PGW - PGG Wrightson

[Agrarinvestor]

Before Snoopy replies in detail, let me presume to say your prediction will prove to be bull**** rather than bullish unless Agria finds funding for a full takeover at a hefty premium.

Dear Sirs,

i tried hard here to convince you to think about Agria as an investment instead of PGW. But i failed, maybe due to my bad english skills, i don't know. My main Argument that Agria is the controlling shareholder and that you as PGW shareholders can only hope of a dividend should be easy to understand. Agria has no need to take PGW private. Why should they ? They need the money to expand their business in China. There are more advantages to have PGW listed at NZX. If it is anoying for PGW's shareholder to discuss AGRIA's matter i can open a new AGRIA thread (but i fear loneliness). Please give me advice in that case. Agria was a threebagger the last 12 Month.


http://www.agriacorp.com/business.asp
China Business
Agria established its edible corn seed business in 2007, vegetable seed business in 2009, field corn seed business in 2010 and forage seed business in 2013.

Agria’s China seeds business is operated by Beijing Agria Nongkeyu Co., Ltd. For more information, please visit:

www.nongkeyu.com.


Field Corn Seeds

We have achieved dramatic growth in the field corn business over the past two years. Notable achievements include:

1. We set up an effective distribution channel with approximately 300 county-level dealers, covering the spring and summer corn markets in 12 provinces including Henan, Hebei, Shandong and Heilongjiang.
2. We are commercializing three key corn hybrids: BY11, Zhongdan 909 and ND375. An additional three hybrids are currently under development.
3. We built two modern corn seed conditioning and packaging plants in Xinjiang and Henan provinces, each with a capacity of 20 tons per hour.
4. We have more than 1,500 hectares of seed production in Xinjiang and Gansu provinces, which are reliable and sustainable for high quality seed production.

Edible Corn Seeds

We conduct our edible corn seed business through Shenzhen Nongkeyu. We have two operating units located in Beijing and Zhuhai. Our seed products cover different varieties including sweet corn, sticky corn and sweet/sticky corn. We have a distribution network covering 28 provinces in China and seed production bases in 6 provinces.Our annual sales volume currently totals approximately 1.2 million kilograms.

Our key focus is innovation in varieties. We are a leader in the industry of edible corn seed research and development.
China is one of the largest markets for edible corn. The planting area reaches 13.5 million mu. We are capturing market opportunities through our leading market share in the JKN2000 variety , as well as development of new species to both consolidate our significant position in China and to expand to southeast Asia.

Forage

We conduct our forage business through Shenzhen PGW Seeds Company Ltd., a wholly-owned subsidiary of Agria. This business unit focuses on developing eco-efficient ranching in China. Through technological cooperation and the introduction of advanced international germplasm, we aim to enhance the quality of forage and livestock.

We are committed to developing innovative grassland services to support the growth of agricultural and livestock industry in China. Through the competitive advantages of advanced forage seed varieties, production and processing technology, and management methods, we provide new technical ideas for the development of domestic and international livestock industry.

Our forage business focuses on three areas.

1. Advanced forage varieties
According to the local climate characteristics, the type of land management conditions and livestock species, we choose different varieties in order to enhance the nutritional value of grass. There are many appropriate forage varieties, including alfalfa, sainfoin, red or white clover, tall fescue, feed corn, peas, brassica crops and herbs.

2. Production technology
We have world leading endophyte technology that focuses on discovery and development of new endophytes and the demonstration of these to improve plant persistence and yield while also improving animal health and performance. Using our unique endophyte technology we protect the plant from a wider range of pests and this helps the plant to better manage other stresses like drought. Our endophyte technology has been widely adopted in temperate regions of the world because they can improve grass yields (in some regions up to 20%) and can reduce animal health issues leading to improved animal performance.

3. Processing technology
In winter, forage contains less nutrients and there is a lack of grass for livestock. Conversely, in warm seasons nutrient-rich forage is growing vigorously. In order to take advantage of the warm season forage, we process nutrient-rich forage by mowing, sun-drying, crushing and processing it into grass particles that we save for feeding livestock in the winter. We are changing traditional processing methods, such that our new processing method creates different nutritious composite particles appropriate for different livestock species, increasing forage utilization by 40%.

Vegetable seeds

We conduct both research and development and sales of vegetable seeds through Tianjin Beiao Seed Technology Development Co., Ltd (“BeOK”). BeOK was established in August 2008 in Tianjin. In January 2010, we acquired 100% of BeOK’s equity. Our vegetable seeds are primarily sold to distributors, who in turn sell them to farmers. As of June 30, 2012, we had approximately 71 vegetable seed products distributors in China. We sell varieties of vegetable seeds in nine categories, including broccoli, celery, chili, Chinese cabbage, cucumber and tomato.

[BlackPeter]

Crunching through the numbers, Belgarion reckons Mr Mrkt should have PGW around 70-75c by FY.

PGW books are cleaning up nicely and there's a few things PGW are doing well that their co-op competitors are either not doing or not doing so well.

Snoopy, Care to comment on my bullish prediction?

Hmm - ft.com puts the annual target on between 36 cents and 56 cents (with a medium of 46 cents). 70 to 75 cents sounds quite optimistic to me. Without additional income for PGW would 75 cents mean a PE of 18.5. Not impossible, but only if the market expects ongoing strong growth - and not sure, whether I see that in this industry. Good years (2014?) are typically followed by bad ones. Where do you see the additional growth coming from?

Discl: still holding - i.e. I am optimistic as well, but not that optimistic!

[RTM]

Well done Snapiti and others who saw the opportunity with PGW. Wished I'd had confidence to add to my holding at that time.

Spot on belgarion, my buying into PGW at such low levels is based on a thoery that the major shareholder is going to use PGW as a cash cow at the same time benefiting from the share price falling to levels where stake holders think the major shareholder is a white knight when they come in with a full takeover.

I believe this will happen in the next 24 months.

Fundamentally PGW is a great buy at current levels.

[Food4Thought]

https://nzx.com/companies/PGW/announcements/249258

Interesting?

[Snoopy]

https://nzx.com/companies/PGW/announcements/249258

Interesting?

I am a long term shareholder of PGW. But I didn't have any idea the joint venture that is "4Seasons Feeds" had an buyout clause. The partner company is International Nutritionals Ltd (INL). INL is owned by RD1 Ltd and Australian company, Wilmar Gavilon Pty, and currently holds the other fifty percent of 4Seasons Feeds Ltd. RD1 is a direct competitor to PGW. Not sure why PGW would set up a joint venture with RD1 and arrange things so PGW could be kicked out. I hope they got a good price for the PGW 50% stake!

Dewdney goes on to say:
"Also, the balance of the portfolio of products currently in the Agri-feeds Ltd business which largely relate to the animal health sector will transition to the Agritrade business operated within the PGG Wrightson retail business unit.”

So it reads as though PGW are shutting down their dedicated animal feed retail arm (that I didn't know existed) and are combining the remnants of that into their normal retail sales channel. If that is what is happening it makes sense for PGW from a controlling the overheads perspective.

SNOOPY

[percy]

Yes,I hope someone found the announcement informative.?
Lost on me.!

[Master98]

Sheep and beef farm profits tipped to rise

http://www.nzherald.co.nz/trade/news...ectid=11247073

Yes Percy, we are all well positioned.

[nzspeak]

Could someone please let me know how the exchange rate affects PGG? obviously it affects farmers income etc but what would happen if say the $NZ went to $US.50 overnight? how would that affect the company/share price?

[BlackPeter]

Could someone please let me know how the exchange rate affects PGG? obviously it affects farmers income etc but what would happen if say the $NZ went to $US.50 overnight? how would that affect the company/share price?

Hmm - I haven't done an In-Depth Analysis, but on first view (assuming you mean PGW, not PGG):

Farmers (their major customers) would have more money with a lower NZ$ - must be good for PGW;

Retail: most of their stuff seems to be sourced in NZ (i.e. cost unchanged), but customers have more money - must be good for the SP;
Livestock & Wool: Better prices (in NZ$) for livestock means larger cut for PGW;
Real Estate: lower NZ$ means farmers have more money and foreign buyers have more money as well, real estate prices go up - must be good for the cut and the SP;
Insurance & Finance: probably not too much exchange rate sensitivity;
Irrigation & Pumping: Most of the equipment they sell probably sourced from overseas, i.e. becomes more expensive, but farmers have more money, i.e. probably no big exchange rate sensitivity;
Agritech (Australia & International) - lower dollar means better prices - must be good for the SP;

So I guess overall - a dropping NZ$ must be good for PGW. The question however is - why do you think the NZ$ would drop?

[noodles]

Could someone please let me know how the exchange rate affects PGG? obviously it affects farmers income etc but what would happen if say the $NZ went to $US.50 overnight? how would that affect the company/share price?

My guess is that the NZD would only go to 50c if commodity prices collapsed.