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[Reference here, here and here]

Total Produce (TOT:ID or LN) is releasing 2011 Preliminary Results @ 7am tomorrow, Tuesday March 6th. Consensus 2011 EPS appears to be around EUR 0.071, bang on my own estimate. This out-turn would put TOT on a 6.3 P/E – far too cheap for such a defensive stock with plenty of firepower for acquisition led growth!

In fact, one of the cheapest companies they could buy is…themselves! With Fyffes (FFY:ID or LN) buying back 32.2 mio shares in Sep-Nov last year, I was v disappointed to see no such announcement from Total Produce. Especially with such a cheap share price, and when you note they’d EUR 89.6 mio of cash lying idle when they reported their interims. I hope to see some comment/plans in this regard tomorrow – failing that, management definitely needs to justify themselves with a more aggressive future acquisition strategy…

Speaking of Fyffes, I was encouraged by their recent set of good results, and a positive outlook. Maybe I’m completely wrong, but I have the fond idea that this provides an encouraging ‘read-through‘ for ToT’s results – we shall see!

Since my last comments, the only item of note is an increase to a 25.3% holding in Capespan, post the regulatory approvals of their recently announced deal. Actually, this is higher than the 24.6% I calculated (and double checked), so unless I’ve screwed up somewhere, it looks like Total has actually added a few more Capespan shares this year.

As I previously tweeted 2-3 weeks back, a break of EUR 0.41 resistance was likely to prompt a quick jump to EUR 0.44 level – which is what we actually saw in v short order. Since then, I’ve been anticipating a confirmed break of this EUR 0.44 level. It looked like this had occurred a week ago (with a EUR 0.45 close), but the way the Irish market trades (and the spreads involved) this wasn’t definitive. I preferred to wait for a bid of EUR 0.45, or better, for at least a day or two to confirm a proper technical break. This looks to be the case today, but I’ve been v conscious of Fyffes results and the FY results out tomorrow.

What really sealed the deal for me was a surprising, and significant, discount in the London GBP offer price, vs. the EUR offer price in Dublin. On a mid-price basis, this happens more often than you might think, and I’ve become better at checking and considering alternative markets/prices these days before trading. Of course, spreads can then often make it difficult to take advantage, and you may also need to include the impact of an FX spread (or two). From my own perspective, I deal in/hold EUR, GBP & USD, which offers me greater flexibility and the opportunity to avoid FX conversions in many instances.

One rather intriguing aspect of Irish stocks is that their UK & Irish listings are (normally) fungible, which offers even more currency flexibility – but you should always check this is the case with each individual broker. Additionally, many Irish, UK & European stocks have a US ADR or OTC listing – so well worth checking that price in relative terms also. Note, however, that US listings are generally not fungible (at least for private investors), and you may suffer some admin/tax headaches re dividends, so you should demand a more substantial discount. This will be unlikely, unfortunately…premiums are much more prevalent.

Anyway, I couldn’t resist this unexpected price discount, and I was keen to add to add to my position one more time ahead of the results, so I’ve increased TOT from 5.2% to 5.9% of my portfolio, my second largest position now.

I’ve tweaked my Fair Value Price Target v slightly to EUR 0.944, for a Potential Upside of 110%. We obviously need to get through tomorrow’s results first, but if we’re actually looking at a confirmed break of the EUR 0.44 level, a rapid move to the EUR 0.56-62 zone is certainly possible.

It will be v interesting to see if the technicals are providing advance warning of good (fundamental) news, as they sometimes do (rather uncannily)..! If not, we’ll probably have to endure a bit of a breather, but considering my ultimate Fair Value target I’m obviously bullish for a significantly higher price in due course, regardless.

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