At an investor presentation on Thursday CEO Hennie Lourens said repurchasing Quantum shares was the cheapest investment the company could make.
"The board will consider and deal with this issue. We have approval from shareholders to buy back shares."
He said Quantum had already spent R4m on buying back its own shares in the past financial year.
Quantum finished a tough financial year to end-September with headline earnings of 28c per share and a declared dividend of 6c per share. This was well down on the 54c per share earnings and 10c per share dividend in the 2015 financial year.
The latest results mean the Quantum share is trading on a trailing price:earnings multiple of less than 10 times, and also at a substantial discount to tangible net asset value of about 680c per share.
But share buyback opportunities will be somewhat limited by Quantum’s capital expenditure (capex) programme for the 2017 financial year. The firm has estimated capex of R169m – including new investment in Africa that could total R117m.
Vunani Securities agribusiness expert Anthony Clark believes the results might signal the bottom of the trading cycle. "I think there could be a strong bounce back in 2017."
Lourens said weakened consumer demand would continue to put pressure on Quantum’s profitability if there was no decrease in the cost of raw materials. He stressed that to mitigate this risk the company would continue to focus on efficiencies in farms and factories.
Lourens said the feed business would remain the backbone of Quantum.
He conceded that African markets were tough, but remained confident Quantum would eke out returns.
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