Apparently Baiada has - might be the next poultry IPO if not bought out first by PE
Bigger and better than Inghams they say
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Comment from Sydney Morning Herald on Inghams IPO - comparisons with Dick Smith and Goodman Fielder are never too healthy for an IPO... Baiada (who own the Steggles brand) are also noted as well as the dependence of duopoly customers in grocery (Coles and Woolworths in Australia and Countdown and Foodstuffs here) and of course KFC which will make it hard to grow earnings.
http://www.smh.com.au/business/comme...04-gshwtd.html
Despite this further downward revision, Ingham is currently at $3.13 a share... at least Tegel started with a bang... so now trading under 12x profit... clearly they are not expecting much growth for the big player...
Could Tegel be in the same basket? (just a thought...)
Flop initially on opening day has turned into more of a flap now that ING is at $3.29.
TGH has more growth potential than ING imo and this will be shown in the next few years - exports, added value products and Australia. In fact, TGH is already successfully building on its export markets (17.5% of sales) while Ingham is 'planning' to ramp up its exports (2% of sales) after its IPO.
http://www.theaustralian.com.au/busi...c0f4abc9eeb834
Competitive edge : New Zealand is unique in the world in being free of the three major exotic avian diseases – Avian influenza (bird flu), Newcastle Disease and Infectious Bursal Disease (IBD) – which makes it one of the healthiest places to raise chickens.
Will take the next two years for the results to show through.
and from http://www.afr.com/markets/chicken-industrys-solid-economics-make-tegel-inghams-hearty-but-bland-fare-20161020-gs7ek5
The $1.3 billion to $1.5 billion Ingham's float means local investors will soon have two listed chicken processors to peck at.
Ingham's is the dominant poultry business in Australia, which is one of the world's biggest consumers of chicken on a per capita basis. Indeed, Australians already eat so much chicken – around 40 kilograms each a year – the earnings growth prospects for Ingham's are linked largely to its ability to cut costs and lift productivity.
The other big poultry stock, New Zealand's Tegel Group, which listed in May, delivered a soft trading update this past week blaming weak pricing. Tegel confirmed its prospectus forecasts are not in doubt, but the stock is trading below its offer price at $NZ1.51. Tegel, investors would recall, listed at the bottom end of the IPO range carved out by its brokers at $NZ1.55 apiece.
But for some investors, massive volumes and slow growth are desirable – at the right price.
Rabobank's senior animal proteins analyst Angus Gidley-Baird says that unlike red meat, the Australian poultry industry offers the processor almost total control of production and supply.
A typical poultry operation needs three generations to breed up the numbers to rear the generation of birds that will be sold for meat. Chickens are grain-fed, so they are not vulnerable to vagaries of weather cycles. Aside from fish and seafood, chickens have the leanest feed conversion ratio, meaning they consume around 1.6kg to 1.8kg of feed to generate 1kg of body weight, versus 7kg to 9kg of feed for grain-fed beef.
Future growth
Observing how the industry has lifted volumes since the 1970s, the Rabobank analyst sees future growth in the processor's ability to grab a greater share of wallet through higher-margin prepared products, and aiming for a greater share in niche export markets.
"What they've seen in terms of growth has been phenomenal but we can still see 3 to 4 per cent growth, which is probably better than most other protein industries," he says. "With 95 per cent of their production going to the domestic market there will reach a time where the consumer has enough chicken in their diet."
In 2015-16 chicken meat production rose by 3 per cent to 1.15 million tonnes and is forecast to rise 4 per cent this year to 1.2 million tonnes, according to ABARES. Average carcase weight is unchanged over the past five years at around 1.86kg a bird, but this is 50 per cent higher than in 1975-76, and 30 per cent higher than in 1995-96.
Chicken's success is in its affordability and its adaptability. "It is the cheapest protein, it lends itself well to most cuisines, chicken will accept most flavours, and from a cultural point of view it's widely accepted by all different religions," says Gidley-Baird.
Dr Paul Aho, a United States economist who consults to the global poultry industry, says the income elasticity of meat is high. "Meat is a luxury. Rising income usually is accompanied by rising meat consumption and, of course, falling income reduces meat consumption. Even in a wealthy country like Australia the ups and downs of income are likely to have a significant effect on meat demand. The recession of 2008 reduced the consumption of all meat in the US including chicken. Total meat consumption per capita in 2016 has not yet recovered the levels of 2007," he says.
Feed, which is about one-third of the cost of chicken farming, is at rock bottom levels in line with the slide in wheat prices. Dr Aho argues that, perversely, this could be working against chicken processors.
Competing meats
"Since 2012, feed costs have declined dramatically around the world. It would appear at first glance that this would be great news for the poultry industry. Unfortunately, feed costs also declined for competing meats. Since competing meats are generally less efficient at converting feed to meat, falling grain prices helps them more than it helps the poultry industry," he says. "On the flipside, rising grain prices hurt competing meats more than they hurt the poultry industry.
"Paradoxically, high and stable grain prices are the most favourable to the poultry industry. Experience has shown that low grain prices often lead to overproduction in the poultry and competing meat industries while high grain prices make all decision makers more cautious."
In notable investor moves, industry fund AustralianSuper has pre-committed to a $150 million stake in Inghams, The Australian Financial Review has reported. Perpetual ceased to be a substantial holder in Tegel as of Monday, ASX disclosures show. The private equity firm TPG (which floated Myer and Healthscope) sees its stake go from 90.1 per cent to 31.9 per cent in the Ingham's float. A range of $3.57 to $4.14 a share has been marked out for Ingham's stock. Morningstar thinks this is too high and values the stock at $3.50 a share.
Close 144 today all time low
Chickens not flavour of the month
This obviously not going to plan for Claris - sure they planned to manage the share price up to 186 plus by Christmas