05-05-2020, 10:50 AM
Eggriculture (ticker 8609 HK) is an interesting Singapore food security play. They did an IPO in Hong Kong GEM market in Sep 2018 raising around S$11mil. They are the 3rd largest local producer of eggs in Singapore, behind Seng Choon (private) and Chew’s Group (which is no longer listed). The company produces eggs in SG under the name N&N Agriculture. The company’s website is https://www.eggriculturefoods.com/en/.
At current share price, the company has a market cap of around HKD 63 mil (or S$11.5mil), and trades at a trailing 12 mth P/E ratio of just 2.7x.
In the 9 mths ended Dec 2019 (note fiscal year end is Mar), the company recorded a net profit of S$3.2mil.
In the 12 mths ended Dec 2019, (i.e. adding up the latest 4 quarters), the company recorded a net profit of S$4.3 million.
The company is likely to benefit from a friendlier environment towards domestic SG food producers going forward. Firstly, in Dec 2018, Malaysia indicated it might restrict the export of eggs. Secondly the covid-19 situation has demonstrated the need for Singapore to accelerate its food security. All this is likely to result in friendlier government policies towards local producers.
One should generally be wary of small cap Singapore companies which decide to list in HK without a strong rationale. Yet this company looks to be a real business. Its auditor is PWC Singapore. Its egg products are readily available in local supermarkets and even 7-11. Balance sheet looks ok with around S$4mil of net debt (as of Sep 19). it has a long 20 year land lease from gov for its farm in Lim Chu Kang.
Chairman & CEO, Ma Chin Chew, who is also 59% shareholder, took a salary of S$195k for the year ended Mar 2019 which looks reasonable in these times of management indulgence.
At current share price, the company has a market cap of around HKD 63 mil (or S$11.5mil), and trades at a trailing 12 mth P/E ratio of just 2.7x.
In the 9 mths ended Dec 2019 (note fiscal year end is Mar), the company recorded a net profit of S$3.2mil.
In the 12 mths ended Dec 2019, (i.e. adding up the latest 4 quarters), the company recorded a net profit of S$4.3 million.
The company is likely to benefit from a friendlier environment towards domestic SG food producers going forward. Firstly, in Dec 2018, Malaysia indicated it might restrict the export of eggs. Secondly the covid-19 situation has demonstrated the need for Singapore to accelerate its food security. All this is likely to result in friendlier government policies towards local producers.
One should generally be wary of small cap Singapore companies which decide to list in HK without a strong rationale. Yet this company looks to be a real business. Its auditor is PWC Singapore. Its egg products are readily available in local supermarkets and even 7-11. Balance sheet looks ok with around S$4mil of net debt (as of Sep 19). it has a long 20 year land lease from gov for its farm in Lim Chu Kang.
Chairman & CEO, Ma Chin Chew, who is also 59% shareholder, took a salary of S$195k for the year ended Mar 2019 which looks reasonable in these times of management indulgence.