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Robot Butchers – Because Humans Aren’t Cutting It

It seems like we’re finally seeing some mainstream hype around “robots taking all the jobs” which is largely coming into the picture now due to advances in technology like deep learning, computer vision, and cloud computing. We did an article about a month ago titled “What Jobs will Robots and AI Do in The Future?” where we went in to the U.S. jobs report from 2016 and then compared it to the same report 5 years earlier to see what jobs are going away. We found 12 job types that had large decreases and then tried to explain each one using technology that exists today. Then we came across the last job type which was “Butchers and other meat, poultry, and fish processing workers” and we thought to ourselves, “there is no way that they have robot butchers and if they do, we have got to see this“. As it turns out, a small publicly traded company in New Zealand is doing just that with robots that look like this:

via GIPHY

Founded in 1913, New Zealand company Scott Technology (NZE:SCT) has been around for ages but only began trading as a public company in 1999. It’s a very interesting company and it looks like they don’t spend too much time trying to impress investors with flashy presentations but rather they just get isht done. With a market cap of just $162 million, this low profile company has rewarded investors with an +84% share price appreciation over the last year along with a dividend that currently yields around 3%. Typically, you don’t want to see growth companies paying dividends because they should be keeping that cash to fund growth. In the case of SCT though, it looks like they are able to do both having made 3 acquisitions in the past two years alone.

SCT actually works in quite a few different areas which this somewhat confusing chart from the company demonstrates:

Robot butchers as a percent of total revenue

 

While robot butchers only make up less than 30% of revenues presently, a very compelling signal about the future of the company came when JBS, the world’s largest meat production company, made an investment in SCT that represented a controlling interest (just over 50%). SCT used all that cash to retire some debt they had on the books from an acquisition and the rest they plan to use for growing quicker.

Automated meat production isn’t a new concept but the sophistication of the SCT robots is unheard of. The machines actually use x-ray vision to look at the carcasses before making cuts, and all that data is then evaluated with deep learning algorithms such that the robots actually get better over time.

For now they are primarily focused on butchering lambs which while cute and furry, also taste delicious. Moving to cattle is actually more complex and the size of the animals becomes an issue as well. Nonetheless, SCT has its sights set on moving into that space next and in particular, wants to sell into the American cattle butchering market which is presently dominated by humans. If you actually want to see some of these robots in action, check out this video from SCT:

For those of you that remember a show called Seinfeld, there was actually an episode called stock tip where George Castanza says he has a “stock tip” about a company with a “robot butcher”. That’s not what this is. With that said, we reached out to Scott Technology before this article to see if they had any interest in listing their shares on the ASX or in the U.S. as an ADR so that we could take a small investment position in their company. It’s interesting, it’s little known, and we wouldn’t be surprised to see increased interest in their shares following this article (we always hold our positions 30 days as is our policy).

The problem is, we couldn’t figure out a way to buy SCT shares on the New Zealand market. Even our favorite international broker in the world, Interactive Brokers, doesn’t let you access the New Zealand stock exchange. Maybe if there’s enough interest from investors, Scott Technology will look at issuing their shares on the ASX or as an ADR in the U.S. so retail investors can get in on this very interesting robotics stock.

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