The strategy. On the back of price upgrades introduced a year ago and materials prices normalization SEKO significantly improved margins and results this year despite the weak consumer sentiment. We expect the Company’s sales volumes to return to growths next year following gradual improvement of the consumers’ purchasing power.
Next year the Company’s margins should experience the positive impact of (i) yoy PLN strengthening (lower costs of materials purchase) and (ii) the launch of a cogeneration system that should lower energy costs, while (i) another minimum wage rise (from January 2024) and (ii) lack (or smaller scale) of a subsidy within the framework of the program ‘Fishing &Sea’ that boosted 1H23 financial results are likely to exert the negative impact. Ultimately, we expect the margins to normalize in 2024, albeit they should be still deemed very good in comparison to historical figures.
We also assume SEKO will continue to pay out dividend next year (we forecast PLN 0.92 per share which implies the dividend yield close to 9%).
The risk factor for the Company lies in the consolidation of the fish processing industry (Lisner took over Graal), however, there two sides to this coin – on the one hand, due to growing competition SEKO may lose its key partners, on the other, commercial networks avoid excessive dependence on one supplier which may help the Company secure its market share.
