PGW - PGG Wrightson

[Beagle]

The funny thing about Beagle's is they can sniff a feed a mile off. We had one for over a decade and Kelly was absolutely addicted to food, she lived for it.
Once she was way down the other end of the house in the lounge closed off with bi-fold double doors and I was down the other end of the house in my bedroom with the door closed and opened a pack of toffee-pops to scoff a few with my cup of milo at bed time and about thirty seconds later there was a scratching at the door, She'd smelt the toffee pops through two sets of closed off doors and a fifteen metre gap down the hallway !!
Another time I came back from a trip and had a chocolate bar that was un-opened in my closed suitcase. She snuck her way into our bedroom, opened the suitcase with her teeth, used her snout to worm her way through everything else in the suitcase down to the bottom, got the chocolate bar out, opened it by scratching with her paws ands scoffed the lot !!

By now, if not long before, LOL you will be wondering what possible relevance has this got to do with PGW ? Well I reckon the yield hounds are really hungry for yield and its crossed their mind that if PGW can pay a 5.5 cps divvy last year and if profit is a little higher they can do so again. We all know Agria love their full share of divvy's so a 5.5 cent fully imputed divvy really satisfies those hounds on a 44 cent SP with a whopping 17.4% gross yield, (5.5 / 44) / 0.72
10 times the normal daily volume today says I ain't the only one that loves a good divvy feed
Kelly got nice and fat and contented off those glutinous feeds and I reckon more than a few people, including myself, would like to follow suit
(Before anyone says chocolate is really bad for dogs, I know that already but she was tenacious to say the least).

[Beagle]

snaps must be part beagle then as I smelt this one coming a month ago........ post 3265

Good sniffing skills there mate. I snapped up a few myself but its never enough with hindsight so my tail is only wagging at half speed

Snoopy - I reckon it is a relief rally. Dairy has had such a pummelling I guess punters were a bit worried about the general contagion effect on the whole farming sector.

[noodles]

By now, if not long before, LOL you will be wondering what possible relevance has this got to do with PGW ? Well I reckon the yield hounds are really hungry for yield and its crossed their mind that if PGW can pay a 5.5 cps divvy last year and if profit is a little higher they can do so again. We all know Agria love their full share of divvy's so a 5.5 cent fully imputed divvy really satisfies those hounds on a 44 cent SP with a whopping 17.4% gross yield, (5.5 / 44) / 0.72

Are you suggesting we will see 5.5c divi this year? Remember, last years included a special dividend of 1c.
Brokers are forecasting eps=4.5c

Now given you great call last financial year, I'm not going to disagree, but maybe you are more of a bulldog than a beagle?

Nobody has mentioned that the rally may be part relief, part technical. We have a dividend adjusted breakout from resistance.

Like Snoopy, my earnings expectations have not changed since the announcement. Neither has my Brokers.

I'm a happy holder

[Beagle]

Agria is just like my old dearly departed beagle, they absolutly love a huge feed so whatever they earn I expect close to 100% pay-out ratio.

[Snoopy]

Well I reckon the yield hounds are really hungry for yield and its crossed their mind that if PGW can pay a 5.5 cps divvy last year and if profit is a little higher they can do so again. We all know Agria love their full share of divvy's so a 5.5 cent fully imputed divvy really satisfies those hounds on a 44 cent SP with a whopping 17.4% gross yield, (5.5 / 44) / 0.72
10 times the normal daily volume today says I ain't the only one that loves a good divvy feed

I'm in the 4.5cps annual dividend camp.

At 44c we are looking at a gross yield of:

(4.5/44)/0.7= 14.6%

Yes that is a great yield, but it is also a ducks lining up peak yield. Farm profitability and output pricing can go down, and I'm not just talking about dairy here. Still I have confidence in 'The Dewd' and his senior management team. I liked that story that came out the other day about how PGW are investing in staff training and how much more engaged the staff on the ground had become. I am happy with onwards and sideways, at least in the short term, from here.

SNOOPY

[Beagle]

Fair enough Snoopy. Companies can't impute any more than the company tax rate of 28% so I make it (4.5/44)/0.72 = 14.2%, still a very tasty feed

[see weed]

.465c and rising, maybe 48c to 50c by months end. It's at a 34 months high. Yield still looks good.

[Snoopy]

.465c and rising, maybe 48c to 50c by months end. It's at a 34 months high. Yield still looks good.

It is at times like this shareholders need to remember that PGW is a cyclical share, not a growth share in the conventional sense. PGW in its current form came into being in CY2006. Here is the dividend record since then.

	Interim Dividend	Final Dividend
2006	1.88c	2.82c
2007	1.88c	3.76c
2008	2.35c	5.18c
2009	2.35c	Nil
2010	Nil	Nil
2011	Nil	Nil
2012	Nil	Nil
2013	2.2c	1.0c
2014	2.0c	3.5c

The dividends in the pre 2010 part of the table have been adjusted for the 9:8 cash issue that took place.
9 new shares issued for every 8 held means that these earlier dividends have to be multiplied by a factor of:

8/(8+9) = 8/17

to gain a comparative measure with each shares on issue today.

I average all that out to a calendar year dividend of 3.21c/share (net). Based on today's closing price of 47.5c this is a net yield over the business cycle of:

3.21/47.5 = 6.76%

To satisfy Roger, that equates to 6.76%/0.72 = 9.39% (gross) ("Companies can't impute any more than the company tax rate of 28%").

For mere taxpayers such as myself, I would be earning (net): 9.39% x 0.7 = 6.57%. (I hope Roger will correct me if I have that wrong!)

These figures strike me as about right (similar in yield to the DPC bonds I have applied for). I would say as an income investor you might look at accumulating PGW on any weakness. But it is no longer cheap enough to chase as a bargain. Having said this, we are still in a favourable part of the farming cycle. So 48-50c may not be out of the question soon. Just don't bank on the current level of dividend being permanent.

SNOOPY

discl: have held PGW since it was created

[bunter]

$1.41 at fair value, assuming 9% div growth.
Most undervalued stock on the exchange, my model says.
In a strong uptrend.
Last company report forecast an increase in earnings.
Candidate for the NZSE 50 at around 60c, is my guess.

Downside - could be hard to sell in a crash.

[noodles]

$1.41 at fair value, assuming 9% div growth.
Most undervalued stock on the exchange, my model says.
In a strong uptrend.
Last company report forecast an increase in earnings.
Candidate for the NZSE 50 at around 60c, is my guess.

Downside - could be hard to sell in a crash.

i think you may have posted on the wrong thread? 1.41?