Scales - SCL

[Beagle]

There was one 'strong growth' and one 'very strong growth' but both are in an historical context and as we should all know "past performance is not a guarantee of future returns".

The countless times that growth is mentioned is actually 26, including the two above. Some people are given to hyperbole when they run out of fingers and toes.

You are right to be cautious.

Best Wishes
Paper Tiger

Disc: SCL is my second largest holding on the NZX

He gave them eyes but they would not see...

[Ghost Monkey]

Both...you must have read a different report than I did...just read the introduction section and that sets the platform for the rest of the report. Growth mentioned countless times.
http://scalescorporation.co.nz/wp-co...ual-Report.pdf
Since then we have the new Chinese part owner who will be assisting with distribution into China. If you can't see the growth to come with this company then I wish you all the best with your ghost banana's

Sure, I see potential. But I've also watched you talk up AIR, CVT and to a lesser extent HLG this year and all are down in that time. So perhaps I just have a healthy skepticism. This is my hard earned cash after all. Talking up 'strong growth' doesn't mean it will continue. 24% ROCE is great, will it be repeated? You always sound so certain in your posts, but the market seems very cautious on this stock at the moment. Undervalued? Perhaps. But there are a lot of risks in this type of industry too.

But I admit, it's been awhile since I read that report and doing so again I acknowledge that you may well be right. However, I still question strong growth. I'm gonna give it a 'potential moderate growth' and may yet invest (in which case I hope you're right and I'm wrong)

[drcjp]

Fwiw, I put SCL at about 7% under done on current form. I anticipate growth news at end of Aug to another 10%. The real story will be in Nov and how much grunt CR is delivering. Happy holder and lover of apple pie/fraiche + rose 😁

[sb9]

Fwiw, I put SCL at about 7% under done on current form. I anticipate growth news at end of Aug to another 10%. The real story will be in Nov and how much grunt CR is delivering. Happy holder and lover of apple pie/fraiche + rose 

Also its just not a horticulture company anymore, well diversified now with two other divisions Cold Stores and Pet Food. Hence the frequent use of word "growth" in their annual report.

[Beagle]

CVT been a great stock for anyone that's been in longer than 5 minutes. Haven't been interested in HLG for quite some time...even tiger's so bored with their life they have nothing better to do that stir the pot know its warmer than usual.

[winner69]

A growth stock is one that achieves above average earnings growth relative to the general economy or the market as a whole.

Scales earning beats these by a long way - and will continue to do so for a while

Yes - "strong growth' are appropriate words for Scales

Issue is - what do punters want o pay for 'strong growth'

I'm willing to pay $4 plus - so todays price is 'cheap' in that respect, just that the market thinks overwise

[Beagle]

The company. Have a look over the last couple of annual reports and you'll easily discover its growth prospects.

Its horticulture division has substantially increased its total planted orchard area and undertaken a large orchard replanting and re-grafting programme over the last couple of years. While this had the effect of reducing production in the initial years, the number of mature hectares is now expected to increase each year until 2021. The replanting has also been to varieties which command a premium in Asia. This coupled with stellar growing conditions, the reserves banks desire to push the NZD lower, a "new" cornerstone shareholder (a major Chinese food distributor with access to over 3,000 supermarkets), not to mention its other divisions, means I just had to buy more yesterday

Well said. With the NZX50 at around 7200 the market overall is "really quite stretched". Thankfully pockets of value remain here and there for those prepared to spend some time understanding them.

[Beagle]

A growth stock is one that achieves above average earnings growth relative to the general economy or the market as a whole.

Scales earning beats these by a long way - and will continue to do so for a while

Yes - "strong growth' are appropriate words for Scales

Issue is - what do punters want o pay for 'strong growth'

I'm willing to pay $4 plus - so todays price is 'cheap' in that respect, just that the market thinks overwise

Agree 100%. Perhaps more to the point is once the Chinese have a thorough understanding of the company and its growth prospects how long before they're prepared to pay $4 a share for the lot !

[Balance]

Ghost Monkey is correct in his observation that one needs to be cautious with companies which over-use a term - in this case, SCL peppering their annual report with 'growth' in second second paragraph.

SCL has earned the right however imo to over-use the 'growth' word because the company has not only delivered on growth (revenues, markets, profits, margins, product range, business etc etc) but has articulated how they believe they will continue to deliver growth.

Contrast that with an example like PEB - the management peppering 'excited, excitement and exciting' all over their presentations and commentaries with scant regard to the fact that their excitement phase was well and truly over, and they have no coherent plans to deliver more excitement.

[Ace]

Agreed - Ghost monkey raises a valid point in being cautious. Regarding Scales growth, I do believe there is a lot of potential there; Scales have taken the necessary steps to ensure organic growth within the company remains strong in both the near term and the long term - including the Orchid Redevelopment Programme as Roger has pointed out, which will start paying off and continue to pay off as the programme is ongoing and adapts as the business grows. Scales has also hinted towards both horizontal and vertical acquisitions - which they labelled as "bolt-on" companies in their annual report. I'd be far more cautious if Scales relied entirely on acquisitions to drive growth compared to focusing on organic growth, but as they say "our business is agribusiness" or something along those lines. With Scales current track record, I have faith that management will deliver; however Paper Tiger is right and that the past is never indicative of what the future may hold.

My concern is that Scales is working with a commodity which means to stay competitive against it's competitors the only thing we can do really is compete on price. Although we have one thing going for us, the apples are NZ premium apples and in a way, it turns that commodity into a franchise which gives us a lot of power in the market; and as SB9 has said; it's no longer just a horticulture company anymore. Take from it what you will, however from what I see there is a lot of room left to grow especially with CR now on the board or playing field - although the impact CR will have on Scales is just speculation at this time I still have every reason to believe Scales has a lot of potential growth going for it.