AVI | Took the biscuit
A poor discretionary environment affected AVI (H1 '19 HEPS -6% yoy) despite relief from low raw material prices. In our view, AVI runs an excellent operation with limited ability to extract further efficiencies. We do not see near-term catalysts to improve consumer spending behaviour. We expect AVI's earnings to decline over the next six months (-2% yoy). Restoring volume growth will be challenging in an intensely competitive environment. We believe margins could come under further pressure from levels that are higher than its global peer Group average. Increasing fishing costs at I&J are a further risk to margins, given potential rising costs for the 2020 deep sea fishing rights renewal.AVI is a branded consumer products company. Co.'s business segments include: Entyce Beverages, which sells tea, coffee and creamer, primarily in South Africa and neighboring countries; Snackworks, which sales a range of sweet and savory biscuits and baked and fried potato and maize snacks; I&J, which catches fish in South African waters, and processes, markets and distributes seafood in local and international markets (mainly Europe and Australia); Fashion brands, which provides personal care and footwear and apparel offerings; Personal Care, which creates, manufactures and distributes cosmetic and toiletry products that range from mass market to bridge fragrances; and Footwear and Apparel.
Avior is a globally recognised capital markets research and trading firm, with the broadest research coverage within the region, with 100+ SA and 20+ SSA companies under coverage. Avior services clients from offices in London, Cape Town and Johannesburg.
Our research quality is consistently recognised in local and global surveys, with 18 analysts currently rated in their respective sectors (FM 2017). Value add through in-depth, innovative, high quality and consistent research with comprehensive underlying fundamental modelling supported by regular analyst and roadshow interactions.
Avior has proven that by working closely with our clients we can mutually develop dominant positions in certain sectors, going from strength to strength. Avior has a dedicated ESG team, having been ranked #1 in Corporate Governance research since 2008.
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