Earlier this month, PureCircle (PURE) completed a $42m (£34m) expansion of its stevia facility in Malaysia, doubling its production capacity of stevia leaf extract. The expansion of the fully automated plant, located south of Kuala Lumpur, will allow the group to grow its output to match global demand.
The benefits of an automated production process won't be lost on PureCircle's management given that the sweetener group's products were locked out of the highly lucrative US market during the reported period, after custom officials acted on allegations that forced labour was used to harvest the crops. The good news is that the withhold release order was withdrawn by customs authorities at the end of January following an investigation into the issue.
The effect of the customs action was manifest in the decline in PureCircle's half-year revenues (see table), despite a 10 per cent improvement in the top line for markets outside the US. Cash profits were down a third and operating cash flow fell to $4.7m from $13m in the corresponding period in FY2016.
Liberum forecasts pre-tax profits and EPS of $7.91m and 4.2¢, respectively, for the year ending June 2017, rising to $17m and 9.1¢ in 2018.
| PURE CIRCLE (PURE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 330p | MARKET VALUE: | £573m | |
| TOUCH: | 325p-330p | 12-MONTH HIGH: | 420p | LOW: 190p |
| DIVIDEND YIELD: | nil | PE RATIO: | 78 | |
| NET ASSET VALUE: | 111¢* | NET DEBT: | 42% | |
| Half-yearto 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2015 | 54.5 | 5.4 | 2.92 | nil |
| 2016 | 47.2 | -2.2 | -0.39 | nil |
| % change | -13 | - | - | - |
Ex-div:- Payment:- £1=$1.22 *Includes intangible assets of $49.6m, or 29¢ a share | ||||
