Gobarto S.A. engages in slaughtering, cutting, producing, and distribution of red meat, pork, beef, poultry, and game in Poland and internationally. The company also operates a limousine cattle breeding farm. In addition, it is involved in the production and trading of rapeseed, rye, wheat, and corn. The company was formerly known as Polski Koncern Miesny DUDA S.A. and changed its name to Gobarto S.A. in June 2016. Gobarto S.A. was founded in 1990 and is based in Warsaw, Poland. Gobarto S.A. is a subsidiary of Cedrob S.A.

Poland

Gobarto S.A.

Basic Materials

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

GOB.WA reported revenue of PLN 3 730mn in the last 12 months, up 9% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 64% from FY23 to PLN 1.26.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 11ppts and its growth accelerated by 3ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported weak EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 3.4% in the last 12 months, a decline from 5.4% in FY23. 

Historically, GOB.WA has reported weak net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 0.9%, down from 2.8% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 2.7% in the last 12 months, a decrease from 8.3% in FY23. 

Gobarto S.A. reported a return on equity (RoE) of 6.1% in the last 12 months, down from 19.3% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 4.3%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.2 in the past several years. This ratio implies a average shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

GOB.WA has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a very small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to weak positions in its industry, bleak profitability, and poor working capital management. We note low margin volatility, among the positive credit factors. 

In highly turbulent market conditions, GOB.WA is volatile. In other words, the stock will fall much more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be large. 

In normal market circumstances, GOB.WA is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from significant to substantial. 

Based on key historical and expected multiples, the stock is fairly valued relative to its peers. In particular, the stock is reasonably priced on P/E, of fair value on EV/EBITD. 

Gobarto S.A.

PLN 26.9

3

Gobarto S.A.

PLN 26.9

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

PLN 26.9

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