Friday, November 19, 2010

Seeka Kiwifruit Industries Ltd: Opportunity for Investors

We are all only to well aware that the New Zealand Kiwifruit industry is undergoing immense pressure from the kiwifruit vine disease PSA.

The listed kiwifruit and avocado marketing company Seeka Kiwifruit Industries Ltd [SEK.NZX] is also under pressure from this disease and its share price has dropped by around 30% since the news broke.

The stock is thinly traded so any news will move the share price wildly but the big drop presents an opportunity for investors to get in while the shares look cheap.

The company has tangible assets of $3.83 per share (valuation pre bad news) so on face value the company is now going cheap.

Just like the BP disaster a few months back it allowed investors to get into a good company with good prospects for a great price.

I am not saying this is going to be a low for the share price because there could be more bad news to come and Seeka have provided a market update with another due at the end of November, but it is worth considering taking a closer look should the valuation of Seeka meet your investment criteria.

Buy on further weakness.

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  1. Hi Darren,

    surely the reduced price is reflecting the reduced sales that will come about from having less producing vines and less crop to sell due to this disease. How long does a new kiwifruit vine take to grow?


  2. Absolutely RJ and that is where the opportunity lies for investors.

    It looks like the share price has recovered significantly since the date of this post though.

    Must be at least 2-3 years to get fruit?


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