BGA - Bega Cheese

[Miner]

BGA slumped today following market update. Only recently the company issued a SPP @$7.10 and the directors unloaded their shares slightly lesser than the rights offer after it is closed.
Now today it has already dived by 8.63%. Who is talking to shareholders who faithfully dished out $7.10 for the scrip on end of OCtober ??? Are we cooking rotten fish with fat of cheese ?
Disclaimer - DNH
Any comments folks

Though I do not follow the free news articles from Motley but probably the wording can be noted.

 

[Miner]

Though I do not follow the freely available notes from Motley Fool but on this instance, it is worth what they have said. Definitely the comparison with A2M and CGC with BGA is not apple with apple.

 

[Miner]

BGA is not going as a smooth cheese and now it is hovering below $5 .
Reviewing our own cheese buying, I am thinking if we have ever bought BEGA brand cheese ourselves. NO.
So could quality be another factor for them not to be able to capture market?

 

[So_Cynical]

Lower milk volume due to the drought and higher farm gate prices, Bega has the capacity to greatly increase their powdered output so potentially get some/more of those Chinese dollars, but capacity is one thing and supply another, Bega like all dairy manufacturers can only processes whats available thus can be constrained by raw product supply.

A heap of shares issued recently at $7.10 makes Bega look pretty cheap now, have been thinking about an entry as i have a weakness for dairy even though i have never done super well out of it.

 

[Miner]

Lower milk volume due to the drought and higher farm gate prices, Bega has the capacity to greatly increase their powdered output so potentially get some/more of those Chinese dollars, but capacity is one thing and supply another, Bega like all dairy manufacturers can only processes whats available thus can be constrained by raw product supply.

A heap of shares issued recently at $7.10 makes Bega look pretty cheap now, have been thinking about an entry as i have a weakness for dairy even though i have never done super well out of it.

Thanks SC for the share. Just making sure you find the current price is cheaper notwithstanding the PE ratio is so high and even if the rights were issued at $7.10. You always analyse very thoroughly so making sure that was a serious comment

 

[Knobby22]

The thing is everything is looking cheap now.
I suppose this one could easily spring back hard and a lot of risk has been removed.
Despite the recent rains though we are into an El Nino, so the drought may reappear.
The company has definitely piqued my interest though.

 

[Miner]

The thing is everything is looking cheap now.
I suppose this one could easily spring back hard and a lot of risk has been removed.
Despite the recent rains though we are into an El Nino, so the drought may reappear.
The company has definitely piqued my interest though.

@Knobby22 are we having cash cow scenario now from investment perspective

 

[mcgrath111]

I've picked too many bottoms in my life.
As noted above, it's not a like for like comparison to companies such as BAL.
I might have a nibble at $3.40, likely won't go that low.

 

[Miner]

Mcgrath
LOL
I am unsure if you would be seen a popular man by the holders who exercised their rights at $7.10 should your wish come true by Santa in 2018

 

[peter2]

Well, someone started nibbling at BGA last week. As a chartist, I'd prefer to see the last tested with a HL and then the subsequent BO would be very attractive. However BGA is not very liquid and prices can continue higher without the "classic" test.

The chart below is part of a research project and should not be considered a recommendation to buy this stock. If you want to read more about the project log in to read the P2 Weekly Portfolio thread.

Setup: Bouncing off support
Grade B as there's no HL and the market may test the last low, my iSL must allow for that.
Buy limit: 5.20-5.40, iSL 4.75, trail higher

 

[dyna]

Been a while since I bought anything(Been selling heaps,though,to whack into super as non-concessional contributions before "retirement") So,I bought ten grand worth of BGA at $3.74,today.Some day the sun will stop shining,Rain will come p*ssing down.Rivers of milk will flow......that's my theory,anyway.

 

[So_Cynical]

I bought ten grand worth of BGA at $3.74,today.Some day the sun will stop shining,Rain will come p*ssing down.Rivers of milk will flow.

You're not crazy, dividend will certainly be cut but longer term anyone buying today will do ok, Bega is a good business.

 

[Smurf1976]

You're not crazy, dividend will certainly be cut but longer term anyone buying today will do ok, Bega is a good business.

Price is down significantly over the past few days but I note that on a weekly chart this past week had the highest volume of any week on the chart which goes back to 2011.

 

[Value Hunter]

I would only ever buy a business like Bega Cheese at or below the NTA per share (according to the preliminary annual report that is $1.36 per share of NTA). Its largely a commodity business operating in a highly competitive market with volatile earnings and modest profitability on a through the cycle basis. Although Bega is a well known brand, the brand does not have premium positioning or pricing power on its products. I feel like dairy products especially cheese is a market that is gradually becoming more fragmented and premiumized (yes I made the word up) like what has gradually happened to the beer market with small craft beer companies taking market share from cheap mas market beer.

Also I would not pay much attention to what Bega Cheese calls normalized earnings as a look through many years of their annual reports suggest they are one of those serial offender companies that frequently have "one off" or "abnormal" costs.

Also Bega seems to be a company that has made too many acquisitions and done too many capital raisings.

 

[barney]

.Some day the sun will stop shining,Rain will come p*ssing down.

You're not crazy, Bega is a good business.

I note that on a weekly chart this past week had the highest volume of any week on the chart which goes back to 2011

I feel like dairy products especially cheese is a market that is gradually becoming more fragmented and premiumized (yes I made the word up)

Bega Cheese is not on my radar of Stocks, but I'm interested in the diverse collection of opinions on where it may or may not head in the longer term compared to the story of the Chart technicals (I think that is also a made up word)

If anybody actually takes the time to digest all my ramblings … you may need to get a life as I am basically talking to myself out loud and may be totally incorrect/delusional

In short, the chart tells me thus: (and bear in mind I am an untrusting Spec trader who is currently having a bad month)

Short term Traders were in control of the initial drop and cleaned up … no doubt about that part!

The short/mid term trading "punishment" is still being developed and will reveal itself soonish.

Next couple of days price action could be very unclear (totally expected and probably better if it is)

However, at some point soon, I expect a quick push north for the current accumulators to cash in some of their chips ...

Followed by another push South (the strength of which will be determined by the amount of said "cashing in" which is completed on the upside push.

As @Smurf1976 has pointed out … the recent Volume indicates multiple parties are likely involved here. The chart is interesting from a learning point of view (my learning) ….

I expect trying to short term trading could be difficult but also lowish risk no matter which way it goes

I'm not trading it but if I were, I'd consider accumulating portions on any serious dips, and taking profit on any serious jumps …..

Congratulations to anyone who has seen fit to finish the above (and below) "war and peace" post

 

[So_Cynical]

Barney you're using a 2 week chart, longer time frames tell different stories and some of the fundamentals tell a
different story again, short term getting hammered for good reasons, these short term issues are not permanent.

 

[barney]

Barney you're using a 2 week chart, longer time frames tell different stories and some of the fundamentals tell a
different story again, short term getting hammered for good reasons, these short term issues are not permanent.

Yeah … probably agreeing rather than disagreeing here S_C

I was commenting on a short term trading basis only, mainly because I think that buying in at this point in time (purely Chart based) is probably not a good trading decision, unless it is just that .... ie. A short term based trading decision looking for the mandatory post dump bounce! lol

All just in my opinion (which should be treated with the appropriate amount of caution of course

Fundamentals aside, The Chart drop generated some serious Volume which means it is being "watched" by Traders, and by default, traders tend to generate retail involvement.

At this point in time it is in limbo for me. I expect the recent lows to be both rejected (up) and tested (down), but the order of events could be a bit hard to read, so basically, I am saying bugger all and sitting on the fence lol …. (I do have my theories on future price action however!)

I could actually be Prime Minister material with that lack of clarity

 

[peter2]

No doubt the price trend of BGA is DOWN. The price has been halved in the past two years. Price has bounced off a long term support level (3.80) after looking likely to go down much further (recent double bottom at 3.55).

Price has filled the gap left by the selloff after the news that milk supply was very tight. The ongoing bush fires provided further reason for another sudden selloff. Again price has rallied quite quickly. This rally has formed a bullish key reversal bar on the weekly chart and adds further merit for more bullish price rises. (I wouldn't want to be short BGA right now.)

I've been impressed by the recent corporate updates on the impact that the current bush fires may have on the company. I also sense a strong community feeling as staff and locals help each other through these difficult times. If a dairy company lifts their milk price and provides assistance to their milk suppliers when times are difficult. I'd know who I'd sell my milk to.

 

[Smurf1976]

Given the current situation, short of the Bega factory itself burning down it's hard to see things getting too much worse really. If it can go wrong then it mostly already has.

 

[Trav.]

Thanks for the charts @peter2

You have highlighted some interesting points which I have spent some time this morning reviewing and have a couple of follow up questions if you don't mind

1. What amount of weighting do you put on the Relative Strength of BGA compared to the XAO or even the XNJ when reviewing your charts?

2. You mentioned the price has filled that gap so I am assuming that you switched to the daily chart at this point. Do you look at multiple time frames before entry? If trading weekly I would have assumed the you would default to the monthly chart but are you just looking at daily time frames for this example only.

3. I am assuming that you just naturally ( through experience ) pick up on the double bottom ( not scanned for ) which gives some weight to your argument that moment is changing to the positive side in addition to the bullish bar.

Cheers
Trav