Scales - SCL

[tim23]

Hi - looking to add this stock to my portfolio, anyone holding/following?

[bunter]

Yes, bought a small number at 1.60 post-float. I reckon it's worth 2.34 and will look to buy more if it ever breaks out of its downtrend.

[noodles]

Tim,

I'm holding a small parcel. I understand that there will be an update before the end of October. Perhaps you should wait till then.

There are a LOT of risks with this one. I would read the prospectus carefully. Also, the Russian situation may be affecting carton price.

All the best,
noodles

[tim23]

Thanks - I see they are due to provide update probably good advice better to pay a bit more than guess, I'm looking to hold long term, want to add rural based stock to portfolio, only hold PGG in that space.

[Okebw]

I note that CIP has initiated coverage with a price target (currently) of $1.65, and expected to be 10% higher than this if/when the Russia situation gets sorted out. A few available at $1.40 today, I think I might pick a few up.

Not a terribly liquid stock, but the CIP coverage could definitely help with that

[Chaowee88]

I note that CIP has initiated coverage with a price target (currently) of $1.65, and expected to be 10% higher than this if/when the Russia situation gets sorted out. A few available at $1.40 today, I think I might pick a few up.

Not a terribly liquid stock, but the CIP coverage could definitely help with that

Did you pick any up? Now 138, with support nearly all crushed. I'm looking at this but not sure when to pull the trigger, although fundamentals are looking better and better I want to really time this down as upside is slim, so every cent will count.

[Okebw]

I was intending to but got distracted by an exam. Luckily it appears. I'm going to attempt to pick some up tomorrow but I'm pretty terrible at picking entry points

[Chaowee88]

I was intending to but got distracted by an exam. Luckily it appears. I'm going to attempt to pick some up tomorrow but I'm pretty terrible at picking entry points

Oh dear when I think it can't go any lower it does. 135 last line of buyers support and it not a large buy order...

[couta1]

Oh dear when I think it can't go any lower it does. 135 last line of buyers support and it not a large buy order...
Closed at $1.36 only10k shares went through on market at $1.35, I bought a parcel at $1.36 a couple of days ago as a long term hold so not worried if it drops a few cents more but then maybe it won't, who knows.

[Chaowee88]

Closed at $1.36 only10k shares went through on market at $1.35, I bought a parcel at $1.36 a couple of days ago as a long term hold so not worried if it drops a few cents more but then maybe it won't, who knows.

Was this stock priced too high at IPO? Not much growth potential for scales but fundamentals are fairly priced, why is the share price being punished so bad?

[noodles]

Was this stock priced too high at IPO? Not much growth potential for scales but fundamentals are fairly priced, why is the share price being punished so bad?
Those pesky Russians are playing havoc in world commodity markets. Apple prices under pressure. The Poles can't sell to Russia, so extra supply on world markets.
http://blogs.ft.com/ftdata/2014/11/04/polish-campaigners-bite-back-at-import-ban-on-apples-from-russia/

[Beagle]

Those pesky Russians are playing havoc in world commodity markets. Apple prices under pressure. The Poles can't sell to Russia, so extra supply on world markets.
Shooting themselves in the foot and pieces of shrapnel going everywhere. Can't see a resolution to their intransigent and extremely aggressive stance anytime soon.

[couta1]

Proposed dividend of 9.4-9.6cps offers a pretty good percentage dividend return when you work it out on current price, about 9% Gross.

[couta1]

Oh dear when I think it can't go any lower it does. 135 last line of buyers support and it not a large buy order...
Looks like $1.35 was the bottom, price refused to go below that over several days and now volume has arrived and pushed the price up:cool:

[Snow Leopard]

Looks like $1.35 was the bottom, price refused to go below that over several days and now volume has arrived and pushed the price up:cool:

$1.52(ish) looked like a bottom (twice :eek2:)
$1.42(ish) looked like a bottom (almost twice :scared:)

and now $1.35 :mad ;:.

But this time could be the true bottom or not.

Only time will tell :cool:.

Best Wishes
Paper Tiger

[RTM]

http://www.freshfruitportal.com/2012/12/14/hail-storms-rattle-new-zealand-apple-growers/?country=unknown

Does anyone have any idea how hard the above hailstorm has hit Scales Apple Crops ?
I seem to recall they had orchards in that area.

[couta1]

All of Scales orchards are located in the Hawkes Bay so none in Nelson area however they do marketing work on behalf of external growers in that area.

[RTM]

Thanks. Took a look at their prospectus.
Looks like 32% (corrected) of their apples come from external supplies. Given their dominance in HB, I guess most of this would be from the Nelson area.

Found the data:
Own Orchards - 2.83 TCE (Tray Carton Equivalent)
Nelson 0.76 TCE
Other HB 0.58

So around 18% of their apples are from Nelson.

[bunter]

Shame to waste my last post on this but that report appears to be two years old.
If it had any effect on Scales they should be over it by now.

Retiring now, 99 not out.

[RTM]

Oooops.....got the wrong hail storm. There was another one this year, not long ago.
http://www.stuff.co.nz/business/farming/62942862/Hail-wrecks-apple-kiwifruit-crop
This one is more relevant.
I guess that's a risk of the SCALES business. What mother nature dishes up.

[noodles]

Can someone please explain the change in sentiment that has caused the rise in share price from $1.35 at the beginning of the week vs $1.48 today?

Maybe it is just Couta signalling his position:)

[tim23]

I agree - its weird, I patiently waited until $1.40 to buy last week then they went south (it often happens like that!) and then the bounce, maybe large seller overhang out of the way?

[couta1]

Can someone please explain the change in sentiment that has caused the rise in share price from $1.35 at the beginning of the week vs $1.48 today?

Maybe it is just Couta signalling his position:)
Up 9% in a week since purchase no complaints from me just put it down to a schizophrenic market:eek2:

[Ginger_steps_]

Up 9% in a week since purchase no complaints from me just put it down to a schizophrenic market:eek2:

I thought you weren't going to spend any more money Couta!? Well at least it's going the right direction huh! I topped up my Xero holding @ $15.85 - fingers crossed!

[couta1]

I thought you weren't going to spend any more money Couta!? Well at least it's going the right direction huh! I topped up my Xero holding @ $15.85 - fingers crossed!
Sold a few AirNZ so that its under 10% of my portfolio total getting a bit stricter on that now bar retirement stock. I reckon you'll do well buying Xro at that price, imagine if it ends up over $60 a share:cool:

[GTM 3442]

Hopefully Scales are part of this, and can get established before the Polish tsunami sweeps in


http://www.stuff.co.nz/business/farming/cropping/63728193/Taiwan-bites-into-apples?cid=outbrain:starter

[Okebw]

Correct me if I'm wrong, and I'll track it down at work later regardless,

But did the prospectus not state that they would pay a single annual dividend in the range of 9.2-9.6 cents for this year?
Don't currently hold but was looking to pick a few up


http://scalescorporation.co.nz/wp-content/uploads/Prospectus-FINAL-As-Amended.pdf

The policy is on page 41 and states as above.

Doesn't look good that they've missed what they stated in the prospectus by so much

[noodles]

Correct me if I'm wrong, and I'll track it down at work later regardless,

But did the prospectus not state that they would pay a single annual dividend in the range of 9.2-9.6 cents for this year?
Don't currently hold but was looking to pick a few up


http://scalescorporation.co.nz/wp-content/uploads/Prospectus-FINAL-As-Amended.pdf

The policy is on page 41 and states as above.

Doesn't look good that they've missed what they stated in the prospectus by so much

You have it wrong. The recent dividend declared was interim. The prospectus was final. The prospectus did not include an interim.

So now we can expect and interim AND a final.

https://www.nzx.com/companies/SCL/announcements/257977

One for the dividend hunters:) I expect gross dividend to we well north of 10%

[RTM]

You have it wrong. The recent dividend declared was interim. The prospectus was final. The prospectus did not include an interim.

So now we can expect and interim AND a final.

https://www.nzx.com/companies/SCL/announcements/257977

One for the dividend hunters:) I expect gross dividend to we well north of 10%

How do you get that Noodles ?
Page 8 of the document linked states for 2015F 10.5-10.7 cents per share. I read this as the total payout for the year. At 10.6 and SP 142c this is about 7.5%. Do you think the interim will be in addition to this payment ?
Cheers, RTM

[couta1]

How do you get that Noodles ?
Page 8 of the document linked states for 2015F 10.5-10.7 cents per share. I read this as the total payout for the year. At 10.6 and SP 142c this is about 7.5%. Do you think the interim will be in addition to this payment ?
Cheers, RTM
I think your forgetting that its fully imputed so add 28% more to get correct gross yield.

[RTM]

I think your forgetting that its fully imputed so add 28% more to get correct gross yield.

Thanks. Yes...wondered about that. Sometime I'm going to have to understand what "fully imputed" means I guess.

[percy]

I found this mornings profit update for the 2015 year very positive.

EBITDA is project to be 6.2% up on prospectus $38.8mil at $41,2mil.
NTAT is projected to be 12.3% up on prospectus $18.5mil at $20.8mil.
With 139,779,006 shares on issue the eps is approx. .148 cents giving a very modest PE of 9.59 on $1.42 share price.

[noodles]

I found this mornings profit update for the 2015 year very positive.

EBITDA is project to be 6.2% up on prospectus $38.8mil at $41,2mil.
NTAT is projected to be 12.3% up on prospectus $18.5mil at $20.8mil.
With 139,779,006 shares on issue the eps is approx. .148 cents giving a very modest PE of 9.59 on $1.42 share price.

They are beating FY14 PFI and meeting FY15 PFI even though the apple price is being suppressed because of the Russian ban. Fantastic. Imagine how well they will do when the Russian issues go away.

Next news will be in Feb when they beat FY14 PFI and I'm guessing beat the FY14 PFI dividend. I expect 10%+ dividend.

[percy]

They are beating FY14 PFI and meeting FY15 PFI even though the apple price is being suppressed because of the Russian ban. Fantastic. Imagine how well they will do when the Russian issues go away.

Next news will be in Feb when they beat FY14 PFI and I'm guessing beat the FY14 PFI dividend. I expect 10%+ dividend.

10% plus dividend will be most welcome.!! lol.

[noodles]

10% plus dividend will be most welcome.!! lol.

We should get a broker upgrade tomorrow.

[percy]

We should get a broker upgrade tomorrow.

Do you think we are well positioned?? lol.

[Joshuatree]

Anyone up with how the fruit set has been in the orchards for next years crop?.

[noodles]

Do you think we are well positioned?? lol.
I'm trying to think of comparisons.
Scales trades on a pe=9.
Sanford trades on a pe= 30.
Seeka trades on a pe=13

Everyone must be too busy going to xmas lunches to notice this gem

[noodles]

Anyone up with how the fruit set has been in the orchards for next years crop?.
Have a listen to the man himself
http://www.radionz.co.nz/national/programmes/businessnews/audio/20161427/scales-says-it%27s-on-track-to-meet-its-full-year-guidance

[noodles]

How do you get that Noodles ?
Page 8 of the document linked states for 2015F 10.5-10.7 cents per share. I read this as the total payout for the year. At 10.6 and SP 142c this is about 7.5%. Do you think the interim will be in addition to this payment ?
Cheers, RTM
10.6 dividend would have 4.12c imputation credits. That is a total of .1472/1.42 =10.4% gross yield

But given the company have said they are in a better capital position than expected, I think this will prove to be conservative

[noodles]

We should get a broker upgrade tomorrow.

The 2 analysts offering 12 month price targets for Scales Corp Ltd have a median target of 182.50, with a high estimate of 200.00 and a low estimate of 165.00.

I suspect the low estimate will be raised when in the next couple of days.

Given it is fresh in the mind of the brokers, it may even make the broker picks for 2015.

http://markets.ft.com/research/Markets/Tearsheets/Forecasts?s=Scl:NZC

[Joshuatree]

Have a listen to the man himself
http://www.radionz.co.nz/national/programmes/businessnews/audio/20161427/scales-says-it%27s-on-track-to-meet-its-full-year-guidance

Thanks noodles heres hoping there is a good crop at harvest. The few trees here have lost a heck of a lot of young apples (and plums) in the storm passing through today. Not a commercial apple growing here, just commenting on weather dependent crop risk. Have emailed them just now.

[Joshuatree]

Scales have given me the same press release as yours noodles,thanks. Is there anyone in say the Hastings region that can give us the occasional update on how the Apple crop is faring with mainly weather(wind and hail) issues, fruit set etc.?

[Okebw]

We should get a broker upgrade tomorrow.

Bingo.

Craigs have upgraded it to a buy with a price target of $1.70.

I shan't post it here since I'd probably get in trouble but its fairly good reading

[noodles]

Scales have given me the same press release as yours noodles,thanks. Is there anyone in say the Hastings region that can give us the occasional update on how the Apple crop is faring with mainly weather(wind and hail) issues, fruit set etc.?
Weather cleared now. Have just checked my back yard peach tree. The 2 green peaches are still on the tree (there were only 2 to begin with).

[noodles]

Bingo.

Craigs have upgraded it to a buy with a price target of $1.70.

I shan't post it here since I'd probably get in trouble but its fairly good reading
First NZ makes much better reading!

[sb9]

Looks like its on the move up...

[Joshuatree]

Oooops.....got the wrong hail storm. There was another one this year, not long ago.
http://www.stuff.co.nz/business/farming/62942862/Hail-wrecks-apple-kiwifruit-crop
This one is more relevant.
I guess that's a risk of the SCALES business. What mother nature dishes up.

Yes all it takes is a 5 min Hail storm to devastate crops
A few years of good weather and consistent returns and great divs may give the perception of less risk and the s/p rerate up.

[Wolf]

I talked to a harvester in Hawkes Bay who said that the recent bad weather had caused delays in harvesting but no damage.

[Joshuatree]

Thanks wolf appreciate it:t_up:. They start apple main harvest feb/ march?

[sb9]

Bingo.

Craigs have upgraded it to a buy with a price target of $1.70.

I shan't post it here since I'd probably get in trouble but its fairly good reading


Hmmm...surprised to see this one has barely moved since the announcement from the company...

[sb9]

Wow, big volume through today almost 1.5ml share traded so far and not much movement in sp, anyone has more insight on this??

[Okebw]

Wow, big volume through today almost 1.5ml share traded so far and not much movement in sp, anyone has more insight on this??

I've got a sneaking suspicion we're going to see an SSH notice from ACC in the next few days

[noodles]

I've got a sneaking suspicion we're going to see an SSH notice from ACC in the next few days

Looks like it is Salt Funds.
https://www.nzx.com/companies/SCL/announcements/259769

[sb9]

Sure enough, looks like sp has got some momentum building into it now..

[noodles]

Sure enough, looks like sp has got some momentum building into it now..
I think as we move closer to the full year results(expected to exceed PFI) and bumper dividend to be announced, we should see some appreciation in price. Dividend hunters will wake up to this one sooner or later.

[sb9]

I think as we move closer to the full year results(expected to exceed PFI) and bumper dividend to be announced, we should see some appreciation in price. Dividend hunters will wake up to this one sooner or later.

Totally agree, looks like the instos and punters are just waking up to this.

[sb9]

Another SSH notice, this from Westpac....looking very attractive now...

[Snow Leopard]

I own a few of these.

I bought on the assumptions that:
the fundamentals look OK;
The P/E is attractive;
The downtrend is about to break;
The wedgie (or whatever the really technical people call it) is about to break to the upside;

But mostly I needed a 'fix' after a few weeks of cold turkey.

Best Wishes
Paper Tiger

[percy]

I own a few of these.

I bought on the assumptions that:
the fundamentals look OK;
The P/E is attractive;
The downtrend is about to break;
The wedgie (or whatever the really technical people call it) is about to break to the upside;

But mostly I needed a 'fix' after a few weeks of cold turkey.

Best Wishes
Paper Tiger

You have been missed....

[noodles]

I own a few of these.

I bought on the assumptions that:
the fundamentals look OK;
The P/E is attractive;
The downtrend is about to break;
The wedgie (or whatever the really technical people call it) is about to break to the upside;

But mostly I needed a 'fix' after a few weeks of cold turkey.

Best Wishes
Paper Tiger

Excellent news. A week back I was starting to wonder if my buying into this stock was a mistake as the price was not moving while the fundamentals seemed compelling. Now the price has risen and the smart money (PT) has joined the register.

[Snow Leopard]

Whether this proves to be smart money or dumb money (It was actually some Ringgit I found down the back of the sofa) remains to be seen.

But I look at it this way (assuming profit for FY14 & FY15 and 70% dividend payout, with full imputations or supplementary [for me :t_up:], as per the prospectus), being conservative :mellow: on valuations and with future growth of 6%:

31-Dec-14 value: $1.441
31-Dec-15 value: $1.556
31-Dec-16 value: $1.649

Dividends to be paid in FY15: 5c (final) + 4c (interim)
[6.1% net yield @ $1.48, 5.8% @ $1.56]
Dividends to be paid in FY16: 6.5c (final) + 5c (interim)
[7.8% net yield @ $1.48, 7.0% @ $1.65].

OK, the future is a little uncertain but I consider it probable that the market at some point will catch up with these dividend yields and raise the price above my valuations, and if it does not, well the the yields are good.

Best Wishes
Paper Tiger

FY refers to Scales Financial Year (and Malaysian Tax year) of 1-Jan to 31-Dec.
DYOR as usual.

[bunter]

SCL just signalled - MA50 crossed MA200.
Dubious value 'cross' as there's not much data. But I bought some more.

Bunter-valuation is 3.34

Discl: coming near-last in the ST share-picking comp.

[bull....]

I notice this share has risen off the lows - is it due to the falling dollar, does this mean they make more money?

[sb9]

Interesting spread today, bid @ $1.54 and ask @ $1.59, who blinks first??

[noodles]

I notice this share has risen off the lows - is it due to the falling dollar, does this mean they make more money?
They will be enjoying a falling dollar.

[sb9]

No trades yet.....

[bull....]

They will be enjoying a falling dollar.

Yes you are correct, iIm surprised only salts, westpac picked up on this it could appear cheap going forward depending on there results and div

[GTM 3442]

I saw a lot of NZ apples in the UAE. How are we going with China?

Hopefully the Polish varieties will be complementary rather than competitive.

http://www.apples-europe.com/en#program_

[bull....]

expecting a good result and bounce above issue price soon

[sb9]

expecting a good result and bounce above issue price soon

Should be a good one along with weakness in NZD....

[sb9]

http://www.stuff.co.nz/business/industries/66139012/apple-prices-shoot-up-in-january

This should give them further boost for earnings.

[RTM]

http://www.stuff.co.nz/business/industries/66139012/apple-prices-shoot-up-in-january

This should give them further boost for earnings.

I wouldn't be to sure after reading the article.
"New season apples arrived later than usual this January, and in smaller volumes, due to bad weather in spring"
Doesn't sound so good especially as most of their apples would be for export.

[bull....]

http://www.nbr.co.nz/article/nz-apple-growers-likely-beat-1-billion-export-target-early-rising-prices-higher-productivity

lower volumes probably factored into forecasts you would think because they would have known from the flowering mths ago, also its down yr means bigger fruit should be which means more kilos for less fruit which should mean more money.

[winner69]

If fruit fly in Auckland is really bad and overseas markets dont want our apples how much does this affect Scales?

[percy]

Not at all as Scales' orchards are in The Hawks Bay.
They are however building a huge cool store in Auckland,but fruit fly will not affect it.

[Joshuatree]

It will affect the whole industry if the insect traps spread around the area start picking up more so heres hoping its just another isolated lovestruck lonely fruit fly event.

[gv1]

This one caught my attention, anyone holding this. Percy mate, hows your take on this one.

[percy]

This one caught my attention, anyone holding this. Percy mate, hows your take on this one.

I am expecting a good result,which is due shortly.Hopefully it will confirm SCL are trading on a low PE and an excellent yield,which will move the sp along.

[gv1]

I am expecting a good result,which is due shortly.Hopefully it will confirm SCL are trading on a low PE and an excellent yield,which will move the sp along.

Cheers mate, dipped my toe in this one as well.

[percy]

Have they fully completed the big storage complex.........1/2 is leased to fontera and I would not be surprised if fontera have taken the other half as well considering they continue to hold back products in their auctions to help lift prices.

I do not think they have started building it yet?
Result will update progress.

[Omega]

I do not think they have started building it yet?
Result will update progress.

Latest reports were that earthworks commenced in Dec and project expected to take approx 9 months.

[percy]

Latest reports were that earthworks commenced in Dec and project expected to take approx 9 months.

Omega.
Thank you.

[bull....]

panic merchants moving in, probably heard they found number 5 in auckland

[sb9]

panic merchants moving in, probably heard they found number 5 in auckland

There are always those who panic and become nervous....

[stoploss]

There are always those who panic and become nervous....

I think you will find this situation gets worse before it gets better , and will take considerable time until they can declare this pest free , IE : Longer than 6 months.

[Tony Two Gloves]

The big unknown as how this will impact on the SP, looking forward to a good result on Thursday but think this may limit any potential upside for a while.

Disc: Holding but not as confident as I was last week.

[Jantar]

I bought a few as a bit of a punt. If the share price drops much further on panic selling it could be a good chance to top up at a cheap price. :D

[Tony Two Gloves]

If the panic isn't justified of course - lol

[percy]

The result is a "cracker".
Actual profit is $18.4 mil,up 15.4% on prospectus $15.9mil.

[Joshuatree]

"Very well positioned" 3rd to last line.

[bull....]

nice result, i like there logistics business for growth

[Snow Leopard]

Looks all right does it not?

Best Wishes
Paper Tiger

[hoyinma]

That's what I was wondering too.
I cant find it anywhere on the report.

[percy]

The directors will decide in their wisdom if, and how much they will pay in May.!!

[sb9]

http://www.nbr.co.nz/article/scales-acquisition-hunt-developing-new-apple-varieties-cs-p-169339

Scales on acquisition hunt, developing new apple varieties....

[gv1]

Something not right with results.. Market didn't like it?

[couta1]

Something not right with results.. Market didn't like it?
Mr Market not like zee old fruit fly aye?

[sb9]

Something not right with results.. Market didn't like it?

The FRUIT FLY hangover......

[gv1]

why is it they always find them near Mt roskill. Is MAF doing some restructure. last time when lot of MAF staff were about to lose jobs then this thing happened- when fruit fly was found then , job losses were canned. Bit suspicious..

[tim23]

Expected a better reaction this stock looks cheap might put it in my stock picks for the comp

[Joshuatree]

Severe gales for mon and tues for hawkesbay forecast. Hope it is downgraded. Good luck to holders ; batten down. Margin of risk built in to s/p for weather events?

[Beagle]

I love a good apple but there's too much risk for my liking while the fruit fly issue is unresolved.

[Joshuatree]

Def more risk than Air NZ ehh Rog.. Not sure what % of crop is picked atp.

[percy]

I have shares in both SCL,and SEK.
I also hold shares in PGW,REL and PAZ.
I am well aware of the risks,and the rewards.
It is just a matter of what suits each individual investor.
I intend adding to my SEK holding,and depending on result,possibly adding to my PAZ holding.
I am happy with the amounts I have in PGW and REL.

[couta1]

Def more risk than Air NZ ehh Rog.. Not sure what % of crop is picked atp.
Both as risky IMO after all if one bird falls out of the sky, well we know what the result of that would be, and if one hurricane arrives well same result really:cool:

[bull....]

http://www.wunderground.com/hurricane/south-pacific/2015/Tropical-Cyclone-Pam?map=5day

at the moment it shows the cyclone will die out by the time it reaches nz

[Beagle]

Def more risk than Air NZ ehh Rog.. Not sure what % of crop is picked atp.

I think so. Obviously planes can divert around bad storms whereas on the other hand apple trees can't. Likewise if a fruitfly goes through a jet engine, no problem it just get's pulverised.
The danger here is that if one or two countries ban apple exports from N.Z. it could cause a domino effect and others follow suit. For this reason to be honest I'm really quite surprised the stock hasn't re-tested 2014 lows in the mid 130's.

[bull....]

If the storm does in fact hit, it probably will hit the lows again - depends how many apples fall off the tree? I may re- enter again then

[couta1]

Sold my holding at open this morning as a precaution having bought at $1.36 can always buy back but just playing it safe(For a change)

[bull....]

Sold my holding at open this morning as a precaution having bought at $1.36 can always buy back but just playing it safe(For a change)

sold mine after there results, price didn't re-act as I was hoping brought a little above your price

[Beagle]

Sold my holding at open this morning as a precaution having bought at $1.36 can always buy back but just playing it safe(For a change)

Nice to see you learning and adapting. I'm interested in the stock but I can't see any possibility of upside at this point whereas on the other hand all the risk appears to be to the downside.

[percy]

Trading on very modest ratios.
A very soundly based business with excellent growth prospects.

[noodles]

Nice to see you learning and adapting. I'm interested in the stock but I can't see any possibility of upside at this point whereas on the other hand all the risk appears to be to the downside.

You want upside?
Gross Dividend yield 9.75%
Distance from Broker targets 30%
Total Potential return 39.75%
FY15 pe ratio:10.4

But wait, there is growth as well:
-"We have a further 450,000+ TCEs of premium apples expected to come into production by 2018 increasing our premiumapple volumes by 43% over 2014 levels"
We again re-affirm FY2015 IPO forecasts.• Beyond this, Scales is positioned for considerable growth: Historical orchard investment is expected to deliver meaningful uplift in premium volumes over next 5years+. A number of initiatives currently underway and scheduled for FY2015 are designed to deliver growth forStorage & Logistics. Meateor continues to diversify supply (both geographically and by protein type).• Scales is positioned conservatively, with considerable headroom in our financial covenants.

[Beagle]

You two gentlemen make a compelling case for the medium / long term. Hopefully the short term risks will pass soon enough with no material impact.

[tim23]

Couta - good luck but you may not buy back probably won't get back under $1.40 I reckon

[percy]

Well team,what is going on?
Queensland Fruit Fly!!!!!!????????????? [think I have put more ! and ?s than found flies]
Cyclone Pam.!!!!!!!!!!!!!!!????????????????????
Yet what is TA telling us? Buy signals!!!!???????
1] Share price $1.53 today.
2] 50 day EMA $1.52
3] 200 day EMA $1.51
4] Share price went through 200 day EMA on 22nd January 2015.
5] Golden Cross occurred 0n 25th February 2015.

[Snow Leopard]

Well team,what is going on?
Queensland Fruit Fly!!!!!!????????????? [think I have put more ! and ?s than found flies]
Cyclone Pam.!!!!!!!!!!!!!!!????????????????????
Yet what is TA telling us? Buy signals!!!!???????
1] Share price $1.53 today.
2] 50 day EMA $1.52
3] 200 day EMA $1.51
4] Share price went through 200 day EMA on 22nd January 2015.
5] Golden Cross occurred 0n 25th February 2015.

Well it is currently in two downtrends (8 months & 1 month) and one uptrend (4 month).

Does a 200 day average mean anything when you have only 161 trading days for the stock?

$1.51 is the new resistance? Vive La Résistance.

I am keeping mine. ;)

Best Wishes
Paper Tiger

[percy]

I am keeping mine. ;)

Best Wishes
Paper Tiger

Me too.!!!!!!
NB.160 day EMA is as per the 200EMA figure I quoted $1.51 according to Yahoo.

[RTM]

Me to.
It would be nice to see something from the company advising if the recent weather event has had any effect (other that watering) on their orchards. Similarly with SEK.


Me too.!!!!!!
NB.160 day EMA is as per the 200EMA figure I quoted $1.51 according to Yahoo.

[sb9]

Checked with MPI website, looks like fruit fly situation is under control, they've not found any more fruit flies than what was earlier. So that should be more assuring that its a localised situation for now at least. MPI have a done great job on this front in my opinion :t_up:

[stoploss]

Checked with MPI website, looks like fruit fly situation is under control, they've not found any more fruit flies than what was earlier. So that should be more assuring that its a localised situation for now at least. MPI have a done great job on this front in my opinion :t_up:

As I said on a previous post this will be a long drawn out process ......
http://www.stuff.co.nz/business/farming/agribusiness/67421295/more-fruit-fly-larvae-found-in-auckland

[sb9]

Wow big volume thro' today, look out for another SSH may be....

[noodles]

http://www.nbr.co.nz/article/salt-funds-wins-mandate-amp-capitals-690m-active-nz-equity-funds-bd-170312

We know Salt is a big fan of Scales. Perhaps they will direct some of the $690m into Scales

[noodles]

Me to.
It would be nice to see something from the company advising if the recent weather event has had any effect (other that watering) on their orchards. Similarly with SEK.
From what I've heard, both regions just got a good dose of rain. No damage to crops.
QFF is under control.

Of far more importance are:
1. FY14 beating profit forecast
2. Lower NZD against USD
3. Bumper dividend coming in May
4. Massive discount to broker targets

[percy]

From what I've heard, both regions just got a good dose of rain. No damage to crops.
QFF is under control.

Of far more importance are:
1. FY14 beating profit forecast
2. Lower NZD against USD
3. Bumper dividend coming in May
4. Massive discount to broker targets

Pleasing that both SCL and SEK had no damage to crops and ,and enjoyed a good dose of rain.
Looks to me SCL shareholders will really enjoy a good dose of Salt????.!!!!! lol.

[sb9]

Another 400k gone thro' this morning...someone is keen

[sb9]

Another big volume day with small upward tick in price...

Anyone has an update on the fruit fly situation.

[percy]

And so the upward trajectory continues.Up another 2 cents to $1.60.
I read the annual report over the weekend.Appears to be a very well managed,soundly based business with good growth prospects.

[Joshuatree]

Really glad for Growers and S/H the storm never eventuated. I was in hosp at the time with (a consolation) swindow bed and it was great to see nothing building up in the skies; storm in a teacup.Dont know re Apple crop size and numbers but hear the kiwifruit season is looking great atp:)

[Tony Two Gloves]

Like how this one is shaping up and agree an excellent Annual Report, knew I should have bought some more last week......

[Beagle]

And so the upward trajectory continues.Up another 2 cents to $1.60.
I read the annual report over the weekend.Appears to be a very well managed,soundly based business with good growth prospects.

Agreed. I took a modest opening position at the IPO price today. I reckon now the FF thing is all but done and dusted the stock has materially de-risked from where it was a month or so ago and on a risk reward basis is probably better buying now than it was in the low 150's when there was material risk of a major catastrophe with the fruit fly issue. I hope me coming on board isn't the precursor to them finding more fruit fly's :eek2:

[noodles]

Agreed. I took a modest opening position at the IPO price today. I reckon now the FF thing is all but done and dusted the stock has materially de-risked from where it was a month or so ago and on a risk reward basis is probably better buying now than it was in the low 150's when there was material risk of a major catastrophe with the fruit fly issue. I hope me coming on board isn't the precursor to them finding more fruit fly's :eek2:

I take great comfort in knowing a couple of my most respected ST'ers (yourself and Percy) are shareholders.

[sb9]

I take great comfort in knowing a couple of my most respected ST'ers (yourself and Percy) are shareholders.

Couldn't agree more on that. Looks like First NZ also like them very much.

[percy]

First of all Joshuatree I hope you are well.
Remember an apple a day ........... !
The SCL annual report had some very interesting reading about land use in NZ;
pg 13 ,"Most of our land is set aside for agriculture production.""This land is used to generate more than $29 billion in Food and Beverage exports;representing 58% of all merchandise trade."
"But compared to our climate peers,our land is relatively unproductive.Small changes in productivity have scope to drive substantial increases in export revenues.
Scales.pg21.Orchard redevelopment and Apple Volumes;
"Over the past 7 years a SIGNIFCANT investment in orchard redevelopment has been made that,by 2018,is expected to result in Mr Apple growing and exporting a further 450,000+ TCEs of premium apples [or 43% increase on current premium volumes] WITHOUT any additional orchard investment.These varieties sold for prices that,on average,were 30% greater than traditional varieties in 2014."
Great stuff!!!!!
Disclosure.Thank you Noodles for bringing SCL and SEK to my attention.

[Beagle]

Thanks to Noodles from me too. Thing is with apples there's no substitute product that's anywhere near as good and I'm a really strong believer in the apple a day keeps the doctor away and am absolutely addicted to having a lovely juicy fresh apple every day. It was a real shock late January / early February this year when apples were basically unavailable in Auckland for a couple of weeks. It really underscored to me how much I've come to love my favourite fruit and two weeks going without was bloody tough.

[Snow Leopard]

I own a few of these...

And I finished doubling up from my initial holding today.

Best Wishes
Paper Tiger

[Baa_Baa]

Coincidence? http://www.stuff.co.nz/life-style/well-good/teach-me/67625837/will-an-apple-a-day-keep-the-doctor-away LOL

[gv1]

[QUOTE=Roger;566853]Agreed. I took a modest opening position at the IPO price today.

Good to see on board mate. Happy landing!!

[Beagle]

[QUOTE=Roger;566853]Agreed. I took a modest opening position at the IPO price today.

Good to see on board mate. Happy landing!!

Thanks mate. You know you're addicted to a good apple when you run out and the local "Supervalue" "supermarket" just up the road is selling premium Rose apples at this time of year for $6.99 a kilo but you buy them anyway :)
If silly Kiwi's can be fooled into paying silly prices surely plenty of those apples will find will willing buyers overseas.

[airedale]

"was a real shock late January / early February this year when apples were basically unavailable in Auckland for a couple of weeks. It really underscored to me how much I've come to love my favourite fruit and two weeks going without was bloody tough."

Hi Roger, not a "real shock" surely. It is a seasonal thing which happens every year. :)

[Beagle]

"was a real shock late January / early February this year when apples were basically unavailable in Auckland for a couple of weeks. It really underscored to me how much I've come to love my favourite fruit and two weeks going without was bloody tough."

Hi Roger, not a "real shock" surely. It is a seasonal thing which happens every year. :)

No mate they normally cover the out of season period with imported apples which for some reason were unavailable for a couple of weeks.

[Joshuatree]

Ok who's taking profits after talking it up;)

[noodles]

Ok who's taking profits after talking it up;)
Not me. I think it is probably those who bought at the ipo just wanting to break even.

[noodles]

Looks like Alan Williams from Agrihq has been on the phone to Andy Borland. Couple of articles from this weeks paper.

http://agrihq.co.nz/article/shanghai-office-to-boost-sales?p=7

http://agrihq.co.nz/article/scales-balances-its-activities?p=7

[percy]

Looks like Alan Williams from Agrihq has been on the phone to Andy Borland. Couple of articles from this weeks paper.

http://agrihq.co.nz/article/shanghai-office-to-boost-sales?p=7

http://agrihq.co.nz/article/scales-balances-its-activities?p=7

Thanks for the links.
Interesting articles.

[Beagle]

Looks like Alan Williams from Agrihq has been on the phone to Andy Borland. Couple of articles from this weeks paper.

http://agrihq.co.nz/article/shanghai-office-to-boost-sales?p=7

http://agrihq.co.nz/article/scales-balances-its-activities?p=7

Thanks mate. Might have to have another bite of this one, excuse the pun :) we appear to be very well positioned.

Some more info on this juicy prospect for those that want to do some background reading
http://mrapple.com/why-mr-apple/

[noodles]

First of all Joshuatree I hope you are well.
Remember an apple a day ........... !
The SCL annual report had some very interesting reading about land use in NZ;
pg 13 ,"Most of our land is set aside for agriculture production.""This land is used to generate more than $29 billion in Food and Beverage exports;representing 58% of all merchandise trade."
"But compared to our climate peers,our land is relatively unproductive.Small changes in productivity have scope to drive substantial increases in export revenues.
Scales.pg21.Orchard redevelopment and Apple Volumes;
"Over the past 7 years a SIGNIFCANT investment in orchard redevelopment has been made that,by 2018,is expected to result in Mr Apple growing and exporting a further 450,000+ TCEs of premium apples [or 43% increase on current premium volumes] WITHOUT any additional orchard investment.These varieties sold for prices that,on average,were 30% greater than traditional varieties in 2014."
Great stuff!!!!!
Disclosure.Thank you Noodles for bringing SCL and SEK to my attention.
percy, Are you really Chris Lee? Same as this post? Have I outed you?
http://www.chrislee.co.nz/index.php?page=newsletter-display&list=2&month=April&year=2015

Chris Lee also likes HNZ. The evidence mounts.

[percy]

percy, Are you really Chris Lee? Same as this post? Have I outed you?
http://www.chrislee.co.nz/index.php?page=newsletter-display&list=2&month=April&year=2015

Chris Lee also likes HNZ. The evidence mounts.

Looks as though I have been outed,Great Uncle Percy Lee.!!!!! lol.
I am pleased he found the excellent annual report as I informative as I did.
The section on NZ land use was an eye opener to me.
As with any excellent report,it was written in simple language,well set out,gave a full clear picture of where the company is,and where they see their future.I find company's who state their clear,simple vision usually achieve their objectives.
I also have found Chris Lee's comments on Heartland very well thought out.He picked up on Heartland very early on.Well before any other broker.

[winner69]

Scales report didn't have a Maori bit .... bad form

[percy]

Scales report didn't have a Maori bit .... bad form

Yeah right!!
Still the best annual report I have read in a long time.

[winner69]

Yeah right!!
Still the best annual report I have read in a long time.

The HNZ Maori version?

[percy]

The HNZ Maori version?

No...........................................
Although I must admit to trying to work out what "well positioned" was in Maori !
Guess you know what "onward and upwards "is ???

[sb9]

Fairly decent volume thro today, almost 800k shares so far.

Good finish at close to 162 supported by big volume, always a good sign price up with volume :t_up:

[sb9]

Chris Lee's impact today I guess, good finish with big volume for the day.

[Beagle]

Good solid business with great growth and trading on undemanding multiples. Plenty of juice to come with this one :)

[noodles]

Good solid business with great growth and trading on undemanding multiples. Plenty of juice to come with this one :)
Yes fundamentally ok. But the technicals are also very strong...

A new closing high above the $1.60 technical resistance and ipo price. All this on high volume.
This is a high probability breakout trade.

Are there any breakout traders on the forum taking part in this?

[noodles]

This stock is covered by 2 brokers. The is still a 27% spread between the current price and the average broker target. Given the current overvaluation on the NZX, I think it would be hard to find a profitable company with such a high spread.

So as you say Roger, plenty of juice.

Reference to 27%
http://www.4-traders.com/SCALES-CORP-LTD-21021561/consensus/

[Snow Leopard]

And I finished doubling up from my initial holding today.

Best Wishes
Paper Tiger


Yes fundamentally ok. But the technicals are also very strong...

A new closing high above the $1.60 technical resistance and ipo price. All this on high volume.
This is a high probability breakout trade.

Are there any breakout traders on the forum taking part in this?

Yes - but I got in a week early :mellow:.


Best Wishes
Paper Tiger

[Goldendigger]

Does anyone know why the SP dropped so much after the IPO? Only good indicators now, I might have to buy in next week.

[noodles]

Does anyone know why the SP dropped so much after the IPO? Only good indicators now, I might have to buy in next week.
Shortly after listing, Russia banned Polish apples. Poland is a huge apple producer. This put downward pressure on apple prices. There was concern that this might hit SCL profitability. SCL beat PFI for Fy14.

[winner69]

This stock is covered by 2 brokers. The is still a 27% spread between the current price and the average broker target. Given the current overvaluation on the NZX, I think it would be hard to find a profitable company with such a high spread.

So as you say Roger, plenty of juice.

Reference to 27%
http://www.4-traders.com/SCALES-CORP-LTD-21021561/consensus/

My rule of thumb for what's it worth is to discount analysts by 10% to 20%.

This Scales at 160 to 180 s what they really mean. Maybe a little more upside then.

(Some analysts have really dumb numbers or managed down by the company, a la Heartland)

[percy]

My rule of thumb for what's it worth is to discount analysts by 10% to 20%.

This Scales at 160 to 180 s what they really mean. Maybe a little more upside then.

(Some analysts have really dumb numbers or managed down by the company, a la Heartland)

Well I think we are talking about the same two brokers here,Craigs and FCNZ.
So their valuations are dumbed up on SCL and dumbed down on HNZ?
We live in interesting times.
Thanks for taking the time to sort out the dumb ups from the dumb downs for us,otherwise I would have remained just plain dumb??? lol..

[winner69]

Well I think we are talking about the same two brokers here,Craigs and FCNZ.
So their valuations are dumbed up on SCL and dumbed down on HNZ?
We live in interesting times.
Thanks for taking the time to sort out the dumb ups from the dumb downs for us,otherwise I would have remained just plain dumb??? lol..

Have you ever considered why one company in particular has 'dumbed down' valuations?

[percy]

Have you ever considered why one company in particular has 'dumbed down' valuations?

Never................................. Well hardly every........................maybe the odd time................sometimes...!!!
I have found some analysts better than others.
Some dumbed up,while others are dumbed down.
No surprises there.!

[noodles]

My rule of thumb for what's it worth is to discount analysts by 10% to 20%.

This Scales at 160 to 180 s what they really mean. Maybe a little more upside then.

(Some analysts have really dumb numbers or managed down by the company, a la Heartland)
Does that rule still hold when you have a dividend hungry investor community and a stock paying a 9% yield?

Some dividend stocks now at a premium to valuations:
Vector -1.9%
GMT: -7%
SKC:1.6%
SPK: 0.3%

[winner69]

Yeah right!!
Still the best annual report I have read in a long time.

So I had a read

Yes it is pretty good, esp the background to the state of the market

[sb9]

Another big volume day today...

[Tony Two Gloves]

Like the way the depth is shaping up on this now, plenty of buyers above $1.60 and sellers starting to thin, hopefully step through to $1.70 over the next few days. I feel something is up with the big volume of late.

I have been in since IPO and purchased further twice (not averaged down!) at $1.45 & $1.40 so it is now my biggest holding and still the one I'm most comfortable with.

[sb9]

Like the way the depth is shaping up on this now, plenty of buyers above $1.60 and sellers starting to thin, hopefully step through to $1.70 over the next few days. I feel something is up with the big volume of late.

I have been in since IPO and purchased further twice (not averaged down!) at $1.45 & $1.40 so it is now my biggest holding and still the one I'm most comfortable with.

Agree, was hoping to see some SSH notice on NZX, nothing yet. Sure i've read somewhere on this forum that they announce dividend sometime in May. Can anyone here confirm pls. If so, could be the reason behind big volumes.

In any case, $1.70 looks like within reach looking at current depth.

[noodles]

Agree, was hoping to see some SSH notice on NZX, nothing yet. Sure i've read somewhere on this forum that they announce dividend sometime in May. Can anyone here confirm pls. If so, could be the reason behind big volumes.

In any case, $1.70 looks like within reach looking at current depth.
Yes, there will be a dividend announcement in May. There should also be an AGM sometime then too.

[sb9]

Yes, there will be a dividend announcement in May. There should also be an AGM sometime then too.

Thanks for that.

[tim23]

Hi - they paid an early dividend in December but 1/2 year ends 30 June so expect result in August and dividend September.

[noodles]

Hi - they paid an early dividend in December but 1/2 year ends 30 June so expect result in August and dividend September.

Have a read of the annual report p.g.19

"Per our Prospectus and Investment Statement our intention is to declareand pay a final dividend in respect of 2014 in or about May 2015 to bringdividends to our IPO forecast. A final dividend of $13,567,000 (11.3 centsper share) was paid on 17 July 2014 in respect of 2013, and an interimdividend of $4,136,000 (3 cents per share) was paid on 19 December 2014in respect of 2014. The final dividend is subject to Board approval. It isstandard practice for the Directors to consider all aspects of the Group’sperformance and financial position prior to declaring any dividend."

[Tony Two Gloves]

Yes the December Divvy was just an interim, could be another 8 plus cents coming shortly....maybe explains the firming SP.

[tim23]

Thanks - that's good news seems odd when FY ends 30 June?

[noodles]

Thanks - that's good news seems odd when FY ends 30 June?
the full year ends 31 dec

[tim23]

Thanks noodles - maybe I should say 1/2 year then, either way I'd be surprised (nicely) if divvy paid sooner than September!

[Gunny]

This should also see Scales jump on the dividendyield.co.nz site that reports SCL at 1.84% and 79th in the order of highest to lowest dividend for 2014. If the actual dividend climbs to say 10 or 11c in total it would suggest a move to 6-7% and in the top 15.

Gunny

Holder having got in before the interim dividend after rebalancing my portfolio that had too high a percentage of AIR and HHZ for my comfort levels.

[noodles]

This should also see Scales jump on the dividendyield.co.nz site that reports SCL at 1.84% and 79th in the order of highest to lowest dividend for 2014. If the actual dividend climbs to say 10 or 11c in total it would suggest a move to 6-7% and in the top 15.

Gunny

Holder having got in before the interim dividend after rebalancing my portfolio that had too high a percentage of AIR and HHZ for my comfort levels.

Gunny, A very astute and well-timed entry. I added some at that time as well.

But lets talk gross dividends as that is the common language around the investment community. Prospectus is 10.5-10.7c
If we use 10.6c, then the gross yield is 9% at the close of $1.64

I think there may be scope to increase this dividend given their results to date have exceeded forecast and they are in a better cash position than expected. Time will tell. I know management are frustrated with the low share price and I am suspect they might raise the dividend to get it moving.

Now you can get 9% from some zero growth gentailers or you can own a growth stock and still get the same yield. No-brainer for me.

[RTM]

Or maybe you could own both so that Queensland Fruit Fly or a major hailstorm / drought or.....??? in Hawkes Bay does not affect you so much.
Disc: Own both SCL & Gentailers. Even if it is a bit boring.

[noodles]

Or maybe you could own both so that Queensland Fruit Fly or a major hailstorm / drought or.....??? in Hawkes Bay does not affect you so much.
Disc: Own both SCL & Gentailers. Even if it is a bit boring.
A fair comment. There are some major risks with the Scales business.

The orchards are well spread around the Hawkes bay, so a hailstorm will not wipe out the whole crop. It is good to see MPI are being a bit over the top with their actions on QFF.

Regarding gentailers, you will be well aware of the Tiwai point shutdown risks as well.

Risk free does not exist on the sharemarket:)

[tim23]

Probably have hail insurance or may have some orchards covered with permanent nets that means hail insurance not necessary?

[sb9]

http://www.3news.co.nz/nznews/mpi-cuts-fruit-fly-zone-2015050413#axzz3Z873aoR8

Looks like the fruit fly hangover is almost gone....

[Jantar]

A good rise today on large volume. Has someone got wind of the dividend early?

[sb9]

A good rise today on large volume. Has someone got wind of the dividend early?

Decent volume today, must be some heavy buying before the dividend announcement later in the month.

[sb9]

https://nzx.com/companies/SCL/announcements/263922

Salt Funds upped their holding....

[sb9]

Next stop $1.70...?

[Beagle]

Its looking very juicy and very tempting to take another bite :)

[Gunny]

How El Nino proof are our Scales orchards? I am seeing news of early signs of one occurring.

Knowing some areas of NZ are effected more than others and the importance of water to the crops there are obviously some risks. I note NZ is not as effected as others like AUS but there are still impacts with drought risks in some areas, higher winds and rainfall in others.

I have not DMOR in detail yet but interested on comments on same i.e. areas crops are compared to high risk areas of a possible El Nino, mitigation of risks by the water supplies, wells etc. that are in place. Possible wind impacts?

Happy, confident holder and looking forward to announcement's this month. Plan to stay in for long term at this stage and seeing a bright future.

[percy]

How El Nino proof are our Scales orchards? I am seeing news of early signs of one occurring.

Knowing some areas of NZ are effected more than others and the importance of water to the crops there are obviously some risks. I note NZ is not as effected as others like AUS but there are still impacts with drought risks in some areas, higher winds and rainfall in others.

I have not DMOR in detail yet but interested on comments on same i.e. areas crops are compared to high risk areas of a possible El Nino, mitigation of risks by the water supplies, wells etc. that are in place. Possible wind impacts?

Happy, confident holder and looking forward to announcement's this month. Plan to stay in for long term at this stage and seeing a bright future.
I think the biggest weather worries will occur in 2065,most probably late in the year,so I think we have a few years of just the usual weather challenges ahead of us.
For your own interest go back to my post #139 on this thread,and read page 13 of SCL's annual report.

[Tony Two Gloves]

Percy, I have heard of long range forecasts, but 2065?? Seriously!!

Doubt any of us will still be holders by then lol.

[percy]

Percy, I have heard of long range forecasts, but 2065?? Seriously!!

Doubt any of us will still be holders by then lol.

Yes seriously.lol.
However, I think if you look at NZ's weather over the last 50 to 100 years, the more we talk about it, the less it changes.
So I can only look forward 50 years,that is why I said it will be probably be late in the year that it changes.
In the meantime the only real weather worry is hail.Always has been.


,

[cheeky]

Fully imputed final divvy of 7cps

https://www.nzx.com/companies/SCL/announcements/264417

[Beagle]

Very juicy and tasty just like their apples :)

[sb9]

Excellent... :t_up:

[sb9]

Umm..seems as if Mr Market has already priced in the divvy announcement.

[percy]

Excellent... :t_up:

Whole heartily agree.!!

[percy]

Very juicy and tasty just like their apples :)

Top companies seem to be able to surprise on the upside.

[Jantar]

Umm..seems as if Mr Market has already priced in the divvy announcement.
Prices made a sudden upward movement about 2 weeks ago. I commented then that it appeared someone might have got an early indication of a improved divy.

[sb9]

Prices made a sudden upward movement about 2 weeks ago. I commented then that it appeared someone might have got an early indication of a improved divy.

Yeah fair point, however one would expect a small spike in sp after such an announcement.

[noodles]

Yeah fair point, however one would expect a small spike in sp after such an announcement.

They had already beaten earning guidance back in Feb. I would have been surprised if they didn't beat dps guidance. In fact, I'm a little disappointed by the magnitude of the beat. The share price reaction is fair in my opinion.

[tim23]

5.8% net at $1.70 seems ok to me, upside ahead I reckon.

[sb9]

Nice lift in sp in an otherwise bearish market today...

[James108]

How does everyone see this company valued? How much do you guys think it will grow in next 5 years. How do you think it compares with similar companies eg PGW?

Based on 43% apple growth over 5 years and capacity and efficiency growth in storage and logistics I guestimate 5% p.a growth over the next 5 years. For my model this puts value at around current market price whereas PGW is slightly under valued by the market. However I think if you take into account the very strong balance sheet of SCL (especially when compared to PGW) they have room to suprise on the upside.

[Beagle]

How does everyone see this company valued? How much do you guys think it will grow in next 5 years. How do you think it compares with similar companies eg PGW?

Based on 43% apple growth over 5 years and capacity and efficiency growth in storage and logistics I guestimate 5% p.a growth over the next 5 years. For my model this puts value at around current market price whereas PGW is slightly under valued by the market. However I think if you take into account the very strong balance sheet of SCL (especially when compared to PGW) they have room to suprise on the upside.
Craigs see fair value at $1.90 and First N.Z. are at $2.10...both would have analysed this a lot more closely than I, (I have only a modest stake). Consensus broker fair value on PGW is 56 cps.
FWIW I hold more in terms of market value in PGW and added more recently at 48 cps. Both good value IMHO but I tend to favour PGW because of its ripper fully imputed dividend yield and its more diversified exposure to the agri sector.

[percy]

James108.
The Scales ASM is being held at 4.30pm on Monday the 8th of June.Not far away.
I expect we will be updated with latest trading, and most probably will receive a profit guidance for the coming year.
Brokers will then adjust their research projections.
So, it may be prudent to wait for the updates before deciding to invest in PGW or SCL.
Like Roger I have more invested in PGW,however I may, depending on the updates ,bring my SCL holding up to the same value as my PGW.

[tim23]

I really like this story, food producer, good yield $2 next stop.

[Beagle]

ST people will be spoiled for analysis after the ASM with Percy, Noodles and myself attending, flying AIR N.Z. of course :)

[gv1]

Thanks Percy, for the reassurance few mths back. One of the best ones at present.....safe travel. I am waiting for that $2.50 stop.

[sb9]

ST people will be spoiled for analysis after the ASM with Percy, Noodles and myself attending, flying AIR N.Z. of course :)

Look forward to you Gents valuable insights on this one.

[James108]

James108.
The Scales ASM is being held at 4.30pm on Monday the 8th of June.Not far away.
I expect we will be updated with latest trading, and most probably will receive a profit guidance for the coming year.
Brokers will then adjust their research projections.
So, it may be prudent to wait for the updates before deciding to invest in PGW or SCL.
Like Roger I have more invested in PGW,however I may, depending on the updates ,bring my SCL holding up to the same value as my PGW.

Thanks Percy and Roger. Like you and Roger I am already a happy PGW holder and am thinking about adding SCL.

[gv1]

Insider buying?

[sb9]

Good endorsement by top management, Kevin Cahill - CEO of Polarcold Stores buying 50,000 shares @1.73 (rounded)...

[brend]

Anyone interested in seeing how nz apples are being pricing/ displayed in China ? Can provide pics or video inside Walmart

[sb9]

Fairly decent turnover today on the back of ASM I guess....

[winner69]

Seemed to be a pretty slick presentation, all positive and well diversified. That word was used a lot, 8 times on counting.

Suppose Andy has new set of disciples after that effort. I might listen

Love that pet food operation

[winner69]

suppose as SCALES SHAREHOLDERS meeting and mainly about APPLES this is a fair representation of what was said (I left SLIDE out but it was a SLIDE show)

[percy]

The ASM was well attended.
The Chairman,Jon Mayson,and the CEO Andy Borland, spoke and presented well.
The company is on track to meet and better their prospectus forecast.
The company is focused on promoting their Mr.Apple brand.
They are excited about the prospects for the new Polarcold coolstore in Auckland.
I said awhile ago that Scales' annual report was the best I had read in a long time,and the meeting confirmed, that SCL is a very well run business, trading on modest ratios with excellent steady growth prospects.

[GTM 3442]

Anyone interested in seeing how nz apples are being pricing/ displayed in China ? Can provide pics or video inside Walmart

Very interested. Upload 'em

[Beagle]

The ASM was well attended.
The Chairman,Jon Mayson,and the CEO Andy Borland, spoke and presented well.
The company is on track to meet and better their prospectus forecast.
The company is focused on promoting their Mr.Apple brand.
They are excited about the prospects for the new Polarcold coolstore in Auckland.
I said awhile ago that Scales' annual report was the best I had read in a long time,and the meeting confirmed, that SCL is a very well run business, trading on modest ratios with excellent steady growth prospects.

Well summed up mate. Its better diversified than many people might imagine. For example producing enough quality dog food to feed a million dogs for a whole year per annum got my attention as a dog lover.
Steady growth this one. New Coolstore in Auckland will make a good difference to their logistical capabilities. Good apple prices, growing brand awareness, good premium apple varities, currency tailwinds, circa 8.5% gross divvy yield all combine to mean you're being paid handsomely well to enjoy steady growth. Undemanding PE of circa 11 makes this a "tasty", long term investment.

Many thanks indeed Percy for your hospitality yesterday and for showing Noodles and I around Christchurch.

[gv1]

Great news!! Good to hear from both of you Roger and Percy. I topped yesterday...great company.

[sb9]

Likewise, would like to share my appreciation for their insight to Roger, Percy and Noodles, thanks guys.

[winner69]

One of noodles favourite phrases is 'Deworsification'

Suppose deworsification is not applicable to this 'better diversified than we thought' (Roger) company in Scales

Sorry mate - couldn't resist

Love that pet food business ....something special ....might try and score a site tour.

[Beagle]

I bought more today. Stock trades cum a 7 cent fully imputed dividend, ex date is very early in July.

[gv1]

Thanks guys, indeed a great company, well done Roger!

[Joshuatree]

A small extract from KPMG Agribuisness report

PIPFRUIT[
The industry has had a challengingdecade, with many growers strugglingto consistently return profits. Exportershave struggled to differentiate theirproducts when presenting them toconsumers; many of the companies areselling the same varieties at the sametime, which has resulted in price oftenbeing the only point of differentiationfor the customer. However, during
our conversations it was noted thatconfidence is building on the back ofimproved returns, export consolidationand new innovation across the sector.
While the industry will never return
to a single-desk seller model, it wassuggested that the days of having morethan 80 exporters competing for thesame customer dollars are now behindus. The expectation is that the industrywill shift towards having five or six majorexporters with some niche players (oftenhaving their own proprietary varieties
to present to customers) enabling thesales conversation to focus on a rangeof factors beyond price. These areencouraging signs that greater value
will be created.
The sector has also recognised that itscore customer base has changed. Lessproduct is being exported to Europe andNorth America, to capture the growthopportunities in emerging Asian markets.Companies in the sector, together with

Pipfruit NZ, have invested in gaining
a deeper understanding of their newconsumers and securing the necessarymarket access.
These learnings are informing initiativesthroughout the supply chain; all designedto lift the value participants are able tocapture. One of the most obvious is thelong-term investment being made in
new apple varieties to meet the tasteand size profile preferred in Asia (inparticular large sweet apples); however,the timeframes to full commercial supplycan be up eight years. It is encouragingto see the sector focused on growing theright quality product to meet consumerneed, and supplying it through aneffective, integrated supply chain.

[noodles]

One of noodles favourite phrases is 'Deworsification'

Suppose deworsification is not applicable to this 'better diversified than we thought' (Roger) company in Scales

Sorry mate - couldn't resist

Love that pet food business ....something special ....might try and score a site tour.
lol. You can blame Peter Lynch for that phrase.
There is a great picture on pg.9 of their investment statement that describes how each of the divisions interact.
http://scalescorporation.co.nz/wp-content/uploads/Investment-Statement-4th-July.pdf

The diversified approach reduces earnings volatility.

I asked the question at the AGM if there was going to be additional acquisitions. The response was that a couple of small ones were on the cards. Clearly, if they can increase the coolstore utilisation rate, it would provide great synergies.

[noodles]

Scales is now my largest holding. I simply don't see much in the way of short term downside.
-With 33% of apples sold, it looks as if prices and volumes are holding up on last year.
-The coolstore business has bounced back (as expected) after a poor 2014
-The currency fall against many of the trading partners (but most importantly the USD) will really drive profitability going forward.

Therefore I expect FY15 PFI forecast to be easily beaten. I estimate they are currently trading on a FY15 pe=10. I also expect brokers are being very conservative with their forecasts. Thus I see broker upgrades by the end of the year. Currently, the average broker target is $2.

They will pay 12c of dividends and 4.7c of imputation credits = 16.7c in the next 6 months. (dividend strippers take note)

Going into FY16, there are many growth initiatives in plan to keep the momentum going. The major initiatives are:
-increased premium apple supply
-$30m Auckland coostore

If they do reach the 12 months broker target of $2, there would be 27c (share price appreciation) + 16.7c (dividend) = 43.7c return on the last close of $1.73. That is a potential 25% upside. But given I think broker estimates are conservative, that may just be a starting point.

[James108]

Dunno if they will reach their broker targets but I think they are good value and I got in last week. Only wish I got in when they were even better value!

[Beagle]

Scales is now my largest holding. I simply don't see much in the way of short term downside.
-With 33% of apples sold, it looks as if prices and volumes are holding up on last year.
-The coolstore business has bounced back (as expected) after a poor 2014
-The currency fall against many of the trading partners (but most importantly the USD) will really drive profitability going forward.

Therefore I expect FY15 PFI forecast to be easily beaten. I estimate they are currently trading on a FY15 pe=10. I also expect brokers are being very conservative with their forecasts. Thus I see broker upgrades by the end of the year. Currently, the average broker target is $2.

They will pay 12c of dividends and 4.7c of imputation credits = 16.7c in the next 6 months. (dividend strippers take note)

Going into FY16, there are many growth initiatives in plan to keep the momentum going. The major initiatives are:
-increased premium apple supply
-$30m Auckland coostore

If they do reach the 12 months broker target of $2, there would be 27c (share price appreciation) + 16.7c (dividend) = 43.7c return on the last close of $1.73. That is a potential 25% upside. But given I think broker estimates are conservative, that may just be a starting point.

Good post mate. Agree 100% :) Recent drop in the currency provides a nice breezy tailwind and probably more to come with further OCR cuts.

[gv1]

Good post mate. Agree 100% :) Recent drop in the currency provides a nice breezy tailwind and probably more to come with further OCR cuts.

Ditto mate....only few left in NZX thats looks so promising.

[noodles]

Ditto mate....only few left in NZX thats looks so promising.
I think that in a few months time, we will be talking about Seeka in the same vein. Look out for the half year results in August.

[winner69]

Love that pet food freezing division. Great innovation for a nz company.

You guys have convinced me this thing is a winner, a sure fire winner. You have talked me out of any doubts I had. But wish noodles would come up with his own earnings forecast instead of going about analysts forecasts, I hate analysts forecasts.

Done the old linear regression channel chart and it's looking all honky dory ---- just under1% a week gain since it was 140 in December.

So what's left of the HNZ cash goes into Scales next week

Hope that CEO who you rave about us good as you make out or he be getting plenty o mouth from me

Don't any of you dare say welcome aboard or good luck ---- luck not needed here

[James108]

^ that post makes me nervous

[winner69]

^ that post makes me nervous

Why? --- highly concentrated portfolio --- expectation of each in it is 30% to 40% return within a year --- will be happy if price stays within the up trending price channel.

My response is you should be happy and have greater confidence of success now I gave joined the team and given Scales this endorsement.

[noodles]

You guys have convinced me this thing is a winner, a sure fire winner. You have talked me out of any doubts I had. But wish noodles would come up with his own earnings forecast instead of going about analysts forecasts, I hate analysts forecasts.

The pe quote is based on my estimate.
Last year the horticulture Division sold $158m worth of apples. 97% went overseas. That result was achieved with a USD at 82c. Now consider how much extra revenue they will achieve at a USD rate close to 70c. Volumes and USD pricing being equal, we should see most of that extra revenue going straight to the bottom line.

Is it not as simple as that as there are multiple currencies, forward cover, and shipping rates to consider, but it illustrates the leverage to falling NZD. #tailwind

[gv1]

Ah well... welcome on board winner69. Happy or fruitful journey sir.

[winner69]

Diversity
Scales values individuals’ differences and seeks to ensure that the Board and workforce both comprise members reflecting diversity.

Scales recruits, promotes and compensates on the basis of merit, regardless of gender, ethnicity, religion, age,nationality, sexual orientation, union membership or political opinion. Scales requires that people in the workplace are treated with respect in accordance with the company’s philosophies of equal employment opportunities, and anti- harassment and discrimination policies.

Hmm .....maybe just words, if the Board and Leadership Team anything to go by

[percy]

Love that pet food freezing division. Great innovation for a nz company.

You guys have convinced me this thing is a winner, a sure fire winner. You have talked me out of any doubts I had. But wish noodles would come up with his own earnings forecast instead of going about analysts forecasts, I hate analysts forecasts.

Done the old linear regression channel chart and it's looking all honky dory ---- just under1% a week gain since it was 140 in December.

So what's left of the HNZ cash goes into Scales next week

Hope that CEO who you rave about us good as you make out or he be getting plenty o mouth from me

Don't any of you dare say welcome aboard or good luck ---- luck not needed here

This is not the sort of business you will be happy to invest in W69.Best to sell,move on and save us all from your moral raves,should Scales not meet your "highly concentrated portfolio's 30% to 40% expectations".
1]All white male board.
2]No diversification.
3]Annual report ,and all communications written and spoken in English only.
4]CEO on over $150,000 pa pay.
5]Reliant on cheap imported labour to pick the crop.
6]No over the top financial projections.
7]The company is looking for 15%ROE,far in excess of your acceptable under 10%.
Please stay away,and let others enjoy investing in this company.....,

[winner69]

This is not the sort of business you will be happy to invest in W69.Best to sell,move on and save us all from your moral raves,should Scales not meet your "highly concentrated portfolio's 30% to 40% expectations".
1]All white male board.
2]No diversification.
3]Annual report ,and all communications written and spoken in English only.
4]CEO on over $150,000 pa pay.
5]Reliant on cheap imported labour to pick the crop.
6]No over the top financial projections.
7]The company is looking for 15%ROE,far in excess of your acceptable under 10%.
Please stay away,and let others enjoy investing in this company.....,

3) weren't many pictures either!!!
6) at least their forecasts (still tied to IPO numbers) seem a honest sort of guidance.
7) ROIC not a problem --- deserve to make decent money as the reward for being productive and making actual stuff and adding value to stuff and exporting stuff. Good for the economic well being of this great country. I have no problem with that

[winner69]

Please stay away,and let others enjoy investing in this company.....,

Geez mate that's not nice.

You telling me to f### off then?

[PSE]

Winner is always welcome.


Scales is now my largest holding. I simply don't see much in the way of short term downside.
-With 33% of apples sold, it looks as if prices and volumes are holding up on last year.
-The coolstore business has bounced back (as expected) after a poor 2014
-The currency fall against many of the trading partners (but most importantly the USD) will really drive profitability going forward.

Therefore I expect FY15 PFI forecast to be easily beaten. I estimate they are currently trading on a FY15 pe=10. I also expect brokers are being very conservative with their forecasts. Thus I see broker upgrades by the end of the year. Currently, the average broker target is $2.

They will pay 12c of dividends and 4.7c of imputation credits = 16.7c in the next 6 months. (dividend strippers take note)

Going into FY16, there are many growth initiatives in plan to keep the momentum going. The major initiatives are:
-increased premium apple supply
-$30m Auckland coostore

If they do reach the 12 months broker target of $2, there would be 27c (share price appreciation) + 16.7c (dividend) = 43.7c return on the last close of $1.73. That is a potential 25% upside. But given I think broker estimates are conservative, that may just be a starting point.

Noodles I started going through the thread but all the death crosses and moving averages gave me a headache.
Scales is recently floated but it is not as rubbish as most IPOs in a hot market as it came out of Hubbard's empire, more crony capitalism no-one offered it to me on the cheap.
In Peter Lynch's terms would you consider SCL a fast grower or a stalwart and if it's a fast grower why and how?
Do you know about the tasty apple brands, noticed them in the supermarket? Do you work in the industry and know that there are new export markets opening up?
On the face of it a cropping business is a little more unstable than others subject as it is to the vaguaries of weather, what has happened in the past? How often does the company get bad seasons or random political factors like the American empire being aggressive against the Russians who shouldn't be in Ukraine?

It's not enough for me to buy on the basis of an analyst estimate as by definition the future of shareprices represents what they don't know, presumably they have priced all the things you mention pretty well.

You could say that Bill Gates is a value investor but only because he had a special insight into microsoft. This sort of insight is how Peter Lynch made is career and recommended that small investors may have an edge.

I don't see your edge.

[Beagle]

Geez mate that's not nice.

You telling me to f### off then?

Uncle Percy is a nice guy mate. I am sure the comment he made was firmly tongue in cheek :)

[PSE]

Not that I am saying it is a bad company if the analysts forecasts turn out as planned you will do OK for sure. Without the history or knowing the industry I have no way of evaluating if this is the case.

[noodles]

The pe quote is based on my estimate.
Last year the horticulture Division sold $158m worth of apples. 97% went overseas. That result was achieved with a USD at 82c. Now consider how much extra revenue they will achieve at a USD rate close to 70c. Volumes and USD pricing being equal, we should see most of that extra revenue going straight to the bottom line.

Is it not as simple as that as there are multiple currencies, forward cover, and shipping rates to consider, but it illustrates the leverage to falling NZD. #tailwind

The table below highlights the currency impact on Scales profitability. To simplify the situation, I assume Scales receives the same price in the foreign currency as last year and produce the same amount of apple. Additionally, the shipping costs will be the same as last year.

In theory all additional revenue should go to the bottom line. If this perfect scenario came to pass, we would see an additional earnings per share of 6.9c. Add that to FY14 15.3c+6.9c = 22.2c

Now that would put Scales on a pe = 7.7. Food for thought.














2014 fx rate
Revenue (NZD)
Current fx rate
Est Revenue
Increase


USD
44.00%
0.82
69876
0.7
81854
11979


Euro
33.00%
0.6
52407
0.62
50716
-1691


UK
20.00%
0.49
31762
0.45
34585
2823


CAD
3.00%
0.9
4764
0.86
4986
222





158808

172141
13333


tax





3733.231513


NPAT





9600


Additional eps





0.069

[winner69]

And they get more for all that dog food as well

[noodles]

Winner is always welcome.



Noodles I started going through the thread but all the death crosses and moving averages gave me a headache.
Scales is recently floated but it is not as rubbish as most IPOs in a hot market as it came out of Hubbard's empire, more crony capitalism no-one offered it to me on the cheap.
In Peter Lynch's terms would you consider SCL a fast grower or a stalwart and if it's a fast grower why and how?
Do you know about the tasty apple brands, noticed them in the supermarket? Do you work in the industry and know that there are new export markets opening up?
On the face of it a cropping business is a little more unstable than others subject as it is to the vaguaries of weather, what has happened in the past? How often does the company get bad seasons or random political factors like the American empire being aggressive against the Russians who shouldn't be in Ukraine?

It's not enough for me to buy on the basis of an analyst estimate as by definition the future of shareprices represents what they don't know, presumably they have priced all the things you mention pretty well.

You could say that Bill Gates is a value investor but only because he had a special insight into microsoft. This sort of insight is how Peter Lynch made is career and recommended that small investors may have an edge.

I don't see your edge.
The best place to go to understand the company is straight to the prospectus and recent annual report. While I don't work industry, I have read the documents published in detail and spoke to management.

Not including the currency benefits, I think Scales can grow their business at an annual rate of close to 10% with the additional capital available from the IPO and organic growth. I expect acquisitions as well. So definitely not a stalwart.

There are numerous risks in the horticulture business. Pests, exchange rate, weather, apple prices etc. Scales has managed to navigate the Russian situation very well. Apples have traditionally been commodity products. That is now changing as NZ apples can demand a premium. Their orchards are spread out across the Hawkes Bay, so hail damage should be minimal. They have irrigation systems to help them during droughts.

Australia is a key upside risk. If we can get better access to this market, it would be a massive bonus. There are a few apples making it into Australia at the moment, but I think we should be conservative here. Asia is currently setting the price premium for Mr Apple. And they simply can't get enough of our apples.

My edge? I don't have an edge. All the information that I have is in the public domain. I just think the market is inefficient. This is a small cap stock in a market enthralled by tech and power companies. If I can steal a stevefleming quote. "Share price follows earnings growth". I can see earnings increasing at Scales, thus I expect the share price to grow. I am comforted by a low pe and high dividend yield. That is my safety net.

[percy]

And they get more for all that dog food as well

W69 the dog's welfare champion,too!??

PS.
You are not the only one who can rant and rave,but it a bit much when you are critical of greedy businesses, looking for higher than 10% ROE, or ROC, while chasing 30% to 40% yourself.
Also you may not be aware the SCL's CEO is an ex banker.!
Moral issues should be discussed on an off market thread.

[Beagle]

The table below highlights the currency impact on Scales profitability. To simplify the situation, I assume Scales receives the same price in the foreign currency as last year and produce the same amount of apple. Additionally, the shipping costs will be the same as last year.

In theory all additional revenue should go to the bottom line. If this perfect scenario came to pass, we would see an additional earnings per share of 6.9c. Add that to FY14 15.3c+6.9c = 22.2c

Now that would put Scales on a pe = 7.7. Food for thought.














2014 fx rate
Revenue (NZD)
Current fx rate
Est Revenue
Increase


USD
44.00%
0.82
69876
0.7
81854
11979


Euro
33.00%
0.6
52407
0.62
50716
-1691


UK
20.00%
0.49
31762
0.45
34585
2823


CAD
3.00%
0.9
4764
0.86
4986
222





158808

172141
13333


tax





3733.231513


NPAT





9600


Additional eps





0.069



Very good analysis there mate. I would venture to suggest that all the risk to the currency is too the downside, (with potentially another two or three reductions in the OCR over time), and accordingly all the risk to eps gains is to the upside.

Its very tempting to have another bite of this juicy prospect. (note to self, how can I resist using all these weak puns ?).