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  1. #221
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    Thanks OTL - all good points. From my side:

    - Markets are currently a little softer/off historic highs. While higher prices are a tailwind on profitability, different products/species/markets go through cycles at different times. However as a processor, it comes down to pricing right and having that in their schedule. Can't see what SFF's inventory was at year end, but would be relatively low currently as only coming into the main season now. Forex an issue but will be covered likely based on their procurement. Key is being able to make money in all market conditions.....
    - Lockdowns in EU an issue for premium cuts, but again as long as priced at the correct levels.
    - Brexit - NZ has diversified away from the EU and not reliant as once were - but a sheepmeat issue not beef or venison.
    - Donning and Doffing will be a significant cost, and I estimate will be roughly 50% bigger than Alliance, based on size. However understand Alliance got off proportionally lightly compared to some other companies.
    - Capex is fine as long as a suitable return/payment (rather than BAU spending). Obviously sustainability is highlighted and rightly so, going to become a bigger issue and best to try to front-foot it. $90m is a reasonable chunk of change to spend over the last 3 years, and sale of Fairton and retained profit from last season is still a large chunk of cash.
    - RCEP - The reality is that with most markets NZ has pretty good access. The main RCEP benefit could be Indonesia, which NZ largely got shut out of and there was a WTO case. Don't know the exact situation, but could be beneficial for beef/beef offals.
    - Covid - Pleased they paid back the subsidy.
    - Venison - From what I hear, Alliance are looking to increase, SFF are pulling back.
    - US growth is mainly grass-fed beef. SFF/Alliance/Anzco share joint ownership of The Lamb Company, which does all their sales up there - but their growth is in beef. SFF doing a bit of their own thing.
    - From the outside, I think their internal disciplines have improved and not all about share, but buying what they can sell, and think they are not buying the expensive stock. Lots more staff from outside the industry.
    - Marketing programmes I'm a bit cynical on. Too easily undercut by competitors, or difficulty in maintaining any premium.
    - Staff - No doubt under pressure like everyone, but less reliant on migrants etc.
    - Logistics and shipping is a major issue currently - delays hampering servicing customers, increases storage costs, slows stock turn and cashflow.

    There are no doubt lots of challenges and moving parts in the industry - weather, markets, currency, supply, Covid, alternative proteins, plant based proteins etc etc. In the short term, they have recently said they are on budget for this year, and while don't expect a record profit would think it would be pretty meaningful. I would have thought they would have swept a little under the carpet from last year, and been quite conservative - as would have been finalised when Covid was starting to hit.

    I see them as a beef company - I think that is where they would make their money, and are obviously good operators. Much of that is commodity business.

    Even if their profit is halved from last year, their PE would still be 4......

    Disc: Happy to hold and looking forward to a good divvie.

  2. #222
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    Good discussion guys. As you pointed out SB, a major issue for exporters at the moment is the high freightcost and lack of shipping availability and this could well get worse before it gets better. For those interested here is a good article on it on RNZ and a good interview with Maersk and a freight forwarder in NZ
    https://www.rnz.co.nz/audio/player?a...-D7a4BlD-iu_s0

  3. #223
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    Thanks for comments peeps. Recommend subscribing to Farmers Weekly's daily digest (free), typically have good articles relating to red meat sector.

  4. #224
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    Quote Originally Posted by Out to lunch View Post
    Thanks for comments peeps. Recommend subscribing to Farmers Weekly's daily digest (free), typically have good articles relating to red meat sector.
    Agree. And also Keith Woodford's columns, which are a infrequent, but well worth reading regardless of the subject.

  5. #225
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    Quote Originally Posted by iceman View Post
    Good discussion guys. As you pointed out SB, a major issue for exporters at the moment is the high freightcost and lack of shipping availability and this could well get worse before it gets better. For those interested here is a good article on it on RNZ and a good interview with Maersk and a freight forwarder in NZ
    https://www.rnz.co.nz/audio/player?a...-D7a4BlD-iu_s0
    SFF are in partnership with Fonterra in the Kotahi shipping initiative - and that underpins the Maersk services (and Maersk also own Hamburg Sud) - so expect they have contracted space and volumes, and possibly may have some sort of priority? But expect just because of their volume, they'd be hit with delays.

    POA sounds like a mess - understaffed and also a new automated system that is slowing things down, not speeding up as they should be. With port strikes in OZ, this is having a knock-on effect to other ports.

    Pinch point will come into the New Year once throughputs start to increase, and then coldstorage will be at a premium.

  6. #226
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    Quote Originally Posted by Sideshow Bob View Post
    SFF are in partnership with Fonterra in the Kotahi shipping initiative - and that underpins the Maersk services (and Maersk also own Hamburg Sud) - so expect they have contracted space and volumes, and possibly may have some sort of priority? But expect just because of their volume, they'd be hit with delays.

    POA sounds like a mess - understaffed and also a new automated system that is slowing things down, not speeding up as they should be. With port strikes in OZ, this is having a knock-on effect to other ports.

    Pinch point will come into the New Year once throughputs start to increase, and then coldstorage will be at a premium.
    I would suspect not much SFF product goes through POA but can't find any details

  7. #227
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    Quote Originally Posted by kiora View Post
    I would suspect not much SFF product goes through POA but can't find any details
    Proportionally very little - perhaps from their Dargaville plant - but most of their NI production would be out of Napier and Tauranga I would think. But POA is having a knock-on in terms of causing delays, vessels omitting ports, getting containers in and emptied so they can be exported again etc.

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