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CGC - Costa Group Holdings

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System

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Costa is Australia's largest horticultural company and is the largest fresh produce supplier to the major Australian food retailers, with forecast pro forma revenue of $704.4 million in FY2015.

Costa's operations include approximately 3,000 planted hectares of farmland, 20 hectares of glasshouse facilities and seven mushroom growing facilities across Australia, in addition to its strategic foreign interests.

It is anticipated that CGC will list on the ASX during July 2015.

http://costagroup.com.au
 
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Captain Blood

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Re: CGC - Costa Group Holdings - was really keen on Costas but now not sure...?

I posted this question on another forum also because I would like opinions from people other than brokers I have spoken to who are all optimistic.
I have been keen on getting into this, but I am new to investing so don't have an understanding of the financial PE etc...

I tried to get shares from OrdMinnet, JBWere and OBWealth for the originl release, but they were all "oversubscribed".

I figured that Costas have great support from Rural Victoria particularly because growers line up to supply to them due to good payment systems and quality. They are worshipped by most growers and many buyers for the way they stopped mafia control and corruption in Footscray and Sydney markets, and their foray into China sounds very promising on top of currently good business.

A broker suggested to me that they have been using private company taxation reporting methods, and that with greater transparency of public reporting their profits will likely increase by anywhere "up to double" due to different accounting requirements alone. Should I believe this?

Costas originally listed via OrdMinnet/JBWere at $2.25 but they are already $2.18 on just the first day, so now I am gun shy.... is this a bad sign on the first day?
 
So_Cynical

So_Cynical

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Re: CGC - Costa Group Holdings - was really keen on Costas but now not sure...?

Captain Blood said:
Costas originally listed via OrdMinnet/JBWere at $2.25 but they are already $2.18 on just the first day, so now I am gun shy.... is this a bad sign on the first day?
Click to expand...

If you like the company - buy it

One day is just one day.
 
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Cashflows

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I remember reading a really good report by alan kohler on the story of the company and the founder Frank Costa in his family business column... though they charge you for access now and I can't quote it.
 
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sinner

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tge oracle said:
The impending supermarket war over fresh Fruit and Veg will be a boon for CGC as they are the major supplier to Coles, Woolies and Aldi in this sector.

Refer to article, below, in today's Australian.

Disc - Opinion only. Invested in CGC. DYOR.

http://www.theaustralian.com.au/bus...tal-coburg-store/story-fn91v9q3-1227525323806
Click to expand...

Hi oracle,

I'm a silent enjoyer of your "food investor" posts in the various threads. The link you posted unfortunately doesn't work for me as it is behind a paywall.

One thought that comes to mind, however, is that of the "milk wars", given that interplay of factors and how the milk suppliers got screwed are you really so certain that Costa will benefit from the supermarket wars?
 
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tge oracle

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sinner said:
Hi oracle,

I'm a silent enjoyer of your "food investor" posts in the various threads. The link you posted unfortunately doesn't work for me as it is behind a paywall.

One thought that comes to mind, however, is that of the "milk wars", given that interplay of factors and how the milk suppliers got screwed are you really so certain that Costa will benefit from the supermarket wars?
Click to expand...


Hi Sinner,

Glad to hear you are enjoying the posts, sorry about the lack of access to news articles…..I overlooked the fact that they are behind pay walls. I like to be fully informed when it comes to investing so pay for access to all newspapers and financial journals. I am an avid reader of such articles and find it to be very beneficial in regards to investment decisions.

In regards to CGC , I would normally agree that a supermarket price war could harm Costa, however, the dynamics are considerably different when compared to the milk wars. The milk market is still relatively fragmented in Australia so the supermarkets can apply leverage/competition amongst suppliers. Additionally, the supermarkets were purchasing their own milk off smaller suppliers and rebranding it with their own home brands. This isn’t happening with Fruit and Veg and is unlikely to do so due to supply/storage/packaging constraints etc. Costa is the “elephant in the room” with regards to Fruit and Veg and are the only viable supplier of such quantity and quality as demanded by the major supermarkets. I am of a view that it is the supermarkets that will "take a haircut” to increase sales volumes and Costa will be the ultimate beneficiary by maintaining prices and increasing sales volumes.


Disc- Opinion only. Invested in CGC. DYOR.
 
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tge oracle

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The recent devastating hailstorms along the Northern NSW coast have destroyed vast areas of blue berry crops near Coffs Harbour. OZ Group Co-Op, a major competitor of Costa, have lost most of their crop for this season according to ABC news reports this evening ( copy attached ).
Costa enjoy significant competitive advantage due to the diversity of growing regions for many of their products. This helps reduce the risk from natural disasters to their crops and helps to guarantee reliable supply.


http://www.abc.net.au/news/2015-09-18/blueberry-crop-damaged-in-hail-storm/6787154


Disc – Opinion only. Invested in CGC. DYOR.
 
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sinner

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Thanks for the previous thoughts, appreciated.

tge oracle said:
The recent devastating hailstorms along the Northern NSW coast have destroyed vast areas of blue berry crops near Coffs Harbour. OZ Group Co-Op, a major competitor of Costa, have lost most of their crop for this season according to ABC news reports this evening ( copy attached ).
Click to expand...

As a serious blueberry addict, I have been enjoying the seasonal price fall from $7+ per punnet down to as low as $3 per punnet recently and am greatly saddened to hear about the loss of so many delicious berries (although a little surprised to hear they grow 'em up there as I thought it was mostly a VIC/TAS industry).
 
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tge oracle

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I have attached a quote from legendary investor Carl Icahn from an article on the front page of today’s SMH. He is very bearish on the world economy and, in particular, Australia. He does, however, single out agriculture ( presumably also aquaculture ) as a bright spot in Australia’s future. I have not posted the full article but it is worth a read.

Quote:

“For Australia, the end of the China-led commodities boom does not spell an end to China-led export growth. Agriculture represents a huge opportunity, as do services and education, while China's need for commodities will never be modest.”


For full article follow link:

http://www.smh.com.au/comment/a-glo...h-us-down-the-wrong-path-20151002-gjzuu8.html



Disc – Invested in MGC, AAC, CGC, WBA, TGR, HUO and CSS
 
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tge oracle

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An interesting article from today’s Australian reports on the impact “ El Nino “ will have on agricultural commodities and more importantly commodity prices.
This is as a result of weather related supply shortages. I hadn’t considered the effect of “ El Nino” , however, I consider it to be another event akin to a favourable macro-economic event such as the falling AUD.

To read the full article, follow the link below.
I have also quoted one of the more relevant sentences in the article for your consideration:

Quote;

“ Several agricultural prices have rallied off their lows on fears of weather-related supply shortages. Sugar prices have risen 31 per cent over the past three weeks; dairy is up 36 per cent, palm oil has gained 13.1 per cent and wheat is up 6.1 per cent over the same *period.”


http://www.theaustralian.com.au/bus...-nino-takes-hold/story-fnay3ubk-1227567903112


Disc – Opinion only. Invested in MGC, CGC, AAC and WBA. DYOR.
 
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tge oracle

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Costa Board and Management delivered a very upbeat performance and outlook yesterday. The presentation was punctuated by news of very strong domestic demand , particularly by the major supermarkets, and increasing export demand which is expected to really take off in Chin, Asia and Europe.
My expectation that the food boom, predicted to happen by many over the past number of years, is just starting to gain a foothold. The lift off in this sector will be explosive when it happens and the current slow and steady gains are only a precursor to the main event.

Disc - Opinion only. Heavily invested in the food sector ( so have a vested interest ). invested in CGC, MGC, WBA, TGR, HUO , CSS and AAC. DYOR.
 
chops_a_must

chops_a_must

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tge oracle said:
An interesting article from today’s Australian reports on the impact “ El Nino “ will have on agricultural commodities and more importantly commodity prices.
This is as a result of weather related supply shortages. I hadn’t considered the effect of “ El Nino” , however, I consider it to be another event akin to a favourable macro-economic event such as the falling AUD.
Click to expand...

One thing they do have an advantage with is as an early adopter of agricultural technology.

It means that they are somewhat less exposed to risk than traditional growers. Their input costs are likely lower as well.

Corporate agriculture is really the future, and it provides the benefits of greater gene stock etc. etc. Which is why they've been able to expand their berry supplies so readily.

They really are looking at becoming a monopoly in some areas of food supply, so aren't going to be under as much supplier squeeze as other sectors in the consumer staples area.
 
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bluchipmike

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Costa Group ltd (cgc)

hi all, does anyone hold a longterm view on this stock.personally think it will be good long term growth stock any thoughts would be appreciated:xyxthumbs
 
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Value Hunter

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Costa Group appears to be a good business but its more cyclical then most people think and there are so many factors out of their control that can (and will eventually) go wrong. I would wait until they have a bad year which could be due to any number of factors such as competition from cheap imports flooding the market, crop disease, drought, flooding, decrease in fruit and vegetable prices, export restrictions/bans/delays, etc and the stock gets hammered before buying.
 
Knobby22

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I own. The managers are trying to have a year round supply of avocado. I have had the price rise 30% since I bought. I am more the if the price is rising get on board if you like the story. At some point it will reverse but who knows when? The price is likely to keep rising.
 
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