PGW - PGG Wrightson

[h2so4]

Snoopy

Well I hope he is right. I sit on the opposite side of the fence. I only see cash burn here and a shrinking business in the future.

[mouse]

This was pointed out at the PyneGould AGM today. See Annual Report, note 21, page 34.
Carrying amount of PGGWrightson, 30 June 2010 was $113.7m. Market value at same date was $$69.4m. ...not fair value. An independent valuation was used as an alternative value. There are no impairment issues necessitating a write down.
So the value of Wrightson is calculated at 82cents a share, not the current market value of 55cents a share. A 25 cent difference which must be due to either the market being wrong or PyneGould valuation being wrong.
Take your choice, if PyneGould is wrong then their share price is too high. If Pyne are right then Wrightson are undervalued by 25 cents at least. I think PyneGould are right on this one.

[percy]

This was pointed out at the PyneGould AGM today. See Annual Report, note 21, page 34.
Carrying amount of PGGWrightson, 30 June 2010 was $113.7m. Market value at same date was $$69.4m. ...not fair value. An independent valuation was used as an alternative value. There are no impairment issues necessitating a write down.
So the value of Wrightson is calculated at 82cents a share, not the current market value of 55cents a share. A 25 cent difference which must be due to either the market being wrong or PyneGould valuation being wrong.
Take your choice, if PyneGould is wrong then their share price is too high. If Pyne are right then Wrightson are undervalued by 25 cents at least. I think PyneGould are right on this one.

Sorry I missed you at the meeting.Will be interesting to see who is right as the difference is huge.PGC board will be aware of this now that it has been mentioned at the agm.They will need to comment in the interim report.You may be right,and the market may rerate PGW.

[Snoopy]

Carrying amount of PGGWrightson, 30 June 2010 was $113.7m. Market value at same date was $69.4m. ...not fair value. An independent valuation was used as an alternative value. There are no impairment issues necessitating a write down. So the value of Wrightson is calculated at 82cents a share, not the current market value of 55cents a share.

Under IFRS 9 Telecom chose to value their investment in Hutchison at fair value using the observable market share price. It seems most odd that PGC should declare the value of their stake in PGW at wildly different from market value under the same rules, with PGW being acceptably liquid. Perhaps PGC considers that as a potential bank, they can make their own rules?

SNOOPY

[GR8DAY]

....at the end of the day there's only one valuation that counts and that's the market............currently 54c annnnnnnnnnnnnnnnnd dropping!

[mouse]

Sorry I missed you at the meeting.Will be interesting to see who is right as the difference is huge.PGC board will be aware of this now that it has been mentioned at the agm.They will need to comment in the interim report.You may be right,and the market may rerate PGW.

The point about PGGWrightson is their seed business seems to fit in with the Chinese grassland problem. As XT said, China arable land is not sufficient to feed their population, but they have large amount of grasslands which have to be developed.
The other point of course is that with Pyne holding 18% of PGGWrightson then it is a very strategic holding which could easily be sold overseas for $113.7m. Pyne are very reluctant to take that step and may therefore hold until the share price improves. They could then distribute the PGGWrightson shares to Pyne Gould investors. All conjecture of course.
Will hopefully catch up with you at the November PyneGould meeting.

[mouse]

I disagree with you. The Market is NEVER right. If it was share prices would not move up or down apart from minor adjustments. Shareholders seek to find underpriced shares and buy them in the knowledge that the price must improve over time. For example, PyneGould was 40 cents last week. They have now announced a dividend of 1.5cents and should therefore improve this week to say 45cents at the minimum. If The Market sold all shares in a company every week, then the market could be said to possibly give a correct value to the shares. But The Market only sells a very small proportion of the shares each week. The Chinese 20% holding is not for sale, nor is the Pyne 18% holding for sale. Both companies obviously value their holding at more than the market valuation.
The Pyne holding must be worth more due to the quantity of shares they hold. It is a significant holding and would therefore under our present rules attract a premium. So fair price could well be 67.5cents as suggested by Belgarion. I am sure the present price is well undervalued. Having said that, the sellers of PGGWrightson may be looking to put their cash into investments paying a dividend. The holders are prepared to hold knowing PGGWrightson is far more than a Blue Chip Company, it is Heartland NZ.
I went to the AGM of PGGWrightson the other day, I went to the AGM of Farmers Mutual Insurance a couple of weeks before our earthquake. The General Manager there told us that Canterbury was due for an earthquake and the theme of the meeting was 'Breaking New Ground!' I shall go to the Christchurch A & P Show in a couple of weeks and chat to the staff of PGGWrightson. You get information on companies from the Annual Reports and chatting to people. Chatting is more important. Are the company vehicles newish is a simple observation. It tells you how the company is doing.

....at the end of the day there's only one valuation that counts and that's the market............currently 54c annnnnnnnnnnnnnnnnd dropping!

[GR8DAY]

Mouse...I didnt say wether it (the market) was right or not I said it's the only one that counts at the end of the day.....like it or lump it........unless of course you just dont care what value the market places on your shares......personally i prefer to know I can get out of any share at a profit rather than a loss!!

[mouse]

Because you bought at a lower price than the market now says the share is worth. The Market for years for example considered General Motors to be worth US$40.00. Actually it was worth 40cents! We have to find shares where the market is wrong. You may have to hold for a few years to make the profit. For example I sold NZFarming Systems for 40 cents. Only a few months ago. In hindsight it was totally foolish since the NTA was $1.00 a share. I am barmy sometimes, but I think not with PGGWrightson.

Mouse...I didnt say wether it (the market) was right or not I said it's the only one that counts at the end of the day.....like it or lump it........unless of course you just dont care what value the market places on your shares......personally i prefer to know I can get out of any share at a profit rather than a loss!!

[winner69]

I bailed yesterday at 55c (yes another loss).......not looking too flash at the mo, might consider re-entering at the 45c mark if they go that low...........but then knowing my luck they will spike up today!

You are a guru mate with that call mate

All the way down from a recent high of 61 to 48 on Friday is pretty dramatic ... esp when the NZX hasn't been doing too badly in the same period .... just imagine what the shareprice would be if the markets had tanked

Chalkie mentioned not many seem to knoe how many millions it is costing to get rid of Mills ... and then he mentioned that they still have the problem of the accounting around the wools business and that could cost zillions

Maybe your 45 will come soon .... but probably that ain't going to be the bottom the way everything is going at the moment

Seems that any stock with a ticker starting with P is a disaster at the moment ,,,, esp those with Pyne connections