Based in Klerksdorp in North West, over-the-counter listed grain and agricultural giant Senwes is not a company familiar to many IM readers.
Readers may be more familiar with its peers — JSE-listed KAL Group (formerly Kaap Agri) and Cape Town Stock Exchange-listed TWK Investments. These three stocks, which differ in terms of operations and strategy, dominate their agricultural regions.
Senwes is a big player in maize, especially white maize, and has a sizeable business in agricultural machinery, being the second-largest John Deere agent in South Africa. It also has large interests in retail, product beneficiation and financial services.
KAL, based in the Western Cape, has evolved into a fuel and convenience store retailer with less than 30% of profit emanating from direct agriculture.
TWK has sizeable interests in forestry and wood chip exports alongside its traditional field crops businesses.
Senwes sits in the vast maize and soya belts that are so important to food production in South Africa. When the weather is favourable under a La Niña — as it was for four years between 2020 and 2023 — farmers get bumper crops, and agricultural companies benefit. In 2024, under a drier, hotter El Niño, the commercial maize crop plunged 22% to 12.85Mt. This hit Senwes in its recent year-end results to April.
A drop in demand in Senwes’s John Deere mechanisation agencies in South Africa and Germany also had a material effect on financial 2025 profits and earnings.
Group revenue declined 5% to R13.9bn, with profit before tax sliding 21% to R985m. The main hit was in agricultural machinery, where profit slumped 91% to R22m, driven by losses in the German agency. The dominant market access grain business reported a 17% fall in profit to R513m. An 11% rise in the financial services division’s profit to R218m and a 34% increase in the manufacturing and processing cluster’s profit to R164m softened the blow.
Headline earnings fell 23% to 386.9c a share, with a total annual dividend of 106c a share reported. The balance sheet remains robust and resilient, with gearing at 71%.
Senwes consistently reports cash generated from operating activities about 20% higher than operating profits. NAV rose 7% to R29.05 a share. On a share price of R19.40, the stock is on an earnings multiple of five and a dividend yield of 5.5%.
The results were a snapshot of the previous year’s agricultural season and harvest. For the 2025 period, agriculture has rebounded with a maize crop of 15Mt forecast (up 17%). A positive outlook for the 2026 season adds lustre to the sector. There has been an uplift in agricultural machinery sales in South Africa, and a restructuring of the German unit should pare losses.
Higher maize and soya crop tonnages should lead to a rebound in revenues and profitability for the market access business.
However, the Senwes share is tightly held with low liquidity (less than 9%) due to the controlling shareholder structure between holding company Agribel, producers and directors. The key driver of the modest uplift in the share price over the past year has been the ongoing share buyback initiative, which has supported the price and mopped up liquidity. IM believes buybacks will continue, and alongside the annual dividend, the capital appreciation potential, though not significant, should be better than money on deposit.
Agriculture is a long-term investment. On a 25-year basis, Senwes has returned a compound annual growth rate of 22.8%: R1,000 invested in the stock in 2000 would have turned into R170,000 by 2025.
There has been speculation for years that the control structure of Senwes — with a fat NAV of R29.05 a share and a discount of 33% — will be unlocked, releasing upside value. IM believes this will happen only on a company beneficial transaction with an empowerment angle. This has always been the hook, given that Agribel has a 68.7% stake in Senwes and trades at a material discount to its assets.
At R19.40, for patient long-term investors, you may eventually reap what you sow in this agricultural giant.
The writer owns shares in Senwes
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