PGW - PGG Wrightson

[Agrarinvestor]

I think 2013 is for Agria and PGW a lost year regardind share price. Agria had some large write offs done, but share price is stable.

What is with PGWs Good Will and their australia business. Is it really a good idea to be invested in Australia, always these weather problems ?

Can it be possible that PGW will have some large write offs in 2013 ?

I only replied on my own posting, for showing that these write downs were expectable, even from a non farming expert, and far away from New Zealand. If shareprice of Agria is falling i will add shares to my 11k.

Here are th expected write downs. Was the release after market ?

For the fiscal year ended June 30, 2013, PGW reported operating earnings before interest, tax and depreciation (Operating EBITDA) of NZ$45.8 million and a net loss of NZ$306.5 million. The net loss reported by PGW includes a goodwill impairment charge of NZ$321.1 million. This goodwill was primarily due to an accounting entry from the 2005 merger of PGG and Wrightson. A number of factors, including PGW's share price, slower than expected recovery and a range of external variables, led the board of directors of PGW to conclude that a write-down of historic goodwill was appropriate. Excluding the impact of this non-cash charge, PGW would have reported net income of NZ$14.6 million. The goodwill write-down has no impact on PGW's operations or cash flow. PGW's fiscal year operating cash flow was NZ$39.3 million.

http://finance.yahoo.com/news/agrias...123000728.html

[winner69]

Raining and bored as

With PGW finally realising that there company wasn't really worth $577 million and writing things off so shareholder equity is now only $256m some financial ratios now reflect reality and worth while looking at again. (Note shareholders have put in $604 million over the years so over the years the company has lost/wasted or whatever you want to call it $350 odd million - love the way they describe Retained Earnings being 'accumulated undistributed profit' ... whoops forgot to use the word losses)

So shareholders have $256m invested in the company ..... and isn't it amazing the market values that at $250m. Some might say the market is pretty clever doing that - a price book ratio of 1

Market Value Added proponents say this means that PGW is at least going to cover its cost of capital in the future. (Theory: Market Value Added is Market Cap - Equity and equals the NPV of future excess returns over the cost of capital)

PGW return on invested capital last year was 5.7% - so currently not really covering the cost of capital (equity and debt). I didn't bother including in debt the $20m they owe the underfunded defined benefit scheme.

So in simple terms the market (by pricing PGW at book value) is telling them to pull their socks up and make more money. We have priced in improved performance.

How much more improvement .... if WACC is say 10% then the shortfall last year was $23m of ebit - 83% more than $27m achieved

Maybe PGW aren't very risky from an equity perspective and the equity premium should not be so high and ACC at 8% is fairer - then another $13m odd last year would have done it

Heck some big growth numbers needed here to justify the current shareprice on a economic value added basis. Almost beyond record profit levels that Norgate made. Lets hope that conditions are better than normal over the next year or so

Or maybe there is hefty takeover premium built into the price!!!

[winner69]

Really really bored so forgive me if I recalculate the Z-Altman score on the reality based balance sheet

Score is 1.96

The people on the internet say Your Z score of 1.96 is in the medium range. Though your company is out of crisis zone, it is mandatory to take precautionary steps and keep tab of the figures to avoid bankruptcy.

Seem a good description of the state of affairs to me .... keep a tab on things and hope for normal times this year ,,,, please no shocks like droughts or whatever ..... and you really have to sell those Heartland shares

No room for complacency here John and Mark ..... a couple of unforeseen shocks and back to shareholders for more dosh .... and they wont like that at all (esp the one who owns most of you)

[winner69]

know how you feel. Have been crunching my value formulas all over the place as the rain hits the big glass window.

PGW comes up strongly as a value buy on the Graham 22.5 score.

(P/E X P/B must be <=22.5)

In PGW's case, thats 9.44 X 0.43 according to Google Finance. Nice and cheap.

The E is 1.9 cents (based on their $14.5m normalised NPAT) so PE is 17.2

Market Cap = Book Value now after the writedwons so P/B=1

So your Graham Score is 17.2 .... still <22.5 but as compelling as you thought

[winner69]

I think Mr Graham would be buying PGW up to 38 cents based on his formula

Which really doesn't make much sense when he doesn't like a pe over 15 and at 38 PGW would have a PE of nearly 20. He obviously believes that a P?B ratio of 1 is the driver of this undervaluation, not the earnings

[winner69]

Ah so the old normalised trick and forget about the bits that always seem to recur ..... you bet NO unusuals this year, of course not.Nno wonder punters are always disappointed they don't make as much money as the likes of Forbar say they should

OK bowing to superior knowledge than Ben would buy up to 50 cents on his formula

I would say good luck to him ... but what the heck would I know

[winner69]

Would Ben apply a discount to his 22.5 Formula .... the 50 cents

[janner]

[QUOTE=

Hmm. I dunno. I think I might grab some cider.[/QUOTE]

Make sure it is Cider.. Not Scrumpy. You will have already given yourself a headache with crunching those numbers.

[winner69]

....... I think I might grab some cider.

Good old cider eh .... when I was young there wasn't much choice outside of Rochdale but a bottle of that was much cheaper than wine and slightly more expensive than beer but packed a lot more punch (in other words got you pissed faster and cheaper and less bloated). It was a value investment, best return for cheapest price ha ha

Mind you you cant beat the real stuff down Somerset way .... that's real bad for you

Occasionally have a Old Mout - the Scrumpy stuff, I am old fashioned but they seem to blend all sorts of fruits into the cider as well .... probably a 4% job for the sissys

What sort you got in the fridge tonight

[winner69]

Just as I finished that dived under the table with another quake ... 5.9 they say

If it wasn't so late might have had a cider to settle the nerves