Our opinion on the current state of LIBSTAR(LBR)Libstar (LBR) is a recently listed decentralised food and beverage company producing "consumer packaged goods." It raised R3 billion in an initial public offer (IPO) in May 2018. It owns the Denny brand, a leading mushroom supplier, and Lancewood, known for its dairy products, among other food brands. Altogether, it makes over 9000 products and has launched 88 new products in the past six months. The company produces private label brands for retailers like Spar, Woolworths, Pick 'n Pay, and Shoprite. A centralised head office supports and invests further in autonomous production units by supplying capital and expertise and making acquisitions.
The company has spent R60 million on coping with COVID-19. Consumer spending is under pressure because of load-shedding, civil unrest, retrenchments, high unemployment, the residue of COVID-19, and now developments in central Europe. This company is entirely dependent on consumer spending.
In its results for the year to 31st December 2023, the company reported revenue up 5,2% and normalised headline earnings per share (HEPS) down 11,2%. The company said, "Selling price inflation and mix changes contributed 10.0% to sales growth. Sales volume declined by 4.8% as the Group experienced a decline in its retail, industrial and export channels. Group net finance costs on interest-bearing debt (excluding IFRS 16 lease liabilities), increased by 53.3% from R109.8 million to R168.3 million, mainly due to the full period impact of the increase in the Johannesburg interbank average lending rate (JIBAR) compared to the prior period."
In a voluntary trading update on 19th June 2024, the company reported revenue up 4,6%. The company said, "Revenue growth was driven by price and mix changes of 6.3%, against a volume decline of 1.7%. Perishable Products category revenue increased by 4.4%, with selling price inflation and mix changes contributing 7.7% to sales growth. Sales volume declined by 3.3% driven mainly by lower beef volumes in the food service channel."
Libstar trades on a multiple of 8,2 and a dividend yield (DY) of 3,07%. Technically, the share has been in a downward trend for some time. We suggest waiting for a clear break above the long-term downward trendline.
LBR trade ideas
Our opinion on the current state of LBRLibstar (LBR) is a recently listed decentralised food and beverage company that specializes in producing "consumer packaged goods." The company successfully raised R3 billion in an initial public offer (IPO) in May 2018. Libstar boasts ownership of prominent brands like Denny, a leading mushroom supplier, and Lancewood, renowned for its dairy products and other food brands. With a diverse portfolio, Libstar manufactures over 9000 products and has introduced 88 new products in the past six months alone.
One of Libstar's key strategies involves producing private label brands for major retailers such as Spar, Woolworths, Pick 'n Pay, and Shoprite. The company operates with a decentralized structure, where autonomous production units receive support and investment from a centralised head office. Additionally, Libstar actively engages in acquisitions, providing capital, expertise, and support to bolster its operations.
However, Libstar faces challenges stemming from various economic factors, including load-shedding, civil unrest, retrenchments, high unemployment, the lingering effects of COVID-19, and recent developments in central Europe. Given its heavy reliance on consumer spending, these factors significantly impact its performance.
In its financial results for the year ending 31st December 2023, Libstar reported a 5.2% increase in revenue, while normalised headline earnings per share (HEPS) declined by 11.2%. The company attributed 10.0% of its sales growth to selling price inflation and mix changes. However, sales volume experienced a 4.8% decline across retail, industrial, and export channels.
Moreover, Libstar faced a notable increase in net finance costs on interest-bearing debt, rising by 53.3% due to the full-period impact of the Johannesburg interbank average lending rate (JIBAR) compared to the previous period.
Currently, Libstar trades at a multiple of 7.34 with a dividend yield (DY) of 3.43%. From a technical standpoint, the share has been on a downward trend for some time. It is advisable to wait for a clear break above the long-term downward trendline before considering further investment.
Libstar soon to rocket to R5.00?These Penny type stocks are very difficult to analyse technically.
There is little volume, high volatility and almost no liquidity.
You can see this by jumping candlesticks between ranges (bids and offers).
So we can deduct a few things but with less certainty than with Blue Chips.
1. Downtrend broken
2. Price ready to break above 200MA - Bullish trend
3. Price to break above the Rectangle formation - Bullish.
If we get a strong push above the range, the next target could be well to R5.00.
If it breaks down, then things will change to bearish.
ABOUT THE COMPANY
Libstar Holdings Limited, a prominent player in South Africa's food and consumer goods industry:
Established in 2005:
Libstar was founded to acquire and grow businesses in the consumer packaged goods sector, aiming to create products that enhance family unity.
Headquartered in Plattekloof, South Africa:
The company operates from its headquarters in Cape Town but has a presence across several provinces in South Africa.
Wide Range of Products:
Libstar boasts an extensive portfolio of over 9,000 products, including dairy and meat products, fresh produce, groceries, and more.
Segments of Operation:
The company operates through various segments, including Perishables, Groceries, Snacks and Confectionery, Baking and Baking Aids, and Household and Personal Care.
B2B and B2C Focus:
Libstar serves both business-to-business (B2B) and business-to-consumer (B2C) markets, offering outsourced manufacturing solutions and food service solutions alongside its consumer products.
Our opinion on the current state of LBRLibstar (LBR) is a recently listed decentralised food and beverage company producing "consumer packaged goods" which raised R3bn in an initial public offer (IPO) in May 2018. It owns the Denny brand which is a leading mushroom supplier, and Lancewood which is known for dairy products and other food brands. Altogether it makes over 9000 products and has launched 88 new products in the past six months. The company makes private label brands for retailers like Spar, Woolworths, Pick 'n Pay and Shoprite. A centralised head office supports and invests further in autonomous production units. It supplies capital and expertise and makes acquisitions. The company has spent R60m on coping with COVID-19.
Consumer spending is under pressure because of load-shedding, civil unrest, retrenchments, high unemployment the residue of COVID-19 and now developments in central Europe. This company is entirely dependent on consumer spending. In its results for the six months to 30th June 2023, the company reported revenue up 4% and diluted headline earnings per share (HEPS) down 58,2%. The company said, "Pricing and mix changes, contributing 11.0% to Group revenue, could only partly mitigate the impact of significant raw material, packaging material and production cost inflation. These inflationary pressures were exacerbated by lower volume production."
In a trading statement for the year to 31st December 2023, the company estimated that normalised HEPS would decrease by between 9,7% and 12,7%. The company said, "The decline is mainly attributable to increased borrowing costs during the year and compares to the decline of 44.9% reported for H1 2023." Libstar trades on a multiple of 11 and a dividend yield (DY) of 5,18%. Technically, the share has been in a downward trend for some time. We suggest waiting for a clear break above the long-term downward trendline.
Our opinion on the current state of LBRLibstar (LBR) is a recently listed decentralised food and beverage company producing "consumer packaged goods" which raised R3bn in an initial public offer (IPO) in May 2018. It owns the Denny brand which is a leading mushroom supplier, and Lancewood which is known for dairy products and other food brands. Altogether it makes over 9000 products and has launched 88 new products in the past six months. The company makes private label brands for retailers like Spar, Woolworths, Pick 'n Pay and Shoprite. A centralised head office supports and invests further in autonomous production units. It supplies capital and expertise and makes acquisitions. The company has spent R60m on coping with COVID-19. Consumer spending is under pressure because of load-shedding, civil unrest, retrenchments, high unemployment the residue of COVID-19 and now developments in central Europe. This company is entirely dependent on consumer spending. In its results for the six months to 30th June 2023 the company reported revenue up 4% and diluted headline earnings per share (HEPS) down 58,2%. The company said, "Pricing and mix changes, contributing 11.0% to Group revenue, could only partly mitigate the impact of significant raw material, packaging material and production cost inflation. These inflationary pressures were exacerbated by lower volume production". Libstar trades on a multiple of 7,43. Technically, the share has been in a downward trend for some time and has now dropped sharply on the latest results. Clearly, the Ukraine crisis and rising inflation has impacted some shares on the JSE. We believe that in time it will begin to perform as the economy improves and we believe that the Ukraine crisis will not continue to impact markets indefinitely. We suggest waiting for a clear break above the long-term downward trendline.