The Berenberg stock exchange raises its recommendation for Greenyard
from ‘hold’ to ‘buy’, the price target rises in an update with the headline ‘from lime to lemonade’ from 10.5 to 13.7 euros.
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Analysts Fraser Donlon and Vasiliki Kotlida – the second taking over from the first – recognize that the fruit and vegetable distributor has struggled in recent years due to the transition from a ‘mere’ wholesaler to long-term contracts with retailers, a strategy in which retailers initially were skeptical.
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It is clear that such long-term contracts give Greenyard greater visibility, which is important in a low-margin industry. But according to the analysts, the supermarkets themselves are also starting to see more benefits: ‘An optimized logistics chain with short supply routes, better product quality and increasing customer satisfaction.’
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We think that a deal with Aldi Nord, still in the testing phase, can be closed quickly. Such a deal can generate 200 to 250 million extra turnover for Greenyard every year
Vasiliki Kotilda and Fraser Donlon
Berenberg analysts
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Donlon and Kotlida note that two of Greenyard’s main customers, Albert Heijn in the Netherlands and Delhaize in Belgium, score consistently well in the assessment of the freshness of their fruit and vegetables. And they suspect that there is more in the pipeline: ‘We think a deal with Aldi Nord, still in the test phase, can be closed quickly. Such a deal could generate an additional 200 to 250 million annual turnover for Greenyard.’
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Due to the sharp fall in debt and the more stable long-term contracts, Berenberg analysts find Greenyard undervalued at a discount of 40 percent against rivals such as Del Monte, Dole and Bonduelle. Hence the buy recommendation.
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