PGW - PGG Wrightson

[BlackPeter]

And think of all that billions of dollars currently sitting in cash looking for a better than 1% or 2% return post the lockdown.

PGW will be irresistibly attractive with its fully imputed gross dividend yield of over 10%+!

Just wondering how their pension scheme is doing these days ... wasn't there a problem if interest rates are further dropping (which they are)?

[kiwidollabill]

To play devils advocate....

Yes they wont be as screwed as the rest of NZ industry but who says they will be doing great? Alot of that smart investor cash will go into long term prospects which have been beaten down...

Bank lending was tightening prior, I cant imagine they will be super keen to open the loan book after having to grow their consumer/business sectors to deal with the downturn. Any extra cash generated by a strong commodity sector will get put towards debt repayment c.f. asset purchases.

Water sector is almost topped out, agency is pretty cyclical (farm purchases at low...), its the retail side which keeps the cash coming....

[Snoopy]

And think of all that billions of dollars currently sitting in cash looking for a better than 1% or 2% return post the lockdown.

PGW will be irresistibly attractive with its fully imputed gross dividend yield of over 10%+!

Former controlling shareholder Alan Lai has had to sell down his Agria owned shares to below the 50.1% controlling level. But in reality, Agria (44.3% stake at EOFY2019) still does control PGW because Lai is good mates with David Cushing who controls the Rural Equities stake (5% IIRC) and the H&G family firm stake (2.66% at EOFY2019).

I suspect the high dividend reflects the will of Alan Lai, who still needs those dividends to support his leveraged buyout vehicle. Just because high dividends are being paid does not mean that this is in the best interests of PGW minority shareholders. There is risk with keeping dividends at current levels, and PGWs bankers may have a say as to whether this continues.

SNOOPY

[Balance]

To play devils advocate....

Yes they wont be as screwed as the rest of NZ industry but who says they will be doing great? Alot of that smart investor cash will go into long term prospects which have been beaten down...

Bank lending was tightening prior, I cant imagine they will be super keen to open the loan book after having to grow their consumer/business sectors to deal with the downturn. Any extra cash generated by a strong commodity sector will get put towards debt repayment c.f. asset purchases.

Water sector is almost topped out, agency is pretty cyclical (farm purchases at low...), its the retail side which keeps the cash coming....

Thanks for playing devil's advocate - it is good that all of us are challenged to test our views and conviction.

The agricultural sector is the one industry left intact pretty much by the lockdown and the outbreak - its importance to NZ has been undermined by this government with all kinds of hindrances but this government is going to be very dependent upon this sector to cushion NZ from a deep recession. Shoe is on the other foot, so to speak.

And the sector is doing well - be it dairy, meat or horticulture, heading into a fourth year of increased profitability. https://www.nzherald.co.nz/the-count...ectid=12304721

The world is going to need and want NZ's food with its unquestionable quality & integrity - we are already seeing that from China as that country emerges from its lockdown. And notice how much the NZ$ is down, compared to the last 5 years?

PGW has showed in its latest results and by paying a dividend (one of the few to do so) that the company is stable, financially sound (EBIT of $19m for HY & debts of $60m) and has overcome many of the problems it had in the past. In other words, well positioned to benefit from what's happening in the agricultural sector.

What's there not to like about a well-positioned industry, a well-positioned company in that industry and a great dividend yield?

[Balance]

https://www.newsroom.co.nz/2020/04/1...bbd29-97843407

Farmers and farming back to the fore in NZ now that tourism is screwed for at least the next year or three. Guess Labour & Greens are are going to have to play nice to the sector after relentlessly hammering farming and farmers for the last 2 years.

“Perhaps the divisions we’ve had that have been exploited in the past politically will be seen for what they are: that we’re all in this together and we’ve just got to help each other out.”

[Snoopy]

https://www.newsroom.co.nz/2020/04/1...bbd29-97843407

Farmers and farming back to the fore in NZ now that tourism is screwed for at least the next year or three. Guess Labour & Greens are are going to have to play nice to the sector after relentlessly hammering farming and farmers for the last 2 years.

“Perhaps the divisions we’ve had that have been exploited in the past politically will be seen for what they are: that we’re all in this together and we’ve just got to help each other out.”

A few issues raised in that article Balance. Like a potential weakening in demand for 'high end' meat cuts. The sort of thing favoured by those high end restaurants that won't exist anymore. Paul Hughs seemed a bit down on dairy too. I know the last dairy auction showed a much welcome spike in prices. But this could have been an end of season effect caused by diminishing supply of product on offer, rather than a portent of what is to come for next season. Then we have this continuing drought which seems to be worst in the upper North Island, including Waikato. This has resulted in a much lower yield of winter feed being grown. Palm Kernel importation to offset this could be a problem with the closure of certain critical ports in Malaysia. Farmers could be looking at a difficult few months.

More specific to PGW, let's not forget the position of the 'fixed up' (sic) pension plan either. The underlying investments will have plunged in value, while the further decline in interest rates will have fuelled a new discount rate present day valuation problem.

Not saying PGW is necessarily a bad place to be. I have been building up my own holding over the last few months after all. But I don't think PGW is the one way bet you paint it to be either.

SNOOPY

[sb9]

Hello, what's up with this special crossing this morning at $2.75 a piece of more than 5.6mln shares??

275

5,628,450

09:35

SP

That's almost 7.5% of total PGW shares on issue.

[Balance]

Hello, what's up with this special crossing this morning at $2.75 a piece of more than 5.6mln shares??

275

5,628,450

09:35

SP

7.45% of the stock done at above market price.

Interesting!

[Balance]

Do I smell a takeover offer?

Here we go - $2.55 and heading higher!

[percy]

Hello, what's up with this special crossing this morning at $2.75 a piece of more than 5.6mln shares??

275

5,628,450

09:35

SP

That's almost 7.5% of total PGW shares on issue.

Yesterday's close was $2.25 so 50 cents above that.
And Ghee Whiz we have just recently received the nice divie.
We certainly live in interesting times.