What's Up: Oman's Assafa Foods to take advantage of supply demand shortage in poultry market.
Omani poultry supplier aims to spread its wings
Stock pickers are going back to basics such as food as the threat of a new global financial crisis increases appetite for staples, a trend that is helping regional poultry producers.
Asaffa Foods in Oman, a seller of fresh and frozen chicken, is expected to benefit from a sizable demand-supply gap, triggered by the country's young and growing population, expanding GDP per capita and expanding expat community, said Kanaga Sundar, the head of research at Gulf Baader Capital Markets in Muscat.
Oman's poultry market demand is about 65,000 tonnes a year. About 40 per cent of total demand is met through local producers, while the rest is imported from regional companies.
Assafa Foods, which holds a 27 per cent market share and running at its full capacity of 17,000 tonnes annually, is expanding its production to capitalise on the demand for poultry.
The new capacity, which is expected to add 4,000 tonnes of chicken annually, is due to be become fully operational by March or April.
A 100 per cent halal company, Assafa also wants to tap into the increase in demand for halal food in the country.
"The expansion will increase the growth of revenues and earnings of the company going forward," Mr Sundar said.
Assafa Foods wants to evolve into a full-fledged food producer.
The company launched its Khayrat brand, which includes an assortment of vegetarian products such as frozen green peas and frozen mixed vegetables.
Assafa also invested four million Omani riyals into the country's first-ever meat processing plant, expected to be fully operational by July with a capacity of 3,600 tonnes a year.
"With Assafa becoming a household name in Oman, we believe it will not be a Herculean task for the company to market its new products to Omani customers," Mr Sundar said. The company uses various channels to promote its goods, with 2 per cent of its revenues spent on advertising, in addition to social media websites like Twitter and Facebook.
Mr Kunaga has a "buy" rating on Assafa Foods, with a target price of 0.553 riyals a share. The stock lost 0.39 per cent to 0.514 riyals yesterday.