Loading...

Kaap Agri Update

April 17, 2024
5
40
0
Anthony Clark
Author
Anthony Clark

Kaap Agri recently had a great FY22 trading update +PSG Group unbundling. My opinion

Western Cap based agricultural & retailing business Kaap Agri has had an eventful year.

Firstly majority shareholder Zeder Investments announced it would unbundle its majority 42% stake. That weighed on the share and year to date the stock is down 25.3%. Its current market cap is R2.82bn

Its interim results to March were good with recurring HEPS rising 15% to 351.11 cents.

Then PSG Group which gained a 20.4% stake in Kaap from its majority ownership of Zeder stated it would unbundle its Kaap shares. This happened last Monday and daily trade was 14 times normal as an extra 15m shares washed around the market.

It is these two liquidity events I believe have contributed to the weakness of Kaap AGRI NOT its operating performance which has been robust in these challenging times.

Its recent trading update for its September 2022 year end was better. RHEPS would rise between 15% to 21% giving a mid range of 565 cents or a prospective PE (based on the current share price of R37.35) of 6.6x. I anticipate RHEPS to be at the very upper end of guidance.

My minimum forecast for FY2023 is 650 cents placing Kaap on a forward PE of 5.7x and a dividend yield of 5.0%

This is one of the cheapest ratings I have seen in Kaap for a decade and I have covered the stock for 17-years.

Its a quality business, little covered or understood by the market but the smart money is now sniffing around sensing a value-trap buying opportunity for what is basically a nationwide retailer on a PE under 6x

I have a BUY on Kaap Agri with a target of R64.00. As always this is not direct advice just an opinion so please do your own background research on Kaap

 

https://drive.google.com/file/d/17k9eoLR9cDySx8M2VRH-DaTOinaT1_9R/view?usp=sharing

 


Related Tags:
1 min read
Share this article:

Related Articles

All articles
Top