daniel chigunwe
Business Writer
Leading stockbroking and research concern, IH Securities has valued Padenga’s agribusiness unit below its peers in the aquaculture industry.
In its analysis of Padenga’s full year earning for the full year to June 2024, IH Securities (IH), valued Padenga’s Agribusiness at a P/E (+1) multiple of 8.86x, compared to its peers in the aquaculture industry at an average of 11.08x and EV/EBITDA (+1) of 4.98x compared to peers at an average of 6.22x.
The undervaluation comes amid IH’s expectations that demand for Nile crocodile skins will “continue easing owing to an increasing shift towards sustainability and ethical sourcing, with alternative materials growing in popularity”.
Performance wise, as previously reported by this publication, the Padenga Agribusiness recorded 20 percent decline in skin harvest volumes at 16,973 skins from 21,280 in the prior period.
Consequently, skin sales fell 22 percent to 14,627 from 18,709.
Despite skin sales revenue growing by 2 percent y/y, PBT for the unit eased owing to a 66 percent decrease in biological fair value gain in the period.
“Nevertheless, increased gold sales are expected to offset any decline in Padenga’s skin sales,” reads part of IH’s research note dated 17 October 2024.
Dallaglio recorded growth in output driven by improved ore grades at Eureka mine in addition to better recovery and higher plant throughput at Pickstone mine.
The newly commissioned Pickstone Underground Project Phase 1 contributed 15 percent of the Group’s gold production in the period under review.
Gold sales for the period firmed 25 percent to 1,351kg versus 1,080kg recorded in 1H23.
The business also benefited from strong gold prices as the metal repeatedly broke price records during the period.
Consequently, Dallaglio recorded a 40 percent increase in turnover, with EBITDA for the unit growing by 98 percent.
Overall, the Group recorded revenue of US$99.24 million for the period, a 33.35 percent increase from the US$74.42 million recorded in the prior comparative period driven by positive performance from the gold mines as well as bullish gold prices.
The Dallaglio business unit contributed 88 percent to total revenue compared to 84 percent registered in 1H23, with Padenga Agribusiness making up the difference.
With the agribusiness under strain, IH highlighted that Padenga has continued on an extensive capital expenditure and expansion campaign at Dallaglio.
Following commissioning of Phase 1 of the Pickstone underground project, the Group has embarked on Phase 2 which entails reequipping and developing the mine below Level 5 and is expected to allow access to higher grade ore by 2Q25.
The Thickener Project is still underway at Eureka, which will result in improved plant recovery and cost efficiencies at the mine.
Dallaglio has also commenced a diamond drilling campaign at Pickstone, providing a potential opportunity for further diversification of revenues.
Bongani Ndlovu