Well, it's all called off. Due to rain, apparently. And no OIO approval by 20 March.
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Well, it's all called off. Due to rain, apparently. And no OIO approval by 20 March.
Record profit. Aside from all the corporate speak, shows also the benefit of throughput - up 25%. Must have declined over the years.
$25.4m for takeover might now seem cheap....
https://www.odt.co.nz/rural-life/red...ts-record-high
Certainly an incredible turn around,after years in the wilderness.
Wanting to spend $11mil of capital.?
Hopefully they will post an agm presentation, and some guidance.
Having the sale to the Chinese turned down certainly seems to have galvanized them!
Long may it continue!
Trading at a PE of 4, and around 60% of NTA. Dividend payout poor however.
Does anyone know much about this company, and why the capex/reinvestment costs are so high (they state most of it is just to maintain operations)?
Maybe the big capital expenditure is a concern,taking into account their market cap is currently under $15mil..?
The current plant capacity infrastructure at Morton Mains continues to constrain growth opportunities. However, additional throughput was still achieved, and an $11 million capital expenditure program is now underway to address constraints, increase efficiency, reduce physical hazards and improve environmental performance.
Probably have to look back over recent years why it is trading at PE of 4. Historically been a solid yet unspectacular performer through its history, but made losses of around $2m in 2016 & 2017, before returning to profitability the last couple of years. Turnover was circa $140m last FY, and made $3.6m net, which is a good effort but traditionally the industry runs on low-ish margins.
They've had a change of strategy, new CEO and new cornerstone (Chinese) shareholder - who at one stage made a takeover offer (at $2.20/share). There are 4 long-term main shareholders which hold circa 63%. Rest is small shareholders and would say likely farmers/suppliers - can be in the top 10 with only 60,000 shares/$80k worth.
Looks like last season they processed more lambs.....much greater efficiencies/lower cost of product. Without being privy to the figures, can see that their EU quota was well down (which is a 3-year rolling average of their share of the national production). With lamb numbers overall having decreased over the years, especially in Southland with dairy, then lower share of a declining market isn't a good place to be. Appears that they've arrested that in the time being - last annual report said that number of livestock processed was 742,000, up 25%.
A few years ago they bought an old plant in Gore, with the goal of processing beef - which I think was a bit of a lemon. Lost money, shut it down and now using for petfood. Probably only paid a couple of mil for it, now getting some revenue/benefit packing ingredients for petfood.
I wouldn't get hung up about NTA. A meat plant in the middle of nowhere in Southland wouldn't have the greatest residual value. Probably the land it sits on is the most value thing (ironically for dairying).
They say their capital expenditure programme is being funded out of cashflow. Some of it will be capital stuff, but expect some will have some payback out of it.
When the takeover was on 2-3 years ago, they stated that <1% of their production was sold chilled - which cannot stress enough that this was absolutely shocking and simply unbelievable!! (what were their sales staff doing??) Just a lost opportunity, and see they have stated some growth and looking at their latest AR would say they are up to about 9% chilled - so good progress but still some what to go. Basically doesn't cost them much more to produce - but sells at a higher price, better cashflow and missing that revenue. Back at the same time - they identified they had a yield 3% lower than the industry - again a lost opportunity, which hopefully they are addressing.
My guess is they probably had a reasonable first 6 months, but 2nd HY would be tougher - due to sales into China through February and now 2m separation rules in plant and the resulting inefficiencies through the lockdown. Expect inventory would be decreased this year, and FX would be a good tail wind.
SFF should report next week, so their result may give a little guide (apparently a pretty strong result), but their FY ended 31/12.
Furthermore....in terms of future (share) prospects....
Not sure on the potential for any future takeover. Binxi probably had their chance and didn't take it. In recent times they've had their own issues with their plant in Oamaru (exports to China suspended - now reinstated. Closed for a few months). Probably have some sort of relationship/influence over Chinese sales, so may not need takeover. Any further increase in Binxi SH would trigger a full takeover.
They largely failed in their foray into beef, with the purchase of the Gore plant, and then shut it down. Think the plant would have significant issues, and would need to spend some money on it. Also, at the same time Alliance is trying to expand their beef production. When it works, beef can be very profitable - but there is potentially room for a niche, well-run efficient operation to take on the bigger boys.
Otherwise the company has been around since about 1987 (I think). Shown no growth/expansion etc. Operating in a geographic area dominated by Alliance/SFF and potentially opportunities to take on the bigger boys - again as niche, operating efficient processor. It has been this for many years, having a better utilisation of their plant compared to others in the area. But seems like they have lost their way. One plus in the current environment, is if unemployment increases, may be better placed for labour - ensuring fully staffed and lower staff turnover.....
Their 2nd largest shareholder is Lowe Corp - Hawkes Bay-based renderers/skin company - so logically could be some connection/relationship there.
In terms of investing, I would be looking for them to be consistently profitable, livestock numbers on better levels (lower cost per unit), better returns out of rendering/petfoods, increasing chilled (more margin) and better operational stats (ie yield). Would also want to see the end of the capital expenditure programme and a return to dividends (given lack of growth). Shares are very illiquid, so would have to maybe wait for an entry point and be a long-term hold.
No FY result as yet - last year was the 4th of July.
Would just be interesting to see how they perform in comparison to other companies.
Still waiting. Must be very soon, maybe before the end of the month??
Midday business news on RNZ yesterday. Starts around 03:25 https://www.rnz.co.nz/audio/player?audio_id=2018765915
https://usx.co.nz/uploads/paperclip/...pdf?1602216037
Must have come out late Friday. Haven't had a chance to have much of a look as yet.
Can see why sneaked it out. While NPAT is marginally down on last year - 15 months rather than a 12 month period. The extra months of April-June would normally be some of their higher throughput/more profitable months I'd imagine. So hard to tell if procuring/processing more or just the addition of those months.
They champion their EBITA strategic plan gains - which is great but what would have happened without these gains?
One of the positive aspects is the capital expenditure of $8.5m, funded out of operating cashflow (and no long term debt). Hopefully are projects that generate income, rather than just cost of doing business.
Keen to push points of difference, premium returns | Otago Daily Times Online News (odt.co.nz)
Interestingly it came out in the ODT before it was announced on the USX.
Going to be a busy boy.
He is currently a director of Lean Meats Ltd and Atkins Ranch Holdings Ltd, and chief executive of Atkins Ranch — a US retail-focused lamb marketer. He is also chief executive of Progressive Meats, a specialist toll processor of lamb, mutton, goat and beef in the Hawke’s Bay.