PI­O­NEER FOOD GROUP

Finweek English Edition - - INVESTMENT -

In­vest­ment bank­ing group UBS has re­cently re­leased an up­dated note on the JSE-listed food group and it main­tains a “Sell” rec­om­men­da­tion. This fol­lows the an­nounce­ment from Pi­o­neer (PFG) that it will un­bun­dle its agribusi­ness in­vest­ments. Us­ing a Sum Of The Parts (SOTP) method­ol­ogy, an­a­lyst Re­nier Swanepoel has a 12-month price tar­get of R72.10/share. Swanepoel wrote in a note to clients: “We be­lieve the sin­gle big­gest chal­lenge within the PFG turn­around re­lates to the agribusi­ness. In ef­fect, this re­spon­si­bil­ity will now be trans­ferred to share­hold­ers. Most of the di­vi­sions’ chal­lenges are struc­tural (such as over-ca­pac­ity and in­ef­fi­ciency), while we are not con­vinced the com­pany suf­fers from too many com­pany-spe­cific is­sues. Mak­ing the busi­ness model vi­able would be de­pen­dent on mak­ing the in­dus­try vi­able (lower feed prices and pos­si­bly some im­port tar­iff pro­tec­tion ini­tia­tives).

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