AGRICULTURAL NEWS - Sovereign Food Investments, the Uitenhage-based poultry group, looks determined to galvanise shareholder support against a possible takeover bid after issuing a fulsome trading statement for the year to end-February.
But Sovereign's shares declined 2.11% to close at R6.95 after the release of the trading statement on Friday, with market watchers pointing out that the firm appeared to have endured torrid trading in the second half.
The company - rumoured to be firmly in the sights of rival poultry group Country Bird Holdings (CBH) - issued a wide-ranging earnings forecast, pencilling in a bottom-line number of between 88c per share and 114c per share. This would mean that earnings could be 15% lower or 10% higher on the year to end-February 2015 earnings of 103c per share.
The trading update follows Sovereign's unsuccessful attempt in the High Court in Port Elizabeth last month to stymie efforts by dissenting shareholders to delay a controversial empowerment scheme.
The company - rumoured to be firmly in the sights of rival poultry group Country Bird Holdings (CBH) - issued a wide-ranging earnings forecast, pencilling in a bottom-line number of between 88c per share and 114c per share. This would mean that earnings could be 15% lower or 10% higher on the year to end-February 2015 earnings of 103c per share.
The trading update follows Sovereign's unsuccessful attempt in the High Court in Port Elizabeth last month to stymie efforts by dissenting shareholders to delay a controversial empowerment scheme.
The trading update also coincides with rumours that CBH has approached Sovereign's board with proposals around a possible transaction. CBH already owns about 10% of Sovereign and is widely expected to pitch a takeover offer for the business.
Vunani Securities small- to mid-cap analyst Anthony Clark commended Sovereign for the trading update, saying the company seemed to have risen above the travails besetting the local poultry industry. "In the past, good hedging policies played out for them as well as mix changes away from low-margin IQF (individually quick frozen) portions."
Sovereign paid a 34c a share dividend last year. Given the current attention of CBH possibly towards Sovereign, it is probably no surprise that CEO Chris Coombes and his feisty board would pull out all the stops and stuff earnings with a better-than-expected result to keep suitors on the hop and curry favour with its big shareholders," Clark said.
Minority shareholder slams trading update
However, Opportune Investments' Chris Logan - a minority shareholder in Sovereign - slammed the trading update as "shocking". He said it appeared Sovereign, after earning 90c a share in the interim period to end August, would earn only about 10c per share in the second half compared with 75c in the second half of last year.
Vunani Securities small- to mid-cap analyst Anthony Clark commended Sovereign for the trading update, saying the company seemed to have risen above the travails besetting the local poultry industry. "In the past, good hedging policies played out for them as well as mix changes away from low-margin IQF (individually quick frozen) portions."
Sovereign paid a 34c a share dividend last year. Given the current attention of CBH possibly towards Sovereign, it is probably no surprise that CEO Chris Coombes and his feisty board would pull out all the stops and stuff earnings with a better-than-expected result to keep suitors on the hop and curry favour with its big shareholders," Clark said.
Minority shareholder slams trading update
However, Opportune Investments' Chris Logan - a minority shareholder in Sovereign - slammed the trading update as "shocking". He said it appeared Sovereign, after earning 90c a share in the interim period to end August, would earn only about 10c per share in the second half compared with 75c in the second half of last year.
