Visits to the company's Chinese berry farms

Confidence in Costa reinvigorated

Confidence in the Costa Group ((CGC)) has been reinvigorated following visits by brokers to the company's Chinese berry farms and its associate, Driscoll's, for packing, logistics and marketing.

Both Credit Suisse and UBS believe they have probably been too conservative in their estimations regarding the rolling out of the berry plantations in China. Costa Group is on track to achieve its five-year plan of 240 hectares of berry plantings by 2020.

Credit Suisse expects the company will be able to enhance its yields and pricing through genetics and management, estimating that after completing the planting in 2020, the joint venture will carry about $100 mln of funds employed and it is reasonable to expect a 20% earnings return on assets in China.

China is part of the company's international division, along with Morocco, which represented 17% of 2018 operating earnings (EBITDA). Costa Group has strong relationships with multiple levels of the Chinese government and is a major employer, one of the largest foreign investors in agriculture.

World's largest fresh produce market
China is the world's largest fresh produce market and fruit consumption per capita is high. This is expected to remain favourable as incomes rise and the consumer is more willing to pay a premium. UBS suggests there is strong potential with jumbo berries. Jumbo berries are priced at a 60-80% premium, regardless of the part of the season and demand is overshooting supply.

Source: fnarena.com


Publication date:


Print   

Receive the daily newsletter in your email for free | Click here


Other news in this sector:


© FreshPlaza.com 2019

Sign up for our daily Newsletter and stay up to date with all the latest news!

Subscribe I am already a subscriber