By Jenny Ruth
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Thursday 17th December 2009 |
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It will be a great achievement if Delegat's Group is able to match its record 2009 result in the year ending June 2010, given the headwinds of the strong New Zealand dollar and the downward pressure on wine export prices, says Forsyth Barr analyst Rob Mercer.
"Delegat's earnings performance has outperformed its Australian peers because its single-brand (Oyster Bay) export strategy has helped to maintain premium prices for its exports where other companies have been forced to discount," Mercer says.
Despite the company reaffiming its guidance that it expects to match the $30 million 2009 net profit this year, Mercer has left his forecast unchanged at $26.6 million because of the currency and industry pricing pressure.
Still, "over the next couple of years we expect the global economy to be well advanced in its recovery phase and for the New Zealand dollar to depreciate relative to the US dollar and the pound," Mercer says.
That combination "will be a key force behind Delegat's next leg of earnings growth which we have assumed occurs in 2012, although it could happen earlier in 2011." He is forecasting a $31.2 million net profit for 2011, rising to $39.4 million in 2012. Mercer values Delegat's shares at $3.19.
BROKER CALL: Forsyth Barr rate Delegat's Group as buy.
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