Downgrades.......Week ending 1st Nov 2019

Welcome to my Friday dribble where we talk things agri sport and life.

I am a couple of days early this week as I will be at a conference for the next 2 days. But there is some news to report.

It’s not just AGM season that brings out the downgrades with BGA announcing at their AGM and Costa announcing their 4th downgrade without having an AGM…!!

The BGA downgrade shows just how tough things are in the sector with the drought and tightening milk supply. The company stated that they have had to increase the price paid to farmers to remain competitive. Positive for farmers but negative for BGA.

It begs the question, if a solid company like BGA are struggling how are the little players going? Stocks like LON, WHA and BFC must be finding it really hard to compete.

One to watch in a couple of weeks is FNP with their AGM update. They seem to be seriously outperforming the broader market and not struggling at all.

Last week I mentioned CGC and they were in a trading halt all week. They came out on Monday with a very big downgrade, where all divisions seem to be struggling. In the case of blueberries and mushrooms its oversupply leading to low prices. In the case of raspberries it’s a thing called Raspberry Crumble, (no, that’s not a new dessert) where the raspberries fall apart rather than stay in a cluster. Hard to believe the stock traded above $7.50 in June 2018. Today it’s trading $2.60.

The most disturbing part of the downgrade and capital raising was the fact that the press reported (AFR) that founder and shareholder Frank Costa was unlikely to take up his entitlement in the raising saying “quote; I just want to see things settle down a bit”….!!! Really..?? Not exactly a glowing vote of confidence in the company’s future performance prospects..!!

One other AGM this week was TGR. The update was all positive with salmon doing well and the prawns seem to be snapping away happily… Good work Mark.