Would these 5 NZX-listed agriculture stocks yield benefits in 2021?

Summary 

  • The NZ agriculture/farming industry’s GDP amounts to billions of dollars every year.
  • Scales Corporation expects an improvement in the nation’s supply chains in the second half of the year, which will smoothen the distribution of its products.
  • After considering future crop volumes, Seeka had established that it had enough post-harvest capacity for next two years’ harvest seasons.

A key contributor to New Zealand’s economy amounting to billions of dollars, the agriculture sector is very important. The sector comprises animal farming, cultivating crops, forestry, and farm practices.

During the year closed December 2020, the agriculture, forestry, and fishing industry’s GDP stood at NZ$12.8 billion.

As per Stats NZ, March 2021 noted an increase of 1.6% compared to the December 2020 quarter. The agriculture, forestry, and fishing sector’s seasonally adjusted growth from December 2019 to March 2021 increased by 0.9%.

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Let’s now cast a glance at the 5 NZX-listed agriculture sector stocks and see if they have the potential to yield benefits in 2021.

Scales Corporation Limited (NZX:SCL)

With a varied agribusiness collection, Scales Corporation Limited has a market capitalisation of ~NZ$655.01 million as on 19 July 2021.

Last month, the Company published its Annual Shareholders Meeting presentation, which mentioned that though it had been through a tumultuous 2020, it was able to deliver robust results.

On the outlook front, Scales Corporation stated that COVID-19-induced lockdowns would show their effect in the 2021 results as well. However, they are anticipating an improvement in the supply chains of the country in the latter part of the year.

The Group earnings guidance has been restated; the underlying net profit is said to fall amid NZ$27.5 million-NZ$33.5 million. The underlying EBITDA is expected to rise from NZ$46.5 million to NZ$53.5 million.

On the growth front, Scales Corporation has been seeking prospects in the wine industry. Scales also hope that international travel resumes soon so that they can move ahead with the identified opportunities.

On 19 July, by the market close, Scales Corporation was at NZ$4.6, declining by 1.50%.

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Allied Farmers Limited (NZX:ALF)

With an emphasis on expanding its current business along with exploration and progression of fresh schemes, Allied Farmers Limited has a market capitalisation of around NZ$17.28 million, as on 19 July.

In February, Allied Farmers declared its 6-month results closed December last year. It noted the unaudited after-tax profit at NZ$0.531 million, reflecting an increase from the earlier anticipated range of NZ$0.2 million-NZ$0.4 million.

On the outlook front, Allied Farmers stated that if the weather condition comes to a normal level throughout the nation, along with the suppression of the pandemic, the livestock trading activity will get immense support from them.

Moreover, the Company is observing positive in-market pricing and is active and well positioned to add to it.

Allied Farmers closed the market session at NZ$1.69, up by 1.69%, on 19 July.

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PGG Wrightson Limited (NZX:PGG)

A market-leading company providing full-service agricultural supplies and services throughout the rural supply chain in the nation, PGG Wrightson Limited has a market capitalisation of ~ NZ$255.89 million, as of 19 July.

Its six months result for the period closed 31 December noted an increase of 41% in the NPAT from continuing operations to NZ$18 million on pcp.

On the outlook front, PGG Wrightson’s CEO Stephen Guerin stated that Fruitfed Supplies business’ crops were in good health, and substantial crops were underway.

On the back of vaccine roll-out in PGG’s trading market nations, the Company is optimistic about the upcoming opportunities in the agriculture sector.

PGG Wrightson considers itself to be fit enough to meet its 2021 full-year operating EBITDA guidance of nearly NZ$57 million.

On 19 July, PGG Wrightson was at NZ$3.36, falling by 0.30%, by the end of the market session.

A quick read; PGG Wrightson (NZX:PGW) Hits $499 Million Six Month Revenue

Seeka Limited (NZX:SEK)

An integrated orchard-to-market service provider Seeka Limited provides quality products to prominent retailers and wholesalers in the domestic and international markets.

The Company has a market capitalisation of above NZ$199.12 million, as of 19 July. Last week, the Company notified that it had made an equity investment in Fruitometry, which is an innovative Agritech.

Last month, Seeka provided an update on facility growth for next year, the Company will develop and onboard a new kiwifruit packaging machine called MAF RODA located at Maketu Corner Te Puke area. The new packing machine will boost the total trays packed each day.

In March, Seeka announced that it had acquired kiwifruit business Opotiki Packing and Cool Storage.

Source: © Kostr22 | Megapixl.com

In its full-year report ended December 2020, the Company mentioned that after analysing future crop volumes, it had been concluded that Seeka had enough post-harvest capacity for the 2021 and 2022 seasons.

On 19 July, Seeka was at NZ$5.05, by the close of the market session, rising by 1.0%.

T & G Global Limited (NZX:TGG)

 An international entity, T & G Global Limited delivers a few of the world’s safest vegetables and fruits. T & G Global is valued at more than NZ$361.50 million.

The Company reviewed FY2020 results in the virtually conducted Annual Shareholder Meeting last month. T & G Global noted growth in revenue to NZ$1.4 billion from NZ$1.2 billion on pcp.

For 2021, the Company’s EO Gareth Edgecombe said that the current year is equally difficult for the company when compared to 2020. With unfavourable weather in Nelson, the apple business substantially affected the crops.

He further added that he was assured that with the right strategy, strong teamwork, they will combat difficulties. The Company is doing everything required to develop the underlying financial strength in its business.     

T & G Global was up by 0.68%, at NZ$2.95, by the close of the market session.

Is New Zealand’s agriculture sector well prepared to sail through 2021?

New Zealand has successfully contained the virus, and the country has begun the vaccination process for the five million population. The year 2021 started on a positive note, and as per the latest information during the 3-month period up to March this year, rural areas have outshined the key urban centres.

As per ASB Regional Economic Scoreboard Q1 2021 published in the beginning of July, a bumper NZ$8.20 kgms milk price for the 2021/2022 season has been projected.  It further mentioned that areas with major dependability on the agriculture sector and farming have been performing a lot better versus other sectors.

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