ALF - Allied Farmers Limited

[WAIKEN]

Interesting trading today. There were a few tiny trades then a large parcel went. I wonder if that went to Waterman or another buyer looking to spoil their quest for 19.9%

[nztx]

ALF probably needs some cornerstone holders in there with the approaching economic turbulence,
NZL results being eroded by hefty financing charges and all the boys & girls showing so much love
every time NZL tries to dig it's way out with a Cap Raise


Any 2024 ALF dividend indication yet .. or still waiting to examine the economic forecasts into early 2024 ?


If things get real bad NZL might have to borrow a further bundle to pay ALF's Fees for all the array
of Managing & Performing duties, that is if the boys and girls still dont want to throw more pocket money
at NZL Cap Raise begging bowls


The last share issue job from NZL @ $1.60 a shot or so for all the Management fees must have gone down like a bad lingering case of indigestion for Management Co when NZL shares then lost so much value in just 6-8 months subsequently - was it half the value of fees lost in impairments on new shares ?



These sort of things happen when cheap dough becomes as scarce as hens teeth and approaching storm
clouds scare most into holding onto their pennies hoping things dont get worse ..

But it could be or get even worse .. Receivers & Liquidators are now having difficulty seeing interest in failed businesses .. imagine what could happen if advanced Primary Sector doom and gloom hits which is possible and if a whole cupboard full of distressed non performing Ag & Forestry hits the skids at Firesale values, possibly less in attempts to stop things totally sliding down a slippery slope.

Once a slide starts and damage done, there won't be many smiles anywhere ..

[Muse]

NZTX - once again (or as always) - I don't think you have a good grasp on what you are talking about or in a position to talk about in any constructive way about ALF's fundamental value. While I certainly wouldn't buy anything from Waterman, I get a whole lot more interested when they are buying something, and have a lot more faith in their track record over yours.

For whatever reason you love to dump on this share but consider this. At 70cps, and using FY23's statutory NPAT attributable to shareholders, gives it a PE of just 6x. ALF holds what 2.8m NZL and at closing price gives that holding a value of $2.3m, so mcap net of surplus NZL assets is $17.9m, or a PE net of surplus assets of 5.35x.

Did you consider that now that ALF fully owns the rural land management company (for only 1/4ths the year, but has now fully paid for the company by way of cash issue (partially funded by debt) and transfer of NZL shares) it will now be able to fully consolidate its earnings going forward whereas previously it just equity accounted its earnings? Holding all else equal, that will give rise to a large rise in NPAT. So if you did a pro rata adjustment for the (at least) 1H result that would result in another $417k is profit. Accounting rules require the contract to be amortised which is a bit like goodwill amortisation which is bogus (in my view) so you could easily addback that at $131k, and then less say a proforma full year interest expense associated with the debt they took on to fund the acquisition. Plus one off transaction expenses associated with the tax loss revenue and costs associated with the valuation of the rural land mgnt company, you are talking about a sub 5 PE multiple.

That doesn't include the full year going forward contribution from the enlarged forestry estate. Yes, performance fees are likely to be lower, but they already have been in the full year just been, and quite well reflected in the go forward position. ALF's holding in NZL shares may be volatile but you can account for that by doing to mark to market on the shares ALF holds in NZL at the prevailing SP. and even if you don't think any performance fees will be payable going forward (ever), all you have to do is look at a broker report showing the ongoing (high margin) base management fees payable to RLM/ALF, and it puts its all in perspective.

This has the hallmarks of a pivot in strategy, away from traditional livestock business (which has been going very well) to a more predictable, higher margin, higher value rural investment/asset management focus. And no, no dividends, but why would you want to declare unimputed dividends when you have massive tax losses that you can utilise to buy other adjacent rural asset management companies and use the tax free cashflows to rip down debt and grow shareholder value? That is, in my view, unarguably the strategy that's been put in place.

No chance Waterman will be buying my shares that I recently purchased well below their entry cost (they want to make 2-3x their money over 5 years, and were very keen paying 75cps recently, so offering 71.5 is taking the absolute piss in my view) but I look forward to the shenanigans they may put forward in their unsolicited offer to get to 19.99%.

[percy]

Excellent research and analysis.
Thank you for sharing as we have a modest holding in the wife's name..

[Muse]

I have a few pennies. Couldnt buy much.

[WAIKEN]

Thanks Fiordland for your excellent analysis and cogent presentation.
I see ALF as massively undervalued. If we add the tax losses the undervaluation is even greater. I believe Watermans will have a plan to utilize these tax losses. The trading was strange yesterday. It looked like an algorithm was operating trading little amounts. The large seller looked like a blocking sell to force sellers below its price. If it was Watermans buying it should be noted in a substantial security holder notice soon. If it wasn't it may be game on as another party may share our view of massive undervaluation and may soak up nervous holders. I see this going to 1.40 over the next few years and sooner if another party is building a large stake.

[golden city]

The uptrend just start ,it is hugely undervalued Alf

[nztx]

NZTX - once again (or as always) - I don't think you have a good grasp on what you are talking about or in a position to talk about in any constructive way about ALF's fundamental value. While I certainly wouldn't buy anything from Waterman, I get a whole lot more interested when they are buying something, and have a lot more faith in their track record over yours.

For whatever reason you love to dump on this share but consider this. At 70cps, and using FY23's statutory NPAT attributable to shareholders, gives it a PE of just 6x. ALF holds what 2.8m NZL and at closing price gives that holding a value of $2.3m, so mcap net of surplus NZL assets is $17.9m, or a PE net of surplus assets of 5.35x.

Did you consider that now that ALF fully owns the rural land management company (for only 1/4ths the year, but has now fully paid for the company by way of cash issue (partially funded by debt) and transfer of NZL shares) it will now be able to fully consolidate its earnings going forward whereas previously it just equity accounted its earnings? Holding all else equal, that will give rise to a large rise in NPAT. So if you did a pro rata adjustment for the (at least) 1H result that would result in another $417k is profit. Accounting rules require the contract to be amortised which is a bit like goodwill amortisation which is bogus (in my view) so you could easily addback that at $131k, and then less say a proforma full year interest expense associated with the debt they took on to fund the acquisition. Plus one off transaction expenses associated with the tax loss revenue and costs associated with the valuation of the rural land mgnt company, you are talking about a sub 5 PE multiple.

That doesn't include the full year going forward contribution from the enlarged forestry estate. Yes, performance fees are likely to be lower, but they already have been in the full year just been, and quite well reflected in the go forward position. ALF's holding in NZL shares may be volatile but you can account for that by doing to mark to market on the shares ALF holds in NZL at the prevailing SP. and even if you don't think any performance fees will be payable going forward (ever), all you have to do is look at a broker report showing the ongoing (high margin) base management fees payable to RLM/ALF, and it puts its all in perspective.

This has the hallmarks of a pivot in strategy, away from traditional livestock business (which has been going very well) to a more predictable, higher margin, higher value rural investment/asset management focus. And no, no dividends, but why would you want to declare unimputed dividends when you have massive tax losses that you can utilise to buy other adjacent rural asset management companies and use the tax free cashflows to rip down debt and grow shareholder value? That is, in my view, unarguably the strategy that's been put in place.

No chance Waterman will be buying my shares that I recently purchased well below their entry cost (they want to make 2-3x their money over 5 years, and were very keen paying 75cps recently, so offering 71.5 is taking the absolute piss in my view) but I look forward to the shenanigans they may put forward in their unsolicited offer to get to 19.99%.

Thanks for the Reputation Comment:

you are one of ST'rs least respected contributers. thank god you don't invest my money.

Just so all can see your low down antics on this site.

[Rawz]

Good post and last ever at that from the great FiordlandMoose

[winner69]

Good post and last ever at that from the great FiordlandMoose

Oh no ….has Fiordland Moose gone for good?

Was muttering about fixing ATM machines on another site ,,,,maybe change in job/lifestyle will be good for him

All the best Moose