Originally Posted by
Lizard
Hi Percy,
I'd think there is a good basis in your NTA argument. BSH doesn't yet trade at NTA, but is likely to close the gap at FY11 result and start to exceed it post HY12. The only question is where NTA will be by then. No matter how much they've purged the books, the NTA on finance coys has not yet reversed its steady shrinkage.
Most of the PGW part is not a finance coy - simply a listed investment over which PGC have little control and for which you cannot control the value at which PGC will sell the shares. Other than the shares that can be presumed to be sold into the Agria bid, the remaining value should really be discounted to you due it being beyond your control.
PGC is also not a finance coy. A large chunk of the assets is in property which needs to be valued at a discount to NAV, if only because most property trusts are. Not to mention the possibility of impairments etc, given that the previous owners didn't manage a return on investment sufficient to pay the interest bills. The other half of PGC is a rather miscellaneous collection of unproven assets. With scale, they should exceed NTA, but without scale, the NTA is eroded by corporate costs. George Kerr may be all you say, but we have seen plenty of management heroes who later failed shareholder expectations. And while all the PGC strands in themselves might prove profitable, they still carry some significant corporate costs that may now be rather excessive to the size of remaining businesses. NTA will be important, but it might be the NTA of 12 months time that justifies the price - caution prevails.