1. Cal-Maine Foods, Inc. ppt宝藏_www.pptbz.com_提供下载
Analyst: Xue Jun (June) Feng
Jack Lindblad
Jiayue (Lydia) Li
October 17, 2017

2. Outlines: Stock Market Prospect Macroeconomic Factors
Industrial Analysis
Company Overview
Financial Analysis
Valuation
Recommendation

3. Stock Market Prospect
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4. Stock Market Prospect Historical Stock Price Portfolio Weight by Cost
Bot $47.68 on
Portfolio Weight by Cost
Portfolio Weight by Market Value
Source: Capital IQ

5. % of Total Shares Outstanding
Stock Market Prospect
Current price
Annualized Return
52 Week Range
Market Cap
PE Ratio (TTM)
EPS (TTM)
Projected PE
$ 42.4
-5%
46.2/ 33.4
2.1 B
N/A
-1.5
29.63
Ownership
Top Holders
% of Total Shares Outstanding
Adams Jr., Fred R.
32.43
T. Rowe Price Group, Inc.
8.04
BlackRock, Inc.
7.58
The Vanguard Group, Inc.
5.52
Janus Henderson Group plc
4.07
Source: CALM K
Yahoo Finance
Capital IQ

6. Macroeconomic Factors
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7. Macroeconomic Factors
Revenue vs. Egg Price
COGS vs. Feed Cost
Egg Price - Highly Volatile
Feed Cost-volatile as well
Source: IBIS World
CALM Investor Presentation

8. Macroeconomic Factors
US. Population Growth
Egg Consumption Per Capita
Total Egg Production
Monthly Hen Inventory
Source: U.S. Census Bureau, Population Division
IBIS World
Rabobank

9. Industrial Analysis
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10. Industrial Analysis
Fragmented Shell Egg Industry, with growing concentration
1990: 56 producers with one million or more layers owned 64% of the 232 million total layers.
2000: 63 producers with one million or more layers owned 79% of the 273 million total layers.
2016: 56 producers with one million or more layers owned 97% of the 319 million total layers.
Major players (All Private except for Cal-Maine)
Porter’s Five Forces
Founded in The largest producer and marketer of shell eggs in the US, with 36 million layers.
Cal-Maine Foods
Rose Acre Farms, Inc.
Rembrandt Enterprises
Hillandale Farms
Founded in 1939.
The second-largest egg producer in the US with 24.8 million layers.
Founded in 2000.
Egg and egg product producers with 14.5 million layers.
Founded in 1958.
Shell eggs producer with 9.0 million layers.
Source: IBIS World
CALM 10K 2017

11. Industrial Segments & Trend
Egg Product Revenue Segment (Total revenue: $14.1 billion )
Cage/battery eggs are produced by hens housed in small cages inside a housing facility;
Barn or cage-free eggs come from hens raised outside cages but not necessarily outdoors;
Free-range (organic) eggs are from hens that are cage-free and have access to the outdoors. 
Hatching eggs are used by egg producers to replace and grow the egg-laying flock and may be sold to other industry operators for egg-laying or meat-production purposes. 
Important Industrial Trend: Shifting to Cage-Free
Fact: 160+ major companies have announced it will switch to all cage-free eggs by 2025, including Walmart and its Sam’s Club warehouse chain. (Two biggest customers for Cal-Maine.)
Why: Animal welfare concerns.
Uncertainty: No clear definition of “cage-free”.
Higher price of cage-free eggs.
Meanings to egg producers: More than 70% of all eggs produced in the U.S. would have to come from cage-free housing by Huge investment: For the equipment alone, it costs about $15 per bird in a conventional caged egg produced house. On a cage-free farm, it’s between $30 and $35 per bird.
Source: IBIS World
CALM 10 K 2017

12. Company Overview
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13. Company Overview Customers 29% 11% 9%
Was founded in 1957 in Jackson, MS.
Primarily engaged in the production, grading, packaging, marketing and distribution of fresh shell eggs.
The largest producer and marketer of shell eggs in the US. Counts for approximately 20% of domestic shell egg consumption.
Largest total flock of layers, pullets and breeders in the U.S.
Customers
National and regional grocery store chains, club stores, foodservice distributors and egg product consumers.
Top ten customers accounted for 70% of net sales in 2017.
29%
11% 9%
Source: CALM Investor Presentation
CALM K

14. How Does CALM make $? Non Specialty Eggs (51%)
Process, Grade, and Package Eggs with “in-line” facilities
Specialty Eggs (46%)
Egg Products (2%)
43 Laying operations
Commercial Sources
36.1 M Layers, and 9.5M Breeders and Pullets
Hatchery
Purchase Corn/Soybean
Manufacture to create feed for chickens
Source: CALM Investor Presentation
CALM K

15. Proven Management Team
Fred Adams - Chairman Emeritus
Fred R. Adams, Jr. served as Chairman of the Board of Directors from 1982 to July Mr. Adams served as our Chief Executive Officer from the formation of the Company in 1969 until October, 2010, when his son-in-law, Adolphus B. Baker became Chief Executive Officer. Mr. Adams has served as the chairman of National Egg Company, United Egg Producers, Mississippi Poultry Association, U. S. Egg Marketers, Inc., and Egg Clearinghouse, Inc.
Adolphus B. Baker - President, Chief Executive and Chairman of the Board of Directors
Adolphus B. Baker has served as President and Chief Executive Officer since October Mr. Baker is the past Chairman of the American Egg Board, past Chairman of Mississippi Poultry Association, and a past chairman of Egg Clearinghouse, Inc. Mr. Baker is currently a member of the Executive Committee of the United Egg Producers and is a director of Trustmark National Bank of Jackson, Mississippi.
Sherman Miller - Vice President, Chief Operations Officer and Director
Timothy A. Dawson - Vice President, Chief Financial Officer, Treasurer, Secretary and Director
Sherman Miller was named Chief Operations Officer in May 2011 and elected to the Board of Directors in July He is a member of the board of the U.S. Poultry and Egg Association.
Timothy A. Dawson was elected as Vice President and Chief Financial Officer on August 1, He was elected as a director in October, 2005.
Source: CALM Investor Presentation
CALM K

16. Business Growth Strategy
Expand Capacity
Cal-Maine focused on the acquisition of existing shell egg production and processing facilities, as well as the construction of new and more efficient facilities.
Since the beginning of fiscal 1989, Cal-Maine has completed 20 acquisitions.
Fiscal 2017
Foodonics International, Inc.
$69 million of cash and $3 million
of deferred purchase price.
1.6 million layers.
Happy Hen Egg Farms, Inc.
For $17.2 million in cash.
350,000 layers.
Fiscal 2014
Delta Egg Farm, LLC.
Acquired the remaining 50% stake for 17 million in cash.
Delta Egg Farm has 1.6 million layers.
Fiscal 2013
Maxim Production Co., Inc.
Commercial egg assets for $65
million. 60 million in cash and $5
million in stock.3.5 million layers.
Pilgrim’s Pride Corporation
Commercial egg assets for $16.3 million in cash. 1.4 million layers.
Last Five Acquisitions
Improve Product Structure-More Specialty Eggs
Prices of value added specialty eggs are less volatile and higher.
Customers’ preference for cage-free eggs.
Source: CALM 10K

17. SWOT Analysis Strengths Weaknesses Opportunities Threats
Market share leader
Efficient, state-of-the-art operations
Solid customer base
Vertically integrated/ low cost producer
High concentration of sales
Cyclical industry – prices & costs
Opportunities
Threats
Industry trend – shifting to Cage free eggs
Further consolidation through acquisitions
Unexpected disease break out
Continue depressed egg prices
Antitrust lawsuit preventing further M&A
Government regulation-USDA, FDA etc.

18. Moat Analysis Intangible Assets Switching Costs Network Effects Cost
Advantage
Efficient
Scale
Intangible Asset:
Cal-Maine is a member of the Egg-
Land’s Best, Inc. (“EB”) and has exclusive
license agreements to sell eggs using
Egg-Land’s Best ® and Land O’ Lakes ®.
Cost Advantage:
Cal-Maine’s operation process is automated, efficient, state-of-art and vertically integrated.
Cal-Maine has largest market share, which brings economy of scale.
Efficient Scale:
Cal-Maine is the largest player in the relatively small shell egg market.
Source: CALM K
Statista

19. Financial Analysis
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20. Financial Analysis – Cal-Maine Foods

21. Financial Analysis Profit Margin Gross Margin CY2013 - CY2016
Asset Turnover
Debt to Value
CY CY2016
CY CY2016
Source: Capital IQ

22. EBIT/Enterprise Value
Financial Analysis
EBIT Growth
Return on Equity (ROE)
CY CY2016
CY CY2016
EBIT/Enterprise Value
EBIT/Tangible Value
CY CY2016
CY CY2016
Source: Capital IQ

23. Valuation
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24. Comparable Valuation
Source: Capital IQ

25. Recommendation
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26. Recommendation Takeaway 2
Bottom of earnings cycle, well positioned for recovery
Takeaway 1
Intrinsic Valuation: $40
Bull: $59
Bear:$28
Takeaway 3
Strong Competitive Positioning, high business risk
Takeaway 4
Uncertainty with regards to future egg prices