Tegel IPO

[Beagle]

Update :

Tegel IPO : $22.5 million to $25.3 million will cover IPO costs, including an $8 million bonus for senior management.

No wonder the senior managers were talking the prospects of Tegel like chooks could fly.

The IPO was very well-timed indeed and the PE interests got their get out of free jail card with the proceeds used to pay bank debt and their debt.

You'd be forgiven for drawing the conclusion that shareholders were betrayed for 30 pieces of silver...(plus inflation for the last ~ 2000 years). Why were senior management granted such massive bonus's because of an IPO float ? Surely not for telling half truth's and application of vast quantities of high gloss red lipstick to a very ordinary looking mature and bloated pig ?

To add insult to injury all shareholders have heard since then is one promise after another all that have turned out to be "inaccurate" putting it extremely kindly.
I'm going to go out on a limb here and suggest that I think this company with its current directors and management team is un-investable regardless of price, what do others think ?

Why, because how can you ever trust the integrity of the management and directors after the IPO betrayal ? At least one director has seen the error of his ways and wants nothing more to do with this ongoing fiasco. Promises that things were on the up and up as recently as December 2017 have come to nothing.
How long before heads need to roll at management and board level ?

Pray tell, what is the point of pumping out ever increasing quantities of chicken if you then have to discount it down to rock bottom to shift it ? Produce 10-20% less and sell if with proper margins and make more money for goodness sake...

[Stranger_Danger]

I wouldn't go as far as saying it is un-investable under the present management team, but, a CEO change is one of the catalysts that may encourage me into the stock.

The truth is, the current CEO had a large financial incentive to get a float away, and in putting him there in the first place, presumably these skills were considered useful.

In future, a different skill set is required, and the potential remuneration is lower, and I could totally understand if the current CEO was less motivated with the "big payday" now in the rear view mirror.

P.S Has there really been a betrayal? From memory, the IPO costs (incl management bonuses) were laid out in advance, and as for the profit forecasts, come on, the thing had two private equity owners in a row, surely nobody truly believed the forecasts. Looks like a pretty standard private equity float to me - the real question is what happens next, because there *is* a real business hiding in amongst this, in my opinion.

[Valuegrowth]

Their competitors are doing a better Job. When they will become competitive?

It seems Inghams have captured market share in New Zealand and Australia through great product development. Their stocks have consistently traded above their issue price. Private equity companyTPG's sale of 55 million Ingham shares this month was easily absorbed by the market.

If I am right, in February their New Plymouth processing plant was affected by ex-cyclone Gita due to water supply issues and private equity company Affinity still retaining a 45 per cent stake in Tegel.It is interesting to see there is a private equity involvement in the poultry sector in Australasia.

[Beagle]

P.S Has there really been a betrayal? From memory, the IPO costs (incl management bonuses) were laid out in advance, and as for the profit forecasts, come on, the thing had two private equity owners in a row, surely nobody truly believed the forecasts. Looks like a pretty standard private equity float to me - the real question is what happens next, because there *is* a real business hiding in amongst this, in my opinion.

You, I and many others on here know full well to take all PE forecasts with a grain of salt but many gullible Joe average investors don't.
I think their entire track record since listing including every single one of their forecasts is shameful so we are not just talking about the IPO forecast.
Directors should simply stop giving forward guidance. They obviously have no forward visibility whatsoever. Frankly you'd be better off watching retail chicken prices and the degree of discounting over time to get an idea on how they're tracking.

[Valuegrowth]

In this sector strong competitors that include strong balance sheet firms could dominate in the coming years. First and foremost Tegel have to consolidate their business and then should become a strong competitor. I also expect some acquisitions to take place globally in this sector as well.

[Balance]

Drumsticks on special at $2.99 kg at Mad Butcher.

Likewise thighs at $3.49 kg.

Going to get worse before things get better for Tegel - plenty of production coming onstream but demand is simply not growing at same pace.

Something has to give and so far it is price of poultry.

[traineeinvestor]

How long before we see some industry consolidation? Australia has just seen a supplier with 2-3% market share being placed in liquidation and Australia's market is not nearly as oversupplied as NZ's.

[Pavan Sharma]

Down at 82 cents, it cant get dragged down any lower its offering a decent dividend while you wiat for a recovery. Hopefully there's some uplift in chicken prices (For Tegel) once they start exporting more.

[Valuegrowth]

Will New Zealand consumers’ per capita consumption of chicken meat continues to increase similar to Asia, Africa and South America?
Will there be further expansion into new export markets?
Will there be improved margins through productivity gains?
How about consumer spending pattern?
Will chicken become alternative proteins as red meat prices are high and less healthy when compare with poultry?
Can they maintain reasonably strong balance sheet while becoming competitive player?

Thanks.

[JeremyALD]

Personally I think Tegel is pretty rubbish, but the SP does seem to be decent value. It's a massive discount off its IPO price and the dividend yield is pretty good. Chicken prices are at all time lows and they are still making 30m NPAT (less 'one off costs') . Chicken is a stable good and Tegel has solid market share in NZ. I see it as an OK play at this price, but they do have a habit of continually disappointing.....