Wynnstay Share Discussion Threads

[topvest] 13/4/2022 16:03

Well done. I'm not going to try and trade WYN but hold long-term and add on weakness.

[1knocker] 13/4/2022 13:16

I was lucky enough to buy into this at the bottom, when it looked (and proved to be) an absolute steal, even as an income stock. Sold out today at 621, having been sorely tempted at 600, thinking I might regret being greedy .So a bit of a bonus to have got 621. Looking forward to getting back in when the price pulls back a bit. There are rocky times ahead, and no stock is immune from volatility, however well managed. Opportunity will come to those who are prepared to be patient.

[value hound] 27/3/2022 11:12

Re-tipped by Simon THompson, FWIW, who concludes with:

"The uncertain geopolitical situation is boosting farmgate prices, too. This offers reassurance to farmers taking advantage of elevated prices as it mitigates higher input cost inflation (energy, fertiliser and fuel), albeit in some cases high prices are likely to curtail demand. It’s a favourable backdrop for Wynnstay.

The group has also just completed the complementary poultry and point-of-lay pullets acquisition of Hampshire-based Humphrey Feed & Pullets, a business that has 200 customers and produced 109,430 tonnes of poultry feed from its Wiltshire manufacturing facility. The plan is to spend £13mn over the next three years redeveloping and modernising the plant to lift capacity to 185,000 tonnes. The £11.5mn total consideration equates to 10 times operating profit and is being funded from a £12.5mn bank facility.

Reflecting the acquisition, house broker Shore Capital upgraded 2022 and 2023 adjusted pre-tax profit estimates to £11mn (3 per cent upgrade) and £11.9m (7 per cent), respectively. On this basis, the shares trade on 13 times next year’s earnings and offer a 2.8 per cent dividend yield.

The holding has produced a 45 per cent total return since I included the shares in my 2021 Bargain Shares Portfolio and I maintain my 685p target. Buy."

[redartbmud] 23/3/2022 19:55

Boys, yes I did.

The presentation by the CEO was excellent, although done by zoom link as he had trested positive for covid.
The Chairman gave me a lot of confidence that he will play an active role in guiding the business strategy and that he knows enough and more to know what's what.
The FD is sound as a pound.
Looking at their development plans for the short/medium term has the potential to improve the business and generate additional returns going forward.

There are obvious problems facing the industry that may create a bumpy ride and headwinds, but the balance sheet is stromg enough to withstand them and the longer term looks bright.

red

[boystown] 23/3/2022 13:39

"Worth the trek though"

Thanks redartbmud - so I guess from the above comment that you came away happy with your ongoing investment then? I have to say, I am, but I'm absolutely NO expert and am aware that low-tech distribution / 'middleman' operations rarely command heady valuations.

[redartbmud] 23/3/2022 13:12

Yes, I was there. Not written up my notes yet, but they were not as full as they might have been.
Worth the trek though.

[boystown] 23/3/2022 13:06

Thanks THORPEMATT - and, of course, we've had a few answers from yesterday's AGM statement which was as circumspect as ever but generally good.

Did anyone go to the AGM?

[redartbmud] 21/3/2022 20:35

AGM tomorrow, so maybe an AGM update?

[thorpematt] 21/3/2022 20:22

Boystown,
I am reading it like this: -

Firstly I think Farmers are pretty savvy and that as a community there are pretty aware of what's going on in terms of prices and so on. So I think they will look to capitalise on any positive price fluctuations and shortages in any particular crops or product. So yes that is likely to mean maximising production where feasible.


I think they always look to optomise yields so I doubt that that will impact much. Fertilisers etc. are essential in ensuring yield and success-rate are high.

Ulitimatly for suppliers such as WYN, whilst they will have increased input cost I think that if demand is strong then every competitor wil be the same and thus no demand destruction occurs. The net result in my eyes is: strong demand x increased prices = higher revenues on similar margins, ultimatly strong EPS and inflation resistance.

So i like this stock anyway, but add in the defensive qualities and inflation hedge it' a good one in this environment (IMO)

[topvest] 21/3/2022 12:03

Good I think as Wynnstay make more money when prices are high.

[boystown] 21/3/2022 11:03

Forgive me for being so thick - but will rising fuel, commodity and wheat prices, pressure on farmers to maximise production (I've read about fewer fields being left fallow this year) be good, bad or indifferent for WYN?

[km18] 16/3/2022 17:11

...from last month...

Company overview:

Wynnstay Group Plc encompasses departments focused on supplying agricultural products and services. As a result, the firm is segmented into two business streams: agriculture and merchanting. The agriculture segment is engaged in manufacturing and supply of animal feeds, fertilizer, seeds. The Feed division is offering a range of animal nutrition products to the agricultural market. These highly enriching and stimulating initiatives were positively reflected on the firm’s financial prospects, where gross profit margin hiked by 37% in 2021 from £8.37m to £11.44m in 2021. Despite the profit rally, the firm’s stock price is undervalued, as illustrated by its low P/E ratio of 14.9x, which is relatively below the consumer staples P/E ratio of 27.31x, hence it is cheaply available for investors to buy the stock. Subsequently, net cash soared 10%, from £8.42m to £9.24m in 2021, signifying that the firm is well positioned to achieve growth objectives this year, given the robust financial position.  This evidence is supported by the firm’s P/FCF ratio of 10.7x, which in turn signifies that Wynnstay is able to finance its operating and investing activities efficiently and more effectively than its peers, hence enabling the firm to continue deriving revenue and profits ahead of expectations as the firm manages to consolidate into the fragmented agricultural industry.

Brief Analysis:

P/E = 14.3, below sector benchmark.
P/FCF = 10.7, above industry threshold.
Net cash of £9.24m, higher than last year.
Operating profit of £11.44m, above prior year....


....from WealthOracleAM

[topvest] 10/3/2022 11:29

Looks like a very high quality acquisition at a very sensible price. This group is very well managed in my view. I agree that the RNS is very clear.

[redartbmud] 10/3/2022 11:09

It also futher increases their footprint and widens the customer base.
Good strategic move.

[value hound] 10/3/2022 11:02

Agreed - all looks very logical and good value. No doubt ST will give this a further fillip at some point.

[thorpematt] 10/3/2022 10:59

Well i think that is a really well written RNS. Hats off to the BoD on that. I always try to work out what I'd pay for an acquisition before looking at the price, I like the value gleaned and I like the strategic fit.

Obviously an expansion in production will lead to the ability to offer this product to a wider audience. That coupled with its own expansion in distribution to market should go well I think.

Not chicken feed this deal...oh no wait, yep it is chicken feed :-)

[topvest] 08/3/2022 11:24

Yes, agreed - WYN should benefit in this environment.

[elsa7878] 04/3/2022 10:55

Despite rising oil prices, with wheat prices as well as other commodities going parabolic farmers must be making hay (sic!).

[jeffian] 18/2/2022 10:41

I bought a few more on the dip yesterday.

[value hound] 18/2/2022 09:58

Update from Simon T's 2021 Bargain Shares review FWIW:

"Specialist agricultural products supplier Wynnstay (WYN) produced a record first-half trading performance last year and one underpinned by three key factors: a strong recovery in farmer confidence, driven by higher farmgate prices; clarity provided by the EU settlement and the landmark Agriculture Act; and the benefits of having a broad spread of activities, supplying both livestock and arable farmers.

The buoyant trading prompted analysts at house broker Shore Capital to push through 15 per cent upgrades to their 2021 and 2022 pre-tax profit estimates (to £9.6mn and £10mn, respectively) last summer. Analysts then raised their 2021 pre-tax profit estimate by a further 15 per cent shortly after the 31 October 2021 financial year end.

The eye-catching trading performance was supported by a return to more normalised levels of tonnage and crop yields (which gave a boost to the group’s arable activities after a poor harvest in 2020); strong grain prices (which incentivises farmers to plant more crop to take advantage of higher prices); and higher-than-expected fertiliser volumes, partly as farmers forward purchased given the volatility in gas and fertiliser prices.

Importantly, the inflationary backdrop and supply chain pressures have been well managed without any major disruption to the business. The backdrop for the industry remains positive, with agriculture set to receive the £3bn support package from the UK government until 2024, thus giving farmers ample time to prepare for the new Agricultural Bill which will provide incentives for sustainable farming practices.

Investors have cottoned onto the positive earnings cycle, hence why the holding has produced a 35.6 per cent total return in the past year. However, trading on a 2022 PE ratio of 13.9, offering a prospective dividend yield of 2.9 per cent and rated a modest 8 per cent premium to book value of 525p a share, the valuation is reasonable enough to suggest that a return to the 2014 and 2017 all-time share price highs (685p) could be a possibility if trading remains robust. Buy."

[gopher] 15/2/2022 18:31

Value doesn't seem to be valued on Aim at present or 10% decline following decent results and reasonable outlook would not have happened