CPF buys stake in Brazil shrimp producer
SET-listed Charoen Pokphand Foods Plc (CPF) has acquired a 40% stake in one of Brazil’s leading shrimp farmers and processors, Camanor Produtos Marinhos Ltda, marking the group’s first expansion into South America.
According to a letter submitted to the Stock Exchange of Thailand (SET), the country’s biggest agro-business conglomerate signed an investment agreement with Camanor on Monday.
CPF has acquired 4.67 million newly issued ordinary shares, which represent 40% of the total and voting capital stock of Camanor on a fully diluted basis, said Adirek Sripratak, chairman of the executive committee at CPF.
The transaction, valued at US$17.5 million (547 million baht), will be financed by CPF’s cash flow and is expected to be completed one month after the agreement is signed.
After the deal is completed, CPF will hold 40% of the joint venture or 11.67 million ordinary shares, said Mr Adirek.
Shrimp farming R&D is an important reason behind the transaction, given Camanor’s significant experience developing new shrimp farming technology and increasing productivity in farm areas. CPF’s expertise in shrimp genetics will allow the joint venture to increase productivity while reducing the cost of production.
Brazil is also a major source of agricultural materials required for producing shrimp feed, as well as a high-growth potential market with a sizeable population and economy, said CPF in its statement.
Investing in Camanor can diversify the geography of CPF’s shrimp production operations, the statement said.
Mr Adirek said the partnership in Brazil will benefit CPF to extend businesses including feed and hatchery. The expansion also serves the shrimp industry and local consumption. The company’s total shrimp production capacity averages 100,000 tonnes per year, which is not enough for domestic demand.
An analyst from Asia Plus Securities (ASP) who requested anonymity said the deal will not have a major impact on CPF’s net profit and revenue.
The cost of the purchase represents only 0.1% of CPF’s assets, and Camanor’s revenue and net profit stood at 530 million baht and 130 million baht in 2017, respectively.
“Camanor’s profit share in the seven months following the deal’s completion is estimated at around 30 million baht, or 0.2% of CPF’s estimated revenue worth 16.25 billion,” said the analyst.
“Perhaps the most interesting aspect of this investment is technology-sharing. Camanor has shrimp farming technology, while CPF has genetic technology and a
diverse array of raw material sources.”
Camanor’s closed shrimp-farming system AquaScience increases productivity by allowing the company to raise shrimp in a high-density environment without using chemicals or antibiotics.
Camanor’s main products include fresh and frozen processed shrimp exported and distributed through domestic wholesalers.
Camanor reported a $16.9 million revenue in 2017, up from $11.9 million in 2016 and $8.26 million in 2015. Net profit for 2017 was registered at $4.35 million, up from $1.36 million in 2016 and $95,000 in 2015.
ASP estimates a 30-baht target price for CPF shares, at 1.97 baht earnings per share for 2018.
CPF shares closed yesterday on the SET at 23.60 baht, up 20 satang, in trade worth 535.2 million baht.