Wynnstay Share Discussion Threads

[pireric] 12/6/2020 10:23

FYI looks like they're also selling down at ZYT and causing weakness there and at WGB too

[studentinvestor13] 11/6/2020 17:46

Welcome zoolook. It is easy to be too fussy over things here and to ignore over a decade of progressive dividends and a big discount to NTAV. In a couple of years time this will have looked like a steal. We need to get Brown Shipley out of the way to get off this floor of a 6% dividend

[zoolook] 11/6/2020 17:07

Classic value share of the type Stephen Bland in early Motley Fool would write about on his PYAD metrics combining low Price(PE), high Yield, strong Asset base (NTAV) and low or no Debt. Of these PE he regarded as the weakest metric and price to NTAV as strongest. Also there is the potential value ‘outer’ of activist interest from DBay. After reflection I’ve bought back in.

[gateside] 11/6/2020 15:53

Yes there was a typo, I meant why has WYN underperformed.Yes the greater diversification of NWF is the main thing I can see.

[elsa7878] 11/6/2020 14:03

WYN has underperformed. NWF has an oil business, in which its gross margins go up as the oil price goes down. So they have had a few great months.

[gateside] 11/6/2020 10:12

Good discussion here. So why has WYN seriously out performed NWF in the last few months?Tempted by WYN for the 5.6% yield. Trouble with companies like WYN they are at the whim of so many factors out of their control, like the weather. Margins are very narrow too.

[thorpematt] 10/6/2020 23:43

SI,
Many thanks. The PER 12 was mentioned in the Aim prospector article as a possible fair valuation.

Thank-you for your notes - I had been reading the annual reports but due to a migraine today, not got as far as I would like. I did see some of those keys you mentioned in the Chairman's statement and as I read more I, like you, will make a judgement on the validity of the "excuses or reasons" for faltering earnings.

It sounds like this could be a business that "any idiot could run". To some extent i felt Dbays involvement here could be indicative of that. Room for improvement means that both growth and margins could improve together and that would improve both variables in the PER calculation.

P.S. no apology needed for being blunt. I apreciate all well-considered views.

[studentinvestor13] 10/6/2020 19:37

The seller is clearing Brown Shipley under 3% and must be out soon to allow this to resufrace. TPG is riproaring.

Thorpe where is this on a PER of 12??? They did 31p earnings last year on a basic basis and 33p on a adjusted basis so we are on 7.7 PER... I agree no big earnings growth but if I can roll out 30-35p a year before acquisitions add to that then BG would say this stock is far too cheap and that is what they have done.

The last year margin was effected by rubbish seasonal weather for farmers and commodity price inflation.

A lot of their business is wholesale trading (Grainlink) and getting a margin so inflation increases revenue without increasing ebit propotionately which means the margin was lower last year.

It does not mean the business is really lower quality than before and ROCE on that is a bit misleading as an indicator.

however you are right because this this entity has not been run with a keen eye for costs. For the first time in the annual report lasy year they said they have started a cost saving program 'a key feature of the year was the introduction of cost reduction and efficiency programmes. Our investment across manufacturing, distribution and systems will support improved efficiencies and is ongoing'

I think this is one of the most predictable earnings businesses there is which makes the dividend yield exceptional. There are huge barriers to entry and enormous scale is needed to make decent profits. The relationships with farmers are an enormous intangible.

others can speak their minds but for me the story is seriously straightforward. Weather has hurt the stock over the last year with the profit warning causing a big drop and then covid created a false low at 200p when it was stupidly cheap. Because of a seller you can still buy at a big discount to net assets which are growing every year because the company is consistently very profitable every year on this market cap with a very robust but boring market position and you get a yield of close to 6%.

They should bother to enhance their margins over time with doing cost saving programs they have neglected in the past and now seem to be doing. The stronger balance sheet will help with either more dividends or more acquisitions to add to earnings.

This is my personal view sorry if I have been blunt and I know you are looking at the stock to analyse and may be invest. I hold and prefer NWF as a business but not even a smidgen close in investment terms where I far far far prefer WYN

[thorpematt] 10/6/2020 00:04

Eric,
Thanks. I apreciate your considered post. I took a look at AP's review. It made a balanced case for purchase, although as our studentinvestor will no doubt tell you, Ben Graham would NOT advocate a PER of 12 for a non-growing EPS.

Last year's op marin was 1.5, against a history of circa 2. This, along with falls in ROA, ROE and ROCE do not instill confidence that the company has pricing power that we'd like. Unless we have specific cause to believe these are one-off falls this has to be a concern for me.

Again (as it often does) we can go back to Ben Graham. He would warn against simply extrapolating past performance and pojecting it into the future to asess likely EPS returns. In his book secuity analysis (any even better book than his more famous intelligent investor IMO) he explains how projecting predicted earnings is more a qualitative assessment than a quantitative one.

So with that in mind I am trying to understand the story. Is WYN a company in need of adjusting operations to enable greater margins (beause if they carry on in downward direction there is not much room) OR are these recent falls in key metrics the result of a clever use of funds which re-positionin the business which will actually see a reduction on regular cap-ex for example, an increase in pricing power or a reduction in static ovrheads.

For the record I am interested in a long position but recognise that others may have answers to these questions or at least some insight. AP's review is mostly just a summary of quanatatative factors - Useful of itself but an understanding of any strategic plan of action is where I am seeking clarity.

[pireric] 09/6/2020 06:53

The operating margin element is a little disconcerting at first, but a lot of that is merely representing predictable trading margin. Aim Prospector wrote a good article earlier in 2020 - if you go back through history and public records, this company has always been profitable within a fairly narrow band of operating margin. Normally a low operating margin is a bad thing because you're always one step away from a bad year and profitability collapsing - that's not true of companies in this space like WYN.

Short term considerations aside around an active seller, this is the lowest rated the company has been since the Global Financial Crisis on an earnings perspective, and ever I think from an asset value perspective. It's also the widest discount to NWF and CARR. You also get an over decade long unbroken streak of increasing dividends each year with a dividend yield (I reckon 5.5%) that is pretty much at the highest level it has ever been with that dividend covered over 2x by free cash flow generation capability.

Boring company, but obvious value.

Eric

[thorpematt] 08/6/2020 23:46

The wafer thin operting margin always freaks me out here. Do investors here think that increased COVID expenses are liekly to erode this further (If only temporarily)?

Is there any positive counter arguement?

I have no concerns over solvency but any risk of an unexpected miss on EPS will give a further downward pressure on the share price. The daily chart here is truly dreadful. The downtrend from early 2017 tells its own story in Mr. Market's assessment of the company.

Such charts can be pre-curser to turn-around and huge value but my concern is that there is a little more negative still to come?

[studentinvestor13] 08/6/2020 15:23

Without forage, better get buying the animal feeds mustnt they ! Ben Graham would say buy the net nets and close your eyes and wake up in the future. The only reason this is down here is there is a seller. Once they are gone like at TPG this will let loose

[elsa7878] 08/6/2020 14:18

Terrible time for farmers. Too wet in the winter and now desperate for rain. Not good for cereal farmers and shortage of grass for cattle too. Some years they can't win. NWF is ok as they have an oil business that sees their margins go through the roof with low oil prices.
I gather Polish beef with lower welfare checks is now landing on our plates. Will it be chlorinated chicken from the US next?
This should be a great hold and tuck away share.

[studentinvestor13] 08/6/2020 11:46

I am taking chunks today for the duo of income and asset value and business must be good as farmers take care of their herds in this environment to keep the food supply chain functioning. I hold some NWF which is better but not even close to this cheap. Buying 60p in the pound on assets. A Benjamin Graham net net. A value investors like myselves dream

Glasson Grains normal production also
hxxps://www.insidermedia.com/news/north-west/sales-pass-125m-at-animal-foodstuffs-firm

[zangdook] 22/5/2020 09:20

OT Wonderful, but they still don't belong in the "paying dividends" list.

[creditcrunchies] 22/5/2020 00:15

zangdook MCB trading update: As a consequence the Board now expects full year adjusted profit before tax to be approximately 15% ahead of current market expectations (*) and for net debt at 30 June 2020 to be lower than expectations.

[spob] 11/5/2020 13:07

Had another look at this today

decided to buy some more

[zangdook] 30/4/2020 14:26

MCB belongs in your second list, I think:

[creditcrunchies] 29/4/2020 23:17

Still paying divis: WYN,HGM,IMB,MCB,
Frozen divi but good value: AV.,RMG,FLO,TPT

[value hound] 29/4/2020 20:45

"quite a few companies to choose from right now all flat on their backs on valuation offering deep value"

Any specific examples CreditCrunchies? Most seem to have moved well up and away already, I'm glad to say. But I'd be very interested in any that haven't.

[creditcrunchies] 29/4/2020 20:00

anybody that can trade through an pandemic was obviously a good buy, quite a few companies to choose from right now all flat on their backs on valuation offering deep value

[davebowler] 29/4/2020 09:25

Rival has good news-

[arthur_lame_stocks] 21/4/2020 19:40

DBay have increased their holding again.

[arthur_lame_stocks] 19/4/2020 09:09

I bought some of these recently at a discount to NCA. I guess it depends how long you've been holding them for and at what price, but I would welcome a bid from DBAY as long as it's at a premium to the current price.

These should trade OK through the current crisis and hopefully it is one which will still be paying a dividend.