Unfortunately your helpful post has come to late for many but all can add it to the list that indicates the prospectus was like dressing up a stinky old ram and selling it as lamb.
Printable View
Posted 4 May - Perhaps I should have been less cryptic. Ask any experienced business broker or accountant and they will tell you its common practice to dress up the financials for sale by engaging in a range of profit normalisation adjustments. It would be a very rare set of financials for a small and medium sized enterprise on the market that was identical to those sent to the IRD. I see no reason why it wouldn't be the same with a float like this. If one was going to serve up one's guests a feed to impress wouldn't one "dress up the bird" so too speak ? (Disc: Not Holding, DYOR, not to be considered professional advice).
ha ha I too know people growing chicken on contract for tegal.
To back up Rodgers over dose in hormones/steroids statement.....did you know from hatching to grow a chicken to a size 8 it only takes an ave of 38 days.....eeeeeeew have you seen all the fat that is left in the pan after cooking.....for health and safety reasons please use a drip tray.
It is also interesting to note that both the pork and chicken industries in NZ had a big campaign in the 90's to stop using the words steroids and start using words like growth hormones or growth promoters or growth enhancers.
Private Equity:
Pre-IPO shareholders have only sold down 2.7% of the total number of shares on issue. If there is going to be any dressing up, it would need to be in future periods. But I doubt PWC (auditors) or public scrutiny would allow this behavior. Private Equity (Affinity still hold 45%). DSE got in trouble because private equity ran the inventory down prior to the float. Tegel have been increasing their inventory and investing in the business. There is no doubt to me that there is a strong dislike towards the stock (not just on here). But I think much of the dislike is because Private Equity is involved, but I think if you drill down a little, you can see that this is not something to be overly concerned with. I think once the concerns over Private Equity fade, investors will focus on the fundamentals and appreciate that it is a stable well managed business.
Growth:
Top-line growth over the last 10 year is 6.5%. Not very exiting, but consumer staples never are. People buy Consumer Staple stocks when they want stable reliable earnings and are not overly influenced by the economic cycle. The EBITDA growth is a lot stronger (12.7%) as they have been investing in capital to make their production more efficient. I am in the process of working out what sort of moat the business has. Will report back soon, but welcome any thoughts.
Given that I had to do some housework ahead of the arrival of our latest guest I thought I would pounce on a chicken instead.
Having crunched on a few bones I have a few scenarios for Tegel:
The 'optimistic' one values TGH at $1.575 now, rising to $1.718 a year ahead.
The 'realistic' one values TGH at $1.454 now, rising to $1.568 a year ahead.
I may show interest if the price gets down to the 'pessimistic' one value range.
Best Wishes
Paper Tiger
There are so many well thought out post shared from well research ST members on this thread that collectively paint an extremely strong picture that this IPO is a pig with lipstick on and a blue bonnet.
Thanks to all for sharing.....I came to the same conclusion after reading the prospectus.
At $1.45, it would seem Tegel would be almost close to the 'bargain basement' valuation that is Heartland's share price! ;)
(note the word almost, and that HBL probably has better growth opportunities - or at least this is my view)
It would be most disappointing to see share price drop below what was already a rock bottom IPO price so soon, aside from it being a blow to the holders, it would most likely also be 'of concern' to any companies who were to consider listing... I could be wrong, but I thought there were a few posters who seemed to believe we wouldn't really be seeing alot lower than the mid $1.70's or so?
I'm sorry but you don't know what you are talking about. The use of hormones to grow poultry has been banned in New Zealand for decades, I challenge you to show one single credible report that shows that local grown poultry uses them or where there is residue from hormones in the meat.
The reason those birds grow in the manner you described is due to selective breeding, the feed they given and the type of barn they are raised in.
I am not a broker trying to sell it, I am a Tiger who may at some point want to buy it.
No, at $1.45 TGH is trading on a prospective one-year forward PE of 12 etc.
For that scenario I have a value of $1.57 for a year's time.
(Since I learnt that PE ratios cloud this valuation mind - I take no interest in them)
Given RBD bought NSW recently I wonder what value I would put on RBD too :).
We will have to see how realistic the prospectus really turned out to be.
I have done my sums and I gets my numbers and I am happy with them.
Best Wishes
Paper Tiger