Graincorp Limited (GNC)



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General Information
Company Name: Graincorp Limited
Stock Code: GNC
Website: www.graincorp.com.au
GICS Sub-Industry: Agricultural Products
Market Cap ($M): 1,961
Equiv. Shares (M): 229

Current Price Data+
Current Price Open High Low Last Close Volume Price Movement
 $ 8.630 $ 8.540 $ 8.640 $ 8.510 $ 8.570 215,111 $ 0.060  0.700 %

Current Broker Consensus Recommendation more
Recommendation: Sell (3.8)
Recommendation Date: 21st Oct 2014
Brokers Surveyed: 5

Company Overview

Business Description:
GrainCorp Limited (GNC) is an integrated grain business cross three grain activities: storage & logistics, marketing and processing. GNC supplies grain and processed grain products to customers in domestic and international markets, with a focus on wheat, barley and canola.

Strategy Analysis:
GNC's strategy is focused on becoming a fully integrated agribusiness creating and capturing value along the grain supply chain. In storage and logistics the key objective is to leverage greater value from its extensive grain storage and handling facilities through supply chain efficiencies, better servicing the customer base and expansion of non-grain commodity activity. GNC continues to grow its marketing business both domestically and internationally and seeks to build a strong presence in international grain trading. In malt GNC seeks to improve efficiency, better leverage group marketing and procurement capabilities and build its capability in the fast growing craft brew market. Since acquisition of the malt business it has made some bolt-on acquisitions that have expanded capacity and further such acquisitions are a possibility. The oils business also offers further opportunities for both organic growth and bolt-on acquisitions. In the Allied Mills joint venture the strategy is to leverage value from the existing milling operations and pursue further downstream opportunities through expansion of its food ingredients product range. GNC has a growth and efficiency initiative in place whereby it targets $110m in additional EBITDA benefits by the end of FY16. The gains are derived from changes to the way it does business, asset optimisation and increased port flexibility. Graincorp reported NPAT up 19.4% to $204.9m for the year ended 30 September 2012. Revenues from ordinary activities were $3.33bn, up 20% from last year, reflecting strong volumes across the group coupled with barley gains in Malt and a growing global reach in Marketing. Total up-country receivals during the year were 12.2Mt (2011: 14.9Mt) with 10.6Mt exported through GrainCorp Ports (2011: 8.1Mt). Grain in storage at the beginning of the year was 6.0Mt, an increase from 2.6Mt in the previous year. Grain in storage at the end of the year is 4.3Mt. Diluted EPS was 102.0 cents compared to 85.9 cents last year. Net operating cash flow was $140.0m compared to $304.8m last year. The final dividend declared was 20 cents, taking the full year dividend to 65 cents compared with 55 cents last year.


Financial Summary
Year to Sep NPAT EPS EPS chg (%) PER DPS Yield (%) Franking (%)
2015  F 100.3 43.5 19.1 19.7 25.0 2.9 100.0
2014  F 84.2 36.5 -52.2 23.5 22.0 2.6 100.0
2013  A 174.5 76.3 -25.2 15.8 40.0 3.3 100.0
Source: Morningstar analyst estimates.

Peer Comparison
EPS Growth (%) P/E (%) Dividend Yield (%)
Company Mkt Cap 2013 A 2014 F 2015 F 2013 A 2014 F 2015 F 2013 A 2014 F 2015 F
Graincorp (GNC) $1,961 M -0.2341 -0.4961 0.1363 11.2335 22.2945 19.6200 4.67 2.72 2.91
Ridley Corp (RIC) $265 M 0.5912 0.0985 0.0088 13.8934 12.6471 12.5364 1.74 4.65 5.23
Select Harvests (SHV) $425 M 0.1922 0.2504 -0.2953 12.2746 9.8165 13.9302 3.34 3.51 2.50

Market Comparison
Earnings P/E Ratio P/B Ratio P/E Growth P/S Ratio
GNC 0.66 22.3 1.12 10.00 0.44
Market 0.90 15.3 1.24 1.72 1.50
Sector 0.66 14.2 1.19 2.62 0.93

Directors
Name Position Start Date
Mr Mark Palmquist Chief Executive Officer,Managing Director 01 October 2014
Mr Donald (Don) C Taylor Non-Executive Chairman 01 October 2003
Mr Donald Gordon McGauchie Non-Executive Director 03 October 2000
Ms Barbara June Gibson Non-Executive Director 03 March 2011
Mr Daniel James Mangelsdorf Non-Executive Director 17 February 2005
Ms Rebecca Dee-Bradbury Non-Executive Director 29 September 2014
Mr Peter John Housden Non-Executive Director (other) 17 October 2008
Mr David Bruce Trebeck Non-Executive Director (other) 27 February 2002
Mr Simon Lucien Tregoning Non-Executive Director (other) 02 December 2008

Management
Name Position
Alistair Bell Chief Financial Officer
Gregory Greer Company Secretary
Betty Ivanoff Group General Counsel,Joint Company Secretary

Substantial Shareholders
Holding Name
22,878,690 (10.00%) UBS AG and its related bodies corporate
45,420,054 (19.90%) ADM Group Company
15,690,596 (6.90%) Credit Suisse Holdings (Australia) Limited
14,082,173 (6.20%) Deutsche Bank Group
15,486,659 (6.80%) The Goldman Sachs Group Inc

Calendar of Events
Date Event
14 May 2015 Report (Interim)
19 December 2014 Report (Annual)
13 November 2014 Report (Prelim)
© 2011 Morningstar, Inc. All rights reserved. The data and content contained herein are not guaranteed to be accurate, complete or timely. Neither Morningstar, nor its affiliates nor their content providers will have any liability for use or distribution of any of this information. To the extent that any of the content above constitutes advice, it is general advice that has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 (a subsidiary of Morningstar, Inc.), without reference to your objectives, financial situation or needs. Before acting on any advice, you should consider the appropriateness of the advice and we recommend you obtain financial, legal and taxation advice before making any financial investment decision. If applicable investors should obtain the relevant product disclosure statement and consider it before making any decision to invest. Some material is copyright and published under licence from ASX Operations Pty Limited ACN 004 523 782 ("ASXO"). DISCLOSURE: Employees may have an interest in the securities discussed in this report. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/fsg.asp.

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