Agribusiness Quantum to post cracking results
A powerful interim trading statement saw shares in agribusiness Quantum Foods — SA’s largest egg producer — scramble to a high.
On Wednesday, the poultry, eggs and animal feeds producer reported that headline earnings would surge more than 500% to 76c per share in the six months to end-December, with its egg business putting in a star performance.
Shares in Quantum, which was unbundled from consumer brands giant Pioneer Foods in 2014, reached 500c in fairly vibrant trade.
They closed at 405c on Tuesday and were trading at 270c less than six months ago.
The detailed trading statement followed an earlier business update in February that advised shareholders that the egg business had significant tailwinds. Average selling prices per dozen eggs had increased 32% in the first four months of the financial year, with production costs lower due to a decline in feed costs. Quantum was also helped by lower egg sales volumes as a result of avian influenza production losses, which firmed prices due to widespread market shortages.
Vunani Securities analyst Anthony Clark said the Quantum trading update pointed to "cracking results" and raised the possibility of a bumper dividend for shareholders.
"Lower input costs combined with higher egg prices when the avian influenza outbreak caused a national shortage of eggs meant a marked uplift in earnings," Clark said.
He cautioned that Quantum’s businesses were cyclical and that if the avian influenza was brought under control egg prices would normalise.
Opportune Investments CEO Chris Logan said he hoped Quantum would benchmark against the best companies in the poultry sector.
"Like Astral Foods is the major force in the local chicken sector, I hope Quantum can become the Astral of the egg industry," Logan said.