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Cranswick gets swine fever boost

Driven by a shortage of pork in China, the food producer saw revenue from 'Far East' exports almost double in the first half of the year
November 26, 2019

With African Swine Fever (ASF) decimating China’s pig herds, the world’s largest consumer of pork has had to look abroad to satisfy its demand. This has proved a windfall for food producer Cranswick (CWK) who saw revenue from its Far East exports surge by 94 per cent in the first half of the 2020 financial year. The group now accounts for almost 60 per cent of all UK pork meat exports to the region. Estimates about how long China will take to restock its herds vary, but Cranswick looks well placed to capitalise on the interim shortage. All three of the group’s pork processing facilities now enjoy full Chinese export approval.

IC TIP: Hold at 3,282p

The overall significance of this opportunity should not be overstated – exports only account for around 9 per cent of group revenue. ASF has also served to elevate pork prices in the UK and EU and Cranswick only sources around a fifth of its pork from its own farms. The domestic market remains highly competitive and the 5.4 per cent like-for-like increase in group sales was driven by price, with only 0.6 per cent volume growth.    

Peel Hunt forecasts adjusted pre-tax profit of £88.5m and EPS of 137.8p for the full year, rising to £103m and 161.1p in FY2021.

CRANSWICK (CWK)   
ORD PRICE:3,282pMARKET VALUE:£ 1.71bn
TOUCH:3,282-3,284p12-MONTH HIGH:3,420pLOW: 2,340p
DIVIDEND YIELD:1.7%PE RATIO:23
NET ASSET VALUE:1,076p*NET DEBT:12%**
Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201871942.666.415.9
201977047.473.216.7
% change+7+11+10+5
Ex-div:12 Dec   
Payment:24 Jan   
*Includes intangible assets of £191m, or 366p a share  **Excludes £47m in lease liabilities