PGW - PGG Wrightson

[noodles]

Hi BP, I'm not sure I understand the depth of selling at 52/3 either ?

Market Depth is not necessary a indicator of sentiment of the stock. To me it shows the PATIENT buyers and sellers in the market rather than the impatient buyers and sellers. So for so many seller's to have bids at 52/53, it tells me they are not concerned about a sudden drop in the share price and are prepared to wait.

[Beagle]

Having owned a beagle hound for 12 years they are eternally optimistic and have a veracious and opportunistic approach towards food consumption. Never trust a hound that isn't optimistic !!

This is a lesson I leaned at cost from the resident snoopy beagle hound who was extremely conservative about HNZ's prospects back when they were 95 cents...hmmm the canine missed out on a huge feed there...one ponders how his ability to sniff out a feed was so far off the mark...

I think management are doing a good job and if they can make their current forecast in the current extremely challenging climatic conditions this augers very well indeed for 2016 and beyond.

I note broker consensus is for 2015 and 2016 EPS of 5.0 cps.

[noodles]

Maybe people are concerned with the drought's effects on the agri sector but as far as I'm concerned the company only very recently upgraded its 2015 forecast and the drought was already in full effect so its effects are probably already pretty well understood by management, I would have thought.

Exactly. Management gave guidance range only a couple of weeks ago. Their low end guidance still beat the FY14 EBITDA by quite a margin.

[Snoopy]

Exactly. Management gave guidance range only a couple of weeks ago. Their low end guidance still beat the FY14 EBITDA by quite a margin.

Noodles, the upper end 'guidance' was based on a repeat of the second half of last financial year this financial year. The lower end guidance was based on a repeat of the second half guidance from the previous year when there were a few drought problems. But what if the drought this year is worse than that two years ago? (it is). What if commodity prices are worse than they were two years ago? (milk and wool are).

I am not sure you city hounds realise the potential seriousness of the rural situation. I think there is a real chance we will end up below lower end guidance for FY2015. But to a major extent FY2015 will soon be history. FY2015 is not the driving force for the share price going forwards from now. Next declared dividend will be in FY2016. I am almost certain things will be a lot tougher in FY2016. Remember, Mark Dewdney hasn't made any forecasts for FY2016.

SNOOPY

[Snoopy]

I think management are doing a good job and if they can make their current forecast in the current extremely challenging climatic conditions this augers very well indeed for 2016 and beyond.

I note broker consensus is for 2015 and 2016 EPS of 5.0 cps.

Please get those brokers to forward the FY2016 long term weather forecast to farmers. It isn't really fair to keep that critical information within the broking community!

SNOOPY

[noodles]

Noodles, the upper end 'guidance' was based on a repeat of the second half of last financial year this financial year. The lower end guidance was based on a repeat of the second half guidance from the previous year when there were a few drought problems. But what if the drought this year is worse than that two years ago? (it is). What if commodity prices are worse than they were two years ago? (milk and wool are).

I am not sure you city hounds realise the potential seriousness of the rural situation. I think there is a real chance we will end up below lower end guidance for FY2015. But to a major extent FY2015 will soon be history. FY2015 is not the driving force for the share price going forwards from now. Next declared dividend will be in FY2016. I am almost certain things will be a lot tougher in FY2016. Remember, Mark Dewdney hasn't made any forecats for FY2016.

SNOOPY

Yes, I'm a city hound. Yes, I understand that commodity prices for beef and lamb are weaker than they were earlier in the year. But as Mark suggested, the drought is becoming localised. So stock can be shifted around the country.

I would hope that the affects from the drought would not flow through to Fy16 earnings. However, I'm happy to be corrected here.

[Snoopy]

Yes, I'm a city hound. Yes, I understand that commodity prices for beef and lamb are weaker than they were earlier in the year. But as Mark suggested, the drought is becoming localised. So stock can be shifted around the country.

I would hope that the affects from the drought would not flow through to Fy16 earnings. However, I'm happy to be corrected here.

Noodles, I am not saying that FY2016 earnings will definitely be down. I am saying there is a large probability that they will. That possibility is reason enough to rebalance my portflio. But remember I still hold 3/4 of my PGW shares!

SNOOPY

[noodles]

Noodles, I am not saying that FY2016 earnings will definitely be down. I am saying there is a large probability that they will. That possibility is reason enough to rebalance my portflio. But remember I still hold 3/4 of my PGW shares!

SNOOPY

But why will FY16 be down? Because of the drought or commodity prices? Just trying to understand your concerns over Fy16

[see weed]

Try to buy more before close but ASB is on a go slow.

[Snow Leopard]

Noodles, I am not saying that FY2016 earnings will definitely be down. I am saying there is a large probability that they will. That possibility is reason enough to rebalance my portflio. But remember I still hold 3/4 of my PGW shares!

SNOOPY

Technically you hold all of your PGW shares on the grounds that the ones you sold are not yours any more.

But why will FY16 be down? Because of the drought or commodity prices? Just trying to understand your concerns over Fy16

I consider it exceedingly unlikely that FY16 will be identical so it will either be up or down.
So we could call it a 50/50 shot either way unless we have some belief that the company is in a position to improve it's 'financial efficiency' and skew that to, say, 60/40 in favour of up.


Watch the price move has the future unfolds.

Best Wishes
Paper Tiger