Don’t Chicken Out on Inghams Just Because Chicken Supply Is Up

We maintain our AUD 3.70 fair value estimate for shares in Inghams following the release of interim fiscal 2022 results. The decrease to our near-term earnings estimates is broadly offset by time value of money. Underlying net profit after tax, or NPAT, was up 6% over the previous corresponding period, or pcp, to AUD 40 million despite a challenging period. The pcp was similarly challenged, with the poultry market in oversupply in early fiscal 2021. The emergence of the omicron variant is weighing heavily on Inghams as labour constraints and demand shifts increased costs and marred manufacturing capability, leading to another oversupply--this time in the wholesale segment--by the end of the half.