Rural Funds Group

Rural Funds Group (ASX: RFF) is a RIET managed by Rural Funds Management Limited (RFM) with a portfolio build-up of $687 million of diversified agricultural assets.

FY18 performance and Outlook: The company reported total revenue of $51.09 million in FY18, depicting a growth by 22.9% on a y-o-y basis. The total operating income was reported at $40.71 million, an increase of 28.3% on a y-o-y basis. The company reported EPU (earnings per unit) of 17.3 cents, AFFO (adjusted funds from operations) of 12.7 cents per unit, distribution per unit (dpu) of 10.03 cents and an AFFO pay-out ratio of 79%. Adjusted total assets came at $792.9 million with $1.72 adjusted NAV per unit, a debt of $198.2 million and a gearing of 25%. The company now estimates AFFO for FY19 to be 13.2 cents per unit and a dividend per unit of 10.43 cents with a 4% growth and 4.9% forecasted yield.


FY19 Forecast (Source: Company Reports)

Performance over the past five years:The AFFO has grown at a double digit CAGR from $7.03 million in FY14 to $32.32 million in FY18. The revenue has increased at a CAGR of over 57% from $8.25 million in FY14 to $51.09 million in FY18. Operating income has grown at a CAGR of 86% while DPU increased at a CAGR of 25.75%. The company currently has 333.14 million shares outstanding with a market cap of $742.9 million and a beta of 0.46x.

RFF has a P/E ratio of 15.78 x with a yield of 4.59% which is comparatively lower than the peers average of 7.63% and 6.27% respectively. Nonetheless, the returns are decent.

Technical analysis: Over the past three months, the stock has soared by 3.24% and is currently trading at $2.22. The stock is currently trading slightly below its one-year resistance level of $2.3. The RSI is also lying in an average range.
With the improving results, better-expected FY19 guidance, and the RSI in an average range with the price towards its resistance level, RFF exhibits a ‘hold’ position.

 

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