Demand Analysis

KEY DEMAND FACTORS

• Price and Volume – Strong as they have increased together for two years
• Institutions and Mutual Funds – OK as 58% ownership leaves some room for growth
• Inside Ownership – Good many insider recent non-open market purchases

Ratio Comparison

		ACTUALS				5 Year Averages
	2003	2004	2005	2006	2007	Actual	Projection
Valuation
P/E Ratio	50.4	35.8	22.0	46.4	36.6	38.23	28.70
Price to Sales	2.3	1.3	0.7	0.9	1.0	1.21	1.46
Price to EBITDA	26.5	17.3	10.8	15.5	15.1	17.04	15.33
Management Effectiveness
Return on Investment	6.28	6.20	6.02	4.03	5.31	5.57	10.84
Return on Equity	7.47	7.65	8.47	6.20	8.04	7.57	15.97
Financial Condition
Total Debt to Equity	0.22	0.27	0.21	0.82	0.88	0.48	0.48
Interest Coverage	6.13	10.35	5.89	3.15	4.95	6.10	8.97
Profitability
Gross Profit Margin	20.49	21.41	18.69	18.97	20.69	20.05	25.10
EBITDA Margin	8.56	7.47	6.63	5.66	6.52	6.97	9.61
Net Profit Margin	4.50	3.60	3.18	1.83	2.63	3.15	5.22
Dividend
Dividend Yield	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Payout Ratio	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Growth
P/E/G						1.18	1.09

COMPARISONS

• Valuation –projected ratios are in line with historical
• Management Effectiveness – management must improve returns
• Financial Condition – debt will continue at the current level
• Profitability – projections are also higher
• Dividend – no dividends for the foreseeable future
• Growth – even with higher price, P/E/G will be about the same

Earnings Projections

Sunopta (STKL)
Earnings Model ($MM)
	2007	2008E	2009E	2010E	2011E	2012E	Forecast
Revenue
Food Group
Grains & Foods	243	291	350	419	503	604	20.0%
Ingredients	73	78	84	89	96	102	7.0%
Fruit	243	279	321	369	425	488	15.0%
Canadian Food Distribution	73	88	105	126	151	182	20.0%
Opta Monerals	193	222	256	294	338	389	15.0%
Other	2	3	3	3	3	3	5.0%
Total Revenues	796	961	1,117	1,301	1,516	1,768	17.3%
- Direct Operating Expenses	631	750	855	975	1,111	1,267	14.0%
Gross Profit	165	211	262	326	404	501	24.9%
Less Expenses & Items
Selling, General, & Admin.	89	109	133	162	198	241	22.0%
Warehousing & Distribution	20	24	29	35	42	50	20.0%
Total Depreciation & Amort.	14	16	19	22	25	29	15.0%
Other Costs & Expenses	4	4	5	5	6	6	9.0%
Total Expenses & Items	128	154	185	224	270	326	20.6%
Other Income	1	1	1	1	1	1	9.0%
EBIT	38	58	78	103	135	176	36.1%
- Interest Expenses	8	9	10	12	13	15	15.0%
Pretax Income	30	49	67	91	122	160	39.8%
- Income Taxes	8	13	18	24	32	42
Minority Interest	(1)	-	-	-	-	-
Net Income	21	36	50	68	90	119	41.5%
Tax Rate	26.1%	26.1%	26.1%	26.1%	26.1%	26.1%
Dividends Paid	-	-	-	-	-	-	10.0%
EBITDA	51	74	96	125	160	204	32.2%
Shares outstanding (000,000's)	62	66	70	74	79	83	6.0%
Diluted Shares outstanding	63	67	71	75	79	84	6.0%
Earnings Per Share
Basic	$0.34	$0.55	$0.71	$0.91	$1.15	$1.42	33.5%
Diluted	$0.33	$0.54	$0.71	$0.90	$1.13	$1.41	33.5%
Source: estimates

ASSUMPTIONS

• All segments projected at conservative rates below recent growth
• Expenses growth will be equal to or slightly more than sales growth

Earnings History

Sunopta (STKL)
Annual Income Statements ($MM)
	2007	2006	2005	2004	2003	2002	I Yr.	5 Yr.
Revenue
Food Group
Grains & Foods	243	186	148	121	60	33	30.7%	48.7%
Ingredients	73	66	64	66	50	28	9.8%	6.8%
Fruit	193	143	75	10	38	21	35.3%	55.4%
Canadian Food Distribution	211	136	100	76	25	14	55.7%	72.3%
Opta Monerals	74	64	35	32	25	24	14.8%	24.8%
Other	2	3	5	1	0	0	-27.0%	72.8%
Total Revenues	796	598	426	306	199	121	33.1%	45.8%
- COGS	631	485	346	241	158	97	30.3%	45.4%
Gross Profit	165	113	80	66	41	24	45.2%	47.4%
Less Expenses & Items
Selling, General, & Admin.	89	59	41	36	23	14	50.6%	44.3%
Warehousing & Distribution	20	16	13	6	2	0	25.0%	191.3%
Total Depreciation & Amort.	14	12	8	7	5	4	22.0%	27.7%
Other Costs & Expenses	4	3	1	1	-	-	40.2%	N/A
Total Expenses & Items	128	90	64	50	31	19	41.9%	47.1%
Other Income	1	(1)	5	1	2	0	-146.3%	10.0%
EBIT	38	22	20	16	12	6	69.9%	46.9%
- Interest Expenses	8	7	3	2	2	1	8.3%	40.0%
Pretax Income	30	15	17	14	10	4	98.5%	49.0%
- Income Taxes	8	3	3	3	1	0	150.1%
Minority Interest	(1)	(1)	(1)	(0)	-	-	23.4%
Net Income	21	11	14	11	9	4	91.0%	41.5%
Tax Rate	26.1%	20.7%	15.4%	22.1%	10.0%	9.8%	26.0%	21.7%
Dividends Paid	-	-	-
EBITDA	51	33	28	23	17	10	54.3%	39.2%
Shares outstanding (000,000's)	62	57	56	54	46	42	8.8%	8.4%
Diluted Shares outstanding	63	58	57	55	49	43	8.9%	7.9%
Earnings Per Share
Basic	$0.34	$0.19	$0.24	$0.20	$0.19	$0.09	75.6%	30.5%
Diluted	$0.33	$0.19	$0.24	$0.20	$0.18	$0.09	75.3%	31.1%
Source: Sunopta Annual Reports & SEC Filings

NOTES

• Focus has shifted from property by adding high growth infrastructure and power generation
• Specialty funds focused on natural resources have done well, too, but should slow down

Investor Summary

SUNOPTA	NYSE:	STKL
Process and Packaged Goods	TARGET:	$23.78

Stock Data			Sales & Earnings	2007A	2008E	2009E
Price 12/20/2007	$12.18		Revenue (MM)	$0.8	$1.0	$1.1
52-Week Range	8.35 - 15.50		EBITDA (MM)	$0.1	$0.1	$0.1
Dividend Yield	0.0%		EPS (diluted)	$0.33	$0.54	$0.71
Capitalization			Value Measures
Shares Outstanding (MM)	62.22		Price/Earnings	36.62	31.45	33.70
Market Capitalization (MM)	$0.8		Price/Sales	0.96	1.18	1.52
Debt/Equity	0.88		Price/Book	2.94
Projections			Growth (5 Yr.)	Historical	Projected
12-Month Price Target	$17.02		Earnings	31.1%	33.5%
24-Month Price Target	$23.78		P/E/G	1.18	1.09
Annual Total Return	39.7%

KEY AREAS FOR GROWTH

• Specialized Agricultural Products – for bio-energy and improved diet
• Specialty Chemicals – from grains for food and other uses
  

MAJOR RISK
Management must improve ROI and profitability ratios.