Select Harvests Limited

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Select Harvests Limited (ASX: SHV) operates a fully integrated almond business consisting of orchards, primary processing, and secondary value-added processing under the Renshaw & Allinga Farms industrial brands.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~50.34% of the total shareholding. Perpetual Investment Management Limited and Yarra Funds Management Limited hold a maximum stake in the company at ~10.27% and ~7.84%, respectively.

1.4 Key Metrics:

During 1HFY22, the company recorded an EBITDA margin of 19.4% against 13.9% of the industry median. In addition, it posted an asset-to-equity ratio of 1.88x as compared to 2.09x of the industry median. Below is captured the trend of the current ratio and debt-to-equity ratio since 1HFY20. 

Section 2: Business Updates, Financial Highlights, and Operational Summary

2.1 Business Updates:

2.2 Insights of 1HFY22:

2.3 Operational Summary:

During 1QFY22, the global almond prices reduced substantially. However, prices maintained flat in 2QFY22. Below is trend of almond volume and prices:

Section 3: Key Risks and Outlook:

Key Priorities for 2HFY22: Below picture provide an overview of SHV's key priorities for 2HFY22:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is August 22, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer

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