Originally Posted by
Snoopy
I couldn't help notice the pearls of wisdom being passed off over the last day or so on this thread by many of the regulars. But how wise are they with respect to PGW? Perhaps it is time to have a look.
People keep bringing up Feltex when another company looks weak. But there is a huge difference between FTX and PGW. Firstly on a day to day basis PGW is profitable, whereas Feltex wasn't. And PGW has a year and four months to sort out it's banking issues. Not the six months or whatever it was that Feltex had.
The figures aren't that hard to find. Thanks to the sleuthing around by people like Chalkie and Winner the figures *have* been found. That some of the details on the balance sheet are unclear is a reason to do your homework. Not just take the easy route and give up.
The share price will move in anticipation of what the farmers are going to do. By the time farmers actually start spending, it will be far too late to get into PGW.
Ther are two forces at work here. On a valuation (PE) perspective, PGW is quite modestly valued. Often in a cyclical industry the PE can go very high in the depths of a downturn. At 7 to 9 the PE is not high at all. You could argue from a day to day business perspective the PGW price is already at rock bottom.
OTOH from a capital investment perspective, if there really is going to be a 1:1 share issue at 50c you could argue that the share price is too high. Why buy shares now when you night be able to pick them up in a rights issue at 60 or 70 cents? The problem is despite what Chalkie says a share issue is not inevitable. To be successful you will need at least one major shareholder to underwrite it. And I can't see either PGC or RPI doing so.
Personally I think the share price might go lower. But I am not sure about that. And in the short term the upcoming traditionally large end of year dividend should support the share price.
Oh and the survival of PGW is not in doubt. What is in doubt is a potential dilution of equity of the existing shareholders. Companies that are making profits generally do not go bust, no matter what direction the share price is moving.
This is where you need to get things into perspective Biker. Norgate has stepped down from the chair. IMO it is extremely unlikely Norgate will be driving the direction of PGW for quite a while. While waiting for that 'dust to settle', perhaps you might ponder the 'divisional profit chart' that I published on 5th August on this thread. In there you will see that by far the biggest contributor to profits is the seeds business. And Norgate has never had anything to do with that.
SNOOPY