Reasons to be positive

By Frank Buhagiar on Monday 19 December 2022

Reasons to be positive
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CommentaryFoodTech Investment

Food on the Move: FFF’s weekly roundup of listed FoodTech’s movers & shakers

Another ‘down’ week (more share price fallers than risers) for FFF’s listed FoodTech space but, ever the optimist, and it is Christmas after all, let’s focus on the positives.  The number of fallers at 32 is four less than last week’s 36.  Tick.  The number of risers may not have budged from 13, but hey at least it stayed stable. Tick.  What’s more, the four non-movers surely count as a win in challenging market conditions. Tick.  And if that is not enough, Santa Claus rally territory is one week closer – Father Christmas won’t let us down…Half a tick.

Prominent among the 13 risers was AgriFORCE Growing Systems (AGRI). The AgTech announced this week that its “UN(THINK) Awakened Flour” is moving into the commercialisation phase following a successful pilot. According to the press release: “The ‘better for you’ flour leverages a patent-pending process to produce a tastier, more nutritious, easier-to-digest product and is now launching in Canada and the U.S.” The flour might be ‘better for you’, but it also seems to be better for shareholders too – the shares added 6.6%.

AGRI’s share price gain was marginally eclipsed by Verde Agritech (NPK) which tacked on 7.1%.  No news out but the potash fertiliser co. was covered by Simply Wall Street in an article titled: “Does Verde AgriTech (TSE:NPK) Deserve A Spot On Your Watchlist?”.  Helpfully, the article goes on to answer its own question: “Verde AgriTech's earnings per share have been soaring, with growth rates sky high…we do think it's worth considering Verde AgriTech for a spot on your watchlist.”

Third consecutive week of share price gains for on-demand delivery and retail platform Dada Nexus (DADA) +6.36% and fresh-food retailer MissFresh (MF) +1.7%.  The two Chinese companies appear to be still benefiting from recent signs that “China's government may be relaxing its zero-COVID policies”, as covered in last week’s Food on the Move: Ho, Ho dear.

As for the fallers, shares in Agrify (AGFY) closed the week down a whopping 73%. The weekly chart reveals the damage was done after the pricing of the cannabis solutions provider’s underwritten public offering was revealed – US$0.65.  The raise is expected to bring in gross proceeds of US$8.7 million which will be used “for working capital and general corporate purposes, which may include capital expenditures and repayment of debt.”  Not the most exciting ways to spend the money, but with our positivity cap on, at least they appear to have got the issue away.

And finally, some M&A activity to report.  “Novozymes and Chr. Hansen have entered into an agreement to create a leading global biosolutions partner through a statutory merger of the two companies. The combination is expected to unleash the full potential of biological solutions and generate significant value for all stakeholders and society at large.”

The world's largest industrial enzymes producer is forking out DKK660.55 per Chr. Hansen share, an implied 49% premium to the takeover target’s pre-announcement share price.  According to the press release, the “combined group would have annual revenue of approximately EUR 3.5 billion. Annual revenue synergies are estimated at EUR 200 million with EUR 80-90 million EBIT impact achievable within four years after completion and estimated EUR 80-90 million in cost synergies achievable within three years after completion. Expected organic revenue growth CAGR of 6-8% until 2025. Expected 29% EBIT margin by 2025 excluding integration costs and PPA amortization.”  All good stuff.  That is, all except the 18% fall in Novozymes’ share price which Credit Suisse put down to the premium being paid. But forget about the double-digit share price decline (at least for now) we’re focusing on the positives remember…