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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| Origin Enterprises Plc | OGN | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
|
|
|---|---|---|---|---|
| 0.00 | 0.00% | 3.21 | 08:00:00 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 3.21 | 3.21 | 3.21 | 3.21 | 3.21 |
| Industry Sector |
|---|
| FOOD PRODUCERS |
| Top Posts |
|---|
Posted at 21/10/2021 20:42 by kaos3 pdo - thank you for your write upregarding megatrends -I can not make up my mind on agri sector in general - and that relates to the Origin too - correlatioon energy/agri costs is cca 90% - being in fertilizers at this gas price is hard for all, same for all agri chemistry - cca 40 % of the EU budget goes into the agri subsidy - what happens when the music stops - climate changes are making it hard for everyone - rich investors are buying up land - making oligopoly out of farming (concentrated risk with only few big distributors being needed, only few agri suppliers will be left after consolidation - when the trend of land concentration is over) - regulatory pressure is making costs huge etc all above makes our customers life hard - and as a consequence - many businesses working with them and for them will have their live much more difficult and less profitable eg the industry will be in turmoil probably soon enough - who will win and why? |
Posted at 04/4/2014 05:09 by wexboy Company: Origin EnterprisesPrior Post(s): 2012 & 2013 Ticker: OGN:ID Price: EUR 7.55 I was only mildly bullish on Origin in 2013, but the shares actually surged over 50% in the past year! While the company continues to make steady progress, it's not immediately obvious intrinsic value's kept pace with the share price. Quite honestly, I consider their associate & JV disposals the most encouraging news in the past year. I've long questioned the logic behind hanging onto these stakes, when a more focused strategy offers better upside. The dam broke, though, when the Saudis showed up & lifted Origin's 24% stake in Continental Farmers Group. This was quickly followed by the sale of the company's stake in the Welcon Invest JV to Austevoll Seafoods (AUSS:NO) in July, for EUR 93 million. Now there are growing whispers of a possible Valeo Foods IPO. [Though I suspect a trade sale could be more attractive, despite investors' new-found IPO enthusiasm]. That would pretty much clear the cupboard & present a great opportunity for a step-change in Origin's corporate strategy: i) Finish the job: Management appears to have an ambiguous attitude towards the animal feed business, which clearly lacks sufficient scale. Understandable, perhaps it's another low margin/high volume business. On the other hand, I think it's a pretty complementary fit with fertilizers & agronomy. Management needs to cut loose, or go big here sell animal-feed asap, or else map out a consolidation strategy within the sector. ii) Get the monkey off its back: Aryzta (YZA:ID) still owns 68% of Origin this stake will continue to be an overhang for the stock (not that shareholders seem to care right now!). More importantly, it's a potential conflict of interest case in point, Origin originally stated the Welcon proceeds would be 'used ultimately for investment in our core Agri-Services business.' But a few months later, the company actually executed a 100 M tender offer instead, at EUR 7.50, with most of the cash going straight into the majority shareholder's pocket! Clearly a great deal for Aryzta, but for minority shareholders maybe not so much...they might have preferred to see the money reinvested in their company (or funding an acquisition), rather than being spent on an over-priced tender. iii) Uncover the jewel in the crown: Agronomy's a high value/high margin knowledge business. With the dramatic improvements in satellite & sensor technology, and in (big) data collection, analysis & prediction, there's obviously broader scope to be a tech business also. Noting the average Western farmer's now close to retirement age, plus the insatiable global demand for food, we're on the cusp of a new wave of farmers & intensive farming techniques. This is a high growth opportunity for any agronomy business, whether it's maximizing yields in (N America), or simply lifting yields (in Russia/Ukraine this acquisition is a small but promising start). Unfortunately, Origin's agronomy division appears to be just another sales channel at the moment. Now, this obviously isn't going to change tomorrow, but breaking it out as a separate segment (internally, and externally) would be a great start when divisional management is (visibly) responsible for & incentivized by their own P&L, good things tend to happen in terms of operating strategy & revenue/profit growth! iv) Bulk up: Origin's agri-business is a blessing & a curse... It's reassuringly stable, which allows for fairly aggressive leverage. But it's also low margin/high volume it's not clear how much scope's left for consolidation and/or margin expansion in the UK/Ireland. If the company wants to maintain/accelerate its growth rate, now's the time to step up & take a few risks. An aggressive new markets & acquisitions strategy is the answer Origin now has significant debt capacity to fund such a strategy, and if investors keep loving the stock it's a perfect opportunity to raise a hefty chunk of fresh equity. The reputation & calibre of Origin's new CFO (to be announced shortly) is crucial to this new strategy. Meanwhile, adjusted operating margin's stable around 6.4%, which still deserves a 0.5625 Price/Sales multiple. I'll also make a (positive) debt adjustment here I calculate another 155 M of debt would still limit net interest expense to 15% (or less) of operating profit. As I mentioned, I'm quite comfortable with a higher level of leverage here, so I'll break my usual habit of hair-cutting this debt adjustment by 50%. On the earnings front, we've seen an 11-12% growth rate for a number of years now, but the Welcon disposal knocks this back to low single digits for 2014 (and a Valeo IPO/disposal could hurt also) so I'll scale back a smidge to a 10.5 Price/Earnings multiple. Averaging the two approaches, we get: (EUR 0.505 EPS * 10.5 P/E + (1,368 M Revenue * 0.5625 P/S + 155 M Debt Adjustment) / 125 M Shares) / 2 = EUR 6.34 Origin's mildly over-valued, but still an interesting/high potential stock. I've come close to buying it on a number of occasions...but it was never quite cheap enough! One to watch though we may possibly see a bit of a bumpy period to come (in terms of results, or investor sentiment, or both), as the company (hopefully) transitions from the old Origin to a new higher growth Origin. Which might offer a better buying opportunity for the enterprising investor... Price Target: EUR 6.34 Upside/(Downside): (16)% _ Cheers, Wexboy |
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