Bottom fishers should look at Fyffes
BANANA distributor Fyffes' better-than-expected trading statement last week will be followed this week by the report of the High Court-appointed inspector into the sale by DCC of its 11 per cent stake in the company in 2000.
In July 2007, the Supreme Court ruled that former DCC chief executive and chairman Jim Flavin had acted on inside information when he sold DCC's Fyffes shareholding in February 2000. Mr Flavin finally quit as DCC chairman in May 2008.
Last week, the High Court ruled that the report of the inspector appointed by the court to investigate the transaction, senior counsel Bill Shipsey, should be distributed to those involved. With the Director of Corporate Enforcement Paul Appleby supporting speedy publication, the report is likely to be published this week.
The High Court ruling came on the same day that Fyffes indicated it expected to report earnings before interest, tax and writeoff of €20m to €21m for 2009. This is at the upper end of predictions and well up on the comparable figure of €15.3m it reported for 2008.
For 2010, Fyffes expects to report earnings before interest and taxation of €17m to €22m. With net cash of €37m at the end of 2009 and a market capitalisation of just €158m at the current 46¢ share price, this means it is being valued at just €121m.
Throw in a four per cent dividend yield and the successful resolution of the international banana trade dispute late last year, and Fyffes starts to look very attractive to bottom fishers.