Webster Limited


WBA Details

Acquisitions drove revenue growth but softness in full year result: Webster Limited (ASX: WBA) posted its preliminary financial report indicating 120% rise in total revenues from ordinary activities for FY16 driven by acquisitions, while the profit after tax is down more than 100%. The statutory loss is $80.7 million including the impairment of goodwill from acquisitions. The group’s profit result included the sale of water entitlements for $21m and the underlying profit before tax has been $14.9 million for the year. WBA had earlier benefitted from increase in the walnut prices worldwide over the past year.
 

WBA Dividends (Source: Company Reports)
 
Meanwhile, WBA stock has risen 13.6% in the last three months (as of August 30, 2016). We maintain our “Buy” recommendation on the stock at the current price of $1.28
 

WBA Daily Chart (Source: Thomson Reuters)
 
Elders Ltd


ELD Details

Boosting capital position: Elders Ltd.’s (ASX: ELD) wholly owned subsidiary, Elders Finance had extended the Hybrid acquisition for two weeks to assist small holders who have not yet had an opportunity to fully consider the offer. The acquisition is $95 each, for the total consideration of $67.03 million. For this ELD had undertaken $102.4 million capital raising at $3.40 per new share.
 

Capital structure pro-forma (Source: Company Reports)
 
ELD has binding pre-commitments totaling $27.9 million from four large Hybrid holders to sell their Hybrids into the on-market Hybrid Acquisition. Additionally, ELD intends to restart payment of fully franked dividends for FY17 of up to 35% of underlying NPAT. On the other hand, ELD stock has fallen over 20.9% during this year to date (as of August 30, 2016) due to challenging weather conditions coupled with volatility in the consumer sentiment, and we maintain our “Expensive” recommendation on the stock at the current price of $3.67
 

ELD Daily Chart (Source: Thomson Reuters)
 
Wellard Ltd


WLD Details

Performance impacted by cattle supply: Wellard Ltd (ASX: WLD) released its preliminary financial report for FY16 with pro forma NPAT of $14.8 million and gross profit of $88.9 million, which are well below the prospectus forecasts at the back of fall in cattle supply in Australia coupled with resultant high cattle prices. This however is in line with the latest estimations of gross profit from operations for FY 16 to be around $85.9 million after the inclusion of a provision for doubtful debts of over $1.2 million. The pro forma FY2016 NPAT was otherwise estimated to be low given the amount of $7.7 million for repairs on the M/V Ocean Swagman and M/V Ocean Outback as a result of mechanical breakdowns. Nonetheless, the company is ready to sail through the challenging livestock market landscape with entry of M/V Ocean Shearer to the fleet and South American operations. WLD stock has fallen 57.7% in the last three months (as of August 30, 2016). We give a “Speculative Buy” recommendation on the stock at the current price of $0.285
 

WLD Daily Chart (Source: Thomson Reuters)
 
Australian Agricultural Company Ltd


AAC Details

Solid performance: Australian Agricultural Company Ltd (ASX: AAC) had reported the net profit after tax of $67.8 million for the FY 16 which is a $58.2 million increase on the FY 15. The total kilograms of beef sold was up by 96 per cent, with the total sales revenue increasing by 44.7 per cent to $489 million. This included production growth at Livingstone Beef processing facility at Darwin as well as a 15 % rise in the sales volumes of its premium Wagyu brands.
 

Financial Performance of FY 16 (Source: Company Reports)
 
Moreover, AAC business performance is improving due to increasing total revenue and margin by owning cattle through the supply chain while maintaining a stable breeding herd. AAC stock has already risen 48.76% in the last six months (as of August 30, 2016). Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $1.775
 

AAC Daily Chart (Source: Thomson Reuters)
 
Select Harvests Ltd


SHV Details

Weak underlying earnings in FY 16:Select Harvests Limited (ASX: SHV) is facing drought conditions in the US and the impact of the drought remains difficult to predict. Moreover, the combination of currency and almond price has caused the sharpest price correction in the challenged business environment. Additionally, SHV has reported FY16 Net Profit after Tax (NPAT) of $33.8m and the underlying Net Profit after Tax (NPAT) of $27.9m, down 53% from $59.4m in FY 15. The underlying earnings per share (EPS) is 38.5 cents per share as compared to FY15 EPS of 86.8 cps.  Based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of $6.70
 

SHV Daily Chart (Source: Thomson Reuters)

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