Philip O'Sullivan's Market Musings

Financial analysis from Dublin, Ireland

Market Musings 21/11/11

with 7 comments

Origin Enterprises issued a solid trading update earlier this morning. Management said the “performance [is] in line with the group’s expectations in the seasonally quiet first quarter of the 2012 financial year”, adding that it “remains comfortable with consensus market estimates for the full year”, helped by the positive outlook for primary food producers. Of course, much hinges on the performance in the second half of Origin’s financial year, which accounts for 85% of the full-year profitability of the group, but given indications of a further loosening of monetary policies in many of the world’s leading economies, I think the outlook for soft commodities will remain positive, which will translate into clear benefits for Origin, which supplies many key inputs into the farming sector. Given this macro backdrop, and the excellent job management has done in repositioning the group through securing strategic alliances for its food and fishmeal operations and concentrating on its core agri-services and agri-inputs operations, Origin Enterprises is a stock I like.


(Disclaimer: I am a shareholder in Total Produce plc) Staying with the food sector, I uncovered this piece of information regarding Total Produce – in its recent H1 results the group referred to having increased its shareholding in the leading South African fresh produce company, Capespan, without stating by how much it has increased its shareholding. I note that some six weeks or so after this announcement Capespan disclosed that Total Produce has in fact nearly doubled its shareholding in the company to 20%. This helps cement Total Produce’s partnership with its leading provider of citrus, deciduous and stonefruit categories to the European market.


A troubling indicator of the health of Ireland’s retail sector – on Saturday morning I went into the Argos store in the Stephen’s Green shopping centre in central Dublin. Despite Christmas being just over a month away, it had no cashiers on duty at 11.15am, with customer service staff taking payments. If a mass-market chain like Argos needs no cashiers at that hour on a Saturday morning during what is meant to be a seasonally busy time, you’d wonder about how grim things must be for a lot of retailers at this time. Which makes plans to raise the VAT rate by 2% all the more ridiculous. The government should instead be taking a chainsaw to public spending, much of which, as multiple reports from the Comptroller and Auditor General show, disappears into a black hole.


Staying with troubling indicators – how’s this for a statistic around the UK housing sector: The average age of a first time home buyer in England is now nearly 43.


If you’ve any plans to travel to Moscow, you should check this place out.


Finally, on a lighter note, one of my readers flagged this tweet by Martin Geddes:


With the Euro, Germany thought it was getting everyone to adopt the Deutschmark. What has happened instead is that Germany got the Lira.

Written by Philip O'Sullivan

November 21, 2011 at 9:43 am

7 Responses

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  1. Hi Philip,

    there seems to be an interesting story behind the Capespan purchase, see for instance here:

    It looks like some kind of takeover battle between the local company Zeder and total produce.



    November 22, 2011 at 7:54 am

  2. Good spot. In terms of the latest disclosures on the Capespan website, I see that Zeder hold 40.2% of Capespan, Total Produce 20.0% and BB Investment 7.9%. It seems from this document ( that a 25% shareholding is enough to block a takeover, so if Total Produce can push its stake up to that level they will safeguard their interests.

    However, given that TOT is a key buyer from Capespan, if it’s forced out by Zeder I assume the trading relationship will be retained, even if TOT is no longer on the share register.

    Philip O'Sullivan

    November 22, 2011 at 9:32 am

  3. there is a really interesting interview with the Guy behind Zeder:

    This seems to be the money quote:

    . We have 40% and our overseas partner has 15%. That’s 55%, so you can put bids on the screen and I think he’s on the screen the last month or two, and I don’t think he’s picked up more than three or four million shares, five million shares, I don’t know the exact number.

    So TOT could actually be the “overseas” partner of Zeder…


    November 22, 2011 at 6:02 pm

  4. sorry forgot: A company named “Bidvest” seems to be interested in Capespan as well.

    So it looks like Zeder and TOT show up as “White Knight”. Maybe Zeder goes for the port business and TOT for the Fruits ?


    November 22, 2011 at 6:07 pm

  5. Some good ‘digging’ for information there. The “overseas partner” has to be Total Produce as none of the other large shareholders fit that description. Zeder it seems is an investment fund ( so I guess they are very happy to partner up with a company with a proven track record in managing produce firms. With disclosed shareholdings for Zeder and TOT of >60% of Capespan’s equity, Bidvest and anyone else who had aspirations to build a stake in Capespan must surely be willing to sell out here rather than be left with a minority stake in an illiquid unlisted company.

    Philip O'Sullivan

    November 22, 2011 at 11:28 pm

  6. […] me to highlight Total’s increased stake in Capespan Group Ltd. There are some good follow-up comments here also. A good spot – I looked some years back, and somehow concluded Total’s shareholding […]

  7. […] on a link I have posted in the comments at valuetock inquisition it looks like that Total Produce is actually the „overseas […]

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