23.12.2024
In the second week of January, I will be looking out for the Full Year Trading Update from the innovative Hilton Food Group (LON:HFG).
A positive statement from the company could well help to take its shares, now 916p, back up over the 1000p level, heading northwards to the 1250p peak that was last reached in March 2022.
The Business
Although it is based in Huntingdon, Cambridgeshire, the group is a truly specialist international business made of local flavours, across the UK, Ireland, Europe, Asia-Pacific and recently in Canada.
With over 7,000 employees, it has operations in ten main countries - Ireland, Canada, Sweden, Poland, Denmark, the Netherlands, Portugal, Greece, New Zealand and Australia.
It operates its own processing facilities to supply its partners or in joint-ventures in local markets, serving over 20 markets.
With 24 modern, high-performance facilities, it works across five food categories: meat, seafood, vegan and vegetarian, easier meals, and services.
It creates and produces high-quality packaged meat, seafood, meat alternatives and pre-prepared food products at scale.
Engaged in the food packing business, it offers beef, pork, lamb, poultry, seafood, and vegan and vegetarian food, such as steak, roast, diced, mince, meatloaf, sausages, burgers, meatballs ribs, chops, bacon, gammon, schnitzel, pulled belly, rib rack, smoked loin, shanks, carcass, chicken kabab, chicken drumsticks, chicken tight, chicken wings, half chicken, duck leg, duck half, coated, salmon, white fish, shellfish, fish cakes, smoked salmon, strips, nuggets, pulled, and balls.
The company also offers meals, that includes sandwiches, wraps, baguettes, hummus, salad, pizza, garlic bread, soup, ready meals, pasta sauce, meal kits, slow cooked, and ready-to-cook foods.
The group works in long-term partnership with leading international retailers and foodservice brands, including amongst a multitude of companies, companies like Ahold, Carnival UK, coop, Costco, Delhaize, ICA, Miller & Carter, Mitchells & Butlers, Morrisons, Ocado, Rimi, Sonae, Tesco, The Ivy, Waitrose & Partners, Woolworths (Australasia), Zabka and Walmart Canada.
“Our ambition is to be the International food and supply chain services partner of choice.”
It continues to leverage its long-term focus on a strong foundation of a clear track record of growth from the long-term strategic ambition, commitment, and delivery.
The group is a diversified protein provider, it is a technology-led supply chain partner, it displays a strong and diversifying growth model and boasts of having ESG strong credentials.
Trading Update
On Guy Fawkes Day the group issued a Trading Update covering the third quarter of the current year to 29th December.
CEO Steve Murrells stated that:
"This has been a further period of progress for Hilton Foods.
The strength of our quality products has continued to underpin our customer relationships as we target further international growth.
In the final quarter of the year, we remain confident in delivering our full year in line with our expectations."
The group stated that the strong performance delivered in the first half of the year had continued in the third quarter across all three geographical operating regions, with trading in line with the Board's expectations.
It noted that the Seafood business was performing in line with expectations and within UK & Ireland, it had continued to grow its core meat volumes and revenues.
In Europe, core meat ranges and convenience meals have performed strongly and the group is continuing to implement its recovery plan within the vegan and vegetarian segment.
Across the APAC region, the group performed strongly and whilst, as expected, deflation in raw material prices has had an impact on its revenues, the actual volumes have remained strong.
The group stated that it was well positioned in a large, attractive multi-channel marketplace, supported by long-standing customer partnerships, a diverse product range, and a growing global footprint, all backed by modern, high-tech, automated facilities.
The Equity
There are some 90m shares in issue.
The larger holders include Abrdn Investment Management (7.79%), Quantum Partners (6.67%), Schroder Investment Management (4.58%), Montanaro Asset Management (4.13%), Coutts & Co (4.06%), Janus Henderson Investors (3.86%), The Vanguard Group (3.60%), Invesco Asset Management (3.4%) and Aberforth Partners (3.08%).
Broker’s Views
Seven analysts follow the group, with five of them calling the shares as a Buy, while two say Hold.
The consensus average Target Price is 1081p, the lowest being 955p, and the highest 1200p.
Analysts Clive Black and Darren Shirley at Shore Capital Markets have estimates for the year to the end of this month for revenues to ease just slightly to £3,936m (£3,990m) but with improving adjusted pre-tax profits to £76.0m (£66.0m), increasing earnings to 60.8p (52.2p) and paying out a slightly higher 32.9p (32.0p) dividend per share.
For 2025 the analysts go for £4,023m sales, £82.5m profits, 66.2p earnings and a 34.8p dividend per share.
The year to end-December 2026 could see £4,104m in revenues, £88.1m profits, 70.8p earnings and a 37.3p dividend.
My View
The Hilton Food Group has a strong reputation, with well-invested modern facilities, and a robust balance sheet.
It has generated its growth over many years and is expected to continue to pursue both geographical expansion and range extension towards its goal of becoming the protein partner of choice.
This is no ‘flash in the pan’ stock, but instead a classic ‘grower’ and ideal for the majority of investors.
It will take time, the shares are now at 916p, but I see them progressing over the 1000p level shortly, with an aim of climbing back up to the 1250p of March 2022.
I now put out an easy Target Price of 1100p on the shares.
(Profile 23.12.24 @ 916p set a Target Price of 1100p)
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