PGW - PGG Wrightson

[winner69]

Any reasons for the 2 cent (3.61%) up ? Volume 2,5 of the average volume.

The Percy couta effect ......when they start spreading the word things happen

[percy]

Sheep and beef farm profits tipped to rise

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

Yes Percy, we are all well positioned.

Agrainvestor.
I think investors are reacting to this article.
I also believe the good work carried out by George Gould is been carried on by Mark Dewdney,who is also well regarded in this sector.I hear the weather in Australia means the seeds business there will/are doing well.
In the last couple of announcements there have been very positive statements that include;"our primary focus moved away from debt reduction to growth."
"store refurbishment and new stores".
With PGW clients better off,PGW is in the right place to benefit from their spending,which means the very high dividend is sustainable.

[Joshuatree]

Yes was hearing re 90$ plus for lambs on national radio rural report this morn and enthusiasm re prices getting better.

[Beagle]

Gents, don't PGW normally give a trading update sometime in May each year ? Perhaps that's what is conferring some renewed interest ?
Disc, I bought a few at 41 cents last week.

[Agrarinvestor]

Hi thanks for the information. If PGW gives us a positive trading update you can see Agria will hit the 2$ mark.
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.

[Snoopy]

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.

Not much wrong with your English from where I sit.

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.

PGW pays dividends. Agria does not. Advantage PGW.

Agria has no need to take PGW private. Why should they? They need the money to expand their business in China.

I agree that Agria will not take PGW private in any forseeable future. They can consolidate PGW into their accounts now. And they do not have to money to make a full takeover bid anyway. The Chinese are used to working in joint ventures with the west. It is a very common business model for China.

Agria do need cash to supposrt their stand alone operations in China. But not for the reasons you think. The Chinese stand alone operations are so small in a PGW context they can be disregarded. The main reason Agria are still in China (IMO) is so that Agria can fulfill US listing requirements as being more than a front page for a foreign business, which would otherwise be regarded as a sham US listing. Agria's US tax treatment woudl change if they sold their Chinese operations.

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 is not sufficiently different from PGW to require its own thread IMO.

Agria was a threebagger the last 12 Month.

IMO Agria is a gamblers share. They are crippled by debt, the dividend payments they have received from PGW only barely cover their interest bill and they survive only at the behest of their bankers. Gambling shares are notoriously volatile. Those who have tripled their money in the last twelve months had a lucky spin on the roulette wheel.

SNOOPY

[percy]

Agrarinvestor,
I used to invest in USA and UK.Used to be a lot of trouble,and costs were high.I now only invest in New Zealand or Australian companies.

[Snoopy]

IMO Agria is a gamblers share. They are crippled by debt, the dividend payments they have received from PGW only barely cover their interest bill and they survive only at the behest of their bankers. Gambling shares are notoriously volatile. Those who have tripled their money in the last twelve months had a lucky spin on the roulette wheel.

Just checked the chart. No-one has tripled their money here. Agria peaked at $US2.05 on March 5th 2014. Since then the price has been on the slide. Agria closed at $US1.30 last night. The PGW chart is quite different showing steady gains over the last year and it has been flattish in the low 40c since, while Agria has declined. Agria still looks like an 'avoid' to me. PGW is the superior hold in every way I can see.

SNOOPY

[Snoopy]

IMO Agria is a gamblers share. They are crippled by debt, the dividend payments they have received from PGW only barely cover their interest bill and they survive only at the behest of their bankers. Gambling shares are notoriously volatile. Those who have tripled their money in the last twelve months had a lucky spin on the roulette wheel.

The March 2014 consolidated half year accounts (investor presentation dated Thursday 6th March 2014) make an interesting commparison with PGW.

Agria is showing short term debt of $US69.149m and long term debt of $US78.169m.

Convert those figures to NZD as at 31st December 2013 (Half year balance date) using $NZ1= $US 0.81624 and I get:

Agria is showing:
1 / Short term debt of $NZ84.717m and
2 / Long term debt of $NZ95.767m.

Now go the the interim PGW annual report and long and short term debt are listed on p15 as follows:
1/ PGW Short term debt $NZ62.245m
2/ PGW Long term debt $NZ60.000m

The difference between the two sets of figures is the underlying Agria debt:

1/ Underlying Agria short term debt: $NZ22.472m
2/ Underlying Agria long term debt: $NZ35.767m

The total income needed to service this extra debt at say 5% interest is:

0.05($22.472m + $35.767m) =$2.912m

The chinese standalone ventures contribute no profit for Agria the last time I looked. So all of this extra interest must be paid from any dividends received from Agrias 50% holding in PGW. Dividend paid by PGW over the last twelve months consist of a 1c dividend (September 2013) and a 2c dividend (April 2014)

Now from the annual PGW report, Agria holds 379,068,619 PGW shares.

A 3c annual dividend on those shares will provide:

0.03 x 379,068,619 = $NZ11.37m

So I take back what I said in the previous post. Agria should have enough free cashflow going forwards to cover their extra debt burden after all, assuming they are roughly cashflow neutral on the standalone Chinese operations.

But whether they were able to renegotiate their underlying Agria only debts at an interest rate of 5% (interest rates are very low in the US) , or whether New Hope has called in their dividend guarantee demanding cash from Agria and wrecking their cashflow is is all unknown and undisclosed. There is just not enough information released in the public domain to know what the true cash position of Agria is going forwards.

There are roughly 110.8m Agria shares on issue. So a PGW NPAT of say $35m less extra interest costs due to Agria of $3m gives $32m, of which the Agria 50% share is $NZ16m

$16m/110.8m = 14.4c eps for Agria shareholders.

14.4 x 0.86 / 130 = 9.5% yield

SNOOPY

[Agrarinvestor]

Just checked the chart. No-one has tripled their money here. Agria peaked at $US2.05 on March 5th 2014. Since then the price has been on the slide. Agria closed at $US1.30 last night. The PGW chart is quite different showing steady gains over the last year and it has been flattish in the low 40c since, while Agria has declined. Agria still looks like an 'avoid' to me. PGW is the superior hold in every way I can see.

SNOOPY

I asked for support here when Agria has a share price of 0.65$. Now Agria find a new botton at 1,30$. In my opinion they will touch the range betwenn 2$ and 2,5$ after earning release. The dividend of PGW is large enough to pay the interest bill for the PGW investment.

Thanks so far for the feadback. I have to admit the Quality of the statements here at sharetrader is as always fair and valuable.