SHV - Select Harvests

[aus_trader]

SHV has been in an up-trend recently and with the recent spike (9.8% up) has made a new Higher-High on the chart mainly due to the report out on Friday 31st May (Breakout type scenario from a traders point of view). The share price increase may also be partly due to investors/traders buying the stock before the ex-dividend date (Thursday June 13, 2019), which is coming up.

 

[HelloU]

r rff arrangements all ok????

 

[aus_trader]

r rff arrangements all ok????

RFF drop was all due to "an article" according to company announcement which came with Trading Halt, so I think business is OK.

Any idea what was so damaging in an article that could wipe nearly half of RFF ?

 

[HelloU]

r rff arrangements all ok????

yesty i posted in the rff thread - before rff went into the halt - that bonitas had released a view that they were not fans of rff. (the bonitas report was released at 10:33am and was very plainly written) .... that was the preface to the post i made in this shv thread.

The post I made in the shv thread is about shv.

 

[aus_trader]

What a reaction to a simple report !!

La Isla Bonita

 

[Dona Ferentes]

Select Harvests says the market conditions remain strong and that its 202 harvest is progressing well. The company noted the Australian Almond Board's January export shipment report which showed month on month shipments rose 40 per cent and 26 per cent year-to-date.

"World demand from major almond importers and domestic customers remains strong. Our Chinese customers have commenced production post the extended Lunar New Year closure as a result of the Coronavirus." "Select Harvests’ 2020 crop is over 65 per cent committed for sale at prices within the previously provided range of $8.00 to $8.50 a kilo. As previously advised, cashflows have been delayed and we anticipate export shipments of the 2020 crop will commence within the next month."

The company said its 2020 harvest was progressing well with 40 per cent of orchards harvested with completion expected by the end of April.

"While it is too early to provide an accurate forecast Select Harvests' management is currently optimistic about crop size and quality."

SHV chart over the last 12 months (up 11% this morning)

 

[Dona Ferentes]

The water situation should mean irrigators can get a share.

Recent rainfall in the Murray-Darling has eased pressure on the system and made water avaiable
https://www.mdba.gov.au/ with a PDF /Local/Temp/River-Murray-Operations-Weekly-Report-11-March-2020.pdf

Murray system still has 28% capacity in its storage. The Darling isn't yet fully flowing, though first flush has hit Menindee.
https://www.mdba.gov.au/media/mr/rain-brings-new-life-after-shocking-summer

 

[The Triangle]

Absolutely irrational market. No debt, great crop report, food. Great pickup below $7, even better in the $5s, but doubt we'll see that again. In the span of a week and today's 10% jump this has now become my largest holding.

I believe with all this corona virus paranoia that having investments in firms with limited debt will be very good.

 

[Dona Ferentes]

... No debt, great crop report, food.

.... investments in firms with limited debt will be very good.

another soothing announcement today (but still fell to $7)

- 50% of harvest completed and at primary processing plant
- yield and quality similar to last year
- an essential service and will continue to operate
- exempt from lockdowns and border restrictions

 

[The Triangle]

Quick turnaround. I sold first thing today. Walked away with a small profit -

Reasonable company - but just a poor report in every aspect. Unwrapping the cash flows and lease liabilities for the period was too annoying to do this weekend.

Considering they would have only just started seeing corona impacts i doubt this year is going to be great. Also China not happy with us or australia. Cant be good for exports.

SHV need to use their low debt status.

Might get back in if this gets back to low 6s.

 

[The Triangle]

Now that this hit the low 6s high 5s thought I would look at it again. Recent crop report is out saying that average price per kilo is between 7.25 and 7.75 for 80%. I'll work on 100% going for less than 7.50. It was 8.20 last year. That is a 70 cent swing or roughly $16 million less revenue. (Considering the same size crop) They also warned out some issues with almond hull demand and quality due to rain.

"The forecast larger US crop and the challenges relating to market access has resulted in aggressive selling by some marketers resulting in a significant softening in pricing and as a consequence the market has seen contract defaults" - I don''t like that one bit.

Costs were already up. Corona virus not showing any signs of slowing down - so not sure what is going to be the driver of prices to go up or costs to go down. Could very easily see this in a medium-term slump down to the mid 4s. Also, given its a agricultural company we're bound to see a bad crop year soon.

 

[Dona Ferentes]

Select Harvest is poised to announce an acquisition of $150 million worth of almond farms, according to market sources.

It is understood that the company will launch a $120m equity raising at $5.20 per share to fund the acquisition

 

[peter2]

You are quick with this news (your post 6:05pm). ASX announcements released at 7:12pm.

SHV has been on my reversal watch list for quite some time and has failed to reverse so far. I was getting ready to place the buy stop order, but will wait to see what happens to price during the cap raising.

 

[rnr]

You are quick with this news (your post 6:05pm). ASX announcements released at 7:12pm.

SHV has been on my reversal watch list for quite some time and has failed to reverse so far. I was getting ready to place the buy stop order, but will wait to see what happens to price during the cap raising.

View attachment 112510

A very interesting observation you have picked up on there @peter2!

 

[The Triangle]

Big dilution at the 'bottom' of the recent share price history. The crop update was once again non-specific and I'm glad I have not re-entered SHV. I do not expect a very good looking 1/2 year result and feel this acquisition and raising will partially mask a a big profit hit and issues with global oversupply. California almond crop sizes in the past few years seem to be bigger than the forecasts. Obviously a lot of people were planting back when the prices were high. Would prefer for SHV to de-risk and diversify to other nuts, or other almond products.

 

[Dona Ferentes]

tight supply and increasing demand .... a wonderful combination. SHV up $1.00 or some 15%

MD Paul Thompson said: “Record almond shipments and the worsening Californian drought have led to a recent price appreciation. Demand for almonds, both in their natural form and as a value-added food ingredient, in products such as plant based milks and yoghurts, continues to grow. Thanks in part to the December 2020 acquisition of Piangil Almond orchard, Select Harvests is set to achieve a record almond crop of 28,250MT in 2021. With good progress being made on the 2022 crop, Select Harvests remains focused on the factors within its control, including almond volume, quality, value adding and operating costs.”

 

[Dona Ferentes]

Select Harvests says it expects its almond crop volume to be higher in 2021 than it was in 2020, with prices also on the rise. It expected the crop from the acquisition of the Piangil Almond Orchard, to be approximately 28,250 million tonnes, above its 2020 crop volume of 23,250 million tonnes.

Market pricing has also significantly increased. The current market prices have increased by 50¢ a kilo to between $6.75 and $7.25 a kilo and demand remains strong at these levels. SHV said 65 per cent of its 2021 crop was committed at prices in the range of $6.15 and $6.45 a kilo.

“The strengthening of current market conditions is pleasing with the demand for inshell almonds, almond kernels and value-added almond products remaining strong,” said managing director Paul Thompson.

“We are looking forward to a strong performance in 2022 including the benefits of our Piangil Almond Orchard acquisition, the improving profile of our orchards and the recent strengthening of the almond price."

and a high for the 12 months.... now $7.64

 

[Dona Ferentes]

and a high for the 12 months.... now $7.64

but a wall of worry .... now getting down to $5 level. Hasn't been there since early 2018

Select Harvests warned its 2023 crop pollination is at risk if the emergence of varroa mite dangerous to European honeybees cannot be successfully eradicated. It was detected in the Port of Newcastle last week, putting all NSW hives on “standstill” orders.

Select Harvests said 29 per cent of its orchards, which are in NSW, are affected by the standstill order and a further 11 per cent rely on NSW hives. All up, 44 per cent of orchards (including Select's hives in Queensland) are at risk of disruption which it is trying to address with strategic hive planning.

 

[peter2]

Sold off early in the day on the news of the possibility of poor pollination. Plenty of demand in the afternoon.

..

Classic transfer from the weak holders to the strong. Plenty of time before the close to decide the outcome.

 

[finicky]

Cool reception of the production update today - closed down 3% and now almost at the level of the major lows of recent years. Below the 2020 CV19 low.
So much that can go wrong with an exporting agricultural company so doubt I would get in at any price.
Two guys from WiIsons opine that SHV is a neglected 'cyclical' that should pay a reward if patient. They say SHV's assets are worth more than it's price and they were referring to a $5.50 share price (closed today @ $4.09). Don't get that, as Commsec's book and tangible stats do not confirm - maybe they've done their own appraisal of current property values. It's almost like they are talking about another company. They mention California will be working through its prior production glut and that drought darkens Cal producers' future.
From elswhere, it was mentioned that SHV should benefit from free trade agreement with India (a big almond consumer)

Why we are bullish on these cyclical stocks

Heightened volatility continues to grip markets, but WAM Capital still sees opportunities in several corners of the market.

www.livewiremarkets.com

Not Held

Chart is All Data Quarterly intervals for perspective. To me it looks a risk of breaking the support of recent major lows.