Undervalued’ South Australian company Beston Global Food to take on debt to drive dairy growth
Valerina Changarathil, The Advertiser
November 22, 2017 12:23pm
SOUTH Australian food producer Beston Global Food Company has launched an independent investigation into its lagging share price in a heated agribusiness market while resolving to take on maiden debt to grow its dairy business.
“Our share price is significantly undervalued, as a result of which we are not on the radar much for investors and brokers and we want to find out why,” chairman Roger Sexton told The Advertiser on the sidelines of the group’s annual meeting in Adelaide on Wednesday.
Given the changes in the agribusiness market and the increased overseas investor interest, Mr Sexton said its share price — up nearly 16 per cent to 29.5c — did not reflect its current and future value.
Beston expects to share the findings of the research by December, Mr Sexton told shareholders.
There was no mention of dividends, but the group announced a “Shareholder Rewards Program”, which would give them a 15 per cent discount of Beston’s dairy, meat, seafood and nutrition products, which now retail in independent supermarkets, some Woolworths supermarkets and Costco and Aldi stores.
Mr Sexton said dairy remained at the heart of the business with more work to be done in “lifting the overall performance” of the division, which is expected to deliver higher earnings in the second half of this year.
“(We) are confident that the hard work over the past 12 months we have done will see the results flowing through over this next 12 months, and particularly from January onwards as our Mozzarella plant (at Jervois) comes on stream.”
The group is targeting annualised milk supply of 130 million litres by end of June, up from 90 million litres, at its dairy factories at Murray Bridge and Jervois.
The group has also resolved to taken on debt funding to secure milk supplies from independent dairy farmers.
“We are also working on our other divisions to pop their profit potential. Our next cab off the rank in this regard is our meat division.”
The group is moving to take full control of Scorpio Foods, a ‘ready-to-eat’ meat business in which it acquired a 40 per cent beneficial interest in 2015 to capitalise on strong domestic demand and with the intention to launch the brand in China.
Beston said a restructure, which involved closure of the Victorian company’s Colac factory and doubling capacity at its Shepparton site, would be finalised next month.
Overseas, it was close to launching its third direct-to-consumer Beston Food Pod in Shanghai
“Our plan is to build these Beston Food Pods to around 20 in number across provincial cities in China and then franchise them,” Mr Sexton said.
A merger proposal is under consideration for the Beston Technologies business, with includes its OZIRIS food provenance tracking technology after an earlier “unsolicited offer” for the business was rejected.
Beston reported “sweet and sour” statutory financial results to the end of June with sales revenues up 49 per cent to $23.8 million and a net loss after tax of $7.7 million.
(20min delay)
