Originally Posted by
Roger
Judging by the evidence of what you posted last week mate its too late and they've already fallen. I think with an average of 61% LVR HNZ have plenty of exposure to the most at risk sector of the industry. Upcoming sales will only reflect what we already know, that being that the massive disconnect between land prices and what that land is actually capable of producing in terms of cash flow has to close. Personally I think an astute buyer of a dairy farm right at the minute would be looking at bidding somewhere in the mid to high $2m range for an operation at its peak that would have been $4m. Just my opinion by why would any astute businessman right at the minute pay any more knowing its never been more of a buyers market ? We're in for a really meaningful correction in dairy farm prices, of that I am very sure. How much of that translates into real losses to HNZ, is very hard to quantify but history tells us that when times are really tough, (e.g. GFC), finance companies invariably underestimate their doubtful debt provisions, usually by a long way. I would have thought its crystal clear, all the risk to HNZ's FY16 forecast is too the downside. In terms of the point you've made mate, hopefully the board are well aware of there legal obligation to place the interests of shareholders ahead of anyone else. Thankfully the Fonterra loan thing buys some participants who are hopelessly unviable, at current pay-out level's, time to be helped to be managed out of the industry rather than be in a foreclosure position and therein probably lies a bit of relief for HNZ shareholders. Without the Fonterra loan thing the situation would be FAR worse.