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Agriculture in Africa
Team 9:Joao Simoes, Kailun Wei, Renee Lynn dela Cruz, Sahil Batra, Sameer Mehta, Xenia Hawrylyshyn
It seems that the world cannot even feed its current population, let alone the 9 billion expected by 2050.
Possible solutions:• Increase the yields of the crops• Improve the harvest efficiency• Land expansion
Developing world is an astonishing opportunity for improvement.
AFRICA• Fastest growing continents• More middle income
households than India• FDI increased to $62B
ZIMBABWE• Inexpensive assets like land• American dollar is their official
currency• Liberal financial exchange
control
Potential of Zimbabwe - 80% of the Investment especially in Agriculture
Methodology
• Profitability • Liquidity• DuPont Identity and Return on Equity• Stock price fluctuations• WACC • Cash Flow statements
Background:• One of the largest sugar producers in Africa• Produces around 50% of consumption in Zimbabwe• Dominates Local, and Exports in Europe
• Incremental increase in their Asset Management Ratios
2010 2011 2012 2013 20140.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Profitability Ratios Hippo Valley
Net Profit MarginGross Profit MarginReturn on AssetsReturn on Equity
2010 2011 2012 2013 20140
0.20.40.60.8
11.21.41.61.8
2
Liquidity Ratios: Hippo Valley Estates
Current Ratio Quick Ratio
Recommendation:Do Not Invest•Highly Volatile Market
Cost and Prices
•Dependent on the Climate Change•No prospects for innovation
Background:• Investment holding company with plantations and orchards
business• Interests in:
TeaMacadamia NutsFruits and VegetablesPoultry
2010 2011 2012 2013 2014
-30.00%
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
Profitability Ratios Ariston
Net Profit MarginGross Profit MarginReturn On AssetsReturn On Equity
2010 2011 2012 2013 20140
0.2
0.4
0.6
0.8
1
1.2
Liquidity Ratios: Ariston Holdings Ltd
Current Ratio Quick Ratio
• Weak DuPont Identity
Recommendation:Do Not Invest•Going Concern•Highly Volatile Prices•High Risks
Background:• Premium quality crocodiles skins and meat• Monopoly of the Niche Market• Export unique position
• Days Sales outstanding = 31 days
_x0007_Ju
n2010
_x0007_Ju
n2011
_x0007_Ju
n2012
_x0007_Ju
n20130.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
140.00%
Profitability Ratios Padenga
Net Profit MarginOperating Profit MarginReturn On AssetsReturn On Equity
2010 2011 2012 2013 416090
2
4
6
8
10
12
14
16
18
Liquidity Ratios: Padenga Holdings Ltd
Current Ratio Quick Ratio
Recommendations:Short Term Investment• Growing market with high profitability• Great Performance• Potential for innovation• Fashion Trends• Ethical Issues
Background:• Grows, Processes and Distributes Tobacco• Owns 75% of the market share• Investing to enhance efficiency and productivity
• Asset management - Inventory turnover increase
2010 2011 2012 2013 2014
-20.00%
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
Profitability Ratios BAT
Net Profit MarginGross Profit MarginReturn On AssetsReturn on Equity
2010 2011 2012 2013 20140
0.20.40.60.8
11.21.41.61.8
2
Liquidity Ratios: BATZ
Current Ratio Quick Ratio
Recommendation:Invest in the Short to Medium Term• Efficient Management of Operation• Strong hold on the Market• Ethical Issues• Rising Health Consciousness
Background:• Producer and Marketer of Hybrid Seeds• Sells to 15 different countries in Africa
Zimbabwe, Zambia and MalawiGovernments are the major buyers
• Above average Days Sales Outstanding = 129 to 254 days
2010 2011 2012 2013 20140.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
Profitability Ratios Seed Co
Net Profit MarginGross Profit MarginReturn On AssetsReturn On Equity
2010 2011 2012 2013 20140
0.5
1
1.5
2
2.5
3
Liquidity Ratios: Seed Co of Zimbabwe Ltd
Current Ratio Quick Ratio
Recommendations:Invest for the Long-term• High Potential for Innovations
• Investing in Research and Development
• Attracting investors (Limagrain, and MAHYCO)
RecapCompany Recommendations
Hippo Valley Estates Do not invest
Ariston Holdings Do not invest
Padenga Holdings Short- Term Investment
British American Tobacco Short to Medium Term Investment
Seed Company Long Term Investment
Final Words• Realistic financial projects with good returns• Seed Co is more than a good financial investment
• End of the era of cheap food + growing concern about how to feed the world
Opportunity to make a difference
Thank You
