Favourable global market spurs Padenga

CROCODILE skin producer Padenga is set to record a revenue increase of at least 12 percent in the year to December 2018, buoyed by a favourable global market, research firm IH Securities (IH) has predicted.
In a review of the company’s first half performance, the equities firm said Padenga was poised for a solid year, after its revenues increased from $11,7 million to $30,2 million between 2010 and 2017,
“We anticipate a significant rise in revenue of 12,5 percent year-on-year for 2018 to $34,07 million on favourable conditions in the global economy, as commodity prices and emerging markets, including China, are exhibiting signs of recovery,” IH said.
“Furthermore, we expect Padenga’s revenue to receive a boost from improved skin quality as 80 new grower pens were constructed during 2017,” it said.
The Gary Sharp-led firm reported relatively subdued performance in 2012 and 2015, as growth slightly receded 8,7 percent and 1,7 percent year-on-year respectively, before picking up 13,8 percent in 2016.
However, IH expects the contribution of Padenga’s alligator operation at Tallow Creek Ranch to group revenue to remain subdued in the near-term, as the operation transforms into a business model focused towards producing medium-sized skins.
“We expect a moderation in the EBITDA margin to 40 percent in 2018 from 46,1 percent in 2017, with recovery coming through in 2019 and thereafter, as a result of sustained efficiencies within the business,” the equities firm said.
“Thus, we therefore forecast EBITDA of $14,06 million for 2018 and a 3,1 percent decrease in net income to $12,45 million in 2018,” it said.
IH expects Padenga to continuously defend its margins in the long-run, given that the business managed to mitigate factors which have impacted on it over the past few years, thus improving operational efficiency.
“Such factors include sustainably harvesting eggs from the wild, which impacted margins, as the company had to pay a fee to the country’s conservation authorities.”
However, IH said “material cost savings are expected as Padenga commissioned a 330kWp solar energy project for its northern farms”.
Padenga is entirely focused on the production and export of crocodile skins and meat to European and Asian markets, and accounts for more than 80 percent of the supply of premium quality Nile crocodile skins to high end luxury brands globally, including the likes of Hermès, Cartier, Louis Vuitton and Prada.
It has also entered the alligator industry in the southern United States, and is in partnership in an operation with Tallow Creek Ranch through which they produce watchband sized and medium sized skins for top-end luxury fashion brands.
TCIM, a French tannery based in Vivoin, is currently the crocodile farmer’s largest sales customer.

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