Maple Leaf gets cash for new plant

Article Excerpt

MAPLE LEAF FOODS INC. $28 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 124.4 million; Market cap: $3.5 billion; Price-to-sales ratio: 1.0; Dividend yield: 1.9%; TSINetwork Rating: Average; www.mapleleaffoods.com) sells fresh and prepared meats under the Maple Leaf and Schneider brands. The company now plans to build a new poultry-processing plant in London, Ontario. This new facility will replace three older plants in the province. The new plant will cost $660 million and should begin operating in 2021. The federal and provincial governments have agreed to contribute a total of $62.5 million to the project. As a result, the net upfront cost to Maple Leaf is $597.5 million. The company will also receive an $8 million government loan, and invest a further $5 million over five years to reduce the plant’s environmental impact. By the end of 2023, the new plan should contribute $105 million to Maple Leaf’s annual gross profits. However, the stock still trades at a somewhat high 22.0 times the…