Stock pick of the week: Syngenta - Buy
Published 12/07/2011 | 12:01
Swiss agri-business firm Syngenta is a structural play on the growing international demand for food.
According to 2050 estimates, demand for grain is expect to hike by 50pc, food grain by 25pc and meat consumption will grow by 70pc – from current levels.
Syngenta provides a complete solution from seed breeding to seed protection to machinery.
The group plans to grow strongly in all crops, particularly corn, vegetables, soybean, cereals, sugar cane and rice.
We see the crop protection pricing environment improving in 2011 and scope for strong profit growth in the seeds business.
The balance sheet should be debt free by end 2012 and management has signalled the potential for a buyback or even a special dividend.
We see upside from the merger of its crop protection and seeds operations globally as it enables Syngenta to cross-sell seeds through its distribution platform in crop protection.
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