FRM (ASX) Ann: App 4E &amp; Full Year Statutory Accounts

Originally posted by Didak ↑

what a great report for FY15. The company performed exceptionally well but to what I have been writing here.
It is very interesting what will happen now and how the market will value FRM. The market cap is 35 milion now with equity of 30 mil. So what is it really worth now? my valuation below

1. Intrinsic Value: ROE is 17% now (really good in this market conditions); and if we want 10% shareholder return (500k = 1 c per share dividend) then our latest intrinsic value is 17%/10% x Equity so 1.7x30= $51 mil which translates into $0.920 per share. Therefore the current capitalisation is a long way away from what the company is really worth. Now is the question will market rally to catch with it? We will see. My conservative target is 1$ per share. The market rallied so rapidly that a short slow down is anticipated.

2. The new plans - I agree with you guys. The board during AGM needs to put few slides on the new growth plans. I like the idea about the new site construction and that will be done through internal cash resources. So if it lifts current production output by 15% of free range (current 50mil) therefore we should see another $ 7.5 - $10 mil revenue flowing through. I might be wrong on those figure but roughly should be there. So they have a plan, its a greenfield, but definitely acquisitions would be great and more insight to attract more investors.

3. Risks - whatever they mention is the risk but every business has a risk. Iron ore is a risk, real estate bubble is a risk, bank who lends to mining is a risk, insurance company has a risk, drug company has a risk. FRM is not the only one so I am not sure why the market is so scared of egg industry. I support stayer, this market segment has a potential, and FRM has now transformed into a financially stable company, so let them pile up cash and expand slowly.

4. Financial performance. Kudos to Bruce for being so financially sharp. I met him in last AGM and his focus was financial stability and debt repayment. Whatever they said in AGM they executed. Well done.
Also i am impressed enormously with 9.2 mil cash flow (agree with paolo on FCF, this is amazing), 5 mil npat, and the debt level of 5.5 mil. Liquidity test is now at 21/16 which is 1.3. This company is still very undervalued when looking at the above and comparing to the mkt cap.

5. Land - stayer mentioned land debate. I actually think they are undervalued with it cause revaluation has been done many years ago. Especially that they build a new facility on their land. So they have lots of it. Good for us. Stayer can you share this info on inghams please??? I did not spend too much time reading/thinking about it so cant add much value here.

5. wishlist - if i had a wishlist I would love to see them to have 10 mil cash flow. Use 5 mil for new facility construction, 2.5 mil for payable reduction and 2.5 mil for debt reduction. I dont want them to pay dividend,
Other solution is that I would love to see the acquisition of the free range company happening. Even tough they need to do capital raising. The company is a different proposition now - so many opportunities. This year will be another strong one. We just need some growth plans laid out in AGM.

Happy days!

Expand

quick survey at supermarket seems to reveal some pricing pressure again - probably reason for pullback besides the fact they have run so far

anyone else have thoughts?

didak -inghams experience does not mean it will be repeated here!! but the pe mob who bought it reaped their entire capital cost back in a short period of time by selling the land and buildings! kept the operating business

No.	Vol.	Price($)
1	51526	30.0¢

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51526

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30.5¢

33372

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1	51526	0.300
1	2000	0.295
1	33430	0.290
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2	97500	0.275

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Price($)

51526

0.300

2000

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0.290

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97500

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Price($)	Vol.	No.
0.305	33372	1
0.320	15000	1
0.330	15172	1
0.350	3590	3
0.360	1075	1

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33372

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1075

(20min delay)
Last 30.5¢		Change 0.010(3.39%)		Mkt cap ! $70.39M

Open	High	Low	Value	Volume
29.5¢	30.5¢	29.5¢	$14.33K	47.48K

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