The Sunday Mail
Enacy Mapakame
MARKET WATCHERS say Seed Co’s share price is likely to rise 50 percent to US$1,46 from the current quote of US$1 buoyed by an aggressive regional expansion exercise, a healthy capital base and improvements in research and development. The listed seed-maker’s share price has risen 3,1 percent year-to-date after reporting strong year-end financials in June.
Performance, however, was below market expectations.
Seed Co Ltd’s net profit for the year ended June 30, 2015 grew 35 percent to US$15 million, which was below a US$17,5 million market forecast.
“We believe with the growth in the global and in particular African population, there is a lot of pressure on governments and aid agencies to support agriculture,” said ABC Stockbrokers analyst Mr James Chiuta in a recent research note.
“Seed Co Ltd, being a top player in over four countries out of the 15 it has a presence in, stands to benefit from this expected increase in efforts to ensure food security.”
IH Securities has guided Seed Co Ltd’s full-year 2016 revenue to rise 6,7 percent to US$101,5 million off 51 000 metric tonnes of seed sales.
Seed Co Ltd dominates the maize and soya seed market in Zimbabwe, Zambia, Malawi, Tanzania and Rwanda.
It also has a presence in several West African countries and is developing products for Nigeria, the DRC and Ethiopia.
With Africa’s population expected to double to two billion within 20 years, market watchers believe Seed Co will draw wider benefits as governments will be under pressure to boost food production.
Early this month, experts forecast below-normal rainfall for the 2015/16 agricultural season for Sub-Saharan Africa.
Further, food shortages that may occur due to drought could push up seed prices.
African economies are largely dependent on agriculture, with more than two-thirds of its people directly employed in the sector.
Seed Co Ltd’s partnership with French seed producer, Vilmorin & Cie, has given the group the financial wherewithal for expansion.
“Vilmorin & Cie, being an established player in the world seed markets, is offering Seed Co Ltd critical technical support that will further enhance research and development position as well as help them grow further in the region,” explained Mr Chiuta.
Vilmorin and Cie, the biggest plant breeding and seed producer in the European Union, last year bought 30 percent of Seed Co Ltd in a US$40 million deal.
Seed Co Ltd chief executive Mr Morgan Nzwere said US$8 million from the deal would go towards investments in West Africa and Ethiopia, with potential production volumes of up to 15 000 tonnes expected in the next five years.
He said at the time that the “transaction will bring us new technologies in areas of research, providing services to Seed Co Ltd for field trials and nurseries, molecular markers analysis, pathology and quality tests, seed production and maintenance of the varieties, equipment and staff deployment”.
On Monday, Seed Co shares closed unchanged at US$1.
In the past 52 weeks, the stock has reached a high of US$1,06 and a low of USc78.
Last week, Agriculture, Mechanisation and Irrigation Development Minister Dr Joseph Made said Government would support Seed Co’s production of vegetable seed to enhance food security.
Seed Co recently acquired 100 percent of Prime Seeds, a top Zimbabwean vegetable seed producer.
