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Rachel Moss8:58

Ashby upgrade on Halden: does it hold?

Ashby Rowe went to Buy this morning…

Ashby Rowe Research7:02

Halden Foods: Leeds makes the case

Upgrade to Buy, target 420p…

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Daily exposure report

Consumer staples 14.2% of NAV…

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Halden reports on the 21st…

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Ashby upgrade on Halden: does it hold?

Rachel Moss

rachel.moss@kestrelcap.com · to you

8:58

Hi Sam,

Ashby Rowe went to Buy on Halden this morning, and the whole case is the Leeds factory. Does the payback hold, and what breaks it?

Their note and model are attached.

Rachel

ashby_halden_upgrade.pdf3 pagesashby_halden_model.xlsx4 tabs

ReplyForward

ashby_halden_upgrade.pdf

Page 1 of 3100%

Ashby RoweEquity Research · UK Food Producers · 7 October

Halden Foods (HLDN.L)

Leeds makes the case. Upgrade to Buy.

The new Leeds facility adds 20m units of capacity in a category where Halden already runs above 90%. At plan utilisation it pays back inside the board’s five-year hurdle and lifts group margin by 120bp by FY28.

We move to Buy with a 420p target. The market is paying for the existing estate and nothing for Leeds.

BUY

Target	420p
Price	336p
Upside	25%
Mkt cap	£480m

12 months

Estimates

£m, year to June	FY25A	FY26E	FY27E
Revenue	612	648	701
EBITDA	74.1	80.6	91.2
EPS, p	21.4	23.0	26.9
P/E, x	15.7	14.6	12.5

Ashby Rowe Equity Research · See disclosures at end1

Investment case

Halden has been capacity constrained for six quarters. Ready meals and chilled sides have grown volumes 8% a year while the estate has not grown at all, and the company has been turning away retailer contracts.

Leeds changes that. The site was acquired in March and is fitted out over nine months, with a ramp to plan utilisation by the third year. We think the market has not yet priced the margin it brings.

Group margin, with and without Leeds

FY25FY26FY27FY28

Risks: retailer pricing, input costs, and the pace of the Leeds ramp. See page 3.

Ashby Rowe Equity Research · See disclosures at end2

Leeds: what we assume

Capital cost	£42m
Fit-out	9 months
Capacity	20m units a year
Utilisation	85% from year 3
Contribution	£1.00 per unit
Site fixed costs	£6m a year
Payback	4.6 years, inside the 5-year hurdle

Our model assumes Leeds reaches 50% utilisation in its first year and 75% in its second, in line with the Doncaster ramp in 2021. Every point of utilisation is worth roughly £0.2m of annual contribution.

Full model available to clients on request.

Ashby Rowe Equity Research · See disclosures at end3

ashby_halden_model.xlsx

FileEditViewInsertFormatData

A1fx

ABCDEFGHI

1Leeds payback (Ashby Rowe)

3Assumptions

4Capital cost, £m42.0

5Capacity, m units a year20.0

6Plan utilisation85%

7Contribution, £ per unit1.00

8Fixed costs, £m a year6.0

10Year 0Year 1Year 2Year 3Year 4Year 5Year 6Year 7

11Utilisation50%75%85%85%85%85%85%

12Contribution, £m10.015.017.017.017.017.017.0

13Fixed costs, £m(6.0)(6.0)(6.0)(6.0)(6.0)(6.0)(6.0)

14Net cash flow(42.0)

15Cumulative(42.0)

17Payback, years

#N/A

18Board hurdle5.0

PaybackInputs

Ready

Re: Ashby upgrade on Halden: does it hold?

ToRachel Moss

SubjectRe: Ashby upgrade on Halden: does it hold?

halden_leeds_sensitivity.xlsxPayback, sensitivity

Send

Sent to Rachel Moss

SheetsDocsMailPythonJupyterpandas

Payback by utilisation

Years, against a 5-year hurdle

4.6

5.0

5.8

85%

78%

70%

Where the case breaks.

The ones worth meeting move one assumption and say where it fails.

Read the reasoning.

Every line opens to the cell, the page or the email.

Imran Qureshi

Financial analyst, 41 min of work

Exceptional1st of 27

Imran did not rebuild the model. He . He also , which most of the field missed, and instead of giving a yes or no.

Worth meeting.

Area by area

Finding what the case rests on

Stood out

Went straight to utilisation.

Working in the model

Did well

Built the cumulative row, then flexed it.

Answering a decision-maker

Stood out

A view and a condition, not a hedge.

What happened

09:04
They received. Neil’s email, then the research note
09:24
They worked on. Changed utilisation to 70%, then 78%
```
85%   4.6 years
78%   5.0 years
70%   5.8 years
```
09:33
They read. Went back to the note and read the year 2 assumption
09:42
They sent. Replied to Neil, with the model attached

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