PGW - PGG Wrightson

[percy]

Bal, so very true ... mergers need a) a very good and thoroughly debated business case and b) exceptional excution ... Kiwi mgt is generally poor at this as it gets left to (generally hopeless) middle management.

I wonder what PGW would look like if Farmlands and CRT were merged into PGW? With RD1 heavily backed (and subsidised) by Fonterra a new and enlarged PGW may be able to compete along the lines of the great NZ grocery duopoly that is Foodstuffs (RD1) and Woolworths/Progressive (PGW).

Will happen.Don't know how many years it will take,but with internet buying/selling/trading it willn't be too many years away.

[Agrarinvestor]

Cynics will argue anything other than "BUY" is a "SELL".

Accumulate makes sense to me. It says there is upside if you are adding to a larger position bought more cheaply, or if you are buying on temporary pricing weakness.

Remeber the rating of PGW in 2009. Price target 2.05$. The biggest joke here are these 5 cent. Why not simple 2$.
If these genius analyst of Goldman Su*** give PGW a accumulate it means nothing.

>>Goldman Sachs is not changing its earning estimates or neutral recommendation on PGG Wrightson. It has a 12-month target price of $2.05 on the stock.<<

http://www.nbr.co.nz/article/failed-...-damages-55247


In my opinion it is more important to observe market prices
Attachment 4289

http://www.indexmundi.com/commoditie...0&currency=nzd

[Snoopy]

PGW haven't given any official guidance as to earnings in FY2013. But under note 26, there are EBITDA growth assumptions. We also must consider the effect of lower debt as PGW repay all their 'bad bank' loans that Heartland refused to take on.

When I plug all that back into my financial model, and work out an 'after tax profit' for each division, then my picture of what will happen in FY2013 looks like this:

FY2012 to FY2013

Agriservices (less insurance, real estate, SA, and finance commissions): $14.3m -> $5.4m
Agritech: $3.7m -> $11.7m
Insurance and Real estate: $2.5m -> $2.6m
Finance Commissions: $0.2m -> $0.8m
South America: $3.3m ->$3.6m

Total: $24.0m ->$24.2m

I am assuming an annual net interest bill of $9.1m, down from $13.8m in FY2012

With 754.8m shares on issue this is eps of 3.3cps. At 40cps, PGW would be on a PE of 12. Hardly a bargain for a share in the cyclical rural industry. I would be in no hurry at all to top up at that price. At 40c there is already some growth you are paying for in FY2014, IMO.

SNOOPY

Note the above figures are underlying earnings and do not include one offs.

Since I wrote this there has been drought in South Australian and NSW and floods in Queensland. That means the expected boost in Agritech sales is IMO unlikely. I think PGW will have a real job to match last years earnings now. 40c a share representing a PER of 15 anyone? My FA analysis says that 40c is a fully stretched valuation for PGW in this market . But you TAers please keep believing that 40c is a really cheap entry point. I will need you there if I want to offload my shares after the half year result is out.

SNOOPY

[Hoop]

Since I wrote this there has been drought in South Australian and NSW and floods in Queensland. That means the expected boost in Agritech sales is IMO unlikely. I think PGW will have a real job to match last years earnings now. 40c a share representing a PER of 15 anyone? My FA analysis says that 40c is a fully stretched valuation for PGW in this market . But you TAers please keep believing that 40c is a really cheap entry point. I will need you there if I want to offload my shares after the half year result is out.

SNOOPY

Thxs for the FA update Snoopy much appreciated...
I curious..why wait until the results to sell...
This TA er just reads and reports on Mr Markets behaviour... Snoopy don't shoot the messenger
40c is just a chart theoretical support point that under that 40 should see buyer numbers drop significantly....In practice I've just looked at the depth and it is true..

412,704	14	43
851,447	21	42
236,064	10	41
420,380	13	40
30,000	3	39

Looking at the above depth (as of Friday close).There's a solid block of buyers and its increasing... so 43c seems supported now... good news for us Nervous Nellies...eh?

".....But you TAers please keep believing that 40c is a really cheap entry point. I will need you there if I want to offload my shares after the half year result is out......"
Got some bad news for you Mate...if PGW gets to that point I'm going to be ahead of you in the selling queue...and I guess I won't be alone either .

Actually this is the 3rd stock in my portfolio that I nearly pushed the sell button on this week...kinda makes me wonder whether Mr Market has already priced in the anticipation of a good reporting season...Hmmmm

[Queenstfarmer]

Droughts / floods...whatever hand Australia gets delt weatherwise...it can't go year in year out without requiring seed.

[Snoopy]

Thxs for the FA update Snoopy much appreciated...
I curious..why wait until the results to sell...

Actually if you know my style Hoop, you will know that I won't be selling for a while yet. I am a long term PGW investor who has only just increased their holding in anticipation of the return of dividends. My comment was more along the lines that some FA investors are more flighty. If PGW produces a poor result then they might sell, leaving some short term investors who believe that PGW is cheap at 40c to pick up their discards. I can tell you that I for one won't be buying more at 40c unless that half year result produces a hidden positive surprise. And if PGW does produce a surprise positive result I won't be buying either as that will be an unlikely trigger for a share price fall at all!

SNOOPY

[Snoopy]

Droughts / floods...whatever hand Australia gets delt weatherwise...it can't go year in year out without requiring seed.

Buying seed is a voluntary action.

The farmers may have been saving their own seed from the previous years crop...

SNOOPY

[Snoopy]

In my opinion it is more important to observe market prices
Attachment 4289

http://www.indexmundi.com/commoditie...0¤cy=nzd

Thanks for this chart Agrainvestor. The cynical may say NZ doesn't produce much maize, nor buy it in for stock feed. So the above chart is of little interest for NZ based agricultural businesses. However, I beg to differ.

This kind if chart is important because it represents the cost pressures on industrial scale farms like those found in the US which do have a feed cost issue. So what this chart represnts is a window on competitors costs in $NZ terms. NZ farmers as a rule do not have these costs. So the higher this chart goes, the better for NZ farmers because in relative terms our 'grass input' cost structure become more cost competitive with maize feed.

Despite the fall off since June, this chart indicates things are still looking good for NZ farmers.

SNOOPY

[Agrarinvestor]

@ Question to the Farmers,

>>Buying seed is a voluntary action.

The farmers may have been saving their own seed from the previous years crop..<<

Is it realy what Farmers are doing. I have learned that it is more common oday to use Hybrid Seeds, than using their own seeds.
The reason is that Hybrid Seeds have 30% higher yield.

I would be very nice if some experts from the farmer section can answer this.

[Joshuatree]

Actually if you know my style Hoop, you will know that I won't be selling for a while yet. I am a long term PGW investor who has only just increased their holding in anticipation of the return of dividends. My comment was more along the lines that some FA investors are more flighty. If PGW produces a poor result it is they that might sell, leaving some short term investors who believe that PGW is cheap at 40c to pick up their discards. I can tell you that I for one won't be buying more at 40c unless that half year result produces a hidden positive surprise. And if PGW does produce a surprise positive result I won't be buying either as that will be an unlikely trigger for a share price fall at all!

SNOOPY

that should be ,..." a surprise positive result I wont be "SELLING" more at 40c i take it?