Future should be brighter
Food producers have been publishing results and they all have the same issue – high input costs due to the recent drought. But the drought is most definitely lessening so they should all see input costs coming down and that should boost profits as margins expand. I already have a holding in Tongaat Hulett* to take advantage of this and am now also looking at Quantum Foods. Its current assets are almost double the market cap while total liabilities are about the same as its market cap, meaning it is trading well below its almost 700c net asset value. At revenue level, it has three legs of equal size: feed, farming and eggs. The company had an issue with eggs that swung into a loss but should rectify itself in the next year, and with input costs likely coming down, this is worth adding as another stock to benefit from improved rainfall and egg profits.