Worse Is Yet To Come?, page-5

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usc75

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02/05/16

18:30

Post #: 17655736
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Originally posted by richtea31 ↑

I think you have been reading to many news articles and not actually read the IPO PDS issues by MGC last year. If you did you would see that the MGC medium term (5 years) strategy is to move away from commodity products and into added value products, which is a great strategy the whole industry now accepts and has embraced. To prove the point the $120m investment in two new fresh milk processing plants was the first step in achieving this for MGC as it costs very little to process raw milk into fresh milk and the profit margin is far greater, and having a 10 year contract to supply Coles realises that extra profit for farmers and was a great move by MGC.

The IPO was to draw down debt in the short term but it was always clear that MGC were going to have to re-borrow to fund their capital investment programme, the PDS clearly states that. The banks and financial institutions have not been slow at offering new debt at a far lower interest rate and that was the point. To restructure debt not become a debt free company. The one negative is MGC have not paid off as much debt as they said they were going to at this point in the year.

The underlying MGC strategy is sound but they need to seriously resolve their failures to improve their international sales, particularly in China and while they did hire a new Executive of Dairy Foods in May last year with this in his portfolio, he has been ineffectual in turning this part of the business around.

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No so. Why?

Para # 1: Anybody that can justify the Private Label Contracts doesn't under the numbers.

Para # 2: MGC have effectively borrowed to pay a farmers an unrealistic Farm Gate Price. And have clearly stated they intend to borrow more for the same purpose.

Para #3: Clearly the market thinks otherwise. Plus now most of the farmers!

In short, nobody-and I mean nobody-agrees with you.

IMO, suggest you do more homework. Study the facts.

MGC Price at posting: $1.23 Sentiment: Sell Disclosure: Not Held
3 Upvote

0 Great analysis

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