The desire for alternatives to sugar seems to be growing unabated if stevia plant producer PureCircle 's (PURE) results are anything to go by. The company is the world's largest producer of the aforementioned crop, which is a sugar alternative used in food and beverages including Coca-Cola Life. The company's adjusted operating profits trebled to $10.7m (£7.7m), driven by improved sales across each of its geographies and higher margins thanks to a better sales mix.
But it doesn't seem as though this will be flash in the pan. Data from global market research company Mintel shows more than 9,000 food and drink products now list stevia as an ingredient. Interestingly, more than 70 per cent of these stevia-based products launched in the past three years. This might explain why the group is expanding its production capacity to support future stevia-based sales of up to $450m-$500m.
The only curious thing about the group is the recent steep fall in its share price. The stock has fallen a fifth since 5 February, even including the 3 per cent bounce on these numbers. Perhaps shareholders are concerned about liquidity, given PureCircle's five largest shareholders now own two-thirds of the group. Indeed, the decline started just a day after the largest of these, Wang Tak Company, upped its stake to 27 per cent.
Joint house broker Liberum expects pre-tax profits of $24m in the 2016 financial year, leading to EPS of 13.3¢, up from $1m and 2.5¢ in 2015.
| PURECIRCLE (PURE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 320p | MARKET VALUE: | £551m | |
| TOUCH: | 317p-330p | 12-MONTH HIGH: | 553p | LOW: 273p |
| DIVIDEND YIELD: | N/A | PE RATIO: | 75 | |
| NET ASSET VALUE: | 109¢* | NET DEBT: | 25% | |
| Half-year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 43.2 | -4.4 | -0.5 | nil |
| 2015 | 54.5 | 5.4 | 2.9 | nil |
| % change | +26 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of $41m, or 24¢ a share £1=$1.39 | ||||
