25.3 million will cover IPO costs, including an $8 million bonus for senior management.Following the IPO, the company's net debt will reduce to $119.5 million.

Do they use imported maize as well? Can they get entire requirements of maize locally? Why are they making use of IPO funds to pay bonus?

Maize not a word in the 83 pages so don't know

As long as they have enough stuff to keep the feedmills going for a year it will be all honky dory

No worries

[kiwidollabill]

Almost all feed raw materials are imported. They hedge the prices but have exposure here

[tango]

I was sick this week and didn't get organised to ask my broker for an allocation. I'm wondering whether to try to apply on the open pool. Anyone else doing that? Or am I misreading it. Is there an open pool? It looks like it but I'm unclear on whether I still have a chance to get shares???

I'm reading it again and it looks like I don't have a chance to apply now. Rats

[axe]

not interested in this one. maybe I'm just chicken? :t_up:

[winner69]

Almost all feed raw materials are imported. They hedge the prices but have exposure here

You obviously not all that keen on Tegel $bill

Irrespective of the 'fundamentals' i feel the major shareholder is incentivised heas to make sure things dont go wrong until next year .....after that who knows

Whatever $2 by year end

[Rep]

Feed sources include maize, wheat (esp if there is a damp harvest in Australia), sorghum, other grains as well as soy meal. As producers here are dependent on imported feed, they are competing with other markets particularly China for feed to grow poultry.

A bumper dry harvest in Australia can result in the cost of feed rising as more of the wheat crop is destined for milling grade rather than going into the secondary feed market. Wet conditions at harvest can see more grain fail to make milling grade and end up as feed.

It can also foment instability elsewhere as it can cause the price of wheat to spike. Revolutions have been sparked by the rise of the cost of your daily loaf.

[tim23]

I reckon if you like food producers why not buy Scales similar yield and a better growth story.

[Valuegrowth]

Currently, global grain market is well supplied. Inventory level is high. Many countries want to produce more grain locally. Tegel should benefit from Lower grain prices. Long term investors should study their business model, market share, financial stability and long term value etc.

[amalgam]

It seems to me the money raised by this issue is going to the existing shareholders & there banks..it is not going to fund expansion of the business. The Private Equity funds selliing shares will in fact own less than 50 percent after this listing..as Winner says in about a years time it will be interesting to see how many shares they have left.
The question is..if it is a such good business, why are they selling?

[trader_jackson]

The question is..if it is a such good business, why are they selling?

Yes this is a good point, like dick smith, things could be ok for the first year or so but beyond that, things will get interesting, particularly when escrows end...

We all know if it was a great business, like hirepool, they wouldn't have sold it;)

[kizame]

I think its quite simple really,they are selling because they can get a premium over what they paid.
Lets not forget that (without all the hype) this is a foodstuff business,a defensive stock maybe when things aren't so good on the market,like utilities. It isn't a growth story!

[Valuegrowth]

I think its quite simple really,they are selling because they can get a premium over what they paid.
Lets not forget that (without all the hype) this is a foodstuff business,a defensive stock maybe when things aren't so good on the market,like utilities. It isn't a growth story!

We should not worry much about who is selling and buying as long as we see huge potential in the mid and long term. I would like to find out and estimate their future earnings for number of years from five years to 10 years. Earnings are the profit a company makes, and in the long run no company can survive without them. Of course there will be some lean period for any industry. What matter to me are future earnings.

In the short run, there could be some affect on share prices when funds try to liquidate their holdings. As Kizame said, we should not forget this is a defensive stock. Therefore, there could be some support especially in 2016/17. As I have value approach, I would like to consider great value and future earnings. It is time to study their story before taking any decision.

[percy]

I consider Tegel to be a "Comsumer Staple",of which we are very short of selection on the NZX.
This sector is composed of companies whose primary lines of business are food,beverages and other household lines.
These types of companies have historically been characterized as noncyclical in nature.
Unlike other areas of the economy,even during economicaly slow times [in theory]demand for the products made by consumer staples companies does not slow down.
So lets compare the price of chicken with its competition.
Chicken...$10.96/kg.
Pork.........$13.28/kg
Beef.........$18.22/kg.
Lamb........$19.29/kg.
I also find it interesting that NZ's chicken consumption is increasing year on year.
Tegel is a welcome addition to anyone's well balanced portfolio/diet.
It is often overlooked when comparing Tegel with SCL,SEK and DGL, that those companies only have one crop a year,were as Tegel is breeding chicks through out the year.ie instead of one stock turn they enjoy a good number of stock turns per year.This is a better use of capital and results in solid year round cash flow.

[Grunter]

A bit concerned about the big boost in profits the year before the IPO - smells of dressing up the turkey.

Also don't believe the hype around possible overseas expansion - it's chicken, so how is Tegel going to have a point of difference in a global marketplace?

Revenues have been pretty stable over a period of time, so this is definitely not a growth opportunity. Margin seems to be very slim, see this as a defensive stock to have for economic downturns - chicken is a substitute good for more expensive meats, so should see consumption increase in poorer economic conditions.

Verdict: Private Equity selling at the top to gain maximum value. Avoid at this stage, but watch closely over the next 12 months.

[Lewylewylewy]

I don't think people eat more chicken when they're poor. Meat is the expensive thing you stop eating when you're struggling.

[Joshuatree]

Verdict: Private Equity selling at the top to gain maximum value. Avoid at this stage, but watch closely over the next 12 months.

Is that your opinion ?.Hopefully not advice as thats dangerous ground.Priced at the BOTTOM of range.Good yield defensive, lower risk play for me to be a starter in this one.

[Grunter]

Is that your opinion ?.Hopefully not advice as thats dangerous ground.Priced at the BOTTOM of range.Good yield defensive, lower risk play for me to be a starter in this one.

It's priced at the bottom of the range because that the maximum price the sellers think they will be able to clear their allotments for. They will of course build in a slight discount to make the offer attractive after the IPO.

I'd never give advice on an internet forum hah!

[Hectorplains]

I don't think people eat more chicken when they're poor. Meat is the expensive thing you stop eating when you're struggling.

The point is that people are eating more chicken in proportion to other meat as it is the cheapest option.

[winner69]

Re lew's note above

Revenues have been pretty stable over a period of time, so this is definitely not a growth opportunity. Jeez lew growth last 3 years have been 6.8%, 8.8% and 3.3% this year. That's better than stable

Margin seems to be very slim. EBITA margins pretty reasonable and not very slim, been >10% last few years with this year 12.9% (Gross margin by the way is 23%/24% which I agree isn't fantastic

chicken is a substitute good for more expensive meats, so should see consumption increase in poorer economic conditions. Hope you right there lew - could call it a growth initiative - adding more to the growth rates mentioned above

A bit concerned about the big boost in profits the year before the IPO - smells of dressing up the turkey. Reading the papers again to come to that conclusion have we lew my old mate. The increased ebita (profits) has been driven mainly by increased sales off set to some extent by increased costs (growth initiatives they say) hardly the stuff of dressing the turkey up.

Lew - did you bother read/study Pages 56-60 of the Disclosure Statement?

Whatever Tegel will be a great investment in the short to medium term. Maybe even for the longer term if things go their way. I reckon the share price will be over $2 by year end

[Lewylewylewy]

Nope, i didn't read pages 56-60, but I also didn't say those things :)

I think your rebuttal might be aimed at Grunter ;)

[Hectorplains]

It's priced at the bottom of the range because that the maximum price the sellers think they will be able to clear their allotments for. They will of course build in a slight discount to make the offer attractive after the IPO.

I'd never give advice on an internet forum hah!

Affinity remain significantly invested, they've sold only about one-third of their equity, retaining 45 per cent and that will be escrowed until after Tegel releases its 2017 results. Unless the shares are trading 20% higher than their IPO price when Tegel releases its half-year numbers. Affinity's interest is closely aligned to a strong sp, and that'll be driven by good earnings.

[Lewylewylewy]

For the record, I've not done any in depth research into tegal because it doesn't fit my strategy at the moment and I don't like the idea of supporting animal cruelty.

[winner69]

Affinity remain significantly invested, they've sold only about one-third of their equity, retaining 45 per cent and that will be escrowed until after Tegel releases its 2017 results. Unless the shares are trading 20% higher than their IPO price when Tegel releases its half-year numbers. Affinity's interest is closely aligned to a strong sp, and that'll be driven by good earnings.

So $1.55 plus 20% is $1.86

Half year to September 16 announced mid to late November

By hook or by crook easy on target to beat the IPO financials

Share price at $2 then I reckon

Things on a roll and Affinity sell 50%

Then 2017

Is that how you see it hector

[Valuegrowth]

I think time to come many countries may implement some sort of animal welfare.

http://ec.europa.eu/food/animals/welfare/index_en.htm

Animal welfare

[Hectorplains]

So $1.55 plus 20% is $1.86

Half year to September 16 announced mid to late November

By hook or by crook easy on target to beat the IPO financials

Share price at $2 then I reckon

Things on a roll and Affinity sell 50%

Then 2017

Is that how you see it hector

Yep - three key factors - huge scaling back almost guarantees an immediate gain on listing, then the good div yield keeps that sp up along with Affinity driving to maximise their exit. Should be around $2 at year end.

[Hectorplains]

For the record, I've not done any in depth research into tegal because it doesn't fit my strategy at the moment and I don't like the idea of supporting animal cruelty.

You were holding RBD thou?

[Sideshow Bob]

If really interested in chicken, could have bought Proten on Unlisted. From 70c to 110c over the last year, plus divvies.

[Valuegrowth]

If really interested in chicken, could have bought Proten on Unlisted. From 70c to 110c over the last year, plus divvies.

Sideshow bob

Can you elaborate more about these unlisted ones? Are they safe investment?

[Lewylewylewy]

You were holding RBD thou?

Yes, RBD support the cruelty, but tegal seem closer to the action. I'm probably being a bit of a hypercrit! I wouldn't eat the stuff lol.

One day tegal may suffer from new animal welfare laws, but I'd say that'd be decades away rather than years away.

[percy]

Yes, RBD support the cruelty, but tegal seem closer to the action. I'm probably being a bit of a hypercrit! I wouldn't eat the stuff lol.

One day tegal may suffer from new animal welfare laws, but I'd say that'd be decades away rather than years away.

Well we enjoyed eating Bambi.
Larry the lamb was nice with mint sauce.
Daisy the pig went down a treat.Made great bacon too.
Timmy the Turkey was enjoyed by all on Christmas day.
Stevie the Steer we have not managed to catch ,so we will have to eat the chooks for awhile yet.

[winner69]

Well we enjoyed eating Bambi.
Larry the lamb was nice with mint sauce.
Daisy the pig went down a treat.Made great bacon too.
Timmy the Turkey was enjoyed by all on Christmas day.
Stevie the Steer we have not managed to catch ,so we will have to eat the chooks for awhile yet.

You left out Bobby the calf

Nicolini's in Courtenay Place does a real nice white veal cutlet with a marsala wine and cream sauce. Worth the $32 he charges.

White veal is almost the ultimate insult to vegetarians, poor Bobby but his life was pretty short

[percy]

You left out Bobby the calf

Nicolini's in Courtenay Place does a real nice white veal cutlet with a marsala wine and cream sauce. Worth the $32 he charges.

White veal is almost the ultimate insult to vegetarians, poor Bobby but his life was pretty short

Thanks for letting me know where Bobby ended up.

[bull....]

should list well I think

[kiwidollabill]

You obviously not all that keen on Tegel $bill

Irrespective of the 'fundamentals' i feel the major shareholder is incentivised heas to make sure things dont go wrong until next year .....after that who knows

Whatever $2 by year end


Any company which has a key input cost associated with a volatile commodity is exposed....

Have come to the conclusion I don't yet have a buy/sell opinion on Tegel. There are other players in the NZ market that operate better than them but that doesn't preclude the IPO from being a success.

[NZSilver]

I think it wont do too bad - prob get up to around $2 - $2.50, giving a nice div too. There is definitely a fair few signs private equity has pulled what they can out of things - e.g. selling factories and leasing back. But what is left is substantial, Tegel looks to be a solid business and good value at $1.55 with the private equity continuing to hold a big chunk. We can thank the poor buggers who bought DSE for the low strike price!

[Grunter]

Re lew's note above

Revenues have been pretty stable over a period of time, so this is definitely not a growth opportunity. Jeez lew growth last 3 years have been 6.8%, 8.8% and 3.3% this year. That's better than stable

Margin seems to be very slim. EBITA margins pretty reasonable and not very slim, been >10% last few years with this year 12.9% (Gross margin by the way is 23%/24% which I agree isn't fantastic

chicken is a substitute good for more expensive meats, so should see consumption increase in poorer economic conditions. Hope you right there lew - could call it a growth initiative - adding more to the growth rates mentioned above

A bit concerned about the big boost in profits the year before the IPO - smells of dressing up the turkey. Reading the papers again to come to that conclusion have we lew my old mate. The increased ebita (profits) has been driven mainly by increased sales off set to some extent by increased costs (growth initiatives they say) hardly the stuff of dressing the turkey up.

Lew - did you bother read/study Pages 56-60 of the Disclosure Statement?

Whatever Tegel will be a great investment in the short to medium term. Maybe even for the longer term if things go their way. I reckon the share price will be over $2 by year end

A 7% CAGR for a company supposedly undertaking a "growth" phase is pretty much flat. Given chicken consumption has increased by 6% overall, what can we say that Tegel itself has brought to that revenue growth, other than just industry-wide growth? How about stretching further back - revenue in 2009 was $465 million, and dropped to $410 million in 2010. You could say revenues have actually been recovering over the last 5 years.

NPAT was $12.8 million in 2009 and $22.6 million in 2010. Given NPAT has been -$12.1 million in 2013, $14 million in 2014, $8.7 million in 2015 and forecast $10 million for 2016, this does not indicate to me a growing company.

EBITDA is expected to increase only $10 million between 2016 and 2017, yet NPAT is expected to increase to $43 million - this indicates to me the primary reason for the NPAT increase is due to 1) interest expense reduction (i.e paying down $130 million in debt with cash raised in the IPO) and 2) tinkering with depreciation. Will paying down debt and chopping some of the interest expense contribute to revenue and NPAT growth? I don't see this as being likely, and you will probably find NPAT will just fluctuate around a new range, but not trend up long term.

PEP sold to Affinity for around $600 million in 2011, and the IPO will give a market cap around the same figure. So the company's value hasn't increased between 2011 and now.

Affinity purchased Tegel through an LBO, so although they are retaining a 45% stake, we don't really know what capital they put up to actually buy Tegel, and thus their real return on their investment. No doubt it will be pretty healthy.

I think that Tegel is a mature company that is a defensive yield play (estimated dividend between 4.5% and 7%), not a growth company.

[Valuegrowth]

If it is not a growth company it is wise to stay with value. I believe we should be able to find out more about this company during next 10 years. Then we can see whether it is a growth company or not.

[Joshuatree]

I think it wont do too bad - prob get up to around $2 - $2.50, giving a nice div too. We can thank the poor buggers who bought DSE for the low strike price!
Thats so true NZS we are the benefactors of the $1.55 pricing unfortunately at others expense.

[winner69]

Grunter - maybe, just maybe, Tegel as the brand leader helped drive the demand that saw industry growth at 6%

Good marketing increases the size of the marketing and hopefully a bigger share of the bigger chicken pie as well

[kiwidollabill]

Ok, lets go back to basics and in light of some data in the prospectus and posted previously
Chicken...$10.96/kg.
Pork.........$13.28/kg
Beef.........$18.22/kg.
Lamb........$19.29/kg.
First off, some of these numbers are a bit funky, I can buy good cuts of beef/lamb at my local butcher at less than quoted.

Look at pg 11 of this (http://www.mbie.govt.nz/info-services/sectors-industries/food-beverage/documents-image-library/Meat%20sector%20review%202013%20-PDF%201.6%20MB.pdf), global growth in poultry/pork while beef/lamb have stayed static over the last 50yrs.

Now, the cost to produce grain fed protein is entirely dependent on how efficient the animal can convert grain into muscle tissue. Us humans have bred chickens over the last 70 years to be extremely efficient at this process. Pigs are on a similar scale, but due to the scale of the NZ industry (and we consume only a small amount of pork to our peers) it sits at a higher cost. See pg 15. The poultry sector is growing entirely due to the fact it is cheap - the demand only exists as the supply is low cost and abundant. For the producers it is a race to the bottom as any increase in rev can only be won due to offering a lower price point - makes it difficult to increase EPS.

Contrast this to Scales (and there was some really lazy reporting around this recently) where the growth has been with demand led sales. Globally the price of pipfruit is up, the x-rate was in their favor and them swinging big on the Chinese market has paid off nicely.

[kiwidollabill]

FYI Some comparisons would be to
NYSE PPC - Pilgrims Pride PE 9.5
NYSE TSN - Tyson Foods PE 19 (overbought) though is diversified with pork/beef divisions
NASDAQ - SAFM PE 12.2

[percy]

The prices quoted were based over a year.
The retailers were Pak'n'Save and Countdown.
SCL,SEK and DGL only have ONE crop a year while Tegel are breeding chicks year round.This means better use of capital,and improved cash flow.
SCL,SEK and DGL are subject to weather conditions.

[Valuegrowth]

FYI Some comparisons would be to
NYSE PPC - Pilgrims Pride PE 9.5
NYSE TSN - Tyson Foods PE 19 (overbought) though is diversified with pork/beef divisions
NASDAQ - SAFM PE 12.2

According to some analysts still TSN is a buy. May be growth players are betting it but not value investors.

http://sonoranweeklyreview.com/tyson-foods-initiated-at-argus-research-with-buy-rating-80-price-target-shares-flat-pre-bell-nysetsn/

Tyson Foods Initiated at Argus Research with Buy Rating, $80 Price Target; Shares Flat Pre Bell (NYSE:TSN)

In any industry well-managed companies having strong balance sheets and strong outlook will outperform others in the mid and long run. I believe we could find some great winning poultry stocks in global markets in the coming decade.

PPC is a weak sister in the group. Still it may pass its 52 weeks high due to group affects.

[kiwidollabill]

The prices quoted were based over a year.
The retailers were Pak'n'Save and Countdown.
SCL,SEK and DGL only have ONE crop a year while Tegel are breeding chicks year round.This means better use of capital,and improved cash flow.
SCL,SEK and DGL are subject to weather conditions.

I cant find a quoted proforma EBIT for Tegel, but ROCE via EBITDA is ~16%, contrast that with SCL which has a group ROCE of 24%. Or have i mucked up the math?

[Sideshow Bob]

Sideshow bob

Can you elaborate more about these unlisted ones? Are they safe investment?


www.unlisted.co.nz (http://www.unlisted.co.nz)

Generally are thinly traded companies, and rather illiquid. Like anything, some wheat, some chaff. Some good companies like Skyline listed there.

Proten are a kiwi company operating in Australia - basically growing chicken under contract. Unlisted profile - http://www.unlisted.co.nz/uPublic/docs/issuer%20profiles/2015%20PROTEN%20Issuer%20Profile.pdf

[Valuegrowth]

www.unlisted.co.nz (http://www.unlisted.co.nz)

Generally are thinly traded companies, and rather illiquid. Like anything, some wheat, some chaff. Some good companies like Skyline listed there.

Proten are a kiwi company operating in Australia - basically growing chicken under contract. Unlisted profile - http://www.unlisted.co.nz/uPublic/docs/issuer%20profiles/2015%20PROTEN%20Issuer%20Profile.pdf

Thank you Sideshow Bob

[Valuegrowth]

I relay like properly made chicken and eggs than other meat varieties. We can eat New Zealand Chicken without any doubt and second thought. They are quality chicken and eggs. I specially like corn-fed Turk’s chicken. It is 100% New Zealand owned and has produced eggs and poultry for over 40 years. Thanks to the environment and the feed, their birds consistently out-perform the leading brands in independent quality tests.

I never had any quality issue in their chicken during last 10 years. Do you think that they also will list their shares in the New Zealand stock Exchange?

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11624438

Strong demand for Tegel shares

[trader_jackson]

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11624438

Strong demand for Tegel shares

Bit of old news, but yes, there was strong demand for Tegel shares, at $1.55 only*...
*basically

[Valuegrowth]

FYI Some comparisons would be to
NYSE PPC - Pilgrims Pride PE 9.5
NYSE TSN - Tyson Foods PE 19 (overbought) though is diversified with pork/beef divisions
NASDAQ - SAFM PE 12.2

In the USA market, chicken stocks are in full swing. SAFM rose by more than 4%.

PPC went up by more than 12% on a huge volume despite recalling their chicken products. There should be something that we don’t know.

https://nz.finance.yahoo.com/q?p=finance.yahoo.com&s=PPC

http://www.globenewswire.com/news-release/2016/04/27/833720/0/en/Pilgrim-s-Pride-Corporation-Announces-Declaration-of-Special-Dividend.html

Pilgrim's Pride Corporation Announces Declaration of Special Dividend

http://edition.cnn.com/2016/04/26/health/chicken-recall-4-5-million-pounds-contamination/

Pilgrim's Pride recalls 4.5 million pounds of chicken

[winner69]

Big day tomorrow

At least $1.75?

[trader_jackson]

Big day tomorrow

At least $1.75?

I think that is a bit high... but could happen I suppose... Dick Smith started its IPO up 5.5%;)

[biker]

1.62 easing back to 1.58.

Disc. Holding.

[NZSilver]

id say 1.83, followed by close 1.71, heading up to $2 in the next month

[percy]

I don't know where the price will be.
Was so wrong with the $1.55 issue price.I was expecting $1.95.
I was very lucky to get a good allocation,so will most probably hold long term.

[Joshuatree]

Ethical issues aside... I hope Tegel does well (as with every New Zealand listed company) but unfortunately I get the feel this is a Feltex/Dick Smith in the making...

Good luck to anyone buying

Your sentiment and actions change a tad?

[trader_jackson]

Your sentiment and actions change a tad?

Partly surprised at how cheap it was listed, but then again, shows nobody (really) wanted to back a cent more, could be good for the stags, but overall sentiment hasn't changed for me... good luck to all holders... lets hope they can achieve what they want to achieve... (alarm bells should be ringing if PE firm decides to sell soon after escrow ends)

[Valuegrowth]

We could expect some active trading in this stock. It is nice to see some food stocks are listing in the NZ exchange. It should follow the trend of (FRM.AX).

There is a private equity involvement in this company. It is wise to study that part as well.

http://www.stuff.co.nz/business/industries/79515620/tegels-sharemarket-float-could-go-either-way-analysts-say

Tegel's sharemarket float could go either way, analysts say

http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11631887

Brisk demand on cards for Tegel float

Good Luck!

[tango]

What time does it list?

[DJMustard]

Lists at 11am nzt. Is there any way to see order depth pre-market?

[777]

Bids
Quantity No. Price
9,500 2 185
10,000 1 175
5,500 1 170
15,500 4 160
229,225 4 155
10,000 1 100
Asks
Price No. Quantity

[tango]

Thanks 777
Interesting range. An optimist there at $1!!!

[777]

Thanks 777
Interesting range. An optimist there at $1!!!

TGH is it's code if you have access to ANZ securities or ASB securities.

[tango]

Thanks, yes ANZ are now showing all the bids. They weren't when I looked earlier.

I wasn't organised to get an allocation so I will have to buy today as close to 155 as possible. Sometimes the shares do an initial surge and then dip so I will be patient...

[DJMustard]

Wow looking at the updated depth, doesn't look like we'll be able to get any orders in anywhere close to 155

[Balance]

Thanks, yes ANZ are now showing all the bids. They weren't when I looked earlier.

I wasn't organised to get an allocation so I will have to buy today as close to 155 as possible. Sometimes the shares do an initial surge and then dip so I will be patient...

My view - Institutions will massage this thing up, and then give retail punters (lured by the promise of yet another high flying post-IPO listing) as much of the stock they want at a premium.

[tango]

You can't rely on that as I've often found that when the share opens it all changes very quickly!

But yeah there are a lot of high bids in there and people asking $1.80+
But a lot of the institutions will be bidding $1.55 and they don't always show up I've noticed

[tango]

My view - Institutions will massage this thing up, and then give retail punters (lured by the promise of yet another high flying post-IPO listing) as much of the stock they want at a premium.
Which is why I won't panic if I don't get the shares early on at the right price. I will hold out until the initial surge is over

[tango]

Match price 179. I wonder how reliable an indicator that is
I won't be bidding that much!

[Balance]

Match price 179. I wonder how reliable an indicator that is
I won't be bidding that much!

Long time away from opening. Have a look at it 5 minutes before opening.

[winner69]

Long time away from opening. Have a look at it 5 minutes before opening.

Might be higher ...... Yippee

[tango]

Might be higher ...... Yippee

Nooooooo I want to buy!

But agree the institutions will be putting their bids in close to 11 and that's when it all shakes out

[winner69]

Nooooooo I want to buy!

But agree the institutions will be putting their bids in close to 11 and that's when it all shakes out

What will you buy at then tango

[sb9]

Any guesses on close price for today, I'm picking 168...

[bull....]

im picking over 1.80

[tango]

What will you buy at then tango

As close to 155 as possible

[tango]

When I went to place my order ANZ offered me the opportunity to buy at the current price of 150 ;)

[DJMustard]

Did you get it tango?

[sb9]

When I went to place my order ANZ offered me the opportunity to buy at the current price of 150 ;)

Could well be, looks like initial fizz has gone away with 4 times sells on offer for bids currently.

[Mickey]

Could well be, looks like initial fizz has gone away with 4 times sells on offer for bids currently.

Looks like there's not a lot of people who feel like chicken tonight.....:p

[trader_jackson]

Almost 7% of the company changed hands today, with sells outweighing buys 4:1, been much the same theme the whole day... will be interesting to see what happens over the next few days... will the retail investor panic or will they hold and hope?

Started up 11%, now up barely half of that, with ... is this house of cards already falling apart? ;);)

[sb9]

Almost 7% of the company changed hands today, with sells outweighing buys 4:1, been much the same theme the whole day... will be interesting to see what happens over the next few days... will the retail investor panic or will they hold and hope?

Started up 11%, now up barely half of that, with ... is this house of cards already falling apart? ;);)

This on a day when the market overall looking very strong, just imagine what would happen when market tanks....

[777]

This on a day when the market overall looking very strong, just imagine what would happen when market tanks....

All your chickens will come home to roost.

[sb9]

All your chickens will come home to roost.

True...

"Any guesses on close price for today, I'm picking 168..."

Was bit generous with my prediction earlier, meant to say 163;)

[Beagle]

Listing premium pays for a few free chicken dinners...small fish, (chickens ?) are sweet.

[CatO'Tonic]

Listing premium pays for a few free chicken dinners...small fish, (chickens ?) are sweet.
I didn’t shell out for this one (too chicken). New listings almost always get a bump on the first day but I was still surprised to see it happen in this climate. Tegel’s growth plans look to be heavily reliant on the performance of overseas economies. Hopefully today’s trend can’t be extrapolated out to 6 or 12 months because there will be a lot of unhappy punters with egg on their faces. Loving all the puns by the way...

[Balance]

Almost 7% of the company changed hands today, with sells outweighing buys 4:1, been much the same theme the whole day... will be interesting to see what happens over the next few days... will the retail investor panic or will they hold and hope?

Started up 11%, now up barely half of that, with ... is this house of cards already falling apart? ;);)

IPO price set to facilitate total exit by Claris sometime in the next 2 years.

29m shares or 8.1% changed hands - which means that over 15% of free float (as Claris and others hold 45% plus).

Volume trades indicate big lots being sold - a lot of smaller buying (10k to 100k lots) indicating that those who obtained volume allocations were taking their gains and selling to retail?

The institutions read this one well - take their profits while they are there and leave the risks to those who bought off them. In an environment of 2% to 3% pa interest rates, making a quick 5% to 10% for the instos not to be sneezed at.

Personally, prefer to invest in true and tried performers like Scales and THL - solid performances with earnings growth and great dividend yields.

[Hectorplains]

Personally, prefer to invest in true and tried performers like Scales and THL - solid performances with earnings growth and great dividend yields.

Not sure that your contrast stacks up. THL's performance has been decidedly hot and cold over the years. Scales early results have impressed - not much of a public track record yet.

[Balance]

Not sure that your contrast stacks up. THL's performance has been decidedly hot and cold over the years. Scales early results have impressed - not much of a public track record yet.

Fair enough comments.

SCL has been around since July 2014 as a public listed company and that is a longer track record than TGH!

THL has been an erratic performer over the decades since its days as Helicopter Line in 1990 - that is true. Look back over the last 5 years shows a solid track record however.

And they are not trading on demanding multiples, reflecting exactly the caution exercised by Hectorplains. That is the beauty of the market.

[airedale]

I didn't rush in to this as it is being sold by a merchant bank who bought it from another merchant bank. The whiff of Feltex and others still hangs around.

[kiwidollabill]

I believe the focus on export is not a result of seeing value in other markets but due to effectively gain share and profit from the other players in the NZ market

[Sideshow Bob]

I would be sceptical on their export plans. Sure would be some niches out there, but chicken internationally is generally an undifferentiated commodity and NZ lacks the scale of production and grain production to compete easily. Throw in there distance/time/cost to market and currency then think it would be a higher risk play - but once NZ growth plateaus, where do you go?

[winner69]

Share price looking good today

[Beagle]

I didn’t shell out for this one (too chicken). New listings almost always get a bump on the first day but I was still surprised to see it happen in this climate. Tegel’s growth plans look to be heavily reliant on the performance of overseas economies. Hopefully today’s trend can’t be extrapolated out to 6 or 12 months because there will be a lot of unhappy punters with egg on their faces. Loving all the puns by the way...

Well I couldn't get all clucky about this one either, too chicken seeing as private equity have a long record of plucking the value before investors get the rest of the droppings.

[Mickey]

Well I couldn't get all clucky about this one either, too chicken seeing as private equity have a long record of plucking the value before investors get the rest of the droppings.

Yep, there's been a few private equity bad eggs already and time will tell whether this one joins the same sh*t omelette or if it's the chook that lays golden eggs....

[Beagle]

Yep, there's been a few private equity bad eggs already and time will tell whether this one joins the same sh*t omelette or if it's the chook that lays golden eggs....

Low growth and word on the street, (from my farmer client who's brother is a massive player in the chicken industry) is they already reached overdose level's with hormones pumping / dressing this bird up for the float so its hard to see it soaring like an eagle from here.

[biker]

IPO price set to facilitate total exit by Claris sometime in the next 2 years.

29m shares or 8.1% changed hands - which means that over 15% of free float (as Claris and others hold 45% plus).

Volume trades indicate big lots being sold - a lot of smaller buying (10k to 100k lots) indicating that those who obtained volume allocations were taking their gains and selling to retail?

The institutions read this one well - take their profits while they are there and leave the risks to those who bought off them. In an environment of 2% to 3% pa interest rates, making a quick 5% to 10% for the instos not to be sneezed at.

Personally, prefer to invest in true and tried performers like Scales and THL - solid performances with earnings growth and great dividend yields.

Possibly just a matter of a gradual change of shareholders from those happy to take a smaller immediate profit to those happy to wait for a larger one. Institutions buying and institutions selling all with different investment criteria, mandates and time horizons. Could all be smart money, just getting shuffled.

[winner69]

Low growth and word on the street, (from my farmer client who's brother is a massive player in the chicken industry) is they already reached overdose level's with hormones pumping / dressing this bird up for the float so its hard to see it soaring like an eagle from here.

Talking of eagles - saw "Eddie the Eagle" the other day and it was an awesome movie. Had a chicken burger (free range the lady said) for lunch after wards. These local cinema/cafes are great.

[Joshuatree]

Re 23 mill shares through first two days; S/P re 8.4% up. Be int to see how it goes when things settle down ;far too early to make judgement calls or crow.

Quantity of Shares



100,001+ 82
10,001 to 100,000 886
5,001 to 10,000 731

1,001 to 5000 983

Final Top 20 Shareholder List (https://www.nzx.com/companies/TGH/announcements/281814)




Total holders 2,682

[Hectorplains]

IPO price set to facilitate total exit by Claris sometime in the next 2 years.

29m shares or 8.1% changed hands - which means that over 15% of free float (as Claris and others hold 45% plus).



NZX ann: top 20 holders have 86% of stock. The turnover of free float (15%) then doesn't compute with the IPO strike price verbiage around long term, 'quality' holders. Of course, I'm probably missing something.

[NZSilver]

I think we will be pleasantly surprised how Tegel performs over the next couple of year, post IPO they have a relatively strong balance sheet with reduced debt. I personally see the overseas growth initiatives are far from simple, but the domestic market is strong and will support this company long term. I still remember being told at university New Zealand is one of the most efficient places in the world to grow chicks as the feed conversion and growth rates are high due to the lack of disease and therefore very reduced requirement for vaccinations which reduce growth rates. Tegel will have a gross div yield close to 7% which is also pretty tidy when you consider interest rates are again likely to reduce come June. If holders get &% div + 10-20% capital growth over the next few years I think that is a pretty tidy investment.

Also generally I find the more people on sharetrader don't like and IPO/new listing the better it performs. There dosnt seem to be much love for Tegel on this thread, so I think it could do quite well :p

[kizame]

I think we will be pleasantly surprised how Tegel performs over the next couple of year, post IPO they have a relatively strong balance sheet with reduced debt. I personally see the overseas growth initiatives are far from simple, but the domestic market is strong and will support this company long term. I still remember being told at university New Zealand is one of the most efficient places in the world to grow chicks as the feed conversion and growth rates are high due to the lack of disease and therefore very reduced requirement for vaccinations which reduce growth rates. Tegel will have a gross div yield close to 7% which is also pretty tidy when you consider interest rates are again likely to reduce come June. If holders get &% div + 10-20% capital growth over the next few years I think that is a pretty tidy investment.

Also generally I find the more people on sharetrader don't like and IPO/new listing the better it performs. There dosnt seem to be much love for Tegel on this thread, so I think it could do quite well :p

Yep quite right NZSilver, I'm not enthused by it,so usually that means a bloody good performance over next 2 years.
It's happened with most supposedly boring stocks that lack any sort of excitement at all.

[Balance]

Also generally I find the more people on sharetrader don't like and IPO/new listing the better it performs. There dosnt seem to be much love for Tegel on this thread, so I think it could do quite well :p

Feltex and Dick Smith come to mind of two IPO lots of people on sharetrader did not like.

Also, Snakk and GeoP.

In support of your point however is Arvida.

[percy]

Feltex and Dick Smith come to mind of two IPO lots of people on sharetrader did not like.

Also, Snakk and GeoP.

In support of your point however is Arvida.

Yes both Feltex and Dick Smith were disasters.
But then there are successful ones such as SCL.
We must remember not all insiders selling is "clever".John Ryder [co-founder] sold his RYM shares very early on.Mark Stewart sold out of EBO well before they took off.
What matters is the company's fundamentals and the sector the company is in.
TGH is in the"consumer staple" sector ,which means it should be a steady if unspectacular performer.The balance sheet is strong and the business appears to be well focussed,and managed.
The "Tegel" brand is very strong,and offcourse they are the market leader.

[RGR367]

As long as those chinese interest are with TGH, it would be nice to stick with this chicken killing company. A look into the future is TGH joining or tying up with a flour/corn milling company/operation.

[NZSilver]

This is going to be a patience game for a few week - until all the trading and offloading is finished. I think it will move higher once volume drops.

[BlackCross]

From what I read the yield will be 6 or 7% but I can't find any guide as to the franking? Anyone any ideas please?

[mshierlaw]

From what I read the yield will be 6 or 7% but I can't find any guide as to the franking? Anyone any ideas please?

http://www.tegel.co.nz/downloads/Tegel%20Group%20Holdings%20Product%20Disclosure%20 Statement.pdf

P4 footnote says they expect dividends to be fully imputed.

[BlackCross]

Thanks mshierlaw... might be my kind of stock...

[muss1]

My two cents:

Now I'm very poorly read on this company, but that's because I don't see any reason to research further. Having said that please correct me if my facts are wrong. The money being raised is paying out existing shareholders, paying off existing debt (that funded previous growth one would imagine) and working capital. None of that is specifically directed at growth for me and it looks like the previous owners are selling down because they've squeezed out what they can. Be sceptical.

[Hectorplains]

My two cents:

Now I'm very poorly read on this company, but that's because I don't see any reason to research further. Having said that please correct me if my facts are wrong. The money being raised is paying out existing shareholders, paying off existing debt (that funded previous growth one would imagine) and working capital. None of that is specifically directed at growth for me and it looks like the previous owners are selling down because they've squeezed out what they can. Be sceptical.


If you're "very poorly read" why do you bother to comment? All this and more was raised on this thread, prior to the float.

[muss1]

If you're "very poorly read" why do you bother to comment? All this and more was raised on this thread, prior to the float.

I've learnt a lot from ST. I thought maybe my comment would help someone somewhere in their assessment of the company.

I'm sorry my comment is a waste of time to you, but maybe others will find it useful.

[NZSilver]

low debt, 7% dividends, consumer staple, NZ + overseas markets, vertically integrated, low end of listing range, and yes PE has had its way with it (ie selling and leasing back facilities) + growth may be only single digit/stagnant - however there is a lot to like.

I think PE has left enough on the table to take a small holding for medium term 1-2 years, with re-assessment based on results.

[Grunter]

low debt, 7% dividends, consumer staple, NZ + overseas markets, vertically integrated, low end of listing range, and yes PE has had its way with it (ie selling and leasing back facilities) + growth may be only single digit/stagnant - however there is a lot to like.

I think PE has left enough on the table to take a small holding for medium term 1-2 years, with re-assessment based on results.

I wonder how long they will be able to maintain those 7% dividends.

[trader_jackson]

I wonder how long they will be able to maintain those 7% dividends.

As long as dick smith managed to maintain there's? ;)

[percy]

As long as dick smith managed to maintain there's? ;)

The comparison between Dick Smith and Tegel over looks the fact that Dick Smith had been a "basket" case for years,under performing in a "tough" retail sector with very low margins.It was then loaded up with debt it could not service.
On the other hand "Tegel" is the trusted brand in the consumer staple sector.Chicken consumption is increasing and Tegel is the largest operator.The float has been used to strengthen Tegel's balance sheet.

[noodles]

Worth a listen...
https://soundcloud.com/nbr-radio/chief-executive-phil-hand-on-how-tegel-will-fare-as-a-public-company
"a lot of growth already locked in with contracts won"

[noodles]

Pre-IPO valuation... Source NBR


Source
Low (EV/EBITDA)
High (EV/EBITDA)
Average


Deutsche Bank Craigs
8.9
9.8
9.35


First NZ
9.3
9.6
9.45


Goldman Sachs
8.9
10.8
9.85


Average


9.55



To reach average valuation, share price would need to reach $1.92

[noodles]

Tegel has been touted as the replacement for Coats on the NZX50. Can anybody confirm?

Coats delisting on 24 June

[noodles]

EV
EBIT
EV/EBIT
pe
Div Yield (gross)


RBD
602
45.1
13.35
18.6
5.94%


TGH
693
80.4
8.62
13.7
6.78%

[NZSilver]

Nice one noodles!

[axe]

some research here on the supplier vs supermarket relationship

http://www.consumersinternational.org/media/1035307/summary,%20the%20relationship%20between%20supermar kets%20and%20suppliers.pdf

8035

[Snow Leopard]

EV
EBIT
EV/EBIT
pe
Div Yield (gross)


RBD
602
45.1
13.35
18.6
5.94%


TGH
693
80.4
8.62
13.7
6.78%




RBD are only part chicken, surely?

Best Wishes
Paper Tiger

[noodles]

RBD are only part chicken, surely?

Best Wishes
Paper Tiger
Very true, and don't forget the milky coffee.

Looking at the PE and Div Yield, RBD is pretty close to the average NZX50 stock.
Investors need to ask themselves if TGH deserves a lower pe and yield than the average NZX stock.

[Grunter]

The float has been used to strengthen Tegel's balance sheet.

You mean provide the PE firm with an exit strategy and return on their investment

[trader_jackson]

RBD has proven its ability to grow sales, Tegel has not yet had a reliable track record of providing good growth, the PE reflects this scepticism

It would be interesting to compare the balance sheet strength of each.

Disclosure: Hold neither

[noodles]

RBD has proven its ability to grow sales, Tegel has not yet had a reliable track record of providing good growth, the PE reflects this scepticism

It would be interesting to compare the balance sheet strength of each.

Disclosure: Hold neither
The Tegel PDS does highlight EBITDA CAGR of 12.7% for FY13-FY17. This is pretty much in-line with RBD over the same period. This growth has occurred during the ownership of private equity (rather than a listed entity). Top line growth is at around 7%. RBD will grow the top line faster. However, this includes that Australian acquisition.

I use Net Debt/EBITDA to measure balance sheet strength:
TGH = 1.42
RBD= 1.09

RBD has less leverage. However, the debt for Tegel is still at acceptable levels. RBD should be able to use their balance sheet to acquire further Australian assets without having to come back to shareholders.

[NZSilver]

The DSE saga has really given Tegel a bad wrap - as you can see from this forum, which was good in a way because the offer price was attractive. It's important to be weary of PE publicly listing companies, however I don't think it is a wise investor who writes them off just because they are owned by PE.

[percy]

The DSE saga has really given Tegel a bad wrap - as you can see from this forum, which was good in a way because the offer price was attractive. It's important to be weary of PE publicly listing companies, however I don't think it is a wise investor who writes them off just because they are owned by PE.

Sage advice, yet if you go to the DSE thread you will note the number of experienced sharetraders who warned DSE should be avoided.
With Noodles helping us with the fundamentals, it means we better understand Tegel, and its future prospects.
The wife and I each received very generous allocations from Craigs,which I am keen to add to at current prices.

[noodles]

The DSE saga has really given Tegel a bad wrap - as you can see from this forum, which was good in a way because the offer price was attractive. It's important to be weary of PE publicly listing companies, however I don't think it is a wise investor who writes them off just because they are owned by PE.

Agreed.

Private Equity are well known for stripping companies of their assets, stripping costs, and on-selling them.

To a certain degree, they have done this. A sales and lease back of properties was undertaken in 2014. I estimate that this was worth around $100m.

But to their credit they have been investing in the business as well. From 2013-2015, $90m of was invested in the business. Some of this was maintenance capex ($28m) and some was financed by a third party ($25m). However, the rest was for growth and productivity improvements.

In fact, capex as a % of depreciation was 215%,262%, and 131% from 2013-2015. This tell me that private equity have been investing heavily in the business. Perhaps it was neglected by previous owners.

Combined with the residual Private Equity shareholding (45%), I feel confident that the owners of the business have been improving the company to make it more competitive, rather than stripping it of assets.

[Beagle]

Tegel has been touted as the replacement for Coats on the NZX50. Can anybody confirm?

Coats delisting on 24 June

I can't confirm one way or another but with the percentage sort of locked up with PE holdings that sometimes counts against a company's assessment criteria. Maybe as a speculative exercise look at the market cap less the market cap held by PE and compare that to the market cap of SCL less the percentage now locked up with Chinese ownership. Could be a fairly tight race because based on my limited knowledge of how the NZX assess these things market cap is only one criteria, volume traded another and there's probably a range of other criteria they incorporate in their black art of deciding how these things are done.. Certainly when CVT entered the NZX50 index there was a quick and significant increase in the SP.

[James108]

Anyone have a link to historic financial statements? The product disclosure statement says these are available from www.business.govt.nz/disclosure but this page doesn't exist???

[noodles]

The historical financial statement are on the ASX site under the same code TGH
http://www.asx.com.au/asx/statistics/announcements.do?by=asxCode&asxCode=TGH&timeframe=D&period=M6

[winner69]

The historical financial statement are on the ASX site under the same code TGH
http://www.asx.com.au/asx/statistics/announcements.do?by=asxCode&asxCode=TGH&timeframe=D&period=M6

http://stocknessmonster.com/news-history?S=TGH&E=ASX&Year=2016

They were filed with the ASX

Comapnaies Office under Ross Group would have older ones if you want to go further back

[crabs]

This IPO is a classic example of how to use a very buoyant market to dress up a dog then cook it and serve it so it looks like tasty chicken.
No matter how much sauce and seasoning you put on it this investment is going to leave a fowl taste in investors mouths.

[NZSilver]

Can you explain the reasoning crabs?