Japfa opts to sell off more Grain stock

Singapore-based Japfa Ltd, a panAsian, industrial agri-food company is likely to sell more shares in Ceylon Grain Elevators PLC, analysts say.

The fourth largest shareholder in the poultry firm, Japfa Ltd held about 6.48 per cent in the company by June this year. "But they sold some 1.27 per cent during March this year," an analyst said.

He said around 1.5 million shares may be on offer in the coming months.

Analysts say that growing purchasing power stemming from revised public sector salaries and reduced prices of essentials from the last budget, to drive the top line from increasing demand conditions will augur well for Grain elevators.

They expect that reduced cost of production and improved margins on the back of importing and stocking of cheaper maize from new found low cost destinations would increase demand. According to the Department of Animal Production, the current per capita consumption for chicken meat and eggs stands at 7.2kg and 97 eggs, respectively which are seen increasing.

Ceylon Grain Elevators deals in feed milling, commercial broiler farming, poultry processing and distribution, breeder farming operations, manufacture and sale of aquatic feed, buying and selling of Poultry equipment and vaccines provision of silo and warehouse facilities. The company has five subsidiaries and an associate stake in one company.

The poultry sector comprises two key areas - Chicken (Broiler and Layer variants) and egg production. 33 broiler and 13 layer breeding farms (in operation as of 2014) served as the main sources for breeding chicken, with purchase of these strains collectively from local Grand Parent (GP) farms and imports from international markets (UK, France and Germany). This is supported by the feed industry to provide animal feed, produced by both commercial feed producers and direct farmers themselves, a SC Securities report said. An estimated 847,572 metric tonnes of total animal feed was produced as of 2014.