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A serious upmove in Vitamin D3 500 prices seems to have happened since July 2024, continuing into August. With Fermenta’s main API being Vitamin D3 (>50% of sales even including one time real estate sale last year), this could set the ball rolling for a potential turnaround in the profit statement of the company in the next 1-2 years.
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It seems that Animal Feed Vitamin D3 500 which was selling at USD 7.5 FOB China till June 24, is now selling for USD 35 FOB China. Attached is an image – this was obtained as freely available information from a source I use for this data – allaboutfeed.com – so please also do your own checks
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One time real estate sale last year can be viewed as a positive or negative in my opinion but should not be accounted for in valuations. It does make profitability for last year look higher, but at the same time it also released cash for the company at an important time.
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With next year, if prices continue to remain firm, the EBITDA profile could transition rapidly. OPM margin in the worst year last year ~8%. In previous upcycle with firmer Vit D3 prices, OPMs have been comfortably between 20-30% for the company. Company’s last results and investor presentation only covers till June, so the upcoming quarters ahead could be especially interesting.
Disclosure : I am not SEBI registered. We hold Fermenta from lower prices last month in our individual and Adezi Ventures family office portfolio with recent transactions. This is not meant as investment advice and we might change/alter view/positions frequently.
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