Follow buying by directors at bombed-out African agribusiness Zambeef Products (ZAM:AIM). The sale of its edible oil and soybean meal producing subsidiary Zamanita de-risks the business significantly. It will allow the £23.6 million cap to focus on core operations and could provide a share price recovery catalyst.

Non-executive director John Rabb has tucked into (3/4 Feb) more than 4.13 million shares at 10.05p, an outlay of £415,184, accompanied in the buying spree by joint chief executive officers Carl Irwin and Francis Grogan with more modest purchases of 995,000 shares apiece. This combined show of faith follows news of the US$25.7 million disposal (3 Feb) of Zambia-based Zamanita, which lost $2 million last year, to Cargill.

The deal should boost sentiment towards the stock, as it reduces the risk profile of Zambeef, paring the AIM counter’s overall gearing and reducing a currency mis-match between its US dollar-denominated debt and sales denominated in a depreciating Zambian Kwacha. Zambeef’s management, who’ve had to contend with a perfect storm of currency hits, intensifying competition and even the impact of swine fever in recent memory, can now focus on the core business of producing and selling beef, pork, poultry, milk and eggs.

Shares believes Zambeef, with operations spanning Zambia, Nigeria and Ghana, remains well-placed to profit from rising protein consumption trends across Africa. Broker Panmure Gordon forecasts a swing from $300,000 losses to $7.8 million profits for the year to September 2015 and urges clients to buy with a 35p price target that implies dramatic potential upside.

The reduction of leverage, currency and commodity price risk is welcome and Zambeef now looks poised to rally from a lowly 9.88p.

THE TRADE

Buyer/Seller: John Rabb, non-executive director

Consideration: £415,184

No. of shares bought/sold: 4,131,187

Subsequent holding: 12,000,000 (4.84%)