Throwback Thursday: BFC and the ‘White Gold Rush’
07/01/2016 / MICK
Back in September we bought to your attention a little company called Beston Global Food Company (ASX:BFC). You can read what we wrote then here, but in summary this is a company that offers investors access to a broad range of agricultural assets including seafood and dairy.
The group is more a property management company, as opposed to an operationally active agricultural player.
If like me you bought back then you’d currently be sitting on 50% more money.
Well done!
Now it hasn’t been smooth sailing the entire time. October saw the group pull out of a planned purchase of the Weneeda Dairy Farm which formed part of the original IPO.
This spooked some investors and the price of the stock was adversely affected. However following the low resulting from the failed purchase BFC has rocketed up the market.
More recently management announced to the market that in addition to the asset management strategy, they were launching an offshoot called Beston Technologies Pty Ltd (wholly owned by ASX:BFC) to manage a new application. This app, which was awarded patent approval will track and trace fresh produce from source to plate to counteract the growing trend of ‘counterfeit’ produce.
This technology will be leveraged to guarantee existing customers that the products they are buying are in fact of high quality, and are sourced as per the labelling. Further still a ‘fee’ will be applied to other producers wishing to employ the same technology.
Yeah that’s right, another revenue stream. One can speculate that the establishment of the ‘offshoot’ Beston Technologies could prepare it for sale down the track.
The assets/brands which BFC own involve several dairy farms, but most importantly in the current market environment is the infant formula. I would be expecting this segment of the business will drive strong returns. There is also a meat (Scorpio Foods) business unit which can expect to capitalise from the growing demand and increasing value from Asia.
It’s worth noting that a business that exports a significant amount stands to benefit from the low Aussie dollar.
Moving forward I expect that the decision to withdraw from the Weneeda Dairy Farm purchase will leave funds available for investment elsewhere. There is a real chance that any movement in this space could further accelerate the rise in the stock’s value.
Like I said in the first article linked above, this remains a good long term stock. It caterers perfectly to the demand placed on Australia to be Asia’s ‘Food Bowl’. Despite the short term gain, I won’t be selling this stock anytime soon.
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