Which was a bit more accurate than your 75 cent'sh forecast. (smiley face).
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Breaking through resistance was good, filling the gap the next day was better - very unbecoming for the ticker ( has to be related to Forbarr upgrade )
Looks good, fundamental value is still there at current levels, providing the very conservative forecast of "increasing EBITDA" is met ( nowhere to hide if they don't )
I joined in the fun yesterday - Still wary of when UBS may want to shed some of their holding.
Looking good but still a disconnect between chicken prices here and rising overseas prices.
Notice drumsticks are still perennially on specials - as low as $2.99 per kg, and boneless breast meat is now selling for $8.99 - $9.99 kg vs around $10.99 - $11.99 kg being the norm a year ago.
Still, always happy with a rising sp!
Without any notice it has appreciated slowly. So far TGH has demonstrated its ability to generate sufficient levels of cash flow, while keeping their debt levels an appropriate level. After tech play, it is a time for some chicken play(especially for attractive stocks). 52 range 1.05 to 1.59.
Chicken stocks are not just chicken plays. Poultry uptake is forecast to rise faster than pork and beef worldwide in the coming decade. Different countries have different strength in the same industry. Low feed cost is one of the main drivers. Some countries will have growth in the poultry industry at lest for next 10 years. Global chicken stocks have more legs. There could be few multibgaars globally. After USA and Europe, we find some well manged locally grown poultry companies in the Asia-pacific region. Will TGL also become one of the growing poultry companies in the world? I was closely following some poultry stocks globally during fast few months.
Some fund managers are no longer classifying strong poultry companies as traditional chicken plays.
scary thoughts from that phrase.
Attachment 9254
:lol:hahaha then yuck what a horrible genetic meddling possibility thought :eek2:
Cut the head off and it could be the current governments mascot.
Good afternoon
Tegel currently exports approximately NZD 100 million product to Australia, the UAE, Hong Kong, the Philippines, and the Pacific Region.
We source our feed from farms globally – from the likes of North and South America, Europe and Australia. So we are able to respond to rising prices in the event of a drought in Australia say, to source it from elsewhere at a lower price. We are also able to adjust the feed mix, eg replace corn with sorghum or adjust the amount of wheat etc. We don’t specify what the total feed costs are.
From our latest annual report:
“To secure input costs, the Company hedges its exposure to certain commodities and foreign exchange risks denominated in US dollars. The Company also uses foreign exchange contracts to hedge revenue from export sales denominated in Australian dollars. All foreign exchange forward contracts and commodity contracts are executed in accordance with the Board-approved FX Hedging and Commodity Risk Treasury Policies. As at 30 April 2017, 89% of US dollar raw material purchase requirements and 77% of forecast Australian dollar receipts were hedged for FY18.”
Hope this helps.
- Take away from this is Tegel have very limited exposure to the negatives that could arise out of a weakening NZD.
Thank you for some information. Still I am studying their business model.
World cereal stocks by the close of seasons in 2018 are now forecast (FAO) at a new all-time high of 720.5 million tonnes. According to the IGC, the forecast for world total grains production in 2017/18 is raised by 19m t m/m (month-on-month), to 2,069m, second only to last season’s record. Therefore, we cannot expect sharp rise in animal feed even in 2018.
https://genevajournal.com/tegel-grou...ing-key-level/
https://simplywall.st/news/2017/10/0...stocks-to-buy/
Following is one of the top winners in the poultry world so far in 2017.
SAFM (Sanderson Farms) It broke several of 52 weeks high and established a new all time high as well. It peaked at an all-time high of $166.65 and currently trading around $ 148.
52 week 74-07 – 166.65
One good thing is they do hedging to minimize risk. Hope they will hedge correctly. Lower NZD is good for their exports.
Pak n sav drumsticks @ $5.99kg last Friday suggests increased cost or surplus raw chicken been used for higher value items instead of been dumped. Always wondered why sell raw chicken if you can get a better price for value added product which I think Tegel is trying to establish with their new product range. Heard new boning machine recently modified to handle various chicken sizes more efficiently which should increase raw chicken yield .... imo
GS new TP $1.70
Disc hold
It was due for rally. Now is has risen from its recent 52 week low 1.06 to 1.45. It is closer to its 52 week high. However, currently it has a below average ROE. It has PE 14.89.Will they have an above average ROE in the future?
very quiet here, bellow is news from NZ Herald:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11944809
plan for chicken farm to create jobs in Northland
Perhaps gain some market share from Mainland?
Earnings out on Wednesday, May - October prices have been less volatile this time round...
Now all they had to do is more or less hold onto market share.
Remain cautious with this one though, I remain open to the idea a 5% volume lift is on the table.
1H17 $ CHICKEN TGH SP 31/05/16 $15.18 $1.65 30/06/16 $14.35 $1.65 31/07/16 $14.44 $1.67 31/08/16 $14.41 $1.71 30/09/16 $13.52 $1.64 31/10/16 $13.42 $1.54
1H18 $ CHICKEN TGH SP 31/05/17 $14.16 $1.10 30/06/17 $14.35 $1.15 31/07/17 $14.81 $1.24 31/08/17 $14.21 $1.25 30/09/17 $14.67 $1.27 31/10/17 $13.74 $1.38
Attachment 9300
Not incredible... lackluster exports.
I'm sorry that's a bloody awful result. Last year was shocking and this year is even worse than that half. They are way behind prospectus forecasts. Glad I got out. Back down they go.
So their target for FY17 was 44m NPAT which they missed by a country mile. Now they've produced 14.8m NPAT in the first half indicating they'll be lucky to beat last year's poor results given the second half of FY17 was a bit better. Meanwhile Inghams seems to be doing OK in this 'competitive marketplace' up 10% on their list price.
This thread has seen the prospectus about 100 times, a flat first half was expected - we got a minor underperformance.
Domestic market performed well, we can see where this result fell short, let us imagine export revenues were flat - we would have seen 2-4% EBITDA growth.
But for the export performance this was actually alright.. they say this was "as expected" not so sure about that though.
"higher costs have been incurred due to additional investment to drive growth, particularly in Australia as we expanded the export sales team, incurred higher distribution costs and established new product lines in new channels" - hmm
TGH remains solid and they have continued to show dominance in the NZ market...
I thought exports would remain stable, so in that regard it underperformed.
I am sure plenty of people shared my same thoughts, has me contemplating taking my profits and buying back later.
At the end of the day brokers will likely continue to support and funnel clients into TGH.
OUT AT 135
Yes a solid company. Will continue to make decent profits.
Punters get carried away about all this talk about investing in their brand, innovation, new products and investing to improve efficiencies etc and assume that all those things will boost profits (markedly?)
In reality those things are the cost of staying in the game (don’t do them and you gradually die) and really only maintain profitability. After all no matter how much they talk about premium products aren’t they still dealing with a commodity product. That’s why they continually ‘have ongoing challenges around pricing’
Current performance plus or minus a bit is about as good as its going to get I reckon.
same comments apply to Metro Glass
Dividends are the only reason you invest in ‘solid’ companies on the understanding what’s touted you are not buying into a ‘growth’ company.
But if short term deposit rates increased to 5%/6% would you pleased with the yields ( and probably not happy with lower share price that would happen)
Nice to know that we somehow share the same sentiments when we identified companies for their dividend giving attributes :cool:
So how would we counteract the going down sp due to the result which is still okay but not may please everybody? Gut feel says we should be buying more of it in due time when the price is low enough to our liking :) Sell more of it now guys and thanks.
I don't own either but clearly one has a superior dividend yield to the other. Seat of the pants to me suggests Tegal has plenty of room to fall given they also touted themselves as a growth stock.
Both floats have been epic fails and investors told a lot of disingenuous stories and half truths.
I warned a while ago on this thread that FY17 profits although incredibly disappointing were predicated upon record low fuel prices and am not surprised to see the biggest gaoin in expenses is in the distribution area http://www.sharechat.co.nz/article/7...-estimateshtml
Worth noting that diesel prices have only recently taken another serious leap upwards.
Beagle your post re Hands remuneration - $768,000 doesn't seem much in these days of greedy CEOs
They say domestic share held in this half (Share based on scan data and management estimates)
their volumes were up 0.8% (assuming this volumes sold). Stats NZ report poultry production for the same period (almost) were up 8.9% on pcp
Don't know what this means - maybe Tegel lots of extra chicken meat in inventories
Have had a chance to review the results.
Too many things to dislike:
1. Yet another profit downgrade - third one. Hope springs eternal this will be the last one?
2. Outlook comment is most uninspiring: "Looking at the remainder of FY18, we will maintain our domestic market share in a challenging pricing environment. Our Australian exports have diversified into more channels and customers. We continue to work towards exceeding FY17 underlying EBITDA."
Protect domestic market share at low(er) margins if necessary seems to be the message, Australian sales have gone backwards so let's try other channels and products and we are not that confident about achieving profit forecast.
3. Sales are static but receivables and inventories have increased hugely (even allowing for seasonal build up if true) - not a good sign.
4. Most disturbing imo, dividends have been paid using debts. Echoes of Feltex.
Out of here.
As mentioned yesterday distribution costs up by millions compared to the pcp. Worth noting that the current diesel price is quite dramatically higher than what was prevailing on average throughout the pcp last year and higher than the most recent half year too. I think there's plenty of potential for the full year profit to be yet another disappointment and be less than FY17.
Food for thought for holders while eating their chicken club sandwich for lunch. EPS last year was 9.52 cps. I think its clear now you've been sold a pup and all that talk of growth is nothing but that, "talk".
Even if current period distribution expenses don't jump millions more compared to pcp where's the growth ? Legendary investor Benjamin Graham reckoned a fair PE for a no growth company is 8.5. On that basis 8.5 x 9.52 gives fair value for Tegal of just 81 cents.
On that basis the dividend yield would be roughly the same as that other recent float that talked a lot about growth and has also delivered none, MPG.
By my reckoning both companies deserve to trade around 80 cps, maybe 90 cps if we're being kind and attributing a PE of 9.5 due to the current very low interest rates.
C’mon beagle you know Ben’s formula was relevant decades ago but not that relevant today.
And surely a ‘solid’ profit making company investing to stay in the game (investing to survive is how some describe it) will achieve some modest growth into the future. That growth probably coming from punters eating more chicken if nothing else.
A DDM calc using say 2% and 3% growth gives a value of 94 cents and $1.07 respectively
That’s how I see it
Yes, No, Maybe. 2% growth in top line sales in line with inflation..so no real inflation adjusted growth. Yes the prevailing risk free interest rate in Ben Grahame's day was 4%, a bit lower now so maybe we stretch to a no real growth PE of 10 which on 9.5 cps means fair value is 95 cps, see we're not that far apart :)
Is it really that 'solid'...just keeps disappointing the market time after time...
P.S. Even though Tegal rhymes with Beagle this hound is not having a bar of investing in it...happy for Mrs Beagle to invest in it at the supermarket though !
So paltry growth really although the dividend isn’t chicken feed or paltry.
Poultry volume growth
48.7k tonnes
UP 1% YEAR ON YEAR
The theme which kept me long Tegel was the recovery in prices - not looking all that likely anymore.
Was not expecting exports to let them down this badly, really would have been a solid half if on par with domestic.
+20% back to where the market valued the forecast being hit - all they have to do now is progress in Aussie as they said they would do :confused:
Not cheap enough to get me back in... plenty of other opportunities
Exactly.. NZ chicken has nothing going for it in the export field ... Nothing...
A company that was oversold from the beginning.. Cleverly enough to suck so many " Experienced " investors in ..
Good only for possible dividends.. Which are not guaranteed ..
Disc. Never a holder.. Probably never will be .. Quote " Plenty of other opportunities ""
A small rise in the last 2-3 trading days, is chicken on the comeback?
perhaps some people wanting a nice holiday dividend to recoup those xmas expenses
Shortage of chicken in the USA, KFC has had to close stores because they cant get any. Maybe a flow on effect may follow, pity Tegel cant supply to them.
I believe its the United Kingdom
https://www.ft.com/content/2f98f57e-...6-4a6390addb44
Company blames ‘teething problems’
but I thought chickens didnt have teeth
No shortage of chicken but a stuff up by the new logistics contractor DHL.
Bit of misfortune for Tegel
Suppose ammonia and dead chickens don’t mix
That link has expired W69
Download Document 361.93KB
The company is working to quantify the one-off costs relating to the disruptions. At this stage theeffect on Net Profit After Tax (NPAT) is estimated to be between NZD$1.5 million and NZD$2.0 million.
Hope Ingram’s not winning in NZ at Tegel’s expense
In spite of market dynamics remaining challenging in NZ they say — The company said New Zealand performance improved in the first half, supported by growing poultry volumes and dairy feed demand, with revenue for New Zealand $191.1m for the half, up from $185.5m for the first half of the 2016 fiscal year.
http://nzx-prod-s7fsd7f98s.s3-websit...741/275186.pdf
Big supporter selling out? Had enough?
Proposed factory near Dargaville sounds gross
John Hart (@farmgeek)
28/02/18, 4:29 PM
Tegel is considering burning 56,000 tonnes of chicken manure each year, plus floor litter, plus about 40 tonnes of carcasses (at 3% mortality).
https://www.nzx.com/announcements/315217
Another profit downgrade but wait, there's more - $8m to $10m of one-off costs.
Otherwise, all's fine and the company is growing volumes!
Just gets worse doesn't it.
The only thing going for it is probably a consistent dividend yield.
This really is no "clucking" good.They really don't get it do they ! What they need to tell the market is what the annual savings will be from the organisational review. No investor cares about whether their management processes are better or not !Quote:
As noted in the FY18 Interim Results, an internal restructure of the business was completed in February 2018 resulting in roles being consolidated. Although there will be a short term cost impact in the FY18 year, there will be ongoing benefit from the improved organisational structure.
For instance, If they said we're going to save $2m per annum from our extremly bloated head office costs the market might say thank goodness for that !
Tegal and Beagle rhyme but I wouldn't have a bar of this flea ridden mutt !
Actually looking around my local supermarket,free range products seem to be a massive growth market,at least Tegel are aware of this and going forward should reap the rewards.So yes not a good year but perhaps a glimmer of hope for next year
The disguised the downgrade amongst the one offs... classic.
They are stuffed until the price cycle lifts whenever that will be.
“In a separate incident, there was an ammonia leak at the New Plymouth plant which resulted in inventory losses.”
I assume inventory losses means lots of dead chickens overcome by ammonia gas. Not a nice way to go I would have thought.
This is the fourth (yes, 4th) downgrade according to the NBR - I have lost count myself.
As for disguising, this company thinks it is very smart in trying to hoodwink the market with all kinds of trickery:
1. Referring F17 last year's results as being for "53 weeks" vs 52 weeks in F18 consistently as one excuse for profit drop,
2. Adjusting the F17 results down to 52 weeks so that NPAT is $31.7m vs $34.2m and EBITDA $72m vs $75.6m.
A simple calculation shows the adjusted $31.7m should be $33.6m and EBITDA $74.2m vs $72m.
The NPAT expected in F18 of $25m to $27m = 20% to 26% Downgrade!
This is what the company said at its AGM in June last year :
"So looking at FY18, based on the current market conditions, holding domestic market share, with continued domestic consumption growth of 4-5% and continuing exports,
overall, we expect to deliver an increase in underlying EBITDA from the level at FY17."
"Tegel is a growing business, the company is in great shape and we are excited about our future prospects."
To quote the Colonel of chicken: FCK
I couldn't agree more. 10 times absolute max. Management scare the wits out of investors with huge so called one-off's and don't even have the decency to say whether the dividend is safe or not or even mention the quantum of the head office cost savings. Beggars belief and really highlights the inexperience of this company in dealing with the investing public in my opinion. It occurs to me they really don't care. The impression I gather is as long as their snouts are in the trough gobbling up as much as they can, shareholders are just a nuisance inconvenience.
Trust us we know what we're doing. Yeah right ! is it too early for a Tui ?
I just sold all my TGH. Fed up with this stupid chicken.
Wasn't impressed with Phil Hand at the AGM last year. Someone asked for more clarification on guidance and Phil refused to give any more detail.
Will be re-allocating funds to more OCA.
I think OCA has more chance of getting to 1.55 than TGH does.
Disappointing for holders – makes the comparison with Inghams even more striking.
Disclosure: hold ING
$1.70 for MPG and $1.55 for TGH.
Article behind the paywall today on NBR. Basically calls the downgrade a shocker and goes on to say that THG has disappointed investors EVERY time it has reported.
As I warned at the outset of this tread, this company was floated when feed costs and distribution costs, (fuel) were at record cyclical lows.
I think the size of the second half downgrade is a clear warning as to this companies future sustainable profitability.
Its clear to be this is headed lower and the level of dividend is at risk. Management asleep at the wheel and trying to claim that profit growth will resume next year lol.
I suppose it will if they have less annual so called "one off" costs next year.
yes ..this is what Inghams said a week or so ago re NZ
In spite of market dynamics remaining challenging in NZ they say — The company said New Zealand performance improved in the first half, supported by growing poultry volumes and dairy feed demand, with revenue for New Zealand $191.1m for the half, up from $185.5m for the first half of the 2016 fiscal year.
An Ingham contract farmer told friend of mine that he is very happy with his contract - Ingham takes care of everything related to the breeding, processing and sale of the chickens and he has to just make sure the farm properties and machinery/equipment are in top condition (especially the air-con!).
Tegel's contract is more generous but he has less confidence as they have been very aggressive in adding quantity in recent years.
Guess the chooks are coming home to roost for Tegel - all the increased volume from contracted farmers that they are obliged to take but in a market that's not growing as fast?
Sign of the times - boneless breast meat on sale at $6.99 at Mad Butcher and $7.99 at the local Pak n Save. You would struggle to buy that at under $10 a year ago.
Stats NZ Food Price Index has chicken breasts at multi year lows
Downward trend in price continues
Cant be good for Tegel
Tegel did get a bit of a hospital pass on listing. A price war with Inghams combined with i think both increasing production while feed prices at a low and still at a low i think. Their time will come when the cycle changes but who wants to be holding in the meantime.:mellow:
I actually think Tegel represents pretty good value at the moment. A market cap of 320m for a company that has and will be around for a very long time. Sure its underperformed significantly but I think that has now been factored in.
It pays a good dividend which should be sustainable and given the current SP any growth at all would be a bonus as its only an underlying PE of less than 10.
However probably safer to wait until they at least deliver one result that isn't behind market expectation.
Chickens on specials again at local Pak n Save - chicken legs at $4.99 per kg and drumsticks at $3.99 kg.
No end in sight to low prices (yahhhhh!) and global prices are dropping now as well.
A scathing article by Shoeshine- Jenny Ruth in the NBR today
Any kind of excuses by Tegel directors and management to try and bluff their way out - to cover their inability to grow profits and grow the company - what they promised to get IPO $$$$ out of punters in NZ (courtesy as well of Forsyth Barr of Feltex, Wynyard and Credit Sails fame).
75 cents is where it will go - all the supermarkets have drumsticks on specials this week it seems, as well as the local shops and the ever reliable Mad Butcher. Ain't no sign of the discounting chicken war abating.
I and others correctly observed that at the time of the IPO chicken feed costs and diesel costs, (distribution costs are a huge factor) were at cyclical lows.
Its clear the promoters timed the IPO well. What's also clear in terms of their talk of growth is they applied very liberal amounts of lipstick to a pretty ordinary looking pig...something seasoned investors have come to expect from private equity floats. Talk of overseas growth was just that...talk, and that's all it will probably ever be in my opinion. Who's going to 60 cents first, this or MPG ?
Tegel sell a commodity product into a price-sensitive market.
Buy at the right price, and it's like buying an electricity company.
I don't think we've seen the right price yet.
Ingham actually delivered a very good result (beating consensus forecasts on earnings, dividend, cash flow and debt reduction), were candid about the impact of rising costs when their hedge contracts expire and had a credible plan to address at least some of the impact. ING's management strike me as being very different from TGH's .... so far.