Agriculture Reporting Season Update
Date: 10/11/2023
*** GENERAL AVICE ONLY***
Upcoming Earnings in ASX Agricultural Stocks Strategy
- ELD – Monday 13th November
- IPL – Tuesday 14th November
- GNC – Wednesday 15th November
- NUF – Wednesday 15th November
Strategy
The majority of ASX companies pay dividends in April and August, however the ASX agricultural companies report after crop results and gives us an opportunity for some “off-season” dividend income and capital upside.
Elders, Grain Corp, Incitec Pivot and Nufarm have been heavily hit on speculation of extended drought conditions and the official declaration of El Nino. At MPC we think the market is underestimating the quality of these businesses and are too forward looking in pricing an extended drought
The strategy over next week will be to watch the Elders result on Monday for clues about the financial results for the season and look to add to Grain Corp and Nufarm either before their results if conditions prove to be stronger than expected. Alternatively, we will wait for potential buying opportunities for dividends.
Company Specifics
- Elders (ELD) – has only had 3 poor reporting results in the last 8 years as management has worked towards an 8-point plan to smooth earnings and be less sensitive to weather.
- Incitec Pivot (IPL) – While IPL has a large part of their business in explosives, the agricultural side in fertilzers. There is a great deal behind the scenes in splitting the business in 2, and an announcement is expected on the future structure of the business.
- Grain Corp (GNC) – increasingly positive signs for the 2023-24 east coast winter crop outcome, with forecasts generally lifting in the southern acreage and implying a more positive FY24 outlook than previously adopted. In the near term there are potential catalysts including both a more favourable December ABARES forecast and investment in new oilseed crush capacity.
- Nufarm (NUF) – significant changes made by Nufarm to its base crop protection business over the last 4-5 years will enable annual earnings to consistently exceed $400m, allowing the company’s seeds division to be the earnings growth engine over the same period.
Disclaimer: The recommendation given is general advice only. It does not take into account your personal objectives, financial situation, or specific needs. This information should not be your sole resource when making such decisions. We strongly recommend you to seek the advice of financial, taxation, and legal professionals before finalising any investment decisions.