10 Reasons
1. Improved governance and management - Stoic Chairman and CEO, new NED Klepec is ex Hancock (GR), new CFO Stevenson is ex Consolidated Pastoral and Heytesbury Beef, stability in the senior operating ranks
2. Now more efficient and overheads are a materially lower (down 30% v pcp)
3. Demand for cattle is higher today than at IPO and demand for shipping space has magnified - China now open and is after heavier (larger) cattle from the south of Australia (longer distance) and Indonesia now wanting heavier cattle from the north. And Supply of shipping space has declined (Elders existing and will become a larger customer of Wellard as will Heytesbury, GR and Consolidated Pastoral)
4. Australian cattle prices are falling (down 15% from 6 months ago) and becoming competitive again in the global market. Live export is the most attractive option for farmers because processing costs in Asia are a fraction of those in Australia
5. AUD grinding lower again and Oil price off 5% last night
6. Australian beef producers (and other agricultural industries) would benefit greatly if US starts a trade war
7. Debt will be sorted without an equity raising - margins opening up (critical for any WC facility), insurance settlement, ship being sold (Ocean Outback currently on a Sea Trial in Singapore), sale of WA sheep abattoir, potential to increase one of the senior shipping loans
8. Register overhangs gone (Standard Chartered, Butt) and register is in better shape - Mauro has material skin in the game, Fulida now more likely to develop into a valuable partner, Heytesbury expertise and customer relationship, GR still not set
9. Index and Passive Funds will scramble when the stock re-enters the ASX300
10. IPO price of $1.39 represents a P/E of only < 8x normalised NPAT (FY18-FY19)
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