This report is an updated version of the report published on 10 April 2025, at 6:33 PM AEST.

Select Harvests Limited (ASX: SHV) 

Select Harvests Limited (ASX: SHV) is an ASX listed producer of almond products for retail and industrial markets. 

Recommendation Rationale - SELL at AUD 5.24 

• Increase in Interest Expenses: At the end of FY24, SHV had a net debt balance of AUD 162.3mn, which exposes the company to interest rate risk. In FY24, SHV's interest expenses increased by 46.7% year-on-year to AUD 14.98mn.
• Technical Observation: SHV shares have crossed their R1 mentioned in the report dated 27 March 2025. Its 14-day Relative Strength Index (RSI) at ~64.23 indicates the stock is approaching overbought zone and may witness retracement soon.
• Overvalued Multiples: On a forward 12-month basis, SHV’s trading multiples such as EV/Sales, EV/EBITDA, P/E and Price/Book Value are higher than the industry (Food & Tobacco) median.
• Climate and Weather Dependency: Almond farming is highly sensitive to climatic conditions, especially rainfall, frost, and extreme temperatures. Adverse weather events (e.g., droughts, floods, frost) can significantly affect crop yields and quality, directly impacting SHV's revenues.

SHV Daily Price Chart

Valuation Methodology: P/E Approach (FY September'25E) (Illustrative)

SHV is expected to trade at a slight premium to its peers considering the turnaround in SHV's bottom-line in FY24, FY25 outlook for pricing, crop production and exports. For conducting valuation, the following peers have been considered: Cobram Estate Olives Ltd (ASX: CBO), Ridley Corporation Ltd (ASX: RIC), Bega Cheese Ltd (ASX: BGA), and others were considered.

Considering that the stock is has crossed its R1, the recent rally in share price, current trading level, and risks associated, the share price can witness resistance at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the closing market price of AUD 5.24, up ~2.14%, as of 10 April 2025.

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

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 10 April 2025. 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.

Note 4: Dividend Yield may vary as per the stock price movement.

Note 5: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.