Booming agriculture

July 17, 2023
Anthony Clark
Anthony Clark

Internationally agricultural related stocks are flying YET on the JSE they are mostly ignored

I was watching the US CNBC market report and they commented that the surging price of soft commodities like corn, wheat & soya has seen companies associated with the agricultural sector boom

John Deere the world's largest agricultural equipment maker was at a record high. Corteva, a leading global seeds business was also powering ahead

On the JSE there are few direct listed agricultural counters, many are either unlisted or Over The Counter (OTC) where you buy & sell the shares on a matched buyer/ matched seller basis privately 

The biggest JSE-lsted stock is Kaap Agri (R45.50) worth R3,4 billion  Interim results to March are due and I see growth in the very high teens % with a better second-half due to a R1bn fuel-related acquisition padding profits

Well run and with much better liquidity from the recent unbundling of Zeder's 42.2% stake in Kaap Agri (more will follow when PSG unbundles its stake gained from Kaap via its 48% stake in Zeder).

Its a well-run company that has generally delivered compound growth of 15% a year. I have the stock as a buy with a target of R64.00

There are a slew of other related agri stocks, many unknown to most (not me) and they are titanic in revenue

Companies like BKB, NWK, Senwes and TWK are vast businesses trading at material discount to Net Asset Value (but) are unknown to most investors. Its worth looking at their websites and reports you will be surprised how well they do

I write often on agriculture and soft commodities

It influences my review and recommendation on key JSE sectors like food & poultry (I've disliked them for two years and it been the right call) 

If this short note just gets you to google and look at the results presentations of any of the companies mentioned that are listed here in South Africa I've achieved some aim

Internationally agri stocks are flying. In South Africa they have been sidelined mainly because nobody (well apart from me Smalltalkdaily) covers them & I have done for years, so that helps.




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