Broker HSBC reiterates BUY , TP up from 3350 to 3700 (15/5/18).
I think HSBC are maybe a bit OTT and I'd settle for 3200.
With testing of January highs recently at 28xx (from 24xx) and then a pause for breath to drop down to 2703, these are a good price for further upward momentum. In addition the company update that there will be accelerated profit in 2nd half and weaker pound for extra overseas earnings makes these a very tempting Buy IMO.
The Editor point out that " the current market consensus of the shares as a 'strong buy' being a reflection of potentially brighter times ahead." this being driven primarily by Primark. The 23% fall off in SP from October high IMO makes for a buying opportunity. Interim results have down well with market.
"Despite a sharp decline in LSE:ABF:AB Foods's half-year headline profit, the adjusted figure is far less painful as continued pressure on the Sugar business is more than offset by stronger contributions elsewhere.In particular, improving fortunes ..."
I suspect mostly generalised fear of bricks-and-mortar retail falling apart due to Amazon et al, along with poor results from other retailers such as Next, M+S etc.
A large chunk of ABF's rise over the last few years has been due to Primark's expansion rather than the more prosaic businesses of supplying Brits with bread, Mexicans with oil, Aussies with meat and everyone with sugar (though the latter now appears to be in the cross-hairs of HMG and other governments).
There is general uncertainty and a lack of confidence in the retail sector. I can find nothing ABF specific. Last broker forecast was a 'hold'. Next interims 17 April. Seems a decent place for your money, though not yet truly cheap (PER = 17.6, PEG = 1.2, yield = 4%).
Good figures. Directors buying shares. Brokers tipping them.....Share price falling. What is happening? I think it is a great company but why the sell off? Should I buy at this level?
PS - they give nice party bags at the agm.
Can not recall why i was looking for the poster hotoliveoyl49.
Maybe he brought by attention to this share.
Spoke to a broker ( C ) always a mistake taking advise in past ,
Bought in @ 2598p ... lets hope its different this time .
At least it not he same broker i last paid attention to who like clln.
SP 2600p. Obviously there's been a general market correction but these have suffered more than most. ABF hasn't visited these low levels very often in past few years and results have been good IMO. Anyone know why the fall?
I'm seriously thinking of buying some at this price.
SP probably down because of sugar revenues down 'AB Sugar revenue from continuing operations was 12% behind last year at constant currency and 13% behind at actual exchange rates. '
I also heard something in media about Primark not doing as well in USA as hoped for though as far as I know they are continuing to open new stores there.
Past experience with ABF share price is that SP often falls following trading update then in following few months SP moves up above level before report. IMO sugar revenues not too important, ABF growth all about Primark. If history repeats now a buying opportunity.
Associated British Food's revenues for the 16 weeks to 6 Jan were 4% up on last time at constant currency with sales at Primark up 7%.
The group said the outlook was unchanged, with progress expected in adjusted operating profit and adjusted earnings for the full year.
An update said: 'Sterling has strengthened against most of our major trading currencies, other than the euro, and as a result sales from continuing operations at actual exchange rates were 3% ahead.
'Other than the expected reduction in sugar revenue, sales growth was delivered by all of our businesses and their combined revenue was 6% ahead at constant currency.'
The update on its retail business said: 'The UK continued to perform well with strong like-for-like sales, a consequent strong increase in share of the total market, and trading which reflected the breadth of our consumer offering.
The sales growth across Europe was held back by unseasonably warm weather in October.
'This was followed by good trading in the five weeks leading up to Christmas.
'Primark achieved record sales in the week before Christmas.
'Trading in the US has continued to make progress.
'Operating margins in the first half are now expected to be close to those in the same period last year with better buying virtually offsetting the adverse effect of the weaker sterling / US dollar exchange rate on purchases. Stock was tightly managed again this period.'
Trading update due on Thursday. A great fan of ABF and traded on many occasions,dbuy at about £29ish and sell £33 ish(as recommended by someone on this board).
Brokers forecast on H.L are £31.-£35 so sold National grid ans Standard life aberdeen(neither going anywhere IMO in short term)
Bought back in @£28.33 big leap of faith with mixed results from High street so will have to wait and see if Primark have been able to beat the trend again and come up with a result that is going to move shares towards broker forecasts
"A year ago, LSE:NXT:Next chief executive Simon Wolfson was battening down the hatches and warning overÂ "exceptional levels of uncertainty"Â in the clothing sector. A Christmas profits warning sent shares 10% lower and set the tone for a difficult ..."
"The festive season has truly arrived with a vengeance and the retail sector depends on the seasonal shopping frenzy. Last weekend heralded the official launch of spending season, a four-day retail extravaganza beginning with Black Friday and ..."
The above link contains analysis of several companies including one of ABF, by well respected analyst Phil Oakley, who now works for Ionic owner of ShareScope and SharePad. I found it informative and worth reading. He does not place enough emphasis on Primark IMO. I am a long term holder of ABF because of the growth of Primark.
I'm a long term holder of this company. I like the fact that it is conservatively run, yet is innovative - this year they bought businesses in the sports nutrition and balsamic vinegar business, as well as expanding Primark. Also, unlike other companies who have tried to open shops in the US, they are taking trouble to adjust their retail model to the reality of US shopping. Also the board have skin in the game, so I will hold and maybe add on weakness. It's a shame the stock market is so negative about them, marking them down today. I wonder if, in the long term, the London market is the right place for them.
"AB Foods, which owns the Primark fashion chain as well as agriculture, ingredients and sugar businesses, said pretax profit in the year to September 16 soared to £1.58bn from £1.04bn the year before, driven by revenue climbing to £15.36bn from £13.40bn. The company raised its full year dividend 12% to 41.0 pence. Primark sales rose 19% year-on-year and climbed 12% at constant currency, but the company warned the unit's operating margin tightened to 10.4% from 11.6% because of the strength of the US dollar on input costs."
Results look pretty good to me. Decrease in operating 11.6 to 10.4 due to dollar strength worrying. I think SP will recover in the coming months. Up until yesterday SP risen 34% in the last 12 months. Dividend has now increased every year since 1997.
SP up 1.8% at 8:46 so as I suspected oversold yesterday.
This article by Shares Magazine explains yesterdays fall. It seems it it is groceries division that investors are concerned about. I invest in ABF because of the growth in Primark and over the years have learnt not to worry too much about other divisions.
"Associated British Foods expects adjusted operating profit to be well ahead of last year. In its third quarter update in July the group reported an improvement in its expectation for the full year underlying operating performance as a result of a stronger profit delivery from Primark. But a pre-close update today said that since then it had experienced an even lower level of markdown which had further improved the full year outlook. It said: "Net interest expense will be at a similar level to last year and, as previously explained, an increase in other financial expense will reflect the impact of last year's fall in bond yields on our UK defined benefit pension scheme."
Reading RNS everything looked positive apart from sterling weakness against dollar resulting in some higher costs for materials at Primark. Good to see 2/3 of Primark profits from abroad.
My feeling is that market expectations for Primark had become overly optimistic which would explain this mornings 2% SP fall. I think SP will recover within weeks. At current high SP I still think at least a weak buy.
SP now above my lower target of 3190. Weighing up fear and greed and think greed is slightly greater. Will place a limit order in to sell 20% of my ABF shares at 3290 or more. Average cost of my ABF shares 2088.3p a share. Currently my largest value shareholding at 6.37% of total value if shares which makes me a bit nervous.
I think there is a good chance of ABF going above its all time closing high of 3559 in the next 12 months so am not planning to top slice more than 20% of my shares.
"Primark, owned by Associated British Foods, said it is recalling a range of men's flip-flops for having higher than accepted levels of a chemical substance. Primark said the flip-flops did not meet its chemical compliance standards, having levels of a "restricted substance" in excess of 1.0 milligrams per kilogram. A spokesman for the chain confirmed that the chemical in question was chrysrene, a common dye for dark colours, but said the levels of the substance would pose a minimal health risk. Primark said the products were on sale from 4th January to 2nd June, and it will offer a full refund without proof of purchase."
Not much impact on ABF I would have thought.
My latest target price to top cut is £32.90 but minded perhaps to drop to £31.90.
Group revenue from continuing businesses for the 40 weeks ended 24 June 2017 was 10% ahead of the same period last year at constant currency and 20% ahead at actual exchange rates. The results of the group in the third quarter were strong with revenue growth of 13% at constant currency and 20% at actual exchange rates. The results to date reflect a material translation benefit from the devaluation of sterling following the result of the UK referendum on EU membership in June last year. At current exchange rates, the translation benefit will be significantly less in the last quarter of our financial year.
The underlying operating performance of the group during the third quarter was ahead of our forecast as a result of a stronger profit delivery from Primark which has marginally improved our group outlook for the full year. We continue to expect to report good growth in adjusted operating profit and adjusted earnings per share for the group.
References to growth in the following commentary are based on constant currency.
Our grocery businesses achieved further revenue growth in the quarter with continued progress for Twinings Ovaltine and George Weston Foods in Australia. In the UK, the bread market has remained very competitive which, combined with inflationary cost pressures in bakery, has had a negative impact on Grocery margins.
Revenue growth for AB Sugar remained strong in the third quarter with the continuing benefit of higher prices and increased production from Illovo in Africa. Whilst world prices have recently fallen below last year's level, this will have little impact on the current financial year with most sales contracts in the EU already committed.
UK sugar production for the 2016/17 year was 900,000 tonnes with a smaller contracted growing area than last year and lower beet yields. Looking ahead to the post-quota environment that begins in the autumn, the contracted area for the 2017/18 season has been increased by a third. The new crop is now well established and making good progress.
In north China, a record beet crop was processed this year and the new season crop is progressing well. Prices have remained stable and, in May, China's Commerce Ministry announced additional duties on sugar imports.
Illovo expects to produce 1.7 million tonnes of sugar this year compared with 1.4 million tonnes produced in the comparable months last year. The season has started well with a good quality crop recovering from last year's drought.
Revenue growth in the third quarter at AB Agri was slightly ahead of that achieved in the first half but margin remains under some pressure in UK and China Feeds. Frontier's performance has been held back by low UK grain stocks and little market volatility, although the crop input segment of the business is performing strongly.
Year on year profit growth remains strong driven by yeast and bakery ingredients and good performances from Abitec in the US and Enzymes. The extension to the enzymes factory in Finland was completed during the quarter. This is the second expansion of this plant in recent years and will increase fermentation capacity by over 40%.
Sales at Primark in the year to date are 13% ahead of last year at constant currency driven by increased retail selling space and growth in like-for-like sales. At actual exchange rates sales continued to benefit from sterling weakness and are 21% ahead year to date.(1) The increase in average retail selling space to date against last year was 13%. Sales growth in the last 16 weeks was 15% at constant currency and 21% at actual exchange rates.
Third quarter trading was particularly strong in the lead up to Easter, benefiting from comparison with results last year that were affected by poor weather and an earlier Easter holiday. As a consequence, like-for-like sales in this period were better than the first hal
ABF is my largest value share holding at 5.8% of total value. At £30 SP I am up 43.7% on average purchase price. I think the SP will go up more in the next 12 months as a result of growing profits from Primark and their sugar business. That said I think I may top slice, selling 20% as risky having so much invested in one company.
ABF has been a good share to trade which I have done 12 times in the last 7 years. Never paid more than 2849.6 to buy. My target price at which to sell some has been £34 for some time but it is taking longer than I expected to get there (BREXIT etc). Perhaps £31 a more reasonable medium time target.
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