PGW - PGG Wrightson

[macduffy]

Results out and to be honest I am unimpressed either by them or the outlook for next year.

There is a final divvy of 7.5c to help us keep the faith but I am thinking no hurry to buy back in.

I'll be keeping away from this one, too. I lost faith in the old Wrightson company many years ago when they sold the profitable Wrightson Farmers" Finance Co. - a sound earner which bound many farmers to the company by providing seasonal finance. The recent sale of the seed business, a key part of the original stock and station businesses, particularly of Wright Stephenson's, just hastens PGW's slide into irrelevance, IMO.

[percy]

Well with a buyer for 1000 shares at $2.30,and the next buyer at $2.10, it looks as though I am stuck.
What comes to mind is the definition of a long term hold:
"A short term position that did not work out."....lol

[percy]

18.1 cents or 23 cents.?
The market says 23 cents.
Yet 18.1 cents could be right.?
Either makes sense to me.?
We continue to live in interesting times.

Was just reconsidering PGW.I note Findlay/Cushing added to their holding at 49 cents awhile ago.Less the 31 cents capital return, that brings things back to 18 cents. which is after consolidation is $1.80.
Perhaps after the not very good outlook we may be heading that way.At 15 cps [7.5 and hopefully another 7.5 interim] divie the yield would work out [at $1.80] 8.33%,while at $2.33 the yield falls to 6.44%
So the question is will they be able to maintain the divie.

[Snoopy]

The assumptions used including discount rates are shown below:

	EOFY2016	EOFY2017	EOFY2018
Discount Rate (10yr govt bond rate)	2.34%	2.97%	2.85%
Inflation	2.0%	2.0%	2.0%
Future Salary Increases	3.0%	3.0%	3.0%
Future Pension Increases	2.0%	2.0%	2.0%

It looks like only the discount rate is moving. The lower the discount rate, that means the more money is required 'now' to fund future obligations. So if the government ten year bond rate halves (from 2.85%), that means the present day obligations of the pension scheme could double? That would be another $10m of 'hidden debt' on the books or more poignantly another $10m of 'shareholder cash' to remove that hidden debt needed?

Perhaps they changed the assumptions to assume more people will die sooner, and so relieve the pension scheme of its future cashflow problem? (of course if the people don't die sooner as assumed, that might be a problem in itself!)

I am very pleased to see in today's announcement that the deficit in the pension scheme has been acknowledged at long last!

"In addition, lump sum funding payments of approximately $10.3 million were made to the group’s Defined Benefit Pension Scheme (Plan) to bring the Plan into actuarial equilibrium in June 2019.”

	EOFY2016	EOFY2017	EOFY2018	EOFY2019	13-08-2019
Discount Rate (10yr govt bond rate)	2.34%	2.97%	2.85%	1.57%	1.10%
Inflation	2.0%	2.0%	2.0%	2.0%
Future Salary Increases	3.0%	3.0%	3.0%	3.0%
Future Pension Increases	2.0%	2.0%	2.0%	2.0%

However, has squaring the scheme up as at 30th June 2019 fixed the issue? Sadly no, as interest rates, and the critical ten year government bond rate, have continued to fall since balance date.

If it gets down to 1% then PGW might need a $20m (not $10m) capital injection into the pension scheme, assuming the earnings of the scheme remain flat. But if interest rates fall, then those fixed interest returns will fall as well. So even more money will have to be pumped in just to keep the future earnings stream steady.....ouch....ouch

$10m in. Another $10m to go? Perhaps the 'dividend haircut' will continue for a few more years?

SNOOPY

[RGR367]

CapRet money on the bank!


disc: a very long holder and boy this stock was really really really really and I meant really really really ...... cheap way back then

[waikare]

CapRet money on the bank!


disc: a very long holder and boy this stock was really really really really and I meant really really really ...... cheap way back then

4.45pm funds not in my Direct Broking Act. at this stage.

[Agrarinvestor]

Gentlemen,

I'm the idiot that has bought indirect PGW via Agria. Sitting now at 75.000 ordinary shares of Agria. Can you tell what exactly has happened with PGW and do you know how much money has gone to Agria?

[percy]

PGW have sold their seeds business, and returned capital to shareholders.Then they consolidated the shares 1 for 10.
Agria received NZ $103.7 mil while retaining their same % holding.

[Agrarinvestor]

Many thanks. I hope that they will distribute to us shareholders.

[percy]

CapRet money on the bank!


disc: a very long holder and boy this stock was really really really really and I meant really really really ...... cheap way back then

May not be over expensive at the current prices, if you have a longer term view of their prospects.