TUR - Turners & Growers

[percy]

HY result out today - seasonal business, so not easy to extrapolate to a FY forecast. Debt/cashflow swing wildly between halves too. Seems they are always full of big plans, yet so slow to show much for them - perhaps typical of most of the larger pies GPG seem to have had their fingers in for the past few years.

My best guess is for a forward P/E about 9 - 9.5 at $1.40 (excluding depreciation tax adjustments). Price to NTA reduced by the depreciation changes, but still about 0.66 - either their valuations are a little generous or they need to extract more value from their assets. Cheap but dull - and hard to get inspired. If their forecast for improved profit can be trusted, then perhaps they make a fair hold with an eye to FY turnaround...

Does not sound as though you think they "are well positioned" for the upturn Lizard.! Dull hold.!!! lol.

[Lizard]

After a backwards blip with kiwifruit PSA, comes an upward blip with another step forward in the move to sell apples into Australia:

Growers Jubilant at Apple Win - Stuff.co.nz

Difficult to compute the value for TUR, though I think Apples are the largest contributor to revenue. Presumably what is good for NZ apples is good for TUR.

Also, here an interesting link to MAF 2010 forecasts (apples page 34):
http://www.maf.govt.nz/mafnet/rural-...010-sonzaf.pdf

A few factors align to suggest a good year for TUR in 2012... seems at lower end risk for longer term hold, but "dull hold" is correct!

[Lizard]

Not many sellers around for TUR of late - perhaps a result of the Aussie floods. One source here suggesting prices of some fruit and vege items could quadruple there.

Australia's Flood Losses could be New Zealand's Gain

[Lizard]

Announcement of a "strategic review" aimed at improving the share price seems to have a few takers. Not sure that pulling out the $2.50 NTA is enough of a reason to claim it is cheap - that just highlights that the return on capital for this operation is sub-par, even taking into account the growth plans in place.

However, I hold - and picked it in the comp this year - so I'm not too bearish on TUR in the short term. I believe they have established a good footing to grow profits from - and perhaps a strategic review could find a way to free up some of the less productive capital in the business?

[Lizard]

Turners half year result out - down on pcp at NPBT level, partly due to high NZD, but also a notable increase in administration expenses. This extra $7m is only explained by the comment:

Overheads have increased from 2010 due mainly to higher than expected professional fees. These are one-off in nature and not expected to continue in future years.

Presumably that means much of this cost increase is associated with the previously announced strategic review process, which is designed to realise value. So the update to the review is:

STRATEGIC REVIEW
As investors are aware the company has been conducting a strategic review during this period. The objective of this review is to identify ways in which to get the full value recognition for shareholders. The company is engaged with a number of parties which have expressed interest in the business.

So strategic review, (as is often the case) is really just a euphemism for "find a buyer for the business so our major shareholder can exit"? After all, the market price of TUR's shares might have been quite simply improved by letting an extra $7m slip through to the bottom line...

I guess the price would have to be good to achieve it, but would be disappointing to see old TUR go full takeover to an overseas buyer, given their holdings of NZ property and plant variety rights.

[winner69]

Bloody foreigners again ... and germans at that .... and 185 seems cheap but GPG prob happy

[Snoopy]

Bloody foreigners again ... and germans at that .... and 185 seems cheap but GPG prob happy

The BayWa offer was a 9% premium to the closing price of $1.70 on November 9th. Not exactly generous and IIRC way under the net asset backing of the company. I hope enough shareholders will reject the offer so that this company remains listed in NZ. Other bidders interested but this was the best price GPG could get. I do hope the sales process was robust and not a give away at all costs as happened with the other Turner's (Auctions).

I see in the Dompost that a local oufit "Elevation Capital" have been buying since January 2009 at an average cost of $1.35 per share. MD Chris Swasbrook was quoted as saying.

"We'll just accept and move on. Sometimes it is better to move on in these situations and that is our plan."

Did a quick search on Elevation Capital to find out more about them and came up with this:

"Elevation Capital Management Limited was established in 2006 and since inception has focused on a disciplined approach to value investing. This means as investment managers we focus primarily on undervalued assets, balance sheet strength, and dividends."

Sounds good, but why are they content to sell of this one so cheaply, at a time of historically low profitability, and at well below NTA? Is this yet another concern with a Warren Buffet cover that is really a mask for ill disciplined trading? They should sack their staff and employ Lizard I reckon.

Basically the deal hands over control of the downstream distribution chain and intellectual property of NZ's apple crop to outsider control! Surely not a good deal for growers in this country?

SNOOPY

[Lizard]

TUR got halfway there with "a relentless upward trajectory"... unfortunately, it was for the NZD exchange rate, not their profits or share price!

[winner69]

Most of the management team and oio asking a few questions

Baywa firmly in control

In a year that the nz market has seen really big gains minority shareholders in tur been left lamenting. ......perils f being a minority I assume

Anybody still holding?

[noodles]

It is worth revisiting this one? Eps for the 6 months were announced quietly after hours on thursday night.

Eps = 14c. With a share price at 1.65, we could be in for a massive re-rating once the full year results come in.

Cashflows are terrible, but looking at last years reports, they make up for it in the second half.

Liquidity is poor.

The results included some gains on sale of property.

Any thoughts?

Disc: am holding tur.nz