Inghams selldown sizzles
Tegel has not performed as expected, says analyst
Private equity company TPG sold down its stake in Australasia’s biggest poultry producer, Inghams Group, this month, raising the question: when will Tegel Group’s private equity masters follow suit?
Australasia’s two biggest listed chicken producers share similar histories. Inghams listed on the ASX in November 2016 at A$3.15 and Tegel listed on both the ASX and NZX in May of that year.
Inghams has consistently traded above its issue price but Tegel, which debuted at $1.69, has struggled to perform and closed yesterday at 81c.
TPG’s sale of 55 million Ingham shares this month was easily absorbed by the market.
Private equity company Affinity retained a 45 per cent stake in Tegel. The escrow period limiting post-float transactions ended in June last year but it appears that Affinity is holding tight.
The view in the market is that Inghams has performed while Tegel has not.
“Inghams seems to be more advanced with its product innovation and in its relationships with key customers,” Harbour Asset Management portfolio manager and analyst Shane Solly said.
“Tegel’s performance has not been as expected, and it appears to be because its competitors are doing a better job,” he said.
“Inghams seems to have captured market share in New Zealand and Australia and they are executing well, with great product development,” he said.
“Tegel still seems to be working its way through some of these processes.”
Tegel said in February that its New Plymouth processing plant was affected by ex-cyclone Gita due to water supply issues.
An internal restructure of the business was completed in February resulting in roles being consolidated. Although there will be a short-term cost impact in the FY18 year, there will be ongoing benefit from the improved organisational structure, it said.
Tegel expects that total pre-tax non-recurring costs in the full year of 2018 to be about $8m-$10m.
However, it said domestic trading continues to benefit from growth in the free range and value-added meal solutions categories.
Hold the line
Talk has gone very quiet on the Vodafone New Zealand float, leaving market players to speculate that it has been put off until the second half of this year or even next year.
The non-deal roadshow which took place in November last year suggested that the company would likely list in the first quarter of this year but that hasn’t eventuated.
Any float would have to wait until the latest set of financials are out now.
Vodafone New Zealand has a March 31 financial year and in past years it hasn’t released its full-year result until August or September, although they could probably be released sooner as part of an IPO prospectus document.
Jeremy Sullivan, an investment broker with Hamilton Hindin Greene, said he would have expected some news by now so it wouldn’t be surprising if the float was pushed out to next year.
Another analyst said it had been “very quiet” on the Vodafone front.
While the float could go ahead in the second half of this year the analyst suggested that the longer the silence the more people start to question whether it was going to go ahead at all.
There is some suggestion that the delay is linked to the result not being as good this year.
Last year the company made a full-year profit of $40.2m in the year to March 31, 2017, which was a big turnaround from its 2016 year in which the company made a loss of $18.3m.