Seeka

[Brain]

I don't understand how the forecast annual NPAT is only 4.5 M when they have already achieved 3.7M for the half year. They are predicting a very very uneventful second half

[iceman]

A few comments in no particular order, after the first glance at the announcements :

A large revenue increase and good growth across most sectors of the business. EPS in the 6 months already above FY14. But outlook indicates 2nd half will not be as outstanding and will not deliver half of annual profits like previous years. But indications are FY EPS of 30c or thereabouts. This is a good 30-40% increase, but less than I expected. Need to study report better to try to understand why but probably explainable by lots of the profit (unusually high share) so far being from post harvest operations that obviously don’t happen in the 2nd half.

An EBIDTA increase of 97% YoY. Spectacular.
Need to invest in coldstorage and not so hidden criticism of Zespri and the industry not collaborating on offshore arrangements, related to that. This is urgent as further growth will be restricted without it. The question will be whether SEK need to fund it or will we have landlords building facilities for us to lease. This issue could affect future dividends. I still expect a final divie of fully imputed 10c though, supported by great cashflow in the HY. But I would like management to attend to this with urgency and come to us for cash if need be.

SEK has run slim margins on coldstorage and loadouts, as well as the grower share scheme, to assist growers rebuilding after the PSA disaster. Long term, I think this will be of huge benefit to SEK and the growers

A gain from impairments and actual insurance payout from the Oakside fire, more than covering the grower scheme this period. More gain on insurance payout indicated for the 2nd half.

The Glassfields acquisition is not delivering to expectations these 6 months. That is disappointing. Bananas and avocado sales in NZ very competitive and pressure on prices. Reassuring that Philippines banana supplier Sumifru has taken a big holding in SEK and is a vote of confidence in the future of this business.

The fact that SEK has provided FY outlook now rather than the normal October announcement, tells me they are extremely confident of achieving what they are saying. As far as I am concerned, we only have upsides from her.

A very happy holder.

[iceman]

Who reckons we hit $5 a share? If NPAT is better than 5 million its quite possible on a PE 15, definitely crossing the fingers and waiting till next week for the surprise!

I do but I'll give it 12 months

[bull....]

ill give some thoughts next week, bit busy with earnings season at da moment here and aus

[silverblizzard888]

I do but I'll give it 12 months

Its a shame I was expecting around $5 million, but round 4.4 still isn't bad either, still great growth.

[Beagle]

Good result and congrats to holders and thanks to Iceman for his detailed comments on SEK.
I'm watching but I remain cautious.

I do the books for a small Kiwifruit operation and they had a ripper year with very strong profit growth.

Fact is it was a brilliant season for growing and prices were good but seasonal returns are variable and I remain comfortable using my long term average yardstick of a PE of 10 to value agri stocks for reasons of seasonal variability in crop size, pricing, disease, pestilence, drought e.t.c. e.t.c I have used this PE of 10 for years and swear by it as a general yardstick. Interesting to note both SCL and PGW are currently trading on a PE of very close to 10.

Anyway...not looking to rain on anyone's parade, just thought I'd share my 2 cents from the accountants coal face on what a private operator achieved for the year and my personal PE yardstick for agri stocks.
Disc: Hold PGW and SCL.

[sb9]

I like this stock for their growth and future earning potential.

However from a trading point of view liquidity is the biggest concern for me and I don't like illiquid stocks.

Good luck to those that are already in.

Disc: Do not hold.

[iceman]

Fair enough comments Roger. I certainly agree we need to be careful in this industry with companies such as SEK & SCL as they are always at great risk and reward from natural events. Just like all primary industries.

But I do not think it is correct to compare SEK to a smallish individual Kiwifruit orchardist. SEK are not a Kiwifruit grower except to a small degree. They got close to 70% of their EBIDTA this HY from post harvest operations. They make their money from infrastructure around the industry and marketing the produce (whats not done by Zespri).
SEK has also been at the forefront of maintaining pricing/profits for growers to help them recover from PSA.
I think it is great that despite that, both growers and SEK are having a good year.

[iceman]

I like this stock for their growth and future earning potential.

However from a trading point of view liquidity is the biggest concern for me and I don't like illiquid stocks.

Good luck to those that are already in.

Disc: Do not hold.

And that I agree with. It is a company that is entering a profitable growth period, quite a substantial growth I believe. Liquidity of stock will be an issue. I would like them to think about funding new coldstorage by new share issues, not bank debt, to increase liquidity

[Beagle]

Fair enough comments Roger. I certainly agree we need to be careful in this industry with companies such as SEK & SCL as they are always at great risk and reward from natural events. Just like all primary industries.

But I do not think it is correct to compare SEK to a smallish individual Kiwifruit orchardist. SEK are not a Kiwifruit grower except to a small degree. They got close to 70% of their EBIDTA this HY from post harvest operations. They make their money from infrastructure around the industry and marketing the produce (whats not done by Zespri).
SEK has also been at the forefront of maintaining pricing/profits for growers to help them recover from PSA.
I think it is great that despite that, both growers and SEK are having a good year.

Fair enough Iceman. To be fair mate all I was trying to say by posting that illustration is that his volumes were very, very good this year so that growth if indicative of other growers harvest, would have been very helpful to SEK's downstream operations. All good and I am sure holders will benefit from the tremendous growth that's forecast for this industry in the years ahead
The lack of liquidity is a concern for me so it doesn't really fit my personal investment profile.