DGL

[PartyPooper]

Being a Wine Manager has keep me away from this stock to say the least. Their products don't move in low socio economic area's. Also add in Pernod Ricard, Constellations and Eurovintage offer better cheap wines and even then the latter companies offer better premium reserve wines.

[samdaman]

cheers for the replies, all in all I think I may pass on this one

[Zaphod]

Keep an eye on the next HY update which will probably occur in February. DGL have missed their targets in the last few market updates due to (on the face of things) wine gluts, exchange rates etc. but this may in fact be a signal that their "super premium" strategy is fundamental flawed.

[Snoopy]

Hey I'm new to investing and have been looking at this company recently.

I've been trying to value this stock with the discount dividend model and the gordon growth model and both return values showing the stock is worth buying. This was using conservative values as well.

How do you define 'conservative' in this instance?

However some warning flags have shot up for me that I thought I may run by here to see what people think.

-The ROE seems to be a huge flag for a lot of value investors and DGL seem to have strange values which hover around an average of 13%. Would this be too small and risky for someone with a tiny amount of money?

IMO for valuation purposes you should always use an average ROE, with a minimum of five years of data points. I prefer an ROE of 15 and above for my new investments. However, given the upheavals in Europe and the associated sharp depreciation of European currencies (Delegates main export thrust is Europe IIRC) over the last two years relative to the NZ dollar, one might expect returns to have fallen. Given the circumstances I would say 13 is OK.

-Is the amount of debt/equity a little high?

Total equity $217.4m. Total debt $203.4m. On the face of it, that is near to as high as I would be comfortable with. However, you have to consider they have just made a large Australian acquisition. You also have to consider that the balance date is 30th June. I am not sure of the seasonality of DGLs production and sales. But if they have a lot of stock on 30th June that they are about to sell, this could artificially raise debt levels when viewed on an annual basis.

-How worrying should one find it that their book value is a good 150mil lower than their market cap?

This is only a worry if you want to buy the company to break it up. In general a company with a good ROE will always trade at a price significantly higher than net asset value.

-Also are these good and relevant fundamentals to be looking at to try value a company?

Given DGL is a relatively mature company, yes.

SNOOPY

[percy]

I enjoy a glass of Sauvignon Blanc now and again.Oyster Bay is very pleasant drop.
I once attended The Oyster Bay AGM held one November in Blenheim.
Was surprised to learn, while on a vineyard tour, that they were making arrangements to have six helicopters on stand by,as they were expecting frosts that night! Then they were working out what parts of the vineyard they would try and save. Yes they were needed.Grapes only produce one crop a year.Horticulture is weather,disease etc difficult business.A wine grower has a lot of problems.A wine seller then has to sell their products overseas.Main UK supermarkets are not easy to deal with.Rising NZ dollar does not help an exporter.
Must admit I thought it was all too difficult and sold my shares,yet I still enjoy a nice Savvignon Blanc without the worries.

[forest]

I enjoy a glass of Sauvignon Blanc now and again.Oyster Bay is very pleasant drop.
I once attended The Oyster Bay AGM held one November in Blenheim.
Was surprised to learn, while on a vineyard tour, that they were making arrangements to have six helicopters on stand by,as they were expecting frosts that night! Then they were working out what parts of the vineyard they would try and save. Yes they were needed.Grapes only produce one crop a year.Horticulture is weather,disease etc difficult business.A wine grower has a lot of problems.A wine seller then has to sell their products overseas.Main UK supermarkets are not easy to deal with.Rising NZ dollar does not help an exporter.
Must admit I thought it was all too difficult and sold my shares,yet I still enjoy a nice Savvignon Blanc without the worries.

On average over 43mil CF from operations in the last 5 years, makes it look a bit more appealing.

[percy]

On average over 43mil CF from operations in the last 5 years, makes it look a bit more appealing.

Excellent.!
Plus Jim Delegat is a brilliant operator.
Pity he can't control the weather.! lol.

[forest]

Excellent.!
Plus Jim Delegat is a brilliant operator.
Pity he can't control the weather.! lol.

Jim is able to partly control the weather, the helicopters can and do keep the frost away when it is important. And many vineyards are able to water each individual grapevine. Controlling the sun is a little harder but owning vineyards in the right parts of the country can give you many hours of predictable sunshine. Modern vineyards to me seem to be able to reduce risk with a little effort.

[percy]

Knew there was a more up to date thread.

[andrewdwalters]

where is the up to date thread??