Forum Archive Index - January 2003

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

Hi Pat,
 
>
>>If STU is 'fairly priced' IMO and 'reasonably cheap' in yours (on a 
>>yield of 6.6%), what does that say for WRI on a yield of 15%?
>
> 
>Good argument, Snoopy.  But, are you still confident on a yield of
>15% for WRI given (1) awful spring, 
>
>

It wasn't so bad in Canterbury, although I've had alarming reports of 
how Dunedin looks.   Marlborough is bad, but that won't necessarily 
do the grape crop any harm.  Not sure about Southland, which is the 
really important area for dairy.  My spies don't go down that far!  
Not sure about the North Island either.  Do they still do any 
significant farming up there? ;-)

>
>
>(2) current forex rate, 
>
>

Yes the $US rate is a bit higher than expected, but I'll start 
worrying if it hits 60c.  IMO 55c is not over the top.  Remember WRI 
management came out and warned the market about the drought 
conditions.  So far no press release regarding the rising exchange 
rate.

>
>
>and (3)
>IMHO, questions on management's commitment/ability to re-engineer
>internal processes and achieve cost-out?
> 
>

I agree that current management have yet to prove themselves in a 
downturn.  But I like what I read in Dr Freeth's speeches.  I *think* 
he is on the right track.  But if the track was certain I doubt if 
the WRI shareprice would be nearly as cheap as it is.

>
>
>I like WRI as well but I'm not sure whether I would place a 'buy'
>now (at $1.17 or so).  Even if I felt confident on the sector
>(despite past spring and NZD value), I'd wonder if Allied Farmers or
>Will & Kettle are better options and, in particular, Pyne Gould
>given the fact that the South Island has had a significant increase
>in the number of new farms vis-a-vis North Island.
>
>

None of those others are as big, have the networking to roll out a 
'Solutions Strategy' or have all that promising biotech research 
going on in the background.   People who buy WRI at today's 
prices are getting that 'for free'.  Furthermore WRI have reversed 
one of their big mistakes and are now offering bridging finance to 
farmers again. ,WRI is the pick of the listed rural 
retailers.

You asked if I was still confident of that 15% yield.  I know the 
dividend payout last year was made in anticipation of a downturn in 
2003.  I know WRI have very low debt.  I know that after several poor 
years prior to the last, Dr Freeth won't want to disappoint the 
market this year.  My belief is that the 15% dividend yield is still 
intact.  But if it was reduced to, say 12%, this wouldn't be a 
disaster as I see it.  Even a 12% yield is still very good.

>
> 
> PS: Sorry changing the sector... from steel to agriculture :-)
> 
> 
No problem.  All fixed ;-)

SNOOPY


-----------------------------------------------
Message posted by Harry Tennyson
 using Pegasus Mail 2.55
I have Word 97 to read attachments
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