Daily ShareChat: Delegat's Group

Delegat's Group has a "corked" macro outlook as a result of the high New Zealand dollar and the current wine glut, says Adrian Allbon at Goldman Sachs JB Were.

"We are still believers that Oyster Bay is a high quality global wine brand and operationally Delegat's continues to execute well on its growth plans," Allbon says.

However, the macro and industry risks remain skewed to the downside and, on his earnings estimates, Delegat's has limited balance sheet flexibility, he says.

Delegat's reported a 12% fall to $13.8 million in first-half net profit and expects the full-year result to be down between 30% and 40% on last year's record $30 million. In December, the company said it expected to match last year's result.

Allbon has cut his valuation of the stock by 8% to $2.30 a share but has a $1.85 12-month target.

Key catalysts critical to his ongoing assessment of Delegat's fortunes are the New Zealand dollar versus the British pound, currently at a post-float high, and the New Zealand industry harvest announcement in mid-June, Allbon says.

"If the industry harvest is flat to modestly down year-on-year, as NZ Wine is currently predicting, then the industry bulk wine surplus should start to normalise in 2011 and improve future prospects."

BROKER CALL:  Goldman Sachs JB Were rate Delegat's as sell (down from buy).

Comments from our readers

No comments yet

Add your comment:

Your name:
Your email:	Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Anti-spam verification:

Type the text you see in the image into the field below. You are asked to do this in order to verify that this enquiry is not being performed by an automated process.