Silver Ferm Farms

[percy]

What? That might push the PE up to crazy levels of 4.....!!

Ha ha....We may have to live with that....lol.
Iceman.That is really pleasing seeing the industry working together.
I would think AFFCO are getting more experienced arranging shipping, which augurs well for the future.

[iceman]

Ha ha....We may have to live with that....lol.
Iceman.That is really pleasing seeing the industry working together.
I would think AFFCO are getting more experienced arranging shipping, which augurs well for the future.

They are hoping to do 3 -4 more load outs this year. It is a great initiative on their behalf. First shipment included some pip fruit, 2nd was AFFCO only and the 3rd was the 3 meat companies. Well done I say.

[Sideshow Bob]

Another buyer now at $1.31.

Still no sellers.

How is your day going Percy??

Puts a trailing PE at over 4!! Complete madness!!

[percy]

Another buyer now at $1.31.

Still no sellers.

How is your day going Percy??

Puts a trailing PE at over 4!! Complete madness!!

One lonely seller with 10,000 shares has appeared at $1.40.
Most probably worried about the PE going over 4.....!!!
And here is me thinking a PE of 7 would be reasonable..ie a share price of $2.62.

[iceman]

One lonely seller with 10,000 shares has appeared at $1.40.
Most probably worried about the PE going over 4.....!!!
And here is me thinking a PE of 7 would be reasonable..ie a share price of $2.62.

I know it has been an exciting ride since we were doing our numbers a couple of years ago and not believing them. But I think now you've just become silly, thinking a "reasonable" price is double what it is now.
I think a more prudent and conservative expectation would be another year of a 55% return. I reckon Beagle should put some of his cash pile in here, if there were any for sale.

[percy]

I know it has been an exciting ride since we were doing our numbers a couple of years ago and not believing them. But I think now you've just become silly, thinking a "reasonable" price is double what it is now.
I think a more prudent and conservative expectation would be another year of a 55% return. I reckon Beagle should put some of his cash pile in here, if there were any for sale.

Below I have compared other companies in the primary sector.Yes they are listed.For comparison I have more than doubled SFF last traded share price of $1.25 to $2.60,and adjusted the dividend yield accordingly.
................................................PE .Ratio.............................Dividend yield......NTA.............Current share price
ALF..............................................8 .03......................................0........ ..........44 cents.................86 cents
ARB.............................................-120......................................0........ ...........14.08 cents.............24 cents
ATM..............................................5 1.1.....................................0......... ...........$1.37.....................$5.56
NZK............................................... .?........................................0....... ..............98 cents..................$1.00
DGL.............................................21 .77....................................1.49%...... .........$4.44.....................$13.38
PGW.............................................17 .91....................................5.19%...... ........$1.983.....................$5.39
SAN..............................................2 7.65....................................0......... .............$1.45......................$4.77
SCL............................................... 32.63...................................3.84...... .............$2.40.......................$4.95
SEK............................................... 9.72.....................................5.15%.... ............$5.44.....................$5.05
SML...............................................-13.79..................................0.......... ..............$2.9261...................$3.45
Silver Fern Farms x2 current SP price. .8.......................................3.04%.
SFF at current share price...................3.936..................... .............6.08%................$3.05 [2020]...........$1.25
And on Unlisted market.
Blue Sky Meats.................................26.......... .............................3.84%................ ..?..........................$1.30

PS.Last sale of SFF 10,000 at $1.40...putting SFF at a PE of 4.408 and the yield reducing to 5.429%
On the 15th February 2021 SFF share price was 79 cents.
In the past year as well as receiving a juicy dividend the share price has risen 77.215% to $1.40.
With the company proving they are a sound company,well managed,in a sector under pinning NZ recovery from Covid set backs,I am sure SFF will receive greater support from suppliers and investors,and I look forward to another 77.215% share price increase to $2.48..... .

[Sideshow Bob]

Offer now at $1.60......!!

Wakey, wakey!!

[Sideshow Bob]

Thanks for the comparison Percy. By any metric, SFF is still well under-priced.

It does suffer from history, with the meat industry historically being poor performing, terrible investment for shareholders, marginal profitability and at the whim of the weather and seasons, and competitive environment for livestock supply. It is also important to realise buying shares in a Coop, not a standard company, and co-operative principles can apply. Buying into a Co-op that's major asset is 50% of SFF Ltd. There is the incentive and payment for supplying shareholders - which in most respects is great for rewarding suppliers and ensuring livestock supply. But this is extra payments at the expense of "dry" shareholders.

Flies below the radar on the USX, and also suffers from lack of tangible market updates or HY reporting.

Expecting another good year just past, and another good profit and dividend. This would be 3 years in a row, and through Covid and other challenges. Generally markets have been firm/strong over this period. Much of the profit in the last 2 years have been retained in the company - $136.1m in profits, and last year paid out approx $53m in dividends (2020 $26.5m, 2019 $1.7m + $24.8m as a later payout). Some of this has also been retained in the Co-Op.

The retained profit within SFF Ltd from the last 2 years (and not including the Coop) is $0.41 cps. All signs another good year in the bag - and at some stage going to start spitting out cash. The key will be if they can put to productive use, or come back to shareholders, but some likely to be retained by the Coop to strengthen the Coop further to become self-sustaining.

Undoubtedly there will be poorer years ahead - history tells us that. The key will be how well they can perform in those harder years, when markets are bad, exchange rates go the wrong way, droughts etc, or when there are unforeseen events or issues like Covid. The key difference I see is that SFF are financially in a much, much, much stronger position than in the past, when probably tettering on the brink. Also some of the behaviours have changed over the years, and also seem to perform well compared to their main competitors in NZ, like Alliance and Anzco.

Clearly Omicron is already/going to impact operations over the coming months. Will be alot of cost, inefficiences, shutdowns - and the company will have to manage best they can. At the same time, livestock will still be out there but likely a bit of a lottery as/when can keep operating.

Sure I've said most of this before, but some of it is key to reiterate as believe it is still pretty compelling as an investment, especially in the current times.

In the meantime, enjoying the little bit of price action, and look forward to the next month or so and the annual result.

[percy]

Wise words as always Sideshow Bob..

[iceman]

All completely correct SB. It is very important to acknowledge that the company completely changed when the Chinese partners became shareholders and injected a lot of money into the business. They made sure that the money was used wisely to clean up the balance sheet, re-brand the business and set a clear focus on future strategy. It is clear that both the farmers in the Co-op and the Chinese partners, get on well and are focused on common goals. This strategic focus and directive from the Chinese partner has been a huge commercial success for the company.

The branding of "sustainable" and "grass fed" has also been helped by a huge shift in consumer behaviour where a huge demographic of younger consumers have become much more aware of the origins of what they eat. That doesn't mean they are all going vegan or buying "beyond meat" products. There is already some indications that some of those that did, are moving back to meat products for health reasons. But they want to be sure that the animals are well looked after in their life and are fed with healthy natural feed. "grass fed" has become a big thing in the US, China and Europe.
Silver Fern Farms has realised this early and is at the forefront of servicing this high demand ethically driven market with an above average exposable incomes. They are successfully doing this with both home cooking and restaurants, particularly in the USA.

That's where I see a huge difference in this company from the years bygone that you mentioned. It is now a very focused operation with a strong balance sheet, driven by a consumer segment that is demanding but prepared to pay fairly for what they want, not to mention the much wider geographic market spread than we had years ago. The other important part is that the farmers seem to be generally happy with the change and have started to see the benefit from the new strategy.They realise the way for them to make money, is to deliver what the market wants in today's World.

So yes I agree, we will have all the issues with weather, FX and other unforeseen events. But this company is nothing like what it was 10 years ago and we are just starting to see the benefit from it now.

Lets remember that Silver Fern Farms produces 30% of all beef, lamb and venison in NZ. It has 16,000 farmer suppliers and 7,000 staff in peak season. Sales are around $ 2.5 Billion. We may be on the USX at the moment but this is a very serious business in NZ's biggest industry.
A real turnaround story in lots of ways !