Even in Dizzying Global Protein Rally, a 208% Return Stands Out

(Bloomberg) -- An out-sized share of China’s beef market is making Minerva SA the world’s best meat stock in an industry-wide boom fueled by the spread of African swine fever in Asia.

The Sao Paulo-based company’s shares have more than tripled in value this year, handing investors three times the average return among global peers and outperforming larger players such as JBS SA and Tyson Foods Inc.

Minerva may not be a household name but it is South America’s largest beef exporter, with operations in Brazil, Argentina and Uruguay. South America has accounted for 70% of Chinese beef imports this year and Minerva has a 21% share of the region’s total shipments, with almost half of its capacity cleared to export to China. The company has been building its presence in China, finding local partners to get more direct access to customers.

All of that is turning Minerva into a cash machine as the pig-killing disease pushes up China’s import demand and global prices at a time of near record-low local currency in Brazil. Brazilian producers are getting the full benefit of swine fever as the U.S. industry endures a trade war with China and cattle supplies remain low in Australia.

The windfall is allowing them to accelerate debt-cutting efforts and boosting the appeal of their shares. Even after a 208% rally this year, Minerva is trading at about 10 times estimated earnings, cheaper than the peer-group average of 15.

“Few times have we seen a long-term strategy paying off as handsomely and as fast as Minerva’s this year,” wrote Thiago Duarte, an analyst at BTG Pactual, reaffirming Minerva as a sector top pick. On Tuesday, Bank of America added the stock to its Brazilian portfolio.

To contact the reporters on this story: Tatiana Freitas in São Paulo at tfreitas4@bloomberg.net;Vinícius Andrade in São Paulo at vandrade3@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Millie Munshi

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