Originally Posted by
Snoopy
The way I see it the better the year is for farmers, the worse it will be for Fonterra unitholders and upcoming Synlait Processing shareholders. That is because milk price is reflected as an input cost for the aforementioned duo, and there is no certainty that that higher input cost can be recovered upstream. If all input cost inflation is recovered then the best case scenario for Fonterra Unitholders and Synlait Processing shareholders is that their positions will stand still. Synlait Processing isn't listed yet, but Fonterra Units trade on a PE much nearer to 20 than 10. PGW trades on a PE of around 10. So straight away these other two agricultural investments are likely to have a far larger growth expectation built into the shareprice than PGW. Are FSF and Synlait better companies than PGW? Probably yes. Are they twice as good? Almost certainly not. That more or less closes the investment case in favour of PGW right there.