http://m.nzherald.co.nz/business/new...ectid=11540792
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You'd be in for this one wouldn't you nzsilver?
Chicken industry if fully intergrated Tegel owns/controls supply to the supermarket. Also NZ has the fastest growing chickens in the world, well that's what I was told at university, as there are not many diseases therefore vaccination requirements are minimal therefore growths checks are minimal. Amount of chicken eaten per capita has also been increasing at a steady rate. I would look at this IPO once financials come out - how about you winner?
Interested, the PE firm should do quite well out of this considering they've sold all of the plants/properties to other parties and now lease them back. Sadly cant find any price details on this. Previous CEO resigned when Affinity Equity took over citing "differences in company direction"
Not sure about here but based on experience back home, chicken is the most vaccinated grown meat. A simple malice akin to colds would wipe the entire poultry in 2 hours. And contract chicken growers make a killing every 8 weeks (for broilers) when demand is really high. It could even be shortened to 5 weeks growing.
I would be keen to have a look.
disc: handled the computerized system on contract growers for chicken of a really big food company somewhere in southeast asia.
A bit dated but still good.
http://www.coriolisresearch.com/pdfs..._2013_meat.pdf
Tegel controls supply to supermarkets? I think you have forgotten about Inghams.
Also after the two key accounts, Progressive and Foodstuffs - there is also a very large single customer who primarily sources from Inghams apart from some supply in the South Island...
Will be priced within an inch of fair value...modest growth and low margins :sleep:
Couple of franchised restaurants/fast foods have long supply contracts with Tegal. As well as supplying Halal chicken to certain restaurants
Making $11m on half a billion dollars of revenue doesn't seem like blatant price gouging although being lumped with a highly geared balance sheet and $35m of interest isn't helpful.
Literally, shiploads of chicken feed in NZ is imported whereas there is a lot of grain grown in Australia and if they have wet conditions prior to harvest, this can result in a lot of wheat ending up in feed rather than as baking grade. NZ is also up against the Chinese domestic market in terms of their needs for feeding the chickens for their consumption - it's staggering to understand how many chickens they consume daily now that the growing middle class is pursuing protein rather than carbs for their dietary requirements.
http://www.nzherald.co.nz/business/n...ectid=11602741
PE of 17+ ,value left in this...?
Although I don't know alot about (nor plan to research to far into) Tegeal... I will not be touching this one (anyone else smelling Hirepool 2?)
Seems like an extremely low net profit margin, with a 'medium' PE given what I expect will be relatively low growth (if any), and I haven't even begun considering other balance sheet factors, the factors that ultimately brought down DSE (like debt).
Not sure if there is export opportunities that could 'boost' growth, but I would be cautious. For me, a good dividend yield, that the institutions will like in this seemingly ever decreasing interest rate environment, is the only thing that will 'get it away'... and in my view that is a dangerous thing to be 'buying the yield, not the company'
Has any one compared this with Pro Ten on [NZ] Unlisted market.
Market cap $118,5mil ,PE 15,6 and dividend yield of 4.6%.
ProTen grow chickens in Australia.
I have stayed away as I think it is a fowl industry to be in.
You wouldn't want your chickens to come home to roost if the ipo fails.
Over the ditch, TPG sunk $900m into Inghams in 2103 and are apparently looking for an out... rumours are it'll IPO this year too. I guess the irony is that they'll be cheering the competition on for a positive listing.
Hmmm, this will be interesting (scary?) when the final numbers are out.
Found this http://www.stuff.co.nz/sunday-star-t...moves-at-Tegel from the previous sale
Revenue 2009/2015 $464m$563m = 3.25% CARG
Net Earnings 2009 $29.5m
EIT 2015 $45.5
Plus I think PEP sold off all the property assets and are now on a lease back.
Looking like a dog.....
Bob was no fool neither were his brother Jack or father Walter - building a personal fortune worth a billion. He sold his bloodstock business in 2008 just before the GFC and Inghams is one of the largest stock feed businesses in Oz so vertically integrated - built partnerships with KFC and McDonalds (McNugget supplier).
Doubt Bob would have left much meat on the bones for the TPG vultures.
Proten's share price has increased by 50% in te last year......not bad for a fowl industry.
http://www.unlisted.co.nz/uPublic/un...?p_prtp_id=139
http://www.nzherald.co.nz/business/n...&ref=nzhbiz_tw
Now calling 2016/2017 EBITA $84M,
Ive noticed how cheap boneless skinless chicken has been this summer.
Every dog (chicken) has its price but would have to be clucking cheap to get any interest from me!
Just dug this out, I struggle to decipher all of it, but the bits I can understand dont make good reading.
https://www.business.govt.nz/compani...E4D132837E0895
Dividend hunters will flock to this big tine - 'above market' yields
And 20% capital gain by 2017 almost assured as Affinity will want to quit what they keep as soon as decently possible
Cats love chicken - i can see Birman licking his chops (or whiskers) at the prospects ahead
I wont be investing on ethical grounds. Anything good for profit is likely to be bad for chickens.
Some of the stories i have heard regarding the Christchurch Tegal factory were enough to turn me off cheap chicken for life.
Dont mind investing in Gambling, Uranium or most other "ethically challenged " industries, but draw the line at poultry death camps
Excellent to see investing on some sort of ethical basis, Ratty.
The hog takes a similar approach. For example, the hog won't invest in HBY unless they cut one of their services subsidiaries loose that works with fracking. Pity, as the rest of HBY isn't too bad.
SKY is verboten as gambling destroys people, families and communities.
RBD off the radar as they are peddling junk food which is in many ways no different to cigarettes, etc.
The above just hog thoughts, and detailed here not to suggest to others that other peoples' ethics should accord with the hogs', but rather that an ethical approach is worthy of consideration.
Where to draw the line with legitimate business is up to investors' personal ethics. Of course there are vegetarians who would not countenance any meat producing industry no matter how well looked after the slaughtered animals were prior to ultimate slaughter. As far as health is concerned then even a tin of baked beans has big dollop of added sugar. Then there is the fat and oil in the diets of sedentary people...so do we need a fat tax, a sugar tax as well as a tobacco tax and carbon tax? I have doubts about swimwear makers as they encourage people to lay about on the beach half undressed, soaking up the bright rays. Should they pay a UV tax when they buy the swimwear - likewise a UV tax on paddling pools and outdoor swimming pools. SKY TV...is a tax is needed on the Kids channels as they facilitate Kiwi kids to blob out in front of the box eating high calorie snacks instead of partaking of physical activity. There are lots of things to consider.
Now I'm really discouraged in our market,that leaves ATM out in the cold too cos those farmers are polluting our rivers and oceans.
I think you are going to have ethical issues with every company on our market if you go into their industry too deeply.
However I do understand the tegel issue with the chickens (dumb as they are ).
Down the south island in Jan and did notice a free range chicken farm,and how refreshing it was to see.
I regularly eat their chicken, and love their turkey at Xmas.
I also pig out on pork,enjoy lamb ,but don't get enough steak.
Agree with you Ratkin.
More profit they make, more killing they did.
Ethical issues aside... I hope Tegel does well (as with every New Zealand listed company) but unfortunately I get the feel this is a Feltex/Dick Smith in the making...
Good luck to anyone buying
Anyone a client of Chris Lee and able to offer a precis of their opinion on this listing?
Decide to put my hand up for the Tegel IPO today.
Had to give Craigs a $ amount.
Markets in a good mood so demand will be high i reckon
Don’t like this not knowing what price will be, esp as indicative range is pretty wide.
But has Mr Munger said recently the stock market is just a casino for punters to get rich quickly ...so les put a few bucks on Tegel and hope.
Mr Mungers thoughts -
“There’s way, way too much of that in America. And too much of the new wealth has gone to people who either own a casino or are playing in a casino. And I don’t think the exaltation of that group has been good for life generally, and I am to some extent a member of that group.
“I’m always afraid I’ll be a terrible example for the youth who want to make a lot of money with and not do much for anybody else and who just want to be shrewd about buying little pieces of paper. Even if you do that very honestly, I don’t consider it much of a life. Just being shrewd about buying little pieces of paper, shrewder than other people, is not an adequate life. It’s not a good example for other people.”
yes, agree, seems to me the demand is high.. so the ipo price will be high... or overvalued???
I think Mr Munger makes a very good point.
Maybe it is one of the reasons I still enjoy my bookselling business.You have to work very hard to make a very modest profit.
Makes me appreciate the more than modest profits I make buying "little bits of paper, " although I very much realise that those "little bits of paper," are part ownership in some very well run businesses.
just talked to my broker, i have to confirm my investment before know what the ipo price is and i might not get that if the ipo was oversubscribed... Gee.. is it really that much demand? i don't think 2.55 is a fair price for this ipo.. Errr. too hard... a bit too risky ..
Taking your comment at face value I find this sort of thing all back to front and ethically unacceptable. Why should investors be required to place a firm order without knowing the price ? Even if they place a firm order it might not eventuate. This way of floating a new company really sucks compared to how it used to be done. Its all geared to maximise the price for the promoters.
Interesting anecdotal story. My daughters boyfriend, I'll call him Ken to protect his identity used to drive trucks for Tegal. Very tough crowd to work for and they REALLY thrash their drivers. I was in the hospital the day our daughter gave birth to her daughter and Ken was there. It was a difficult birth and our daughter was absolutely knackered and Ken had been previously told he was entitled to 14 days paternity leave which I thought was very reasonable of them. But then what would you know, his mobile phone goes and the area controller was doing a really big emotional job on him saying that they had so many drivers away sick that they desperately needed him back that day ! It was the second time he'd pestered him that same day ! Ken phoned his father who is a line haul driver for Toll to get his advice. His father apparently told him that Tegal have a real reputation for working their drivers into a state of burnout and he told him to tell Tegal, your driver problem isn't my problem.
Things between Ken and the area controller went from bad to worse when he did come back a few days later, (well before he should have), with the paternity leave entitlement. Anyway that's the story I got. If that's how they treat their drivers I wonder how they treat their chickens ?
In terms of a new float generally, tell me the price and I'll tell you if I want some. If its any other scheme of arrangement the promoters can go fish as far as I'm concerned.
some key risks like banning imported chicken
Attachment 7979
also supply chain interruption
Attachment 7981
are things im looking into but I like the fact technology has improved
Attachment 7982
quicker production equals more profit as long as we don't get problems like in the first picture.
Regelation fits quite nicely into one of my investment themes, but the "book build" pricing is a real turn-off.
So I will be doing something on market later on in the piece.
Inasmuch as I've very little left on the one that is deep frying their chickens (RBD), I might as well try this one killing their chickens for a change and see how it goes within 2 years. Just emailed ASB for my target allocation and hope the demand is not so great that the indicative high price is reached. GL to us all.
Not for me this one, don't like the huge price range either.
Do not think that it will be any good for the Stags either.. ..
So many trying to get in for just that reason.. IMHO..
Room for export growth. ???????????
We import food stocks..
The exporting food stock Countries have an immediate advantage.
Internal growth may come from the increasing. Butter Chicken Market..
But. " They " usually want everything for nothing..
Again... Not for me perc !!
I don't mean to get all excited or go on the offensive, but while we're at it, I thought we could take a look at Dick Smith's positives (at IPO):
One of the top retailers in Australasia.
Strong balance sheet.
Ratios are modest,and dividend yield is attractive.
Retail sales are growing.
Room for off shore growth.
Stable earner for long term investors.
I realize some of the things above could be 'hotly' debated, but I think my point is made... as always DYOR.
There is a difference in being the largest compared to the best. These guys are getting their arses handed to them in the Free Range market- unable to respond to pricing pressure and have overcapacity in supply. They are price takers in the majority of their product range
A bit of cognitive dissonance being demonstrated by some on this thread?
Good sign - 'iconic' only appears 4 times in the documents
That'll add a few cents to the final share price
Feltex still hold the record for the use of iconic - pumpkin patch pretty close 2nd
Not sure if it has already been shared, but for those who are following:
"The brokers said more than $NZ200 million of retail bids had been received"
Read more: http://www.afr.com/street-talk/tegel...#ixzz463iKTZZ3
Ok, so either all those that were dissing Tegel were actually putting in big orders or they just weren't convincing enough:).
GOTCHA!! Tegel priced at $1.55 http://www.nbr.co.nz/article/tegal-s...ge-ck-p-187832
Full article here: http://www.theaustralian.com.au/busi...696e9c1afaa1fd - if you don't subscribe to NBR.
One of New Zealand’s most familiar consumer brands, the chicken producer Tegel Foods, will list on the stockmarket next month at a price of $NZ1.55 per share after investors supported the deal at the lowest end of the valuation range.
This newspaper’s BusinessNow blog revealed the price on Tuesday.
As this column also reported, Affinity Equity Partners, an Asia-focused private equity firm and the majority owner of Tegel, was faced with two options after a $NZ299 million ($270m) bookbuild concluded yesterday morning: take the floor price or book a higher profit on its sell-down with the slightly higher valuation of $NZ1.75, or 8.2 times forward earnings. At that level a number of top investors declared they would walk.
After a lengthy period of deliberation with the IPO’s joint lead managers, Deutsche and Goldman Sachs, Affinity plumped for the cheapest price, in an effort to avert a poor performance post-listing, as well as lock in a high-quality *register dominated by long-term investors. As a result, a number of fund managers suffered heavy scale-backs on their allocations, paving the way for a strong debut on the stock exchange.
Yet while Affinity spent hours pondering the final deal price, fund managers’ reluctance to climb far above the floor price was evident weeks ago. As this column has stressed, Tegel’s comparatively weak growth prospects always presented the greatest hurdle to a lofty valuation, with the deal’s appeal centering principally on the company’s high-yield, iconic brand and respected management team.
Tegel’s lengthy ownership by private equity firms — Affinity purchased the poultry business for $463m in 2011 from Pacific Equity Partners, which had held it since 2005 — also helped stifle appetite for an expensive valuation.
In the past few years shares in a string of companies floated by buyout firms have headed south, denting enthusiasm. Dick Smith’s spectacular collapse in February ranks among the worst offenders.
Nonetheless, Tegel’s solid earn*ings, delivered chiefly from its domestic market, where it ranks as the country’s leading poultry producer, garnered support at the low end of the 8-9 times forward earnings valuation range. Retail investors also flocked to the deal, offering over $NZ200m in binding commitments. Tegel will list on the stock exchange with a market capitalisation of $NZ552m.
Hectorplains;
Thank you for posting the full article.
Will be interesting to see how much I will be scaled.
Applied for equal amounts for the wife and me via Craigs.
The news is on the NZ Herald now.
Percy, so you're probably one of those that the company said are “long-term, high quality investors” whom they wanted to keep :)
I'm just happy that the amount I allocated is right to the cents. Giving this a 2 year horizon. GL to us all again.
Cheap as
Another Comvita and Scales in the making i reckon
It appears there is going to be massive scaling.
Sound too good mate. Let see how it goes
What is the code?
$1.55 ... we all know why that was... people did not want to pay a cent premium for this... speaks a million word of what the market thinks of the company... could be good for punters wanting to make a quick buck as I would imagine some will simply buy in for the dividend yield, even if the share price went nowhere.
Good luck to the holders, certainly shaping up to be a bit more interesting than I thought!
Cheap as and a bargain
Rest assured there will be a few good announcements over the next few months and H1 will beat forecasts and the share price will be $1.90 to $2.00 by November/December and Claris will be selling 1/2 their shares.
Full year will be pretty good as well (by hook or by crook) and come mid next year Claris can sell the rest
Then what ---who knows
Punters who have been frightened off by Dick Smiths fiasco are missing out. Don't forget Dick Smiths weren't doing too badly and stil paying good dividends until that horrible PE outfit sold out.
How many shares are on offer? Most articles just give a percentage of the business but not actually mention the number of shares. At $1.55, are the number of shares constant?
The number of shares on issue on completion of the offer is listed as "254.1m – 355.1m " The number of shares being offered is 137.5m – 192.4m. At $155 it would be $355.1m (cf: http://www.sharechat.co.nz/pdf/Tegel.pdf)
Just got the confirmation from ASB and molting was so bad I only got less than 50% of what I applied for :mad ;: Looks like it will be a trial scamper on listing date.
Got just under two thirds of my app from craigs. Happy atp that the shares were priced at the bottom end $1.55 which increases the odds of a robust demand on listing and good early life for this company; and it minimalises the scaling too..