Sygen International

Sygen, a Growth Company Investor recommendation at 38.5p, has signed the world's largest pig genetics contract with pork processor Triumph Foods. Under the deal, the world's single largest genetic supply agreement, Sygen will provide genetic support for over 550,000 sows, around 10% of the US breeding herd. Sygen will work with Triumph, the biggest producer group in the US, to develop pigs with desirable traits. Although Sygen has already worked with Triumph, the new deal includes many producers the company hasn't worked with before, securing the group's long-term margins in North America. Sygen, which recently warned the dollar and a slow start to the US pig breeding season would hit second half profits, has been trying to insulate itself from the 'pork cycle' by outsourcing production and moving into shrimp genetics. But the buoyant pork market, growing at the expense of other meats (owing to Canadian BSE and bird flu), should still contribute 90% of annual profits. In the half to December, Sygen scored a 16% profits rise to £3.6m on £63.4m turnover. Figures for the year to June are out next month - Investec's Ingrid Boon forecasts 'normalised' profits of £6.1m, giving earnings of 1.7p, and £18m cash at the year-end. She suggests a jump in profits to £10.6m in 2005, for EPS of 2.4p. On a forward multipe of 14 times for 2005, we still believe the shares are well worth holding.

Sector: Food Producers

Companies: Sygen International

Market cap: £103.3m

PE Forecast: 20.3

Share price: 34.5p