Report
Victor Dima
EUR 22.26 For Business Accounts Only

Tongaat Hulett (HOLD, TP ZAR 140/share) - FY 17A result: 300 bps y/y EBIT margin expansion driven by sugar operations; solid sugar production outlook

​TON FY 17A sales estimate 5% below ACe and 8% below consensus driven by lower than expected sugar operation revenues.

300bps y/y improvement in EBIT margin with strong sugar operations margin despite weak operating performance by starch division.

Muted performance from Land conversion and development division, with only 75 hectare land development vs. 121 hectare in FY 16A.

Strong guidance for sugar production: +44% over 2 years from FY 17A level of 1.05m tons. Land development guidance healthy with current negotiations for 233 hectares, however, we remain conservative in our estimates. Maintain HOLD.

Underlying
Tongaat Hulett

Tongaat Hulett is an agricultural and agri-processing business which includes integrated components of land management and property development. Through its sugar and starch operations, Co. produces a range of refined carbohydrate products from sugar cane and maize. In addition, Co. is engaged in the production of downstream agricultural products, biofuel production and electricity generation. Co. operates in Botswana, Namibia, Mozambique, South Africa, Swaziland and Zimbabwe.

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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