RIC - Animal Nutrients, Ingredients

- Australia’s leading provider of high performance animal nutrition solutions.
- Ridley has been an integral part of Australian agriculture for almost 30 years, building strong partnerships with suppliers, customers and local communities.
- Major brands that include Barastoc, Cobber, Rumevite, and Primo
- Provide complete rations, mineral concentrates, nutritional blocks and supplements that meet the needs of a wide range of species, including dairy cows, poultry, pig, beef, horse, sheep, dog, at all stages of life.
- Acquired the global rights (excluding China and Vietnam) to a CSIRO developed prawn additive called Novacq. Novacq and its amazing claims that it had the ability to speed up the weight gain of prawns by more than 30% or increase the size of the prawns by over 30%.
- Trial results out of Thailand confirming CSIRO claims that the Novacq additive is capable of reducing the time to harvest from 70 days to 50 days. This improvement will allow Thai prawn farmers to increase the amount of prawn harvests from 3 to 4 a year.
- Another important metric that also improves dramatically with the use of Novacq is survival rates. With significant disease rates in Thailand in recent years it is understood that there will be a preference to harvest early rather than grow larger prawns. .
- Over a 10 year period it is possible that Ridley could expand their operations to achieve a 25%+ market share. It could be expected that their revenue could conservatively reach approximately $165m and a high case of $330m from Novacq sales alone.
- In Australia however it may be a preference to grow much bigger prawns as the Australian consumer is willing to pay a premium for such a product.
- Ridley is a robust company delivering a solid EBIT of $35.9m from continuing operations. They are diversified across a large range of animal products and have an opportunity to grow their profit in these areas.
- When considering Ridley for clients I think it is important to understand that this is a long term opportunity that won’t happen overnight. For people looking to make a quick buck this isn’t the right stock. For investors looking for long term accumulation Ridley should return handsomely if they achieve their objectives.
- For a shorter term trade I see good value in buying below $1.20 and selling near $1.60.
Ridley Corporation- It’s all about growth! 18 September 2017

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