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Zambeef’s H1 results are as expected following its interim pre-close trading update. Soya has been a tricky product versus exceptional prior year performances, but higher maize prices, a switch to wheat in the winter and tight cost control should help to offset the pressure. Recent volatility in the Kwacha leads to an adjustment to our FX assumption which, alongside lower H1 revenue from soya, results in our FY23 revenue forecast decreasing from $329.2m to $314.2m. The resolution of Zambia’s debt restructuring is expected to stabilise the currency, and whilst there is no published timetable for the debt restructuring it must be done. Gross margin pressures and reclassification of costs from overheads to cost of sales impact our FY23 gross profit forecast, which decreases from $101.9m to $92.5m. The impact is much less pronounced at the EBITDA level, with our FY23 EBITDA forecast decreasing from $26.2m to $25.5m. We roll the adjustments forward to FY24, resulting in similar movements in forecasts. Our target price remains under review.
Zambeef Products PLC
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The firm, which is part of the Amicorp Group, primarily serves start-up asset managers with initial assets under management ranging between US$10m and US$20m. Due 8th June 2023. WE Soda, the world’s largest producer of natural soda ash, more commonly known in the UK as sodium carbonate or washing soda, announces that it is considering listing on the Premium Segment of the Main Market. WE Soda, an extractor of soda ash in Turkey and the US, is a subsidiary of Ciner Group, an industrial and media conglomerate. It is a high-margin business and last year it reported adjusted operating profits of $892m on revenues of $1.77 bn. The Offer would be wholly comprised of ordinary shares to be sold by the existing shareholder. Separately from and in addition to the Offer, the Company is also considering making an exempt public offer of Shares to retail investors in the UK through the PrimaryBid platform. The value of Shares sold will not exceed EUR8m equivalent (approximately £6.95m). Altona Rare Earths, a mining exploration company focused on the development of a significant Rare Earth Elements mining project in Africa, intends to join the Main Market. The Company has withdrawn from the AQSE Growth Market and intends to list on 9th June 2023 with the new ticker (REE). £2m raised. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet*** Evgen Pharma 3.65p £10m (EVG.L) The clinical stage drug development company developing sulforaphane-based medicines for the treatment of multiple diseases, announces its audited results for the year ended 31 March 2023. The Company signed an out-licensing deal with STALICLA SA for neurodevelopmental disorders and schizophrenia, royalties including $0.5m milestone payments were received from STALICLA and up to $5.5m in further milestones expected within 2024. The Company expects to start the first phase of glioblastoma trial in 2024 and will be conducted as an Investigator Sponsored Study at the Erasmus University Medical Centre, Rotterdam. Evgen announced a post tax loss of £4.0m (2022: loss of £2.7m), cash outflow from operations of £4.1m and holds cash and short term investments of £5.0m. Financial performance is in line with expectations. Gusbourne 68.5p £41.6m (GUS.L) The English wine producer announces its audited final results for the year ended 31 December 2022. Net revenue increased 49% to £6.24m (2021: £4.19m), while gross profit increased by 58% to £3.69m (2021: £2.34m) and gross profit margin increased to 59.2% compared to 55.9% in 2021. The Group reported a reduction off 22% in adjusted EBITDA loss to £1.13m (2021: loss £1.45m). The Company acquired a further 55 hectares of freehold land for £1.7m, contiguous with the Group's existing Kent vineyards. The Group is planning to plant most of this new land with new vineyards in 2024. The increased revenue base combined with anticipated improvement in gross margin and cost discipline is expected to see the Group move towards EBITDA breakeven for the current financial year. LoopUp Group 2.55p £4.8m (LOOP.L) The cloud platform for premium hybrid communications, announces its preliminary unaudited results for the year ended 31 December 2022. Revenue decreased 15.5% to £16.5m (FY21: 19.5m) whilst gross margin remained consistent at 69%. Adjusted EBITDA decreased to a loss of £0.9m (FY21: 1.2m profit) and net debt increased by 142% to £5.8m (FY21: £2.4m). Post period, Preliminary Q1-23 Group revenue of c.£6.5m and LoopUp has been certified onto Microsoft's Operator Connect partner program with Cloud Telephony service availability in 48 countries. The Group remains confident to meet FY-23 market expectations. Mirriad Advertising 3p £14.7m (MIRI.L) The in-content advertising company, announces its final audited results for the year ended 31 December 2022. Revenue of £1.5m (2021: £2.0m) a reduction from 2021 as the Company exits its Chinese business and focuses on growth in the US market. EBITDA loss increased by 31% to £15.2m (2021: loss £11.6m) and cash consumption increased to £12.9m (2021: £10.4m). The number of advertisers placing campaigns increased to 59 during the year (2021: 45). The Company holds net cash at 31 December 2022 of £11.3m and post period (June 2023), completed a £5.75m placing together with an open offer raising a further £0.55m. Trading in the current year is lower than originally anticipated in the US. N Brown Group 23.95p £110.3m (BWNG.L) A UK clothing and footwear digital retailer, announces that further to the announcements made on 29 November 2022 and 23 February 2023, Dominic Appleton, who joined the Group as Chief Financial Officer Designate on 1 March 2023, has today been appointed Chief Financial Officer and a Board Director of the Company. The Company also announces that Rachel Izzard has stepped down as Chief Financial Officer and a Board Director. Ramsdens Holdings 262.5p £83.3m (RFX.L) The diversified financial services provider and retailer, announces its interim results for the six months ended 31 March 2023. Revenue increased 33% to £39.0m (HY22: £29.3m), gross profit increased to £20.5m (HY22: £15.7m) and Profit before tax went up 68% to £3.7m (HY22: 2.2m). Six new stores opened in the Period with total store estate at 158 stores, excluding two franchised stores (H1 FY22: 153 stores). The Company anticipates the opening of six new stores in the second half of FY23 and reports positive trading in FY23. RUA Life Sciences 44p £9.5m (RUA.L) The holding company of a group of medical device businesses focused on the exploitation of Elast-Eon™, the long-term implantable biostable polyurethane, provides an update for the year ended 31 March 2023. Revenue growth of 34% with consolidated revenues of £2.17m (Contract Manufacture £1.62m and Biomaterials £554k). R&D expenditure is expected to be £1.07m (2022: £887k), an increase of 21% and the Group holds cash of £1.48m (2022: 2.96m). Unaudited R&D expenditure of the Group is expected to be £1,070,000 (2022: £887k), an increase of £183k over the preceding year. Overall, loss before tax for the period is expected to be similar to last year at around £2.3 to 2.4m. Strip Tinning Holdings 37.5p £5.8m (STG.L) A supplier of specialist connectors to the automotive sector, announces its full year results for the year ended 31 December 2022. Total Revenues decreased by c.9% to £10.2m (FY 21: £11.2m), however EV product sales increased 225% to £1.3m (FY 21: £0.4m). The Company reported an adjusted EBITDA loss of £2.2m (FY 21: £0.5m profit). The Company holds cash of £1.3m (FY21: £0.3m). The Company won a £1.4m grant during FY 22 to support production scale up of the EV business. The Board is confident of a return to revenue growth in FY 24, with high exposure to the fast-growing EV space. ValiRx 9.25p £9.5m (VAL.L) A life science company focusing on early-stage cancer therapeutics and women's health, announces that the evaluation agreement announced on 14 February 2022 from Barcelona University has been expanded to a broader collaboration including additional molecules targeting KRAS (Kirsten RAt Sarcoma) as possible drugs for treating cancer. The Expanded Evaluation Agreement is scheduled to be active for up to four years, with the potential to extend by a further four years. Zambeef Products 7.25p £21.8m (ZAM.L) The integrated cold chain foods and retail business with operations in Zambia, Nigeria and Ghana provides the following update on trading. For the year ended 30 September 2023, revenue, adjusted EBITDA and reported profit before tax are expected to be in line with market expectations. However, gross profit is expected to be between 8% - 12% behind market expectations, largely due to the pressure on margins arising from lower than expected pricing and higher input costs. If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”. Chef: Emily Liu 0203 764 2344 emily.liu@hybridan.com Chef: Sacha Morris 0203 764 2345 sacha.morris@hybridan.com
ZAM VAL RUA RFX TXG TXG EVG GUS MIRI BWNG LOOP
Zambeef’s interim pre-close trading update reassures on the full-year outturn despite a tougher H1 due to several issues outside its control. Soya has been a tricky product this summer versus exceptional prior year performances, but higher maize prices, a switch to wheat in winter and tight cost control should help to offset the pressure. The weakness of the Kwacha versus the US dollar has impacted revenue, but the resolution of the country’s debt restructuring should reverse the currency hit. We leave our forecasts unchanged pending the publication of the interims, due later this month.
Zambeef delivered excellent FY22 results, with revenue, EBITDA (Adj.) and reported PBT in line with our US forecasts. A strong performance from Cropping & Milling offset a decline in Retail and Cold Chain Food Products. The diversified portfolio and strength of Zambeef’s brands gives the business a welcome resilience. The new CEO, Ms. Faith Mukutu and CFO, Mr M’boo John Mumba are both internal promotions and they should be well-placed to deliver the strategy: exit low return assets and invest in high-return assets to drive profitability. To this end, Zambeef will spend US$100m in capex; the programme has started and will ramp up over the next couple of years.
Zambeef has reported H1 2022 results in respect of the six-month period ending March 2022. The divisions have experienced widely varying trading conditions. The Retail & Cold Chain Food (RCCF) businesses have struggled in the period due to cost inflation and squeezed consumers trading down to lower margin products. The cropping business has had a bumper period due to rapidly rising commodity prices. The other divisions are trading inline, and there is a further benefit from a stronger local currency versus the US$ y-o-y. Overall, these results are consistent with our FY2022E forecasts, so we are making no changes to our expectations.
ZAM has reported results for the year ending September 2021. Despite another tough (albeit improving) macro year in Zambia, ZAM has delivered a very resilient performance highlighting its strong market position and operational management. The group has navigated high inflation, supply constraints, a consumer trading down, drought and load-shedding to deliver results that are slightly better than our expectations. Year-end net debt was in line and a comfortable 19% of equity. We slightly upgrade our FY 2021/22 forecasts as we expect a moderately stronger Kwacha than previously, while operational projections remain much as before.
ZAM has issued a positive trading statement in respect of the full year ended 30 September 2021, requiring upgrades to our FY expectations. This has largely been driven by stabilisation in the macro situation, appreciation of the Kwacha in H2 and increased consumer spending as a result of an economic stimulus package. We upgrade FY2021 revenues by c10%, EBIT by 11% and adjusted PBT by c65%. Our target price remains under review.
Zambeef has reported H1 2021 results for half year ended March 2021. In what has been a difficult period for the Zambian economy (low growth, high inflation, very weak currency and drought), Zambeef has once again delivered a very resilient set of results demonstrating operational robustness, an ability to implement inflationary price increases and improved working capital management. Despite expectations of an ongoing tricky macro situation, we have made no changes to our FY2021 expectations.
Zambeef has reported FY2020 full year results for year ended September 2020. In what has been a tumultuous period for the Zambian economy (low growth, high inflation, very weak currency and drought), Zambeef has delivered a very good set of results demonstrating operational robustness, an ability to implement inflationary price increases and improve working capital management. Despite further expectations of FX weakness and an ongoing tricky macro situation, we have only made minor adjustments to our FY2021 expectations.
Zambeef has reported FY2020 interim results for the six-month period ending 31 March 2020. In what is a tough macro environment in Zambia, we believe that the company has delivered a strong performance, with underlying growth in revenue of +27% y-o-y (+9% in US$) and +31% y-o-y underlying growth in gross profit (+12% in US$). While customers are gravitating to lower-margin products, Stock Feed and Cropping have countered with a very good performance. We had largely anticipated these dynamics, so we are not changing our forecasts at this stage, but the weakness of the Kwacha needs to be monitored.
Zambeef has reported FY2019 results for the twelve-month period ending 30 September 2019. In what is a tough macro environment in Zambia, we believe that the company has delivered a very creditable performance, with underlying growth in revenue of +12.7% y-o-y and +10.0% y-o-y underlying growth in gross profit. The underlying gross margin slipped 80bps in the period, reflecting the lack of pricing power given the tough economic environment and customers gravitating to lower-margin products, plus several other cost pressures. Our forecasts had anticipated many of these issues. However, expectations are for another material weakening (c15%) of the Kwacha in FY2020 which we had not anticipated. Our US Dollar forecasts move down commensurately.
Zambeef has just released a brief trading update for the year ending 30 September 2019. The trading update highlights that the cropping business has outperformed expectations such that FY2019E adjusted PBT is likely to be c20% higher than our expectations. We are thus increasing our FY2019E adjusted PBT forecast from US$2.5m to US$3.0m. We are not changing our target price or future forecasts.
Zambeef has announced the disposal of Sinazongwe Farm for US$10m gross (US$9.25m net). While the sale process has taken quite some time, at US$3,900/ha for the 2,500ha farm we see this as a good price, particularly as the impact on the income statement is small. The cash raised will be used to pay back debt and represents 2.5p/share. Our earnings forecasts are not materially affected but the cash is a welcome injection to the balance sheet.
Zambeef has reported FY2019 interim results for the six-month period ending 31 March 2019. In what is a tough macro environment in Zambia, we believe that the company has delivered a creditable performance, with underlying growth in revenue of 15.5% y-o-y and 4.5% y-o-y underlying growth in gross profit. The underlying gross margin slipped 370bps in the period, reflecting the lack of pricing power given the tough economic environment and customers gravitating to lower-margin products. We had largely anticipated these issues, so we are not changing our forecasts for the operations at this stage. Our US dollar forecasts are trimmed slightly on translation, as we now believe that the kwacha will be weaker for longer than we have previously assumed.
Zambeef has this morning issued an H1 trading update for the six months ending 31 March 2019. This statement highlights a number of macro and cost pressures currently facing the business which taken together are likely to reduce our Gross Profit margin estimate by c100bps for the current year. Operational gearing magnifies this change such that we downgrade our FY 2019E adjusted EBIT forecast 20% (to US$9.5m) and our adjusted PBT forecast 44% (to US$3.0m). Despite tough trading conditions, we continue to forecast c10% organic revenue growth in the current financial year, highlighting the strength of its offering in the Zambian market.
Zambeef has announced FY 2018 results for the year ending September 2018. This is an upbeat statement highlighting that the momentum that was evident in the Retail and Cold Chain Food Products businesses at the interim stage continued to the end of the year. The Group has modestly beaten our expectations and we upgrade c5% underlying for FY 2019 but this is more than wiped out by an expected 13% FX headwind. We retain our 20p price target.
Zambeef has today reported FY2018 interim results. A stabilised economy coupled with a stable local currency and stable commodity prices has enabled the business to perform well despite significant fuel, electricity and labour cost pressures. We believe that our full year expectations are starting to look conservative but will await news on the winter harvest before making a judgement. We reinstate our previous forecasts and target price of 20p/share.
Zambeef has announced FY2017 results that are slightly better than our recently revised forecasts. Unfortunately a number of factors result in a material downgrade for FY2018. Further, joint-CEO Carl Irwin is leaving to be replaced by Tim Pollock, currently a non-exec, from CDC Group plc.
Zambeef (ZAM LN), a vertically-integrated agribusiness with operations in Zambia, Nigeria and Ghana, has released its full-year results for the period ended 30 September 2017 (FY 2017).
Zambeef* (ZAM): You win some, you lose some… (CORP) | Savannah Resources* (SAV): Environmental permits issued in Oman (CORP) | Avacta* (AVCT): External validation of Affimer utility (CORP)
ZAM SAV AVCT
Zambeef has made two intra-day announcements today. One deals with the disposal of 90% of Zampalm for the excellent price of US$16m (4p/share). This was in our valuation at zero, and the proceeds will be used for debt reduction. The other announcement deals with a year-end trading update which highlights that trading in Retailing, Cold Chain Food Products and Stock Feed has all been above market expectations while Cropping has suffered some significant one-off challenges. The group is expected to make a small loss in FY 2017E but there is no material impact on FY 2018E.
Zambeef has reported FY2017 interim results which we can characterise as follows: a strong operational performance (especially in retail, cold food chain volumes and crop yields) has been offset by weaker than expected agri-commodity prices (especially soya) and a tricky economic environment in Zambia as the economy adjusts following the currency collapse late in 2015. Coupled with a few operational issues in Milk and Eggs, we are materially reducing our FY2017 expectations but our target price of 20p is unchanged as we do not believe that the longer-term outlook or investment case has fundamentally changed.
Zambeef (ZAM LN), a vertically-integrated agribusiness with operations in Zambia, Nigeria and Ghana, has released its full-year results for the period ended 30 September 2016 (FY 2016).
This month saw another large palm oil producer look to take advantage of the persistent value gap between those producers listed in London and those listed in South East Asia, with Kuala Lumpur Kepong (KLK MK) making a 640p bid for London-listed MP Evans (MPE LN), a c50% premium to the prior day’s closing price. The bid was swiftly rejected by the MPE board and the majority of its shareholders.
ZAM CMET RE/ CARR MPE DKL TOM
Zambeef (ZAM LN), a vertically-integrated agribusiness with operations in Zambia, Nigeria and Ghana, has released a trading update for the year ending 30 September 2016.
Zambeef has concluded a major capital raising exercise with the UK’s Developmental Financial Investor (DFI), The Commonwealth Development Corporation (CDC). With US$65m raised through the issuance of ordinary and preference shares, Zambeef is now able to purchase RCL's stake in ZamChick and ZamHatch for cash and pay down a material portion of debt, releasing significant free cash flow from the business. We believe this could be the trigger that allows the shares to re-rate and achieve our target price of 15p (undiluted) or 22p (diluted).
Zambeef Products (ZAM LN), the vertically integrated agri-business with operations in Zambia, Nigeria and Ghana, has secured US$65m through the issue of new ordinary shares (US$9.5m) and new convertible redeemable preference (US$55.5m) shares to the UK government Development Finance Institution, CDC Group
Zambeef* (ZAM): Transformational deal with CDC (CORP) | Aggregated Micro Power* (AMPH): Fundraising and acquisitions (CORP) | Lok’nStore* (LOK): Low-cost, high-quality growth (CORP) | Communisis (CMS): Margins rising, debt falling, confidence in the full year (BUY) | ServicePower* (SVR): Positive trading update (CORP)
ZAM AMPH LOK CMS SVR
VSA Agri Thought for the Month It is hard to forecast the precise impact on UK farming from the recent Brexit vote but we would highlight a few areas: Subsidies: Annual subsides of c£3bn are currently paid to UK farmers. Farming Minister George Eustice has previously said that support would be maintained following a Brexit vote. Farmers will be anxious to see this happen. However, money may be saved through a cap on the maximum payout for the largest farms. Regulation: How will regulations change as we exit the EU Common Agricultural Policy? Farmers will look for regulations to be simplified and more tailored to the UK. Exports: A weaker currency should increase the attractiveness of UK farming exports, offset by any increased cost from raw material imports and any newly imposed trade tariffs. Labour: UK farming is heavily reliant on seasonal agricultural workers, many from other EU states. The UK government has previously looked to encourage the employment of more UK workers on-farm but how will things change for those bringing in workers from abroad?
ZAM MPE PIM CWK CHOC NWF AEP DKL
Supporting the agribusiness growth story | Dairy Crest – opportunity and new numbers
Zambeef Products PLC Dairy Crest Group
As expected, H1 2016 results show strong momentum in the core Cold Chain Food Products, Retailing and Stockfeed businesses offset by an extremely strong FX headwind when reported in US dollars. There is evidence of a stabilisation or upward movement in agri commodities while cost control was excellent, enabling us to make a 16.5% upgrade to FY2016E adjusted PBT, albeit off a low base. There are still uncertainties relating to the Zambian economy and the settlement of the RCL put option. As such we are not changing our 15p price target, but continue to believe there is substantial value in the shares at these levels.
Zambeef (ZAM LN), the vertically integrated agri-business with operations in Zambia, Nigeria and Ghana, has released interim results for the period ended 31 March 2016 (H1 2016).
Zambeef (ZAM LN), a vertically-integrated agribusiness with operations in Zambia, Nigeria and Ghana, has released its full-year results for the period ended 30 September 2015 (FY 2015), following its trading update for the period, released 30 September.
Zambeef*: Strong underlying progress (CORP) | Weatherly International*: Loan repayment deferral (CORP)
Zambeef Products PLC Weatherly International
The recent sharp share price fall (c.50% since the release of Zambeef's FY15 pre-close trading statement on September 30) is attributable, we believe, to heavy investor selling on the back of continued recent volatile swings in the Zambian currency (Kwacha) against the US$, reflecting in turn exchange rate risk back at the forefront for some investors. We therefore welcome today's update in which the company (1) clarifies further the past impact on currency fluctuations on its reported and underlying earnings and cashflows; (2) outlines further its efforts to hedge and address the currency mismatch between the company's revenues, costs and liabilities, where we single out the material progress made on net debt reduction; and (3) highlights encouraging robust demand in its core markets (ie retailing of cold chain meats and dairy products) in the first month of FY16, thereby continuing the established patterns seen in FY15 which had become obscured by the currency risk issues.
Following its year-end trading update on 30 September, Zambeef (ZAM LN), a vertically-integrated agribusiness with operations in Zambia, Nigeria and Ghana, has released a further statement, updating on its US dollar debt position.
Zambeef: FY 2015 Trading Update
FY 2015 estimates are unchanged but the real issue is FY 2016, and the recent impact of the depreciation of the Zambian currency.
During H115, Zambeef has made significant progress in improving the profitability of its core cold chain food distribution businesses. Gross profits from the beef, chicken, pork, milk, eggs and fish operations rose by 29% year on year to $21.3m (48% in kwacha terms), resulting in the group generating $0.1m profit before tax (adjusted for unrealised forex) compared with a $3.2m loss in H114. Following the disposal of the non-core Zamanita business which completed earlier this month, we reinstate our estimates and see fair value at 17-30p.
Zambeef has made a strong start to the year with all core businesses performing well, strong cash generation and a non-core business sold off, resulting in a much stronger balance sheet. The fly in the ointment is the weak Zambian Kwacha, which has resulted in US$7.6m of exchange losses in H1. This is clearly exceptional in nature and should not detract from the improvement in operating performance. We continue to believe that Zambeef is an excellent recovery story in very dynamic frontier markets. We retain our 24p price target, implying c100% upside.
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Zambeef offers an interesting investment opportunity on three levels: 1) it is a direct play on the rapid growth in GDP and GDP per capita in subSaharan Africa, specifically Zambia; 2) we expect the business to have a strong recovery in earnings after a turbulent couple of years; and 3) the valuation offers substantial upside given the shares currently trade at 0.2x book value, 8x FY 2016E earnings and have the potential to deliver a double-digit free cash yield. Our 24p target offers c100% upside from current levels.
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