Wynnstay Group

Rising food consumption by a burgeoning global population underpins the long-term investment case at Wales-based agricultural supplies-to-specialist-retail counter Wynnstay.

Under enthusiastic CEO Ken Greetham, Wynnstay cultivated strong financials for the half to April, supported by its broad spread of agricultural activities and a growing contribution from its retail operations. Revenues edged up 2% to £120.3m, as reduced agricultural commodity prices were offset by 11% like-for-like growth within its country stores network and ongoing expansion of the Just for Pets chain. Pre-tax profits rose 12% to £3.55m, reflecting the benefits of November’s Youngs Animal Feeds acquisition, as well as improved feed margins and partial recovery in fertiliser volumes. Investors were also treated to a 9% dividend hike to 2.4p.

Bulls argue there is scope for Wynnstay to boost its strong position in the agricultural sector through further acquisitions. Indeed, the company, which has just raised £4m, continues to progress its consolidation strategy, having acquired seed processor Woodheads in May for up to £3.35m in a move more than doubling its seed volumes and expanding its reach into the Yorkshire agricultural region.

With the group's agricultural supply and retail operations proving resilient to changing economic conditions, analysts see Wynnstay growing profits from £5.22m to £5.7m this year. From likely earnings of 26.9p, further dividend progression from 6.5p to 7p is predicted.

Selling for ten times earnings, the shares, recommended by Growth Company Investor at 193p a year ago, remain modestly priced and should migrate north towards broker WH Ireland’s 300p target. With its market value strongly underpinned by more than £42m of net assets, Wynnstay still represents very good value indeed.