Chicken shares take wing

16:00, Mar 23 2013
Uncaged: Owned mainly by Kiwis, ProTen is expanding rapidly in Australia.

A little-known Australian company that trades on the Unlisted platform in this country has seen its share price jump 54 per cent in six months.

ProTen is an Australian chicken-farming business but more than 95 per cent of its shareholders are based in New Zealand. ProTen was formed when several New Zealand chicken farmers merged their operations and the business grew as others joined in.

Eventually the company started operating in Australia and the business expanded so quickly there that it eventually pulled out of the New Zealand market. But its New Zealand shareholders have remained remarkably committed.

One reason is undoubtedly the company's strong cashflows which allow it to pay monthly dividends, providing its shareholders with a dependable income stream. Which means the shares are tightly held.

"The issue we now have is that we haven't got enough sellers," ProTen chief executive Daniel Bryant said.

"Our shareholders seem too happy. There's a few buyers but not enough sellers."


That has seen the company's share price rise from A$0.37 ($0.46) to A$0.57 over the past six months.

Although the company is still relatively small, with revenue of A$17.7 million for the year to June 2012, it is growing strongly and institutional investors are starting to show some interest.

ProTen produces broiler chickens (chickens produced for their meat rather than eggs) and is partway though an expansion programme to increase production from 28 million chickens a year to 42 million over the next 12 months. That will give it about a 9 per cent share of the Australian chicken meat market.

The expansion has been financed by an issue of convertible preference shares, restricted to sophisticated investors, which brought on board a few wealthy individuals and the firm's first institutional investor, an Australian superannuation fund.

The company has also restructured its banking arrangements (at June 30 it had about A$53m of debt) and, after putting its banking business up for grabs last year, appointed Rabobank as its primary lender, a move which it said provided it with improved pricing, terms and conditions and covenants.

ProTen raises its chickens in huge ventilated sheds and, although they are not kept in cages, they cannot go outside. It works in partnership with Baiada Poultry, which processes and distributes all of the chickens ProTen produces.

Baiada is expanding one of its its factories, at Griffith in New South Wales, to enable it to process 1 million birds a week, and ProTen will be supplying 470,000 of those.

Bryant said the company's growth was underpinned by rising demand for chicken meat in Australia. Per capita consumption has risen from 38 kilograms a year to 45kg over the last few years.

Sunday Star Times