Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

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Wellard Limited plans to raise US$240-290m in its IPO which was launched today. We had a look at the deal earlier this week, <a href="http://www.smartkarma.com/insights/ready-to-server-the-chinese-consumer-but-where-s-the-beef" target="_blank" data-smartkarma-citation="insights:1847">Ready to Serve the Chinese Consumer but Where’s the Beef?</a>. In this insight, ran the deal through our framework and have provided a summary of our earlier arguments, along with highlighting developments since our last note.In our view, the industry is at peak volumes, which look unsustainable over the next few years, while import prices in the US (biggest export market for Australia) seems to have started to correct, after years of record high prices.

Wellard Limited plans to raise US$240-290m in its IPO which was launched today. We had a look at the deal earlier this week, Ready to Serve the Chinese Consumer but Where’s the Beef?. In this insight, ran the deal through our framework and have provided a summary of our earlier arguments, along with highlighting developments since our last note.In our view, the industry is at peak volumes, which look unsustainable over the next few years, while import prices in the US (biggest export market for Australia) seems to have started to correct, after years of record high prices. 

Industry Seems to Be at Peak Prices and Peak Volumes

Wellard Limited plans to raise USD250-300m through an issuance of primary and secondary shares. The&nbsp;IPO is&nbsp;expected&nbsp;to be launched later this week.&nbsp;While we await the official deal launch, here we take a look at the main factors that could impact the deal:<ul><li>The company seems to be positioning itself as the go between for supplying Asia's incessant appetite for meat. Revenue and EBITDA growth have been robust over the past few years, and the recently signed FTA with China is supposed to add to growth.</li><li>The only issue is, Meat &amp; Livestock Australia Limited (MLA) is&nbsp;forecasting a drop in exports over the next few years owing to a fall&nbsp;in cattle numbers.&nbsp;Hence, to keep up the growth momentum Wellard will have to win market share and not just ride on increase in China demand.</li><li>Moreover, the company has no long-term agreements in place with either buyers or suppliers. In addition, the speed with which it has shifted from sheep to cattle exports, and changed its country export profile over the past three years, showcases the dearth of entry barriers for the industry.</li></ul>

Wellard Limited plans to raise USD250-300m through an issuance of primary and secondary shares. The&nbsp;IPO is&nbsp;expected&nbsp;to be launched later this week.&nbsp;While we await the official deal launch, here we take a look at the main factors that could impact the deal:The company seems to be positioning itself as the go between for supplying Asia's incessant appetite for meat. Revenue and EBITDA growth have been robust over the past few years, and the recently signed FTA with China is supposed to add to growth.The only issue is, Meat &amp; Livestock Australia Limited (MLA) is&nbsp;forecasting a drop in exports over the next few years owing to a fall&nbsp;in cattle numbers.&nbsp;Hence, to keep up the growth momentum Wellard will have to win market share and not just ride on increase in China demand.Moreover, the company has no long-term agreements in place with either buyers or suppliers. In addition, the speed with which it has shifted from sheep to cattle exports, and changed its country export profile over the past three years, showcases the dearth of entry barriers for the industry.

Ready to Serve the Chinese Consumer but Where's the Beef?

New Zealand

Fonterra Cooperative Group Ltd is a New Zealand multinational dairy co-operative and its farmer shareholders are the suppliers of milk to Fonterra in New Zealand. The Company operates Fonterra Shareholders' Fund, which provides additional financial flexibility for farmer shareholders who would have the opportunity to sell economic rights of shares to the fund.

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Fonterra Shareholders Fund (FSF NZ)

Industry Seems to Be at Peak Prices and Peak Volumes

Wellard Limited plans to raise US$240-290m in its IPO which was launched today. We had a look at the deal earlier this week, Ready to Serve the...

Sumeet Singh

Ready to Serve the Chinese Consumer but Where's the Beef?

Wellard Limited plans to raise USD250-300m through an issuance of primary and secondary shares. The IPO is expected to be launched later this...

Sumeet Singh

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)