PGW - PGG Wrightson

[Snoopy]

There are some eerie parallels

- Chinese have a stake in the company

All Chinese are not equal! Haeir are a well established global giant. Agria are a minnow with plenty of Chinese competition. Read my excerpt from the Agria report on this thread (post 1918).

SNOOPY

[Snoopy]

There are some eerie parallels

- a "deep value play" at the 35c mark

Check out my post 2183 on PEs. At 37c (today's market price) PGW is on a PE of 12 and is trading at a premium of 20% to asset backing. That doesn't tick any of my deep value boxes. In historical terms PGW is actually rather expensive at 37c IMO.

SNOOPY

[Snoopy]

There are some eerie parallels

- A sense that "the worst is over". The company is not broken, but the stock remains troubled due to sentiment and fallout from a few years ago.

I certainly hope the worst is over! In historical terms Agriservices had a bumper result in FY2012, which was rather masked by the Agritech result being so terrible. Yet even in their best year, Agriservices did not earn their cost of capital.

Our farming insider Snapiti admits that although FY2013 will be good it won't match FY2012. So I would expect Agriservices earnings to decrease in FY2013 for that reason. If PGW can recover any kind of normalized (whatever that means) profitability from Agritech then despite farming fortunes being on the wane there is still room for profit growth at PGW in FY2013. But will this happen? PGW have restructured all of the Australian seed businesses under one umbrella now. But any upturn in profitability at Agritech could still be years away.

SNOOPY

[Balance]

All Chinese are not equal! Haeir are a well established global giant. Agria are a minnow with plenty of Chinese competition. Read my excerpt from the Agria report on this thread (post 1918).

SNOOPY

Snoopy, you are still missing the woods for the tree - New Hope, not Agria.

Just as in HNZ, it's the Christchurch old boys' not PGC or Georgie boy.

[Snoopy]

South America increased EBITDA contribution from $4.2m to $5.4m.

Yes I should have mentioned South America is looking reasonably promising. Albeit the whole operation is still relatively small compared to the NZ/Oz business.

SNOOPY

[Snoopy]

Snoopy, you are still missing the woods for the tree - New Hope, not Agria.

Look at the shareholders agreement between Agria and New Hope you quoted before Balance

https://www.nzx.com/companies/PGW/announcements/210728

in particular this bit

"The Shareholders Agreement further provides that New Hope International has the right to sell its Agria Asia Investments Limited shares to Agria Group Limited. The right to sell is subject to limits as to the number of shares New Hope International can sell from 29 April 2011 up to 29 April 2014. Further New Hope International may sell all of its shares, irrespective of the limits referred to, if Agria Corporation undergoes a change in control or Mr Xie Tao’s service agreement with Agria Corporation is unilaterally terminated by Agria Corporation (Put Option)."

I believe that XT has seen the writing on the wall at Agria, having resigned from the PGW board. I believe XT is on the brink of leaving Agria but out of courtesy to his friend Alan Lai has not put in his resignation yet because of the above clause.

It is XT that has the relationship with New Hope, not Alan Lai. New Hope have had many chances to put some serious money into Agria but have failed to do so. The only capital New Hope have put into Agria has an escape clause that will allow them to get it all back if things go bad. From the New Hope website they seem more interested in animal farming anyway, not plants.

If Agria has any hope now it will come from Ngai Tahu, not New Hope IMO.

SNOOPY

[Snoopy]

I believe that XT has seen the writing on the wall at Agria, having resigned from the PGW board.

I should note that the shareprice of Agria has improved by a few cents in recent days and is now nudging 80c. However to get an average share price of more than $1 over six months, the shareprice for Agria is going to have to rise to $1.20 very soon if Agria is to stop the NYSE delisting process. If the average share price over six months must be $1 or more over six months for Agria to remain listed, and it has already spent 3 months at just below 80c, the maths requires this kind of share price recovery. A 50% increase in the Agria share price (from 80c to $1.20) isn't going to happen once Agria announce their huge loss for the year.

SNOOPY

[Balance]

Look at the shareholders agreement between Agria and New Hope you quoted before Balance

https://www.nzx.com/companies/PGW/announcements/210728

in particular this bit

"The Shareholders Agreement further provides that New Hope International has the right to sell its Agria Asia Investments Limited shares to Agria Group Limited. The right to sell is subject to limits as to the number of shares New Hope International can sell from 29 April 2011 up to 29 April 2014. Further New Hope International may sell all of its shares, irrespective of the limits referred to, if Agria Corporation undergoes a change in control or Mr Xie Tao’s service agreement with Agria Corporation is unilaterally terminated by Agria Corporation (Put Option)."

I believe that XT has seen the writing on the wall at Agria, having resigned from the PGW board. I believe XT is on the brink of leaving Agria but out of courtesy to his friend Alan Lai has not put in his resignation yet because of the above clause.

It is XT that has the relationship with New Hope, not Alan Lai. New Hope have had many chances to put some serious money into Agria but have failed to do so. The only capital New Hope have put into Agria has an escape clause that will allow them to get it all back if things go bad. From the New Hope website they seem more interested in animal farming anyway, not plants.

If Agria has any hope now it will come from Ngai Tahu, not New Hope IMO.

SNOOPY

Full text of the shareholders' agreement include :

"Under the terms of the Shareholders Agreement, if Agria Corporation wishes to transfer its Agria Group Limited shares to a third party it must first offer the shares to New Hope International. This right does not apply to a transfer of Agria Group Limited shares to a company that is wholly owned or solely benefically owned by Agria Corporation (Right of First Offer)."

"On 28 June 2011 Agria Group Limited and New Hope International entered into an agreement (Charge Agreement) giving New Hope International a charge over Agria Group Limited’s Agria Asia Investments Limited shares (Charge). The Charge is given to secure Agria Group Limited’s obligations under the Put Option."

Why have you left out the first clause and last clause of the agreement between Agria and New Hope, Snoopy?

It's not like you to leave out half the picture!

[Agrarinvestor]

Put option. Does it mean New hope has the right to sell their shares to AGRIA for the current value, or for a value that AGRIA wishes to pay ?

>>The repurchase price (“Repurchase Price”) payable by Agria Group to New Hope upon exercise of the Put Option by New Hope shall be a price to be agreed upon in writing by Agria Group and New Hope.<<

http://www.sec.gov/Archives/edgar/da...223exv4w55.htm


Therefore i ask myself, for what sense is this Put Option if Agria has to agree ?

[Agrarinvestor]

I should note that the shareprice of Agria has improved by a few cents in recent days and is now nudging 80c. However to get an average share price of more than $1 over six months, the shareprice for Agria is going to have to rise to $1.20 very soon if Agria is to stop the NYSE delisting process. If the average share price over six months must be $1 or more over six months for Agria to remain listed, and it has already spent 3 months at just below 80c, the maths requires this kind of share price recovery. A 50% increase in the Agria share price (from 80c to $1.20) isn't going to happen once Agria announce their huge loss for the year.

SNOOPY

Hallo Snoopy,

this is not correct. Agrias shareprice has only to be valued above 1$ for a period of 30 days. This should not be a problem after the annual report is out.

>>NYSE continued listing standard requiring a listed security to maintain a minimum average closing price of $1.00 per share over a consecutive 30-trading-day period. The NYSE noted that the minimum average closing price is the only listing criteria the Company is not in compliance with. The Company has six months from receipt of the notification to bring its ADS price and average ADS price back above $1.00. <<

Agria can not inspire shareholder to buy shares until the annual report is out.
After that, i am sure, they will take proper actions to bring the share price above 1,50$. In the meantime i am happy that they are keeping there powder dry.