Crocodiles are tenacious animals. For over 250 million years they have adapted to differing environments. Today they are among the few prehistoric species still alive.
If the recent financial results by Padenga Holdings Pvt Ltd are anything to go by, Padenga Agribusiness has been formed around the tenacity of the reptile it farms. Dying is not an option.
Many market analysts had written off this business. In the post covid world, the business has been experiencing turbulence. Volumes have fallen. The luxury market has not been the same. We now know even the rich cry. Their pockets also hurt sometimes.
Animal rights activists and environmentalists have been on the offensive. On the extreme, some demand a total ban on making money from animals whether dead or alive. In general it is now accepted animals have rights. These must be respected by whosoever keeps them If you are like Padenga who makes money by selling crocodile skins to the top 1 percent luxury market you must abide by a plethora of emerging environmental, safety and animal’ rights obligations. The rich only buy skins with no blemish.
In the end you have double whamy. On the one hand your compliance cost goes up. On the other the market you serve is shrinking .
When the market assessed all this, many felt that the wisest decision for Padenga Holdings was to exit the crocodile business and concentrate on an emerging booming gold sector. In the current financial year, gold has delivered outstanding results. Of the total USD 223 million delivered by the group, gold accounts for 86 percent.
It is said that the market is never wrong but occasionally misinformed . Padenga Agribusiness is as resilient as the crocodiles it farms. The business can adapt to changing circumstances and still strive.
The 2024 financial results show that, PAB is still profitable. It delivered in that year USD 30,4 million on 40 percent less volumes. It had a surge in prices by 79 percent. Lest we forget this business is not mining . It is agriculture. There are simply very few farms in Zimbabwe that can boasts of revenues per year of USD30 million on less volumes.
There will always be a problem being paired against a super performer. Gold is certainly on an impressive run . More like Usain Bolt with his Jamaican team mates. They were all top runners. Without Bolt they bagged prizes and awards. Against their superstar they appeared to be laggards. The world only got to see how much Jamaica was a super team on the relay in August on 2002. Collectively the team beat all records including the one set by Bolt on his own.
PAB is not a drain on the group . It is a great runner being paired against a super star. They way around this is to view the business in its own right. It is agriculture.
Perhaps this explains one reason the Padenga Holdings stock is viewed by many a seriously an undervalued asset. Its stock market price is around US 20 cents. Many believe that it should be hovering between 40- 60 cents. We need to open our eyes and see beyond the comparison. The partnership between agriculture and mining is delivering a world class team.
The secret to the business, like its crocodiles is the ability to take tough decisions. This means it will have to continue reducing volumes to meet emerging international market trends. Costs must continue being right sized. To continue playing in the big league the highest environmental standards must continue being met .
The crux of the crocodile business seems clear. To be a top performer you have to be like the animals you keep. You must adapt to challenging environments. You must be lean. You must be decisive. Who knows this business may be around for the next 200 million years. Afterall they are no signs that crocodiles are getting extinct
