Business / Companies
Robust maiden set of full results from Padenga Holdings
15 Sep 2011 at 08:23hrs | Views
Padenga Holdings' posted a robust maiden set of full year results showing attributable earnings of $3.7 million and earnings per share of 0.7 US cents per share. Revenue of $19.6 million was in line with management guidance of $19.7 million. Total skin sales amounted to 62,884 including carry over stock of 17,495 skins. EBITDA margins were 32.1% (we had anticipated 38.6%), impacted by the firm Rand coupled with bans of some key feed ingredients and shortage of local soya. A final dividend of 0.166 US cents per share was declared. The LDR is Friday 30 September 2011.
Cash generation was strong with EBITDA / OCF of 103%, implying that capital expenditure can be funded from operating cash flow, which will enable Padenga to increase its dividend payout ratio. Net gearing was a manageable 7.4%. Post balance sheet date the company repaid all loans.
Padenga achieved an 88% first grade ratio against a target of 80% and average skin size was 4% below budget attributed to frequent dietary changes as a result of the ban of some feed ingredients. The hatchling crop is stocked at lowest densities in line with group strategy to produce bigger premium quality skins. Major pen floor resurfacing undertaken during the period using new materials will impact positively on skin quality by reducing skin damage and diseases. Furthermore, the new material will result in less frequent resurfacing going forward.
Management asserted that if all formalities are concluded they should establish an alligator farm in Southern USA in FY 2012 with an initial stock of 5,000 alligators which will be increased to 10,000 in two years. This will require approximately $1.7 million in capital expenditure. Negotiations are however still at preliminary stages. The alligator business will help provide a more even split in terms of income, as the market generates revenue in January compared to June for the Niloticus division. Prospects are also good given Padenga's competitive advantage in terms of established relations with players in the sector, and their historical knowledge of the business which will assist them to leverage on the less complex and quicker turnaround alligator business.
The market for superior quality skins remains firm and is expected to grow by approximately 5% p.a. over the next five years. The company's FY 2012 target of 42,800 skins is fully contracted for sale and Padenga anticipates receiving premium prices. The average skin price achieved for FY 2011 was approximately $300 per skin and this is expected to improve in FY 2012. Margins are healthy with EBITDA margins expected to increase to approximately 59% in five years time and net margins of between 20% and 40%.
Cash generation was strong with EBITDA / OCF of 103%, implying that capital expenditure can be funded from operating cash flow, which will enable Padenga to increase its dividend payout ratio. Net gearing was a manageable 7.4%. Post balance sheet date the company repaid all loans.
Management asserted that if all formalities are concluded they should establish an alligator farm in Southern USA in FY 2012 with an initial stock of 5,000 alligators which will be increased to 10,000 in two years. This will require approximately $1.7 million in capital expenditure. Negotiations are however still at preliminary stages. The alligator business will help provide a more even split in terms of income, as the market generates revenue in January compared to June for the Niloticus division. Prospects are also good given Padenga's competitive advantage in terms of established relations with players in the sector, and their historical knowledge of the business which will assist them to leverage on the less complex and quicker turnaround alligator business.
The market for superior quality skins remains firm and is expected to grow by approximately 5% p.a. over the next five years. The company's FY 2012 target of 42,800 skins is fully contracted for sale and Padenga anticipates receiving premium prices. The average skin price achieved for FY 2011 was approximately $300 per skin and this is expected to improve in FY 2012. Margins are healthy with EBITDA margins expected to increase to approximately 59% in five years time and net margins of between 20% and 40%.
Source - Imara Stockbrokers
