SEK - Seeka

[seaweed]

Just a little reminder SEK goes ex div tomorrow. You have to buy in before 5pm tonight to receive the 25c div. 

[lorraina]

Going from excellent posts on the other site, Kiwi Fruit Orchards came through the cyclone with little damage.

[Rawz]

SEK is heading for the NZX50 as per CEO Michael Franks.

Reckons as of today it would get in. Next review is June.

[seaweed]

SEK is heading for the NZX50 as per CEO Michael Franks.

Reckons as of today it would get in. Next review is June.

Shhh don't tell everybody yet. Was hoping to top up again. Went to the AGM and all sounding really positive, and what a friendly and happy bunch of people. They treat you like part of the family. I was very impressed with the video presentation of the auto sizing 8 lanes of kiwi fruit sorting into there different sizes then they are feed into about 20 roller lanes where packers put them into there boxes. But very soon those packers will be replaced by automation packing which could possibly run 24hours a day. Sounds like good growth to me.       

[bulltrap]

SEK is heading for the NZX50 as per CEO Michael Franks.

Reckons as of today it would get in. Next review is June.

There's a grain of truth there, in that SEK is a nose in front to take KMD's spot if it drops out.

The sticking point is whether KMD is actually likely to drop out, once all its new shares are issued.

Disc: Holding a bit of both

[Sideshow Bob]

NZX website right now says:

KMD 1.447 billion shares on issue (post cap raise) = $98.4m market cap

SEK 44.1 million shares on issue = $227.6m market cap

PLus another 413k shares issued today, which will increase the market cap.

Appreciate perhaps a bit of criteria around dropping out or being included.

Perhaps not a commentary about how good Seeka is going, but more how sh**e KMD is.......

[bulltrap]

SEK is heading for the NZX50 as per CEO Michael Franks.

Reckons as of today it would get in. Next review is June.

They posted a video of the Annual Shareholder Meeting 2026 on their Investor page today - plain old .mp4 with no subtitles, and not cross-posted to YouTube that I could find.

I generated a rough transcript and here's Michael's bit about NZX 50, from about 58:20 in the vid:

The company has thankfully had a reasonably strong recovery in its share price as well as paying dividends, reflective of its performance, debt and dividends, I think.

Perhaps one thing that we could tell you is that we're knocking on the door of the NZX 50, which would be quite a positive thing for the business, and who would have thought that two years ago, three years ago, we would get in. We actually, if it was done today, if Standard & Poor's did it today, we would be in. And so, you know, the next review dates are 20th of June.

And so we may or may not get in there, but we're right on the doorstep. Which is, if you think about life, that's quite remarkable for where this company's come from.

I'll put an update on the NZX 50 Index - Forthcoming potential Changes thread about KMD's position, which is a bit of a mess - like KMD itself.

[Basil]

My thoughts on Seeka.  I need to preface this by saying Agri stocks are not really my thing as I have always believed there's strong elements of cyclicality and high risks from weather, disease and other environmental factors such as climate change. That belief at my core probably opens me up a lot to confirmation bias so please by all means if you disagree, that's fine and I don't plan on arguing the point. Apart from that, others know the kiwifruit industry far better than I so I will keep this brief.

On face value its looks very cheap trading on just on 7 times FY25 earnings but of course that was a record year. Debt is certainly coming down nicely and the recent asset sale reduced leverage to a comfortable level and certainly considerably de-risks the business going forward. Likewise increased automation makes a lot of sense given this is such a labour intensive industry.

The recently signed free trade agreement with India will certainly do the business no harm however on the other side of the coin I am unsure how the rapidly escalating freight costs will affect them or how long dramatically higher freight and shipping costs will persist ?

Talking with my Kiwifruit farmer client earlier this week it seems he's had another very good year and others have reported in this thread similar results elsewhere in the country and indeed SEK's own forecast is for similar volumes to FY25, which could be conservative guidance.

Weather is such a vital element in a successful season and you don't have to go back very far in SEK's history to see the impact, (FY23, loss of 28 cps). There's no question the company is making forward progress however in my opinion, with all agricultural and horticultural companies, you are better to base your analysis of metrics on the average weather conditions that prevail over time not one or two years of good growing conditions and that is my main caution with this one.

Assuming a similar result for FY26 or perhaps a slight increase to say 80 cps, their eps history over the last 5 years, inclusive of FY26 estimate is 18 cps, -28cps, 51 cps, (normalized for building depreciation change), 76 cps, 80 cps, giving an average eps of 39.4 cps. Their average earnings per share over the last 10 years is not materially different at 38.6 cps.

SEK trades on ~ 13 times average earnings and only 7 times apparent peak earnings.
A decision to invest seems primary centered around whether increased automation and expansion of processing and cool storage facilities drives operational gains over the medium to long term which it seems reasonable to assume it will but questions present about how long will the good times and good weather last for the industry ?

Where are things at with the level of Gold kiwifruit being grown illegally in China and what happens to the industry if there's rampant growth in production there ? How long will the massively increased freight rates persist ?

Wrapping this up with TA analysis. A very nice uptrend since last year but I also note the shares were $7 all the way back this time of year in 2018 which brings me back full circle to my concerns about this being a cyclical industry and perhaps shareholders and growers are currently riding the crest of a wave ? I hope I'm wrong and shareholders and growers do really well in the years ahead. Good luck to holders.

[Plata]

On a 10 year lense its basically a no growth company isn't it? Doesn't seem that attractive to me given the risks with a single item agri business.

Automation is great but how many labour seconds per kiwifruit are there remaining to automate? It's one of those things where cutting waste/labour time 50% the first time looks great but as you keep cutting the size of the change in $ keeps shrinking.

[Basil]

Winner noted the share price is only up 50 something percent in 28 years.  Not a very good long term hold.  I think like all agri stocks it better to trade the cycles.