Your passage makes sense Warren. Here are some comments, dovetailed into yours.
1) Profit driven by cost of livestock (agreed), which is dependent upon livestock access both nationally and internationally. Wellard do, and continue to firm up their strategy to, access livestock from international sources, thus increasing the opportunity to select quality and manage livestock cost. More to be done here.
2) I'm not sure how to best interpret the current low volume and tapering SP of late, other than market acceptance in the absence of further financial progress (at the debt level and profit status/trend). I suspect AGM will confirm previous information, which will help stablise SP (albiet at low to mid 20s).
3) BUTT and Fulida is an interesting strategy play. Their entrance into Wellard was significant for me to continue owning Wellard. I am carrying large unrealised losses (like many of us). However, surely BUTT and Fulida are not in the game of risking lost of capital if Wellard defaults or suffers from protracted low/no profit. Personally, I believe that both have already assessed the strategic value in terms of livestock supply and opportunistic capital return. So I see that BUTT and Wellard "do care" if Wellard survives. Thus, they would have made a positive judgment that Wellard would not go under and, furthermore, to invest in Wellard as stockholders given its strategic role in livestock shipping.
4) Additional capital may be necessary given margin compression and that Wellard is a capital intensive business with significant operational costs. The case for CR would need to be compelling to investors. However, I don't believe it will be given the previous IPO, SP decline since listing, ASX report tardiness and incompleteness, bank loan issues, repeated NPAT guidance revisions, and low level profitability at the moment. Even a business case that emphasizes future market size for beef and livestock export, growth and strategic positioning by Wellard in readiness for that market may be insufficient to galvanize stockholders and investors to be interested in a CR. A second source of capital maybe the sale of a ship, but this would be a sort term gain for the future strategic compromise. A third possibility, and much more strategically aligned, is that that BUTT and Fulida consider private capital to support Wellard.
I to have decided to hold....
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