PGW - PGG Wrightson

[Toddy]

No surprise here. I also don't see farmers changing their spending habits in the current environment.

Farmlands and Wrightsons carparks in the Bay are still pretty quiet.

Share price overvalued?

[winner69]

Even though FY guidance down from that previously given pretty solid H2 forecasted with ebitda about the same as last years…..even though H1 was down 24%

Things must be getting better

[Balance]

Even though FY guidance down from that previously pretty solid H2 forecasted with ebitda about the same as last years…..even though H1 was down 24%

Things must be getting better

Guidance of $50m vs market consensus of $53m - so steady as she goes.

Cancelling the interim dividend however is unexpected. Not going to be popular with the dividend income investors who have funds invested in discretionary & non discretionary brokers' accounts (eg. Craigs & Forbar).

[kiora]

And not so popular with some on the board?

"❖The PGW Board has by a majority determined PGW will reinvest capital back into growing the business by suspending the interim dividend to avoid adding debt in the face of rising interest costs"

Tensions?
Good or bad for the company?

[Balance]

And not so popular with some on the board?

"❖The PGW Board has by a majority determined PGW will reinvest capital back into growing the business by suspending the interim dividend to avoid adding debt in the face of rising interest costs"

Tensions?
Good or bad for the company?

Good for the company imo as it shows that Agria (needing dividends) is not having its way. Could explain why there's a move against the independent directors - not good!

[iceman]

So here is the reason for the major shareholder wanting Board changes, purely motivated by their own needs, not what is best for PGW. I'm happy to be out of PGW
"Distributions
Given the current challenges faced in the sector and broader economy and the impacts these have had on our business, the PGW Board has determined not to pay an interim dividend. The Board considers that this is an appropriate and prudent measure to take at the present time. At a broader level the PGW Board is also assessing its ongoing dividend payout ratio given the need to strike the right balance between sustainable distributions for shareholders whilst retaining sufficient earnings in the best interests of the company to allow it to effectively execute upon its strategy.”

[bull....]

No surprise here. I also don't see farmers changing their spending habits in the current environment.

Farmlands and Wrightsons carparks in the Bay are still pretty quiet.

Share price overvalued?

yea i reckon pgw and skl are both overvalued at moment

[Toddy]

yea i reckon pgw and skl are both overvalued at moment

Skl have an attractive balance sheet though. So I don't see the sp coming under as much pressure as PGW.

[Snoopy]

Interesting to plug this new EBITDA guidance into the 'Consolidated Statement of Profit and Loss for FY2023' and the associated cost structures.

Consolidated Statement of Profit and Loss

	FY2024 Forecast	FY2023 Actual
Operating EBITDA	$52.000m	$61.194m
less Depreciation and Amortisation Expense	$28.063m	$28.063m
equals EBIT	$23.937m	$33.509m
less Net Interest and Finance Costs	$9.573m	$9.573m
equals Profit Before Income tax	$14.364m	$23.936m
less Income Tax Expense	$4.022m	$6.418m
equals Profit Net of Income Tax	$10.342m	$17.518m

Now: $10.342m/75.484m= 13.7cps

As it happens 10.0cps has already been paid out during FY2023 as the final dividend for FY2022. So to keep that balance sheet intact, the final dividend paid during FY2024 (actually the interim dividend for FY2024) should be no more that 4cps. And 4cps is only a little down on the interim dividend paid in that same time space but a year earlier of 12cps. Hey, just a minute........

Guidance of $50m vs market consensus of $53m - so steady as she goes.

Cancelling the interim dividend however is unexpected. Not going to be popular with the dividend income investors who have funds invested in discretionary & non discretionary brokers' accounts (eg. Craigs & Forbar).

You forgot to mention that late last year PGW reduced their EBITDA guidance to $52m, so $50m is a second downgrade. What did you say about downgrades coming in threes? It would come as no surprise to me if the new $50m EBITDA guidance for the FY2024 year was not met. You also have to remember that traditionally most of the profit comes in the first half. So it wouldn't surprise me if PGW only breaks even on a NPAT basis for the year.

I was predicting an interim dividend of no more than 4c. So with rural conditions softening, it is no real surprise there is no interim dividend.

So am I selling out? Quite the reverse. I topped up my holding this morning. Looking through the next business cycle and averaging across the dividend stream, I reckon I am going to get a 10% gross yield. That is far too tasty a prize to leave on the table. Next plan is to free up some of my bank deposit money to buy some more.

SNOOPY

[RGR367]

................

So am I selling out? Quite the reverse. I topped up my holding this morning. Looking through the next business cycle and averaging across the dividend stream, I reckon I am going to get a 10% gross yield. That is far too tasty a prize to leave on the table. Next plan is to free up some of my bank deposit money to buy some more.

SNOOPY

As this one has been a long book-value-negative stock already in my portfolio, I might just follow you and further increase my holding also. SP is just too tempting not to.