Recently, Forbes Asia released its annual Best Under A Billion list for 2022. The list showcases 200 Asia-Pacific listed companies with less than US$1 billion in sales and consistent growth in both their revenues and net profit.
On the list were seven listed-companies from Singapore and those companies are:
- Eggriculture Foods Ltd (HKG: 8609)
- Grand Venture Technology Ltd (SGX: JLB)
- Koda Ltd (SGX: BJZ)
- Micro-Mechanics (Holdings) Ltd (SGX: 5DD)
- Nordic Group Ltd (SGX: MR7)
- The Hour Glass Ltd (SGX: AGS)
- UMS Holdings Limited (SGX: 558)
Source: Forbes
The smallest company on the list (in terms of market value) is Eggriculture Foods Ltd (HKG: 8609). It’s also the only Singapore company on the list that is listed on the Hong Kong stock exchange.
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In this article, let’s explore several key aspects of the company – from its business background to its current market valuation.
Eggriculture Foods Ltd’s Business
Eggriculture Foods is involved in the production and sale of egg products mainly in Singapore.
It is currently one of the only three-layer farms licensed by the Agri-Food & Veterinary Authority of Singapore (AVA) to produce fresh chicken eggs here, occupying 13 hectares of farmland.
The company has around half a million layers producing an average of 350,000 fresh eggs daily. Eggriculture Foods’ egg products include fresh chicken eggs and processed egg products.
The company sells fresh chicken eggs under the name of “安安 N&N”. The bulk of Eggriculture Foods’ revenue comes from selling such fresh eggs.
Source: Eggriculture Foods
Meanwhile, its pasteurised eggs – Singapore’s first and only pasteurised eggs – are sold under the brand name of “Egg Story”.
As of 2017, Eggriculture Foods had a 20.7% market share in Singapore’s egg production sector.
Source: Eggriculture Foods initial public offering (IPO) prospectus
Eggriculture Foods Ltd’s Financial Highlights
Now, let’s take a look at how Eggriculture Foods has performed financially over the past five financial years (the company has a 31 March year-end):
|
FY2018 |
FY2019 | FY2020 | FY2021 | FY2022 | Compound Annual Growth Rate (CAGR) | |
|
Revenue (S$’ 000) |
25,123 | 33,295 | 46,252 | 52,453 | 67,058 | 27.8% |
|
Profit before tax (S$’ 000) |
936 | 1,967 | 5,996 | 8,511 | 3,786 | 41.8% |
| Income tax expense
(S$’ 000) |
(463) | (402) | (838) | (1,049) | (253) |
N/A |
| Profit for the year
(S$’ 000) |
473 | 1,565 | 5,158 | 7,462 | 3,533 |
65.3% |
| Profit margin | 1.9% | 4.7% | 11.2% | 14.2% | 5.3% |
N/A |
From FY2018 to FY2022, revenue has grown from S$25.1 million to S$67.1 million, growing at an annualised rate of 28% while its profit has increased at a faster rate of 65% per annum.
In FY2022, the company’s revenue grew around 28% year-on-year to US$67.1 million mainly due to more eggs sold to a larger customer base as a result of past acquisitions of egg distributors.
During the year, egg prices continued to be volatile and feed costs increased due to the pandemic-driven supply chain disruptions. As a result, Eggriculture Foods’ bottom line was impacted as well.
For its first quarter ended 30 June 2022, the company’s sales soared around 48% year-on-year S$22.1 million from an increase in its customer base.
Meanwhile, its net profit ballooned close to 9x, from S$0.6 million last year to S$5.3 million in the latest quarter. Eggriculture Foods said that the bottom-line growth was due to an increase in its flock size arising from its farm expansion.
The company doesn’t pay any dividends.
Risks For Eggriculture Foods Ltd For Investors To Note
Every company has risks, and Eggriculture Foods is no different. Let’s now look at some of the risks that investors should take note of before investing in the company:
Firstly, Eggriculture Foods is operating in a highly-competitive industry selling commodity products. If the company cannot pass on any raw material cost increases due to inflation to its customers, its profitability will be impacted.
Secondly, Its business is subject to risks of poultry-related diseases and infection, such as Salmonella and avian influenza (or bird flu). Although Singapore did not experience any major outbreaks of bird flu, which had severely affected other countries, any future poultry-related diseases could harm the company’s business.
Lastly, Eggriculture Foods imports eggs from overseas and its business is exposed to fluctuations in egg prices, which is something to be wary about.
Eggriculture Foods Ltd’s Growth Prospects
Over though Eggriculture Foods’ business has grown over the years, it’s not resting on its laurels.
The company has expanded its chicken egg farm and it is scheduled to start operating in the next two years. With that, Eggriculture Foods’ own eggs production will increase, enabling the company to reduce its reliance on sourced eggs and also improve its cost controls and the quality of its eggs.
The company is also diversifying its revenue stream by building a quail farm, which will be operational in 2023. It’s likely to face some start up challenges when the farm starts its operations. However, the planned expansions should allow the company to consolidate its market presence as a major egg distributor in Singapore.
Eggriculture Foods Ltd’s Share Price and Valuation
At the time of writing, each Eggriculture Foods share is selling at HK$0.325.
For the year-to-date period, the company’s share price has risen some 35%, as seen from the chart below. Currently, Eggriculture Foods’ stock price is at HK$0.325. Its market capitalisation is currently about HKD 162.5 million, or about SGD 28.9 million.
Source: Google Finance
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This article was written by Sudhan P, an investment analyst who is an avid investor of businesses listed on the stock market for over a decade now and is a huge advocate of investor education.
The post Cracking The Financials Behind Eggriculture, A Singapore, Forbes-Asia-Best-Under-a-Billion Company That Is Listed In Hong Kong appeared first on DollarsAndSense.sg.
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