Agree that SEK has a clear strategy that they are executing on which should drive future earnings growth. Even without growth, the current share price to underlying NTA and dividend yield are attractive relative to other opportunities on the NZX.
Some musings on SEK:
Published NTA is arguably understated. SEK policy is to revalue land and buildings on a three year rolling basis, meaning in times where values are increasing there is a time lag until these higher values are recognised in the financial statements. Adding weight is the transaction that T&G did late last year to sell and lease back a packhouse, cold store and storage property in Hawkes Bay to PFI at a yield of 4.4%. Admittedly a large site at 9.56 ha however the Dec 2020 financial statements indicate that SEK land and buildings are carried at capitalisation rates between 6.25 and 10.5%. Therefore, I suggest current market values will be somewhat higher than current carrying values.
There appears to be a large seller(s) of SEK shares at present, which is keeping a lid on share price growth. The shares issued as part of the two completed and one yet to complete amalgamation transactions probably means that there is a bit of an overhang that is likely to persist for a while yet - the NZ Fruits transaction will result in a further $10m of shares being issued, a chunk of which will no doubt find their way to market. For a longer term investor, this presents an ideal buying opportunity at present and over the coming couple of months.
The largest shareholder, Tomlinson Group Investments Limited, did increase their shareholding by 330,000 odd shares in October which is a positive sign.
There is only a small number of institutional shareholders on the register - it will be interesting to see whether this changes going forward. If there is a share overhang, maybe this provides the opportunity for greater institutional involvement as these shares find a new home.