GrainCorp's Portfolio Review Will Likely Lead to Leaner Company, but We Don't See Economic Moat
We maintain our AUD 9.40 per share fair value estimate for no-moat GrainCorp following the firm’s annual general meeting, based on a 50/50 weighting of the indicative, nonbinding AUD 10.42 bid from Long-Term Asset Partners, or LTAP, and our estimated value of AUD 8.30 per share for the company on a standalone basis. Management noted conversations with LTAP are ongoing, but no binding bid has yet been received. We continue to believe LTAP’s valuation offers a substantial premium for shareholders,...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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