Goodman Fielder (GFF) Share Trading Update

Submitted by Craig Strzelecki on 28 February, 2007 - 06:24

Goodman Fielder (GFF) has a Neutral 1 share trading recommendation and a price target of $2.52 per share from analyst UBS. They have downgraded their rating from Buy 1 to Neutral 1 with their DCF based price target is lowered from $2.65 to $2.52 in line with their earnings downgrade. GFF reported H1 07 EBITDA 6% below our expectations due to challenging conditions in NZ and restructuring costs. Headline NPAT was boosted $29m by a non-operational FX gain. Reassuringly, FY 07 prospectus NPAT was reiterated excl the FX gain & restructuring but this implies faith in a stronger H2 performance. Bolt on acquisition opportunities are gaining momentum & Australian Baking is strong. FY 07 EPS +3.2% flattered by FX gain & lower tax charge; EBIT -8.6%. FY 08-09 EBIT lowered 7-8% but EPS -4% given tax rate of 27% versus our previous 31%. GFF is focused on FY 07 NPAT prospectus of $224m but we remain more cautious at $208m given NZ challenges where new management does not start until April. Australian Baking duopoly, bolt on acquisition pipeline, 13.6x 08 PE and 5.7% dividend yield remain key investment positives. However potential stock overhang (Rank's 20% holding escrowed to Aug 07) could weigh on the share price now and management faces stiffer operational challenges than we anticipated.

Goodman Fielder Limited is listed on the Australian Stock Exchange (ASX) under stock code GFF. You can view their investor website here. GFF was listed on the ASX on 19 December, 2005. Max Ould is the chairman for Goodman Fielder and the Managing Director is Peter Margin. Goodman Fielder manufactures and supplies various consumer food products, including baking, spreads & oils, edible fats and dairy goods. The company owns a host of iconic brands that generations of Australians and New Zealanders have grown up with and put in their supermarket trolleys every week.Their brands include Meadow Lea, Praise, White Wings, Pampas, Mighty Soft, Helga's, Wonder White, Vogel's (under licence), Meadow Fresh, and Irvines. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade GFF. Check your charts and good luck with your share trading!

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