Ann: Wellard Update-WLD.AX, page-153

PDATE, 11.30am:
Now it’s not just ugly, it’s plain embarrassing.

WA’s biggest sharemarket float since Multiplex in 2003, Wellard was spruiked by managers UBS, Deutsche Bank and Morgans as a chance to get in on a well-run, long-standing business with solid financials.

Yesterday’s extraordinary “mini-downgrade” of the reduced profit forecast issued only on Friday has confirmed investors’ fears that the live export industry is a lot more unpredictable than they would have garnered from the company’s prospectus and that management’s visibility on earnings is worryingly clouded.

The revision means Wellard may have lost up to a quarter of its downgraded earnings inside four business days.

And there could be another announcement detailing yet more leakage in the next few days, once there is a better handle on its shipping schedule. It is the corporate equivalent of death by a thousand cuts.

And its shares have continued to fall this morning, falling 3 cents to 40 cents.
Even the float managers, who took $4.5 million in fees off the listing, have underestimated the risks.

“Is there further risk to FY16 profit guidance,” UBS asked in a research note after Friday’s downgrade. It answered optimistically: “We no longer believe so.”

Mauro Balzarini and his team know the live export business and have been side-swiped by an unhappy coincidence of market forces.

They are now confronting the increased weight of expectation and responsibility that accompanies the transition from private ownership to a listed company.

Wellard cannot escape the prospectus window quick enough. With the release of what will be an alarmingly diminished annual profit, it will be relieved of the more onerous disclosure obligations around prospectus forecasts.

But it will enter its second financial year with its credibility in tatters and facing a long period of rehabilitation.

For investors pursuing predictability, Wellard has been a disaster.

Its rapid fall from grace will test the company’s board, led by David Griffiths. But at least he has been in the furnace before, as a director of failed forestry group Great Southern.
https://au.news.yahoo.com/thewest/wa/a/31856454/comment-wellard-an-embarrassing-mess/