Stock Watch: Eaagads Limited

Eaagads Limited announced results for the half year ended 30th September 2015 with the following highlights:

Revenues edged up by 6.48% to KES 44.73 Mn from KES 42 Mn in the previous financial half year on account of enhanced sales volumes of coffee. This occurred notwithstanding that global prices have remained stumpy throughout the year due to enhanced production from Brazil.

Production costs improved marginally by 1.92%, accounting for KES 35.47 Mn in HY 16 from KES 36.17 Mn in HY 15. Gross profit for the HY 16 period stood at KES 22.35 Mn, representing a 21.37% decline from the previous year.

PBT was down 27.48% to KES 13.61 Mn, with the PAT standing 20.57% less than the previous year at KES 9.53 Mn from KES 12 Mn in the previous year.

Basic & Diluted EPS was 23.33% higher than the previous year, standing at KES 0.37 from KES 0.3 in HY 15. This represented a CAGR decline of 158.91% and an average EPS of 0.38. The forward EPS for 2016 is set at 0.22

Outlook

El-Nino rains continue throughout Kenya, affecting some parts of the country. However, there is a likelihood that Eaagads production areas will not experience severe weather patterns within their growing areas as compared to other coffee growing regions, thereby not affecting production levels in the short term. International prices however remain relatively low, thereby affecting the amount of money the company could have gained.

Global coffee prices are expected to remain relatively low, as compared to 2014 levels when prices were up due to declined production from South America (mostly affecting Brazil); on account of enhanced global production from Columbia, Indonesia and Vietnam.