Registered Members Login:
   
Forgotten Your Details? Click Here To Recover +
Welcome To The ShareCafe Community - Talk Shares And Take Stock With Smart Investors - New Here? Click To Register >

  
 
  
Reply to this topic

D2O, DUXTON WATER
nipper
post Posted: Sep 14 2019, 08:20 PM
  Quote Post


Posts: 6,048
Thanks: 2167


Funds flow fast as water barons tap opportunity
QUOTE
...Prior to the 1980s, entitlement to irrigation water was linked direct­ly to ownership of agricult­ural land. Over the years, state and federal governments relaxed the rules, removing in 2014 the last barriers to anyone buying, selling, leasing and speculating on irrig­ation water entitlements, whether they had any connection to the land or not.

Now water barons can trade water like farmers: they can buy and sell permanent entitlements, which provide a share of available water each year across a region, and trade what is known as temp­orary “allocation” water on the spot market.

[Duxton] set up their dedicated water trading company separate from agricultural concerns. They described Duxton Water as “Australia’s only ASX-listed vehicle providing investors with direct access to water”....
https://www.theaustralian.com.au/business/f...#story-comments

1. Everyone wants to capitalise gains and socialise losses
2. No Govt imposed model leaves all players happy



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
mullokintyre
post Posted: Sep 9 2019, 02:55 PM
  Quote Post


Posts: 1,872
Thanks: 716


Duxton getting a littlennegative publicity.

From The Australian
QUOTE
Investors are allegedly hoarding billions of litres of water, ratcheting up the cost and cruelling food growers who claim they face a massive artificial price spike that is crippling agriculture.

Representatives from about a dozen horticultural industries have written to Water Resources Minister David Littleproud claiming the non-farm water investors are playing the market.

They say the result is a market “squeeze”, pushing up the price of water for irrigation from a longterm average of about $135 a megalitre to $800.

At those prices, farmers say, many crops are no longer profitable, with growers suffering severe financial and emotional hardship that may ultimately force them to “turn off”, or not water, grape vines and nut and citrus trees.

Darren Minter, who farms citrus, almonds and asparagus south of the Victorian city of Mildura, said he would lose money this year, and next year might have to cut off water to his almond trees and not grow asparagus, resulting in no work for 150 employees.

“We want action today because if we keep going this way, it’s going to drive a lot of farmers bust,” Mr Minter said. “Water barons who own water, who don’t own land, should be stopped immediately.”

One of the signatories to the letter to Mr Littleproud, Australian Grape and Wine chief executive Tony Battaglene, said “We have become far more vulnerable to the water trading system”.

Mr Battaglene said at current prices, grape growers were at a “tipping point” on deciding whether it was worth irrigating.

“Once the water price increases up towards $800, it means that it is very hard to produce a crop that can be made into wine that can sell,” he said.

It is understood that among other requests, the letter from the agricultural groups calls for a temporary ban on non-landowning water investors from buying water, and from “carrying over” water from one year to the next.

Sources familiar with the letter said it did not name names but the greatest concern was South Australian company Duxton Water Ltd.

Over three years since it listed on the stock exchange, Duxton Water has amassed water rights worth $256m, giving it control over 74 billion litres of water entitlements, equivalent to the capacity of the Woronora Dam near Sydney.

Rather than sell or lease all its annual water allocations each year, Duxton has “carried over” some water and increased its entitlements by 12.5 billion litres in the six months to June.

While irrigation farmers are fearful of speaking out about Duxton, the head of the largest olivegrowing enterprise in Australia, Rob McGavin, was prepared to express a view to The Australian.

“My concern about Duxton is the amount of allocation water they have reportedly purchased over the last 18 months compared to their annual consumptive use or need, and the material impact this could be having on the price all irrigators are having to pay for allocation water,” Mr McGavin, the chief executive of Boundary Bend Ltd, said.

Duxton Water says its shareholders enjoyed a total return of nearly 30 per cent in the year to June.

In the six months ended June 30, during a severe drought now officially classed as the worst ever, Duxton more than doubled its half-year profit compared with the corresponding period last year, to $2.5m.

Mr McGavin said non-farm water traders and brokers were “driving Maseratis” at a time when farmers were going broke.

He criticised the decision over recent years to change the system in which water entitlements were tied to land ownership to allow non-land-owning investors to purchase water and trade it.

In one example, since the water market in northern Victoria was opened to non-land owners, they have acquired 12 per cent of the volume, while government environmental water holders account for 28 per cent and 57 per cent remains tied to land.

Mr McGavin said the 12 per cent owned by non-farm investors had a disproportionate effect on the market because most of that owned by farmers was used on their farms rather than traded.

Mr McGavin noted that California, among other jurisdictions, banned non-farmers from owning agricultural water precisely to avoid speculation.

“Australian farmers are being used as a real-life guinea pig test case to let the free market rule, but nobody else thinks it’s a good idea,” Mr McGavin said.

“The problem is that one person with a big chequebook can own so much water, working in an office, not slashing the vines and so on. It seems to me that it becomes unfair.”

In a statement to The Australian, Duxton Water said it was a long-term investor in water, not a speculator. It said just over half its water entitlements were let out on long-term lease to irrigators.

“The company will continue to actively manage its allocation holding in order to meet its obligations to its farming partners both short and long term,” it said.

“Our goal is to be a long-term partner with the farming community and to make it easy for farmers to access water over shorter and longer-term periods.”

Duxton said it carried more than $8m worth of water to meet its future commitments to farmers, saying such an amount was “not material”.

It denied its activities had pushed up the price of agricultural water, saying the spike was the result of huge amounts of planting of permanent crops, the government buy-back of water entitlements for environmental flows and drought.

Earlier this year, Mr Littleproud announced that he had asked the Australian Competition & Consumer Commission to investigate the water trading market, and The Australian is aware of at least one letter to the ACCC from an agricultural business listing concerns about Duxton and other non-farm water owners.

In a statement to The Australian, Mr Littleproud encouraged all water users to make a submission to the ACCC. “I want to be sure the water market isn’t being distorted,” he said, adding: “There is a lack of transparency”.

“I want to make sure that family farming businesses are not locked out of the water market,” he said. “I do not want to see traders, brokers or any major market players pushing up water prices as water is a critical resource.”


Having lived in the Goulburn Valley for 40 years, I have seen many changes in irrigation over time.
One of the biggest mistakes was to separate water from the land.
There are a number of local water brokers who say they provide a "service" and help to discover the water prices.
However, like the other investors who trade, they don't produce anything, don't grow anything, just take a fee for the service.
They do very well I might add, but the farmers who actually produce something with the water, once again get squeezed.
Lower prices for their produce, higher prices for their cost inputs.
I can see the likes of Dutton and Webster getting pressure from rural groups.
I have sold out of Websters just in case.

Mick



--------------------
sent from my Olivetti Typewriter.

Said 'Thanks' for this post: early birds  nipper  
 
nipper
post Posted: Nov 18 2017, 07:44 AM
  Quote Post


Posts: 6,048
Thanks: 2167


there was never any reason to buy D2O other than it could be held in a portfolio as an 'alternative asset', or even a bond, giving a steady return above bank interest but with market volatility (paid 2.3c dividend in Sept, for the quarter).

That and exposure to real assets in the agricultural sector (and a way to own something local rather than bleating about overseas ownership). As usual, the original money has done OK, finding a way to monetise, yet maintain management rights and control; and looks like they are going again:
QUOTE
Broker Taylor Collison has started beating the drum for another agricultural sector float out of the Duxton Capital camp. This time it is a cropping farm play called Duxton Broadacre Farms, which is seeking to raise up to $22 million for up to a $66.2 million market capitalisation.

The pitch is about buying farms suitable for large scale cropping operations and capitalising on forecast increases in global grain consumption. It already has three farms in its $58.3 million portfolio and wants the ability and access to capital to buy more. Duxton Broadacre Farms is managed by Duxton Capital and is chaired by Duxton co-founder Ed Peter.

It's the second initial public offering in just over a year from Duxton, which was founded by a team spun-out of the Deutsche Bank Complex Assets unit. Duxton Water D2O listed at $1.10 a share last September. It last closed at $1.07.

Taylor Collison is lead manager for the new IPO and is seeking to have it listed on January 17, according to a prospectus lodged with the corporate regulator.




--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: May 11 2017, 04:18 PM
  Quote Post


Posts: 6,048
Thanks: 2167


QUOTE
... we wanted to be able to harvest or lease our water rights to provide an income to our investors and that we were expecting to be able generate an annual yield of at least 5-7% given a normal year. Unfortunately we were not given a normal year. Indeed we were given the wettest year on record for the Murray Darling basin. This led to a fall in the temporary water prices from roughly $275 per meg a year ago to currently $45 per meg now. Due to this extreme weather our gross yield is currently about 4.6% thus our net yield will be under our target. We also said we would like to and expected to be able to lock in leases for approximately 65 -70% of our portfolio. But again, due to the depressed price of the temporary water, we have been reluctant to lock in current prices and currently have half of the portfolio under long term lease – so less than our target. That said, the leases we have added have been at levels above starting point and pulled up our blended long term leasing rate from our original 5.94% to sit currently at 6%.

Now for the good news and the future. Temporary pricing for the 2017 -2018 irrigation year is clearly improving. Already we can see prices in the futures market of over $100. At that level we should see a marked improvement in our yields. If we took indicative pricing on the current futures market with our current leased positions, gross yield would be 5.1% with the limited start of season temporary allocations, going to 6.4% if we receive the allocations at levels currently indicated by the Government. As Max will discuss later, the expectations for the long term weather forecast looks like a dry to normal year. So a return to longer term average pricing of $180 or higher could be on the cards. We have also not stopped our discussions with potential long term lessees of water and have more demand than we have water. As prices are now moving our way we will start signing and announcing contracts with the goal of 65-70% of our portfolio locked in.
Chairman's address
QUOTE
Lastly, I would like to address the current investing market and how we see ourselves fitting into the world. Your company has no debt. During the IPO road show we tried to explain our worst scenario: a very wet year with Temporary prices collapsing. This is exactly what we have just seen. If we had had debt our yield would have been needed to cover interest expense, as our balance sheet is exceptionally strong we are in a position to declare a dividend this year.




--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Sep 20 2016, 01:32 PM
  Quote Post


Posts: 6,048
Thanks: 2167


In Reply To: ShareScene.com's post @ Sep 20 2016, 12:11 PM

getting dumped by the 'stags'. There was never upside in this. Buying assets, taking out costs, gives NTA sub $1.10. The upside is in the longer term, the incremental rise of a limited resource (the licenses, not the water)

"oh, when will they ever learn?"



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
ShareScene.com
post Posted: Sep 20 2016, 12:11 PM
  Quote Post



Posts: 4,290
Thanks: 206


Added by request: Duxton Water - D20

Regards,

ShareScene Support

 
 



Back To Top Of Page
Reply to this topic


You agree through the use of ShareCafe, that you understand and accept the TERMS OF USE.


TERMS OF USE  -  CONTACT ADMIN  -  ADVERTISING