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MarketScreener Homepage  >  Equities  >  Toronto Stock Exchange  >  Burcon NutraScience Corporation    BU   CA1208311029

BURCON NUTRASCIENCE CORPORATION

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Nestle teams up with Canadian plant-based ingredient makers

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01/24/2020 | 01:14pm EST
A logo is pictured during the 152nd Annual General Meeting of Nestle in Lausanne

WINNIPEG, Manitoba/ZURICH (Reuters) - Food company Nestle SA said on Friday it has teamed up with small Canadian plant-based food ingredient makers Burcon and Merit Functional Foods, the second such supply agreement this month that targets Canadian crops.

Meat substitutes from plants in burgers, nuggets and many other foods are a fast-growing industry, driving up demand for crops that produce them.

Canada is among the world's largest growers of peas and the biggest producer of canola, crops high in protein that technology companies like Burcon can separate and isolate for use in foods and beverages.

The agreement with Nestle is long-term, with no expiry, Burcon Chief Executive Johann Tergesen said in an interview. Nestle will buy pea and canola proteins from a 20,000-tonne-per-year Merit plant to be built by the end of this year in Winnipeg, Manitoba.

Merit will process the proteins using Burcon technology under a licensing agreement.

"It's a little bit like Christmas morning for those of us who have been doing this for 20 years," Tergesen said.

"In the early days, I had to explain to people what protein was. Now it has been a wild ride."

Burcon stock jumped 36% in Toronto to C$1.89 per share, touching its highest price in nearly three years. Nestle stock rose 0.9% in Switzerland.

With the deal, Burcon expects to report its first-ever commercial revenue and profit in 2021. Terms were not released.

Nestle launched soy and wheat protein-based "Incredible Burgers" in Europe last year. The deal gives the company access to a range of ingredients for its foods and beverages, using the "unique expertise" of Burcon and Merit, Nestle Chief Technology Officer Stefan Palzer said.

It comes after Beyond Meat Inc this month struck a similar supply agreement with France-based Roquette, which is also building a pea protein plant in Manitoba.

The new commercial demand "provides a real sense of optimism for the future," said Gord Bacon of Pulse Canada, an industry group representing pulse farmers and processors.

"To have a diversified market base is what every group producing commodities or ingredients in Canada would hope for."

With so much of Canada's peas exported raw, finding enough supply to satisfy the Nestle deal will not be a challenge, said Ryan Bracken, Merit's co-CEO. The company is already planning to expand the Winnipeg plant under construction to more than double production.

By Rod Nickel and Silke Koltrowitz

Stocks mentioned in the article
ChangeLast1st jan.
BEYOND MEAT, INC. -4.38% 120.58 Delayed Quote.59.50%
BURCON NUTRASCIENCE CORPORATION 8.43% 1.8 Delayed Quote.85.57%
CRB COMMODITY INDEX 0.10% 195.01 End-of-day quote.0.00%
FEEDER CATTLE?FUTURES (GF) - CMG (ELECTRONIC)/C1 -0.02% 140.775 End-of-day quote.-3.13%
LIVE CATTLE (LE) - CMG (ELECTRONIC)/C1 0.06% 120.175 End-of-day quote.-2.73%
LME NICKEL CASH -0.12% 12685 End-of-day quote.-9.88%
NESTLÉ S.A. 0.37% 109.78 Delayed Quote.4.37%
WHEAT FUTURES (W) - CBR (FLOOR)/C1 -0.93% 560 End-of-day quote.1.43%
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Financials (CAD)
Sales 2020 0,03 M
EBIT 2020 -
Net income 2020 -
Debt 2020 -
Yield 2020 -
P/E ratio 2020 -32,7x
P/E ratio 2021 -60,0x
Capi. / Sales2020 6 495x
Capi. / Sales2021 42,2x
Capitalization 172 M
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Mean consensus BUY
Number of Analysts 2
Average target price 2,88  CAD
Last Close Price 1,80  CAD
Spread / Highest target 80,6%
Spread / Average Target 59,7%
Spread / Lowest Target 38,9%
EPS Revisions
Managers
NameTitle
Johann Franz Tergesen President & Chief Executive Officer
David Lorne John Tyrrell Chairman
Jade Cheng Chief Financial Officer & Treasurer
Martin Hans Schweizer Vice President-Technical Development
Mei Wah Chau Director
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