PGW - PGG Wrightson

[Snoopy]

Can we say since Agria has taken over the board no bad decisions has been made ?

I am not sure Agria has taken over the board. They seem to have politely fallen in behind Sir John Anderson

Can we say that the investments in Australia were good decisions ?

No. All businesses acquired were loss making, and losses have increased since acquisition. As a result profits at Agritech have been effectively erased.

In a worst case scenario i asume that Agria itselfs earns 0$ in china (i don't hope so), but with its investment in PGG they have at least 50,2 % of the 25 Million NZ$

Yes, but that does not offset the capital write down they will have made on their PGW shares on 30th June. The net result is still a large loss for Agria.

That means by a market cap of 49 Million US$ a P/E Ratio 0f 4. Keep in mind that Agria will report an increase in Revenue by 400% within the next weeks.
700 Million of Revenue for a 49Million market cap company.

The reason why the PE is so low is that Agria has no income as collateral to finance the upcoming rolling over of their loans. No dividend from PGW extinguishes all short term hope. I believe that Agria is technically bankrupt. They will be delisted from the NYSE before the end of year and crawl off to die behind a rock away from the public gaze.

SNOOPY

[Master98]

I have to admire the optimism of all you PGW celebrants. I think I must have been reading a different results announcement to what everyone else on this thread read. Agritech I though was a disaster. A PE of 13 is IMO not sustainable for a seller of agricultural commodities at the bottom of the world. Long term a PE of 6 to 10 is probably about as good as you can expect.

I have to admit to being surprised by the bounceback of Agriservices in FY2012. But what none of you have expressed is that this comes after the best year for farmers for some time. Dairy farmers probably did better in FY2008, but as a general overview this is about as good as it gets for farmers over the last decade. Since 30th June 2012 the NZ dollar has continued to appreciate while commodity prices have not. I haven't met anyone who doesn't think FY2013 will be a lot tougher down on the farm than FY2012. This represents a peak of earnings for Agriservices and the only way from here on in is downwards IMO.

SNOOPY

Snoopy, if my memory is right, you said pgw earning is only 2cps for next 5 or 6 years which I totally disagree with you, you should surprise with this annual result, you only look at the dark side, but the bright side is more promising, as long as pgw can secure china market, I can say pgw will booming for next 5 or 6 years, I hope the seeds, grain and livestock business can successfully enter into china.

[Snoopy]

Snoopy, if my memory is right, you said pgw earning is only 2cps for next 5 or 6 years which I totally disagree with you, you should surprise with this annual result, you only look at the dark side, but the bright side is more promising, as long as pgw can secure china market, I can say pgw will booming for next 5 or 6 years, I hope the seeds, grain and livestock business can successfully enter into china.

Master in my post 1971 I said 2.5cps for FY2012. So yes I am impressed by something over 3c. But how that can be sustained over the next five years or so, well I would like to hear how you think this will be achieved?

If you are pinning everything on entry to the Chinese market, I think you are being optimistic. Look at how how PGW took to establish themselves in Uruguay. Why do you think China will be any different?

SNOOPY

[root]

It looks like there is a small parade, but someone is raining on it.

[Master98]

Look at how how PGW took to establish themselves in Uruguay. Why do you think China will be any different?

SNOOPY

i dont want to convinced you, snoopy, but you should know china is a totally different country and different story from Uruguay, these two country are not comparable, china is second large export market of nz and second large economy entity of whole world.china has 1.3b people need to be feeded.

[Snoopy]

I dont want to convinced you, snoopy, but you should know china is a totally different country and different story from Uruguay, these two country are not comparable, china is second large export market of nz and second large economy entity of whole world.china has 1.3b people need to be feeded.

Master you do not need to convince me of the potential of China. All I am saying is having 'the potentia'l and 'executing a business plan' are two different things. Many an exporter has come unstuck chasing just 1-2% of a large market. 1-2% from a very small base can be a very difficult transition.

Before putting more money into PGW, I would like to see some evidence that PGW can make any progress. Have a look at section 4 of the financial statements, the Segmental Report. You will see that current sales in China are nil. That is right, nothing at all. I fail to see how forming an association with the extremely shakey Agria is a certain passport for PGW exports to China.

SNOOPY

[Master98]

You will see that current sales in China are nil. That is right, nothing at all. I fail to see how forming an association with the extremely shakey Agria is a certain passport for PGW exports to China.

SNOOPY

Sales into china ramp up from 2012-2013 financial year, not supposed to included in year 2011-2012 result.

[Master98]

But this does not change the fact that, given this result, PGW shares are under valued @ 32 cents and I believe with-in a month they well break the 40 cent mark.
The market place will decide and time well tell.

Honestly, I have no idea what is the trend of share price even through had a solid finical result, the main factor is the 40m shares out of doggie Gogerie sold at 29c will impact the market which depend on what’s percentage of long-term holders or percentage of short-term holders.

[Master98]

Given the makeup of shareholder register I expect they'll be a few with bigger holdings wanting out and the result should have a few bigger players wanting in. E.g. those out want to book a capital gain and those in want the divies. (Quite a few funds can only buy stocks with dependable divie streams.) It'll take a while for these buyers and sellers to agree a price to exchange on.

Nothing new here, just how the game is played. Patience is required so don't read anything much into the fact that our sleepy little market didn't move much after the result.

yeah, agree

[Master98]

Repayment of Crafar farm loans expected soon

PGG Wrightson says it expects to recover loans made to the Crafar family when the sale of the Crafar farms is finalised in October.
It is one of three lenders, along with Westpac and Rabobank, who are secured creditors of the 16 North Island farms put into receivership in 2009.
Ownership of the farms is expected to transfer to the Shanghai Pengxin company in the next couple of months, now that opponents of the sale have failed in their legal bid to block it.
Mr Gould says that will clear just about all of the property loans PGGW is still holding after selling its finance arm.
He says the company's non-Crafar loans amount to about $4 million.

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