Costa Group Holdings Ltd


CGC Details

Result exceeded prospectus forecasts: Costa Group Holdings Ltd (ASX: CGC) recently issued 200,000 C class shares to its chairman, Neil Chatfield. The group reported an 11.6% rise in revenues to $821.9 million, which is 9.6% above the prospectus forecast. Produce segment reported a revenue growth of 18.7% led by citrus, berry and mushroom volume growth. Costa Farms and Logistic segment grew by 5.9%. The international revenue increased by 79.1% to $12.1 million. As a result, the statutory net profit after tax grew 485.6% to $25.3 million while pro forma net profit grew 29.3% to $49.3 million.
 

FY16 Results (Source: Company Reports)
 
FY16 projects (76ha) across four regions – FNQ, WA, Tasmania and Corindi were also finished on schedule. Morocco business saw strong demand for African blue product while price premium was achieved. China joint venture is progressing well wherein second farm was being established in new region at Manlai. On the other hand, for FY17, the group expects 10% growth in net profit (pre – SGARA), which is slightly lower as compared to FY16 growth. Moreover, the stock is trading at a higher P/E. We rate the stock as “Expensive” at the current price of $3.00
 

CGC Daily Chart (Source: Thomson Reuters)
 
Seafarms Group Ltd


SFG Details

Strength from new project:Seafarms Group Ltd (ASX: SFG) is currently developing the project, Sea Dragon (PSD) - a large scale integrated land based shrimp aquaculture project in northern Australia. The cost of the project is over $65 million and is expected to be completed by end of CY16. At full productions, the PSD would be the 7^th largest producer of shrimp globally. At full capacity of 162000 tonnes, the company expects to earn revenues of US$2.1 billion. Meanwhile, the company has changed its year ending from September to June and accordingly for nine months, shrimps’ sales grew 4.7% to $19.2 million. The group has seen continuous improvement in black tiger production, while yield improved by 37% in FY16 second half. The group had initiated brand positioning while enhancing its presence in social media network. With the first export shipment to Europe, the company is focusing on export market as it offers better pricing and better terms of trade along with the strong domestic market. Its Cardwell operations acquired in 2014, reported a production growth of 121% post acquisition.
 

Seafarm group’s production overview (Source: Company Reports)
 
Seafarm Group has raised $11 million placement for Institutional and professional investors. Considering the solid progress of the company’s projects, we recommend a “Buy” on the stock at the current market price of $0.099
 

SFGDaily Chart (Source: Thomson Reuters)
 
Australian Agricultural Company Ltd


AAC Details

Benefit from China led growth:Australian Agricultural Company Ltd (ASX: AAC) is well positioned to benefit from demand in China. The food exports to China have risen from under $1 billion to over $ 5 billion in the past decade. AAC is Australia’s largest producer of beef and recently improved business model with the building of a processing facility in Darwin. The facility provides for an improved vertically integrated offering and a strategically positioned asset close to Asia. AAC’s total kilograms of beef and by-products sold in 2016 had risen by 96% while total sales revenues increased by 45%. Beef exports to US and South Korea were up 175% and 54%, respectively. With the stock available at an attractive P/E, we recommend a “Hold” at the current price of $1.69
 

AAC Daily Chart (Source: Thomson Reuters)
 
Capilano Honey Ltd


CZZ Details

Strategic acquisitions and divestments:Capilano Honey Ltd.’s (ASX: CZZ) Manuka beekeeping assets were sold to Medibee Apiaries Pty Ltd for $9.225 million. Medibee Apiaries Pty Ltd, a 50:50 joint venture company with Comvita, was formed to deliver premium honey for a range of medical and natural health products. The group has been continually putting efforts to make strategic acquisitions. In July 2016, Capilano Honey Limited acquired 50% of the share capital in Western Honey Supplies Pty Ltd for consideration of $2.500 million and established a 50:50 Joint Venture with this Western Australian honey producer. This venture would strengthen their geographic diversity, while improving supply chain security and growing net production of honey over time.
 

Honey Sales (Source: Company Reports)
 
For FY16, the company has reported a 10.6% rise in revenues to $133.62 million while net profit grew 20.9% to $9.48 million. The group will have its AGM in November 2016. On the other hand, we believe the stock reached slightly higher levels while trading at a high P/E. We rate the stock as “Expensive” at the current price of  $19.11, and would review it at a later date.
 

CZZ Daily Chart (Source: Thomson Reuters)
 
Clean Seas Tuna Limited


CSS Details

Building distribution in China: Clean Seas Tuna Limited (ASX: CSS) reported that FY16 sales exceeded 2000 tonnes while sale was of the order of $30.09 million for FY16 against $18.48 million in FY15. Net loss was at $9.93 million against the profit of $1 million. The company has signed a contract with Beston Global Food Company Ltd (BFC) for the distribution of its fresh and frozen Kingfish into China, Hong Kong and South Korea for the period from June 2016 to December 2017. This includes the initial shipment of 176 tonnes of frozen products. Through these sales, the China operations of BFC have facilitated the establishment of group’s Kingfish as a premium seafood product in the Chinese and South Korean market. We recommend a “Buy” on the stock at the current market price of  $0.04
 

CSS Daily Chart (Source: Thomson Reuters)
 
Farm Pride Foods Ltd


FRM Details

Strong profit growth:Farm Pride Foods Ltd (ASX: FRM) recently reported for acceptance of resignation of its auditor, Pitcher Partners by ASIC. FRM earlier reported total revenues of $93.77 million for FY16 as against $91.34 million in FY15. The consolidated net profit was at $8.13 million from $5.05 million in 2015. Improved customer services, operational performance, consistent quality and ongoing focus led the company to report strong profit numbers. Furthermore, the new free-range facility is due for completion by end of CY16, cash investment was at $6.42 million during the period. On the other hand, the dairy market has been under some pressure and the egg industry faces pricing challenges. Based on the foregoing, we rate the stock as “Expensive” at the current market price of $1.90
 

FRM Daily Chart (Source: Thomson Reuters)

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