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Inghams Group Ltd ING

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Stock XASX Rating as of
A$2.88 +0.03 (1.05%)
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As of Delayed Price Closed

Company Report

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Poultry Is Commoditized and Inghams is a Price-Taker

Angus Hewitt

We forecast Inghams' top line growth to be driven by population growth and some per-capita increases in chicken consumption, aided by process enhancements and further improvements in the feed conversion ratio for chicken. Despite Inghams' dominant market share, and the industry's duopolylike structure, competition in poultry is intense. Poultry is largely commoditized, and Inghams possesses limited opportunity to differentiate its products, leading to our view that the firm lacks a long-lasting competitive advantage required to award an economic moat. Further, Inghams' customer base is highly concentrated, with around 60% of sales comprising five customers, including supermarket giants Woolworths and Coles, and quick-service restaurant KFC. In our view, the balance of power lies firmly with these key customers.

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Price vs Fair Value

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ING is trading at a 678% premium.
Price
A$2.88
Fair Value
A$9.80
Uncertainty
Medium
1-Star Price
A$1.00
5-Star Price
A$8.22
Economic Moat
Lhx
Capital Allocation
Ggqyhhvv

Bulls Say, Bears Say

Bulls

Inghams benefits from a consumer trend toward protein-rich, fresh, easy-to-prepare meals.

Bears

With little differentiation between competitors, poultry meat is highly commoditized, and Inghams is a price-taker.

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Trading Information

Previous Close Price
A$2.85
Day Range
A$2.83–2.89
52-Week Range
A$2.83–4.51
Bid/Ask
A$2.86 / A$2.90
Market Cap
A$1.07 Bil
Volume/Avg
2.1 Mil / 1.8 Mil

Key Statistics

Price/Earnings (Normalized)
8.71
Price/Sales
0.33
Dividend Yield (Trailing)
6.94%
Dividend Yield (Forward)
5.56%
Total Yield
6.94%

Company Profile

Inghams is the largest vertically integrated poultry producer in Australia and New Zealand. The firm enjoys a number-one position in Australia with approximately 40% market share and a number-two position in New Zealand with around 35% share. Inghams supplies poultry products, notably to major Australian supermarkets Woolworths and Coles, and quick-service restaurants McDonalds and KFC. Sales are heavily skewed toward poultry, which includes the production and sale of chicken and turkey products.
Sector
Consumer Defensive
Industry
Farm Products
Stock Style Box
Small Value
Total Number of Employees
8,000
Website
https://www.inghams.com.au

Competitors

Valuation

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Metric
ING
PPC
TSN
Price/Earnings (Normalized)
 8.7112.3722.96
Price/Book Value
 4.872.831.15
Price/Sales
 0.330.590.39
Price/Cash Flow
 2.778.1210.67
Price/Earnings
ING
PPC
TSN

Financial Strength

Metric
ING
PPC
TSN
Quick Ratio
 0.500.990.85
Current Ratio
 1.051.821.82
Interest Coverage
 2.336.010.98
Quick Ratio
ING
PPC
TSN

Profitability

Metric
ING
PPC
TSN
Return on Assets (Normalized)
 4.17%8.65%2.45%
Return on Equity (Normalized)
 53.25%25.68%4.97%
Return on Invested Capital (Normalized)
 7.55%13.57%4.23%
Return on Assets
ING
PPC
TSN

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