Hello Pezz, Today's Second Report:
I bought a tranche of Sygen International uk.finance.yahoo.com for GBP 0.4675-0.47 per share.
This is a pick highlighted by Anton, my cyber pal from London who had earlier highlighted the wager of Golar LNG, the Norwegian LNG shipping/logistic company (see reference below)
Message 19729999
January 25th, 2004
While I was on the airplane on January 13th, my broker sold Message 19692270 <<January 14th, 2004>> my Golar LNG finance.yahoo.com at NOK 124/shr, claiming a fortunate 43% profit over so many weeks since Message 19601861 <<December 16th, 2003>> - this pick is the brilliant spec of Anton, a cyber pal in London who lurks on this BBR thread
Why Sygen, I hear you ask.
Well, the company used to be called Pig Improvement Company. They changed their name because they have branched out to improving other of god’s creatures. They now do genetically modified pigs in UK & US, and super shrimps in Mexico and Brazil. Anton’s point being that surely the timing has to be right when we have avian flu, sars, mad cow, blind sheep, poisoned fish, damaged clams, and such all around us. I agree.
Besides, the GBP may have some oomph left in its rise against USD, and so I might as well have my broker set up the GBP account, and I spend the time setting up my MS Money-MS Excel programs to take account of yet another variety of paper money.
QUOTE
Sygen International plc Company Profile
Breeding better hogs is big business at Sygen International. Through subsidiary PIC International, the firm plans to use genomics to develop not only pigs but also other edible creatures that are cheaper to raise and healthier to eat without modifying any genes. Its hog operations subcontract multiplication farms to produce breeding stock, then buy the breeding stock back to sell to commercial hog farmers in about 35 countries. Sygen is a partner in SyAqua, a joint venture with other interested firms that won a US federal grant to use biotechnology to improve shrimp harvests.
reuters.co.uk
sygeninternational.com
poultrysolutions.com
NOV 2002 - It is now one year since the Pig Improvement Company (PIC) decided that it should re-christen itself. It was a sad day for fans of quaintly-named listed firms, but a good day for its shareholders. In the past 12 months, the shares have outperformed the market by 56 per cent as the group has shown how it is more than just a pig breeder.
Last month, Sygen spent $4.5m (about GBP3m) buying Super Shrimp, Mexicos largest shrimp breeder. This move into shrimps may seem illogical, but Sygen has for many years used technology to spot disease-resistant genes in swine and realised that this could be used on other species. Further, buying Super Shrimp was cheaper than setting up its own breeding hatcheries. Sygen scientists, who work on analysing pig genes, can now also work on shrimps, and the company should be able to save GBP1m in development costs this year.
Also, many of Super Shrimps customers farm pigs as well as shrimps, allowing Sygen to extend its customer base in Mexico. Far more significantly, multi-species farming is also popular in Asia. Sygen currently has a 1 per cent share of the pig market in Asia but, crucially, its the only pig breeder in that continent to offer farmers what it calls"technified" sows - pigs specifically bred to be more succulent and resistant to disease.
Currently, 40 per cent of the 12m sows processed in North and South America are"technified", and Sygen supplies nearly all of these, which gives an idea of the potential for Asia, where over 50m sows a year are processed. So, if Sygen could raise its market share, it could significantly increase the operating profit of GBP600,000 that it made in Asia last year.
The one problem that has dogged the firm in the past is unpredictable hog prices. Obviously, the diversification into shrimps should help. But, more importantly, Sygen is restructuring how its customers pay their bills so that it becomes less vulnerable to the hog cycle. Instead of paying an up-front fee for their pigs, customers now spread the payments over the three years of the sows life. This increases the visibility of Sygens revenues, but it does mean that turnover will fall over the next couple of years as the group moves more customers over onto this payment method. And it will never be fully immune to the hog price cycle because if farmers are unable to sell pigs for a good price, they will be nervous about stocking up. It was the cyclical slump in hog prices to a four-year low in the summer that led to the fall in Sygens shares. Still, hog prices are now recovering, which can only be good news.
Assuming Sygen delivers WestLB Panmures earnings forecast of 3.1p per share this year - there was an exceptional tax credit in 2001 which flattered that years earnings figure - then the shares are trading on a punchy 15 times prospective earnings. However, the broker estimates that earnings will rise strongly to 4.1p in 2004 as hog prices improve, giving a 2004 earnings multiple of 11. And as Sygen starts to make profits in Europe, which it can offset against previous losses, then its tax bill should also fall. The recent derating looks overdone. Buy.
Ord price: 48p Market value: GBP141m
Touch: 47-49p 12-month High: 64p Low: 38p
Dividend yield: 1.5%* PE ratio: 15*
Net asset value: 14p Net cash: GBP30m
Year to Turnover Pre-tax Stated earnings Net div per
end Jun (GBPm) profit (GBPm) per share (p) share (p)
1999 151 -19.0 -5.4 nil
2000 140 -1.8 -1.0 nil
2001 175 9.9 7.9 nil
2002 165 12.7 3.7 0.5
2003* 154 14.0 3.1 0.7
% change -7 +10 -16 +40
*WestLB Panmure's estimates Beta: 0.18
Market makers: 7 Normal market size: 15,000 |
