GrainCorp’s Heady 2017 Profits Likely to Wilt, but Long-Term Trajectory on Track; Maintain FVE
No-moat GrainCorp enjoyed a bumper Australian grain crop in fiscal 2017 driving 67% revenue growth and a near-doubling of EBITDA margins in the storage and logistics, or S&L, segment, while rising brewing demand led to solid contribution from the malt business. The resulting AUD 390 million of underlying EBITDA trailed our AUD 420 million forecast, owing to competitive pressure in the oils business, but net profit after tax still grew nearly 170%. The company will face pressure from more-cha...GrainCorp is a food ingredients and agribusiness company. Co. focuses its activities on three main grains (wheat, barley and canola). Co.'s reporting segments are: Storage and Logistics, which include grain receivals, transport, testing, storage of grains and other bulk commodities; Marketing, which markets grain and agricultural products and operates grain pools; Malt, which produces malt products, provides brewing inputs and other malting services, sells farm inputs, and exports malt; and Oils, which includes the processing and crushing of oilseeds. Co. also has a 60.0% joint venture interest in Allied Mills Australia Pty Ltd, a supplier of milled edible flour for human consumption.
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