ALF.Allied Farmers Ltd

[Mos]

Positive development for ALF - more FUM

https://www.nzx.com/announcements/424986

[Shareguy]

Have been following this company for a while. Trading on very good fundamentals.

Has been good growth in EPS.  FY23 EPS $0.1159 which is a very attractive PE of 6.4 based on my buy price of $0.74. FY22 EPS $0.0998 FY21 $0.0857

Then there is the huge tax losses, so not expecting any dividend anytime soon. WAF have just under the 20 percent with 19.99 percent of shares.

DISC.  Took a small position this morning

[Mos]

Looks like a solid transaction for NZL and good income generator for ALF

https://www.nzx.com/announcements/426510

[Shareguy]

Looks like a solid transaction for NZL and good income generator for ALF

https://www.nzx.com/announcements/426510

Yes will add to ALF EPS.

[Shareguy]

The result a slight miss on npat compared to last year but not unexpected given the rural decline and confirmed by PGW recent result.

However I'm expecting full year result to pass last years on the announcements made on the new transactions from NZL which will feed into second half result.

Based on last years result of eps of $.1159 Trading on a pe of 6.9 at $.80 SP.

No surprise re no dividend,  given the tax loss situation.

[mfd]

Yes, slight reduction despite now owning 100% of NZRLM but I guess that highlights the importance of transaction fees to NZRLM income, which is lumpy and absent this half. Next half will have significant transaction fees, and the future looks promising:

"Roc Partners was attracted to NZL's sector-leading deal-flow in New Zealand and will continue to partner on funding future deals, which should lead to an uplift in assets under management, NAV accretion, and thus income for NZRLM"

[Shareguy]

Also to note

ALF have $178m in accumulated tax looses sitting there TO BE UTILISED by ALF or someone else acquiring ALF.

WAF now have just under full take over threshold at 19.9 percent of shares.

[lorraina]

The ability to utilise the tax losses is dependent on continuing to meet shareholder continuity requirements of prevailing income tax legislation.
Therefore a takeover would mean ALF lose the tax losses.

[Plata]

Don't forget NPAT was reduced by depreciation of the NZL management contract. Arguably a totally meaningless expense given the contract is perpetual.

[Plata]

Liquidity has really dried up of late. RIP to the poor sharesies sods that sold at 69 cents today . Does anyone have any thoughts on when they might resume dividends? Surely chewing through the entire tax loss will take until 2030?

[mfd]

Liquidity has really dried up of late. RIP to the poor sharesies sods that sold at 69 cents today . Does anyone have any thoughts on when they might resume dividends? Surely chewing through the entire tax loss will take until 2030?

I'm not expecting dividends any time soon. In the current situation and with the current share price, I'd prefer to see buy backs if they can't find anything better to do with the cash - but I expect that they will be able to find something better. With rural sentiment pretty low at the moment maybe there's some bargains to be had in order to speed up the process of chewing up tax losses.

Or, as the Chair put in back in November, "exploring growth opportunities that leverage its core strengths in the rural and asset management sectors"

[Plata]

We will see. I don't hold NZ investors in particularly high esteem regarding their patience for lack of dividends. Will be impressed (and pleased) if they can get away with retaining all earnings for years on end.

[Mos]

Special meeting at 11am tomorrow to vote on resolution to implement new constitution that will help to preserve $186 m of tax losses through facilitating shareholder continuity measures. Will be voting in support of this resolution.

[Mos]

Interesting update from ALF yesterday. FY24 trading performance similar to last year plus one off gain on asset sale of $4.2 m. Not bad in context of $23.6 m market cap - likely to have eliminated all bank debt with funds left over. No danger of paying any tax in the foreseeable future with those $186 m of tax losses. Need to build flow of profits to start making a dent in them.

[lorraina]

Prospects look good.
However I sold the wife's holding and recycled the funds into more 2CC for her.
Reason being 2CC's fully imputed divies.Currently gross yield of 13.282%.Next divie due end of November.