Australian Agricultural Company Ltd (ASX: AAC)

Rise in operating EBITDA but fall in revenue: Australian Agricultural Company Ltd.’s stock plunged about 7.4% on November 15, 2017 with the release of the half year results that highlighted few headwinds and a new director appointment (Jessica Rudd). While, the group’s operating EBITDA (earnings before interest, tax, depreciation and amortisation) for the six months to September 30, 2017 (H1 FY18) was up 16% over previous corresponding period (pcp), the statutory EBITDA loss of ($36.5) million was indicated and included a mark to market of livestock inventory valuation. There was a 7.9% dip in total sales revenue of $197.2 million impacted by move to transition to internal supply chains. On the other hand, the improved average sale prices across Luxury/Prestige and Premium brands and entry in Taiwan have been positive. Nonetheless, Livingstone Beef pricing was impacted by global market dynamics with enhanced competition from the US exports. Margin compression may pose more pressure going forward. We give a “Hold” on the stock till the time some easing of pressure is noted with improvement in performance in the coming months, at the current price of $1.44
 

Production and costs (Source: Company Reports)
 

Quintis Ltd (ASX: QIN)

High statutory net loss: For FY17, a reduced revenue of $97.4 million, a non-cash reduction to the fair value of Quintis’ biological assets of $307.4 million (before tax) and a non-cash impairment of goodwill and intangible assets of $154.7 million (before tax) led to the group report for a statutory net loss after tax of $416.8 million against FY16 figure of $90.1 million net profit after tax. The only positive thing was the higher revenue from product sales, i.e., sales of sandalwood and oil products, at $39.3 million against FY16 figure of $29.9 million, at the back of increased size of the 2016 annual harvest.

The group is discussing about recapitalisation plans and seeking support from its lenders. While the stock is in suspension, not much is expected once the trading resumes. The group will hold its Annual General Meeting on December 15, 2017.

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