Forum Archive Index - March 2001

["Malcolm Eves" <malcolm@easternasset.co.nz>]

I advance a contrarian view about the value of Enza and therefore GPG's
investment. I believe that this investment will turn out to be a nightmare
for GPG as they have failed to recognise the desperate state the pip fruit
industry was in and they thought that they would be able to take (minority)
control and with the monopoly position turn a remarkable profit. They have
misread the export season badly, demanding fruit of a large size and high
colour when the season has produced small fruit and low colour.They will be
very short with their export volume this year and growers have received
desperately low packout yields increasing the certainty that the export
industry will be deregulated. Therefore what's in Enza for GPG/FR Partners?
No more monopoly export control over an industry that has fragmented and
will continue to do so. They will be shown up as out of touch with market
forces and grower needs (money) and may not even return a profit on the very
selected market segment that they targeted.
I believe they are going to lose a lot of their money on the foray into
Enza, this being an industry that they did not understand at all.Certainly
not the bitterness of the growers from years of monopolistic disdain and
waste of growers money and they will be very hard pushed to come out of this
with anything but a loss. GPG will be seen as a company interested in GPG
first, second and third (rightly so) and this is not what this grower
cooperative was about to start with. Some confused growers still believe
that Enza is their cooperative!! but by the time the (small) cheques are
banked there will be no goodwill left for GPG even in the hardest
grower-believers mind. So GPG/FR will own what? The physical assets of Enza
not the market domination for a commodity product. Alternative exporters are
going to show Enza up as a very poor marketer I think. And don't think that
the growers are going to stand by and see those assets sold off for a song
without a fight.
GPG/FR have badly miscalculated in my opinion and the value of this
investment to GPG should be significantly discounted.
How many others are there like this in their portfolio? They got it badly
wrong with Fletchers too.

----- Original Message -----
From: "Derek" <dkw@paradise.net.nz>
To: <sharechat@sharechat.co.nz>
Sent: Monday, March 26, 2001 9:15 PM
Subject: Re: [sharechat] Enza...Derek


> Thanks Tony,
>
> Doesn't sound that bad really, the arguments with the other would-be apple
> exporters were pretty public and I wouldn't have thought that statement
> this would have had such a large effect on the Enza share price. (Although
> before GPG came along Enza was trading at current levels.)
>
> For the record I've underlined the bits I find _promising_.
>
> Rgds,
> Derek
>
> Enza:
>
> _So far_, less than satisfactory.
>
> _Prior_ to the appointment of the new Board, the company was in a worse
> position than previously known, with possible severe repercussions for New
> Zealand apple and pear growers.
>
> _GPG has contributed_ a disproportionate level of input relative to the
> absolute size of our investment (18% of the capital with a book value of
> 1.8 million) but which we accept, within reason, as our _contribution to
> the rescue_ of an important national industry.
>
> _Enza can become_ a large (Year 2000 sales of NZ$800 million) and
> successful organisation if industry politics embrace a greater sense of
> unity and commercial logic.
>
>
>
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