It All Starts With The Food

To begin, we focus on analyzing the business inputs across different industries. In this post, we take examples of companies listed in the food and related space. Our methodology involves examining key factors:

• Cost of Goods Sold (COGS)
• Operational Expenditure (Opex)
• Capital Expenditure (Capex)
• Change in Working Capital

We take the past three years' data and, evaluate the amount of each input required to generate $1 in sales. It is important to note that Capex and M&A may not fully capture the input-to-sales ratio, as they can generate revenue and earnings over multiple years.

Companies Included: Thai Coconut (Thailand), Seeka (New Zealand)

Thai Coconut (Thailand)

Current Market Cap: USD 271 million

Brief Description: Manufacture and sale of coconut milk, coconut water, processed coconut, pet food and healthy food, including cheese and butter from plant protein. (Source: Company Factsheet)

Return Ratios

RoA (3 YR avg.): 10%

Leverage Factor (Asset/Equity): 1.9x

RoE: 19%

Breakdown per $1 of Revenue

Source: Annual Reports, Our Calculations

The table above highlights that Cost of Goods Sold (COGS)—covering raw materials (e.g., coconuts), packaging, energy costs etc. —is the largest expense component. Additionally, the company has increased investments (Capex), mainly to enhance capacity utilization and support capacity expansion.

Operating expenses (Opex) remain steady at $0.13–$0.14 per $1 of sales, encompassing distribution, promotions, marketing, brand-building costs etc. Meanwhile, the change in working capital is the smallest input.

Seeka (New Zealand)

Current Market Cap: USD 103 million

Brief Description: Seeka is New Zealand and Australia’s largest fully integrated kiwifruit supply company, growing 1000 hectares and packing a fifth of the national kiwifruit crop from leased, managed, and contract orchards. Seeka operates a comprehensive orcharding and post-harvest service to New Zealand kiwifruit and avocado orchardists. (Source: Company LinkedIn Page).

Return Ratios

RoA (3 YR avg.): 0%

Leverage Factor (Asset/Equity): 2.1x

RoE: 0%

Breakdown per $1 of Revenue

Source: Annual Reports, Our Calculations

The table above highlights that Cost of Goods Sold (COGS)—covering raw materials (e.g., kiwifruit), packaging, staff costs directly involved in the production etc. — is the largest expense component. Between 2022 and 2024, the company reduced its capital expenditures (Capex) by ~55%, to focus toward plant maintenance and to improve shareholder returns through enhanced cash flow generation.

Operating expenses (Opex) stand at $0.14–$0.18 per $1 of sales, encompassing depreciation, salary, and other admin related expenses. Meanwhile, the change in working capital is the smallest input.

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