GNC (ASX) Ann: GrainCorp announces upgrade to FY21 guidance

Originally posted by Hopeful9: ↑

Many years ago a rural Federal Liberal MP who I knew well told me (what has by 2021 become ABARES) 'is always wrong'.

However 'The Weekly Times' of Wednesday 8 September 2021 highlights ABARES' 7 September 2021 crop forecasts, which suggest that Oz may have its third highest ever winter grain crop.

This remains to be seen, but forecasts include a national harvest of 54.8 million tonnes, 32 per cent above the 10-year median and only a million tonnes below the winter 2020 winter grain crop that is still, in September 2021, being exported.

Some of the rise is attributed to Western Australia that is of little interest to GNC holders, but fortunately the rest is due to excellent growing conditions in much of NSW.

The ABARES report highlights the possibility of mice continuing to be a problem in northern NSW and southwest Queensland, and highlights how given two consecutive good crops, 'on-farm storage is likely to increase'. The implication is that grain stored on-farm is far more likely to suffer from plagues than if stored in (say) GNC silos and bunkers where crop quality is more 'protected'.

While NSW wheat production is said to fall by 15 per cent to 11.1 million tonnes, this would be 65 per cent above the decade-long median. Barley at 2.7m and canola at 1.1m tonnes will be well above average if achieved.

In Victoria, the other big state for GNC receivals, the total winter crop is suggested to decline by 20 per cent to 7.7 million tonnes but this is still good in my view. Soil moisture has been given a tick by ABARES, and in the last week there's been godo rainfall in areas like Walpeup, Nhill and Horsham.

As one example where ABARES was mistaken, previously it said winter 2020 canola production was 950000 tonnes but it has revised this historic figure to 1.1 million tonnes due to information it received about sales. Even with the presumed winter 2021 drop, there's still 3.7m tonnes of wheat forecast to be harvested in Victoria that will keep GNC busy.

Importantly even if only 80 per cent of forecasts by ABARES become reality (in volume terms), GNC should continue to have an exportable surplus, albeit probably smaller than it is enjoying from the winter 2020 crop.

It will be interesting to hear what GNC says at its November 2021 AGM about overseas demand for its marketed crops and how successful it has been at finding bulk ships to carry the exports. We already know it's been busy upgrading at least a few rural receival points and reopening a few others that from memory were closed in about 2014 when it rationalised the number of handling points.

It's an open question as to whether continuing NSW and Victorian travel curbs/lockdowns, and the relative unavailability of foreign backpackers, will inhibit GNC's search for casual harvest handling labour.

We'd do well to remember rural resident AaronS76's wise words about how what matters is when the grain is at the millers domestically, or loaded on a ship for export, but at this stage subject to the usual caveats about what climatic conditions God can send, it's a pretty rosy outlook, Droughts in parts of Europe and less than ideal conditions in Canada and IIRC parts of the USA graingrowing belt have been helping to drive demand for our quality crops.

Expand

I just got this ...Wed, 8 Sept at 9:31 am

Wednesday, 8 September 2021
GNC - GRAINCORP LIMITED
Macquarie rates GNC as Outperform (1) - ABARES has released its second east coast crop production estimates for winter, at 26.5mt. This is a 20% increase on the first estimate in June, and Macquarie raises its forecasts to the same level. The broker's previous analysis suggested there was potential for 28.5mt by the end of the season.
The broker notes Graincorp has the greatest leverage within the agricultural sector to another above-average winter crop.
The weather outlook also indicates above-average rainfall for the grain belt on the east coast over the next three months. Macquarie retains an Outperform rating and raises the target to $7.32 from $7.27.
Target price is $7.32 Current Price is $6.38 Difference: $0.94 If GNC meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges). Current consensus price target is $6.81, suggesting upside of 6.7%(ex-dividends)The company's fiscal year ends in September.
Forecast for FY21:
Macquarie forecasts a full year FY21 dividend of 24.80 cents and EPS of 59.40 cents . At the last closing share price the estimated dividend yield is 3.89%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.74. How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 57.6, implying annual growth of 106.9%. Current consensus DPS estimate is 29.9, implying a prospective dividend yield of 4.7%. Current consensus EPS estimate suggests the PER is 11.1.
Forecast for FY22:
Macquarie forecasts a full year FY22 dividend of 25.50 cents and EPS of 54.70 cents . At the last closing share price the estimated dividend yield is 4.00%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 11.66. How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 55.3, implying annual growth of -4.0%. Current consensus DPS estimate is 32.9, implying a prospective dividend yield of 5.2%. Current consensus EPS estimate suggests the PER is 11.5.
Market Sentiment: 0.8All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

No.	Vol.	Price($)
2	2278	$7.83

No.

Vol.

Price($)

2278

$7.83

Price($)	Vol.	No.
$7.86	24995	4

Price($)

Vol.

No.

$7.86

24995

No.	Vol.	Price($)
2	2278	7.830
6	6923	7.820
6	13795	7.810
9	12055	7.800
4	16777	7.790

No.

Vol.

Price($)

2278

7.830

6923

7.820

13795

7.810

12055

7.800

16777

7.790

Price($)	Vol.	No.
7.860	24995	4
7.870	5723	2
7.880	5635	3
7.890	5723	2
7.900	10314	2

Price($)

Vol.

No.

7.860

24995

7.870

5723

7.880

5635

7.890

5723

7.900

10314

(20min delay)
Last $7.84		Change -0.060(0.76%)		Mkt cap ! $1.742B

Open	High	Low	Value	Volume
$7.93	$7.93	$7.83	$6.072M	771.0K

I just got this ...Wed, 8 Sept at 9:31 amWednesday, 8 September...

GNC - GRAINCORP LIMITED

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I just got this ...Wed, 8 Sept at 9:31 amWednesday, 8 September...

GNC - GRAINCORP LIMITED

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