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.