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Astral Foods Ltd.

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$JSEARL - Astral Foods: Alternate Wave Count Calls For RecoverySee link below for previous analysis. I have updated my preferred wave count and it has significant implications. The new count shows the decline from 33519 to 11079 as a complete zig zag pattern. Wave (A) is a impulse with distinguishable five waves. Wave (C) is also an impulse though more simple in structure. I am looking at the advance from 11079 to 22166 as a leading diagonal and the correction to 13176 as a zig zag, however it is possible that this correction is still unfolding. The key level to watch for the bullish outlook is 11079 as a break below this level invalidates the bullish forecast.
JSE:ARL
by Loyiso_BlaqueSoros_Mpeta
Our opinion on the current state of ARLAstral Foods (ARL) stands as a prominent poultry producer in South Africa, with a comprehensive range of operations within the poultry industry. Their activities include integrated broiler operations, where they possess the capacity to process approximately 4.4 million broilers each week. Additionally, they operate Ross Poultry Breeders, which supplies breeding stock to the South African broiler industry, National Chicks, a supplier of day-old chicks and hatching eggs, and Meadowfeeds, a division comprising seven mills that produce specialized products for various farm animals. Investing in Astral Foods involves considering several factors, including the influence of weather conditions and the cost of feed, particularly maize. Furthermore, the company's performance can be affected by the dumping of low-cost chicken onto the South African market by major poultry exporters such as Europe, Brazil, and the United States. However, the current valuation of the company's shares appears reasonable, considering these factors. Astral Foods, classified as an essential service, has not experienced significant disruptions due to COVID-19. Nevertheless, the company anticipates a potential oversupply of chicken in the market due to higher unemployment levels in the foreseeable future. Overall, Astral Foods is considered a relatively risky commodity share, but it is trading well below its previous levels. In its financial results for the year ending on September 30, 2023, the company reported a 0.4% decrease in revenue and a headline loss of 1324c per share, a stark contrast to the 2762c profit reported in the prior year. This decline was attributed to factors such as load shedding costs and the outbreak of Highly Pathogenic Avian Influenza (bird flu), resulting in an operating loss of R621 million. In a trading statement for the three months ending on December 31, 2023, Astral Foods estimated a substantial increase in headline earnings per share (HEPS), projecting at least a 300% rise to 654c. This improved performance is attributed to lower load shedding costs and reduced feed costs. From a technical perspective, Astral Foods displayed a classic rising head-and-shoulders formation six years ago, with the left shoulder peaking in mid-January 2018, the head in April 2018, and the right shoulder in July 2018. The neckline was eventually broken, leading to a significant decline in the share price to approximately R144, where it has since moved sideways and currently trades around R158. The company has encountered challenges related to rising feed costs, the unreliability and high expenses associated with electricity and water, as well as increased maize and fertilizer costs due to the Ukraine conflict. The recent outbreak of avian flu has also negatively impacted the company. While Astral Foods is generally well-managed, it is perceived as a risky investment due to these factors.
JSE:ARL
by PDSnetSA
Our opinion on the current state of ARLAstral Foods (ARL) is a leading poultry producer in South Africa. The company's activities include integrated broiler operations, where they have a processing capacity of 4,4 million broilers per week; Ross Poultry Breeders, which supplies breeding stock to the South African broiler industry; National Chicks, which is a day-old chick and hatching egg supplier; and Meadowfeeds, which has seven mills producing a wide range of specialised products for farm animals. Buying this share is a gamble on weather conditions and the cost of feed (maize). Since poultry imports into South Africa are about 30% of total consumption, it is also a gamble on the dumping of cheap chicken onto the South African market by Europe, Brazil, and the US - but at current levels the share looks reasonable. As an essential service, Astral has not been greatly impacted by COVID-19 except that it is expecting an over-supply of chicken as a result of higher unemployment in due course. Overall, we view this as a relatively risky commodity share, but one which is trading well below previous levels. In its results for the six months to 31st March 2023 the company reported revenue up 6% and headline earnings per share (HEPS) down 88%. The company said, "The Group’s operating profit declined by 88% to R98 million (March 2022: R785 million) including R741 million load shedding costs incurred during the reporting period, and which could not be recovered from the market". In a trading statement for the year to 30th September 2023 the company estimated that it will make a headline loss of 1802c per share compared to a profit of 2762c in the previous year. The company said, "...the South African poultry industry is currently being ravaged by an outbreak of Highly Pathogenic Avian Influenza (bird flu), with additional costs being incurred by Astral as well as other producers to cull broiler breeding stock". In a trading statement for the year to 30th September 2023 the company estimated that it would make a headline loss of between 1243c and 1519c per share compared with a profit of 2762c in the previous year. The company said, "The Group's balance sheet is geared to approximately 26% to maintain sufficient liquidity and solvency". Technically, this share produced a classical rising head-and-shoulders formation - with the left shoulder peaking in mid-January 2018, the head in April 2018 and the right shoulder in July 2018. The neckline was broken, and the share fell sharply to around R144. It is now trading at around R147 and at this level, it is trading on a P:E of around 9,8 - which reflects the volatility of its earnings stream. The company has problems with rising feed costs and the unreliability and costs of electricity and water. Rising maize and fertiliser costs as a result of the war in Ukraine will impact margins. We find this company, although generally well-managed, to be risky.
JSE:ARL
by PDSnetSA
Our opinion on the current state of ARLAstral Foods (ARL) is a leading poultry producer in South Africa. The company's activities include integrated broiler operations, where they have a processing capacity of 4,4 million broilers per week; Ross Poultry Breeders, which supplies breeding stock to the South African broiler industry; National Chicks, which is a day-old chick and hatching egg supplier; and Meadowfeeds, which has seven mills producing a wide range of specialised products for farm animals. Buying this share is a gamble on weather conditions and the cost of feed (maize). Since poultry imports into South Africa are about 30% of total consumption, it is also a gamble on the dumping of cheap chicken onto the South African market by Europe, Brazil, and the US - but at current levels the share looks reasonable. As an essential service, Astral has not been greatly impacted by COVID-19 except that it is expecting an over-supply of chicken as a result of higher unemployment in due course. Overall, we view this as a relatively risky commodity share, but one which is trading well below previous levels. In its results for the six months to 31st March 2023 the company reported revenue up 6% and headline earnings per share (HEPS) down 88%. The company said, "The Group’s operating profit declined by 88% to R98 million (March 2022: R785 million) including R741 million load shedding costs incurred during the reporting period, and which could not be recovered from the market". In a trading statement for the year to 30th September 2023 the company estimated that it will make a headline loss of 1802c per share compared to a profit of 2762c in the previous year. The company said, "...the South African poultry industry is currently being ravaged by an outbreak of Highly Pathogenic Avian Influenza (bird flu), with additional costs being incurred by Astral as well as other producers to cull broiler breeding stock". Technically, this share produced a classical rising head-and-shoulders formation - with the left shoulder peaking in mid-January 2018, the head in April 2018 and the right shoulder in July 2018. The neckline was broken, and the share fell sharply to around R144. It is now trading at around R161 and at this level, it is trading on a P:E of around 11,5 - which reflects the volatility of its earnings stream. The company has problems with rising feed costs and the unreliability and costs of electricity and water. Rising maize and fertiliser costs as a result of the war in Ukraine will impact margins. We find this company, although generally well-managed, to be risky.
JSE:ARL
by PDSnetSA
$JSEARL - Astral Foods: How Low Can The Bears Take It?The last update on Astral was on 27.04.2023 and that short-term view has been quickly invalidated. The longer-term view shared 22.02.2023 is now fully underway, link below. Astral released interim results for the six months ended 31 March 2023 on 22.05.2023 with the following salient results: Revenue up 6% Operating profit down 89% Earnings per share down 89% Headline earnings per share down 88% Net cash outflow down R1.2 billion No dividend down 100% The technical structure has not changed but price has now broken below the support trendline which triggers the downside continuation outlook. Since wave (A) was large and complex, wave (C) can be smaller and more simple in structure but my initial target for wave (C) is 11079 as a minimum target.
JSE:ARLShort
by Loyiso_BlaqueSoros_Mpeta
$JSEARL - Astral Foods: Short-Term Technical BuyI still maintain my long-term bearish view on Astral as per my previous analysis, link below. Stock do not go down in a straight line and even with weak fundamentals and a strong bear trend, there will be bounces/corrections to the upside. Astral stock has found trendline support at 14896 and has broken above the short-term resistance trendline. As the stock continued to make new lows from 27 October 2022, the MACD starting trending up creating bullish convergence and the MACD is gaining momentum above the zero-line. Long position idea: open @ market aggressive stop-loss @ 15800 conservative stop-loss @ 14796 take-profit 1 @ 18000 take-profit 2 @ 19000
JSE:ARLLong
by Loyiso_BlaqueSoros_Mpeta
$JSEARL - Astral Foods: More Pain In StoreOn 21 November 2022, with the release and publishing of Astral’s year end results for the year ended 30 September 2022, the Group strongly cautioned the market that Astral was expecting market conditions to deteriorate, with record high feed input costs, devastating levels of load shedding and the general decay of municipal infrastructure continuing to impact operational efficiencies and costs negatively. This is still pretty much the fundamental theme for Astral and the chart captures it well. From the 2018 peak at 33519, the selloff to 11079 unfolded in fives waves for wave (A). As a bare minimum, in this case bear, the bear market should unfold in three waves. The choppy move to 22166 looks corrective in nature but it is hard to conclude that it is all of wave (B). Regardless, the main forecast is for further downside to complete wave (C) of the zigzag correction. In the short-term, I will monitor how price reacts at the support trendline.
JSE:ARLShort
by Loyiso_BlaqueSoros_Mpeta
Not the time to play chicken! ARLIt was announced yesterday that government will be dropping import tariffs on poultry for a period of 12 months to help fight the rising cost of chicken. Let's not forget, that the tariffs were put in place to protect local producers against cheaper imports. The latest development leaves them with very little to no place to hide. I suspect our local producers like ARL are preparing for some price squeezes ahead. Technically too, ARL chart shows a failed break-out and does look to have found overhead resistance. the stock has become rather over-bought and we should see selling momentum start to pick up. For the more patient trader, I think you could enter a short target of around R178.00
JSE:ARLShort
by RobbyP
ARL- No time to be chicken. When the looting is over...(Also see, TBS & AVI)...With SA retail once again brought to it's knees, we do have some (unfortunate) opportunities, especially with our food producers. With supply chains disrupted and store shelves empty, we can only expect the "re-stocking" to benefit our brand owners and food producers. This is a buying opportunity for unusually high demand when the looting is over. Now is not the time to be "chicken". Buy ARL at current levels for targets above R280.00
JSE:ARLLong
by RobbyP