Daily ShareChat: Delegat's
By Jenny Ruth
Wine company Delegat's Group delivered a "respectable" annual result, given its difficult trading conditions and the strength of the New Zealand dollar, says Adrian Allbon, an analyst at Goldman Sachs JB Were.
Delegat's normalised net profit fell 17% to $18.9 million for the year ended June, above Allbon's $18.2 million forecast.
"Despite lower profitability, Delegat's generated strong operating cash flow due to its lower harvest volume (down 10% year-on-year) and a 30% reduction in grape prices lowering its inventory investment," Allbon says.
"Critically, the strong cash flow generation has enabled Delegat's to reduce its net debt 7% to $129 million."
Allbon has lowered his forecast for 2011 to $22.6 million from $24.4 million, which is below the company's $23 million to $30 million guidance range. That reflects his expectation the New Zealand dollar will be higher than the company expects, especially against the Australian dollar, and the prices the company realises will also be lower than its forecasts.
In the year ended June, its average price per case fell to $113 compared with $125 the previous year.
Allbon values the shares at $2.15 and has a $1.70 12-month target. "If we see evidence that Delegat's is outperforming industry issues, its attractive valuation metrics may prompt a more positive recommendation."
Daily ShareChat articles report how the main experts in the market might view a certain share and we provide this commentary as a useful resource for investors. Content on this site does not in any way constitute a recommendation to buy, hold or sell any particular share. Investors should always seek professional advice before making any investment decisions.
Comments from our readers
No comments yet
Add your comment:
Delegat’s Group Limited
Delegat's buys Australia's Barossa Valley Estate assets out of receivership for A$24.7M
Delegat's lifts first-half profit, selling more wine while keeping expenses in check
Delegats expands in Hawke‘s Bay
Jim Delegat loses suit against director of Salthouse Marine
Delegat's sees small lift in annual earnings, warns on strong currency
Delegat's FY profit falls 22 percent on lower harvest, drop in sales
Delegat's first-half profit reaches a record before non-cash writedowns
Delegat's expects $20m to $24m annual operating profit
Delegat's profits and sales up