Citrus could account for at least 40% of Costa Group’s sales growth to 2025, Credit Suisse ascertains, after Citrus Australia published its strategy.
The broker notes around 10% of the Costa Group future crop will be sold to China and any reduction in demand could affect pricing. Furthermore the company is likely to remain an important consolidator as those growers that lack scale exit the market.
Overall, demand is still outstripping supply for Australian citrus, although the supply of mandarins is about to rise.
Outperform rating and $4.15 target are unchanged.
Sector: Food, Beverage & Tobacco.
Target price is $4.15.Current Price is $3.09. Difference: $1.06 – (brackets indicate current price is over target). If CGC meets the Credit Suisse target it will return approximately 26% (excluding dividends, fees and charges – negative figures indicate an expected loss).
