Avior Capital Markets - RCL Foods Ltd (108N) RCL Foods | Fowled by SA sugar and chicken imports

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Avior Capital Markets

Jiten Bechoo ...

Pratish Soni

RCL Foods | Fowled by SA sugar and chicken imports

RCL Foods has a diverse portfolio of branded and commodity food products. However, weak pricing power in SA's chicken and sugar industries lead to margin volatility. HEPS fell 27% yoy to 54cps in H1 '19. Steep profit drawdowns in sugar and chicken have offset the grocery businesses' good performance. RCL is gaining market share in its grocery categories despite deep discounting by peers. Efforts to innovate its grocery portfolio, including new products and pack sizes are increasing consumers. With higher sugar tariffs in place and stable production, RCL's sugar business will probably normalise profitability over the next 12m. For chicken profits to recover, RCL depends on the imposition of higher anti-dumping tariffs on Brazilian chicken imports. Further, the chicken business is sensitive to maize input prices

20/03/2019 13 EN

Underlying

RCL Foods Ltd

RCL Foods is a holding company. Through its subsidiaries, Co. is engaged in producing and marketing chicken and its related products. Co. breeds and rears its own livestock which it feeds from its own feed mills, processes, distributes and markets fresh, frozen, value-added and further-processed chicken. Co. operates in the local retail, wholesale and foodservice channels under its own brands, including Rainbow FoodSolutions, Cobb and Epol. Co. consumer brands include Rainbow and Farmer Brown.

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ZAE000179438 Johannesburg Stock Exchange South Africa

Provider

Avior Capital Markets

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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Analysts

Jiten Bechoo

Pratish Soni

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RCL Foods | Fowled by SA sugar and chicken imports

Vital Signs: Actionable charts

Vital Signs: Actionable charts

RCL FOODS sees a downgrade to Slightly Negative on account of less fundamental stars

Tiger Brands | ESG | Pressed to execute

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