FINANCIAL securities firm, IH Securities, sees a boost in Seed Co sales volume on the back of a projected wetter 2024/25 season in southern Africa.
The 2023/24 cropping season was negatively affected by an El Niño-induced drought categorised by average to below normal rains significantly lowering food security in the region.
In a latest weather update, the World Meteorological Organisation, has however, predicted above normal rainfall for southern Africa for the second half year of 2024.
In its analysis of Seed Co International’s recently released financial results for the year ended March 31, 2024, IH Securities said the tail end of the El Niño phenomenon came with new uncertainties in terms of climate.
“There is potential upside to sales volumes in the region as a result. There is, however, risk that flooding may impact on the agricultural season. Furthermore, a La Niña phenomenon could result in below normal rainfall in East Africa, posing downside risk to volumes in that region.”
IH Securities said: “The group is expected to retain its stronghold in its operating markets as it will leverage on its wide geographical footprint to introduce new seed varieties across markets in line with their needs. Seed Co is currently trading at a PER [price-earnings ration] multiple of 21,85x, which is demanding at these levels.”
Seed Co International Limited is incorporated and domiciled in Botswana and listed on the Botswana Stock Exchange and the Victoria Falls Stock Exchange.
The company has subsidiaries, an associate and joint ventures in Botswana, the Democratic Republic of Congo, Ghana, Kenya, Malawi, Mozambique, Nigeria, Rwanda, South Africa, Tanzania and Zambia.
Its operations in Angola, Ethiopia and parts of West Africa are in developmental stages.
