Origin Enterprises (AO) | Buy | Solid Q3 performance in a challenging market

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Origin Enterprises (AO) | Buy | Solid Q3 performance in a challenging market

Origin Enterprises Buy | Target Price: EUR4.80

Company description Management

Origin is a leading provider of agri services, inputs and crop technology. It Sean Coyle, CEO

supports the crop production sectors in the UK, Central Europe and Brazil, where Colm Purcell, CFO

It has leading market shares. It has a cash-generative fertiliser blending and TJ Kelly, MD Living Landscapes

distribution business in Ireland and the UK. M&A is an integral part of the Key shareholders

company's strategy. Recently, it expanded the Living Landscapes segment where Free float 60.00%

it operates in sports turf, urban landscapes, environmental & amenity markets Artemis 14.90%

and green infrastructure. FIL Limited 10.00% HOLD 7.20%

Investment case Valuation methodology

The shares offer value, which largely relates to a certain We value the shares through a DCF and include adverse market

cyclicality in the results, the large exposure to the UK and conditions once every five years. There are only few relatable

previous acquisitions, which need to prove to be value-creating. peers.

By investing in Living Landscapes, management is diversifying We consider the FCF and dividend yield as attractive. However,

the portfolio. As a result, the income streams should become extreme weather is to become more common and would imply a

less susceptible to Irish/UK weather, volatility in raw material certain volatility in the prospective FCF yield.

prices and movements in forex. Over time, this will result in The company is diversifying the portfolio but this is to take time

steadier cashflows and higher multiples. and involves risks as well.

The company is exposed to several external factors, including Risks to our rating