Food Production

Food Production equity research

Explore the most viewed and latest equity research and media content for companies within the Food Production sector. Stocks operating in this sector provide services ranging from agriculture & fishing to general food production.

Food Production equity research

06 Nov 18

THE MONTHLY November 2018

In addition to Hardman’s monthly analysis of client stocks, the thorny issue of market disruption – a popular theme currently - is also addressed. In a wide-ranging article, Hardman’s utilities analyst, Nigel Hawkins, assesses the impact that market disruption has already made. In some sectors, notably telecoms and aviation, market disruption has been apparent for many years, as the rise of Vodafone, Ryanair and easyJet demonstrates. However, in some sectors, such as oil and housebuilding, structural changes have been modest – the dominance of the big players endures. For investors, there is real interest in those sectors where changes are underway. The UK groceries market, which may shortly become a duopoly, is a case in point. And, intriguingly, who knows if there is a company currently languishing in AIM, which will attain a £50bn market valuation within the next decade?

Companies: OPM AVO AGY APH ARBB AVCT DISH BNO BUR CMH CLIG CSH DNL DPP GTLY GDR HAYD KOOV MCL MUR NSF OXB PHP RE/ REDX SCE SIXH TON VAL VTA W7L

12 Nov 18

Carr's Group - Recovery in both divisions confirmed

The FY18 results for Carr’s Group show that it has delivered the promised recovery in both divisions. This is the result of (1) market conditions which have boosted demand for feed blocks in the US and a wide range of agricultural inputs in the UK; and (2) prior year investment, for example in feed block production capacity and in acquisitions. Noting that the FY18 performance was ahead of our estimates, we revise our FY19 and FY20 forecasts upwards and raise our indicative valuation by 4p/share to 182p/share.

Companies: Carr's Group

18 Jul 16

Machinations

Could Brexit be a positive for the UK Industrials sector? While the EU and UK are important to each other in terms of trade, the level of that importance is asymmetric: 44% of UK exports go to the EU and a further 10% go to countries with free trade agreements with the EU; only 15% of EU exports go to the UK. As a result, we feel that UK bargaining power is relatively weak and we need to accept the possibility that the UK drops out of the single market and trades under WTO terms with Europe. The extent to which this is a positive or negative for UK Industrials depends entirely on the value of Sterling versus the Euro or US Dollar. We analyse this and conclude that with a 7% (or greater) depreciation of Sterling (versus pre-Brexit levels), all the costs associated with WTO trade are more than compensated for. Big exporters become strategic winners and big foreign FX earners become financial winners. Largely domestic players are at risk. Export or die!

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19 Sep 18

LIBERUM: Science in Sport* - Initiation - Moving forward

SiS operates in a structurally growing market in which it is rapidly taking share through its distinct market position and product range. The approach towards quality, cutting-edge science and banned substance testing is unique and is the only brand with dual accreditation at site and product level.

Companies: Science In Sport

03 Oct 17

Finding attractive opportunities

Downing Strategic Micro-Cap Investment Trust (DSM), which had its IPO on 9 May 2017, focuses on driving long-term returns from an overlooked area of the market, investing in companies below £150m market capitalisation at the time of investment. The manager (Downing LLP ‘Downing’) takes strategic stakes in companies that it concludes have reached a transformational stage and yet are undervalued. It does so after executing a private equity style due diligence process. Downing is prepared to be constructively active and engaged in its involvement. In our view this differentiates its mandate from the vast majority of other small and micro-cap managers.

Companies: RGD RHL BMS GMAA ADT

16 Oct 17

Shopping Trolley

We examine wet-led and food-led capacity across the regions and conclude that excess capacity remains in the food-led segment (although Central, Welsh and Yorkshire regions lag the national average). Despite recent profit warnings, an increasing divergence in reported performance between pubs and restaurants, and a recent reduction in eating out frequency and spend, existing food-led operators remain too focused, in our view, on trimming estate tails and slowing rollout rather than substantial capacity reduction – and combined with smaller PE-backed concepts scaling up and landlord pragmatism, net new capacity continues to enter the market. Given the severe cost and competitive pressures, as well as downside macro risks, we foresee more pain across the sector – in the near term expect aggressive menu price discounting to continue, leading subsequently to margin pressure and forecasting risk for listed operators and financing risk for smaller, highly leveraged private operators. While rightsizing will happen (it did with pubs), the process may be protracted. We run the finnCap Slide Rule over the casual dining space, with our preferred pick (BUY, 19p PT) scoring highest on QVGM metrics. While not immune to sector woes, lacks an estate tail, should be a beneficiary of trading down, and has a number of self-help levers, as well as a management team that has seen the movie (many times) before.

Companies: BOTB FUL HOTC IDP JOUL CAKE PHTM RGD RBG SCS SHOE

09 Nov 17

The Joy of Techs

This quarter we use finnCap’s Slide Rule to provide both top-down and bottom-up analysis of the UK’s Technology and Telecoms sectors. Our findings are very reassuring: the Tech sector scores the best (across all sectors) when considering Growth and Quality – Taptica*, Frontier Developments* and dotDigital* in particular stand out on these metrics. Given these attractive characteristics and growth prospects, the Tech sector is unsurprisingly one of the most expensive – currently trading at 17.2x FY1 EV/EBIT and 23.8x FY1 P/E, versus 15.0x and 18.5x respectively for the wider market. Despite valuations appearing high, we believe there are value opportunities. For example, Proactis* features in finnCap’s QVGM+ portfolio (ranked 17/462) – the company offers attractive organic and inorganic growth, with earnings forecast to grow by 26% CAGR over the next two years, but despite this, only trades on 15x FY1 earnings and offers 8% FCF yield in FY2.

Companies: 7DIG ALT AMO ARTA BOTB BLTG CTP CITY D4T4 DTC DOTD ELCO ESG FDEV GBG IDEA IDOX IMTK IGP IOM KBT KCOM KWS LRM MAI MMX NASA NET PHD QTX QXT RCN 932 SSY SEE SIM SPE SRT STR TAP TAX TEP TPOP TRAK UNG VIP ZOO CYAN ONEV

03 Sep 18

The Monthly September 2018

September’s Hardman Monthly features an article from guest contributor, Tim Ward. Tim is the Chief Executive of the Quoted Companies Alliance (QCA), an organisation that champions the interests of small to mid-size quoted companies.

Companies: OPM AVO AGY APH ARBB AVCT BNO CMH DNL EVG GDR INL KOOV MCL MUR NSF OXB PHP RE/ REDX SCLP SCE SIXH TRX TON VAL W7L

01 Oct 18

Carr's Group - Acquisition broadens animal nutrition offer

On 21 September, Carr’s Group announced that it had completed the acquisition of Animax, a producer of animal health products, for a total cash consideration of up to £8.5m. The transaction will broaden the group’s existing range of animal health products and supplements. We raise our estimates and reiterate our indicative valuation of 178p/share.

Companies: Carr's Group

04 Oct 18

THE MONTHLY October 2018

We are in the midst of the Conference season for political parties and trade unions in Britain. We all have a lot on our minds, with generational constitutional issues to the fore, but these have come to the fore after many years of concerns building up about citizens’ ‘place in the world’.

Companies: OPM AGY ARBB AVCT DISH BNO BUR CMH CLIG DNL DPP GTLY GDR HAYD KOOV MCL MUR NSF OXB PHP RE/ REDX SCE SIXH TRX TON VAL VTA W7L

07 Nov 18

Q3: a decent quarter

The company scored quite a decent quarter given the strong comparables from last year. Sterling’s headwinds and Brexit woes clearly weighed on the reported figures limiting the excitement.

Companies: Kerry Group

12 Apr 17

Venture Life Products

05 May 15

Overview of the business with CEO Dennis Melka

16 Sep 15

Product Update

12 Apr 17

Venture Life Investors Overview

21 Sep 16

Interim Results: 30 June 2016

13 Jul 15

Executive Interview - Cooks Global Foods

20 Dec 12

Analyst Interview - Devro

04 Jan 16

Company Overview

11 Nov 14

Executive Interview - Carr’s Milling Industries

15 Oct 14

Executive Interview - Carr’s Milling Industries

Latest Content

Carr's Group

VSA Morning Agri Comment

Carr’s Group (CARR LN) # , the agricultural and engineering group, has released results for the year ended 2 September 2018 (FY 2018).

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12 Nov 18
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Carr's Group

Carr's Group - Recovery in both divisions confirmed

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12 Nov 18
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CENTRALE DEL LATTE DI TORINO

Centrale del Latte d'Italia - Deteriorating consumer environment

The economic and consumer environment in Italy remained challenging in Q3, and Centrale del Latte d’Italia (CLI) also faced tough comparatives as we start to cycle a full year of price increases. The export business continued to be a stand-out performer, albeit from a low base. We leave our forecasts unchanged, but we note the current headwinds are unlikely to abate in the near future. We expected H2 to be more difficult than H1 as the comparatives got tougher, so we leave our estimates unchanged. Our fair value remains €3.35 per share.

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12 Nov 18
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BNOCMHRE/SCEELCOARBBSIXHTONAPHMURITVAGYEMECLIGZOOGDRDPPOPMAVOCSHDNLOXBKOOVHAYDGMDNSFREDXVALGTLYW7LRREPHPPURPAVCTMCLVTABURDISH

Deoleo

Ugly 9M

9M update: sales were down 11% with the EBITDA margin contracting to 2.8%. The net loss for the period stood at €-63m. By region, Southern Europe recorded a sales contraction of 8% and the EBITDA margin was at 4.6% (-60bp). Northern Europe’s sales were down 14%, whereas the EBITDA margin stood at 1.9%. North America recorded -12% in sales with the EBITDA margin at 5% (vs. 17% a year earlier). The International businesses’ revenues were down 6% and the margin stood at 11.2% (-110bp).

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08 Nov 18
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Kerry Group

Q3: a decent quarter

The company scored quite a decent quarter given the strong comparables from last year. Sterling’s headwinds and Brexit woes clearly weighed on the reported figures limiting the excitement.

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07 Nov 18
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OPM AVO AGY APH ARBB AVCT DISH BNO BUR CMH CLIG CSH DNL DPP GTLY GDR HAYD KOOV MCL MUR NSF OXB PHP RE/ REDX SCE SIXH TON VAL VTA W7L

THE MONTHLY November 2018

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06 Nov 18
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Dekeloil Public

VSA Morning Agri Comment

Côte d'Ivoire palm oil producer DekelOil Public Limited (DKL LN)# has announced that Capro CI, a wholly-owned subsidiary of Pearlside Holdings (a vehicle DKL has an option to acquire a 58.5% interest in) has awarded a €6.5m turnkey contract for the construction of its large-scale cashew processing project at Tiébissou in Côte d'Ivoire to Overseas Projects & Services Limited (OPSL).

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31 Oct 18
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Parmalat

Q3 falls flat

9M update: sales flat (+0.1%) at constant FX and scope of consolidation and excluding Venezuela. Volumes were up +1.2%. On the reported figures, sales were down 2.1%. FY18 maintained: net revenue is expected to contract by 1%, whereas EBITDA growth is expected to be in a range between -3% and 0%.

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31 Oct 18
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Ebro Foods

Q3: challenging cost structure

Q3 update: Sales are up 11%, however, the EBITDA margin contracted by 340bp due to the Rice business which was impacted by higher raw material prices (mainly in North America) as well as a weaker Pasta performance and higher logistics costs in the US. By division, Rice recorded +16% in sales and a 516bp EBITDA margin contraction to 9.2%. Pasta recorded +7% in sales and a 316bp EBITDA margin contraction to 9.8% (in Europe, Pasta consumption was negatively impacted by the hot weather, the group expects a more normalised Q4). After 9M, the group’s sales are up 5%, whereas the EBITA margin is 11% vs. 14.3% a year ago. For the FY, the group expects a turnover of €2.63bn, a €304.8m EBITDA and net profit of €148.2m.

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