Report
Victor Dima
EUR 44.50 For Business Accounts Only

Astral Foods (Sell, TP ZAR 130/share) - H1 17e HEPS guidance revised up; drives 20% upgrade to FY 17e HEPS


  • We increase our FY 17e HEPS by 20% post yesterday’s trading update with revised H1 17e HEPS guidance. We make no changes to FY 18e/19e estimates. Our TP increases by 7% to ZAR 130/share (from ZAR 122/share). We maintain SELL.
  • ARL expects H1 17e HEPS to be between ZAR 3.10/share to ZAR 3.87/share (H1 16A: ZAR 7.74/share) i.e. 50%-60% below y/y vs. earlier guidance of at-least ZAR 1.94/share (-75% y/y). HEPS upward revision is driven by better Q2 17e performance with planned poultry cutbacks and selling price increases. New guidance imply 75% upgrade to ACe H1 17e HEPS (now at ZAR 3.40/share).
  • ARL is trading at c. 30% premium to its historical 2 yr average multiple, which is unwarranted in our view, given the weak state of SA chicken industry.


Underlying
Astral Foods Ltd.

Astral Foods is a poultry producer. Co. is engaged in manufacturing of animal feeds, broiler genetics, production and sale of day-old chicks and hatching eggs, breeder and broiler production, abattoir and further processing operations and sales and distribution of various key poultry brands. Co. has four broiler production, processing, distribution, sales and marketing operations, which include: Festive (Olifantsfontein), County Fair (Western Cape), Goldi (Standerton) and Mountain Valley (Camperdown). Co. has three operating segments, Poultry, Feed, and Other Africa.

Provider
Arqaam Capital
Arqaam Capital

Established in 2007, Arqaam Capital is a specialist emerging markets investment bank, bringing regional and international product offerings to the emerging markets. Arqaam Capital combines international best practice with expertise in the markets in which we operate. Our primary role is to provide financial intermediation and create investment opportunities for frontier and emerging markets investors looking to invest in their own markets and abroad, as well as international investors seeking opportunities in target frontier and emerging markets. Arqaam Capital is headquartered in the Dubai International Financial Centre (DIFC), with additional offices in Libya, Lebanon, Egypt, and South Africa. 

Arqaam Capital's research platform provides the largest coverage footprint of MENA equities and one of the largest on the African continent with a total of 300 stocks under coverage. Arqaam Capital is ranked as one of the leading research providers in the region - a reflection of its broad coverage universe, its in-depth and high quality research, as well the compelling investment ideas that the team generates. The analysts closely analyze their sectors and issue in-depth company and sector research while the strategy team connects the micro with the macro, focusing on index analysis, macroeconomics and strategy research. 

Analysts
Victor Dima

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