Eight stocks in the Food industry

A2 Milk Company Ltd

 
Upgraded outlook: a2 Milk Company Ltd (ASX: A2M) has been added in S&P/ASX 300 Index and All Ordinaries Index as per the S&P DJ Indices Announcement for March Quarter. The company reported record financial results for the first half of the 2016 with total revenue increasing 86% to $139.1 million from the prior year period. Net profit after tax multiplied several times to $10.1 million from $0.1 million earlier. Group operating EBITDA stood at $18.7 million, representing a 472% increase, while gross margin increased 1.2% to $57 million. There was significant growth in revenue and earnings in China.
 

Financial highlights (Source: Company reports)
 
As a result, for full year of 2016, the group has revised its revenue estimates in the range of $335 million to $350 million and group operating EBITDA is forecasted to be in the range of $45 million to $49 million.  Based on the foregoing, we recommend investors to "HOLD" the stock at the current share price of  $1.65
 
 
A2M Daily Chart (Source: Thomson Reuters)
 

Webster Ltd

WBA Dividend Details
 
Revenue growth through acquisitions: Webster Ltd (ASX: WBA) reported first half of 2016 sales revenue from ordinary activities increase by 330% to $56.8 million from the prior year period driven by full operations of the acquired company Bengerang Limitied and Tandou Limitied.
 

Financial highlights (Source: Company reports)
 
But, Net loss after tax attributable to members widened to $96.8 million from $4.3 million in year ago period mainly led by impairment of goodwill charge of $96.4 million. However, WBA enhanced its cash and cash equivalents at the end of the year that increased to $6.3 million from $2.2 million earlier. We remain bullish on the stock and maintain our "BUY" recommendation at the current share price of  $1.17

 
WBA Daily Chart (Source: Thomson Reuters)
 

Vitaco Holdings Ltd

VIT Dividend Details
 
Outstanding performance in China: Vitaco Holdings Ltd (ASX: VIT) reported a revenue of $110.5 million in the first half of 2016, an increase of 37.6% from prior comparable period. The company reported strong growth in all divisions, with excellent result in Vitamins & Dietary Supplements (VDS) leading to revenue and EBIT growth of 41% and 77%.
 

Financials & Forecast (Source: Company reports)
 
China sales stood at $11.5 million during the period which was driven by 233% increase in VDS sales to China coupled with contribution from Musashi acquisition. VIT has been added in S&P/ASX 300 Index and All Ordinaries Index as per the S&P DJ Indices Announcement for March Quarter On the other hand, the stock corrected over 28.30% (as of March 11, 2016) during this year to date impacted by the investors’ concerns over the group’s china segment growth. But, Management estimates a better second half of 2016 performance and we believe the recent correction as an entry opportunity for the stock as we place a "BUY" at the current share price of  $1.88
 
 
VIT Daily Chart (Source: Thomson Reuters)
 

Refresh Group Ltd

RGP Dividend Details
 
Higher valuations: Refresh Group Ltd (ASX: RGP) stock surged by 66% in the last six months and increased 10.7% in the past 5 days alone (as of March 03, 2016) driven by its strong performance. RGP recorded an increase of 8% in financial revenue from ordinary activities in its half year ended in December 2015 to $3.12 million from year ago period while profit for the period attributable to members rose 163% to $0.42 million or 4 cents per share. However, we believe that the strong rally in the stock placed RGP at very high valuations while the stock also has a low dividend yield. We give an "Expensive” recommendation on the stock at the current share price of  $0.076
 
 
RGP Daily Chart (Source: Thomson Reuters)
 

Graincorp Ltd

GNC Dividend Details
 
Bleak agriculture outlook: Graincorp Ltd (ASX: GNC) recently provided a weak FY16 guidance due to challenging conditions across the industry. Underlying EBITDA is seen in the range of $240 million to $270 million compared to $235 million reported in earlier financial year. Underlying NPAT is seen between $40 million to $55 million compared to $45 million in FY15. The company comments that the agriculture sector in Australia continues to face the same macro conditions experienced in FY15, including low grain stocks in eastern Australia, increased availability of grain globally and cheap ocean freight reducing Australia’s export competitiveness. Trading at a high P/E ratio and above stated bleak outlook, we rate the stock as "Expensive" at the current share price of  $7.43
 
 
GNC Daily Chart (Source: Thomson Reuters)
 

Capilano Honey Ltd

CZZ Dividend Details
 
Entering into new ventures for growth: Capilano Honey Ltd (ASX: CZZ) recently announced that it has signed a Memorandum of Understanding with Comvita (NZX: CVT) to form a new, jointly-owned apiary business in a 50:50 ownership agreement. The new business intends to operate a number of Leptospermum honey producing apiaries in Australia, to deliver premium honey for a range of medical and natural health products.
 
 
Financial Highlights (Source: Company reports)
 
Meanwhile, CZZ also reported a record first half of 2016 results with net profit before tax of $7.77 million against $5.12 million for the same period last year. Revenue was up 15% to $67.1 million with export sales driving growth of 32%. CZZ has been added in All Ordinaries Index as per the S&P DJ Indices Announcement for March Quarter. But, the CZZ stock fell over 13.12% during this year to date (as of March 11, 2016) due to the group’s rising inventories, which increased to $32.6 million in the first half of 2016 against $23.3 million in pcp. Moreover, the company has a low dividend yield. Therefore, we rate the stock "Expensive" at the current share price of  $18.47
 
 
CZZ Daily Chart (Source: Thomson Reuters)
 

Fonterra Shareholders' Fund

FSF Dividend Details
 
Solid bottom line performance: Fonterra Shareholders' Fund (ASX: FSF) recently reduced its forecast Farmgate Milk Price for the 2015/2016 season from $4.15 per kgMS to $3.90 per kgMS. Fonterra is forecasting its New Zealand milk production to be at least 4% lower than last season as New Zealand farmers respond to the ongoing low prices by reducing herd size and feeding significantly less supplementary feed which is expected to have an impact on this autumn’s production. Therefore, the stock fell over 6.86% (as of March 11, 2016) in the last five days alone.
 

Second half performance (Source: Company reports)
 
But investors need to note that for FY15, the group delivered a solid bottom line growth with normalised EBIT reaching $974 million, up 94%, while net profit after tax was up 183% to $506 million. Trading at a good dividend yield, we give the stock a "BUY" recommendation at the current share price of  $5.15
 
 
FSF Daily Chart (Source: Thomson Reuters)
 

Ridley Corporation Ltd

RIC Dividend Details
 
Stable financials: Ridley Corporation Ltd (ASX: RIC) stock fell over 17.30% in the last three months (as of March 11, 2016) on the back of tough market conditions in Australia. However, RIC managed to deliver first half of 2016 revenue increase by 2% to $472.7 million from year ago period. EBIT result for agribusiness stood at $27.7 million, which is higher by $2.1 million on same period last year with no normalizing adjustments.
 

Financial highlights (Source: Company reports)
 
We rate the stock a "Speculative Buy" at the current share price of  $1.31.
 
 
RIC Daily Chart (Source: Thomson Reuters)

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