Ken said:nufarm have come up on the radar.
recommendation as a buy on westpac broking.
It seems undervalued.
Would people be steering clear of nufarm due to weather conditions?
intrinsic valuation is $11.50
Today I bought 20l of Roundup. The price has gone up 50%+ since I bought the last pack. Accompaning the pack was a leaflet explaining the price rise. The reason was a shortage of product because of excessive demand. Now the cost of production and distribution hasn't gone up 50% so the profit margin must be much higher than before. Add this to the easing of the drought in the cropping areas and Nufarm must be heading for a bumper year.
Just wondering anyone knows why NUF falls today? I am tempted but would like to know whether there is any change of conditions.
Old bad news, on the 17/6 - downgraded its earnings guidance for 2008-09. It cut its forecast by 15 per cent to a net operating profit of $A187 million. It blamed the downgrade on a fall in glyphosate sales. The company has just raised $A300 million in capital.
The cap raising was at $11.25 per share closing date 23/6, which probably explains why the dump today.
The good news is at the current price, the stock is quite oversold, I am expecting a bounce from this level (if lower @9.00), soon.
Of course this didn't come entirely out of the blue - the Chinese had tried before and to a lot of investors it was only a matter of when they would try again.
A combination of a depressed market, a profit downgrade from NUF and subsequent drop in the SP were all the ingredients needed to re-ignite a bid.
I bought a few today because I reckon NUF is a well run company with a good business and prospects. At $10-$11 I'll be happy to hold, whether or not this situation develops into an actual offer.
Have a look back in this thread, particularly the links to news items provided in posts 4 and 5.