Forum Archive Index - August 2002

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Ben,

> 
>I remember a great analysis you did on Wrightson some months back. 
>I'd be interested in hearing your views on the latest profit
>announcement:
> 
>

Yes, I usually shy away from making 'recommendations' as what may be 
a buy for the income investor might be a sell for the growth investor 
and vica versa.

However, I certainly hope some of the sharechatters took up my 
suggestion and got on board WRI a couple of months ago!   15% yield 
going into the third best year for farming in two decades with the 
company being a market leader, and having low debt?   There is no 
such thing as a "no-brainer" investment decision, but buying WRI two 
months ago would have to be just about as close as you could get.  
There were plenty of folk fretting about the general election at the 
time but that with hindsight was just market noise, and allowed 
investors who aren't distracted by such things to pick up some 
bargains.

The WRI result was always going to be good.  The question is what 
happens from here?  The problem with WRI has traditionally been 
return on equity.  It hasn't been flash and that means that it can be 
a fine balancing act between making a strong profit and a loss.  My 
other concern with WRI is the board.   They are lacking in diversity 
of experience.   Nevertheless, I think CEO Alan Freeth has done a 
good job.  I see the reduced turnover as encouraging.  It indicates 
WRI are focussing on profits, not sales at any margin.

Nevertheless, there is still no external director of WRI with a 
strong retail background, and no-one there with a good science 
background to independently assess, for example, the risks of their 
genetically modified grass project.  I get the impression that WRI 
had a good year 'in spite of their directors' and not because of 
them.  It will be interesting to see if the non-executive directors 
try to vote themselves a bonus share scheme at this years AGM as just 
reward for all the hard work they have done (cough, cough).  It's 
easy to surf a rising wave.

I'm quite happy to hold WRI at these levels.   I don't see a huge 
upside from here, but then again if WRI is to be brought into line 
with some of the other rural retailer shares on the market, perhaps 
there is a bit of swell in the old surf yet?   Maybe Phaedrus would 
like to comment?

SNOOPY


 


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