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CGC, COSTA GROUP HOLDINGS LIMITED
nipper
post Posted: Jun 1 2019, 12:49 PM
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QUOTE
The company’s annual meeting was told yesterday that Costa is now looking at 2019 net profit after tax of $57 million to $66 million. That’s down from an expected $73.6 million after a season of bad quality fruit, low prices and even a fruit fly in the company’s citrus orchards in the Riverina area of NSW.

Instead of a rise of around 30%, earnings for the year will be up between 0.7% at worst and 16% at best.

Costa had projected that 30% jump in profits in February, hoping for an end to the volatile growing season for berries, avocados, and tomatoes which had earlier seen the company to downgrade its profits on January 10 (the company is changing its financial year to match a calendar year and the local growing seasons). That downgrade saw the shares plunge sharply from $7.30 to $4.51.

The confidence in the upgrade in the February interim earnings statement saw the shares recover but yesterday’s downgrade saw them plunge another 27% to $3.75, a two year low.

The reason ; lower yields and higher costs from its mushrooms, blueberry, raspberry crops, and citrus crops.

As well an oversupply of tomatoes dropped the forecast price for that crop, but chief executive officer Mr. Harry Debney said in a speech on Thursday to the annual meeting that “market conditions are now back to normal.”
- getting to happen too often. I thought diversifying crops, locations, etc would buffer the impact, but clearly not . (don't hold)



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
blacksheep
post Posted: Apr 9 2019, 08:57 PM
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If you believe in broker analysis.......confidence in CGC is back
QUOTE
Confidence in Costa Group ((CGC)) has been reinvigorated following visits by brokers to the company's Chinese berry farms and its associate, Driscoll's, for packing, logistics and marketing.

Both Credit Suisse and UBS believe they have probably been too conservative in their estimations regarding the rolling out of the berry plantations in China. Costa Group is on track to achieve its five-year plan of 240 hectares of berry plantings by 2020.

Credit Suisse expects the company will be able to enhance its yields and pricing through genetics and management, estimating that after completing the planting in 2020, the joint venture will carry about $100m of funds employed and it is reasonable to expect a 20% earnings (EBIT) return on assets in China.

read more - https://www.fnarena.com/index.php/2019/04/0...ted-by-berries/

QUOTE
Macquarie rates CGC as Outperform

Macquarie believes the company is well-positioned for growth and on track to achieve its targets for five-year berry plantings of 240ha in China by 2020. The international business is a driver of the company's target for net profit growth of 30% or more in 2019.

China forms part of the company's international division, along with Morocco, and represented 17% of 2018 operating earnings.

Macquarie notes jumbo berries are priced at 60-80% premium regardless of the season. There is also market scarcity and Costa Group has a logistical advantage, taking just two days to market from harvest.

Macquarie maintains an Outperform rating and reduces the target to $6.22 from $6.27.


Total short positions as at 3/4/2019 = 4.64%
https://www.shortman.com.au/stock?q=cgc
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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Jan 14 2019, 09:16 PM
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In Reply To: blacksheep's post @ Jan 12 2019, 10:35 AM

Another notable short alert reported Friday although SP finished the day up 4.53%. @ $4.85/share - rise could be short lived IMHO
https://www.shortman.com.au/stock?q=CGC
QUOTE
Fri 11th Jan, 2019 5,982,435 319,937,318 1.87% 16,599,739 36.04%




--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Jan 12 2019, 10:35 AM
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In Reply To: blacksheep's post @ Nov 21 2017, 06:19 PM

QUOTE
A hedge fund manager who is short Costa and declined to be named said this downgrade was foreshadowed.

"The structure of Costa's relationship with its major landlord VitalHarvest, who earns most of its income from a revenue-sharing agreement with its tenant, and the Costa family's decision to sell out of their exposure to this entity via the VitalHarvest IPO last year, foreshadowed what insiders thought about the true prospects for the 2019 year," the hedge fund manager said

https://www.afr.com/business/agriculture/cr...20190110-h19woa

Short positions as at 7/1/2019 = 3.18% - about to go higher in coming days by looks of things
Notable short alert for Thursday 10/1/2019

QUOTE
Thu 10th Jan, 2019 4,294,315 319,937,318 1.34% 16,404,785 26.18%


https://www.shortman.com.au/stock?q=cgc
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Apparently for Macquarie the market update came as an "unwelcome surprise" - while for shorters the downgrade was "forshadowed"
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CGC – Macquarie rates the stock as Outperform
By Broker News | More Articles by Broker News

Post profit warning, Macquarie analysts stick with the view this company remains solidly positioned with (still) a solid track record, though the latest market update must have come as an unwelcome surprise.

Macquarie was previously of the view everything was looking swell and solid from an operational point of view. Its own forecast was for double digit percentage growth, well above company guidance and certainly well above yesterday’s update for a flat outlook for the present year.

Apparently, demand for tomatoes, berries and avocados during December 2018 disappointed, while January too is growing below expectations. Estimates culled by -8-15%. Target price drops to $5.55 from $7.60.




--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
nipper
post Posted: Jan 10 2019, 05:23 PM
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QUOTE
In a note to the market, Costa said subdued demand for tomatoes, berries and avocados had hit sales. That exacerbated previously flagged delays in its mushroom development and costs of its Moroccan joint venture.

Costa said trading conditions for January appeared to be slower than planned and that patchy demand had caused it to cut prices for a number of its product lines alongside an early finish to its citrus “off season”.

“If current trading conditions continue, this, together with short term slippage of the commissioning of the Monarto mushroom facility upgrade in South Australia and the previously announced additional costs from investments such as African Blue, is expected to result in largely flat growth for the twelve month NPAT-S to the end of June 2019 compared to the prior year,” it said.

Looking to next year, it said the factors were only cyclical and that forecasts for the 2019 calendar year were in line with previous guidance.
.... down by 40% at one stage, today. (something's always on Special at the local supermarket)



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Aug 26 2018, 03:52 PM
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QUOTE
Costa shares had almost doubled in the past 12 months as investors rushed to the stock, making it a mid-cap market darling.

Chief executive Harry Debney said analysts had got a little ahead of themselves.

“We gave guidance for 25 per cent (profit growth); we produced more than 26 per cent, so we were spot on, but we are a high-growth company. I think all of the analysts were ahead of us. They thought we would be outperforming by a margin above that,’’ Mr Debney said after Costa posted a 10.2 per cent lift in annual revenue to $1 billion as net profit rose 26.3 per cent to $76.69 million.
We have done very well over the last three years, every year, and we are saying we are giving guidance of low double-digit performance for each of the next three to five years.

“Now I don’t know of any company that gives long-term guidance but we are prepared to do that.’’

The company’s earnings before interest and tax rose 30.9 per cent to $150.79m while revenue growth was achieved across all its reportable segments, which include citrus, avocados, mushrooms and berries.

However, its Moroccan blueberry venture, African Blue, of which it owns 86 per cent and will soon move to 90 per cent, posted disappointing earnings as the cold northern hemisphere delayed both the China and Morocco harvests, with Morocco most significantly affected.




--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 


blacksheep
post Posted: Feb 27 2018, 01:09 PM
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SP up almost 10% following release of results - briefly went through the $7.00 mark

QUOTE
1H FY2018 Financial results
 Revenue of $489.4m – 9.8% growth on 1H FY2017
 Statutory NPAT of $66.2m, inclusive of a $40.1m non-cash gain arising from the revaluation
of the Group’s 49% interest previously held in African Blue.
 EBITDA before SGARA and material items $60.9m – up 24.2% on 1H FY2017
 NPAT before SGARA and material items of $28.6m –14.5% growth on 1H FY2017
 Leverage increased to 1.4x EBITDA-S due to the acquisition of African Blue and growth
projects as at December 2017
 Interim dividend of 5.0 cents per share, an increase of 25% on 1H FY2017, fully franked
(record date 15th March, payment date 5th April 2018).


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--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Nov 22 2017, 01:30 PM
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In Reply To: nipper's post @ Nov 22 2017, 11:08 AM

Seems age.and death, was very much featured back in 2015 when Costa was looking to IPO - quite a story

QUOTE
Now Frank has decided to sell the $1 billion business that was started by his great uncle as a small fruit shop in 1888.

The father of eight daughters, he looked through his extended family and found no one who was willing or able to take over, which means he is now looking for an offer too good to refuse.

"I am 77 and I want the deal done while I am still sharp enough to see it through."


http://www.theage.com.au/victoria/frank-co...311-141bdw.html



--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
nipper
post Posted: Nov 22 2017, 11:08 AM
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Posts: 5,610
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In Reply To: blacksheep's post @ Nov 21 2017, 06:19 PM

QUOTE
real reason
Too much presumption; death is as real as it gets.



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
blacksheep
post Posted: Nov 21 2017, 06:19 PM
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In Reply To: nipper's post @ Nov 21 2017, 03:54 PM

There's always a "valid" excuse - does anyone really get the full picture?

Family IPO's always have a number of question marks. Back in 2015 when Costa IPO'd - No interest in Costa IPO

QUOTE
My initial thoughts on the Costa Group IPO are as follows:

1. It looks rather expensive on a forecast (minimum) PER of 15.

2. The operating margin looks fairly high (for a food business) at around 10%. I would imagine that the major supermarkets would be looking at those margins already and ‘suggesting’ that wholesale prices should come down. To some extent berries and mushrooms are premium products and the supermarkets like dealing with big suppliers that can guarantee on-shelf availability, but I’m not sure I’d be relying on that competitive advantage too much.

3. The business has quite a number of risks that are hard to protect against, including weather and the risk of contamination

4. I dislike the fact that this is essentially a private equity sell-down. The Costa family are selling the large majority of their shares into the IPO, which doesn’t fill me with confidence about the future of the business.


https://www.intelligentinvestor.com.au/no-i...sta-ipo-1499236

Then earlier this year - Costa family considers selling horticulture farms

QUOTE
The move would unwind some of the Costa family's related-party transactions with the listed Costa Group, an arrangement queried by a number of investors and analysts since the group listed in July 2015.

Costa Group floated at $2.25 a share in July 2015 and this week shares have trading around $4.70.

The properties leased to Costa Group include blueberry and raspberry farms on the NSW North Coast’s Corindi district; blueberries in Tumbarumba in southern NSW; blueberries, raspberries and blackberries near Devonport in northern Tasmania; and citrus in the South Australian Riverland.

"If they did look to sell them, we may or may not be interested in buying them," said Costa Group chief executive, Harry Debney, when contacted by The Australian Financial Review.

"They are not a dominant part of our portfolio, we have in excess of 40 farms."

The leases for the Costa Asset Management farms expire in 2026, with options to renew.

The properties also entitle the owner to a fixed rent and a share of earnings from Costa Group's berries and citrus businesses.


http://www.farmonline.com.au/story/4731427...-selling-farms/

Real reason???? Maybe the share price was at an all time high ? smile.gif

It will be interesting to see how the SP travels from here.






--------------------
The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington

Said 'Thanks' for this post: nipper  
 
 


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