Although Zeder’s interim results came in at the top end of market expectations yesterday, the share price closed unchanged at R4.15 on the JSE.
Analysts described the results as “solid”, but said investors were now waiting to see whether Zeder’s management could take the company to the next stage before pushing the share price any higher.
Zeder, which holds strategic stakes in companies operating in the agricultural sector, measures its performance by “sum-of-the-parts (SOTP) value” per share and recurring headline earnings a share. The SOTP value increased by 8.8 percent to R4.34 a share in the six months to August.
Over the same period recurring headline earnings a share increased by 8.2 percent to 9.2c.
Management attributed this increase mainly to improved contributions from Capespan, Zaad and Kaap Agri.
The contributions from these investments helped to counter the lower return from the cash proceeds earned on the disposal of the bulk of Zeder’s investment in Capevin Holdings.
Zeder’s most significant investment is its 47 percent stake in unlisted Agri Voedsel, which owns a 30.5 percent economic interest in JSE-listed Pioneer Foods. It described Pioneer’s overall performance as “constrained by a prolonged high commodity price cycle and structural challenges within the poultry industry”.
However, Zeder believed Pioneer’s core divisions were performing well and was optimistic about its long-term prospects. “It is a leading food producer with strong fundamentals, which under new management remains well poised to benefit from the growing demand for food and beverages both in sub-Saharan Africa and select international markets.”
Analysts said Zeder was under some pressure to prove that it could add value to its investments at an operational level. “They’ve generated good returns in the past by buying agricultural-base assets such as KWV and Kaap Agri at significant discounts to the value of their component parts. Now… we need to see if they can take their game to the next level,” Chris Logan of Opportune Investments said.
During the six months, Zeder increased its stake in Capespan to 72 percent from 37 percent, prompting expectations that it was planning to develop the fruit and logistics firm into a major global player.
Zeder, which provided for a R54.4 million management fee to be paid to PSG for the six-month period, said it continued to believe that the agribusiness, food and beverage sectors offered rewarding investment opportunities.
The attraction of the sector was highlighted recently by reports that a North American owned company, AgriGroupe, was set to fund a management-backed buyout of Afgri. The African Farmers’ Association of South Africa has petitioned the government to block the transaction.