reports
- Steph Erasmus
AECI | An explosive performance
While FY ‘18a AECI (AFE) operating profit increased c.27% YoY, Schirm's performance disappointed. The speciality chemicals sector in Germany has de-rated c.20% since the purchase of Schirm. In our view, the Schirm acquisition will provide the Group's Plant and Animal health segment with a double agricultural season in the Northern and Southern Hemispheres which will unlock value for the Group. We expect Schirm's FY ‘21f operating profit to expand to ZAR283m (FY ‘18a: -ZAR21m). Our DCF me...
- Steph Erasmus
AECI | Ready, steady, acquire, go?
AECI has struggled to deploy capital over the past five years, evidenced by special dividends and share buybacks. However; AECI deployed R3.9bn on two strategic acquisitions after the reporting date. The two acquisitions diversify AECI's product and geographical footprint. The new acquisitions will be earnings accretive for AECI. However, we are concerned that management may have overpaid. Management must ensure that margins are maintained if the acquisitions are to be accretive.
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