Australian Agricultural Company Limited ASX Code: AAC ...€¦ · Australian Agricultural Company...
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Business Summary Australian Agricultural Company Limited (AAC) is a provider of beef and agricultural products. The company is involved in the operation of grazing and farming properties, beef cattle breeding, growing, feedlotting and trading, and beef value-add businesses relating to wholesale meat marketing. AAC services beef to customers in domestic and global markets. Finished & Store Cattle: This business operates an integrated cattle production system across 18 owned cattle stations, 2 leased stations, 7 agisted properties, 2 owned feedlots, 4 external feedlots, and 2 owned and 1 external farms located throughout Queensland and the Northern Territory. The Finished & Store Cattle group produces beef cattle that are either exported or sold for meat. Farming: This business operates 18,900 ha of dryland cropping and 2,300 ha of irrigation and across four diverse properties within QLD and NT. Queensland properties include Wylarah Farm at Surat, Lynora Downs Farm at Rolleston, Goonoo Farm at Comet and in the NT - Tipperary Station. Principal crops include irrigated and dryland cotton; corn (grain, silage); sorghum (grain, hay, and silage); wheat and chickpeas. Branded Beef: This business markets and distributes branded beef both internationally and domestically. The business operates from offices at Newstead in Brisbane. The business offers customers a selection of six brands of beef which include grass fed, grain fed and the Wagyu beef. Beef Processing: The Darwin Beef Processing Facility is under construction at Livingstone Valley, 50km south of Darwin in the NT. The facility will process more than 1000 head of cattle a day at full capacity, producing beef products, hides and rendered products for export markets in the USA, Asia and Europe. Products Company's product lineup include Wylarah, Westholme, 1824, Brunette Downs Grassfed Beef and Weltree etc. Latest Research Here is the beef AAC has yet to react in a meaningful way to the 31% rally in cattle prices CTYD. Historically there has been a close relationship between the share price of AAC and the EYCI, with movements in cattle prices having a high correlation to balance sheet herd values and also driving revenues on live cattle sales. The two major implications of rising cattle values for AAC are: For more information see full research report 10 Feb 2020. GICS - Food/Beverage/Tobacco Australian Agricultural Company Limited ASX Code: AAC Price: $1.065 12 Mth Target Price: $1.40 Rating: Buy Important Disclaimer - This may affect your legal rights: Because this document has been prepared without consideration of any specific client's financial situation, particular needs and investment objectives, a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the proper authority of such licensee, who has provided you with this report by arrangement with Bell Potter Securities Limited) should be consulted before any investment decision is made. While this document is based on the information from sources which are considered reliable, Bell Potter Securities Limited, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate. Nor does Bell Potter Securities Limited accept any responsibility to inform you of any matter that subsequently comes to its notice, which may affect any of the information contained in this document. This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. This is general investment advice only and does not constitute advice to any person. Disclosure of Interest: Bell Potter Securities Limited receives commission from dealing in securities and its authorised representatives, or introducers of business, may directly share in this commission. Bell Potter Securities and its associates may hold shares in the companies recommended. Snapshot Date Market Cap. Shares on issue 12 Month High 12 Month Low 22 April 2020 $642m 602.8m $1.33 $0.94 Rating Rating 12 Mth Target Price Capital Gain Gross Yield Implied Total Return Buy $1.40 31.5% NA% 31.5% Investment Fundamentals FYE 31 Mar 2019A 2020F 2021F 2022F Profit $m -37.1 -19.0 11.8 15.9 Profit (norm)* $m -37.1 -19.0 11.8 15.9 EPS* ¢ -6.2 -3.1 2.0 2.6 EPS Growth % 0.0 0.0 0.0 35.0 P/E* x 0.0 0.0 54.6 40.4 P/E Relative % 0.0 0.0 0.0 0.0 DPS ¢ 0.0 0.0 0.0 0.0 Yield % 0.0 0.0 0.0 0.0 Franking % 0.0 0.0 0.0 0.0 * Adjusted for goodwill and unusual items Source: Based on Bell Potter estimates Share Price Chart Total Return on $10,000 Investment
Transcript of Australian Agricultural Company Limited ASX Code: AAC ...€¦ · Australian Agricultural Company...
Business SummaryAustralian Agricultural Company Limited (AAC) is a provider of beef andagricultural products. The company is involved in the operation of grazing andfarming properties, beef cattle breeding, growing, feedlotting and trading, andbeef value-add businesses relating to wholesale meat marketing. AACservices beef to customers in domestic and global markets.
Finished & Store Cattle: This business operates an integrated cattleproduction system across 18 owned cattle stations, 2 leased stations, 7agisted properties, 2 owned feedlots, 4 external feedlots, and 2 owned and 1external farms located throughout Queensland and the Northern Territory.The Finished & Store Cattle group produces beef cattle that are eitherexported or sold for meat.
Farming: This business operates 18,900 ha of dryland cropping and 2,300ha of irrigation and across four diverse properties within QLD and NT.Queensland properties include Wylarah Farm at Surat, Lynora Downs Farmat Rolleston, Goonoo Farm at Comet and in the NT - Tipperary Station.Principal crops include irrigated and dryland cotton; corn (grain, silage);sorghum (grain, hay, and silage); wheat and chickpeas.
Branded Beef: This business markets and distributes branded beef bothinternationally and domestically. The business operates from offices atNewstead in Brisbane. The business offers customers a selection of sixbrands of beef which include grass fed, grain fed and the Wagyu beef.
Beef Processing: The Darwin Beef Processing Facility is under constructionat Livingstone Valley, 50km south of Darwin in the NT. The facility willprocess more than 1000 head of cattle a day at full capacity, producing beefproducts, hides and rendered products for export markets in the USA, Asiaand Europe.
Products Company's product lineup include Wylarah, Westholme, 1824,Brunette Downs Grassfed Beef and Weltree etc.
Latest ResearchHere is the beef
AAC has yet to react in a meaningful way to the 31% rally in cattle pricesCTYD. Historically there has been a close relationship between the shareprice of AAC and the EYCI, with movements in cattle prices having a highcorrelation to balance sheet herd values and also driving revenues on livecattle sales. The two major implications of rising cattle values for AAC are:
For more information see full research report 10 Feb 2020.
GICS - Food/Beverage/Tobacco
Australian Agricultural Company Limited
ASX Code: AAC Price: $1.065 12 Mth Target Price: $1.40 Rating: Buy
Important Disclaimer - This may affect your legal rights: Because this document has been prepared without consideration of any specific client's financial situation, particular needs and investmentobjectives, a Bell Potter Securities Limited investment adviser (or the financial services licensee, or the proper authority of such licensee, who has provided you with this report by arrangement withBell Potter Securities Limited) should be consulted before any investment decision is made. While this document is based on the information from sources which are considered reliable, Bell PotterSecurities Limited, its directors, employees and consultants do not represent, warrant or guarantee, expressly or impliedly, that the information contained in this document is complete or accurate.Nor does Bell Potter Securities Limited accept any responsibility to inform you of any matter that subsequently comes to its notice, which may affect any of the information contained in this document.This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Bell Potter Securities Limited. This is generalinvestment advice only and does not constitute advice to any person.Disclosure of Interest: Bell Potter Securities Limited receives commission from dealing in securities and its authorised representatives, or introducers of business, may directly share in thiscommission. Bell Potter Securities and its associates may hold shares in the companies recommended.
Snapshot
DateMarket Cap.Shares on issue12 Month High12 Month Low
22 April 2020$642m602.8m$1.33$0.94
RatingRating12 Mth Target Price
Capital GainGross Yield
Implied Total Return
Buy$1.4031.5%NA%31.5%
Investment FundamentalsFYE 31 Mar 2019A 2020F 2021F 2022F
Profit $m -37.1 -19.0 11.8 15.9Profit (norm)* $m -37.1 -19.0 11.8 15.9
EPS* ¢ -6.2 -3.1 2.0 2.6EPS Growth % 0.0 0.0 0.0 35.0P/E* x 0.0 0.0 54.6 40.4P/E Relative % 0.0 0.0 0.0 0.0
DPS ¢ 0.0 0.0 0.0 0.0Yield % 0.0 0.0 0.0 0.0Franking % 0.0 0.0 0.0 0.0* Adjusted for goodwill and unusual itemsSource: Based on Bell Potter estimates
Share Price Chart
Total Return on $10,000 Investment
Profit & Loss ($M)2015A 2016A 2017A 2018A 2019A
Sales Revenue 347 495 448 380 364Total Revenue ex. Int. 560 774 751 545 425EBITDA 48 138 136 -36 -136Depreciation & Amort. -16 -20 -19 -17 -12Goodwill Amortisation -- -- -- -- --EBIT 33 118 116 -53 -148Net Interest -20 -21 -20 -17 -16Profit Before Tax 12 97 96 -70 -164Income Tax -2 -29 -25 43 61Outside Equity Int. -- -- -- -- --Profit after Tax 10 68 72 -28 -102Significant Items after Tax -- -- -- -75 -46Reported Profit after Tax 10 68 72 -103 -148Preferred Dividends -- -- -- -- --
Cash Flow ($M)2015A 2016A 2017A 2018A 2019A
Receipts from Customers 337 509 500 376 378Funds from Operations -88 40 48 -20 26Net Operating Cashflow -76 22 29 -40 13Capex -67 -20 -29 -20 -26Acquisitions & Investments -- -- -- -2 -0Sale of Invest. & Subsid. -- -- -- -- --Net Investing Cashflow -66 -19 -28 -21 -26Proceeds from Issues 0 -- -- -- --Dividends Paid -- -- -- -- --Net Financing Cashflow 85 -- 27 30 9Net Increase Cash -57 2 28 -31 -4Cash at Beginning 69 12 15 43 11Exchange Rate Adjust. -- -- -- -- --Cash at End 12 15 43 11 8
Ratios and Substantial Shareholders2015A 2016A 2017A 2018A 2019A
Profitability RatiosEBITDA Margin % 13.90 27.94 30.26 -9.38 -37.38EBIT Margin % 9.37 23.81 26.01 -13.96 -40.68Net Profit Margin % 2.77 13.69 15.99 -7.27 -28.13Return on Equity % 1.26 7.65 7.03 -2.82 -12.14Return on Assets % 1.99 5.96 5.54 -1.06 -7.10
Debt/Safety RatiosNet Debt/Equity % 46.85 40.03 31.84 35.31 42.49Interest Cover x 1.59 5.66 5.77 -3.04 -9.39
No Substantial Shareholders
Balance Sheet ($M)2015A 2016A 2017A 2018A 2019A
Cash & Equivalent 12 15 43 11 8Receivables 30 24 14 21 19Inventories 237 269 29 35 205Other Current Assets 2 2 271 260 1Current Assets 281 310 357 327 232Prop. Plant & Equipment 668 742 792 754 795Intangibles -- 3 3 3 3Other Non-Current Assets 2 2 271 260 2Non-Current Assets 934 1,073 1,189 1,129 1,055Total Assets 1,214 1,383 1,546 1,455 1,287Interest Bearing Debt 369 369 367 356 366Other Liabilities 82 128 161 121 77Total Liabilities 452 497 528 478 443Net Assets 762 886 1,018 978 844Share Capital 461 461 491 532 529Reserves 310 366 397 418 435Retained Earnings -9 59 130 28 -121Outside Equity Int. -- -- -- -- --Total Shareholders Equity 762 886 1,018 978 844
Current Analyst Recommendations *
* Source: Morningstar. This chart shows the spread of recommendations from thosebroker analyst's in Australia with research coverage of this stock.
Principals & DirectorsPrincipals
Company Secretary Mr Bruce Bennett
Directors
Mr Hugh Killen(Chief Executive Officer,Managing Director)Mr Donald Gordon McGauchie(Non-ExecutiveDirector,Non-Executive Chairman)Mr Thomas (Tom) B Keene(Non-Executive Director)Mr Stuart Alexander Black(Non-Executive Director)Mr Anthony Abraham(Non-Executive Director)Dr Shehan Dissanayake(Non-Executive Director)Mr Neil Reisman(Non-Executive Director)Ms Jessica Claire Rudd(Non-Executive Director)Mr Marc Jonathan Blazer(Non-Executive Director)
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Australian Agricultural Company Limited
Bell Potter Securities Research
AFS Licence No. 243480 ABN 25 006 390 772
Email [email protected]
Website www.bellpotter.com.au
