Beston hopes $26m mozzarella factory will help turn its share price around
Food & Agriculture
Food & Agriculture
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Australian investors are overlooking agribusiness opportunities despite big interest overseas, according to food producer Beston Global.
“Since our Initial Public Offering in August 2015, we have naturally been concerned with the lack of market coverage on BFC, especially given the changes occurring in the food industry,” Beston boss Sean Ebert told shareholders at the company’s AGM this week.
“We have therefore commissioned an independent research report on our company which we expect to be completed prior to the end of this half-year.”
South Australian Beston (ASX:BFC) raised $100 million in its IPO at an issue price of 35c — but hasn’t traded at that level this year.
Shares at the company closed at 28c on Wednesday.
Chairman Roger Sexton said the lack of investor love belied increasing interest from the ever-populous Chinese market.
“Given the increasing interest being shown in agribusiness companies by overseas investors, we share the view expressed by a number of these investors that it would be timely for a “Health and Wellbeing” Exchange Traded Fund (ETF) to be established,” Mr Sexton told shareholders.
Dairy products account for 85 per cent of the business. Milk through its factory topped 90 million litres in the past year, and was expected to eclipse 130 million by mid-2018.
Beston made a $7.7 million loss last year, citing wet winter conditions and lower sales from China — though revenue increased by 49 per cent.
The group hopes to ramp up production at its new $26 million state-of-the-art mozzarella plant to sell more cheese domestically and overseas.
Beston cheese products are already stocked at Aldi, Costco and IGA as well as Chinese supermarkets, and under orders from the likes of fast food chain Guzman y Gomez.
Beston belives it is well-placed to become the “third player” in the Australian dairy industry as a result of mass consolidation of the dairy market.
Dairy giant Murray Goulburn (ASX:MGC) was acquired by Canadian Saputo in September, and fellow South Australian B.D Farm Paris Creek by Primary Opinion earlier this week.
“Dairy is at the heart of BFC right now. We have further work to do in lifting the overall performance of this division but are confident that the hard work over the past 12 months we have done will see the results flowing through over this next 12 months, and particularly from January onwards as our Mozzarella plant comes on stream,” the chairman said.
“We are also working on our other divisions to ‘pop’ their profit potential. Our next cab off the rank in this regard is our meat division.”
Beston announced it would move to a 100 per cent shareholding in Scorpio Foods’ ready-to-eat meat business, alongside its seafood, water and nutrition products.
In an attempt to engage Chinese consumers, they have constructed branded “food pods” strategically dotted in supermarkets to showcase their produce and allow shoppers to verify the origin of their produce.
“The Beston Food Pods have generated a huge amount of interest amongst consumers in China and have provided us with an innovative, physical presence to position Beston Global Food’s products as premium quality, safe, healthy and authentic food and beverage products and further build our brand in the minds of Chinese consumers,” Mr Sexton said.
They hope to have 20 rolled out across provincial cities in China before franchising them.