The Feed the World Vue is a portfolio that includes companies which have exposure to growing demand for agricultural goods (grains, dairy, seeds, oils and packaged food); while providing diversification across different geographies.
Every quarter our Investment team conducts a thorough review of this portfolio, taking into account recent earnings and related news flow, and provides our investors with an update on its performance and any changes made to the Vue.
The Feed the World Vue has had a challenging year relative to the broad market, generating a total return of +5.37% in the last year (1 May 2017 to 30 Apr 2018).
This is primarily due to sector specific issues. Nonetheless, the Vue has made a comeback in the past quarter returning +4.91% (1 Feb 2018 to 30 Apr 2018).
The key drivers contributing to performance in the last year were China Mengniu Dairy (+67.33%), LDC SA (+67.10%) and Zoetis (+48.57%).
Three of the high-performing stocks in the portfolio
China Mengniu Dairy Co. Ltd. (HKG:2319)
A leading player in China’s dairy industry
Mengniu is a leading player in China’s dairy industry. It primarily operates in three segments: liquid milk products (including ultra-high-temperature UHT milk, milk beverages and yoghurt) that represent 90% of group sales; ice cream (9% of group sales); and other dairy products(1%), mainly milk powder.
4Q FY 2017 Report
China Mengniu reported a robust 4Q FY 2017 in March rounding off a great 2017. This past year many of the company initiatives have started to bear fruit – restructuring of corporate structure, optimised supply chain and new product innovation.
For the year, China Mengniu grew revenues by +12% and operating profits by +126%. The company also gained market share across multiple product categories like liquid milk, UHT products, and chilled yogurt.
Kicking off 2018 from a position of strength, company management remains confident of delivering double digit top line growth for this financial year. Growth is likely to continue driven by product innovation and company expects to be able to maintain margins. Any upside from margins will likely be reinvested into the business.
LDC SA (EPA:LOUP)
The France's largest poultry processor
LDC. S.A. (also Groupe LDC or LDC) is France's largest poultry processor, and one of the European top three. L.D.C. produces fresh poultry products--primarily chicken, turkey, duck, but also goose and pheasant--under the Fermiers de Loué, Poulet de Bresse, Poulet d'Ardeche, and Le Gascogne brand names.
A trustworthy brand
LDC has been executing well on its long term strategy of building a premium brand in poultry which is known for certified, environment friendly local produce.
LDC has been able to build a trustworthy brand which provides quality produce at competitive price points. To offer an alternative to people who are vegetarian, LDC also offers vegetarian products under the Le Gaulois brand.
While some analysts have flagged a potential for weaker poultry prices, LDC is likely to be able to maintain margins driven by its strong brand.
Strong revenue growth outlook
LDC grew revenues for FY 2018 (fiscal year till Feb 2018) by +6.9%, of which +5.6% was organic. LDC is acquiring Marcel Favreau, which specializes in slaughter and preparation of barbary duck and has an annual turnover of €21 million; and potentially Le Marais’ subsidiaries (€50 million in annual sales).
LDC is also targeting acquisition of Groupe Doux. LDC looks well positioned from both organic growth as well as M&A driven opportunities.
Zoetis is the only pure play in animal health. It is also the largest animal health company in the world. Its therapeutic footprint includes medicines and vaccines for livestock and companion animals.
The company was a former business unit of Pfizer for 60 years prior to its initial public offering in January 2013. Zoetis has global scale and sells to over 120 countries across eight core species and five major product categories.
4Q FY 2017 Report
Zoetis reported 4Q FY 2017 results in February, capping off a strong year for the company. In 2017, the company grew revenues by+8% and earnings +21% over the previous year.
While US livestock supported growth, companion animal revenues delivered over +14% growth. The company also saw more favourable product mix which supported operating margin expansion. Looking ahead, Zoetis expects 2018 to be a good year, with the outlook for US livestock being very favourable.
Management is forecasting a +5-7% topline growth and a adjusted net income growth of +20-26%. The company also anticipates upside from growth opportunities in companion animals in developing markets, with growing medicalisation rates as well as approval of drugs like Apoquel, used to treat skin conditions in dogs.
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Past Performance is not a reliable indicator of previous performance. See how our performance is calculated.