Sasini FY2023 Results Update: A Year Of Two Halves

Sasini printed a 52.9% drop in its EPS for the year ended 30th September 2023. The decline was in part driven by a 22.2% drop in revenues to KES 5.7bn from KES 7.3bn last year.

This underperformance was on the back of the prolonged drought in the first half of the year that adversely impacted tea, coffee, and avocado production volumes, a drop in global coffee prices, and a delay in the opening of the Avocado export season in Kenya among other factors.

The group reported a gross profit of KES 1.4bn (-23.8%y/y) with an operating income of KES 1.7bn (-31.2% y/y). Operating expenses, on the other hand, grew marginally to KES 1.1bn (+0.8%y/y) pushing the operating profit lower to KES 661.3m (-54.3%y/y).

Profit before tax for the period under review printed at KES 873.0m (-43.8%y/y) on a KES 211.7m (+99.1% y/y) net fixed income adjustment.

The board of directors has recommended a final dividend of KES 0.50 per share with a book closure of 22nd February 2024. This brings the full-year dividend payment for 2023 to KES 1.50 per share (vis-a-vis KES 1.00 per share in 2022). The 72nd AGM will be held electronically on 7th March 2023 at 11.00 am.

Outlook and Recommendation

We believe the rainfall experienced in the FY2024 cycle will tailwind tea, avocado, and coffee production volumes for the group. However, we may see suppressed coffee prices in 2024 due to increased supply from key producers like Brazil, Vietnam, and Colombia.

Sasini is currently trading at 0.31x P/B and trailing the P/E ratio of 8.30x – a discount to the industry medians of 0.75x for P/B and 11.40x for P/E. As such, from a relative valuation standpoint, the counter presents investors with a good value proposition against its peers, thus we recommend a BUY.

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