Macquarie believes the company is well-positioned for growth and on track to achieve its targets for five-year berry plantings of 240ha in China by 2020. The international business is a driver of the company’s target for net profit growth of 30% or more in 2019.
China forms part of the company’s international division, along with Morocco, and represented 17% of 2018 operating earnings.
Macquarie notes jumbo berries are priced at 60-80% premium regardless of the season. There is also market scarcity and Costa Group has a logistical advantage, taking just two days to market from harvest.
Macquarie maintains an Outperform rating and reduces the target to $6.22 from $6.27.
Sector: Food, Beverage & Tobacco.
Target price is $6.22.Current Price is $5.35. Difference: $0.87 – (brackets indicate current price is over target). If CGC meets the Macquarie target it will return approximately 14% (excluding dividends, fees and charges – negative figures indicate an expected loss).
