Prime land packs pretty punch

Satara group general manager Murray Gough says many of its properties are zoned industrial. Picture / Alan Gibson

The company itself has a market capitalisation of $10.8 million.

It's been a tough year to be a kiwifruit packer but tiny Mt Maunganui company Satara has discovered it's sitting pretty on some prime real estate.

A $9.5 million leap in its property value has dwarfed its last annual profit of $1.1 million and comes as welcome news for a company expecting returns to drop this year.

Group general manager Murray Gough said the industry was going through a difficult period under the squeeze of high exchange rates.

But the company had been advised that its land and buildings could be revalued up by at least 40 per cent, taking the book value to $33.27 million.

Satara, which is listed on the NZX alternative exchange, has a market capitalisation of just $10.8 million.

Gough said the company would consider cashing in and relocating its packing and cooling facilities after a more detailed valuation.

Satara has six facilities in the region - two at Katikati, one at Mt Maunganui, two in Te Puke and one in Tauranga.

Gough said he was pleasantly surprised at the rapid rise in value over the past two years.

"We find ourselves in a fortunate situation," he said. "Kiwifruit companies generally operate on rural land but many of our properties are zoned industrial."

The increase has been attributed to a rise in property prices in the western Bay of Plenty combined with a shortage of industrial and commercial land in the Tauranga and Mt Maunganui area.

The company has commissioned a detailed valuation of all land and buildings, a year ahead of schedule, due to be completed by the end of February.

Gough said the board was concerned shareholders might make decisions without taking account of the impact of property prices on the net asset backing of shares.

If initial indications were accurate, then net tangible asset backing per investor share would increase by about 55c to $1.79.

Shares in the company, which traces its history back to 1971 and the Bay of Plenty Co-operative Growers, rose 4c yesterday to finish on 66c.

The company listed on the exchange on December 13 last year, with shares hitting a high of $1.30 and a low of 60c during the last 12 months.

A two-tier share structure means growers retain a majority block of non-tradeable shares based on the number of trays they produce each season - basically a $1 share a tray produced. This ensures they keep a 60 per cent controlling stake in the company. The remaining investor shares are traded on the market.

Satara packed a record crop of 11,182 million trays for the year ended last December and posted revenue of $54.14 million, up from $49.95 million the year before.

VALUE BOOST

* Satara's land and buildings could be revalued up by at least 40 per cent.

* That would take the book value to $33.27 million.

* It has six facilities in the Bay of Plenty region.