Graincorp (ASX:GNC) is a diverse agribusiness. It is the largest grain storage and handling company on the East Coast of Australia. It is also a crusher and refiner of oilseed and a refiner of edible fats and oil.
Graincorp was one of the stocks selected for our inaugural NAPS Australia and New Zealand portfolio. With the year almost over they have deliver a total shareholder return of 8.4%, well above the ASX 300 benchmark at 5.1%. This performance was aided over the last week as they released their full year results (they have a 30 September year end) and surprised the market with a better than expected result.
Profits in FY23 were well below those in FY22, however this was expected as FY22 saw a bumper harvest, the second largest on record. The crop this year was still very strong, and revenue, EBITDA, EPS and dividends were all above expectations.
Graincorp was selected for the NAPS portfolio because its StockRank was 98. 11 months later and following the release of their FY23 results the StockRank is still 98. The two biggest factors contributing to this are the Quality score of 93 and the Value score of 94.
Despite the fall in some of the headline numbers in the most recent results, the Health Trend remains high at 7 out of 9. The return on assets and the gross margin fell, but all the other measures remained positive. Return on Capital and Return on Equity remain high despite contracting from last year’s levels.
Breaking the results down further, Graincorp’s business is divided into two main segments: Agribusiness and Processing.
The Agribusiness segment is dominated by grain storage and handling with the largest network on the East Coast of Australia. They have 160 regional receival sites and seven bulk ports, all connected by road and rail infrastructure.
The Processing segment is primarily involved in the refining of edible fats and oils. They are a leading oilseed crusher and refiner in Australia. The segment also includes Animal Nutrition. They are the largest canola meal producers and a supplier of vegetable oil and molasses-based feed supplements.
The results for the two segments moved in opposite directions in FY23. Agribusiness is the largest component with an EBITDA of $401m. This was down 36% on the…
