Citi upbeat on Costa Group's citrus farm buy, sees path to further expansion

Commerce

07/03/2021 23:54

** Citi Research says horticulture co Costa Group's  CGC.AX 
deal for KW Orchards complements its existing assets and will
generate synergies
    ** CGC said on Friday it would buy farming operations of KW
Orchards citrus farm and an associated packing operation, EJT
citrus packing facility; financial details were not disclosed
 urn:newsml:reuters.com:*:nASX8c89xH
    ** Citi estimates the company paid A$35 mln to A$40 mln
($27.00 mln to $30.85 mln) for the assets and that the deal will
raise earnings per share by 0.4% 
    ** Brokerage says deal is part of CGC's plan to expand
citrus hectares in Victoria and should lower packing costs while
also providing synergies in selling into export markets 
    ** Citi estimates the business could contribute A$20 mln to
A$30 mln in revenue and EBITDA of A$4 mln to A$5 mln annually
    ** Citi reckons co will consider expansion beyond 700
hectares, particularly if the new packing facility project is
approved


($1 = 1.2965 Australian dollars)

 (Reporting by Arundhati Dutta in Bengaluru)
 ((arundhati.dutta@thomsonreuters.com;))