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NEW COVENT GARDEN SOUP COMPANY was bought by S DAINELS for 22m pound and Singapore Food bought over the whole enlarge entity for 26m pound which include the Juice and Fruit business.The enlarge entity of S DANIELS is producing 230m singapore dollars of sale now and earning the company 12.5m net profit in singapore dollars last year. The return on investment is great for the 73.5m initial capital.
They bought over farmhouse fare(a company that do english desserts,the purchase price also come with company meeting certain ebita) last year the company produce 2.7m net profit before Singfood bought into the company....the purchase may give a boast of 7-10% to this year net profit.
If base on Q1 result(net already up 40%) they are right on track to at least hit back the 2005 net profit of $36m....about 7.1c eps....if i add the 2.7m from farmhouse fare....net profit may come in at about 38m-40m...which work out to be around 7.5 eps per share....which work out to be only 12x p/e only(multi year low valuation for SFI) and net dividend may come in at 5c which work out to around 5.5% net base on 91.5c share price.
The growth driver is the UK arm S Daniel which own New Covent Garden Soup which have a 50% market share in UK(amazing to have that kind of branding power and market share esp in F&B....i can only remember coca cola with that kind of market share)
They bought over S Daniel(former listed company in London stock exchange) in 2002 at about 19 pences per shares(about 52c sing per share base on exchange rate of 2.7sing to 1 pound in 2002),base on current exchange rate of 3.02 currently,singfood investment already sitting on 11-12% profit on exchange rates alone.When Singfood took over S Daniel,FSTE was indexing at 3800-3900 area and FSTE already hit 6700 points up 80% compare to Singfood purchase. If we value Singfood investment in S Daniel(75m)conservative apprecaition(included currency gain) at 70%. S Daniel should be worth 130m-135m in Singfood books....Per share worth of S Daniel shares in SFI books 130m/515m(outstanding shares) about 25c per Singfood share.I would guess value would be higher if they decided to float the shares back to stock market.
Furthermore now the whole S Daniel is generating about 12.5m net profit for Singfood.Singfood is no longer a OEM for food product.They have become brand owner.
There are certain competitive advantages in Singfood business.(Buffett deem it as Durable competitive advantage)
1.)Monoploy in Abattoir and Hog and Catering biz to SAF is likely to continue with government concern over food safety and hygiene(bird flu,Pig virus,food poisoning and terroist)
2.)Financial Strength-Strong ROE at 25% in Q1,strong cash flow,low debt to equity at 0.4(likely to come down to 0.2-0.3 this year),good dividend at 6.5% yield
3.)With Temasek as major shareholders(big bro support)
4.)Strong operation in UK,they bought S Daniel at a good price during the market bottom in 2002,with currency apprecation may hitting 11%.If they decide to float S Daniel back to the stock market,my guess is the inital investment of 74m would be subtaintally higher.
5.)Strong branding in UK market(New Covent Garden Soup,Johnson Juice and Farmhouse Fare).A strong brand name is important for a biz to maintain margin and pricing power
6.)Making way into Middle east market with 3m retort pouch orders and also exporting to Japan(due to our stringent guideline on food safety)
7.)Strong Q1 number where net profit up 40%
8.)Share prices at close to 2 year low even the market have rally in the past two years(two year share price range at 87c-1.24c).Very defensive stock
*Views maybe tainted by vested interest,take it with a pinch of salt,do your own research too
*Number provided are rough number and my own estimate
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hi governor, that is a good recap... it gives good dividends and steady. waiting for people to invest i guess... me still holding. like u said i also think that its price should be much higher, same level as smrt.
This one laggard for the past two year.....the trading range for the share was at between 87c-1.24 for the past two years....now at 93c....at the lower end of the range.
The growth driver is the UK arm S Daniel which own New Covent Garden Soup which have a 50% market share in UK(amazing to have that kind of branding power and market share esp in F&B....i can only remember coca cola with that kind of market share)
They bought over S Daniel(former listed company in London stock exchange) in 2002 at about 19 pences per shares(about 52c sing per share base on exchange rate of 2.7sing to 1 pound in 2002),base on current exchange rate of 3.02 currently,singfood investment already sitting on 11-12% profit on exchange rates alone.When Singfood took over S Daniel,FSTE was indexing at 3800-3900 area and FSTE already hit 6700 points up 80% compare to Singfood purchase. If we value Singfood investment in S Daniel(75m)conservative apprecaition(included currency gain) at 70%. S Daniel should be worth 130m-135m in Singfood books....Per share worth of S Daniel shares in SFI books 130m/515m(outstanding shares) about 25c per Singfood share.I would guess value would be higher if they decided to float the shares back to stock market.
Furthermore now the whole S Daniel is generating about 12.5m net profit for Singfood.Singfood is no longer a OEM for food product.They have become brand owner.
*First q net already up 40%
*Number provided are rough number and my own estimate
*Views may be tainted by vested interest,take it with a pinch of salt,do your own research too.
yes i know... i suppose that this stock should be better than smrt as at least it is consumer related...
waiting for pp to discover it. target at 1.03
hi sarah, just xd so there is some weakness. will stay stagnant for awhile then move higher before 3rdQ results. Cheers!
come on this laggard
With thinness, I wonder how one can get out without sacrificing a great deal.
only 53 lots done !
Lousy volumes... not a very liquid stock.
pretty stable stock with decent dividends, at least higher than interest in banks. waiting for it to hit $1....
FOCUS
Singapore Food Industries: Value emerging at current price
Summary: Following a dismal set of 4Q and FY06 results, SFI?s share price took a beating and hit a low of 86 cents. At this price, we believe the market has already factored in most of the negatives, including the still muted outlook for its core operations. The group recently proposed a final dividend of 3.2 cents in February and the stock is still trading cum dividend. All in, the full year dividend of 4.96 cents implies a payout ratio of 84%, and is significantly higher than management?s policy of paying out about 60-70% of earnings as dividend. We expect the dividend policy to remain and based on our estimate, we are expecting a payout of 5.3 cents in FY07. At current price, this translates to a good dividend yield of 6.2%. We are retaining our FY07 earnings projection of S$32.1m and fair value of 96 cents. At 86 cents, we are upgrading the stock to a BUY. (Carmen Lee)