United Cacao# – FY 2014 Results: Planting On Schedule:
For full report please click here: United_Cacao_FY_2014_Results_01 060715
Last Tuesday, United Cacao (CHOC LN)# released its FY 2014 results. As a pre-revenue company, these are largely academic on a financial basis. However, strong operational progress has been demonstrated.
2,000ha Due to Be Planted By Year-End
Assuming sufficient debt funding is secured, CHOC is on target to fully plant out its 3,250ha corporate cacao estate by the end of 2016, as planned, with 2,000ha due to be planted by the end of 2015.
Broad In-Country Support
It is clear that CHOC operates with considerable local support, which has increased with the recent launch of its cacao smallholder programme. The company also recently entertained the President of Peru, Ollanta Humala, on his recent visit to the nearby town of Tamshiyacu. CHOC’s dual-listing on the Lima stock exchange (completed 19 June) should also increase domestic support, making the company’s stock available for local investors.
Fragility of Global Cacao Supply Obvious in 2015
With Cocobod, the cocoa board of Ghana, the second-largest global producer, recently reducing its 2014/15 crop estimate to 750,000t, just 75% of its initial expectations, and a developing El Niño now also attracting speculation, this year has certainly demonstrated the high level of fragility in global cacao supply chain. This provides us with confidence that CHOC is developing its business into an environment with attractive long-term supply and demand fundamentals.
Recommendation and Target Price
VSA Capital maintain our BUY recommendation but having made some changes to our forecasts (see page 8) have increased our 10-year DCF-derived target price to 253p (from 238p).
#Indicates VSA house stock.
All disclosures and supporting charts can be found in the PDF version.
