MFB, BFG & CVT: 3 food stocks to watch on inflation concerns

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MFB, BFG & CVT: 3 food stocks to watch on inflation concerns

 MFB, BFG & CVT: 3 food stocks to watch on inflation concerns
Image source: Alexander Raths, Shutterstock.com

Highlights

  • Inflationary pressure in NZ is mounting.
  • Official inflation figure is 5.9%, an all-time high.
  • Economists expect it to rise further due to global factors.

The average price of petrol per litre is now up by 31% compared to last year. It has already reached NZ$3 in some places. Tomatoes have hit an all-time high, reflected in food price inflation, which is the highest since 2011. The cost of living according to recent figures is as high as 5.2%, the highest since 2008.

This is not all. According to economists, this is set to rise even further and reach its worst in decades due to global reasons. The main reason for the increasing price of oil is due to the Russia-Ukraine war.

Besides this, there are some other factors that are driving the pressure related to the pandemic. These include, costs of raw materials and inputs rising at every stage of the supply chain, logistics, and transportation costs are also rising due to disruptions caused by the COVID-19 pandemic.

Energy costs are rising partly due to increased global demand last year, and partly due to supply shortages due to cartel-controlled productions.
Against this backdrop, let’s examine some important food stocks listed on the NZX.

Image Source: © 2022 Kalkine Media

My Food Bag Group Limited (NZX:MFB)

A meal kit operator, MFB, continued to perform strongly in Q3. In its update for
Q3, its reported net sales value was up by 15% at NZ$52.1 million. The deliveries also grew by 9%. The Company reported higher sales during Christmas as Kiwis ordered Christmas boxes, a special offering during Christmas.

However, MFB will face inflationary pressure now as increased labour costs and pricing pressures will add cost pressures and this remains the main focus area of the company for the period ahead.
Related Read: Is My Food Bag (NZX:MFB) same as HelloFresh?

Also Read: My Food Bag (NZX:MFB): The Company ends Q3 FY22 on a strong note

On 7 March, the stock was trading down by almost 4.21% at NZ$0. 910, at the time of writing.

Burger Fuel Group Limited (NZX:BFG)

BFG is a food chain that reported system sales increased by 11.6% at NZ$45.6 million, for the half year ended 30 September. The growth can be attributed to the opening of more franchised stores. The total store strength was 77 stores across the globe on 30 September. BFG’s net profit was up by 12.7% at NZ$46K. Even though the revenue was reduced due to the impact of the COVID-19 pandemic, it was offset by rent reliefs and government wage subsidies. The net profit was up by 12.7% at NZ$46K. The revenue declined because of the impact of the COVID-19 pandemic, but that was offset by rent reliefs and the government wage subsidy.

On 7 March, the stock was trading up by 1.54% at NZ$0.33, at the time of writing.

Comvita Limited (NZX:CVT)

CVT is the producer of a world-famous honey brand, Manuka. Recently, it announced its 1H FY22 results with a 39% jump in operating profits. It announced a record EBITDA growth of 14%- and double-digit bottom-line growth in the Manuka honey brand. The Company said that its business transformation plan was on track and declared a fully imputed dividend of 2.5 cps. 

Earlier, the Company had declared a sharebuyback scheme in which, it plans to buy 300,000 of its ordinary shares in relation to the proposed share scheme arrangement for the employees.

The Company is very confident of its unique business model. It plans to achieve 50% digital sales by 2025.

Also Read: Comvita (NZX:CVT) Hits Profitability In Interim Results

Also Read: Why to explore 2 NZX food stocks in 2022?

On 7 March, the stock was trading flat at NZ$3.55, at the time of writing.

Bottom line: The food industry will feel the heat of supply chain disruptions and increased costs.  However, some companies in this sector have been able to do well despite disruptions by innovating and devising new strategies.

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