By Thomas Kerr, CFA
READ THE FULL SDOT RESEARCH REPORT
New CEO
On February 13, 2025, Sadot Group (NASDAQ:SDOT) announced the appointment of Catia Jorge as new Chief Executive Officer. Ms. Jorge has nearly 30 years of experience in agricultural markets, commodity trading, and operational leadership. Most recently, she served as Brazil Country Head and Vice President/Grains Business Head Latin America for Olam Agri. There she managed a $1.0 billion annual revenue portfolio. Prior to Olam, she held roles at Cargill Agricola South America exporting over 7 million metric tons of grain exports annually as well as leadership positions at J. Macedo. Ms. Jorge holds a master’s degree in Agri-Business from Kansas State University and an MBA in Global Trade from the University of Dallas.
Sadot Group Chairman of the Board Kevin Mohan stated, “Catia’s deep expertise in global agriculture markets, her leadership acumen and her strategic vision make her the perfect fit to lead Sadot through its next stage of expansion. She’s a strong and collaborative leader with a reputation for developing unique solutions that consistently drive growth and value. Over the past two years our team has built a strong foundation and Catia is the right leader at the right time to accelerate growth and take us to the next level, establishing Sadot as a leading player in the global food supply chain.”
Ms. Jorge succeeds Michael Roper, who will transition into a new leadership position as Chief Governance & Compliance Officer, which will oversee the company’s regulatory and capital market requirements. Mr. Roper will continue to lead the previously announced efforts to divest the remaining restaurant operations.
Pet Food Ingredients
On January 27, 2025, Sadot announced the entry into the North American pet food ingredients supply business, which is a fast growing sector within the food and agriculture industry.
The company will leverage its extensive experience and industry relationships with the goal of meeting the increasing demand for ingredients to supply the premium pet food sector in North America. Sadot is in the process of establishing a network of logistical partners, suppliers and customers to provide a comprehensive offering to the market. This will cover both dry and wet pet food formulations.
The size of the U.S. pet food industry is approximately $60.0 billion. As of 2024, 86.9 million homes, or 66% of U.S. households own a pet, which includes 65.1 million homes with dogs, and 46.5 million having cats.
Convertible Note Offering
On December 3, 2024, the company announced it had raised $3.0 million in capital through a convertible note with a 12-month term. The note is convertible into shares of common stock at a fixed purchase price of $4.10 per share, with no warrant coverage. Sadot plans to use the proceeds for general corporate purposes and growth initiatives, including recent expansions into Canada and Brazil, and potential farming operations in Indonesia.
Valuation and Estimates
Our price target is $15.00 at this time as we believe the company is on the path to generate increasing free cash flow going forward. High margin trading activity and increased ancillary services will help increase gross and operating margins.
Due to the variability and timing of trading results and sales contracts, EPS estimates are difficult to predict with any reliability. We are conservative in our EPS estimates and prefer to recognize free cash flow and margin improvements as the key factors in predicting our target price.
We maintain our 2024 and 2025 estimates at this time as we await the release of the company’s 4th quarter and full-year 2024 financial results.
SDOT stock is also trading at approximately 52% of book value per share (as of 9/30/24) whereas many peers in the commodity sector are trading 25%-50% above book value.
We believe Sadot’s current low Enterprise Value appears to be irrational and more reflective of the ongoing microcap stock malaise as opposed to company fundamentals.
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