SOUTH AFRICA — Quantum Foods finished weakly on its opening day on the JSE despite making a plucky start.

Unbundled from consumer brands giant Pioneer Foods and separately listed on Monday, Quantum finished at 350c after briefly touching an intraday high of 547c in the morning trading session. Pioneer lost more than 4% to finish at R114.98.

The closing price gives poultry, egg and animal feeds business Quantum a market capitalisation of R816m — one of the smaller food listings.

Market sources reckoned the listing was largely as expected, with some arguing that the share price could come under further pressure if larger minority shareholders wanted to exit what is deemed a “difficult business”.

Quantum’s shareholding profile reflects that of Pioneer, which means PSG-controlled Zeder is the major shareholder. Other significant shareholders include Coronation Fund Managers (9.8%) and the Government Employees Pension Fund (9.1%).

Vunani Securities agribusiness expert Anthony Clark suggested the Quantum price was holding up better than expected. “The company must rank as one of the most difficult stocks to model (a profit forecast). There are so many indicators that one has to follow … the egg price, the maize price, the demand for broilers.”

Mr Clark felt a price range of around 300c might better reflect Quantum’s prospects. “The operating margin, at best, will probably be around 5%…. With possible earnings between 20c a share and 30c a share, it seems a bit ludicrous for Quantum to be trading on a forward earnings multiple of 15 to 20 times.”

Mr Clark reckoned 20% to 30% of Pioneer’s shareholders might not want to hold on to Quantum’s shares for the long term.

Zeder CEO Norman Celliers said the unbundling and listing of Quantum represented the completion of a long process.

“We think it was well handled from a group point of view.”

He conceded the poultry segment was still at a delicate stage of the cycle. “But we think Quantum is well structured and well capitalised in an industry where the macro factors are starting to point in the right direction.”

October 8, 2014;