Global Food Co. Expands Reach Into Brazil

Sadot Group Inc. (SDOT:NASDAQ), an emerging player in the global food supply chain sector, announced it is expanding its reach with a wholly-owned subsidiary in Brazil, Sadot Brasil Ltda.

Sadot Brasil Ltda. will source and export soybeans, soybean meal, wheat, and corn from the South American country.

"Two distinguished professionals" in the international grain-trading business, agricultural engineer Paulo de Sa and finance professional Flavio de Campos, are starting the trading arm's operations, the company said.

"We believe that the agreement to begin operations of Sadot Brasil Ltda. establishes a strong presence in one of the world's most important grain-producing regions," said Sadout Group Inc. Chief Executive Officer Michael Roper. "We believe this will further expand our global presence and allow us to establish a foothold in the critical, growing Brazilian market."

Sadout Group said it also plans to expand its operations into verticals of the global food and feed supply chain, including farming, sustainability, and trading and shipping of agri-commodities.

"The inception of Sadot Brasil Ltda. has the potential to provide growth in the trading verticals, managed by experienced industry professionals," the company said in a release.

"Since forming the Sadot Agri-Foods operations, the company has quickly established itself as a player in the global agriculture commodity trading, shipping, and logistics space," Zacks Small-Cap Research analyst Tom Kerr wrote.

One analyst said Sadot is undervalued since as it makes moves in its newer, high-income-generating Agri-Foods division.

"Since forming the Sadot Agri-Foods operations, the company has quickly established itself as a player in the global agriculture commodity trading, shipping, and logistics space," Zacks Small-Cap Research analyst Tom Kerr wrote in an October 11 research note.

"We believe that as profitability improves in both the Agri-Foods segment and Restaurant segment, the stock could be worth US$4 per share," wrote Kerr.

The stock was US$0.3836 on Wednesday afternoon. A share price of US$4 would be a 943% return for investors.

Last July, the company announced that it had pivoted and changed the company name from Muscle Maker Inc. to the Sadot Group Inc. The company trades under the symbol SDOT on Nasdaq.

The Catalyst: Strongest Economy in Latin America, Caribbean

According to the International Fund for Agricultural Development, Brazil is "a major agricultural and industrial power, and the strongest economy in Latin America and the Caribbean."

Analyst Rob Goldman predicts that "Sadot Group will first generate a profit in 2024 of an estimated US$14.6 million."

The country is also the fourth-largest agricultural-producing country in the world, the main producer of coffee, sugarcane, and citrus, and the second-largest soybean, beef, and poultry producer, the organization said.

According to the World Bank, circumstances for citizens are improving, in part because of the importance of the agriculture industry.

"The income level of the poorest 40% of the population increased by an average of 7.1% (in real terms) between 2003 and 2014, compared to a 4.4% increase in income for the population as a whole," the organization noted.

Principals Bring Experience to Table

According to Sadot, de Sa has more than 30 years in the agri-commodities market and food industry and has worked in leadership positions in origination, logistics, and trading at Louis Dreyfus; as supply chain manager at SGS; grains trader at AWB Brasil; supply chain director at Algar Agro, and a member of the managing committee at JV Algar Bunge.

He also founded Agria, an agri-business services consultancy company, Sadot said.

An experienced finance professional with more than 30 years of experience in the agri-business, technology, and food industries, de Campos has worked in leading agri-commodities trading companies and agri-industries, such as Cargill, Sucden, AWB Brasil, Imcopa, and CJ Brasil. He has held leadership and senior-level positions in finance, accounting and control, planning and reporting, risk management, auditing, information technology, and human resources.

Agri-Foods is Co.'s Largest Division

Agri-Foods is Sadot Group's largest division, and it generates the most revenue. Since coming online, it has generated strong monthly revenue, with a year-to-date (January through August in 2023) a total of US$488M, Kerr reported.

Of the eight months, March had the most revenue, at US$93.8M. In August, the most recent month for which a total is available, revenue was US$67M, up from US$53M in July.

"The company does not report monthly profitability on these revenues," wrote Kerr. "However, we believe the net margins are in the 1−3% range on average."

Analyst Rob Goldman predicts that "Sadot Group will first generate a profit in 2024 of an estimated US$14.6 million."

Goldman forecasts full-year 2024 (FY24) revenue to be US$1.05 billion with US$13.9 million of it coming from the restaurant-related business."

Technical Analyst Clive Maund rated the stock a Buy in September 2023, saying it was "below a still strongly rising 200-day moving average and the rapidly improving momentum (MACD), which is now trending higher . . .  To that, we can add that the price has pushed its nose out above the second downtrend line, with volume having become light in recent weeks and downside volume having eased off with the Accumulation line having held up well on the drop from late July."

Ownership and Share Structure

Insiders own 4.33% of the company. Joey Giamichael owns 3.47%, Kevin James Mohan owns 1%, and Michael John Roper owns 0.40%.

Institutions own 34.9% of the company. AGGIA LLC FZ owns 26.71% with 12.49 million shares, Thoroughbred Diagnostics LLC owns 2.09% with 0.98 million shares, The Vanguard Group Inc. owns 1.78% with 0.83 million shares, and Geode Capital Management LLC owns 0.84% with 0.39 million shares, according to Reuters.

There are 46.76 million shares outstanding, with 29.3 million free-float traded shares. The company has a market cap of US$18 million. It trades in the 52-week period between US$0.37 and US$1.5989.

Important Disclosures:

1. Sadot Group Inc. has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000.
2. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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