Capilano Honey price target up 15% on accretive acquisition

Capilano has announced the acquisition of KirksBees Honey, a manuka honey producer based in NSW. The acquisition is part of CZZ's vertical integration strategy to secure supply. Based on our estimates, the acquisition, costing $6.0M, is based on a ~5x EBITDA multiple and is EPS accretive immediately. We estimate that the EPS accretion in FY16 and FY17 is 7.6% and 9.7% respectively. We continue to be impressed by CZZ's EPS growth profile, dominant market positions, export market opportunity and vertical integration, which could deliver sustained EPS growth. We have raised our TP by 15.5% to A$16.17 (A$14.00 previously) and re-iterate our BUY rating. You can see our research here: (VIEW LINK)


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