Our opinion on the current state of QFH

Quantum (QFH) operates in the chicken industry with divisions focused on animal feeds, eggs and layers, broilers, and sales of related products in Africa. While the company faced challenges due to the Southern Africa drought, it has since benefited from improved conditions and lower feed costs, leading to higher egg prices. However, the chicken business is known for its challenges, including labor issues, working capital constraints, disease threats, and competition from imported chicken.

Recent events, such as an unprotected strike and disease outbreaks, have affected Quantum's operations and financial performance. In its results for the year ending 30th September 2023, the company reported revenue growth of 15.5% but suffered a headline loss of 17.4c per share due to various challenges, including avian flu outbreaks. The risk of avian flu remains high, impacting the company's outlook for the financial year ending 30th September 2024.

Quantum faces volatility in its business environment, making investment in the company subject to considerable risk. The company struggles to pass on increased raw material costs to consumers amid the current economic climate. From a technical perspective, the share price has been on a sideways to downward trend since August 2020, with this pattern expected to persist.

A recent sale of a significant portion of shares by Astral Foods sparked a jump in Quantum's share price amid speculation of a potential takeover. However, Country Bird Holdings (CBH) subsequently indicated that it had no intention of making a takeover bid, adding further uncertainty to the company's future. Investors should carefully consider these factors before investing in Quantum.