PETALING JAYA: SD Guthrie Bhd
’s acquisition of a 48% stake in Netherlands-based Marvesa Supply Chain Services BV for €54mil (RM250mil) is seen as a strategic move to strengthen its downstream presence in Europe, but the earnings impact from the investment is expected to be “minimal”.
Kenanga Research noted the investment “should fit well with SD Guthrie’s plantation as well as its downstream operations in Europe”.
However, it added that the impact on earnings is expected to be “minimal”, given the RM250mil consideration and SD Guthrie’s overall asset base of RM31bil.
“No guidance was provided as to the valuation SD Guthrie paid for Marvesa nor any earnings guidance.
“We suspect the acquisition could be neutral given the RM250mil consideration and SD Guthrie’s own valuation status, but even if it is slightly dilutive, the overall impact on financial year 2025 forecasts is likely to be minimal or less than 5%,” it noted.
MIDF Research is, however, more upbeat, noting the acquisition is “well poised to drive further growth” for SD Guthrie’s downstream business while diversifying its exposure beyond palm oil into soft oils such as soybean oil.
“This makes Marvesa an ideal partner to serve customers across 11 countries from its Zwijndrecht refinery in the Netherlands,” it noted.
Marvesa, part of the 60-year-old Marvesa Holding BV, specialises in trading, processing and distributing oils and fats. It operates a 300,000 tonnes refinery in Zwijndrecht, producing oils and fats for industrial frying, emulsifiers, bakery and confectionery ingredients, margarines, dairy products, candles and milk substitutes.
It also has a 100,000 cubic m tank farm across the Netherlands, Spain, Argentina and Indonesia.
Kenanga Research speculated that SD Guthrie’s latest move is likely driven by three key factors – the growth potential in the global animal nutrition market, the increasing demand for traceability in food supply chains and the potential for synergistic growth in the European and Asian markets.
MIDF Research noted that despite concerns over the upcoming European Union Deforestation Regulation, SD Guthrie remains committed to expanding in the region, leveraging its supply chains.
The acquisition is expected to enhance SD Guthrie’s trading volumes in lecithin, soy and other soft oils.
MIDF Research estimates, that if the deal is funded through term loans, SD Guthrie’s net gearing would rise to 0.25 times, still within the sector’s average range of between 19 and 25 times.
It has maintained a “buy” call on SD Guthrie with a target price (TP) of RM5.43 a share “pending further clarity on the earnings guidance”, while Kenanga Research has maintained a “market perform” rating on the counter with a TP of RM4.60 a share.
SD Guthrie shares gained 1.24% to close at RM4.91 yesterday.
