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rmbbrave
22-10-2005, 10:28 AM
Strong prices bolster PGG-Wrightson merger

22.10.05


Strong product prices were assisting in the bedding down of the newly merged PGG-Wrightson, interim managing director Baird McConnon told the annual meeting in Dunedin yesterday.

McConnon said after the meeting that rural supply stores had been busy in recent weeks, a sign that clients appeared to be giving the company the benefit of time before judging its success or failure.

The focus had been on ensuring the merged entity retained its strength, with minimal impact on the business and none on clients.

"If we succeed with our clients, we will succeed with our business."

McConnon expected the company to vacate Wrightson's Porirua head office by next March.

The corporate office is moving to Christchurch and account processing to offices in Napier and Dunedin.

He said it was too early to say how many of the 2700 staff inherited with the merger would keep their jobs, and added it was premature to judge which of the 20 South Island centres where both companies had rural supply stores would close.

A 100-day schedule has been adopted to bed in the merged company and create a divisional business structure which utilises the entity's size and strength, as well as a district management system which gives clients access to decision-makers.

McConnon said the proposed structure adopted the best elements of the way PGG and Wrightson previously operated.

PGG-Wrightson will operate six divisions - livestock, wool, rural supplies, finance, real estate and seed and grain - with three business units: Agri-Feeds, which imports and distributes animal feed and animal health products; Agriculture New Zealand Training, a private rural training organisation; and Irrigation and Pumping.

It has also created a joint venture with specialist Merino wool marketing company, New Zealand Merino. A remit to increase directors' fees from $400,000, previously paid to PGG's eight directors, to $875,000 for PGG-Wrightson's 12 directors, was passed without dissent.

Earlier, the former chief executive of PGG, Hugh Martyn, said it achieved a 6 per cent increase in sales, breaching the $300 million mark for the first time.

The $17 million tax-paid profit was down $750,000 on the previous year, due in part to the poor performance of its Irrigation and Pumping division.

- NZPA

rmbbrave
22-10-2005, 10:32 AM
PGW has been one of the few companies not to suffer much of a "correction" in the last week, listed at 2.16 and now at 2.14.

craic
25-10-2005, 02:28 PM
Watch out for the BIG improvement to come when a few zillion chickens are slaughtered and the European public go off chicken meat etc. Watch our little wooly muttons and scraggy beefs diappear across the water to fill the gap.

FYA4999
03-11-2005, 11:56 AM
I wonder if any institutions are buying up this stock? SP is starting to lift off. Perhaps index funds are buying in.

Wow - what a day...the stock surged to a high of $2.45, before backtracking a bit...and there was NO NEWS. I think I'll hold on this one a bit longer! :D

duncan macgregor
04-11-2005, 10:30 AM
Somebody is buying up big on this company today great volume. Cant be on the back of the bird flue scare still who is complaining. macdunk

rmbbrave
04-11-2005, 10:44 AM
quote:Originally posted by duncan macgregor

Somebody is buying up big on this company today great volume. Cant be on the back of the bird flue scare still who is complaining. macdunk


That's good.

I got some a few days ago at 2.30

Footsie
04-11-2005, 12:30 PM
I've been looking at getting into this stock for a while..

i've obviously been looking for too long as its ralled 12% in a week.

I guess its quite tightly held and as soon as somebody wants vol...price goes up.

Snow Leopard
02-02-2006, 05:01 PM
There has been heavy selling of PGW since the 18th january, when the Aon insurance announcement came out. Closed at $1.96.

Rural seems to be out of favour at the moment.

foodee
02-02-2006, 07:03 PM
Have been out for a wee while.
Farming out of favour
Horticulture(here in HB) really struggling - will impact on W&K
Dry weather and so on
Ongoing increasing costs esp fuel and power and so the list goes on
Plus restructuring within the co.


Will look again when things change.

Phaedrus
02-02-2006, 07:33 PM
PGW has been in a downtrend for about 3 months, so far. The previous uptrend ended with a nice clear "V" reversal and most any trend indicator would have got you out fairly shortly thereafter. Note how the OBV (On Balance Volume) indicated a "Sell" weeks before any of the other 3 indicators shown here were triggered. This is exactly what "leading" indicators are supposed to do - provide early notice of trend weakness.

http://h1.ripway.com/Phaedrus/PGW22001.gif

Bobby_Fischer
07-02-2006, 12:42 PM
SP has now fallen about 22% in three weeks, with no obvious explanation. With the result due next Thursday can't help wondering who has had a sneak preview. Where is the NZX?

Sideshow Bob
07-02-2006, 04:45 PM
I think that there are probably concerns on farm incomes - and therefore farmers spending. Dairy incomes have held up well, but sheep & beef farmers are under pressure, and the golden times of the last 4-5 years have seemingly dimmed. A drop in the dollar might help returns, but market prices for beef & lamb have fallen, with pelts, wool, venison & Velvet still depressed.

If it continues, will put pressure on farm prices, which appear to be driven by capital gain, rather than yield.

As Foodee mentions, costs have continued to increase, including interest rates, which will start to bite as farmers come off fixed rates. Many are pretty heavily leveraged.

FYA4999
06-04-2006, 10:23 AM
Possible break in downward trend happening...maybe low NZD has something to do with it.

Perhaps market looking for undervalued stocks right now.

Mick100
06-04-2006, 05:35 PM
This drop in the value of the NZD couldn't have come at a better time for our farmers - at the hieght of the killing season. Even the dairy farmers will be breathing a sigh of relief although Fonterra have 15 months of forward currency hedges in place so it will be 06-07 season before they get some benifit from the lower dollar

They say that spending levels are very closely correlated with confidence in future returns and I'm betting that the confidence levels of farmers have rachetted up a few notches since the NZD has taken a dive.

Agricultural commodities appear to be right at the bottom of thier price cycle at the moment so hopefully we will have rising prices along with a falling dollar and boom times for NZ farmers.
Bought some PGW today.
,

Mick100
20-04-2006, 07:23 PM
PGW must have broken out of it's downtrend by now - any chartists out yhere to give me an update - thanks
,

duncan macgregor
21-04-2006, 07:38 AM
MICK, PHAEDRUS would with his system sold at about $2-20 on the sell indicator and bought back in at $1-85 on the buy indication. I prefer doing the fundamental evaluation at the buying bit. PGW was a fundamental screaming buy at the end of feb. They sold surplus properties then the dollar started to drop the company was under priced with a divi looming. As always A fundamentely good companies share price will go to high go sideways then drop to low. Your other company that you hold like this is POT which is at the beginning of a long slow uptrend. The forestry exports will be the fundametals behind that. macdunk
app to PHAEDRUS if i got it wrong

Mick100
21-04-2006, 10:42 PM
It didn't break the downtrend until it went over $2.00 macdunk. It shot up to $2.10 then came back down to test the trendline at $2.00 and then it was away - perfect breakout
Correct me if I'm wrong but did PGW put in an inverse H&S over the past couple of months.
The chartists should be drooling over this one but they're nowhere to be seen - I'm disapointed.
,

duncan macgregor
22-04-2006, 07:52 AM
MICK, I can only say what i did. I sold out at $2-20 average when it hit my time line in dec and bought at $1-85 in feb. I find charts mixed with a bit of common sense the way to go. My time line told me to get out my common sense told me that the share was underpriced buy back in. Tread lines is no way to buy a share fundamental analysis is. The tech side of it comes into its own at the sell end. The herd had gone to far and was dithering about before running to far in the opposite direction. macdunk

kittydashwood
22-04-2006, 08:49 AM
:D
Comedy hour!!!

FYA4999
24-04-2006, 02:23 PM
Plenty of Buy orders...thinning out on the Sell side...PGW is definitely heading up.

I'm happy...:D

duncan macgregor
24-04-2006, 03:09 PM
quote:Originally posted by FYA4999

Plenty of Buy orders...thinning out on the Sell side...PGW is definitely heading up.

I'm happy...:D
Dont fall in love with it remember to get out when the time is right. It ought to trend up for a considerable period with the lower dollar, mad cow disease, bird flue,to name a few items that are influencing the sp. macdunk

Mick100
24-04-2006, 04:34 PM
I'll be holding long term.
The growing middle class in asia are going to demand, and be able to afford, more than three bowls of rice a day from now on. There are not many countries in the world that produce huge food surpluses such as NZ does. More and more arable land is going to be used to grow crops for bio fuels around the world which means less land available to grow food crops leading to reduced supply and increased food prices.
,
,

duncan macgregor
25-04-2006, 09:30 AM
MICK, Never think you will hold long term even although it looks like a long term hold. I thought i was in this company long term but bailed out on my sell system then rebought back in. It certainly looks good fundamentely with the lower dollar plus the mad cow disease in the USA plus bird flue worries. If the sp rises to fast we might get another 15pc play at the top so dont stick them under the bed just yet. macdunk

FYA4999
25-04-2006, 11:03 AM
Where's Phaedrus these days? We need another chart update!!

;)

duncan macgregor
25-04-2006, 01:41 PM
quote:Originally posted by FYA4999

Where's Phaedrus these days? We need another chart update!!

;)
I think you expect PHAEDRUS to give you a simple chart that explains all. It would be a difficult thing to post a meaningfull chart on this company. Lets take me for instance with my little play as an example. I bought PGG at $1-74 on sept 2004 before it amalginated with WRI i got extra shares in the new company for nothing plus all the dividends since then. To give out a simple chart means nothing unless everything fundamentely is accounted for.
To draw a chart starting at $1-74 up to $2-20 {todays price] means very little unless dividends bonus shares whatever are counted. I would not expect PHAEDRUS to go into all the nitty gritty other than a chart on the sp which is only part of the story. macdunk

Phaedrus
25-04-2006, 03:55 PM
FYA4999 - here is a PGW chart for you. The 4 indicators shown here are all in good broad agreement and would currently have you holding this stock. Note how the OBV generated signals are much earlier than the rest - this is exactly what a "leading" indicator is supposed to do. Note also the sudden drop in the OBV right at the top of the uptrend as bigger holders (presumed to be the smart money) exited. Didn't they time that nicely? Bigger players are not invariably right of course, but it pays to keep an eye on what they are doing. Exactly the same phenomenon can be seen with other stocks - take a look at CAV for example - another exquisitely timed exit. It could be that these people know more than you and I - or perhaps they are just lucky.

Duncan.
Chart data is corrected for everything that has a quantifiable effect on the shareprice. Charts have therefore been corrected for share splits, bonus issues, capital distributions, new issues, stock consolidations etc.
If you can identify a nitty or a gritty that you think has been missed, I would be interested to know its identity. An overlooked correction appears on the chart as an aprupt vertical step - playing hell with all technical indicators. TA would be worthless on stocks like GPG (regular bonus issues) or NZR (big dividends) unless the data were corrected for these events.

Mick100. Yes, PGW did give a classical inverse "Head and Shoulders" formation - these are bullish as of course you know. I prefer to split these into their formative parts - a downtrend, a V reversal then an uptrend. Same thing though, whatever you call it.

http://img.photobucket.com/albums/v418/789456/PGW425001.gif

duncan macgregor
25-04-2006, 05:20 PM
PHAEDRUS, the two companies merged in oct 2005. PGG got a bonus issue of one share for every eight. Thats when PGW started up before that you had two sep companies with completely different prices. What companies fortunes does your chart follow PGG or WRI before the merger. Your chart only indicates PGW which was non existent at that time. The fortunes of both companies leading up to the merger and charts were nothing similar. MACDUNK

Mick100
25-04-2006, 05:48 PM
Thanks for the update Phaedrus
.

Phaedrus
25-04-2006, 06:34 PM
Duncan,
Prices prior to the merger are based on corrected WRI data. That is how charts covering such a merger are usually presented. That is how Yahoo Finance handled it.

If you feel that I am playing fast and loose with the data and do not trust this process, simply ignore all of the chart prior to 10/10/05. Guess what? You get the same signals, the same marked drop in the OBV, the same excellent OBV entry point in February etc etc.

FYA4999
25-04-2006, 06:37 PM
Nice one Phaedrus...hope you post us an update when the Sell indicators are flashing too!

[:o)]

ps : MacDunk you've got a good point re the merger, but everything from Oct 2005 onwards refers to PGW, so its all good...we've got an uptrend.

duncan macgregor
25-04-2006, 09:14 PM
quote:Originally posted by Phaedrus

Duncan,
Prices prior to the merger are based on corrected WRI data. That is how charts covering such a merger are usually presented. That is how Yahoo Finance handled it.

If you feel that I am playing fast and loose with the data and do not trust this process, simply ignore all of the chart prior to 10/10/05. Guess what? You get the same signals, the same marked drop in the OBV, the same excellent OBV entry point in February etc etc.

PHAEDRUS, Any chart or other form of analysis is only as good as its accuracy. Like I said i had PGG up to the merger and yet post a chart for a company that did not exist before the merger. It might be accurate after the merger but for a pgg holder Its totally useless. If they cant even get the name of the company right what other things do they overlook. I do like the way you post your charts but this one leaves a lot to be desired. macdunk

Morpheus
22-05-2006, 02:23 PM
So it looks like Fonterra will be expanding its RD1 stores in the South Island. Products and services catering to the beef, sheep and cropping sectors to be introduced over time to complement RD1's existing strengths in dairy.
What do sharetraders think?

NZ's Fonterra in retail services deal with Landmark
Monday May 22, 2006, 9:48 am
WELLINGTON, May 22 (Reuters) - New Zealand dairy giant Fonterra Co-operative said on Monday it had reached a deal with Australia's Landmark to expand retail services to their rural customers.

Landmark is the rural trading and services division of Australian national wheat exporter, AWB Ltd. (ASX: AWB.ax) .

Under the new deal, a joint venture in New Zealand and an alliance in Australia will introduce new services like finance, insurance and real estate plus an expanded livestock sales service through Fonterra's RD1 stores in New Zealand and new Landmark Fonterra branded stores in Australia, the companies said in a joint statement.

"The RD1 stores in New Zealand and the Landmark Fonterra outlets in Australia are destined to become the leading one-stop shop for all the supply needs of dairy farmers," RD1 Chief Executive John Lea said.

Products and services catering to the beef, sheep and cropping sectors will be introduced over time to complement RD1's existing strengths in dairy.

Fonterra, which has 51 RD1 stores in New Zealand, will expand the number of its stores in the South Island, while the Landmark Fonterra chain will intially begin with 11 outlets in Victoria in Australia before looking to expand.

Landmark, which has 430 stores in Australia, will make a net investment of NZ$35-45 million ($22-28 million) in the joint venture.

Unlisted Fonterra is owned by around 12,000 farmer shareholders and generates around 20 percent of New Zealand's exports and 7 percent of gross domestic product.

($1=NZ$=1.61)

Bobby_Fischer
31-05-2006, 05:21 PM
Unusual volume and up 20 against the tide today, as it were. Didn't this get a broker downgrade on the back of the story above (NZ First Capital?)? So something bubbling away in the background? More Aussie poachers, perhaps?

Snow Leopard
31-05-2006, 07:21 PM
quote:Originally posted by Bobby_Fischer

Unusual volume and up 20 against the tide today, as it were. Didn't this get a broker downgrade on the back of the story above (NZ First Capital?)? So something bubbling away in the background? More Aussie poachers, perhaps?

Don't PGC and Craig Norgate's company (Rural Porfolio something) have a majority stake between them?

Bobby_Fischer
31-05-2006, 08:16 PM
You're quite right PT. I forgotten about that. Each also has pre-emptive rights to the other's holding. So just some portfolio activity then, you reckon?

rmbbrave
04-07-2006, 08:50 AM
PGG Wrightson cuts profit forecast by $3m to $27m

Tuesday July 4, 2006
By Martha McKenzie-Minifie


PGG Wrightson has cut its profit forecast by 10 per cent, after bad weather in the South Island and delays in selling surplus property.

New Zealand's largest rural service company, formed last year by Craig Norgate, yesterday announced it expected a net profit of around $27 million, after a $10 million deduction for amortisation, compared with a previous forecast of $30 million.

The result included $7.5 million in one-off items, PGG Wrightson chief executive officer Barry Brook said.

Shares in the company fell 22c to $2.00.

Brook said a wet May and cold and snowy June in the South Island affected the company.

"We've had reduced livestock activity and farmers haven't been spending to the same extent," said Brook. "The regrassing activities have been down and the wet weather impacted on the maize harvest in the North Island too."

He said some property that became surplus through last year's merger of PGG and Wrightson had taken longer than expected to sell.

Brook would not elaborate but said more detail would be available in the company's annual results announcement next month.

Goldman Sachs JBWere analyst Rodney Deacon was surprised at the size of the downgrade and said the company was previously "pretty adamant" about achieving its $30 million forecast.

Deacon said there could be more bad weather, which could further affect the company's performance.

Forsyth Barr analyst John Cairns said the announcement was not a surprise.

"It is negative but then when you consider the trading environment - they are directly impacted by the climatic conditions, so it's to be expected in a company such as this."

Cairns said the company's confirmation that synergies achieved through the merger of Pyne Gould Guinness and Wrightson were expected to exceed $25 million a year was positive.

* Pyne Gould Corporation, an investment company which holds a stake in PGG Wrightson, yesterday announced it expected to report a year end operating profit above last year's result, notwithstanding more difficult trading conditions in the rural sector.

duncan macgregor
04-07-2006, 09:19 AM
quote:Originally posted by duncan macgregor

MICK, Never think you will hold long term even although it looks like a long term hold. I thought i was in this company long term but bailed out on my sell system then rebought back in. It certainly looks good fundamentely with the lower dollar plus the mad cow disease in the USA plus bird flue worries. If the sp rises to fast we might get another 15pc play at the top so dont stick them under the bed just yet. macdunk

Anyone out there with them under the bed?. It is a situation that was easy to work out. Bad weather worse than normal, before the dropping dollar got drip fed back to the farm. This is a dead certainty uptrend when the shock of winter wears off. This looks like a 20pc play coming up [plus dividends] in the next 12 months.
macdunk

rmbbrave
04-07-2006, 09:34 AM
Does that mean you have recently bought back in and at what price?

I recently sold at 2.19.

duncan macgregor
04-07-2006, 09:48 AM
quote:Originally posted by rmbbrave

Does that mean you have recently bought back in and at what price?

I recently sold at 2.19.

No not so far i think there is a bit of downside left. macdunk

duncan macgregor
19-07-2006, 08:13 PM
quote:Originally posted by duncan macgregor


quote:Originally posted by rmbbrave

Does that mean you have recently bought back in and at what price?

I recently sold at 2.19.

No not so far i think there is a bit of downside left. macdunk

The last of the downside i think is over. The only other unresolved bad news is the deer velvet downtrend. The price dropped to far with the butter scare looks like the uptrend starts now. Whoever bought at under $2-00 is looking at a bargain. macdunk

rmbbrave
19-07-2006, 09:52 PM
They finished today at 1.98.

So if you want a "bargin" you can still get one.

Have you bought back into PGW Duncan?

duncan macgregor
20-07-2006, 07:48 AM
quote:Originally posted by rmbbrave

They finished today at 1.98.

So if you want a "bargin" you can still get one.

Have you bought back into PGW Duncan?

RMBBRAVE, money where the mouth is. The farming cycle with the lower dollar and the rise of china can only trend up. Another 20pcenter plus divies on the way. macdunk

rmbbrave
20-07-2006, 11:47 AM
Another 20%er Duncan?

Over what time frame?

Mick100
20-07-2006, 11:55 AM
Good call Macdunk

Take alook at a long term chart of PGW. It's on a steady incline

I think you will get your 20% plus divi on this one.

rmbbrave, I assume macdunk's time frame is one year.
,

duncan macgregor
20-07-2006, 12:17 PM
quote:Originally posted by Mick100


Good call Macdunk

Take alook at a long term chart of PGW. It's on a steady incline

I think you will get your 20% plus divi on this one.

rmbbrave, I assume macdunk's time frame is one year.
,



Maybe yes and maybe no mick. It should trend up at 20pc pa plus dividends over what period remains to be seen. The sp will one day be to high for what it is and trend down all over again. I expect a timeframe of at least a couple of years but that depends on outside influences. macdunk

kittydashwood
20-07-2006, 01:21 PM
Don't get the wool pulled this little heifer is going nowhere until the EU let Fonterra play butterball and the insurance pays out for the extreme weather events this year.

To ignore the risks would be Duncanesque, I do share your positive view for the future of PGW but thebuy order at 1.85 could still be filled before September.

disc. hold

kittydashwood
20-07-2006, 01:44 PM
Oh my god I just realised MACD has become a guru!!
Congratulations Duncan maybe we can get you a new keyboard for the next 2500 posts.
:)

duncan macgregor
20-07-2006, 01:51 PM
quote:Originally posted by kittydashwood

Don't get the wool pulled this little heifer is going nowhere until the EU let Fonterra play butterball and the insurance pays out for the extreme weather events this year.

To ignore the risks would be Duncanesque, I do share your positive view for the future of PGW but thebuy order at 1.85 could still be filled before September.

disc. hold

KITTY, the butterball is sold its back to squire one. More upside than downside. The only downside in the immediate future is the deer velvet. I doubt very much if the sp will be under $2-00 before it hits $2-50 which it will do before this cycle is over. The end of the bad weather season is always a good buy in time dont get to greedy and miss out. macdunk

Mick100
20-07-2006, 02:50 PM
Congratulations Macdunk, your a bloody genious

PGW has 3-4 yrs of upside from here in my opinion

I'm expecting a doubling in shareprice in the next 4 yrs. Who cares wheather you pay $2.00 or 1.85 as long as your in on the bull market in Ag commodities
,

kittydashwood
20-07-2006, 05:11 PM
Truth is I've been long since pgg was 1.08 in 2003

Mick100
20-07-2006, 05:50 PM
quote:Originally posted by kittydashwood

Truth is I've been long since pgg was 1.08 in 2003


You may be clever but your not a Guru ;)
,

Snow Leopard
20-07-2006, 05:57 PM
I am a guru, and I was interested in PGW.
But if MacDunk is going to sing it's praises, then I am out.

duncan macgregor
20-07-2006, 06:25 PM
quote:Originally posted by Paper Tiger

I am a guru, and I was interested in PGW.
But if MacDunk is going to sing it's praises, then I am out.

AH DONT SING AND AM NOT SINGIN. AH DONT SMILE AND AH AINT LAUGHIN.
AND AH DONT SING PRAISES CAUSE IT AINT SUNDAY. macdunk

Snow Leopard
20-07-2006, 06:37 PM
quote:Originally posted by duncan macgregor

AH DONT SING AND AM NOT SINGIN. AH DONT SMILE AND AH AINT LAUGHIN.
AND AH DONT SING PRAISES CAUSE IT AINT SUNDAY. macdunk

Presbyterian heh?

BRICKS
23-07-2006, 02:02 AM
DONT forget ALF it has a big weather proof fiance company and not much butter to boot but very hard to BUY.. [8D]

Sideshow Bob
23-07-2006, 03:15 PM
Never held, but how much of their income comes from Real Estate?


Winter Blamed For Farm Sales Drop

Sat 22-Jul-2006 6:37AM


The Real Estate Institute is blaming the harsh winter for a significant drop in farm sales.


It says the number of farm properties to change hands dropped by almost 100 last month, from about 250 in May. It is also 50 fewer sales than in June last year.

The median price for farm properties is also down on the previous month and a year ago

The Institute's rural spokesperson, Murray Cleland, says while there is always a winter slow-down, the extent of the drop in sales has been surprising.

The lifestyle property market has caught a cold as well, with fewer sales last month and the median price dropping to below $400,000.

However, he says the market fundamentals remain good, especially with the falling dollar and he expects to see a revival of interest in the spring.


http://www.fencepost.com/news/detail.jhtml;jsessionid=2T2RSJN2L02VQCTTIYJCFEQKON DBKIV0?ElementId=/news/repository/20060722_063711_Winter_Blamed_For_Farm_Sales_Drop. xml

duncan macgregor
25-07-2006, 07:44 AM
Good pay out from fronterra, slightly more than expected after a year fighting the high dollar. Everything points to a trend up according to what i hear down at the farm. The high price of fuel is more of an advantage than a disadvantage to NZ farmers in one respect. overseas farmers on average have a greater exposure to fuel prices than nz farmers creating higher prices for their produce. macdunk

CAM
25-07-2006, 07:59 AM
quote:Originally posted by duncan macgregor

overseas farmers on average have a greater exposure to fuel prices than nz farmers
macdunk


Whats your source of info for that statement?

cheers

duncan macgregor
25-07-2006, 08:09 AM
CAM, Been there seen that. NZ farmers dont have to crop to the extent most overseas farmers do in order to feed their animals. The higher the price of fuel the greater the advantage. macdunk

kittydashwood
25-07-2006, 09:05 AM
MACD that statement is erroneous as the NZ dollar is the worst performing currencey in the world and oil is measure in US DOLLARS

duncan macgregor
25-07-2006, 09:36 AM
quote:Originally posted by kittydashwood

MACD that statement is erroneous as the NZ dollar is the worst performing currencey in the world and oil is measure in US DOLLARS
KITTY you are dashing into the woods and cant even see the trees. The lower our dollar is the better our farmers like it, or dont you know that?. The NZ farmer in comparison to the average overseas farmer grows very little crops to feed his animals due to the climate. This means in simple terms that if the world price of fuel rises it raises the world price of produce giving the NZ farmer an advantage.
America for instance exports a lot of grain fed beef.
The price of fuel is not only governed by low or high dollars you have to take into account the tax take. Compare the price of fuel in NZ to the UK for instance you will find your arguement looses all credability. macdunk

Deev8
25-07-2006, 11:39 AM
quote:Originally posted by duncan macgregor

Compare the price of fuel in NZ to the UK for instance you will find your arguement looses all credability. macdunk


Good point, except for the fact that farmers in the UK don't pay the retail price for diesel - agricultural diesel attracts a much lower rate of duty and tax.

duncan macgregor
25-07-2006, 12:22 PM
quote:Originally posted by Deev8

Good point, except for the fact that farmers in the UK don't pay the retail price for diesel - agricultural diesel attracts a much lower rate of duty and tax.
[/quote]
That is exactly the point when you compare one countries advantages over anothers. You simply cant take one little part of the cost structure and ignore the rest to suit your arguement. I would think for instance the initial cost structure to start up and run a farm in the UK far exceeds what the nz farmer has to contend with. The average beef, milk, or even sheep farm must crop to keep things fed in the winter, much more than their NZ counterpart. Regardless of what price fuel is, it is to our advantage the higher it goes.
With cropping comes extra fuel bills, labour costs, plus cost of machinary, that we in nz dont have to put up with. macdunk

Mick100
25-07-2006, 01:00 PM
quote:Originally posted by duncan macgregor
[ The average beef, milk, or even sheep farm must crop to keep things fed in the winter, much more than their NZ counterpart. Regardless of what price fuel is, it is to our advantage the higher it goes.
With cropping comes extra fuel bills, labour costs, plus cost of machinary, that we in nz dont have to put up with. macdunk


Your dead right Macdunk

NZ is one of the few countries in the world where animals are pasture fed all years round. Most of the supplementary feed is made from surplus pasture in the late spring so there is little need for cropping

That's a very good point - that rising fuel costs make NZ farmers more competitive in world markets.
.

Deev8
25-07-2006, 03:23 PM
quote:Originally posted by Mick100

That's a very good point - that rising fuel costs make NZ farmers more competitive in world markets.

Is that because our farm produce is transported shorter distances to reach their final markets?

Mick100
25-07-2006, 05:12 PM
quote:Originally posted by Deev8


quote:Originally posted by Mick100

That's a very good point - that rising fuel costs make NZ farmers more competitive in world markets.

Is that because our farm produce is transported shorter distances to reach their final markets?


High value products such as dairy, meat and wool will not be disadvantaged too much by higher shipping costs. Low value products such as apples will be severely disadvantaged by higher shipping costs. Overall higher fuel costs will make NZ produce more competitive in global markets, or to be more accurate, will make north american and European Ag products less competitive due to much higher costs of production. The increased shipping costs of NZ products is insignificant compared to the increased costs of production that farmers in other parts of the world will have to bear.
.

Sideshow Bob
25-07-2006, 07:08 PM
quote:Originally posted by Mick100


quote:Originally posted by Deev8


quote:Originally posted by Mick100

That's a very good point - that rising fuel costs make NZ farmers more competitive in world markets.

Is that because our farm produce is transported shorter distances to reach their final markets?


High value products such as dairy, meat and wool will not be disadvantaged too much by higher shipping costs. Low value products such as apples will be severely disadvantaged by higher shipping costs. Overall higher fuel costs will make NZ produce more competitive in global markets, or to be more accurate, will make north american and European Ag products less competitive due to much higher costs of production. The increased shipping costs of NZ products is insignificant compared to the increased costs of production that farmers in other parts of the world will have to bear.
.


Likely the bigger pressure is going to come from 'food miles', especially in the UK. Link below:

http://www.bbc.co.uk/food/food_matters/foodmiles.shtml

Fonterra recently has been attacked on this front in the UK from a local butter company, where 30% of goods transported on the road is food & agriculture. Although shipping from NZ is probably more fuel efficient than trucking fruit & vege from Spain to the UK - shipping costs are probably only 25-40c/Kg.

kittydashwood
25-07-2006, 07:42 PM
And when oil hits 100$ as Soros and co predict for next year?
Just how will that help Dunkle? As the NZ USD could be at .57
Triple whammy will only be averted by commodity prices staying high.

Interesting comments by Rod Oram on RNZ today suggesting Fonterra will be hard placed to lift their payouts past 5$ per share. Good to see PGW slipping into the Australian market.

(FROM THE INDEPENDANT)
PGG LAUNCHES IN AUSTRALIA


PGG Wrightson is expanding in Australia with the launch of a Melbourne-based real estate business to service the increasing demand from the New Zealand dairy industry for suitable properties across the Tasman.

Mick100
25-07-2006, 08:04 PM
Another point worth mentioning is that the Asian countries are closer to NZ than European countries. The increase in demand for NZ's Ag commodities is going to come from Asian countries. The first thing that the people of developing countries increase spending on, as their incomes increase, is food. How many people in the developed world live on a couple of bowls of rice a day? - not many. NZ is in a prime positon to capitalise on the hundreds of millions of people in the asian countries who are going to lift themselves out of poverty over the next 20 yrs.
,

duncan macgregor
25-07-2006, 08:33 PM
You are right on to it MICK. Nz is well placed for the chinese developing market. The lower dollar, plus the ever increasing price of oil will only help, not hinder profit levels for farmers. Kitty is talking a whole heap of rubbish if she thinks oil at $100 dollars a barrel will be a problem. Nz can produce farm products cheaper than almost every other country, roll on the price of oil as far as PGW is concerned.
When its time to move on macdunk is the first to pull the pin, i never fall in love with any company. Bought and sold this one a couple of times already, will probabely do like wise in the future. KITTY AMERICA is heading for bankrupsy, keep out of that market. MACDUNK

kittydashwood
25-07-2006, 09:16 PM
ok duncan i will when you stop posting dribble

kura
25-07-2006, 11:15 PM
$100 Oil, Easy, just realise that the entire western economy is built on cheap energy, then it's quite simple. Sure in terms of comparative advantage, we would still have it all over most of our competitors, as we require less oil per kilo of beef than our competitors, (but offset by the consequent high cost of transport)

But given the problems with global warming, we really need to eliminate carbon emmisions as much as possible, so rather than employing contractors to do things like bulldozing/digging at my place that use heavy machinery, why don't we just import a few million guys from these third world countries, who earn less than a dollar a day, gee we would solve two problems at once !!!

The Doctor
26-07-2006, 08:17 AM
'global warming'...what a myth!...cold and ice this winter worst for years.

warthog
26-07-2006, 08:35 AM
quote:Originally posted by The Doctor

'global warming'...what a myth!...cold and ice this winter worst for years.


There is clown talk elsewhere this morning as well as here. If you lived in some of the places that have been profoundly affected by global warming, you would be fiddling to a different tune.

BRICKS
26-07-2006, 08:56 AM
quote:Originally posted by warthog


quote:Originally posted by The Doctor

'global warming'...what a myth!...cold and ice this winter worst for years.


There is clown talk elsewhere this morning as well as here. If you lived in some of the places that have been profoundly affected by global warming, you would be fiddling to a different tune.


GLOBAL warming has nothing to do with the fortunes of PGG.. [8D]

duncan macgregor
26-07-2006, 11:54 AM
Good announcement on the end of june quarter. Milkpowder butter cheese up 25.6pc or 95million. Meat and edible offal up $74 million. This should be good for PGW with some of that coming back to the company. KITTY i hope your prediction of a 57c cross rate with the yankey dollar comes to pass. Funny i always used to think that if you sold something you got paid in the other guys money, or what ever money you agreed to. MACDUNK

warthog
26-07-2006, 02:57 PM
quote:Originally posted by BRICKS


quote:Originally posted by warthog


quote:Originally posted by The Doctor

'global warming'...what a myth!...cold and ice this winter worst for years.


There is clown talk elsewhere this morning as well as here. If you lived in some of the places that have been profoundly affected by global warming, you would be fiddling to a different tune.


GLOBAL warming has nothing to do with the fortunes of PGG.. [8D]


Actually, this thread is about PGW.

In any case, both PGG and PGW's fortunes - or lack of them - have a lot to do with global warming.

This is assuming you are on the same planet as the rest of us BRICKS. I'm beginning to think that you actually are, but it's in a parallel universe. ;)

BRICKS
26-07-2006, 05:10 PM
quote:Originally posted by warthog


quote:Originally posted by BRICKS


quote:Originally posted by warthog


quote:Originally posted by The Doctor

'global warming'...what a myth!...cold and ice this winter worst for years.


There is clown talk elsewhere this morning as well as here. If you lived in some of the places that have been profoundly affected by global warming, you would be fiddling to a different tune.


GLOBAL warming has nothing to do with the fortunes of PGG.. [8D]


Actually, this thread is about PGW.

In any case, both PGG and PGW's fortunes - or lack of them - have a lot to do with {{global warning.}}

This is assuming you are on the same planet as the rest of us BRICKS. I'm beginning to think that you actually are, but it's in a parallel universe. ;)


wartie all you hot air air HELPS too thanks for the {{ WARNING }}

Stick to being So muddy, So smelly & So dumb.. [8D]

BRICKS
26-07-2006, 06:26 PM
wartie change his story this is called "CHEATING" HOG called warning back to WARMING you are So muddy So smelly & So dumb.. [8D][8D]

BRICKS
27-07-2006, 07:25 PM
quote:Originally posted by BRICKS

wartie change his story this is called "CHEATING" HOG called warning back to WARMING you are So muddy So smelly & So dumb.. [8D][8D]


THE wart gone to WATER.. [8D]

kittydashwood
02-08-2006, 11:55 AM
Where's my 20% Duncan?
Or did you just sell out?[:X]

duncan macgregor
02-08-2006, 08:51 PM
quote:Originally posted by kittydashwood

Where's my 20% Duncan?
Or did you just sell out?[:X]

KITTY, It all depends where you are coming from. Is it a trading account or is it an investment account?.
My investment account started with reid farmers then PGG then PGW.
It is so far in front it dousnt matter as long as the company remains solvent on a confirmed slow uptrend.
My trading account had me in and out of WRI, which was a really good trading share. What really counts is not a short downtrend which is very normal for this company giving good buying opportunities followed by sharp uptrends.
Long term very safe company to hold for long extended periods riding the rises and falls. Trading share under $2-00 is a must buy over $2-60 is a must sell.
The fundamentals are increasing profit margines with the farming outlook on the rise. The dropping dollar, china coming in to the market place, its all sunny for the future. The increased oil prices hurt the competition more than the NZ farmer so that is a positive.
My Trading and investing accounts are both loaded up looking for $2-60 within 12 months. MACDUNK

BRICKS
05-08-2006, 02:40 AM
WELL.. PGW... $1.88... [8D]

shasta
05-08-2006, 10:31 AM
...and looking very cheap!

On watchlist for now.

foodee
05-08-2006, 12:49 PM
The last time I mentioned double top(not this thread) I got told off.

shasta
05-08-2006, 02:55 PM
We wouldn't do that to you Foodee, you stay on the nice threads! :D

glennj
06-08-2006, 08:03 AM
quote:Originally posted by kittydashwood

Where's my 20% Duncan?
Or did you just sell out? .
Might have to wait a while! Amalgamation synergies & affects of lower dollar not showing though yet. Am back in on this one & will patiently hold until I judge it overvalued & time to sell.

kittydashwood
06-08-2006, 08:49 AM
Still holding and still waiting for a sub 1.85 price to increase my holding.
Interesting to see PGW on a certain US hedge fund's list of investment targets.
Now how low will fatty let this go? He'll be in boots and all below 1.75 buying up Duncan's failed "investment".

duncan macgregor
06-08-2006, 09:07 AM
quote:Originally posted by kittydashwood

Still holding and still waiting for a sub 1.85 price to increase my holding.
Interesting to see PGW on a certain US hedge fund's list of investment targets.
Now how low will fatty let this go? He'll be in boots and all below 1.75 buying up Duncan's failed "investment".

KITTY, TUT, TUT, Tall poppy syndrome have we?. Macdunk bought WRI at 86c and sold out at $1-27 which was my very first trade. I have made similar trades all the way up in my trading portfolio.
In my investment portfolio i bought PGG at i think $1-84 as you did remember those extra shares we got brings the price down about another 23c. All the dividends etc makes it still a good investment holding long term. I loaded up kitty at about $2-00 so save your scorn for another day this company will trend up. macdunk

kittydashwood
06-08-2006, 09:14 AM
I looked at the chart again and see a distinct possible at we could see a fibonacci retrenchment from the resistance at 2.10.
33% of 2.10 =.70
15% of 2.10 =.35
So I my low entry target is ---- 1.40
First stop on the way there should be ---- 1.75

duncan macgregor
06-08-2006, 09:36 AM
quote:Originally posted by kittydashwood

I looked at the chart again and see a distinct possible at we could see a fibonacci retrenchment from the resistance at 2.10.
33% of 2.10 =.70
15% of 2.10 =.35
So I my low entry target is ---- 1.40
First stop on the way there should be ---- 1.75

Carefull Kitty you are getting very close to me placing you in the same pigeon hole that i have yogi in oz in. I take it hopefully that this numbers game has nothing to do with lunar predictions?. Have a chat to yogi you might have something in common. Only joking.
macdunk

Mick100
06-08-2006, 02:11 PM
Well Macdunk, It looks as though we got this one wrong - never mind - if there's two of us that are wrong it's not so bad

Seriously now - if your in for the long term I don't think there's much to be concerned about
The fundermentals look very good for this company over the next 12 months. The NZ dollar is likely to fall further and demand from asia is likely to strengthen. Ag commodites always trail the metals and energy in the typical commodities bull market. I'd be very surprised if Ag commodities don't have a good run up in price over the next couple of yrs.
.

shasta
06-08-2006, 02:23 PM
Bit early to say that Mick, the fundamentals haven't materially changed, & should the share price drop down to anything like $1.75 (as per Kitty's post) i would be lining up for some.

Mick100
06-08-2006, 02:29 PM
quote:Originally posted by shasta

Bit early to say that Mick, the fundamentals haven't materially changed, .


That's exactly the same sought of feedback I got when I was loading up on miners and oilers in 2002-03 ;)
.

kittydashwood
06-08-2006, 02:36 PM
yes duncan all chartists are astrologers right?
Fibonacci (1170-1240) lived and worked as a merchant and mathematician in Pisa, Italy

Fibonacci summation series: 1,1,2,3,5,8,13,21,34,55,……..

The ratio of any number to its next higher number approaches 0.618

The ratios or alternate numbers approach 2.618 or its inverse 0.382

Fibonacci percentage retrenchments or projection are 61.8%, 38% and 50%

shasta
06-08-2006, 02:47 PM
Mick

My last post was in response to your one saying perhaps you & macdunk have got it wrong!

I do agree with you both on the fundamentals going forward & see this current weakness as perhaps a limited opportunity to get in a little earlier than i imagined, at a cheaper price. ;)

kittydashwood
06-08-2006, 02:51 PM
The fact remains we are all bottom picking a share which has broken medium uptrend.

shasta
06-08-2006, 02:59 PM
For that fact alone, it is currently on my watchlist for longer term holds only.

winner69
06-08-2006, 07:07 PM
quote:Originally posted by kittydashwood

I looked at the chart again and see a distinct possible at we could see a fibonacci retrenchment from the resistance at 2.10.
33% of 2.10 =.70
15% of 2.10 =.35
So I my low entry target is ---- 1.40
First stop on the way there should be ---- 1.75





KITTY ... Phaedrus wouldn't approve of how you calcualte these fib numbers ... like where do you get the 15% and the 33% from.

Bit closer to what they are with your other post.

I don't know whether the charts I use for PGW are right or not (bonus issues and all that) but they all look the same so as Phaedrus pointed in an earlier post they are probably OK .... if so the fib levels in my book are at 200 (38.2% retracement), 185 (50%) and 175 (61.8%).

If the charts are correct fibs have worked for PGW in the past ....

Certainly negative sentiment around this stock at the moment so keep an eye on the chart

duncan macgregor
07-08-2006, 07:58 AM
quote:Originally posted by kittydashwood

yes duncan all chartists are astrologers right?
Fibonacci (1170-1240) lived and worked as a merchant and mathematician in Pisa, Italy

Fibonacci summation series: 1,1,2,3,5,8,13,21,34,55,……..

The ratio of any number to its next higher number approaches 0.618

The ratios or alternate numbers approach 2.618 or its inverse 0.382

Fibonacci percentage retrenchments or projection are 61.8%, 38% and 50%


KITTY, a bit off topic and a bit of pin pricking on my part.
Surely mathematics must be absolutely correct to the letter or it is worthless. LEONARDO PISANO FIBONACCi 1170-1250. He was eighty not seventy when he died. macdunk

kittydashwood
07-08-2006, 02:05 PM
ok starting to look pretty tasty now.
maybe later in the week this overhang will be sorted out.
One way or the other.

I work in 6.18 steps

30% and 15% are conversational numbers only.
I guess to be exact on it the bottoms from 2.10 should be 1.97 (broken) 1.84 (we are on it now) and 1.71.
If it broke the old support of 1.67-1.71 i would be very very patient.

winner69
07-08-2006, 06:10 PM
quote:Originally posted by winner69
.... if so the fib levels in my book are at 200 (38.2% retracement), 185 (50%) and 175 (61.8%).



That 175 looking more likely now

Closed today at 182 .... low for the day as well

foodee
11-08-2006, 11:30 AM
This share is holding well despite the impact of this winter's weather on the farming sector.[?]
I remember 'Bola' well in 1988.

Fodder
11-08-2006, 07:58 PM
Big volume traded in the last ten minutes today...125,000 over 12 trades all at 1.85.
Was this an off market crossing? It wasn't denoted as such in the conditions field...I'm wondering where all the buyers came from all of a sudden?

Mick100
11-08-2006, 10:57 PM
It was most likely Macdunk topping up ;)
,

duncan macgregor
12-08-2006, 07:48 AM
quote:Originally posted by Mick100



It was most likely Macdunk topping up ;)
,
MICK you have to wonder who the sellers are, not the buyers.
I cant work out why someone would watch the price downtrend in a safe company like this, then sell at the bottom. I see that they sold an old PGG seed farm surplus to requirements for $7 million in the last few weeks. When the herd wake up watch this one trend. macdunk

kittydashwood
12-08-2006, 10:27 AM
grabbed a few 1.83-1.84 on the wilder oversold.
i think most buyers are like me waiting off depth, coaxing that sucker down.
hard to see the bottom in muddy water best feel your way in like floundering.
hard to take a full position before the company gives guidance.

KJ
12-08-2006, 02:23 PM
quote:Originally posted by duncan macgregor


quote:Originally posted by Mick100



It was most likely Macdunk topping up ;)
,
MICK you have to wonder who the sellers are, not the buyers.
I cant work out why someone would watch the price downtrend in a safe company like this, then sell at the bottom. I see that they sold an old PGG seed farm surplus to requirements for $7 million in the last few weeks. When the herd wake up watch this one trend. macdunk


I took the article to mean a "profit" of $7m.

kittydashwood
17-08-2006, 10:13 AM
Where's my 20% Duncan?
Is this your 1.75 W69?

1.76 this morning and a little change on the OBV.
Williams shows three descending peaks to the floor today.
Short term selling could climax today?

kittydashwood
17-08-2006, 10:33 AM
Woops there goes duncans stop loss

nelehdine
17-08-2006, 10:39 AM
I've been watching for a few weeks , almost bgt in at 194 but decided to wait, just been partially filled on my buy order at 172. Real case of catching a falling knife but can't see any real problem in the medium term in buying at these levels. Will add the same again if we drop into the 160's. Decent bid at 170 , hopefully it will stick around and provide some support.

kittydashwood
17-08-2006, 10:44 AM
Same

duncan macgregor
17-08-2006, 11:51 AM
I have had some of these since PGG days in my long term portfolio. In my trading portfolio I got out at about $2-20 and back in at under $2 on average. Talk about catching a falling knife, I am as guilty as hell. I will buy some more very shortly once it turns the corner. Bad winter, Townie investors,wait until they see lambs skipping about in the sunshine on the tele. The fundamentals say that this is a screaming buy. MACDUNK

Mick100
17-08-2006, 01:08 PM
Macdunk, could grab a trailor load of ewes with lambs and run them down Queen st at lunchtime.

The lawnmowers are out where I live so I assume the grass is growing.

PGW is looking a bit sick on the chart
Could be a double top - not good
,

Snoopy
17-08-2006, 01:27 PM
quote:Originally posted by duncan macgregor

Bad winter, Townie investors,wait until they see lambs skipping about in the sunshine on the tele. The fundamentals say that this is a screaming buy. MACDUNK


You may consider lambs skipping in the field sufficient fundamental analysis yourself Macdunk. IMO the main problem with your 'fundamental analysis' is that you have skipped the numerical bit (which some might consider 'all of it').

Here is the latest profit guidance put out by PGW management:

"The expectation now is for an NPAT of approximately $27 million after the deduction of $10 million for amortisation. This result includes a net $7.5 million of one-off items."

That points to an ongoing profitability of $27m+$7.5m(0.66)= $32m per year. The number of PGW shares on issue are 281,313,018. That means we are looking at earnings per share of:

$32m/281.3m= 11.4cps.

Based on a share price of $1.80, I calculate an ongoing P/E ratio of 16. Fair value, but hardly a 'screaming buy' in a cyclical industry like farming, I would have thought! Quoting further from the PGW management outlook:

"Prospects for the coming year will be affected by the impact of the lower exchange rate on farm gate returns, the volume of farm output and trading activity. Indications, at this stage, are that the influence of these factors is expected to be more positive in the coming year when compared to the year just ended. While recognising the impact adverse climatic conditions can have in general terms the outlook for the coming year is encouraging with evidence of confidence returning to the farming sector."

I don't agree with much of that myself. I predict a higher exchange rate, relative to the $US, and an associated slump in farm values once reality hits home. Then we will see a slump in farmer confidence due to the 'negative wealth effect'. The cold weather should mean a delayed start for farm production as well, which will further depress the immediate outlook. To offset that, there are probably some merger benefits still to flow through. And my prediction is that farmers will stop spending on those luxury items first, before they stop spending on their farms.

Despite my overall negative outlook for farming in general, and PGW in particular, I've topped up on a few shares today. I always buy in gloom, when the outlook is bad, as you well know Macdunk. The final dividend is coming up and will probably be another 4cps, matching the interim dividend. Based on a share price of $1.80, I calculate the annual pretax dividend yield at 6.6%, or less than you would get with the same money in the bank.

I wonder how many old WRI shareholders out there still think they will be getting a 10.5cps final dividend as per last year? Boy are those shareholders in for a nasty surprise! Maybe some of those 'income investors' have figured it out and are selling now, creating the current share price weakness?

At any rate because PGW is now what I would class as 'relatively expensive' for an NZ share, it looks like I will have to move PGW from my 'income' to my 'growth' portfolio. Is growth likely? The ambitious Craig Norgate (hasn't he been quiet lately? Too quiet I think, you can guarantee he isn't twiddling his thumbs at his desk!) is at the helm. IMO we 'growth investors' can expect to see some more action from this company over the next year or so! It might even hit $2 again if everything goes well.

SNOOPY

discl: hold PGW

Mick100
17-08-2006, 02:14 PM
quote:Originally posted by Snoopy




"Prospects for the coming year will be affected by the impact of the lower exchange rate on farm gate returns, the volume of farm output and trading activity. Indications, at this stage, are that the influence of these factors is expected to be more positive in the coming year when compared to the year just ended. While recognising the impact adverse climatic conditions can have in general terms the outlook for the coming year is encouraging with evidence of confidence returning to the farming sector."

I don't agree with much of that myself. I predict a higher exchange rate, relative to the $US, and an associated slump in farm values once reality hits home.












I tend to agree with you about the exchange rate with the USD Snoopy
I think the USD may fall as fast of faster than the NZD meaning the NZD could appreciate against the USD. I'll add that I expect the USD to fall against all other major currencies over the next yr or so.
The effect of this depreciating USD should be higher commodity prices in US dollars which means that NZ farmer should still be better off.

I don't see land values going down in the medium term although they could stop increasing in value for a few yrs.

So far, Ag commodities have not taken part in the commodities bull market. The base metals and energy always lead a new commodities bull market while ag commodities usually have their turn in the second half of the bull market. I'm quietly confident that ag commodities will have their day in the sun over the next few yrs.
PGW is a long term hold for me. Short term fluctuations in shareprice are for short term traders to take advantage of. I'll keep both eyes on the big picture.
.

kittydashwood
17-08-2006, 02:31 PM
mick look at the us-nzd is that an inverted head and shoulders?

Mick100
17-08-2006, 02:50 PM
I'd like to see a chart of the nzd against an index - US ,canadian. euro, yen, pound.
.

winner69
17-08-2006, 08:33 PM
quote:Originally posted by kittydashwood


Is this your 1.75 W69?




There is another Fib support thingie at 151 as well

What surprises me is that 30% has been lost so fast ,,,, like 6 weeks .... thats some fall

Obviously nots all well down on the farm

Snoopy
17-08-2006, 09:36 PM
quote:Originally posted by Mick100


I tend to agree with you about the exchange rate with the USD Snoopy
I think the USD may fall as fast of faster than the NZD meaning the NZD could appreciate against the USD. I'll add that I expect the USD to fall against all other major currencies over the next yr or so.
The effect of this depreciating USD should be higher commodity prices in US dollars which means that NZ farmer should still be better off.


I hope you are right Mick. Did you see the figures quoted on page 1 of the 'Dairy Equity Anyone?' thread though? I'm referring to the milk solid payout per kilogram over the last 5 years. I'll quote the figures from 2002 to 2006 inclusive:

$5.33, $3.63, $4.85, $4.59, $4.10

Not a very encouraging trend there....


quote:
I don't see land values going down in the medium term although they could stop increasing in value for a few yrs.


From the same Rod Oram article, dairy farm profitability is $1,000 per hectare. Cost of land is $20,000 per hectare. I make that a return of 5%, *before* you start paying tax.

Now I know that dairy farming isn't the only game in 'farmland'. However, I do notice that farms still seem to be being converted from 'something else' to dairy. Unless you as a farmer can boost your earnings to more than a 5% return on your land, surely land prices must fall? And if Rod Oram is right about milk solid production costs being about half of what it costs here in Chile and Argentina, what hope is there of boosting dairy earnings long term?

If you believe Big Bear's figures (operating costs of a dairy farm at $4.10, which more or less matches the payout) then even Rod Oram's 5% return figure is wildly optimistic!


quote:
So far, Ag commodities have not taken part in the commodities bull market. The base metals and energy always lead a new commodities bull market while ag commodities usually have their turn in the second half of the bull market.


Ag commodities 'usually' have their turn in the second half of the bull market? Again I hope you are right Mick. But how many commodity bull markets have you studied? I'm trying to figure out if you have an exit strategy!

SNOOPY

Mick100
18-08-2006, 12:27 AM
quote:Originally posted by Snoopy


quote:Originally posted by Mick100


I tend to agree with you about the exchange rate with the USD Snoopy
I think the USD may fall as fast of faster than the NZD meaning the NZD could appreciate against the USD. I'll add that I expect the USD to fall against all other major currencies over the next yr or so.
The effect of this depreciating USD should be higher commodity prices in US dollars which means that NZ farmer should still be better off.


I hope you are right Mick. Did you see the figures quoted on page 1 of the 'Dairy Equity Anyone?' thread though? I'm referring to the milk solid payout per kilogram over the last 5 years. I'll quote the figures from 2002 to 2006 inclusive:

$5.33, $3.63, $4.85, $4.59, $4.10

Not a very encouraging trend there....


quote:
I don't see land values going down in the medium term although they could stop increasing in value for a few yrs.


From the same Rod Oram article, dairy farm profitability is $1,000 per hectare. Cost of land is $20,000 per hectare. I make that a return of 5%, *before* you start paying tax.

Now I know that dairy farming isn't the only game in 'farmland'. However, I do notice that farms still seem to be being converted from 'something else' to dairy. Unless you as a farmer can boost your earnings to more than a 5% return on your land, surely land prices must fall? And if Rod Oram is right about milk solid production costs being about half of what it costs here in Chile and Argentina, what hope is there of boosting dairy earnings long term?

If you believe Big Bear's figures (operating costs of a dairy farm at $4.10, which more or less matches the payout) then even Rod Oram's 5% return figure is wildly optimistic!


quote:
So far, Ag commodities have not taken part in the commodities bull market. The base metals and energy always lead a new commodities bull market while ag commodities usually have their turn in the second half of the bull market.


Ag commodities 'usually' have their turn in the second half of the bull market? Again I hope you are right Mick. But how many commodity bull markets have you studied? I'm trying to figure out if you have an exit strategy!

SNOOPY




being an ex dairy farmer I still have a couple of "tea ladies" on the job. An example from a very well managed operation:
-Running costs (everything except the mortage including manager and labour) were 43% of income.
-Bought another farm with 100% borrowed money and put a 50/50 sharemilker on - income covers costs and interests payments

these figures are from 2001 but would still make rod oram and big bear's assertions look as if they are taken from a "worst case senario"- and that's putting it mildly.
,

Mick100
18-08-2006, 01:08 AM
quote:Originally posted by Snoopy
[

Ag commodities 'usually' have their turn in the second half of the bull market? Again I hope you are right Mick. But how many commodity bull markets have you studied? I'm trying to figure out if you have an exit strategy!

SNOOPY




I'v looked at the commodities bull markets from the past 200 yrs Snoopy. They last an average of 18 yrs from bottom to top so this one has another 10-15 yrs to go. I may have moved into ag commodities too soon - I don't know when they are going to fire, it may be another 5 yrs or it could be 6 months from now.
.

nelehdine
18-08-2006, 08:54 AM
I invested $400k in a dairy farm equity partnership in Sept 03. 700 cows , 160ha ... some shares recently changed hands, values my stake at $568k . A good solid return, not fantastic but no complaints. Will hold for foreseeable future.

KJ
18-08-2006, 10:03 AM
Snoppy
Just a point re your calculation for ongoing profit-the projected profit for 2006 of $27m probably needs to be adjusted for the fact that the first half results include 6 mths for PGG but under 3 mths for Wrightson and Williams & Kettle.

I would have thought that ongoing profit would be closer to $40m as merger synergies are expected to exceed $25m annually and the full impact will flow through to the 2007 yr.

nelehdine
18-08-2006, 10:08 AM
Tiny number gone thru at 180 to show a rather spectacular rebound. Decent bids down in the low 170's , possibly may have seen near term low yesterday.

KJ
20-08-2006, 10:34 AM
Quoting further from the PGW management outlook:

"Prospects for the coming year will be affected by the impact of the lower exchange rate on farm gate returns, the volume of farm output and trading activity. Indications, at this stage, are that the influence of these factors is expected to be more positive in the coming year when compared to the year just ended. While recognising the impact adverse climatic conditions can have in general terms the outlook for the coming year is encouraging with evidence of confidence returning to the farming sector."

I don't agree with much of that myself. I predict a higher exchange rate, relative to the $US, and an associated slump in farm values once reality hits home. Then we will see a slump in farmer confidence due to the 'negative wealth effect'. The cold weather should mean a delayed start for farm production as well, which will further depress the immediate outlook. To offset that, there are probably some merger benefits still to flow through. And my prediction is that farmers will stop spending on those luxury items first, before they stop spending on their farms.

Despite my overall negative outlook for farming in general, and PGW in particular, I've topped up on a few shares today. I always buy in gloom, when the outlook is bad, as you well know Macdunk.

SNOOPY

discl: hold PGW

Snoopy-re-reading this I find it hard to follow.You are very negative about PGW,you expect the share price to fall much further still,but you have just bought more shares.Does not make sensr.








[/quote]

Snoopy
20-08-2006, 09:26 PM
quote:Originally posted by KJ


PGW management outlook:
"Prospects for the coming year will be affected by the impact of the lower exchange rate on farm gate returns, the volume of farm output and trading activity. Indications, at this stage, are that the influence of these factors is expected to be more positive in the coming year when compared to the year just ended. While recognising the impact adverse climatic conditions can have in general terms the outlook for the coming year is encouraging with evidence of confidence returning to the farming sector."

Snoopy wrote
I don't agree with much of that myself. I predict a higher exchange rate, relative to the $US, and an associated slump in farm values once reality hits home. Then we will see a slump in farmer confidence due to the 'negative wealth effect'. The cold weather should mean a delayed start for farm production as well, which will further depress the immediate outlook. To offset that, there are probably some merger benefits still to flow through. And my prediction is that farmers will stop spending on those luxury items first, before they stop spending on their farms.

Despite my overall negative outlook for farming in general, and PGW in particular, I've topped up on a few shares today. I always buy in gloom, when the outlook is bad.


Snoopy-re-reading this I find it hard to follow. You are very negative about PGW, you expect the share price to fall much further still, but you have just bought more shares. Does not make sense.


'Very negative about PGW'? I did list some positive aspects of the PGW position as well, so I don't think that 'very negative' is a fair summary of my position. Perhaps 'overall negative' would be a fair summary. Now as to the particular negatives I have brought up....

Cold weather depressing farm output is a result of short term climatic fluctuations. Such things may distract the reef fish investor. That is good for me, as I might be able to buy some shares cheaply. But long term I expect any particular 'weather bomb' to have no effect on the long term performance of PGW. Furthermore if there is a farm lead slowdown in the economy, I expect farm supply companies to be amongst the last to feel the chill. Farmers invest too much of their soul in their land to allow productivity to plummet by ceasing to buy fertilizer and gumboots. Finally despite my belief that our exchange rate will appreciate against the $US, I don't claim to be a great macroeconomic student. I could very easily be dead wrong. My main reason for stating my exchange rate belief was to counter PGW's management's belief that the exchange rate will go the other way. I don't believe that they are great exchange rate predictors either!

The PGW share price has fallen significantly. Although I do expect the share price to fall a bit further I don't expect it to fall by much - perhaps 10% at the most. Also, my conviction that the PGW share price will fall I would guess is around 70%. Consequently that means I see about a 30% chance that the share price will rise. With Mr Norgate's penchant for doing deals, and the weather's sudden propensity to change for the better (in NZ) and worse (where the competition is in Australia) The PGW share price could rise significantly- perhaps by up to 25%.

Now we have enough information to calculate what will happen to the share price if either my 'negative scenario' or the implied 'positive scenario' comes to pass:

0.7 x (1.76-[0.9 x 1.76])= 12.3cps (expected loss, negative scenario)
0.3 x ([1.25x1.76]-1.76)= 13.2cps (expected gain, positive scenario)

Notice that my expected gain in the positive scenario is greater than
my expected loss in the negative scenario. Therefore it makes sense to invest in PGW, *even though I think there is a 70% chance that the share

winner69
21-08-2006, 06:11 AM
quote:Originally posted by Snoopy
Now we have enough information to calculate what will happen to the share price if either my 'negative scenario' or the implied 'positive scenario' comes to pass:

0.7 x (1.76-[0.9 x 1.76])= 12.3cps (expected loss, negative scenario)
0.3 x ([1.25x1.76]-1.76)= 13.2cps (expected gain, positive scenario)

Notice that my expected gain in the positive scenario is greater than
my expected loss in the negative scenario. Therefore it makes sense to invest in PGW, *even though I think there is a 70% chance that the share price will go down*!
SNOOPY




... but isn't the 'expected outcome' of this scenario less than 1 cent .... so why do it if these are what you think the probabalities are.

Mr Taleb wouldn't approve of your logic

.... but then I forgot it is a portfolio rebalancing exercise.

Cheers

KJ
21-08-2006, 09:35 AM
Snoopy-I follow the rebalancing part.However you say "it makes sense to invest in PGW even though I think there is a 70% chance that the share price will go down"
Does not seem to follow logic to me.

Snoopy
21-08-2006, 10:35 AM
quote:Originally posted by KJ

Snoopy-I follow the rebalancing part.However you say "it makes sense to invest in PGW even though I think there is a 70% chance that the share price will go down"
Does not seem to follow logic to me.


KJ, it doesn't make sense because you haven't considered the payoff of the alternative outcomes. It can make perfect sense to have more losing than winning bets, provided the amount you make on the winners more than wipes out your losses.

Or, another way to look at the same logic. There is no point if having more winners than losers if all of your all of your winnings can be wiped out by one unexpected precipitous loss. As Nassim Nicholas Taleb would put it, a 'black swan' event. (This is rather an unfortunate metaphor in this part of the world as almost all wild swans are black. But in most parts of the world, black swans do not exist.)

Winner, I don't know if in his trading days Taleb traded individual shares. From what I have read, he was more into trading indicies. I agree that buying into PGW at $1.76 last week is probably not going to go down as one of *my* great investment decisions. And perhaps my 1c margin on the deal being a good one is thin. Nevertheless I think it is exactly the kind of deal that Taleb would approve of, even if the return is not likely to be as good as buying into Telecom ;).

SNOOPY

KJ
21-08-2006, 12:15 PM
Fair enough Snoopy-we all have our own approach and yours is obviously more complex than mine.IMO it is easy to "analyse things to death" for no gain so I try to keep it as simple as possible.

Snoopy
21-08-2006, 02:24 PM
quote:Originally posted by KJ

Fair enough Snoopy-we all have our own approach and yours is obviously more complex than mine. IMO it is easy to "analyse things to death" for no gain so I try to keep it as simple as possible.


Would you buy a lotto ticket without having some idea of the chance of winning and some idea of how big the big prize is?

To 'keep things simple' you could just focus on the big prize and totally ignore the chance of getting it. I suspect many punters do, but that doesn't make such behaviour rational.

Alternatively you could 'keep things simple' and vow to never buy a Lotto ticket because whatever the prize the chances of winning are so small, why bother? Never mind that with some weekends where a jackpot must be paid out, you may find that your expected return on buying a lotto ticket is actually *positive*!

With any investment you have to consider:

1/ The chances of it coming off.
2/ Your payout if it does come off.

This is investment at the 'barest of bones' level. It doesn't get any simpler than this. Any further simplification is a misrepresentation of the investment process.

SNOOPY

KJ
21-08-2006, 09:35 PM
Snoopy-what I said was to keep it "as simple as possible".You have put your own spin on this.Let me clarify for you what I mean by this
as you are painting an inaccurate picture.

When selecting stocks I look at certain basics. In brief:

-Earnings growth-history and looking ahead-important correlation between earnings growth & share price
-Sound fundamentals
-Must be in LT uptrend/do not buy in downtrend
-Good liquidity for the shares
-Be very mindful of economic issues and market sentiment
-Invest no more than 20% of fund in any one stock
-Use simple TA as an aid to FA-trend line breaks & resistance/support
levels.Helpful to determine entry & exit points.
-predetermined exit strategy

This is a summary of the approach that I use when I refer to "as simple as possible"
Do not tell me that it does not work because I have used it for yrs and it does work.

Your analogy with lotto tickets in your last post reinforces my view that you may overdo the analysis side.Your earlier post refers to "70% chance that price will go up-30% chance it will go down". Who believes this stuff?

From Mauldin-"we can never know what price is really "low" nor what price is really "high".We can however have a modest chance of knowing what the trend is." This is closer to the mark.

nelehdine
24-08-2006, 09:54 PM
nice close today at 181 ... looks like a short term bottom may be in. May look to flick my 172 purchase towards 190 ... 10% gain ???

Halebop
24-08-2006, 10:56 PM
quote:Originally posted by Snoopy

To 'keep things simple' you could just focus on the big prize and totally ignore the chance of getting it. I suspect many punters do, but that doesn't make such behaviour rational...

...With any investment you have to consider:

1/ The chances of it coming off.
2/ Your payout if it does come off.

This is investment at the 'barest of bones' level. It doesn't get any simpler than this. Any further simplification is a misrepresentation of the investment process...

The only tiny problems comes with those little lines "The chance of it coming off" and "Your payout if it does come off". There is no reliable model or methodology for these and it certainly won't be found in your "0.7 x (1.76-[0.9 x 1.76])= 12.3cps (expected loss, negative scenario)" math.

Its pretty much like advising the hapless neophyte investor to "Buy Low, Sell High". The barest bones simple system of them all.

Snoopy
26-08-2006, 12:10 PM
quote:Originally posted by KJ

Snoopy
Just a point re your calculation for ongoing profit-the projected profit for 2006 of $27m probably needs to be adjusted for the fact that the first half results include 6 mths for PGG but under 3 mths for Wrightson and Williams & Kettle.


Good point KJ. Yes the annual PGW profit includes only 9 months of profit from the old Wrightsons. However we also need to add on the overall one off charge resulting from the Pyne Gould/Wrightson merger to the declared profit of $27m.

The ongoing overall 'partial profit' (excluding 3 months from WRI) was $27m + 0.67($7.5m)= $32m.

To complete the total picture, a little homework is required.

We know that traditionally 'W' (the ongoing profit attributable from the old Wrightson's business) has been skewed against the first half of the year, on roughly a 30:70 basis. Assuming the half year profits are evenly distributed over the each six months of the year we can think of the 'W' profit broken down on a quarterly basis as follows: 15:15:35:35. That means that the amount of the W omitted from the quoted total figures for PGW for FY2006 is 0.15W (or conversely 0.85W has been included).

Therefore 0.85W + P = $32m

Note: P the ongoing profit attributable from the old Pyne Gould Guiness business.

The Wrightson's profit for FY2005 was $20.5m. But that included $4m of 'one offs'. Therefore the ongoing Wrightson profit was $16.5m? Not quite. This $16.5 ongoing profit figure is itself distorted because of Wrightson's own takeover of William and Kettle in March 2005, three quarters of the way through the financial year for WKL.

The normalised FY2005 profit for WKL was around $6m. We need to include the 9 months of the year that WKL was not part of WRI to get a useful normalised result for WRI for FY2005.

$16.5m + 0.75($6m)= $21m.

The last year of independent trading for Pyne Gould Guinness produced a result of: NPAT= $17m which adjusted for a non taxable $1m profit due to sale of fixed assets down to P=$16m.

If these adjusted 2005 'W' and 'P' profit figures were carried over into FY2006, then we would expected a quoted PGW profit of.

0.85($21m)+ $16m= $34m, ignoring any synergy benefits of the merger.

So why is the actual result ($32m adjusted for one offs) so much worse than this? Any theories?

SNOOPY

Snoopy
26-08-2006, 01:33 PM
quote:Originally posted by KJ


I would have thought that ongoing profit would be closer to $40m as merger synergies are expected to exceed $25m annually and the full impact will flow through to the 2007 yr.


I read the full FY2006 result news release on 'Stocknessmonster'

http://stocknessmonster.com/news-item?S=PGW&E=NZSE&N=135735

and thought it was a bit confusing. I resolved to set aside a quiet time later to reread it. I have done that, and I am afraid to say I am still confused!

"The financial result reflects trading conditions that were materially less favourable than those prevailing at the time of the merger in October 2005. At that time, expectations were for NPAT of $30 million, after amortisation of $9 million and net merger costs of $7 million after tax. The NPAT reported today is after amortisation of $10 million and includes a net gain of $7 million in non-recurring items."

If we add back those original expected net merger costs of $7m from the original prediction, my interpretation is that PGW management were looking for a NPAT excluding one offs of

$30m + (0.67)$7m= $34.7m

"The $7 million net gain on non-recurring items included restructuring costs, the sale of surplus properties, and the gains on sale of the PGG Insurance and Merino businesses, to Aon and Merino New Zealand respectively. The result also included equity accounted earnings totaling $0.4 million from the New Zealand Merino Company, the Kelso Wrightson joint venture and New Zealand Wool Handlers in the period before the merger."

Are PGW saying there has been a $14m turnaround here? From an expected $7m net loss to an actual $7m net gain as a result of the merger?

If that is true, their just announced $27m profit when 'normalised to remove one offs' is only $20m. Thus the 10% profit downgrade from $30m to $27m when announced in July, was actually a much more significant 40% profit downgrade from $34.7m to $20m when one off items are stripped out of the results.

Or am I misreading what PGW management have said?

"Earnings before interest and tax were $54.5 million, including:

o$29.4 million from Rural Services (Livestock, Wool, Rural Supplies,
Real Estate, Insurance, Training)
o$6.3 million from Finance
o$17.1 million from Seeds & Grain
o$1.7 million from Uruguay

In addition to the above contributions, there was $6.6 million in net one offs and $10.6 million in amortisation costs."

OK, so the total EBIT from ongoing businesses is $54.5m. Net bank debt for the financing of the ongoing business is $202m. At say 8% interest (a guess) that equates to an annual interest bill of $16m.

That gives ongoing EBT of $54.5m-$16m= $38.5m. Tax at 33% produces a NPAT= $25.8m from ordinary items. That compares badly with the equivalent 2005 figures, calculated in my previous post, of $34m.

Was ongoing FY2006 really that much worse than ongoing FY2005? Remember that the FY 2006 results should include some (most?) of the $25m of synergy benefits referred to!

"The merger had a favourable effect on group earnings, with synergies captured to date totaling more than $25 million on an annualised basis. The full effect of these synergies will flow in the 2006-07 year."

I am unclear what makes up this '$25m synergy captured' figure. Does it include the one off property sales as a result of PGW holding properties surplus to requirements? Such sales are not going to be repeated in subsequent years.

If the $25m entirely relates solely to ongoing operating costs, how much was captured in the current year? Presumably 3/4 of it, if the merger was completed in a legal sense in early October 2005, one quarter of the way through the financial year. That means the remaining $6.25m to be captured will effect the base line profitability in FY2007 to an extent of 0.67x$6.25m= $4m NPAT.

I

Snoopy
26-08-2006, 02:14 PM
quote:Originally posted by Halebop


The only tiny problems comes with those little lines "The chance of it coming off" and "Your payout if it does come off".

There is no reliable model or methodology for these and it certainly won't be found in your "0.7 x (1.76-[0.9 x 1.76])= 12.3cps (expected loss, negative scenario)" math.


That fact that there is 'no reliable model' is the point Halebop. That is why I advocate a more probabilistic approach. Look at different possible models of what might happen and try to assess what the chances are of each of those different models being right.

IMO the only sensible investing methodology is to consider all possible outcomes (within reason). Certainly focussing on one particular most likely outcome is a flawed technique, if you consider the chance of all other outcomes to be nil.

Your statement that there is 'no reliable methodology' for doing this stuff is correct too Halebop, but not of any practical use. A 'reliable methodology' to me would suggest that movement of investment valuations is somehow pre-ordained and predictable if we could just harness the 'right tool' or 'right technique' of analysis. Whatever investment tool or method you use, even if you apply it perfectly, sometimes you will be wrong. Even the best methods cannot be reliable in a system that is not deterministic. IMO making use of the best tools you have got is certainly better than doing nothing because 'you might be wrong'.

SNOOPY

KJ
26-08-2006, 03:04 PM
Snoopy-you are busy.
My understanding (loosely)is this:

-if the coy had not made unbudgeted net gains of $7m from property/business sales,profit would have been around $20m

-at the time of the merger, revenue was expected to be $912m-actual $849m

-underlying earnings are down $17m on the investment statement

-synergy benefits of $25m are on a pa basis-should be higher in 2007.

-some of reasons for poorer than forecast profit:

(1)downturn in rural services sector
(2)livestock,rural supplies & seeds & grain most affected
(3)livestock trading lower due to unusual weather and reduced prices.
-reduced NPBT by $3.9m-reduced prices cut earnings by a further $1.7m.

(4)sheep and beef farm net incomes fell by 30%-big affect on rural supplies business.
(5)wool prices hit by high NZ$

They seem comfortable with NPAT projections of $45m to $55m.

Snoopy
26-08-2006, 07:13 PM
quote:Originally posted by KJ


My understanding (loosely)is this:

-if the coy had not made unbudgeted net gains of $7m from property/business sales, profit would have been around $20m

-underlying earnings are down $17m on the investment statement

-synergy benefits of $25m are on a pa basis-should be higher in 2007.


Unless you are mistaken KJ, and I'm not saying you are, this paints a grim picture. It means that, but for the $25m merger synergies, these busineses would have collectively lost money in FY2006!

Yet despite PGW having only existed in its current form for 9 months, we shareholders have already received a fully imputed interim dividend of 4cps. Furthermore PGW have declared a:

"fully imputed final dividend of six cents per share."

That makes a total of 10cps. Yet underlying earnings are only just over 7cps.

This company has only just been formed (October 2005). So it should have no extra imputation credits on account from previous years to attach to this year's final dividend. Can anyone explain the mismatch of imputation credits declared to be paid, compared to imputation credits on the books? Something is wrong here.

Remember than land sales are not taxable. So PGW is unlikely to have made any extra imputation credits from selling off the land.


quote:
They seem comfortable with NPAT projections of $45m to $55m.


At those profit levels the forward PER improves to around 7.6-9.3 at today' share prices. That is probably reasonable at the top of the business cycle, for a cyclical business. So I see no compelling reason why the PGW share price should go higher from here.

SNOOPY

discl: hold PGW

Mick100
26-08-2006, 09:04 PM
quote:Originally posted by Snoopy
[

At those profit levels the forward PER improves to around 7.6-9.3 at today' share prices. That is probably reasonable at the top of the business cycle, for a cyclical business. So I see no compelling reason why the PGW share price should go higher from here.

SNOOPY

discl: hold PGW















As usual, your getting bogged down in the details and missing the big picture again Snoopy. What do you think is going to happen to food prices when a big chunk of the world's arable land is being used to grow crops for bio fuel production? The main source of protien in asian diets comes from chicken. What do you think is going to happen to food prices if every last chicken is wiped out by bird flu? What do you think the growing middle class (now 200m in china) are going to spend more money on than they did previously? And remember that china's ag productivity levels are already quite high so there's not alot of scope for increased production domestically. Where are they going to get the food from which meets their newly aquired tastes?

World food prices are going to be heading north in my opinion and although NZ is no longer the cheapest producer of meat and dairy products it is still a more efficient producer than most other countries in the world. PGW has the lions share of farm retail business so they do stand to benifit from rising world food prices.
.

winner69
27-08-2006, 06:32 AM
quote:Originally posted by Mick100

World food prices are going to be heading north in my opinion

Mick ... you know how to ruin a sunday morning coffee

rising world prices .... nzer's will pay about the same for the leftover stuff not good to export .... ****e mate ... even more and more people in NZ dependent on the government .... winner better make sure his shares make decent gains

agree with your hypotheseis though... so the way forward is to share the riches of a food producer so you can afford to eat the stuff?

duncan macgregor
27-08-2006, 07:49 AM
Mick is quite right food prices will soar. With China taking over manufacturing you want to be very pleased that we have products to sell with soaring prices. I am starting to find it very difficult to hold anything long term, and might think about going full time trading. PGW is a classic example of a share that i trade in one account, and hold long term in another. I am forced for the sake of tax reasons watch the price go down in my long term portfolio and still hold. In my trading account i am miles in front. Other shares with the same companies with similar results are NZO, POT,
Long term PGW is a must own but short term plays as with POT, and NZO, it is much more profitable to trade even allowing for tax.
macdunk

rmbbrave
27-08-2006, 09:43 AM
After FPA's recent fall Duncan's hammering away on the "China will steal all it's business theme" is starting to look prophetic.

rmbbrave
27-08-2006, 09:53 AM
quote:Originally posted by winner69


quote:Originally posted by Mick100

World food prices are going to be heading north in my opinion

Mick ... you know how to ruin a sunday morning coffee

rising world prices .... nzer's will pay about the same for the leftover stuff not good to export .... ****e mate ... even more and more people in NZ dependent on the government .... winner better make sure his shares make decent gains

agree with your hypotheseis though... so the way forward is to share the riches of a food producer so you can afford to eat the stuff?




Food prices are always going North - it's called inflation.

Do you mean you expect food prices to rise faster than manufactured goods or services?

Mick100
27-08-2006, 11:57 AM
quote:Originally posted by rmbbrave
[

Food prices are always going North - it's called inflation.

Do you mean you expect food prices to rise faster than manufactured goods or services?


In "real" terms food prices have been decling for the past 200 yrs.
In case you don't know what "real" means teachy - it's taking inflation out of the food prices.

This has come about because of the increase in productivity of farmers, eg - in 1820 (US) each man working on the land produced enough food to feed 4 people. Today each each man working on the land in the US produces enough food to feed 100 people.
Steadily rising productivity has led to lower prices or to put it another way - technology is a curse on the man who works with a hoe.

My argument is that this situation is about to change in a big way.
Increases in productivity are going to be harder to get from now on in the developed world. The big leaps forward in technology have already been taken with the use of modern macinery, irrigation, fertilizer, pesticides and insecticides. The only place left to increase productivity is through genetic modification of seeds.

Now to come back to my earlier points which are going to increase demand/reduce supply of high value food products;
- a growing middle class in asia
- a decline in the area of land available to grow food crops
- the possibility of bird flue becoming more widespread
.

rmbbrave
27-08-2006, 12:18 PM
What percentage of the price you pay at the supermarket is the actual cost of growing the food and what percentage is the cost of processing, transport, marketing, packaging and mark-up for each stage of the chain?

With fresh vegetables the cost of the food itself is likely to be quite high but with something like a packet of potato chips the cost of the spuds themselves would be a small percentage of the product.

If the price of potatoes doubles the cost of a packet of chips might only go up a few cents.

KJ
27-08-2006, 02:00 PM
quote:Originally posted by Mick100


quote:Originally posted by Snoopy
[

At those profit levels the forward PER improves to around 7.6-9.3 at today' share prices. That is probably reasonable at the top of the business cycle, for a cyclical business. So I see no compelling reason why the PGW share price should go higher from here.

SNOOPY

discl: hold PGW















As usual, your getting bogged down in the details and missing the big picture again Snoopy. What do you think is going to happen to food prices when a big chunk of the world's arable land is being used to grow crops for bio fuel production? The main source of protien in asian diets comes from chicken. What do you think is going to happen to food prices if every last chicken is wiped out by bird flu? What do you think the growing middle class (now 200m in china) are going to spend more money on than they did previously? And remember that china's ag productivity levels are already quite high so there's not alot of scope for increased production domestically. Where are they going to get the food from which meets their newly aquired tastes?

World food prices are going to be heading north in my opinion and although NZ is no longer the cheapest producer of meat and dairy products it is still a more efficient producer than most other countries in the world. PGW has the lions share of farm retail business so they do stand to benifit from rising world food prices.
.


Mick-& others-are you currently buying PGW now on the basis that rising world food prices are imminent? Or would it be better to assess the coy fundamentals looking out 1 to 2 yrs?

Mick100
27-08-2006, 02:46 PM
Hi KJ

I'm a commodities bull
In 2002-03 I got into base metals, precious metals, oil, nat gas, and coal.
This yr I have diversified my portfolio somewhat by adding a few mining services companies and a couple of companies related to ag commodities- PGW and AAC (looking at a third ag company)

My strategy is to play the commodties bull market.
I don't know if I'v got my timing right with PGW.
There are not alot of ag related companies to pick from on the NZX/ASX but I do want to have some exposure to ag commodities over the next few yrs for reasons that I have already made clear.
.

Snoopy
27-08-2006, 06:02 PM
quote:Originally posted by Mick100


As usual, your getting bogged down in the details and missing the big picture again Snoopy.


It is my job to remind people about the details Mick, just as it is yours to remind us of the 'big picture' :-)


quote:
What do you think is going to happen to food prices when a big chunk of the world's arable land is being used to grow crops for bio fuel production?


Perhaps nothing. If the US stops subsidizing their farmers, and shunting them across to producing bioethanol might be an economic way to do that, then some of the third world ag food producers might be able to get their act together. On wages of NZ25c/hour I don't see food prices rising too much.


quote:
The main source of protien in asian diets comes from chicken. What do you think is going to happen to food prices if every last chicken is wiped out by bird flu?


KFC in China will close down for a start. However as a 'YUM' shareholder I can report that in calendar year 2005 KFC opened 324 new chicken restaurants in China, an increase of 20%. Perhaps the fear of bird flu is being overplayed in the general media?


quote:
What do you think the growing middle class (now 200m in china) are going to spend more money on than they did previously? And remember that china's ag productivity levels are already quite high so there's not alot of scope for increased production domestically. Where are they going to get the food from which meets their newly aquired tastes?


Thre is a role for NZ here, to be sure.


quote:
World food prices are going to be heading north in my opinion and although NZ is no longer the cheapest producer of meat and dairy products it is still a more efficient producer than most other countries in the world. PGW has the lions share of farm retail business so they do stand to benefit from rising world food prices.


So the world prices of dairy products are going to be controlled by Argentina, but for NZ producers their costs will be in stubbornly high kiwi dollars? That doesn't sound like a certain recipe for prosperity of the kiwi farmer!

When it comes down to it Mick, you are a self declared 'food commodity bull'. As such, if your own projected scenario comes to pass, it matters not if you buy your PGW shares at $1.50 or $2.50. Your returns will only drop from 'absolutely incredible' to 'fantastic' if you purchase your PGW shares towards the high end of my just mentioned price band.

They say if there is a 'gold rush', the best business plan is not to dig for nuggets yourself but sell spades. As 'spade sellers' I think PGW is well placed to benefit from any uplift of the agricultural sector. Whereas my heart has me looking at indirectly owned Fronterra shares, my head tells me they will be overpriced. Short of owning a farm myself, I think PGW (the leading farm retailer) is the place to be if I want to take advantage of living in the land where 'anything grows'. I am not a seller. But neither am I a buyer at current prices.

A lot of water has to flow under the bridge before NZ farmers conquer Asia.

duncan macgregor
28-08-2006, 07:06 AM
quote:Originally posted by Snoopy
A lot of water has to flow under the bridge before NZ farmers conquer Asia. The one thing that is certain about farming is that the unexpected happens. If the weather beats down the price of PGW shares in the future, as it surely will, then I am a buyer. In the meantime I am quite happy to hang onto my holding. If PGW really is on a P/E of 21 a lot of the improvement over the next year or two is already built into the share price. Personally, I'll be chuffed if PGW hits $2 over the next twelve months.

SNOOPY

discl: hold PGW
SNOOPY, What a whole lot of guff you write. Are you expecting us to beleave that you were holding shares in a company at $2-30 something watch them fall to $1-70 something then say you would be happy if they reach $2-00 in 12 months. Either you have no system at all or your real name is mary holm.
Fundamental analysis as you have proved, is as useless as tits on a bull. It all boils down to perception as i have told you in the past.
It is how the investors perceive the market, not the PE. Look at your analysis on TEL, RBD, pages and pages of what turned into be useless tripe. The market is controlled by emotion, not mathematics.
Understanding the investors next move has nothing to do with the PE of a company. This is a very good share to trade, it goes to high then drops to low with no risk of losing the lot. If you trade PGW you will make three times as much as your buy and hold method.
MACDUNK

kittydashwood
28-08-2006, 11:24 AM
MICK IPSU STATESIDE is a good vehicle for your theory
TIM on ASX could fit too...

craic
28-08-2006, 11:57 AM
For once I agree with DMcG. I have held the rural stock for years and I have done very well. It is part of an investment portfolio and I do not have a stop loss. I do however have a top selling strategy and that is to set a figure as my top price and then, if it continues to rise - leave it alone. If it gets to my number or above and then starts to drop back, I sell. My top figure for PGW is 240cps and I am reasonably confident that it will reach that number. Two recent examples of sales under this scheme were SKC at 553cps and WHS at 503cps. AIA, my biggest holding will go on the block at 220cps. The reason I do not have a stop loss is because I am fairly ruthless with the bottom dwellers on my portfolio. I have nothing left to send to the Knackers yard.

Snoopy
28-08-2006, 12:14 PM
quote:Originally posted by duncan macgregor

Snoopy wrote
A lot of water has to flow under the bridge before NZ farmers conquer Asia. The one thing that is certain about farming is that the unexpected happens. If the weather beats down the price of PGW shares in the future, as it surely will, then I am a buyer. In the meantime I am quite happy to hang onto my holding. If PGW really is on a P/E of 21 a lot of the improvement over the next year or two is already built into the share price. Personally, I'll be chuffed if PGW hits $2 over the next twelve months.

SNOOPY, What a whole lot of guff you write. Are you expecting us to believe that you were holding shares in a company at $2-30 something watch them fall to $1-70 something then say you would be happy if they reach $2-00 in 12 months. Either you have no system at all or your real name is Mary Holm.


To tell you the truth Macdunk, I wasn't watching. If the PGW share price really did get up to $2.30 I think it would have been before the 40% ongoing profit downgrade. So at the time $2.30 would have represented a P/E of 17-18. Not out of line for a growing company.
So even if I had been watching, I don't think that I would have sold.

What I do know, following the compulsory acquisition of my Carter Holt shares earlier this year, is that I now have only one direct exposure to NZs farming backbone - my shares in PGW. And if anything my relative holding in this sector is too low. I have looked at other ways of getting exposure to farming. IMO holding PGW is still the best way to do it. I don't think that quitting the sector completely, becaue of some transient movement in share price that does not go outside my fair value valuation range, is a sound long term investment strategy.


quote:
Fundamental analysis as you have proved, is as useless as tits on a bull. It all boils down to perception as i have told you in the past.
It is how the investors perceive the market, not the PE.
The market is controlled by emotion, not mathematics.


Short term you are right. F/A isn't necessarily a good predictor of the direction a share price will move. But I don't 'do' short term. I don't trade at all. Long term the market behaves like a weighing machine and that is where ongoing PE matters.


quote:
Look at your analysis on TEL, RBD, pages and pages of what turned into be useless tripe.


On the contrary. TEL and RBD continue to be good dividend paying shares. In the case of TEL in particular, I have been buying significant blocks of shares (well, significant for me) to the exrent that my shareholding has increased by nearly 40% (in share number terms) since the unbundling slump. I would not have had the confidence to do that without my F/A.


quote:
Understanding the investors next move has nothing to do with the PE of a company. This is a very good share to trade, it goes too high then drops to low with no risk of losing the lot. If you trade PGW you will make three times as much as your buy and hold method.


I know farming as a fickle business Macdunk. I have cousins who are farmers. I don't for a moment think that I can predict the weather, rules around trade access to foreign markets or even what is going to happen to the kiwi currency. If you think

kittydashwood
28-08-2006, 03:05 PM
High fuel prices exerts another squeeze on food producers as suddenly producers have the option of growing for bio desiel or ethanol.
Look at the Archer Daniels Midland price, look at the ethanol squeeze on sugar.
The increase in fuel cropping can only place more pressure on global food prices.
PS still no NZ butter on US supermarket shelves, FPA selling well but in a deflationary environment (who wants to buy a luxery item that will be cheaper tommorrow)very interested to see the Pumpkin Patch selling well via their own branded stores, attached to Nordstrom. Colours seem to be a miss this year and the kids are all hispanic and asian and the hype is all pakeha

rmbbrave
29-08-2006, 08:23 AM
Simmering food sector off the boil
29 August 2006
By SUE ALLEN

New Zealand needs to lift pastoral productivity by 50 per cent in the next decade if the $15 billion food and beverage industry is to survive.


Tony Nowell, co-chairman of the Food and Beverage Taskforce, unveiled yesterday a 49-point plan for the sector, which generates about half of New Zealand's merchandise export earnings each year.

Mr Nowell said the industry faced challenges on every front, including an unrelenting squeeze on margins as supermarket chains consolidated buying power.

Competitors such as China and South America were expanding production and improving quality; overseas food-safety regimes were becoming more stringent; there were constraints on land because of urban sprawl; and consumer tastes were changing.

In the present market, maintaining a compound growth rate of 5 per cent would not be easy, he said.

The task force had a three-pronged plan to maintain growth levels: improved productivity; new products; and entry to new markets.

Mr Nowell said international best practice for pastoral productivity was about 19 tonnes of dry matter per hectare. New Zealand's average of about 12.

"So, if we can move the pastoral sector more toward best practice, and fairly aggressively. . . then clearly there is a very large gain for the country."

An example of new products was developing functional foods such as added calcium milk and sports drinks.

Food tailored to specific genetic types is becoming an increasingly hot topic overseas and this was an area New Zealand could develop, he said.

Other recommendations included using a "NZ Inc" brand overseas, which would help smaller players; $750,000 of Government money to promote New Zealand food and wine domestically, including a New Zealand Food Week; and more help for exporters.

Key assets included New Zealand's biosecurity regime, which had helped exporters capitalise as competitors were hit by bird flu, foot and mouth and mad cow disease. But that needed protection, he said.

AdvertisementAdvertisementThe industry also had to work harder to become an employer of choice and more research was needed to work out more about markets and consumers.

He believed the vision the task force had set was achievable.

"However, it won't be easy and it will need a concerted effort by both the private sector and Government to achieve the ends we believe are possible."

A "peak organisation" was needed to champion the changes required made up from private industry and government organisations

Snoopy
29-08-2006, 09:47 AM
quote:Originally posted by craic

I have held the rural stock for years and I have done very well. It is part of an investment portfolio and I do not have a stop loss. I do however have a top selling strategy and that is to set a figure as my top price and then, if it continues to rise - leave it alone. If it gets to my number or above and then starts to drop back, I sell. My top figure for PGW is 240cps


$2.40 is one of the higher PGW valuation figures I have seen as a 'prediction'. But is it out of line? I have already expressed some concern over the seemingly high ongoing P/E that PGW trades at: 25+ (with the share price north of $1.80.) Nevertheless when there are difficult times on the farm some of the established industry players do trade at high P/E ratios. I think Carter Holt traded at a P/E of 50 by the time it was taken over.

Another way to value a company is by EBIT multiple. If we look right back to the Grant Samuel December 2004 valuation report on Wrighton's (as it was then), in Appendix 2, we can get an idea of what these EBIT multiples are. On a 'good' year that multiple is about 8, and on a bad year it rises to 12 for rural services companies.

EBIT figures released by PGW for FY2006 were $29.4m (Rural Services), $6.3m (Finance), $8.9m (Seed and Grain) and $1.7m (Uraguay). That is a total of $46.3m. If we assume that FY2006 was a 'bad year' and use the multiple of 12, I get:

($46.3m x 12)/281.3m = $1.98.

This implies that profitability needs to rise by about 50% in 2007 (our good year) to stop the share price falling from that ~$2 point (if it gets there)! Of course we all know the market doesn't always behave rationally: it tends to overshoot on the upside and the downside. A 20% overshoot on the upside is a price of $2.40, which is Craic's selling point: that looks about right as a point to get out to me. 40c under this $2 valuation reduces us to a share price of $1.60. I would mark that down as a 'good value' entry point. By that same stadard I would regard $1.80 as 'fair value', despite the high P/E that $1.80 applies. That high P/E is IMO caused by 'seasonal factors'.

SNOOPY

discl: hold PGW

KJ
29-08-2006, 12:07 PM
Fair comments Snoopy-Looking at fwd PE say 2007 NPAT of $50m (their estimates are $45 to $50m)would give:
P/e of 10 at current price of 186
P/e of 11.2 at SP of 200
P/e of 13.5 at SP of 240

IMO it will struggle to break 200 until there is some good news on improved trading and earnings.Depends a bit on how the overall market sentiment goes.

Snoopy
29-08-2006, 09:29 PM
quote:Originally posted by KJ

Looking at fwd PE say 2007 NPAT of $50m (their estimates are $45 to $50m)would give:
P/e of 10 at current price of 186
P/e of 11.2 at SP of 200
P/e of 13.5 at SP of 240

IMO it will struggle to break 200 until there is some good news on improved trading and earnings.


I agree KJ. So why didn't I sell when the share got to $2.30? Because the profit downgrade hadn't happened back then. It is very easy to be wise with the benefit of hindsight! Looks like we are agreed that $2 will be all we can reasonably expect before the end of the 2006 calendar year.

I paid my semi-annual visit to PGW Christchurch branch today (the old Pyne Gould Guinness store on Blenheim road). The blond lady behind the counter (the other lady I think was new) remembered me, even though the last time I saw her was in the big Wrightson superstore (now closed) on Waterloo Road many months (a year?) previously. I took my time wandering around the 'new' store and frankly the selection of product didn't seem as good. Never mind, they had what I wanted out the back when I asked. I guess most farmers know what to ask for anyway when it comes down to it. Apparently the plan is to 'knock out a wall' and extend the display part of the building so that more goods can be shown off.

Having spent all my money on fertilizer, I stopped to have a brief look around the apparel section. The range of goods on display had widened. There were some really nasty looking chinese slave made jean shorts (or were they longs where the legs had already fallen off) then some reasonable looking middle range Aussie stuff, and the top of the range was an NZ made jean with triple stitching. That would be fine except the last kiwi made pair of jeans I bought, the stitching was OK and it was the material that went (a different brand I might add).

There was a steady stream of 4WD mounted customers that came into the shop while I was there, and all bought something. What is more the mud on the 4WD utes was real, not that spray on stuff that the Fendalton folk have. It was 'stock take' day and I remarked that for once it would have been an easy job because the winter had been so bad they hardly would have sold anything! I got the stone faced silent reply to that comment showing it was either true or they were so shocked that I had said it, they didn't know what to say! However, I did prise out of them that the lamb feed and dog biscuits were moving out like hot cakes. We may be looking at a slow start (a good opportunity to purchase shares when the price dips?) and a bumper finish to the season. In the meantime, back to work on the garden!

SNOOPY

discl: hold PGW shares in one hand and a fork in the other.

Snow Leopard
30-08-2006, 06:08 AM
quote:
It was 'stock take' day and I remarked that for once it would have been an easy job because the winter had been so bad they hardly would have sold anything! I got the stone faced silent reply to that comment showing it was either true or they were so shocked that I had said it, they didn't know what to say!

Reminds me of my father asking just before the shop closed for the day "Do you have any pies left?".
"Yes we have".
"Should not have made so many then".

I am still smarting from the decision not to invest in Williams & Kettle two days before the takeover was announced.
I recently did 'due diligence' on PGW and rejected them again.

Snoopy
30-08-2006, 09:30 AM
quote:Originally posted by Paper Tiger


Reminds me of my father asking just before the shop closed for the day "Do you have any pies left?".
"Yes we have".
"Should not have made so many then".

I am still smarting from the decision not to invest in Williams & Kettle two days before the takeover was announced.
I recently did 'due diligence' on PGW and rejected them again.


Are you implying there is some kind of inventory control problem within PGW, or maybe even the rural supplies industry in general PT?
Interested to know why your 'due diligence' gave PGW the thumbs down to get your contrary point of view.

SNOOPY

duncan macgregor
30-08-2006, 10:24 AM
When a good solid company that is running in profit with good prospects for the future has a sp variation as this company does then the astute investor stands to make a pile. PGW has a 12 month low at $1-70 with a high at $2-45 which makes the average between optimists and pessimists at $2-07. Thats what the market tells me its worth. The pessimists have had their rough winter, but spring is just around the corner where the optimists will ride the price up to to high a level all over again. The pendulum keeps swinging guys learn to understand that. The company is running at a decent profit you guys tell me its worth $2-07 what more is there to work out?.
MACDUNK

Snow Leopard
30-08-2006, 02:57 PM
quote:Originally posted by Snoopy

Are you implying there is some kind of inventory control problem within PGW, or maybe even the rural supplies industry in general PT?

No.

quote:
Interested to know why your 'due diligence' gave PGW the thumbs down to get your contrary point of view.

My estimated of NPATA for continuing operations for 2007 is $42.9m including $15.1m of A. (The equivalent 2006 figures are NPATA = $27.8m, A = $10.6m)

So that is a forward P/E of 12.1, historical P/E of 18.7 which does not give me a very good entry price at the moment.

FYA4999
04-09-2006, 07:47 AM
Anyone know when PGW goes ex-div?

I found the following article on the Sydney Morning Herald today:

http://www.smh.com.au/articles/2006/09/03/1157222010887.html

If the theory proves correct, there will be big implications to the world agricultural markets in the next few years. ;)

duncan macgregor
04-09-2006, 08:42 AM
paid out 4c on the 2nd of oct. macdunk

KJ
04-09-2006, 09:26 AM
goes ex 18/9- 6 cents - payment date 2/10

warthog
05-09-2006, 05:33 PM
Interestingly, PGW might not fare as well as some think - especially those who have bought in of late ($1.72-$1.82) - what with the kiwi showing resilience. Spring/Summer looking decidedly dry, and rural sales looking like they could possibly plateau.

Comments?

Mick100
05-09-2006, 06:14 PM
quote:Originally posted by warthog
[ Spring/Summer looking decidedly dry,

Comments?


Dunno where your living warty - not in NZ I assume. I can say that I live in one of the dryest parts of the country and I would have guessed that rainfall had been higher than normal over the past 6 weeks. I also watch the news ocassionally and I've seen snow, flooding and slips all over the place. In fact I would guess that many farmers could be seeing the effects of far too much rain at the moment.
,

nelehdine
05-09-2006, 06:22 PM
Agree with Mick , certainly farm I have a stake in near Rakaia would love more of the same warm dry weather we have had over the last 10 days. Soil moisture levels are certainly very high and it looks like there is plenty of snow in the Sth Alps to melt during the summer and keep the centre pivot irrigators rotating via the various rivers and irrigation schemes. Looks to be a good year for farmers , kiwi $ blip higher the last few weeks will hopefully reverse over spring.

Disc: Bgt 5000 PGW at 172 a few weeks ago.

warthog
05-09-2006, 07:13 PM
Interesting comments - thanks.

Actually, the hog is looking to summer/late summer, and just pondering what a dry turn would do for PGW. Irrigation in some places will certainly attenuate any draught-like conditions, but there's a lingering exposure there. Ditto the kiwi - most are picking a continued fall, but that's by no means a solid assumption from what the hog is hearing.

@Mick100: living NZ, but not seeing a lot of rain. Maybe one needs to be closer to the West coast?

Sideshow Bob
05-09-2006, 08:10 PM
Travelled between Christchuch & Dunedin at the weekend, and a passenger, had the opportunity to have a good look around.

The dairy developments that were going in along SH1 was huge. Plantations had been milled and land developed. Some huge irrigation booms and pipes going in. Traditionally dairy are high inputs, so likely to be good for the stock & station business.

Also alot of irrigation going in through the McKenzie country through Omarama & Twizel, presumably for dairy farms.

Soil moisture is pretty high in most places down this way, and well placed come spring. Still plenty of snow up in those hills also.

Water and irrigations rights are going to be a huge issue in the future. These sort of developments require huge quantities to make them work, and only so much to go around.

Will water be the next thing to trade?? [}:)]

Snoopy
05-09-2006, 10:33 PM
quote:Originally posted by warthog

Interestingly, PGW might not fare as well as some think - especially those who have bought in of late ($1.72-$1.82) - what with the kiwi showing resilience. Spring/Summer looking decidedly dry, and rural sales looking like they could possibly plateau.

Comments?


Warthog, I think the marriage of Pyne Gould Guinness and Wrightsons (and Williams & Kettle and Fruitfed) was consummated with the intention of being able to ride out exactly the kind of conditions that you describe.

The old Wrightsons was particularly volatile in earnings. At one point they were selling off the family silver (the finance division) just to survive. That year IIRC all dividends were cancelled. Then a couple of years later the company was trading on a dividend yield of 15%! Merging four companies together (five if you count the previous PGG merger with Reid Farmers) was a way to spread the risk both geographically and in the disciplines in which the new combined umbrella company operated. For sure, PGW will still be cyclical. But the troughs should not be as low and the highs should be higher.
'Should' that is according to Messer's Norgate and Gould who engineered the final match up between PGG and WRI. The new company PGW is too new to have a track record, so investment is to some extent a matter of faith in the executive team.

Until I see evidence of major mistakes, I am inclined to go with Norgate and Gould. PGG (still the headline name of this company) have a proud tradition of never having missed, nor ever having cut their dividend. Stability of dividend tends to stabalize the share price. If that makes PGW sound a little dull, I would counter that is no bad thing in our volatile agricultural markets.

Whether $1.85 for PGW is cheap or not, that depends on the synergy benefits of the merger yet to be realised - and the weather man!

SNOOPY

discl: hold PGW

warthog
06-09-2006, 08:29 AM
Merger benefits, yes, the weather, and the Kiwi.

As the Dave Dobbyn tune goes ... "and the outlook for Thursday, your guess is good as mine ..."

Disc: no PGW, but watching.

duncan macgregor
06-09-2006, 08:56 AM
I dont know what some of you guys are worried about. Lets take this as a long term stick it under the bed investment, for the mum and dad investor. The world is now moving into a new era where china is destroying all your manufacturing companies with its cheap labour. Whats left?, other than agriculture,oil and mining, plus power companies, or ports to invest in. That is Newzealand in the free market world that you all think is a great idea. We are lucky that the chinese will become prosperous at our expence, then will be forced to pay extortinate prices for our farm produce.
There is not very many companies that have the potential for the long term investor like this one, so dont knock it.
I think the unemployed will all bugger off to Australia where they will be far better off which will leave PGW the gold nugget of the nz market. macdunk

warthog
06-09-2006, 06:01 PM
quote:Originally posted by duncan macgregor

I dont know what some of you guys are worried about. Lets take this as a long term stick it under the bed investment, for the mum and dad investor. The world is now moving into a new era where china is destroying all your manufacturing companies with its cheap labour. Whats left?, other than agriculture,oil and mining, plus power companies, or ports to invest in. That is Newzealand in the free market world that you all think is a great idea. We are lucky that the chinese will become prosperous at our expence, then will be forced to pay extortinate prices for our farm produce.
There is not very many companies that have the potential for the long term investor like this one, so dont knock it.
I think the unemployed will all bugger off to Australia where they will be far better off which will leave PGW the gold nugget of the nz market. macdunk


Over the next 20 years China will also have issues of its own, namely inflation and currency appreciation - more the latter if not the former, which dovetails with MacDunk's view of China buying NZ produce, although the prices may not seem that high to the Chinese ...

kittydashwood
07-09-2006, 03:04 PM
There are some big herds developing in China roll on the PGW China office,

Snow Leopard
20-09-2006, 12:56 PM
It seems to accepted that we are in an el Nińo weather pattern and this period of dry weather will negatively impact on farm productivity and through to the likes of PGW. My short-term view is, more than ever, that now is not a good time to buy into this one.

BRICKS
20-09-2006, 03:46 PM
quote:Originally posted by Paper Tiger

It seems to accepted that we are in an el Nińo weather pattern and this period of dry weather will negatively impact on farm productivity and through to the likes of PGW. My short-term view is, more than ever, that now is not a good time to buy into this one.




THANKS.. for that.. [8D]

kittydashwood
21-09-2006, 01:23 PM
double bottom with higher MACD low on the second dip.
could be the short term low or the 1.70 support needs one final serious test.

so many bears now in the woods one could go hunting.

rmbbrave
24-09-2006, 03:14 PM
Grim year for sheep and beef sector

1.00pm Friday September 22, 2006


The Ministry of Agriculture and Forestry's (MAF) 2006 monitoring report into the status of the sheep and beef farming sectors reports a tough past year, but some optimism about the near future.

The author of the Sheep and Beef Monitoring Report, John Greer, says the key issue for sheep farmers in the 2005/06 year was a sharp fall in export lamb prices - down by nine to ten dollars a head. Beef and wool revenue also declined.

The report is part of an annual process where MAF monitors the production and financial status of farms. Trends, issues, and sector concerns are also monitored. The reports are based on model farms designed to best typify average farming operations within specific regions and information for each model is drawn from real growers and a wide cross-section of agribusiness.

The drop in lamb returns saw the cash farm revenue on the national sheep and beef model fall eight per cent to $320,800, despite a record high lambing percentage.

"Farmers were unable to slow their operating or capital spending in the face of the decline in product prices and revenue from December 2005," John Greer says. "Consequently a disposable deficit of $45,300 was incurred on the model sheep farm.

Mr Greer says sheep farmers continue to focus on improving productivity, with changes in sheep breeds to improve lambing percentage being a common approach. "Farmers are also changing pasture varieties and using nitrogen strategically in order to up production."

With cattle, the report finds farmers are deploying tactics such as buying weaner bulls instead of bull calves, buying younger trading cattle and holding onto their cattle longer in a bid to maintain trading margins.

John Greer says because farmers have spent above maintenance levels on fertiliser, repairs and maintenance in recent years, many are feeling comfortable deferring spending in these areas for the next couple of years.

Finding good quality permanent labour has proved an issue for farmers, putting stress on them and their families.

Looking to the future, the lamb price is expected to rise four to five dollars per head in 2006/07.

The report says the industry predicts stock numbers will increase slightly and gross farm revenue is expected to increase five per cent to $339,000.

"This is, however, dependent on farmers' assumptions for lambing percentages to hold and prices to improve as predicted. For many of the models, industry observers felt farmers were a little optimistic in their estimate of lambing percentage," Mr Greer says.

Cash farm expenditure is expected to increase slightly overall. But Mr Greer says with a dramatic reduction in tax payments expected on the back of the low 2005/06 profit, farmers expect the disposable surplus on the national average sheep and beef model to recover to $5,500. "Overall, financial performance is expected to be better than last year but still at the lower end of the range, with cash farm expenditure at 60 per cent of gross farm revenue, and return on capital only 1.5 per cent."

The report notes that the financial effects of the heavy snows in Canterbury this winter are not yet known. "It is, however, anticipated that farm profitability will be reduced through the cost of feed purchases and reduced stock performance," John Greer says.

winner69
24-09-2006, 04:30 PM
quote:Originally posted by kittydashwood

double bottom with higher MACD low on the second dip.
could be the short term low or the 1.70 support needs one final serious test.

so many bears now in the woods one could go hunting.


Still testing that 170 eh kitty

Looking at long term chart wouldn't want it see go below 160 odd either .... but there is another one of those fibs at 151

Looks like a wait and see job .... but plenty of weakness at the mo

winner69
25-09-2006, 06:08 PM
Close today at 162 .... chartwise pretty dangerous territory ..... anything could happen from here

Amazing down 33% from the last high.

Latest views kitty

kittydashwood
26-09-2006, 04:17 AM
umbrella type pattern happening,1.75-1.70 could carve a floor a little lower maybe even to 1.58 more likely a spring loaded possum trap on 1.60
Still dem bears are all about doom doom toll the bells from the back paddock.
drought will boost irrigation unit after dismal year last time out. I imagine realestate will show some downturn but I bet everybody is a little surprised at the strength of the rural market. Second wind for the hobby farm as that aprtment investment gets cashed up?
Williams at -90 says buy but in the long term this could trade sideways to down if the strong kiwi continues. A share price below 1.52 would have me seriously questioning my investment.
Bottom of the last cycle was .99 PGG so they must be worth 1.40
Oils down that must be good.

Sideshow Bob
26-09-2006, 06:08 PM
Interesting.....

http://www.nzx.com/market/market_announcements/by_company?id=137423

PGG Wrightson considers offering investment opportunity in Uruguay

The Board of PGG Wrightson Limited (PGW) announces that it is considering promoting a public offering to farmers and other investors for a company based on the application of New Zealand farming systems to pastoral agriculture in Uruguay.

The offering being contemplated would be for ordinary shares in a new company, NZ Farming Systems Uruguay Limited (NZFSU). The size of the offer is expected to be in excess of $100 million. The net proceeds of the offer would be used to purchase and develop farms in Uruguay using intensive pasture based farm management systems developed in New Zealand.

The Board emphasizes that no firm decision has been taken to make such an offering. No money is currently being sought and no applications for shares in NZFSU will be accepted, or money received, until any potential investor has received an investment statement.

The proposal is subject to final due diligence, which is likely to take several weeks. It is anticipated that the offer, if approved, would open on 6 November 2006.

Further details will be released if and when the final proposal is approved. No further comment will be made until this time.

rmbbrave
28-09-2006, 08:45 AM
Uruguay 'the new Southland' for PGG

Thursday September 28, 2006
By Stephen Ward


The lure of cheaper land for beef and dairy farming is behind PGG Wrightson's plan to raise more than $100 million for farming in Uruguay.

One dairy sector observer described Uruguay as a bit like Southland some years ago, when cheaper land prices attracted North Island dairy farmers to set up there.

There were already some significant investments from New Zealand going into places like Chile and Uruguay.

"Frankly, we think it's going to be a wave," said the source, who has an understanding of what PGG Wrightson is considering.

On Tuesday, the listed rural services giant announced it was considering a public offering to farmers and other investors for a company based on applying New Zealand farming systems in the South American country.

The proceeds of any NZ Farming Systems Uruguay (NZFSU) offer would be used to buy and develop farms that would use farm management tools developed in New Zealand, PGG Wrightson said.

The company is expecting that, if it goes ahead, the offer will open in November.

No further details were available but it is understood about two thirds of any capital raised would be applied to dairy and a third to beef farming.

Using cheaper land would naturally help widen margins between production costs and commodity prices.

Although the offer is likely to be a general one, the probable concentration on dairy indicates it will be pitched heavily at dairy farmers.

The fact that Fonterra's forecast payout this year is unchanged at $4.05/kg of milk solids - with even that threatened by the dollar's strength - may make the offer tempting for some in the dairy sector. If the offer sucks capital away from Fonterra, that could make it harder for the co-op to keep boosting production.

Fonterra - through its investments such as Soprole in Chile - does provide shareholders with significant exposure to South American dairy processing.

But New Zealand farmers could find it difficult to individually take direct advantage of South American land prices, and any PGG Wrightson offer may allow them to collectively get a stronger slice of the action.

The source suggested the NZFSU deal could be viewed as "a very big farm partnership".

In May, PGG Wrightson director Craig Norgate told a farmers' meeting in Hawkes Bay that part of the firm's strategy was looking to invest in farming in South America, which was predicted to undergo growth in the next decade similar to that New Zealand had been through, The company had a demonstration farm in Uruguay "literally 10 times more productive" than its neighbours by using New Zealand seeds and farm management, he was reported as saying.

Late last year, PGG Wrightson spent about $15 million on mainly-dairy farms in Uruguay. Norgate said in May that PGG Wrightson was looking to include New Zealand farmers in its Uruguay operations.


http://www.nzherald.co.nz/section/story.cfm?c_id=3&ObjectID=10403306

BRICKS
28-09-2006, 08:56 AM
DONT go running around thinking because the land is cheep your going to make money,,

Reason ;

1 The money is usual not worth the paper its printed on.
2 If you cant speak the language don't bother to GO.
3 Think someone will run it fore you like NZ your a fool.
4 Banking in these type of counties is not or no where like NZ
5 Just travel and find out your self.

.. [8D]

Halebop
28-09-2006, 10:03 AM
In absense of any substance on detail, I'd speculate PGG are following the "Macquarie Model". Fees on management of farms are probably a far more certain income than what the farms themselves can deliver.

warthog
28-09-2006, 04:09 PM
WRI had build quite a bit of experience dealing with that part of the world, so the hog wouldn't be surprised if the latest foray finds its origins in that experience.

BRICKS you are full of nonsense. Many large Western businesses have established successful businesses - often in partnership with local entities - all over the world.

Banking all over the world - at a certain level - is quite similar providing ones does one's homework. Language and culture is of course an issue but certainly not insurmountable.

Speaking of language, can anybody spot more mistakes in BRICKS' last posting than the hog (15)??

BRICKS
28-09-2006, 05:11 PM
quote:Originally posted by warthog

WRI had build quite a bit of experience dealing with that part of the world, so the hog wouldn't be surprised if the latest foray finds its origins in that experience.

BRICKS you are full of nonsense. Many large Western businesses have established successful businesses - often in partnership with local entities - all over the world.

Banking all over the world - at a certain level - is quite similar providing ones does one's homework. Language and culture is of course an issue but certainly not insurmountable.

Speaking of language, can anybody spot more mistakes in BRICKS' last posting than the hog (15)??


CHEATING HOG go do some traveling in some of these country`s before you open your dirty hog MOUTH.. [8D]

warthog
28-09-2006, 06:05 PM
If you can string enough words together to explain how the hog is dirty and/or cheating, this old hog would be much obliged (and amused). I must say, I haven't fathomed your accusations of cheating, having read them more or less as mindless banter.

But there you go - feel free to sling it all at me ...

Widely travelled are you BRICKS? Whangarei and Hamilton (with all due respect) don't really count as travel.

duncan macgregor
28-09-2006, 06:56 PM
quote:Originally posted by BRICKS


quote:Originally posted by warthog

WRI had build quite a bit of experience dealing with that part of the world, so the hog wouldn't be surprised if the latest foray finds its origins in that experience.

BRICKS you are full of nonsense. Many large Western businesses have established successful businesses - often in partnership with local entities - all over the world.

Banking all over the world - at a certain level - is quite similar providing ones does one's homework. Language and culture is of course an issue but certainly not insurmountable.

Speaking of language, can anybody spot more mistakes in BRICKS' last posting than the hog (15)??


CHEATING HOG go do some traveling in some of these country`s before you open your dirty hog MOUTH.. [8D]

BRICKS, Are you seriousely suggesting that pigs can fly or should the hog travel Air nz on this world tour for his educational trip. I think if it reverts to bad language at five paces the hog will win. I suggest that you openly challenge the hog to a spelling contest that should shut him up dont you think?. I am on your side as always. MACDUNK
That rotten pig said you had fifteen mistakes i only counted thirteen.

warthog
28-09-2006, 07:07 PM
MacDunk you of all punters should knw the hog doesn't resort to simplistic basic language to prevail over bacteria and the like when making a point. If only BRICKS knew where people had been and what they had done with their lives it might give the old mud block pause for thought, eh MacDunk?

The hog is still waiting for the substance behind the accusations of cheating and lying. Of course, one doesn't hold out much hope. In fact, none at all, but let's wait and see.

BRICKS
29-09-2006, 06:31 AM
quote:Originally posted by warthog

MacDunk you of all punters should knw the hog doesn't resort to simplistic basic language to prevail over bacteria and the like when making a point. If only BRICKS knew where people had been and what they had done with their lives it might give the old mud block pause for thought, eh MacDunk?

The hog is still waiting for the substance behind the accusations of cheating and lying. Of course, one doesn't hold out much hope. In fact, none at all, but let's wait and see.


JUST for you CHEATING hog you are all CRAP and just keep telling yourself that your NOT,, SCOTSMAN watching your writings over a period is like the thick brick story you love to repeat & repeat..

TO talk with both of you would be a large WASTE of time so carry on in the manner that only you BOTH KNOW.. end of STORY.. [8D]

HOG the word above is KNOW not knw [try cheating again]

duncan macgregor
29-09-2006, 07:43 AM
quote:Originally posted by BRICKS


quote:Originally posted by warthog

MacDunk you of all punters should knw the hog doesn't resort to simplistic basic language to prevail over bacteria and the like when making a point. If only BRICKS knew where people had been and what they had done with their lives it might give the old mud block pause for thought, eh MacDunk?

The hog is still waiting for the substance behind the accusations of cheating and lying. Of course, one doesn't hold out much hope. In fact, none at all, but let's wait and see.


JUST for you CHEATING hog you are all CRAP and just keep telling yourself that your NOT,, SCOTSMAN watching your writings over a period is like the thick brick story you love to repeat & repeat..

TO talk with both of you would be a large WASTE of time so carry on in the manner that only you BOTH KNOW.. end of STORY.. [8D]

HOG the word above is KNOW not knw [try cheating again]
Last time i take your side against the hog if you ken what i mean. Your old mate MACDUNK

BRICKS
29-09-2006, 08:33 AM
quote:Originally posted by duncan macgregor


quote:Originally posted by BRICKS


quote:Originally posted by warthog

MacDunk you of all punters should knw the hog doesn't resort to simplistic basic language to prevail over bacteria and the like when making a point. If only BRICKS knew where people had been and what they had done with their lives it might give the old mud block pause for thought, eh MacDunk?

The hog is still waiting for the substance behind the accusations of cheating and lying. Of course, one doesn't hold out much hope. In fact, none at all, but let's wait and see.


JUST for you CHEATING hog you are all CRAP and just keep telling yourself that your NOT,, SCOTSMAN watching your writings over a period is like the thick brick story you love to repeat & repeat..

TO talk with both of you would be a large WASTE of time so carry on in the manner that only you BOTH KNOW.. end of STORY.. [8D]

HOG the word above is KNOW not knw [try cheating again]
Last time i take your side against the hog if you ken what i mean. Your old mate MACDUNK


THANKS and FAREWELL for EVER..[8D]

warthog
29-09-2006, 08:52 AM
quote:Originally posted by BRICKS
HOG the word above is KNOW not knw [try cheating again]


New day, new word for BRICKS ...

typo: ty·po (tp) n. Informa. pl. ty·pos. A typographical error. Mistake made during typing.

Contrast with another word not unfamiliar to BRICKS that has a similar but not identical meaning ...

mistake: mis?take? [mi-steyk] n., verb, -took, -tak?en, -tak?ing.
1. an error in action, calculation, opinion, or judgment caused by poor reasoning, insufficient knowledge, etc.
2. a misunderstanding or misconception.

Farewell BRICKS [8D]

BRICKS
29-09-2006, 09:34 AM
quote:Originally posted by warthog


quote:Originally posted by BRICKS
HOG the word above is KNOW not knw [try cheating again]


New day, new word for BRICKS ...

typo: ty·po (tp) n. Informa. pl. ty·pos. A typographical error. Mistake made during typing.

Contrast with another word not unfamiliar to BRICKS that has a similar but not identical meaning ...

mistake: mis?take? [mi-steyk] n., verb, -took, -tak?en, -tak?ing.
1. an error in action, calculation, opinion, or judgment caused by poor reasoning, insufficient knowledge, etc.
2. a misunderstanding or misconception.

Farewell BRICKS [8D]


THANKS and FAREWELL for EVER...[8D]

kittydashwood
29-09-2006, 10:48 AM
Who said agriculture was boring bids from 1.00 to 1.65 and sells from 1.66-2.05

kittydashwood
30-09-2006, 07:02 PM
looks like craig gets the same investment spam i do....

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nelehdine
02-10-2006, 09:54 AM
As a part owner of a dairy farm in Mid Canterbury I would certainly look at any opportunity to invest in agriculture in South America. The idea of a big equity partnership owning several dairy and beef farms certainly appeals.

BRICKS
02-10-2006, 10:34 AM
quote:Originally posted by nelehdine

As a part owner of a dairy farm in Mid Canterbury I would certainly look at any opportunity to invest in agriculture in South America. The idea of a big equity partnership owning several dairy and beef farms certainly appeals.


YOU should GO there first have a look get the feel and let us KNOW.. [8D]

nelehdine
02-10-2006, 02:25 PM
Fellow shareholders in our farm company have been to Brazil,Uruguay and Argentina ... great long term future according to them, that's good enough for me prior to looking at any investment proposal on its own merits.

Thanks for the concern ...

whatsup
02-10-2006, 03:26 PM
More to the point what has happened at PGW or is the company in a cyclical downturn?

limegreen
02-10-2006, 03:29 PM
quote:Originally posted by nelehdine

Fellow shareholders in our farm company have been to Brazil,Uruguay and Argentina ... great long term future according to them, that's good enough for me prior to looking at any investment proposal on its own merits.


Possibly better than in Mid-Canterbury from what I here. I know a non-dairy farmer there getting huge prices for feed. They reckon it'll be a crunch summer for some dairy operators. Hope you're not in that boat neleh.

kura
02-10-2006, 05:02 PM
I can understand dairy farming in south America, but don't they still have "Foot and Mouth" type problems that restrict their beef export opportunities ?

Regards Neledine in Canterbury, arn't they supposed to suffer under forthcoming El Nino ? Would be OK if they have irragation sorted though.

Will purchase a minimal holding in PGW, just to keep an eye on them (watchlists don't work for me, need a couple of at risk dollars for me to pay attention) and to also get a chance of a punt in South America (assuming there will be priority for existing holders)

limegreen
02-10-2006, 05:19 PM
quote:Originally posted by kura
Regards Neledine in Canterbury, arn't they supposed to suffer under forthcoming El Nino ? Would be OK if they have irragation sorted though.

Probably OK if the water comes from the Rangitata, but everybody seems to be drilling ever deeper bores. And the groundwater and rivers continue to get skankier.

Sideshow Bob
02-10-2006, 05:28 PM
quote:Originally posted by kura

I can understand dairy farming in south America, but don't they still have "Foot and Mouth" type problems that restrict their beef export opportunities ?



Generally Uruguay hasn't suffered from FMD in recent years, similar to neighbours Argentina & Brazil. When these countries have had problems, it has only been certain provinces, and export bans & movement controls are put in place - but South Americans have a way of getting around these things. Must be a risk though, as think it is widespread in Paraguay.

Uruguay have picked up alot of market sgare in some countries, when the argies have had an export ban to keep the domestic price down, or FMD problems.

Cheap beef is still flooding out of Brazil, and their exports are still growing.

kura
02-10-2006, 07:10 PM
quote:Originally posted by limegreen

groundwater and rivers continue to get skankier.

Can't say I've ever heard of the word "skankier" before, it's a new one for me ! Is it some sort of rhyming slang for a similar sounding word begining with "w" ? or just something localised to the South Island ?

nelehdine
02-10-2006, 07:26 PM
Water is not skanky as it comes from the Rakaia , farm only about 1km from northern banks. Plenty of snow up in the alps and its been raining solidly now for virtually 24hrs. Sept was kind after a very rough winter. Cow condition is not optimal going into mating but production in Sept was ahead of budget after a slow start in August. Has been an excellent investment over the last few years, not as good as my viticulture partnership here in sunny Marlborough but not bad. ( 11.5% compound return over the last 3 years ... vineyard return comfotably over 20% !! )

Phaedrus
02-10-2006, 07:28 PM
From the adjective [u]skanky</u>
foul, disgusting, repelling, revolting, yucky, distasteful,loathsome, repellent, wicked.
offensive - unpleasant or disgusting especially to the senses.

(Source - Free Online Dictionary)

kura
02-10-2006, 08:07 PM
Thank you for my elucidation Phaedrus, however all this talk of South Island rivers reminds me of my very first sharemarket investment "Waitaki NZR" (anyone remember it ? ) As an investment it was definitely not skanky, (not great either) but had to sell when I purchased my first cave.

limegreen
02-10-2006, 09:20 PM
quote:Originally posted by kura
Can't say I've ever heard of the word "skankier" before, it's a new one for me ! Is it some sort of rhyming slang for a similar sounding word begining with "w" ? or just something localised to the South Island ?


Pretty much what Phaedrus said. However, most of the other smaller rivers are no longer swimmable. So in this case skankier isn't just foul and disgusting, but high levels of the wrong sort of bacteria (nitrates aren't as bigger issue for swimming), but not great for drinking.

They don't rate the small foothills streams, but it's not an overly pretty picture. Especially damning is that the water downstream from the Ashburton not-very-techinogical-treatment-plant is no skankier than the upstream reading.

http://www.ecan.govt.nz/Our+Environment/Water/SwimmingWaterQuality/Sites/Central-Canterbury-Plains.htm

limegreen
02-10-2006, 09:22 PM
quote:Originally posted by nelehdine

Water is not skanky as it comes from the Rakaia , farm only about 1km from northern banks.


North of the Rakaia[?] That's not Mid-Canterbury... (but Selwyn, Ruth Richardson land). But the water in the Rakaia is not so bad (but no swimmable).

COLIN
02-10-2006, 09:52 PM
quote:Originally posted by kura

Thank you for my elucidation Phaedrus, however all this talk of South Island rivers reminds me of my very first sharemarket investment "Waitaki NZR" (anyone remember it ? ) As an investment it was definitely not skanky, (not great either) but had to sell when I purchased my first cave.

Gee you must be old, like me! I think it was one of my first share investments, too. I also seem to recall moving in and out of it several times as the volatility in meat company shares offered opportunities to try and capitalise from picking the peaks and troughs. In those days an investment of 200 pounds was considered an average size!

Snoopy
05-10-2006, 10:00 PM
Just to give a counterpoint on PGW, here is what my broker said about it in their latest client mailout. I don't actually agree with what they are saying, but there you go.

---------

PGG Wrightson Ltd (PGW)
At $1.76 PE is 17.6x and GDY 8.48%.

SELL at current levels due to high PE, volatile earnings and potential dividend reduction. For continued rural exposure switch to Pyne Gould Corporation Ltd (see below). NPAT of $27m (after amortisation of $10m and includes a net gain of $7m in non-recurring items). The result reflects trading conditions that were materially less favourable than those prevailing at the time of the merger in October 2005. PGW's focus will be on improving operating results, with synergy gains available for the full year and a continued focus on programmes to assist farmer clients to improve their productivity and profitability. To justify this PE the company would require a substantial increase in ongoing earnings.

-----------

Pyne Gould Corporation Ltd (PGC)
At $4.30 PE is 14.1x and GDY 7.19%

BUY. Very solid result, Kiwibank Initiative excellent, with more to come.
NPAT for the year ended 30 June 2006 of $66.3m, compared with $30.2m last year, included a non-operating abnormal gain of $37.3m resulting from the merger of Pyne Gould Guinness with Wrightson to form PGG Wrightson. Both MARAC and Perpetual made substantial contributions to the overall group result. The contribution from PGG Wrightson was down on last year due to merger activity and generally slower trading conditions in the rural sector.

SNOOPY

Snoopy
06-10-2006, 03:46 PM
quote:Originally posted by Snoopy


"The merger had a favourable effect on group earnings, with synergies captured to date totaling more than $25 million on an annualised basis. The full effect of these synergies will flow in the 2006-07 year."

I am unclear what makes up this '$25m synergy captured' figure. Does it include the one off property sales as a result of PGW holding properties surplus to requirements? Such sales are not going to be repeated in subsequent years.

If the $25m entirely relates solely to ongoing operating costs, how much was captured in the current year? Presumably 3/4 of it, if the merger was completed in a legal sense in early October 2005, one quarter of the way through the financial year. That means the remaining $6.25m to be captured will effect the base line profitability in FY2007 to an extent of 0.67x$6.25m= $4m NPAT.


Way back on page 7 of this thread I asked the above question. With the publication of the annual report I now have the answer, from p5 of the report:

"On the positive side , the merger had favourable effect on earnings, with synergies totalling more than $25m on an annualised basis. These came from savings in corporate administration, processing and IT, the store rationalisation programme and renegotiated terms of trade with suppliers."

Judging from the way the savings are expressed, one off gains/losses from surplus property sales have been excluded. That puts the ongoing savings in a more favourable light, meaning the full $25m of savings will continue.

That in turn means we are looking at a baseline profitability figure for FY2007 of around $25m, or on a 'per share' basis:

($20m + 0.67x$6.25m)/281.3m = 8.8c eps

From a cashflow perspective, if we remove the amortization expense of $10.6m as a result of the merger, then projected cashflow for FY2007 (assuming current climatic and economic conditions)is:

($20m + 0.67x$6.25m + 0.67x$10.6m)/281.3m = 11.1 cps.

The dividend over the last year was 4c + 6c = 10cps. That means there is no reason to expect that the dividend will be cut in FY2007, even if the farmer's position doesn't improve. Contrary to what my broker believes, IMO the PGW dividend looks safe.

Taking to task my brokers 'high price' comment, it is true that even at $1.72 (yesterday's closing price) the normalised P/E ratio is not low at 19.5. But given the growing and exchange rate conditions of FY2005 (not the very best, but nevertheless towards the high side of the business cycle) the earnings per share could very quickly rise to 12cps which would reduce the P/E to 14. Couple with Criag Norgate's growth ambitions, including possible preferential entry to the Uraguay farms float, and I wouldn't say that PGW was overpriced at $1.72. I'm a holder of PGW at these price levels.

SNOOPY

discl: PGW shareholder

kittydashwood
09-10-2006, 04:04 PM
yes rated a sell from the metro portfolio a while ago too.
interesting days trading with the resistance touched.
suprising to see it up for the day.
I somehow doubt the resistance is thin, especially after the North Korean test. Unfortunately events like this add value to the growing (false) notion that the kiwi dollar is a safe haven.

rmbbrave
14-10-2006, 05:35 PM
One giant step - then a stumble

Saturday October 14, 2006
By Stephen Ward


Just over a year ago, Craig Norgate and his allies were celebrating the launch of PGG Wrightson, the company which merged farm services and supplies businesses Pyne Gould Guinness and Wrightson.

They sold the merger by telling shareholders it would increase returns and efficiency, and provide more power to invest in innovation.

But the new operation has been having teething troubles.

Its shares were listed on October 7 last year at $2.15 and have been as high as $2.45 in the past 12 months.

But last night they closed at $1.72, and have been as low as $1.62.

Merger benefits of about $10 million were achieved in the year to June, and are likely to be better than expected.

But net profits before one-offs undershot projections by $10 million - or 33 per cent - amid tougher times for farming generally.

Some farmers have gone to other firms because they didn't like PGG or Wrightson or they wanted to help maintain competition.

The merged company acknowledges it had lost market share in its livestock business in Otago, and in wool and rural supplies in the lower North Island. This hasn't been helped by rivals poaching staff.

And the sharemarket is wary about the company's exposure to a farming industry threatened again by the high New Zealand dollar.

But Norgate, a PGG Wrightson director, says he's not worried by scepticism from analysts or institutional investors.

If local institutions weren't interested in buying shares "that's their prerogative ... we're not out courting them", the former Fonterra CEO said.

Norgate - who set off the events that brought PGG, Wrightson and Williams and Kettle together in the merged entity - also points out that American investor Capital Group has a 5 per cent stake.

The share price had fallen only because of light trading and would quickly pick up if anyone tried to buy a significant stake, he said.

Of anyone dissatisfied with the way things are going, Norgate says: "We're pretty relaxed about those that are grumpy because they're probably not the sort of people that are in this game for the long-term anyway.

"So those on the register are pretty darn happy or they wouldn't be there.

"And it is not about what we've done in 12 months. It's about what we do in the next two to three years."

He says the PGG Wrightson story is still in its early stages.

"We're only in the first couple of chapters ... all we've really done inside the company is crunch the companies together, make the changes that needed to be made and drop the merger synergies to the bottom line. But there hasn't really been any value-add."

Annual profits were down less than might have been expected in light of the farming industry's tough times, he said.

And the company says it's been regaining some of the lost market share and gaining staff from other companies.

But Norgate - whose family has a joint 30 per cent stake with the McConnon clan through Rural Portfolio Investments - acknowledges: "This is the year where we've got to get some runs on the board in terms of proving that those merger benefits have hit the bottom line."

So, what do farmers, competitors, analysts and institutional investors think of PGG Wrightson a year on?

Some local institutional investors and analysts have misgivings about buying the stock because of farming's volatility and the share price.

Most farming leaders spoken to by the Weekend Herald said they hadn't noticed much of a difference in farm services and supplies since the merger.

Grains Council chairman Andrew Gillanders, who farms at Darfield in Canterbury, said rationalisation had lead to seed varieties being discontinued, which had upset some farmers.

Most cropping farmers were waiting to see how PGG Wrightson came through the January-February harvest period before making up their minds about it.

Dairy Farmers of New Zealand chairman Frank Brenmuhl said: "For most farmers it's business as usual."

But Joh

rmbbrave
14-10-2006, 05:37 PM
Institutions keep PGG Wrightson at arm's length

Saturday October 14, 2006
By Stephen Ward


Institutional investors have been holding off from taking a slice of PGG Wrightson.

"Most people back Mr Norgate - he's got a pretty good reputation, but it wasn't the right sector for the right time in our view," said Rickey Ward, explaining why Tyndall Investment Management has not bought in.

Ward said mergers could often cost more than expected and experience hiccups. The adverse affect of the strong dollar would flow on from the export sector to the farm services and supplies companies and hit earnings.

"So you're [taking] more of a macro view and relating that to the current price rather than disliking the company," Ward said.

NZ equity manager at Tower Asset Management Wayne Stechman said the agriculture sector was "notoriously" cyclical.

He did not rule out investing at the right price, but said Tower's view was that the benefits of putting PGG and Wrightson together had already been reflected in the share price.

PGG and Wrightson had not been great returners in their own rights apart from when operating conditions were particularly favourable.

"It's a bit like airlines and forestry companies. If you stay out of the things forever you tend to benefit by that," said Stechman.

Buying the stock would be more of a 50-50 call if it was around $1.60.

AMP Capital Investors portfolio manager Stan Wilson also said the stock was not cheap enough.

"Because of the cyclical nature of the cashflows you've got to be in probably buying the stock when it's at its absolute extremes - and I don't think we're there yet."

But Wilson said he had talked to major shareholders and was due to visit operations in Christchurch to find out more about the company.

Meanwhile, in a paper, Citigroup analyst Ian Graham criticised the company for overstating group earnings before interest and tax (EBIT) in a results presentation. The figure given should have been more clearly identified as earnings before interest, tax and amortisation (EBITA).

The company said this was a genuine mistake spotted by other analysts at the time and another part of the presentation had it right.

But Graham believed more should have been done to ensure the market was not confused by the mistake. His paper recommended selling the stock but holding if it dropped to $1.47.

First NZ Capital analyst Andrew Mortimer believed too much had been made of the ebit/ebita.

But he said the profit performance was not good. While he had not believed the originally forecast $30 million net profit achievable in the tougher conditions that developed "I certainly didn't expect the magnitude of what they actually finally reported".

The merger was a good idea but Mortimer felt the company's future was "pretty murky" given factors such as the strong dollar and the likelihood competition would intensify.

Forsyth Barr analyst John Cairns thought a decent job had been made of the merger but "the big issue ... is how much of the synergies they can retain".

"I think the merged entity is in a far better position to compete than [PGG and Wrightson] as independent stand-alones."

kittydashwood
15-10-2006, 11:57 AM
Well the absolute denial by all makes me want to buy.

But I guess it's probably going to be rangebound 1.60-1.80 based on currencey.
Big volume above 1.75 will be the signal i'm waiting for before adding to my position.
In the meantime it's bound to test the recent bottom after the symphony of indifferent press... If it doesn't, PGW could well be already targeted for acquisition.

Mick100
15-10-2006, 12:33 PM
Looks like my theory regarding increasing food prices is already beginning to play out. Corn and wheat prices are going through the roof, ATM, and the other grains are being dragged along with them. With all beef and dairy cattle in the northern hemisphere being grain fed and even australia's cattle are finished on grain, it's only a matter of time before meat and dairy commodity prices start rising. Pastural farmers in the southern hemisphere will have much lower cost of production than their counterparts in the northern hemisphere.
China is experiencing massive problems with water for irrigation as well as residential supplies so they won't be able to increase food production under these circumstances. The amount of water required to produce a kilo of beef or gallon of milk is staggering. As I have pointed out before, as people in developing countries become wealthier, they always increase the amount of protein in theit diets. So china could find itself in a position of having increased demand while domestic supplies of protein rich food are diminishing.
.
,

Bling_Bling
16-10-2006, 08:35 AM
PGW going into South America = :([xx(]

Mick100
16-10-2006, 01:52 PM
quote:Originally posted by Bling_Bling

PGW going into South America = :([xx(]


Why do you comment on something that you, obviously, no nothing about [xx(]
.

duncan macgregor
16-10-2006, 02:35 PM
quote:Originally posted by Mick100


quote:Originally posted by Bling_Bling

PGW going into South America = :([xx(]


Why do you comment on something that you, obviously, no nothing about [xx(]
.
You are a bit grumpy MICK, Monday blues perhaps?. I comment on things that i know nothing about all the time. Seriousely i think its up to a company to enlighten the unenlightened with up to date information. NZO are masters at keeping us in the dark PGW are only amateurs in comparison.:D macdunk

Bling_Bling
17-10-2006, 10:14 AM
quote:Originally posted by Mick100


quote:Originally posted by Bling_Bling

PGW going into South America = :([xx(]


Why do you comment on something that you, obviously, no nothing about [xx(]
.



Then please explain to us why you think going there is such a good idea.

Get the local operations humping before thinking about going offshore or the deck of cards will fall.

duncan macgregor
17-10-2006, 10:42 AM
quote:Originally posted by Bling_Bling


quote:Originally posted by Mick100


quote:Originally posted by Bling_Bling

PGW going into South America = :([xx(]


Why do you comment on something that you, obviously, no nothing about [xx(]
.
BLING BLING


Then please explain to us why you think going there is such a good idea.

Get the local operations humping before thinking about going offshore or the deck of cards will fall.
Bling Bling PGW were already there They do have a knowledge of that market. However like you i too am uneasy with their Expansion. I think what is wrong we have so many companies starting up overseas, then coming a gutser, that we shudder at the thought of it all. It all stems from a complete lack of communication from the company, to the share holders, about what is actually going on. Most NZ companies need to inform the shareholders what the hell they are up to in a much clearer way, otherwise we are flying blind. macdunk

Mick100
17-10-2006, 11:01 AM
quote:Originally posted by Bling_Bling


quote:Originally posted by Mick100


quote:Originally posted by Bling_Bling

PGW going into South America = :([xx(]


Why do you comment on something that you, obviously, no nothing about [xx(]
.



Then please explain to us why you think going there is such a good idea.



I don't usually reply to ignorant posts such as yours bling but I'll make an exception on this occasion.

PGW have been operating a profitable seeds business in Uruguay since 1999 - so they have been in south america for seven yrs

From what I understand, if there are additional properties purchased for commercial farming purposes, this will be carried out under a separate entity - not PGW (PGW already run a commercial demonstration farm in Uruguay)

From PGW shareholder point of veiw, nothing has changed in recent times other than the fact that if they were to set up an entity to purchase and run farms in uruguay, that PGW shareholders would get preference to buy equity in this NEW entity.
,

Bling_Bling
17-10-2006, 02:28 PM
Mick, thanks for the explanation. Ignorant, dont think so .. hahaha... I for one will not buy any PGW shares, thanks for coming. Maybe they should at least get their local operations going first and start to meet profit forecast.

Maybe there is something about those latin girls that keeps the boys from going there.

kittydashwood
19-10-2006, 08:26 AM
Chance of a triple bottom today if 1.62 holds and we finish higher.
All rests with the forex i guess although the credit downgrade for fonterra
can help. RD1 next piece of the puzzle for PGW locally, and I'm sure that farmers will
want Fonterrra to concerntrate on their core business and add value.
RD1 sale could make sense.

I feel the press. institutions and punters have got the big picture on PGW wrong!
The bump up in soft commodities last week came after early warnings of the failure of this years monsoon. Mick One Hundred is not wrong in expecting another wave on the commodity cycle, this time this time softs will star.

Despite the skeptical black singlet posts the South American investment is a great idea.
Particulary if the farm owning entity can be floated on it's own. Hell they might even consider North America, as grain prices rise on the back of the monsoon failure(predicted) grass feed beef and lamb becomes more competitive.
Anyway North American agricultural practice with dairy and beef is dark ages stuff. What's an electric fence?

The question is how will PGW pay for this?
Will they cut dividends?
Will they borrow from the bank of PGC?
Will they raise funds with a rights issue?

Bling_Bling
19-10-2006, 08:39 AM
I dont like to type hence my posts are nice and short to the point. I know abit about south america dairy farms then you may think. Fonterra is there and also every farmers are talking about it. South America is suppose to be the next big dairy supplier due to the low cost of farms and labour..etc..blah blah blah. A number of NZ companies have also been in China and Aust and failed being the next big expansion..blah blah blah....

All I am trying to say is lets get the PGW house in order before dreaming about latin girls.

kittydashwood
30-10-2006, 10:05 AM
Seems like selling is abating.
A trip to resistance coming up.
Even if it fails this time there will eventually be a pgw feeding frenzy as this stock is relatively illiquid. I wager a rights issue is round the corner. Nice way to raise cash and improve liquidity, maybe giving the isnto's one less reason to ignore the sector.

Mick100
31-10-2006, 09:56 AM
Meat and dairy prices firming up

http://www1.asbbank.co.nz/reports/rural/report7.asp?idMessage=5634

,

duncan macgregor
03-11-2006, 01:17 PM
PGW have just made an announcement about its south American farming venture. Go to www.nzfsu.co.nz after 3pm for details. I can feel a little share spike coming on.[:) macdunk

Snow Leopard
03-11-2006, 02:06 PM
[:0]

duncan macgregor
03-11-2006, 05:57 PM
quote:Originally posted by Paper Tiger

[:0]
We shall see a little later PT, PGW at $1-63 lets see what happens I said a little spike you said UGH.I think short term a 10pc rise. I have got to be wrong sooner 0r later but not this time i expect. macdunk

Snow Leopard
03-11-2006, 07:32 PM
quote:Originally posted by duncan macgregor


quote:Originally posted by Paper Tiger

[:0]
We shall see a little later PT, PGW at $1-63 lets see what happens I said a little spike you said UGH.I think short term a 10pc rise. I have got to be wrong sooner 0r later but not this time i expect. macdunk


:( or [xx(] or :( or even [V] could be construed as "UGH"
but [:0] is definitely shocked.

duncan macgregor
03-11-2006, 07:54 PM
quote:Originally posted by Paper Tiger


quote:Originally posted by duncan macgregor


quote:Originally posted by Paper Tiger

[:0]
We shall see a little later PT, PGW at $1-63 lets see what happens I said a little spike you said UGH.I think short term a 10pc rise. I have got to be wrong sooner 0r later but not this time i expect. macdunk

:( or [xx(] or :( or even [V] could be construed as "UGH"
but [:0] is definitely shocked.

So i take it PT with all your burps and ughs you think it is going nowhere.[?]MACDUNK

Fodder
03-11-2006, 09:17 PM
quote:Originally posted by duncan macgregor

PGW have just made an announcement about its south American farming venture. Go to www.nzfsu.co.nz after 3pm for details. I can feel a little share spike coming on.[:) macdunk


Sure as hell needs something to turn it around...but I don't think this will be enough Mac...this one's got to be a very strong contender for dog ([xx(]) of the year.

Disc: PGW..my dumbest BUY this year[V]

Snoopy
03-11-2006, 11:25 PM
quote:Originally posted by duncan macgregor


We shall see a little later PT, PGW at $1-63 lets see what happens I said a little spike you said UGH.I think short term a 10pc rise. I have got to be wrong sooner 0r later but not this time i expect. macdunk


The move into corporate farming in Uraguay has been well signalled. It is interesting in that PGG Wrightsons seem to be packaging it as part of the finance division.

I've just read the prospectus and I don't think there is any preferential allocation for existing PGW shareholders. Perhaps the minimum subscription amount of $10,000 down plus $10,000 in a years time might have something to do with that! No dividend for two to three years either.

PGW get a short term cash injection of $6m (with 281m shares on issue that only amounts to 2c per share). But then they have to pay $9m in a years time to complete the purchase of their partially paid allocated shares.

Whether PGW gets to clip the ticket as 'fund manager' for this project is something that I am still trying to work out. But in the absence of that, I don't think this announcement is material to PGW itself. My prediction: no reaction or maybe a slightly negative one when existing PGW shareholders twig that they are not being offered a sweetener to get into this project.

SNOOPY

discl: hold PGW

Bling_Bling
04-11-2006, 06:48 AM
Isnt PGW very highly leveraged?

Snoopy
04-11-2006, 12:29 PM
quote:Originally posted by Bling_Bling

Isnt PGW very highly leveraged?


PGW has reported total equity of $415m and total liabilities of $709m as at the 30th June 2006 balance date.

Weigh those liabilities against the underlying profit of $20m over the same period and I get a payback time of $709m/$20m = 35 years. On the surface, yes you are right Bling Bling, the debt level is too high.

However, PGW now has a finance loan book of $331.7m. This debt is leant mostly to farmers for their own businesses, and those farmers are responsible for paying it back. To my way of thinking, this debt should be taken away from total liabilities on the books so that the only debt that remains is that related to the underlying PGW business. If we do that, then the minimum debt repayment time reduces to:

($709m - $331.7m)/$20m = 19 years.

That is still high. But we also have to consider that PGW has hit an agricultural trough at the moment. The predicted profit levels at the time of the Pyne Gould Guiness and Wrightsons merger was nearer $40m. That reduces the debt repayment time for the company to under 10 years, a debt level I regard as 'moderate'.

You are correct to say that the debt levels at PGW need to be monitored Bling Bling. But I would not have any real concerns at this point in the business cycle.

SNOOPY

discl: hold PGW

kittydashwood
05-11-2006, 09:36 AM
Fodder you will live up to your name by buying high and selling low.

I feel this trough has been managed much better by PGW than the last rural downturn was managed by WKL WRI and PGG.

Consolidation worked as it seems size does matter when margins shrink.
Technically Momentum from the big down shift is being unwound, although commoditiy prices could take us a step lower still. OBV down trend has seen a slope reversal.
Williams bounced off the 50% this week showing an increase in buyer numbers.

This is a consumer cyclical stock and we are in the downside of the cycle.
So short term gains are likely to be meagre and fleeting.

Another 10% of downside left say the brokers and the press, but then when have they every been able to pick tops and bottoms.
Still this stock remains one of the best exposure to the NZ rural engine and when times are good they are very good.

Bling_Bling
06-11-2006, 06:59 AM
Thanks for the numbers snoopy. Does the PGW have any commitments to the bank in regards to the loans subject to the share prices and profit at a certain level? If share price and profit falls below a level, will it breach bank loan agreement? With the dollar at these levels it will have an impact on the farming sector. $NZ is forecast to stay high for a long period.

BRICKS
06-11-2006, 07:58 AM
MUST agree Bling sounds DOGGY along with BUGGER the current shareholders after my current world travel found the following ::
" IF you cant speak the language don't bother to GO "

Bling_Bling
06-11-2006, 08:41 AM
quote:Originally posted by BRICKS

MUST agree Bling sounds DOGGY along with BUGGER the current shareholders after my current world travel found the following ::
" IF you cant speak the language don't bother to GO "


Please put up our hands how many Nz listed companies have gone into China and made money?

Snoopy
06-11-2006, 06:40 PM
quote:Originally posted by Bling_Bling

Thanks for the numbers snoopy. Does the PGW have any commitments to the bank in regards to the loans subject to the share prices and profit at a certain level? If share price and profit falls below a level, will it breach bank loan agreement?


All the PGW bank loans are at 'overdraft rate' which for them is 7.2%. The total loan that they have from the banks is $253m. It is interesting to ponder that this makes PGW profitability quite sensitive to interest rates. For each 0.25% interest rates move the annual interest bill changes by $3m.

There are $56m in borrowing facilities unused. Let's be conservative and say $40m as $16m (6cps) has since been paid out in the form of a final dividend. That should be sufficient to see PGW through a couple of bad seasons. I think it is extremely unlikely that any borrowing facility covenants are linked to the PGW share price. There is no suggestion here that funds are going to be raised from shareholders which is the only time the share price really matters, as far as the banks are concerned.

As far as profits affecting bank loan covenants, I think it is more likely that there is some kind of 'cashflow covenant'. What this conevant is is not disclosed. But if we use Telecom's yardstick, that gross debt should not exceed EBITDA by a factor of 1.7 on a long run basis, then we have:

PGW gross debt (excluding customer finance debt) = $377.3m
EBITDA = $54.5m + $6.6m= $61.1m
1.7 x EBITDA= $104m

According to the Telecom yardstick, the banks should have called their loans in long ago! ;-P. That would be difficult considering PGW was only created last year. Can that be correct or have I made a mistake? Mind you I don't think PGW would have (or need?) an 'A' credit rating as Telecom does.

I'll take another tack. Let's look at 'borrowing interest'. If the 'nominal' interest bill is:

0.072x $377.3= $27m

Then, if we add the FY2006 ongoing operating profit of $20m to last years bank loan and 'overdraft interest paid' of $17m then we get interest cover of:

$37m/$27m= 1.4 times

Not that great is it?


quote:
With the dollar at these levels it will have an impact on the farming sector. $NZ is forecast to stay high for a long period.


PGW is already guaranteed $7m in profit for FY2007 following the sale of a seeds research farm, Ceres Farm on 31st July 2006. I don't think there is any cause for alarm this financial year, as the full savings from the merger are yet to make themselves felt. A couple of bad seasons and perhaps I may have to revisit that comment?

SNOOPY

discl: hold PGW

Bling_Bling
07-11-2006, 07:59 AM
Very impressive Snoopy, thanks. :) Do you work for an investment bank?

Anyway, I am keeping an eye on this pup. There may come a time for Bling to buy some stock in the future. But for now, I will just sit in the sidelines and watch the game being played.

I do have concerns for firms that are cyclical and are highly leveraged. So me gonna sit and wait and watch.;)


disc: not a shareholder

Snoopy
09-11-2006, 10:06 PM
quote:Originally posted by duncan macgregor

PGW have just made an announcement about its south American farming venture. Go to www.nzfsu.co.nz after 3pm for details.


The NZ Farming Systems Uruguay prospectus comes with its own free DVD! Don't get too excited at the prospect of three hours of total entertainment though. It is only a ten minute presentation on farming in Uruguay. Where did I find this out?

I managed to score a seat at the Christchurch roadshow on this, so I thought you people might be interested in an 'on the Spot' (no he was the Telecom dog), rather an 'on the Snoop' report.

The offer is described as 'pre-float semi wholesale' targeting medium to large investors. The shares are unlikely to be tradeable until January/February 2008 when an NZX listing is expected. Investors are being asked to stump up 50% cash now, with the remaining 50% cash due in a years time. The minimum investment being offered is $20,000 worth of shares, with a nominal $1 value.

The principal thrust of the NZFSU project is to capture New Zealand dairy prices, while only spending one quarter of the capital you would need to spend if you were doing the same thing in New Zealand. There is a second bow in this business: raising cattle for meat. The resulting beef produced in Uruguay is very high quality, good enough to grace the plates of the best New York restaurants (as well as being exported to the rest of South America and Europe). But back to the main (dairy) dish.

The NZFSU venture is possible because the South American currency crisis of a few years ago has dramatically weakened Uruguayan land prices in kiwi dollar terms. A further consequence is that farm workers wages are low. To take advantage of this, individuals are hired to bottle feed calves before they are turned out into the paddock to put on 'grass weight' - something that couldn't be contemplated in New Zealand. Astonishingly, some Uruguayan farms even have their own live in vets! Thus the animals get a flying start in life, which is accelerated by the benign climate which sees good grass growth all year round.

PGW have bought three farms which they are using as a 'proof of concept' to show that NZ farming methods - using designer grass and irrigation - can dramatically boost the productivity the land. The proceeds of the IPO will be used to buy these farns and more. But this offer is not an exit strategy for PGW. PGW intends to pour all money received from the float back into the NZFSU business when the second half downpayment of their installment shares become due in December 2007.

How does PGW get value from all of this?

PGW 'clips the ticket' as 'fund manager', taking 1% of the gross value of the farm assets in 'management fees' per year (1.5% during the development phase). Plus a bonus payment should certain profitability targets be met. NZFSU is not an end in itself but the first step in a grand vision by Craig Norgate. The ultimate aim is to have many such investment structures like NZFSU, with PGW Finance as a kind of 'collective merchant bank overlord', the Macquarie Bank of global farming infrastructure if you like. The initial impact on PGW will not be high however. One percent of a one hundred million investment is only 'one million', not hugely significant when the overall profit of PGW is some thirty times that, even in a 'bad year'!

The underlying business of NZFSU is structured to be largely debt free. But PGW are comfortable with their own finance customers using 100% debt financing to buy shares. Provided, that is, those farmers have sufficient equity in their own farms. The investment has been structured with an unusually long application time, mainly to accommodate farmers who may have to put financial arrangements in place in order to take up the offer. So is this new venture a goer? F

Snoopy
09-11-2006, 11:07 PM
quote:Originally posted by Snoopy


(continued)


NZ Farming Systems Uruguay: Question Time

There were only two sensible questions asked during question time. Actually I am being rude here. The other questions that were asked were sensible, but could have been answered by just reading the prospectus in detail.

The first 'sensible question' related to the prospective statement of financial performance (p41). The highlighted profit of $US1.7m ($NZ2.5m) for FY2008 (year ended 30th June) was thought a little low given the total investment of $NZ100m or so. Norgate pointed out that 30-06-2008 was only 18 months away. That meant the full capital of the company would only have been in the bank for 6 months.
With a three year development program drawn up for each farm, and no guarantee that all the farms sought would be even bought at that time, this figure represents 'early days'. When it was suggested that even when 'ramped up', the targeted cash payout of $6m per $100m invested did not compare that well with some of the best New Zealand dairy farms, director Keith Smith gave a wry smile with a comment along the lines:

"We, as directors, had to sign this prospectus off."

The clear implication given was that the $6m on $100m cash return was considered to be conservative, and rightly so given the point at which this investment is at.

The second sensible question related to asset value of the farms, listed at $US9.3m in the opinion of the regiserted valuer (p53) but only $US1.2m as at December 2005 as a rateable value (p56). Even allowing for some known inflation in land values over the year, this questioner thought a near 900% increase a little excessive. IMO Norgate's answer that these 'rateable values' were kept artificailly low to minimise the rates bill was not as convincing as his second argument that these values were based on undeveloped land before PGW had spent any money on the property. I think these land values will have to be watched, particularly as PGW is paid more as a fund manager the more these farms are deemed to be worth.

Overall, IMO the roadshow sold the concept of New Zealand farming Systems Uruguay well. The main doubt in my mind came from the idea of promoting the offer to farmers as 'sensible diversification' (is producing the same global commodity in another part of the globe *really* diversifying?). What for instance do you as an NZ farmer do if you have a 'very tough' year?

a/ Sell your NZ farm?
b/ Sell your Uruguaian shares?

And what effect will have those forced share sales have on the remaining equity of the non-farmer investors?

The other reservation I had was price, both in relation to asset values and earnings. It doesn't seem to be priced at a level than makes this thing a glaringly obvious bargain. But on balance if I had to go with the 'Yays' or the 'Nays', I would have to vote for the 'Yay' box.

SNOOPY

Snoopy
10-11-2006, 08:13 PM
quote:Originally posted by Snoopy


The other reservation I had was...


One more thing. This corporate farm ownership thing has been tried before, and in New Zealand. The New Zealand Rural Property Trust was the name of the New Zealand equivalent IIRC. NZRPT is an outfit I know little about, except something in my memory says it was a bit of a failure.

Can anyone with a memory broader than mine elaborate more on the history and fate of NZRPT? Amazingly NZRPT has never been discussed on Sharetrader before from an operational perspective if my searching is right. I am wondering if NZFSU is liable to run into the same problems that NZRPT did?

SNOOPY