BGA - Bega Cheese

[peter2]

RSC vs XAO: is probably the last thing I look at. I use it to decide between multiple opportunities. In this case (BGA), I was surprised to see the strength in the daily chart. Reversals are usually weaker than the index in all time frames. I'm usually trading pull-backs in the daily chart on stocks that are trending up and stronger than the index in the weekly chart.

Yep, switched to the daily because the weekly hides many of the gaps. I use the monthly chart occasionally and did with BGA to see the huge support level at 3.80.

Yes, just an observation as it was below the 3.80 level (dashed line). If I looked, there would be a bullish divergence indicator signal on the double bottom. Experience means I don't have to look for it to know it's there.

For short term trader: Double bottom with bullish divergence makes that 1st blue bar a buy signal for a short term trade setup. The next 1st BB after the selloff day would be another. I passed on this one because of the possible impact the fires may have on supply. That's when I read BGA's updates.

 

[Trav.]

Awesome thanks for taking the time to respond.

 

[Muschu]

Any thoughts on what is happening with BGA please? I've held for a month or so and have done well, but the last several days have seen downward movement on the back of no announcements. Thoughts appreciated.

 

[Country Lad]

Any thoughts on what is happening with BGA please? I've held for a month or so and have done well, but the last several days have seen downward movement on the back of no announcements. Thoughts appreciated.

About the only thing I can think of is that Bega had won the right to use its labelling for the peanut butter products in a Federal Court decision and on 19 May Kraft-Heinz has filed an application in the High Court seeking leave to appeal that judgement.

Market usually doesn’t like litigation.

 

[Dona Ferentes]

BGA isn't doing too badly. Cruised through the GCC; no drastic sell-off in Feb-March..

Bega exports over 60 million units of cheese per year to approximately 40 different countries

- strengthening AUD may have an impact here, over the last few weeks. Competing against the Europeans is always tough, plus I'd imagine supply lines may have been impacted recently.

As a provider of "natural cheese, processed cheese, powders and butter, packages cheese, cream cheese, powders and nutritionals", when dealing in volume there are only a few outlets, and maintaining aisle presence in the supermarkets is the hardest game.

 

[Dona Ferentes]

reported today:
Bega Cheese generated normalised earnings before interest, depreciation and tax (EBITDA) of $103.0 million in FY2020.

Strong growth in the Australian and international branded business did not entirely offset the impact of reduced margins in Bega Cheese’s bulk dairy ingredients and nutritionals business with normalised EBITDA 2% lower than the prior year. The result was at the upper end of the guidance provided to the market on 29 October 2019. Bega Cheese statutory EBITDA of $87.8 million was 11% higher than the prior year.

Net cash inflow from operating activities was $137.7 million in FY2020, compared to net cash inflows of $100.3 million in FY2019.

Net working capital was $121.4 million for FY2020, a decrease of $56.3 million from FY2019. This has been achieved through an increased focus on accounts receivable and inventory management.

Bega Cheese has continued to make progress reducing net debt throughout FY2020. Net debt fell year on year by $51.8 million to $236.4 million. The normalised EBITDA to net debt leverage ratio has reduced from 2.75 times to 2.35 times. Bega Cheese is well within year end bank covenants of 3.75 times. Bega Cheese expects its leverage ratio to continue to reduce throughout FY2021 and is in a strong position to meet covenant requirements in the future.

Final FY2020 dividend : 5.0 cents per share

Executive Chairman of Bega Cheese Barry Irvin commented:

“It has been a year like no other, we began the year in the grips of drought which contributed to a very competitive milk procurement environment and then managed never before seen bushfires. While still managing the impacts of those difficult circumstances COVID-19 was upon us, resulting in a major correction in global dairy commodity prices, a collapse in Australian and international food service demand and an increase in Australian retail demand”. Bega Cheese’s diversified dairy and food business and regional milk procurement model proved to be key to managing through the drought, devastating bushfires (particularly in the Bega and Gippsland regions) and the rapid changes in markets."

and there's a rumour now China Inc can't take over Aust dairy assets, Bega might be the obvious bidder.

 

[peter2]

The BGA chart looks much more bullish now. Price is just below its yearly high and a very strong resistance level (5.50). Traders must be careful with placements of their exit triggers as the market depth is thin.

There's an aggressive entry (BO > 5.40) or a more conservative one at 5.60.

 

[Dona Ferentes]

Bega Cheese is expected to raise up to $400 million to fund its purchase of Japanese drinks giant Kirin's Lion Dairy and Drinks.

 

[Dona Ferentes]

The acquisition of the Lion dairy and drinks business for $560million gives Bega some real muscle in the Australian industry, and also increases the export business to about $500 million in revenues. Exports of cream cheese go to Japan, fresh yoghurt goes to Asia and powdered milk for infant formula to Asia.

Before the Vegemite acquisition in 2017, Bega's brand products portfolio made up just 20 per cent of its business as the company was little more than a provider of milk and cheese for private label brands owned by supermarkets. Bedding down the Mondelez buiness was an important stepping stone in learning how to extract value from branded gooods; the percentage was at 59 per cent last week, and by January, when it absorbs the Lion dairy and drinks business, it will be at 70 per cent. Lion manufactures milk and juice brands such as Big M, Pura, Dairy Farmers and Daily Juice.

CEO Barry Irwin says that these purchases are crucial in delivering better returns for shareholders over time. Group revenue will double to $3 billion a year with the Lion acquisition.

 

[dyna]

Institutional shareholders leapt at the 2:9 accelerated issue at $4.60.Seems like a better deal than the last (two) times this mob put their paws into the pockets of the punters!

 

[mullokintyre]

Sitting at 5.51 today which is my buy in price.
Not a big parcel, but would be keen to add to it if there is some price weakness.
Mick

 

[Dona Ferentes]

Bega Cheese has for the first time exceeded $2 billion in revenue after completing the acquisition of Lion Dairy and Drinks. The $528 million acquisition has seen the company effectively double in size ... employee numbers have jumped from approximately 2,050 to 4,150.

Executive chairman Barry Irvin said he was pleased with the result. It is a solid result, or a result that is in line with expectations, in the context of challenging changing markets and a major acquisition, he said.

The $2.1 billion in revenue for the financial year to the end of June, up 39%, helped drive normalised earnings before interest, tax, depreciation and amortisation to $141.7 million, both nearly 40 per cent higher than the prior financial year; normalised profits increased 24 per cent to $39 million.

It will pay a final fully franked dividend of 5¢ per share for the financial year, taking the total dividend for the year to 10¢ per share.

Strong farm gate relationships along with the flexibility of a globally competitive supply chain helped navigate fluctuations in demand for product and a competitive market for milk supply, said Irvin.

Chief executive Paul Van Heerwaarden confirmed Bega Cheese had faced challenges managing milk supply in a very competitive market.

While we increased our milk intake through the [Lion] acquisition, we lost some milk supply in Victoria due to the end of the two year Koroit supply guarantee with Saputo, strong competition for milk, and supplier exits due to retirements and alternative land use, he said.

 

[IrishDigger]

I reckon the taste of Vegemite has changed and a browse on the question, 'Has The Taste Of Vegemite Changed' supports my belief, this is despite denials by Bega Management.

 

[Dona Ferentes]

I reckon the taste of Vegemite has changed and a browse on the question, 'Has The Taste Of Vegemite Changed' supports my belief, this is despite denials by Bega Management.

I definitely don't buy their peanut butter.

 

[mullokintyre]

No matter who makes it, I have never liked the taste of vegemite.
Always felt like an outcaste in my family because of it.
Mick

 

[dyna]

Try B-Mite. Bit of an acquired taste though, and hideously expensive. American p-butter is the best ( Skippy , Super Jif ) doesn't have quite so much salt as ours, perhaps.

 

[mullokintyre]

Forecast update on Bega out today.
Expecting EBITDA to be in the range 190 to 215 million, a significant improvement on last years 142 million.
Still stiff competition among processors to get the suppliers milk.
That will at least beg ood for dairyfarmers, as will the abundance of water for Goulburn Valley and Murray valley dairy farmers.
Should give the co a boost today.
Mick

 

[mullokintyre]

Market didn't like it, down 8% on open.
So I topped up.
The FTA signed between OZ and UK has about 125,000 tons of cheese that is exempt from tariffs which will help a small amount in the long run.
Dairy is on the up at the moment, giving some producers to invest in infrastructure and larger her sizes.
Mick

 

[Ann]

I was watching this for a buy as dairy is supposed to be rising in price, I guess rising dairy is not good for Bega, I noticed their sliced aged tasty has had a pretty large price increase at the supermarket. I left it and bought another brand.

I wonder if this is going to be another short seller's toy now?

 

[dyna]

Having to watch BGA like a hawk ,now. Methinks this thing is turning into a classic trader's stock.
The next drought can't be all that far off ,either.