Our opinion on the current state of ASTRAL(ARL)Astral Foods (ARL) is South Africa's leading poultry producer, with substantial operations in broiler processing, breeding stock supply, day-old chick production, and animal feed production through its subsidiary, Meadowfeeds. It processes 4.4 million broilers per week and is a key supplier in the domestic poultry sector. The company’s performance is tied to weather conditions, feed costs (primarily maize), and the impact of international poultry imports, which make up around 30% of South African consumption and create price competition.
In its interim results to 31st March 2024, Astral reported revenue growth of 4% and a significant increase in headline earnings per share (HEPS) to 884c from 163c in the previous period, with the Poultry Division returning to profitability. Cash generation was strong, with an operating profit increase of 461.2% to R550 million. In its trading statement for the full year ending 30th September 2024, Astral projected HEPS between 1853c and 1985c, a notable recovery from a loss of 1324c the previous year.
Despite ongoing challenges, including rising maize and fertilizer costs due to the Ukraine conflict, electricity and water issues, and recent avian flu outbreaks, the share has shown resilience. Technically, it broke through a long-term downward trendline on 20th May 2024 at 15470c and is currently trading upward at 17395c. Astral’s management appears strong, and the stock remains attractive at these levels, though it is exposed to commodity price risks and industry-specific challenges.
