Nwf Share Discussion Threads

[cyfran101] 15/6/2013 15:13

IC Sector Review:

Whatever side of the gatepost you're on, this debate is part of the much wider and critical issue of food security, and what is undeniable is that production must become more efficient if we are to meet rising demand for food from a rapidly multiplying global population. This is where investors stand to make appetising profits.

Demand for cereal is set to rise by almost 50 per cent by 2050 to feed the extra three billion people on the planet. And as people in emerging markets become richer they are demanding more protein, usually in the form of meat, too. At the same time, food supply is becoming increasingly constrained because of limited land availability, lower water supplies, adverse climate conditions and an increasing use of arable fields for bio fuel and animal feed rather than crops for food.

In fact, raising animals for food already uses a third of the earth's arable land mass, according to the United Nations, and producing meat is both inefficient and expensive. It takes three kilogrammes of grain to produce just one kilogramme of meat. So, with the proportion of cereal used as feed estimated to reach 45 to 50 per cent by 2050, not only must crop yields rise and costs fall, but alternatives to traditional feeds must be found.

Fortunately, there's certainly scope for innovation here after three decades of chronic under-investment in agricultural research and development. Yields have stagnated for cereals, partly as a result of declining investment, while a lack of spending on food technology has wiped out productivity growth in the UK, too. Take dairy farming, where the top one-third of UK farmers are twice as efficient as the rest. Similarly, the cost of growing wheat for the top 20 per cent of wheat farmers is £100 a tonne, while for the bottom 20 per cent, it is £160 a tonne. Wheat yields, too, have the potential to increase by 30 per cent by some estimates. The companies that facilitate this, from the processors to the seed, feed and fertiliser manufacturers, will be well positioned to benefit.

Phil Carroll, analyst at Shore Capital, calls this sweet spot the "value gap". While prices in the main commodities have retreated from their highs to a new price plateau, Mr Carroll says he's not interested in the commodities themselves, but the companies that add value to help meet demand, which is where the real opportunity lies.

In the small UK-listed agri-food sector, Aim-listed Wynnstay Group(WYN) stands out. It has a 14 per cent share of the UK seed market and is steadily increasing revenue and profit, while expanding geographically and making acquisitions. It develops feed products and healthcare supplements for livestock, but is also involved in all the areas of crop production, supplying seed, fertilisers and crop protection products. Boss Ken Greetham predicts a massive market for agricultural products over the next 30 years. "We have limited land and water and can't do much about that, but we can do a lot with technology and that has been lacking in our industry," he says. Companies in the sector are finally redirecting investment towards research and development, he adds, while the outlook for UK agriculture and exports is at its strongest since the 1940s.

NWF(NWF) is another domestic player. It now feeds one in seven dairy cows in Britain, investing in animal nutrition research projects to improve farmers' profitability. Meanwhile, Carr's Milling Industries (CRM) operates a diverse business model, manufacturing speciality feed and fertilisers as well as specialist machinery and fuel. For extra diversification, it processes and sells cereals to bakers, food manufacturers and retailers.

Then there are a suite of global giants which dominate the business of feed ingredients and crop nutrients and protection such as Mosaic Company (NYSE: MOS), Nutreco(AM: NUO) and Agrium (TSX: AGU). US-based Archer Daniels(NYSE: ADM) is developing alternatives to traditional cereal-based feeds that can transform crop residue into a nutritious feed source, squeezing more value out of every acre. This is particularly important in bad crop years and expands capacity without requiring additional land.

Indeed, crop protection, fertiliser, seed engineering and nutrition is now big business, but sustainability is becoming an equally important factor as farmers are increasingly demanding less environmentally harmful crop treatments. Chemical giant BASF(GER: BAS) recently paid $1bn (£651m) for Becker Underwood, which develops yield-improving biological products that stimulate plant growth with fewer chemicals. Bayer 's (GER: BAYN) CropScience business shelled out nearly $500m to acquire AgraQuest, which also offers the so-called 'green products'.

Smaller companies such as UK-listed Plant Health Care (PHC) are also active in this space. In addition to organic fertiliser, it makes proteins that stimulate a plant's immune response, thereby increasing yields. The business strategy is to license this technology to bigger players. In 2008, it signed a deal with Monsanto (NYSE:MON) and a recent tie-up with Arysta LifeScience will see Plant Health's main product, Harpin, sold with branded fungicides in the US in 2014.

Elsewhere, pork specialist Cranswick(CRW) is experiencing high demand for meat, both at home and abroad, helped by the lower cost of pork relative to other meats. Recent European Union rules forcing continental pig farmers to up their welfare standards has also levelled the playing field and given Cranswick a boost. In addition, it has just bought East Anglian Pigs, an outdoor pig farm, suggesting Cranswick sees significant scope for growth here. Indeed, the UK is only 50 per cent self-sufficient in pig meat, while UK and European herds are in decline.

IC VIEW:

In Britain, food self-sufficiency has declined over the past decade to 59 per cent and the weather has caused havoc for farmers - last year's washout means Britain is likely to be a net importer of wheat for the first time in a decade. Yet cash-strapped Brits still demand cheap food and prefer to buy British. And, with global consumption rising, high food prices and finite resources, innovative technology to drive efficiency and boost yields will be vital to prevent demand from outstripping supply, playing into the hands of companies that help farmers maximise productivity and process their goods. This is something bigger players are picking up on and vying to gain exposure to - Glencore's recent acquisition of Canadian grain handler Viterra is a case in point. True, many of these companies will suffer short-term bumps along the way, inevitable given the nature of agriculture, but the evidence suggests that, for those of you willing to take a long-term view, investment in this sector will pay off.

FAVOURITES:

Carr's Milling is one of our long-standing buy tips (875p, 3 May 2012). It has recently seen extra demand for specialist animal feed due to poor grazing conditions and, trading on 10 times forward earnings, is below the peer average of 13. We also like Swiss giant Syngenta (VTX: SYNN), a leader in crop protection and seed supplying. Its shares have risen 11 per cent on our buy tip (335CHF, 16 Aug 2012). Rising grain prices have helped and a forward PE ratio of 16 means it's cheaper than peers Monsanto and Bayer, too. Produce Investments (PIL) recently reported a half-year loss of £1.2m, but this was largely down to last year's unseasonably wet weather. The underlying business model is sound and the shares could be worth snapping up at an all-time low of 135p, rated on a cheap five times forward earnings. It's worth keeping an eye on Canada's Agrium, too. The vertically integrated company mines its own nutrients and offers growers across the Americas crop production services through its retail unit. Buying the bulk of Viterra's agri-products business from Glencore beefs up its retail presence in Canada and Australia.

OUTSIDERS:

Plant Health Care has some innovative ideas and is cash-rich, which should help fund further development of its promising third-generation plant treatment products. But it's still early days and the company is not yet profitable - last year it reported a loss of £4.2m and revenue has been falling since 2008.
BROKER VIEW:

Agriculture as an investment

Year on year, harvests will vary, the rain will come and go, making the supply side of large elements of agriculture unpredictable and volatile. However, prices are a function of supply and demand and the latter has followed a new upward trajectory in recent years. While many in the West seek to reduce their calorie intake, there are many new tummies in the East seeking nutrition and not just rice-based diets. Such demand is driving up long-term agricultural prices and with it the cost of land, inputs and outputs.

Investors have identified this equation with inflows to global agriculture and with most farm-related stocks enjoying a re-rating. On the agri-input side, Plant Healthcare is bringing improved productivity to crop yields in the Americas through its 'Harpin' innovation, while Wynnstay is adding value through seeds, feeds and fertilisers to British farmers. Produce Investments, a leader in the UK potato market, recently extended its geography for production to the south-west of England plus entry in the fresh flower market, with the prospect of more to come. The Real Good Food Co. has developed a strategically important low-cost supply of cane sugar from Omnicane in Mauritius.

Further up the food chain, Cranswick started life as a Yorkshire farming enterprise and is now a fast-growing market-leading value-added food processor, now exporting to Australia, China and the US. Analysis from Sion Roberts, director of the European Farming and Food Partnerships, shows how 'value added' in agri-food has entered a new higher-value phase. Tim Smith, Tesco's technical director, has outlined its plans for a simpler supply chain, with fewer intermediaries and ultimately more product and value added for the UK farmers and growers. From the strong domestic scene to medium-term global context, the small but well-formed and growing UK-listed agri-food sector remains an attractive investment opportunity.

Clive Black and Phil Carroll, analysts at Shore Capital

[dealit] 17/5/2013 20:47

Not surprised zico01, I have always felt that NWF was one to have in my portfolio. Not many shares in issue 3 to 4% dividend I said in my previous posting all it will take now is an institutional investor to get on board and these could fly, IMHO.

[zico01] 17/5/2013 08:50

Charles Stanley has upgraded after the TS to a BUY also raised ptp by 25% to £7.5m

[dealit] 16/5/2013 15:51

When you look at the Financials of NWF plus the trading statement today, I would feel that the institutions would love to have these in their portfolios paying a 3 to 4% dividend. IMHO 140p is my target price upto the results.

[9degrees] 16/5/2013 07:56

here's hoping!

[dealit] 16/5/2013 07:14

Very encouraging trading statements delivered today share price hopefully will go further north IMHO

[dealit] 02/5/2013 17:46

Yes moving north at last not a large amount of shares being traded but nearly all buys, their cannot be many shares about which is why the share price is affected quickly. News maybe shortly and they pay a nice divi.

[9degrees] 02/5/2013 11:28

This is creeping up..

[9degrees] 19/3/2013 12:30

Dont know what is going on ? I knwo that the seed sector is suffering due to last years poor harvest and the ruddy poor weather doent help. see the AGM update from Wynnstay today to which gives an insight but their share price has held up well.

[hybrasil] 19/3/2013 11:33

Hard to follow the logic in the price fall.

[9degrees] 11/3/2013 13:16

Horse meat problems ??

[9degrees] 11/3/2013 09:45

what is happening ?? down down

[dealit] 23/2/2013 16:51

9degrees, I have edited my post sorry about that.

[9degrees] 21/2/2013 22:09

dealit do you mean 125p ?? if not what is 25 p in relation to?

[dealit] 20/2/2013 16:38

Hoping for 125p before EX Div date on the 20/3/2013. All IMHO.

[dealit] 29/1/2013 14:19

Share price dropped back today with an increase of 28% in the EPS. Should bounce back I would say before XDIV date becuase of the dividend, beats any bank interests easily.

[9degrees] 29/1/2013 09:49

Results not too bad . The fuels decrease in turnover is not a surprise and they have made more profit from a smaller turnover . Feeds are good. Food and Storage division needs sorting out and then things will fly

[9degrees] 22/1/2013 09:54

wow look at wynnstay go - their results due out this week and they are presumably good based on feeds stuffs etc

[raven lr] 18/1/2013 22:02

Market appears short of stock and bad weather is upon us. A few more buyers could push shares up nicely.

[david90] 31/12/2012 14:45

Scammers have managed to obtain a part of the share register however it is well out of date. Like others I have been getting these calls and my solution is to keep asking questions until they realise they are being wound up or I get bored. At least it costs them time and money.
Happy New Year

[crumppot] 31/12/2012 10:35

These people do not withold their numbers and are always overseas. I do not like holding nominee acs and I should not need to. The FSA should be looking into this sort of activity more thoroughly.
Happy new year.

[9degrees] 30/12/2012 10:38

Crump.
buy and sell via nominee account eg barclays stockbrokers . it can be done online and cheaply and efficiently

[redartbmud] 28/12/2012 11:29

crump

I no longer answer the phone to anyone who witholds their number. scammers have now got the message, by and large. FSA are useless and toothless. If someone really wants me they will leave a message.

red

[crumppot] 28/12/2012 09:48

I keep on getting calls from overseas asking if I want to sell my NWF shares for anything between £5-£15. Each call offers a different amount. It is obviously some sort of bolier room scam so I say I won't sell for anything less than £20 per share!
I have been in touch with the company secretary who is aware of the problem but could only recommend the FSA who were not any help....does anyone have any ideas of how to stop these calls as I get one every night?

[hybrasil] 17/9/2012 12:37

looks like you were right ravenlr.

ofcourse another mild winter would not help