Consensus community valuation
$2.81
Average Intrinsic Value
12.2%
Undervalued by
Active Member Straws
#Broker/Analyst Views
Last edited 5 months ago

28-June-2019:  http://www.asx.com.au/documents/research/clv-190628-phillipcapital-altona-site-visit-update.pdf

That's an update from Phillip Capital (PC) after a site visit to Clover's Altona (Melbourne) Production facility.  PC have a "Hold" call on CLV - which they regard as a "High" risk investment - and a price target (PT) of $1.75 (previously $1.66).  CLV closed yesterday (05-Jul-19) at $1.93, so Clover is already 10% above PC's PT, so perhaps not attractively priced for people who aren't already onboard the Clover train - according to Phillip Capital at least.

However, there is plenty of good info in this update, for anybody interested in CLV, who are a niche food ingredients’ company focussed on the production and sale of Omega-3 and DHA rich natural tuna oils and micro-encapsulated powders for applications in infant formulae, food, beverages and supplements.  CLV provides these powders and oils to most of the leading infant formula manufacturers in Australia, New Zealand and to many of the leading multinationals.

DHA (Docosahexaenoic Acid) is an Omega-3 fatty acid which is essential for brain development in babies and children and is widely used to fortify infant formula. Governments are increasingly legislating the requirement for DHA in infant formula to match the levels found naturally occurring in human breast milk.

CLV uses patented technology licenced exclusively from CSIRO for the encapsulation of marine (fish) oils and algae oils into a dry stable powder form. This protects the ingredients from oxidation, degradation and adverse taste and smell. CLV is one of just 4 global providers of these key ingredients. Competitors are BASF, DSM and Friesland Campina, all large multinationals.

Clover is the only Australian listed company involved in the space, and Washington H Soul Pattinson (ASX: SOL) have been long-term cornerstone investors in CLV - and still hold 22.6% of CLV.  SOL have a good track record of backing winners, like API, TPM (TPG Telecom) and NHC (New Hope Coal).  See http://www.whsp.com.au/

CLV has a market capitalisation of around $319 million, big enough to feature on SOL's home page (see link above), whereas SOL's 19.95% investment in Palla Pharma Limited (ASX: PAL, formerly TPI Enterprises - ASX: TPE) doesn't rate a mention, because PAL's market cap is only around $87m.  Incidentally, Thorney Opportunities (ASX: TOP)/TIGA Trading (Thorney Investment Group Australia) have recently increased their own stake in PAL from 14% to 17%.  PAL and CLV are both companies worth keeping an eye on.

Disclosure:  I hold shares in PAL, and have held shares in CLV previously, but I don't currently hold any CLV shares.  I also hold SOL shares, and they are a core position in my SMSF.

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#Broker/Analyst Views
Last edited 8 months ago

01 October 2019:  https://www.asx.com.au/documents/products/clv-191001-phillipcapital-fy19-results.pdf

Phillip Capital update:  "Clover Corporation Limited (CLV)  - Strong FY19 Results – Inventory build shows confidence"

  • Recommendation:  Hold
  • Risk Rating:  High
  • 12-mth Target Price (AUD) $2.30 (was $1.75)
  • Share Price (AUD) on Oct 01:  $2.98
  • Share Price (AUD) on Oct 04 (last traded price):  $3.15

While brokers tend to often be behind the curve and chase share prices up and down with their price targets (/valuations), in this case, despite raising their PT by +31% (from $1.75 to $2.30), Clover's last traded price is STILL +37% ABOVE Phillip Capital's new PT.  Hence the "Hold" call.  Others might suggest they are even a "Sell" at these levels.

I have held Clover (CLV) before, but not currently.  Not at these levels.  I do hold SOL, who (in turn) own 24.1% of CLV, but SOL are plenty diversified (NHC, API, TPM, BKW, etc.) and SOL do NOT look expensive at current levels (around $20 - $21).  So - I have indirect expsoure to CLV through SOL.

 

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##globalleader
Added 2 months ago
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#Broker/Analyst Views
Added 2 months ago

30-March-2020:  Phillip Capital:  Clover Corp (CLV):  “1H20 Results – Growth slows to 10%, Costs rise +18%”

PC’s call on CLV is “Hold” with a PT of $1.64 (down from $2.30) and a “High” Risk Rating.

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