Bega Earnings: Strong First Half and Potential for a Guidance Upgrade

We raise our fair value estimate for shares in no-moat-rated Bega by 5% to AUD 4.20, given the buoyant first-half fiscal 2024 profit in the core branded business. Adjusted EBITDA of AUD 77 million was 11% lower than in the first half of fiscal 2023. But considering hostile conditions in the bulk segment, the result is impressive. Profitability in the bulk division, which processes milk, was weighed down by high Australian farm gate milk prices and low global prices squeezing margins. The bulk division lost AUD 6 million versus a AUD 50 million EBITDA profit a year ago. The shares appear roughly fairly valued at current prices.