Buy Signal on Vilmorin (RIN-FR)
Vilmorin is a €1.2Bn market cap and a the world No. 4 in production of vegetable seeds and field crops. Revenues are mainly derived from 3 segments including:
1/vegetable seeds (49% of sales) for professionals in the agrifood industry (No. 1 worldwide in vegetable seeds for professionals in vegetable production);
2/ field seeds (47% of sales) mainly straw cereals (corn, wheat, barley, etc.) and oilseeds (sunflower, rapeseed, etc.);
3/ garden products (4% of sales) including vegetable and floral seeds intended for gardening enthusiasts, plants, bulbs, plant treatment products, etc.
The Group revenue is mainly derived from Europe (59%), Americas (22%) , Africa & Middle East (10%) and Asia-Pac (9%).
A progressive margin expansion coupled with organic growth should translates into a double digit EPS growth in 2021 and 2022, that should favor the stock rerating. The group’s sales and business model proved resilient in 2019-2020 and its growth prospects are confirmed amid strong momentum on commodity prices led by China and structural growth factors such as the increasing world population and the adoption of genetically modified seeds worldwide. For 2021/22, Vilmorin is expected to post a €1.54bn revenue coupled with a c.8.2% operating margin.
Short term catalyst: Momentum in wheat, corn prices, market shares.
This signal looks consistent with the Bullish momentum in the Agricultural commodities.