Bega Drops the Cheese, but the Milk Price Sours Fiscal 2023

We maintain our AUD 5.20 fair value estimate for no-moat Bega following the release of fiscal 2022 results. Underlying EBITDA was AUD 180 million, up 6% from the prior year and 5% below our forecast. The period was marred by pandemic-related cost increases, mostly from high absenteeism as staff were forced into isolation, and elevated input costs weighing on margins. However, the earnings impact was more than offset by the first full year of earnings from the Lion Dairy and Drinks acquisition coming online.