Marc Hasenfuss Editor-at-large
Zeder Investments CEO Norman Celliers
Zeder Investments CEO Norman Celliers

The portfolio of Zeder Investments, the agribusiness conglomerate controlled by PSG Group, has taken on a more balanced look — albeit courtesy of a marked drop in the market value of its core investment in JSE-listed Pioneer Foods.

Interim results to end August released on Tuesday show Pioneer now makes up around 53% of Zeder’s sum-of-the-parts (SOTP) value of R10.7bn. SOTP is the method used to evaluate a conglomerate to determine what its aggregate divisions would be worth if they were to be disposed of. 

The group’s SOPT per share has reduced to 623c as at the start of October, well off the 785c per share recorded at the end of February 2018.

It was only two years ago that Pioneer accounted for between 70% and 80% of Zeder’s SOTP value, with many market watchers regarding Zeder as a proxy for the staple foods giant.

The market’s loss of appetite for listed food counters has seen Zeder’s 27% stake in Pioneer reduced to R5.4bn compared with R7.7bn at the end of February 2018 and R6.1bn at the end of August 2017. In the third quarter of 2016 the Pioneer stake was worth around R10bn.

The rapid crimping of Pioneer’s market value has meant Zeder’s significant “smaller” investments becoming more relevant. The 98% stake in unlisted fruit marketing firm Capespan (worth R2.2bn) and the 93% stake in seed specialist Zaad (worth R2.2bn) along with the 41% holding in listed agri-services company Kaap Agri (R1.2bn) are collectively worth more than the Pioneer investment.

Zeder CEO Norman Celliers said most of the portfolio offered good value and indicated that the group would have looked to topping up its various stakes were it not restricted by debt. Zeder sits with debt of R1.5bn but gearing could be eased in the months ahead following the recent sale of Capespan’s shareholding in Chinese fruit marketing business Joy Wing Mau for almost R1.2bn.

Celliers said Capespan planned to invest in its core fruit and logistics divisions and to reduce debt. He said there was likely to be a dividend through to Zeder, which would bolster cash resources at a group level.

Looking ahead, Celliers was hopeful for a stronger second half, noting that the first six months of Zeder’s earnings traditionally represented the lesser half of its annual earnings. He explained that the first half usually reflected the annual input-cost cycle associated with many of its agriculture investments as well as the softer half of the annual consumer sales and spending cycles.

Celliers maintained that despite inevitable cyclicality, investing in the agribusiness industry should offer attractive long-term returns.

“The plan for now is to dig in, stay committed and continue focusing on growing our business.”