Rural Funds Group

RFF Details

Recently, Rural Funds Management Limited (ASX: RFF) has completed the fully underwritten, 2 for 9 accelerated pro rata non-renounceable Entitlement Offer. The retail component of the entitlement offer (Retail Entitlement Offer), under which eligible retail unitholders to participate, comprised approximately $60.0 million, and closed on Monday, 26 June 2017. The Retail Entitlement Offer was well supported by existing retail unitholders, with acceptances of approximately $33.3 million, representing a participation rate of approximately 55.5%. Approximately 15,723,158 million new units were not taken up under the Retail Entitlement Offer and will be allocated to the underwriters, UBS AG Australia Branch, Bell Potter Securities Limited and Wilsons Corporate Finance Ltd, in accordance with the terms of the underwriting agreement. New units under the Retail Entitlement Offer were issued on Friday, 30 June 2017 and commenced trading on a normal settlement basis on Monday, 3 July 2017. We maintain a “Hold” recommendation at the current price of $ 1.82


RFF Daily chart; Source: (Thomson Reuters)

Australian Agricultural Company Ltd

AAC Details

For FY17, Australian Agricultural Company (ASX: AAC) reported a revenue of $446.7mn during FY17 against $489.4mn in FY16. Operating EBITDA (earnings before interest, tax, depreciation and amortization) grew by 202% yoy to $45.0 million, while statutory EBITDA stood at $133.2mn. Notably, EBITDA margin improved by 700bps to 10% compared to 3% in FY16, and net operating cash flow increased by $7.5mn to $29.3mn. During, September - March 2017 volume increased by 11% yoy, while overall average sale price increased by 28% yoy. The group is focusing on their luxury branded beef business on Branding & Marketing, Integrated Supply Chain and Innovation & Technology. Moreover, 27% decrease in cost of production per kg driven by improved supply chain management, increased focus on internal supply and favorable seasonal conditions. Further, 12% increase in Wagyu and Shortfed average meat sale price per kg driven by a combination of supportive macro conditions, operational focus and strategic partnerships. AAC stock rose over 11.6% in the last three months (as on July 05, 2017) and still trading at moderate levels. Given further benefits from the on-going efficiency improvement measures, we give a “Buy” on the stock at the current price of $1.81


AAC Daily chart; (Source: Thomson Reuters)

Graincorp Ltd

GNC Details

The group delivered an EBITDA of $236 million in the first half of 2017 as compared to $134 million in the prior corresponding period (pcp) and consequently the underlying NPAT rose to $100 million from $32 million pcp. The group expects to reach their full year EBITDA estimate of $385 million-$425 million and underlying NPAT of $130 million-$160 million. Growing Australian grain harvest and better export volumes, coupled with the group’s network efficiency efforts and managing costs have contributed to the decent result during the period. The group reported that average receivals per site rose to 70,000 tons from 40,000 tons of last harvest, driven by their developing a modern, efficient network through Project Regeneration. GNC is also enhancing their sales mix with a better focus on higher margin products. Better canola supply drove their oil supply with lower procurement costs. However, the group continued to face pressure on margins in GrainCorp Foods and unfavorable foreign exchange impact. Moreover, the industry continues to face supply chain disruptions given the industrial dispute affecting the Victorian rail provider and earlier harsh weather.We give an “Expensive” recommendation on the stock at the current price of $9.47


GNC Daily chart; (Source: Thomson Reuters)

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