Apologies if this has been posted somewhere else. From Coppo...

Apologies if this has been posted somewhere else.
From Coppo Report July 5th 2016.

Bell Potter Research Aus.
Dairy Farms Group (AHF) Hold, TP$0.21 – Jonathan Snape Adjusting for a lower farmgate Farmgate downgrades a headwind: FY16e is a year that incorporates only partial recognition of the earnings benefits of the CDC acquisition and both the Brucknell 4 and Heywood Properties. Looking to FY17e a full year’s contribution from CDC and the benefit of a larger herd set the scene for a material uplift in profitability in AHF. However, near term, downgrades to Fonterra’s closing 2015/16 farmgate milk price (FMP), from $5.60/KgMS to $5.00/KgMS, and a lower opening FMP for 2016/17 of $4.75/KgMS (closing forecast of $5.00/KgMS) suggest lower returns for the dairy farming operations of AHF. CDC provides a partial hedge: The revenue of AHF’s farming operations are linked to the FMP and the cost structure of CDC is also linked to the FMP. To t he extent that milk volumes produced on farm match milk volumes processed at CDC, there is natural hed ge to the integrated business on movements in the FMP. However, a portion of the CDC contracts are toll processing arrangements, where farmgate prices are contracted independently of CDC. As such we estimate AHF remains effectively long milk in FY17-18e, though at a contracting level. Downgrade to earnings: We have incorporated lower FMP assumptions and higher net debt (on lower cashflows) in FY16-18e resulting a downgrade in FY16e NPAT from a profit of $0.24m to a loss of $0.30m and NPAT downgrades of 14% in FY17e and FY18e. Our target price falls to $0.21ps (prev. $0.24ps) as a result of these changes. Investment view: retain Hold rating: The acquisition of CDC transformed AH F from what was essentially fresh dairy foods products in China. In the longer-term this reduces the group’s exposure to fluctuations in Hold rating. Disclosure: Bell Potter Securities acted as Lead Manager in AHF's $15.7m placement and SPP in Jun'15 and received fees for that service.